Spanish oil company sues Argentina
16.05.12 @ 09:28
BRUSSELS - The Spanish oil and gas giant Repsol-YPF filed a lawsuit against Argentina at a US district court in Manhattan on Tuesday (15 May) for nationalising its majority-owned stake in the energy company YPF.
Repsol Chairman Antonio Brufau said the company's claim would be based on an estimated €10 billion total value for YPF.
The plaintiffs argue Argentina seized control of YPF’s facilities and operations without due compensation or tendering a contract, reports Bloomberg. The plaintiff also claims the seizure constitutes a breach of contract to the company’s shareholders.
Argentine President Cristina Fernandez de Kirchner 16 April announced they were expropriating Repsol’s 51 percent share of YPF’s class D shares, all belonging to Repsol, without compensation.
On 18 April, the Argentine government carried out the exact same measure with Repsol YPF Gas S.A., a company in which Repsol owned approximately 85 percent.
The Argentine president claims the company reneged on its commitments to invest in the country. The move has been popular among Argentinians.
Domestic oil production has been on a steady decline, dropping by around 20 percent between 2004 and 2011. Consequently, Argentina has had to increase its energy import in 2011, costing the country nearly €7 billion.
Meanwhile YPF shares have fallen 50 percent in the past 5 months and 31 percent since the seizure was announced, reports Reuters. Repsol reported in May that profits, excluding YPF, rose 12.4 percent to €643 million.
For its part, Spain stopped importing Argentine biodiesel following Argentina’s nationalisation of YPF.
The YPF seizure was met with fierce criticism from the United States and the EU, both threatening to file a complaint against Argentina at the World Trade Organisation (WTO).
“We expect Argentina’s authorities to uphold their international commitments and obligations in particular with those resulting in bilateral agreements on protection of investments with Spain,” EU commission President Barroso told reporters on Tuesday (17 April) in Brussels.
Commission Vice President Antonio Tajani said in a speech delivered at the European Parliament in April that the take-over “sends a very negative signal to international investors, who seek stability and predictability for their investments, and it could seriously harm the business environment in Argentina.”
And in May, the EU trade commissioner Karel De Gucht warned the EU would respond to the Argentine seizure. A Spanish official told Le Monde newspaper on Tuesday that the EU decided to file a complaint at the WTO though this has yet to be officially announced by the Commission.
Separately, Bolivia seized control of assets held by Spanish utility company Red Eléctrica de España on 1 May. The country’s president, Evo Morales, expropriated Transportadora de Electricidad claiming it is part of Bolivia’s larger strategy to reclaim ownership over its natural resources.