Repsol’s board backs chairman with opposition of Pemex

Mexican firm’s alliance up in the air as it moves toward accord with YPF

The in-principle agreement on compensation for the expropriation of its Argentinean unit YPF, approved unanimously on Wednesday by the board of directors of Spanish oil firm Repsol, left state-owned core shareholder Petróleos Méxicanos (Pemex) as a moral victor but also as an enemy in the house.

Pemex helped broker the deal with the Argentinean government on compensation in “liquid assets” of some five billion dollars for Repsol’s 51-percent stake in YPF.

But prior to Wednesday’s board meeting, Pemex’s chief executive officer, Emilio Lozoya, had launched a series of attacks against Repsol’s chairman, Antonio Brufau, for his management of the company and had put out feelers about his possible ouster.

Pemex’s representative on Repsol’s board, Arturo Henríquez, was alone in voting against a proposal on Wednesday that expressed “full support” for Brufau and his team.

The Mexican company, which holds a 9.4-percent stake in Repsol, later issued a statement explaining its stance: “Pemex voted against because it believes that it [the management] has not produced the desired results for the company and its shareholders.”

Pemex’s show of no-confidence in Brufau and his team practically leaves the strategic industrial alliance agreement it signed with Repsol in February of last year not worth the paper it is written on.

There were no moves afoot at Wednesday’s meeting to dissolve that agreement, but if Pemex were to formally break it, it would, as a competitor rather than an ally, lose its representation on Repsol’s board.

But the key to Pemex’s permanence on Repsol’s board could rest on the outcome of a possible alliance with YPF to jointly develop the Vaca Muerta field discovered by Repsol before the expropriation.

Reuters on Thursday quoted Pemex board member Hector Moreira as saying the company is likely to discuss taking a potential stake in the Vaca Muerta shale deposit at the board’s next meeting on December 19. “I would expect that the CEO will inform [the board of his thinking on Vaca Muerta],” Moreira said.

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