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YPF Repsol: Spain warns Argentina of strong response

Category: Business

Published: 17th Apr 2012 12:07:43

The Spanish government has warned it will defend its interests as a row with Argentina over the nationalisation of oil company YPF intensifies.

The majority stake in YPF is owned by Spanish oil firm Repsol, whose shares fell by 8% in early trading in Madrid.

Promising a "clear and overwhelming" response, Spain summoned the Argentine ambassador to express its concern.

The nationalisation has alarmed foreign investors but is said to be popular among ordinary Argentines.

Repsol has vowed to demand compensation, saying it could seek international arbitration over its 57% stake in YPF.

"These acts will not remain unpunished," Repsol executive chairman Antonio Brufau told reporters.

The head of the European Commission, Jose Manuel Barroso, said he was "seriously disappointed" by Argentina's decision.

The EU expected "the Argentinian authorities to uphold international commitments and obligations", he said.

Argentina's ambassador to Madrid, Carlo Antonio Bettini, was due to visit the foreign ministry at midday (10:00 GMT), the ministry told the BBC News website.

Earlier, Spanish Foreign Minister Jose Manuel Garcia-Margallo said the "climate of friendship" between the two countries had been broken.

The Spanish Prime Minister, Mariano Rajoy, is travelling to Mexico and Colombia, where he is expected to seek support for Madrid's position.

His Industry Minister, Jose Manuel Soria, said Spain would take "all measures it considers appropriate" to defend the interests of Repsol and Spanish businesses abroad.

The nationalisation was announced to applause on Monday at a meeting between Argentine President Cristina Fernandez de Kirchner, her cabinet and provincial governors.

Reading out a statement at the meeting, an official said YPF had been "declared a public utility and subject to expropriation of 51% of its assets".

The government took over the management of YPF with immediate effect while the bill on expropriation was sent to the Argentine Congress.

Supporters of the nationalisation celebrated in Buenos Aires, waving placards that read "YPF - we're going for everything".

Graffiti appeared on a city centre wall that read "Repsol, get out of YPF".

Mrs Fernandez de Kirchner stunned investors in 2008 when she nationalised private pension funds and she has also renationalised the country's flagship airline, Aerolineas Argentinas.

Many Argentines blame free-market policies such as the privatisations of the 1990s for the economic crisis which resulted in a debt default in 2001-02.

Argentina wants to reduce its expensive energy imports from elsewhere, the BBC's Tom Burridge reports from Madrid.

Before rumours surfaced several weeks ago that Argentina might take YPF from Repsol, Spain and Argentina generally enjoyed good political ties, and important economic ones.

Spain does a significant amount of trade in the country, so there is likely to be an economic fallout to this dispute too, our correspondent says.

But President Fernandez de Kirchner has dismissed the threat of reprisals.

"This president isn't going to respond to any threats... because I represent the Argentine people," she said.

"I'm the head of state, not a thug."

According to AFP news agency, Repsol will seek compensation of at least $10bn (£6.3bn; 7.7bn euros).

YPF accounts for just over a quarter of Repsol's operating profit, 21% of its net profit and 33.7% of its investments, Mr Brufau said.

Repsol's executive chairman accused President Fernandez de Kirchner of resorting to nationalisation "as a way of hiding the economic and social crisis which Argentina is suffering".

Argentina's crisis, he argued, was rooted in "a mistaken energy policy".

He accused Argentina of running a campaign of "harassment" in recent weeks in order to push down the price of YPF shares and get a bargain price for the expropriation.

"It is not appropriate for a modern country, Argentina does not deserve this," he said.

Repsol's Argentine partner, the Eskenazi family's Grupo Petersen, has a 25.5% stake in YPF which will not be affected by the nationalisation.

However, Reuters notes that it is unclear how Petersen will be able to repay a $1.9bn loan provided by Repsol.

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BBC News, 2012. YPF Repsol: Spain warns Argentina of strong response [Online] (Updated 17th Apr 2012)
Available at: http://www.ukwirednews.com/news/1422794/YPF-Repsol-Spain-warns-Argentina-of-strong-response [Accessed 25th Jul 2014]

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