News of a preliminary agreement between Repsol and the Argentine government on compensation for last year's expropriation of a subsidiary of the energy firm drove gains on the Spanish stock market today.
The administration of Cristina Fernández took control of 51 per cent of Repsol subsidiary YPF in April 2012, claiming the Spanish firm had failed to invest enough in its operations. Repsol contested the move, leading to a series of legal wrangles and souring relations between Madrid and Buenos Aires.
Nineteen months on, the two sides appear to have found a solution, with the Argentine government putting a compensation offer on the table on Monday. Neither Repsol nor the Argentine government would give details, but Spanish media have reported that Buenos Aires is prepared to pay €3.7 billion, at least some of which would be in sovereign debt.
The same reports say the deal would also see Repsol drop all legal action against Argentina, including a complaint before the World Bank.
Repsol had been demanding compensation worth €7 billion.
A brief statement said it would “analyse and agree on what it deems best for the exclusive interests of the company and its shareholders” in a board meeting today.
Major gains on Spain's Ibex index yesterday (left) showed the market anticipating a positive response to the offer. Repsol closed up 4.3 per cent and was among the day's biggest gainers, along with Sacyr Vallehermoso and Caixabank, both of which hold stakes in the firm.
The government of Mariano Rajoy has closely followed the case, due to Repsol’s size and global significance. Spanish industry minister José Manuel Soria was involved in the negotiations with the Argentine government that led to Monday’s pre-accord, along with representatives of Repsol, Caixabank, Sacyr and Pemex.
