Energy Explorers Bemoan Cost Of Labor Disputes In Argentina

Reuters

BUENOS AIRES, May 19 (Reuters) - Labor disputes are on the rise in Argentina and costing foreign energy companies millions of dollars as they explore the country's vast but barely-tapped Vaca Muerta shale oil and gas field, company officials said.

Trade Unions are a powerful force in Argentina, Latin America's No. 3 economy, where the frequency of industrial disputes are a deterrent to explorers already unsettled by President Cristina Fernandez's heavy-handed trade and currency controls.

Argentina's state-run energy company YPF estimates $200 billion is required over the next decade to exploit Vaca Muerta, which covers an area the size of Belgium, but so far foreign firms have made little more than foothold investments.

"In the last few years labor disputes have cost us in the region of $10 million, enough to drill a well," Maximiliano Hardie, venture lead and operations manager at Shell Argentina, said at an industry conference in Buenos Aires.

"Between 2013 and 2014 the number of strike days, and therefore the amount of unproductive time, increased," he said.

Years of under-investment in Argentina's energy sector have left the South American country a net energy importer. Mired in a decade-long debt battle, the cash-strapped country needs the deep-pockets of energy companies like Chevron Corp, Royal Dutch Shell and Exxon Mobil.

Investor confidence is unlikely to improve before October's presidential election. Fernandez is constitutionally barred from a third straight term and the three front-running aspirants all tout more investor-friendly policies.

Javier Iguacel, vice president of business development at Pluspetrol, told the conference an explorer's survival depended on maximizing drilling time.

"And for this, changes are needed. We have to be working 365 days a year, 24 hours a day," Iguacel said.

The next disruption, however, is likely to come in the next few weeks.

An official at Argentina's main oil workers union, the Private Oil and Gas Union of Rio Negro, Neuquen and La Pampa, on Tuesday told Reuters that members would take part in a national strike that is expected to take place in early June.

The government is currently locked in lengthy negotiations with big business and unions over the size of salary increases in the face of one of the world's highest inflation rates.

(Writing by Richard Lough; Editing by Bernard Orr)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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