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Argentina to Pay Repsol for YPF Nationalization

The lower house of Argentina’s congress agreed to pay Spanish oil company Repsol $5 billion in bonds in compensation for its expropriation of the company’s 51 percent share of Argentine oil company Yacimientos Petrolíferos Fiscales (Treasury Petroleum Fields—YPF). After YPF was nationalized in 2012, Repsol’s share in the company was seized and reduced to 12 percent without any compensation. The settlement had been pending since the company’s expropriation.

The settlement with Repsol is essential in order to attract long-term investors to Argentina’s Vaca Muerta shale deposit in the Patagonia region, potentially one of the world’s largest deposits of natural gas. Since Repsol’s expropriation, YPF has had difficulty attracting partners to the project, which would be a crucial boost to Argentina’s struggling economy, currently dependent on fuel imports.

The settlement is less than Repsol’s original demand of $10.5 billion. The dollar bond payment—which had been previously approved by the senate—will mature between 2017 and 2033, and guarantees a minimum market value of $4.67 billion. If the market value of the bonds does not amount to the minimum, the Argentine government must pay an additional $1 billion in bonds.

Any opinions expressed in this piece do not necessarily reflect those of Americas Quarterly or its publishers.
Tags: Argentina, Repsol, YPF

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