YPF Repsol: Spain warns Argentina of strong response

Demonstrators in Buenos Aires backed the nationalisation of YPF on Monday

The Spanish government has warned it will defend its interests as a row with Argentina over the nationalisation of oil company YPF intensifies.

The majority stake in YPF is owned by Spanish oil firm Repsol, whose shares fell by 8% in early trading in Madrid.
Promising a "clear and overwhelming" response, Spain summoned the Argentine ambassador to express its concern.
The nationalisation has alarmed foreign investors but is said to be popular among ordinary Argentines.

Nationalising YPF

• Spain's Repsol has hitherto owned 57.4% of shares with 25.5% belonging to Argentina's Petersen, 0.02% to the Argentine government and 17% traded on stock exchanges
• The Argentine government proposes to seize 51% of the shares, all of which will be taken from Repsol's stake, leaving the Spanish firm with 6.4%
• The expropriated shares will in turn be divided between the Argentine government and provincial governors
• Following the expropriation, Petersen will retain its 25.5% stake and 17% of the shares will continue to be traded

Repsol has vowed to demand compensation, saying it could seek international arbitration over its 57% stake in YPF.

"These acts will not remain unpunished," Repsol executive chairman Antonio Brufau told reporters.
The head of the European Commission, Jose Manuel Barroso, said he was "seriously disappointed" by Argentina's decision.
The EU expected "the Argentinian authorities to uphold international commitments and obligations", he said.
The European Commission had been due to hold talks with Argentina later this week as part of a trade and economic treaty but the meeting has been postponed and a Commission spokeswoman said "all possible options" were being considered.
'Friendship' strained Argentina's ambassador to Madrid, Carlo Antonio Bettini, was due to visit the foreign ministry at midday (10:00 GMT), the ministry told the BBC News website.
Earlier, Spanish Foreign Minister Jose Manuel Garcia-Margallo said the "climate of friendship" between the two countries had been broken.

President Fernandez de Kirchner's policies have won support among ordinary Argentines

The Spanish Prime Minister, Mariano Rajoy, is travelling to Mexico and Colombia, where he is expected to seek support for Madrid's position.
His Industry Minister, Jose Manuel Soria, said Spain would take "all measures it considers appropriate" to defend the interests of Repsol and Spanish businesses abroad.
The nationalisation was announced to applause on Monday at a meeting between Argentine President Cristina Fernandez de 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".
The government took over the management of YPF with immediate effect while the bill on expropriation was sent to the Argentine Congress.

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YPF is not the first big firm to be nationalised by President Cristina Fernandez and it is unlikely to be the last.
Ms Fernandez has continued the economic nationalism of her late husband and predecessor, Nestor Kirchner, bringing such companies as the national airline under renewed state control.
Like Aerolineas Argentinas, YPF was privatised in the 1990s by former President Carlos Menem, a man who transformed the Peronist party into an engine of free-market reform.
But since Argentina's economic collapse of 2001-02, Peronism has gone back to its original corporatist vision, and many sectors of the economy that were liberalised in that era are now back in government hands.

Supporters of the nationalisation celebrated in Buenos Aires, waving placards that read "YPF - we're going for everything".

Graffiti appeared on a city centre wall that read "Repsol, get out of YPF".
Mrs Fernandez de Kirchner stunned investors in 2008 when she nationalised private pension funds and she has also renationalised the country's flagship airline, Aerolineas Argentinas.
Many Argentines blame free-market policies such as the privatisations of the 1990s for the economic crisis which resulted in a debt default in 2001-02.
Argentina wants to reduce its expensive energy imports from elsewhere, the BBC's Tom Burridge reports from Madrid.
Before rumours 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, our correspondent says.
But President Fernandez de Kirchner has dismissed the threat of reprisals.
"This president isn't going to respond to any threats... because I represent the Argentine people," she said.
"I'm the head of state, not a thug."
'Mistaken policy' According to AFP news agency, Repsol will seek compensation of at least $10bn (£6.3bn; 7.7bn euros).
YPF accounts for just over a quarter of Repsol's operating profit, 21% of its net profit and 33.7% of its investments, Mr Brufau said.
Repsol's executive chairman accused President Fernandez de Kirchner of resorting to nationalisation "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 nationalisation.
However, Reuters notes that it is unclear how Petersen will be able to repay a $1.9bn loan provided by Repsol.