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As Shell thrives, Aranguren faces questions

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Tuesday, June 14, 2016

Energy giant Shell is already expanding its business in the sector’s marquee Vaca Muerta formation, echoing other private firms who have gained traction in the country’s oil sector following President Mauricio Macri’s arrival in office six months ago.

But each of Shell’s positive announcements in the country come with an almost automatic question mark — addressing the company’s relationship with its previous CEO and current Energy Minister Juan José Aranguren.

Speaking to the Télam news agency yesterday, Shell said it will produce 10,000 more barrels a day in Vaca Muerta as part of a US$252-million investment in Cruz de Lorena and Sierra Blanca. The corporate news came shortly after Shell’s global CEO Ben Van Beurden said his bet on Vaca Muerta was “long term,” suggesting that the cuts the company is undergoing in other countries won’t follow in Argentina. Shell is trying to sell assets amounting to US$30 billion across the world before 2018.

In Argentina, of late, business has done well. Shell has also won a majority of tenders for gas supply done by the Energy Ministry.

But the government’s vision of favouring the investment in Vaca Muerta of companies outside of state-controlled YPF, as well as the fact that the gas auctions are organized by Aranguren’s Energy Ministry itself, is inevitably raising eyebrows.

Aranguren has a long trajectory as a foe of Kirchnerism during the past decade, allying with Civic Coalition’s Elisa Carrió as they both shared a critical view of a government they saw as riddled with corruption.

But with Aranguren still holding around US$1 million in Shell shares despite working as the top national authority on the area, Carrió has now distanced herself from him.

“I am sure of Aranguren’s decency but there is a clear conflict of interest,” Carrió said yesterday. Inside the ruling coalition, Aranguren’s honesty is not questioned, but his decision to hold to Shell’s shares is.

The Ministry argues that Shell is winning auctions simply because it offers the best prices, and that Aranguren is not himself in charge of the bidding process. But for opposition and even government politicians, that reply does not suffice at a moment in which state graft is at the heart of the debate.

conflicts of interest

Aranguren, who retains Macri’s support, is facing questions on other fronts too.

As the face of utility rate hikes, he has taken flack for the discontent they cause, after some households and company’s saw their bills rise by 500 percent.

“Aranguren would never be my Energy Minister. I want ministers and officials who have social sensibility,” Renewal Front’s leader Sergio Massa said yesterday, echoing critics of the official.

Aranguren’s political and technical capabilities have also been questioned, after he was forced to backtrack on some hikes to users in especially cold areas or for those without access to gas in winter, as well as making exceptions for small industries, local clubs and more.

“I have an Excel spreadsheet where results need to fit,” Aranguren replied when asked on the issue.

Economists such as former minister Domingo Cavallo have also questioned the fact that the oil sector is maintaining subsidies paid for by consumers which ensure it receives more per barrel than anywhere else in the world.

On Wednesday, Aranguren could face a heated questioning session when he speaks before the Senate, even from fellow government supporters.

Senator Laura Rodríguez Machado, the leader of PRO’s caucus in the Upper House, recently asked Anti-Corruption Office head Laura Alonso to investigate potential ethical violations and incompatibilities. It will be up to Alonso, another Macri ally, to undermine Aranguren with her verdict or not.


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