Repsol, Pluspetrol eye Latin America accord

Spain's Repsol SA and Argentina's Pluspetrol Energy SA have agreed to form an alliance to build an integrated gas business in Latin America. Under the deal, Repsol's Astra affiliate in Argentina will take a 45% shareholding in Pluspetrol for $340 million. Meanwhile, Repsol has reportedly scheduled full privatization for March or April 1997, when the Spanish government sells its remaining 10% stake in the company. The sale is expected to be worth 150 billion pesetas ($1.1 billion) at

Feb. 3, 1997

2 min read

Spain's Repsol SA and Argentina's Pluspetrol Energy SA have agreed to form an alliance to build an integrated gas business in Latin America.

Under the deal, Repsol's Astra affiliate in Argentina will take a 45% shareholding in Pluspetrol for $340 million.

Meanwhile, Repsol has reportedly scheduled full privatization for March or April 1997, when the Spanish government sells its remaining 10% stake in the company. The sale is expected to be worth 150 billion pesetas ($1.1 billion) at current market prices.

Gas alliance

A spokesman for the partners said the deal arises from Pluspetrol's decision in 1995 to split into three divisions: international exploration and production operations, Argentine exploration and production, and gas operations.

This third unit is the partner in the Repsol deal and has assets including a 60% interest in Ramos field-Argentina's second largest gas field-and outright ownership of a gas-fired power plant in Tucuman province.

The power plant is already operational but is currently being expanded to have capacity to supply 460 MW of electric power.

The spokesman said Ramos field currently produces 8 billion cu m/year of gas, but the venture partners will increase output to 11 billion cu m/year by 1998.

This is intended to release a significant amount of non-contracted gas production to be used as a lever for entry into new gas projects in rapidly developing markets in northwestern Argentina, northern Chile, and Brazil.

The companies intend to develop and acquire new assets in gas production, transportation and supply, and electricity generation, distribution, and supply.

The split of operations within Pluspetrol was carried out to give more strategic focus to the company and enable downstream gas operations to raise capital without being linked to the company's risk profile in exploration.