Chubut threatens to cut oil and gas unless national government transfers tax funds

Six governors representing all of southern Argentina co-signed the statement, describing themselves as the “United Provinces of the South”

A worker walks near a pile of sand at Vaca Muerta shale oil and gas drilling, in the Patagonian province of Neuquen, Argentina January 21, 2019. Picture taken January 21, 2019. REUTERS/Agustin Marcarian

Chubut will stop sending oil and gas to the rest of Argentina unless the national government releases AR$13.5 billion in federal tax revenues, the province’s governor Ignacio Torres said on Friday afternoon.

“The provinces existed before the Nation and deserve respect,” Torres wrote in a statement co-signed by five other provincial governors. “Nobody can subjugate them nor extort them by threatening to restrict public funds that belong to them by right.

“In February the national government illegally retained AR$13.5 billion. It’s more than a third of our monthly share of federal tax revenue. If they do not comply with the Constitution and do not send the resources to the people of Chubut, then Chubut will not deliver its oil and gas.”

The statement was titled “The United Provinces of the South,” and bore the signatures of:

  • Ignacio Torres, governor of Chubut
  • Gustavo Melella, governor of Tierra del Fuego
  • Claudio Vidal, governor of Santa Cruz 
  • Sergio Ziliotto, governor of La Pampa
  • Rolando Figueroa, governor of Neuquén
  • Alberto Weretilneck, governor of Rio Negro

Torres is a member of PRO, the right-wing party that is in talks with President Javier Milei’s La Libertad Avanza party to form a coalition. However, Ziliotto is a member of the Peronist opposition Justicialista party.

Within hours, nine governors from the Juntos por el Cambio coalition and Argentina’s General Confederation of Labor chimed in to back Torres.

“The governors of Juntos por el Cambio express their complete backing and support for Chubut Governor Ignacio Torres in this difficult moment the people of Chubut are experiencing,” they wrote in a statement.


A fortnight ago, the government announced it would cut subsidies to companies providing transport services nationally — a move that impacts the price of public transport across Argentine provinces. It also cut discretionary funding to the provinces by 98% throughout January. 

Two days before that announcement, President Milei had expressed his annoyance with a group of governors after the deputies representing their provinces in Congress did not back his flagship omnibus bill, which collapsed due to lack of support from lawmakers. 

In the aftermath of the legislative failure, the government singled out governors for having “destroyed” the bill to protect their interests and impede the current administration from solving Argentina’s “structural” problems.

In their statement, the governors hit back at the national administration, saying Chubut was suffering from “reprisals” for the omnibus bill’s failure. “This is not revenge against the governor of Chubut,” it reads. “It affects over 600,000 people of Chubut who are thus feeling the impacts on their right to education, health, security and development.”

After Torres filed a lawsuit, a federal court on Thursday ordered the government not to cut the transport subsidies. 

“This is not a war, it’s about protecting transport users, who have the same rights as inhabitants of greater Buenos Aires,” the southern governors’ statement read.

“Our solidarity with the people of Chubut,” Buenos Aires Province’s Peronist Governor Axel Kicillof, who was not one of the signatories, posted on X. “All provinces are being subjected to this “extortion” and funding cuts. It is not, as Milei claims, against the governors, but against the people of the provinces.” 

Torres is unlikely to actually turn off the tap, according to Juan José Carbajales of energy consultancy Paspartú. Argentine law grants companies the right to sell the oil and gas they extract. This is subject to 12% royalties. “If they don’t export or sell to refineries, the province gets nothing,” he said. “There’s nowhere else to sell it: export capacity is not enough and the refineries are in Buenos Aires province, except for two small ones in Plaza Huincul and Luján de Cuyo.”

Moreover, he noted, Argentina’s Gas Plan requires producers to meet their contractual obligations to distributors through December 2028 and penalizes them if they fail to deliver.

“This is very difficult to bring about, as well as anti-economical for the province itself.” If it did happen, he added, it would initially hit refineries in Buenos Aires Province that blend Vaca Muerta crude with that from elsewhere. 


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