Spain and Argentina put an end to nearly two years of a heated dispute late Thursday when the government of President Cristina Fernández de Kirchner signed a formal agreement to pay 5 billion dollars to Repsol in compensation for the 2012 expropriation of the Spanish oil giant’s shares in YPF. The agreement, which will now go to the Argentinean Congress and Repsol’s stockholders for approval, is the final chapter of a bitter diplomatic standoff, in which both sides had taken to international forums. While initial reports had stated that the $5 billion was to be paid in full, the money will be in installments in the form of dollar-denominated sovereign bonds. The document was signed on behalf of Repsol by Nemesio Fernández-Cuesta, the firm’s general director, and Luis Suárez de Lezo, one of the 16 board members of the oil company’s board and head of the legal team. Economy Minister Axel Kicillof signed on the Argentinean government’s behalf. Compared with 2012, when thousands of Fernández de Kirchner’s supporters rallied around her after she announced her populist move, Thursday’s session at the Finance Ministry in Buenos Aires was very low key. The Spanish officials left the country soon after the document was penned. In April 2012, Fernández de Kirchner announced that the government would expropriate a 51-percent stake in YPF held by Repsol after accusing the Spanish oil company of refusing to boost production and make major investments in the country’s energy sector.
Repsol, which acquired the stake in 1999, accused the Argentinean government of taking over YPF just months after Repsol announced a large oil find known as the Vaca Muerta field under a rocky formation stretching across Neuquén and Mendoza provinces. Repsol officials have estimated the Vaca Muerta discovery could yield as much as four billion barrels of crude and help Argentina meet its energy supplies for many years to come. Repsol had demanded 10 billion dollars in compensation and filed international judicial and trade complaints against Argentina. As part of the agreement, both sides will drop litigation proceedings. Newspapers critical of the government reported that Argentina may actually end up paying some 8 billion dollars to Repsol when interest paid on the bonds to be issued is included. However, Kicillof said the interest rates paid by the bonds are reasonable. “We spoke with Repsol and we are going to pay in installments until 2033, which of course is not what Repsol wanted," he said during an interview on Radio Continental, a station belonging to Grupo PRISA, which publishes EL PAÍS. Because Repsol could not convince Argentina to pay the entire amount upfront, the company included clauses in the agreement with legal and financial ramifications for the Argentinean government if it defaults on its payments. Buenos Aires had offered Repsol a minority participation in the exploration of the Vaca Muerta field but the Spanish oil company wanted to avoid any more alliances with the Argentinean government.