Argentina to Include New Companies in Vaca Muerta Labor Deal
BUENOS AIRES, July 13 (Reuters) - Argentina plans to include new companies in a 2017 pact among oil producers, workers and the government in an effort to boost competitiveness in the Vaca Muerta shale play, the country's production minister told Reuters on Friday.
Mining Minister Dante Sica, who assumed the role three weeks ago amid a Cabinet shakeup in market-friendly President Mauricio Macri's government, said in an interview that he planned to meet with oil industry suppliers and service providers operating in the sprawling Patagonian shale formation over the coming weeks.
"We will sit down and discuss, see where the needs are, where the logistical bottlenecks are," Sica said. "That way we can move quickly to unlock those resources and increase productivity and competitiveness."
Vaca Muerta is one of the largest reserves of unconventional hydrocarbons on the planet, though much of its oil and gas remains untapped.
The labor agreement, signed early last year, sought to attract companies by cutting costs and encouraging competition.
"There are more investors, potentially with projects that are ready to go," Sica said. "We are already seeing strong demand from oil service providers."
The minister added that Argentina's mining sector also needs to address regulatory discrepancies that are holding up new projects.
Sica referred to lack of clarity in its Glacier Law, which sets limits on mining exploration, and the Federal Mining Agreement, which seeks to unify policies among provinces.
"As we resolve these issues, we will see an expanded mining sector with new projects in its portfolio," Sica said.
Exports from Argentina's mining industry are a huge generator of foreign currency needed to balance its trade deficit. The economy has been hurt by drought and recent turbulence in its financial markets, causing the peso currency to slide more than 30 percent and inflation to speed up.
However, a devalued peso could become an opportunity for exporters and local industry, which no longer have to compete with massive imports.
Sica, who previously served as director of Abeceb.com, a consulting firm that monitors the country's trade balance, said exports should rebound in the first quarter, helping reduce the country's trade deficit, which surpassed $8.4 billion last year.
"Transforming that deficit into a surplus will take us a few years, but the path forward is to continually chip away at it," Sica said. (Reporting by Eliana Raszewski; writing by Scott Squires; editing by Jonathan Oatis)
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