(RTTNews) - Spanish oil giant Repsol announced Friday that it has canceled its contract to supply liquid natural gas (LNG) to Argentina, following disputes over the nationalization of the Spanish firm's stakes in energy company YPF by the Argentine government.
"We are terminating the contract because Enarsa (state-run Argentine firm) is not respecting its terms," Repsol spokesman Kristian Rix was quoted as saying in a statement by the Spanish media.
The spokesman said the Argentine state-owned company "has made a series of violations, including non-payments, and we have no confidence they are going to respect the rest of the terms."
Pointing out that the Argentine firm had failed to pay for a liquid gas tanker, the spokesman noted that
Enarsa had changed delivery schedules and wanted to re-negotiate prices. He, however, did not mention how much money the Argentine firmed owed his company.
"We hold them accountable for the contract breach and reserve the right to demand compensation or take relevant legal action," he added.
At present, Argentina depends on LNG imports to meet about 20 to 30% of its domestic natural gas consumption. Under the contract canceled Friday, Repsol was required to supply 10 of the 80 LNG shipments required to meet peak demand between June and September. The Spanish firm Repsol had canceled one LNG shipment to Argentina last month following the nationalization of YPF.
The latest developments come after the Argentine government expropriated 51 percent of YPF's stock from Repsol in April, ignoring threats of strong retaliation by the Spanish government as well as the European Union.
While Spain warned of a slew of swift retaliatory measures against Argentina over its decision to nationalize YPF, the EU cautioned that Argentina would face long-term consequences if it went ahead with its nationalization plans.
However, EU's Ambassador to the South American nation was cited as saying in an interview earlier on Friday that the European bloc respected the Argentine decision. Nevertheless, the Ambassador cautioned that the EU expects Argentina to compensate the Spanish oil giant.
Incidentally, the Argentine government has ruled out fully paying the compensation demanded by the Spanish firm for its stakes in YPF. In response, Repsol has reportedly filed a class action lawsuit against Argentina in a New York court.
Repsol, which had been controlling YPF since 1999, had a 57.43 percent stake in the Argentine oil company when it was nationalized. YPF was privatized only in 1993, and almost a quarter of the company's shares are held by Argentina's Eskenazi family through its firm, Peterson.
Notably, the Argentine government's move to re-nationalize YPF, which provides about a third of the country's oil and a quarter of its gas requirements, came a year after the company announced the discovery of large swathes of shale oil and gas fields.
While announcing her government's decision to nationalize YPF in mid-April, President Cristina Fernandez de Kirchner blamed the doubling of the country's oil imports last year on the failure of companies like Repsol to make adequate investments in oil and gas production. She insisted that reclaiming control of Argentina's largest oil company was of vital national interest.
The Argentine government has been following a policy of nationalization in the service and industrial sectors in recent years. Argentina's private pension funds worth some $24 billion, Aerolineas Argentinas SA, as well as the country's postal service, railways and water works have already been nationalized.
For comments and feedback: contact email@example.com
Copyright(c) 2012 RTTNews.com. All Rights Reserved
Copyright 2012 NoticiasFinancieras/Grupo de Diarios America. All Rights Reserved.
(Originally published May 19, 2012, by RTT News.)