MercoPress. South Atlantic News Agency

Argentine province of Salta joins the pack and revokes YPF oil concessions

Juan Manuel Uturbey, “all companies were given an ultimatum” to come up with an investment plan to boost oil and gas production

As was anticipated yet another Argentine province, Salta, announced Sunday its decision to revoke a concession from Spanish held oil company YPF. The governor from the north-west province of Salta, Juan Manuel Uturbey, and a close ally of President Cristina Fernandez, announced his decision to revoke oil company YPF concession of the Tartagal Oeste area and his intention to include it in a list of areas that will be put out to tender.

Urtubey explained that “this week, as included in the plans of the provincial Energy Secretariat, we accepted to revoke YPF concession of the Tartagal Oeste region since there was no oil production taking place there, and moved forward with a list of areas that will be put out to tender, including this one.”

He added that “all companies were given an ultimatum so they would come up with an investment plan increasing exploitation and exploration of the area on a 15% average”.

“We have told those corporations unable to invest in those areas to have the good will to hand them over to those who have interest in doing so,” he stated.

The governor said that the decision was made last Friday and that their goal is to “begin production in the area in order to achieve a 15% increase in gas and oil production”.

Salta thus joins the provinces of Mendoza, Chubut, Neuquen and Santa Cruz which in recent weeks have adopted similar positions regarding YPF oil and gas concessions.

Last week Mendoza announced it had decided to revoke the Ceferino and Cerro Mollar Norte concessions, which represent just 0.06% of YPF total oil and gas output in Argentina, according to energy sector sources

“I took the decision – based on (YPF) non-compliance with its conservation, production, maintenance and work obligations – to decree the expiration of these areas, which will revert to the province,” Governor Francisco Perez said.

Previously YPF had also been stripped of its concessions to operate in six areas of Santa Cruz, Chubut and Neuquen.

These decisions have come amid a wider dispute between the company and President Cristina Fernandez’s administration, which accuses YPF of a decline in investment and output.

YPF has said it will invest a record 15 billion Pesos (3.43bn dollars) this year in Argentina, up from 13.3 billion Pesos in 2011.

Meanwhile, in a resolution published last Friday in the Official Gazette, the Argentine government blasted YPF for failing to contribute to a fiduciary fund created to meet the liquefied petroleum gas needs of low-income sectors and expand natural gas networks.

Since 2008, natural gas producers have contributed to that fund in exchange for higher gas prices at the wellhead. The accord with gas producers was most recently extended in December but YPF chose not to continue to participate, the natural gas regulator, known as Enargas, said.

YPF participation is of “crucial importance” for the accord’s success, the regulator said, adding that the company’s “unscrupulous behaviour” forced it to design a new procedure to ensure the fund’s continuance.

YPF, a company with Spanish and Argentine capital that Cristina Fernandez’s government had once held up as a model corporation, began being targeted for criticism last December. The government has blamed the company for fuel shortages, a drop in oil and gas output, lack of sufficient investment in its operations and a soaring fuels imports’ bill, almost ten billion dollars last year.

YPF, in which Spain’s Repsol has a 57.43% stake and Argentina’s Grupo Petersen holds 25.4%, is one of the largest investors in Argentina, the top contributor to the Treasury and the country’s largest oil and gas producer.