Latin America & Caribbean

Argentina's congress approves $5bn Repsol compensation

A refinery owned by YPF in Argentina Image copyright Reuters
Image caption Repsol initially demanded for $10bn in compensation, but eventually agreed to $5bn

Argentina's congress has given final approval to pay the Spanish oil giant Repsol $5bn (£3bn) in compensation for the nationalisation in 2012 of its stake in Argentine oil firm, YPF.

After a marathon 16-hour session, the Chamber of Deputies passed the settlement plan by 135 votes to 59.

The deal is seen as crucial in helping Argentina attract foreign investment in its shale oil and gas reserves, which are among the world's largest.

It has already been approved by Repsol.

The deal will come into effect immediately, as it has already been approved by the Senate and signed by President Cristina Fernandez de Kirchner.

'Key deal'

YPF is responsible for about a third of Argentina's oil and a quarter of its gas output.

Argentina is keen to develop the Vaca Muerta shale formation - a key YPF asset - but has so far struggled to attract investors, not least due to the uncertainty over the legal proceedings with Repsol.

As part of the settlement, Repsol agreed to drop its lawsuits against Argentina.

Congressman Mario Metaza said it was "invaluable to have concluded this settlement in a friendly way".

But during the long debate, many lawmakers spoke out against the deal, arguing the government was bowing to foreign pressure.

Claudia Lozano of the left-wing Popular Unity party said the government was giving Repsol "a prize for driving Argentina's energy resources into the ground".

When it seized Repsol's share in 2012, Argentina had accused the firm of not investing enough in YPF to increase output.

Margarita Stolbizer of the Generation for a National Encounter (GEN) party said that while she agreed compensation had to be paid, the figure was "too high".

Repsol had originally demanded $10bn.

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