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Spain summons Argentine ambassador in energy dispute, warns country against becoming "pariah"
MADRID (AP) ' Spain warned Argentina Friday it risks becoming "an international pariah" if it tries to wrest control of energy company Repsol's majority stake in its South American YPF unit, raising tensions between the two nations and sending Repsol's shares plunging.
Spanish Foreign Minister Jose Manuel Garcia-Margallo summoned Argentina's Ambassador Carlo Antonio Bettini to convey Spain's "concern" over possible nationalization of YPF, which represents 42 percent of Repsol's total reserves, estimated at 2.1 billion barrels of crude.
"Breaking the rules comes with a cost and Argentina could turn itself into an international pariah," said Inigo Mendez de Vigo, Spain's Secretary of State for European Affairs, in an interview aired on the Onda Cero radio network.
Shares of Repsol YPF SA plunged 2.5 percent to '17.52 ($23.04) in midday trading in Madrid amid the escalating tensions, though Repsol told Spanish security regulators that it had received no official notice by Argentina of its plans for YPF.
Repsol made the announcement just hours after Argentine President Cristina Fernandez met with top key members of her government to plot her government's next moves regarding YPF, accused by Fernandez' administration of paying out too much in profits and not investing enough in exploration and production.
"Repsol YPF SA informs that it has not received any notification from the (Argentine) authorities related to its stake in its subsidiary YPF SA," the company said.
Spain's government has warned that any "hostile gestures" against Spanish companies doing business abroad would be seen by Madrid as an act of aggression. Fernandez responded late Thursday that she was "ready to pay all the prices that must be paid" to continue support for her model of growth in Argentina ' but did not directly refer to the Repsol dispute.
How Argentina may try to displace Repsol, which owns 57 percent of YPF, has been the subject of wide speculation since the government's pressure campaign began in February. In recent weeks, governors of oil-producing provinces have withdrawn a growing number of its oil and gas leases, alleging the company failed to keep its promises to develop them.
Repsol president Antonio Brufau met Thursday with Argentine Planning Minister Julio de Vido, presenting a detailed plan to expand its investments in Argentina, but de Vido rejected it as insufficient, according to a report by the local Diarios y Noticias news agency.
The agency also said it had obtained a draft copy of a law to be proposed by the Fernandez government that would declare 50.1 percent of the company's shares to be "a public good" subject to government expropriation and control.
YPF spokesman Sergio Resumil told The Associated Press that he wasn't aware of what transpired during the meeting between Brufau and de Vido. Neither side made any public statement about it or the reported plan to expropriate a controlling number of the company's shares.
Argentine Cabinet chief Juan Manuel Abal Medina said last month that "if the only way forward is to nationalize YPF, it will be nationalized."
De Vido met Thursday evening with the 10 governors of Argentina's oil-producing provinces, who have a considerable degree of power over mineral resources. Then the oil group met with Fernandez herself.
Jujuy Gov. Eduardo Fellner said afterward that they "analyzed in depth" the revocation of the YPF leases, the state news agency Telam reported. Fellner denied they discussed a government takeover, the report said.
While Repsol shares fell, speculation about the possibility of a re-nationalization of the formerly state-owned company drove YPF stock up sharply. YPF shares trading in Buenos Aires closed up 7.4 percent Thursday at 123 pesos, and YPF closed up 8.6 percent at $22.93 in New York.
Associated Press Writers Michael Warren and Almudena Calatrava contributed from Buenos Aires.