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Renationalized Argentinian Gas Company Loses Arbitration as its Stocks Plunge

Wednesday, May, 29, 2013


Last year, when the Argentinian government seized YPF (Yacimientos Petrolíferos Fiscales) by purchasing a controlling 51% share, a Brazilian company compelled arbitration and won—a move that could end up costing YPF 1.6 billion dollars in indemnity payments.  As a result of the announcement, YPF’s stocks took an immediate 3.6% dip. 

The dispute stemmed from accusations that YPF had rescinded on several gas-export contracts in 2009 with the Brazilian company AES Corporation (AES).  The panel of arbitrators indeed found YPF guilty of doing so, and will award the Uruguaiana-based AES remuneration that is speculated to be approximately 1.6 billion dollars.  According to equity strategist Carlos Aszpis, “The ruling is a black cloud on the company’s horizon and triggered the share price fall.”

However, arbitration proceedings have not ended, as damages are yet to be determined by the same panel of arbitrators who ruled on YPF’s guilt.  The speculation over awarded amounts have been determined by claims filed by AES for damages in amounts over 1 billion.  YPF also filed reports with the Securities and Exchange Commission detailing additional damages sought by subsidiaries directly involved totaling 17 million dollars, along with 366 million dollars in lost profit. 

Buenos Aires-based YPF has publically stated that it will defend its shareholders’ interests, despite the devastating news.  One of YPF’s subsidiaries, Spain’s Repsol SA, is also seeking compensation in the amount of 10.5 billion dollars from the Argentinian government, alleging that its renationalization of YPF, rather than YPF itself, was responsible for the halt in gas export.