Repsol to Increase Presence in Venezuela

Repsol YPF's Chairman and Chief Executive Officer, Antonio Brufau, will various Memorandums of Understanding with Rafael Ramírez, Venezuela's Minister of Energy and Mining, and the Chairman of PDVSA. The agreements will heighten the company's presence in the region and significantly increase its hydrocarbon production and reserves in that country, where it is the leading publicly traded petroleum company.

Joint Venture With PDVSA. The first of these Memorandums of Understanding, contemplates the creation of a joint venture between PDVSA (51%) and Repsol YPF (49%) that would be one of the largest petroleum producers in Latin America. The participation in the joint venture would permit Repsol YPF to increase its current net production (100,000 barrels per day) by 60% to 160,000 barrels/day. Repsol YPF would double its reserves in Venezuela, as important assets of PDVSA would be incorporated into the joint venture.

The PDVSA-Repsol YPF joint venture would be the first of its kind to be created in Venezuela, the fifth largest producer of crude oil in the world and the leading provider to the United States market, and would have exploration and production hydrocarbon rights in the areas where its activities are currently being developed (Mene Grande, Quiriquire, y Quiamare- la Ceiba), as well as in nearby areas such as Barúa-Motatan, Ceuta-Tomoporo y Orocual.

The Memorandum of Understanding also includes plans to identify new exploration and development areas where Repsol YPF could be granted gas licenses.

LNG Project. The second Memorandum of Understanding with PDVSA contemplates the identification of business opportunities by building a liquefied natural gas plant on the Venezuela coast, and the granting to Repsol YPF one or various licenses for gas to supply the volumes required by the plant, as well as to include Repsol YPF´s participation in the Gran Mariscal Sucre project, considered to be the principle LNG project being studied in Venezuela.

Electricity Generation Plant. The third Memorandum of Understanding scheduled to be signed tomorrow in Venezuela would allow Termobarrancas (a subsidiary Repsol YPF in that country) to construct, develop and operate an electricity generation plant in the municipality of Obispos del Estado Barinas.

As a result of this contract, PDVSA would buy from Repsol YPF blocks of electricity up to 300 megawatts/hour. Production could begin in the final quarter of 2005, with an estimated production of 80 megawatts. The gas that would feed the plant would be supplied from one of the fields that Repsol YPF has in the Barrancas area.

Scientific and Technical Cooperation. Besides the commercial agreements, Repsol YPF and PDVSA agreed to cooperate in the coming three years in the technical and scientific formation of personnel at PDVSA and the Ministry of Energy and Oil, including the awarding on the part of Repsol YPF, of 20 scholarships to attend the Instituto Superior de la Energía ISE.


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