The Argentine government ended a period of administrative controlover recently nationalized oil firm YPF, accusing its formermajority shareholder, Spanish energy major Repsol, of using thecompany as a cash cow to fund its international expansion. Planning Minister Julio De Vido and Deputy Economy Minister AxelKicillof leveled the accusations Friday in presenting a reportprepared by government-appointed administrators on the situation atYPF. The government expropriated a 51 percent stake in the company fromRepsol on April 16 and that takeover was signed into law lastmonth. "YPF was a company in liquidation," Kicillof said. "It was a dairycow that they were going to milk it until it was dead," Kicillof,who has emerged as a key figure in President Cristina Fernandez'sadministration, said. |
"They didn't explore ... they let reserves fall, they letproduction fall and they made a lot of money," he said of Repsol'smanagement of Argentina's largest oil firm. He said the new administrators "saw confidential plans for thefuture that were going to cause even more damage ... what I'vecalled 'depletion' ..
with irrational use of resources." "We found all of that when we opened the company's confidentialfiles," Kicillof said, adding that Repsol's strategy consisted ofusing YPF's profits for its international expansion. "Repsol is internationalizing on the backs of YPF," he said,accusing the Spanish company of "cannibalizing" the Argentine firmand "pillaging our environment." "Repsol stopped exploring. I don't know what that company wasdoing. It wasn't an oil company.
It was something else. It was afinancial company (looking for) easy profits to transfer abroad,"the deputy economy minister said, adding that a 100-day andfive-year business plan for YPF will be announced soon. According to Kicillof, despite all the "destruction they sewed,"YPF remains a company with "enormous potential." Kicillof also referred to the massive Vaca Muerta non-conventionalhydrocarbon formation, which some analysts and industry executivessay was at the root of the expropriation. "We found a timetable of 142 meetings with international oilcompanies, 142 meetings to sell our resources or the entirecompany.
I believe the entire company," he said. Despite the criticism of Repsol for its contacts with other energycompanies, De Vido acknowledged that the Argentine government alsohas met with multinational firms in search of possible partnershipsto develop Vaca Muerta, located in west-central Argentina. He referred specifically to companies such as Houston-based ApacheCorporation and France's Total that are now producing shale oil inArgentina, squeezing it out of tight rock reservoirs through aprocess known as hydraulic fracturing, or "fracking." Repsol sent a letter to President Fernandez last month formallyproclaiming a dispute over Buenos Aires' nationalization of thecompany's YPF unit, the first step toward invoking internationalarbitration. The Spanish company, which says the nationalization violates abilateral treaty on protection of investments, has valued its stakein YPF at $10.5 billion, although Argentine state administratorshave strongly hinted the government will not pay that much.
The Spanish government also has blasted the expropriation move andretaliated by announcing plans to limit imports of Argentinebiodiesel. Madrid said it also will pursue "measures of a diplomatic nature"in various international forums in response to the takeover. The Argentine federal government is keeping just over half of thecontrolling 51 percent stake in YPF, with the remainder to bedivided among the country's oil-producing provinces. Argentina's Grupo Petersen had owned more than 25 percent in YPFbut a group of banks led by Credit Suisse will take over 19 percentof that stake and Repsol the other six percent after Petersendefaulted on a loan used to buy the stake. That will leave Repsol with a roughly 12 percent stake in YPF.
The remainder of the shares continue to be traded on the BuenosAires and New York stock exchanges. YPF shareholders will vote on a new board at an assembly scheduledfor Monday. EFE.
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