Spain and Argentina agree to YPF talks

Argentina, Spain and Mexico have agreed to negotiate a deal on Buenos Aires' 2012 nationalization of Repsol's stake in YPF, the Economy Ministry said Monday.

Spain and Argentina agree to YPF talks
Economy Minister and YPF's vice auditor Axel Kicillof presents a report of the Argentina's oil company YPF since the intervention in 2012. Photo: Juan Mabromata/AFP

Negotiations will set a compensation amount that will have to be agreeable to the Spanish oil giant which had held a 51 percent share of Argentina's YPF.

The agreement to negotiate means that the parties will cease litigation and other action in the case. Repsol had put the value of its loss at $10 billion, and filed for help with the International Centre for Settlement of Investment Disputes.

“Both parties agree that the draft deal will help normalize and strengthen the historic links between the three countries and their companies,” read a short communiqué by the Argentinian government.

Argentina's leftist government in April 2012 decided to nationalize YPF, in which Repsol had controlling interest, sparking a major diplomatic row.

Buenos Aires argued that the Spanish company was not investing enough in the Argentine company and using it only to extract profit.

Argentina 's Economy Minister Axel Kicillof, the driving force behind YPF's expropriation, described Repsol's approach as the "debasement of the company and a policy of creating shortages that would raise domestic prices to those prevailing internationally."

Pemex holds 9.5 percent of Repsol's capital.

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Spanish oil giant Repsol swings back to profit

Spain's oil giant Repsol said on Thursday that it swung back to profit in the third quarter as the company reduced costs to adapt to a slump in oil prices which has hit production revenues.

Spanish oil giant Repsol swings back to profit

The company posted a net profit of €481 million ($$535 million) in the July-September period, compared to a net loss of 221 million euros in the same year-ago period.

The result was higher than forecast by analysts polled by Factset who predicted the company would table a net profit of €308 million.

“The efficiency and savings measures implemented by Repsol throughout the year improved earnings and bolstered the company's resilience to the current environment of depressed crude oil and gas prices,” the company said in a statement.

Repsol in October 2015 unveiled an ambitious cost-cutting programme outlined in October 2015 which involves slashing billions from capital spending by 2020 and slashing 1,500 jobs by 2018.

The company said lower spending on exploration helped it to drastically reduce its loss in its upstream operations to €28 million from €395 million in the third quarter of 2015 despite the slump in oil and gas prices.

In its downstream operations, which includes refining, earnings fell 42 percent in the third quarter to 395 million euros from a year earlier due to lower margins, the company said.

During the first nine months of the year Repol's posted a net profit of €1.12 billion, a 35 percent increase over the same time last year.

Oil prices have recovered to around $50 a barrel since producers cartel OPEC agreed at the end of September to cap output in a bid to tackle an oversupply that has hammered prices.

Nevertheless, crude prices are still only about half their mid-2014 levels.