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OIL

Repsol accepts Argentina YPF compensation deal

Spanish oil giant Repsol said on Tuesday it had agreed to accept a €3.6 billion ($5 billion) compensation package from Argentina for the country's controversial seizure of its subsidiary YPF.

Repsol accepts Argentina YPF compensation deal
Repsol's 51 per cent stake in YPF was controvertially expropriated by the Argentinian government in 2012. Photo: JUAN VARGAS/NA/AFP

The deal seeks to repair the financial hit taken by Repsol when Argentina's President Cristina Kirchner ordered the nationalization of Repsol's 51 per cent stake in YPF in April 2012.

"The agreement reached between the Republic of Argentina and Repsol recognises the company's right to receive $5 billion as compensation for the expropriation of 51 per cent of the shares of YPF," Repsol said in a statement.

The amount is to be paid in Argentine government bonds. The agreement has yet to be approved by Repsol shareholders and the Argentine parliament.

The deal "stipulates guarantees for effective payment as well as the termination of all judicial and arbitration proceedings and the reciprocal waiver of future claims", the statement added.

The expropriation soured relations between Argentina and Spain and sparked international outrage including from Spain's European Union partners.

Kirchner blamed it on Repsol's failure to make agreed investments in the firm. Spain saw it as a blow to its strategic interests.

The nationalization of its subsidiary in Argentina hit Repsol's profits hard in 2013, it said on Tuesday in a separate statement announcing its annual results.

Its net profits slumped by 90 per cent in 2013 to €195 million, it said.

At "constant cost of supply", a measure which Repsol says makes its results comparable to those of US oil companies, it recorded net profits of €1.8 billion, down by 6.7 per cent from the previous year.

Repsol said last week that the expropriation of IPF forced it to make provisions of €1.28 billion in 2013, hitting its financial results.

Settlement of the dispute could help to lure investment to the vast Vaca Muerta shale oil and gas field in Argentina, discovered by YPF in 2010.

It is estimated to contain the equivalent of 22.8 billion barrels of oil, described by Repsol at the time as the largest discovery in its history.

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ARGENTINA

One dead, one missing as Spanish fishing boat sinks near Argentina

One person has died and another is missing after a Spanish fishing vessel sank off Argentina on Wednesday (July 11), but 25 crew members have been rescued, the Argentine Navy said.

One dead, one missing as Spanish fishing boat sinks near Argentina
Photos: Handout pictures released by the Argentine Navy shows Spanish fishing vessel "Dorneda"

The crew of the Dornera were found at dawn in two rafts and a small boat, 308 nautical miles off Argentina's Patagonian coast, the Navy said in a statement.

Most of the crew are Spanish but there are also Moroccans, Peruvians and Indonesians amongst them, spokesman Enrique Balbi said.

The 25 survivors and dead sailor are aboard an Argentine fishing boat heading back to dry land and expected to arrive in Patagonia in around two days, Balbi told AFP.

To reach there, the Argentine boat must negotiate 570 kilometres of open water through a South Atlantic storm in the middle of winter, said Balbi.

The Dornera is believed to have capsized after being inundated by “a lot of water down the stern ramp where the fish nets are pulled up,” according to Balbi.

“The water entered the engine room and caused a power cut,” he said. “That made the boat uncontrollable in a storm.”

“Realizing a shipwreck was inevitable, the crew abandoned ship.” Balbi added: “At this time of year, adverse conditions created by low pressure generate a lot of wind and big waves. This can happen to any boat when there are big waves.”

Spain picked up a distress beacon and alerted the Argentine Navy, which sent out two fishing vessels to locate the sailors.

Balbi said the boat, owned by Spanish seafood company Freiremar, was fishing in international waters but that “it's still our search and rescue area”.

Two aircraft have been sent to Patagonia to help in the search and rescue operation for the missing sailor.