31 May 2012Spanish oil giant Repsol said yesterday it will invest 19.1 billion euros over the next four years as part of a new strategic plan developed in response to the nationalization of its Argentine unit YPF.
The bulk of the money -- 12.6 billion euros ($15.8 billion) -- will go towards developing ten new exploration projects in Algeria, Brazil, Bolivia, Russia, the United States, Spain, Peru and Venezuela, it said in a statement.
The company is seeking to reassure investors over its future after Argentine President Cristina Kirchner signed a bill earlier this month nationalizing oil and gas producer YPF, which Repsol had controlled with a 51 percent stake.
Repsol was left with 6.4 percent of YPF, Argentinas leading oil and gas company, following the nationalization.
The expropriation of YPF caused us in a certain way to question everything and refocus, regain our strength, Repsol president Antonio Brafau told a news conference called to outline the companys 2012-16 strategic plan.
Best Out of Bad Situation
Repsol has margin to grow on its own, independently of what happened with YPF. This company is about more than YPF. Repsol said it plans to pump 500,000 barrels of oil equivalent a day by 2016, a yearly production growth rate of more than 7 percent. The company had previously forecast growth of 3 to 4 percent for the period.
The rise in production would lead its 2016 net profit to be 1.8 times the 1.7 billion euros it posted last year, the company said.
Repsols strategy is a brave attempt to make the best out of a bad situation, said Stuart Joyner, oil and gas analyst at Investec.
It is a package of measures designed to show that it can survive the loss of YPF. Repsol dpends strongly on one country, Brazil, where the execution risks are high, he added.
The company said it would slash its dividend payout ratio to conserve cash in the wake of the nationalisation of its Argentine unit.
Repsol said its dividend payout ratio through 2016 will fall to 40-55 percent, from a previous range of 50-60 percent.
Kirchner has argued that the nationalisation of YPF was justified because Argentina faces sharp rises in its bill for imported oil, and Repsol had failed to make agreed investments needed to expand domestic production.
Brafau said Repsol would seek compensation of at least 8.0 billion euros from Argentina for its expropriated shares.
We will do everything that is necessary, either through dialogue or the courts, to reover what belongs to us, he said.
Argentina counters that Repsol is leaving $9 billion in debt, while in just over a decade it earned more than $15.7 billion, most of it sent overseas and not