Early development
The company, specializing in the exploration, production, refining and commercialization of petroleum, had its origin in 1907, when oil was discovered near the city of Comodoro Rivadavia in Chubut. Following World War I, oil had become an important resource, leading to struggles between rival powers to gain control of it.
YPF was created by President of Argentina Hipólito Yrigoyen on 3 June 1922.[1] It was the first entirely state-run oil company in the world, the second being the French Total founded in 1924 by the conservative Prime Minister Raymond Poincaré.[12] YPF's creation was followed by the creation of ANCAP in Uruguay (1931), YPFB in Bolivia (1936), Pemex in Mexico (1938), ENAP in Chile (1950), and Petrobras in Brazil (1953). Mosconi served as YPF's first director.
YPF bought its first tanker in the United States in 1923, and built not only several extracting facilities, but whole towns and cities, such as Comodoro Rivadavia; Caleta Olivia in Santa Cruz; Plaza Huincul in Neuquén; and General Mosconi in Salta. Bolstered by production in Comodoro Rivadavia, the firm produced 2.2 million barrels in its first year of operation (1922); this represented over three-quarters of domestic production and nearly a fourth of Argentina's oil consumption that year. Contracts signed in 1923 with Bethlehem Steel allowed YPF to begin the production of gasoline and kerosene.[13]
Mosconi, who had previously been in charge of the Aeronautics division of the Army, proposed to Joaquín Corvalán, governor of Salta Province, the exploitation of Salta's oil by YPF, offering 13% royalties for the province.[14] Corvalán, allied with the Standard Oil of New Jersey, rejected Mosconi's proposal, however, referring to the concept of "provincial autonomy". This refusal led Mosconi to evolve in favor of the nationalization of oil supplies in order to strengthen Argentina's independence.[14]
The first YPF oil refinery was inaugurated in December 1925 in La Plata, and was at the time the tenth largest in the world.[15] According to Mosconi, this spawned the beginning of "the mobilization of all sort of resistance and obstacles" from the oil trusts, in particular from Standard Oil, which was one of the most influential foreign companies in Argentina, with a presence in Comodoro Rivadavia, Jujuy, and Salta.[15]
The Chamber of Deputies approved a law on 28 September 1928, establishing a state monopoly on oil.[16] The monopoly, however, was not absolute, being limited to oil exploration, exploitation and transport, but excluding selling and imports.[16] Private firms opposed themselves to the law project, refusing to pay a 10% royalty.[17] The bill was supported by President Marcelo Torcuato de Alvear but was ultimately blocked by the conservatives in the Senate.
Oil nationalization became an important theme of Yrigoyen's electoral campaign of 1928, although the Yrigoyenistas focused their criticism on Standard Oil of New Jersey, abstaining themselves from attacking British Empire interests, to which Argentina's economy was closely linked (in particular Royal Dutch Shell).[17]
Following Yrigoyen's victory in the 1928 elections, YPF, still directed by Enrique Mosconi, reduced oil prices in May 1929, leading to the cheapest petroleum in the world[17] and to an important increase in YPF's sales compared to its rival private companies, forcing them to also lower their prices.[17] Mosconi also reduced the price of kerosene and agrochemicals to contribute to the development of the interior regions of Argentina.[17] YPF produced 5.5 million barrels by 1929, and though its share of domestic output had declined to 58% (from 77% in 1923) amid a sharp rise of Esso and Royal Dutch Shell production in Chubut, the firm now covered a third of the nation's oil market. A partnership with distributor Auger & Co. signed in 1925 resulted in a network of over 700 filling stations selling 178 million liters (47 million gallons) by 1930 – an 18% market share. Company revenues in 1930 reached US$25 million.[13]
The Petroleum Institute (Instituto del Petróleo) was created on 30 December 1929, and directed by Ricardo Rojas, the rector of the University of Buenos Aires. Foreseeing conflicts with US private companies, Mosconi proposed an agreement with the Soviet state company Amtorg, which was to allow Argentina to import 250,000 tons of petroleum each year, paid by trade with leather, wool, tannin and mutton.[18] The agreement was to be made official in September 1930, along with the complete nationalization of oil resources;[18] but on 6 September 1930, Yrigoyen was deposed by a military coup headed by General José Félix Uriburu, and the project was withdrawn.
Decline and privatization
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).[22] 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.[20] 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.[22]
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
