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Europe’s Repsol shareholders jump into epic battle over Argentina’s shale riches

Repsol YPF
AP Photo/Natacha Pisarenko
An Argentine flag, bottom, and a flag of the YPF oil company flutter in front of the YPF headquarters in Buenos Aires, Argentina, Monday, April…
Published This article is more than 2 years old.

European shareholders want to help pry Spanish oil firm Repsol from the jaws of the Argentine government. Repsol is suing the Argentine government for seizing 51% of YPF, the Argentine oil company formerly owned by Repsol. The company is also suing Chevron and other multinationals firms, which have since penned deals with YPF to develop the country’s rich shale resources. European shareholder organizations spent this week lobbying US investors in Repsol as well as the US Securities and Exchange Commission and the World Bank.

The lawsuits could take months or years to resolve, but the shareholders hope to shame the Argentine government into paying $10.5 billion for Repsol’s claim to the 51% stake in YPF. The shareholders also want to add their legal opinion to some of Repsol’s suits.

But chances are, Argentina wouldn’t obey a ruling in Repsol’s favor. The Argentine government has held out on $20 billion in legal fines for other cases over contract termination, bond defaults and other alleged violations.

“Argentina needs to attract foreign investors, not turn them off,” said Henning Wegener, director general of the Spanish Association of Minority Shareholders for Listed Companies, one of the shareholder groups helping Repsol. “Resolving the Repsol case would be a way to show the world that it welcomes foreign investors.”

Argentina also has bigger fish to fry, argues Wegener—namely a currency crisis and a decade-long fight with bondholders over its $100 billion default in 2001. In the meantime, the government will be busy gobbling up private assets to pay the bills.

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