Repsol's Production in Argentina Disrupted by Strike

A strike by workers has disrupted oil and gas production of Repsol-YPF SA in the north of Santa Cruz, Argentina's second-biggest oil and gas producing province.

In a statement Thursday, the company said that since Tuesday afternoon, "protesters identified as members of the Santa Cruz Union of Private Oil Producers took control of the company's treatment and petroleum extraction plants located in the Las Heras, Pico Truncado and Canadon Seco well plants of other operators in the area."

"As a consequence of this force majeure, Repsol YPF was obliged to completely stop production in the oil and gas wells operated by the company in this zone," the statement said.

The company said the protesters are calling for an additional 144% increase in the food assistance portion of workers' salaries.

"This demand surprised the companies, not just because the concept is not addressed in the Collective Work Agreement, but also because an agreement was recently signed between the Chamber of Hydrocarbon Producing Firms and the Federation of Private Oil Producer Unions, through which an extraordinary payment of 700 pesos ($1=ARS2.9175) would be provided until the renewal of the Collective Work Agreement" in June.

Argentine newswires reported Wednesday that an estimated 800 workers had gone on strike and that the demand for an increase in food assistance - from ARS180 per month to ARS440 - would apply to days in which workers worked more than eight hours and that it be retroactive to January. Newswire Diarios y Noticias quoted the secretary general of the union, Hector Segovia, as saying that the occupation of the plants would continue for an "indefinite time."

A Repsol-YPF spokesman said he couldn't quantify the size of the supply disruption, though he called Santa Cruz an "important zone" for the company.

In its statement, the company said that the disruption might cause problems in other industries throughout the southern Argentine region of Patagonia. It cited risks for gas-generated electricity production, which in turn could disrupt the electric pumping of drinking water in the Canadon Seco area. In addition, Repsol YPF argued, "the paralyzing of these production plants not only provokes a disequilibrium in the normal supply of crude oil in the internal and external market, but also affects the income from royalties and retentions for the province and the nation."

The company said it had appealed to national and provincial government organizations to intervene and force and end to the strike.