"I hope to reach a deal on YPF"

Repsol chairman Antonio Brufau discusses the chances of an agreement with Argentina

Miguel Jiménez
Repsol Chairman Antonio Brufau at the firm's new headquarters in Madrid.
Repsol Chairman Antonio Brufau at the firm's new headquarters in Madrid.BERNARDO PÉREZ (EL PAÍS)

Antonio Brufau has been chairman of leading Spanish oil company Repsol since 2004. Before that he was a partner at the consultant Arthur Andersen, assistant general manager at savings bank La Caixa and chairman of Gas Natural. In the first interview he has granted since the government of President Cristina Fernández de Kirchner expropriated its Argentinean unit YPF in April he makes it clear Repsol will fight for compensation in court. However, he speaks more about negotiations to reach an agreement in the interim period.

Question. What chance is there of reaching an agreement with Argentina over YPF?

Answer. It's very difficult. A negotiation depends on the willingness of both parties and that both of us recognize the fair value of what has been expropriated. Am I optimistic? More like reasonably realistic. We will use all legal means. We will go to the [World Bank's] International Centre for Settlement of Investment Disputes when we believe it is best to do so. I hope we understand this is not good for Repsol, but above all that that is also the case for Argentina, and that we're able to reach an agreement.

Q. There are some people who say that since you had the dispute with the Argentinean government that perhaps you're not the best person to reach an agreement.

Am I optimistic? More like reasonably realistic. We will use all legal means"

A. Those who say so don't know very well what they are saying. But if that were the case, it doesn't seem very logical that the party that initiated the conflict should ask for the negotiator to be changed. This is not a personal issue. It is an issue between Repsol and the Argentinean state and what is important is that this company gets back what belongs to it. But if that were true, the day we get back what is ours, that same day I would call a board meeting and put my resignation in its hands. The very same day.

Q. In what moment did things break with Argentina?

A. It's difficult to know. Until November 2011 we were one of the pet companies of Argentina and of the government, according to what was said publicly. In the last quarter of last year, after many years of struggle, we unveiled the large discovery of non-conventional crude and gas in Vaca Muerta, which could represent a paradigm development in the Argentinean energy sector. Something of this importance was the detonator for the expropriation. In my opinion, there lies the origin of the problem.

Q. Is there anything you regret, anything that might have been done differently?

Until November 2011 we were one of Argentina's pet companies"

A. I've thought a lot about it. To this day, I can't think of anything we could have done differently.

Q. Did Argentina take advantage of a moment of Spanish weakness, with a new government on board?

A. The Spanish government was on top of the situation and I feel they have backed me. I don't know what else they could have done. Protecting investment globally is not easy. There are bilateral treaties and arbitration mechanisms, but unlike trade rules, these take time. Europe is thinking this over.

Q. In what other countries do you see Repsol's investments at risk?

"We've reduced our gasoline margins"

M. J.

Repsol Chairman Antonio Brufau rejected claims that the company was slow to adjust its margins when the price of crude oil falls. Brufau was speaking after the anti-trust authorities concluded that consumers were paying too much for gasoline because of failures of the market.

"I don't think that is the case," Brufau said in the interview with EL PAÍS. "We have reduced margins. The price of gasoline is very tight, the margin is low and our prices are below the average in Europe."

Brufau said he feels comfortable about the situation of the company's shareholder structure, which has seen uninvited incursions by Spanish builder Sacyr and Pemex, the Mexican state oil company, only for them to later reduce their holdings. "As regards the most important investors, those that are represented on the board of directors, the situation could not be better," Brufau said. "La Caixa, Sacyr and Pemex are supporting the company a lot."

The Repsol chairman said the company was not looking for new international partners because it does not need to. "Every year we are among the operators with the biggest [hydrocarbon] discoveries in the world," he said. In refinement, it is not irrelevant that in 2012 the biggest refinery built in Europe was here, the biggest industrial investment in Spain. This is a company that does what it says and is creating a future for itself."

A. We are present in 30 countries and have seen many nationalization or renegotiation situations in Venezuela, in Ecuador, in Bolivia, in Libya... In all of these cases we have sat down at the table to negotiate and we have always reached satisfactory agreements. It's nothing new for Repsol to sit down and negotiate. We feel welcome in all countries, and therefore, when a country that has invited you to work with it, to share the future, asks you to do things in a different way to what you have been doing, then you adapt. But you have to sit down to negotiate. If the Argentinean government had wanted a more active role in Vaca Muerta, we would have sat down with them to see how we could take on board their interests. But that is one thing, while: "Get out of the way, I'm taking over" is another.

Q. At some point you have described this as robbery.

A. I don't like to use such words because in the end run the courts are there to decide how you are compensated for the damage done. And I'm still hopeful and believe that we can reach an agreement on YPF. It would have been better if this had taken place earlier, but I hope we can reach an agreement that compensates us for what is ours. All countries have the right to nationalize what they believe is important, but that implies a fair price and payment. A fair payment, not what the nationalizing party decides.

Q. Have specific talks been opened?

A. Discretion is very important. We're using all the necessary channels.

Q. The government of Hugo Chávez recommended that you don't go down the legal road. How are relations with the Venezuelan government?

A. They couldn't be better. What they suggested to me, among other things, is that [the Venezuelan state oil company] PDVSA take part in finding a solution to the situation. I would be delighted, and that is what I told them. That PDVSA, which is a friend of Argentina and of Repsol, take part.

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