Repsol demands $10.5bn compensation from Argentina
Spain Tuesday threatened to take swift economic retaliation against Argentina after it announced plans to take control of YPF, in which Spanish oil giant Repsol is the majority shareholder.
Repsol had acquired majority stake in YPF, a former Argentine state-owned company, in the 1998.
Vowing to take all "legal measures as appropriate, to preserve the value of its assets and interests of all shareholders", Repsol Chairman Antonio Brufau has demanded $10.5 billion in compensation from Argentina for the proposed plan to seize assets of its oil and gas unit YPF SA.
At a press conference, the company announced that the measure proposed by Argentine President Cristina Fernandez de Kirchner is manifestly unlawful and seriously discriminatory.
Repsol said YPF was worth $18-billion as a whole and its compensation demand was commensurate with the value. The oil company's shares fell as much as 9 per cent Tuesday, the most since 2008.
"They are going to lead the country into chaos. A responsible country should plan based on reality and not how they would like things to be," Brufau said.
Authorities called in the Argentinian ambassador to express displeasure at the move by Argentina's assertive president which has alarmed many foreign governments and investors.
Promising action in the coming days, Spanish industry minister Jose Manuel Soria said: "There will be consequences that we'll see over the next few days. They will be in the diplomatic field, the industrial field, and on energy."
Argentine president has however dismissed the risk of reprisals. "This president isn't going to respond to any threats ... because I represent the Argentine people. I'm the head of state, not a thug," she said.
Repsol-YPF has been under pressure from the government to boost investments and improve oil and gas production, which has been slipping.
Fernandez said the government would ask Congress, which she controls, to approve a bill to expropriate a controlling 51-per-cent stake in the company by seizing shares held by Repsol.
Repsol owns 57 per cent of YP, while its Argentine partner, the Eskenazi family's Grupo Petersen, owns a 25.5 per-cent stake.
Argentina needs an estimated $25 billion a year over the next decade to develop South America's biggest shale fields, the Vaca Muerta, where YPF discovered reserves forecast to hold as much as 23 billion barrels of oil equivalent.
"I am seriously disappointed by yesterday's announcement," European Commission President Jose Barroso told reporters in Brussels Tuesday. "We expect the Argentine authorities to uphold their international commitments and obligations, in particular those resulting from a bilateral agreement on investments with Spain."
Argentina's oil reserves fell about 18 per cent from 1998 to 2010, according to the Argentine Oil and Gas Institute.
Repsol is responsible for about 54 per cent of the country's decline in reserves and production since buying YPF in 1998, according to a copy of the Argentine bill.
Source: Latin America News.Net
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