MercoPress. South Atlantic News Agency

Argentina puts pressure on YPF: wants oil companies with long term investments

Vice president Boudou, the short term financial logics does not serve the purposes of the country

Vice President Amado Boudou brushed aside ‘Repsol-YPF nationalization rumours’ and said Argentina is interested in oil companies that make long term investments and don’t fall prey of short term financial profits.

Boudou comments follow on a growing debate in Argentina over oil companies and dwindling national production, forcing an increasing fuel imports’ bill and alleged price-fixing collusion. Last week, the Argentine government announced an end to oil and gas incentives.

“The problem here is not whether to nationalize or not, it’s more about whether the company insists with a short-term financial strategy or goes beyond and uses its full investment potential to increase its production.”

Likewise, the official remarked that what should be discussed is “if the company has a national commitment in terms that if its operations aim to oil production and everything such an enterprise implies, or on the contrary, if it works based on short-term financial logics”.

“YPF holds 60% of the Argentine market share, so it’s necessary they use 100% of their production capacity. We need the company to explore for more oil but also to focus on production.”

“This exclusively financial and short-term vision contrasts with our economic and social model. It’s very important that the company authorities (understand) this and have an attitude that corresponds to the circumstances,” Boudou said.

Boudou also remarked that “it is obvious that Argentina needs to satisfy its domestic fuel demands”, and remembered, “YPF production have been decreasing since 1999, while gas production have also experienced a decrease since 2003.”

Furthermore, the Vice President indicated that “considering the constant growth Argentina has been experiencing since 2003, it is not reasonable that having oil sources in our own soil, we have to be importing them”.

Asked specifically about the YPF possible nationalization rumours Boudou said “it’s an issue that has to be seen clearly. The problem is the denationalization of our hydrocarbons system... The provinces have lost a role and are, according to the Constitution, the owners of what’s under the ground. It’s important that they have a preponderant role because...they are the ones who receive the royalties,” Boudou said.

Last Saturday Planning Minister Julio de Vido accused YPF, in which Repsol has a 57.43% stake, of having made insufficient investments in exploration, extraction and refining and warned that the government will ensure compliance with the laws so that the oil firms can achieve full production of oil reserves.

Last Friday the Argentine government announced the cancellation of petroleum and gas production incentives worth some 2 billion pesos (459.7 million dollars) per year, which impacts not only YPF but also Pan American Energy, jointly owned by Argentine and Chinese interests, Brazilian oil giant Petrobras, US-based Exxon and China’s Sinopec, among others.

YPF, managed by Argentina’s Petersen Group, which owns 25.46% of the firm, posted net income of 4.5 billion pesos (1.03 billion dollars) in the first nine months of last year, 1.61% less than during the same period in 2010.

With assets of 52.86 billion pesos (12.15bn dollars) and net shareholders equity of 20.76 billion pesos (4.77bn dollars) as of September 30, YPF is the largest hydrocarbons producer in Argentina.

The Argentine government owns 0.02% of YPF shares but has the right to participate in the decisions of the company’s board of directors and to veto them since the privatization of the firm in 1999. The remaining 17.09 percent of YPF shares trade on the Buenos Aires and New York stock exchange