BUENOS AIRES, Argentina (AP) -- The Spanish-run oil company YPF has rejected an Argentine effort to assert control over its profits in the South American country, voting to recapitalize its gains rather than create a separate fund to develop new energy resources.
The proposal to pay up to $1.3 billion in stock rather than cash dividends goes to YPF shareholders next month. YPF says the money will remain in Argentina to be invested in the business. The government of President Cristina Fernandez had proposed putting it in a separate fund that would be more difficult to liquidate.
The outcome of Wednesday's board meeting has deepened the conflict between the government and the company now controlled by Spain's Repsol firm.
YPF remains Argentina's largest company and is key the country's energy future. The government has accused the company of paying too much of its profits in dividends and not investing enough in energy exploration and production.
Roberto Baratta, the lone representative of the Argentine state on the board, voted against the majority, and the Argentine government's next move remains unclear. Already, several provinces have revoked YPF licenses in areas that the company had yet to fully develop.
More ominously for the Spanish shareholders, Cabinet chief Juan Manuel Abal Medina said in a radio interview hours before Wednesday's meeting that "if the only way forward is to nationalize YPF, it will be nationalized."
Industry analyst Eduardo Fernandez told The Associated Press that he doubts Argentina will make such a move, because "there's not enough money in Argentina to nationalize" the company. Furthermore, he said, YPF's decision "to capitalize the profits is a good signal aimed at developing new reserves or increasing refining capacity" in Argentina, so the government shouldn't be complaining.
Antonio Brufau, the Spanish CEO of both YPF and Spain's Repsol YPF SA, reaffirmed that in a statement, saying "the board's decision doesn't involve sending foreign currency abroad nor does it require the purchase of dollars in the local market; and by increasing the company's capital it becomes much stronger in order to confront its investment challenges."
The company plans record investments of $3.4 billion in Argentina this year, it said.
But Argentina's secretary of political economy, Axel Kicillof, insisted that YPF create a reserve fund specifically destined toward energy investments in Argentina, rather than send its profits to its shareholders, which he said is no guarantee of increased investment.
"This paper is very liquid — it's even priced in the New York Stock Exchange," where any shareholder can simply sell to get the dollars that the government wants to keep working inside Argentina, Kicillof complained.
Associated Press Writer Jorge Sainz in Madrid contributed to this report.