Argentina Ordered to Relinquish 51% Stake in YPF Amid $16 Billion Judgment

A U.S. judge has ordered Argentina to relinquish its 51% controlling stake in YPF, the state-run oil company, as partial compensation for the seizure of shares from former investors during the 2012 nationalization of the energy group. This ruling is part of a $16 billion U.S. court judgment against Argentina, which has been a significant financial burden for the country.

The decision presents a new challenge for President Javier Milei, who has vowed to appeal the ruling. Milei, known for his libertarian views, has inherited an economy in disarray, partly due to the contentious takeover of YPF by Cristina Fernández de Kirchner. The nationalization of YPF in 2012 further strained Argentina's global financial obligations, adding to its reputation as a serial defaulter.

Judge Loretta Preska of the Southern District of New York granted the request of former shareholders, largely represented by Burford Capital, which finances litigation in return for a share of the winnings. The judge gave Argentina two weeks to transfer its shares in YPF to Bank of New York Mellon Corp, the major U.S. custody bank.

The legal battle stems from a long-running case that saw Judge Preska find Argentina liable for $16.1 billion in damages and interest in 2023. The plaintiffs argue that the government should have launched a tender offer for stakes held by minority shareholders. This ruling is a significant development in the ongoing legal disputes surrounding the nationalization of YPF.

Milei, whose government has been struggling to build up depleted foreign reserves, has vowed to appeal the ruling to defend national interests. He has blamed the problem on his political rivals, stating that the consequences of the previous government's actions continue to affect Argentina. Marcel García, Director for the Americas at a New York-based risk consultancy, noted that the ruling serves as a reminder for the Milei administration that the country's problems will not disappear simply by blaming the opposition.

YPF has been a crucial pillar of Argentina's economy, particularly with its accelerated development of the country's vast shale gas reserves in the Vaca Muerta field. The field has seen record production, with crude output hitting 448,000 barrels per day in May, a 22.5% increase from the same month in 2024. In 2024, YPF reported a net profit of almost $2.4 billion, a significant improvement from a $1.3 billion loss the previous year.

Milei has hoped to leverage investments in the Vaca Muerta field to address the nation's long-standing fiscal weaknesses and pay its massive deficits. However, the loss of the controlling stake in YPF could cripple Argentina at a critical moment for Milei's government, potentially undermining his efforts to stabilize the economy.