The law on the expropriation of 51% of the shares of YPF, which is owned 57% by Spain’s Repsol, was approved Thursday. The Lawmakers passed the expropriation, claiming the nation is facing a severe energy crisis that threatens its economy
The nationalization of YPF, which was privatized in the ’90s, passed by a large majority – 207 votes in favor, 32 against and 6 abstentions – after two days of intense debate in the ‘lower house’. Severely challenged by Spain and the European Union, the initiative had already received a comfortable ‘green light’ from the Senate last week. In its most relevant article, the new law states “the public interest and subject to expropriation for 51% stake in Sociedad Anónima YPF” dispossessed of total shares, 51% will be controlled by the state, 49% by the oil producing provinces; Repsol will remain a minority shareholder.
In order to justify the expropriation, Buenos Aires has claimed, on the one hand, the need to achieve self-sufficiency in oil and gas sector and to support economic growth, accusing Repsol of having lowered production and failing to invest enough in Argentina.
Spain, the largest by far foreign investor in Argentina, has threatened retaliation, starting with the cancellation of bio-diesel fuel imports from Argentina, amounting to estimated losses valued at $ 800 million. The EU is considering the abolition of customs duty concessions granted previously to certain Argentine products for entry into the EU. Argentina is also likely to be sidelined in the negotiations for a trade agreement between EU and Mercosur, South American common market.
The share price of Repsol subject to expropriation will be determined by a court: the Spanish company has set at $ 10.5 billion, a sum that Buenos Aires refuses to pay.