Enap, Repsol YPF, Enarsa Sign Offshore E&P Contract

Chile's state oil firm Enap, through its international subsidiary Sipetrol, and Spanish oil firm Repsol YPF (NYSE: REP) have signed a contract with Argentina's state-owned energy company Enarsa to explore two offshore areas in southern Argentina's Austral basin, according to Repsol YPF and Enap statements.

The blocks are E2 - formerly known as CAM-1 - and CAM-3.

Repsol YPF expects initial exploration investment in the areas will be US$20mn-50mn and that investment could reach US$500mn in a later production phase, the company said in its statement.

The first well will be drilled this year in the Austral basin using seismic data recorded by Repsol YPF and Sipetrol in 2004.

Each company will have 33.3% participation in the consortium. Repsol YPF and Sipetrol will finance the exploratory stage and Enarsa will pay its share of the costs when commercial production begins, the statement said.

The agreement was signed in Buenos Aires on Monday by Sipetrol Argentina president Nelson Muņoz Guerrero, Enarsa president Exequiel Espinoza and Repsol YPF general director for Argentina, Enrique Locutora.

The signing ceremony was attended by Argentina's President Nestor Kirchner, federal planning and public investment minister Julio De Vido, energy secretary Daniel Cameron, Chile's ambassador to Argentina Luis Maira and Enap CEO Enrique Davila, the statements said.

This contract falls under a broad 10-year agreement signed by Repsol YPF and fledgling state company Enarsa in January 2006 to investigate alternatives for partnering in the exploration and development of hydrocarbons throughout Argentina's continental shelf, the San Jorge Gulf and the Austral basin.

Repsol YPF and Enarsa also formed a consortium with Brazilian federal energy company Petrobras (NYSE: PBR) and Uruguay's state oil firm Ancap last month for the exploration of hydrocarbons in three blocks of the Colorado Marina basin.

This latest contract will mark the first cooperation between Enarsa and Sipetrol, which recently signed an agreement with the government of Argentina's Tierra del Fuego province for the exploration, development and production of hydrocarbons areas in the region.

Sipetrol's Argentine assets include the operation of an offshore platform in the Poseidon exploration block, a hydrocarbons treatment plant (BRTF) currently undergoing a US$5mn expansion and 50% participation in production from the Magallanes area.

Sipetrol is also 100% owner and operator of a production concession in the Pampa del Castillo-La Guitarra area in the San Jorge Gulf and a 50% partner in the Campamento Central Canadon Perdido area.

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