MercoPress. South Atlantic News Agency

Spanish King rings Cristina Fernandez to cool YPF taking over campaign

Juan Carlos and Cristina, smiles for the family souvenir

Spain’s Foreign Secretary Manuel Garcia Margallo admitted there is great concern in Madrid over the situation of Repsol-YPF in Argentina, which is questioning the oil corporation for not having invested sufficiently or paid sufficient taxes, and revealed that King Juan Carlos has been on the phone with President Cristina Fernandez.

Although Garcia Margallo did not name Argentina specifically he said that “not one moment goes by with this government not concerned over Repsol-YPF”, adding that Spain prefers negotiations but if not, the two countries have treaties which allow the litigation to be taken to court.

“Don Juan Carlos (Spanish King) last week held a phone conference on the issue with President Cristina Fernandez, which was the follow up on a previous one”, said Garcia Margallo.

Besides the King’s phone calls the Spanish government last week sent its Industry Minister Jose Manuel Soria who held talks with his Federal Planning and Economy peers, Julio De Vido and Hernan Lorenzino. Repsol-YPF CEO Antonio Brufau also attended some of the meetings.

“If it weren’t for the King we would be going through very difficult moments in certain countries, of which I do not want to remember, as in the Quixote, and in which the King is also helping us to put the fire off”, admitted the Spanish minister.

Following the phone calls with the Spanish King and the ministerial visit, President Cristina Fernandez in her March first address to Congress abstained from any initiatives on YPF, as had been expected, and which could have included a process of re-nationalization of the corporation.

Garcia Margallo recalled that Spain and Argentina have subscribed an accord to protect investments which enables taking the case to international courts such as the International Centre for Settlement of Investment Disputes, a World Bank branch.

However, “we have this accord but I prefer any time a friendly understanding than going to court” adding that Spain is concerned with the lack of legal security mainly in Venezuela but also in Argentina.

Oil industry sources said that Repsol-YPF and other companies are under constant threats from the Argentine government to the point of “emulating the recovery of YPF for Argentina with the Malvinas campaign”, constantly pounded in the official media,

The Argentine government is blaming the oil corporations for the soaring fuel imports’ bill which last year was almost ten billion dollars and for not investing sufficiently in the long term to make up hydrocarbons reserves. “They are more interested in the financial short term than in ensuring self sufficiency for Argentina”.

The government is also encouraging the oil producing provinces, which have suffered dwindling funds from royalties because of less production, to demand the oil companies for not having honoured contracts, missed tax payments, thus opening the way for a possible takeover. Unless the companies present convincing long term investment plans.

But in spite of the good words from the King and the Foreign Affairs Secretary “the climate is quite sombre and nobody wants a serious conflict with Cristina Fernandez”, according to oil industry sources.