President Cristina Fernandez sent her plan to take control of oil firm YPF… (Natacha Pisarenko / Associated…)
Bogota, Colombia, and Buenos Aires — In a televised address to the nation from the presidential palace in Buenos Aires, President Cristina Fernandez said she would ask Argentina's Congress to approve a law to nationalize a 51% controlling interest of oil company YPF, justifying it by declaring oil production as in the national interest.
What was not clear Monday was how much the government would pay to acquire the controlling interest and how soon. Shares of the company have fallen sharply since rumors of a nationalization began circulating several months ago, cutting the value of majority owner Repsol’s investment by more than half.
Fernandez framed the takeover as a move necessitated by the failure of Spain's Repsol and other oil companies to invest adequately in oil and gas production, producing a doubling of imports last year. But industry analysts blame government price controls and consumer subsidies that cut company profits and act as disincentives to invest.
“We are the only country in Latin America, and I might say the world, that doesn’t control its natural resources,” Fernandez said. “In 2011, for the first time in 17 years, the nation had to import gas and oil, with a deficit of $3.029 billion,” she said referring to the difference between what the country collected in energy exports and paid out for imports.
Fernandez also declared an emergency "intervention" in YPF management which over the next 30 days will give her government provisional control of the company until a law is passed and a majority of shares in the company are purchased. The action was necessary to "preserve assets and patrimony" and to ensure fuel supplies.
The Spanish government, meanwhile, reacted harshly to the planned takeover and hinted that it would soon take retaliatory measures. Industry minister Jose Manuel Soria said Monday that the plan is viewed not just as a hostile act against Repsol but "against Spain and the Spanish government as well."
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