MADRID – Spanish energy major Repsol is prepared to negotiate with the Argentine government to secure fair compensation for nationalized oil firm YPF, CEO Antonio Brufau said Tuesday.
Brufau, however, recalled in presenting Repsol’s latest five-year strategic plan that he sent a letter to Argentine President Cristina Fernandez to negotiate compensation for the 51 percent in YPF expropriated from Repsol but has not yet received a response.
He was referring to Repsol’s move earlier this month to formally proclaim a dispute over Buenos Aires’ nationalization of the company, the first step toward invoking international arbitration at the World Bank’s International Center for Settlement of Investment Disputes.
Argentina announced plans for the takeover on April 16 and a bill formalizing the nationalization was signed into law earlier this month.
“I would love to believe there’s a willingness to talk but so far I haven’t seen it,” Brufau said, adding that the dispute at the ICSID will drag on for three or four years and expressing hope a solution can be worked out in that timeframe with a new Argentine government.
Repsol, meanwhile, said in a filing with Spanish securities regulators that it planned to invest 19.1 billion euros ($23.8 billion) through 2016 with the goal of nearly doubling its net income by achieving significant growth in exploration and production (Upstream) and maximizing the return of its refining, marketing, chemicals and LPG (Downstream) operations.
Its 2012-2016 strategic plan, which no longer includes YPF, calls for an investment outlay that is significantly lower than the 28.5 billion euros ($35.6 billion) approved for the 2010-2014 period.
At the end of 2016, Repsol expects to achieve output totaling 500,000 barrels of oil equivalent per day, which would be equivalent to an annual production growth rate of 7 percent.
The plan is based on a Brent crude price of $80 per barrel.
Brufau warned that Repsol’s dividend will fall in the coming years.
The nationalization of originally state-owned YPF reduces Repsol’s stake in the Argentine firm from 57.4 percent to around 6 percent.
The Argentine federal government is keeping just over half of the controlling 51 percent stake in YPF, with the remainder to be divided among the country’s oil-producing provinces.
Argentina’s Grupo Petersen still holds a 25.46 percent interest and another 17.09 percent of the shares continue to be traded on the Buenos Aires and New York stock exchanges.
Repsol says the nationalization violates a bilateral treaty on protection of investments.
The Spanish company has valued its stake in YPF at $10.5 billion, although YPF’s new administrators have hinted the government will not pay that much and are auditing the firm’s finances amid concerns about a lack of investment and fuel shortages.
Repsol has said the recent discovery of massive unconventional shale gas and oil reserves in west-central Argentina was behind the move to seize control of the firm and has denied Buenos Aires’ accusations that YPF’s dividend policy sapped it of the resources it needed to invest and meet the country’s energy needs.
It also has said energy companies in Argentina have been discouraged from investing due to regulated fuel and electricity prices.
The Spanish government has blasted the expropriation move and retaliated by announcing plans to limit imports of Argentine biodiesel.
Madrid said it also will pursue “measures of a diplomatic nature” in various international forums in response to the takeover. EFE