Argentina Moves to Seize Control of Spanish Energy Company YPF
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Despite fierce criticism from Spain and EU officials, Argentina has announced plans to seize majority control of Spanish oil and gas company YPF. Last November, YPF announced a major 1 billion barrel shale oil find in Argentina.
Cheered by her ministers and regional governors, Argentina President Cristina Fernandez said a bill has already been sent to Congress that would allow for the nationalisation of 51 percent of YPF, which is now majority-owned by a Spanish energy company, Repsol YPF.
Despite fierce criticism from Spain and EU officials, Argentina has announced plans to seize majority control of Spanish oil and gas company YPF. Last November, YPF announced a major 1 billion barrel shale oil find in Argentina.
Cheered by her ministers and regional governors, Argentina President Cristina Fernandez said a bill has already been sent to Congress that would allow for the nationalisation of 51 percent of YPF, which is now majority-owned by a Spanish energy company, Repsol YPF.
Referring to energy as a “vital resource” for the Latin American nation, Fernandez added that of the seized shares, the government will hold 51 percent while the country’s oil-producing provinces will hold the reminding 49 percent.
In a statement, Repsol called the announcement “unlawful and gravely discriminatory”. Repsol is expected to see its entire 57.5 percent shareholding confiscated by the Argentine government.
A former Respol executive told the Financial Times:
[quote] This is a very big blow for Repsol. The business model has been based on YPF being a cash cow, and reinvesting that into other areas. I think any compensation Repsol will get will be peanuts in comparison. [/quote]
Related: Argentina Oil and Gas Industry
Speaking to journalists after a crisis cabinet meeting called by Spanish Prime Minister Mariano Rajoy, Spain’s industry minister Jose Manuel Soria said:
[quote] It’s a hostile decision against Repsol, thus against a Spanish business, and thus against Spain. The government is announcing that it will take all the measures it considers appropriate to defend the legitimate interests of Repsol and of all Spanish businesses abroad. [/quote]
Spain and EU officials had previously expressed concern over such a hostile state takeover of YPF, with Spain warning of the dire consequences for Argentina’s international image.
Yet, Fernandez refused to bow to international pressure, insisting that she was acting in national interest. She said:
[quote] I am a head of state, not a hoodlum. All companies present here, even if the shareholders are overseas, are Argentine companies. [/quote]
Authorities in Argentina are accusing YPF of not investing enough to increase output from its oilfields, and so lessen the need for imports, an accusation Repsol firmly rejects. In recent months, Argentina systematically withdrew operating licenses and land leases for the Spanish energy company.
Robert Plummer, business reporter with the BBC, noted that “YPF is not the first big firm to be nationalised by President Cristina Fernandez and it is unlikely to be the last.”
He added that Fernandez has continued the economic nationalism of her late husband and predecessor, Nestor Kirchner, bringing such companies under renewed state control. But since Argentina’s economic collapse of 2001-02, the country has gone back to its original corporatist vision, and many sectors of the economy that were liberalised in the 1990s by former President Carlos Menem are now back in government hands.
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