Peter Howard Wertheim
OGJ Correspondent
RIO DE JANEIRO, Oct. 16 -- Argentina has threatened statutory sanctions against foreign oil companies if it detects problems in the supply of products such as diesel.
The administration of President Néstor Kirchner reactivated a law, enacted in 1974 during the administration of former nationalist-populist President Juan Perón, empowering the government to intervene in commerce and industry, close establishments, apply fines, and imprison executives.
The main diesel suppliers in Argentina are Petroleo Brasileiro SA (Petrobras), Royal Dutch Shell PLC, Repsol YPF, and a unit of ExxonMobil Corp.
In a press conference, Guillermo Moreno, domestic commerce secretary, said, "It is the duty of all public employees to enforce abidance of the law." He threatened to imprison executives from oil companies that do not increase diesel imports as specified by the government.
Diesel prices are frozen in Argentina at levels below international prices. The government insists that companies can compensate for losses on diesel imports with revenues from exports of other products.
Members of Moreno's staff have told the powerful farmers' organization Soc. Rural Argentina (SRA) that oil companies had failed to import diesel levels demanded by the government to alleviate a shortage plaguing agriculture.
Hundreds of SRA members recently blocked roads linking Rosário with Buenos Aires, Córdoba with Pilar, and Tucumán with Famaillá.
Kirchner seeks reelection in 2007 and is trying to avoid inflation, which hobbled Argentina during the 1990s.
In September, Argentina's Internal Commerce Secretariat told the local Shell unit to stop selling a new diesel formulation, which costs 10% more than regular diesel, because the company failed to obtain government approval.
Last year, Kirchner called on citizens to boycott Shell after the local unit raised pump prices amid rising world oil prices. Shell dropped prices after government-aligned protest groups marched on Shell stations.
