Argentina's Senate approved a government proposal to pay Repsol $5 billion in bonds to compensate the Spanish oil major for the nationalization of its majority stake in energy company YPF two years ago.
YPF has been under Argentine government control since President Cristina Fernandez ordered 51 percent of the company be nationalized in 2012.
The compensation proposal, which has already been approved by Repsol's board, will now be voted on in the lower house of Congress. The deal is key to Argentina landing investment in unconventional energy exploration from international oil companies.
A U.S. Department of Energy report has shown that Argentina has more natural gas trapped in shale rock than all of Europe, a 774-trillion-cubic-feet bounty that could transform the outlook for Western Hemisphere supply.
The country's shale gas reserves trail only China and the United States.
Among YPF's major challenges is to attract investment to Argentina's promising Vaca Muerta shale oil and gas configuration in Patagonia.