The Battle for the Future of Argentina’s Vaca Muerta: Neuquén’s 2019 Gubernatorial Election
March 5, 2019
This article was originally published by Rice University’s Center for Energy Studies, Baker Institute for Public Policy, on Forbes blog on February 27, 2019.
On March 10, the Argentine province of Neuquén will hold gubernatorial and legislative elections. Neuquén is home to the Vaca Muerta, one of the largest shale deposits in the world, and under Argentina’s federal system of government, the Neuquén governor plays a major role in the development and management of the province’s hydrocarbon resources.
The future direction of energy policy in Neuquén (and hence in Argentina as well) will vary notably depending on which one of the three leading gubernatorial candidates is victorious. The possible scenarios range from a seamless continuation of the province’s current pro-development policies to a much more hostile environment for international oil companies (IOCs) and for many private Argentine companies.
The gubernatorial election features nine candidates. However, only three have any hope of victory:
- Governor Omar Gutiérrez of the Neuquén People’s Movement (MPN),
- Ramón Rioseco of Cristina Fernández de Kirchner’s Citizen Unity-Neuquén Front alliance, and
- Horacio “Pechi” Quiroga of President Mauricio Macri’s Let’s Change alliance.
Victory by any one of these three candidates is well within the realm of possibility, although heading into the homestretch, Gutiérrez and Rioseco appear to possess slight advantages over Quiroga. Gutiérrez would maintain his government’s pro-development policies and continue to serve as a forceful advocate for the development of the Vaca Muerta at the federal level. Quiroga also would continue the current pro-development policies, albeit with some initial potential conflict with the provincial bureaucracy. Rioseco would push to modify the province’s current policies and create a more hostile environment for IOCs in Neuquén as well as dampen prospects for major federally sponsored infrastructure projects designed to support the exploitation of the Vaca Muerta.
Omar Gutiérrez (MPN)
The MPN has governed Neuquén continuously since Argentina’s return to democracy in 1983. Gutiérrez enjoys the support provided by his control of the provincial public sector as well as the backing of some of Neuquén’s most powerful labor unions, including the Neuquén branch of the construction workers’ union (UOCRA) and the Private Sector Petroleum and Gas Union of Río Negro, Neuquén and La Pampa, which for more than 30 years has been run by MPN national senator Guillermo Pereyra.
During Gutiérrez's first four-year term as governor (2015-19), the Neuquén provincial government has been a strong advocate for policies promoting the development of the Vaca Muerta including federal subsidies for producers, respect for the rule of law and contracts, and infrastructure investment to aid in the transport of natural gas from the Vaca Muerta to external markets and to domestic petrochemical plants. Gutiérrez and his fellow MPN leaders such as Pereyra have maintained a good working relationship with the Macri Administration.
However, the MPN has long demonstrated its ability to get along with presidents of all political stripes, an ability aided by the fact that as a provincial-based party it never represents a threat to the president at the national level. Therefore, in the event Cristina Fernández de Kirchner or another Peronist defeats Macri in the 2019 presidential election, there is no reason to believe Gutiérrez would not be able to establish and maintain a good working relationship with them, although in the case of Fernández de Kircher the energy policies she would likely pursue would be contrary to the more pro-development policies favored by the MPN.
Ramón Rioseco (Citizen’s Unity-Neuquén Front)
Cristina Fernández de Kirchner’s candidate in Neuquén is Peronist Ramón Rioseco. Rioseco’s home base of support is in Cutral Có, Neuquén’s second most populous city (albeit containing only 7 percent of provincial voters), of which he is the de facto mayor. Rioseco ran against Gutiérrez in the 2015 gubernatorial election, finishing in second place with 31 percent of the vote, 10 percent behind Gutiérrez.
A Rioseco victory would result in provincial policies that are less conducive to the successful development of energy resources in Neuquén, especially by IOCs and many private Argentine companies. Also, in the event President Macri is reelected, Rioseco’s control of Neuquén would lead to significant friction between the national and provincial governments in the area of energy policy as well as in broader federal-provincial government relations.
And, if Fernández de Kirchner is elected president, the Neuquén provincial government would largely subordinate itself to the federal government and follow Fernández de Kirchner’s lead in the area of energy policy, to the further determinant of pro-development energy policy in Neuquén.
Horacio “Pechi” Quiroga (Let’s Change)
The standard bearer for President Macri’s Let’s Change alliance, Pechi Quiroga, has since 2011 served as the mayor of Neuquén’s most prominent city, the City of Neuquén, where two out of every five provincial voters reside. A member of Let’s Change’s junior partner, the Radical Civic Union (UCR), as opposed to Macri’s Federal Proposal (PRO), Quiroga also competed in the 2015 gubernatorial election where he finished third with 21 percent of the vote.
Quiroga’s 2019 campaign has been adversely affected by his association with Macri, whose approval ratings are underwater in Neuquén, as well as by recent Macri administration IMF-mandated cuts to natural gas subsidies in the Vaca Muerta that have caused some energy companies to scale back their investment plans in Neuquén.
A Quiroga victory would result in a continuation of the current pro-development energy policy pursued by Gutiérrez. And, as a two-term mayor of Neuquén’s capital city, Quiroga is best positioned among the non-MPN political elite to guide the province through the difficult transition from MPN to non-MPN rule after 36 years of MPN government. That said, a Quiroga transition would be a rocky and conflictual in the beginning.
Election Rules and Potential Spoiler Candidates
Whoever wins the most votes on March 10 will be governor for the 2019-23 period. Neuquén allows fusion candidacies in which a gubernatorial candidate can be the nominee of more than one party and all of the votes cast for that candidate on the ballots of these parties are summed together for the purpose of determining the winner. In addition to being the MPN candidate, Gutiérrez is the gubernatorial candidate of four other parties running separate lists of candidates for the 35-member provincial legislature that is elected province-wide using proportional representation. Neither Rioseco nor Quiroga is the candidate of any other party.
Among the six gubernatorial candidates with no chance of victory, three possess the ability to play the role of spoiler by siphoning off a small but potentially significant number of votes from the three major candidates.
Jorge Sobisch is running as the candidate of the small Christian Democrat Party. Sobisch is a former member of the MPN who was the governor from 1999 to 2007 (and could not run for reelection due to Neuquén’s two consecutive term limit). While Sobisch’s popularity has diminished substantially, his candidacy could adversely affect Gutiérrez in a close contest since the 5 to 10 percent of the vote he is projected to win would come mostly from MPN voters who otherwise would have cast their ballot primarily for Gutiérrez.
Alejandro Vidal is running as the candidate of the newly formed Equals party. Vidal is a member of the UCR like Quiroga but is from the wing that is critical of the UCR’s alliance with Macri’s PRO. Vidal is not expected to surpass 5 percent of the vote, but many of his votes will come from people who absent his candidacy would vote for Quiroga.
Mercedes Lamarca is running as the candidate of the small Free of the South Movement (LIBRES). In 2015, LIBRES supported Rioseco’s candidacy (along with three other parties) and contributed 7 percent to his overall total of 31 percent. While like Vidal she is not expected to surpass 5 percent of the vote, Lamarca will draw the most support from those who would have otherwise voted for Rioseco had she not been on the ballot.
The March 10 election is pivotal for Neuquén and the Vaca Muerta in particular but also for Argentina’s future economic prospects more generally. A Gutiérrez victory would mean continued smooth sailing for IOCs and Argentine private energy companies, and a Quiroga victory some minor chop but nothing that would adversely affect the current pro-development course of the province. In contrast, a Rioseco victory would represent a potentially devastating storm that could swamp or at least delay the Vaca Muerta, Neuquén, and Argentina from reaching their full development potential in the short to medium term.
Mark P. Jones is a senior associate (non-resident) with the Americas Program at the Center for Strategic and International Studies in Washington, D.C.
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