US Court Orders Argentina to Surrender Majority Stake in State Oil Company: A Major Setback for Milei

Argentina’s Oil Future in Jeopardy

In Buenos Aires, the future of Argentina’s state-run oil company, YPF, is uncertain. A U.S. judge has ordered the country to give up its 51% controlling stake in YPF due to a $16 billion court ruling. This decision relates to Argentina’s controversial 2012 nationalization of the company, which led to the seizure of shares from previous investors.

This ruling poses a significant challenge for President Javier Milei, who took office with a promise to revitalize the economy and privatize state-owned companies. Former President Cristina Fernández de Kirchner made the bold move to nationalize YPF, which has haunted Argentina’s reputation in global finance. Milei says he will appeal the ruling, blaming political rivals for the challenges he faces today.

The judge’s order follows a long legal battle. Last year, the court found Argentina liable for damages related to the forced buyout of YPF shares. The plaintiffs, mainly represented by Burford Capital, argue that the government should have compensated minority shareholders with a tender offer.

YPF is crucial to Argentina’s economy, especially as it taps into the Vaca Muerta shale gas reserves. Crude oil production there hit a record 448,000 barrels per day in May 2023, which is a 22.5% increase compared to the previous year. In fact, YPF reported a net profit of approximately $2.4 billion in 2024, a significant turnaround from the previous year’s loss.

Milei’s administration is in a tough spot. Losing control of YPF at this time could severely impact economic recovery efforts. As Marcelo J. García from Horizon Engage notes, “Control of YPF is important for Milei; that’s why an appeal is the only option for him.”

This situation reflects broader issues in Argentina’s economy, including high inflation and significant foreign debt. As the Milei government tries to stabilize the economy, the stakes for YPF and its impact on national finances are higher than ever.

For those interested in understanding more about Latin America’s evolving economic landscape, you can explore the Associated Press’s coverage here.

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Argentina, Cristina Fernandez de Kirchner, Javier Milei, Loretta Preska, General news, Latin America, South America, Politics, Business, Burford Capital Ltd., World news, Marcelo J. Garca, Financial services, X Corp.