Chubut, Argentina—In mid-June, at the onset of winter in the Southern Hemisphere, a gang of burly, masked construction workers took over Cerro Dragón, an oil and gas field 15 times the size of Buenos Aires and Argentina’s most important source of hydrocarbons. Some 500 members of a union nicknamed the Dragons wrecked offices, spray-painted seditious messages on buildings, and barricaded access routes with torched cars in a scene Pan American Energy’s chief executive Oscar Prieto compared to battle-scarred Baghdad. The disarray forced Pan American—majority-owned by oil giant BP, with China’s CNOOC holding a 20 percent share—to halt production in the field for the first time in its more than 50 years of operations. The threat was calculated to irk a government already spending heavily on imported energy and that has demonstrated its willingness to take over companies.

“If we don’t come...

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