BUENOS AIRES, Argentina — The future of Argentina’s state-controlled oil company recently faced uncertainty after a U.S. judge ordered the financially struggling nation to relinquish its 51% ownership stake in YPF. This action aims to partially compensate for the confiscation of shares from previous investors during the 2012 nationalization of the energy group.
This significant ruling, meant to enforce a $16 billion judgment in favor of the United States against Argentina, adds a new challenge for libertarian President Javier Milei. The ruling contrasts with the policies of former leftist President Cristina Fernández de Kirchner who had nationalized YPF during her term from 2007 to 2015 and engaged in legal battles that followed. In response, Milei has declared his intention to appeal the decision.
The expropriation of YPF by Fernández contributed to Argentina’s notoriety as a habitual defaulter, ignoring its international financial commitments. Now, Milei, who took over an ailing economy after years of excessive state expenditure, had campaigned on promises to privatize state enterprises.
Judge Loretta Preska of the Southern District of New York sided with former shareholders, primarily backed by Burford Capital, which funds litigation for a cut of the proceeds, demanding Argentina to transfer its YPF shares to Bank of New York Mellon Corp. within two weeks according to the court order. Since YPF is listed on the New York Stock Exchange, the lawsuit was filed in a U.S. district court, and YPF’s stock ended the day down by 5.6%.
The ruling is the result of an ongoing legal dispute, which earlier found Argentina responsible for $16.1 billion in damages and interest. The plaintiffs maintained that the government ought to have extended a tender offer for the outstanding shares of minority investors.
Facing difficulties in restoring depleted foreign reserves, Milei has announced plans to challenge the ruling to “defend national interests” and has criticized his political adversaries for creating the situation. “More than 10 years have passed, and we Argentines continue to suffer the consequences of the worst government in Argentine history,” Milei expressed via a social media platform.
Marcelo J. García, the Director for the Americas at Horizon Engage, a risk consultancy based in New York, remarked that the decision exemplifies the ongoing issues the Milei administration faces, despite his tendency to blame the opposition. “Control of YPF is crucial for Milei; that’s why an appeal is his only option,” García commented.
Being forced to relinquish the controlling interest in YPF, a key part of the economy, would significantly weaken Argentina at a pivotal time for Milei’s leadership. YPF has been advancing efforts to develop Argentina’s vast shale gas reserves in the Vaca Muerta region, located in Patagonia. Official data shows that crude oil production in Vaca Muerta reached an unprecedented level in May, with 448,000 barrels per day, a 22.5% increase compared to the same month in 2024.
In 2024, YPF reported a net profit of nearly $2.4 billion, bouncing back from a $1.3 billion loss the prior year. Milei hopes that investments in the Vaca Muerta field will help address the country’s chronic fiscal issues and enable it to manage its sizable deficits.