Monday, May 7, 2012

Repsol warns oil giants to sue if they join YPF, British paper

Spain-based energy group Repsol has sent letters to oil majors including Exxon, Chevron and ConcoPhillips warning it would sue if they try to invest in YPF or its assets, according to British newspaper The Financial Times.

According to the newspaper, whose staff had access to the documents, the letters were sent today emphasizing that “Repsol would take actions and/or legal proceedings necessary to protect our investment … to prevent any improper interference or unfair competition by third parties seeking to take advantage of the current circumstances to directly or indirectly acquire interests in YPF assets in which we have an interest”.

It said it could also sue companies which “profit at the expense [of Repsol]” or take any steps “prejudicing Repsol’s ability to fully defend and recover its rights”.

The letters allegedly conclude saying “We [Repsol] are confident that we will count on your understanding and support.”

After the expropriation of Argentina’s biggest company, which left Respol with a 6.4 percent stake, Repsol has called the nationalisation “unconstitutional, discriminatory and unlawful”.

President Cristina Fernández de Kirchner appointed Miguel Galuccio as new YPF chief until shareholders meet on June 4 to elect a new board.

The Argentine government needs deep-pocketed partners to help YPF develop Vaca Muerta, which is considered the world’s third largest shale reserves – oil and gas trapped deep in the earth’s bedrock that require costly, high-tech drilling to extract.

Planning Minister Julio De Vido, and Economy Deputy Minister, who were put in charge of YPF by decree on April 16, have already sounded out Total of France, Petrobras of Brazil and US companies Chevron, ConocoPhillips, ExxonMobil and Apache Corp about partnering YPF, but there have been no announcements.

Repsol said earlier this year it had discovered 1.5 billion barrels in contingent reserves it expected could be extracted – in Vaca Muerta, of which 1.2 billion would be attributable to YPF. Of that, 116 million were classified as reserves, meaning the investment decision to develop them had been taken. In all, it said Vaca Muerta had total prospective reserves of more than 21 billion barrels.