Repsol and Mobil have agreed to found a 50-50 joint venture to produce, import and market lubricating oils manufactured by both corporations, using the Eg3 sales network as one of their main retail channels. This new company will allow Mobil and Repsol to increase their activity in lubricants, with a transfer of technology and "know-how" in the commercialisation of products under their brand names.

Eg3 is a company in which Repsol�s affiliate, Astra, holds a 93.8% stake, and is a growing enterprise, with an 11.6% share in the Argentine fuel market, and an annual turnover of 800 million dollars. It has a network of 650 service stations throughout the Federal District and other 12 provinces, and owns one of Argentina�s most advanced refineries, at Bah�a Blanca, with a capacity of 31,500 barrels per day.

The production of lubricating oils for the new company will be carried out at an industrial plant currently owned by Eg3 in Avellaneda (in the province of Buenos Aires), where large investments have been made to raise the blending capacity, construct new tanks for additives, improve packaging lines and set up a high-tech laboratory to give a technical support to customer services. In June, 1997, this facility was awarded the ISO 9002 Quality Certificate for the standards achieved in production through to customer sales and service.

This agreement between Repsol and Mobil will lead to a wider range of products, effectively competing in all market segments, and will be to the benefit of the consumer, who will be presented with quality products, guaranteed by the manufacturers� name and reputation. Both companies are experienced in strategic alliances and use the latest technology in their production of lubricating oils, to meet the requirements of the Argentine market.

The consumption of lubricating oils in Argentina is currently some 300,000 cubic metres per year, showing a 5% growth over 1996 levels, in a trend which is expected to continue in the medium term. Eg3 has a 6% market share in these products.