Repsol Said to Near Final YPF Compensation With Argentina

Repsol SA is close to reaching an agreement with Argentina on final terms of a compensation package for the seizure of its YPF unit, ending an almost two-year conflict, said two people with knowledge of the process.

Executives of the Madrid-based company are working on the document in Buenos Aires with members of Argentine Economy Minister Axel Kicillof’s team, said the people, asking not to be identified before a binding agreement is signed.

The proposed compensation, preliminary terms of which were negotiated in November, continues to be centered on Argentine government bonds, the people said. YPF declined to comment in an e-mailed response to questions. Kristian Rix, a spokesman for Repsol, also declined to comment on the YPF process.

The negotiating teams intend to have final terms ready for presentation at a Feb. 26 Repsol board meeting, which pending approval could then be delivered to shareholders in March, one of the people said.

President Cristina Fernandez de Kirchner’s government seized 51 percent of YPF in April 2012 after saying Repsol hadn’t invested enough. For Argentina, settling the dispute may help attract more companies to develop some of the world’s largest shale fields as the country seeks to reduce energy imports.

The preliminary compensation arrangement was negotiated in Buenos Aires late November by ministers from Argentina and Spain, Repsol executives, and representatives from the Spanish company’s two largest shareholders -- Mexican oil producer Petroleos Mexicanos and Barcelona-based CaixaBank SA.

Export Incentives

The proposal is based on $5 billion of 10-year bonds, a person briefed on the matter said at the time. Repsol, which hasn’t disclosed terms of the proposal, originally sought $10.5 billion compensation and sued in international courts.

Argentina holds the world’s second-largest reserves of shale gas and the fourth-largest of shale oil, according to U.S. Energy Information Administration data. The country is offering tax and export incentives to energy companies that invest at least $1 billion over a five-year period.

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