MercoPress. South Atlantic News Agency

Argentina fines YPF for un-paid tax bill further straining relation with the industry

Tough times ahead for the oil and gas industry in Argentina

Argentina’s largest energy company YPF, dropped the most in the Buenos Aires Stock Exchange’s leading share index on Wednesday after the federal tax agency banned it from importing and exporting because of an unpaid tax bill.

YPF declined 4.4% to 153 pesos at 2:27 p.m. in Buenos Aires, the biggest decliner in the Merval index. The shares plunged 22% in the 12 months through this week.

YPF is prohibited from importing or exporting any goods until it pays 8 million dollars of overdue gas-export levies, an official from the tax agency known as Afip, confirmed from Buenos Aires today. State news agency Telam reported the sanctions earlier Wednesday.

The Argentine oil producer’s shares plunged 13% through this week since Jan. 29, when Pagina/12 newspaper reported that government officials discussed re-nationalizing the company that was bought by Repsol YPF SA (REP) in 1999. The paper didn’t say where it obtained the information.

Since the beginning of this year, President Cristina Fernandez has stepped up pressure on YPF to invest more in oil production, blaming it and other companies for a doubling of imports in 2011. The government on Feb. 3 withdrew a plan that provided financial incentives for investment for YPF, BP Plc, Petrobras SA and Exxon Mobil Corp., citing an increase in local crude prices.

YPF, which said last week that its 30.000 square kilometre Vaca Muerta formation in southern Argentina holds at least 23 billion barrels of oil equivalent, lost eight potential investors in South America’s shale deposits after the government’s measures made oil investment less attractive, a person familiar with the talks said Feb. 13.

Companies from the US, Canada and Europe abandoned negotiations after the government withdrew financial incentives for producers and forced companies to repatriate export revenue, the person said, declining to be identified because talks are private. Six of the producers cited unpredictable policies, this person said.

In recent weeks, several officials in President Cristina Fernandez’s administration have said the Argentine company must invest more domestically.

Last week, Repsol CEO Antonio Brufau held a “constructive and positive” meeting with Economy Minister Hernan Lorenzino and Planning Minister Julio de Vido in which he informed them of YPF’s investment plans, a source close to the gathering.

Brufau’s arrival in Argentina coincided with a government announcement concerning the slashing of incentives for oil and natural gas production by 460 million dollars.

For their part, the governors of 10 Argentine provinces pledged last week to pressure energy companies operating in their territories to boost production, saying greater output is needed to reduce imports. Governors did not rule out cancelling the companies’ concessions if they do not produce more.