YPF Nationalized

[joemama]

After months of speculation, Cristina finally pulled the trigger and nationalized YPF.

http://www.lanacion.com.ar/1465449-expropiacion-de-ypf

Seems to me this will further isolate Argentina from foreign investment opportunities, not to mention the impact it will have with their relationship with Spain.

 

[MorganF]

I have a very naive question about this: a friend who was defending the nationalization argued that, according to the privatization terms, YPF was required to spend a certain amount investing in argentina, but it never did that. Out of curiosity, is that true? What is the other side to that claim?

 

[scotttswan]

I suspect that's the whole of the EU who will be stopping imports from Argentina.

 

[citygirl]

Utter BS - YPF announced prior to being nationalized that "it will invest a record $3.42 billion this year in Argentina, up from $3.03 billion in 2011."

YPF was also " one of the biggest investors in Argentina, the top contributor to the Treasury and the country's largest oil and gas producer."

And up until recently, the Kirchner's couldn't heap enough praise on YPF for being a model corporation.

I wish I could say I was remotely surprised but sadly, not at all. The bad decisions just keep coming from this gov't.

 

[moonwitch2]

This is just uff. I'm not against nationalisation, there have been some great examples of where it has done wonders, but really I have no faith in her to make the most of this for the benefit of the people in the country.

 

[AndrewWoodward]

Any speculation on how Spain will respond? Argentina is going to find itself getting very lonely it seems...

 

[jimdepalermo]

The other part of the same announcement today hasn't gotten much attention. She also announced lowering the export tariffs on beef and beef products. I assume this is recognition that at official exchange rates, Argentine agro exports are becoming uncompetitive, at least when you add on the steep tariff the government charges the exporters.

Lots of fun to come, friends!

 

[jimdepalermo]

Scanning news sources and analysis, I find one that speaks to the question better than I can. Martín Caparros is an Argentine who writes blog about Argentina for the Madrid daily El País. The full post is here.

Caparros is totally sympathetic about the need for government control of energy exploration and development, and agrees that the last Peronist government sold YPF for "dos guitas." But he also claims that party leaders profited handsomely by the sale, including the Kirchners as well as Menem, and he [rhetorically] questions why the government has never taken action against them.

He goes on to examine the love-hate, praise-insult history of the K government toward YPF. And then concludes with this paragraph (my translation):

State control of hydrocarbon exploration and exploitation is necessary... The problem is that it's the state that will then run it: a state controlled by an incompetent government that works to maintain its own power, that conspires to enrich its friends, that changes judges it doesn't like, that silences voices that don't give it flattery, that keeps so many in poverty and desperation. A government, above all, whose political energy produced the emergency that now it aspires to remedy... We shall see. ​

 

[Napoleon]

The other part of the same announcement today hasn't gotten much attention. She also announced lowering the export tariffs on beef and beef products. I assume this is recognition that at official exchange rates, Argentine agro exports are becoming uncompetitive, at least when you add on the steep tariff the government charges the exporters.

Lots of fun to come, friends!

I saw this at the end of the Buenos Aires Herald's article. This means that Beef prices might go up some more. This country is being led by short term decision making. Chile (and Brazil to a lesser extent) is led by long term decision making.

This is unsettling.

 

[jimdepalermo]

Claiming insufficient investment by the foreign oil companies operating in Venezuela, the government began nationalizing exploration and production in 1973. Under government management, production declined 31% by 1976 and continued falling through the 1980s.

In the early 1990s, the government loosened controls on private (mostly foreign) participation, and production rose by 55% in the 8 years until Chavez was elected president and re-nationalized oil production. Under his watch, production has declined by 28%.

Can we expect better results from the Argentine government?