Facts on the dispute between Argentina, Spain

The international biodiesel drama between Spain and Argentina continues to heat up. Here’s a briefing of what has developed since my previous F.A.M.E. Forum blog entry on this topic about two months ago, with the facts coming from the USDA’s Foreign Agricultural Service and Spain's ministry of industry, energy and tourism.

April 16, Argentina expropriated 51 percent of YPF, a subsidiary of Repsol, Spain’s largest petroleum company.

April 20, Spain’s council of ministers agreed to implement a quota system that only EU producers would be eligible to apply, and quotas would be granted to whichever EU producers chosen, and only fuel produced under this quota system would be eligible to meet Spain’s consumption mandate.

The biodiesel mandate in Spain is 7 percent by energy content. Last year Spain consumed 1.52 million metric tons (more than 450 million gallons) of biodiesel, 695,000 tons (nearly 210 million gallons) of which came from Argentina. Spain’s own biodiesel production capacity in 2011 was 4.4 million tons (around 1.32 billion gallons), which has been operating at only a small fraction of this.

April 21, the ministerial order IET 822/2012 was published.

The quota system works like this: EU biodiesel companies are invited to present their requests for production quota within a 30-day period. Five million tons will be distributed among producers from which at least 4 million tons should be requested by biodiesel companies to ensure fair competition, the FAS reports. If the total amount requested is below 4 million, then the submission deadline will be postponed; the quota allocation procedure will be canceled altogether if less than 2 million tons are requested.

Within days, Argentina announces it intends to boost its national biodiesel mandate from 7 percent biodiesel to 10 percent.

This week, according to the Buenos Aires Herald, the Argentine foreign ministry sent a letter to the EU’s trade director Jean Luc De Marty relaying its concern about the discriminatory action Spain has taken, and asked for the EU to intervene.