March 11, 2014
Auditor general: let me watch over YPF
In order to improve Argentina’s energy sector and motivate new investments in the country, the government must allow state-controlled YPF to undergo routine audits by an independent government body in order to confirm its financial balances and production levels, Auditor-General Leandro Despouy said yesterday, when he presented a report on Argentina’s energy policies over the last decade.
“If the government’s intention is to boost the current energy system, YPF has to be a credible company and that can only be achieved by us auditing the company,” Despouy told the Herald.
“We would of course have a constructive attitude towards the country’s most important company. What is at stake is the credibility of Argentina as a country and of its energy policy.”
Despouy yesterday presented a report at the Senate where he harshly criticized the government’s energy policies implemented in the last decade and asked to be authorized to audit the company, something that has been rejected by the government due to YPF’s status as a public company.
“They said we cannot audit YPF because a corporation can’t be audited by a public control office. Still, we currently audit other companies with the same characteristics as YPF such as Aerolineas Argentinas and Enarsa,” Despouy told the Herald. “Congress must debate this issue.”
The loss of energy self-sufficiency, a drop in the production of oil and gas, lack of policies and control of the state on private companies and a misguided subsidies policies were on top of the list of problems of the energy sector in the last decade listed by Despouy. The Auditor-General said the state doesn’t sanction companies when they don’t fulfill agreements and criticized the increasing amounts of energy imported.
“In more than 100 audits between 2002 and 2013, we have warned about the lack of planning and state inefficiency in assuring investments in the energy section,” Despouy said. “Concessionaires implemented short-term policies and chose only to extract and not to invest in new projects.”
According to the report, a 33 percent drop in oil production has been registered since 1998, while gas production decreased 16 percent since 2004. Argentina will end the year with a negative trade balance in energy reaching US$7 billion. Energy subsidies used to be 0.31 percent of the country’s GDP in 2004 but in 2012 they rose to 2.85 percent.
Even though the report focuses on the last decade, there was room to discuss the future of the energy sector in Argentina with the Vaca Muerta shale formation in Neuquén as the main hope for the government. Despouy sees no change in the near future and asked the government to invest more in boosting exploration of oil and gas reservoirs.
“Argentina has to invest more and more in exploring conventional and unconventional reservoirs, together with carrying on deep studies into the environmental impact new techniques can have,” Despouy said. “Vaca Muerta can change the outlookbut only in a long-term future.”
A full house
Numerous legislators, mainly from the Radical party, attended the presentation of the report, including Rodolfo Terragno, Ernesto Sanz, Ricardo Gil Lavedra, Fernando “Pino” Solanas (UNEN), Norma Morandini (Civic Front of Córdoba) and Mario Cafiero (Project South). Despouy invited all of them to discuss the report after the presentations by former energy secretaries Alieto Guadagni and Jorge Lapeña.
All attending the event supported Despouy’s report, except for Cafiero who considered it to be “incomplete” because it did not include the damage done by Repsol to the country’s energy system when it controlled YPF. In fact, the report mentions a lack of investment but not the Repsol case specifically.
“The report is incomplete. Important aspects of what happened to Argentina’s energy sector when Repsol controlled YPF are not mentioned. Repsol caused Argentina’s energy crisis,” Cafiero said. “They were the ones who started Argentina’s energy imports. They decreased their production in order to force us to buy energy from other countries.”