YPF S.A. (, formerly ; English: "Fiscal Oilfields") is a vertically integrated, majority state-owned Argentine energy company, engaged in oil and gas exploration and production, and the transportation, refining, and marketing of gas and petroleum products. In the 2020 Forbes Global 2000, YPF was ranked as the 1360th largest public company in the world.
Founded in 1922 under President Hipólito Yrigoyen's administration, YPF was the first oil company established as a state enterprise outside of the Soviet Union, and the first state oil company to become vertically integrated.
YPF's first director was Enrique Mosconi, who took up his charge in 1922, remaining there until 1930.Quién era y qué pensaba el fundador de YPF by on Página/12, 3 May 2012 During his run on the company, Mosconi advocated economic independence and starting in 1928, nationalization of oil supplies; the latter, however, was never achieved due to a 1930 military coup against Yrigoyen backed by, among others, foreign oil interests.
YPF was privatized under president Carlos Menem and was bought by the Spanish firm Repsol in 1999; the resulting merged company was called Repsol YPF.
The renationalization of 51% of the firm was initiated in 2012 by President Cristina Fernández de Kirchner. The government of Argentina eventually agreed to pay $5 billion compensation to Repsol.
History
Early development
The company, specializing in the exploration, production, refining and commercialization of petroleum, had its origin in 1907, when oil was discovered near the city of Comodoro Rivadavia in Chubut. Following World War I, oil had become an important resource, leading to struggles between rival powers to gain control of it.
YPF was created by President of Argentina Hipólito Yrigoyen on 3 June 1922. It was the first entirely state-run oil company in the world, the second being the French Total founded in 1924 by the conservative Prime Minister Raymond Poincaré.Felipe Pigna, Los Mitos de la historia argentina, 3, ed. Planeta Historia y Sociedad, 2006, , p. 152 YPF's creation was followed by the creation of ANCAP in Uruguay (1931), YPFB in Bolivia (1936), Pemex in Mexico (1938), ENAP in Chile (1950), and Petrobras in Brazil (1953). Mosconi served as YPF's first director.
YPF bought its first tanker in the United States in 1923, and built not only several extracting facilities, but whole towns and cities, such as Comodoro Rivadavia; Caleta Olivia in Santa Cruz; Plaza Huincul in Neuquén; and General Mosconi in Salta. Bolstered by production in Comodoro Rivadavia, the firm produced 2.2 million barrels in its first year of operation (1922); this represented over three-quarters of domestic production and nearly a fourth of Argentina's oil consumption that year. Contracts signed in 1923 with Bethlehem Steel allowed YPF to begin the production of gasoline and kerosene.
Mosconi, who had previously been in charge of the Aeronautics division of the Army, proposed to Joaquín Corvalán, governor of Salta Province, the exploitation of Salta's oil by YPF, offering 13% royalties for the province.Pablo Villegas N., Mosconi, el petróleo y la independencia integral de Sudamérica. Bolpress, 19 June 2007. Retrieved 20 April 2012. Corvalán, allied with the Standard Oil of New Jersey, rejected Mosconi's proposal, however, referring to the concept of "provincial autonomy". This refusal led Mosconi to evolve in favor of the nationalization of oil supplies in order to strengthen Argentina's independence.
The first YPF oil refinery was inaugurated in December 1925 in La Plata, and was at the time the tenth largest in the world.Felipe Pigna, 2006, p.153 According to Mosconi, this spawned the beginning of "the mobilization of all sort of resistance and obstacles" from the oil trusts, in particular from Standard Oil, which was one of the most influential foreign companies in Argentina, with a presence in Comodoro Rivadavia, Jujuy, and Salta.
The Chamber of Deputies approved a law on 28 September 1928, establishing a state monopoly on oil.Felipe Pigna, 2006, p.154 The monopoly, however, was not absolute, being limited to oil exploration, exploitation and transport, but excluding selling and imports. Private firms opposed themselves to the law project, refusing to pay a 10% royalty.Felipe Pigna, 2006, p.155 The bill was supported by President Marcelo Torcuato de Alvear but was ultimately blocked by the conservatives in the Senate.
Oil nationalization became an important theme of Yrigoyen's electoral campaign of 1928, although the Yrigoyenistas focused their criticism on Standard Oil of New Jersey, abstaining themselves from attacking British Empire interests, to which Argentina's economy was closely linked (in particular Royal Dutch Shell).
Following Yrigoyen's victory in the 1928 elections, YPF, still directed by Enrique Mosconi, reduced oil prices in May 1929, leading to the cheapest petroleum in the world and to an important increase in YPF's sales compared to its rival private companies, forcing them to also lower their prices. Mosconi also reduced the price of kerosene and agrochemicals to contribute to the development of the interior regions of Argentina. YPF produced 5.5 million barrels by 1929, and though its share of domestic output had declined to 58% (from 77% in 1923) amid a sharp rise of Esso and Royal Dutch Shell production in Chubut, the firm now covered a third of the nation's oil market. A partnership with distributor Auger & Co. signed in 1925 resulted in a network of over 700 filling stations selling 178 million liters (47 million gallons) by 1930 – an 18% market share. Company revenues in 1930 reached US$25 million.
The Petroleum Institute (Instituto del Petróleo) was created on 30 December 1929, and directed by Ricardo Rojas, the rector of the University of Buenos Aires. Foreseeing conflicts with US private companies, Mosconi proposed an agreement with the Soviet state company Amtorg, which was to allow Argentina to import 250,000 tons of petroleum each year, paid by trade with leather, wool, tannin and mutton.Felipe Pigna, 2006, p.156 The agreement was to be made official in September 1930, along with the complete nationalization of oil resources; but on 6 September 1930, Yrigoyen was deposed by a military coup headed by General José Félix Uriburu, and the project was withdrawn.
Energy self-sufficiency
The coup was lobbied for chiefly by Standard Oil, whose interests in Salta Province and neighboring Bolivia conflicted with those of YPF. The subsequent Concordance regime supported YPF, however, and its role as the nation's leading oil distillates retailer was bolstered by a 1936 agreement with the Automóvil Club Argentino (ACA) to supply a chain of ACA service stations. Oil production by YPF continued to grow, and soon eclipsed private production: from just over 5 million barrels (37% of the total) in 1934, production grew to 15 million in 1945 (67%). The development of the nation's sizable natural gas resources also originated largely from YPF. Drawing from an initiative by YPF director Julio Canessa, President Juan Perón ordered that the gas flared off in YPF oil extraction should instead be captured, and sold by a state company, thus establishing the sister firm Gas del Estado ("State Gas") in 1946. The nation's first gas compressor and what at the time was the world's longest gas pipeline were completed by 1949, leading to a fifty-fold increase in natural gas production. Oil production at YPF surpassed 25 million barrels (84% of the nation's total) by 1955.
This gain was partly offset by a 40% drop in private-sector output, however, such that overall oil production rose by only one-third during the Peronist decade while annual consumption nearly doubled to 70 million barrels. The nation's oil supply thus shifted from 60% domestic in 1945, to 60% imported by 1954. Oil imports by 1955 rose to US$300 million, or over one fourth of total merchandise imports. Perón had made economic nationalism a policy centerpiece. YPF was granted an exemption from steep oil import tariffs levied on private firms, and Article 40 of the Constitution of 1949 stipulated the nationalization of all energy and mineral resources. The deteriorating oil deficit led Perón to court foreign investment in the sector as early as 1947, however, when an oil drilling contract was signed by YPF with U.S. firm Drilexco. Total exploration doubled, and significant reserves in Salta Province were developed. A more controversial joint venture with Standard Oil of California was signed in 1955 for the eventual production of up to 56 million barrels a year. These initiatives were opposed by much of the Army, the opposition UCR, and among others Perón's point man on national oil policy, YPF head Julio Canessa, who was dismissed. The venture ended following Perón's overthrow in September.
An erstwhile critic of both the Drilexco and Standard Oil contracts, President Arturo Frondizi enacted policies in 1958 which granted foreign firms rental contracts by YPF over new wells to foster exploration and production. A key part of the developmentalist economic policy advanced by Frondizi, this policy was made with the caveat that oil and gas resources themselves would be renationalized. Thirteen contracts were signed with mainly U.S. firms, whereby each contractor would earn 40% of the revenues produced from the new wells. Private production, which had virtually ceased, grew to become one third of the nation's total. YPF itself benefited by way of a royalty bonanza, which financed record investments. These in turn led a doubling of YPF production to 65 million barrels; including the private sector, Argentina's oil production thus nearly tripled to 98 million barrels by 1962, and despite higher consumption, imports fell to merely one sixth of total demand.
These contracts created a controversy referred to by Frondizi himself as the "oil battle," and were ultimately cancelled by President Arturo Illia in 1963 over concerns that YPF would be deprived of adequate returns for its exploration investments; of the foreign firms which had taken part in the 1958 bids, only Amoco remained. The cancellations cost US$50 million in indemnity payments, though they proved fortuitous after the company's discovery of the Puesto Hernández field in 1965. Puesto Hernández, near Rincón de los Sauces, Neuquén Province, was later declared the "national energy capital" due to its having at the time around half of Argentina's reserves of oil and natural gas. This discovery allowed YPF output to rise by 50% between 1965 and 1968 to 95 million barrels, its share of the nation's oil output growing from two-thirds to three-fourths. New oil field rental contracts were signed following a 1967 policy change enacted by President Juan Carlos Onganía which had the goal of achieving self-sufficiency in oil by 1975. Regaining its monopoly on oil imports in 1971 (which still averaged around 15 million barrels), YPF retained a majority of production (75%), as well as refining and distribution (60%), of petroleum in Argentina. The firm operated 7 refineries and 3,000 service stations by 1977, while production reached 118 million barrels.
Decline and privatization
Perón's return to Argentina and to the presidency in 1973 was followed by the addition of nearly 20,000 employees (YPF employed 53,000 by 1976). It also coincided with the 1973 oil shock, however, and the US$470 million in added oil import costs combined with larger payrolls to erase profits in 1974, while production declined slightly. The dictatorship installed in a March 1976 coup initially presided over a revitalization and streamlining of YPF. Output increased by 20% and its finances initially improved following a wave of layoffs that returned employment levels to around 35,000 by 1979.