July 2 (Bloomberg) -- Repsol YPF SA, Spain’s biggest oil producer, has been approached by companies interested in its $12 billion Argentine YPF unit as it seeks to boost spending on exploration and production in Brazil and the Gulf of Mexico.

None of the proposals is “firm,” Madrid-based Repsol said in a regulatory filing today, without identifying the companies or the size of a potential sale. A public offering of a minority stake in YPF also remains “open,” Repsol said.

Chief Executive Officer Antonio Brufau wants to cut Repsol’s stake in YPF after Argentine restrictions on natural gas exports and price caps on crude reduced profitability. The company also needs to raise funds for production, including in the deepwater fields off Brazil where Brufau said last year Repsol would spend at least $1.5 billion developing deposits.

“Repsol has been looking for divestment alternatives in YPF for a long time,” Bruno Almeida da Silva, an analyst at Oporto, Portugal-based Banco BPI SA, said in a note today to investors. He has an “accumulate” rating on Repsol shares.

Repsol delayed a public offering of a stake in YPF in November after paying $15.5 billion for more than 80 percent of YPF in 1999. Last year Repsol sold a 15 percent stake in YPF for $2.2 billion to Argentine investor Enrique Eskenazi.

Failed Attempt

China National Petroleum Corp. is interested in taking control of YPF, the South China Morning Post reported today, citing people it didn’t identify. CNPC, as China’s biggest producer is known, may offer to buy as much as 75 percent of YPF, while rival Cnooc Ltd. is interested in a 25 percent stake, according to the newspaper.

Repsol gained less than 1 percent to 16.22 euros in Madrid after rising as much as 3.9 percent. The stock has climbed 7.4 percent so far this year, giving the company a market value of 19.8 billion euros ($27.7 billion). YPF’s American Depositary Receipts rose 31 cents, or 1 percent, to $31.10, as of 12:24 p.m. in New York, valuing the unit at $12.2 billion.

Foreign oil companies may have a renewed interest in Argentina after the government of President Cristina Fernandez de Kirchner lost its majority in Congress in legislative elections June 28, said Daniel Montamat, a former energy minister of Argentina who now works as an industry consultant.

“I can’t see the government trying to block this,” Montamat said. “I see a weakened government right now. There are new political expectations in Argentina.”

Nationalizations

Fernandez nationalized about $24 billion in pension funds last year, and Congress in December approved her plans to take over the country’s biggest airline, Aerolineas Argentinas SA, from Spain’s Grupo Marsans. Under the government of Fernandez’s husband and predecessor Nestor Kirchner, Argentina nationalized the largest water utility and the national postal service.

Repsol bought the stake in YPF during a privatization by the government of Carlos Menem in 1999. Caps on oil prices introduced in 2007 by Nestor Kirchner have eroded earnings. YPF reported a 59 percent decline in first-quarter net income.

Kirchner set a maximum price that companies could earn on each barrel of oil exported at $42 a barrel. All revenue above that amount is collected as taxes, according to Repsol. Taxes on exports below that amount are as high as 45 percent. The government stopped diesel exports in 2005, according to Repsol.

A month after Kirchner’s price caps, Repsol agreed to sell 15 percent of YPF to Petersen Energia, owned by Eskenazi. Eskenazi has an option to buy an additional 10 percent. Repsol Chief Operating Officer Miguel Martinez said May 8 that Repsol is continuing to work on the sale of a stake in YPF.

Chinese Acquisitions

Liu Weijiang, a Beijing-based spokesman at CNPC, didn’t answer calls to his office and his mobile phone. Xiao Zongwei, a Beijing-based spokesman at Cnooc, also didn’t pick up calls.

China has spent as much as $5.4 billion since December on oil assets in Singapore, Syria and Kazakhstan after crude prices fell from a record $147.27 a barrel on July 11. Another Chinese oil company, China Petrochemical Corp., or Sinopec Group, last month announced plans to purchase Addax Petroleum Corp. to gain reserves in Iraq’s Kurdistan and in West Africa.

Repsol’s oil and gas production slumped 4.9 percent in the first quarter from a year earlier. The company announced discoveries in Algeria, Brazil, the U.S. and Morocco this year.

Oil and gas exploration spending will total 575 million euros a year through 2012, Nemesio Fernandez Cuesta, Repsol’s general director of upstream, said Feb. 11.

YPF accounts for 52 percent of Argentina’s refining capacity through three refineries in the provinces of Buenos Aires, Mendoza and Neuquen, according to the company’s Web site. YPF also explores for oil and gas and operates a chain of service stations across the South American country.

“An injection of capital would lead to a quick upgrade in reserves” at Repsol, said Montamat.

To contact the reporter on this story: Joao Lima in Lisbon at jlima1@bloomberg.net. To contact the reporter on this story: Matthew Craze in Santiago at mcraze@bloomberg.net.

Last Updated: July 2, 2009 12:44 EDT