Argentine President Cristina Fernandez has unveiled draft legislation to take over 51 percent of the oil concern YPF, despite objections from Spain. Spanish utility Repsol currently has a majority holding in YPF.
Argentina on Monday confirmed its intention to expropriate 51 percent of the largest Argentine-based oil company, Yacimientos Petroliferos Fiscales (YPF), in which Spain's Repsol currently has a 57 percent holding.
An expropriation declaration read in Buenos Aires drew applause at a meeting between President Cristina Kirchner, her cabinet and governors of oil-producing provinces. These regions, which recently retracted oil leases from YPF, stand to gain stakes in a revised YPF.
Fernandez said her government would ask Congress to approve the bill. It would restore sovereignty over Argentine hydrocarbon resources and make fuel supply a national priority. She accused YPF's present owners of "draining" oil fields dry and failing to invest in exploration to ensure future energy supplies.
"We are going to have a recovery of the company," Fernandez said, denying that YPF was being nationalized. "I am a head of state and not a hoodlum."
Spain's Repsol bought YPF in 1999 for $15 billion (11 billion euros) under a privatization drive by then Argentine President Carlos Menem.
Under the bill, a special tribunal would establish the share price to be paid to shareholders, including Repsol.
On Monday, YPF shares slumped to between 12 and 15 percent on the New York Stock Exchange to around $19 a share.
Spain vows to resist
The Spanish government on Monday said Spain would defend national interests.
"We will be accompanied, as we already are, by our European partners," said the secretary general of Spain's ruling conservative Popular Party, Maria Dolores de Cospedal.
The European Commission warned that an Argentine state takeover would send a very negative signal to investors.
Visiting Buenos Aires over the weekend, Repsol chairman Antonio Brufau urged the government to talk the issue through.
"One has to talk, to talk, not impose or go around making remarks for politics' sake," Brufau said.
YPF is Argentina's biggest company, and Spain is Argentina's largest foreign investor. YPF crude oil prospects within Argentina are said to represent 42 percent of Repsol's total estimated reserves.
Argentina has reserves of shale oil and gas in Patagonia, but energy analysts say it will require huge investments to bring these on-line.
ipj/ncy (AP, AFP, Reuters)