MercoPress. South Atlantic News Agency

Spain vows to defend Repsol-YPF interests in Argentina; board meeting to decide on YPF profits

Minister Soria: “we defend any Spanish company’s interests all over the world”

Adding fuel to the quarrel between Argentina and Spain for disagreements over Spanish investors administrated YPF, Spanish Industry minister of José Manuel Soria vowed on Tuesday to defend his country’s interests.

YPF, controlled by Spain's Repsol, is under Argentine government pressure to increase oil and natural gas output in order to reduce a mounting fuel bill that is eroding the trade surplus. YPF board of directors is scheduled to meet Wednesday.

“We defend any Spanish company’s interests all over the world” said Soria.

However Soria reiterated Spain’s intentions to maintain good diplomatic relations with Argentina. “The government strives to hold the best bilateral relations with other administrations, as we do with Argentina,” the official argued.

Last week, Argentine Planning Minister Julio de Vido lashed out at Soria by saying though oil company YPF is run by Spanish investors it should not be considered an asset of the European country.

Previously, the Spanish official had affirmed that the company’s interests “were those of Repsol and Spain.”

On Monday, Neuquen province, home to huge untapped reserves of shale oil and natural gas, said it was stripping the country's biggest energy company YPF of two concessions due to insufficient investment.

The two concessions involved are Chihuido de la Salina and Portezuelo-Minas, currently not in production. Last week the provinces of Santa Cruz and Chubut cancelled YPF licences. This was a particular strong blow for the Spanish controlled company since El Trebol-Escalante and Campamento Central-Cañadón Perdido represent 7% of current total production.

“In accordance with the Hydrocarbons bill, the province of Neuquen has decided to revert the concessions of Chihuido de la Salina and Portezuelo Minas, both in its territory which will be awarded to the provincial company Gas y Petróleo del Neuquén Sociedad Anónima, for its continuity. Worker, contractors and public opinion are informed that their jobs will not be affected” said the official Neuquen release from Governor Jorge Sapag.

The decision was announced a few hours after YPF presented an appeal to the 9 March summons from Neuquen regarding lack of investments in four concession areas.

From the YPF reply surfaces an investment proposal for conventional and non conventional reservoirs in the areas of Rincon del Mangrullo and Don Ruiz, which “will be analyzed before a provincial decision is announced” added the release.

Three other Argentine provinces, Mendoza, Formosa and La Pampa, which belong to the so called Hydrocarbons Federal Accord, agreed between the national government and oil producing provinces, are also demanding YPF to present investment plans to increase national production of oil and gas.

Mendoza is expected to make an announcement on the issue next Thursday.

YPF sources said on Tuesday they had yet to receive the official notification of the withdrawal of oil and gas concessions announced by the provinces of Santa Cruz and Chubut. The company is waiting for the full text of the provincial decrees to present appeals.

However on Wednesday a new chapter of the ongoing struggle is expected when the YPF board meets to which the Argentine government representative will attend. The purpose of the meeting is to call shareholders and decide on fiscal year 2011 earnings.

Government representative Roberto Baratta has proposed “a voluntary reserve for investments, exploration and exploitation of hydrocarbons” instead of distributing dividends. In previous years YPF has distributed 90% of annual profits.

An interesting side of the ‘recovery’ of insufficient producing licensed areas is the case of Campamento Central and Cañadon Perdido from the province of Chubut. In effect the licence withdrawn not only belonged to YPF but also to its partner ENAP, Chile’s government owned overseas oil corporation.

Under an agreement dating back to December 2000, Repsol-YPF acquired 25% of Enap-Sipetrol investment in the Venezuelan concession at Quiamare-La Ceiba which at the time had a daily production of 15.000 barrels of oil.

In exchange ENAP received 50% of the Campamento Central and Cañadon Perdido blocks in the province of Chubut, with a daily production of 7.500 bpd and with YPF remaining as the operator.