Argentina plans to nationalize spanish-owned oil company
by The Canadian Press
Dangerous ploy could make country "international pariah" warn Spanish politicians
BUENOS AIRES, Argentina—Argentine President Cristina Fernandez has proposed a bill to nationalize the YPF oil company that is controlled by Spain’s Repsol.
Fernandez’ says her motive is recovering Argentina’s sovereignty over its hydrocarbon resources. She said the shares being expropriated will be split between the national and provincial governments.
Argentina spent more than $3 billion in 2011 to important gas and petroleum. This year’s gas and liquid natural gas imports are expected to be more than $10 billion, all while the country faces an energy crisis.
The YPF subsidiary represents 42 per cent of Repsol’s total reserves, estimated at 2.1 billion barrels of crude.
YPF is Argentina’s biggest company, and Spain is Argentina’s largest foreign investor, with the U.S. in second place.
Governors of oil-producing Argentine provinces have withdrawn about 15 oil leases—representing 18 per cent of YPF’s crude production—alleging the company failed to develop them. YPF has countered that it has invested millions in those areas and plans to increase production, but Argentine officials have said that still falls short.
How Argentina may try to displace Repsol, which owns 57 per cent of YPF, has been the subject of wide speculation. Even with its sinking share prices, YPF is valued at $13.6 billion—buying half of that would deplete Argentina’s treasury considerably and threaten populist subsidies that have kept the country’s economy afloat.