The energy company, YPF, is controlled by Spain's Repsol but is increasingly under pressure from Argentine President Cristina Fernandez de Kirchner, who wants the company to invest more profits in Argentina and increase oil and natural gas output.
Fernandez has hinted she plans to move YPF under state control. News of the president's plans alarmed Spanish government to a point that King Juan Carlos twice telephoned Fernandez on the issue.
Details of the conversations weren't revealed but the government's actions this month signaled a rebuff to the Spanish monarch that hasn't gone down well in Madrid.
Spanish Industry Minister of Jose Manuel Soria vowed to defend YPF and at one point likened the company's interests to those of Spain. Talks continued in Buenos Aires and in Madrid Wednesday without a clear resolution of the dispute.
Argentina wants YPF to stop giving dividends to Spanish investors and threatened the company with antitrust action over accusations it pushes fuel prices up by limiting supplies.
Energy demand has surged in Argentina amid economic growth and fuel imports continue to be a drain on currency earned through commodity exports.
Last week, responding to the war of words in the capital, Argentina's Chubut and Santa Cruz provinces stripped YPF of several oil concessions, citing lack of investment.
On Monday, the Neuquen province announced it was stripping YPF of two concessions due to insufficient investment.
Neither of the Neuquen concessions, Chihuido de la Salina and Portezuelo-Minas, are in production but the province is rich in untapped reserves of shale oil and natural gas that YPF wants to exploit.
Argentina says it wants YPF to invest more and produce more oil and gas. YPF frequently lists its investments in Argentina but has resisted government interference, a familiar experience for investors in the country.
Investors fear the worst. Fernandez nationalized Argentina's private pension system, ignored business pleas to confront the country's double-digit inflation rate and raised eyebrows when she dripped into central bank reserves to pay sovereign debt.
YPF reaction to the government and the provinces' measures indicated a political confrontation with Spain would likely get intertwined with international litigation.
YPF invested $350 million in Chubut and $380 million in Santa Cruz, the company said, and promised legal action against the government and the provinces.
The company produces about 35 percent of all the oil drilled in Argentina but the latest suspension of concessions means YPF will likely produce less this year.