For more than a decade, one executive was the visible face of opposition to the state-oriented energy policies spearheaded by late former president Néstor Kirchner and his wife and successor President Cristina Fernández de Kirchner: Juan Jose Aranguren, chief executive of Shell Argentina. Now Aranguren could become the country's next energy secretary.
When the outspoken Aranguren steps down from his role as head of Shell's Argentinian affiliate on 30 June, he will take the energy helm at Fundación Pensar, a think tank run by Buenos Aires city mayor and presidential hopeful Mauricio Macri's right-of-center PRO party. That would position him to be the country´s next energy secretary if Macri prevails in this October´s election.
It´s hard to underestimate the political sea change this could mean for energy investors attracted to Argentina´s plentiful shale resources but long averse to the government´s policies they see as interventionist and unpredictable.
Aranguren's future post in Fundacion Pensar, which Argus ascertained from a senior think tank official, exemplifies the stark choice Argentinians will face at the polls. Indeed, the contrast between the two best-placed presidential contenders has solidified in recent days, after the candidates named their running mates.
Ruling Front for Victory (FPV) candidate and Buenos Aires governor Daniel Scioli named the current president's legal and technical secretary Carlos Zannini. Although Scioli has long been seen as a distant Kirchner ally, the alliance with Zannini, a behind-the-scenes power broker closely identified with Fernández and her husband's administrations, is seen as a signal of political continuity. That was confirmed by the presence of staunch Fernandez allies, including members of the influential youth group La Cámpora, on Scioli's ticket for legislative slots.
In contrast, Macri chose as his running mate Gabriela Michetti, a senator who has long spoken up against the government's policies.
A third presidential candidate, Renewal Front leader Sergio Massa, who was the big winner of the 2013 mid-term elections, has plunged in the polls in recent months and is now in a distant third place.
Aranguren, a 37-year veteran of Shell, has emerged as one of Argentina´s most vocal business leaders, frequently criticizing government policy in a country where most executives prefer to speak off the record, if at all.
In a high point of tension, Kirchner personally called on Argentinians to boycott Shell in 2005 after the company increased retail fuel prices. A government secretary launched more than 50 lawsuits against Aranguren, often calling for his imprisonment, accusing him and his company of hoarding fuel, assertions roundly dismissed by the executive and the major. Last year, economy minister Axel Kicillof accused Aranguren of trying to force a devaluation of the currency, which he denied.
Shell declined to comment on Aranguren´s future political role.
The candidates have not yet laid out specific energy policies. But as the campaign advances, they will come under pressure to address how they would attract much-needed upstream investment and boost flagging oil and natural gas production. The Kirchner years were marked by the transformation of Argentina from a regional gas exporter into a major importer of LNG and pipeline gas from Bolivia. The economy is shrinking and inflation is running at an unofficial annual rate of more than 30pc.
Macri's advisers and allies frequently talk about "normalizing" the country, which first means ending litigation in New York with a group of holdout creditors that pushed the country into default last year. There has been no progress in negotiations with a small group of hedge funds that have refused to restructure defaulted bonds, keeping Argentina largely locked out of international capital market since its historic 2001 default.
Settling with the holdouts is seen as a gateway to more investment, particularly in the giant Vaca Muerta shale formation. In order for the country to become energy self-sufficient, upstream investment has to increase from the current $7.5bn/yr to $24bn/yr, according to estimates from Macri's advisers. They pledge to eliminate current restrictions on repatriating profits. But not everything would change. No one is seriously contemplating undoing the controversial 2012 expropriation of a majority stake in state-controlled YPF from Spain's Repsol.
In the electricity sector, Macri plans to quickly move to reverse years of spiraling subsidies and frozen tariffs that have kept electricity bills low but led to power outages during periods of high demand.
For now, Scioli is leading in the polls, although few have measured how his recent pro-government tilt affects his numbers. With the government's political machine on his side, he would seem to be hard to beat.
The path his presidency would take in the energy sector remains more of a mystery. Scioli's advisers have long spoken of a gradual change and re-opening to international markets. Talk that the outgoing governor of shale-rich Neuquen province, Jorge Sapag, who regularly courts foreign oil companies, would lead Scioli´s energy portfolio supports this contention. Yet the strong presence of government allies on his team casts doubt on the possibility of any sharp policy shifts.
dp/pg
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