Argentina’s Mendoza province revoked two concessions from YPF SA (YPFD), the country’s biggest oil producer, raising the number of fields lost by the company this month to nine as the government seeks increased investments.
Economic growth in recent years has led to “larger demand for energy and fuel,” which hasn’t been met by YPF investments, Francisco Perez, governor of the western province of Mendoza, said at a press conference today. The provincial government dismissed a proposal by YPF to repair a well and invest in a new one, Perez said.
The government of President Cristina Fernandez de Kirchner is pressuring YPF and other oil companies since January to boost investments to help curb declining output and rising fuel imports. It supported decisions by three provinces to withdraw a combined seven YPF licenses in the past two weeks.
South America’s second-largest economy grew 9.2 percent in 2011, according to Fernandez, following average growth of 5.6 percent between 2008 and 2010.
“The company informs that it will take legal actions,” YPF said in an e-mailed statement. The company said it invested $600 million in Mendoza last year and boosted investment annually since 2007.
Ceferino and Cerro Mollas were the fields withdrawn in Mendoza, YPF said.
YPF’s management this week defied a government proposal to skip dividends and reinvest profit. Instead the board chose to use profit to issue new shares. The decision, which is pending shareholders’ approval at an April 25 meeting, will be opposed by the government with “all measures,” Deputy Economy Minister Axel Kicillof said March 21.
YPF is controlled by Repsol YPF SA (REP), Spain’s largest energy company, which owns a 57.4 percent stake. Argentina’s Grupo Petersen owns another 25.6 percent and operates the unit. Under the terms of the sale through which Petersen bought its stake in 2008 from Repsol, YPF distributes 90 percent of annual net income in dividends in semi-annual payments.
YPF rose 1.7 percent to 146 pesos at 1:49 p.m. in Buenos Aires. It has dropped 14 percent this year. Repsol declined 1.9 percent to 19.24 euros in Madrid.
To contact the reporters on this story: Eliana Raszewski in Buenos Aires at firstname.lastname@example.org; Rodrigo Orihuela in Rio de Janeiro at email@example.com
To contact the editor responsible for this story: Robin Saponar at firstname.lastname@example.org