Repsol SA is close to reaching an
agreement with Argentina on final terms of a compensation
package for the seizure of its YPF unit, ending an almost two-year conflict, said two people with knowledge of the process.
Executives of the Madrid-based company are working on the
document in Buenos Aires with members of Argentine Economy
Minister Axel Kicillof’s team, said the people, asking not to be
identified before a binding agreement is signed.
The proposed compensation, preliminary terms of which were
negotiated in November, continues to be centered on Argentine
government bonds, the people said. YPF declined to comment in an
e-mailed response to questions. Kristian Rix, a spokesman for
Repsol, also declined to comment on the YPF process.
The negotiating teams intend to have final terms ready for
presentation at a Feb. 26 Repsol board meeting, which pending
approval could then be delivered to shareholders in March, one
of the people said.
President Cristina Fernandez de Kirchner’s government
seized 51 percent of YPF in April 2012 after saying Repsol
hadn’t invested enough. For Argentina, settling the dispute may
help attract more companies to develop some of the world’s
largest shale fields as the country seeks to reduce energy
imports.
The preliminary compensation arrangement was negotiated in
Buenos Aires late November by ministers from Argentina and
Spain, Repsol executives, and representatives from the Spanish
company’s two largest shareholders -- Mexican oil producer
Petroleos Mexicanos and Barcelona-based CaixaBank SA. (CABK)
Export Incentives
The proposal is based on $5 billion of 10-year bonds, a
person briefed on the matter said at the time. Repsol, which
hasn’t disclosed terms of the proposal, originally sought $10.5
billion compensation and sued in international courts.
Argentina holds the world’s second-largest reserves of
shale gas and the fourth-largest of shale oil, according to U.S.
Energy Information Administration data. The country is offering
tax and export incentives to energy companies that invest at
least $1 billion over a five-year period.
To contact the reporter on this story:
Pablo Gonzalez in Buenos Aires at
pgonzalez49@bloomberg.net
To contact the editor responsible for this story:
James Attwood at
jattwood3@bloomberg.net