Argentina: Back to unpredictable

A Supreme Court ruling in Argentina yesterday thrust that country back into unpredictable territory.

Ratifying a lower court decision, the justices ordered the government to repeal increases in natural gas rates for residential customers until it holds public hearings. The court said wellhead gas prices set by the government require hearings as well. The landmark ruling suggests electricity rate hikes will be subject to the same criteria.

President Mauricio Macri swept into office last December pledging to dismantle huge subsidies that blew out the fiscal deficit under his predecessor and nemesis Cristina Fernandez de Kirchner. Now he and his self-described technocrats are back to square one.  Continue reading

Bondholder control bodes ill for future production growth

If you owe a lender $100, you’ve got a problem. If you owe $1mn, the lender has a problem. Oil companies exist at both ends of this old adage, and it all bodes ill for future production.

Lower for longer has led to a cash flow crisis in an industry that relies on up-front funding for returns that could be years down the line. Exploration spend is being pared to the bone, in favour of targeting cash to wring maximum value out of assets that already produce.

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