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UPDATE 5-Argentine provinces pull several YPF concessions
March 14, 2012 / 9:53 PM / 6 years ago

UPDATE 5-Argentine provinces pull several YPF concessions

* Argentina says oil company not producing enough

* More moves against YPF may be on the way

* Chubut province accounts for 7 pct of YPF’s output

By Guido Nejamkis and Alejandro Lifschitz

BUENOS AIRES, March 14 (Reuters) - Argentina’s Chubut and Santa Cruz provinces have stripped the country’s biggest energy company, YPF, of several concessions, citing lack of investment, according to provincial decrees signed on Wednesday.

YPF, controlled by Spain’s Repsol, is under heavy pressure by the Argentine government to increase oil and natural gas output. The South American country’s economy has boomed in recent years, spurring energy demand while costly fuel imports eat into its cherished trade surplus.

“We have said enough!” Chubut Governor Martin Buzzi said in a speech carried by local radio in which he called for energy self sufficiency in Argentina.

“We just rescinded the YPF contracts. They have 90 days to fully hand over operations,” he added. “We are going to continue to move forward the way we did today.”

YPF issued a statement saying it would take legal action against the “unilateral” revocation of its concessions in Chubut, which account for 7 percent of the company’s total output in Argentina. Its Santa Cruz wells produce much less.

Concessions are the agreements by which companies are allowed to explore and drill for oil in certain areas of Argentina during certain periods.

YPF produced about 35 percent of all the oil drilled in Argentina last year.

YPF says it invested $350 million in Chubut last year and $380 million in Santa Cruz, above levels in the two prior years. But Argentine authorities were clearly unsatisfied.

“The revocation of these areas clearly shows that the government’s offensive against the company, which started in January, is far from over,” said Ignacio Labaqui, who analyzes Argentina for New York-based consultancy Medley Global Advisors.

“Other provinces will probably follow suit,” he added. “It is the provincial administrations that are leading the attack against YPF, but they are obviously doing so with the national government’s blessing.”

Argentina has also launched an antitrust probe against YPF to investigate accusations that it pushes fuel prices up by limiting supplies. It also urged YPF last week to withhold dividend payments and reinvest those funds instead.

President Cristina Fernandez is criticized by business for her unpredictable policies aimed at increasing the state’s role in the economy. She nationalized Argentina’s private pension system, ignores constant calls from Wall Street to confront the country’s double-digit inflation rate and embraces the use of central bank reserves to pay sovereign debt.

But the 59-year-old leader was easily re-elected last year and is loved by many for her generous social spending and the emphasis that her administration places on human rights.

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