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Repsol accepts Argentina YPF compensation deal

Spanish oil giant Repsol said on Tuesday it had agreed to accept a €3.6 billion ($5 billion) compensation package from Argentina for the country's controversial seizure of its subsidiary YPF.

Repsol accepts Argentina YPF compensation deal
Repsol's 51 per cent stake in YPF was controvertially expropriated by the Argentinian government in 2012. Photo: JUAN VARGAS/NA/AFP

The deal seeks to repair the financial hit taken by Repsol when Argentina's President Cristina Kirchner ordered the nationalization of Repsol's 51 per cent stake in YPF in April 2012.

"The agreement reached between the Republic of Argentina and Repsol recognises the company's right to receive $5 billion as compensation for the expropriation of 51 per cent of the shares of YPF," Repsol said in a statement.

The amount is to be paid in Argentine government bonds. The agreement has yet to be approved by Repsol shareholders and the Argentine parliament.

The deal "stipulates guarantees for effective payment as well as the termination of all judicial and arbitration proceedings and the reciprocal waiver of future claims", the statement added.

The expropriation soured relations between Argentina and Spain and sparked international outrage including from Spain's European Union partners.

Kirchner blamed it on Repsol's failure to make agreed investments in the firm. Spain saw it as a blow to its strategic interests.

The nationalization of its subsidiary in Argentina hit Repsol's profits hard in 2013, it said on Tuesday in a separate statement announcing its annual results.

Its net profits slumped by 90 per cent in 2013 to €195 million, it said.

At "constant cost of supply", a measure which Repsol says makes its results comparable to those of US oil companies, it recorded net profits of €1.8 billion, down by 6.7 per cent from the previous year.

Repsol said last week that the expropriation of IPF forced it to make provisions of €1.28 billion in 2013, hitting its financial results.

Settlement of the dispute could help to lure investment to the vast Vaca Muerta shale oil and gas field in Argentina, discovered by YPF in 2010.

It is estimated to contain the equivalent of 22.8 billion barrels of oil, described by Repsol at the time as the largest discovery in its history.

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OIL

NGOs take Norway to European Court over Arctic oil exploration

Two NGOs and six young climate activists have decided to take Norway to the European Court of Human Rights (ECHR) to demand the cancellation of oil permits in the Arctic, Greenpeace announced on Tuesday.

NGOs take Norway to European Court over Arctic oil exploration
Northern Norway. Photo by Vidar Nordli-Mathisen on Unsplash.

It’s the latest turn in a legal tussle between environmental organisations Greenpeace and Young Friends of the Earth Norway on one side and the Norwegian state on the other.

The organisations are demanding the government cancel 10 oil exploration licenses in the Barents Sea awarded in 2016, arguing it was unconstitutional.

Referring to the Paris Agreement, which seeks to limit global warming to less than two degrees Celsius above pre-industrial levels, the organisations claim that the oil licenses violated article 112 of Norway’s constitution, guaranteeing everyone the right to a healthy environment.”

The six activists, alongside Greenpeace Nordic and Young Friends of the Earth Norway, hope that the European Court of Human Rights will hear their case and find that Norway’s oil expansion is in breach of human rights,” Greenpeace said in a statement.

In December, Norway’s Supreme Court rejected the claim brought by the organisations, their third successive legal defeat.

READ MORE: Norway sees oil in its future despite IEA’s warnings 

While most of the judges on the court agreed that article 112 could be invoked if the state failed to meet its climate and environmental obligations– they did not think it was applicable in this case.

The court also held that the granting of oil permits was not contrary to the European Convention on Human Rights, in part because they did not represent “a real and immediate risk” to life and physical integrity.

“The young activists and the environmental organisations argue that this judgment was flawed, as it discounted the significance of their environmental constitutional rights and did not take into account an accurate assessment of the consequences of climate change for the coming generations,” Greenpeace said.

On Friday, the Norwegian government unveiled a white paper on the country’s energy future, which still includes oil exploration despite a warning from the International Energy Agency (IEA).

The IEA recently warned that all future fossil fuel projects must be scrapped if the world is to reach net-zero carbon emissions by 2050.

The Norwegian case is an example of a global trend in which climate activists are increasingly turning to courts to pursue their agenda.

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