Brazil & Southern Cone - September 2007 (ISSN 1471-4431

At the end of August, Esso, the subsidiary owned by Exxon Mobile, announced its departure from Argentina. Its assets, worth some US$200 million, include a refinery, three fuel deposits and a network of approximately 500 service stations, 90 of which are their own. The multinational is also leaving Brazil, Uruguay and Paraguay to focus on operations in South-east Asia.

While the official buyer has yet to be confirmed, interested candidates include the Brazilian state company, Petrobras. However, the Argentine government recently expressed "discomfort" with the prospect of Petrobras buying the assets; planning minister, Julio De Vido warned that the Brazilian company should first honour its existing commitments. Petrol sector sources interpreted this as a clear message - that the sale of Esso does not simply involve a buyer and a seller but also a third party - the government - who can authorise the operation or not. If successful, Petrobras, which already has a presence in Argentina, would operate a network of some 1200 service stations out of a total of 4,100. 

Esso has operated in Argentina for 96 years and the local press reported the reasons for their departure to be, among others, "complaints over lack of profitability, scarcity of demand and the controversies between the government and Shell". The latter complaint refers to the problematic relationship between the Argentine government and Shell, most recently demonstrated on 5 September as the government closed a Shell refinery in the Buenos Aires province due to purported environmental concerns. Six days later, the government lifted the ban after the multinational agreed to invest US$60 million in improving environmental practice. 

The dispute over the closure represents only the latest in a series of clashes between President Néstor Kirchner's government and Shell, which began in 2005 after Kirchner called on the Argentine public to boycott Shell's products following an increase in prices. This year alone, some 30 fines have been levied against Shell for violations of storage legislation, causing local executives to protest that the company is being targeted by the government. Accounting for only 13% of the retail fuel market, the company has reportedly been subject to 64% of the 800-some inspections carried out by government agents this year.

Strike
On 24 September 4,840 customs officers went on a national day-long strike to protest the dismissal of 11 customs officials arrested last week for taking bribes. The customs union denies that the 11 customs workers had done anything wrong and said they were the victim of an institutional feud between customs workers and airport security police. The organisers of the strike also warned that they would carry out more strikes in the future and that these would be more dramatic.