Skip to main content

Argentina, Spain at odds over oil company expropriation

By the CNN Wire Staff
April 17, 2012 -- Updated 1728 GMT (0128 HKT)
Argentinian President Cristina Fernandez de Kirchner
Argentinian President Cristina Fernandez de Kirchner
  • Argentina announced it is expropriating oil company YPF
  • The company is owned by Spanish multinational Repsol
  • Argentina's president says the country must control its resources
  • Spain calls the move unfriendly and unjust

Buenos Aires, Argentina (CNN) -- The Argentine government's decision to reclaim what was once its state-owned oil company through expropriation is straining diplomatic relations with Spain, where the news was met with objections.

The Spanish energy company Repsol purchased Argentina's oil and gas company, YPF, in 1999 during a period of privatization.

But Argentine President Cristina Fernandez de Kirchner announced this week a government plan to take YPF back through legislation that would expropriate a 51% share of the company. Through a decree, Fernandez immediately placed the leadership of YPF in the hands of Julio De Vido, the country's minister of planning and public investment.

The Senate began debating the proposed law Tuesday.

Fernandez argued that such a move is necessary for the sake of Argentina's sovereignty over its natural resources.

Spanish Foreign Minister Jose Manuel Garcia Margallo criticized the announcement.

"The government strenuously condemns the arbitrary decision by the Argentine government," he said, adding that it "breaks the climate of cordiality and friendship that traditionally have marked relations between Argentina and Spain."

Furthermore, the expropriation breaks a verbal agreement between the two governments from February about the future of YPF, he said.

During her announcement, Fernandez said Argentina had to act to reclaim a state oil company because it is the only country in Latin America "that does not manage its natural resources."

In 2011, for the first time in 17 years, Argentina became a net importer of natural gas and oil, she said.

"To continue with this policy of emptying and not investment, Argentina would become a non-viable country because of business policies and not because of lack of resources," Fernandez said.

The loss of YPF would be an important loss for Repsol. YPF accounts for about 25% of its profits and 60% of its production.

Repsol's president, Antonio Brufau, said his company is considering legal action against Argentina, seeking compensation of about $10 billion.

"I have to say that unfortunately, the president of Argentina yesterday carried out an absolutely illegitimate and unjustifiable act from a legal perspective," Brufau said.

Fernandez, who has recently stirred nationalistic sentiments by rekindling a feud with Britain over the Falklands, has found some support at home.

The government should use any tool at its disposal to be able to manage its natural resources, the Strategic Center for Argentine Growth and Development said in a statement.

The organization "recognizes that natural energy resources, especially the non-renewable ones, are indispensable to carry forward any plan for growth, development and industrialization of a country."

The group's president, Mauro Gonzalez, said, "The sovereignty of a country doesn't only involve the protection of its geographic limits but also its non-renewable natural resources."

CNN's Al Goodman contributed to this report.

Part of complete coverage on
February 6, 2013 -- Updated 1526 GMT (2326 HKT)
Advocates say the exam includes unnecessarily invasive and irrelevant procedures -- like a so-called "two finger" test.
February 6, 2013 -- Updated 0009 GMT (0809 HKT)
Supplies of food, clothing and fuel are running short in Damascus and people are going hungry as the civil war drags on.
February 6, 2013 -- Updated 1801 GMT (0201 HKT)
Supporters of Richard III want a reconstruction of his head to bring a human aspect to a leader portrayed as a murderous villain.
February 5, 2013 -- Updated 1548 GMT (2348 HKT)
Robert Fowler spent 130 days held hostage by the same al Qaeda group that was behind the Algeria massacre. He shares his experience.
February 6, 2013 -- Updated 0507 GMT (1307 HKT)
As "We are the World" plays, a video shows what looks like a nuclear attack on the U.S. Jim Clancy reports on a bizarre video from North Korea.
The relationship is, once again, cold enough to make Obama's much-trumpeted "reset" in Russian-U.S. relations seem thoroughly off the rails.
Ten years on, what do you think the Iraq war has changed in you, and in your country? Send us your thoughts and experiences.
February 5, 2013 -- Updated 1215 GMT (2015 HKT)
Musician Daniela Mercury has sold more than 12 million albums worldwide over a career span of nearly 30 years.
Photojournalist Alison Wright travelled the world to capture its many faces in her latest book, "Face to Face: Portraits of the Human Spirit."
February 6, 2013 -- Updated 0006 GMT (0806 HKT)
Europol claims 380 soccer matches, including top level ones, were fixed - as the scandal widens, CNN's Dan Rivers looks at how it's done.
February 6, 2013 -- Updated 1237 GMT (2037 HKT)
That galaxy far, far away is apparently bigger than first thought. The "Star Wars" franchise will get two spinoff movies, Disney announced.
July 25, 2014 -- Updated 2327 GMT (0727 HKT)
It's an essential part of any trip, an activity we all take part in. Yet almost none of us are any good at it. Souvenir buying is too often an obligatory slog.