YPF - The Argentine Oil Nationalization of 2012: R E V: J U N E 2 6, 2 0 1 3

9 - 71 3 - 0 2 9
REV: JUNE 26, 2013
NOEL MAURER
GUSTAVO HERRERO
YPF — The Argentine Oil Nationalization of 2012

On Monday, April 16, 2012, President Cristina Fernández de Kirchner of Argentina declared that
the Argentine government would nationalize a 51% stake in YPF, Argentina’s largest oil producer.
The decree specifically targeted shares owned by Repsol, a Spanish oil company, leaving the compa-
ny’s other owners untouched.1 The federal government would control 26.01%, while an additional
24.99% would be under the collective control of the hydrocarbon-producing provinces.2 The execu-
tive order came under the form of a presidential decree, while an expropriation law was sent to Con-
gress for approval. The decree placed the company under the temporary administration of the federal
planning minister, Julio de Vido, and the vice-minister of the economy, Axel Kicillof.
President Fernández announced the expropriation on national television. “The model is not social-
ization, clearly, but rather the recuperation of sovereignty and control over a fundamental instru-
ment,” she told an enthusiastic audience. She went on to blame Repsol for hollowing out YPF. “To
continue with this policy of tunneling, of not producing, of not exploring, would practically make our
country unviable — not for lack of resources, but due to business strategies.” The speech ended with
a passionate rebuff to angry words from Repsol and the Spanish government: “This President will
not respond to any threats, I will not respond to any outbursts, I will not echo the lack of respect and
insolent words said by others. I am a head of state and not a gangster.”3
Cheering crowds filled the Plaza de Mayo and pro-nationalization graffiti appeared on walls
around the capital. Referees in the national soccer league went so far as to don non-regulation jerseys
supporting the action. A poll taken six days later showed 62% support. Other results from the same
poll, however, showed some red flags. A 44% plurality blamed the government for recent declines in
hydrocarbon production, against 36% who blamed Repsol. Only 49% believed that the move would
benefit the economy; 47% said that it would hurt Argentina’s international image.4
President Fernández’s decision had been widely expected.5 She postponed the announcement to
attend the Summit of the Americas in Cartagena, where she hoped to receive an endorsement for
Argentina’s claim to sovereignty over the British-ruled Malvinas, known in the U.K. as the Falkland
Islands. She knew that sovereignty over Malvinas and the ownership of YPF struck a nationalist
chord in the heart of millions of Argentines. Fernández met personally with U.S. President Barack
Obama, but Obama reportedly vetoed any mention of the dispute at the Summit.6 President Fernán-
dez left early to return to Buenos Aires, declaring, “This is pointless. Why did I even come here?”7
The next day she announced the nationalization.
On May 3, 2012, the Argentine Congress approved the expropriation law with 208 votes in favor,
32 against, and 5 abstentions. Senator Maria Eugenia Estenssoro, perhaps the most vocal opponent to
________________________________________________________________________________________________________________
Professor Noel Maurer and Gustavo Herrero, Executive Director of the HBS Latin America Research Center (LARC), wrote this case with the
assistance of Regina Garcia-Cuellar, Senior Researcher, and Cintra Scott, Research Associate. HBS cases are developed solely as the basis for class
discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
Copyright © 2012, 2013 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-
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713-029 YPF — The Argentine Oil Nationalization of 2012
the expropriation, ended up abstaining. “I experienced a tremendous inner struggle,” she said, “I was
adamantly opposed to the expropriation, particularly because of the way in which it was done, but I
did not want my vote to be interpreted as a defense of Repsol’s interests. I had opposed the Repsol
transaction ever since 1999, because it went against everything that my father had worked for.”8
(Senator Estenssoro’s father had led YPF after it was privatized in the early 1990s.)
The Spanish government protested vociferously and angrily. It imposed a ban on imports of Ar-
gentine biodiesel. The move bloodied the nose of an important Argentine industry: in 2011, Argenti-
na sold $990.6 million of biofuel to Spanish consumers.9 (Spain also zeroed-out aid to Argentina
worth approximately €4 million in 2011, but the cut was part of the country’s general austerity and
applied to all countries.10) The European Parliament supported Spain, passing a resolution calling for
sanctions.11 In theory, the European Union could impose sanctions against Argentina’s annual ex-
ports of $10.4 billion; in practice, the European Commission lacked the legal authority to take such a
step. On May 25, however, the European Union filed a suit at the World Trade Organization (WTO).
The suit did not directly involve the nationalization — rather, it protested Argentina’s import licens-
ing regime12 — but observers believed that the nationalization played a key role in the decision.13
Antonio Brufau, the CEO of Repsol, claimed that Repsol’s investment in YPF was worth $10.5 bil-
lion. Axel Kicillof’s initial response was incredulity. “We’re not going to pay what they say.” He later
clarified his position: “I don't know if the value is $10bn, the only thing I can say is that I don't know
how this figure was reached. They are welcome to sit down and negotiate the price.”14
Brufau needed to decide how his company would pursue its interests. The company quickly can-
celled nine liquefied natural gas (LNG) shipments due Argentina.15 The move forced the Argentine
government to buy on the spot market at a 26% premium.16 At a value of $40 million per shipment,
the damage to Argentina would reach $94 million. Under Argentina’s investment treaty with Spain,
Repsol could also take Argentina to the International Center for the Settlement of Investment Dis-
putes (ICSID), a World Bank organization that arbitrated investor-state disputes. Argentina, however,
was the only country to have ignored ICSID rulings since the body’s creation in 1965.17
A History of the Argentine Energy Industry

The Origins of YPF
“Argentina is not an oil country; it is a country with oil.”
— Gustavo Petracchi, former Energy Secretary and head of Gas de Estado
On December 13, 1907, a team of geologists from the Department of Agriculture discovered oil on
the coast of Patagonia, near the town of Comodoro Rivadavia. The finding was made on federal land.
In 1911, the government placed the federal fields under the control of the Petroleum Bureau.
In 1913, Petroleum Bureau Director Luis Huergo warned that private investment would open the
way for Standard Oil (now ExxonMobil) to seize control. “Standard Oil acts like a band of cruel usu-
rious pirates, headed by an ex-clerk, who began by carrying thousands of families among his own
countrymen to ruin. Like an octopus, Standard Oil has extended its tentacles everywhere, accumulat-
ing colossal fortunes of millions of pesos on the basis of human blood and tears.”18 He was not heed-
ed, although the federal government did reserve federal lands for itself.
In 1916, Argentina held its first presidential election under universal male suffrage. Hipólito
Yrigoyen of the Radical Party won. On June 3, 1922, Yrigoyen transformed the Petroleum Bureau into
YPF — The Argentine Oil Nationalization of 2012 713-029
Yacimientos Petróleos Fiscales (YPF). YPF became the second national oil company (NOC) in histo-
ry.19 Under its first CEO, Enrique Mosconi, YPF moved downstream, building a refinery in 1923 and
a network of service stations in 1928.20 Mosconi lobbied to sell a 49% stake in YPF to the public. In his
words, it would free YPF from the “slow administrative process characteristic of state organizations.”
He also hoped that it would mobilize “the spirit of national capital, which today is not invested.”21
Mosconi failed to see his reforms enacted before the military coup of 1930 forced him into exile.
He did, however, see YPF’s production grow from 6,084 to 14,292 barrels per day, although its share
declined from 77% to 58%. Crude oil imports declined from 70% of consumption to 58%.22 After 1930,
the military government did its best to squeeze out private oil producers and refiners and enacted
restrictions on imports. Imports declined from 58% of consumption in 1930 to 25% by 1939.
Cycles of “Urgency and Betrayal”

Juan Perón rose to influence after a nationalist coup in 1943, and became president in 1946. In 1954
he reversed earlier policies and invited foreign companies into Argentina.23 In May 1955, Perón
signed the first “service contract” (structured like a modern production sharing agreement) with
SoCal (today ChevronTexaco).24 He also started Argentina’s natural gas industry: in 1946 he ordered
that the gas flared during oil extraction be captured and sold via the state-owned Gas de Estado.25
A coup overthrew Perón in September 1955. The contracts were cancelled. The coup leader, Gen-
eral Pedro Aramburu, stated, “The main purpose of the revolutionary movement was the threat
looming over the oil industry.”26 In 1958, the country returned to civilian rule. President Arturo
Frondizi implemented an oil strategy not unlike Perón’s. In areas where YPF owned oil and gas re-
serves, Frondizi offered 20 to 40 year production sharing agreements. YPF signed contracts with three
foreign companies to drill 2,100 wells within four years.27
The military overthrew Frondizi in March 1962. In 1963, elections brought Arturo Illia to the pres-
idency. Illia cancelled all the contracts.28 The cancellations affected Conoco, Exxon, Marathon, Amo-
co, Unocal, and Shell. As a result, the Kennedy administration slashed economic and military aid,
and the IMF and World Bank denied the country credits. A coup overthrew Illia in June 1966. In 1967
the new government under General Juan Carlos Onganía settled with the foreign companies. Com-
panies that had found oil were compensated for the value of their initial investment, plus 15% annu-
ally on the value of that investment prior to the contract’s annulment. Payment came in the form of
dollar-denominated bonds bearing interest rates between 6.5% and 6.75% for terms ranging from
nine to 24 years.29 (The Conoco-Marathon joint venture failed to find oil and in turn requested no
compensation.30)
Onganía fell to a countercoup in 1970, and the new military regime reverted to resource national-
ism. Civilian rule returned after defeat in the 1982 war with the United Kingdom, but hydrocarbon
policy remained unclear. Production lagged demand. Price controls forced YPF into sustained loss-
es.31 YPF’s workforce bloated, growing to over 50,000 people by the end of the 1980s.
Carlos Menem won the 1989 election. Menem issued a decree changing YPF’s service contracts in-
to 25-year concessions, with a 12% royalty for provincial governments and no special oil taxes. (Pre-
viously, YPF purchased oil produced under service contracts at a fixed price.) The decree also forced
YPF to sell all its secondary (low-production) areas.32 The secondary areas attracted $244.6 million in
investment. Although they produced only 6% of Argentina’s crude, they proved profitable, earning
an annual return on investment averaging 24% between 1991 and 1997. They also proved risky: four-
teen earned phenomenal returns, but eight out of the 28 areas lost money, and an additional four
earned less than 10%.33 In valuing secondary areas before putting them out to bid, YPF used a 20%
discount rate (in dollars).34
Menem’s then partially privatized YPF. In 1990, he allowed YPF to sell unprofitable refineries,
service stations, and export terminals. Under José Estenssoro’s leadership, YPF raised $2.3 billion
while reducing its payroll from 51,000 in December 1990 to 8,000 in December 1993. (YPF’s produc-
tion share dropped from 98% to 43%.)35 In 1993, Menem sold 58.3% of YPF to the public. The federal
government retained a 20.3% stake, including a “golden share” that gave it a right of veto. The prov-
inces retained 11.2% and 10% was distributed to the company’s employees. The federal government
earned $3.04 billion from the sale, of which it used $1.7 billion to cover part of YPF’s retirement obli-
gations.36
Estenssoro remained CEO after the privatization, and expanded into other American countries,
acquiring Maxus Energy Corporation of Dallas for $740 million in 1995.37 He also invested in explora-
tion and development (E&D). Estenssoro died in a plane accident in Ecuador, in 1995, while visiting
oil companies. Gas de Estado, meanwhile, was divided into two transportation and eight distribution
companies, which were then privatized. Oil and gas production soared, and the country became a net
exporter of both products.38 By 1999, 16.4% of YPF’s production came from outside Argentina, as did
38% of its $5.5 billion in revenues. Oil breakeven prices fell from $11 per barrel in 1995 to only $7 in
1999. “We now act like an American company,” said Estenssoro’s successor, Roberto Monti.39
The Second Reconquista: Repsol Enters Argentina

In January 1999, the federal government sold 14.99% of YPF for US$2.01 billion ($38 per share) to
Repsol, a Spanish oil company. President Menem decided to sell to a single “strategic partner” to
maximize revenue.40 Monti and the rest of the YPF board opposed the sale. In May, Repsol bought
the other 85% at a price of $44.78 per share, a 25% premium. The federal government received $837
for its 5.01% share, Santa Cruz province $948 million, Chubut province $78 million, and the rest of the
shareholders $11.442 billion.41
Repsol’s goal was to turn itself into an integrated international oil company. Prior to 1996, Repsol
owned five Spanish refineries, a chain of service stations, and a 91% stake in a Spanish natural gas
distributor. Between 1996 and 1999, Repsol bought service stations in Ecuador, Peru, and Argentina.
In 1997, it bought a majority stake in PlusPetrol Energy, which owned 60% of Argentina’s largest gas
field.42 From Repsol’s point of view, the YPF acquisition was an easy and relatively inexpensive way
into the upstream portion of the industry. It bought the company at a price of $4.65 per barrel, rather
less than the $7.40 that BP Amoco offered Arco around the same time, and significantly less than the
$8.00 per barrel that Exxon paid for Mobil. With YPF, the company leaped into 7th place in oil produc-
tion and refining and 8th in terms of oil and gas reserves.43 Repsol financed the deal with debt: its
debt-to-equity ratio went from 38% to 70%.44
The Eskenazi Deal45

On February 28, 2008, Repsol sold a 14.9% stake in YPF to Petersen Energía S.A. (PESA). PESA
was a Spanish holding company wholly-owned by Petersen Energía PTY Ltd., incorporated in Aus-
tralia, which in turn was wholly-owned by the Eskenazi family of Argentina. Grupo Petersen, con-
trolled by the Eskenazi family, had acquired the Banco de la Provincia de Santa Cruz when it was
privatized in 1998, when Nestor Kirchner was governor of that province.46
The price of the transaction was set at $33.14 per share, totaling $2.235 million. The payment terms
were the following:
x $1,018,850,000 in cash, which PESA obtained from a syndicated loan agreement led by Credit
Suisse International with Goldman Sachs, BNP Paribas, and Banco Itau Europa.
x $201,150,000 through the transfer of undistributed 2006 dividends in YPF ceded by Repsol to
PESA.
x $1,015,000,000 through a vendor`s loan agreement signed by the parties. The vendor’s loan
was extended for ten years and contemplated an interest rate of 8.12% per annum until May
15, 2013, and 7.0% per annum thereafter. It was subordinated to the syndicated loan cited
above.
On the same day, the parties signed an agreement that awarded the Eskenazi family an option to
acquire a further 10.1% in YPF through PESA or through any company controlled by them. The price
at which the option could be exercised resulted from a company value of $15 billion minus any divi-
dends paid out between the signature date and the execution date, plus any capital additions made
during that period. The option was valid for four years from the signature date.
Subject to the Eskenazi family’s request, Repsol would finance up to 48% of the option price under
the same conditions as the vendor’s loan above. Repsol and PESA also signed a shareholders agree-
ment attached to the stock purchase agreement, which established, among other stipulations:
a) YPF would distribute 90% of its net profits by way of dividends to the shareholders for a
period of ten years starting in 2008.
b) A board member representing PESA would be appointed executive vice-president and
CEO of YPF at the upcoming shareholders meeting. It established that Sebastián Eskenazi
would be the first PESA representative to be appointed to that position. A chief operating
officer (COO) would be appointed among the board members representing Repsol.
The deal was subject to the approval of the CNDC, Argentina`s anti-trust agency. The share pur-
chase agreement established that any controversies between the parties would be resolved by arbitra-
tion of the International Chamber of Commerce (ICC), in New York City, with hearings held in Span-
ish. The loans were collateralized by Petersen’s holdings of YPF stock. Some observers believed that
Repsol brought the Eskenazis on-board for political reasons. Nicolás Gadano, an economist who spe-
cialized on the history of oil in Argentina, suggested that Repsol viewed the Eskenazis as “experts in
regulated markets.”47 “Without the Eskenazis, hydrocarbon prices would likely have been even more
controlled,” suggested Sebastián Scheimberg, an energy analyst.48 Oscar Vignart, former President of
Dow Argentina, called the Eskenazi deal an “insurance policy” for Repsol.49
On May 19, 2011, a few months before the option expired, PEISA (an affiliate of PESA) acquired
10.56% of YPF for $1.34 billion. A consortium of banks formed by Banco Itau, Standard Bank, Credit
Suisse, and Citi provided PEISA with a loan for $670 million, with Repsol providing the financing for
the remaining 50%. The terms were the same as those of the 2008 transaction, with PEISA posting its
YPF shares as collateral.
The Repsol Era

Repsol took over YPF in 1999. The government held a position on the board, and had a say on ma-
jor decisions such as investments and dividend payments.
Between 1999 and 2011, YPF experienced a 42.5% drop in oil production and a 31% drop in gas.
YPF`s market share fell from 40% to 34% in oil and from 32% to 23% in gas. YPF performed relatively
well in financial terms. Margins averaged 14.4%. The new management transferred most of YPF’s
international assets to Repsol in Spain. After a severe dip during 2002, YPF’s sales increased almost
monotonically, to US$13.8 billion by 2011. See Exhibit 1a for YPF’s selected financial and operating
data in the 1999-2011 period and Exhibit 1b for similar data for Repsol.
The dividend payout ratio was equivalent to 98.1% of net income, reaching a total of $16.9 billion,
of which Repsol collected $15.0 billion. The company`s indebtedness throughout the period grew
275%. “Repsol paid high dividends to finance its debt,” said a former Secretary of Energy. See Exhibit
2 for comparables of dividend payout ratios of other companies. Repsol did not pass the dividends to
its shareholders. Rather, it acquired oil assets in other regions of the world. Axel Kicillof character-
ized Repsol’s policy as treating YPF as a “dairy cow that they were going to milk until dead.”50 See
Exhibit 3 for Repsol`s ownership structure and Exhibit 1b for its dividend payout.
Energy Crisis, Pricing, and Exchange Controls

Argentina`s energy matrix depended 89% on hydrocarbons, compared to 60% in the United States
and 50% in Brazil. Gas accounted for 49% of Argentina`s energy production and oil accounted for
40%. The rest came mostly from hydropower, with some contribution from two nuclear power sta-
tions with a third due to start commercial production in late 2012. Thirteen wind farms contributed a
desultory amount to the country’s energy mix.
Oil production peaked in 1998. Between 1999 and 2011, oil production in Argentina dropped
27.2%, while YPF`s production dropped 38.5%. In gas, the country`s production peaked in 2004 with
52.2 billion cubic meters, a 28% increase vis-à-vis 1999, after which it fell, for a modest 11.7% increase
for the 1999-2011 period. YPF, on the other hand, experienced a drop of 18.1% over the same period.
See Exhibit 4 for the evolution of oil and gas production in Argentina and at YPF.
Argentina’s energy crisis began with the devaluation of the peso in January 2002. The Argentine
government reacted by freezing gas rates, in order to protect consumers suffering through an eco-
nomic downturn considerably worse than the Great Depression. “With 50% underemployment, it
was impossible to raise gas rates,” said Senator María Eugenia Estenssoro of the opposition Civic
Coalition.51 The fall in the peso, however, meant that the wholesale dollar price of gas sold in Argen-
tina fell from US$1.15 per MMBTU to 40¢. The price of gas sold to residential customers fell from
US$1.88 to 66¢.52 By 2011, the government raised the cap to US$2.50, but the law required producers
to sell part of their output to households and small retailers at prices between 30¢ and 50¢. Large
industrial users paid between 50¢ and $2.50.53
The result was a gas shortage. In March 2004, as the southern hemisphere winter began, gas com-
panies cut supplies by a fifth to 20 large industrial customers. The Argentine government mandated
that the companies satisfy domestic demand before exporting. Exports dropped 35% almost immedi-
ately. By the end of the month, they were down 47%. Exports slowly climbed again, but the Argen-
tine government declared its export limitations daily.54 In May 2005 the Argentines once again
slashed exports in response to domestic shortfalls.55 In 2006, Argentina cut exports altogether for two
weeks. In an attempt to discourage exports in a less unpredictable manner, in July 2006 Buenos Aires
raised export taxes from 20% to 45%.56
The government also imposed a 20% export tax on oil in 2001. The aim was to drive a wedge be-
tween the domestic price and the international price. It raised the tax to 45% in 2004. In 2007, the
Kirchner administration introduced the concept of “mobile withholding taxes.” The system worked
as follows. Export taxes rose progressively with the price of oil to a rate of 45% when the oil price
reached $42 per barrel. At that point, exporters would receive $42 × 55% or $23.10 per barrel. When
the price was between $42 and $60.90, the export tax would be fixed at $18.90 per barrel, and the price
received by exporters would rise from $23.10 to $42. Above $60.90, a marginal tax of 100% would kick
in, capping the price received by Argentine producers on crude exports at $42 per barrel.57 Domestic
oil prices were somewhat higher than the export cap, but the effect was to limit the realized price of
crude received by YPF (before domestic taxes and royalties) to $56 per barrel in 2011, half the world
price.58 The scheme applied to gasoline, fuel oil, and gasoil as well as crude.59
As a consequence of the price freeze on utilities, natural gas was sold for $2.65 per BTU, while the
production cost in Argentina was $2.84 per BTU, in January 2012, the cost of imported gas from Bo-
livia was $10.7 per BTU and the cost of imports from other sources added up to $19.71 per BTU.60
The distortion in oil and gas prices discouraged investment in exploration and development. Ar-
gentina’s proven oil and gas reserves experienced a drop of 34% between 1999 and 2011, with YPF’s
reserves dropping more than twice that figure. See Exhibit 5 for the evolution of reserves.
Subsidies
The Argentine government realized that low prices would depress investment. As a result, it es-
tablished a wide variety of subsidy programs to compensate producers, refiners, and distributors.
“Petróleo Plus” granted tax credits to companies that committed to pre-specified targets for increases
in production and reserves. Qualifying companies could rebate between 55% and 70% of their export
tax payments. In 2010, the program contributed over US$200 million to YPF’s earnings.61 Total energy
subsidies rose from ₱4.0 billion in 2006 to ₱45.8 billion in 2011. (See Exhibit 6.) In February 2012, the
government suspended the Petróleo Plus scheme, stating that it had become unaffordable. According
to Juan José Aranguren, the President of Shell Argentina, the end of Petróleo Plus caused Pan-
American Energy’s revenues to drop by $45 million per month.62 Shell refused to participate in the
program, believing it unsustainable.
Despite the subsidies, declining production put pressure on Argentina’s balance of payments. The
country became a net importer of energy in 2011. (See Exhibit 7 and Exhibit 8.) The current account
surplus disappeared in 2011, and looked set to turn sharply negative in 2012 — driven by the increas-
ing energy deficit. The government could allow the exchange rate to fall, but that risked more infla-
tion, which was already generating a great deal of anger, including accusations from normally credi-
ble sources that the government was faking the numbers. The government could defend the exchange
rate by spending central bank reserves, but those reserves were not unlimited.
The Fernández administration, therefore, chose to impose controls on foreign exchange. Business-
es had to apply to import licenses and Argentines desiring to go overseas were subject to limits on the
amount of dollars they could take out of country. Police teams with specially-trained dogs patrolled
the borders looking for dollar smugglers; similar teams cracked down on illegal dollar-dealers oper-
ating in the streets of the capital city. (They accidently arrested a Brazilian couple carrying two thou-
sand dollars on their persons, which was not illegal.) The import license regime became the legal
basis for a European suit at the WTO against Argentina following the YPF nationalization.
Beating a Dead Cow

In November 2011, Repsol YPF found a billion barrels of shale oil at Loma de la Lata (in English,
literally, “Tin Can Hill”), in the Vaca Muerta (“Dead Cow”) region.63 Vaca Muerta had seen a large
number of shale oil and shale gas discoveries.64 A report by the Energy Information Agency reported
that Argentina had the third largest shale gas reserves in the world, after the United States and China.
Shale oil (also called “tight oil”) was produced by hydraulic fracking. In fracking, simplified, a
vertical well was drilled to a specific depth and turned horizontal through the shale. After that, ex-
plosives were blasted into the rock and pressurized fluid pumped in to break it up further and liber-
ate the hydrocarbons. Shale oil wells had hyperbolic decline rates. A typical well in Texas initially
produced 900 barrels per day, declining to 200 by the end of the first year, and well under 100 by five
years. Wells were generally spaced at 160 acres. YPF prospected 428 square kilometers, or 661 160-
acre blocks. A back-of-the-envelope calculation suggested that Argentina’s production could rise by
more than 314,000 barrels per day if the fields were fully developed.65 Costs, however, were high.
Operating costs in shale plays in Texas were around $8 per barrel, with $10 a likely estimate for Ar-
gentina. Capital costs were even higher: wells cost about $12 million in Argentina.66 Total production
costs were likely to range as high as $56 per barrel.
Arbitration and Expropriation

The International Center for the Settlement of Investment Disputes (ICSID) was an organization
within the World Bank Group. Its goal, as its name implied, was to provide a binding forum in which
investors and governments could settle disputes. Before ICSID, it was difficult for a private investor
to take a foreign government to arbitration. Governments could take each other to arbitration, but
investors needed to obtain the active support of their home government. There were a few excep-
tions, with arbitration clauses in oil and mineral concessions, but they were rare. Moreover, it was
unclear how arbitration would be enforced, other than by the actions of investors’ home govern-
ments. Investment disputes, therefore, tended to be settled via diplomatic confrontations, backed by
threats of economic sanctions, covert action, or force.
The situation began to change in 1958, when the New York Convention pledged signatories to
recognize and enforce foreign arbitration decisions in their domestic legal systems.67 Then, in 1965,
the Washington Convention created ICSID.68 Under ICSID rules, a foreign investor could take a gov-
ernment to arbitration under the terms of a bilateral investment treaty (BIT), clauses in its investment
contract, or domestic law. The two parties chose the arbitrators. If two parties failed to agree, each
party would appoint one arbitrator, and the Secretary-General of ICSID would choose the third.69
(Concession contracts often specified non-ICSID forums, but the general rules were similar.)
The tribunal, once constituted, accepted arguments from both parties and rendered a decision. If it
found for the government, then the process would end. If it found for the claimant, the tribunal
would decide upon the amount of compensation. The general aim was to leave the claimant in the
same economic position that it would have had absent the dispute. When market values were availa-
ble, arbitrators could take them into account. More commonly tribunals attempted to calculate the net
present value of future cash flows in order to value compensation. Both methods required difficult
decisions. Arbitrators needed to decide on the appropriate time to value the investment and an ap-
propriate discount rate. Tribunals had no explicit requirement to follow precedents.
Should the tribunal find for the claimant, the government could attempt to annul the decision.
Annulments were not appeals. Article 52 of the Washington Convention laid out the grounds: (1)
improper selection of the tribunal; (2) manifest overstepping of its powers; (3) corruption; (4) viola-
tion of a fundamental procedural rule; or (5) failure to explain the reasoning behind the award. The
Secretary-General was responsible for choosing whether to appoint a panel to decide on annulment.
Arbitrations generally lasted four to five years. Some BITs required a year or more of negotiation
or the use of local courts before beginning the process. Arbitrations also tended to be rather expen-
sive. Exxon Mobil and Venezuela, for example, respectively spent $24.9 million and $18.5 million in
legal expenses, plus $2.7 million for the cost of the tribunal.70 It was standard, however, for judg-
ments to accrue interest retroactively to the beginning of the dispute, in order to compensate victori-
ous claimants for delay.
If a government refused to pay, claimants had to go to national courts to collect. Embassies, consu-
lates, military assets, and central bank reserves, however, were not subject to attachment. In 2007
claimants against Argentina attempted to attach the presidential jet when it landed in the United
States; a U.S. court dismissed that case, since the jet was registered to the Argentine Air Force.71 In
2011, the Argentine embassy in France briefly had to pay its employees in cash after a judge attached
its accounts on behalf of investors, but the Court of Cassation rapidly overturned the decision.72
Other government assets were vulnerable to legal action. Claimants could receive worldwide
freezing orders (also known as “Mareva injunctions”) that would prevent the government from re-
moving, spending or dissipating expropriated assets (including inventory). Claimants could also go
after the assets of state-owned corporations. In 2003 the Paris Court of Appeals allowed the attach-
ment of assets belonging to the Congolese and Cameroonian national oil companies, even though
they were not directly involved in the disputes.73 Courts in the United States and United Kingdom
allowed similar moves against state-owned companies in cases against Cuba and Nigeria.74
Claimants could go also to their home governments to enforce judgments via sanctions. In March
2009, an ICSID panel refused to annul a $165.2 million (plus interest) judgment against Argentina
favor of Azurix Corp., a Texas-based water company. In September 2009, Azurix filed a petition with
the U.S. Trade Representative (USTR). A second company, CMS Gas, received a $133.2 million (plus
interest) judgment against Argentina, which it sold for $54 million to Blue Ridge Investments (a sub-
sidiary of Bank of America).75 The new owners joined Azurix in appealing to the USTR. In September
2011, President Barack Obama announced that Argentina “has not acted in good faith in enforcing
arbitral awards in favor of U.S. owned companies.”76 The administration declared that the U.S.
would vote against all credits for Argentina, beginning with a $230 million loan from the Inter-
American Development Bank, until it paid Azurix and Blue Ridge.77 In April 2012, President Obama
used his authority under the Trade Act of 1974 to suspend Argentina’s “Generalized System of Pref-
erences” (GSP). The action hit $477 million in Argentine exports, costing exporters (chiefly cheese,
candy, and leather goods) $17 million per year.78
Very few countries defaulted on ICSID judgments.79 The Russian Federation refused to pay Franz
Sedelmayer, a German national, a $2.4 million judgment in 1998 after it seized a villa on which
Sedelmayer had a 25-year lease.80 Sedelmayer was unable to attach overflight fees paid by Russia to
Germany but he did take possession of real estate owned in Cologne by the Russian security services
— which produced rental revenue of $348,000 per year.81 Recently, Kyrgyzstan, Thailand, and Zim-
babwe all delayed payments; the Kyrgyz and Thai governments eventually paid. (German courts
seized a Thai airplane in 2011.) As of November 2011, only three states (Argentina, Russia, and Zim-
babwe) had outstanding payment issues.82
Argentina at ICSID
The 2002 price freeze and “pesification” of utility rates (and other contracts) provoked a wave of
ICSID cases against Argentina. The result was a record 47 cases against a single country. All of these
cases involved claims resulting from the economic crisis. As of June 2012, 18 claims were still pend-
ing. (See Exhibit 9.)
Argentina did not fare badly at arbitration. Fourteen claims were settled. The settlements general-
ly involved negotiated rate hikes in return for dropping the claim. (The exception was Unisys’s con-
tract to overhaul IT systems used by the Argentine judiciary. Argentina cancelled the contract after
the crisis and Unisys sued for $55 million. The two parties agreed to an $8 million settlement, but as
of June 2012 the Argentine government made no move to pay.) Argentina won an additional five
cases outright. Two more were annulled on technical grounds by ICSID panels. The D.C. Court of
Appeals vacated a third case because BG Group, a British oil and gas company, had not followed a
requirement in the U.K.-Argentina BIT that it pursue remedies in the Argentine courts for 18 months
before going to arbitration.
By mid-2012, Argentina had lost four cases from the 2001 crisis totaling $322.5 million — $330.5
million if the $8 million Unisys settlement was included. In addition, the country owed $105 million
for a case brought in 1996 by a consortium of the Compañía de Aguas del Aconquija and Vivendi Uni-
versal, making a total of $435.5 million in unpaid judgments. The Argentine government claimed that
Article 54 of the Washington Convention required companies to collect their awards through the
Argentine court system. (See Exhibit 10.) No claimant, however, accepted the Argentine interpreta-
tion. They worried that using Argentine courts to collect would obviate the purpose of international
arbitration and open them up to the potential for politicized justice.83
After the Nationalization

Repsol retained a seat on YPF’s board after the nationalization. Miguel Galuccio, a former Schlum-
berger executive, became CEO; Axel Kicillof represented the government on the board.
The new management declared that it would no longer pay dividends in order to use the funds
for capital investment. The Eskenazi family, in turn, on June 3 defaulted on its debts to Repsol and
the bank consortium that had lent them the money for their stake. Ironically, the Eskenazi default
increased the Spanish company’s remained share from 6.4% to 12.4%, as Repsol took possession of
the shares that the Eskenazis had pledged as collateral.84 The banks took control of the rest of the
Eskenazis’ 25% share.
On June 2, Axel Kicillof and Planning Minister Julio de Vido announced that YPF’s oil production
was up 4.2% and gas 10.2% since the nationalization.85 Part of the rise came from greater effort. The
government added 14 drill rigs to the 8 engaged in workover activity to maintain wells at the time of
the nationalization. The end result would be 130 more new wells and 400 more repairs by the end of
the 2012 than would have occurred under Repsol’s policy.86 Aranguren of Shell Argentina, however,
pointed out that much of the rise was in upstream production. “Refineries in Argentina maximize
their profits. Since the relative prices of various products change, that is not always the same thing as
maximizing the volume of production. It is possible to optimize production based on volume.”87
On June 6, Galuccio announced that YPF would invest $7 billion per year for five years. “We need
to be realistic,” he cautioned. “Although I'd like to be able to double the production of gas and fuel
overnight, I'm not a magician. In this industry, every extra barrel requires investment, technology,
and above all, hard work.” Galuccio aimed to increase production 6% per year over the period, start-
ing with 1,000 new wells in 2013, a drilling level unmatched since 1996. Specifically, Galuccio
planned spend $1.36 billion to drill 132 shale oil wells and 14 natural gas wells in the Vaca Muerta
area.88 It was not clear, however, where YPF would get the necessary resources. Galuccio announced
that he intended to look for international partners.
On June 15, President Fernández announced “the good news that Carlos Slim has bought 8% of
YPF.”89 The Mexican telecoms mogul and multi-billionaire acquired 8.4% of YPF on June 15, worth
$345 million at current prices.90 Miguel Galuccio called it “a clear signal to the international financial
10
market that they see YPF as a solid company with good growth potential.”91 Slim’s eponymous son,
however, confirmed that “the acquisition was not a share purchase, but rather the exercise of a finan-
cial guarantee.”92 Slim had founded Inbursa, a Mexican bank which partially financed the Eskenazis’
stake in YPF. The Eskenazis turned over 25.9 million shares to Inbursa as collateral, which made up
the lion’s share of Slim’s holding of 32.9 million shares.93
The Argentine government discussed partnering with Total, Petrobras, Chevron, ConocoPhillips,
ExxonMobil, and Apache. At the end of May, plans were floated to invest $20.3 billion in new shale
gas investments in the Vaca Muerta fields, with an ultimate production of 11 mcf94 per day. Eleven
different companies — Chevron, ConocoPhillips, Ecopetrol, EOG, ExxonMobil, Shell, Sinopec, Statoil,
Talisman, Vale do Río Doce, and Venoco — discussed drilling more than 12,000 wells. ConocoPhillips
and Talisman were expected to jointly put in about $4.3 billion.95 As of June 25, however, no formal
commitments had been announced. On June 19, the Argentine government invited Gazprom to in-
vest in YPF operations after a meeting between President Fernández and Vladimir Putin at the G-20
summit in Los Cabos, Mexico, but concrete details were scarce.96
Repsol filed a lawsuit against the Argentine government in the U.S. District Court in Manhattan,
presided over by Judge Thomas Griesa. The complaint accused Argentina of violating its pledge to
tender for all Class D shares of YPF if it ever took back control of the company. “Argentina's failure to
launch a tender offer despite having retaken control over YPF constitutes a breach of its contractual
obligations to other shareholders,” read the complaint.97
Repsol also sent letters to other major international oil companies, including ExxonMobil, Chev-
ron, ConocoPhillips, and Shell, indicating that it would defend its claim to its assets. The letter stated
that Repsol would sue if any of them invested in YPF or YPF assets, or otherwise took actions “preju-
dicing Repsol’s ability to fully defend and recover its rights,” in the words of the letter.98 “It wasn’t a
threat so much as a statement,” said Juan José Aranguren. “I do not believe that any company will
deal with the Argentine government or the nationalized assets without some sort of guarantee.”99 In
July, YPF’s new management and the Argentine government discussed the possibility of investment
from Exxon Mobil, Chevron, ConocoPhillips, and Apache: reportedly all four insisted on legal guar-
antees that would protect their investments, allow them to export, and insure that they could freely
repatriate profits.100
Decisions
President Fernández faced difficult decisions in the wake of the nationalization. The move was
popular with the Argentine public, but had not produced the hoped-for bump in the President’s ap-
proval ratings. (See Exhibit 11.) She needed to figure out how she could now leverage her control
over YPF into greater oil and gas production in both the short and long run. Some observers hoped
that the nationalization might give her political cover to make more fundamental energy reforms.
“They might say, ‘Now that we have thrown out Repsol, we have to make sacrifices,’” suggested
Gustavo Petracchi.101 Senator Estenssoro, however, believed this unlikely.102
The questions were legion. Should President Fernández take the opportunity to reform? Could a
nationally-controlled YPF invest more? Could it find partners to develop Argentina’s immense re-
serves of unconventional shale oil and gas? Would other companies be willing to invest in a country
that had just nationalized one of its largest foreign investors? Should she offer compensation, and if
so, how much?
11
Repsol’s Brufau had an equally difficult set of decisions to make. The Argentina-Spain BIT re-
quired a six-month period of negotiation followed by 18 months in Argentine courts before ICSID
arbitration could start. The Spanish government seemed willing to defend its corporate interests, but
it was not clear what Spain could do without the cooperation of the European Union, and it was not
clear that the European Union could act without proper legal authorization. Should Repsol cooperate
with the Argentine authorities or adopt a confrontational stance? If the latter, how far should it go in
using the legal and political tools available to it?
12
Exhibit 1a YPF indicators (in millions of AR$ except as noted)
2011 2010 2009 2008 2007 2006 2005

Sales 56,697 44,162 34,320 34,875 29,104 25,635 22,901
Net Income 5,296 5,790 3,486 3,640 4,086 4,457 5,337
Investment 12,289 8,624 5,603 7,043 6,187 5,109 3,262
Cash Flow before Dividends 4,486 4,889 5,763 9,546 2,120 2,932 4,506
Dividends Paid Out 5,565 4,444 4,897 9,287 2,360 2,360 4,878
Total Assets 55,399 44,630 37,876 36,953 38,102 35,394 32,224
Financial Indebtedness 12,767 7,789 6,819 4,479 994 1,425 1,453
Oil Production (millions bbl) 100 107 111 115 120 126 134
Gas Production (billions of cubic feet) 441 491 533 607 635 651 668
Developed YPF Oil & Gas Reserves (million bbl) 437 404 429 451 604
End of Year FX AR$ per USD 4.30 3.97 3.81 3.45 3.14 3.07 3.03
Net Income in USD million 1,232 1,458 915 1,055 1,301 1,452 1,761
Accumulated NI in USD mill 1999-2011 16,882
Repsol Dividends in USD million 971 840 964 2,019 752 769 1,610
Accum Repsol Divs in USD mm 1999-2011 14,969
Dividend Payout Ratio 105.1% 76.8% 140.5% 255.1% 57.8% 53.0% 91.4%
Total Dividend Payout Ratio 1999-2011 98.1%
Net margin 1999-2011 14.4%
2004 2003 2002 2001 2000 1999

Sales 19,931 16,456 19,599 17,810 8,660 6,598
Net Income 4,876 4,628 3,344 1,788 1,229 477
Investment 2,584 2,246 1,182 386 1,216 510
Cash Flow before Dividends 2,225 2,906 1,516 2,853 284 322
Dividends Paid Out 5,310 2,990 37 3,604 311 311
Total Assets 30,922 32,944 31,756 28,766 12,593 11,970
Financial Indebtedness 1,930 1,945 4,257 4,906 1,914 3,408
Oil Production (million bbl) 146 157 160 182 164 174
Gas Production (billions of cubic feet) 705 644 543 558 619 640
Developed YPF Oil & Gas Reserves (million bbl) 908 1,047 1,136 1,343 1,261 1,119
End of Year FX AR$ per USD 2.97 2.93 3.37 1.00 1.00 1.00
Net Income in USD million 1,642 1,580 992 1,788 1,229 477
Repsol Dividends in USD million 1,788 1,020 11 3,604 311 311
Dividend Payout Ratio 108.9% 64.6% 1.1% 201.6% 25.3% 65.2%
Source: Comisión Nacional de Valores (CNV), webpage www.cnv.gob.ar.
13
Exhibit 1b Repsol Indicators (in millions of €, unless noted as US$)
2011 2010 2009 2008 2007 2006 2005

Total operating revenues 63,732 60,430 49,032 61711 55,923 55,080 51,045
Supplies -42,904 -36,184 -31,433 -41395 -36,294 -35,117 -32,512
Personnel expenses -2,579 -2,411 -2087 -2023 -1,855 -1,674 -1,542
Depreciation and amortization of nc assts -3,519 -3,947 -3620 -3115 -3,141 -3,094 -2,450
Other operating expenses -9,925 -10,267 -8,648 -10,158 -8,825 -9,284 -8,380
Total operating expenses (58,927) (52,809) (45,788) (56,691) (50,115) (49,169) (44,884)
Net Income 2,193 4,693 1,559 2,555 3,188 3,124 3,120

Investment 6,255 5,106 9003 5597 5,373 5,737 3,713
Cash Flow before Dividends (2,489) 4,721 680 1,335 537 684 (60)
Dividends Paid Out 1,282 581 1,294 998 509 825 681
Total Assets 70,957 67,631 58083 49064 47,164 45,201 45,782
Financial Indebtedness 20,375 19,418 18953 12313 11,583 12,039 12,422
End of Year FX € per US$ 0.77 0.75 0.70 0.71 0.68 0.76 0.84
Net Income in US$ mm 2,840 6,220 2,234 3,602 4,695 4,125 3,695
Accumulated NI in US$ mm 1999-2011 39,500
Accum divs paid out in US$ mm 1999-2011 14,969
Dividend Payout Ratio 58.5% 12.4% 83.0% 39.1% 16.0% 26.4% 21.8%
Total Dividend Payout Ratio 32.9%
Net margin 1999-2011 5.0%
2004 2003 2002 2001 2000 1999

Total operating revenues 40,292 37,206 36,490 43,653 45,742 26,295
Supplies -24,920 -29,917 -24,198 -26,921 -27,895 unavail.
Personnel expenses -1,330 -1111 -1,161 -1,732 -1,648 unavail.
Depreciation and amortization of nc assts -6,988 -3,933 -5182 -7109 -7093 unavail.
Other operating expenses -2,368 -2,245 -2,626 -2,971 -2,864 unavail.
Total operating expenses (35,606) (37,206) (33,167) (38,733) (39,500) --
Net Income 2,414 2,020 1,952 1,025 2,429 1,011
Investment 3,747 3,837 2,753 4,817 6,118 unavail.
Cash Flow before Dividends (835) 686 393 1,038 783 unavail.
Dividends Paid Out 535 634 476 1,121 783 567
Total Assets 39,693 38,033 38,064 51,439 52,419 42,050
Financial Indebtedness 13,861 10,823 12,272 21,051 22,073 unavail.
End of Year FX € per US$ 0.73 0.80 0.95 1.13 1.06 1.00
Net Income in US$ mm 3,294 2,536 2,046 908 2,288 1,016
Dividend Payout Ratio 22.2% 31.4% 24.4% 109.4% 32.2% 56.1%
Source: Income and cash flow statement and balance sheet data from Repsol’s annual reports posted online at repsol.com for
2011-2004. Earlier reports found via 20-F filings with the SEC, online at sec.gov. Note that Repsol delisted its ADRs
from the NYSE in February 2011 so it was no longer required to adhere to the SEC’s reporting obligations for its 2010
and 2011 annual reports. FX rates from oanda.com. Calculations made by casewriters for accumulated net income and
payout ratios.
14
Exhibit 2 Dividend Payments of Selected Oil Companies
2010, local currency
Dividends as % of
Dividends Net Income Net Income
Exxon Mobil 8,498 30,460 27.9%
BP 2,627 (3,719) NM
Shell 9,584 20,127 47.6%
Petrobras 9,415 35,189 26.8%
YPF 4,444 5,790 76.8%
Source: Company filings via Bloomberg.
Exhibit 3 Repsol YPF Shareholder Structure
Significant Shareholders 32.3%

Sacyr Vallehermoso (Spanish builder) 10.0%
La Caixa (Spanish bank) 12.8%
PEMEX (Mexican state-owned oil co.) 9.5%
Free Float 67.7%
Source: Company filings via Bloomberg.
15
Exhibit 4 Argentine Hydrocarbon Production
1000
900 45%
800
43%
700
National crude oil in
600 41% 1000s of bpd
500 YPF in 1000s of bpd
39%
400
300 37% YPF as % of national
oil (right axis)
200
35%
100
0 33%
1980 1990 2000 2010
50 90%
45
80%
40
35 70%
National natural gas
30 in billion cf
60%
25 YPF in billion cf
50%
20
15 YPF as % of national
40% gas (right axis)
10
30%
5
0 20%
1980 1990 2000 2010
Source: BP and http://www.energia.gov.ar/contenidos/verpagina.php?idpagina=3299, Secretariat of Energy of Argentina,

accessed on June 4, 2012.
16
Exhibit 5 Argentine and YPF Hydrocarbon Reserves
Repsol YPF (a) Argentina

Oil (c) Natural Gas (d) Total (e) Oil (b) Natural Gas (d) Total (e)
Year (mmbl) (bcf) (mmboe) (mmbl) (bcf) (mmboe)
1999 1,667 10,683 3,570 2,753 25,744 7,044

2000 1,809 9,689 3,534 2,974 27,475 7,553
2001 1,768 11,501 3,817 2,879 26,980 7,376
2002 1,514 11,070 3,485 2,821 23,449 6,729
2003 1,351 8,685 2,898 2,675 21,648 6,283
2004 1,228 9,063 2,842 2,320 19,529 5,575
2005 875 7,160 2,150 2,320 15,503 4,904
2006 778 4,463 1,573 2,468 15,750 5,093
2007 668 4,112 1,340 2,587 15,538 5,177
2008 652 3,741 1,318 2,616 15,115 5,135
2009 657 4,512 1,460 2,520 14,091 4,868
2010 531 2,533 982 2,505 13,384 4,736
2011 585 2,361 1,004 2,504 12,678 4,617
Sources: (a) Source: 20-F filings found in www.ypf.com;

(b) Source: OPEC, Annual Statistical Bulletin, pg 24, World Proven crude oil reserves
http://www.opec.org/opec_web/en/publications/202.htm
(c) From 2002 to 1999 Proved developed reserves of crude oil, condensed oil and LPG;
(d) Proved developed reserves of natural gas in billions of cubic feet;
(e) Gas is converted to oil equivalent using a factor of 6,000 cubic feet per gas per 1 barrel of oil equivalent.
17
Exhibit 6 Argentine Federal Subsidies (by type, in millions of current pesos)
Trans- Public Food and Rural and

Total portation Energy enterprises agriculture forests Industrial
1993 ₱ 1,915
1994 ₱ 2,783
1995 ₱ 4,680 ₱ 264
1996 ₱ 4,445 ₱ 276
1997 ₱ 5,700 ₱ 278
1998 ₱ 5,910 ₱ 343
1999 ₱ 6,411 ₱ 228
2000 ₱ 6,155 ₱ 116
2001 ₱ 5,819 ₱ 116
2002 ₱ 8,696 ₱ 344
2003 ₱ 11,140 ₱ 770
2004 ₱ 12,373 ₱ 1,759
2005 ₱ 14,697 ₱ 2,976 ₱ 2,020 ₱ 157 ₱ 1,181 ₱ 136 ₱ 248
2006 ₱ 17,640 ₱ 4,421 ₱ 4,032 ₱ 232 ₱ 3,799 ₱ 223 ₱ 124
2007 ₱ 28,323 ₱ 6,688 ₱ 8,331 ₱ 521 ₱ 2,315 ₱ 329 ₱ 45
2008 ₱ 45,336 ₱ 8,896 ₱ 16,486 ₱ 1,413 ₱ 2,903 ₱ 680 ₱ 62
2009 ₱ 52,452 ₱ 10,802 ₱ 15,944 ₱ 2,320 ₱ 10,198 ₱ 1,008 ₱ 134
2010 ₱ 75,889 ₱ 13,306 ₱ 26,022 ₱ 4,144 ₱ 1,499 ₱ 158
2011 ₱ 111,427 ₱ 19,005 ₱ 45,799 ₱ 6,712
Source: Transportation, energy and public enterprises from Carta Energética Año IV. Volumen Nº 12, Marzo 2012, p. 2. Other
data from http://www.iee.org.ar/analis-sep-2011.pdf.
Exhibit 7 Argentine Balance of Trade (by category, in millions of U.S. dollars)
Agriculture Manufactures Energy Balance

2001 13,512 (11,174) 3,950 6,289
2002 13,458 (872) 4,136 16,722
2003 16,451 (5,583) 4,864 15,732
2004 18,804 (11,891) 5,192 12,105
2005 21,236 (15,160) 5,587 11,663
2006 23,871 (17,604) 6,031 12,298
2007 3,154 (24,543) 4,074 11,071
2008 39,966 (31,030) 3,662 12,598
2009 30,518 (17,442) 3,812 16,888
2010 38,081 (27,983) 1,958 12,056
2011 48,609 (35,333) (2,931) 10,345
2012 (est) 46,281 (32,945) (4,506) 8,831
Source: Adapted from Carta Energética Año IV. Volumen Nº 12, Marzo 2012, p. 3.
18
Exhibit 8 Argentine Balance of Payments (in billions of U.S. dollars)
2006 2007 2008 2009 2010 2011 2012*

Current-account 7.8 7.4 6.8 11.0 2.8 0.0 -5.7
Trade balance 14.0 13.5 15.4 18.5 14.3 13.5 5.6
Goods: exports fob 46.5 56.0 70.0 55.7 68.1 84.3 86.6
Goods: imports (fob) -32.6 -42.5 -54.6 -37.1 -53.9 -70.7 -81.0
Services: balance -0.5 -0.5 -1.3 -1.3 -1.1 -2.2 -1.3
Income: balance -6.2 -5.9 -7.6 -9.0 -9.9 -10.7 -9.9
Current transfers: balance 0.5 0.4 0.2 2.7 -0.4 -0.5 -0.2
Financial Account
Principal repayments due -7.6 -9.2 -6.9 -10.0 -10.4 -5.4 -6.6
Net debt inflows 8.8 9.1 7.0 7.5 6.8 8.3 7.2
Net direct investment flows 3.1 5.0 8.3 3.3 6.1 5.0 5.8
Net portfolio investment
flows 4.3 2.8 -7.1 -2.1 12.1 -0.5 -1.5
IMF credit 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Increase in interest arrears 0.2 2.0 0.6 0.8 0.0 0.0 0.0
Increase in principal arrears 0.9 4.0 2.3 1.2 0.0 0.0 0.0
Other capital flows (net) -13.6 -6.9 -10.7 -10.1 -13.2 -13.3 -10.4
Change in international
reserves -3.9 -14.1 -0.3 -1.7 -4.2 5.9 11.1
Memoranda
International reserves 32.0 46.1 46.4 48.0 52.2 46.4 35.3
Current account balance /
3.6 2.8 2.1 3.6 0.8 0.0 0.1
GDP (%)
Source: 2006-11 from the Economist Intelligence Unit. 2012 estimates from Carta Energética Año IV. Volumen Nº 12, Marzo
2012, p. 3.
19
Exhibit 9 Arbitration cases against Argentina filed since 2001
Decided or Annulment Amount

Date filed discontinued decided Outcome (million $) Industry
CIT Group 2/27/2004 5/12/2009 Won na Leasing
Impregilo S.p.A. 10/15/2008 6/21/2011 Won na Highway construction
Metalpar and Buen Aire 4/7/2003 6/6/2008 Won na Motor vehicles
TSA Spectrum 4/8/2005 12/19/2008 Won na Telecoms
Wintershall A.G. 7/15/2004 12/8/2008 Won na Gas and oil production
BG Group 4/25/2003 12/24/2007 Overturned $ 185.3 Gas distribution
Enron and Ponderosa Assets 4/11/2001 5/22/2007 7/30/2010 Annulled $ 106.2 Gas transportation
Sempra Energy 12/6/2002 9/28/2007 6/29/2010 Annulled $ 128.2 Gas distribution
AES Corporation 12/19/2002 1/23/2006 Settled na Electricity distribution
Aguas Cordobesas, Suez, and
Sociedad General de Aguas de 7/17/2003 1/24/2007 Settled na Water
Barcelona
BP America 2/27/2004 8/20/2008 Settled na Hydrocarbon concession
Camuzzi International 4/23/2003 1/25/2007 Settled na Electricity distribution
Camuzzi International 2/27/2003 6/21/2007 Settled na Gas distribution
CGE Argentina 2/4/2005 7/28/2009 Settled na Electricity distribution
Electricidad Argentina and EDF 8/12/2003 2/5/2008 Settled na Electricity distribution
Enersis 7/22/2003 3/28/2006 Settled na Electricity distribution
France Telecom 8/26/2004 3/30/2006 Settled na Telecoms
Gas Natural SDG 5/29/2003 11/11/2005 Settled na Gas distribution
Pan-American Energy (BP) 6/6/2003 8/20/2008 Settled na Hydrocarbon concession
Pioneer Natural Resources 6/5/2003 6/23/2005 Settled na Hydrocarbon concession
RGA Reinsurance Company 11/11/2004 9/14/2006 Settled na Financial reinsurance
Saur International 1/27/2004 4/7/2006 Settled na Water and sewer
Telefónica 7/21/2003 10/2/2009 Settled na Telecoms
Settled, but
Unisys Corporation 10/15/2003 10/26/2004 $ 8.0 Information services
unpaid
Azurix 10/23/2001 7/14/2006 9/1/2009 Loss $ 165.2 Water and sewer
CMS Gas 8/24/2001 5/12/2005 9/25/2007 Loss $ 133.2 Gas distribution
Continental Casualty 5/22/2003 9/5/2008 9/16/2011 Loss $ 2.8 Insurance
Impregilo S.p.A. 7/25/2007 7/25/2007 6/21/2011 Loss $ 21.3 Water
EDF, Saur and León 8/12/2003 6/11/2012 Pending Loss unknown Electricity distribution
El Paso Energy International 6/12/2003 10/31/2011 Pending Loss $ 43.0 Hydrocarbon concession
LG&E Energy 1/31/2002 7/25/2007 Pending Loss $ 57.4 Gas distribution
National Grid plc 4/25/2003 11/3/2008 Pending Loss $ 53.6 Electricity transmission
Siemens 7/17/2002 2/6/2007 Pending Loss $ 237.8 Information services
Asset Recovery Trust S.A. 6/23/2005 Pending tbd Collection contract
AWG Group Ltd. 7/17/2003 Pending tbd Water and sewer
Azurix (Mendoza) 12/8/2003 Pending tbd Water and sewer
DaimlerChrysler Services A.G. 1/14/2005 Pending tbd Leasing
Giordano Alpi and others 7/28/2008 Pending tbd Bondholders
Abaclat 2/7/2007 Pending tbd Bondholders
Giovanni Alemanni and others 3/27/2007 Pending tbd Bondholders
Hochtief Aktiengesellschaft 12/18/2007 Pending tbd Highway construction
Mobil Argentina 8/5/2004 Pending tbd Gas production
20
Decided or Annulment Amount

Date filed discontinued decided Outcome (million $) Industry
Suez, Sociedad General de Aguas
de Barcelona S.A. and Interagua 7/17/2003 Pending tbd Water
Servicios Integrales de Agua S.A.
Suez, Sociedad General de Aguas
de Barcelona S.A., Vivendi Univer- 7/17/2003 Pending tbd Water
sal S.A.
Total 1/22/2004 Pending tbd Gas production
Urbaser S.A. and Consorcio de
Aguas Bilbao Biskaia, Bilbao Bis- 10/1/2007 Pending tbd Water
kaia Ur Partzuergoa
Sources: Latin Arbitration Law, http://www.latinarbitrationlaw.com/argentina; United Nations Conference on Trade and
Development (UNCTAD), http://archive.unctad.org/iia-dbcases/cases.aspx; Lucy Reed, “Scorecard of Investment
Treaty Cases Against Argentina Since 2001,” Kluwer Arbitration Blog, March 2, 2009, available at
http://kluwerarbitrationblog.com/blog/2009/03/02/scorecard-of-investment-treaty-cases-against-argentina-since-
2001, accessed May 7, 2013; Luke Peterson, "Round-Up: Where things stand with Argentina and its many investment
treaty arbitrations," Investment Arbitration Reporter, December 17, 2008. Available at
http://www.iareporter.com/articles/20090929_15, accessed May 7, 2013; Luke Peterson, "Argentina by the numbers:
where things stand with investment treaty claims arising out of the Argentine financial crisis," Investment Arbitration
Reporter, February 1, 2011. Available at http://www.iareporter.com/articles/20110201_9, accessed May 7, 2013;
Investment Treaty Arbitration, “New Awards, Decisions and Materials,” available at
http://italaw.com/alphabetical_list_respondant.htm; and International Investment Arbitration and Public Policy,
http://www.iiapp.org/search.
Exhibit 10 Article 54 of the Washington Convention
Applicable Law
(1) The Tribunal shall apply the rules of law designated by the parties as applicable to the
substance of the dispute. Failing such designation by the parties, the Tribunal shall apply (a)
the law determined by the conflict of laws rules which it considers applicable and (b) such
rules of international law as the Tribunal considers applicable.
(2) The Tribunal may decide ex aequo et bono if the parties have expressly authorized it
to do so and if the law applicable to the arbitration so permits.
Source: Article 54 of the Washington Convention, available at http://icsid.worldbank.org/ICSID/StaticFiles/facility/partD-
chap09.htm, accessed on June 13, 2012.
Note: “Ex aequo et bono” is a Latin phrase meaning “according to the right and good.” In the context of arbitration, it refers
to the power of the arbitrators to make decisions based on what they believe to be fair and equitable.
21
Exhibit 11 President Fernández’s monthly approval rating.
80
70
60
50
40
30
20
10
Source: Poliarquía Consultores, Indice de Confianza en el Gobierno (monthly), available at

http://www.utdt.edu/ver_contenido.php?id_contenido=1351&id_item_menu=2970, accessed February 7, 2013.
Note: The vertical grey line is the date of President Fernández’s re-election. She won with 54.1% of the vote, ten points less
than her approval rating.
22
Endnotes
1 The complete text of the national decree can be found at “El decreto de la expropiación de YPF,” available via
Perfil.com, online at http://www.perfil.com/contenidos/2012/04/16/noticia_0022.html, accessed June 2013.
2 The hydrocarbon-producing provinces were Formosa, Jujuy, Salta, Mendoza, La Pampa, Neuquén, Río Ne-
gro, Chubut, Santa Cruz, and Tierra del Fuego.

3 “Las frases más destacadas del discurso de Cristina Kirchner,” La Nación, April 16, 2012, available online at
http://www.lanacion.com.ar/1465470-cristina-somos-el-unico-pais-que-no-maneja-sus-recursos-naturales,
accessed June 2013.
4 “YPF: el 62% apoya la estatización,” La Nación, April 22, 2012, available at
http://www.lanacion.com.ar/1467219-ypf-el-62-apoya-la-estatizacion, accessed June 2013.
5 Jude Webber and Miles Johnson, “Argentina pulls back over YPF seizure,” Financial Times, April 13, 2012.
6 “Obama confirms at the summit US neutrality on the Falklands/Malvinas question,” MercoPress, April 16,
2012, available at http://en.mercopress.com/2012/04/16/obama-confirms-at-the-summit-us-neutrality-on-the-
falklands-malvinas-question, accessed June 2013.
7 “Cristina Fernandez abandons summit with no declaration on Falklands/Malvinas,” MercoPress, April 15,
2012, available at http://en.mercopress.com/2012/04/15/cristina-fernandez-abandons-summit-with-no-
declaration-on-falklands-malvinas, accessed June 2013.
8 Interview with Senator Maria Eugenia Estenssoro, May 30, 2012.
9 Martin Roberts, “Spain targets Argentine biodiesel in YPF reprisal,” Reuters, April 20, 2012, available at
http://www.reuters.com/article/2012/04/20/us-spain-argentina-idUSBRE83J1DY20120420, accessed June

2013.
10 “Spain, on the edge of a financial cliff, cancels all development aid to Latin America,” MercoPress, May 23,
2012, available at http://en.mercopress.com/2012/05/23/spain-on-the-edge-of-a-financial-cliff-cancels-all-
development-aid-to-latin-america, accessed June 2013.
11 Fiona Govan and Emily Gosden, “European Parliament calls for sanctions against Argentina,” The Tele-
graph, April 20, 2012.
12 “EU Brings WTO Dispute Against Argentina,” International Law Prof Blog (blog), May 29, 2012,
http://lawprofessors.typepad.com/international_law/2012/05/eu-brings-wto-dispute-against-argentina.html,
accessed June 2013.
13 “EU agrees to file a trade suit with WTO against Argentina’s import restrictions,” MercoPress, May 15,
2012, available at http://en.mercopress.com/2012/05/15/eu-agrees-to-file-a-trade-suit-with-wto-against-

argentina-s-import-restrictions, accessed June 2013.
14 Fiona Govan and Emily Gosden, “Argentina ‘to negotiate’ on YPF compensation,” The Telegraph, April 20,
2012.
15 “Repsol cancels Argentina gas exports,” BBC, May 18, 2012, available at
http://www.bbc.co.uk/news/world-latin-america-18127122.
16 Jude Webber, “Repsol cancels LNG shipments to Argentina,” Financial Times, May 18, 2012.
17 Russia and Zimbabwe also faced unpaid claims as of 2012.
18 Carl Solberg, Oil and Nationalism in Argentina: A History, (Stanford University Press, 1979), p. 19.
23
19
The first was the Anglo-Persian Oil Company, today BP. Created in 1908, the British government pur-
chased a majority stake in 1913. See “Business: The Company File: From Anglo-Persian Oil to BP Amoco,” BBC,
August 11, 1998, http://news.bbc.co.uk/2/hi/business/149259.stm, accessed June 2013.
20Mosconi convinced Congress to issue $10.5 million in foreign debt ($112 million in 2011 dollars) which
were then loaned to YPF. YPF then signed a construction contract for a refinery with Bethlehem Steel. (YPF rap-
idly repaid the government.) Mosconi, it should be added, did not hesitate to use political power against YPF’s
competitors. In 1924, President Marcelo T. de Alvear issued a decree that reserved all federal land for YPF. He
was less successful at gaining access to provincial reserves: Salta, for example, preferred to deal with foreign
investors, which it believed would be willing to pay higher-royalties than the federal company. See Carl Solberg,
“Entrepreneurship in Public Enterprise: General Enrique Mosconi and the Argentine Petroleum Industry,” Busi-
ness History Review, Vol. 56, No. 3 (Autumn, 1982), pp. 380-99: 386-87 and 390.
21 Quoted in Solberg, “Entrepreneurship in Public Enterprise: General Enrique Mosconi and the Argentine
Petroleum Industry,” p. 392.

22
Solberg, “Entrepreneurship in Public Enterprise: General Enrique Mosconi and the Argentine Petroleum
Industry,” p. 389.
23
Nicolás Gadano, “Urgency and Betrayal: Three Attempts to Foster Private Investment in Argentina’s Oil
Industry,” in William Hogan and Federico Sturzenegger, eds., The Natural Resources Trap (MIT Press: Cambridge
MA, 2010), pp. 369-95: 374.
24 Ibid., p. 375.
25 See “Presidencia de Juan D. Perón (1946 - 1952),” Todo Argentina, http://www.todo-
argentina.net/historia/peronista/peron1/index.html, accessed June 2013.
26
Pedro Aramburu, “Message to the people of the Provisional President General Pedro E. Aramburu on the
Commemoration of the Day of Oil,” December 13, 1955.
27 Frondizi’s policy was contradictory: he also pushed through a nationalization law that was not imple-
mented. Gadano, pp. 376-77.

28Frondizi’s policies brought oil production from 97,000 bpd to 269,000 bpd — and brought Argentina self-
sufficiency for the first time. See Gadano, “Urgency and Betrayal,” pp. 376-77.
29 The terms of the annulment agreements with Tennessee Gas, Esso, and Shell are translated in 5 Int'l Legal
Materials 103 (1966), 6 Int'l Legal Materials 1 (1967), and 6 Int'l Legal Materials 19 (1967), respectively. See also 15
Va. J. Int'l L. 277 1974-1975, p. 308.
30 15 Va. J. Int'l L. 277 1974-1975, p. 308.
31
Nicolás Gadano and Federico Sturzenegger, “La privatización de reservas en el sector hidrocarburífero: el
caso de Argentina,” Revista de Análisis Económico, Vol. 13(1), June, pp. 75-115, 1998: 80.
32 Gadano and Sturzenegger.
33 Gadano and Sturzenegger, pp. 83-84.
34 Gadano and Sturzenegger, p. 90.
35
Sang-Hyun Yi, “The Political Economy of Privatization of YPF in Argentina,” Pusan University of Foreign
Studies, Institute of Iberoamerican Studies, mimeo, p. 128.
36 Sang-Hyun Yi, pp. 181-82.
24
37Calvin Sims, “José Estenssoro, 61, Who Led Oil Privatization in Argentina.” The New York Times, May 5,
1995, online at http://www.nytimes.com/1995/05/05/obituaries/jose-estenssoro-61-who-led-oil-privatization-
in-argentina.html, accessed June 2013.
38 Nicolás Gadano, “Urgency and Betrayal,” pp. 378-79.
39Cate Reavis, “Argentina’s YPF Sociedad Anónima (E): A New Era,” HBS Case 9-300-028, October 21, 1999,
pp. 1-2.
40 The Financial Times, November 5, 1998, p. 31.
41 Sang-Hyun Yi, p. 165.
42 “Argentina: Energy,” Cambridge International Forecasts Country Report (July 1999).
43 Cate Reavis, “Argentina’s YPF Sociedad Anónima (E): A New Era,” HBS Case 9-300-028, October 21, 1999,
p. 1.
44 Cate Reavis, “Argentina’s YPF Sociedad Anónima (E): A New Era,” HBS Case 9-300-028, October 21, 1999,
p. 3.
45 Information in this section has been largely drawn from the Share Purchase Agreement signed between
Repsol and Petersen Energia S.A., filed before the Comisión Nacional de Valores (Argentine SEC equivalent) at
www.cnv.gob.ar.
46 Source: http://www.bancosantacruz.com/inst_nuestra.html, accessed on June 9, 2012
47 Interview with Nicolás Gadano, May 29, 2012
48 Interview with Sebastián Scheimberg, May 29, 2012.
49 Interview with Oscar Vignart, May 29, 2012.
50 Jude Webber, “Repsol keeps seat on YPF board,” Financial Times, June 5, 2012, available at
http://www.ft.com/intl/cms/s/0/29e3655a-ae92-11e1-b842-00144feabdc0.html#axzz1yb9GUqow.
51 Interview with María Estenssoro, May 31, 2012.
52 http://www.oxfordenergy.org/pdfs/NG7.pdf, p. 16.
53 Anish Kapadia, Matt Portillo, Shola Labinjo and Hubert van der Heijden, “A Deep Dive into South Ameri-
can E&P, Argentina: Change is in the wind,” Tudor, Pickering, Holt & Co., May 2011, p. 14.
54 http://www.oxfordenergy.org/pdfs/NG7.pdf, p. 36.
55 http://www.stratfor.com/argentinas_cutbacks_and_chiles_energy_future. Accessed September 2009.
56 The Encyclopedia of Earth. “Energy Profile of Chile.” Information on energy in Chile, 2008.
http://www.eoearth.org/article/Energy_profile_of_Chile. Accessed February 2009.
57 Juan Antonio Zapata, “Oil and Gas in Argentina,” Paper presented at the Conference on Oil and Gas in
Federal Systems, March 3-4, 2010, p. 3. Available at http://siteresources.worldbank.org/ EX-

TOGMC/Resources/336929-1266445624608/Framework_Paper_Argentina2.pdf.
58 Anish Kapadia, Matt Portillo, Shola Labinjo and Hubert van der Heijden, “A Deep Dive into South Ameri-
59 Source: http://www.ecoportal.net/Temas_Especiales/Energias/petroleo_gas_y_crisis_energetica_en
_argentina_2003_2007_algunos_aportes_desde_el_marxismo_ecologico, accessed on June 15, 2012
60 Alieto Guadagni, “Presente y Futuro del Gas en Argentina,” Econometrica, February 2012.
25
61
Anish Kapadia, Matt Portillo, Shola Labinjo and Hubert van der Heijden, “A Deep Dive into South Ameri-
62 Interview with Juan Josè Aranguren, June 1, 2012.
63
“YPF announces a billion barrels shale-oil discovery in Argentina,” MercoPress, November 8, 2011, online
at http://en.mercopress.com/2011/11/08/ypf-announces-a-billion-barrels-shale-oil-discovery-in-argentina,
accessed June 2013.
64See Clifford Krauss, “Argentina Hopes for a Big Payoff in Its Shale Oil Field Discovery,” New York Times,
July 4, 2011.
65 Noel Maurer, “Argentina beats a dead cow, and finds oil,” January 31, 2012, post on blog “The Power and
the Money,” http://noelmaurer.typepad.com/aab/2012/01/argentina-beats-a-dead-cow-and-finds-oil.html,

accessed June 2013.
66 Jude Webber, “Argentina Poised for Shale Oil and Gas Boom,” December 12, 2011, online at
http://www.ft.com/intl/cms/s/0/feaf971e-14f4-11e1-b9b8-00144feabdc0.html#axzz1yjJKfF2u (subscription
required), accessed June 2013.
67
The New York Convention is formally known as the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards.
68
The Washington Convention is formally known as the International Convention for the Settlement of In-
vestment Disputes.
69 ICSID Convention, Regulation and Rules (April 2006), Articles 9 and 10, pp. 14-15.
70 Noel Maurer, The Empire Trap (Princeton: Princeton, New Jersey, 2013), p. 424.
71 Michele Colella and Denise Dussault v. The Republic of Argentina, F.Supp.2d, 2007 WL 1545204
(N.D.Cal.).
Arrêt n° 867 du 28 septembre 2011 (09-72.057) - Cour de cassation – Première chambre civile. Deman-
72
deur(s) : La société NML Capital Ltd; Défendeur(s) : La République Argentine.

73 E. Gaillard and J. Younan, eds., “State Entities in International Arbitration,” IAI Series on International Arbi-
tration (New York: Juris, 2008) pp. 190-91.

74
J. Eloy Anzola, “Venezuela Clashes with Investment Arbitration,” Transnational Dispute Management, forth-
coming article October 2011, p. 10, online at
http://eanzola.com/images/uploads/Venezuela_clashes_with_Investment_Arbitration.pdf, accessed June 2013.
75
Embassy Buenos Aires, (Sept. 22, 2008). Argentina: CMS International Arbitration Case. WikiLeaks. Wik-
iLeaks cable: 08BUENOSAIRES1316. http://leaks.hohesc.us/?view=08BUENOSAIRES1316, accessed June 2012.
76 Matt Moffett, “Besting Argentina in Court Doesn't Seem to Pay, “ Wall Street Journal, April 20, 2012.
77
“US will vote against loans to Argentina in World Bank and IDB,” MercoPress, September 29, 2011,
http://en.mercopress.com/2011/09/29/us-will-vote-against-loans-to-argentina-in-world-bank-and-idb, ac-
cessed June 2013.
78
U.S. Embassy, Buenos Aires, “GSP Fact Sheet,” available at http://argentina.usembassy.gov/gsp2.html,
accessed June 2012.
79 Clint Peinhardt and Todd Allee, “The International Centre for Settlement of Investment Disputes: a Multi-
lateral Organization Enhancing a Bilateral Treaty Regime,” Paper prepared for the 2006 Annual Meeting of the
Midwest Political Science Association in Chicago, IL, April 14, 2006, p. 9. Kazakhstan delayed paying a 2003 judg-
ment worth $9.9 million to AIG Capital Partners, but it eventually settled.
26
80 Alan Alexandroff and Ian Laird, “Compliance and Enforcement” (Chapter 29), The Oxford Handbook of In-
ternational Investment Law, (Oxford University Press, 2008), p. 1183, online at http://alanalexandroff.com/wp-
content/uploads/2010/11/asa_laird_ch29.pdf, accessed June 2013.
81 Ibid., p. 1184.
82 OECD, Investor-State Dispute Settlement (PDF file), p. 30, downloaded from OECD website,
http://www.oecd.org/daf/inv/internationalinvestmentagreements/50291642.pdf, accessed June 2013.
83 Matt Moffett, “Besting Argentina in Court Doesn't Seem to Pay,” Wall Street Journal, April 20, 2012.
84 “Repsol’s Stake In YPF Increases Amid Partner’s Default,” June 3, 2012,
http://www.wstribune.com/2012/06/03/repsols-stake-ypf-increases-partners-default, accessed June 2013.
85 “Repsol’s only purpose was “to milk dry” YPF of resources and reserves,” MercoPress, June 2, 2012,
http://en.mercopress.com/2012/06/02/repsol-s-only-purpose-was-to-milk-dry-ypf-of-resources-and-reserves,
accessed June 2012.
86 Jude Webber, “Argentina quick to make YPF changes,” Financial Times, April 18, 2012.
87 Interview with Jose with Juan Josè Aranguren, June 1, 2012.
88 “YPF unveils plan to invest 35bn dollars in five years with he help from partners,” MercoPress, June 6,
2012, http://en.mercopress.com/2012/06/06/ypf-unveils-plan-to-invest-35bn-dollars-in-five-years-with-he-
help-from-partners, accessed June 2012.
89 John Paul Rathbone, Jude Webber and Adam Thomson, “Slim’s YPF stake: more than meets the eye,” Fi-
nancial Times, June 18, 2012, available at http://blogs.ft.com/beyond-brics/2012/06/18/slims-ypf-stake-more-

than-meets-the-eye/
90 Rodrigo Orihuela and Crayton Harrison, “YPF Soars as Billionaire Slim Gets 8.4% Stake From Eskenazis,”
Bloomberg, June 15, 2012, available at http://mobile.bloomberg.com/news/2012-06-14/ypf-says-mexican-
billionaire-carlos-slim-owns-a-8-4-stake.
91 Jude Webber, “Slim buys stake in nationalised YPF,” Financial Times, June 15, 2012.
92 “El hijo de Slim confirmó que la operación de YPF no fue una compra,” Clarín, June 18, 2012, available at
http://www.ieco.clarin.com/economia/Slim-confirmo-operacion-YPF-compra_0_721128114.html.
93 Rodrigo Orihuela and Crayton Harrison, “YPF Soars as Billionaire Slim Gets 8.4% Stake From Eskenazis,”
Bloomberg, June 15, 2012, http://mobile.bloomberg.com/news/2012-06-14/ypf-says-mexican-billionaire-carlos-
slim-owns-a-8-4-stake, accessed June 2012.
94 1,000 cubic feet.
95 “Hay 10 socios para invertir en Vaca Muerta,” La Mañana de Neuquén, May 31, 2012.
96 “Argentina invites Russia’s Gazprom to consider investing in YPF operations,” MercoPress, June 19, 2012,
http://en.mercopress.com/2012/06/19/argentina-invites-russia-s-gazprom-to-consider-investing-in-ypf-
operations, accessed June 2012.
97 “Repsol sues Argentina over YPF in NY court and also takes the case to World Bank arbitration,” Merco-
Press, May 16, 2012, http://en.mercopress.com/2012/05/16/repsol-sues-argentina-over-ypf-in-ny-court-and-
also-takes-the-case-to-world-bank-arbitration, accessed June 2012.
98 Jude Webber and Miles Johnson, “Repsol warns rivals over investing in YPF,” Financial Times, May 7, 2012,
http://www.ft.com/intl/cms/s/0/a401e746-9860-11e1-8617-00144feabdc0.html#axzz1yjJKfF2u, accessed June

2012.
99 Interview with Juan Josè Aranguren, June 1, 2012.
27
100
Carlos Burgueño “Petroleras de EE.UU. interesadas en invertir en YPF: Son al menos cuatro compañías,
pero exigen una ley que les permita girar utilidades,” Ambito.com, July 18, 2012.
101 Interview with Gustavo Petracchi, May 28, 2012.
102 Interview with María Eugenia Estenssoro, May 31, 2012.
28

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REV: JUNE 26, 2013

YPF — The Argentine Oil Nationalization of 2012

A History of the Argentine Energy Industry

Cycles of “Urgency and Betrayal”

The Second Reconquista: Repsol Enters Argentina

The Eskenazi Deal45

The Repsol Era

Energy Crisis, Pricing, and Exchange Controls

Beating a Dead Cow

Arbitration and Expropriation

After the Nationalization

Exhibit 1a YPF indicators (in millions of AR$ except as noted)

2011 2010 2009 2008 2007 2006 2005

2004 2003 2002 2001 2000 1999

Source: Comisión Nacional de Valores (CNV), webpage www.cnv.gob.ar.

Exhibit 1b Repsol Indicators (in millions of €, unless noted as US$)

2011 2010 2009 2008 2007 2006 2005

Net Income 2,193 4,693 1,559 2,555 3,188 3,124 3,120

2004 2003 2002 2001 2000 1999

Exhibit 2 Dividend Payments of Selected Oil Companies

2010, local currency

Source: Company filings via Bloomberg.

Exhibit 3 Repsol YPF Shareholder Structure

Significant Shareholders 32.3%

Source: Company filings via Bloomberg.

Exhibit 4 Argentine Hydrocarbon Production

Source: BP and http://www.energia.gov.ar/contenidos/verpagina.php?idpagina=3299, Secretariat of Energy of Argentina,

Exhibit 5 Argentine and YPF Hydrocarbon Reserves

Repsol YPF (a) Argentina

1999 1,667 10,683 3,570 2,753 25,744 7,044

Sources: (a) Source: 20-F filings found in www.ypf.com;

Exhibit 6 Argentine Federal Subsidies (by type, in millions of current pesos)

Trans- Public Food and Rural and

Exhibit 7 Argentine Balance of Trade (by category, in millions of U.S. dollars)

Agriculture Manufactures Energy Balance

Exhibit 8 Argentine Balance of Payments (in billions of U.S. dollars)

2006 2007 2008 2009 2010 2011 2012*

Exhibit 9 Arbitration cases against Argentina filed since 2001

Decided or Annulment Amount

Decided or Annulment Amount

Exhibit 10 Article 54 of the Washington Convention

Exhibit 11 President Fernández’s monthly approval rating.

Source: Poliarquía Consultores, Indice de Confianza en el Gobierno (monthly), available at

gro, Chubut, Santa Cruz, and Tierra del Fuego.

http://www.reuters.com/article/2012/04/20/us-spain-argentina-idUSBRE83J1DY20120420, accessed June

2012, available at http://en.mercopress.com/2012/05/15/eu-agrees-to-file-a-trade-suit-with-wto-against-

Petroleum Industry,” p. 392.

mented. Gadano, pp. 376-77.

Federal Systems, March 3-4, 2010, p. 3. Available at http://siteresources.worldbank.org/ EX-

the Money,” http://noelmaurer.typepad.com/aab/2012/01/argentina-beats-a-dead-cow-and-finds-oil.html,

deur(s) : La société NML Capital Ltd; Défendeur(s) : La République Argentine.

tration (New York: Juris, 2008) pp. 190-91.

nancial Times, June 18, 2012, available at http://blogs.ft.com/beyond-brics/2012/06/18/slims-ypf-stake-more-

http://www.ft.com/intl/cms/s/0/a401e746-9860-11e1-8617-00144feabdc0.html#axzz1yjJKfF2u, accessed June

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