The supervisory board of Spanish oil and petrochemicals giant Repsol has approved a definitive $5 billion settlement from Argentina over assets seized in 2012. This draws a line under a two-year battle for compensation after President Cristina Fernandez de Kirchner's government seized 51% of YPF in April 2012, charging Repsol had not invested enough.

Although the compensation is half of what Repsol was initially demanding, the company is known to be eager to end a rocky chapter in its history and avoid a protracted legal fight.

Under the agreement, news reports said the Spanish group will receive a package of three dollar-denominated Argentine sovereign bonds with a nominal value of $5 billion. It will also receive additional bonds for a maximum face value of up to $1 billion to compensate for the market discount on the first group of bonds.

Argentine sovereign bonds mostly trade at a steep discount since the country defaulted on international debt in 2002.

The total market value of the combined packages will be at least $4.67 billion, which could be supplemented by $500 million in back interest payments on one of the bonds, known as the Discount 33. Repsol can sell the bonds whenever it wants, although the final amount it receives cannot exceed $5 billion after expenses and interest.

As part of the deal, which follows nearly three months of negotiations in Buenos Aires and still requires approval from the Spanish group's shareholders and the Argentine Congress, Repsol will drop all lawsuits against Argentina and waive any future legal claims. It had initially sought $10.5 billion in compensation in international arbitration.

Ending the dispute may help attract investors to the country to develop some of the world's largest shale fields, observers said.

"This is very positive," YPF CEO Miguel Galuccio told international journalists in Buenos Aires. "Repsol still has a 12% stake in the company, there should be a new dynamic now in the board. We should be able to leave this dispute in the past and focus on a more constructive future," he added.