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Mexican Presidential Candidates Criticize YPF Expropriation
Uan Montes -
April 17, 2012
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"I'm a head of state and not a hoodlum." - Argentine President Cristina Fernández de Kirchner after seizing control of the Spanish-owned oil company, YPF.

Mexico's leading presidential candidates agreed on one thing Tuesday, that Argentina's decision to nationalize Spanish-controlled oil company YPF SA (YPF) is the wrong path to create growth and promote investment.

"I respect Argentina's sovereignty. But it doesn't seem to me the best way to promote investments and confidence in the country," said front-runner Enrique Pena Nieto of the Intitutional Revolutionary Party, or PRI, at the World Economic Forum's Latin American event in Puerto Vallarta.

Argentina's President Cristina Fernández de Kirchner announced early Monday that her government will ask Congress to put 51% of YPF, Argentina's biggest oil company, in state hands, ousting Spanish firm Repsol YPF SA (REP.MC) as the majority shareholder.

Conservative candidate Josefina Vazquez Mota, of the ruling National Action Party, or PAN, said expropriation leads nowhere and goes against globalization rules. "We expropriated the banking system, and Mexico is still paying the consequences today of low growth," Vazquez Mota said at the same event. Mexico's banks were nationalized in 1982 and reprivatized in the early 1990s.

With less than three months to go before the July 1 presidential election, Vazquez Mota is trailing far behind Pena Nieto, according to opinion polls. Leftist Andres Manuel Lopez Obrador, who didn't attend the World Economic Forum event, is in third place.

Mexico's oil industry was expropriated in 1938, and no private or foreign investment is allowed in upstream oil and gas activities except under contract to state oil monopoly Petroleos Mexicanos, or Pemex. There are no private oil and gas concessions. Pemex has a 9.5% stake in Repsol, and recently signed a 10-year industrial alliance with the Spanish company.

Spain has asked Mexico, which holds the revolving presidency of the Group of 20 this year, to support Spain over the YPF issue.

Both Pena Nieto and Vazquez Mota have said they want to open Pemex to co-investments with private capital, while keeping the company in state hands.

+ Wexico

If elected president, Pena Nieto said he wants in the short term to increase investment in exploration and production, alongside private capital, in order to improve the company's productivity. Vazquez Mota reiterated recent comments that she would be open to selling a minority stake in the company on the stock market.

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