MercoPress. South Atlantic News Agency

Argentina’s policy on foreign investments keeping businesses away

Petrobras CEO Maria da Gracas Foster said the company intends to continue operating in Argentina but would sell some assets

Concern over Argentina's erratic policy on foreign investments is pushing regional business entrepreneurs toward caution and or keeping them away from South America’s second largest economy. Argentina nationalized Spanish oil major Repsol's majority stake in local energy giant YPF last year, a move that triggered alarm in the international investor community.

Argentina and Repsol are still locked in dispute over Repsol's compensation claims. Madrid's attempts to cool tempers over YPF seizure have encouraged Buenos Aires to delay any settlement indefinitely. Repsol wants 10 billion dollars to recover losses from the seizure.

Although YPF has drawn other investors prepared to risk investing in Argentina, the business climate in the country isn't encouraging, independent data indicated.

Brazilian state-managed energy giant Petrobras, the world's seventh largest energy company, said it is considering selling some of its assets in Argentina, leaving unclear if the decision had anything to do with the YPF Repsol takeover and acrimonious exchanges with Spain that followed.

Petrobras Chief Executive Officer Maria da Gracas Foster said the company intended to continue operating in Argentina but would sell some assets.

”We've been there (in Argentina) for many years and in no way do we intend to leave the country,” Foster said during an appearance before Brazil's congress.

Petrobras says it is looking into various options for raising cash to finance its wide-ranging expansion in Brazil, particularly its offshore oil fields discovered in the past two years, and a sale of assets in Argentina is in the cards.

Petrobras plans call for fundraising up to 9.9 billion. Much of that cash is likely to be raised through divestment and restructuring of units within the group, including operations in Argentina.

Petrobras interests in Argentina include an accident-prone refinery in the port of Bahia Blanca, natural gas pipeline networks, power generation units and fuel-distribution networks. Several incidents at the refinery since 2011, including an explosion and a fire, have disrupted the plant's operations.

In recent weeks media speculation over Petrobras intentions regarding the company's assets in Argentina sparked renewed recrimination between President Cristina Fernandez and the opposition. The argument arose over reports that members of the president's family were involved in a secret plan to acquire the Brazilian assets.

Petrobras has been reported trying to sell interests in Africa as well. Earlier in May Petrobras announced it raised 11 billion dollars through bond issues due in 2016, 2019, 2023 and 2043 at fixed rates and with floating rates in 2016 and 2019.