Argentina

Argentina embarked on a series of petroleum privatization efforts which began in 1985 and continued through 1993, when the final step in privatization was achieved with the sale of Yacimientos Petroliferos Fiscales (YPF), the state oil company of Argentina. Since the liberalizing of rules governing foreign participation in Argentine oil and gas, the benefits realized from new sources of investment and technology have been substantial and have been responsible for reversing years of declining oil production in Argentina. In terms of crude oil production, YPF is relatively small when compared to such giant Latin American petroleum companies as Mexico's Pemex and Venezuela's Petroleos de Venezuela SA (PDVSA). During 1994, YPF ranked 37th and 50th respectively, in terms of the world's crude oil producing companies and refining companies.

However, despite its size, the privatization of YPF represents one of the most significant and successful of all Latin American state-oil company privatizations. In 1990, Argentine crude oil production stood at 483,000 barrels-per-day, a level less than that produced a decade earlier. However, by 1995, Argentine production reached more than 700,000 barrels per day, and 1 million barrels of crude are expected to be produced daily in the year 2000 {see Endnote 37}. During 1994, when drilling activity was largely deteriorating in all other regions, the opposite was true in Argentina, which experienced a 66-percent increase in its crude oil and natural gas rig count between 1993 and 1994 {see Endnote 38}.

An influx of private investment largely accounts for the turnaround in Argentine petroleum. For instance, U.S. direct investment in Argentina's petroleum industry has climbed from $452 million in 1989 to $773 million in 1994 {see Endnote 39}.

Foreign companies were involved in Argentina's petroleum industry for several years prior to privatization. In 1994, the Argentine subsidiaries of the U.S. companies Amoco and Occidental accounted for 7 percent and 3 percent, respectively, of Argentina's crude oil production {see Endnote 40}. Exxon and Royal Dutch/Shell (Shell Oil Company's Netherlands/UK parent) also have owned major Argentine refineries for several years.

Privatization is responsible for more recent foreign ventures. In 1993, YPF announced that it would modernize its flagship La Plata refinery with technical assistance from Chevron. In 1992, the U.S. company Enron led a joint venture that won the concession to own and operate one of the two Argentine national gas transmission systems divested by Argentina when the state gas company, Gas del Estado, was privatized {see Endnote 41 and Endnote 42}. Drilling companies from the United States entered Argentina with Pride Petroleum Services' 1996 purchase of Argentina's largest drilling and workover rig company, Quitral-Co. S.A.I.C., for approximately $140 million {see Endnote 43}. In 1996, the former Spanish state oil company, Repsol, purchased a 38-percent controlling interest in Argentina's fifth-largest energy company and fourth-largest crude oil producer, Astra {see Endnote 44 and Endnote 45}.

In addition to encouraging foreign direct investment, privatization also may be responsible for a more outward-looking Argentine oil industry. YPF entered the ranks of major multinational oil companies with its acquisition of Maxus Petroleum in 1994. Maxus, a U.S. independent crude oil exploration and production company, has operations in Asia and the United States, in addition to Bolivia, Colombia, Ecuador, and Venezuela. Other recent actions by YPF also indicate an attempt to broaden its operations overseas: