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Spain has warned it will defend its interests as a row with Argentina over the nationalization of oil company YPF Repsol.

Promising a “clear and overwhelming” response, the Spanish government summoned the Argentine ambassador to Madrid to express its concern.

The majority stake in YPF is owned by Spanish oil firm Repsol.

Repsol shares fell by 8% in early trading in Madrid and the firm has vowed to demand compensation.

It said it would seek international arbitration over its 57% stake in YPF if necessary.

“These acts will not remain unpunished,” Repsol executive chairman Antonio Brufau told reporters.

According to AFP news agency, Repsol will seek compensation of at least $10 billion (7.7 billion Euros).

Spain has warned it will defend its interests as a row with Argentina over the nationalization of oil company YPF Repsol

Spain has warned it will defend its interests as a row with Argentina over the nationalization of oil company YPF Repsol

Argentina’s ambassador to Madrid, Carlo Antonio Bettini, is due to arrive at the foreign ministry at midday.

Earlier, Spanish Foreign Minister Jose Manuel Garcia-Margallo said the “climate of friendship” between the two countries had been broken.

Spanish Prime Minister Mariano Rajoy is due to visit Mexico and Colombia, where he is expected to seek support for Madrid’s position.

The nationalization was announced to applause on Monday at a meeting between Argentine President Cristina Fernandez Kirchner, her cabinet and provincial governors.

Reading out a statement at the meeting, an official said YPF had been “declared a public utility and subject to expropriation of 51% of its assets”.

Argentina wants to reduce its expensive energy imports from elsewhere.

Before rumors surfaced several weeks ago that Argentina might take YPF from Repsol, Spain and Argentina generally enjoyed good political ties, and important economic ones.

Spain does a significant amount of trade in the country, so there is likely to be an economic fallout to this dispute too.

Antonio Brufau accused President Cristina Fernandez Kirchner of resorting to nationalization “as a way of hiding the economic and social crisis which Argentina is suffering”.

Argentina’s crisis, he argued, was rooted in “a mistaken energy policy”.

He accused Argentina of running a campaign of “harassment” in recent weeks in order to push down the price of YPF shares and get a bargain price for the expropriation.

“It is not appropriate for a modern country, Argentina does not deserve this,” he said.

Repsol’s Argentine partner, the Eskenazi family’s Grupo Petersen, has a 25.5% stake in YPF which will not be affected by the nationalization.

However, Reuters notes that it is unclear how Petersen will be able to repay a $1.9 billion loan provided by Repsol.

 

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Argentina has decided to nationalize a controlling interest in country’s biggest oil company YPF owned by Spanish firm Repsol.

President Cristina Fernandez said a bill be presented to the Senate allowing the government to expropriate 51% of YPF shares.

The move, announced on national television, was welcomed by her cabinet and Argentine governors.

Spain and the EU have already expressed concern at such a state takeover of YPF, in which Repsol has a 57.4% stake.

Shares in YPF fell some 18% on Wall Street following the announcement.

YPF has come under sustained criticism from the Argentine government, which accuses it of failing to invest enough in local oil fields.

Argentina has decided to nationalize a controlling interest in country’s biggest oil company YPF owned by Spanish firm Repsol

Argentina has decided to nationalize a controlling interest in country’s biggest oil company YPF owned by Spanish firm Repsol

The Argentina authorities have accused YPF of not investing enough to increase its output and so lessen the need for imports, an accusation it rejects.

The company has been stripped of a number of leases, including in some of the biggest oil fields in the country.

In recent weeks, speculation has grown that the Argentine government was planning to force through a bigger state role in the firm.

Spain has previously warned Buenos Aires that a takeover of YPF could have consequences for Argentina’s international image.

The European Commission, the EU’s executive arm, has made it clear it backs Spain’s position.

In November last year, YPF, which was privatized in 1993, announced a major find of 1 billion barrels of shale oil.

Argentina has some of the world’s largest reserves of shale oil and gas, hydrocarbons trapped deep underground.

Argentina is ranked number three in the world in terms of recoverable resources, behind China and the US, according to the US Energy Information Administration.

 

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