Can you tell us about your participation in the book you co-wrote, Consensos energéticos 2016 – La política para salir de la crisis energética?

In 2008, six former ministers of energy came together at the Consejo Argentino para Relaciones Internacionales. Although they had many disagreements, they agreed on one crucial point: Argentina’s hydrocarbon reserves exceed the country’s needs ten times, yet the country still imports energy. The hydrocarbon sector is crucial for the country’s development and progress. This led to the co-authorship of the book, Consensos energéticos 2015 – La política para salir de la crisis energética.

You wrote, “over the last 12 years, the Kirchnerist government created distrust through its interventionism, anomie, shortsightedness, and corruption.” Can you give an example of government interventionism under the Kirchner presidencies?

The Kirchner administration intervened in the hydrocarbon sector by breaching the law. Following the 2002 crisis in Argentina and the end of the peso’s peg to the dollar, the newly elected Kirchner administration decided to revise hydrocarbon-related contracts, including exploration concessions and production permits. By executive decree, the Kirchner administration unilaterally refused to renew concessions and permits, fixed oil and gas prices, and nationalized utility regulatory commissions. Additionally, the Kirchner administration manipulated the national budget arbitrarily. This interventionism led to crony capitalism, where the Kirchners rewarded public works to companies with close connections to them.

You wrote that exploiting Argentina’s hydrocarbon resources will require, among other measures, eradicating ideologies. What ideologies should be eradicated?

The Kirchner administration often speaks of energy sovereignty, which they define as Argentina’s energy independence secured by Argentine companies. Argentina has enough energy resources to be energy independent and is right to pursue that independence either through private companies or through private-public partnerships. However, it is impractical to insist that Argentine companies lead the effort. An analysis of the financials of the companies nationalized by the Kirchner administrations shows that they are all indebted, and even YPF benefits from government subsidies. The Kirchner administration confuses energy independence and patriotism. Therefore, the ideologies that should be eradicated are those that prioritize nationalism over practical solutions to achieve energy independence.

You wrote that one of the challenges associated with developing effective policies that regulate the hydrocarbon industry relates to balancing the conflicting needs to attract risk-seeking investors on one hand and to maximize royalties for the federal and provincial governments. How should an effective hydrocarbon policy balance these conflicting needs?

An effective hydrocarbon policy that balances public and private interests will need to provide companies with legal security, politically independent institutions, and regulations that are clear and stable. The Argentine government should properly compensate companies for the risks they take to explore and produce hydrocarbons if the country is to attract the investment it needs. The involvement of consumers in oil rent, however, leaves less rent available for companies and deters them from further investments. The next administration will need to rebuild trust with the private sector and reach agreements with other political parties to maintain political stability. Countries like Peru and Chile have managed to preserve regulatory stability despite changes of government and have attracted investments.