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Exxon plans to leave Argentina; Shell claims “discrimination”

Friday, August 31st 2007 - 21:00 UTC
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Oil companies fed up with  government intervention Oil companies fed up with government intervention

ExxonMobil is working with J.P. Morgan to sell its assets in Argentina including hundreds of service stations and a 200 million US dollars refinery, according to reports in the Buenos Aires press. Fuel companies in Argentina are operating under heavy government intervention.

The news came as a surprise since the focus this month in Argentina has been on the local unit of Royal Dutch Shell, which the government has repeatedly fined since late last year and whose executives are now facing jail time allegedly for hiking prices and limiting supplies. "We can't deny or confirm the reports" said Thomas Hess Public Affairs official from Esso, a company which has been in Argentina since the beginning of last century and currently dominates 12% of the domestic fuel market behind Shell's 19% and Repsol-YPF with 50% plus. However Shell president Juan Jose Aranguren, who has been clashing with President Kirchner's top price controller Commerce Secretary Guillermo Moreno over alleged infractions to the 1974 "Supply Law", denied the Dutch-British corporation was thinking of selling its assets in Argentina. "I don't practice futurology but what I can say is what I've repeated since 2004 when rumors were abound about Shell selling assets in Latinamerica and we faced the situation making it plain clear that the corporation had decided to remain in several countries of the region, and one of them was Argentina", said Aranguren interviewed by a local broadcasting station. Aranguren further accused the government of "discrimination". Although Shell only accounts for 12% of the retail fuel market, Aranguren says the company has been subject to 64% of the 800-some inspections carried out by Moreno's agents this year. He also says Shell is exceeding government requirements to increase supply by roughly 7% on the year. Business daily Cronista reported Thursday that Argentina's Environmental Secretary Romina Picolotti is threatening to shut down Shell's Doc Sud refinery following an inspection last week, while social activist Luis D'Elia, a former Kirchner administration official, threatened to lead protests at Shell stations nationwide. Aranguren said there's "no conflict" with the government" but a situation where "Justice must asses if the corporation committed or not a violation". The Buenos Aires press offered a list of local businessmen similar to one that initially appeared in media reports when Repsol said it wanted to sell 25% of its Argentina unit, YPF, to a local partner. Another potential buyer of Esso assets is state-run Petroleos de Venezuela or PdVSA, which has expressed interest in purchasing refining and retail fuel operations in Argentina. PdVSA failed in a bid to buy Shell Argentina's downstream operations in early 2005, agreeing instead to buy a smaller refinery and some 150 service stations operated by family-owned Argentine oil company Rhasa. Analysts say that the "hostile, unpredictable environment" makes energy companies, currently flush with cash, reluctant to enter or expand in Argentina.

Categories: Energy & Oil, Argentina.

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