Argentina's President Cristina Kirchner announced on Monday that she will ask Congress to expropriate 51% of leading energy company YPF, which is controlled by Spanish giant Repsol, sparking concerns in Spain and the European Union.
AFP - Argentina said Monday it would expropriate the country's biggest oil company, YPF, controlled by Spain's Repsol, taking a 51 percent stake to be shared by the state and oil-producing provinces.
The move, which had drawn expressions of concern from Spain and the EU, was announced to applause at a meeting between President Cristina Kirchner and her cabinet and Argentine governors.
Reading a statement at the meeting, an official said YPF-Repsol "is declared a public utility and subject to expropriation of 51 percent of its assets."
"Of the shares subject to expropriation, 51 percent will belong to the state and the remaining 49 percent will be distributed among the provinces" that produce oil, the declaration said.
Spain immediately said it would respond to the move.
"I am convinced the government will make the correct response to this situation," the secretary general of the ruling conservative Popular Party, Maria Dolores de Cospedal, told reporters.
The government will make "the most suitable response for the defense of nationals interests... a sufficient and complete response to defend the interests of Spanish companies in Argentina," she added.
Spain and the European Union last week warned that Argentina would damage relations with them if it went ahead and nationalized YPF.
"We will be accompanied, as we already are by our European partners... and also our partners elsewhere," Cospedal said, without elaborating.
YPF oil concessions had previously been revoked by 16 provinces, on grounds that the company was not meeting its investment obligations.
Kirchner has pressured oil companies operating in Argentina to increase production, after the country's bill for oil imports shot up 110 percent last year to $9.4 billion.
The president sent a bill to Congress, which was expected to approve the measure to take over YPF.
It would call for a special tribunal to establish the price to paid to the shareholders including Repsol.
"We are not going to have a nationalization. We are going to have a recovery" of the company, which had been state-controlled until 1999.
The president said the group would operate "as a corporation, with professional directors."
In New York, YPF shares were down 12 percent to $19.35 in afternoon trade after plunging more than 15 percent on the news.
Repsol bought Yacimientos Petroliferos Fiscales in 1999 for $15 billion dollars in what was the biggest operation of the privatization program of former Argentine president Carlos Menem.
On Sunday, Repsol chairman Antonio Brufau urged Argentina's government Sunday to sit down and talk about the issue.
"One has to talk, to talk, not impose or go around making remarks for politics' sake. Things have to be taken care of in the office, and by talking. People bridge their differences by talking," he told Radio Mitre.
He has been in Buenos Aires since last week trying to get negotiations started on the issue.
Date created : 2012-04-16