Spain’s Repsol Criticises Chevron over Vaca Muerta Shale Deal

on Jul 25, 2013
Listen, Thursday, July 25th: Spain’s Repsol SA (MCE:REP) has launched an attack on US energy giant Chevron Corp (NYSE:CVX) for signing a deal with Argentina’s YPF SA (NYSE:YPF), the Financial Times has reported. The Spanish oil and gas company, whose 51 percent stake in YPF was expropriated last year, described Chevron’s actions as “scandalous” and in violation of “the most elementary ethical principles”. Repsol’s share price was marginally down in morning trading in Madrid today. Chevron’s share price closed less than one percent lower in New York on Wednesday, whereas YPF’s share price lost 1.35 percent.

**Repsol Criticising Chevron over Deal with YPF**
The FT quoted Repsol as criticising Chevron for signing a deal with Argentina’s government to develop shale oil assets in Vaca Muerta, accusing the US company of “shamelessly applying double standards to its business dealings”.
Earlier in July, Chevron reached a final agreement with Buenos Aires-based YPF for an initial investment of approximately $1.24 billion (£820 million) in the future development of shale oil and gas resources from the Vaca Muerta formation. The deal, initially agreed last December, is the first major investment in Argentina’s oil sector since the government nationalised Repsol’s stake in YPF without compensation.

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**Repsol Lawsuits**
The FT reported that yesterday, Repsol filed a complaint against Argentina with the International Centre for Settlement of Investment Disputes (ICSID), the World Bank’s arbitration branch. The complaint, if successful, could see the Latin American country issued with a notice to cease any transactions related to assets of its YPF division. In addition, Repsol has already brought a lawsuit against YPF, Chevron and other companies looking to partner up with YPF in the Vaca Muerta assets.

The FT quoted Chevron as saying that it was “vigorously defending itself against Repsol’s allegations and believes there is no legal basis for its lawsuits”. YPF noted that Repsol still retained 11.8 percent in the renationalised company. “Therefore, YPF considers that the lack of ethics is on the part of those who are acting against the interests of the company in which they are shareholders,” an YPF spokesman noted, as quoted by the FT.

**Repsol Results Update**
!m[US Oil Major’s Actions Described as “Scandalous”](/uploads/story/4326/thumbs/pic1_inline.jpg)
Today, the Spanish company released its first-half results reporting that its net income during the period rose 2.6 percent to €1.054 billion (£907 million) as compared with the first half of 2012. Repsol pointed out that the increase was “especially significant as the year-earlier period included earnings from YPF”.

While Repsol’s output rose 12 percent during the first half to 359,700 barrels of oil equivalent per day, the company noted that its downstream division continued to be affected by the weakness in the Spanish local market which caused a fall in sales volumes.
**Repsol’s share price was 0.63 percent down at €17.24 in Madrid as of 10:20 BST on 25 July 2013.**
**Chevron’s share price closed 0.70 percent down at $126.37 in New York on July 24. YPF’s share price closed 1.35 percent down at $16.75.**


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