In a bold move to gain control of Argentina's energy reserves, President Cristina Fernandez de Kirchner pushed forward a bill to renationalise the country's largest oil company despite fierce criticism from abroad and the risk of a major rift with Spain.
In a national address, Ms Kirchner said the legislation put to congress would give Argentina a majority stake in oil and gas company YPF by taking control of 51% of its shares currently held by Spain's Repsol.
Both Repsol and Spain strongly oppose the move and have warned that it could turn Argentina into an international pariah.
YPF is vital for Argentina's energy future, especially after its recent find of huge unconventional oil and natural gas reserves.
But the company is under pressure from Ms Kirchner's government to raise output while its shares have plunged in recent months on fears of possible state intervention.
Argentina this year expects to import more than 10 billion US dollars worth of gas and natural liquid gas to address an energy crisis even though it is an oil-producing nation, according to estimates from the hydrocarbon sector.
"We are the only country in Latin America, and I would say in practically the entire world, that doesn't manage its own natural resources," Ms Kirchner said.
She said her proposal "is not a model of statism" but "the recovery of sovereignty".
Critics blame the government for an energy shortage and high petrol prices.
But Ms Kirchner said the shortage is the result of Repsol's "emptying" of YPF, and that Argentina had a deficit of three billion US dollars last year partly due to energy imports.
Argentinians gathered in Buenos Aires' main square shouting slogans, waving national flags and carrying banners supporting the government takeover.
One of them read: "Today, with Cristina, we recovered YPF." YPF was privatised in the 1990s. Repsol's subsidiary in Argentina holds 57% of YPF's shares.
Ms Kirchner said the renationalisation was a long-held desire of her late husband and predecessor, former president Nestor Kirchner.
"I hope he's watching over me because he always wanted to recover YPF for the country," she said.