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After a long debate, Argentine Congress approves Repsol/YPF agreement terms

Friday, April 25th 2014 - 06:04 UTC
Full article 7 comments
Cristina Fernandez anticipated that with YPF under government control Argentina will be hydrocarbons self-sufficient by 2019 Cristina Fernandez anticipated that with YPF under government control Argentina will be hydrocarbons self-sufficient by 2019

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.

Top Comments

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  • Briton

    5 billion dollars in bonds

    ah, but are the bonds themselves worth anything when you try to sell them.

    Apr 25th, 2014 - 09:41 am 0
  • CabezaDura2

    I've asked by now to many Ks the same question and they NEVER seem to know how to answer it.

    If they were so keen on Vaca Muerta and if it was such a asset for the country why couden't they simply give the concession of Vaca Muerta to ENARSA which was already a State owned company???

    Those 35 Bn USD would have being needed anyway to drill VM, why did they have to go for YPF which is probably worth far less than 5 Bn USD plus interests, and have all the difficulties of clashing with Spain and the oil giant

    Apr 25th, 2014 - 11:06 am 0
  • yankeeboy

    Cue NML attaching the newly owned YPF shares. I was wondering why they haven't tried getting them before and then I remembered they haven't been paid for them yet!

    Apr 25th, 2014 - 11:46 am 0
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