MercoPress. South Atlantic News Agency
YPF dispute in calmer waters: Argentina yields and Repsol CEO calls for dialogue
CEO Brufau: “We must talk, talk, and talk, instead of imposing things.” The CEO from Spain’s main oil corporation Repsol, Antonio Brufau said that there should be no speeches or attempts to impose, but rather more dialogue, in direct reference to the ongoing conflict with the Argentine government over the possible takeover of the YPF branch.
“There should be no speeches or attempts to impose, but try to establish more dialogue” to resolve the conflict that is threatening to re-nationalize YPF of which Repsol holds almost a 60% stake indicated CEO Brufau in a round of interviews with Buenos Aires radios.
CEO Brufau talked extensively about the dispute but at no moment chose to reveal Repsol's strategy to prevent the advance of the Cristina Fernandez administration, saying only that the situation will not be resolved by imposition and called for more dialogue.
“The conflict resolution has to be achieved in offices, in private, and not through public speeches. We are trying to make things the right way”, Brufau remarked and added; “We are trying to talk to whoever we have to talk within the Argentine government”.
Likewise, he insisted “We must talk, talk, and talk, instead of imposing things.”
Brufau arrived in Buenos Aires last weekend with expectations of having a meeting with President Cristina Fernandez, but apparently he only managed to reach Federal Planning minister Julio De Vido.
Spain’s Repsol could lose its majority stake in YPF if the Argentine government decides to move forward on the expropriation or nationalization of the company, alleging a sharp decline of investment, hence oil and gas production, in the last decade according to the administration of Cristina Fernandez.
Meantime the Buenos Aires daily La Nacion published on Sunday that the Argentine government has decided to postpone the planned state takeover of YPF.
“The government will wait for the return of the president and will begin a round of negotiations with all parties involved” said La Nacion which did not reveal sources. The strong international reaction to the “public interest” draft bill sent last week to Congress which would open the way for the nationalization of YPF left the Argentine government “disconcerted”.
Last Thursday the Argentine president had been expected to announce the compulsive takeover of a majority control of YPF, 50.01%, based on the draft bill sent earlier in the day to Congress.
Apparently the Argentine government is divided on the issue with a group pushing for the takeover while the moderates feel the international and legal consequences of such a move are far too risky.
According to La Nacion the target would be now to have control over a 30% of YPF, but based on negotiations and a consensus with Repsol and other main shareholders. Before the dispute erupted three months ago YPF had an estimated value of 18 billion dollars but since, because of the uncertainties generated has dropped to 10 billion.
“The Argentine government could offer 6 billion dollars and begin negotiations on the percentage stake and a time table for its completion”, reports La Nacion, but quoting government sources points out that this does not ensure the main goal of the current situation which is increasing investments and production, “something which will only be palpable in four to five years”.
What is certain is that the Thursday announcement was suspended given the strong warnings from Spain, the unequivocal support for Madrid from the European Union and indirectly from the US.
Spain used such words as “aggression”, “economic and fraternal rupture”, boycott to Argentine “soybeans and beef”, and “breaking the rules has its consequences”.
However on Saturday Spain through its Minister of Industry, Jose Manuel Soria sounded more conciliatory arguing that he was optimistic since “things seem to be returning to course”.
Besides the recent suspension by some Argentine provinces of YPF concessions also punished Chile’s oil corporation Enap which is an associate of YPF in some fields and furthermore one of the shareholders of Repsol is the powerful Pemex, Mexico’s oil and gas state monopoly.
YPF extracts 54% of Argentina’s oil and 43.8% of natural gas production.
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Read all commentsA lesson for the Argentinian government - this is what happens when you get delusions of grandeur and think you can do whatever you want without consequences *chuckle*. I wonder how many more humiliating retreats there'll be this year.
Apr 15th, 2012 - 11:48 pm 0While I do not agree with nationalisations and expropriations dictated unilaterally by populist governments, at the same time I have to say that the guys from Repsol had it coming, just as they have it coming in Mexico in anywhere else where they go around trying to squeeze profits with marginal, minimum investments.
Apr 16th, 2012 - 09:56 am 0People resent it when they see a foreign company coming and taking everything without investing and creating more and better jobs. The spanish do not invest, they try to get the best deal for themselves and try to do business on top of other countries and peoples. They get what they pay for.
@3 Yes, that is business. Making profits for shareholders is their main concern. Like it or not, the Argentine government knew this when they decided to sell their oil rights to private companies. If it goes against their political ideals then they should have considered that and not suspended their morals when eagerly taking the money they obtained selling the rights.
Apr 16th, 2012 - 10:08 am 0The Argentine governemnt is incapable of looking long-term or thinking through the consequences of their actions and decision making. This comes from having a mentally incapable, tyrannical leader with an uncontrollable temper. (She admitted this herself) Everyone agrees to her slightest whim because they don't want to anger her. They lie to her for fear of another outburst. And the Argentine people suffer thhe consequences.
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