MercoPress. South Atlantic News Agency

“Public interest” draft bill taking over 50.01% of YPF in Argentine congress

Repsol and the Argentine group Petersen would have to give up shares

Argentine president Cristina Fernandez has sent a draft bill to her lawmakers in Congress that would allow the government to take a controlling stake in local oil and gas giant, YPF SA at the expense of its two largest shareholders, newspaper Clarin reported Thursday.

The legislation would declare 50.01% of YPF class D shares of “public interest” and subject to expropriation, with compensation to be determined by a special tribunal and the Energy Secretariat, Clarin said, citing the draft.

The newspaper said Argentina's Eskenazi family, which owns 25.5% of the company through its Grupo Petersen holding, would be forced to give up all 100 million of its class D shares.

Spain's Repsol YPF largest shareholder with a 57.4% stake--would have to cede 96.6 million shares, Clarin said.

President Cristina Fernandez faction of the ruling Peronist movement controls both houses of Congress.

A lower-house lawmaker said the bill hasn't been formally submitted to Congress yet.

The president was widely expected to announce her plans for YPF in a televised event Thursday night but made no mention of energy policy during her speech.

YPF has been the target of intense takeover speculation after Pagina 12, which is close to the government, said in late January the administration was looking at ways to return the company to the state fold.

Founded as a state-run company in 1922, YPF quickly became Argentina's largest oil and gas producer. It was privatized in the 1990s, and Repsol acquired about 98% of the firm in 1999.

Cristina Fernandez blames under-investment by private-sector energy companies for falling production of oil and gas that has turned Argentina into a net energy importer.

Critics of the Kirchner administration's energy policies point to onerous price caps and the absence of financial incentives as the main reasons why producers haven't invested more in exploration and production

At the behest of the administration, provincial governments in recent weeks have revoked a number of concessions held by energy companies, including Petrobras Argentina SA and Chile's state-owned Empresa Nacional del Petroleo SA.

But the majority of the concessions rescinded to date was held by YPF, and affect some of its largest oil and gas fields.