MercoPress. South Atlantic News Agency

YPF and Repsol reach an 'agreement in principle' with Mexican mediation

Pemex which holds 9,5% of Repsol was represented by CEO Lozoya

The dispute between the Argentine government and Repsol over the seizure of a 51% stake in petroleum company YPF has shown some signs of cooling, with the Ministry of Economy announcing on Monday that an “agreement in principle” for compensating the Spanish corporation had been reached.

 “An agreement in principle has been reached over the compensation for the expropriation of 51% of YPF's shares, in April 2012,” a press statement from the government ministry affirmed.

The understanding, which will need to be approved by Repsol's most senior governing bodies, “will imply fixing a compensation figure and its payment with liquid assets, and that both parties will end their respective legal actions,” according to the release.

The announcement came after new Economy Minister Axel Kicillof and YPF CEO Miguel Galuccio, accompanied by Argentine ambassador to Spain Carlos Bettini and the Presidential Legal and Technical Secretary Carlos Zannini, met on Monday afternoon with representatives from Repsol and the Spanish government.

Madrid was represented by Spanish Industry and Tourism Minister José Manuel Soria. The private sector delegation also included a representative from the financial entity Caixabank (main shareholder of Repsol with a 13% stake).

The Repsol delegation was made up of the Exploration and Production director Luis Cabra and head of Operations Nemesio Fernandez Cuesta. The Spanish company's president Antonio Brufau did not attend.

But who was present was CEO Emilio Lozoya, from Petroleos Mexicanos, Pemex,, which holds 9.5% of Repsol and has been particularly critical of the Spanish company's management and retributions. This was made public when Lozoya was summoned to the Mexican congress.

“The sides involved coincide that the current agreement in principle contributes to normalize and strengthen the historic links between the three countries”, says the release.

Repsol in a brief announcement said the Administration Council will assess and accord what it considers appropriate, and this will be decided in a meeting with shareholders next 27 November.

Last June Pemex sponsored a mediation between Repsol and YPF which was ultimately rejected by the Spanish company's board describing it “as unsatisfactory” and based “on overvalued assets”.

Apparently the proposal was for a joint society of Repsol with YPF and Pemex to exploit 6.4% of the shale deposits of Vaca Muerta, and for all sides to drop all their legal demands.