Petroleos Mexicanos’s chief executive officer said it’s “ridiculous” 30 years of partnership with Repsol YPF SA (REP) hasn’t paid off, and the oil producer is undaunted by hostility toward its increased stake in the Spanish company.
Pemex, as the state oil company is known, holds deep-water deposits and needs help in accessing them, while Repsol has the expertise and not the reserves, Juan Jose Suarez Coppel told reporters in his Mexico City office yesterday. Repsol could benefit from the companies’ collaboration, the CEO said.
The partnership “wasn’t working for us,” Suarez Coppel said. “And Pemex would like to have a heavier influence in the decisions and a stronger voice on the board.”
Repsol is seeking to halt an alliance between Pemex and Sacyr Vallehermoso SA (SYV), its largest shareholder, after the two companies agreed to coordinate their combined 29.8 percent voting stake to restructure the Madrid-based oil producer’s management. Pemex, a founder of the Spanish company in 1979, almost doubled its stake in Repsol to nearly 10 percent.
“I never expected such a reaction,” Suarez Coppel said. “But we’re not going to back off and go back home because they’re reacting like this.”
Blocking Board Vote
Repsol changed its bylaws on Sept. 28 to preclude rivals from holding positions on its board, preventing both Pemex and Sacyr from voting. Repsol also asked Spain’s energy and securities regulators to review the agreement.
Suarez Coppel, 52, said he expects to convince other Repsol shareholders that Pemex’s goal is to improve Repsol’s value. Pemex wouldn’t vote in favor of increasing Repsol’s dividends if doing so would cut profitable investments, he said.
Repsol Chairman and CEO Antonio Brufau is fighting to retain control of Spain’s biggest oil company after Sacyr and Pemex said they want the company to split the roles of CEO and chairman and focus on its oil business to boost returns.
Sacyr and Pemex are filing a lawsuit against Repsol to regain voting rights on the board. Kristian Rix, a spokesman for Repsol, declined to comment.
Sacyr rose 7.4 percent, the most since Aug. 30, to close at 4.538 euros in Madrid, while Repsol shares climbed 2.28 percent to 21.52 euros.
Pemex dollar-denominated perpetual bonds rose 0.11 cents to 98.90 cents per dollar. The yield on the bond issued last year fell 1 basis points, or 0.01 percentage point, to 6.705 percent.
Pemex, whose output fell last month to the lowest since July 1990, has been talking with oil companies to join its first foreign project to get more experience in deep waters, Suarez Coppel said. Such talks never moved forward with Repsol, he said.
“This is another of the reasons why we feel there isn’t mutual interest,” Suarez Coppel said.
Pemex is accelerating its deep-water exploration activity. The company, which primarily discovered gas in 15 deep-water wells drilled since 2005, plans to drill five more deep-water wells this year and eight to 10 wells in 2012. Mexico estimates it may have 30 billion barrels of oil in deep waters.
The chief executive of the Mexican oil producer said other missed opportunities between Pemex and Repsol could have been in refining.
“Both companies may have invested in a U.S. Gulf refinery, or we could have invested in a European refinery,” he said.
Suarez Coppel said he considers Brufau a friend and he met with his Repsol counterpart the morning after announcing the agreement in August to explain his motives behind the alliance with Sacyr.
“I tried to finish the talks as cordial as possible, but it ended with him saying ‘then we’ll meet again’,” he said. “I didn’t know what he meant at the time, and now I know.”
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