Repsol YPF to Advance Argentina Investments

Repsol YPF said that it will bring forward its investments in Argentina under a $6 billion (EUR4.77 billion) 3-year schedule for 2007/2009. Effects of the company’s decision include:

-$4.6 billion (EUR3.658 billion) will be allotted to the exploration and production of oil and gas in that country.

-The schedule for advancing investment in Argentina is based on a deeper knowledge of the fields acquired over the past year.

-Repsol YPF will strengthen technical and strategic joint ventures with other companies given the growing interest in Argentina on the part of operators specialized in the exploration of mature regions.

-New reserves will be generated by intensifying exploration activity and through additional development with the application of improved operating methods and new technologies in mature areas.

-Deepwater operations will increase in association with Enarsa, such as in the Gulf of San Jorge. The viability of the Tight Gas project will be developed to obtain commercial gas from low permeability structures.

-The investment schedule in Argentina will make it possible to project additional investment after the 2007-2009 period, and allows the company to define future options for incorporating production and reserves beyond the year 2010.

The investment schedule, presented by Repsol YPF Executive Chairman Antonio Brufau to Argentine President Nestor Kirchner, who is currently on an official visit to Spain, contemplates a total investment for Argentina of $6 billion (EUR4.77 billion) during the 3-year period of 2007 to 2009. Of this amount, $4.6 billion (EUR3.658 billion) is earmarked for exploration and production. The remaining $1.4 billion (EUR1.113 billion) will be allotted to the refining/marketing and chemical areas.

Repsol YPF noted one of the specific program to benefit under the schedule will be the expansion of deepwater offshore exploration, in association with Enarsa, and for which a latest generation platform has been contracted. In addition, new techniques based on the best international practices will be applied to improve recovery at mature fields, with the emphasis on knowledge of the subsoil obtained through technologies for field typification, including the acquisition of additional 3D seismic.

At the same time, operations in heavy and other types of crude oil will be developed in the Neuquen basin and Santa Cruz, and advanced-technology pilot projects for tertiary recovery and the injection of chemicals will be accelerated. Finally, plans for secondary recovery will be revitalized in line with the successful experience accumulated at similar fields.

As part of this program, investments will be made in a pilot project to determine the viability of the first tight gas project in Argentina. This type of operation for the non-conventional extraction of gas has produced excellent results in countries with mature oil basins, such as the United States, where 40% of the gas in that country is produced using this new technology.

Tight gas is essentiall gas obtained from gaseous sands with very low permeability. Thanks to sophisticated study techniques, coupled with a deeper knowledge of the fields, it is possible to determine the viability of applying this new technology, which requires wells to be drilled via non-conventional methods.