March 24, 2020 / 7:30 PM / 13 days ago

Argentina's YPF oil firm says demand already down, warns of 'difficult' future

BUENOS AIRES, March 24 (Reuters) - Argentine state-run oil company YPF has already seen a drop in energy consumption because of a nationwide mandatory quarantine over the coronavirus announced last Friday, a company executive said in an internal video obtained by local newspaper La Nacion on Tuesday and confirmed to Reuters by the company

Daniel Gonzalez, YPF’s executive president, told employees in the video that major drops in demand for all fuels meant that “very difficult” times were coming and the company’s income would be impacted, the newspaper reported.

A spokesman for YPF, which leads production activities in the Vaca Muerta shale play, told Reuters the video was for the company’s internal use, but confirmed its veracity.

“The demand for gasoline is 70% below that of the previous days, diesel is closer to 50% and aviation fuel is down about 90%,” Gonzalez said in the video, according to La Nacion. “This will leave us with the need to export crude oil at low prices, with which our income will clearly be negatively affected.”

His message comes as the South American country recorded two new coronavirus deaths on Tuesday, bringing the death toll to six, with 301 confirmed cases.

Gonzalez said gas production was falling with demand and already “between 15 and 20% below what it was in previous days.”

“Oil production is practically unaffected. We have stopped drilling and completing wells. We are wrapping up leaving the last new wells and equipment in a safe condition,” the executive said, adding his thanks to the workers who continue to keep the company running.

The Argentine government ordered a mandatory quarantine from last Friday until March 31, dealing a significant blow to an economy already in recession, with high rates of inflation and poverty.

YPF said Thursday that it would gradually suspend activities not critical to its business, and will scale down staff to a minimum at essential operations to ensure energy supply amid the coronavirus outbreak. (Reporting by Lucila Sigal writing by Aislinn Laing)

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