EU parliament slams Argentina’s YPF seizure

Apr 20, 2012, 9:13 PM

Associated Press

BRUSSELS (AP) – The European Union parliament on Friday condemned Argentina’s move to seize control of the YPF division of Spanish oil and gas company Repsol and demanded that the EU take action against Buenos Aires at the World Trade Organization.

The parliament also called on the EU to look at the “possible partial suspension of the unilateral tariff preferences” as a way of punishing any country that attempts to nationalize a European company’s assets.

Argentina says it is making the move _ which would take control of 51 per cent of YPF, leaving Repsol with a 6 percent stake _ because Repsol has not invested enough in the country’s oil industry.

Support in Argentina for seizing the formerly state-owned YPF runs so deep that even former President Carlos Menem says he’s in favor of its expropriation from Repsol. Menem, now 81 and a senator, said he will vote for the re-nationalization next week, even though he knows many will criticize him. As president from 1989-1999, Menem sold off many state enterprises in a privatization wave. But he says Repsol took all its profits out of the country and failed to invest anything in Argentina.

Repsol YPF SA and Spain have slammed Argentina’s re-nationalization of YPF as outright “pillaging” and an attack on their interests. The company’s chief executive, Antonio Brufau, told reporters Wednesday that YPF is worth $18.3 billion, and he valued Repsol’s stake at $10.5 billion.

Argentine Planning Minister Julio de Vido, meanwhile, met Friday with Brazilian officials about the move, and told reporters that his country would like Brazil to increase its Argentine market share from 8 percent to 15 percent. He also said that assets of Brazil’s state-run oil giant, Petrobras, would not be expropriated.

Brazilian Energy Minister Edison Lobao said that Petrobras invested $500 million in Argentina last year, and planned to invest an equal amount this year because “it is good business” for the oil company.

The European parliament called the re-nationalization “an attack on the exercise of free enterprise and the principle of legal certainty” which hurt Argentina’s investment climate.

The resolution, backed by the major parties in the Strasbourg-based legislature, also calls on European Commission to take up the issue at the WTO and the G-20 and explore measures to better protect EU interests in future.

Spain also took its first retaliatory step Friday, announcing it would approve a measure promoting domestic biodiesel fuel production, thereby reducing biodiesel imports from Argentina. Deputy Prime Minister Soraya Saenz de Santamaria said political and diplomatic retaliatory measures were under consideration but that no decisions had been made.

Last year Spain imported (EURO)700 million ($923.4 million) of Argentine biodiesel that was used as agricultural fuel, the Industry Ministry said Friday.

The Group of 20 industrial powers has a summit in Mexico in June that could bring Argentine President Cristina Fernandez and Spanish Prime Minister Mariano Rajoy together face to face for the first time.

Repsol shares on Friday reversed three days of steep losses since Argentina made the nationalization Monday night, rising 2.1 percent to (EURO)14.98 ($19.76) each in late afternoon trading in Madrid. But the gain, in line with a 2 percent rise for Spain’s benchmark Ibex index, didn’t come close to erasing the company’s share prices losses for the week.

The European parliament complained that Repsol had “been the target of a public harassment campaign” in Argentina, resulting in the plummeting of its shares.

Spain is the top foreign investor in Argentina, ahead of the United States. Spanish direct investment in Argentina totaled $23 billion in 2010. That was 26.3 percent of the total invested in that country, compared with 16.8 percent for the United States, according to the Argentine central bank.


AP Business Writer Alan Clendenning contributed from Madrid, and reporter Marco Sibaja contributed from Brasilia.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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EU parliament slams Argentina’s YPF seizure