Labor Conflict Threatens Oil Companies, Fuel Supply In Argentina
December 13 2010 - 8:19PM
Dow Jones News
A nearly two-week-old labor union dispute is threatening to
derail crude oil production and fuel supplies in Argentina,
companies affected by the situation said Monday.
The conflict, which began Dec. 1, already has completed halted
output at two facilities, one in Chubut Province and another Santa
Cruz Province, owned by the YPF SA (YPF), the local unit of Spain's
Repsol YPF SA (REP, REP.MC).
YPF has ceased producing roughly 100,000 barrels of oil a day at
the facilities.
"The situation is very serious," a YPF official said Monday,
noting that union officials have refused to abide by a government
order to return to work.
The oil industry union that started the conflict accuses YPF of
failing to adhere to a collective bargaining agreement and increase
salaries. Meanwhile, YPF has said that people associated with the
union have destroyed facilities, blocked a key transportation
center and beaten YPF employees.
YPF offers storage facilities for multiple producers in the
area, including Pan American Energy and Occidental Petroleum Corp.
(OXY). In addition, virtually all producers in the region rely on
the transportation center to send oil to refineries located
elsewhere in the country.
This situation affects every oil company in Argentina,
Occidental Spokesman Richard Kline said Monday.
Kline said it was too soon to say how the conflict might affect
production for Occidental, which produces around 44,000 barrels a
day in the area.
Pan American Energy continues to produce oil and is storing it
at its own facilities, a person familiar with the company's output
said. "But that storage capacity is finite," added the person, who
asked to be unnamed.
Brazil's Petroleo Brasileiro SA (PBR, PETR4.BR) also has
production facilities in the area and could be affected by the
conflict, industry officials said. Numerous smaller oil and gas
companies could also see business affected if the situation isn't
resolved soon.
"The industry trusts that the conflict will be resolved," an
industry official said.
Oil produced in this part of Patagonia, which reportedly
accounts for around half of total national output, is shipped to
refineries where it is converted into fuel.
Gas stations around the country run by the Argentine unit of
Royal Dutch Shell PLC (RDSA), Petrobras and others eventually could
run into bottlenecks, industry officials said.
Union conflicts are widespread and common in Argentina,
especially in the oil and gas industry.
Last month oil industry union leaders signed a peace pact with
energy companies and the government, pledging to avoid strikes and
other conflicts.
The pact was hailed as step forward for the industry but it
appears to have accomplished little.
So far this year, at least two-dozen labor conflicts have either
reduced or completely shut down the equivalent of one month's
production oil and gas in Argentina, according to industry
data.
Last year, some 164 labor disputes, including strikes and
roadblocks that prevented workers from reaching production
facilities, affected output on 241 days.
A spokesman for the oil workers union that started the conflict
could not be reached for comment.
--By Taos Turner, Dow Jones Newswires; 5411-4103-6728;
taos.turner@dowjones.com
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