The Spanish energy major filed a complaint against YPF at the International Center for Settlement of Investment Disputes as YPF announced it is taking over Argentine gas distribution network Metrogas.
YPF also announced plans to explore for undersea oil and gas in collaboration with British Gas, a partnership that took the industry by surprise as it intends to operate in the South Atlantic waters near the Falkland Islands.
As part of the deal YPF takes over Metrogas equity held until recently by British Gas.
YPF said it took control of Metrogas after acquiring 54.67 percent of the shares of Gas Argentino from BG. The takeover leaves YPF as the main stockholder and controller of 70 percent of the largest gas distribution network in Argentina.
YPF's says it aims to make Metrogas "a more efficient and profitable company, taking control for the first time of one of the gas distribution companies most attractive in Latin America with over 2 million clients" in Buenos Aires and environs.
Metrogas has been losing money in recent operations, partly because it was barred from raising gas tariffs under policies enforced by President Cristina Fernandez de Kirchner.
Metrogas debts, many to gas providers, are known to exceed $200 million.
Exactly how YPF will restructure Metrogas and clear its debt remains unclear. BG losses in the distribution company are blamed largely on unprofitable operations. Any energy price rises are bound to be unpopular with Argentine consumers.
YPF has also benefited from a strong management that steered the nationalized company through the messy business of state takeover and transition to an operation so far unaffected by the ongoing dispute with former majority owner Repsol.
In its complaint before the International Center for Settlement of Investment Disputes, Repsol calls the seizure unlawful and discriminatory.
Repsol also denies Argentine accusations that as majority owner of YPF it didn't invest enough to ensure the company's growth. The takeover has soured Argentina's relations with EU and other trade partners. Repsol says the 51 percent of YPF it lost to Argentine nationalization is worth $10 billion. Argentina disputes the figure.
Earlier in May Repsol sued Argentina through a U.S. court and also warned companies that invest in nationalized YPF will face legal action.
In November, a Spanish court agreed to consider Repsol legal action against U.S.-based Chevron Corp. over its recent cooperation agreement with YPF.
U.S. President Barack Obama has warned Argentina faces suspension of trade benefits for failing to pay more than $300 million in compensation awards in two earlier disputes handled by ICSID.