ARGENTINA rejected Spanish oil giant Repsol's demand for $10.5bn in compensation after Argentine President Cristina Fernandez de Kirchner seized Repsol's YPF unit, saying it hasn't invested enough in the South American country.
Argentina will rely on "solid data" to value its takeover of 51pc of YPF's shares and not use estimates from Repsol, deputy economy minister Axel Kicillof said at a Senate hearing.
The government will ensure the profitability of the company "beyond Repsol's expectations," said Kicillof, who Fernandez named earlier this week to help lead YPF.
"The numbers that some executives talked recklessly about in valuing the company will be revised as we review the fine print and the secret information managed by the company,"
Kicillof said, adding that YPF's 2011 profit of 5.3bn pesos (€950m) won't be used for dividends and may be reinvested.
The appropriation damaged Argentina's relations with Spain, its biggest investor, and put in question the future of the country's largest taxpayer.
Spain vowed to retaliate against Argentina's exporters and Repsol chairman Antonio Brufau said he will use all legal means to win full payment for the oil producer.
"A takeover sends a very negative signal to international investors and it could seriously harm the business environment in Argentina," European Union foreign policy chief Catherine Ashton said in Strasbourg earlier this week.
"The measure creates legal insecurity for all European Union and foreign firms in the country."
Trade between Argentina and the EU totaled about €20bn last year, up from €16bn in 2010, according to a report by Argentina's national statistics institute. Spain is Argentina's fifth-biggest destination for exports, after Brazil, China, Chile and the US, the report said. (Bloomberg)