Repsol and Iberdrola have signed an agreement to create a joint venture company before the end of January 1998, in order to begin the start-up process for energy projects under the Industrial Cooperation Agreement signed on January 29^th, last. This agreement also contemplates the acquisition of natural gas reserves and fuel supply for the generation of electrical power in Spain.

Both Repsol and Iberdrola have a 50% stake in this joint venture, and will appoint the Board of Directors with an equal representation from each of the founding companies. The agreement permits a possible participation by third parties through affiliates for certain projects.

The investment programme for this project is of approximately 300 billion pesetas, spanning the period 1998 to 2003, for the construction of combined cycles and cogeneration facilities and an IGCC plant at Bilbao. The overall programme will install some 3,000 MW.