Argentina moves to seize control of Repsol's YPF

Tue Apr 17, 2012 4:24am EDT
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By Hilary Burke and Helen Popper

BUENOS AIRES (Reuters) - Argentine President Cristina Fernandez unveiled plans on Monday to seize control of leading energy company YPF, drawing swift warnings from key trade partners and risking the country's further economic isolation.

YPF (YPFD.BA: Quote), controlled by Spain's Repsol (REP.MC: Quote), has been under intense pressure from Fernandez's center-left government to boost production, and its share price has plunged due to months of speculation about a state takeover.

Until recently, YPF had a harmonious relationship with Fernandez, whose increasingly interventionist and off-beat policies infuriate critics. She praised YPF when it found massive resources of shale oil and natural gas in late 2010.

However, a surging fuel import bill has pushed a widening energy shortfall to the top of her agenda at a time of worsening state finances in Latin America's No. 3 economy.

Fernandez said the government would ask Congress, which she controls, to approve a bill to expropriate a controlling 51 percent stake in the company by seizing shares held exclusively by Repsol, saying energy was a "vital resource."

"If this policy continues - draining fields dry, no exploration and practically no investment - the country will end up having no viable future, not because of a lack of resources but because of business policies," she said.

YPF's market value is $10.6 billion, although an Argentine tribunal will be responsible for valuing the company as part of the takeover. Central bank reserves or state pension funds could be used for compensation, analysts say.

Fernandez, who still wears the black of mourning 18 months after the death of her husband and predecessor as president, Nestor Kirchner, stunned investors in 2008 when she nationalized private pension funds at the height of the global financial crisis.   Continued...

Argentina's President Cristina Fernandez arrives at the Mercosur trade block summit in Montevideo December 20, 2011. REUTERS/Pablo La Rosa