YPF ordered to divulge shale deal with Chevron

OREANDA-NEWS. November 12, 2015. Argentina's supreme court has ordered state-controlled YPF to publicly release all clauses of a 2013 contract with Chevron to develop shale oil in the country's vast Vaca Muerta formation.

In a 3-1 ruling, the justices sided with opposition Socialist Senator Hector Ruben Giustiniani, ruling that the state's 51pc stake in the firm effectively makes it a public company subject to transparency laws.

"YPF operates under the jurisdiction of the national executive power," the justices wrote in the ruling. "In effect, it is the one that exercises all political rights over the expropriated shares." The justices noted that president Cristina Fernandez de Kirchner appointed Miguel Galuccio as YPF chief executive and economy minister Axel Kicillof is a board director.

Argentina expropriated a 51pc stake in YPF in 2012 from Spain's Repsol.

The court dismissed the inclusion of Chevron in the lawsuit, saying the conflict is solely with YPF as a state-controlled company is under the purview of the executive branch. The one dissenting justice, Elena Highton de Nolasco, asserted that Chevron should also have been included in the decision.

Chevron is the biggest foreign investor in Argentina's emerging shale play.

Although the case excluded the US major, it could be affected by the release of the contract terms in the face of competitors. At the same time for Argentina, the landmark ruling could dissuade other foreign companies from partnering with YPF because of the risk that their contract details would have to be divulged as well.

Both Chevron and YPF said they are preparing statements on the ruling.

The timing on the release of the contract will be up to a lower court.

YPF?s shale contract with Chevron has been a lightning rod over alleged "secret clauses" favorable to the US firm. YPF has repeatedly denied any contractual slant, while refusing to divulge the contract?s contents.

The court criticized YPF's assertions of commercial sensitivity, saying that its "imprecise and generic affirmations" were not enough to prove that releasing information would put industrial, technical or scientific secrets at risk.

Chevron and YPF have a 50:50 partnership in Loma Campana, which produces around 50,000 b/d of oil equivalent (boe/d). The two companies are the first to put a shale pilot project into production on a large scale in Argentina.

Critics characterized the ruling as politically motivated, as the court decided the case, which was filed more than a year ago, shortly before Argentinians vote in an unprecedented run-off election on 22 November.

Center-right opposition candidate Mauricio Macri is currently polling well above ruling party contender Daniel Scioli.