BUENOS AIRES, Argentina (AP) -- Repsol said Wednesday its board has approved negotiations for terms of payment by Argentina to compensate the Spanish energy giant for last year's expropriation of its YPF division and its vast holdings of unconventional oil and gas fields.
Investment bankers hired by Repsol will negotiate with Argentina "with the objective of finding a fair, effective and quick solution of the controversy," Repsol said in a statement after the board met in Madrid. A tentative deal on talks was reached Monday in Buenos Aires by company executives, Spanish and Argentine officials and the chief executive of Mexico's state oil company, Pemex, which holds a minority stake in YPF.
Repsol's statement didn't list a value for compensation, but a person with direct knowledge of the preliminary deal put it at $5 billion in Argentine bonds denominated in U.S. dollars. In return, Repsol would drop legal action against Argentina, said the person, who agreed to discuss details of the deal only if not quoted by name.
A finalized agreement could pave the way for Pemex to join the exploration of Argentina's vast Vaca Muerta shale oil and gas deposit. President Cristina Fernandez called her Mexican counterpart, Enrique Pena Nieto, on Wednesday to thank him for the "key role" played by Pemex in reaching a deal.
The presidency site said Fernandez planned to call Spanish Prime Minister Mariano Rajoy to thank him for the help of Spanish minister Jose Manuel Soria in the negotiations.
The seizure of YPF last year angered Spain and led to harsh criticism of Argentina by the European Union, the United States and some Latin American leaders. Argentina claimed Repsol was not investing enough in the country's oil industry — a charge vigorously denied by Repsol.
The expropriation of Argentina's former national oil company, privatized in the 1990s, was hugely popular among Argentines who blame privatizations and other free-market policies of that decade for the country's economic crisis and debt default in 2001-2002.
Argentina has the world's third-largest deposits of shale oil and gas, but needs international help to develop them. So far, Chevron Corp. is the only major oil company that has made a commitment to help develop the fields.
Repsol originally argued its 51 percent stake in YPF was worth $10.5 billion, but apparently decided it was better to accept half the compensation it originally demanded now rather than wait years until courts settled the case.
Economic analysts were optimistic about the deal. "For Argentina it was crucial to reach this agreement," said a former energy secretary, Emilio Apud. "It's definitely a first step toward recovering trust in the government."
It is also welcome news for Repsol and Spain, ending 18 months of tensions that started just as Spain was teetering on the edge of possible financial collapse.
The expropriation came "at a bad point where Spain was fighting to keep international credibility to commercial interests and Spanish interests abroad, and it was an especially hard blow with a key partner in Latin America," said Antonio Barroso, a London- based analyst with the Teneo Intelligence consulting firm.
A settlement is good news for other big Spanish companies doing business in Argentina, Barosso said. He said investors and Spanish executives feared the YPF expropriation could "set a very dangerous precedent for other industries and in bilateral relations for the two countries."
Aldo Abram, an economist at Buenos Aires-based Exante consulting group, said the deal was a strong signal that investor rights will be protected. "There will be more possibilities that people will want to invest their money in Argentina," he said.
The resolution is expected to help YPF regain deals with foreign companies that had stayed away from Vaca Muerta in fear of possible legal action by Repsol.
"Pemex is carrying out a strategy that allows foreign companies to partner in exploration and there's no doubt that Vaca Muerta is very attractive," said Arturo Carranza, a Mexican analyst for Solana Consultores.
Although Pemex lacks the experience for these types of projects, Carranza said it could strike deals with other major oil companies to strengthen its workforce.
"For Pemex it would be very attractive to have some experience in the exploitation of these kinds of fields because in northern Mexico we have projects similar to Vaca Muerta," he said. "We could gain experience and the technology to explore our own fields."
Associated Press writers Debora Rey in Buenos Aires, Alan Clendenning in Madrid, Eduardo Castillo in Mexico City and Luis Andres Henao in Santiago, Chile, contributed to this report.