Latin America Finds Its Footing, by Andrés Cala
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While the U.S. and Spain have wallowed in the Great Recession swamp, Latin America has begun breaking free of the old order that bogged down progress. Now, the region is restructuring relations with its old international masters, as Andrés Cala explains.
The behind-the-scenes orchestrator of the YPF deal was the Mexican state-owned oil company Pemex, which holds nearly a 10 percent stake in Repsol and has openly criticized its management. But behind the Pemex rebellion against Repsol’s management is Mexico’s own ambition to take a stake in Argentina’s huge oil and gas development plans.
A bilateral deal with Argentina will allow Mexico to partake in the Vaca Muerta shale field development, one of the world’s most coveted unconventional oil and gas plays, and at very attractive terms. Pemex wants to use this oil and gas technology and experience to develop its own unconventional fields. So, brokering the deal with Repsol was an important diplomatic and corporate score for Mexico.
The YPF expropriation was engineered by the populist Argentine government of President Cristina Kirchner and her late husband, Nestor Kirchner, but it was a targeted move, not part of a broader nationalization trend. Indeed, American, Chinese and European companies are competing to buy stakes, a process that will hasten once Repsol’s legal challenges are withdrawn.