Ganging Up Against Goliath.

SPAIN'S REPSOL, WHICH RECENTLY TOOK OVER Argentine oil giant YPF, is hoping to keep regulators happy and foreign competitors at bay as it makes a major swap of service stations and refineries with Brazil's Petrobras. * In Argentina, Repsol must appease Argentine regulators, who insist Repsol divest itself of its EG3 brand service stations before approving the takeover of YPF. In Brazil, Repsol needs to supply its Brazilian gas stations with locally refined oil. * Aside from regulatory hurdles, the move also insures that multinational heavyweights are kept out. "Repsol-YPF would prefer, as part of the swap, to Let Petrobras have some of its EG3 stations as opposed to having to sell them to some major foreign oil-products distributor," says Julio Bueno, a director at BR Distribuidora, Petrobras' distribution arm, who is involved in the swap talks. "With the swap, Repsol-YPF will also get a stake in a Petrobras refinery, and keep yet another foreign group from entering the Argentine oil-products distribution market." * Coincidentally, before the takeo ver, YPF and Petrobras had already opened the first of a planned 1,000 gas stations to be built in Brazil and Argentina in the next five years. Sounds like the makings of a perfect deal.