Argentina is close to striking a deal with Spanish oil group Repsol to compensate the company for the nationalisation of its YPF unit last year which prompted a diplomatic crisis between Buenos Aires and Madrid. A delegation from Spain, including José Manuel Soria, industry minister, and several executives from Repsol, met Argentine officials in Buenos Aires on Monday to reach a preliminary agreement over compensation for the Spanish company, people close to the talks said.
Repsol said in a statement on Monday night that it had noted the agreement between the governments and would consider its value to its shareholders ahead of a board meeting scheduled for Wednesday. Argentina, led by president Cristina Fernández, expropriated Repsol’s majority stake in YPF, its former state oil company, last year after accusing the company of failing to invest sufficiently in the country’s energy sector, a charge Repsol vehemently denied. Repsol was seeking at least $10.5bn in compensation from Buenos Aires and had filed international arbitration claims to block further development of YPF’s assets, which included one of the world’s largest recent discoveries of shale gas, the Vaca Muerta field. No figure for any compensation was mentioned in an official announcement from the Argentine government, which was represented at the meeting by Miguel Galuccio, YPF president, and Axel Kicillof, the recently appointed minister of economy and close Fernández ally, said people briefed on the talks. Spain’s El Mundo newspaper reported that the Argentine government had offered Repsol up to $5bn in debt backed by the country’s government. Repsol declined to comment on what the possible value of any agreement might be. Argentina’s government said an agreement had been reached as to how much Repsol would be compensated in liquid assets and that both parties would drop legal action under way. YPF said Mr Galuccio was “very happy” with the agreement, describing it as the best possible scenario as it could clear the way for YPF, Repsol and Mexican state oil company Pemex to develop Argentina’s shale reserves in the Patagonian Vaca Muerta field. Asked whether Pemex may now participate in the development of Vaca Muerta, a spokesman said: “That’s one of the things that is being negotiated.” The possible agreement comes as Repsol’s management has come under pressure from Pemex, its second-largest shareholder, to strike a settlement with Buenos Aires. Emilio Lozoya, Pemex director-general – who was present at the meeting on Monday, people briefed on the talks said – had in the past month attacked the pay levels of Antonio Brufau, Repsol’s executive chairman.