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by Andres Oppenheimer
One year after Argentina's nationalization of YPF, the country's biggest oil company, our forecasts have come true: the firm's energy production is falling, its debt is rising, and its board has just awarded itself a generous raise.
It's a movie we have seen many times before - most recently in Venezuela, Bolivia and Ecuador - but the fact that Latin American governments insist on adopting pseudo-nationalistic policies that have failed everywhere never ceases to amaze me.
According to YPF's official data, the company's gas production fell 3.7 percent during the first three months this year, while its oil production fell 0.7 percent during the same period. YPF's energy production fell 0.6 percent in 2012 from already low levels a year earlier.
That's a far cry from President Cristina Fernandez de Kirchner's vow that the nationalization would increase YPF's production, put an end energy to imports and help "recover our sovereignty."
To make things worse, a report in the daily Clarin earlier this week said that YPF's board of directors has just awarded itself a 67 percent raise. Sources who follow YPF closely tell me that the actual raise was smaller - the calculation of a 67 percent increase comes from comparing this year's salaries with those of a 9-month period last year - but still significant for a financially-strapped company.
Granted, the decline of Argentina's biggest oil company did not start when Fernandez announced the government takeover of YPF from a Spanish-Australian group led by Spain's oil giant
Argentina - a former energy exporter - had to start importing hydro-carbons in 2010.
The Fernandez government says
In a statement on the occasion of the first anniversary of YPF's expropriation, eight former Argentine energy ministers have published a joint statement denouncing Fernandez and her late husband Nestor Kirchner's energy policy over the past 10 years, saying the policy has been "to consume irresponsibly without investing in stock reposition."
As a result, Argentina's energy production has plummeted, they said. The country is producing 25 percent less oil and 13 percent less gas than it produced in 2003.
While critical of
In a recent testimony to the
He added that if Argentina is allowed "to carry out these policies without having to face the consequences, the rule of law could be seriously undermined, creating a domino effect in other Latin-American countries."
Now, Argentina's government is triumphantly announcing that
My opinion: There are some cases of successful state-run oil companies - such as Norway's Statoil - but Argentina's expropriation of YPF is a text-book case of what happens when a populist government with few checks and balances nationalizes a major company.
One would think that the disastrous expropriation of YPF, or the equally horrific outcome of Argentina's takeover of the
But as I'm writing these lines, I'm reading in the Argentine press that Fernandez earlier this week expropriated the Tren de la Costa railroad line and its affiliated companies. No need to spend time guessing how that will end.
WORLD | AFRICA | ASIA | EUROPE | LATIN AMERICA | MIDDLE EAST | UNITED STATES | ECONOMICS | EDUCATION | ENVIRONMENT | FOREIGN POLICY | POLITICS
Article: Copyright ©, Tribune Media Services.
"Argentina's Oil Fiasco No Surprise"