Vol. 76/No. 18      May 7, 2012

Argentina’s president, Cristina Fernández de Kirchner, announced on national television April 16 that the government would seize a majority stake in Yacimientos Petroliferos Fiscales. YPF is a subsidiary of Spain’s largest oil company, Repsol.

Fernández argued that the nationalization was justified because of Repsol’s policy of “emptying out [YPF], not producing, not investing.” She called it “a recovery of sovereignty and control.” Argentina, which was previously energy self-sufficient, had to spend more than $9 billion on energy imports last year.

“This is a very big blow for Repsol,” said one former company executive to the Financial Times April 17. “The business model has been based on YPF being a cash cow, and reinvesting that into other areas. I think any compensation Repsol will get will be peanuts in comparison.”

YPF accounts for two-fifths of Repsol’s estimated reserves of crude oil and one-third of the company’s profits. Repsol called Buenos Aires’ move “gravely discriminatory and manifestly illegal” and threatened legal action.

The week before the announcement Madrid warned Buenos Aires that any meddling with YPF would be considered an attack against Spain and turn Buenos Aires into an international pariah. But not much has happened.

The European Parliament adopted a nonbinding resolution April 20 supporting Madrid, and calling on the EU’s executive arm, the European Commission, to suspend tariffs beneficial to Argentina’s exports to the EU.

The European Commission did cancel a meeting of the EU-Argentina joint committee set for April 19-20 in Buenos Aires.

EU officials have publicly condemned the nationalization, but José Ignacio Torreblanca of the European Council of Foreign Relations said to Reuters April 23 that the EU could give little more than moral support and that Spain’s “threat really has very little credibility. What measures can they take?”

Spanish banks and companies have invested significantly in Argentina and rely on their Latin American assets to offset dwindling revenues at home.

The Argentine government has not backed off. The decision has the approval of 62 percent of Argentines, according to a public opinion poll.

“What we want is for Argentina to return to … the path of dialogue,” Spanish Foreign Minister José Manuel García Margallo pleaded, as he went into a meeting with EU counterparts April 23.
 
 
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