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Repsol Said to Cut Gas Shipment on Argentina Noncompliance

Repsol YPF SA blocked a shipment of liquefied natural gas to Argentina because the government failed to supply the Madrid-based company with a letter of credit, said a person briefed on the matter.

Spain’s largest oil company diverted the course of the vessel on April 27 after the payment guarantee failed to arrive, said the person, who asked not to be identified because Repsol hasn’t made details of the shipment publicly available.

Repsol requires the letter of credit for shipments after Argentina defaulted on $95 billion in debt in 2001, the person said. YPF, Repsol’s Argentine unit, anticipated Repsol would block shipments in order to “damage” Argentina after the government seized control of the company this month, YPF said on its website April 28.

YPF said it will guarantee gas supplies to Argentina and negotiate a LNG import deal with another company. Argentina’s gas regulator Enargas began to ration supplies to manufacturers April 28, Clarin reported today, without citing anyone.

Repsol had no comment on the shipment, spokesman Kristian Rix said by telephone. Government spokesman Alfredo Scoccimarro didn’t answer calls to his office or mobile phone made during a public holiday in Argentina.

Share Drops

Shares in Repsol fell 1.7 percent to 14.45 euros in Spain today, bringing its decline so far this year to 39 percent. YPF gained 2.2 percent to $14.48 percent at 3:24 p.m. in New York trading, reducing a slump this year to 58 percent.

YPF increased gas production by 2 million cubic meters a day since the government took control of the company, it said in the statement. Imports from neighboring Bolivia will be boosted by 2 million cubic meters a day, it said. Gas supplies to residential areas won’t be affected by the cuts, newspaper Infobae reported, citing Enargas official Antonio Prosanto.

Argentina had to spend $9.3 billion on fuel imports last year to replace a “huge decline” in YPF oil and gas output, the company said. Argentina had sold fuel and foodstuffs at subsidized prices since its 2001 debt default.

Repsol said it invested $20 billion in YPF since buying the assets in a privatization in 1999 when Carlos Menem was president of the country. The government estimates the company’s investments at $3.7 billion. Former Argentine President Nestor Kirchner introduced caps on oil prices in 2007.

Congress Debate

Argentina’s Congress is debating a bill to nationalize a 51 percent stake in YPF after the government seized control of the company April 16.

The government is preparing to expropriate the 25 percent stake in YPF owned by Argentine investor Sebastian Eskenazi, newspaper La Nacion reported today, citing government officials that it didn’t identify.

The government may re-sell the stake to a third party, the Buenos Aires newspaper reported. The Petersen Group holds $2.9 billion of debt with creditors including Credit Suisse Group AG and Goldman Sachs Group Inc., La Nacion reported.

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