President Cristina's Fernandez has proposed to the Argentine Congress a law authorizing the expropriation of 51% of the YPF oil firm, currently majority-owned by the Spanish multinational Repsol: El Gobierno Nacional propuso la expropiación del 51 por ciento de YPF y declara de interés público el autoabastecimiento de combustible Página 12 16.04.2012
In her message on the proposal, Cristina noted that, even though Argentina has the third-largest reserves of natural gas after China and the US, Argentina is faced with the need to import both gas and oil for the first time in 17 years. She has criticized the Repsol subsidiary YPF, which was privatized in 1999, for insufficient investment in Argentine exploration and production. When it comes to exploration, they've essentially not done any Argentina since the company was privatized, having been a state-owned firm since its founding in 1922.
The President criticized them for having paid out in dividends since 1999 amounting to over 80% of the company's net worth, while failing to invest adequately in Argentina. Repsol has used YPF as a cash cow to fund its investments in other countries, notably Libya.
The logic of the free market from the perspective of a multinational corporation like Repsol may not meet the needs of an individual country like Argentina, which was clearly the case with YPF. Cristina said, "El problema fue la desnacionalización" ("The problem was the de-nationalization.")
Tags: argentina, cristina fernández, james galbraith, ypf