26 November 2013, News Wires – Argentina said on Tuesday that a pending deal with Spanish oil major Repsol is aimed at kick-starting shale drilling in the South American country, putting an end to the long stand-off between energy investors and President Cristina Fernandez.
Nineteen months after seizing control of Argentina’s main energy company YPF from Repsol, Fernandez’s government announced a preliminary deal late on Monday to pay Repsol for its nationalized shares.
The accord, expected to be approved by Repsol on Wednesday, could help Argentina repair a relationship with global investors left in tatters after the country’s 2002 sovereign default.
Tapping its vast shale reserves would also shore up central bank reserves drained in part by expensive oil imports.
The Repsol deal showed new flexibility on the part of Fernandez, whose policy model, marked by long-running feuds with private-sector investors from farmers to sovereign bondholders, was rejected by voters who shunned her candidates in the Oct. 27 congressional midterm.
The accord – in which Spain’s government was proposing Repsol receive $5 billion in compensation from Argentina – could set the stage for a radical increase in unconventional energy exploration. Early on Tuesday, Argentina’s new cabinet chief Jorge Capitanich said the government was out to attract investment in Vaca Muerta, the country’s massive shale oil and gas formation.