Alarm grows over Russian swoop for Spanish oil firm

Business Materials 21 November 2008 18:26 (UTC +04:00)

Concern was mounting in Spain on Friday over a possible Russian purchase of nearly 30 per cent of the country's largest oil company Repsol YPF, with the governing Socialists appearing divided over the issue, reported dpa.

Repsol should remain a "clearly Spanish and independent" company, senior European affairs official Diego Lopez Garrido said amid reports that the Russian oil giant Lukoil was about to become Repsol's main shareholder.

The possibilities of a Russian company entering the strategic energy sector might depend on whether Moscow offered reciprocity to Spanish companies, Lopez Garrido also said.

Lopez Garrido's comments partly echoed those of Industry Minister Miguel Sebastian, who earlier stressed the need for Repsol to remain in Spanish hands.

Prime Minister Jose Luis Rodriguez Zapatero, however, did not exclude the possibility of a deal with Lukoil, stressing the private nature of the company.

European Economic and Monetary Affairs Commissioner Joaquin Almunia said the principle of reciprocity applied to private companies such as Lukoil.

"It is logical for there to be a treatment of equality for investors, not only in Spain but also for Spanish investors when they go to other countries," Almunia said in Madrid.

The private ownership of Lukoil was irrelevant given that the Russian government "controls big companies," the daily El Mundo argued, warning that the Russian ruling class could "take control of the energy market in our country."

The daily El Pais said the possible deal re-awakened fears of Russian domination over European energy markets.

Several Spanish opposition parties have expressed similar concerns.

Lukoil meanwhile apparently moved closer to a deal as La Caixa bank announced it was willing to sell the Russian company a part of its stake in Repsol.

La Caixa said it would sell Lukoil a part of the 12.5 per cent stake owned by its holding company Criteria, if Lukoil also reached a deal with construction group Sacyr Vallehermoso to acquire its 20 per cent stake, and if the deal could be financed.

Criteria and Sacyr were believed to be in talks with Lukoil about the deal, which was estimated to be worth about 9 billion euros (11 billion dollars).

Sacyr, which has been hit by Spain's construction crisis, has accrued significant debts, while La Caixa needs an injection of liquidity because of the global financial crisis, according to analysts.

Buying more than 30 per cent of Repsol would force Lukoil to launch a bid for the entire company.

La Caixa was meeting with bank representatives to seek financing for the deal, the bank told the stock market watchdog CNMV.

The CNMV temporarily suspended trading in the stocks of Repsol and Criteria during the morning hours.