After a 16-hour debate, Argentina's Lower House passed the law to pay Spanish Repsol 5 billion dollars in bonds to compensate for the 2012 seizure of a majority stake in Argentina's energy company YPF.
Ruling Victory Front and its allies gave full legislative approval to the bill, passed with 135 votes in favour, 59 against and 42 abstentions around four in the morning of Thursday.
The deal, sealed last February and previously approved by the Senate and Repsol’s Administrative Council is expected to be swiftly ratified by president Cristina Fernández, who forecasted that with YPF under government control, Argentina will become self sufficient in hydrocarbons by 2019.
The terms of the settlement include the payment of 5 billion dollars issued in dollar-denominated bonds with interest rates of up 8.75%. The bonds are set to mature from 2017 to 2033.
Congress’ approval was one of the conditions required by Repsol to remove its lawsuits against Argentina in international courts.
Government officials pointed out that the compensation was fair and that this deal will help YPF lure investors. They also emphasized the benefits of paying for YPF shares in debt rather than cash on the grounds that it will place less stress on the country's reserves.
Opposition lawmakers, on the contrary, criticized the amount and details of the compensation as well as the government’s energy policies.
YPF is run by the federal government since Argentina seized 51% of YPF shares from Repsol in May 2012.
Argentina was self sufficient in oil and gas until 2003, the result of strong policies to promote production sponsored by the government of Carlos Menem. However with the Kirchner couple the policy was the opposite: freezing of fuel prices, thus oil and gas at the wells, and consequently a dramatic fall in investment. As a result in 2011, 2012, and 2013, Argentina was faces with a soaring imported fuel bill in the billions of dollars.