Irving Oil & Repsol YPF Ink Deal on Canaport LNG Project

Irving Oil Limited and Repsol YPF, S.A. have entered into definitive agreements to develop an LNG import and regassification terminal in Saint John, New Brunswick, Canada. The agreements form a new company, Canaport LNG, which will construct, own and operate the terminal.

The Canaport LNG terminal will initially be capable of delivering 1 billion cubic feet per day of regassified LNG into the market, as provided in its existing permit. Repsol will be responsible for providing all of the LNG and will hold the capacity of the terminal. Irving Oil will market the regassified LNG in Atlantic Canada, and Repsol will market the regassified LNG elsewhere in Canada and in the USA.

The parties have nearly completed front end engineering design for the terminal, and plan to request proposals for engineering, procurement and construction (EPC) contracts during July of this year. The terminal will be operational, delivering regassified LNG into the marketplace, during 2008.

This agreement is a key element for Repsol YPF's LNG projects in the Atlantic Basin, one of the principle vectors of growth for the 2005-2009 period as outlined in Repsol YPF's Strategic Plan.

Repsol YPF considers this to be a very important step in completing its integrated LNG value chain, ensuring secure supplies of natural gas to key markets in the USA and Atlantic Canada, both areas where there is a growing demand for natural gas.

Irving Oil is very pleased to be partnering with Repsol, a company that has a strong international reputation and is a world leader in the LNG industry. Irving Oil sees the Canaport LNG terminal as central to meeting the increasing demand for natural gas in the US Northeast and Atlantic Canada. This is a significant milestone in Southern New Brunswick's growth as an important energy hub.