Argentina gov’t confirms it will set a local price reference

The Government reaffirmed the need to set a reference price for the local oil barrel in order to facilitate investments in the sector once the coronavirus pandemic comes to an end, and to avoid the possibility of having to import crude in a medium term.

This was assured by the head of the Productive Development Ministry, Matías Kulfas, when referring to the dialogue he holds with the oil productive chain to establish the so-called "criollo barrel" to grant stability to the prices of a sector hit by volatility.

Since March, Kulfas has summoned the oil producing companies, refineries and provincial producers to analyze the restoration of the criollo barrel, which triggered differences regarding the reference value the local crude should have.

Along with the price definition, the government seeks to count on the companies' commitment to maintain the levels of production and employment, in addition to promoting the development of small and medium-sized oil services' companies to strengthen the regional productive framework.

"We are finalizing the definition of a few details," Kulfas stated in an interview with La Red, after explaining that "the idea is to have a reference price that avoids a negative scenario for those projects that are currently working in Argentina, even with a low level of activity."

"If we don't do this," he continued, "then the great danger is that, when the activity normalizes and prices escalate, we won't have our production on its feet and we'll have to import oil, that's why we are looking to grant certainty."

The official also analyzed that "in the short term, it's clear that the global oil production suffered severe complications. The demand dropped 30 percent and it is expected that the normalization brings a positive scenario."

In the last weeks, the hydrocarbon productive chain showed its support to set a local oil price to commercialize within the country, to face the drop in prices and the international oil demand.

The March local barrel debate was resumed after the strong fluctuations of the international oil prices led to a historic plunge, in which the United States' WTI reached a negative value and the value of the Brent -the local benchmark- bloke the 20 dollar barrier.