BUENOS AIRES, Nov 29 (Reuters) - Negotiations between Argentina and Repsol over compensation for the seizure of the Spanish oil major's controlling stake in energy company YPF will begin next week, the Argentine government said on Friday.
Repsol's board unanimously agreed on Wednesday to start talks on a preliminary agreement proposed by Argentina to settle the 18-month standoff.
"Next week the two parties will begin negotiating prices and conditions, and the instrument of payment," Cabinet chief Jorge Capitanich told reporters on Friday.
Capitanich said on Thursday the compensation will be paid with an Argentine bond, although the sum and terms have yet to be negotiated.
YPF shares have risen 13.76 percent since the preliminary agreement with Repsol was announced on Monday.
Sources with knowledge of the matter have told Reuters in Madrid the deal was worth $5 billion, half of what Repsol was initially demanding after Argentina seized its majority stake in YPF in 2012.
Repsol has not commented on the content of the preliminary agreement and the Argentine government has not disclosed details of its offer.
President Cristina Fernández nationalized 51 percent of YPF last year, arguing that the Spanish company had not made the investments required to revert the decline in the output and reserves of Argentina's main oil and gas company.
The seizure further damaged the financial credibility of Argentina, which has not recovered from a massive default in 2002 and ongoing legal battles with holdout bondholders.
Capitanich, who was appointed last week with instructions to restore investor confidence in Argentina, said the Fernandez administration was optimistic about reaching an agreement with Repsol.
"Argentina has tenaciously defended its legitimate interests," Capitanich said. He said the government's stance in the dispute has been "prudence, patience and perseverance."
A stumbling block in the talks could be the guarantees sought by Repsol and the terms of the assets used to compensate Repsol. Argentina has not tapped the international bond market since it defaulted a decade ago and any bond issued to pay Repsol would have to be subject to Argentine law, which would make the bond less liquid.
Repsol has hired an international investment bank to oversee the process.