BUENOS AIRES – Argentine President Cristina Fernandez announced yesterday she will ask Congress to expropriate 51 per cent of leading energy company YPF, drawing swift warnings from key trade partners and risking the country’s further economic isolation.
YPF, controlled by Spain’s Repsol, has been under intense pressure from Ms Fernandez’s centre-left government and its share price has plunged due to months of speculation about a state takeover.
Until recently, YPF had a relatively harmonious relationship with Ms Fernandez, whose increasingly interventionist and off-beat economic policies infuriate critics.However, a surging fuel import bill has pushed energy to the top of the government’s agenda as state finances worsen in Latin America’s third biggest economy.
Ms Fernandez said the government would ask Congress, which she controls, to approve a bill to expropriate 51 per cent of the energy company, as energy was a vital resource. “If this policy continues – draining fields dry, no exploration and practically no investment – the country will end up having no viable future, not because of a lack of resources but because of business policies,” she said.
Of the expropriated shares, the government would hold 51 per cent and the rest would be held by the country’s oil-producing provinces. It was not clear if the 51 per cent to be expropriated would come exclusively from Repsol, which owns 57 per cent of YPF.
The announcement drew warnings from Spain and the EU, which recently criticised Argentine import curbs. Energy analysts say the heavy-handed approach is unlikely to resolve the energy time-bomb despite the discovery of huge reserves of shale oil and gas in Patagonia. Massive investment will be required to bring the shale resources onstream, and the spiraling cost of fuel imports prompted Ms Fernandez to seek a swifter resolution to the country’s growing energy deficit.– (Reuters)