European Parliament condemns Argentina's seizure of YPF

20 April 2012 13:59  [Source: ICIS news]

LONDON (ICIS)--The European Parliament on Friday passed a resolution which condemns Argentina’s seizure of the controlling interest in oil firm YPF from Spain-based energy company Repsol.

The Parliament said it “deplores” the actions of Argentina’s government, which on 16 April, announced a decision to table a draft law in its Congress to expropriate 51% of the shares in YPF, which is majority-owned by Repsol.

Argentina’s announcement was accompanied by the takeover of YPF’s main offices, which led to the immediate appointment of a government minister as controller of the company, with all the powers of the board of directors.

The Parliament’s resolution said that the European Commission should use all appropriate dispute settlement tools available at the World Trade Organisation (WTO) and G20 to respond to Argentina’s “unilateral and arbitrary” decision to expropriate YPF. It asked the Commission to consider “the partial suspension of tariff preferences” that benefit Argentine exports into the EU.

The resolution also called for the Argentine authorities to “return to the path of dialogue and negotiation”.

“MEPs call on the European Council, the European Commission and the EU High Representative Catherine Ashton to make every effort to defend Europe’s presence and investments in the country [Argentina]. Trade Commissioner De Gucht and High Representative Ashton should also use all diplomatic avenues available to solve this situation with their Argentine counterparts,” the European Parliament said in a statement.

The Parliament said it expresses deep concerns regarding the situation, as it represents the “non-fulfilment of obligations under international agreements”, and warned that it may have negative effects such as international disinvestment and adverse consequences for Argentina in the international community.

On 18 April, three commissions of the Argentine Senate approved a bill allowing the state to take over YPF. The bill, sent by Argentine President Cristina Fernandez de Kirchner, will now go to the full Senate for approval next week. If approved by the Senate, the bill will go before the Argentine House, the nation’s second legislative chamber.

The bill needs approval from both chambers before it becomes law. It has received support from the political parties Frente para la Victoria, Union Civica Radical and Frente Amplio Progresista.

If Argentina proceeds with the YPF takeover, Repsol said it would fight to obtain what it called a fair price for its majority stake.

“Repsol will resort to international arbitration tribunals and seek to press individual charges, as well as class actions, anywhere and everywhere that can get us a result,” said Kristian Rix, deputy director of international and financial media at Repsol, on Wednesday.

The Argentine government has still not determined how much it would pay Repsol for its YPF stake. Argentina will rely on “solid data” to value the takeover, and it will not use estimates provided by Repsol, said Axel Kicillof, Argentine deputy economy minister and one of the ministers appointed to lead YPF.

Earlier, Repsol had valued its YPF stake at $10.5bn (€8bn), based on a formula that assumes a share price of $46.55.

($1 = €0.76)

Additional reporting by Al Greenwood, Leela Landress and Paula Krizanovic

By: Franco Capaldo
+44 (0)20 8652 3214

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