Gazprom Says Repsol Talks Could Involve Asset Swap

Dow Jones Newswires

MOSCOW, Nov 26, 2006 (Dow Jones Newswires)

Russian natural gas company OAO Gazprom (GSPBEX.RS) said Friday that ongoing talks with Spanish-Argentine Repsol-YPF SA (REP) could result in an asset swap, although it declined to specify what assets may be under discussion.

Gazprom and Madrid-based oil and gas company Repsol signed a memorandum of understanding in October in which the two sides agreed to study possible "cooperation in Europe, Latin America and Africa," and the production of liquefied natural gas, or LNG, using Russian gas reserves.

The document specifically mentioned Gazprom's Baltic LNG project, which would ship LNG from a planned terminal near St. Petersburg to world markets.

Asked Friday whether talks could involve an asset swap, a Gazprom spokesman said: "It's possible, but it's still too early say what we might swap, or whether a swap might take place.... We're still in negotiations with Repsol on the memorandum that we have signed."

A spokesman for Repsol-YPF declined to comment immediately.

Earlier this month, Spanish daily La Vanguardia said that Repsol-YPF had been in talks with Gazprom's rival Russian company OAO Lukoil Holdings (LKOH.RS) about a possible share swap in a move widely seen as an attempt to increase oil and gas reserves.

Negotiations broke down because Lukoil wanted more than a 20% stake in Repsol-YPF in exchange for 12% of its own shares, according to the daily.

Repsol-YPF, a company with most of its reserves in Latin America and the Caribbean, has struggled to find new reserves. The company recently suffered a decrease in oil and gas production, largely due to the maturity of its Argentine fields.

The company has also been hit by legal and regulatory issues in Bolivia, and has suspended plans to list a small stake of its Argentine division YPF.

Gazprom has said it plans to expand into developed markets like Europe and the U.S. by swapping stakes in its vast upstream reserves for downstream assets from international oil and gas companies.

At 1552 GMT, Repsol-YPF shares were down EUR0.14, or 0.5%, at EUR27.66, in line with the wider Madrid market. At this price, the company has a EUR33- billion market value.

(David Roman in Madrid contributed to this report.)

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