YPF takeover hurts Argentine investor confidence: Spanish PM

7th May 2012, Comments 0 comments

Argentina's decision to seize control of oil giant Repsol's YPF subsidiary will trigger a "tremendous" loss in investor confidence in the country, Spanish Prime Minister Mariano Rajoy said Monday.

Argentine President Cristina Kirchner on Friday signed a bill expropriating 51 percent of YPF's stock from Repsol, its majority shareholder, sealing a measure that has roiled the country's trade ties with Europe.

"These things raise many doubts, they are very unpleasant and it makes people think. I think it does much more harm to the country that takes this decision than to the affected company," Rajoy told radio Onda Cero.

"It does much harm to the company but after that with what confidence can someone invest in nations that take these sorts of decisions and don't explain them? This does great harm to them because the loss in confidence is tremendous."

Kirchner has argued that the move was justified because Argentina faces sharp rises in its bill for imported oil, and Repsol has failed to make agreed investments needed to expand domestic production.

Spain, the European Union and international organisations have criticised the measure, warning that it puts Argentina's overall trade and investment relations in jeopardy.

Rajoy said "sometimes you try to hide your weaknesses by taking supposed acts of authority."

YPF accounts for 34 percent of Argentina's domestic oil production, 25 percent of domestic gas production and 54 percent of domestic refining, according to the Argentine Oil Institute.

Repsol said it will seek at least $10 billion in compensation for its expropriated shares, as well as international arbitration to settle the claim.

Argentina counters that Repsol is leaving a $9 billion debt, while in just over a decade it earned more than $15.7 billion, most of it sent overseas and not reinvested.

© 2012 AFP

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