Facing intense criticism over the nationalization of its biggest oil firm, Argentina Thursday order the seizure of another unit of the Spanish firm Repsol, YPF Gas, a move expected to inflame tensions further.
In a case that has sparked fears of a new wave of expropriations, a statement published in the official gazette said the Argentine government was declaring YPF Gas a public utility and taking 51 percent of the shares.
YPF Gas is not part of the YPF oil group ordered nationalized this week, leading to global condemnation, but a separate company. But an 85 percent stake in the gas firm is owned by Repsol Butano SA, a division of the Spanish energy giant.
Officials said the move was an extension of the takeover of YPF, the big unit of Repsol which Argentina decided to seize this week.
The government statement indicates that YPF Gas "plays an essential role in Argentina's hydrocarbon policy."
YPF Gas is the main provider of fuel tanks that are supplied to low-income households in the South American nation that are not on the gas network, officials said.
The move expands the nationalization effort ordered by Argentina, which claimed the Spanish firm was failing to invest in the country and forcing it to import more of its energy supplies.
Spain and the European Union have warned that the nationalization would damage relations and others have voiced concerns of a chilling effect on capital investment in the region.
"I think it's a mistake and I think it's a symptom that we have to watch out for -- if under economic pressure, whether countries will move to more national, autocratic policies, respond more to nationalism, more to protectionism," Zoellick said at a news conference.
Repsol bought Yacimientos Petroliferos Fiscales in 1999 for $15 billion in what was the biggest operation of the privatization program of former Argentine president Carlos Menem.
Credit rating firm Standard & Poor's downgraded Spanish oil firm Repsol's rating by one notch Thursday.
S& P lowered the rating to BBB-minus from BBB, indicating strong creditworthiness but an increased vulnerability to economic shocks, with a negative outlook, it said in a statement.
"The nationalization of YPF will materially worsen Repsol's credit metrics," since the Argentine subsidiary accounted for a large share of Repsol's profits last year, it said.
US ratings agency Moody's downgraded YPF on Tuesday.
Kirchner has argued that the expropriation was justified because YPF crude production had dropped while oil and gas imports doubled in 2011. Imports are forecast to triple by the end of the year.
Argentina also faces a drop in its trade surplus -- down 11 percent in 2011 -- which is its main source of hard currency since foreign credit markets closed their doors after the 2001 debt default.
Source: AFP Global Edition