Hague Attacks Argentina's Oil Firm Seizure

Foreign Secretary William Hague has hit out at Argentina after its government said it was seizing a Spanish-controlled energy firm.

Argentina has sent shock waves through the oil industry by announcing plans to nationalise local oil assets controlled by Spanish company Repsol.

Mr Hague warned the move by President Cristina Fernadez to take over a large part of YPF, the country's biggest oil company, was part of a wider protectionist agenda.

Repsol would see its stake reduced from 57% to 6% as a result, potentially losing billions of dollars.

The announcement - part of Argentina's efforts to curb fuel price hikes - has drawn a furious response from Madrid, which has threatened trade and diplomatic reprisals.

Mr Hague said he was "very concerned" by the developments.

"This is the latest in a series of trade and investment-related actions taken by Argentina which are damaging to business interests and will undermine Argentina's economy by reducing its attractiveness to international investors," he said.

"The Argentine government has made no secret of the fact that it wishes to reduce imports and boost its domestic trade surplus through a variety of restrictive trade measures.

"This goes against all the commitments Argentina has made in the G20 to promote transparency and reduce protectionism.

"We will work with Spain and our EU partners to ensure the Argentine authorities uphold their international commitments and obligations."

Argentina and Britain have been locked in a diplomatic battle over the disputed Falkland Islands for months.

Buenos Aires lays claim to the islands, which has been by the UK since 1833.

Tensions rose ahead of the 30th anniversary of Argentina's invasion of the archipelago, with Buenos Aires accusing Britain of militarising the South Atlantic.

The war of words was also intensified by Prince William's deployment to the islands in his role as an RAF search and rescue helicopter pilot, the threat of legal action over oil exploration and Argentina's decision to prevent British-linked ships from docking in its ports.

Mr Hague's criticisms come as it has been reported the takeover scuppers years of planning by China's Sinopec Group to buy YDF.

Sources told Chinese website Caixin.com that Sinopec had held talks with Repsol to buy its controlling 57% stake in YPF.

Caixin.com cited a source as saying Sinopec, China's second-largest oil company, had reached a non-binding agreement to take over YPF for more than £9bn.

The Caixin.com report said Sinopec was still in talks with Repsol to buy YPF despite the nationalisation threat and the Financial Times said Repsol had not informed Argentina of the discussions with the Chinese oil firm.

Sinopec declined to comment.

The Spanish government is strongly supporting Repsol, saying it would demand at least £6.25bn in compensation if the plans were executed.

The European Union has also warned Buenos Aires that it was sending the wrong signal to investors, who dumped Repsol shares, which plunged more than 7% on Tuesday.

Repsol described Argentina's move as "clearly unlawful and seriously discriminatory" and said it would take legal action.

The Spanish company has also denied Argentine accusations that it had failed to invest enough in YPF, saying that it had poured $20bn into YPF in addition to $15bn it paid to buy the subsidiary in 1999.

Energy-rich Argentina has gone from being a major exporter of natural gas and oil to a major buyer of expensive energy imports that erode its trade surplus.Repsol president Antonio Brufau dismissed the criticism.

He accused Ms Fernandez of trying to cover up Argentina's economic and social ills with the "unlawful" expropriation.

Mr Fernandez, who already nationalised Argentina's flagship airline and private pension funds, said her aim is nothing less than to recover her country's sovereignty.

She accused Repsol of provoking an energy crisis by exporting too much of Argentina's oil and failing to invest locally even as it paid huge dividends abroad.