Argentine officials have been ratcheting up the pressure on Spanish-owned oil company YPF-Repsol, demanding increased investment in hydrocarbon production against a backdrop of declines in output that have made Argentina one of the fastest-growing import markets for natural gas. The threat of a similar scenario with oil has the government on the offensive against the nation’s top energy company.
The gas shortage is reverberating throughout the rest of the economy, driving import restrictions to shore up the trade balance and tighter currency controls to ensure the availability of dollars for purchases of foreign gas. Looking forward, the government's posture on YPF raises questions about how it will exploit its substantial proven reserves of oil and natural gas -- reserves that could eventually turn Argentina into a major player in global energy markets.
So far, threats against YPF have resulted in the stripping of minor concessions by oil-producing provinces -- in Argentina, provinces control all natural resources within their territory. But the government of President Cristina Fernandez de Kirchner is seeking a larger national presence and more favorable terms for the development of the country's oil and natural gas reserves, and talk of a national takeover is swirling once again.