Chevron Embargo Could Hinder Investments in Argentina, Says YPF

The CEO of Argentine state-controlled oil company YPF says a court ruling embargoing the assets of Chevron Corp.‘s local subsidiary could hinder investment flows into the South American country.

Miguel Galuccio, who has headed YPF since Argentina seized a 51 percent stake in the company last year from Spain’s Repsol, issued the warning in an open letter to a group of Ecuadorian plaintiffs trying to collect on a huge judgment against Chevron for environmental damage in the Amazon.

YPF and Chevron Argentina signed a memorandum of understanding in December that paves the way for an eventual partnership to develop shale oil and gas reserves in the massive Vaca Muerta formation, which is located in the western Argentine province of Neuquen.

In the letter, published Thursday by the Pagina/12 daily, Galuccio told the Ecuadorian plaintiffs that the legal action they have brought against Chevron in the South American country “is absolutely detrimental to Argentina and could have a negative effect on investment” there.

Galuccio said Argentina is pursuing a path of energy independence and that developing Vaca Muerta is essential to meeting that goal.

In November, an Argentine court embargoed up to $19.55 billion in assets of the local subsidiary of Chevron, the South American country’s fourth-largest oil producer.

The embargo was sought by attorneys representing a group of Indians and villagers in Ecuador’s Amazon who won a nearly $20 billion judgment against Chevron for environmental damage.

The plaintiffs are trying to collect on the judgment in several foreign countries since Chevron has few assets in Ecuador.

The Ecuadorian courts found Texaco, which Chevron acquired in 2001, guilty of dumping billions of gallons of toxic drilling waste in a 480,000-hectare (1,850-sq.-mile) area of the Ecuadorian Amazon between 1964 and 1990.

Chevron succeeded in having the pollution case moved from the United States to Ecuador in 2003 but later said the case was marred by fraud and that it could not receive a fair trial in the Andean nation, currently governed by leftist President Rafael Correa.

The company, which maintains that Texaco had been cleared of any liability for damages by the Ecuadorian government of the time after remediating its share of environmental impacts, has refused to pay the judgment.

Plaintiffs say that mid-1990s agreement with the government did not release it from third-party claims and that Chevron is reneging on its pledge to abide by whatever decision was handed down by Ecuadorian courts.

Published in Latino Daily News