BUENOS AIRES, April 24 (Reuters) - Argentina’s Congress gave final approval on Thursday to pay Repsol $5 billion in bonds to compensate the Spanish oil giant for the 2012 nationalization of Argentine energy company YPF.
The lower house of Congress passed the compensation plan by an early-morning vote of 135 to 59 following a marathon debate that started Wednesday noon. The plan had already been approved by Argentina’s Senate and Repsol’s board.
The settlement - pending since the government seized 51 percent of YPF from former parent Repsol two years ago - is vital to Argentina’s effort to attract investment to develop its promising Vaca Muerta shale oil and gas formation.
“It is invaluable to have concluded this settlement in a friendly way,” government-allied congressman Mario Metaza said during the debate.
A U.S. Department of Energy report has shown that Argentina has more natural gas trapped in shale rock than all of Europe at 774 trillion cubic feet, which could transform the outlook for Western hemisphere supply. The country’s shale gas reserves lag only those of China and the United States.
Confronted by falling dollar reserves, a weakening economy and inflation of more than 30 percent, Argentina has in the past three months made overtures to international investors by reversing some of the populist policies that defined President Cristina Fernandez’s first six years in office.
Since January, the government has cut heating gas subsidies, let the local peso currency devalue by 18 percent and revamped inflation reporting to more accurately reflect consumer prices. Fernandez’s final term in office ends in late 2015.
Investors, long put off by her antagonism toward big business, are interested in Argentina again and hoping that more pragmatic policies and prudent state spending bolster reserves and slow one of the world’s highest inflation rates.
Chevron Corp this month doubled down on its investment in Vaca Muerta, saying it and YPF plan to spend an extra $1.6 billion on new wells and exploration projects.
Reporting by Hugh Bronstein and Alejandro Lifschitz