Chevron Corp. (NYSE: CVX) is in trouble.
As Ecuadorean plaintiffs try to target Chevron for $19 billion in fees over Amazonian oil spills, a Buenos Aires judge has embargoed the company’s Argentina earnings.
This isn’t the first time Chevron has been in trouble over environmental affairs. Per Fox News, Chevron has been a leading partner of YPF SA (NYSE: YPF), the state-controlled oil company, in Argentina.
That company was expropriated by President Cristina Fernandez from Spain’s Grupo Repsol (MCE: REP), and Repsol is suing Chevron and YPF for unfair competition and for drilling for shale products in Vaca Muerta basin—a Repsol discovery.
Also, Repsol is demanding $10 billion for the controlling stake in YPF that was taken away; the demands have gone all the way to the World Bank’s International Center.
Repsol has said it will contest any other international oil firm should it attempt to partner with YPF.
From Fox News:
“I don’t see the future of Chevron in Argentina as very auspicious under these conditions. They can turn it around, but it’s difficult,” said Emilio Apud, a former Argentine energy secretary who now works as a consultant. “The numbers just won’t add up, and if they had a hope of future profits in Argentina from Vaca Muerta, that too is in doubt.”
Chevron, of course, has refuted all allegations. The company has been close to YPF since early in 1990s and decided in September of this year to jointly develop Argentine shale reserves.
Argentina has the world’s third-largest shale reserves after the U.S. and China.
YPF has not been able to acquire this funding necessary to pursue the country’s unconventional resources mainly due to the Repsol warning and Argentina’s system of suppressing consumer energy prices well beneath worldwide market averages.
Even the planned natural gas price increase to $7.50 per million BTU will keep prices below what Argentina pays Bolivia to import gas—$12 per million BTU, Fox News reports
These events stretch all the way to Canada, where Chevron is also facing a court case since the Ecuadorean plaintiffs are also targeting Chevron’s Canadian subsidiary. The case is still in the Ecuadorean constitutional court, however, so a ruling may be delayed.
Chevron was down 0.59% on Monday afternoon to $105.07.