Argentina probably will unveil an oil export payment plan within a week to restore output by the largest producers YPF SA (YPF:US), Pan American Energy LLC, Petrobras Argentina SA (PESA) and China Petroleum & Chemical Corp. (600028)’s Argentine unit, according to six people with knowledge of the plans.
Argentine President Cristina Fernandez de Kirchner will probably eliminate an oil export compensation program and allow producers to export at $70 a barrel if the market price is above $80, said the people who asked not to be identified because the measure hasn’t been made public.
Under the current program known as Oil Plus, Argentina pays $42 a barrel for exports, plus a compensation of as much as $28 a barrel. Delayed compensation payments prompted China Petroleum & Chemical Corp. (386), known as Sinopec, and Pan American to reduce production last year.
“The Oil Plus program is dead and will soon be replaced by a new regulation,” said Cayetano Capurro, an union leader representing 12,000 oil workers, in a phone interview from Comodoro Rivadavia, Argentina, in the southern province of Chubut. “The companies will have certainty for their payments and thus will resume their normal output.”
Capurro is scheduled to meet Fernandez and Argentina’s Planning Minister Julio De Vido on Jan. 7 to discuss the oil policy. Capurro said he was told about the revised program in a meeting yesterday with Chubut’s Governor Martin Buzzi.
Buzzi wasn’t available to take calls, said his secretary, who confirmed the meeting between Buzzi and Capurro.
Chubut relies on income from oil exports and has been waiting for the new regulation “for months,” Oil Minister Ezequiel Cufre said by telephone from Buenos Aires. He said he couldn’t confirm the timing of an announcement.
Norma Madeo, a spokeswoman for Argentina’s Economy Minister Hernan Lorenzino, declined to comment by phone.
Capurro said today his union plans to go on strike on Jan. 14 if the new regulation isn’t unveiled. Pan American has informed several hundred union workers they will be fired because the current payment program curbs production, according to Capurro, who said Pan American would shelve its plans to fire workers if the new payment plan is revealed. Pan American declined to comment on the new program.
Fernandez suspended the oil export compensation payment program in February. The program was revived retroactively in June to oil companies producing more. Producers weren’t paid $1.7 billion for the period while the program was halted.
In August, Sinopec sent a letter to the Argentine government requesting a delayed $184 million oil exportation compensation payment.
Pan American Energy, which exports 40 percent of its Chubut-based Cerro Dragon field, reduced output to 89,700 barrels in November 2012 from 100,600 barrels in December 2011, the company said today in an e-mail response to questions.
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