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Madrid – Shares of Spanish energy company Repsol plunged Tuesday after Argentina announced plans to nationalize the firm's extensive Argentine oil operations.
Repsol YPF president Antonio Brufau told reporters that company will mount a legal fight against the plan to seize control of YPF and accused the Argentine government of launching the move in order to quell rising unrest at home.
Argentine President Cristina Fernández de Kirchner "carried out an unlawful act and made unlawful charges after a campaign aimed at knocking down YPF shares and allowing expropriation at a bargain price," Brufau told reporters.
Repsol YPF SA shares sank 4.7 percent Tuesday morning in Madrid to €16.66 each, underperforming the benchmark Ibex index, which was up 1.4 percent.
Spain's government has jumped to back Repsol in its fight amid deteriorating relations with Argentina, and is seeking to line up allies to contest the move and possibly isolate Argentina economically.
In her national address Monday, Fernández said the legislation put to congress would give Argentina a majority stake in YPF — Argentina's largest company — by taking control of 51 percent of its shares held by Repsol.
YPF is vital for Argentina's energy future, especially after a recent find of huge unconventional oil and natural gas reserves.
But the company has been under intense pressure from Fernández's government to raise output while its shares have nosedived in recent months on fears of possible state intervention.
Argentina this year expects to import more than $10 billion worth of gas and natural liquid gas to address an energy crisis even though it is an oil-producing nation, according to estimates from the hydrocarbon sector.
Spain strongly opposes the nationalization plan and has warned that it could turn Argentina into an international pariah. The country is the largest foreign investor in Argentina, ahead of the United States.
Brufau told reporters that YPF is worth $18.3 billion, and he valued Repsol's stake at $10.5 billion.
YPF shares have plunged in value since February, when Fernández' administration mounted the campaign that led to Monday's nationalization announcement.
The decision by Fernández "is only a way of covering up the social and economic crisis Argentina is facing" amid high inflation and energy prices, Brufau said.
Brufau also accused Fernández of being "an expert manipulator" in her accusations that YPF had underfunded the unit, saying that Repsol has invested $20 million in Argentina since it bought YPF in 1999.
Based on reporting by the Associated Press.