Friday, May 17, 2013

Nationalizing YPF in Argentina

Aljazeera English's Counting the Cost just over a year ago did a program whose first part is devoted to the nationalization of Argentine oil company YPF, Argentina's president vs capitalism 04/21/2012, which takes a skeptical view of the action:

They have an accompanying article, Argentina's president vs capitalism 04/27/2013. Nationalizing YPF certainly meant the state taking more control and responsibility and prioritizing Argentina's interest in developing their oil and natural gas reserves over the profit maximization of that single company, which had previously been the subsidiary of a Spanish firm, Repsol. As the article reports:

Argentina accuses Repsol of driving down production at YPF and taking 90 per cent of the company's profits.

But could this drama have a lot more to do with Fernandez falling out with Argentina's billionaire Eskenazi family? Through the family's Peterson Group it owns 25 per cent of YPF.

Nestor Kirchner, Fernandez's late husband, helped the Eskenazis buy the stake - although it was Repsol that loaned the money.
YPF is now state-owned but is not run as though it were a government agency. It remains a separate business that will need to generate a profit. Calling it "state capitalism" would be more meaningful that saying it was "vs. capitalism." State ownership of the leading oil firms of major oil-producing countries is common among a variety of governments, including China, Mexico, Norway, Russia, Saudi Arabia and Venezuela. I wrote a series of posts last year about a series of articles in The Economist on state capitalism, including one on state-owned oil companies.

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