What Paul Gregory is Writing About: YPF

Tuesday, April 17, 2012

Two Major Events in International Oil: Argentina's Nationalization of YPF and Exxon's "Hostage" Deal With Russia

One of the greatest Latin American success stories was the privatization of Argentina's YPF in July of 1993 against enormous political and labor opposition. The Kirchner government reversed this hard-won success yesterday with its nationalization of YPF. The nationalized YPF will again become a bloated political rent-seeking machine to pay off Kirchner's supporters. YPF's expropriated partners (mainly Repsol of Spain) will get little.

At about the same time, ExxonMobil signed the only possible deal with Russia's national oil company Rosneft to jointly develop Siberia's energy reserves. The key section of the deal gives Rosneft properties of equivalent value in the United States. This time when Putin decides to expropriate ExxonMobil's investment in Russia, they can take back Rosneft's U.S. holdings. Putin has forced Western energy companies into such "hostage" deals. Let's see if they work.

Who Am I?

Paul R. Gregory is a Research Fellow, Hoover Institution
Cullen Professor of Economics, University of Houston. He is also a research professor at the German Institute for Economic Research in Berlin. He is chair emeritus of the International Advisory Board of the Kyiv School of Economics. He serves as co-editor of the Yale-Hoover Series on Stalin, Stalinism, and Cold War. He has co-edited archival publications, such as the seven volume History of Stalin's Gulag (2004) and the three-volume Stenograms of Meetings of the Politburo (2008). Gregory is the organizer of the Hoover Sino-Soviet Archives Workshop that takes place in the summer at the Hoover Institution.
His recent publications include Lenin's Brain and Other Tales from the Secret Soviet Archives (Hoover 2004) and Terror by Quota (Yale, 2009).

Paul Gregory has a regular blog Forbes.com