Argentina’s Policies Hinder Development of Vast Oil, Gas Reserves
From LA Times
By Kate Linthicum
When the Argentine oil company YPF announced two years ago that it had discovered some of the world’s largest reserves of shale gas and oil on a barren plain in Patagonia, many began looking to the energy industry as the answer to Argentina’s financial woes.
The country’s growing dependence on foreign fuel has been a main driver of economic instability. Oil and gas imports have drained currency reserves, and large energy subsidies have contributed to a soaring inflation rate.
According to a U.S. Energy Department report touted by officials and energy analysts, tapping the hydrocarbons buried deep in the so-called Vaca Muerta formation in Patagonia could reverse Argentina’s steady decline in oil and gas production, meeting domestic demand and providing enough for export.
But Argentina’s path to becoming a world energy power is far from clear.
More than a decade after its default on nearly $100 billion in debt in 2002 after a prolonged recession, Argentina is still considered a risky investment. That fact was highlighted this week when President Cristina Fernandez de Kirchner suggested that she would defy a U.S. appeals court’s order to pay more than $1.3 billion to a small group of bond investors who refused to swap out defaulted securities for new, discounted ones, and instead have sued for the original face value.
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