The Canadian Press - ONLINE EDITION

Done deal: Argentina's Congress approves $5 billion payoff to Spain's Repsol for YPF takeover

  • Print

BUENOS AIRES, Argentina - Argentina is hoping to have an easier time attracting international investors to exploit its oil and gas fields now that lawmakers have agreed to pay $5 billion to the Spanish company Grupo Repsol for its controlling stake in the YPF oil company.

President Cristina Fernandez nationalized the company two years ago without paying anything beforehand to Respsol, which had demanded $10.5 billion in compensation.

The deal was approved early Thursday by a vote of 135-59, with 42 deputies abstaining after a marathon debate in Argentina's legislature.

Repsol's board and shareholders already agreed to accept the package of dollar-denominated bonds, accepting less than half what Repsol President Antonio Brufau said the company's 51 per cent stake was worth.

"We have worked very hard to obtain a just compensation. Our efforts have been rewarded with an agreement that creates value for our shareholders and strengthens the company's financial position," Brufau told shareholders in March. A company spokesman said Thursday that there would be no additional comment.

In the deal, Repsol agreed to drop all legal action against YPF as well as its threats to sue potential investors in the Vaca Muerta shale deposits that the company discovered in Argentina's Patagonia region under Repsol's leadership.

Fernandez and her economy ministers justified the seizure of the controlling 51 per cent stake in YPF by arguing the Madrid-based Repsol had failed to invest sufficiently in exploration and oil development in Argentina, obligating the government to spend billions of dollars on fuel imports.

Repsol said Fernandez had only herself to blame because price controls, consumer subsidies and ever-changing energy policies made it impossible to count on a return from its investments.

The Vaca Muerta find remains one of the world's largest potential sources of shale oil and natural gas, and YPF's executives have been trying to attract deep-pocketed international partners willing to make the long-term investments needed to extract it using hydraulic fracturing technology. The deal could mark a turning point for the Fernandez government, which has been running out of money to keep importing fuel.

Repsol's indemnity includes a new 10-year bond paying 8.75 per cent interest worth $3.25 billion, another 2017 bond paying 7 per cent interest valued at $500 million, and a third bond, due in 2033 and paying 8.28 per cent interest, valued at $1.25 billion. Argentina also promised Repsol an additional $1 billion in bonds should the package not reach a market value of $4.76 billion, on the condition that Repsol return any net profits exceeding the agreed-upon $5 billion total.

Repsol still owns 12 per cent of YPF now that the deal is done.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Glenn January won't blame offensive line for first loss

View more like this

Photo Store Gallery

  • KEN GIGLIOTTI  WINNIPEG FREE PRESS / July 23 2009 - 090723 - Bart Kives story - Harry Lazarenko Annual River Bank Tour - receding water from summer rains and erosion  damage by flood  and ice  during spring flooding -  Red River , Lyndale Dr. damage to tree roots , river bank damage  , high water marks after 2009 Flood - POY
  • JOE BRYKSA/WINNIPEG FREE PRESS Local- A large osprey lands in it's nest in a hydro pole on Hyw 59  near the Hillside Beach turnoff turn off. Osprey a large narrow winged hawk which can have a wingspan of over 54 inches are making a incredible recovery since pesticide use of the 1950's and  1960's- For the last two decades these fish hawks have been reappearing in the Lake Winnipeg area- Aug 03, 2005

View More Gallery Photos

Poll

Will you miss Grandma Elm?

View Results

View Related Story

Ads by Google