Spanish petroleum giant Repsol on Friday cancelled its contract to supply liquid natural gas to Argentina after the South American nation seized control of its subsidiary YPF.
"We are terminating the contract because (state-run Argentine firm) Enarsa is not respecting its terms," spokesman Kristian Rix said.
The Argentine company "has made a series of violations, including non-payments, and we have no confidence they are going to respect the rest of the terms," he added.
Argentine President Cristina Kirchner this month signed a bill expropriating 51 percent of YPF's stock from Repsol, its majority shareholder, arguing Repsol had failed to make agreed investments needed to expand domestic production.
The move led Repsol to file a class action lawsuit against Argentina in a New York court.
Rix said Argentina had failed to pay for a liquid gas tanker, but he did not specify how much it was owed.
Rix also said Enarsa had changed delivery schedules and wanted to negotiate prices.
"We hold them accountable for the contract breach and reserve the right to demand compensation or take relevant legal action," he said.
The European Union's ambassador to Argentina said in an interview published Friday that the EU respected Argentina's decision to seize control of YPF, but expected Argentina to compensate the oil giant.