Argentina, home to massive reserves of oil and natural gas, hopes to export its way out of its economic crisis. Increased output from the Vaca Muerta shale reservoir brings glimmers of hope, with state-controlled oil company YPF at the heart of this endeavor.
However, over a decade after the nationalization of YPF, legal miscalculations around the procedure continue to haunt taxpayers.
Last week, Argentina suffered a major legal blow when a New York judge ruled that YPF’s expropriation had been conducted unlawfully. The U.S. court found that while Argentina had compensated the former majority owner, Spanish oil giant Repsol, it had failed to extend a tender offer to other minority shareholders, thus violating the company’s charter.
Argentina will now face a substantial bill, which could reach USD 16 billion in damages owed to two former YPF shareholders.
The ruling raises questions about whether the nationalization of the firm — by the Peronist administration of now Vice President Cristina Kirchner in 2012, and approved with bipartisan support in Congress — was a good idea in the first place. Currently, damages are more than triple YPF’s entire USD 5 billion market cap, of which the Argentinian state only owns 51 percent.
The USD 16 billion in compensation is added to the USD 5 billion that Argentina already paid to Repsol after seizing the company in 2012. This totals more than USD 20 billion in payments for shares that are only worth around...
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