Repsol shares rally after reassurances on YPF unit
Argentina says no to nationalization but then backtracks after controversial removal of drilling licenses
Repsol’s share price jumped on Wednesday after a top official in the government of Cristina Fernández de Kirchner said the nationalization of the leading Spanish oil firm’s Argentinean unit YPF was not on the administration’s agenda.
Repsol’s shares closed up 4.28 percent at 20.100 euros after a high of 20.465. Repsol has been under heavy pressure of late due to nationalization fears after the government of the South American country accused Repsol of failing to fulfill its investment commitments, something the Spanish company denies.
Juan Manuel Abal Medina, the head of Fernández’s Cabinet said the government did not want to take over YPF, in which Repsol holds a 57-percent stake.
“We’re not heading there,” Abal Medina said in an interview late Tuesday with the Argentinean radio station Continental. “We’re talking about the idea that they have to fulfill their commitment as a company, which is produce. Nothing out of this world; nothing strange.”
Abal Medina lamented the fact that although the country has hydrocarbon reserves, it is importing energy, while YPF is “sending its earnings overseas” in the form of dividends paid to Repsol. “It is logical that we who are the custodians of Argentineans’ wealth should concern ourselves with this,” the Cabinet chief said.
Repsol’s rally was sustained despite subsequent remarks by Abal Medina on Wednesday to the state-owned news agency Télam in which he said the Fernández administration was ruling out “no course of action” as regards YPF.
The Argentinean provinces of Chubut, Santa Cruz and Neuquén have withdrawn production licenses awarded to YPF to develop oil and gas wells.
In a YPF board meeting held on March 8, the government’s representative, Roberto Baratta, proposed that dividends that have yet to be paid out on 2010 and 2011 earnings should go into a “voluntary reserve fund for investment in exploration and production” in Argentina.