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ECONOMY | 23-01-2021 10:08

Nielsen departs troubled YPF, replaced by CFK ally

Pablo González, seen as an ally of Vice-President Cristina Fernández de Kirchner, to assume leadership of state energy company.

Guillermo Nielsen has confirmed that he is stepping down as president of state energy giant YPF, having accepted an offer to become Argentina's ambassador to Saudi Arabia.

His resignation will see him replaced at the top of the helm of the company, subject to approval from the board, by Pablo González, a lawmaker from Santa Cruz Province who is seen as an ally of Vice-President Cristina Fernández de Kirchner. 

The change comes at a challenging time for the firm, which is in negotiations with creditors to reschedule upcoming payments for more than US$6.2 billion in bonds. 

Nielsen, who oversaw Argentina’s sovereign debt restructuring in the early 2000s as finance secretary, said he would continue to be involved in the current talks. 

In a series of posts on Twitter, Nielsen outlined his reasons for departure, saying they “originate in a new challenge that was offered to me by the president.”

The 69-year-old said he would continue to be involved in the refinancing effort “until my exit from the oil company is finalised.”

“The company is doing its best to offer a voluntary opportunity for investors to follow up on debt refinancing needs within the framework of the multiple restrictions faced by YPF,” he added.

Marginalised

According to Bloomberg, Nielsen had become marginalised from decision-making at YPF amid internal struggles within the government.

Many analysts see his departure as proof of the struggle for control in the government between backers of President Alberto Fernández and his vice-president, which has now spread to the energy firm’s headquarters in Buenos Aires.

González's arrival at the helm of YPF is the latest in a series of political reshuffles that have seen allies of Kirchnerismo assume positions of power. Over the past year, La Cámpora militant Fernanda Raverta has taken charge of the ANSES social security agency, while Mayor of Avellaneda Jorge Ferraresi – a vice-president of the Patria Institute – has become Housing and Development minister. A number of lower-level positions have also been handed to Kirchnerite figures.

Fernández tapped Nielsen – who was rumoured to be a potential economy minister before being appointed to lead YPF – for the post over a year ago, though Fernández de Kirchner has long been interested in having an ally atop the company.

In 2012, she nationalised YPF and during her administration, she placed allies in other key energy roles, such as the Energy Ministry, state energy company Ieasa, and Argentina's energy and natural gas regulators.

Fernández de Kirchner, who has a history of economic interventionism, especially in energy markets, had already taken steps to influence YPF: Sergio Affronti, another ally, was appointed in May to head the company's executive management team.

New man in charge 

González, 52, trained as a lawyer in Santa Cruz, then worked in the natural gas sector in the Patagonian province before entering politics. More recently, he was deputy governor of Santa Cruz, acting as representative of Alicia Kirchner, Fernández de Kirchner's sister-in-law. He is currently a legislator in the lower house Chamber of Deputies representing the region.

González is seen as close to Máximo Kirchner and has been in public service for 28 years. In a recent interview with local radio in Santa Cruz, he reportedly lashed out at lawmakers who were "cogs in the wheel," criticising "Zoom-diputados" who "do politics on the networks and are never seen in a neighbourhood."

He has expressed support for plans to "decentralise" YPF's activity and proposed creating an "operational infrastructure" for the company in his home region.

Severe crisis

González will join the firm at a time of severe crisis. The coronavirus pandemic has pushed the state energy giant to its limits, slashing revenue when it most needed cash to increase shale drilling in the Vaca Muerta formation, which has suffered four years of production losses as output from traditional oil fields declines.

To find a solution, YPF is cutting costs, divesting assets, including its headquarters, a sleek glass skyscraper, and now seeking relief from bondholders. Instead of paying off the debt over the next two years, the company wants to use the money to finance its investments in shale.

 

– TIMES with agencies

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