Mexico’s government-controlled PEMEX oil business is seeking to buy a further interest in Spain’s Repsol petroleum company. According to sources in Spain, Pemex is looking for an allied investor willing to front financing so that it can buy an additional 10 percent share of the Spanish government-owned concern. Pemex already owns 9.3 percent of Repsol. It is believed that Mexican plutocrat Carlos Slim, who already has significant interests in telecommunication, may be the independent investor to whom Pemex might recur. At the closing of the market on November 18, Repsol’s stock stood at 18.66 euros. Ten percent of Repsol would thus cost more than 2.4 million euros.
It is possible that Spanish president Mariano Rajoy would have been informed of the move by Mexican president Enrique Peña Nieto during the Iberoamerican Summit held in October.
Spain’s leading savings bank, Barcelona’s La Caixa, which heretofore has been a major investor in Repsol, is reducing its holdings in the oil company in order to comply with new banking laws. Earlier in November, La Caixa announced that it was issuing convertible bonds for Repsol stock. The bank currently owns 12.02 percent of Repsol, but could reduce this to 9.52 percent if the bonds are converted. This would mean that within three years – when the bonds become convertible, with a level of ownership similar to that of Pemex currently.
Carlos Slim is an ally of La Caixa, and is buying up interests in economically distressed Spain. This summer, Slim bought 0.5 percent of the Fenosa natural gas company while keeping his options open to purchase up to 3 percent. This move apparently flustered the directors of Fenosa and Repsol’s president Antonio Brufau. La Caixa currently owns 34 percent and Repsol owns 30 percent of Fenosa, and are thus the biggest stock holders. Adding to their consternation is the fact that Slim bought 6 percent of Argentina’s YPF petroleum company before it was bought out by Repsol in 1993. In 1999, 51 percent of YPF was renationalized by the Argentine government.
Relations between Pemex and Repsol have been rocky of late. Pemex CEO Emilio Lozoya said in recent days “I am very disappointed with Repsol’s development under Brufau’s watch. We want better results for our investment in the company.” However, Pemex is currently a loser: during the last quarter, Pemex lost 2.3 million euros, Repsol showed a profit of 356 million euros.
Observers say that Pemex is looking to obtain petroleum exploration technology and experience that Repsol has gained, especially in deepwater exploration in booming Brazil.
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