Repsol YPF Confirms Interest in Brazil

Last Friday, Ramón Blanco, Repsol YPF Chief Operating Officer, was granted audience by the President of the Federal Republic of Brazil, Luiz Inacio Lula Da Silva. During this interview, Repsol YPF declared its intention to invest $200 million in the country during this year, and a discussion was held about the integration of the Brazilian, Argentine and Bolivian energy markets, all neighboring countries in which Repsol YPF operates.

On this occasion, in the presence of the Brazilian Minister of Energy and Mines, it was also mentioned that Brazil, although ranking as the ninth economy in the world, is one of the largest MERCOSUR countries, deficient in oil and gas production. Indeed, its natural gas market has a high growth potential, with annual growth rates of over 17%. In 2001, gas consumption was 10.9 bcm, and forecasts indicate that demand will treble in coming years.

It was also put forward that energy integration between Brazil and two of the region’s largest producers: Argentina and Bolivia, would create a single energy market in the area, improving system efficiency, and producing advantages for the domestic consumers in these countries, for whom energy would cost less.

This energy integration would allow gas produced in Bolivia and Argentina (where Repsol YPF operates important gas projects) to enter the Brazilian market. In 2001, Repsol YPF produced 162 million barrels of oil equivalent and 563.38 billion cubic feet of natural gas. In Bolivia, the company produced 7 million barrels of oil and 68.8 billion cubic feet of natural gas.

Repsol YPF was the first foreign company for 45 years to invest in the refining business in Brazil, through its association with REFAP and the Petróleos de Manguinhos refinery, in Rio de Janeiro, which has a 14,500 barrels per day capacity. We were also the earliest company to receive authorisation from the Agencia Nacional del Petróleo (National Petroleum Agency) to import natural gas as fuel for the thermal power station at Cuiaba, and to import crude oil outside the monopoly. And Repsol YPF won areas in the first round of exploration and production concessions offered for tender by ANP, before any other company.

In December 2001, through an asset swap agreement with Petrobras, we received a 30% stake in the Alberto Pasqualini (REFAP) refinery, in Río Grande de Sul, and a network of 481 service stations concentrated in the central, southeast and south of Brazil, with sale of 480 million litres per annum. Also included in the deal was a 10% stake in the Albacora Leste field, one of the largest in the country, located at the Cuenca de Campos offshore rig. Repsol YPF was also awarded another seven exploration blocks. With reference to gas, Repsol YPF is a pioneer in the export of natural gas from Argentina to Brazil, with a 600 Mw supply to the thermal power station of Uruguayana, in the state of Río Grande do Sul.

The company also forms part of the consortium developing a gas pipeline between Uruguayana and Porto Alegre to satisfy market growth in the area.

The company also owns a 26% shareholding in the Termogaúcha thermal power station, currently being built in Porto Alegre, and holds and important position in the distribution of lubricating oil and chemical products produced in Argentina.