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Business Recorder | 15 May 2016
Argentina agrees $217 million arbitration deal with energy companies
Argentina has agreed to pay $217 million to two energy companies in long-standing arbitration cases stemming from its 2001/02 economic crisis, part of the centre-right government’s efforts to lure back foreign investors. The country will pay damages to Britain’s BG Group, now owned by Royal Dutch Shell, and US firm El Paso Energy, now owned by Kinder Morgan, the Argentine finance ministry said in a statement late on Friday.
"Both agreements put an end to the claims and level the way to re-establishing direct investments, particularly from companies coming from the associated countries (Britain and the United States) and in the energy sector," the ministry said. The World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) had found in favour of both companies in 2014.
Last month, Argentina returned to global debt markets and paid off ’holdout’ creditors, 14 years after a massive sovereign debt default that triggered an exit of investors and a wave of litigation. New business-friendly President Mauricio Macri hopes closing that painful chapter in the country’s history will bring down borrowing costs across Latin America’s third-largest economy and attract the investment needed to kick-start growth.
The government is keen to move towards energy self-sufficiency and Macri has promised to increase investment in the oil sector, particularly in renewable energy and the sprawling Vaca Muerta shale formation in Patagonia. The payment will be via dollar-denominated bonds, the government said.