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Repsol receives offers for Argentine arm
Financial Times
July 02, 2009

By Victor Mallet in Madrid

Repsol YPF, the Spanish oil group, on Thursday confirmed that it had received offers to buy part of YPF, its Argentine company, in a putative deal that could be worth billions of euros and ultimately help shore up the finances of some of Repsol's shareholders.

Reacting to media reports that Chinese bidders, including China National Petroleum Corp (CNPC), were negotiating to buy control of YPF. Repsol issued a statement reiterating its desire to sell part of its YPF stake, possibly through a public share offering.

"Repsol wants to make it known that it has received various proposals from different companies, although none of them is firm," it said in a statement issued via the market regulator in Spain.

The company first proposed a share offer of 20 per cent of YPF over a year ago, largely to diversify out of Argentina and release funds for investment in Brazil and elsewhere, but the plan was put on ice when the world markets collapsed.

Repsol executives still want to reduce the group's exposure to Argentina, which accounts for two-thirds of its oil production, but insist they intend to keep majority control of YPF.

Argentina is particularly worrisome for foreign investors in Latin America because the government has nationalised various foreign-controlled assets, including the Aerol neas Argentinas airline previously owned by Marsans of Spain. The Buenos Aires government has already made clear its desire to see more of YPF in local hands, which would preclude the sale of the whole company to CNPC.

Two years ago, Repsol was persuaded to sell a 15 per cent stake in YPF to the Argentinian Grupo Petersen, which also has an option to buy a further 10 per cent by 2012. That sale valued YPF at just under $15bn.

Hong Kong s South China Morning Post newspaper reported on Thursday that CNPC planned to revive its $17bn bid for YPF, while CNOOC, another Chinese oil group, was interested in a 25 per cent stake.

Major shareholders in Repsol, including Sacyr, the indebted Spanish construction group that has a 20 per cent stake, are eager to see a rise in the value of their Repsol shares in order to sell their holdings at a higher price.

Repsol shares were trading 2.8 per cent higher at 16.64 in the early afternoon in Madrid.

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