First Well in the Barrancas Project in Venezuela Inaugurated

Venezuela's President Hugo Chavez, together with Repsol YPF's Chairman and CEO Alfonso Cortina, inaugurated today the first well in the "Barrancas" project in Venezuela. The ceremony was also attended by Rafael Ramírez, Minister of Energy and Mines; Alí Rodriguez, Chairman of PDVSA; José Luis Sánchez, Chairman of Ente Nacional del Gas; Luis Vierma, Deputy-Minister for Hydrocarbons; Ramón Blanco, Chief Operating Officer for Repsol YPF; and Miguel Angel Remón, Executive Vice-President of Upstream for Repsol YPF.

In the same ceremony, the Venezuelan officials authorized an increase in current gas production at the Quiriquire block of 3.4 million cubic meters (22,500 beop/day), including associated liquids, thus making Repsol YPF the principal private gas producer in the country.

Repsol YPF was awarded in 2001 the Barrancas block concession for the exploration and exploitation of non-associated gaseous hydrocarbons (free gas). This block is in the southwest of Venezuela, crossing the states of Barinas, Portuguesa and Trujillo.

There are five potential fields in the Barrancas block, for which Repsol YPF has a 100% stake: Sipororo, Guaramacal, Guaramacal Sur, Barrancas and La Yuca. In the first exploration phase, now initiated, a discovery well called Sipororo 2X will be drilled, and the Sipororo 1X well drilled in the nineties by PDVSA will be recovered. If these test positive, 3D seismic will be acquired to define drilling of the wells necessary for the project's full development. Discovery drilling at the Guaramacal site will be undertaken in a second exploration phase.

Gas production from the block will begin in the first half of 2005, and by 2006 it is expected to reach 2 million cubic meters of gas per day, earmarked as feedstock for a 450 MW thermoelectric power station to be installed in the Obispos municipality, in the state of Barinas. This project will help resolve electricity generation problems in this region of Venezuela, and bringing competitive prices that will favour the west of Venezuela.

Repsol YPF is committed to strengthening neighboring communities by setting up projects that stimulate the use of the region's natural resources and social co-responsibility, and encourage a capacity for work and self-management. In this way, our Company contributes to the economic wellbeing and quality of life of local inhabitants. This innovative venture is expected to give direct employment to 100 workers, and create 1000 indirect jobs.

Repsol YPF currently produces 220,000 barrels of oil equivalent per day (boepd) in the Caribbean, 100,000 of which come from the Quiriquire, Quiamare – La Ceiba, Cuarico Occidental and Mene Grande fields in Venezuela. The other 120,000 boepd are produced at its gas and oil fields in Trinidad & Tobago.

This project constitutes a new step in Repsol YPF's strategy, confirming the Group's interest in continuing development in the area of the Caribbean, and particularly in Venezuela.