By Taos Turner
Argentina's deputy economy minister on Tuesday effectively laid out the government's new mission statement for oil and gas producer, YPF SA (YPF, YPFD.BA).
Argentine President Cristina Kirchner seized management of YPF on Monday, after calling on Congress to nationalize the company and force it to boost oil and gas output.
The company's new priority won't be profitability, but providing cheap energy to people and companies.
YPF's goal will be "to keep prices low to foment purchasing power" and "keep companies competitive" by providing consistently cheap oil and gas, Axel Kicillof, Argentina's deputy economy minister, said in congressional testimony.
On Monday, Kirchner asked Congress to nationalize 51% of YPF by expropriating the vast bulk of shares owned by its majority shareholder, Spain's Repsol YPF SA (REPYY, REP.MC).
Kicillof slammed Repsol in his testimony, saying the company had "emptied" YPF and focused on profit when it should have focused on boosting oil and gas production.
Repsol Chairman Antonio Brufau has denied the charges and said Argentina's government is simply trying to cover up the country's economic problems and an unsustainable energy policy.
Kicillof accused private-sector companies of being uninterested in improving the social good in Argentina.
Kicillof said the price of oil in Argentina should remain uncoupled from global oil prices and that the state should keep prices low while also increasing production.
Brufau "would have a heart attack," if he knew how low the cost of a barrel of oil should be in Argentina, said Kicillof.
Famous for his long sideburns and for shunning ties and suits, Kicillof is considered the intellectual architect behind Kirchner's plans to nationalize YPF.
Before coming to the Economy Ministry, he helped manage flag carrier Aerolineas Argentina, which Kirchner nationalized in 2008, wresting control from Spain's Marsans.
Critics say Aerolineas loses money every day. But Kicillof defended the airline, saying it is now a more efficient company.
Repsol's current stake in YPF is about 57%. Under the expropriation bill, Argentina's federal and provincial governments would take 51% of YPF from Repsol, leaving Repsol with a 6% stake.
The remaining 49% would be in the hands of the Eskenazi family, which holds 25%, and other investors.
-By Taos Turner, Dow Jones Newswires; 5411-4103-6728; [email protected]