The discovery of shale oil and gas in Patagonia seemed to secure his place in a small circle of business leaders to have harmonious ties with President Cristina Fernandez, whose combative style and interventionist policies infuriate critics. 

But YPF, controlled by Spain's Repsol, is bearing the brunt of government pressure for energy companies to invest more to bring new resources on stream.

It has been accused of overcharging and its share price had been hit by speculation that it could be renationalized. 

The company's stock price soared 8 percent on Wednesday after YPF said its southern Argentina Vaca Muerta shale prospect holds oil and gas resources of 22.8 billion barrels, a staggering find that may double the country's oil and gas output within a decade.

"I think they are saying that a lot of investment is required, and for that (the government) has to create the right (investment) security conditions in order to attract capital," said Buenos Aires-based oil analyst Victor Bronstein.  

"They are sending a political message."  

A state takeover is unlikely, most analysts say, adding that the current tension stems from arm-twisting tactics by an administration anxious to force more energy investment and so reduce a surging fuel import bill. 

"We can't go back to (colonial) times ... when everything got taken, all the gold and all the silver and they didn't leave anything behind," Fernandez said in a Jan. 26 speech, addressing her comments to energy companies and not specifically YPF. 

"They need to realize that those days have gone, re-investment in the country is necessary." she said. 

Argentina's fuel imports doubled to some $9.3 billion last year as Latin America's No. 3 economy grew by about 9 percent. 

The soaring imports are eroding Fernandez's cherished trade surplus, which is especially bad news for Argentina because the government has earmarked foreign currency reserves to pay debt for a third consecutive year in 2012. 

YPF's troubles began last month when Fernandez's point man on energy, Planning Minister Julio De Vido, accused five companies including YPF of fixing diesel prices and of operating like a cartel.   

At the same time, he bemoaned YPF's "delay" in bringing its non-conventional energy discoveries in Patagonia on stream. 

Such treatment has traditionally been reserved for long-time government foes including Shell, who Fernandez's late husband and predecessor as president, Nestor Kirchner, once urged Argentines to boycott over prices. 

YPF shares fell by nearly 17 percent in Buenos Aires last week after the Pagina 12 newspaper — seen as broadly reflecting government thinking - said government officials were debating a possible state takeover. 

The company has declined to comment on the speculation.  

Privatized in 1992 after 70 years as a state company, YPF has instead said it "fully rejects" the overcharging accusations and it said in a statement on Wednesday that it invested 13.3 billion pesos ($3.06 billion) last year — 50 percent more than in 2010 and the bulk on exploration and production. 

"In 2011, YPF added 137 million barrels of oil to its reserves book," it said, estimating last year's oil reserves replacement rate at more than 160 percent. 

Fernandez has already nationalized private pensions funds and Argentina's flag-carrier airline, and YPF's takeover would likely prove popular with voters who helped her to a landslide re-election in October. It might also win support from leftist opposition ranks. 

Few industry analysts, however, think Fernandez would be willing to assume the fiscal and potential legal costs of an YPF takeover. YPF has a market value of about $15 billion and Fernandez's cash-strapped government could ill-afford a buy-out. 

"If they wanted the public sector to have a bigger role in the energy sector, they already have a way to do it without nationalizing YPF. They could give (state energy company) Enarsa a bigger role," said Diego Giacomini, chief economist at Buenos Aires-based consulting firm Economia & Regiones. 

Some analysts say the renationalization talk might be a first step toward stripping YPF of operating concessions on the grounds of slack investment. 

Fernandez's rivals say her prickly ties with big business and unpredictable policy-making are to blame for the fact that Argentina trails smaller regional economies like Chile and Peru in long-term investments in mining and energy. 

Repsol plans to keep reducing its YPF holdings to 51 percent from 57 percent now it frees capital to invest in developing more promising resources in emerging markets such as Brazil.  

"The government's priority is that they don't take money out of the country in order to invest in other countries," an energy minister in a leading oil province said. 

YPF's proven reserves of crude and natural gas  — which do not include the new shale finds — fell 15 percent and 31 percent respectively between 2007 and 2010. 

Despite the size of the new shale resources, the most recent of which is estimated at almost a billion barrels of oil equivalent or two years of Argentine demand, government price controls mean energy firms are reluctant to invest. 

"They cause extraordinary uncertainty, which makes investors very wary," said Jorge Lapena, a former energy secretary. 

Industry experts say bringing Argentina's non-conventional energy resources on line would require an annual estimated investment of between $5 billion and $8 billion. 

YPF spent almost $1.5 billion on investment projects between January and September last year, only a little more than it spends on annual dividend payments, analysts say. The government may be pressuring the company now to force it to reduce dividends and put more of the cash into projects.  

Dividend payments are split between Repsol and Eskenazi's Grupo Petersen, which has a 25 percent stake and entered YPF in 2008 with the approval of the government. 

Eskenazi's group would likely be hardest hit by any government drive to limit dividend payments, because of the debt its took on to buy into YPF. 

"Eskenazi would perhaps have the most to lose because the loan repayments are linked to the dividends he was going to get," said Guido Bizzozero, a market analyst at Buenos Aires brokerage Allaria Ledesma. 

Rather than sacrifice dividends, YPF might take advantage of low debt levels to sell bonds to finance the production projects Fernandez seems determined to secure. 

But Fernandez's policy-making has typically become more interventionist when economic circumstances deteriorate and some analysts think YPF's nationalization cannot be ruled out. 

The pressure on the firm and last week's move to scrap a program of some $461 million in annual tax incentives for companies drilling for new resources suggest the government may be shifting to a tougher position.

"(Fernandez) could be convinced by her inner circle that a carrot-and-stick strategy ... will not deliver a meaningful production increase," Barclays Capital analyst Sebastian Vargas wrote in a report. "In that case, the possibility of a Repsol-YPF expropriation would become more real."