The oil-producing provinces of Argentina have warned that they will stop supplying oil to the country if Javier Milei’s government follows through with the plan to withhold a significant amount of federal tax revenue.
The governor of Chubut province, Ignacio Torres, stated to a local TV channel that no oil will be extracted on Wednesday unless the provinces are respected and their burdens are relieved.
The national government plans to keep around $15.3 million from Chubut in order to recoup unpaid debt from that province and 10 others, according to Economy Minister Luis Caputo.
In reaction to the danger, the president of Argentina publicly criticized the governor of Chubut and his colleagues, calling them “financially corrupt”. This argument led a local expert to caution that the president may have taken on more than he can handle.
Artemio Lopez informed AFP that there is currently a rebellion taking place in the provinces, and Milei’s assessment of the level of conflict is incorrect. He stressed that while it may be one thing for the president to clash with an unpopular parliament, facing opposition from provincial governors is a whole different challenge.
The analyst mentioned that the majority of them received a larger share of the vote compared to him in the previous election.
Most of Argentina’s current and future oil production is located in Patagonia, in the southern part of the country. The Vaca Muerta shale play, the world’s second largest, is found in the northern part of the region. However, state-owned YPF has recently reported a significant shale oil and gas discovery in Chubut, which is located approximately 1,000 miles south of the Vaca Muerta formation.
Currently, the Vaca Muerta region contributes to approximately 66% of Argentina’s total oil output. Investments in this area were projected to surpass $10.7 billion last year, marking an 18% rise from the previous year.
