YPF downplays Spanish court decision to hear Repsol case

12 July 2013 20:01  [Source: ICIS news]

MEDELLIN, Colombia (ICIS)--The decision by a Spanish court to judge a lawsuit filed by oil giant Repsol against former Argentine subsidiary Yacimientos Petroliferos Fiscales (YPF), US oil major Chevron and Sino-Argentine group Bridas was downplayed by YPF on Friday.

Spain’s mercantile court this week agreed to hear Repsol’s claims that the three companies are engaging in unfair competition through the exploration of the Vaca Muerta shale gas and oil fields in central Argentina, assets that were previously held by Repsol.

Argentina’s government expropriated Repsol’s majority share in YPF in May 2012 following a dispute over under-investment and dwindling production. Repsol is seeking $10.5bn (€8.0bn) in compensation through a separate lawsuit in the US.

“The court’s ruling is a purely procedural decision that has no bearing on the activity of YPF or its position with regards the lawsuit brought by Repsol,” said a spokesperson for YPF. The decision “does not resolve the central issue”, he added.

The court’s decision follows recent negotiations between YPF and Repsol to agree on a compensation package for last year’s expropriation.

In June, Repsol’s board rejected an offer from YPF of a 47% stake in a joint venture to exploit a small part of Vaca Muerta, valued at around $3.5bn. The offer, described by Repsol as “unsatisfactory”, also included $1.5bn toward development.

“YPF will continue defending its interests, putting forward all the arguments and evidence in its defence,” YPF said. “If necessary, it will also call into question the competence of the Spanish courts.”

According to the US Energy Information Administration (EIA), Argentina has the world’s second largest shale gas reserves, with an estimated 802 trillion cubic feet (tcf) of recoverable gas, much of which lies in the vast Vaca Muerta formation.

The Argentine company is keen to partner with investors to develop this potential as the country seeks to become energy independent.

Although the consequences of the Spanish court’s ruling are unclear, would-be partners already wary about investing in Argentina’s resources after last year’s takeover may decide to give Vaca Muerta a wide berth, at least for the time being.

The deal with Chevron, worth $1.5bn, will reportedly be signed off next week, although the US company did not immediately respond to a request for comment.

($1 = €0.76)


By: Simon West
713-525-2653



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