US Justice Orders Argentina to Hand Over 51% of Oil Company YPF

Direct blow to the jaw of the Argentine economy, catching Javier Milei's liberal government completely off guard. A New York judge ordered the South American state on Monday to hand over its 51% stake in the oil company YPF to comply with an adverse ruling in a multi-million dollar lawsuit stemming from its expropriation from the Spanish multinational Repsol nearly thirteen years ago, without any public offer to other minority shareholders to prevent them from also being harmed.

Judge Loretta Preska, from the New York district, has ordered the Argentine government—YPF is state-owned—to transfer these shares within two weeks to a custody account in a bank in the said US city. Once there, they would be available to the Anglo-Saxon investment funds Burford (UK) and Eton Capital (US), unless further appeals delay the delivery until a final resolution in this case.

In fact, through social media, President Milei announced shortly after that he would fight the legal battle. "Let all Argentines know that we will appeal this ruling in all relevant instances to defend national interests," he asserted on X. This case is part of a general lawsuit for which the country was already condemned in 2023 to pay more than 16 billion dollars (13.588 billion euros) for the expropriation of YPF in 2012.

Following the news, YPF shares fell 4.4% on the Buenos Aires Stock Exchange—its subsidiary Metrogas also lost 5.3%—while on Wall Street, its losses approached 6%, although analysts expected it to recover. Argentina maintains control of YPF through its majority stake in the company's main decisions, such as the approval of different initiatives or the election of the board of directors. Its expropriation took place under the government of Cristina Fernández de Kirchner, who is now serving a six-year prison sentence (to be served under house arrest) for corruption.

The case began in 2015 when the English investment firm Burford Capital and the American Eton Park filed the lawsuit after acquiring the litigation rights from YPF of two companies established in Spain that precisely went bankrupt: Petersen Energía Inversora and Petersen Energía. These two companies formerly belonged to the Argentine group Petersen—of the Eskenazi family—which held a 25% stake in the Argentine oil company at the time of nationalization and did not take part in the New York trial, reports EFE.

Burford Capital and Eton Park claimed in the trial for hefty compensations, arguing that the South American state should have launched a public acquisition offer for the remaining shares not owned by Repsol. Argentina argued in the hearing that the YPF nationalization law approved by Parliament in 2012 prevented the state from acquiring additional shares.

Founded in 1922, YPF, whose shares are also traded on the New York Stock Exchange, plays a strategic role in Argentina's energy sector. The company produces 40% of the country's oil and 30% of its gas. It has three refineries (accounting for 50% of Argentina's refining capacity), a wide network of gas stations, as well as significant participation in pipelines, gas distribution, and renewable energy generation.

The oil company leads the development of the unconventional hydrocarbon formation of Vaca Muerta and is involved in multi-billion dollar projects in partnership with other companies to export oil and liquefied gas by sea. According to YPF's latest quarterly balance, the company has assets worth 29.714 billion dollars and a net worth of 11.908 billion.