Repsol-YPF, Petrobras to allow asset acquisition
Repsol-YPF SA has signed an agreement with Petroleo Brasileiro SA that will allow both firms to acquire assets owned by the other. The deal is expected to lead to a 20% reduction of Repsol-YPF�s dominant share of the fuels market in Argentina while giving it a solid toehold in the much larger Brazilian market.
RIO DE JANEIRO�Repsol-YPF SA has signed an agreement with Petroleo Brasileiro SA that will allow both firms to acquire assets owned by the other. The deal is expected to lead to a 20% reduction of Repsol-YPF�s dominant share of the fuels market in Argentina while giving it a solid toehold in the much larger Brazilian market.
The Spanish-Argentine major did not say if Petrobras is about to let it obtain a minority stake in a refinery in southern Brazil, as had been rumored in recent weeks. Both sides set a June 30 deadline for placing a value on assets to be sold or swapped.
Petrobras, in turn, will work with Repsol-YPF to raise its profile upstream in the other Southern Cone countries of South America (Argentina, Bolivia, Chile, Paraguay, and Uruguay). No further details were provided. Separately, the two firms signed an agreement to begin studying joint measures to increase their participation in new markets for natural gas in the Southern Cone, including supply for power generation.
Repsol-YPF has been under heavy pressure from the Argentine government to shed downstream assets in order to allow more competition in the aviation, diesel, and gasoline markets. Repsol-YPF has a market share of about 50% and thus has taken much of the heat over the spike in fuels prices stemming from the runup in crude oil prices. Royal Dutch/Shell and ExxonMobil Corp. hold much of the remaining gasoline market in Brazil.
Argentina Energy Sec. Daniel Montamat blasted the refiner-marketers for its marketing practices, alleging there is no serious competition in Argentina�s fuels market. Officials also have called on Repsol-YPF CEO Alfonso Cortina to honor his pledge to divest downstream assets belonging to the firm�s Astra subsidiary prior to Repsol�s purchase of YPF in May 1999. Astra operates or owns about 790 service stations and has a stake in a small refinery.
Argentina President Fernando de la Rua looks favorably upon Petrobras�s likely entry into the fuels market there, as he is anxious to promote bilateral investment and trade with Brazil. Petrobras�s deepwater drilling technology could also help YPF explore untapped areas off Argentina with oil and gas-bearing potential.