Argentine Economy Minister Axel Kicillof said the federal government, crude-producing municipalities, oil companies and unions agreed to a 5 percent cut in gasoline prices and to reduce the domestic oil barrel price by $7 starting Jan. 1. Argentine crude is sold in a range of about $60 to $80 a barrel.
Argentina had authorized gasoline price increases of about 40 percent over the past year, almost in line with the country’s estimated annual inflation rate. YPF SA, the state-run energy company, has the largest market share for gasoline and is the biggest producer. Pan American Energy, a joint venture between Bridas and BP Plc, is the largest exporter of crude.
“Given the international conditions, we worked hard to reach an agreement that will be reflected in the pockets of workers,” Kicillof said today in Buenos Aires. “At the same time, we can not allow for a drop in oil companies’ output.”
Kicillof said companies that maintain or boost production and exports will be rewarded.
YPF’s American depositary receipts gained 3.6 percent to $25.61 at noon in New York. The ADRs have dropped 22 percent this year.
“It’s very good news,” Cabinet Chief Jorge Capitanich said earlier today at a press conference in Buenos Aires. “It will have an impact on all businesses.”
Crude in international markets has fallen by more than 40 percent this year. Oil is set for the biggest annual loss since 2008 amid the highest U.S. output in more than three decades.
Guillermo Pereyra, a senator and head of an oil workers union in Neuquen province, had announced the measures to reporters late yesterday.
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