Spain’s energy conglomerate Repsol has had an interesting few months in Latin America.
In 1999 Repsol bought Argentina’s Yacimientos Petroliferos Fiscales (YPF), creating Respol-YPF to begin exploiting Argentina’s vast Vaca Muerta shale gas concession, estimated to contain nearly 22.5 billion barrels of recoverable oil and natural gas. Battered by rising energy import bills and frustrated by Respol-YPF’s sluggish development of the concession, last month the Argentinean government nationalized the concession, provoking howls of protest not only from Repsol but the European Union as well. Repsol promptly demanded $10.5 billion in compensation.
But don’t cry for me, Repsol. Repsol’s first quarter 2012 results indicate that the company is still doing quite well despite the Argentinean debacle, as it posted net income of $804 million, 12.4 percent higher than the $716 million reported in the year-earlier period. Including YPF, quarterly net profit rose to $991 million, an improvement of 3.5 percent from $957 million in 2011.
Accordingly, Repsol’s brave new frontier in Latin America is Brazil.