On the 40th anniversary of…
Turkey’s recent referendum has come…
Back in 1999 the Spanish conglomerate Repsol SA completed a takeover of the Argentine energy firm YPF to form one of the largest petrochemical companies in the world. Repsol are now promising to use all legal means possible and necessary to win full compensation after Argentina seized YPF in order to run it as a state owned organisation.
Repsol chairman Antonio Brufau says that he will demand $10.5 billion after Argentine president Cristina Fernandez de Kirchner deliberately deceived investors, executives, and her own people when she expropriated the company and declared that all of her countries hydrocarbons were a sector of public interest and therefore to be nationalised.
Fernandez also said that she was taking YPF following Repsols insufficient investment in new oil production which has caused them to increase imports. Maybe she has a point there, but she is undoubtedly going to find it more difficult to attract investors now, following this hostile move against former partner Repsol.
Brufau has suggested that the president has not been truthful with her reasons, and he believes that “Vaca Muerta is behind this, without a doubt.”
Vaca Muerta is the largest shale field in South America, estimated to hold 23 billion barrels of oil equivalent, which was discovered by Repsol back in February. Since the announcement of the discovery the Argentine government has turned against the Spanish owned Repsol, whom they didn’t want to benefit from the huge find. Brufau also stated that he had read many articles in the local Argentine press stating that the find “has to belong to the state instead of being in private hands.”
Since the takeover Fernandez has replaced YPF CEO Sebastian Eskenazi with her Planning Minister Julio de Vido, and is currently pushing for a bill in Argentina’s Congress to take a 51 percent stake in the company, releasing the other 49 to the nation’s provinces.
The conflict has moved from being between Argentina and Repsol, to a national quarrel between Spain and Argentina. The Spanish Industry Minister Jose Manuel Soria has promised to retaliate, and although he will not give specific details just yet, he stated that “the consequences will be in the areas of diplomacy, trade, industry and energy.”
Brufau said that just before the seizure took place Repsol actually received several offers in the region of $15 billion and $18 billion for its stake in YPF. He now plans to use these documents as evidence of the value of the stake in court hearings.
The President of the European Commission, Jose Barroso, said, “I am seriously disappointed by yesterday’s announcement. We expect the Argentine authorities to uphold their international commitments and obligations, in particular those resulting from a bilateral agreement on investments with Spain.”
By. James Burgess of Oilprice.com
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…