Argentina′s president signs off on oil company takeover | News | DW | 05.05.2012
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Argentina's president signs off on oil company takeover

Buenos Aires has signed off on the expropriation of Repsol, wresting control of Argentina's biggest energy player from the Spanish-owned oil company. President Fernandez has named an Argentinean to head the new YPF.

Argentinean President Cristina Fernandez on Friday signed into law the partial nationalization of the formerly majority Spanish-held oil firm YPF, calling the move a historic step for the South American nation's sovereignty.

The law, which won overwhelming bi-partisan support in Argentina's Congress, will expropriate 51 percent of the shares that the Spanish firm Repsol holds in YPF. Repsol will be left with a 7 percent share, while another 26 percent is held by the Argentinean company Eskenazi. The rest is to be bid on the stock exchanges in Buenos Aires and New York.

"We will have a YPF in line with the interests of the country and absolutely professional," Kirchner said during her during an event celebrating the signing of the law.

"In a complex world, in a world that's almost hostile, we are committed to keep working amid all these competing interests for the good of the world," she said.

Diplomatic row

The move sparked a diplomatic row with Spain and the European Union, which both threatened retaliatory measures. Madrid has restricted the importation of biodiesel from Argentina in response. Buenos Aires has not compensated Repsol for its shares.

Argentinahas the third largest shale reserves in the world - behind China and the US - most of which is controlled by multinationals like Repsol. The Spanish company had come under fire from Buenos Aires for allegedly worsening Argentina's energy crisis by not investing enough in the country's energy resources.

Repsol, however, blamed government policies such as public intervention and price controls for declining production, saying that it was not profitable to extract Argentina's vast oil and gas reserves more quickly.

'Expropriation'

Fernandez's government named 44-year-old Miguel Galuccio to head YPF in its new incarnation. Galuccio formerly worked for the Texas-based oil services giant Schlumberger as the head of the production management division in London.

Stephen Ellis, a senior equity analyst who follows Schlumberger for Morningstar, Inc., told the Associated Press that Galuccio's experience at the Texas company made him a choice to head YPF.

"I'm not condoning Argentina's nationalization of YPF, which is a bad thing, but Miguel is a reasonable choice for the role," Ellis said.

Although the Argentinean government now holds a majority stake in YPF, the company will remain in private hands. Fernandez emphasized that the move was an "expropriation" and not a nationalization, since the new YPF is being established as a private company free from oversight from the nation's auditor general.

slk/ai (AP, dpa)