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People's Daily Online>>China Business

Argentina’s YPF takeover raises alarm

By Song Shengxia  (Global Times)

08:03, April 19, 2012

Argentina's plan to nationalize its biggest oil company YPF, controlled by Spain's Repsol, could thwart Chinese companies' plans to acquire stakes in the company, and Argentina's protectionist practices could alienate foreign investors, Chinese energy officials said yesterday.

"The Argentinean government's planned takeover of YPF would bring a lot of uncertainty to any plan by Chinese businesses to invest in the company," Yang Hongwei, director of the Energy Efficiency Center at the Energy Research Institute of the National Development and Reform Commission, told the Global Times yesterday.

"It is because the ownership of the oil company has transferred to the government which may not encourage foreign investment in its energy-oriented companies or may impose harsh terms on potential foreign investors," Yang said.

"The move by a Latin American country to nationalize a private company, especially one in the energy resources sector, has not occurred for the first time. Chinese companies should be alert to the risks arising from changes in policies and political landscape in the foreign markets," Yang noted.

Argentinean President Cristina Fernandez pushed forward a bill Monday to nationalize oil and gas company YPF, which if approved by the country's legislature, could give Argentina a majority stake in YPF by taking control of 51 percent of its shares currently held by Spain's Repsol.

Fernandez, who has already nationalized Argentina's flagship airline and private pension funds, said her aim is nothing less than to recover her country's sovereignty.

Reports about Sinopec Group, China's second largest oil company, holding talks with Repsol to buy its controlling 57 percent stake in YPF surfaced Tuesday following Argentina's move.

Sinopec had reached a non-binding agreement to take over YPF for more than $15 billion, Chinese financial news website caixin.com reported yesterday, citing an unnamed source.

Sinopec could not be reached for comment yesterday, but Sinopec Group spokesman Huang Wensheng told China Business News late Tuesday that the company does not comment on market rumors.

The Ministry of Commerce declined to make a comment yesterday.

"The risks of investment in overseas energy exploration by Chinese companies have long been underestimated and any change in the political landscape and legal system of foreign host countries could jeopardize the companies' plans for sealing a deal, and may even cause losses," Ding Yifan, a researcher at the Development and Research Center of the State Council, told the Global Times yesterday.

"China should focus more on exporting know-how and services to minimize losses in its drive to expand its own investments in foreign countries," Ding said.

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