The Argentine government ended a period of administrative control over recently nationalized oil firm YPF, accusing its former majority shareholder, Spanish energy major Repsol, of using the company as a cash cow to fund its international expansion.
Planning Minister Julio De Vido and Deputy Economy Minister Axel Kicillof leveled the accusations Friday in presenting a report prepared by government-appointed administrators on the situation at YPF.
The government expropriated a 51 percent stake in the company from Repsol on April 16 and that takeover was signed into law last month.
"YPF was a company in liquidation," Kicillof said. "It was a dairy cow that they were going to milk it until it was dead," Kicillof, who has emerged as a key figure in President Cristina Fernandez's administration, said.
"They didn't explore ... they let reserves fall, they let production fall and they made a lot of money," he said of Repsol's management of Argentina's largest oil firm.
He said the new administrators "saw confidential plans for the future that were going to cause even more damage ... what I've called 'depletion' ... with irrational use of resources."
"We found all of that when we opened the company's confidential files," Kicillof said, adding that Repsol's strategy consisted of using YPF's profits for its international expansion.
"Repsol is internationalizing on the backs of YPF," he said, accusing the Spanish company of "cannibalizing" the Argentine firm and "pillaging our environment."
"Repsol stopped exploring. I don't know what that company was doing. It wasn't an oil company. It was something else. It was a financial company (looking for) easy profits to transfer abroad," the deputy economy minister said, adding that a 100-day and five-year business plan for YPF will be announced soon.
According to Kicillof, despite all the "destruction they sewed," YPF remains a company with "enormous potential."
Kicillof also referred to the massive Vaca Muerta non-conventional hydrocarbon formation, which some analysts and industry executives say was at the root of the expropriation.
"We found a timetable of 142 meetings with international oil companies, 142 meetings to sell our resources or the entire company. I believe the entire company," he said.
Despite the criticism of Repsol for its contacts with other energy companies, De Vido acknowledged that the Argentine government also has met with multinational firms in search of possible partnerships to develop Vaca Muerta, located in west-central Argentina.
He referred specifically to companies such as Houston-based Apache Corporation and France's Total that are now producing shale oil in Argentina, squeezing it out of tight rock reservoirs through a process known as hydraulic fracturing, or "fracking."
Repsol sent a letter to President Fernandez last month formally proclaiming a dispute over Buenos Aires' nationalization of the company's YPF unit, the first step toward invoking international arbitration.
The Spanish company, which says the nationalization violates a bilateral treaty on protection of investments, has valued its stake in YPF at $10.5 billion, although Argentine state administrators have strongly hinted the government will not pay that much.
The Spanish government also has blasted the expropriation move and retaliated by announcing plans to limit imports of Argentine biodiesel.
Madrid said it also will pursue "measures of a diplomatic nature" in various international forums in response to the takeover.
The Argentine federal government is keeping just over half of the controlling 51 percent stake in YPF, with the remainder to be divided among the country's oil-producing provinces.
Argentina's Grupo Petersen had owned more than 25 percent in YPF but a group of banks led by Credit Suisse will take over 19 percent of that stake and Repsol the other six percent after Petersen defaulted on a loan used to buy the stake.
That will leave Repsol with a roughly 12 percent stake in YPF.
The remainder of the shares continue to be traded on the Buenos Aires and New York stock exchanges.
YPF shareholders will vote on a new board at an assembly scheduled for Monday. EFE