Spanish oil giant Repsol says it has agreed to accept $US5 billion ($A5.55 billion) in compensation from Argentina for the country's seizure of its subsidiary YPF.
The deal seeks to repair the financial hit taken by Repsol when Argentina's President Cristina Kirchner stunned the international financial community in April 2012 by ordering the nationalisation of Repsol's 51-per cent stake in YPF.
"The agreement reached between the Republic of Argentina and Repsol recognises the company's right to receive $US5 billion as compensation for the expropriation of 51 per cent of the shares of YPF," Repsol said in a statement on Tuesday.
The amount is to be paid in Argentine government bonds. The agreement has yet to be approved by Repsol shareholders and the Argentine parliament.
The deal "stipulates guarantees for effective payment as well as the termination of all judicial and arbitration proceedings and the reciprocal waiver of future claims," the statement added.
The expropriation soured relations between Argentina and Spain and sparked international outrage including from Spain's European Union partners.
Kirchner blamed it on Repsol's failure to make agreed investments in the firm. Spain saw it as a blow to its strategic interests.
The nationalisation of its subsidiary in Argentina forced Repsol to make provisions of 1.28 billion euros ($A1.96 billion) in 2013, the company said last week.
Settlement of the dispute could help to lure investment to the vast Vaca Muerta shale oil and gas field in Argentina, discovered by YPF in 2010.
It is estimated to contain the equivalent of 22.8 billion barrels of oil, described by Repsol at the time as the largest discovery in its history.
