Argentina wants Shell Oil out of the country

The Holland-British oil giant unilaterally raised fuel prices and blocked an ambitious deal with the Venezuelan PDVSA

In an official speech last week, Argentina's president Nestor Kirchner launched a loudly campaign to boycott Shell Oil operations in this South American country, after the Holland-British giant unilaterally announced an increasing in his retail fuel prices and frustrated an ambitious deal with the Venezuelan State owned PDVSA. Mr. Kirchner asked Argentineans not to buy anything from Shell, “not even a can of oil”, as according to local sources, asked social movements to block its petrol stations.

The immediate explanation for Kirchner’s attitude is the fear of an escalate in the inflation rates that started moving up this year, rising concerns on a population still touched by the hyperinflation of 1989-1990. However, the case has deeper roots as Shell Oil was ready to sell its $1 billion operation in Argentina early this year to the Venezuelan PDVSA, after months of negotiations. But a last minute decision from its board of directors pulled out the sale.

Some analysts believe the case sparked the outrage of Kirchner's administration, which simply waited for an opportunity to blame Shell. In last week's statement, Kirchner said Shell was one of the worst companies of the world, quoting reports from a “specialized foreign magazine”. “We want foreign investments but not the worst of them”, added Kirchner in the opportunity.

Shell had repeatedly announced its will to sell out its operations in Argentina, where it holds refineries and petrol stations, but lacks of owned wells. Negotiations with PDVSA were almost finished when suddenly Shell quitted them. Some Kirchner supporters believe the decision was politically instigated to frustrate the energetic alliance between Argentina and the leftist ruled Hugo Chavez’s Venezuela.

Now, according to sources quoted by local newspapers, PDVSA is interested in purchasing a quite smaller operation owned by the Uruguayan state-owned ANCAP, which has a 2% market share. Shell has more than 900 stations in Argentina, where it controls 16 per cent of the local market.

Argentina, Venezuela and Brazil, signed recently an “energy chart”, an instrument aimed to boost oil, gas and electricity cooperation between the three nations. Last year, Argentina created a new state-controlled oil company, ENARSA, after having privatized its oil monopoly in 1994.

On the photo: Argentine President Nestor Kirchner