Samuel Logan is the founding partner of Southern Pulse, a private human intelligence organization focused on investigating security, politics, energy, and black market economics in Latin America. Southern Pulse investigators operate from hubs in Mexico, El Salvador, Colombia, Brazil, and Chile to leverage Southern Pulse's HUMINT network, unique access, and deep understanding of the region to mitigate risk for public and private sector clients with exposure to political, security, financial, or legal risk in Latin America.
In the interview Sam Talks about (Interview conducted by Jen Alic of Oilprice.com):
SL: While there are certainly short-term gains to be realized, the long-term effects of the Argentina-Spain relationship and Argentina's relationship with other oil majors will result in significant setbacks in investment confidence and overall appetite for working with the Argentine government.
SL: The Eskenazi family really took a hit from this action. When brought on board by the Kirchners, they took out loans to buy their stakeholder position in YPF. The payback on those loans was based partially on dividend payments. So the Kirchner nationalization and subsequent decision on dividends has left them in default. Carlos Slim, who got 8% of YPF when Eskenazi defaulted, was simply making a personal investment, not a political statement. When you're the world's richest man, it's not particularly risky to make low-value purchases and hold them long term to see if they pan out.
SL: The Argentine lawsuit will move forward and the UK firms will ignore the action, but BP could get caught in the crossfire as a UK firm with holdings in Argentina. Already we've seen Kirchner's administration apply pressure to BP.
SL: The Falklands have long been used as symbols in Argentina, and this is an issue that crosses party lines so there is more political currency available for the Falklands issue across the Argentine political spectrum. There could be more saber rattling, but at this point I don't see the Argentine government taking definitive action.
SL: It's not just energy. This is more about Argentina's overall economic policies and the steadily increasing economic pressures the Kirchner government is facing. Inflation, currency controls and price controls on gasoline all play a huge role in this market, which extends well beyond the recent actions with YPF. Let's not forget that until recently Argentina was a natural gas exporter. Due to a long-term political negligence and mismanagement of infrastructure, Argentina is dependent on multinational energy firms to develop deposits and other known reserves - not to mention the potential for hydraulic fracturing. Ultimately, the irrational behavior Argentina has shown against multinational energy firms underscores a brewing political crisis that shows little to no sign of abatement in the near-term. It's likely to get worse for energy firms in Argentina before it gets better.