November 20, 2013 / 7:19 PM / 5 years ago

Mexico Pemex CEO criticizes Repsol chairman's earnings

MEXICO CITY (Reuters) - The chief executive of Mexico’s state-run oil monopoly Pemex PEMX.UL on Wednesday criticized the compensation paid to the chairman of Spain’s Repsol (REP.MC) as excessive, amid a dispute between the two that originated from Argentina.

Antonio Brufau, chairman of Spanish oil company Repsol, speaks during a ceremony to present company's strategic plan in Madrid May 29, 2012. REUTERS/Sergio Perez

CEO Emilio Lozoya also told Mexico’s Congress that Pemex was not looking to tie up with tycoon Carlos Slim in a bid to oust Repsol Chairman Antonio Brufau.

Spain’s ABC newspaper reported on Tuesday that Pemex wanted billionaire Slim to buy a stake in Spain’s Repsol to gain more say on Repsol’s board. Spokesmen for Slim and Pemex have denied it.

Pemex has a 9.4 percent stake in Repsol, and has no plans to buy a larger stake, a Pemex spokesman said on Tuesday. It has in the past threatened to sell out of Repsol due to differences with Brufau.

“Our criticism has been about the compensation .. of the administration,” Lozoya told a Congressional hearing. “$8 million a year for the chairman given results that are significantly below those of the rest of its competitors.”

“This relationship between shareholder return and compensation for the administration is completely outside international norms,” he added. Lozoya said Pemex’s return on its stake in Repsol had been “zero” since it bought in.

He said that the average return for European oil companies had been 87 percent, for international oil majors 69 percent, and Repsol’s performance could not be blamed on the YPF expropriation.

Brufau was paid more than 7 million euros ($9.42 million) in 2012, making him one of Spain’s highest-paid executives, including retirement payments of 2.7 million euros which he has said he will renounce in the future.

Repsol’s shares have risen 12.8 percent since Brufau became boss in 2004, versus a 19 percent rise for Royal Dutch Shell, a 9.4 percent rise for France’s Total, a 8.9 percent decline for BP and a 44 percent fall for Italy’s ENI over the same period.

The Spanish company pays an 0.95 euro per share dividend, with a dividend yield in line with European peers at 5 times.

However, some investors want more profits to be returned to shareholders rather than invested in new exploration and production projects.

This was the main point of contention when Pemex teamed up with shareholder Sacyr SVO.MC in a failed attempt to overthrow Brufau in 2011.

While Repsol has said it remains committed to investing in new projects, other European integrated oil majors have recently promised to control spending and put more cash in the pockets of investors.

Repsol’s production has risen 7 percent so far this year, outstripping an average 2-3 percent output growth for peers.

Pemex on Tuesday reiterated in a filing with the U.S. Securities and Exchange Commission that half of its stake in Repsol has been registered with “available for sale” status.

Argentina seized Repsol’s majority stake in Buenos Aires-based energy firm YPF (YPFD.BA) last year, arguing it had not done enough to invest in output.

Since then Repsol has vowed to sue any firm that partners with YPF, to cover losses stemming from the expropriation which it says merits a $10.5 billion reimbursement. Pemex has disagreed with Repsol’s strategy.

The Mexican oil monopoly has had talks about the prospect of exploiting the vast Vaca Muerta shale field owned by Argentine state energy firm YPF (YPFD.BA) as part of its bid to work on projects outside Mexico, stoking differences between Pemex and Repsol.

In August, President Enrique Pena Nieto proposed an energy sector overhaul that seeks to lure billions of dollars in foreign and private investment to boost the country’s oil and gas sector. It is the axis of a wider economic reform push that spans telecoms to taxes.

Mexico’s Congress is expected to vote on the energy reform before the end of the year.

($1 = 0.7428 euros)

Reporting by Ana Isabel Martinez and David Alire Garcia in Mexico City and Tracy Rucinski and Andres Gonzalez in Madrid; Writing by Simon Gardner; editing by Andrew Hay

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