Argentina's Senate Approves Plan to Expropriate YPF

Argentina's Senate Approves Plan to Expropriate YPF

BUENOS AIRES - Argentina's Senate voted in the small hours of Thursday morning to approve President Cristina Kirchner's bill to expropriate YPF SA, the country's biggest oil and gas company.


Sixty-three senators voted for the bill, three against and four abstained, leaving no doubt about the popularity of the measure.

The legislation now moves to the Lower House of Congress, where it is expected to easily pass next week.

"We want YPF as a tool for developing the country," opposition Senator Ernesto Sanz said, justifying his vote for the bill while also criticizing the government for what he said were its failed energy policies.

Last week, Kirchner asked Congress to nationalize YPF by expropriating 51% of it from the company's majority shareholder, Spain's Repsol YPF SA's.

Kirchner accuses Repsol of underinvesting in exploration and production, which she said has forced the government to import billions of dollars of fuel every year. This, in turn, has turned Argentina into a net energy importer for the first time in 17 years, she said.

Over the past decade oil and gas production has plummeted amid soaring demand and insufficient investment.

But Repsol has rejected the government's claims and noted that YPF has invested far more than any other company in the industry, where production has fallen across the board at most companies. YPF invested about $3 billion in 2011 and was on track to invest even more this year. Repsol also noted that government officials, including the state's representative on YPF's board, had formally approved of the company's plans for years.

YPF's expropriation seems likely to lead to a long legal battle between Repsol and the government, which has scoffed at Repsol's claims that the company be compensated about $10 billion for its shares.

YPF was a state-run company until it was privatized in the 1990s.

Copyright (c) 2012 Dow Jones & Company, Inc.


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Philippe | Apr. 27, 2012
Many nations believe that democracies are really a latent philosophy. A little known fact about: Trinidad, Venezuela and Shell relates to the Argentinian situation. In the early 20th century Shell was the principal oil producer of Venezuela, by far. The political institutions in Venezuela were, as today, very instable. Shell wanted to protect its investor against a possible nationalization. Shell decided to produce crude oil in Venezuela, but did not want to invest in refineries. The little island of Trinidad was the perfect place to invest in refineries. The crude was produced in Venezuela but refine in the nearby independent state of Trinidad. When, ultimately Venezuela nationalized the oil production it could not refine it and had to deal with Shell to make quick turnaround gasoline to Venezuela. This lesson is still valid today; do not put all your eggs in the same basket. What private outfit would invest in Argentina? Few, and probably for public relation than real business.

Bob Willsie | Apr. 26, 2012
Ah yes, back to the 60s South American socialist/communist mentality of nationalize everything and that will solve all our problems. This will be followed by 10-20 years of decline, with rampant inflation of 50% to 100% or more per year being the final result. Throw in a few bloody coups, a realization of "Well, guess that didnt work.", then a dozen years or so of rebuilding an economic growth under free enterprise, and they will be almost back to where they are now. Then, rinse, lather repeat. Communism-- the Lie that sounds so good, but can never work...


Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
Counsel/Senior Counsel
Expertise: Legal
Location: Houston, TX
Senior Chemical Export Charterer - Houston, TX
Expertise: Logistics Management
Location: Houston, TX
Land Analyst - Powder River Basin
Expertise: Landman|Lease Analyst|Legal
Location: Denver, CO
search for more jobs

Brent Crude Oil : $52.57/BBL 1.34%
Light Crude Oil : $48.41/BBL 1.61%
Natural Gas : $2.93/MMBtu 0.34%
Updated in last 24 hours