Argentine President Cristina Fernandez de Kirchner’s seizure of YPF SA (YPFD) will reduce investment in oil fields as energy producers flock to other Latin American countries, WTRG Economics said.
The CHART OF THE DAY shows oil rigs, an indicator of spending on production, fell year-over-year in Argentina, while energy producers increased installations in neighboring Brazil, according to Baker Hughes Inc. (BHI:US) The rig count in Argentina dropped 14 percent to 49 rigs in March, while in Brazil the number rose 11 percent to 82.
Fernandez wrested control of YPF, the nation’s largest crude supplier, from Spanish owner Repsol YPF SA (REP) after a dispute over declining production and spending on new drilling.
“You typically do not see companies rushing in to invest more in countries that expropriate because you’re taking a good chance you’re not going to see a return on your investment,” James Williams, an economist at WTRG, an energy-research firm in London, Arkansas, said yesterday in an interview. “In countries where that isn’t the case and have oil, you’re seeing an increase in activity --Colombia and Brazil are two good examples.”
Colombia surpassed Argentina as South America’s third- largest crude producer in 2009, behind Brazil and Venezuela.
Fernandez tapped Planning Minister Julio de Vido to run Buenos Aires-based YPF, in an expropriation which follows the takeovers of airline Aerolineas Argentinas and a $24 billion pension fund since she took office in 2007.
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