Argentina's Government to Sell Stake in YPF, Sparking Controversy

Strategic Insights -

The Argentine government is pushing forward with plans to sell a 14.99% stake in YPF, the country's largest energy concern, despite opposition from local lawmakers and market volatility. The sale, which has a minimum price of $38 per share, is expected to raise at least $2 billion for the government's coffers. However, the move has sparked concerns that foreign control of the company could undermine Argentina's energy security.

Key Takeaways:

  • The Argentine government is selling a 14.99% stake in YPF, the country's largest energy concern, to a strategic partner.
  • The sale has a minimum price of $38 per share, 30% above the pre-announcement price.
  • The sale is expected to raise at least $2 billion for the government's coffers.
  • Opponents of the sale, including Radical party deputies, have asked for the sale to be suspended.
  • Repsol, a Spanish oil group, has been identified as the favored bidder, and has already invested $2 billion in Latin America since 1997.
  • Other companies, including BP Amoco, ENI, Consolidated Natural Gas, and Perez Companc, have expressed interest in the deal.
  • The sale comes at a time of industry consolidation, and Latin America is seen as an area of great interest for energy groups.
  • YPF is Argentina's largest energy company, producing 783,000 barrels of oil per day and accounting for 50% of the country's oil and gas activity.

Statistics:

  • The minimum price of the sale is $38 per share.
  • The sale is expected to raise at least $2 billion for the government's coffers.
  • YPF produces 783,000 barrels of oil per day.
  • YPF accounts for 50% of all oil and gas activity in Argentina.
  • Repsol has invested $2 billion in Latin America since 1997.
  • The average profit decline for integrated international oil companies in the third quarter of 1998 was 44%, compared to YPF's 30% decline.

Sources:

  • [Financial Times, February 1999]
  • [Reuters, February 1999]