In Cairo, tomorrow, Tuesday October 15th, the Chairman of Repsol, Alfonso Cortina, and the President of Midor, Hussein Salem, will sign a protocol agreement and contracts referring to Repsol's participation in a project to construct and exploit a high complexity refinery in the free-trade zone of Alexandria, in Egypt. Repsol will be the technical operator of this new refinery.

Midor is a company owned 40% by H. Salem (a private Egyptian real-estate group), 40% by Merhav (a private Israeli trading and project development group), and 20% by the state-owned Egyptian oil company, EGPC. The current contract allows Repsol to act as owner's representative supervising engineering, purchase of materials and construction of the whole project. Repsol will also be technical operator of the refinery, supplying crude-oil and feedstocks, and commercializing its products.

The aforementioned agreement grants Repsol a purchase option on 10% of Midor capital equity, and this may be increased to 20% upon exercise of this option if the shareholders so agree. The dead-line for taking up the option is 30 months from enforcement date of the operating contract.

Should Repsol decide to exercise the option, it will have an indefinite right of first refusal on any possible sale of shares by other shareholders.

The refinery's production set-up is such that its distillation capacity of 5 million tonnes per year makes it possible to obtain products in line with international standards, with no production of fuel-oil. The refinery will have atmospheric and vacuum distillation units, a hydrocracker for medium distillates, isomerisation, continuous catalytic reforming (CCR), desulphurisation, coker and sulphur recovery. The fuel used at these facilities will be refinery and natural gas.

This project involves an investment of 1.2 billion dollars, and is scheduled to go into production at the beginning of the year 2000.

Apart from this, the refinery's strategic location sets it at a logistical advantage for product transport and distribution: connection to the SUMED (Suez-Mediterranean) pipeline, the Alexandria port oil terminal, the local network of LPG storage tanks, the loading station for tanker lorries and the El Ameriya refinery belonging to EGPC. Its area of influence will cover the Egyptian and Israeli markets, and possibly extend to nearby markets. It is estimated that 30% of production could be exported to the Eastern Mediterranean.

This agreement implies an important international acknowledgement of Repsol's technological and management capacity in carrying out an important project with advanced technology and taking charge of the operation, supply and marketing of a high conversion refinery in a country with exceptional growth potential. It also provides Repsol with a chance of taking up a stake in Midor and becoming familiar with the East Mediterranean region, where the Egyptian market may present further business opportunities.

ALEXANDRIA REFINERY

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