BUENOS AIRES, Argentina — A U.S. court ruling has cast uncertainty on the control of YPF, the national oil company of Argentina, as the country faces the prospect of relinquishing its majority stake due to a long-standing legal dispute tied to its controversial nationalization in 2012. Judge Loretta Preska of the Southern District of New York has ordered the nation to hand over its 51% share in YPF as partial compensation for damages awarded to former investors, a move that complicates the economic landscape for President Javier Milei.
The ruling, which follows a $16 billion judgment against Argentina, poses significant challenges for the Milei administration, which has inherited an economy marked by extensive debt and inflation. Many observers are keenly aware of the implications of this decision, especially given that YPF has become integral to the nation’s energy strategy, particularly in developing the vast shale oil and gas reserves located in the Vaca Muerta field.
In her order, Judge Preska allowed two weeks for Argentina to transfer its stake to Bank of New York Mellon Corp, a major U.S. custodian, giving the plaintiffs—largely represented by Burford Capital—a path for potential financial restitution. Shares of YPF dropped 5.6% in response to the judge’s announcement, reflecting investor concerns regarding the company’s future amid ongoing legal uncertainties.
The origins of this case date back over a decade, when former President Cristina Fernández de Kirchner oversaw the nationalization of YPF, a decision that many believe deepened the country’s financial woes. Critics of the Milei administration argue that this ruling underscores the lasting repercussions of past policies and economic management. In the wake of the judgment, Milei has pledged to appeal, framing the legal battle as necessary to protect national interests while also pointing to the legacy of past administrations.
Economic analysts emphasize the importance of YPF to Argentina’s current administration. Marcelo J. García, a director at Horizon Engage, noted that control of YPF is crucial for Milei, especially as the government seeks to bolster foreign reserves through investment in the energy sector. The company has recently increased its crude production to unprecedented levels, and YPF’s profits have rebounded sharply, posting nearly $2.4 billion in net income last year, a stark contrast to the $1.3 billion loss recorded in the previous period.
Milei, who ran on a platform advocating for the privatization of state-owned enterprises, faces mounting pressure. His administration has struggled with a myriad of economic crises characterized by soaring inflation and dwindling public confidence. The stakes are especially high with YPF, which many consider a key player in alleviating the nation’s fiscal issues and attracting foreign investment.
As Argentina continues to grapple with a challenging economic environment, the appeal against the U.S. ruling offers a glimmer of hope for those within the Milei administration advocating for a different economic trajectory. Whether this legal fight will restore control of YPF or further entrench the country’s financial difficulties remains to be seen, but the path forward appears fraught with challenges that demand astute navigation in both domestic and international arenas.