March 14, 2012 / 3:10 AM / in 6 years

UPDATE 1-Argentina's YPF may lose concessions Weds in spat with province

* Argentina turns up heat on YPF to boost production

* Chubut province could take away two concessions on Weds

* Areas represent 7 pct of YPF’s total production-govt data (Recasts and writes through)

By Karina Grazina and Alejandro Lifschitz

BUENOS AIRES, March 13 (Reuters) - Argentina’s YPF looked set to lose two concessions on Wednesday, equivalent to 7 percent of its national output, after the country’s biggest oil-producing province said the energy firm had failed to meet an ultimatum on investment plans.

YPF, controlled by Spain’s Repsol, has become embroiled in increasingly heated disputes with authorities amid pressure to raise output as Argentina’s fast-growing economy spurs energy demand and costly fuel imports eat into the nation’s cherished trade surplus.

Chubut province, run by an ally of center-left President Cristina Fernandez, had demanded that YPF submit by Tuesday night an investment plan to boost flagging oil and natural gas output.

Argentina’s biggest energy firm instead responded with a formal defense of its actions that affirmed investments worth hundreds of millions of dollars in the province, an industry source with knowledge of the matter said.

“We will likely take back (the concessions) because the report that YPF presented did not meet our expectations,” a spokesman for Chubut’s provincial government told Reuters.

He said earlier in the day the province was on track for a rescission, adding that a public event was scheduled on Wednesday at 6 p.m.

Adding to YPF’s woes, the government has launched an antitrust probe against the company to investigate accusations that the firm pushes fuel prices up by limiting supplies. It also urged YPF last week to withhold dividend payments and reinvest those funds instead.

In reponse to Chubut, which produces about 30 percent of Argentina’s crude oil, YPF argued it had met investment targets set by law for the fields of El Trebol-Escalante and Campamento Central-Bella Vista Este-Canadon Perdido, according to the industry source, who spoke on condition of anonymity.

YPF also said it was investing and producing more than most other energy firms in the province and that it was “striking” that it had only been called to task when the majority of fields in Chubut had seen a decline in production.

YPF is also facing similar pressure from other provinces.

Santa Cruz province, which extracts about 20 percent of Argentine oil has asked YPF to justify its lack of investment in more than 20 energy fields. The industry source said the province threatened on Monday to take away concessions to the Barranca Yankowsky, Cerro Piedras-Cerro Guadal Norte and Los Monos fields, giving the company 24 hours to respond.

These provinces make up just 0.7 percent of YPF’s national production, official data shows.

The source said YPF has asked Santa Cruz to provide details of its findings in these areas and for more time so that it can respond properly.

YPF said it invested $350 million in Chubut last year and $380 million in Santa Cruz, above levels in the two prior years.

The company has said its production fell last year due to protracted labor disputes in the Patagonia region, which cut output by 9.6 million barrels of oil equivalent. (Additional reporting by Guido Nejamkis; Writing by Hilary Burke; Editing by Edwina Gibbs)

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