Spanish-Argentine oil firm Repsol YPF on Wednesday lost two concessions in southern Argentina amid a dispute over acceptable investment levels, and the company said it would appeal.
Chubut governor Martin Buzzi made the announcement at a ceremony near the province of Santa Cruz. Santa Cruz and Chubut had given the company a deadline of Tuesday to present a plan to increase output by 15 percent, which lapsed.
The provinces, among Argentina's leading oil producers, maintain the company has not kept its word on development investment.
Repsol YPF said in a statement it would "take the appropriate legal steps to ensure that its rights are protected."
The government is pressuring producers, including others in Neuquen and Mendoza provinces, to boost domestic output.
Last year Argentina spent more than nine billion dollars on imported oil.
President Kristina Kirchner's family political base is in oil-rich Santa Cruz.
Argentine law allows for concessions to be revoked in some circumstances, said industry analyst Fernando Mezzadri.
Repsol YPF, privatized in the 1990s for 16 billion dollars, is the local market leader in gasoline sales and has 52 percent of domestic refining capacity.