LOS ANGELES, June 25 – Sooner or later we all expect to see the headline, don’t we? You know, the one that proclaims China’s national oil companies are buying into the Argentine’s recently nationalized oil company Yacimientos Petroliferos Fiscales.
Well, that headline is coming closer by the day, with both Russia and China now courting Argentina’s President Cristina Fernández de Kirchner. Remember her?
She’s the lady – we don’t know if she’s made of iron yet – who had no compunction in nationalizing Repsol’s share of YPF a few weeks back or in personally confronting British Prime Minister David Cameron over her country’s endless demand for the return of the Falkland islands.
Well, Kirchner seems to have been biding her time in the knowledge that a dead cow may represent just the bargaining chip to get what she wants. A dead cow? Oh, that’s the English translation for Vaca Muerta, the name of the oil-rich region she seized from Repsol.
VACA MUERTA
As a reminder, Vaca Muerta holds a fairly large amount of oil – shale oil to be precise. According to estimates of the United States Geological Survey, Argentina’s reserves of shale oil rank only behind those of the United States and Canada.
Repsol YPF began to attract attention to the project late last year when reporting “its biggest ever oil discovery” in the Vaca Muerta formation, which it described as “one of the world’s largest non-conventional reservoirs.”
The company confirmed recoverable resources of 927 million barrels of oil equivalent (boe) of non-conventional hydrocarbons, of which 741 million boe are high quality oil (40-45º API).
At the time, Repsol YPF cited the highly respected consultants Wood Mackenzie as identifying the Vaca Muerta shale as “one of the best in the world” in comparison with other areas it examined in Australia, China and Europe.
CASH COW
That represents a cash cow to someone, and the Chinese are just as interested in cash cows as anybody.
To be sure, the Chinese government made polite noises at the time of Argentina’s takeover of YPF, saying something about the disturbance to the country’s investment climate. But that was then and now is another moment.
China’s President Wen Jibao, in Mexico for last week’s meeting of the Leaders’ Summit of the Group of Twenty, or G20, added other destinations to his Latin American ‘goodwill tour’ – among them Uruguay, Brazil and Argentina.
Argentina’s government naturally attached great importance to Wen’s June 23-25 visit, considered a major diplomatic event between the two countries after Chinese President Hu Jintao’s visit to Argentina in 2004.
CHINA’S ‘PARAMOUNT ROLE’
Kirchner and Wen wasted no time in hailing 40 years of strong diplomatic ties between their two countries, with the Chinese leader calling the four-decade mark an “important milestone” in the “deepening friendship and trust” between Buenos Aires and Beijing.
Kirchner said China had played a “paramount” role in fuelling global growth over the past 10 years, while stressing that their two countries have a common vision in “defending territorial integrity.”
Wen agreed, saying that both countries have offered staunch support for each other on major issues concerning sovereignty and territorial integrity and have established firm political mutual trust.
China’s Ambassador to Argentina Yin Hengmin used that phrase just a day ahead of Wen’s visit, saying that China and Argentina could seek more collaboration in international affairs based on political mutual trust.
POLITICAL FLIRT
Argentina always adheres to the one-China policy and China backs Argentina’s stance on the Malvinas Islands, called the Falkland Islands by Britain, Yin said.
Quite what level of support Argentina could expect from China over the Falklands remains to be seen, but there can be little doubt that Kirchner will be seeking to use the Vaca Muerta development as an enticement to greater Chinese involvement in her country’s effort to see the islands’ return.
But Kirchner is leaving nothing to chance. She’s nothing if not a political flirt, and she’s certainly been flirting with Russia’s President Vladimir Putin, with much the same purpose in mind as with the Chinese.
RUSSIANS EYE VACA MUERTA
Indeed, it emerged that Putin and Kirchner used a June 19 meeting at the G20 summit to map out several strategically important areas in which the two governments want to broaden their cooperation.
According to Russia Today, the two heads of state discussed hydrocarbons and nuclear energy, transportation and railroad development, and agriculture and agro-industry as key areas for greater cooperation – all areas of interest to China as well.
Indeed, officials from Russia’s state-owned OAO Gazprom even said they plan to contact the new leadership of YPF to discuss a specific work plan for cooperation in the exploration, exploitation, and distribution of natural gas in Argentina – including development of Vaca Muerta.
There was no mention of the Falklands in the report. But then, there was no mention of oil in the Chinese reports either.
REVIVING A DEAD HORSE?
One thing, though, will certainly be true: Kirchner’s efforts to woo the Russians and Chinese will stimulate their most ardent efforts – as well as the narrow-eyed attention of Washington and London.
It’s amazing the kind of attention someone can drum up by beating a dead cow and playing suitors off against one another. Who knows? Kirchner may yet pump some life into that erstwhile dead horse known as Las Malvinas.
© Glamma Productions Inc. 2012