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Argentina, Repsol in talks regarding YPF compensation: Argentina

People walk past a YPF petrol station in Buenos Aires November 26, 2013. REUTERS/Marcos Brindicci

BUENOS AIRES (Reuters) - Argentina has begun talks with Repsol (REP.MC) about compensation to the Spanish oil major for last year´s nationalization of the South American country's top oil company, YPF (YPFD.BA), a government official said on Thursday.

Argentine cabinet chief Jorge Capitanich told reporters that the long-awaited negotiations had begun but declined to elaborate on the progress or location of the talks.

"Negotiations with Repsol have begun. They are meeting," Capitanich told a news conference.

Argentina and Repsol struck a preliminary deal last week over compensation for the 2012 seizure of the Spanish company's majority stake in YPF. Sources have said Argentina is offering a compensation package worth $5 billion, half the sum Repsol was initially demanding.

Details of the settlement, which is likely to be paid in 10-year U.S. dollar denominated Argentine bonds, are expected to be ironed out in the coming weeks.

(Reporting by Hugh Bronstein; Editing by Bob Burgdorfer)