YPF contracts Citigroup for sale

Argentinian NOC YPF has chosen Citigroup from among 10 banks to advise on a divestment transaction related to one of its subsidiaries, international media reported over the weekend.

The state-owned company is moving ahead with the sale of its stake in local gas distributor Metrogas to meet legal requirements. Argentine Law 24.076 states that as a producer, the YPF cannot hold a controlling interest in a distributing company.

It is not yet clear whether YPF intends to sell its entire 70% interest, or if it will relinquish only 21% to step down from its controlling shareholder status. Market experts predict that the NOC could receive USD 700,000-1 billion if it chooses to completely divest from Metrogas.

Argentina’s national gas regulator, Enargas, called in January for YPF to comply with the law. The NOC’s purchase of Metrogas’ majority shares was initially approved by regulatory authorities in April 2013, as it was then thought that the vertical integration of the company would provide “a substantial benefit to the user of the natural gas distribution service.”

Metrogas was established in 1992 and serves around 2.2 million customers in Buenos Aires.