ANNOUNCEMENT 07 May 2012In May 2012, the government of Argentina announced altered domestic business conditions for foreign investors.
NUMBER OF INTERVENTIONS
Ley 26.741 of 3 May 2012, published in Official Gazette of 7 May 2012: http://infoleg.mecon.gov.ar/infolegInternet/anexos/195000-199999/196894/norma.htm
On May 7, 2012, the Presidency of Argentina enacted the Law 26.741 that expropriates the assets that the Spanish petroleum company Repsol had on YPF S.A. Gas and Repsol YPF S.A.
The Argentinean legislation provides that the National Executive shall determine the national policy concerning exploitation, industrialization, transportation and marketing of hydrocarbons, with the main objective of meeting the needs of the country, its deposits, and reserves. In addition, it establishes that permit holders and licensees will have control over the extracted hydrocarbons and, consequently, may transport, commercialize and industrialize their products, in compliance with the regulations issued by the National Executive on technical grounds.
The Law 26.741 stipulates that the expropriated shares, that used to be owned by the Spanish company Repsol, would be distributed as follows: 51% will go to the National State and the remaining 49% will be distributed among the provinces that are members of the Federal Organization of Oil Producing States.
Given the enactment of Law 26.741, the National Executive will be able to exercise all the rights that the expropriation conferred. This implies that the Executive and the designated auditor of YPF S.A. will take control of the oil companies and its resources.