Union agreement promises peace for Vaca Muerta this year – 05/05/2019

The oil industry and the unions agreed on Friday paritarias of the sector. Workers in the sector will receive a 54.7% improvement for the period that ended in March and is a recognition of inflation last year. In addition, they will benefit from an increase of 28% until March 2020, with two review clauses due to an increase in the cost of living.

In Neuquén, the electoral process has already been solved and the oil companies are celebrating milestones. Companies get better results than expected in some wells, They plan to obtain financing from the markets and announce inaugurations, such as a joint pipeline between Tecpetrol and YPF.

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But the main trade unionists in the southern oil sector are getting into different electoral adventures. In Chubut, they are on the governor, Mariano Arcioni, while in Santa Cruz, they play in the space Unidad Ciudadana / Front for Victoria.

The political stance has led some unions to toughen their claims, according to the companies. The most discussed part was the recognition of past inflation.

The companies had agreed to take into account an increase in the cost of living that they would pay retroactively from April, date of expiry of their parity. But there was disagreements about this number, which finally closed at 14.7%. There was pressure and traction on it. The issue was then discussed at the competitiveness table Vaca Muerta, a space shared by the national executive power, the companies, the unions and the governor of Neuquén, Omar Gutiérrez.

Oil companies are waiting for a positive year for Vaca Muerta. They have higher expectations in oil – whose international price is firm – than in gas. In this segment, "interpretation" of subsidies was combined due to stimulus measures taken by the national government with a drop in imported liquid gas (LNG).

Unions will receive a 28% increase from April 2019 to March 2020. They will receive 10% from June, then two increases of 9% in November and March. There will be a review if inflation exceeds this trend.

Oil production increased by 3% in March compared to the same month last year and stands at 3.3% per year. Although unconventional deposits represent less than 15% of the total, its growth is significant, by more than 50%.

A disagreement of the United States with Iran has aroused interest for Argentine oil. Businesses even felt they could raise refining prices. If they did not, they thought they could find an outlet through exports.

In gas, the improvement is 2.9% compared to the same month in 2018 and the cumulative gains ahead of 5.6%, according to data from the Mosconi Institute. But there an alarm goes off. "Low-cost Tecpetrol production from Fortín de Piedra, 12-month natural gas production decreases 1.8% and unconventional March production is reduced 14.8% compared to the same month of the previous year ", clarify your report. The gas obtained by Tecpetrol in Fortín de Piedra benefits from the subsidies granted as part of the recovery plan (resolution 46/2017) recently "reinterpreted by the government".

The local gas landscape is more complicated. The temperature is warmer than expected, that's why this liquid stayed. Governments and companies are already thinking that they will be able to export the pipeline to Chile in the middle of winter, but that field offices should be expected until September and October.

The reinterpretation of the Vaca Muerta gas resolution is accompanied by a drop in LNG (liquid gas) prices for export. This could mean that imports by ship – which Argentina uses in winter – to be less expensive.

The demand for electric power fell by 10% from one year to the next in March. This is due to the decline in industrial activity and the decline in consumption. Thermal power plants needed less gas, but it's also growth in production thanks to non-renewable energies.