MADRID — Argentina's President Cristina Fernandez is using her bid to nationalize YPF, the Argentine oil unit of Spanish energy firm Repsol, to try to quell rising unrest at home, the company's president claimed Tuesday as the company's shares plunged almost 7 percent.
Repsol president Antonio Brufau told reporters Tuesday that the company will fight Fernandez' nationalization plan and she "carried out an unlawful act and made unlawful charges after a campaign aimed at knocking down YPF shares and allowing expropriation at a bargain price."
Fernandez sparked a diplomatic and economic row between Spain and Argentina Monday when she sent a bill to her country's parliament to put 51 per cent of YPF in state hands. Argentina has in the past accused Repsol of failing to invest in the company and its oil sector.
The decision by Fernandez "is only a way of covering up the social and economic crisis Argentina is facing" amid high inflation and energy prices, Brufau added.
Repsol shares were down 6.8 percent to €16.29 ($21.22) each in early afternoon trading in Madrid, far underperforming the benchmark Ibex index, which was up 1 percent. Analysts were concerned that Argentina has not stated any compensation terms for the nationalization of YPF, which has 42 percent of Repsol's total reserves, estimated at 2.1 billion barrels of crude.
Brufau told reporters that YPF is worth $18.3 billion, and he valued Repsol's stake at $10.5 billion.
In a sign of the rising tensions between Spain and Argentina over the nationalization plan, the Spanish foreign ministry summoned Argentina's ambassador to Madrid for the second time in five days to mount another formal protest.
Justice Minister Alberto Ruiz Gallardon said Argentina's plan to nationalize YPF "represents an extraordinary political error in the medium and long term."
Gallardon and other officials suggested Spain would retaliate, but did not say how. Energy Minister Jose Manuel Soria said the government could take action within days and cited possible lines of diplomatic or commercial retaliation against Argentina but did not provide specifics.
YPF is Argentina's largest company and vital for its energy future, especially after a recent find of huge unconventional oil and natural gas reserves — a discovery that Brufau stressed came from his company's exploration efforts.
But the company has been under intense pressure from Fernandez's government to raise output while its shares have plunged in recent months on fears of possible state intervention.
Argentina this year expects to import more than $10 billion worth of gas and natural liquid gas to address an energy crisis even though it is an oil-producing nation, according to estimates from the hydrocarbon sector.
The European Union is backing Spain in the dispute, and Spain's government is seeking to line up allies to contest the nationalization and possibly isolate Argentina economically. Prime Minister Mariano Rajoy is expected to try to drum up support this week during a trip to Mexico and Colombia.
Brufau said Repsol will mount a legal fight against the nationalization, and encouraged shareholders to take part to try to fend off Fernandez' legislation in congress.
He also also accused Fernandez of being "an expert manipulator" in her accusations that Repsol underfunded its YPF unit, saying that Repsol has invested $20 million in Argentina since it bought YPF in 1999.
YPF shares have plunged in value in Buenos Aires and New York since February, when Fernandez' administration mounted the campaign that led to Monday's nationalization announcement.
Spain is the largest foreign investor in Argentina, ahead of the United States. Spanish bank and telecommunications companies have a heavy presence in Argentina, where they have managed to earn profits to offset deep losses at home in recent years because of the financial crisis hitting Spain particularly hard.
Spain's Telefonica SA operates six companies in Argentina, where it is the leading telecom provider, with revenue last year of €3.17 billion, up from €3 billion in 2010, according to its annual report.
Associated Press writers Jorge Sainz and Barry Hatton contributed from Madrid and Lisbon, Portugal.
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