Venezuela Gets Good Sign From Repsol on YPF Dispute, Chavez Says

Venezuela has received a “positive” letter from Repsol SA (REP) about its efforts to resolve a dispute with Argentina over the nationalization of its YPF unit, President Hugo Chavez said today.

Venezuela is “friends” with Repsol and maintains good relations with the company, Chavez said on state television, adding that he received a letter from Repsol Chairman Antonio Brufau yesterday that contained a “good signal.”

The self-professed socialist on July 23 warned Repsol to “think carefully” about taking action against Argentina after it nationalized a 51 percent stake in its YPF unit in April. The company has said that it would seek as much as $10.5 billion in compensation and consider international arbitration.

“We’re going to fix all of this as allies. That’s what we propose,” Chavez said. “I’m not going to disclose the contents of a private letter, but it makes me happy that we can contribute and help make sure that things keep advancing in Latin America.”

Repsol, Spain’s largest oil company, and Italy’s ENI SpA (ENI) signed an agreement yesterday with Petroleos de Venezuela SA for the Rafael Urdaneta natural gas project in the South American country, Chavez said.

“Repsol would not have signed a new agreement in the country if their investments in Venezuela were at risk,” Chavez said. “We are friends with Repsol.”

Perla Field

Eni and Repsol are joint operators of the Perla field that is part of the Rafael Urdaneta project and located 50 kilometers (31 miles) off Venezuela’s western coast. PDVSA, as the Caracas- based company is called, has a right to take a 35 percent stake in the field, which is estimated to hold 17 trillion cubic feet of gas, during the development phase, which would reduce the Eni and Repsol shares to 32.5 percent each.

PDVSA said in June that it would begin early production of 80 million cubic feet of natural gas a day at the Perla field along with partners Eni and Repsol in the first quarter of 2013. The block will produce 300 million cubic feet a day of gas in 2013 and reach maximum capacity of 1.2 billion cubic feet in 2019, PDVSA said.

“We are also also friends with Argentina,” Chavez said. “What I’ve done is send a message to Repsol that I don’t agree with an international suit against Argentina. That would send a bad signal.”

To contact the reporters on this story: Charlie Devereux in Caracas at cdevereux3@bloomberg.net; Nathan Crooks in Caracas at ncrooks@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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