Seismic reflections: YPF nationalisation

The de-facto nationalisation of Repsol-controlled YPF, Argentina’s leading oil and gas company and the second-largest integrated petroleum concern in South America, was not surprising given the speculation and intensifying political pressure of recent months. We believe the key issue behind the Argentine government’s move surrounds YPF’s massive shale resources in the Vaca Muerte formation in the provinces of Neuquen and Mendoza. In our view, it is no coincidence that YPF is being nationalised subsequent to the recent announcement by the company concerning the scale of the resources in the Vaca Muerte. The Argentine government appears to think it can take control of a sizeable integrated oil and gas company with a resource base that many companies would covet at a bargain basement price, which it has engineered itself.

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