Repsol shareholder and Argentina in talks over YPF: source

Tue Mar 5, 2013 2:12pm EST

The logo of Spanish oil major Repsol is seen outside a petrol station in Madrid February 28, 2013. REUTERS/Sergio Perez

The logo of Spanish oil major Repsol is seen outside a petrol station in Madrid February 28, 2013.

Credit: Reuters/Sergio Perez

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MADRID (Reuters) - A key shareholder in Spanish oil group Repsol (REP.MC) has held talks with Argentina's government to try to broker a compensation deal for the seizure of its majority stake in national oil company YPF (YPFD.BA) last year, a source with knowledge of the matter told Reuters on Tuesday.

The source said Spanish lender Caixabank(CABK.MC), which owns 12.5 percent of Repsol, has been discussing the idea of the Argentine government compensating Repsol for the expropriation in exchange for investing in an oil project there.

They were very preliminary and the source did not foresee a deal in the short- to medium-term.

Caixabank declined to comment on the matter.

A spokesman for Repsol said neither the company nor its board was in talks with the Argentine government. Caixabank's chairman Isidro Faine is a member of Repsol's board.

Earlier YPF shares rose 2.86 percent after media reports in Argentina said that President Cristina Fernandez had held talks with Faine.

Newspapers said that Fernandez's government was suggesting to Caixa that Repsol might be given a stake in a company that would explore for oil in the Vaca Muerta onshore shale formation as some kind of compensation for the YPF expropriation.

Repsol's shares rose 1.89 percent on Tuesday to close at 17.01 euros while Caixabank (CABK.MC) rose 0.75 percent to 3.09 euros.

In April last year Fernandez announced the seizure of Repsol's 51 percent stake in YPF, saying that the Spanish oil and gas company had not invested enough in Argentina and had let local oil production and exploration decline.

The World Bank's arbitration body, known as ICSID, in December began an arbitration process after Repsol filed a complaint against the South American country.

Repsol says the expropriation violated a Spain-Argentina investment treaty.

The seizure of cash-contributor YPF hit Repsol for much of 2012, triggering funding and debt concerns. It was forced to sell assets to cut debt and raise funds for exploration and to conserve its investment grade credit rating.

Its shares lost 31 percent in 2012.

However, the company bounced back in the fourth quarter, coming in with a net profit of 517 million euros, above the 355 million posted in the same period of 2011 and beating forecasts.

(Additional reporting by Carlos Ruano in Madrid and Alejandro Lifschitz in Buenos Aires; Writing by Sarah Morris; Editing by Fiona Ortiz and Greg Mahlich)

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