23rd Oct 2016

EU gets behind Spain on Argentina oil grab

  • Repsol-sponsored biker. The FT reports the Spanish firm was trying to sell its subsidiary to China (Photo: ImageNationPhotography)

The European Commission has sharply criticised Argentina's plan to nationalise Spanish energy firm Repsol YPF, with EU foreign ministers to discuss the issue next week.

"I am seriously disappointed about yesterday’s announcement. 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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

Argentine President Cristina Fernandez de Kirchner on Monday announced the takeover of the Spanish-owned firm, one of the largest in South America.

With a 57 percent stake, Repsol is the majority shareholder in YPF, which they value at some €7.9 billion. Fernandez is sending a bill to congress to finalise the act which would leave Repsol with a 6 percent share in the company.

The EU commission said Argentina's decision to take control of the company without adequate and fair compensation is illegal. The executive, along with the Spanish authorities, warned action would be taken in the next few days.

For her part, EU foreign policy chief Catherine Ashton said: "The measure creates legal uncertainty for all EU and foreign firms in the country. The Spanish government has our full backing in this matter."

EU foreign ministers are to discuss the issue on Monday. An EU-Argentine joint committee meeting has been postponed in the meantime.

"These actions will not remain unpunished," Repsol executive chairman Antonio Brufau warned. He added that: "[Fernandez] carried out an unlawful act and made unlawful charges after a campaign aimed at knocking down YPF shares and allowing expropriation at a bargain price."

According to the company, the YPF takeover will not affect Repsol's business outside Argentina. Repsol posted a €2.193 billion net income in 2011, 53.3 percent lower than that recorded in 2010 while YPF posted €1.352 billion income, a 16.8 percent drop from the previous year.

YPF shares in the company have plummeted following Monday's announcement.

In an insight into what is going on behind the scenes, The Financial Times reports that Repsol had secretly tried to sell the Argentinian branch to a Chinese buyer. The paper also claims Repsol had not informed Buenos Aires of the Chinese buy-out negotiations.

Meanwhile, the UK - a historical antagonist of Argentina - has also hit out against Buenos Aires.

UK foreign minister William Hague said the takeover is part of a wider protectionist agenda. "This goes against all the commitments Argentina has made in the G20 to promote transparency and reduce protectionism," he noted.

In an echo of the 1980s Falklands War, Argentina refused in March to let two British cruise ships dock at the port of Ushuaia in protest at military manouevres around the Falklands islands. In early April, Buenos Aires also warned British and American banks advising UK companies exploring for oil around the islands that the activity is "unlawful."

A vast amount of oil, worth some €140 billion, is believed to lie under the disputed mairitime territory.

"After oil was discovered off the Falklands, she [Fernandez] suddenly revived the Argentine claim," British conservative MEP Charles Tannock said.

The loss of Repsel's Argentinian assets will not affect the Spanish economy, says Joachim Voth, a research professor at the Economics Department, Universitat Pompeu Fabra, Barcelona.

"Repsol's stake is part of Spanish assets abroad. The value of these is going down, as a result of the Argentina seizing part of the company, is not good news. But it has no direct impact on business conditions in Spain itself," he told EUobserver.


Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

News in Brief

  1. Canada and Wallonia end talks without Ceta deal
  2. Juncker hopes for Canada accord in 'next few days'
  3. Romania drops opposition to Ceta
  4. Difficulties remain on Ceta deal, says Walloon leader
  5. Brexit could lead to 'some civil unrest' in Northern Ireland
  6. ECB holds rates and continues quantitive easing programme
  7. Support for Danish People's Party drops, poll
  8. Spain's highest court overturns Catalan ban on bullfighting

Stakeholders' Highlights

  1. EFADraft Bill for a 2nd Scottish Independence Referendum
  2. UNICEFCalls on European Council to Address Plight of Refugee and Migrant Children
  3. ECTAJoin us on 9-10 November in Brussels and Discover the new EU Digital Landscape
  4. Access NowCan you Hear me now? Verizon’s Opportunity to Stand for Global Users
  5. Belgrade Security ForumMeaningful Dialogue Missing Not Only in the Balkans, but Throughout Europe
  6. EASPDJoin the Trip! 20 Years on the Road. Conference & Photo Exhibition on 19-21 October
  7. EuropecheEU Fishing Sector Celebrates Sustainably Sourced Seafood in EU Parliament
  8. World VisionWomen and Girls Urge EU Leadership to Help end Gender-based Violence
  9. Dialogue PlatformIs Jihadism Blind Spot of Western Intellectuals ? Wednesday 26 October
  10. Belgrade Security ForumGet the Latest News and Updates on the Belgrade Security Forum @BelSecForum
  11. Crowdsourcing Week EuropeMaster Crowdsourcing, Crowdfunding and Innovation! Conference 21 November - 10% Discount Code CSWEU16
  12. EJCEU Parliament's Roadmap for Relations with Iran a Massive Missed Opportunity