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Daily Telegraph: Argentina orders Shell to shut plant

By Russell Hotten, Industry Editor
Last Updated: 2:17am BST 07/09/2007

Royal Dutch Shell’s long-running battles with the government of Argentina intensified after the company was ordered to close a refinery for allegedly breaching environmental laws.

The order to shut the facility, which produces about 12pc of Argentina’s diesel fuel, will further anger the Anglo-Dutch company, which has already accused Buenos Aires of “discrimination” and “unacceptable” behaviour.

The country’s environment department says there have been leaks at Shell’s Dock Sud refinery and that the plant has been extracting millions of gallons of water from the River Plate without a permit, endangering wildlife. Also, Brazil’s Petrobas oil group is being investigated for allegedly breaking environmental rules.

Shell said yesterday that it was “analysing the documentation received and the allegations made.”

But closure of the refinery, which could take up to a week to implement, re-ignites a dispute between Shell and the government of President Nestor Kirchner.

In 2005 the President called for a boycott of Shell after forecourt prices were raised and in June the company was fined over shortages of diesel supplies. He has accused Shell of being one of the “worst” companies in Argentina. Shell says it is being unfairly targeted, and last month said that “the discrimination against Shell is unacceptable.”

It was unclear why Shell thinks it is being singled out by the government. The company’s press office in London did not return calls yesterday.

Argentina is battling inflation and the government may want to avoid fuel price rises by firing warning shots at the oil majors. But the government’s move also raises the possibility of Argentina becoming another example of an energy-rich country closing or seizing assets from oil companies.

From Russia to Venezuela, the world’s biggest oil and gas companies have been targeted by governments keen to secure a larger slice of revenues from the ever-higher rise in energy prices.

On Tuesday, Algeria terminated a contract with Spain’s Repsol to develop a major gas project.

Yesterday Kazakhstan demanded a leading role for its state energy company in running the huge Kashagan oilfield, after a group of Western oil companies failed to meet new time and cost targets. The government suspended the project, led by Italy’s Eni and including Shell and Exxon. Kashagan is one of the biggest oil finds in 25 years.

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