Repsol’s only purpose was “to milk dry” YPF of resources and reserves
Argentine President Cristina Fernandez made the historic decision to nationalize oil and gas company YPF at “the right moment” because Repsol was “milking dry” YPF resources and reserves, said Planning Minister Julio De Vido and Deputy Economy minister Axel Kicillof at a press conference at the Economy ministry in Buenos Aires.
Argentina’s largest oil and gas company YPF was seized from Spain’s Repsol over a month and a half ago, and the two ministers presented a long report on the state of the company and the reasons which triggered the appropriation of a majority 51% stake in the company.
Repsol’s only interest was making money, plummeted oil and gas production to a minimum, emptied hydrocarbons reserves, indebted the company, used YPF to expand worldwide and finally when it could not convince the Argentine government to increase fuel prices it put the company on sale, pointed out in a quick overview Kicillof.
Nevertheless “YPF has a great potential” and since it was taken over “oil production is up 4.2% and gas 10.2%” said Minister De Vido who promised fuels will be priced according to “Argentine costs, not international costs”, and anticipate no shortage of gas for cooking and heating this winter.
“The purpose of Repsol was to milk dry YPF, and make money at any cost since they left a total mess of the company with record low production and record low reserves” said Kicillof holding a 91 page report with pictures and graphs on the “destruction of YPF”.
Kicillof added that the Vaca Muerta shale deposits (considered among the largest in the world) have always been there but the problem is that production costs are very high and demands advanced technology. “Repsol people held 143 meetings with different international oil companies to sell them the deposits and why not the whole company” claimed Kicillof.
Kicillof accused Repsol Spanish oil giant of an irrational use of the resources and of “expanding internationally” while not investing in Argentina. “It looked like YPF was a deficient company, producing less and less with fewer resources when the reality was, as the figures show, profits were sky rocking”.
De Vido exposed the lack of investment by Repsol highlighting Argentina’s energy capacity and described YPF seizure as “a leap towards economy consistency”.
Further on De Vido blasted Repsol CEO Antonio Brufau for disclosing his hopes for a “new Argentine government” in order to further discuss a compensation for Spanish petrol giant, following the expropriation of YPF.
“Besides all the looting, it seems to me it is very disrespectful,” De Vido said.
Brufau told reporters last Tuesday that he was “confident that a new Argentine government would negotiate,” adding that his “prediction is that within three to four years we will be able to find a solution to this issue.”
Summing up the report and conference helped to show Argentina’s strategy regarding Repsol’s claims.
First of all the two ministers repeatedly said the company was not Spanish since it traded in the stock exchange, thus eliminating the bilateral country to country dispute. Secondly. according to confidential data and documents recovered when the seizure there is ‘sufficient evidence’ to prove Repsol “was never interested in developing YPF”, but rather to use it as a jumping board for international expansion. With this in mind management concentrated in making the most profit at the expense of local development of YPF in Argentina.
Finally Repsol-YPF was “exceedingly profitable” having obtained over 13 billion dollars in dividends since the original operation back in 1998, which is approximately the price paid by the Spanish company for YPF, according to Kicillof.
“It is evident they were on their way out, they were highly indebted, they borrowed short term money to pay dividends, but fortunately this won’t be a problem for this administration given the experience it has in re-structuring debts”, said the Argentine official who also blasted the Brufau management of YPF for its “systematic disregard for the environment”.
Kicillof said the so-called “Enrique Mosconi” report which will be available on the web.