Spain goes in defense of Repsol against Argentina

Spanish Industry and Energy Minister José Manuel Soria made a lightning trip early this week to Buenos Aires to meet with Planning Minister Julio De Vido to discuss growing pressure the Argentinean government has put on Spanish oil firm Repsol YPF, Argentinian sources said Wednesday.

The administration of Cristina Fernández de Kirchner has threatened to renationalize Repsol's Argentinean unit YPF after accusing the leading Spanish oil firm of failing to invest enough to increase output. Repsol denies the accusation, pointing to capital expenditure of 1.026 billion euros in 2009, 1.644 billion in 2010 and 2.414 billion last year.

Soria's haste in traveling to Buenos Aires was sparked by fears that Fernández might announce "drastic" measures against Repsol YPF in a speech she delivered on Thursday in Congress at the start of a new term.

Soria left Buenos Aires breathing at little easier after the two sides agreed to set up respective working groups to help diffuse tensions between the Spanish company and the Fernández administration.

In his interview with De Vido, the Argentinean minister reassured Soria by noting that Repsol is the Latin American country's most important industrial investor. In her speech before Congress, the president did not say she would nationalize YPF but stated that her government "will take measures to guarantee energy supplies."

Other sources indicated that King Juan Carlos phoned Fernández this week to mediate in the dispute. Repsol Chairman Antonio Brufau coincided with Soria in Buenos Aires in what was his third trip to the Argentinean capital in less than a month.

The previous Friday the Argentinean secretary of state, Daniel Cameron, and the secretary of state for political economy, Alex Kicillof, tried to gatecrash a YPF board meeting. Brufau complained to fellow board members that YPF was being subjected to "threats of sanctions and restrictions of dubious legal basis."