page_title: YPF
section_title: Decline and privatization
hierarchical_section_title: YPF / History / Decline and privatization
caption_attribution_description: English: HFB-320 Hansa Jet LQ-JRH of YPF at Buenos Aires Aeroparque in 1972
context_page_description: YPF S.A. is a vertically integrated Argentine energy company, engaged in oil and gas exploration and production, and the transportation, refining, and marketing of gas and petroleum products.
  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. 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 by Carlos Menem and bought by the Spanish firm Repsol in 1999; the resulting merger produced '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.
  According to Bloomberg, the board of directors include Matteo Reggio and Miguel Guttierez.
context_section_description: 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.
  The military government was openly hostile to YPF's paramount position in the oil industry, however.  The company lost money every year after 1975 and by 1981 was US$4.1 billion in debt.  YPF losses resulted, at least in large part, from policy decisions beyond its control. Government policy after 1976 kept oil prices well below inflation, with the consequence that costs increased faster than income.  YPF also bore an extremely heavy tax burden, as 68.4% of its revenues were paid as tax to the national and provincial governments, as well as a long list of state agencies that included the National Energy Fund, the National Highway Council, and the Provincial Road Fund.  Another serious drain resulted from the failure of other state enterprises such as Argentine Railways and  the national airline to pay YPF for their fuel in full and on time.  These intergovernmental accounts represented 20% of YPF's sales and were as much as ten years in arrears.  The tax policy of the military government followed the same path as its civilian predecessors, a path that regarded YPF as a convenient source of funds to ease the country's chronic and serious fiscal deficit position.
  The death in a helicopter crash of the firm's director, Raúl Ondarts, and the appointment of General Guillermo Suárez Mason in 1981 was followed by a period of severe mismanagement, moreover. Powerful as head of the First Army Corps (which committed many of the "Dirty War" atrocities), Suárez Mason installed many of his hard-line Army Intelligence colleagues in managerial posts at YPF. They in turn diverted large quantities of fuel into the director's newly established company Sol Petróleo, a dummy corporation used by Suárez Mason and his appointees for embezzlement as well as to divert funds to the Contras and the fascist organization P2 (to which the director belonged).
  Suárez Mason had YPF borrow heavily not only to cover such asset stripping but also at the behest of Economy Minister José Alfredo Martínez de Hoz, whose bid for currency strength and policy of financial deregulation required a sharp rise in foreign debt to maintain. YPF debts thus rose 142-fold during Suárez Mason's tenure, at the end of which in 1983 the company recorded a US$6 billion loss (the largest in the world at the time).
  YPF nonetheless remained the 365th largest firm in the world, with sales of over US$4 billion in 1992. Argentine President Carlos Menem initiated the privatization of YPF through an IPO on the New York and other stock exchanges on 28 June 1993, at a value of US$3 billion for stock equal to a 45% share in the company.  During the 18 months prior to the IPO, YPF underwent a massive restructuring process led by its new CEO José Estenssoro, who had been appointed by President Menem.  The staff of YPF was reduced from 52,000 to 10,600 through layoffs agreed with unions and outsourcing of services to companies established by former YPF employees during the restructuring process.  The financial bottom line for the company was increased from a loss about $1 billion in 1991 (although the accounting system at the time could not accurately compute actual profit) to a profit of $1 billion in 1993, and the underlying value of YPF was increased from about US$2 billion to the US$9 billion after privatization.
  Estenssoro stayed on as CEO, and further streamlined the company while expanding its reach outside Argentina, acquiring Maxus Energy Corporation of Dallas for US$740 million in 1995. Estensso
caption: YPF business jet, Aeroparque Newbery, 1972
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