MercoPress. South Atlantic News Agency
Debts and environmental cleanup to subtracted from YPF compensation says Argentina
Argentina accused Spain's Repsol oil company on Tuesday of hiding the true value of its Argentine YPF unit and said a thorough review of its books after seizing control of its offices will affect the compensation paid to its shareholders. Read full article
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Disclaimer & comment rulesBring on the pariah state! Fantastic future for the Falklands arising!
Apr 18th, 2012 - 09:13 am - Link - Report abuse 0De Vido: “LIES LIES LIES LIES LIES LIES LIES LIES LIES LIES LIES”
Apr 18th, 2012 - 09:39 am - Link - Report abuse 0Axel 'tracksuit-boy' Kicillof: “LIES I GOT MY PHD FROM ONLINE AND PRINTED IT OFF AT HOME LIES”
Argentinian Public: *Thunderous Applause*
Can someone tell me how this is this not Venezuela V.2.0?
I read about this yesterday. Repsol will not get a peso. They will pursue it through the courts and will win but Argentina will not pay up; they never do. Though, to be fair, they actually can't pay up because they are brasic. And once they have asset stripped the company they will still be buying in oil and gas.
Apr 18th, 2012 - 09:56 am - Link - Report abuse 0So just in case the value decided on by INDEC (crooked enough to hide behind a spiral staircase in any case) is more than Argentina feels like paying, they can make up any amount for environmental cleanup that they want and deduct that as well?
Apr 18th, 2012 - 09:56 am - Link - Report abuse 0What's the odds that the amount deducted for cleanup will be:
i) large
ii) never be spent on actually cleaning anything up?
On the plus side, I'm sure that Repsol would be looking for somewhere sane to work with in the immediate area. Anyone got any suggestions?
I can see shares in De Vido Environmental Management Inc and Killicof Pollution Measurement Services going up from this.
Apr 18th, 2012 - 10:11 am - Link - Report abuse 0Watching the Argentinians follow the Chavez model is truly hilarious. They're never going to get a dime of foreign investment for generations and generations. Even the Brazilians will be viewing this furkshow in horror.
One for the Argentinean posters on here. I'm pretty neutral on this one but want to know what you think.
Apr 18th, 2012 - 10:37 am - Link - Report abuse 01. Nationalisation rarely sees any significant increase in production (I know that is did the 1930s with YPF but in the modern age this doesn't seem to be the case) and if there is any increase it won’t be enough to cover the energy deficit.
2. If there is no increase in production, Argentina will continue to import energy. This will cost considerable amounts.
3. To truly increase production billions (some figures talk of $200-$250 over the next 10 years) will have to be invested (mainly in shale oil). Argentina does not have this money and will not over the next 10 years.
4. The “godfathers” of nationalisation in Russia and other countries have given up on pure nationalisation as private companies are the only ones with the ability and expertise to extract on this kind of scale.
5. It is unlikely the foreign investment will be flooding in over the next few years given the nationalisation and general capital flight from the country and issues of legal risk.
So, my question is, what is the end game here? Will they seek investment further down the line (this would be quite a U-turn). Or will YPF stay nationalised and lack the money to make any real investments in the industry/infrastructure this increasing the energy deficit. What is the financial model behind this and has it been published?
This proves that CFK has finally gone completely off her meds. If she thinks the Chinese are going to rescue Argentina she is really wrong. this little stunt will send the Chinese money elsewhere. What for 100% inflation in the coming six months while they start printing money to pay YPF..
Apr 18th, 2012 - 11:00 am - Link - Report abuse 0Is it too late to say “I told you so....” ?
Apr 18th, 2012 - 11:04 am - Link - Report abuse 0I think it is but I'll say it anyway, I told you so!!!
Britain has nationalised some industries in the past but these were to support them otherwise they'd have died... Northern Rock/Network Rail. This is a very different proposition to YPF which seems to have been stolen from spain.
Apr 18th, 2012 - 11:19 am - Link - Report abuse 0Even in the UK, our water assets, electricity generation and other utilities are under foreign ownership (even the Severn Bridge betwixt England and Wales is french!) however international law and the the consideration of the knock on effect prevents the UK government (or others) from mugging foreign investors. If we all played Argentina's game, international trade would be at an end...well it soon will be for Argentina.
You couldnt make this up, this will be great for foreign Investment in RG land. Although all the trolls do keep telling us Argentina is booming and uk is finished. Maybe in years to come this model of economics witll be called 'Kircherreich policy'. At least now the Maldives are safe :)
Apr 18th, 2012 - 11:52 am - Link - Report abuse 0And the Falklands are safe too!
Apr 18th, 2012 - 12:06 pm - Link - Report abuse 0lf Argentina implodes, there may be some rich pickings just going begging!
We even may get a new neighbour that we talk to!
I am not convinced that they wont get the money to invest. The Arabs, Venezuela and Chinese dont normally follow trends. The question is, at what cost to Argentina on the long run? Very sad
Apr 18th, 2012 - 12:11 pm - Link - Report abuse 0@6. Hello Welsh Wizard. You are trying to find a purely rational explanation to this topic and I'm afraid you'll never find one.
Apr 18th, 2012 - 12:41 pm - Link - Report abuse 0Fact is, over the last 10 years, YPF has significantly underperformed in exploration drilling when compared to the previous decades. From 105 in the 80s and 100 in the 90s it went down to 25 in the 00s. Add to this that, in the past few years, YPF has made profits of 13 billion Pesos and has sent abroad 17 billion in utilities - i.e. 130% were remitted abroad as dividends. Compared to other oil companies (Shell, Petrobras, etc) they re-invest 60% of their profits in exploration and drilling and pay 40% as dividends. The problem, is that this has gone for far too long, and the Argentinean government knew all along.
But what happened now? Given the continuous increase in economic growth, as well as heavy energy subsidizing from the government, the situation became unsustainable. Additionally, oil companies found it cheaper to extract gas in Bolivia, for example, thus widening the fiscal problem.
YPF needs an investment of about 20 billion Pesos in the next 3 years to substantially alleviate the hole that the energy bill is creating in the government's budget.
So what does the Government trying to achieve? First and foremost, its a popular decision. I read that more than 60% of Argentineans wanted it nationalised for old times sake and feel the control of strategic natural resources ought to belong to the State. The provinces are also happy since they get their share.
My take is they will try to mirror Petrobras' success; hope they can milk YPF now to fund re-investments in the short term and/or at least lessen the burden of cash outflow due to imports in fuel whilst maintaining subsidies.
CFK has lost 30 points over the last few months so this move is not only economical, but political. Whether it works out its anyone's guess at this point.
As for investment, its hard to say. Latam looks promising for outsiders right now.
@12 You claim to be african, which is something that may or may not be true. Assuming you not to be a prevaricator you would know that in most African failed states, China has built unneeded infrastructure, backed by loans with exorbitant interest rates, and paid for this infrastructure by taking their oil, minerals and farmland, all of which they need like a crack addict. No african state is going to argue with a country that has a standing army of millions.
Apr 18th, 2012 - 12:42 pm - Link - Report abuse 0I see no difference between their policy with corrupt African states and corrupt South American states. So I'd be expecting Argentina to quickly find they've gone to bed with the devil.
@12. “The question is, at what cost to Argentina on the long run?”
Apr 18th, 2012 - 01:00 pm - Link - Report abuse 0Argentina is clearly betting that the benefit will outweigh the cost. Of course, this will depend in the proper administration of YPF.
As you pointed out, China and Brazil will continue to invest. China because they needs raw material to maintain their growth and neither Africa nor Europe can provide them this as well as Latam. Brazil because they know that despite the occasional quarrels both the Argentine and Brazilian government understand each other eventually. Yes they complain but it takes a telephone call to sort things out.
Additionally, and despite its many current flaws, Mercosur guarantees entry to the Brazilian market via Argentina, and some industries find this more attractive.
The loudest complaint came, of course, from Spain and is being echoed by their buddies at the EU.
Yet, The US has hardly blinked thus far.
its too early to tell what the consequences will be, or how beneficial this will be for Argentina.
#13
Apr 18th, 2012 - 01:06 pm - Link - Report abuse 0What exactly do you mean by “From 105 in the 80s and 100 in the 90s it went down to 25 in the 00s”? What are you talking about? Without specifying, your comment is meaningless.
“Given the continuous increase in economic growth, as well as heavy energy subsidizing from the government, the situation became unsustainable.” If the government wanted to increase oil/gas production, it should have allowed the oil companies to charge MORE - thats why YPF production was down. Even the Bolivian government allowed Repsol to charge substantially more for gas.
“So what does the Government trying to achieve? First and foremost, its a popular decision. I read that more than 60% of Argentineans wanted it nationalised for old times sake and feel the control of strategic natural resources ought to belong to the State. The provinces are also happy since they get their share.” Internally popular, OK. But at what international cost? Argentina can kiss good bye to any foreign investment for the foreseeable future. And there are serious calls for Argentina to be booted out of the G20.
“Hope they can milk YPF now to fund re-investments in the short term”. This is possibly the crux of the issue - a complete ignorance of economics and finance. How can milking the assets of the oil company fund reinvestment by that oil company in the short term?
“As for investment, its hard to say. Latam looks promising for outsiders right now.” Latin America might, but Argentina looks like a complete no go area: this action is competely contrary to the provisions of the Bilateral investment treaty with Spain, so foreign invetors are hardly likely to be queuing up!
@ 14
Apr 18th, 2012 - 01:09 pm - Link - Report abuse 0I concurr Yoghurt. Sad indeed that potential is wasted on a silly ideology. I am just curious as what the Russians think of all this. It might be an opportunity for them to get a foothold in South America.
But the devil remains the devil whether drinking vodka or eating rice.
@ Troneas
South America at large might be looking good for investment but not Argentina.
@17. Except that Argentina is the second economy in South America and the country with the second highest population after Brazil and the one with the highest income per capita.
Apr 18th, 2012 - 01:11 pm - Link - Report abuse 013 Troneas
Apr 18th, 2012 - 01:16 pm - Link - Report abuse 0Thanks for this. I can see that there is huge political advantage in nationalising (especially when you consider the place that EPF holds in the Argentinean national consciousness). My real issue is with lack of clarity between the previous administration (that of Nestor) and the current. The dividend sharing mechanism was set up (and rubber stamped) previously by Nestor to bring in an Argentinean company alongside Repsol and only 6 months ago the government member of the board of YPF said that the government was happy with the amount of investment from Repsol (given the YPF makes up about 23% of worldwide profits, Respol was investing over 35% of its worldwide investments in YPF alone which seems to be reasonable). This amount of investment was not lowered or rescinded during this 6 month period which is why it makes me think that this was almost purely a political move. Also, speaking with friends over there they are now telling me that the government is saying that YPF was owned 100% by Repsol, when I’ve said that it was actually 56.4% I’m told that I’m a liar.
I worry for this administration as it seems that policy is increasingly being made ‘on the hoof’ and that policy is dictated by the possible rise in resultant popularity. I also worry that Cristina does not have the benefit of number of good tried and tested advisors, shrewd political operators who would have handled this situation better whilst getting the same result. Interestingly, she reminds me (not with regards to policy but very much with regards to modus operandi) of Thatcher who lost it towards the end and was out to pick a fight with anyone and everyone to the detriment of her government and her country.
@ 19 You worry too much, go out, visit your family and have a piece of cake :)
Apr 18th, 2012 - 01:30 pm - Link - Report abuse 0@19. You are right about Repsol owing 56.4%. It did use to own much more before but they sold it to the Esquenazi family which is an Argentinean family with close ties to the Kirchner administration. This family has kept all its shares (around 23%) so one of the main reasons Repsol is upset right now is because of this discrimination.
Apr 18th, 2012 - 01:37 pm - Link - Report abuse 0And yes, you are absolutely right about the contradictions. CFK supported the privatization of YPF back in 1991. Apparently now she claims that these past 20 and how YPF has been managed has proven her wrong.
The whole thing blew up in Novemeber/December 2011. There was a before and after then. In November/December 2011 was when CFK had a look at the numbers and went berserk when she saw the energy bill. Whatever had been said before that became irrelevant.
And yes, but this is not just from this administration. Argentinean politics have been made “on the hoof” for the past 50 or so years. There has been no continuity at all and policies are generally short term patches without consideration of what will be.
And the different between Thatcher and CFK is that Thatcher wanted to remain in government. Many people think that CFK has had enough. She wasn't truly convinced if she wanted to run if you remember and this has been her final election. This doesn't mean she wants to be ousted but I suspect she will try to impose much of her agenda both nationally and internationally without much thought about her popularity as far as she feels her government is secure.
@20 I was thinking the same thing. I hope he wasn't suggesting that Thatcher was picking a fight with Argentina, as that isn't backed up by historical fact. They didn't see that curve ball coming at all, hence the resignations immediately after finding out the Argies had invaded.
Apr 18th, 2012 - 01:40 pm - Link - Report abuse 022 GreekYoghurt
Apr 18th, 2012 - 01:48 pm - Link - Report abuse 0Purely meant that she got VERY obstreperous by the end and seemed hell bent on arguing with anyone. Didn't want imply that she was picking a fight with Argentina.
@19 What type of cake?
@ Troneas
Apr 18th, 2012 - 01:51 pm - Link - Report abuse 0My sources claim Chile to have the higest per capita income. But lets assume you are right. The EU have cancelled trade talks after CFK's announcment and says that the investment climate in Argentina is unpredictable. As a business man that seriously contemplated investing and emmigration to Argentina, I assure you that all my advisers (some Argentine) warned against investing in AR. They told me to keep my money outside AR and just live the good life. The Campo strike when I was in AR and then surprising to me, CFK's landslide re-election killed of any notions of investing. If I a small business man dont have the appetite for the AR risk why should bigger ones?
Stability, predictability, a positive business climate, rule of law, protection of ownership rights and being able to plan your business is paramount to investing anywhere. Sadly none of these conditions are reasonably guaranteed in Argentina for foreign investors.
Well, we are at the end-game of whether Argentina can remain solvent.
Apr 18th, 2012 - 02:03 pm - Link - Report abuse 0Thieving YPF as they have / will (Repsol will get nothing) does not mean that the numbnuts running the country have solved the energy crisis for Argentina.
You have to laugh at the 'Governors' of the regions INSISTING on self sufficiency with fuel. These are the idiots that conspired with CFK to bring down YPF.
So what are the solutions to this energy crisis?: answer came there NONE!
Does anyone think Kicillof even owns a suit and tie? It's hard to take him and his word-macro PhD seriously when he's sat there in un-ironed clothes and sh!t sideburns.
Apr 18th, 2012 - 02:20 pm - Link - Report abuse 0Time for argies to pick another country and emigrate! Best thing to do is to pick countries with similar mind-sets. Communist China, North Korea, Russia and, most especially, Somalia spring to mind.
Apr 18th, 2012 - 02:32 pm - Link - Report abuse 0Hmm didn't I say they would legally make YPF bankrupt before they took it over...take away all the concessions dream up an environmental damage..Repsol here is your U$5 now go away. Oh wait let me recalculate that....No No...you OWE ARG money here is the bill...all your assets plus send us money to clean up the mess you made. Thuggery pure and simple.
Apr 18th, 2012 - 03:21 pm - Link - Report abuse 0Arg will lose at ICSID but how will Spain get their $...that's the real question.
Deadbeats don't pay their bills. I think they should send a couple destroyers up Rio De La Plata to collect. The only think Thugs understand is power. RGs are cowards and will back down immediately.
There is little sense that nationalism intended to be a assertion of firm political control, is a symptom that CFK is losing her grip. SHE has been circulating that regional solidarity will help her out of a crisis, if only by presenting a united front on the Falkland Islands. But her only real allies are Venezuela and Cuba.
Apr 18th, 2012 - 03:30 pm - Link - Report abuse 0HER government style depends on creating enemies. Now with the renationalisation of YPF, she has plenty of them: Spain, UK, USA, and international investors everywhere. Argentina is becoming a periah state.
WAKE UP!
@28 http://en.wikipedia.org/wiki/List_of_active_Spanish_Navy_ships
Apr 18th, 2012 - 03:31 pm - Link - Report abuse 0Time for the EU to put an embargo on Argentina. Mess with one you mess
Apr 18th, 2012 - 04:15 pm - Link - Report abuse 0with the 27. Simple as that!!!
31 @ Argie Sunshine
Apr 18th, 2012 - 04:48 pm - Link - Report abuse 0It is just Argentina, Venezuela, Cuba, North Korea and Iran.
Dream on...
@30
Apr 18th, 2012 - 06:36 pm - Link - Report abuse 0That is a nice naval fleet they have there!
More than enough to 'encourage' the Argies to play fair with YPF / Repsol AND keep away from the Spanish fishing fleet.
http://tn.com.ar/sociedad/00089564/misiones-golpean-a-periodistas-en-el-consejo-deliberante
Apr 18th, 2012 - 07:08 pm - Link - Report abuse 0Unable to handle politics? resort to violence. typical argies.
@34 That's hilarious. I guess with Justitium the journalists get under the jack-boot first.
Apr 18th, 2012 - 07:21 pm - Link - Report abuse 0State of emergency, what what?
( 4 )
Apr 18th, 2012 - 08:07 pm - Link - Report abuse 0I heard that some programs which convert the ( *. flv ) files to the (*.mp 4 )format content spy/ad wares sometimes......is that true ?
26 GreekYoghurt (#) - I thought that everyone knew that La Campora members , especially self-processed communists, never wear a suit.
Apr 18th, 2012 - 09:09 pm - Link - Report abuse 0@37
Apr 18th, 2012 - 09:15 pm - Link - Report abuse 0http://3.bp.blogspot.com/_yMFKL2Aqu7U/TTBXs7P0NvI/AAAAAAAAAAs/lfhezEVePNw/s1600/adolf_hitler.jpg
Here's one in a suit.
#26 So you're a snob too. Funny though as you've never been seen to praise the style of my immaculately turned out Queen =)
Apr 18th, 2012 - 11:16 pm - Link - Report abuse 0I am assuming that Argentina has legislation in place to protect the environment and possibly there are additional environmental clauses within the YPF contract.
Apr 19th, 2012 - 12:52 am - Link - Report abuse 0If YPF has fully complied with these requirements then there can be no claim against them for any environmental damange. You might argue that if there is some damage then for the sake of good will YPF would work towards cleaning up their mess. But hey, I doubt whether any of the Spaniards would p*** on CFK if she were on fire so there's not much hope of that happening.
If YPF fell short of their environmental requirements then they should be fully responsible for any clean up. However, you have to ask why this has not been closely monitored in the past as it should have been.
HOWEVER, if the authorities were aware of these shortcomings and turned a blind eye, they are just as responsible as YPF and all of those involved should be held accountable.
Does anyone know whether this is happening with other companies in other areas? Whatever failings have occured I doubt whether it only affects YPF, whether it is inadequate legislation or inadequate enforcement.
Economic crises understandably are difficult for the people involved, but they will eventually resolve themselves. Environmental damage is much much worse, with ongoing consequences for decades. If there have been failings either in terms of sloppy legislation or corruption then I hope it is rooted out at every level and dealt with to stop this from happening elsewhere in Argentina.
Having said all of that..... my gut feeling is that this is ONLY either another piece of anti-REPSOL propoganda to fire up the Argentine population or an attempt by the Argentine Government to warn REPSOL off trying to claim compensation (coming as it does only hours after they announced that they would!!!!).
If there is any environmental damage then I doubt it is as bad as reported and has possibly been done with the full knowledge of the authorities. Wait & see!!
41. Argentina has some of the most polluted water ways in the world. The Tigre delta and the Matanza-Riachuelo Basin. I don't think YPF could do as much damage as the RGs have done to their own land. If you ever fly out of BA towards the south you can see BLACK water coming from the Riachuelo into the bay it is gross but you can't leave out Tigre with all the poor kids playing in it. OMG it is disgusting it is BLACK and it STINKS with dead fish and garbage floating where ever it is plugged up. REALLY REALLY GROSS.
Apr 19th, 2012 - 01:42 am - Link - Report abuse 0@41 yankeeboy,
Apr 19th, 2012 - 07:20 am - Link - Report abuse 0Thats the type of “culture” that they want to foist on us!
We haven't even got slums here.
@42 do you have slums in stanley and beggar kids playing in the oozing acrid waters of moody brook?
Apr 19th, 2012 - 09:09 am - Link - Report abuse 042. I was looking at buying one of the islands in far out Tigre but there is no running water! The people living there got the water right from the delta, filtered it somehow through something that looked like a series of kids play pools and said it was fine..don't worry! If you go pretty far out about an hour or so by boat some of the islands are cool but I'm not hiding from anyone so I decided it was too remote and scary. There is no law out there someone could have you hostage for a long time before anyone ever found you.
Apr 19th, 2012 - 10:48 am - Link - Report abuse 0BTW RGs, in a civilized country you don't have to worry about things like that it isn't even something to be considered.
That is one of the big differences and until you live somewhere civilized you'll never know because you have to fear for your safety at all times in your country...it is very sad.
By the time they have finished the maths I'd guess that the Argentine government will be billing YPF for the pleasure of taking over their company.
Apr 19th, 2012 - 12:39 pm - Link - Report abuse 0Is this what all the Falklands jabbering was all about? Pretend you're going to steal an entire group of islands so that when you do get round to stealing your countries largest company nobody is that perturbed.
How is the situation in Libya and Iraq all you racist people. Will it be better if Argentina desided to bombs and kill the dictatorship in Islas Malvinas Argentina for our oil or is the power of killing muslim women and children to theft oil solely reserved for white trash and racists in EU and USA???
Apr 20th, 2012 - 08:00 pm - Link - Report abuse 0www.gregpalast.com/the-globalizer-who-came-in-from-the-cold/
www.morningstaronline.co.uk/news/content/view/full/117885
www.bradblog.com/?p=9238
46 Pratt-Junta
Apr 20th, 2012 - 09:26 pm - Link - Report abuse 0I should try doubling the tablets and lying down in a darkened room.
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