The Nationalizations Begin: Argentina Takes Over Oil And Gas Producer YPF

Tyler Durden's picture




 

Update 2: SPAIN SEES FIRMS' INTERESTS AS NATIONAL INTEREST, OFFICIAL SAYS; SPAIN ANALYZING RESPONSE TO ARGENTINA OVER YPF, OFFICIAL SAYS. Oops.

Update: TRADING HALT: YPF (NYSE)-NEWS DISSEMINATION. Translation: YPF shareholders - you have been Corzined. The money has vaporized. Jon Corzine has been appointed to the newly formed Argentina based Board of Dictators. Have a nice day

There are those who naively believe that any time the tables turn against a government, that government will quietly sit in the corner and play by the rules as its power erodes to zero. Probably the best example of just this is Executive Order 6102 when FDR, in a country that supposedly honors contract laws, issued Executive Order 6102, which effectively nationalized all private gold, no questions asked. And while we may not be there just yet, we are getting close, as demonstrated by the most recent developments in Argentina, where president Cristina Kirchner asked Congress to "expropriate" oil and gas producer YPF (which is majority owned by Repsol YPF) thereby "allowing the government to share ownership of the company with oil-producing provinces, a spokeswoman for Ms. Kirchner said Monday." What is the pretext for this move formerly associated almost exclusively with lawless, "communist" third world banana republics? Why "hydrocarbon self-sufficiency" of course. How soon until any and every government follows suit in a world in which excess liquidity sloshing around makes expropriation of vital energy producing assets a key prerogative? And how long until the resultant (accelerating) collapse in faith of the monetary system, leads government to declare "monetary self-sufficiency" and confiscate everything that is not nailed down. In exchange for worthless pieces of paper of course. Just to make it "fair". And just to return the favor, the market just sent Argentina CDS up by 60 bps, to just shy of 1000 bps. You know, because it's only "fair."

More on this sad development from the WSJ:

The mismatch in Argentina between rapidly growing energy consumption and languishing oil production after a decade of accelerated economic growth appears to be spurring the country's increasingly aggressive stance on YPF. Consumption of oil and gas increased 38% and 25%, respectively, from 2003 to 2010, but oil and gas production decreased 12% and 2.3% in that period, according to Barclays Capital.

 

Argentina has had to rely increasingly on costly imports. The energy trade balance swung from a surplus of about $2 billion in 2010 to a deficit of about $3 billion in 2011. Making matters worse, Argentina is increasingly strapped for dollars to pay for energy imports, as it has been coping with a wave of capital flight.

 

Mrs. Kirchner blames years of declining oil and gas output on companies that she says haven't invested enough. Following her cue, provincial governments in recent weeks have rescinded more than a dozen of YPF's production concessions and unleashed a wave of vitriol against the company.

 

But critics and industry officials say government policies such as high taxes, price caps on home energy rates and unpredictable rule changes like a suspension of tax breaks on production spending have discouraged investment.

Needless to say, it is all YPF's fault it is being nationalized. As for will determine the value of equitable compensation?

The bill calls for YPF's shareholders to be compensated at a value to be determined by a federal tribunal.

Not just a tribunal, but a tribunal which promises to deliver a fair and equitable transfer of monetary equivalents to those saying goodbye to their real assets.

Incidentally, nationalization always and without fail, lead to a collapse in efficiency, productivity and output. We can't wait to see as more and more commodity producers are "expropriated" only to see their outputs plunge, in the process sending the price of whatever commodities are currently in circulation and/or warehoused through the roof, thus leaving the expropriators far worse off than if they done nothing.

Finally, here are the Repsol YPF shareholders who will be less than delighted with this harbinger of what is to come.

All we can say about the big Spanish bank holders: nothing like being kicked when you are down.

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Mon, 04/16/2012 - 12:53 | 2348902 GeneMarchbanks
GeneMarchbanks's picture

The time to decide is upon us all, fascism or socialism? I know which the US will go with full tilt.

Mon, 04/16/2012 - 12:56 | 2348907 Dr. Engali
Dr. Engali's picture

I don't want either , thank you.

Mon, 04/16/2012 - 12:58 | 2348916 surf0766
surf0766's picture

nor communism !!

Mon, 04/16/2012 - 13:26 | 2349003 redpill
redpill's picture

Argentina is a mildly-amusing sideshow.

 

The real story is Europe, and what is about to tear it into tiny little pieces.  This isn't a black swan, it's the KRAKEN.

Mon, 04/16/2012 - 13:35 | 2349040 I think I need ...
I think I need to buy a gun's picture

so this piece implies everyone of you going and handing your gold in. Make sure you obey!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1

Mon, 04/16/2012 - 13:45 | 2349071 hedgeless_horseman
hedgeless_horseman's picture

 

 

What are you wearing to the Resource Wars?

 

Mon, 04/16/2012 - 13:47 | 2349074 francis_sawyer
francis_sawyer's picture

all your hydrocarbons are belong to us...

Mon, 04/16/2012 - 13:52 | 2349092 boogerbently
boogerbently's picture

I'd prefer nationalizing US oil to ME paying for this depression.

Mon, 04/16/2012 - 13:59 | 2349113 francis_sawyer
francis_sawyer's picture

Well the first thing you know old Jed's a millionaire...

the kinfolk said "Jed, move away from there"...

they said, Argentina is the place you oughtta be...

So they loaded up the truck and they moved to Buenos Airee......

Mon, 04/16/2012 - 14:43 | 2349261 Oh regional Indian
Oh regional Indian's picture

:-)

But man, marxist warrior, street ganglady KK showed her hand eh?

All in all though, much as the white world might want to get their knickers in a twist of un-safe havens for their multi-nationals, they are the original rape artists. They deserve it. I say nationalize it all.

Let each nation figure out it's own wants and needs. And don't say that people cannot runt he plants. Perhaps Plant and machinery is fair exchange, piad for. But not this ownership strangle-hold and major profit repatriation overseas that most oilcos have practised.

Look at BP and NIgeria. Look at BP and anywhere. Exxon Valdez comes to mind.

Burma Shell. 

They deserve it.

But is this the balck swan for Spain/Santandar? if Santandar is involved, watch out below.

ori

stream-of-consciousnesstwo

Mon, 04/16/2012 - 15:40 | 2349463 LFMayor
LFMayor's picture

"They Deserve it".

Why don't you Hindis bitch about the Mughuls?  I mean come on, they invaded, raped, pillaged and enslaved you a couple of hundred years before the portugese and the british.

I don't think they get brought up as much because they're moslem.  And we all know that moslems play by a different set of rules.  More, shall we say, traditional rules.

Or how about those Aryans?  They invaded way before that, and brought you that wonderful caste system after they raped, pillaged and enslaved.  No complaints there either, huh?

Europe and America have simply made the mistake of trying to improve the station of others.  If they had picked up on the old Roman methods of annihilations, enslavement and colonialism in the ancient sense we wouldn't have this incessant pissing and moaning.

goddamn age of enlightenment hippies.  Socialist do gooders will be the death of us all.

So now, for bringing medicines, electricty, clean water, copious amounts of food and that funny thing called equal human suffrage and rights to the world, we get demonized.

When Old Uncle Sam finally hears enough, says Fuck It and ties on a mean drunk, you'll have a reason to complain.

Mon, 04/16/2012 - 15:46 | 2349500 Oh regional Indian
Oh regional Indian's picture

C'mon LF, that was then, this is now. 

This rape is current. You represent the anonymous face of the white man's "bringing goodness and civilization" to the barbarians of the east, heathen, un-cultured.

It has been singularly and in every aspect been proven, beyond a shadow of doubt that white nation's intervention in any other nation's affairs has ended badly for the other nation.

It's been a pretty continuous rape for well nigh 600 years now from the Eurozone LF, so just face it. It's all good, but we can deal with what is now, NOW.

Uncle Sam.....hmmm.....I went to school in Troy New York, the home of Uncle Sam... too funny. I think Uncle Sam needs to look inside his own striped pants nad see that all si well and peaceful, and leave the world to do like-wise.

ori

Mon, 04/16/2012 - 16:35 | 2349695 Ahmeexnal
Ahmeexnal's picture

ORI,

China is about to nationalize all the western high tech assembly plants.

It will be a fair exchange, as China will pay with T-bonds and euro-bonds it wants to dump anyway.

Timing, timing....

Tue, 04/17/2012 - 00:16 | 2350534 StychoKiller
StychoKiller's picture

Hardly anyone obeys the Prime Directive these days...

Mon, 04/16/2012 - 16:48 | 2349748 Reptil
Reptil's picture

YPF was a state consortium to begin with. PUBLIC PROPERTY.

It was given away by the Argentinian elite, so they could bathe in luxury (for a while).
at 0:58:05 in (but it's worth watching as a whole, since this will be the future of the USA - until the popular revolt in Argentina - I'm not so sure about that in the USA)

https://www.youtube.com/watch?v=Zsqa-YHE36A

Mon, 04/16/2012 - 13:55 | 2349100 blu
blu's picture

No kidding, whodathunkit?

Shit just got real, baby.

Mon, 04/16/2012 - 13:58 | 2349109 CH1
CH1's picture

All your oil are belong to us!

Mon, 04/16/2012 - 15:11 | 2349340 dwayne elizando
dwayne elizando's picture

I was hoping to wear Blythes silver shorts......on my head!

Mon, 04/16/2012 - 14:28 | 2349212 EBR MOD 0
EBR MOD 0's picture

Sure, show up at my door..the hung over easter bunny has a surprize...be sure you dress in appropriate casual attire.

Mon, 04/16/2012 - 14:03 | 2349125 Arnold Ziffel
Mon, 04/16/2012 - 14:33 | 2349227 NidStyles
NidStyles's picture

RELEASE THE KRAKEN!!! Oh, was I too soon?

Mon, 04/16/2012 - 15:34 | 2349434 A Nanny Moose
A Nanny Moose's picture

Fitting, since Argentina is where many former Nazis landed

Mon, 04/16/2012 - 16:35 | 2349690 Bicycle Repairman
Bicycle Repairman's picture

Argentina is a valuable cautionary tale.  They've tried socialism, fascism and nationalism with little positive affect.  Many say the USA will follow Japan's sorry path.  No such luck.  We will soon be Argentinians.  Get out your pots and pans, everybody!!!!

Mon, 04/16/2012 - 14:08 | 2349140 Gully Foyle
Gully Foyle's picture

I agree with all of you, Bakunin Anarchy or Enlightened Despot are the best choices we have now.

Mon, 04/16/2012 - 12:58 | 2348919 LawsofPhysics
LawsofPhysics's picture

If you are in the U.S. or Europe, that decision has already been made.

Mon, 04/16/2012 - 13:02 | 2348933 Dr. Engali
Dr. Engali's picture

They may think they have made their decision, but we will see how this all plays out.

Mon, 04/16/2012 - 13:12 | 2348961 LawsofPhysics
LawsofPhysics's picture

we will indeed.  long black markets and local thugs.

Mon, 04/16/2012 - 13:20 | 2348984 Manthong
Manthong's picture

How soon before "We are all Argentinians, now"?

Mon, 04/16/2012 - 16:35 | 2349701 Bicycle Repairman
Bicycle Repairman's picture

We're over 50% now.  Call it when you are ready.

Mon, 04/16/2012 - 13:21 | 2348986 I think I need ...
I think I need to buy a gun's picture

did everyone get their tax returns in on time in the old currency because its almost on like donkey kong

Mon, 04/16/2012 - 13:58 | 2349104 salvadordaly
Mon, 04/16/2012 - 16:26 | 2349224 i-dog
i-dog's picture

You can be sure it is coordinated ... Ordo ab Chao.

Mon, 04/16/2012 - 13:07 | 2348950 t_kAyk
t_kAyk's picture

Speaking of... 

http://endthelie.com/2012/04/12/first-new-concentration-camps-in-europe-set-to-sprout-on-greek-soil/#axzz1rseGYZnR

"In language that might have been lifted straight from the Nazi lexicon, these establishments will be known as ‘closed-hospitality’ centers.

The incarcerates will be undocumented – meaning unwanted – refugees flooding in from North Africa, particularly the once prosperous and richest country in the Maghreb belt, namely Libya.

Most of the Mediterranean countries are in the thick of the refugee tide, but Greece is so far the only country that plans to compulsorily pen them up.

The first ‘reception center’ is scheduled to open at a former army base near Athens in the next few weeks."

Mon, 04/16/2012 - 14:21 | 2349177 CPL
CPL's picture

I've been reading about that, the reeducation camps are built by Israeli contractors.

 

Oh sweet irony.  Let us not forgot the past to avoid repeating it.

Mon, 04/16/2012 - 14:58 | 2349273 smiler03
smiler03's picture

So you think illegal immigrants are directly comparable to prisoners of war?

"Currently it can be safely estimated that there are 1 million illegal immigrants “in transit” from Turkey to Europe and many of them will end up in Greece and allocate themselves in the newly founded ghettos in the centre of Athens, in the port of Patras or in various locations in the countryside, thus adding up to the 2.5 million illegal aliens already present in Greece."

This in a country with a population of just over 11 million.

http://rieas.gr/index.php?option=com_content&task=view&id=812&Itemid=89

Meanwhile in the US..................

"On any given day, more than 32,000 people who are not American citizens are held in detention in a patchwork of county jails, privately run prisons and federal facilities while the government decides whether to deport them. In the year ending Sept. 30, 2008, more than 407,000 people spent time in custody, according to Immigration and Customs Enforcement."

http://topics.nytimes.com/top/reference/timestopics/subjects/i/immigration_detention_us/incustody_deaths/index.html

 

Mon, 04/16/2012 - 16:07 | 2349578 Matt
Matt's picture

re: how to escape the concentration camp.

Tad out of date, assumes things like "due process". Love the reference to "Flaming Faggot Guises".

Mon, 04/16/2012 - 13:29 | 2349012 RafterManFMJ
Mon, 04/16/2012 - 14:11 | 2349153 tmosley
tmosley's picture

You'll have both and you'll like it (after a stint in a re-education camp).

Mon, 04/16/2012 - 12:58 | 2348911 HoofHearted
HoofHearted's picture

 

How soon until any and every government follows suit in a world in which excess liquidity sloshing around makes expropriation of vital energy producing assets a key prerogative? And how long until the resultant (accelerating) collapse in faith of the monetary system, leads government to declare "monetary self-sufficiency" and confiscate everything that is not nailed down. In exchange for worthless pieces of paper of course. Just to make it "fair".

One answer for both Gene and the above question....

"....and poof, it's gone!"

Mon, 04/16/2012 - 13:24 | 2348997 Doubleguns
Doubleguns's picture

While confiscating everything and handing out the worthless pieces of paper I suspect they will collect much lead until the burden causes them to keel over.

Mon, 04/16/2012 - 13:02 | 2348931 Global Hunter
Global Hunter's picture

can we try how they do it in Bhutan for a few years because it can't be any worse than what we've got now.

Mon, 04/16/2012 - 15:08 | 2349317 Oh regional Indian
Oh regional Indian's picture

Happiness Index, FTW!

But they've been compromised too. Sadly by India, who is helping them de-velop a true british style demoncrazy!

ori

Mon, 04/16/2012 - 15:31 | 2349419 Global Hunter
Global Hunter's picture

appreciate the posts/insights ori...hapiness something not encouraged in the west as there's no way to tax or profit from it yet.  radical idea that hapiness thingy

Mon, 04/16/2012 - 15:41 | 2349466 Oh regional Indian
Oh regional Indian's picture

Thanks GH and yes, can't tax it, won't allow it seems to be the dominant theme west-side, eh?

ori

Mon, 04/16/2012 - 13:04 | 2348938 navy62802
navy62802's picture

There are those who still think they are holding the pass against a revolution that may be coming up the road. But they are gazing in the wrong direction. The revolution is behind them. It went by in the Night of Depression, singing songs to freedom.

- Garet Garrett, The Revolution Was (1938)

Mon, 04/16/2012 - 13:14 | 2348969 Monedas
Monedas's picture

Fascism, Socialism, Communism ?  There is not a RCH (Red Cunt Hair) of difference ?    Monedas  2012   You can throw Trotsky-ism in there too !  This not the 1930s when the "perceived differences" were to kill for !

Mon, 04/16/2012 - 13:22 | 2348990 DCFusor
DCFusor's picture

That's because everyone is still working in the wrong idea-space.

 

The issue isn't which of the above - it's "state-ism".  Once the state devours all, it kind of doesn't matter what they call themselves.

I do NOT welcome our new statist overlords.

Mon, 04/16/2012 - 13:56 | 2349103 Monedas
Monedas's picture

Right !  A real alternative would be a limited government democracy ! Like ours used to be....and evolve towards more freedom....not less !   Monedas  2012   Comedy Jihad Shit Happens

Mon, 04/16/2012 - 14:20 | 2349175 machineh
machineh's picture

Precisely!

STATISM = FASCISM + SOCIALISM

Two for the price of one (and more than you can ever afford). 

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