Repsol Boss Snubs The Russians

The oil and gas company chief said he would resign if it doesn't remain Spanish and independent.

Spanish oil and gas company Repsol's chairman, Antoni Brufau, said last week he would resign if the company did not remain Spanish, independent and private: "If these conditions are not met, I will no longer head up the company." The statement appears to underscore Spaniards' unhappiness about a possible sale of a substantial stake in the company's to Russia's Lukoil.

Since the news broke that Lukoil (other-otc: LUKOY - news - people ), Russia's second-biggest oil producer, was in talks with Spanish building company Sacyr Vallehermoso (other-otc: SYRVF - news - people ) and savings bank La Caixa to buy a stake in Repsol, Brufau has reiterated the importance of maintaining these conditions. Anyone who buys a significant stake but does not launch a takeover bid must abide by Repsol's statutes, which restrict voting rights to stakes of 10.0%, Brufau said. He also said the company cannot be controlled by a shareholder who holds a 30.0% stake. "Losing control of the company as a result of a transaction that doesn't involve a takeover bid, will not have me at the forefront [of that company]. I say it clearly."

Last week, Spanish Prime Minister Jose Luis Rodriguez Zapatero also said his country will fight to keep Repsol Spanish and independent.

Two of Repsol's primary stockholders have said that they were in talks with the Russian oil company to sell their stake. Holding company Criteria Caixa (other-otc: CIXPF - news - people ), the investment arm of La Caixa, holds a 12.5% stake in Repsol. La Caixa said it would sell part of its stake if debt-laden Spanish builder Sacyr Vallehermoso, Repsol's biggest shareholder with a 20.0% stake, also reaches an agreement to sell.

But fresh reports suggest that Lukoil's ambitions to expand in Spain may yet be checked. The chairman of Sacyr Vallehermoso, Luis del Rivero, has asked for government aid as an alternative to selling its stake to Lukoil, according to a report in El Mundo newspaper, citing sources involved in the talks.

Sacyr Vallehermoso, which put its Repsol stake up for sale in September as it struggled with a falling property market and massive debt, declined to comment. At 30.00 euros ($37.81) per share, 30.0% of Repsol is worth 11.25 billion euros ($14.09 billion). Lukoil is reportedly interested in acquiring a 30.0% stake in the company, which would turn it into a majority shareholder. Repsol is trading at roughly half the price from the original 30 euros per share Sacyr paid for the shares in 2006.

The possible sale has sparked political concerns that Spain's biggest oil producer could end up in Russian control. (See "Tug-Of-War Over Repsol.") Shares of Repsol (nyse: REP - news - people ) rose 1.15% on Thursday morning in Madrid.

[Source: Por Javier Espinoza, Forbes, Madrid, 07Dec08]

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