MercoPress. South Atlantic News Agency

YPF feeling the noose from Argentina; Madrid doing its best to defend Spanish interest

Minister García-Margallo: “Spain doing what must be done”

Foreign Affairs minister Jose Manuel García-Margallo assured that the Spanish government “is doing what must be done” to defend the interests of Spanish companies in Argentina, but has avoided releasing details.

“The government is aware every day of Spanish companies’ interests in Argentina, and in any other part of the world, and is concerned with the defence of the interests of Spanish companies, but discretion with negotiations must be maintained”, said García-Margallo.

During a press conference the minister thus replied to reports in the Madrid media saying the Spanish Executive feared the outcome of the situation with Repsol-YPF in Argentina, because of an alleged ‘change in government policy’.

“I can assure you that the concern of the Spanish government is 24 hours seven days a week in defence of Spanish interests” added the minister, however “keeping discretion about what is happening”.

“But I can guarantee that the government is doing what must be done”, he underlined.

Lately the Argentine government has increased pressure on YPF, Argentina’s largest oil company controlled by Repsol. The last attempt was to have government officials sit at the board of directors.

The incident which occurred last week is a further escalation of the conflict between the Argentine government and YPF, 57.43% of which belongs to Repsol but operations are under management of the Argentine Petersen group which holds a 25.46% stake.

Argentine authorities blame Repsol-YPF (and the rest of oil companies) for fuel supply problems in the domestic market, fall in hydrocarbons production and lack of investments, in spite the fact YPF doubled its investments in exploration and refining in Argentina last year.

President Cristina Fernandez is furious, and has made it public, that the import fuel bill in Argentina last year soared to 11 billion dollars.

Since the beginning of the year Repsol-YPF and the other oil companies have been exposed to fines and sanctions threats, which have reflected in the company’s share prices plummeting 5%.

There are also insistent rumours of a possible re-nationalization of YPF since the Argentine state holds (since 1999) the golden share equivalent to 0.02% of stock, with the right to participate in the decisions of the ruling board and veto power.

However the Argentine government says it is not threatening YPF, but rather demanding that the corporation abides by laws in defence of the interests of Argentina.

“Argentina is interested in oil companies that make long term investments and don’t fall prey of short term financial profits”, said at the time Vice-President Amado Boudou in recent statements.

“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, Boudou 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”.