N2S, a Spanish supplier of software to the energy sector, has almost half of its 85 employees in Latin America, spread among Mexico, Brazil and Peru. It was scheduled to open an office in Argentina this year, hiring 20 employees there. But N2S abandoned the plan on Wednesday, two days after the government announced it would seize majority control over the activities in Argentina of Repsol YPF, Spain?s largest oil company.
Repsol bought most of the Argentine oil company YPF in 1999 and held a 57% interest before Argentina?s decision.
?Argentina really looked like a very attractive market for us, and we believed it was serious in its commitment to foreign investment ? until Monday?s decision,? said Francisco de la Pe?a, managing director of N2S. ?I?m sure that a lot of other Spanish companies are as disappointed and worried about what has just happened as we are.?
In fact, since the start of the European sovereign debt crisis, several of Spain?s largest companies have been trying to reassure anxious investors that Latin America would help them stay afloat even as a surge in Spain?s borrowing costs has raised concerns that the country could be pushed into a Greek-style international bailout.
The message from some Spanish executives has been that booming Latin America would increasingly reduce their reliance on earnings from recession-hit Spain.
Spanish companies now have combined annual revenue of about $39.3 billion in Argentina alone. Altogether, Spanish investments overseas were equivalent last year to 50.6% of Spain?s gross domestic product, compared with 3.6% 15 years earlier.
Telef?nica is the other Spanish heavyweight in Argentina, with 16 million wireless users and a market share of almost 30%. Other significant Spanish investors include Mapfre, an insurance company; Codere, a gambling company; and the utilities Endesa and Gas Natural.
Like other Spanish companies with a large exposure to Argentina, and perhaps mindful of retaliatory measures the Spanish government has threatened to take against Argentina, Telef?nica would not comment on its plans there.