MercoPress. South Atlantic News Agency

With dwindling oil production Argentina floats idea of re-nationalizing YPF

Cristina Fernandez, subsoil belongs to the Argentines, oil corporations should take notice and re-invest

YPF SA shares fell the most in 20 months after newspaper Pagina/12 said Argentine officials discussed a takeover of the country’s biggest oil producer, following a controversy with the oil industry over alleged fuel-price fixing and lack of investment which doubled the country’s fuel imports bill to 9.4 billion dollars in 2011.

YPF’s American depositary receipts fell 12% to 35 dollars at mid trading in New York, after earlier dropping as much as 14%, the most since June 2009. Trading volume surged fivefold to 2.2 million from this year’s average. The stock has tumbled 18% in 12 months through Jan. 27, more than the New York Stock Exchange Composite Index’s 2.3% decline.

Argentine government officials, lawmakers and oil industry specialists discussed re-nationalizing the company that was bought by Spain’s Repsol YPF SA in 1999, Pagina/12 reported on Sunday.

So far the Argentine government has reported YPF, Shell, Petrobras, Esso and Argentina Oil as abusing “their dominant position” and likewise, according to Pagina 12, has also called on the provinces to re-surface the Federal organization of hydrocarbons’ producing provinces, Ofephi.

According to Ofephi in the last five years (2006/2011) YPF has lost production of over a million cubic meters (from 13.7 million to 12.4 million), and responsibility rests on oil companies because of their lack of investment in exploration and production in that period of time.

This has led the Cristina Fernandez administration to consider a change of strategy which would not be limited to ‘correctives’. This would come through changes in the “structural conditions” through the re-emergence of a government oil company in stage, reported Pagina 12.

Cristina Fernandez in her speech last week on resumption of office following medical leave warned oil corporations that the subsoil belongs to the Argentines. “It’s good they take notice of that and re-invest in the country”. It was then that the president accused oil companies for a doubling of fuel imports to 9.4 billion dollars in 2011 from a year earlier.

Meanwhile the government has ordered refining firms to sell diesel for use in public transport at the same price they charge drivers at the pump, the National Commission for the Defence of Competition, or CNDC, said.

The Domestic Commerce Secretariat issued the resolution, after the government last week accused five companies of abusing their dominant position in the wholesale diesel market to fix prices.

The companies were warned to stop charging higher prices “in the diesel market for public passenger bus transport” than what they charge at service stations, the competition agency said.

“The measure was adopted to protect the economic interests of the population at large and particularly those who depend to a greater extent on public transport.”

The government accused the companies of some 808.3 million dollars in annual overcharging affecting both public bus service, which is government-subsidized, and cargo transport.

Repsol local YPF unit, which has slammed the accusations as “unjustified,” controls 65% of Argentina’s diesel market, followed by Shell Argentina with 20% and Exxon unit Esso with 9%, while Petrobras and Oil Combustibles have the remaining share, according to government figures.

Cristina Fernandez said she would use all legally permitted tools at her disposal to defend the interests of the Argentine people.