Juan Jose Aranguren, the next energy minister of Argentina, said Friday he will seek to rebuild investor confidence in the country by improving business conditions after taking office December 10.
"We need, as in other sectors of economic activity, to restore rationality," he said on Radio Mitre a day after getting tapped for the post by the conservative President-elect Mauricio Macri. "We must emerge from the schizophrenia we have lived in the energy sector in recent years."
Aranguren, who comes to the post after working for years as the chief executive of Shell Argentina, said he will cut energy subsidies and push for a rapid increase in energy production to reduce imports.
He called it "a crime" to subsidize energy "in a country that imports 15% of its energy" when it also has rich resources of oil, gas and renewable power.
"Only countries that are exporters subsidize energy," he said in his first public comments since getting appointed. "Our country is the only case that is an importer and subsidizes energy."
Argentina holds among the world's greatest potential for shale oil and gas, of which only about 54,000 b/d of oil equivalent is now in production.
The outgoing populist-left government has paid subsidies on energy since coming to office in 2003, at first to keep down gas and power bills to help pull the economy out of a 2001-02 crisis by fueling consumer spending.
In recent years, the outgoing administration has been paying producers subsidies to prop up wellhead prices at up to $80/b for crude and $7.50/MMBtu for gas to encourage rebuilding production after dwindling by 20% over the past decade.
The effort has helped to stabilize oil production at 532,000 b/d and to increase gas production by 3.2% to 117.3 million cu m/d in the first three quarters of 2015 compared with the annual average of 113.7 million cu m/d in 2014, according to the Argentine Oil and Gas Institute, an industry group.
However, with energy consumption continuing to rise, imports of crude, diesel and gas have held steady.
Aranguren warned that if temperatures surge this summer, blackouts could return because of years of insufficient investment in improving distribution.
