South America Inc
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Repsol Redefines Its Strategy for Latin America
From Universia Knowledge@ Wharton
On May 11, Repsol-YPF, the Spanish petroleum company, announced its latest find: the discovery of hydrocarbons in Brazil’s Santos Basin. The discovery, baptized Panoramix, is located 180 kilometers off the coast of the state of Sao Paulo. In addition to its significant potential for gas and liquids, the find reinforces the company’s commitment in Brazil, where it has made three great discoveries in the first five months of 2009. The first, Piracuca, was made in January. Three months later, Repsol-YPF confirmed its economic viability. The second, also located in the Santos Basin and named Iguazú, was confirmed in April. The third, Panoramix, has just started up. These discoveries fall within the new strategic map that Repsol is drawing up in Latin America, which will permit the company to reduce its exposure to the decisions made by some governments in the region, including Ecuador, Bolivia, Venezuela and Argentina. In addition, the firm is turning its attention toward North America, where it is eyeing the possibility of supplying energy to the United States.
Repsol, headed by Antonio Brufau, has undergone tough times in recent years. Populism peaked in several countries in the region, putting at risk a large part of Repsol’s investments. The “Argentinization” of YPF, on the part of Argentina’s president Cristina Kirchner followed expropriations by Bolivia, Venezuela and Ecuador. With the arrival of Kirchner to the presidency, the government began a process aimed at recovering the capital of YPF, almost a decade after it was acquired by the Spanish company Repsol. This forced the company to diplomatically try to save as much of its investments as it could, since it lost 25% of its reserves in two years. However, at the same time, it was redesigning its strategy in the region, as part of its Strategic Plan 2008-2012, aware that it had to reduce its exposure to these countries, and that it had to respond to them not only with good words but also with powerful moves. And in Brazil, it has found one of the most important of such moves. >>>>Go to Full Story >>>