MercoPress. South Atlantic News Agency

Repsol takes YPF/Chevron deal to World Bank’s Investment Disputes Centre

The recent event when YPF/Chevron signed the agreement to develop unconventional hydrocarbons

Spanish oil company Repsol asked the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) to take provisional measures to prevent YPF state-owned oil company to execute the deal it sealed with Chevron last year to explore for unconventional hydrocarbons in the Vaca Muerta shale formation.

“Considering the deal YPF signed with Chevron, Repsol has asked ICSID arbitration tribunal to take measures to prevent the Argentine government of doing any action that involves YPF strategic assets,” a Repsol source said.

YPF signed a deal with Chevron to invest 1.24 billion dollars to develop Argentina’s shale deposit in Vaca Muerta. According to the US Energy Department Argentina has the second-largest important reserves of unconventional gas and the fourth largest unconventional oil (shale oil) reserves in the world.

Chevron was the first international company to sign a deal with YPF after Argentina seized a majority stake in the company from Repsol, its previous controller, last year.

Argentina’s giant Vaca Muerta field has 661 billion barrels of oil and 1.81 trillion cubic feet of natural gas resources, according to estimates by YPF.

“Repsol had already presented complains at the ICSID to declare the expropriation illegal and because of that any deal like the one signed with Chevron is illegitimate” the Repsol source said. “It puts YPF’s assets in danger.”

However a YPF spokesman downplayed Repsol for its CIADI complaint, saying it “has no legal basis since Repsol was never owner of the rights over Vaca Muerta.”

“The assets and resources were always property of YPF and because of that YPF has full authority to make deals and any commercial operation it considers convenient,” a representative from the state-controlled company said.

Repsol is seeking to “indirectly condition YPF actions,” the spokesman said, adding that “YPF acts according to its rights and meeting its legal obligations, protecting its interest of all its shareholders, including Repsol, which owns 11.8% of YPF shares.”

YPF added that the ICSID filing was contradictory to the July 26 statement by the Repsol board that it wanted to seek “a negotiated solution,” insisting then it was “open to dialogue.”

Meanwhile, Repsol announced it increased profits in the second quarter by 5.8%, reaching 674million dollars and improving analysts’ expectations.

“This increase is especially meaningful if it is compared to the first half-year of 2012, which was the last one in which Repsol consolidated its participation in YPF,” Repsol said.