Argentina to Seize Control of Oil Firm
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President Cristina Kirchner, in a move that marks a watershed in expanding the state's grip on the economy, said she will send a bill to Congress to nationalize Argentina's largest oil-and-gas company, YPF SA, The Wall Street Journal reported. The move fired up a battle with the company's Spanish controlling shareholder and the Madrid government. Under the proposal, which declares the petroleum industry of "national public interest," Argentina's federal and provincial governments would take 51% of the company, now majority owned by Repsol YPF SA of Spain. The move is sure to be approved in Argentina's Congress, where the leftist Mrs. Kirchner's governing Peronist party holds a majority. Initial indications were that the government would take its stake entirely out of Repsol's shares, which would leave the company with roughly 6% of YPF, down from 57%. YPF's market value was $10.6 billion as of Friday in Argentina. Its American depositary shares fell 11% in New York trading on Monday. Mrs. Kirchner's bill calls for YPF's shareholders to be compensated at a value to be determined by a federal tribunal. The nationalization marks the culmination of a monthslong battle between YPF and the Kirchner government. The administration blames YPF for low production that has forced Argentina to spend heavily for imported energy, at a time when it is enduring a scarcity of dollars due to capital flight. Read more. (Subscription required.)