By Mark P. Jones, Ph.D.
Fellow in Political Science
Between March 10 and June 16 five Argentine Petro-Provinces (Neuquén, Chubut, Río Negro, Tierra del Fuego, La Pampa) elected their governor and provincial legislators for four-year terms, locking in the political leadership for the 2019-23 period. In four of the five provinces the candidate of the provincial governing party was victorious, in two (Chubut, Neuquén), the incumbent and in two (La Pampa, Río Negro) the incumbent’s handpicked successor. In the fifth province (Tierra del Fuego) the incumbent governor was defeated. Combined these five provinces produce approximately three-quarters of Argentina’s natural gas (74%) and two-thirds of its petroleum (67%). The next Petro-Province election will take place in Santa Cruz on August 11, and will be previewed as part of this series during the first week of August.
Neuquén (Produces 54% of Natural Gas & 26% of Petroleum in Argentina). The 2019 provincial electoral season began in Neuquén, home of the world’s second largest shale gas deposit, the Vaca Muerta. The incumbent governor, Omar Gutiérrez of the provincial-based Neuquén Peoples Movement (MPN) handily defeated his closest rivals with 40% of the vote to 26% for Peronist Ramón Rioseco (closely aligned with Cristina Fernández) and 15% for Horacio “Pechi” Quiroga who ran as the standard bearer of President Mauricio Macri’s Let’s Change alliance. The parties supporting Gutiérrez won a combined 15 of the 35 seats in the unicameral provincial legislature, while those supporting Rioseco and Quiroga won 9 and 6 seats respectively, with an anti-Gutiérrez MPN splinter group capturing 3 seats and a far-left party 2. As a consequence, to pass legislation during his second term Gutiérrez during will need opposition support.
Chubut (7% Natural Gas, 30% Petroleum). Governor Mariano Arcioni (a Peronist) of the provincial-based Chubut Forward alliance was re-elected with 41% of the vote, compared to 34% for Carlos Linares (also a Peronist, but more closely aligned with Cristina Fernández) and 16% for Gustavo Menna, the candidate of Macri’s Let’s Change alliance. Chubut Forward won an absolute majority (16) of the 27 seats in the unicameral provincial legislature, followed by Linares’ Patriotic Front with 8 and Let’s Change with 3. As a result, Arcioni will be able to pass legislation without having to seek opposition support, which is distinct from the situation during his first term where he has lacked a majority in the legislature.
Río Negro (5% Natural Gas, 6% Petroleum). Governor Alberto Wertilneck of the provincial-based Together We Are Río Negro (JSRN) was prevented by the provincial constitution’s limit on two consecutive terms in office from running for re-election. His handpicked candidate, Arabela Carreras, easily defeated Cristina Fernández’s candidate, Peronist Martín Soria, 53% to 35%, with the candidate of Macri’s Let’s Change alliance, Lorena Matzken, garnering only 6% of the vote. Carreras will be able to rely on a robust JSRN majority (28) in the 46 seat unicameral provincial legislature, followed by Soria’s Front for Victory with 17, and Let’s Change with 1.
Tierra del Fuego (7% Natural Gas, 2% Petroleum). Río Grande mayor Gustavo Melella handily defeated Governor Rosana Bertone, 55% to 41%. Macri’s candidate, Juan Rodríguez of To Be Fueguino, won a meager 4%. Melella will face a unicameral provincial legislature where the parties that supported him possess only 6 of the 15 seats, with his own party (FORJA) holding 4 and the provincial-based Fueguino Peoples Movement with 2. To pass legislation, Melella will need to obtain the assistance of some combination of Bertone’s Fueguino Unity (4 seats), the Green Party of the Colazo family (3 seats), and To Be Fueguino (2 seats). Since Bertone’s Fueguino Unity and Melella’s FORJA both respond to the leadership of Cristina Fernández, if her presidential election ticket is victorious later this year, Melella should be able to rely on the support of the 4 Fueguino Unity legislators. By the same token, it should also not be overly difficult for Melella to obtain the support of the Green Party delegation.
La Pampa (1% Natural Gas, 3% Petroleum). Governor Carlos Verna chose not to run for re-election due to health issues, and chose Sergio Ziliotto as his successor. Ziliotto won 53% of the vote to 32% for the candidate of Macri’s Let’s Change alliance, Daniel Kroneberger. While Kroneberger finished a distant second, his 32% was far and away the best performance by a Let’s Change gubernatorial candidate in these five Petro-Provinces, with the other four garnering 16%, 15%, 6%, and 4%. Ziliotto’s Pampean Justicialist Front won a majority (17) of the 30 seats in the unicameral provincial legislature, followed by Let’s Change with 11 and a minor party with 2.
Argentina is approaching a pivotal crossroads, with voters later this year presented with two very distinct options. They can return to the familiar and comfortable option offered by the presidential ticket of Alberto Fernández and former president Cristina Fernández (who for strategic reasons is running as the vice-presidential candidate) that offers scant hope of stemming the country’s century-long decline. Or, they can go with the option offered by President Macri, who is seeking re-election. Macri could very well lead Argentines to the same dismal destination of continued decline as Alberto and Cristina, but he could also set them on a path to a much brighter future.
Which option Argentines choose will likely have a notable impact on investment activity in Argentina by international energy companies in at least the short to medium term. Victory by the Fernández-Fernández ticket would lead to more modest investments designed to maintain a foothold in Argentina, but at the same time not expose the companies to excessive risk in the event of expropriation, the unilateral breaking of contracts, and the arbitrary implementation of capital controls and price freezes. In contrast, a victory by Macri could quite possibly lead to more robust investments, including in the basic infrastructure (e.g., expanded pipelines, railways, and highways), LNG export terminals, and petrochemical plants needed to fully realize the potential of Argentina’s vast energy reserves, in particular the Vaca Muerta.
If Macri is re-elected, the governors who will be best positioned to have the most productive and conflict-free relationship with the federal government in the areas of energy and fiscal policy are Gutiérrez (Neuquén) and Carreras (Río Negro), followed by Arcioni (Chubut). The opposite is true for Melella (Tierra del Fuego), whose left wing policy agenda and ties to Cristina Fernández and organized labor would be expected to result in the most conflict with a Macri-led federal government. Ziliotto (La Pampa) would occupy an intermediate position, with relations not as positive as Gutiérrez or Carreras but not as negative as Melella.
If the Fernández-Fernández ticket is victorious, Melella and Ziliotto will be the governors best positioned to have the most productive and conflict-free relationship with the federal government in the areas of energy and fiscal policy. In contrast, Carreras and Arcioni would at least initially be expected to have the worst working relationship with the Fernández-Fernández-led federal government, although more akin to that of Ziliotto with Macri rather than that of Melella with Macri. Finally, Gutiérrez would occupy an intermediate position, with relations not as positive as Melella and Ziliotto but also not as negative as Carreras and Arcioni. In all five cases however, the balance of power between the provincial governments and the federal government in the area of energy and fiscal policy would shift sharply in favor of the federal government in the event of a Fernández-Fernández victory, compared to the more favorable balance of power (for provincial governments) under Macri.
Note: This is the tenth entry of the Baker Institute’s Center for Energy Studies series on the 2019 Argentine elections.
Previous entries in this series are:
The 2019 Presidential and Petro-Province Elections in Argentina. January 22, 2019.
This post originally appeared in the Forbes blog on July 8, 2019.