Gabriel Bornoroni, the president of CECHA (Confederación de Entidades del Comercio de Hidrocarburos) grouping for the service station sector, does not believe that local petrol prices will go down, despite their slump internationally and a drop of 90 percent in sales owing to the impact of the quarantine, even though service stations have remained open.
“The oil companies and the government have reached an agreement to freeze prices, which have not been updated since last October despite the rise of the dollar, which goes along with the domestic ‘barril criollo,’ so I don’t think petrol prices will go down because they are shielded at both ends from international fluctuations,” the CECHA leader told PERFIL:
“(The government and oil companies) are now negotiating a barril criollo of around US$45 and I don’t think that will go down despite the fall of prices on the international market [to their lowest level in history] because the government wants to preserve the Vaca Muerta jobs,” he added.
“That is the exact equilibrium level so that everybody can continue receiving their salaries and so that the country can still count on a potential like Vaca Muerta so that when all this is over, we have the possibility to export crude oil or processed fuel.”
Bornoroni then explained that it was WTI crude which had negative prices for the first time in history but indicated: “That’s the benchmark in Argentina for royalties or the final price; here we use Brent from the North Sea or Europe, which is a sweeter crude and used by Argentine refineries to produce petrol and that’s at US$22,” then adding the consideration that if the ‘barril criollo’ were thus priced, “Vaca Muerta would have no reason to exist, it would be completely paralysed.”
Furthermore, Bornoroni admits that the sector has become “very complicated” due to the impact of quarantine even though service stations remain open because they were declared an essential activity.
“We have been gravely affected because we are selling 90 percent less, the stations stay 100 percent open as an essential service but sell only 10 percent while having to maintain all our infrastructure and the wages of our work team – this leaves us totally off balance to keep going,” he warned.
Bornoroni indicated that there are currently 4,830 service stations nationwide and expressed optimism that this will continue to be the number when the coronavirus pandemic crisis is over.
“The government has commenced assistance which has been well received – what we ask of the national government is that they treat us like all the pymes [small and medium-sized companies] with measures like deferred social security contributions along with their 95 percent reduction and credits at zero interest rates in order to pay salaries – what we want is that the measures for the pymes also accrue to the service stations.”
He commented: "At first that did not happen because we were an essential service, we were exempt, but afterwards we were included and I suppose we will keep being included in all the measures for PYMES.”