MercoPress. South Atlantic News Agency

YPF shares plummet on growing investors’ fear of Argentine government takeover

The company’s market value has fallen 25% so far this year

Shares in Argentina's biggest energy company, YPF plummeted on Tuesday because of growing investor fear over a possible government plan to seize control of the oil firm.

YPF, controlled by Spanish oil major Repsol, has seen its market value fall by about 25% so far this year and its stock was down 16% in trade in Buenos Aires, its lowest level since July 2009.

The company's U.S.-listed shares fell 15.5% to a three-year low on Monday, a holiday in Argentina, battered by weekend media reports that said President Cristina Fernandez had made up her mind on the need for state control.

Pagina 12 newspaper, which is seen as reflecting government thinking, said internal debate was now focused on how to go about that.

It gave the possible options as expropriation or state intervention including the purchase of company shares, saying officials were determined to reverse falling energy output in order to reduce fuel imports that more than doubled to ten billion dollars last year.

Protecting the trade surplus is a priority for Cristina Fernandez government that nationalized private pension funds and the nation's flagship airline in 2008, because her government uses foreign currency reserves to pay its debts.

Investor jitters over a possible intervention or takeover of YPF have pressured other Argentine assets in recent days.

Meanwhile the spread between the yield on benchmark Argentine bonds and comparable US Treasuries widened 10 basis points to 912 basis points, according to the JPMorgan Emerging Markets Bond Index, underperforming the index.

Further pressure on YPF's stock came from weekend comments by the governor of Argentina's top crude-producing province, Chubut, who said he was advancing with plans to revoke YPF concession on the key Manantiales Behr field on the grounds of insufficient investment.

Six provinces, including Chubut, have already stripped operating licenses from YPF, but most have been marginal in terms of overall output.

Manantiales Behr accounts for about 10% of the company's total national oil output and any effort to rescind the operating license would likely spark further legal action by YPF, which has accused Chubut of singling it out unfairly.