A while back on this forum there were grand declarations from the peanut gallery that that Argentina's nationalisation of an oil company had not added any risk to doing business in that country for resource companies.
And the rationale given by the smug self-determined sage was that even were a foreign company to have its assets taken from it by the state that company could simply obtain adequate compensation through the international legal system and everything would be hunky-dory.
At the time I thought that it was a feeble argument purely on the basis that any such compensation would require considerable time effort and expense dealing with lawyers, not something that most resource companies or their shareholders would relish. In my view of course that trepidation would translate into greater risk being perceived (and like discrimination, risk is mainly about perceptions).
Then I came across this snippet indicating one junior resource company had decided that they were not going to risk their scarce resources in Argentina on account of how Repsol was treated.
So maybe a couple of mining execs have been put off but surely one junior back-tracking does not put meat onto the bone that there is an increased risk for resource companies to do business in Argentina...
... though this Bloomberg piece probably does:
"Repsol YPF SA (REP), the Spanish oil explorer seeking $10.5 billion from Argentina for seizing its assets, will line up behind companies from Exxon Mobil Corp. to Unisys Corp. (UIS) yet to be repaid by the most-sued nation on earth.
There are 26 cases pending against Argentina, more than any other country, at the World Bank’s International Centre for Settlement of Investment Disputes in Washington, the principal arbitration court for claims against sovereign countries. So far, it has refused to pay any of the tribunal’s judgments, according to a Bank of America Merrill Lynch economists’ report.
The prospects of compensation are dim for Madrid-based Repsol, the worst-performing oil stock this year, because of Argentina’s resistance to pay existing judgments and because Repsol’s case will be behind those of hedge funds, utilities and energy companies already pursuing reimbursement for currency devaluations, nationalizations and rate freezes after Argentina’s $95 billion default a decade ago."
