Argentinian President Cristina Fernández de Kirchner (Efe).
Ángel Collado 04/17/2012 (06:00 AM CET)
Argentina’s President Cristina Fernández announced yesterday that her government will renationalise the oil company YPF, majority-owned by the Spanish oil group Repsol. The news was received with outrage in political and economic spheres in Spain, as well as concern that other Spanish companies will follow.
The Argentinian government will seize 51 percent of YPF, the biggest oil group in the country, Fernández said.
The news came as a bombshell in Madrid and it showed that the diplomatic pressure by the Spanish government during the last weeks, both in direct contacts with Argentina and indirect contacts through the European Commission, had little, or no, effect.
The Spanish oil group Repsol currently holds 57 percent of the shares in YPF, an Argentinian oil group that was privatized in the 1990s when Repsol invested in the group. After the renationalisation, Repsol will be left with 6 percent of the shares.
In a press conference on Monday evening, the Spanish Foreign Minister José Manuel García Margallo said the government considers the decision a “hostile gesture”. He said that there will be consequences.
The government in Madrid, however, has its hands quite tied up, given that it must protect the interest of other Spanish companies in the region. It must also wait for the final documents dealing with the renationalisation, before it can act.
José Manuel Soria, the Spanish industry minister, said in a radio interview on Tuesday morning that the Spanish government will take a series of measures “in the diplomatic, commercial, energy and industrial areas.” He accused Argentina of an “arbitrary decision against Spain and Spaniards.”
The industry minister added that by this decision, Argentina broke a verbal agreement reached between the authorities of the two countries that included creating a group to discuss the differences regarding YPF.
He said neither Argentinian nor international law covers the decision to renationalise the oil company, and added that “this does not mean” that other Spanish companies in the Latin American country will not have to follow the same path.
“Once this door is open, it is difficult to close it,” he said. “Argentina is a less safe place to invest in for any company in the world.”
Spanish companies have invested heavily in Argentina in, for instance, telecommunications, metal and chemical industries, food industry and in the private financial sector, although investments have dropped during the last years because of a legal insecurity. There is fear that companies like Telefónica, a telecom giant, or BBVA and Santander banks will be next.
The executive chairman of Repsol, Antonio Brufau, called the Argentinian renationalisation “an illegitimate and unjustifiable act” in a press conference on Tuesday morning. He said the oil group will take the case to an international arbitration court and request a compensation equivalent to Repsol’s 57-percent stake in YPF, which he said adds up to USD 10.5bn.
Brufau said the oil group had fallen victim of a “campaign of harassment, coercion and leaks in order to make YPF shares fall to facilitate a renationalisation at a very low price,” and he added “these acts will not go unpunished.”
Respol also runs the risk that other countries in the region will follow the example of Argentina and nationalize the oil sectors. Rumors say that Bolivia, Venezuela and Peru are looking closely at developments in Argentina, and the Spanish oil giant, which operates in the three countries, have already experienced tensions with the authorities.
In Argentina, the decision by the president received strong support.
Repsol shares dropped by up to 9 percent during the day following the decision.
This article was based on reports by Arantxa Palacios, Carlos Hernanz, Álvaro Rigal, Agustín Marco, Alfredo Pascual, María Benito and Enrique Utrera. It was translated and edited by Stina Lunden.
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