Feb. 12 (Bloomberg) -- Argentina's government lifted a ban on exports from a refinery owned by Royal Dutch Shell Plc after the company agreed to observe price caps.

Shell agreed to lower prices at the pump to Oct. 1, 2007, levels, said a government official who declined to be identified because of department policy. The accord follows similar agreements with Repsol-YPF SA, Petroleo Brasileiro SA and Exxon Mobil Corp., he said. A Shell spokesman in Argentina couldn't immediately be reached for comment.

Juan Aranguren, Argentina chief for The Hague-based Shell, said in a letter dated yesterday that an agreement with Interior Commerce Secretary Guillermo Moreno will allow Shell to ``maximize'' production at its Dock Sud refinery. The letter didn't make reference to exports or price caps.

Shell informed clients Feb. 8 that it would have to reduce production because it was running out of storage capacity. Diesel and naphtha fuels, which Shell normally exports from Argentina, accumulated in storage tanks since a ban on overseas sales was implemented early January.

The agreement eases a conflict that has brewed since ex- President Nestor Kirchner called for a nationwide boycott of Shell gasoline stations in 2005 after the company raised its fuel prices beyond government indicated prices. Kirchner, who was replaced by his wife, Cristina Fernandez de Kirchner, as president on Dec. 10, introduced price caps on commodities to ease inflation in the South American country.

To contact the reporter on this story: Matthew Craze in Santiago at mcraze@bloomberg.net.

Last Updated: February 12, 2008 09:24 EST