Argentina is beginning to see signs that conservative President Mauricio Macri’s policy, touted as a surefire plan to attract waves of foreign investment and revitalize the country’s economy, is backfiring less than a year into his mandate, as energy giant Royal Dutch Shell announced that it is considering selling off its assets in Argentina.
Shell CEO Ben van Beurden said Wednesday during a press conference in New York that the Netherlands-headquartered multinational is undertaking a “strategic review” of its business activities in the South American country, Reuters reported.
According to the company, the review focuses on Shell’s “downstream” operations including refining, transportation, and distribution, but would not impact the “upstream” activities of oil and gas exploration and production.
The move is part of a global divestment campaign amounting to US$30 billion. In a statement, Shell indicated that the company has “no intention of losing presence in Argentina.”
“We consider our global investments in shale a priority for future growth as of the year 2020, therefore we are committed to development and growth of our non-conventional (energy) business in Argentina in the coming years,” the company stated.
The review will consider divesting holdings including Shell’s refinery in Buenos Aires, which has a capacity of 100,000 barrels per day, as well as the company’s network of some 600 service stations and other assets.
Shell announced preliminary plans in June to scale back operations in some countries to focus on expanding business in liquified natural gas, chemical industries, and other ventures. The revised vision came just months after Shell acquired British oil and gas corporation BG Group for US$54 billion in February, making it the second largest private oil company in the world.
In Argentina, Shell employees more than 2,400 workers, according to Politica Argentina.
The news of Shell’s divestment comes Macri has been pushing neoliberal policies aimed at attracting foreign investment since entering office last December. The conservative president moved swiftly to follow through on promises to cut capital controls, lift trade restrictions, and slash subsidies in the energy and transportation sectors, while also rekindling close relations with the United States.
Macri has also garnered criticism over close ties between his government and the energy industry. His Minister of Energy and Mining, Juan Jose Aranguren, previously served as the president of Shell Argentina for more than a decade from 2003 to mid-2015, announcing his resignation months ahead of the election to join Macri’s team.
Critics have argued that Macri’s economic policy will turn the country back to 1990s neoliberalism and undo the social gains and welfare programs of his left-wing predecessors, Cristina Fernandez and her husband Nestor Kirchner.
Months of austerity policies, including mass layoffs in the public and private sectors that have put more than 179,000 workers out of a job and huge hikes in the price of utilities, have proven to hit poor and working class Argentines hard