Nationalization of Oil Industry Essay Example | Topics and Well Written Essays - 1750 words

nationalization of Oil Industry - Essay ExampleArgentinean President Cristina Fernndez de Kirchner in April 2012 has announced that Argentina would take control of Repsol YPF, the countrys biggest crude oil producer, by nationalizing 51 percent of the companys shares (Gaudn, 2012). Until 1999 YPF was the largest oil company in Argentina and was owned by the government. However, lack of effectual management and expertise was pulling down profits in the oil industry. As a result, the government started encouraging foreign investment in the market so as to invigorate oil production. Between the years 1993 and 1999, Madrid based Repsol had acquired 100 percent of the companys shares (Weinstein, 2012) and its name was changed from YPF to Repsol YPF. Spain is the largest foreign investor in Argentina with the European market being the largest export market for the country (Hernandez, 2012). However, the current dispute is over a slump in investment by the Spanish owner of YPF, which is leading to a drop in energy output in Argentina.In the home country, Buenos Aires based YPF is considered an emblem of state pride (Economist, 2012a). Nationalization of the $18 billion worth company in 2012 would start out huge revenue to the cash-strapped government, which is a significantly beneficial aspect of the Presidents decision. whence nationalization of the countrys biggest oil company is plain a populist move by the President. Energy officials from Brazil and the President of Uruguay have praised this activeness (Economist, 2012a).... Justifications Cited for Nationalization of Oil In the home country, Buenos Aires based YPF, is considered an emblem of state pride (Economist, 2012a). Nationalization of the $18 billion worth company in 2012 would bring huge revenue to the cash-strapped government, which is a significantly beneficial aspect of the Presidents decision. Hence nationalization of the countrys biggest oil company is apparently a populist move by the President . Energy officials from Brazil and the President of Uruguay have praised this action (Economist, 2012a). Ms. Fernandez has accused Repsol in terms of its failure to make plenty investment in exploiting the resources of the country. YPF has declared that it has discovered an oil shale site whose estimated potential yield would be 23 billion barrels approximately (Forero, 2012). In the scope of soaring cost of oil, which is damaging the countrys economy, the lack of potential investment in Argentinean gas and oil reserves is a primary generate cause behind the seizure of Repsol YPfs shares. The President said that Repsol was not producing enough oil and was therefore failing to meet the countrys enumerate energy requirements. Argentina is currently facing a serious shortage in its total production of energy. This situation is being fixed by importation energy at a higher price from other countries (Economist, 2012a). Ms. Fernandez has said that if this continues Argentina would b ecome an unviable state for investment (Macalister, 2012). Pressure exerted by the government on YPF was increasing since the past two months before the decision of nationalization was taken. It is evident that the current situation has been created as a turn from the 2004