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Repsol Aims to Boost Argentine Participation in YPF

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Oct. 6 (Bloomberg) -- Repsol YPF SA, Spain’s biggest oil company, aims to sell part of its stake in its Argentine unit to local investors, Chief Executive Officer Antonio Brufau said.

The Spanish oil producer and refiner is seeking Argentine partners in YPF SA, as the unit is called, either through a private sale or a share sale, Brufau told reporters in Buenos Aires.

“The thing is it will take time because Argentina is a difficult place to gather funds and I don’t need investors in New York, I want local ones,” he said. Repsol owns 84 percent of YPF and Argentina’s Petersen Group, controlled by the Eskenazi family, has a 15.4 percent stake.

Madrid-based Repsol is investing in exploration in Brazil’s offshore Santos Basin and elsewhere to increase output, while seeking to reduce exposure to mature fields in Argentina. Repsol forecasts annual production growth of as much as 4 percent through 2014 as projects in Brazil and Peru come on stream.

Repsol may raise about $3 billion from the sale of a 20 percent stake in YPF through a stock offering in Buenos Aires and New York, Argentine investor Sebastian Eskenazi said May 19. Eskenazi, whose family bought 15 percent of YPF from Repsol for $2.2 billion in December 2007, expects to exercise an option to boost the stake to 25 percent by 2012 this year.

Oil and gas production at Repsol’s upstream division, which doesn’t include Argentine unit YPF, was unchanged from a year earlier at 340,000 barrels of oil equivalent a day in the second quarter. Output from Buenos Aires-based YPF fell 7 percent to 556,000 barrels a day as fields matured.

Public Offering

Repsol wants to sell part of its holding in YPF “sooner rather than later,” Brufau said on April 29. In 2008 Repsol delayed a public offering of a stake in YPF.

The Spanish company on Oct. 1 said China Petrochemical Corp. will invest $7.1 billion in Repsol’s Brazilian unit as it raises funds to develop offshore projects in that Latin American country. Sinopec Group, as the company is known, will buy new shares in the Brazilian unit and will hold 40 percent of that division after the capital increase.

Repsol has stakes in blocks in Brazil’s Santos and Espirito Santo basins and plans to invest as much as $14 billion there through 2019.

Since 2007, Repsol and partners BG Group Plc and Brazil’s Petroleo Brasileiro SA have found hydrocarbons in the offshore Carioca, Guara and Iguacu fields in the Santos Basin’s BM-S-9 block. They are ultra-deep deposits beneath a salt layer under the seabed and Repsol estimates the Guara and Carioca fields may hold as much as 3 billion barrels.

Petrobras, as the Brazilian state-controlled company is known, estimated in November 2007 that the Santos Basin’s pre-salt Tupi field may contain as many as 8 billion barrels of oil, the largest find in the Americas since Mexico’s Cantarell field in 1976. Repsol doesn’t own a stake in Tupi.

To contact the reporter on this story: Rodrigo Orihuela in Buenos Aires at rorihuela@bloomberg.net; Joao Lima in Lisbon at jlima1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.

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