MADRID (Reuters)—Spanish oil company Repsol YPF S.A. will seek punitive damages from Argentina for the seizure of its Argentine energy unit Yacimientos Petroliferos Fiscales, its chairman warned, in a move backed by fuming shareholders on Thursday.

Fresh demands would raise the stakes in a potentially long legal battle. Repsol has already sued Argentina for $10 billion in compensation over the seizure of its majority stake in YPF in mid-April, in a case that could drag on for years.

"This was an act of piracy," Repsol shareholder Rafael Gonzalez said at the company's annual meeting in Madrid, pleading with Chairman Antonio Brufau to keep up the fight against Argentina.

Repsol's shares have lost almost half their value so far this year, hit by Argentine President Cristina Fernandez's expropriation of a 51% stake in YPF from Repsol on April 16. Ms. Fernandez contends that the Spanish company did not invest enough.

Repsol also has taken steps to file a complaint at the World Bank's International Center for Settlement of Investment Disputes (ICSID), though analysts have noted Argentina's track record in ignoring past ICSID fines.

Mr. Brufau opened the door on Thursday to negotiations with Argentina to reach an agreement suitable to both sides in a move to avoid a drawn-out court battle, as well as pipe down anger from some shareholders who accused his management for the company's Argentine travails.

"I've been getting rid of my Repsol shares because year after year it's just another bad excuse for the share price decline. The oil crisis, Argentina...Tomorrow it will be an earthquake," shareholder Elena Martinez said.

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Repsol unveiled a four-year strategic plan earlier this week, pledging heavy investment in its exploration business in a bid to recover from the blow of the loss of YPF.

The company still owns 6% of YPF and now holds the voting rights on another 6% of the company that had been put up as guarantees from fellow YPF shareholder, the Petersen Group.

Repsol had extended a €1.5 billion ($1.88 billion) loan to Petersen Group, owned by Argentina's Eskenazi family, to buy a 25% stake in YPF, but Petersen defaulted on payments earlier this month, another mishap that provoked shareholder ire on Thursday.