Argentina’s state oil producer YPF said on Thursday a labor strike in the energy-rich province of Neuquen will cut output by 80,000 barrels of crude oil and 3 million cubic meters of natural gas, costing the company some $12 million. Argentina’s vast Vaca Muerta shale oil and gas formation, thought to be one of the world’s largest, is partially located in Neuquen, which accounts for 64 percent of the country’s natural gas production.
If the strike, which began at 8:00 p.m. local time (2300 GMT) on Wednesday is over in 24 hours and oilfields take 48 hours to get back on track, the total cut in output could be 160,000 barrels of oil per day and 6 million cubic meters of gas, YPF said. Workers were striking after a small independent refinery dismissed several dozen workers.
“YPF considers this measure absolutely unjustified and it has a negative impact on production,” the company said in a statement, several hours after Reuters reported that production was paralyzed in Neuquen. YPF, which was nationalized in 2012, saw its production of hydrocarbons jump last year, thanks in part to Vaca Muerta.
The country needs foreign investment to develop the formation and has signed one major Vaca Muerta deal, a $1.24 billion joint venture with U.S.-based Chevron Corp.