MercoPress. South Atlantic News Agency

Increased Repsol/YPF investments in Argentina

Spain's Repsol YPF SA, Europe's fifth-largest oil company, will increase its planned investment in Argentina by 12% in the 2005-2009 period announced Chairman Antonio Brufau in Buenos Aires, a 32% expansion over the previous five years.

The company will increase investment to 6.7 billion US dollars from the 6 billion US dollars plan announced earlier this year, including further investments in South Atlantic off-shore exploration.

Repsol will boost exploration, development and production of oil and gas, Brufau told reporters at the presidential palace in Buenos Aires following a meeting with President Nestor Kirchner. "We are optimistic. We'll be hiring 200 Argentine professionals this year and 380 more next year".

Mr. Brufau said the performance of the company and recovery of the Argentine economy had been decisive for the additional investment program, "besides Argentina is a priority for RepsolYPF and we closely follow opportunities, and growth needs".

During the meeting with President Kirchner, RepsolYPF CEO detailed the company's 1.3 billion US dollars 2005 investment which included gas and oil production, expansion of existing pipelines, technical improvements in refineries, biodiesel research and the company's new offices in Buenos Aires.

As to the additional funds, most of it will be invested in increasing oil and gas exploration and production since Argentina needs "to expand its oil and gas reserves horizon, which at the current level of domestic demand now stands at nine years". "Argentina is rich in hydrocarbons but current investments need time to mature, (at least four years) and in the meantime we might have to import some oil", admitted Mr. Brufau. However this must not be "over dramatized" since many producing countries "must import oil and gas in line with the increase in domestic demand".

As to the recent agreement signed with Petroleos de Venezuela, PDVSA, Mr. Brufau said it will contribute to increase supply in Argentina, "but in the mid term".

In the last two years Repsol/YPF has invested 169 million US dollars in 43 exploratory drillings which is over half of existing wells in Argentina.

Of that sum 54 million US dollars was invested in on shore wells and 82 million off shore working at depths between 3.000 and 5.000 metres.

The rest went to exploratory deep water 3D surveying and exploring in the Malvinas and Golfo San Jorge basins, "even when exploration resumption in the South Atlantic has proved a difficult task". For the coming three year period exploratory drilling will absorb between 80 and 100 million US dollars annually.

In refining and marketing the company invested 180 million US dollars in 2005 and expects to jump to 400 million US dollars next year.

"Repsol/YPF three refineries in Argentina are working at full capacity with the purpose of supplying the domestic marked demand", he added.

Mr. Brufau said the company managed to absorb the diesel oil additional demand and its participation in the domestic market expanded to 57%, plus importing 96.000 cubic metres. Finally he announced the construction of a bio-diesel plant in the province of Buenos Aires to supply the growing demand in Argentina, Brazil and Bolivia.