22nd Aug 2019

MEPs back YPF-Repsol, despite company violations in Argentina

  • Spanish NGOs claim YPF-Rapsol is damaging the ecosystem in Argentina (Photo: Sosialistisk Ungdom - SU)

The European Parliament on Friday (20 April) overwhelmingly passed a non-binding resolution condemning the re-nationalisation of Spanish majority-owned energy firm YPF.

The parliament claims the Argentine move was unilateral, arbitrary, attacks free enterprise, and will cause the deterioration of EU investments in the country.

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MEPs want the EU to take action against Buenos Aires at the World Trade Organisation and at the G20. They also call upon the European Commission and the Council “to explore and adopt any measures required to safeguard European interests.”

The Greens, for the most part, voted against the resolution noting YPF has failed to meet it commitments of investments on infrastructure in the country. Its Spanish-based multinational parent company Repsol has a 57 percent stake in YPF.

David Hall at the Public Services International Research Unit University of Greenwich, told Euobserver by phone that “Repsol has treated YPF as a cash cow to finance dividend distributions rather than as an entity that reinvests.”

Shares in YPF-Repsol plummeted, when Argentine President Cristina Fernandez de Kirchner announced earlier in the week her intentions to expropriate 51 percent of Repsol’s share. The company is now demanding €7.58 billion in compensation, a sum Argentinian minister Axel Kicillof says the country will not pay.

The news fares badly for Spanish Caixa bank which has a 12.8 percent share, the largest of the shareholders, in YPF-Repsol. Other major shareholders include Sacyr Vallehermoso, a Spanish-construction company, with 10.0 percent invested in the company.

The UK-based Chase Nominees, of JP Morgan Chase, has a 9.8 percent share. The Mexican state-owned petroleum company, Petroleos Mexicanos, has a 9.49 percent share. A number of smaller shareholders are also French.

EU commission chief Jose Manuel Barroso and foreign affairs chief Catherine Ashton have described the take-over as hostile and possibly even illegal.

Claims by indigenous people

Meanwhile, in Argentina indigenous people near and around the company’s gas and oil extraction sites have allegedly been contaminated with 17 different heavy metals, said to cause nervous disorders, skin diseases and foetal anencephaly, said a consortium of Spanish NGOs.

“Repsol has shown an absolute disregard in the area where it operates for the rights of indigenous peoples in Latin America,” Monica Vargos of the Observatorio de la Deuda en la Globalización, a Spanish NGO, told EUobserver by phone from Madrid.

Vargos said the Argentine Mapuche Indians took their case against the company to Spain in 2002 and demanded around €330 million in damages. “The company professes corporate responsibility, but for us, it’s only green washing,” she said.

YPF has extracted gas and oil from Argentina since 1999, netting an estimated €12.5 billion in profits. Its multinational-parent Repsol, based in Spain, is required to reinvest some of those profits into the development of the surrounding regions, including the Llancanelo Reserve where it also operates.

Repsol bought its stake into the Argentine branch for less than €10 billion in 1999, before firing around 6,000 workers. The company has struggled to produce enough energy to meet expanding domestic demand.

Argentine oil production has been on a steady decline, dropping by around 20 percent between 2004 and 2011. Consequently, it has had to increase its energy import in 2011, costing the country nearly €7 billion.

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