Following the announcement of President-elect Javier Milei’s intention to privatize YPF, the oil company’s shares on Wall Street experienced a 41.3% increase in value. However, the privatization process may not be as simple for the new ruling party as it appears.

President-elect Milei has promised that before privatizing the 51% of the share package held by the National State and producing provinces, he will revalue its value to make it more attractive for potential buyers. However, experts emphasize that this is an important operation and that in principle, the expropriation law needs to be repealed from 2012 when YPF was controlled by Spanish company Repsol.

To transfer shares to the private sector, President-elect Milei must obtain authorization from Congress. He has mentioned that he may use a Decree of Necessity and Urgency (DNU) but acknowledges that it depends on political strength at any given time. The DNU must also be approved by Parliament, which implies a risk for potential buyers.

President-elect Milei also faces obstacles in defining whether to sell the entire package to a single buyer or sell shares on the stock market. According to stock market analyst Sebastián Marill, anyone who owns more than 15% of YPF’s shares must make an offer for the entire company and agree with 49% of private shareholders under YPF’s statute.

The privatization process may also face legal challenges due to ongoing lawsuits against Argentina for expropriating YPF in 2012 and compensating Repsol with US$5 billion in 2014. In September 2021, New York Judge Loretta Preska ruled that Argentina must pay another US$16 billion due to its obligation to launch a public offer to holders of retail shares when it took control of YPF in 2012. The ruling was appealed, and the case remains open.