Argentina is making few friends in the oil and gas industry these days
Interview with Sam Logan (*) Angering Spain by seizing and nationalizing a majority of Repsol's shares in YPF and ramping up the rhetoric over the Falkland Islands as exploration deals promise to make the territory a major oil player overnight, Argentina is making few friends in the fossil fuels industry these days.
Sam Logan, owner of the Latin America-focused private intelligence boutique, Southern Pulse, speaks to Oilprice.com about the politics of populism behind Argentina's energy aggression.
In the interview Sam Talks about: Why Carlos Slim bought shares in YPF; Why Argentina won't take any definitive action in the Falklands; Why things will get worse for energy firms in Argentina; Argentina's brewing political crisis and Argentina's future relationship with Spain
The Interview conducted by Jen Alic of Oilprice.com
Oilprice.com: In April, Argentina nationalized Spanish Repsol's shares in YPF and now shareholders have approved a move that could see sharp cut in dividend payouts and a redirection of profits to investment. This is in line with President Cristina Fernandez justification for nationalizing Repsol's shares in YPF. She had accused Repsol of fleecing YPF by using too much of its profits for shareholder benefits rather than investing in exploration and turning Argentina into an importer of fuel. Will this essentially political and economic populism help or harm Argentina?
Sam Logan: While there are certainly short-term gains to be realized, the long-term effects of the Argentina-Spain relationship and Argentina's relationship with other oil majors will result in significant setbacks in investment confidence and overall appetite for working with the Argentine government.
Oilprice.com: What we would like to know is what is missing from this story and what role certain vested interests, such as the Eskenazi family (minority YPF shareholders brought on by the Kirchners who later defaulted on their Repsol loans) and Carlos Slim have played in the YPF saga.
Sam Logan: The Eskenazi family really took a hit from this action. When brought on board by the Kirchners, they took out loans to buy their stakeholder position in YPF. The payback on those loans was based partially on dividend payments. So the Kirchner nationalization and subsequent decision on dividends has left them in default. Carlos Slim, who got 8% of YPF when Eskenazi defaulted, was simply making a personal investment, not a political statement. When you're the world's richest man, it's not particularly risky to make low-value purchases and hold them long term to see if they pan out.
Oilprice.com: Populism is also at play in Argentina's renewed push over the Falkland Islands. Last week, Premier signed a $1 billion deal develop Rockhopper Exploration's Sea Lion field in the Falkland Islands and Argentina is threatening to sue Premier for illegal activity. How will this play out for Argentina, and for big oil? What can we expect in the near- medium-term?
Sam Logan: The Argentine lawsuit will move forward and the UK firms will ignore the action, but BP could get caught in the crossfire as a UK firm with holdings in Argentina. Already we've seen Cristina Fernandez’ administration apply pressure to BP.
Oilprice.com: How are oil and the Falklands used as symbols of national sovereignty in Argentina?
Sam Logan: The Falklands have long been used as symbols in Argentina, and this is an issue that crosses party lines so there is more political currency available for the Falklands issue across the Argentine political spectrum. There could be more saber rattling, but at this point I don't see the Argentine government taking definitive action.
Oilprice.com: Would you agree that at the heart of the matter is Argentina's misguided energy policy, in place since 2003?
Sam Logan: It's not just energy. This is more about Argentina's overall economic policies and the steadily increasing economic pressures the Cristina Fernandez government is facing. Inflation, currency controls and price controls on gasoline all play a huge role in this market, which extends well beyond the recent actions with YPF. Let's not forget that until recently Argentina was a natural gas exporter. Due to a longterm political negligence and mismanagement of infrastructure, Argentina is dependent on multinational energy firms to develop deposits and other known reserves - not to mention the potential for hydraulic fracturing. Ultimately, the irrational behavior Argentina has shown against multinational energy firms underscores a brewing political crisis that shows little to no sign of abatement in the near-term. It's likely to get worse for energy firms in Argentina before it gets better.
(*) Samuel Logan is the founding partner of Southern Pulse, a private human intelligence organization focused on investigating security, politics, energy, and black market economics in Latin America. Southern Pulse investigators operate from hubs in Mexico, El Salvador, Colombia, Brazil, and Chile to leverage Southern Pulse's HUMINT network, unique access, and deep understanding of the region to mitigate risk for public and private sector clients with exposure to political, security, financial, or legal risk in Latin America.
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Here's a list of “Who knows him”
Government:
US State Department
US Department of Justice
US Southern Command
US Army
US Coast Guard
US Navy
Drug Enforcement Administration
Bureau of Alcohol, Tobacco, and Firearms
Immigration and Customs Enforcement
US Customs and Border Protection
US Treasury Department
NASA
Brazilian Intelligence Agency (ABIn)
Brazilian Federal Police
Mexican Attorney General's Office
NGOs:
United States Institute of Peace
Woodrow Wilson International Center for Scholars
UN Foundation
German Institute for International and Security Affairs
North American Congress on Latin America
Council on Hemispheric Affairs
Council for Strategic and International Studies
International Relations and Security Network
Council on Foreign Relations
Washington Office on Latin America
Center for International Policy Studies
International Crisis Group
Centro de Recursos para el Analisis de Conflictos
Academic:
Universidade de Brasilia
Universidad de los Andes, Colombia
University of Reading, UK
Vienna Univ. of Economics and Business Admin.
Tufts
Berkeley
Amherst
Cal State
University of Texas
Texas Christian University
University of California
National Defense University
Georgetown University
George Washington University
Monterey Institute of International Studies
Media:
Aljazeera
NBC
BBC
CNN
Univision
El Universal (Mexico)
O Globo
Jornal do Brasil
The Guardian
Dow Jones
Wall Street Journal
The Boston Globe
The Washington Times
The Miami Herald
The Los Angeles Times
The Houston Chronicle
The New York Times
The Washington Post
The Dallas Morning News
Border Land Productions
Guard House Productions
Private:
The RAND Corporation
Control Risks
Gerson Lehrman Group
Business Monitor International
Riskline
Olive Group
Kroll
iJET International
BAE Systems
Stratfor
Xe
Triple Canopy
Woodside
Petrobras
Total
British Petroleum
Chevron
Prudential
Risk analysis consulting firms
Public Relations firms
Private security firms
Due Diligence firms
....but as the m
Again who knows him? Is brother of Obama?
Well Dany? would you care to refute his answers?
Little tip, Hugo and CFK are not up there, neither is that corrupt joke of an organisation you have down there.
The big fields they discover 20-30yrs ago are pretty much depleted adn if they don't do something soon they will run dry.
The Ks have destroyed this industry. This is yet another example of a very long list that will take 10-15yrs to recover once the dynasty is finished.
As I have said many times I think the K dynasty will be studied as the perfect example of how to ruin a country through bad government.
My advice to Rgs is buy sugar.
It's your prerogative to exploit your oil resources when you decide the time is right, equally it's our prerogative to exploit ours, for us the time is right now so we're going for it.
Good luck with yours (once you get your shit together enough to do anything with them....if ever).
You have to get out of the ground before you can sell it
By the time Argentina pays there loans, the world will be running cars on hydrogen. Anyone that has ever consulted with Saudi Arabia knows that they are already planning for a non-oil based economy.
Excuses pouring out of us? what excuses? we're already in the process of exploiting our oil resources in the Falklands, you're the one making excuses for Argentinas lack of progress on that score with your own resources....ah yes...how foolish of me...it's not that you're incapable of developing new fields, it's all part of a grand plan isn't it?
BTW if you really didn't care about our opinions you'd not reply to our comments on here, you're as transparent as a piece of glass you bitter, envious little man.
#22 I didn't know you where argentine or at the very least an argy wanebe, you got one thing right it might just be us Argentine developing our oil fields. All in time. I didn't think size mattered to homosexuals.
#23 we have many pirates in Islas Malvinas Argentina who should be treated as you stated. Australia does it to Muslims and blacks why not do it to white trash.
This is not trying to tell you anything, simply making observations.
Like, the “white trash” in the Falklands are armed to the Fcuking teeth.
Try it, if you’ve got the pelotas that is.
Odd very odd
why are you quoting yourself? we all read your inane drivel the first time, it doesn't improve with being repeated.
I see that my assumption that you are a fascist (based on your comments advocating genocide and ethnic clensing on another thread) is accurate, your references here to the correct treatment of Muslims and blacks confirms that. Ah...and homosexuals and white trash apparently. Tell me Nazi pirat, is there anyone in the world you're not mad at?
What pirates?
More than the pirates......I want to know who in Argentina is going to capture the so called pirates. The RG Navy we have more ships in just one port Portsmouth, Virginia than their entire navy.
They have an Argentine fix to the blackout expropriate....jajajajajajajajajaja
“What I love about Dany is that when you mock him he comes back with a comment that makes no sense whatsoever.”
Internet trolls always do, that's their raison d'être.
Of course. And their way of making people walk the plank was to chuck them off aircraft into the sea.
Is it not interesting that two of the historical characters much lauded by the Argentines,Vernet (who sought permission from UK for his settlement), and Jewett comitted piracy? That's why the USA kicked them out.
The Malvinistas never actually mention the real people guilty of piracy, nor the fact that the UK did not eject anyone by force( in 1833 the UP ot RP garrison were asked to leave), but that the USA did actually eject settlers.
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