MercoPress. South Atlantic News Agency

Argentine government and Repsol partners in YPF’s asset striping claims former minister

Guadagni gives an account of “the most spectacular finance operation in recent history”

A former Argentine Energy and Industry secretary questioned the energy policy of President Cristina Fernandez administration but also strongly criticized Spain’s Repsol management of the recently seized YPF.

“The worst decision made by any Argentine government was to sell YPF to Repsol back in 1999. YPF was an integrated oil and gas company with a vast experience and expertise in hydrocarbons exploration and production, while Repsol was merely a collection of gasoline stations, mostly in Spain”, said Alieto Guadagni addressing a forum of finance executives in Buenos Aires.

Guadagni is also member of the so called Energy Group of 8, of former Energy secretaries that regularly publish reports on Argentina’s oil industry and reserves, fuels and energy stats, strongly criticizing the Cristina Fernandez administration management in the field.

Nevertheless he praised the recovery of Argentina’s main corporation and celebrated the naming of oil expert Miguel Galuccio as the nationalized company new CEO.

Guadagni then was ironic about the incorporation of the Petersen group, belonging to the Eskenazi family to YPF and the approval and backing from the Cristina Fernandez to the move. The Eskenazi group from Patagonia is close friends of the Kirchner family.

“In 2008 happened the most spectacular operation in the world of finances”, said Guadagni.

“Repsol CEO Brufau while walking along a street in Madrid met someone he had never seen before and who knew nothing about the oil business but nevertheless invited him into the business: don’t you want to buy 25% of the company? But since the fellow had no funds for such an operation he simply told him: don’t worry, I’ll lend you the money”, underlined Guadagni to the laughter of his audience.

However the former secretary pointed out it was not a contract between two private institutions because a clause conditioned the approval of the accord to the written authorization from the Competition Defence Committee, an office belonging to Argentina’s Interior Commerce Secretary, and “this is more serious than the signature by the Repsol CEO in the name of the state”.

Guadagni then went on to explain the dividends scam. “From then onwards YPF that until then distributed profits of 700 million dollars, started distributing one billion dollars. Tell me if this is not really a lead case, you that are finance experts and managers?”

This meant that under the management of Repsol, “the Spanish company gobbled 80% of proven reserves” and now YPF will need an investment of 30 billion dollars in the next three years plus a new refinery to recover.

“Last year Argentina imported 4 billion dollars in gas-oil. How much does a refinery cost? between 4 and 5 billion dollars”.

Finally Guadagni said that the fact Galuccio, a graduate from Buenos Aires prestigious Technologic Institute is a great step forward but that is only part of the problem or solution, for YPF the real challenge is the energy policy.

“I imagine in fifteen days a request from YPF CEO for a readjustment of fuel prices, because the company needs revenue, and inevitably a discussion with the Secretary of Commerce (Guillermo Moreno)”, and the bottom line will be if YPF becomes an accumulation company, to invest and develop resources and make Argentina self sufficient, or a distribution instrument (fuel subsidies) for the government”.

Until the seizure of YPF, Repsol held 57.4% of the company’s shares; the Petersen group or Eskenazi family and close friends of the Kirchner family 25.6% and 17% was traded at stock markets in Buenos Aires and New York.

Following the takeover the Argentine federal government and oil producing provinces share a 51% stake; the Eskenazi family still has 25.6%; Repsol, 6.4% and the remaining 17% which are traded in markets.