Spanish oil giant Repsol plans to invest $23.8 billion over the next four years in a strategic move to compensate for the loss of its Argentine gas and oil unit YPF to nationalization.
Most of the investment, or $15.8 billion, will go to new oil exploration projects in Spain, Russia, South America, the United States and Algeria.
Prior to nationalization, Repsol held a 51% stake in YPF. After nationalization, that stake fell to 6.4% but that stake could rise to 12% if another shareholder, Grupo Petersen, defaults on a loan to Repsol.
YPF was nationalized in early May by Argentine President Cristina Kirchner, who says nationalization was necessary to save Argentina from the rising cost of imported oil.
The government also claims Repsol failed to increase domestic oil production by not making agreed-upon investments and that Repsol neglected to reinvest the $15.7 billion the company earned during its time in Argentina, instead sending it overseas.
Repsol will leave Argentina with $9 billion in debt and is seeking $9.9 billion in compensation for expropriated shares.
New Strategic Plan
Repsol president Antonio Brafau says: "The expropriation of YPF caused us to question everything and refocus, regain our strength. Repsol has a margin to grow on its own, independently of what happened with YPF. This company is about more than YPF."
He added there are no plans for a merger as the outlook for the future is strong.
Repsol plans to increase oil product 7% to 500,000 barrels pumped per day. It also forecasts net profit in 2016 will be nearly double the $2.2 billion it posted in 2011.
Key Statistics - Global Crude Oil (source: MarketLine)
- In 2010, the global rude oil market grew by 32% and was valued at over $2 trillion.
- It is predicted the global crude oil market will be valued at $2.7 trillion in 2015 for a 27% increase since 2010.
- In 2010, the crude oil market grew 1.5%, reaching a volume of 27 billion barrels worldwide.
- It is predicted the global crude oil market will reach a volume of 30.5 billion barrels in 2015, or a 13% increase since 2010.
- Nearly 37% of the global crude oil market’s value is the Americas.