April 25, 2012 / 2:20 PM / 6 years ago

Argentine Senate set to approve YPF takeover bill

* Polls show most Argentines favor the expropriation

* Senate approval would allow law to pass next week

* Spain halts imports of Argentine biodiesel in reprisal

By Hugh Bronstein

BUENOS AIRES, April 25 (Reuters) - Argentine senators are set to approve the nationalization of the country’s biggest oil company on Wednesday, underscoring broad domestic support for a move that sparked outrage among foreign investors and trade partners.

President Cristina Fernandez, who controls both houses of Congress, unveiled plans last week to seize a controlling 51-percent stake of YPF from Spain’s Repsol.

Most Argentines support the move to renationalize YPF, which was privatized in the 1990s after 70 years under full state control, and several leftist and centrist parties are expected to vote with the government.

More than 60 legislators in the 72-member Senate could vote in favor of the expropriation bill, political analysts say, clearing the way for it to get final approval next week in the lower house, which is expected to debate the bill on May 3.

“It’s going to be voted with an extremely wide margin,” ruling party Senator Daniel Filmus told reporters as he entered the Senate. “(This bill) creates the right conditions for us to debate a federal energy policy.”

Once the takeover becomes law, attention will turn to the compensation Argentina will pay Repsol for its majority stake in YPF. Officials have already said it will be a far cry from the $9.3 billion the company has requested.

Despite winning widespread support at home, Fernandez’s move has deepened the concerns of foreign investors and governments about increasingly antagonistic policies such as import curbs.

Repsol has denied her accusations that it failed to invest to boost production -- a major justification of the takeover -- and Madrid has vowed to halt multimillion-dollar imports of biodiesel from Argentina in retaliation.

The chorus of condemnation was joined by ratings agencies Moody’s and S&P this week when they said the YPF seizure heightens investor risks in Argentina and could increase the country’s economic isolation.

London-based Capital Economics said it could have “a significant impact on investment flows into the wider economy, making the current ‘model’ increasingly reliant on maintaining a dwindling trade surplus.”

The trade surplus, a pillar of Fernandez’s economic policy, shrank last year as fuel imports more than doubled -- sending the issue of flagging oil and natural gas production to the top of the president’s list of priorities.


Latin America’s No. 3 economy has yet to return to global credit markets a decade after its crippling 2001/02 financial crisis and sovereign debt default -- the biggest in history.

Many Argentines blame the free-market policies of the 1990s for precipitating the meltdown and Fernandez’s calls for “energy sovereignty” have struck a chord with voters.

A survey published last weekend by local polling company Poliarquia showed 62 percent of respondents agreed with the expropriation, with 23 percent against it. Other opinion polls yielded similar results.

Fernandez was re-elected in October with 54 percent of the vote on pledges to deepen the unorthodox policy mix began on the ashes of the crisis by Nestor Kirchner, her late husband and predecessor as president.

Fernandez, a fiery public speaker who is sometimes compared to Argentina’s famous first lady Evita Peron, has worn only black since Kirchner’s sudden death in 2010 and she dedicated YPF’s takeover to his memory.

”We need to have energy sovereignty,“ she said in a speech on Tuesday, acknowledging that she was nervous when she announced the YPF takeover plan. ”They weren’t nerves caused by doubts or insecurities. On the contrary; I‘m absolutely certain that this is the only way.

“What upset me was that (Kirchner) couldn’t be there to see such a historic moment.”

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