REUTERS: Tariff fight roils Argentina’s shale patch as Macri opens trade

07/12/2017

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July 12, 2017 | By: Luc Cohen. 

BUENOS AIRES (Reuters) – Argentina needs oil rigs to develop its vast shale oil and gas resources. The United States has plenty of idle equipment laying around after its own unconventional drilling boom cooled.

But moving that machinery from the plains of Texas to the windswept Patagonian desert is proving complex and costly for global oil majors who say Argentina’s protectionist past is slowing efforts to spark its own shale revolution.

A move by Argentina’s government to cut import taxes on used oil-field equipment has sparked fierce opposition from local manufacturers, who are lobbying the government to include protections for them in a measure they fear will destroy their livelihoods.

Among them is Adrian Ramos, president of QM Equipment, a manufacturer of drilling and fracking equipment located in the Argentine coastal city of Mar del Plata.

“We got in touch with [the Production Ministry] and let them know it was totally impossible for us to survive this,” Ramos told Reuters in a telephone interview.

Negotiations with Ramos and others have slowed the rollout of tariff reductions. President Mauricio Macri in April had promised oil executives the changes would be coming within “weeks.”

The previously unreported talks with local manufacturers underscore the challenges faced by Macri, who came to power in 2015 on a wave of popular discontent that ended 12 years of leftist rule. The market-friendly former businessman has pledged to revive Argentina’s moribund, inflation-racked economy by reducing trade barriers and wooing foreign investment.

 

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