April 4, 2012 6:39 pm

YPF and Argentina

You Poor Fools. Argentina seems intent on bringing the national oil companyYPF – 57 per cent owned by Repsol of Spain – back into state control. Regional authorities have been stripping it of concessions; ministers have ratcheted up calls for increased investment. YPF’s share price has tumbled 44 per cent since late January and 17 per cent this week. That makes a renationalisation less unaffordable for a government that lacks the means to do it. But it would not make such a move any more acceptable.

YPF was privatised in the 1990s; Repsol acquired it in 1998 with the state retaining a golden share. One route to exercising control would be for Buenos Aires to buy the 25 per cent of YPF owned by the Eskenazi family. That stake, worth about $2bn today, was acquired at the urging of Néstor Kirchner, the former president, five years ago. The family borrowed heavily to do the president’s bidding and relies on YPF’s dividends (a 90 per cent payout ratio) to finance the debt. That adds to a sense that this is a movie everyone has seen before: the Eskenazis’ predicament at YPF is akin to that of Sacyr Vallehermoso, the indebted Spanish property group, at Repsol: a shareholder repenting at leisure after investing in haste.

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Giving the state a bigger stake in YPF could align the interests of Repsol and Argentina more closely. It would also ease the Eskenazis’ plight. The trouble is that Argentina cannot afford it even after the share price tumble. Nor has Repsol been a careless owner: it says it has invested $11bn in Argentina since 2007. Would Buenos Aires have done the same?

Argentina could have chosen the Petrobras model for YPF, with the state as supportive shareholder. Alas, it seems to be opting for Mexico’s Pemex: a national oil company neutered by a government that has confused state ownership with the best interests of Argentina itself.

Email the Lex team in confidence at lex@ft.com