YPF Nationalized

[garygrunson]

This could be the first tremor in the 'Sky is Falling' prediction that many expats have been claiming for years.

Kiss foreign investment goodbye. Kiss any production out of YPF goodbye. Say hello to even higher inflation. Kiss innovation goodbye.

I know of at least 3 tech firms that are leaving the country this winter. Why would any sane business owner invest money in a country that might one day just take their business? Is sad really.

Exxon, Shell, BP etc. would invest in Argentina in seconds. There is TOO much money to ignore a little problem with the current government. Small companies might think twice, but big companies will continue to invest and make money from and off Argentina.

Do you think Monsanto, Exxon, Microsoft, Google, etc are going home? Fat chance. The sky is not falling...

 

[joemama]

Do you think Monsanto, Exxon, Microsoft, Google, etc are going home? Fat chance. The sky is not falling...

Good point with big companies. I hope you are right.

Argentina is like Randy Moss. Talented, productive, cocky, yet self destructive. In the end no matter how much they shoot themselves in the foot, there will always be people that want to engage that potential.

 

[Crema Americana]

I think it's the smaller companies that are less likely to take advantage than the huge multinationals... so I'm not sure how it's a good thing to keep Monsanto and lose everybody else?

I don't know if this is the beginning of the end, but it's a move towards turning Argentina into Chavezlandia.... and who wants that??

I would love it if Argentina could effectively manage and control her own resources -- it would honestly be great if a competent government could whip this country into shape (as fascist or communist as it may be)... but I don't see it happening. The corruption and inability to properly manage anything (roads, trains, airlines, etc) in an efficient manner is too much here for a success story.

People say capitalists are greedy, but politicians are pretty greedy, too. If something is running well or someone is making too much money, they don't have any problem taking it. And using laws from Videla's time, classic!

I wonder how this type of takeover looks like on the inside... would Repsol take their machines or engineers with them? Such a sudden change of management must be disrupting to the company's operations.

 

[scotttswan]

Exxon, Shell, BP etc. would invest in Argentina in seconds. There is TOO much money to ignore a little problem with the current government. Small companies might think twice, but big companies will continue to invest and make money from and off Argentina.

Do you think Monsanto, Exxon, Microsoft, Google, etc are going home? Fat chance. The sky is not falling...

BP are actually trying to get out of Argentina and almost sold their share of some oil company to the Chinese a few months ago...

 

[nicoenarg]

It would make sense, they see an opening and they will quickly jump in to "help". With oil, there are no rules except that it must keep flowing. Besides these oil companies have plenty of capital to "help".

Which is sort of the point. This could be why the US had a pretty tepid response to this story. Can't condemn something when you might find a US oil company gaining all the lost profits. It could happen, or something very similar. Oil corrupts on all sides.

It would certainly make a whole lot of sense. However, the problem might be that of ideological differences than of whether Exxon, BP etc are willing to "help" or not.

So far, the Argentine government has distanced itself from the rest of the world, and they have made it clear that they don't like the West. So for that reason alone, I don't think they will be welcoming Exxon or BP with arms wide open even if said companies are ready to help with their equipment all loaded up.

Secondly, de Vido seems to have been forced to say that there are investors lined up because of all the "concern" about how and where the country is going to cough up $25 Billion US Dollars a year. People in the know know that Argentina does not have that kind of money, and the government itself knows they don't have that kind of money.

Saying publicly that they have got investors lined up not only eases people's fear of the whole damn country going down the drain but also makes other companies listen in. "Oh if they have companies lined up, then this must not be as bad as the media reports. Let us jump in with our quotes!" (very simplistic rendition, of course).

Here's the problem though, the Argentine government has just about zero credibility in the rest of the world so I don't think any company will let their guard down and be like, "yeah why not, I am coming in!" Especially Exxon when they were recently burned by Venezuela in a move that CFK seems to have copied, word for word or rather, act for act. Exxon asked for U$S12 Billion and were given U$S250 Million instead and Venezuela called that settled (wonder if Repsol is going to get U$S200-225 Million, if that, from Argentina since they are asking for U$S10 Billion). This was after Venezuela told the media that they will pay a Billion US Dollars to Exxon.

A possibility that I see is very likely is that Venezuela and Cuba will jump in with some sort of help, whether monetary or expertise or how to avoid paying compaines and maybe take over some more. Who knows! At this point all we know for sure is that Spain is pissed off, EU is pissed off, Mexico is pissed off (they own 10% of Repsol) and Chile is concerned.

Oh another thing, as for saying that the US hasn't said much about this whole fiasco because they want their companies to get in. I think we might want to lay off conspiracy theories for a while because even when Exxon (an American company) got robbed by Chavez, the US government distanced itself from the whole thing. Whether I like Washington or not, this is how the US government has traditionally dealt with these kinds of matters.

 

[nicoenarg]

By the way, Exxon signed a huge deal yesterday with Russian government's Rosneft. Another reason Exxon will not be looking Argentina's way.

One thing I didn't mention above was that China will likely step in if Argentina is looking for partners outside of Mercosur or LatAm.

 

[camberiu]

The Brazilian media is reporting that there is a meeting scheduled for the 20th between Julio de Vido and Petrobras CEO Graca Foster. It seems that the main topic of the meeting will be on how Petrobras can help the Argentinian government to "turn YPF around".

So,, it seems that it will be Petrobras to de rescue instead of Exxon and BP. That would make sense, as it is politically acceptable for Cristina to have the Brazilian state owned oil monopoly assist them to play with their new toy.

 

[MorganF]

Okay, should we take bets here as to whether PetroBras is going to help out, or going to run far away fleeing...?

(Unlike most of you here, who seem to have sophisticated knowledge and analyses of these geopolitical situations, I'm completely naive and thus truly have no inclination! But I think it is useful to put down our predictions!)

 

[davonz]

it seems that it will be Petrobras to de rescue instead of Exxon and BP. That would make sense, as it is politically acceptable for Cristina to have the Brazilian state owned oil monopoly assist them to play with their new toy.

I would tend to think this is a more likely outcome. Even though the big oil companies dont care about alot of stuff, and go where they can make money, at the end of the day they want to make money, and after what has happened with YPF i very much doubt if they would be willing to take the risk now. Pertrobras have one trump card, the brazilian gov, who can pull strings. Who is argentinas biggest south american trading partner / where does the majority of the cars produced here go ? ?

Argentina has been seen as a risk for as long as i can remember for small innovated companies who dont have deep pockets. I just need to look at NZ companies (we dont have the big multinationals) that have invested in south america. Except for a fishing company (boats can be sailed off to greener waters in an instant) i can't think of any who have invested in argentina. Instead they have put their money into chile and urugary because the risk is minimal and they have stable economies and govs compared to the rest of south america.

Big companies will usually take the risk as they can pull strings and have money to pay off who needs to be paid off. But that risk becomes unacceptable when they face losing everything, unless its not so much a physical lose (biuldings, equipment, invested monies), and more of a intellectual lose. Compaines like microsoft only have an intellectual risk - if they got taken by the gov does it matter, the staff can be moved, the buildings etc are leased, they lose a bit but not much, its more a disruption that anything.
Oil companies are a whole different story - unless they are just providing the staff and technical skills to develop a field and the state is providing the equipment.
If the state is on the oil companies side they will take what they can and not worry to much about anything else - there are alot of african countries where this has happened. But when the state is against them the risk is to big.

I think its probably all lies that is being told about investors and other oil companies lining up to help out.

 

[NomadInBA]

Argentina has been seen as a risk for as long as i can remember for small innovated companies who dont have deep pockets. I just need to look at NZ companies (we dont have the big multinationals) that have invested in south america. Except for a fishing company (boats can be sailed off to greener waters in an instant) i can't think of any who have invested in argentina. Instead they have put their money into chile and urugary because the risk is minimal and they have stable economies and govs compared to the rest of south america.

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I have to disagree on this point. I'm a kiwi and work for a multinational NZ company that has entered the Argentine market and is looking to investment in what is looking to be a very lucrative market. That said, we are in a market where thankfully we don't need to import or export anything in order run our operations. Argentine is a big market with many opportunities for foreign companies who know the market and what to expect. I'm not saying that it is easy and the reality is that it is extremely difficult to operate but doable. For this reason many companies don't consider entering Argentina but those that do, can find themselves in a market with little international competition.