<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Mayara Vilas Boas</p> <p>Argentine President Cristina Fernandez De Kirchner has made her message to foreign companies operating in her country clear: Either boost investment or face the risk of expropriation.</p> <p>It's hard to draw any other conclusion after the April 16 <a href="http://www.bloomberg.com/news/2012-04-17/argentina-seizes-51-of-oil-producer-ypf-to-stem-imports.html">seizure</a> of most of oil producer YPF SA's holdings in Argentina. Kirchner said the company, which was 57 percent owned by Spain's Repsol YPF SA, failed to follow through on promised investments, leaving the country overly dependent on imported oil.</p> <p>Never mind the predictable tensions this has caused between Spain and Argentina, Kirchner seems undeterred and is intent on taking control of YPF Gas SA, another company controlled by Repsol.</p> <p>None of this can sit well with Brazil's state-owned oil producer, Petroleo Brasileiro SA, or Petrobras. The company is already on shaky ground with local authorities in Argentina's Neuquen province, where tentative permission to drill six wells has been revoked.</p> <p>Kirchner has so far limited her saber-rattling to international energy companies. But there's no reason to believe that companies in other industries won't end up as candidates for government takeover on similar pretexts.</p> <p>Although the expropriation has hurt Repsol the most -- its shares have declined more than 20 percent this month -- the biggest loser might end up being Argentina. Economic growth was already tumbling before the seizure. The country lacks the capital to make the huge investments needed for oil and gas exploration and production.</p> <p>If investors become wary of putting their money into Argentina, would anyone blame them?</p> <p>(Mayara Vilas Boas is on the staff of Bloomberg View.)</p> <p>For more quick commentary from Bloomberg View, <a href="http://www.bloomberg.com/view/the-ticker/">go to the Ticker</a>.</p> </body> </html>