ENERGY ADVISOR a WEEKLY PUBLICATION of the DIALOGUE March 9, 2018

LATIN AMERICA ADVISOR ENERGY ADVISOR A WEEKLY PUBLICATION OF THE DIALOGUE www.thedialogue.org March 9, 2018

BOARD OF ADVISORS FEATURED Q&A TOP NEWS Nigel Blackaby Global Head, OIL & GAS International Arbitration Group, Freshfi elds Bruckhaus Deringer Will Argentina’s Honduran Energy Mary Rose Brusewitz Executive Accused Partner, Strasburger & Price Tight Oil Reserves in Killing Activist Jeffrey Davidow Roberto David Castillo Mejia Senior Counselor, stands accused of planning the The Cohen Group Meet Expectations? murder of Berta Cáceres, an Ramón Espinasa activist who opposed a dam being Consultant, built by his company, Desa. Inter-American Development Bank Page 2 Luis Giusti Senior Advisor, Center for Strategic & OIL & GAS International Studies Jonathan C. Hamilton Pemex Seeks Partner, Foreign Partners White & Case Chief executive Carlos Treviño Raul Herrera Partner, told an industry conference Corporate & Securities Practice, Tuesday that Pemex might bring Arnold & Porter foreign companies into two heavy A drilling pad in the Rincón del Mangrullo block, one of Argentina’s leading unconventional gas James R. Jones developments. // File Photo: BBVA. crude oil fi elds in the Gulf of Chairman, Mexico’s shallow waters, among Monarch Global Strategies other partnerships at home as Jorge Kamine Led by CEO Miguel Galuccio, Mexico City-based Vista Oil well as abroad. Counsel, & Gas last month announced it will spend at least $700 Page 3 Skadden Arps million to acquire assets that will make it the fi fth-largest Craig A. Kelly Q OIL & GAS Director, oil producer in Argentina, with rights to develop vast swaths Americas Int’l Gov’t Relations, of acreage in the country’s resource-rich Vaca Muerta shale deposit. Exxon Mobil Former Petrobras Galuccio is the former head of Argentine state oil company YPF, a job Jeremy Martin CEO Sentenced to Vice President, Energy & Sustainability, he took in 2012 after the government of Cristina Fernández de Kirchner 11 Years for Graft Institute of the Americas expropriated the company from Spain’s Repsol. How attractive is Argen- Aldemir Bendine, a former chief Larry Pascal Chairman, tina for oil and gas investors today? What factors are most shaping the executive of Brazilian state oil Americas Practice Group, future of Argentina’s oil and gas production? Will business-friendly pol- giant Petrobras who was brought Haynes & Boone in to stabilize the company amid icies toward the energy sector that were put in place under the current Charles Shapiro a massive graft scandal, was on President, government of President Mauricio Macri stay in place in subsequent Wednesday himself convicted of World Affairs Council of Atlanta administrations? corruption. R. Kirk Sherr Page 2 President, Clearview Strategy Group RoseAnne Franco, head of oil & gas risk at Verisk Maplec- Mark Thurber roft: “While the United States continues to offer opportunities Partner, Andrews Kurth in the tight oil space, for those companies seeking to tap the Alexandra Valderrama unconventional segment abroad, Argentina is increasingly Manager, A International Government Affairs, compelling. The Macri administration’s efforts to unwind price distortions Chevron and promote investment, notably in the Vaca Muerta deal announced in Lisa Viscidi January 2017, have placed the play on more competitive footing. YPF Program Director, Inter-American Dialogue and other operators are conducting numerous pilots that are expected to Max Yzaguirre move into development in the early 2020s. However, as unconventional President and CEO, projects scale up, there are ‘growing pains’ to highlight in the short term. The Yzaguirre Group These are expected to give way to new investment in logistics, equipment and oil services. Operators are considering funding to boost pipeline and Bendine // File Photo: Brazilian Government. Continued on page 3

POWER SECTOR NEWS massive graft scandal, was on Wednesday NEWS BRIEFS himself convicted of corruption, Agência Brasil Energy Executive reported. “The condemned took his position France’s Neoen Eyes Stock as CEO of Petrobras amid a corruption scandal Market Listing by End Accused of Killing and with the expectation that he would solve problems,” federal judge Sérgio Moro said of of This Year: Report Honduran Activist Bendine, sentencing him 11 years in prison French renewable energy fi rm Neoen plans a for taking nearly a million dollars in bribes stock market listing by the end of 2018 that Honduran police last week arrested a from construction fi rm Odebrecht. “The last could value the company at $1.24 billion, high-ranking energy industry executive in con- behavior one would expect from him would be Reuters reported Wednesday. Founded in 2008, nection with the 2016 killing of an activist who corruption, once again putting at risk the rep- Neoen has been growing quickly in France, led a decade-long fi ght against his company’s utation of the company,” Moro added, Reuters Australia and Latin America, notably in Mexico dam project, The New York Times reported. reported. Bendine, who led state-owned lender and Argentina. Last December, Neoen broke Roberto David Castillo Mejia, who reportedly Banco do Brasil from 2009 to 2015 and had ground on a 37 megawatt solar plant in Jamai- has a background with military intelligence, been considered a skilled businessman from ca, which it says will be among the largest in was executive president of the Honduran outside the oil industry who could help set the Caribbean. The company also has a 101 company, Desarrollos Energéticos, or Desa, Petrobras on fi rmer footing, was charged last megawatt solar plant in El Salvador. that is building the dam at the time the activist, year with the crimes. Authorities also accused Berta Cáceres, 43, was shot and killed. The Bendine of unsuccessfully seeking bribes from executive’s arrest came almost two years to the Odebrecht even before he had joined Petrobras, Drummond Considers day of the anniversary of her killing. Honduran where he worked from February 2015 to May offi cials said Castillo was “the person in charge 2016. Bendine’s attorneys said throughout the Sale of Colombia Assets of providing logistics and other resources trial that he was innocent. Alabama-based Drummond Co., a producer of to one of the material authors already being coal, oil and gas and foundry coke, is explor- prosecuted for the crime,” according to Reu- Pemex Seeks ing the possible sale of at least a portion of ters. In a statement, Desa defended Castillo its Colombia operations, AL.com reported and its employees, saying they were “totally Foreign Partners Wednesday. In a statement, the company said unconnected” to the crime. The company went it has engaged Goldman Sachs to “explore on to accuse authorities of “unjust detention” Mexican state-run oil company Pemex this investment options” for its equity in Drum- resulting from “international pressure and week amped up its outreach to foreign partners mond International, which operates large coal campaigns by diverse NGOs to discredit the in the face of increased competition and mines, railroad facilities and an ocean port in company.” Others detained in the case to date declining production, Reuters reported. Chief Colombia. Last year, Drummond exported 32.3 have had connections to the Honduran military. executive Carlos Treviño told an industry con- million tons of coal from Colombia, making it Last year, Global Witness, an nongovernmental ference Tuesday that Pemex might bring for- the largest thermal producer and exporter from organization, named Honduras the deadliest eign companies into two heavy crude oil fi elds the country. country in the world for environmental activ- in the Gulf of Mexico’s shallow waters. “The ists, documenting more than 120 such people name of the game in Pemex right now is part- killed there since 2010. nership,” said Treviño. Earlier this week, he said Peru Advances Bidding Pemex will look for partners for two deepwater blocks it just won in a January auction. Treviño for Transmission Project OIL AND GAS NEWS also said that Pemex hopes Russia’s Lukoil will Peru’s energy and mines ministry has assigned take part in the country’s bidding processes investment promotion agency ProInversión Former Petrobras for both midstream and upstream business, with handling the bidding for the 500kV La Niña state-run news agency Sputnik reported. Lukoil - Piura electricity transmission project, state CEO Sentenced to said in November that the two companies were news agency Andina reported Wednesday. This planning to discuss the establishment of a joint is the largest project in Peru’s 10-year trans- 11 Years for Graft venture to implement new projects. Pemex is mission development plan, announced last also looking into ways to deepen energy co- year, with an estimated cost of $91.1 million, Aldemir Bendine, a former chief executive of operation with Jamaica, Foreign Minister Luis according to Global Transmission Report. The Brazilian state oil giant Petrobras who was Videgaray said on Tuesday on a Caribbean trip. project is part of Peru’s planned grid intercon- brought in to stabilize the company amid a He added Mexico would be signing a memo- nection with neighboring Ecuador.

COPYRIGHT © 2018, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ENERGY ADVISOR March 9, 2018 randum of understanding to provide technical accounts, PDVSA and Venezuela are already on U.S. exports of oil products that are crucial support to Jamaica’s oil reﬁ nery, Petrojam, more than $2.25 billion in default, according to for diluting Venezuela’s extra-heavy oil, could which is jointly owned by a unit of Venezuelan a report from Caracas Capital on Thursday. The worsen the situation for PDVSA, analysts warn. national oil company PDVSA. International Energy Agency recently forecast According to data compiled by Bloomberg, Ven- that Venezuelan production of oil will decline ezuela’s imports of heavy naphtha from Gulf by 700,000 barrels of oil per day through 2023, Coast reﬁ neries in the United States total some Latin America Rig Oilprice.com reported Wednesday. The threat 2 million barrels per month. [Editor’s note: See Count Up 11 Percent of expanded U.S. sanctions on Venezuela to related Q&A in the Feb. 16 issue of the Energy include the oil industry, as well as restrictions Advisor.]

Houston-based Baker Hughes said Wednesday FEATURED Q&A / Continued from page 1 that the number of drilling rigs actively explor- water management capacity. The govern- from tax and royalty revenue on oil and gas ing for or developing oil or natural gas in Latin ment is planning on roadway and railway development. The national government prof- America in February stood at 199, an increase expansions. The well-established services its from its dividend from YPF, and a reduced of 20 rigs over the same month last year, an 11 sector will need to step up with a large trade defi cit if indigenous production can percent increase. As a region, Latin America number of suitable rigs and crews, fracking substitute for imports. The provinces and oil had more than twice as many rigs in operation technology and expertise and suffi cient workers are both incentivized to see YPF sell than both Europe and Africa, and nearly as quantities of suitable sand for proppant. off or joint venture its massive holdings to many as Asia, which had 210 rigs operating Costs remain high as compared to the Unit- facilitate development; the company has far last month. The Middle East had 396 rigs ed States, but labor costs have decreased more acreage than it has capital or labor to operating last month. North America led the rig due to the peso’s devaluation. The success count, with 1,292 rigs operating. Global prices of Macri’s Cambiemos coalition in the Octo- for crude oil have recovered in recent months ber 2017 midterms suggests support for the after losing half their value amid a glut of Current price levels administration’s current business-friendly supply, a downward trend that started in 2014. exceed market prices direction and position the president well for [Editor’s note: See Q&A on ways global oil and therefore incen- 2019. Post-2020, we still anticipate pragma- prices are affecting Latin American countries in tivize investment.” tism on the policy front. However, investors the Feb. 2 edition of the Energy Advisor.] — David Goldwyn will have to remain mindful of community activism and labor. Mapuche communities Venezuela Refi neries have raised concerns over groundwater contamination from hydraulic fracturing, and develop itself. This balance of power keeps Operating at 43% labor is active. Increasing fi scal revenues the unions from raising wages too high and of Capacity and local employment should help buffer the keeps the provinces from overreaching on sector from volatile policy swings over the taxes. YPF is increasingly monetizing its longer term.” acreage to invite new operators, including Refi neries run by Venezuelan state oil company Vista, Statoil, Chevron, Exxon and Shell. PDVSA will operate at 43 percent of their total David L. Goldwyn, president President Macri has cleverly managed capacity in March due to a lack of spare parts, of Goldwyn Global Strategies: national politics through a gradualist light crude and feedstock, Reuters reported “Argentina is an increasingly approach. That said, the government still last week, citing internal documents. PDVSA attractive destination for oil and controls natural gas and wellhead prices has been unable to deliver the crude grades its A gas investment. Despite its volatile past, a for oil. Current price levels exceed market facilities need in order to produce fuels for the unique balance of power in the energy sector prices and therefore incentivize investment. domestic market and for export, according to suggests a period of stability in the fi scal If the day comes when market prices exceed the report. PDVSA’s refi ning network plans to framework, worker wage rates and the avail- those caps, will the government respect process 701,000 barrels per day of Venezuelan ability of prospective acreage to develop. market prices or, as Argentine governments and imported crude in March, but the company Argentina is unique in that nearly all of its oil have in the past, will it cap prices and kill has struggled amid an economic crisis in Ven- and gas acreage has already been allocated, off investment and bankrupt the national oil ezuela, which suffers from the world’s highest either to YPF or provincial oil companies, in company? Only time will tell, but the current rate of infl ation. Venezuelan offi cials say they large tracts intended for conventional devel- government seems both intent and able to are in talks with debtors over renegotiating the opment. The provincial governments profi t do the right thing.” country’s $70 billion in foreign bonds. By some Continued on page 6

POLITICAL NEWS THE DIALOGUE CONTINUES AMLO Widens Lead Ahead of Mexico’s Will Brazil’s New Biofuels Presidential Election Policy Yield Better Outcomes?

A new poll shows Mexican leftist presidential In December, Brazil’s Con- renewable fuels—this is possible in Brazil be- hopeful Andrés Manuel López Obrador has ex- gress approved the Renov- cause most of the nation’s cars are ﬂ ex-fuel tended his lead to 14 points, Reuters reported. Q aBio program, which requires vehicles (i.e., they can use either gasoline or AMLO, as he is known, has 35 percent support fuel distributors to gradually pure ethanol). The real test for the Brazilian ahead of the July 1 election, according to a sur- increase the amount of biofuels traded each biofuel sector, however, is the long run: year. In late January, a Brazilian ofﬁ cial said how will things work out if sugar prices rise the government is expected to publish a (most of Brazilian ethanol is made from sug- draft governance model for the program. As ar cane, and mills have to opt to maximize global oil prices rise, what will be the effect sugar or ethanol production) and crude oil on Brazil’s biofuel sector? Is the sector quotes collapse in the future? The answer competitive in the global market? What ef- is still a question mark, while RenovaBio’s fect will the program have on Brazil’s energy draft is not yet public. Another pressing sector as a whole? question is how corn ethanol production in Brazil will behave from RenovaBio onward.

AMLO // File Photo: Salvadoran Government. Pedro Shinzato, market intelli- The international biofuel market will benefi t gence analyst at INTL FCStone: from the program. Higher consumption and vey by Parametria conducted last week. Polling ”RenovaBio is designed to help production in the country, which along with in second place, Ricardo Anaya of left-right A Brazil comply with its commit- the United States, holds most of the global coalition For Mexico in Front, slipped to 21 per- ments made in the Paris Agreement in late biofuel supply and demand, may prompt cent, while former fi nance minister and ruling 2015. Through a mechanism of decar- other countries to increase their biofuel pro- Institutional Revolutionary Party hopeful José bonization credits (CBIOs) and individual duction and use as the sector develops more Antonio Meade slid for the second consecutive environmental effi ciency scores for each experience and matures, possibly creating month, to 16 percent from 18 percent. biofuel producer or importer, it aims to new standards that the rest of the world can support those who adopt cleaner methods, later adopt.” reducing Brazil’s total pollution emissions. In Brazilian Court the short to medium term, higher global oil Denies Lula’s Bid to prices may help fuel distributors meet their EDITOR’S NOTE: The above is a continua- decarbonization goals. Higher fossil fuel tion of the Q&A in last week’s issue of the Remain Out of Jail prices tend to stimulate the obligated parties Energy Advisor. to divert demand from non-renewable to In a unanimous vote, Brazil’s Superior Court of Justice on Tuesday denied a bid by former Brazilian President Luiz Inácio Lula da Silva continues his appeals. Lula is the frontrunner where no evidence was needed, only convic- to remain out of jail while he appeals the ahead of Brazil’s October presidential election. tions,” Lula told Metropole radio early on Tues- corruption conviction against him, O Estado However, Brazilian law bars the candidacy of day. Lula’s lawyer, Supulveda Pertence, later de S.Paulo reported. A lower appeals court in any politician who has a criminal conviction said the former president was being subjected January upheld Lula’s corruption conviction that has been upheld on appeal. Lula, who over- to a “Kafkaesque trial,” Agence France-Presse and increased his sentence to 12 years from saw strong growth and falling inequality during reported. Despite his popularity, 40 percent of the original nine and a half years on corruption his 2003-2011 presidency, faces six more trials Brazilians disapprove of him, with many seeing and money laundering charges, on which Lula related to corruption, Reuters reported. Lula him as responsible for systematic corruption had been convicted last July. Tuesday’s 5-0 de- has denied wrongdoing and has said that he is uncovered since his presidency, and also for cision means that the popular former president being persecuted in order to prevent him from the severe recession that Brazil suffered after could be behind bars within weeks, even as he returning to the presidency. “This process is he left offi ce. [Editor’s note: See Q&A in the like we are still in the time of the Inquisition, Feb. 1 issue of the Advisor.]

NEWS BRIEFS ECONOMIC NEWS Eleven Countries to Argentina’s Last Trump Planning to Sign Paciﬁ c Trade Military Dictator Bignone Dies at 90 Off er Canada, Mexico Deal, Minus U.S.

Reynaldo Bignone, the last of four military Tariff Exemptions Eleven Asia-Pacifi c nations on Thursday presidents from Argentina’s brutal 1976-83 signed a slimmed-down version of the dictatorship, died Wednesday at age 90, the U.S. President Donald Trump is planning to massive Trans-Pacifi c Partnership trade Associated Press reported, citing the state-run offer Canada and Mexico temporary exemp- deal, now dubbed the Comprehensive and Telam news agency. Bignone had been serving tions from the steel and aluminum tariffs that Progressive Agreement for Trans-Pacifi c a life sentence under house arrest for human he announced last week, The Washington Partnership, or CPTPP, Agence France-Press rights crimes that included the torture, disap- Post reported Wednesday. The plan is still reported. The United States has backed out pearances and killing of tens of thousands of being fi nalized, but one possibility would be of the TPP, leaving Australia, Brunei, Canada, people, as well as the kidnapping of babies that Canada and Mexico would receive 30-day Chile, Japan, Malaysia, Mexico, New Zealand, from their mothers. He served as president of exemptions from the tariffs, a period that Peru, Singapore and Vietnam, representing Argentina from July 1, 1982, to Dec. 10, 1983, could be extended, based on the progress in together 13.5 percent of global gross domes- when he handed over power to Raúl Alfonsín. renegotiating the North American Free Trade tic product, to proceed with the agreement, Agreement, or NAFTA. If the talks to renego- which is to be signed in Chile. Together, the tiate the trade accord fail, then Canada and 11 nations represent 13.5 percent of global Mexico would be subject to the same tariffs Chile’s Outgoing as other countries—a 25 percent tariff on steel President Proposes and 10 percent on aluminum, Bloomberg News New Constitution reported. “Here’s the situation, and the president has made this public. There’s going to Michelle Bachelet, Chile’s outgoing president, be a provision which will exclude Canada and on Tuesday sent a proposal to Congress for a Mexico until the NAFTA thing is concluded one new constitution that would ensure equal pay way or another,” White House Trade Advisor for men and women and advance a host of Peter Navarro said Wednesday. This week, U.S., other socially progressive priorities, the Asso- Canadian and Mexican negotiators meeting in ciated Press reported. A moderate socialist, Mexico concluded the seventh round of NAFTA Pickerill // File Photo: @pickerill_joe via Twitter. Bachelet hands the presidency off on Sunday renegotiation talks, with no announcements of to conservative President-elect Sebastián gross domestic product, down from 40 percent breakthroughs on major points of contention. Piñera. Some lawmakers criticized the timing had the United States stayed in. Critics of Other U.S. allies could seek similar exemptions, of Bachelet’s move, but others said it sets a U.S. President Donald Trump’s decision to Navarro added. Earlier on Wednesday, White policy agenda that Piñera will need to address pull out say Washington’s absence leaves an House Press Secretary Sarah Huckabee Sand- when he takes offi ce. open path for China to forge stronger ties with ers said the plan for the tariffs would include Pacifi c Rim trading partners at the expense of “potential carve-outs for Canada and Mexico, the United States. Chile said membership of based on national security” considerations, as the new pact will improve access to markets Cuba Imposes New well as potential exclusions for other countries. currently responsible for 17 percent of its total Restrictions on Imports Among the nations seeking exemptions is exports. In related news, Canada on Friday is Australia, where Foreign Minister Julie Bishop expected to announce the start of formal free Cuba’s central bank has imposed new restric- cited the country’s status as a “close ally and tions on imports by state-run companies in a trade negotiations with Mercosur, the Southern partner” of the United States in an interview Cone trade bloc consisting of Argentina, Brazil, bid to curb mounting foreign debt and address with Sky News. Navarro said Wednesday night a cash shortage, Reuters reported Tuesday. Uruguay and Paraguay, the Canadian Press in an interview with the Fox Business Network reported. Trade ministry spokesman Joseph The rules require fi rms to obtain a letter of that Trump would sign the tariff proclamations credit from the central bank for purchases Pickerill said Mercosur countries “are keen [on] on Thursday surrounded by steel and aluminum Canada’s approach to trade … and are prepared above the equivalent of $100,000. While the industry workers in the Oval Offi ce. However, move will likely lead to a short-term plunge to do a more comprehensive deal than was another source told Bloomberg News that the ever on the table in the past.” [Editor’s note: in imports, it could also result in a purge of signing would not happen as planned because nonessential or insolvent companies. See related Q&A on the TPP in the Feb. 2 issue attorneys needed to fi nalize the details. of the Advisor.]

FEATURED Q&A / Continued from page 3 LATIN AMERICA ENERGY ADVISOR is published weekly by the Inter-American Dialogue Copyright © 2018 Paola Carvajal, principal in the be motivated to maintain the policies to energy practice of Arthur D. leverage the benefi ts of these activity levels Erik Brand Little in Washington: “So far, Ar- in the energy industry.” Publisher [email protected] A gentina is the only Latin Ameri- can country in which unconventional produc- Chris Cote, energy markets ana- Gene Kuleta Editor tion has started commercially, though it is lyst at ESAI Energy: “Argentina’s [email protected] still small relative to its potential. The Vaca shale basins will be a strong Muerta formation is a large, concentrated A source of production growth, and broadly known play, with high shale oil especially for natural gas, in three to fi ve Michael Shifter, President and gas potential. The development of its years, but the case for development depends Genaro Arriagada, Nonresident Senior Fellow unconventional hydrocarbons has gained in large part on policy continuity, and, there- Sergio Bitar, Nonresident Senior Fellow the attention of upstream investors mainly fore, next year’s general election. Investors, Joan Caivano, Director, Special Projects because: 1) the government, both at national wary of Argentina’s mercurial political histo- Michael Camilleri, Director, Peter D. Bell Rule of and local levels, has strongly supported the ry, seem to trust President Mauricio Macri. Law Program industry by maintaining higher domestic Until recently, investors held out on investing Kevin Casas-Zamora, Nonresident Senior Fellow prices for unconventional gas developments in Argentina’s shale basins, believing they Ariel Fiszbein, Director, Education Program and facilitating the process for licensing could get a better deal on labor costs. So Alejandro Ganimian, Nonresident Fellow the prospective areas; 2) YPF and other es- Macri spent a lot of political capital negotiat- Peter Hakim, President Emeritus tablished national and international players ing with labor unions province by province to Claudio Loser, Senior Fellow have developed extended production pilots reduce their compensation. The government Nora Lustig, Nonresident Senior Fellow with positive results; 3) local authorities and is guaranteeing gas prices above interna- Margaret Myers, Director, China and Latin America Program communities are familiar with and support- tional prices through 2021. In turn, majors Manuel Orozco, Director, Migration ive of the oil and gas industry; 4) the new such as ExxonMobil and Chevron, as well as Remittances & Development presidential administration that took over at state-owned YPF and other independents, Jeffrey Puryear, Senior Fellow the end of 2015 removed all export restric- have announced large investments. Now, Tamar Solnik, Director, Finance & Administration tions, taxes and foreign exchange controls, the big lift for production is developing the Lisa Viscidi, Director, Energy Program further liberalizing the economy. Argentina energy infrastructure of Vaca Muerta. Low- Denisse Yanovich, Director, Development and External Relations reached a total unconventional production ered tariffs on the import of energy-related of 80,000 barrels of oil equivalent per day capital goods allows companies to bring in Latin America Energy Advisor is published in 2017, which represents an accumulated rigs and other machinery, but how will they weekly, with the exception of some major growth of 33 percent from the 2015 level. In get proppant to the well pad? How will the U.S. holidays, by the Inter-American Dialogue the future, the growing supply-demand gaps oil and gas be exported? Water, sand, diesel, 1155 15th Street NW, Suite 800 Washington, DC 20005 Phone: 202-822-9002 in the Argentine oil and, particularly, natural steel and trucks will be in high demand over www.thedialogue.org gas markets provide life-cycle incentives for the next few years. Will the price guarantees, ISSN 2163-7962 investors and producers. As the unconven- labor reforms and economic growth last? To tional production expands the scale, the be sure, Macri has pushed through policies Subscription Inquiries are welcomed at [email protected] development of infrastructure to connect the that make him unpopular in many areas of The opinions expressed by the members of the Board of producing fi elds to markets, the growth of a Argentina, but the outcome of last October’s Advisors and by guest commentators do not necessarily capable and effi cient local service industry, midterms bodes well for him in 2019. In the represent those of the publisher. The analysis is the sole and the support from local communities, will background, the uptick in global economic view of each commentator and does not necessarily represent the views of their respective employers or be key to maintaining a profi table unconven- growth will lift Argentina’s agricultural and fi rms. The information in this report has been obtained tional hydrocarbon production. It is diffi cult other commodity markets, boosting overall from reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are to say whether subsequent administrations economic growth. Still, voters want cash in guaranteed. If you have any questions relating to the will maintain the current policies. However, their wallets, not in Vaca Muerta. The clock contents of this publication, contact the editorial offi ces of the Inter-American Dialogue. Contents of this report as long as the industry gains momentum, is ticking for Macri to connect the dots.” may not be reproduced, stored in a retrieval system, demonstrates a positive impact on local or transmitted without prior written permission from the publisher. communities and helps reduce the energy Editor’s Note: On March 27, the Dialogue will defi cit in the country, new administrations, be hosting an event in Washington on Argen- regardless of their political ideology, will tina’s unconventional oil and gas sector.