Argentina renationalises YPF, the country’s biggest oil company
It was announced on 17 April that Argentina is renationalising YPF (increasing its holding to 51%), the country’s biggest oil company, by means of compulsorily purchasing most of the 57.43% shareholding in that company held by Repsol, which is registered in Spain (and is itself formerly a nationalised industry) but in fact controlled by a wide variety of international financiers. If anybody was wondering, for instance, why Mexico’s president Felipe Calderón, weighed in on the side of Repsol saying that “no one in their right mind is going to invest in a country that expropriates investments”, this is easily explained when one realises that Mexico’s state-controlled oil company, Pemex, has nearly a 10% shareholding in Repsol.
According to the Financial Times of 18 April (Jude Webber and Miles Johnson, ‘Argentina to renationalise oil group YPF’) 51% of YPF “has a market value of around $5bn, according to analysts’ estimates”. This of course has not prevented Repsol from demanding no less than $10bn for its ill gotten share! The figure of $10 bn was, incidentally, the overinflated price that Repsol had been hoping to extract from Sinopec, the Chinese oil company, as the price of selling its shareholding in YPF to them!
The reason for the re-nationalisation of Repsol was simple: like any other private imperialist undertaking, Repsol is run for the benefit of its shareholders, not for the benefit of the country or countries in which it operates. Repsol was thus exporting from Argentina 90% of its not inconsiderable profits, at a time when Argentina is in desperate need of capital, not least the 25 billion euros required to develop one of the world’s largest fields of shale gas (belonging to YPF) which was discovered last November at a place in Patagonia with the improbable name of Vaca Muerta (Dead Cow). This field is estimated to contain some 927 million barrels of oil, but there was no prospect of the people of Argentina benefiting from it in any way as long as it was in the grasp of the dead hand of Repsol.
Spain has, on behalf of the financiers of various nationalities who now control Repsol, been breathing fire and issuing threats against Argentina. The EU is apparently going to retaliate by refusing to purchase Argentine biofuel. However, from the point of view of the financiers, there is no step that can be taken that wouldn’t hurt them more than it hurts Argentina. According to Fredrik Erixon, director of the European Centre for International Political Economy think-tank, “If Europe is going to take retaliatory action, the ones who are going to lose the most are European importers of Argentine products. You’re going to shoot yourself in the foot.” Quoted by Miles Johnson, James Politi and Joshua Chaffin, ‘Spain eyes retaliation for YPF seizure’, Financial Times, 19 April 2012). Even the Financial Times’ John Gapper, who thinks Argentina is hurting its own interests by renationalising, is forced to admit that “Argentina ’s chances of being punished, as opposed to hurting itself, are slim – the worst it is likely to suffer is an adverse financial ruling by an international arbitration panel. Meanwhile, the world is stuffed with investors and companies that repeatedly pile back into such places” (Argentina’s oil raid can only end badly’, 19 April 2012). It is more than clear that China, for one, will be happy to invest in Argentina, especially since Repsol is out of the way. Sinopec, an oil company 75% controlled by the Chinese state, has bought 40% of Repsol’s holding in Brazil (at a price of 7bn euros, as well as 30% of the Portuguese company Galp’s holding in that country (3.54bn euros). Sinopec already has operations in the Santa Cruz province of Argentina, which it is interested in expanding. CNOOC, 64% owned by the Chinese state, purchased 50% the Argentine oil company Bridas in 2010 (2.35 billion euros) as well as 60% of Pan American Energy, the country’s second largest oil company, for 5.4 billion euros. The Chinese Development Bank lent 7.6bn euros to Brazil’s Petrobras in 20009 and 5.9bn euros to Ecuador, all of which has helped secure for China a steady supply. In Venezuela Sinopec, CNOOC and CNPC are to invest by 2015 over 30 bn euros in four projects aiming at the production of 800,000 barrels a day (as opposed to the 112,000 produced at present). They will also be building a refinery with a capacity of 200,000 barrels a day. In this context, then, YPF would seem to be an important target for Chinese investment. However, Chinese policy has always been to ensure that the countries with which it does business themselves also benefit from the arrangements that it makes. While China is interested in acquiring sufficient oil at a fair price to keep its economy going, it does not have the same unquenchable thirst for the extraction of all or any profit that is the case for western imperialist countries.
It is interesting to see, for example, in the case of Repsol, who it is who does not benefit from its activities. Clearly the company never had any interest in assisting in the general development of the Argentine economy. It wasn’t even much good to the country of its supposed nationality, i.e., Spain. It only declares a quarter of its profits in that country, and on those it paid in 2010 only an effective tax rate of 26.8% (not quite 1bn euros), i.e., less than the 30% tax rate that is the Spanish norm. Neither does it do much for its employees: whereas its profits grew between 1998 by almost 12%, the average wages of its employees only increased 1.7%. Like every multinational monopoly its sole raison d’être is profit for the benefit of the kings of finance who control it.
The nationalisation of YPF is extremely popular in Argentina. According to an opinion poll conducted recently, no fewer than 74% of Argentines are in favour of the government’s decision, either because they think that Repsol consistently acted against Argentina’s best interests or because they think that in the interests of its sovereignty Argentina should control its own strategic resources.
Interestingly, the Argentine state takeover of YPF leaves it with substantial holdings in a number of other companies controlling strategic resources all over the world, including, for example, British Gas! It will have stakes in strategic resources in Bolivia, Peru, Angola, and even the US. It has, for instance, a 23.1% holding in Petrobras. It also has substantial holdings in many other strategic Argentine companies, with the result that by nationalising it, the Argentine government is acquiring a stake not only its oil fields, but also various utilities which should never have been privatised in the first place.