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Argentinian refinery halted, shortages loom: union

02 Mar 2018 17:19 GMT
Argentinian refinery halted, shortages loom: union

Buenos Aires, 2 March (Argus) — Argentina's 40,000 b/d San Lorenzo refinery has suspended operations as its local owner Oil Combustibles wrestles with a corruption scandal and bankruptcy proceedings.

The country's fifth-largest refinery came to a complete halt on 28 February, according to Hector Brizuela, a refinery employee who is the legal secretary of the local affiliate of the Supeh oil workers' union.

"We were forced to shut down because there is a shortage of raw material," Brizuela told Argus.

The union leader warned that the company will also run out of refined products to supply its service stations by this weekend.

The company has presented an emergency plan that includes importing refined products to supply its retail network, but there is no evidence that the plan has been executed, Brizuela said.

The firm was not immediately available to comment.

Oil Combustibles is currently mired in legal woes after a judge in December ordered the arrest of Cristóbal López and Fabián de Sousa, two business leaders with close ties to the previous administration. The two executives lead Indalo Group, the company that owns Oil Combustibles.

Oil Combustibles bought the refinery and a network of around 360 service stations from Brazil's state-controlled Petrobras for $110mn in 2010. The firm also has rights to 14 exploration and production blocks in Argentina.

Lopez and De Souza are accused of using taxes that were collected from fuel sales to build their own business empire rather than pay it to the state, taking advantage of favorable payment plans approved by the AFIP tax agency.

Indalo has long denied any wrongdoing. The arrests came as local judges have been placing several high-profile business leaders and former government officials behind bars as part of ongoing corruption investigations.

Local equity fund OP Investments made a move to purchase Oil Combustibles last year. The transaction was effectively blocked by the judiciary while the company is in bankruptcy proceedings.

"The courts are preventing the sale, which in turn is leading the new owners to say they cannot invest capital," explained Brizuela.

The San Lorenzo refinery has a capacity to produce 1,500 m3/d of asphalt, in addition to a range of other products.