Pemex-Sacyr alliance to get green light

The National Energy Commission (CNE), the industry watchdog, has decided that no authorization is necessary for the alliance between Pemex and Sacyr that would jointly secure both companies' nearly 30 percent of Repsol's voting rights, according to sources in the know.

The decision was made after a meeting that ran on for several hours and where some board members disagreed with the final conclusion. The CNE's decision does not mean that it is either for or against the operation, merely that it does not require CNE permission to go ahead. Managers at the Spanish energy giant Repsol had asked the watchdog to determine whether the Pemex-Sacyr move required prior consent, considering the clout it would gain over a strategic Spanish firm.

The agreement between the Mexican state-owned oil monopoly and the Spanish construction firm has put Repsol managers on the defensive, especially since a Pemex report shows that the company aims to gain access to Repsol's state-of-the-art technology for its own purposes. A Pemex report said the company hoped to slash its own operating costs by $105m a year thanks to Repsol's technology, among other goals.

A day before the CNE ruling, Repsol's board expressed unanimous support for president Antonio Brufau and asked Pemex, which currently controls over 9 percent of the shares, and Sacyr, which holds close to a 20-percent stake, to abandon their alliance. In the meantime, the board has modified its internal rules so that the Sacyr and Pemex representatives may be expelled if necessary in future. Board members also changed other regulations to protect Repsol's technology and to make it harder for shareholders such as Pemex to get their hands on it.

The law says that the CNE must authorize the purchase of shares representing over 20 percent of capital or less if they grant significant influence over a company involved in regulated energy activities such as transportation or the distribution of gas and electricity. These regulations were used to prevent Germany's E.ON from buying Spanish electricity company Endesa in 2007. The wording was later changed to comply with a European Union request for an exemption for EU firms.

Repsol argued that Pemex is not a EU company, that its alliance with Sacyr grants it significant influence over Repsol and that the latter engages in regulated energy activities, mostly through Gas Natural Fenosa.

But the CNE, which is strongly influenced by Industry Minister Miguel Sebastián, who is close to Sacyr president Luis del Rivero, has decided to shelve a case involving a foreign state bent on acquiring an influential position within Spain's top energy firm.

Sacyr has consistently been at odds with Repsol's managers, and the embattled construction firm, which is dragged back by debt of around 20 billion euros, is actively seeking to boost the share price of a company in which it holds a 20-percent stake. Since it raised its stake in Repsol, the oil company's shares have lost 26 percent in value, causing Sacyr to lose over 1.5 billion euros on its investment.