By Eric Watkins
LOS ANGELES, April 26 – Not content with stirring up a hornet’s nest over the nationalization of Yacimientos Petroliferos Fiscales, Argentina’s government has threatened legal action against oil companies operating in waters off the Falkland Islands – known in Spanish as Las Malvinas.
The Foreign Ministry said Argentina will press charges against companies considered to be “illegally operating” in the Falklands, adding that the companies have until May 2 to justify their actions.
“If case of failure to offer a response and once the legal deadline expires, we will issue the corresponding sanctions to every company according to a resolution by the Argentine Energy Secretariat,” the ministry said.
The ministry said that on April 17, all oil companies currently exploring in the Falklands basin were notified “of their clandestine actions and their consequences” by the Argentine embassy in the United Kingdom.
Argentina identified the companies as Argos Resources, Rockhopper Exploration, Borders and Southern PLC, Falkland Oil & Gas Ltd and Desire Petroleum PLC.
The government claimed its actions reaffirmed “Argentina’s decision to defend the nation’s sovereign rights by any peaceful means possible – both legal and diplomatic- as well as the country’s natural resources, which belong to all Argentines.”
The warning against UK companies came as Argentina’s Senate dutifully rubber stamped a government bill to nationalize Yacimientos Petroliferos Fiscales by a vote of 63 to three, with four abstentions.
The Senate vote cleared the way for further approval by the lower house next week – a process designed to place a legal fig leaf of respectability over an otherwise naked grab.
The seizure of YPF ordered by Argentina’s President Cristina Fernandez de Kirchner has been wildly popular, with two national polls showing 74% and 62% of those questioned supporting the president’s action.
Even former president Carlos Menem, who oversaw the privatization of the formerly state-owned YPF in 1999, last week came out in favor of Fernandez’s takeover.
“The scenario has changed, the situation is different now than when I decided YPF privatization. I know I will be criticized but it won’t be the first time,” he added. “I have nothing against Spain, but Repsol did not make any investments here,” said Menem, sticking to the government’s line.
What else could the poor man say, given the climate of hostility being whipped up in Argentina these days? “The privatization of YPF was one of the worst mistakes of that era,” said Fernandez ally, Senator Miguel Pichetto, referring to Menem’s time in office.
“Moments like this define whose side you are on,” said Senator Daniel Filmus, another Fernandez ally. “Are you on the side of the national interest or are you are fighting the side of those who prey on our natural resources?”
Meanwhile, Spanish oil company Repsol launched a nationwide media campaign to defend itself against the arguments used by the Kirchner regime for nationalizing YPF.
Repsol said “it is not true” that it failed to invest “sufficient amounts in YPF” since it acquired the company in 1999 during Menem’s privatization drive, saying it has invested $20 billion in YPF since then.
The firm also gave a breakdown of its capital expenditure over the past three years, showing an upward trend of 1.03 billion euros in 2009, 1.64 billion in 2010 and 2.473 billion last year.
But few people are going to pay much heed to ads in the current climate of self-congratulation taking place in Argentina today. With the company now in the hands of the government, the only thing that matters is moving ahead with development – and getting the cash to do it.
“It’s good that the state resumes control of YPF, something it should never have lost,” said former economy minister Roberto Lavagna. “Now we need to talk about the most important issue: where are we going to get the necessary money … to achieve energy self-sufficiency?”
If Argentina thinks that investment cash will come from Brazil, it has another thing coming. Last week, in response to Argentina’s request for nearly a 100% increase in its current investment of $500 million, Brazil declined.
But a scathing indictment of Argentina’s actions followed in Brazil’s Veja magazine this week, with journalist Duda Texeira arguing that Cristina Fernández has become the “great apprentice of Chavist petro-populism,” referring to Venezuela’s president, Hugo Chavez.
“Oil is capable of generating the most demagogic, retrograde and nationalist instincts of any people and its rulers,” said Texeira, who argued that, “YPF will not have the capital to maintain – much less increase – the current production of oil.”
Lack of energy supplies and inflation eventually will harm the pockets of all Argentines in an authentic “Venezuelanization” process, said Texeira, who concluded: “As always the Argentine people will suffer the most, for having let itself be seduced by cheap nationalism.”
© Glamma Productions 2012