The Spanish government pledged to take “decisive” action against Argentina within days, after President Cristina Fernandez de Kirchner seized YPF SA, the Argentine oil company majority-owned by Repsol YPF SA.
“The Spanish government is working on measures that will be announced in the coming days,” Industry Minister Jose Manuel Soria said at a press conference in Madrid last night. “They will be clear and decisive.”
Fernandez took control of Argentina’s largest crude producer yesterday, ousting Spain’s Repsol, after a dispute over slumping oil output and investments. She replaced Chief Executive Officer Sebastian Eskenazi with Planning Minister Julio De Vido and plans to send a bill to Argentina’s Congress to take a 51 percent stake in the company.
Repsol plunged as much as 9 percent, the biggest drop in more than three years, and traded down 6.2 percent at 16.40 euros as of 10:09 a.m. in Madrid.
Repsol Chief Executive Officer Antonio Brufau said Argentina aimed to take over YPF cheaply and that the company demands compensation. “The expropriation isn’t anything more than a way to cover up the social and economic crisis Argentina is suffering at the moment,” Brufau told journalists in Madrid.
Soria, Spain’s industry minister, said “the consequences will be in the areas of diplomacy, trade, industry and energy,” in an interview on state radio station RNE today. He declined to be more specific before measures are implemented and said they will be announced in the coming days.
Repsol’s 57.4 percent stake in YPF was worth 4.1 billion euros ($5.4 billion) at the end of last year, the Madrid-based company said in a regulatory statement yesterday. The unit accounted for 21 percent of profit and 34 percent of investment in 2011. Repsol also said it is owed 1.54 billion euros by Grupo Petersen, which was YPF’s second-biggest shareholder.
Repsol said the move is “manifestly illegal” and that it will take all legal measures to defend the value of its assets and the interests of its shareholders.
“This is a patent breach of the obligations the Argentine state took on with the privatization of YPF, violating the most fundamental principles of a secure legal framework,” Repsol said in the statement.
Spain’s allies in the European Union and abroad will support it, said Maria Dolores Cospedal, general secretary of the governing People’s Party.
“The government has contacted the commission and the European institutions to inform them of this arbitrary decision and has asked that this measure should be urgently discussed at the plenary session now being held in Strasbourg,” Foreign Minister Jose Manuel Garcia-Margallo said.