The explosive consequences of South American populism
23 November 2012
Resource-rich South America should be reaping the full benefits of the high demand
for hydrocarbons around the globe. That several countries in the region are not is due
to a number of reasons, amongst the most important of which are politicians wedded to
populism and nationalism.
Argentina’s President Cristina Fernández de Kirchner is a case in point. Her nationalisation of the Argentine oil firm YPF in April this year, expropriating 51% of Repsol’s majority stake in the process, has seriously damaged the country’s ability to develop its massive shale gas reserves.
Repsol is demanding $10.5 billion for its confiscated assets and has said it is ready to take legal action against anyone who now invests in YPF.
One of the few supporters of the Argentine move is Venezuela’s President, Hugo Chavez, who warned Repsol to “think carefully” about taking action against Argentina. “They have a lot of investment here in Venezuela,” Chavez said in July.
Repsol was one of the few western oil companies willing to invest in Venezuela after its spate of oil sector nationalisations in 2007, a decision the Spanish group may well have come to regret.
In the November issue we look at some of the possible consequences for the Venezuelan oil and gas sector of Chavez’ recent re-election, particularly in the light of the catastrophic explosion and fire at the country’s Amuay refinery in August, attributed by many observers to a continuing failure to invest in maintenance by its nationalised owner, PdVSA.
A link to the article is available below.
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