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Repsol pursues Argentina for $10.5B

by Paul Whitfield  |  Published December 4, 2012 at 12:53 PM
Spain's Repsol SA will seek about $10.5 billion of compensation from Argentina through the World Bank's arbitration body following the expropriation of its 51% stake in Argentinian unit YPF SA earlier this year.

Repsol on Monday, Dec. 3, filed papers with the International Centre for Settlement of Investment Disputes, or ICSID, alleging that Argentinian President Cristina Fernández de Kirchner's government broke international law with the "discriminatory" seizure of the bulk of Repsol's stake in YPF. It has also accused the government of breaching domestic takeover law by declining to make a general offer for YPF once it had secured a majority of the oil and gas group.

"We will ask for cash-or-kind compensation," said Repsol spokesman Kristian Rix.

Repsol's claim against Argentina will be presented in full once ICSID has convened a tribunal to hear the case.

The Madrid-based oil company will, however, base its claim on a $10.5 billion figure that was calculated using YPF bylaws written when the company was privatized in 1991, said Rix.

Argentina took Repsol's stake in YPF in early May, weeks after it expelled Repsol executives from YPF's headquarters, claiming that the move was necessary because Repsol had underinvested in YPF and forced Argentina into massively increasing energy imports. Argentina spent $9.4 billion on energy imports last year.

Members of the upper house of Argentina's parliament have said they expect to pay Repsol no compensation as the price of the asset will have to be adjusted for debt on YPF's books and to account for the environmental damage done by the organization.

Repsol contends that it improved YPF's environmental record and was never once sanctioned for environmental mismanagement.

"Over 13 years there was not a single complaint," said Rix. "We are convinced that the reason [for the seizure] is that we made a huge discovery of shale gas at Vaca Muerta that the government doesn't want private companies to share in."

YPF is searching for a partner to help it develop the Vaca Muerta (dead cow) shale field in Argentine's Patagonia region. The field is thought to contain at least 23 billion barrels of oil equivalent. Its newly installed CEO Miguel Galuccio said in September that he had struck a deal with Chevron Corp. to help develop the field.

Repsol, which still owns 12% of YPF, has said that it will take legal action against any company that helps develop the field.

Tags: Chevron Corp. | Cristina Fernández de Kirchner | expropriation | ICSID | International Centre for Settlement of Investment Disputes | Miguel Galuccio | Repsol SA | shale | Vaca Muerta | World Bank | YPF SA

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