With the support of the majority of Argentines and despite threats of retaliation by the European Union, the Senate passed the bill for the expropriation of the company ‘YPF’, controlled by Spain’s ‘Repsol’.
The nationalization of Argentina’s main oil company, privatized in the 90s, was approved by 63 members of the ‘upper house’, and only three against and four abstentions. The government of President Cristina Fernandez hopes to get the final go-ahead next week at the House of Rrepresentatives.
The bill states that “public utility and subject to expropriation,” a 51% stake in ‘YPF’, which ‘Repsol’ currently holds 57.43%, Argentina’s ‘Grupo Petersen’ on 25.46%, State 0.02%, the rest is distributed among private investors. According to the text, 51% of the shares are subject to expropriation, the state will get 51% and the oil-producing provinces 49%, ‘Repsol’ will retain 6.43%.
To justify the expropriation, the government has claimed the need to achieve self-sufficiency in oil and gas sector to maintain economic growth, also accusing ‘Repsol’ of failing to invest enough in Argentina and have lowered production costs, forcing the country to spend millions on fuel imports.
According to a survey published by the ‘Instituto Poliarquía published in ‘La Nacion’ – typically critical of the Executive – 62% of Argentines are in favor of the expropriation of YPF.
In the meantime, expect tough decisions from overseas against Buenos Aires, at least on the basis of threats from the last few days in Madrid and Brussels. The EU is considering waiving customs duty concessions granted to certain Argentine products – due in 2014 – but for now Spain has suspended the import of bio-diesel produced in Argentina with an estimated loss of 800 million dollars for the South American country.