The Argentine Senate approved a bill early Thursday morning that would nationalize Yacimientos Petrolíferos Fiscales (YPF), the country’s biggest oil and gas producer. Sixty-three out of a total of 72 senators voted in favor of the expropriation—more than the majority required to pass the bill—versus three against and four abstentions. President Cristina Fernández de Kirchner’s coalition party Frente para la Victoria (Front for Victory—FPV) has strong influence over both houses and the bill is widely expected to also pass the Chamber of Deputies next week.
The senate vote comes a week following Fernández announcement that the government intended to seize a 51-percent stake in YPF from its Spanish parent company Repsol, which currently ownes 57.4 percent of the company. Fernández blamed energy companies like Repsol for their lack of adequate investment in the energy sector and for Argentina’s energy trade deficit, which reached almost $3 billion in 2011. The government contends that YPF takeover will help solve Argentina’s short-term energy needs.
Shale gas may in the future offer new solutions to Argentina’s energy challenges, as the country is believed to have the world’s third-largest shale-gas reserves after China and the United States. But in a recent article “Argentina’s Shale Gas Revolution,” published in the Spring 2012 issue of Americas Quarterly, Francisco Resnicoff and Gabi Huesca warn that the Kirchner Administration does not have the financial means to exploit these resources and will likely have trouble attracting the level of foreign investment required to exploit its shale-gas reserves.