Repsol accuses Argentina of an ‘illegal’ act and demands compensation
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Spanish oil giant Repsol said it would fight for at least 8 billion euros in compensation from Argentina on Tuesday after President Cristina Kirchner announced plans to seize Respsol-controlled YPF, the country’s biggest oil company.
AFP - Spanish oil giant Repsol vowed Tuesday to fight for at least $10 billion (8.0 billion euros) in compensation for Argentina’s decision to expropriate its subsidiary YPF.
Argentinian President Cristina Kirchner’s decision to nationalise the firm infuriated Repsol and the Spanish government, and provoked deep concern in the European Union.
“These acts will not remain unpunished,” said Repsol executive chairman Antonio Brufau, whose company’s shares plummeted more than seven percent on the Madrid stock market.
Brufau said the group would seek international arbitration over Argentina’s decision to take over 51 percent of YPF, in which Repsol has a 57.4-percent stake.
Repsol would seek an amount at least equal to the value of its stake in YPF, which the firm estimates at $10.5 billion, the Repsol chief told a news conference.
“Repsol will launch all legal actions that are within its reach,” Brufau promised, saying he had a wide range of options including constitutional, commercial and civil actions.
Repsol’s share price plunged 7.18 percent to 16.23 euros by mid-afternoon in reaction to Buenos Aires’ intervention.
Spain’s government summoned Argentina’s ambassador, Carlos Bettini, for the second time in five days to ask why Buenos Aires had ignored warnings against intervening in the Repsol subsidiary.
European Commission president Jose Manuel Barroso said he was “seriously disappointed” by the decision. An EU official said the Spain-Argentina investment treaty provides for compensation in such cases.
Repsol denied Argentine accusations that it had failed to invest enough in YPF, saying that it had poured $20 billion into YPF in addition to $15 billion it paid to buy the subsidiary in 1999.
“The investments have always been much higher than the results,” Brufau said. The Repsol boss accused Kirchner of taking the decision “as a way of hiding the economic and social crisis which Argentina is suffering.”
He blamed that crisis in part on “a mistaken energy policy”.
Argentina had run a campaign of “harrassment” over past weeks so as to make the YPF share price fall and ease the expropriation at a bargain price, Brufau charged.
“It is not appropriate for a modern country, Argentina does not deserve this,” he said of the takeover, which Repsol has described as “manifestly illegal and gravely discriminatory”.
Brufau said YPF accounted for 25.6 percent of the group’s operating profit, 21 percent of its net profit and 33.7 percent of its investments, adding that: “These are big figures but we can withstand them.”
Spain’s government denounced the decision as “hostile” and warned of a forceful response.
Argentina had “broken the climate of friendship” between the two countries, Foreign Minister Jose Manuel Garcia Margallo told a news conference after a crisis meeting called Monday by Prime Minister Mariano Rajoy.
Rajoy is expected to rally support for Spain as he attends an economic forum on Latin America in Mexico.
Front page headlines in Spain lambasted the Argentine takeover, many of them splashing a photograph of Kirchner announcing her decision with a picture of Evita Peron, the populist first lady of Argentina in the 1940s and 50s, in the background.
“Pillaging,” headlined an editorial by the leading daily El Pais.
“The expropriation of 51 percent of YPF opens a conflict that will have grave consequences for Argentina,” it said.
“It is not hard to predict that a YPF run by the group that governs Argentina will lose any possibility of making profits,” the paper said, arguing that it would end up squandering the country’s natural resources.