November 20, 2013 / 11:49 PM / in 4 years

Mexico Pemex CEO criticizes Repsol chairman's pay

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 tussle over the handling of a dispute involving 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

Emilio Lozoya, CEO of Pemex - which has a 9.4 percent stake in Repsol - also told Mexico’s Congress that the oil giant was not looking to tie up with Mexican billionaire tycoon Carlos Slim in a bid to oust Repsol Chairman Antonio Brufau.

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 YPF as part of its bid to work on projects outside Mexico, stoking differences between Pemex and Repsol.

Pemex 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.

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.

Lozoya said a 22 million euro severance package for Brufau should he leave Repsol was another example of excessive compensation given the company’s recent returns.

“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 Brufau took over.

Repsol declined to comment.

Repsol’s shares have risen 12.8 percent since October 2004, when Brufau took over as CEO of Repsol. By comparison, the share price of Norway’s Statoil rose 41.8 percent during the same period while oil major BP (BP.L) has fallen 9.6 percent, according to Thomson Reuters data.

“All oil companies are different, so they are not easily comparable,” said David Shields, an independent oil analyst based in Mexico City.

“Who invests in Spanish companies when Spain is going down the drain? That’s what Pemex did,” said Shields, noting Spain’s feeble economic performance in recent years.

PROFITS VERSUS INVESTMENTS

But 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.

Separately, Spain’s ABC newspaper reported on Tuesday that Pemex wanted 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.

In August, Mexican 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 and Diane Craft

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