21-DAY STRIKE, A TORPEDO AIMED AT VACA MUERTA WATERLINE

In Vaca Muerta, expectations for April were encouraging , boasting signs of improvement in the main indicators after reporting historical records of fracture activity in March 2021. However, fate had other plans lying ahead for the star resource of Neuquén: a 21-day strike due to doctors’ salary claims and then supported by other sectors brought about an increasing conflict up to the almost complete stoppage of the oil industry. The negative impact is an expansive wave that goes beyond the province of Neuquén.
The conflict that had started with the provincial doctors claiming for their wages brought the oil industry in Vaca Muerta to a stop after 21 days of roadblocks in more than 30 points of the province, including internal routes of the fields, set up in strategic points and in a coordinated way.
April ended up with a total of 239 fracture stages and one active piece of equipment in the non-conventional resource.
Without going into any further political analysis of these road-blocks, the impact of this strike over the whole value chain can be analized as an EXPEANSIVE WAVE or CONCENTRIC RINGS with negative effects beyond the province.
THE FIRST RING of the impact is immediate, the operation. It means that as cuts step up and coordinate to stop any movement of equipment, water, sand and basic supplies start to run short in the operations and therefore, they have to stop. At the same time, staff changes are not allowed and the pandemic as well as the fatigue put staff at risk. The costs related to this ring amount to millions for the industry with an immediate effect on the companies’pockets.
THE SECOND RING of this wide- ranging wave started to have a poweful effect over the production of existing wells connected to the treatment plants. The coordinated blockroads were so precise that they even blocked basic supplies for the shift staff like water and food. As it was impossible to discharge the liquids production and almost without any supplies for the staff, the plants had to stop and close the wells- in this way 4 MMm3/d of gas and 9.000bbl/d were lost due to closures.
THE THIRD RING is having impact at this moment. It is focused on the wells that were drilling or completing and operations had to be stopped, delaying the start-up and the production , especially that of gas so necessary to face the cold season, as if timing had been planned to produce a greater impact.
To make it worse, the initial production (that is differed) is the highest one in the useful life of the wells and the companies will have, in turn, difficulties to meet the objectives of the Gas.AR plan.
THE FOURTH CONCENTRIC RING goes beyond the province and will have an impact on the country’s gas supply, at the most critical and coldest moment of the year, that is the seasonal peak of winter consumption. The simplified sequence would be the following:
there will be no gas in winter, LNG will have to be imported at much higher prices and with dollars sent abroad.The shortage builds up a scenario where “somebody” will have to decide who will have the supply cut off and who will not. There is gas shortage in the trading companies, the prices of the gas that goes to industries are rising and this ends up impacting on the consumer´s prices.
THE FIFTH RING goes beyond the limits of our country and matches a reputational damage done to Vaca Muerta. In a global context of industry recovery, this resource holds a less attractive position as regards other international projects – discouraging foreign direct investment.
In the middle of this scenario, a question runs through all the rings and the whole society: “”who will pay for the stand by”?.