MADRID — The Spanish government warned on Friday that it would take unspecified retaliatory measures against Argentina if it proceeded with plans to take back control of YPF, the large oil and gas producer, from Repsol, its Spanish parent.
The warning came as José Manuel Garcia-Margallo, the Spanish foreign minister, also announced that Spain had called on the European Commission, the United States Treasury and other governments in Latin America to support Spain in its efforts to prevent the nationalization of YPF.
Meanwhile, Iñigo Mendez de Vigo, the Spanish secretary of state for European affairs, warned in a radio interview that Argentina could become “an international pariah” if such a nationalization went ahead.
The dispute with Argentina could not have come at a worse time for Repsol and the government in Madrid, which is already struggling with Spain’s second recession in three years, as well as facing soaring borrowing costs amid concerns among investors about whether Spain will be the next euro economy to require a bailout.
For Repsol, meanwhile, YPF has come to account for a third of its profits and 42 percent of its estimated reserves of crude oil.
Repsol took control of YPF in 1999 and owns 57 percent of its equity.
The YPF takeover was one of several forays by Spain’s largest banks and industrial companies into Latin America. These investments have recently helped soften the blow of crumbling earnings at home.
Most YPF shares are traded in New York, where they dropped 5 percent in early trading, continuing a 35 percent slide since Argentine leaders began pressuring the company in January.
Governors of oil-producing Argentine provinces have withdrawn about 15 oil leases, representing 18 percent of YPF's crude production, alleging the company failed to keep its promises to develop them. YPF countered that it had invested millions in those areas and plans to increase production, but Argentine officials have said that still falls short.
How Argentina may try to displace Repsol, which owns 57 percent of YPF, has been the subject of wide speculation since the government's pressure campaign began in February. Even with its share prices depressed, YPF is valued at $13.6 billion, and buying half of that would deplete Argentina's treasury of funds it needs to maintain the populist subsidies that have kept the country's economy humming.
Expectations rose sharply this week when Jorge Sapag, governor of oil-producing Neuquen province, told reporters that "what's coming is a mixed (public-private) company" whose board would include representatives from Argentina's provinces.
A proposed law then circulated among Argentine lawmakers Thursday, declaring 50.01 percent of YPF shares "a public good" subject to government expropriation. The proposal wasn't formally submitted to Congress, nor was there any announcement from President Cristina Fernandez following her meeting with a governors group.
Fernandez was flying Friday afternoon to a regional summit in Colombia, leaving nearly everyone involved in suspense about Argentina's next move.
Her only public comments came in an unrelated address to the nation Thursday night, when without mentioning Repsol-YPF by name, she said she was "ready to pay all the prices that must be paid" to keep Argentina growing.
No comments:
Post a Comment