YPF Nationalized

[ctru]

The future remains to be seen what Argentina can do with a nationalized player in oil production. Perhaps it will become a rival to also gvmt owned PetroBras. In this day and age when the technology is not solely within the confines of a Seven Sisters firm, there is very little risk of technological backwardation as a result of nationalization as the technology can easily be bought piecemeal as required per project.

Whom will take the risk of engaging in a business venture with this government? Maybe with a fat upfront payment..?

When it comes to the on-land technology oil exploration it's not that complicated. But if Argentina wants to move a greater portion of their exploration off-shore (where more of their future deposits are likely to reside), the technology is not so standard, and it would be interesting to see which high tech companies that are willing to invest their resources in this unstable environment.

 

[camberiu]

All that being said, I would encourage all the detractors to look at the great successes of petroleum nationalization, instead of focusing on the negatives. A list of the some the positives: Saudi Arabia, Iran, Malaysia, Kuwait, Canada, China, Norway, Qatar, Brasil,...the list is long and you may notice that many of the top players today are sovereign owned firms which are in some cases the technology leaders in extraction and/or production.

I do not know about the other countries, but as a Brazilian, I take offense on you adding Brasil to the list of "successful oil nationalization countries"

State owned Petrobras is well known in Brazil as a cesspool of nepotism, corruption and inefficiency. Despite being a net oil exporter, Brazil has one of the highest gasoline prices in the world. You can check the gas prices in Brazil vs the rest of the world here:

http://brazilianbubble.com/gasoline-price-comparison-brazil-vs-world/

Oil nationalization was one the the WORST things to ever happen to Brazil. Petrobras is a disgrace and should be privatized ASAP.

 

[AndrewWoodward]

Since Norway was mentioned, it's worth those interested reading about their policies and development after discovering oil. I think you'll find the circumstances and the outcome pretty different than the case here. Norway invested heavily both in the infrastructure needed immediately and in the long term health of the country. They've also been careful to avoid using the money made based on short term politics. Argentina, on the other hand, is acting only a few years after privatizing to try to keep energy prices artificially low and stop imports.

Argentina needs billions of dollars in investment to up it's reserves, and where will that money come from? Local regulations keep the returns on investment pretty low, and VPF won't be a cash cow. They still have debt to service, and now will be fighting a legal fight with Repsol. You might see a temporary rise in investment, but at what long term price? And if Argentina once again ignores its treaty obligations, which I'm sure are being violated here with Spain, they'll be rejecting any chance of further private investment and further ostracizing themselves from a vital infrastructure they're barely accepted in today.

 

[trennod]

Karla I suggest you take a step back and consider the implications for Argentina on all fronts (not just the future success of YPF under government ownership and any oil supply security for Arg) given the fact this was an extremely hostile nationalisation. Your cost/benefit thought process should include future impact on foreign investment (country risk etc etc) and any potential economic sanctions (thus direct impact on exports).

I understand we cant evaluate now and dont have a mirror ball, but if you were to put a bet on, do you truly think the Argentina government are going to be able to successfully manage this company, given their track record? I think the only thing that will save them is high oil prices (of course out of their control), just as the soybean prices has saved them from flattening this country once and for all since they took office. This is the same government that has a list of accomplishments including:
- runaway inflation (they havent stopped it);
- nationalisation of pension funds;
- import bans;
- currency controls;
- continued statistic doctoring that the IMF have continued to pledge 0 confidence in their numbers.

These are just a few of the top of my head, I am sure you can enlighten me with some of their more positive accomplishments. Please dont forget if you are going to drop in any economic growth numbers to remember there may be some question marks over those figures (see last point).

Oh and Karla, if you work in any business, economic, financial environment then you will know business confidence is extremely low (numerous reasons) and that this is usually a great economic indicator.

 

[KarlaBA]

Karla I suggest you take a step back and consider the implications for Argentina on all fronts (not just the future success of YPF under government ownership and any oil supply security for Arg) given the fact this was an extremely hostile nationalisation. Your cost/benefit thought process should include future impact on foreign investment (country risk etc etc) and any potential economic sanctions (thus direct impact on exports).

Yes, here we have the standard response to anything not understood or liked regarding a foreign gmvt; "the dreaded fear of what international investors may or may not like". It all sounds good when the economics prof is teaching you this garbage, but unfortunately it is totally irrelevant. First, for some nations international investment is not important or useful at all. Second, international investment goes where ever there is a buck to be made, history be damned. All this sob story about foreign investment is trotted out every time there is a debt default, and guess what in a few years later foreign investors are falling over themselves to invest. Why? Because the absence of capital makes the returns on capital extremely high, which in turn attracts capital. After 2002 i bought Millions of Argie gvmt bonds when everyone else was wanting to sell. A few years later i sold those bonds for a very handsome profit.

 

[citygirl]

Aerolinas was bankrupted completely by the prior owners. I flew many times when it was under Spanish Gvmt control and later under Marsans control; both periods it was much worse than today (and that is when oil was <$20/barrel).

Stop being so negative about the gvmt; they have a very shitty hand dealt to them by history and they are doing actually very well considering that there was nearly a revolution in 2002. Every time you want to criticize, stop and think if you could do better yourself under the circumstances. I doubt it.

I'll stop being negative about this government when it starts making logical decisions. The decisions here are BAD.

Again- you didn't answer my question - do you think they'll make a success of it? Do you think the economy is heading in the right direction here? Do you own/manage a business here?

And I am not running for office but yes, I think I could sure as hell do a better job given the incredible natural resources here, the educated work force, the access to major markets and all of the things that *should** put Argentina at the head of LATAM. I'm hard pressed to think of how I could do a worse job than what's been done here. Where exactly do you think we fall when looking at the economies in Mercosur? Please - I have JUST as much right to criticize as anyone. Hell, probably more, our business actually pays its taxes

 

[KarlaBA]

I do not know about the other countries, but as a Brazilian, I take offense on you adding Brasil to the list of "successful oil nationalization countries"

State owned Petrobras is well known in Brazil as a cesspool of nepotism, corruption and inefficiency. Despite being a net oil exporter, Brazil has one of the highest gasoline prices in the world. You can check the gas prices in Brazil vs the rest of the world here:

http://brazilianbubble.com/gasoline-price-comparison-brazil-vs-world/

Oil nationalization was one the the WORST things to ever happen to Brazil. Petrobras is a disgrace and should be privatized ASAP.

PetroBras is a world leader in deep water extraction technology. I'd say that is pretty impressive for a 'state owned' company that you think is shit. PetroBras may have corruption inside, but it hasn't stopped PetroBras from excelling in its market. The price of fuel in Brasil is competely irrelevant to the success of PetroBras.

In case you haven't realized it yet, all institutions are full of corruption; that is the natural outcome of getting a bunch of selfish individuals together. What matters is if the corruption gets so out of hand that it stops the institution from performing.

 

[LostinBA]

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.

But she SAID today that the the Argentine government will run it in a professional way! What could go wrong with that?! haha.

 

[trennod]

Yes, here we have the standard response to anything not understood or liked regarding a foreign gmvt; "the dreaded fear of what international investors may or may not like". It all sounds good when the economics prof is teaching you this garbage, but unfortunately it is totally irrelevant. First, for some nations international investment is not important or useful at all. Second, international investment goes where ever there is a buck to be made, history be damned. All this sob story about foreign investment is trotted out every time there is a debt default, and guess what in a few years later foreign investors are falling over themselves to invest. Why? Because the absence of capital makes the returns on capital extremely high, which in turn attracts capital. After 2002 i bought Millions of Argie gvmt bonds when everyone else was wanting to sell. A few years later i sold those bonds for a very handsome profit.

Foreign investment is only one of my arguments, however with your response you have to be joking? If that country is a basket case the risk of that buck being made decreases. That foreign investment (all things equal) will go elsewhere. Like Chile, Uruguay, Brazil. We are seeing it, do you want some examples? PM me and I will give you a whole list of company names including multinationals which see Argentina as as high of a risk as Venezuela.Business are nervous.

So what has this government done that is so great? And how are they going compared to their counterparts in those 3 countries I listed above?

I dont think you should be doing any comparisons with 01/02, if we get to that situation and people are wanting Arg bonds you know thats not a good thing right?

But anyhoo, do you really think foreign investors are going to be jumping over to themselves to buy Argy bonds any time soon unless we do hit rock bottom 01? Thats the best joke I have heard in a few days

 

[Gringoboy]

I still maintain that the whole issue is a ruse.
It's the same old story with CK; she tries to blind us with smoke.
She's actually a very clever politician and knows how to tug those heartstrings at least those of the following masses (see video of her speech).
She always arouses the passion of the lowest common denominator and succeeds every time, being the avatar of Evita that she is.