Spain warns Argentina over Repsol takeover

Madrid threatened to retaliate after Argentina announced it will expropriate a subsidiary of Spanish oil giant Repsol, warning the move breaks a ‘good understanding’ between the countries. Spain will take “all measures it considers appropriate” to defend the interests of Repsol and Spanish businesses abroad, Industry Minister Jose Manuel Soria told a news conference late on Tuesday. Spain is considering action on diplomacy, trade, industry and energy, he said, without giving further details. The government backed the company, which says it will take legal action after Argentinian President Cristina Kirchner announced she would nationalise Repsol’s YPF subsidiary. The European Union warned Buenos Aires that it was sending the wrong signal to investors, who dumped Repsol shares, sending them 6.06 per cent lower on the Madrid stock exchange. In New York, trading in YPF remained suspended for a second day. “These acts will not remain unpunished,” said Repsol executive chairman Antonio Brufau after Argentina’s decision to take a 51 per cent stake of YPF, virtually wiping out Repsol’s 57.4 per cent holding. Repsol would seek an amount at least equal to the value of its stake, which the firm estimates at $10.5 billion, the Repsol chief said. Legal actions “Repsol will launch all legal actions that are within its reach,” Brufau vowed, saying he had a wide range of options including constitutional, commercial and civil actions to counter the “manifestly illegal and gravely discriminatory” move. Spain’s government summoned Argentina’s ambassador, Carlos Bettini, for the second time in five days to ask why Buenos Aires had ignored warnings against intervening in the Repsol subsidiary. “Argentina has shot itself in the foot in a serious way,” Foreign Minister Jose Manuel Garcia-Margallo told reporters. “What worries me is that this means a cut, or at least distrust, in relations that have been really fraternal for a very long time,” he said. Speaking in Mexico, Spanish Prime Minister Mariano Rajoy said the “decision breaks the previous good understanding between the two countries.” It was a “negative decision ... without justification,” he told the World Economic Forum on Latin America. Later Tuesday, Argentina’s deputy economy minister Axel Kicillof, who helped mastermind the takeover, accused Repsol’s chief of running up its debt. Kicillof, speaking to lawmakers, said Brufau had hidden the actual value of the company, after incurring about $9 billion in debt. “He who speaks about excellent management owes $9 billion. Sometimes he hides the debt with investment. Brufau told us he does not have the money to invest. Where did they put it that they do not have it?” Kicillof said. The proposal for the takeover of YPF is to be debated next week in the Senate, where the ruling party holds a majority, as well as in the Chamber of Delegates.