Argentina's supreme court has ordered state-controlled YPF to publicly release all clauses of a 2013 contract with Chevron to develop shale oil in the country's vast Vaca Muerta formation. In a 3-1 ruling, the justices sided with opposition Socialist Senator Hector Ruben Giustiniani, ruling that the state's 51% stake in the firm effectively makes it a public company subject to transparency laws.
YPF operates under the jurisdiction of the national executive power, the justices wrote in the ruling. In effect, it is the one that exercises all political rights over the expropriated shares. The justices noted that president Cristina Fernandez appointed Miguel Galuccio as YPF chief executive and economy minister Axel Kicillof is a board director.
Argentina expropriated a 51% stake in YPF in 2012 from Spain's Repsol.
The court dismissed the inclusion of Chevron in the lawsuit, saying the conflict is solely with YPF as a state-controlled company is under the purview of the executive branch. The one dissenting justice, Elena Highton de Nolasco, asserted that Chevron should also have been included in the decision.
Chevron is the biggest foreign investor in Argentina's emerging shale play.
Although the case excluded the US major, it could be affected by the release of the contract terms in the face of competitors. At the same time for Argentina, the landmark ruling could dissuade other foreign companies from partnering with YPF because of the risk that their contract details would have to be divulged as well.
YPF said it will comply with the decision, making it clear that it disagrees with the ruling. Chevron said it is preparing a response.
The timing on the release of the contract will be up to a lower court.
YPF´s shale contract with Chevron has been a lightning rod over alleged secret clauses favorable to the US firm. YPF has repeatedly denied any contractual slant, while refusing to divulge the contract´s contents.
The court criticized YPF's assertions of commercial sensitivity, saying that its imprecise and generic affirmations were not enough to prove that releasing information would put industrial, technical or scientific secrets at risk.
Chevron and YPF have a 50:50 partnership in Loma Campana, which produces around 47,000 b/d of oil equivalent (boe/d). The two companies are the first to put a shale pilot project into production on a large scale in Argentina.
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Since YPF has been found by the Argentine supreme court to be a public or national company, that would also make its international assets subject to seizure by creditors.Nov 11th, 2015 - 12:39 pm 0
Argentina had earlier argued that YPF assets could not be seized because it was not a public company, that it was independent. There could be a game change now. Still to be seen. But the Argentine supreme court observation that ” “YPF operates under the jurisdiction of the national executive power” certainly increases YPF's asset vulnerability.
Oh dear, transparency, now who would have thought it?Nov 11th, 2015 - 03:21 pm 0
expropriated shares = stolen sharesNov 11th, 2015 - 04:32 pm 0
perpetrators of fraud
rotting roadkill - a nation of thugs.