Coronavirus in Argentina: oil companies agree to pay up to 60% of salaries of staff without tasks

06/01/2020 - 20:36

• Clarín.com
• Economy
• Economy

Oil production has been falling as a result of the coronavirus quarantine and companies had to make adjustments that reached their suppliers. YPF, the largest company in the sector, reported that “ an agreement was reached between all the oil unions in the country and the Chamber of Hydrocarbon-Producing Companies, so that workers in oil service companies can collect up to 60% of their wages while they do not provide effective services ”.

Oil service companies are both international and local, large and small, that perform tasks in the fields. "An agreement was reached with FSUPeH so that workers can continue to go through this difficult situation," said YPF.

Oil suppliers are experiencing a cut in their income. In some cases, they invoice 30% of what they received in February, before the quarantine.

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The providers have to pay the salaries on their own. But their income is tied to the benefits they provide to YPF . Without a job with the largest oil company, the companies say they do not have the resources to meet their obligations. Some asked the oil companies they work with to help them cover at least administrative costs.

YPF understands that the contracts it is paying are enough to cover up to 60% of the salaries of the supplier companies.

"In the framework of the Covid-19 pandemic -which obviously seriously affects the company's income- YPF seeks efficiencies to mitigate its consequences and improve in each of its operations, taking care of the health and safety of its workers," emphasized YPF.

Halliburton and Schlumberger are the largest oil services companies. In both there were notifications to their workers about delays in the payment chain.

However, the hardest hit in the Neuquén basins are local suppliers. Some say - but ask not to be named, for fear of straining the relationship - that, between April and May, they barely reached a third of the income they had before the pandemic.

The contracts are being fulfilled with a dropper. Oil production has been falling. In April, it was 477,000 barrels per day, representing a loss of 60,000 compared to March. By May, it is estimated that it will be around 400,000 barrels. In two months, the contraction would be in the order of 20%.

All the basins are affected, but the ones with the greatest drop are Neuquén and Santa Cruz (Austral basin). In both, the most prominent player is YPF.

"In the Neuquén basin, several fields had to be partially or totally closed due to the lack of demand for crude oil in this basin, the absence of remaining storage capacity, and very low crude oil export prices," details a report circulating among businessmen from the sector.

Guillermo Nielsen, head of the company, said the oil company "cannot go ahead with so many employees in the company to produce less oil." Then he clarified that there will be "no layoffs." The unions that depend on YPF came out to criticize.

YPF billed $ 675,000 million in 2019. Its turnover grows every year, at the rate of inflation. However, this year it faces the prospect of stable or declining income. The first measure the company took was a pay cut. 

Fuel sales are rebounding from April, the first month of the pandemic, but it is estimated that they could only fully recover by October. The implementation of a "support price" (through the Creole barrel of oil, which establishes a special amount for national oil production) would not change YPF's plans. Nielsen explained that the company has its own oil until the end of the year.

The real fall in income for the second quarter (between April and June) will only be known in July. According to some industry estimates, YPF would have less than 50% of the money it had to invest in exploration.

Well in Vaca Muerta.

Oil companies no longer have a place to store the crude they stored during the strongest phase of restrictions.