Under the aforementioned agreement, Repsol YPF will receive a 30% stake in the REFAP refinery in south Brazil, with a refining capacity of 180,000 boepd, a service station network concentrated in central, southeast and south Brazil, with sales of 480 million litres per annum;  a 10% stake in the Albacora Leste oil field, with more than 1,000 million boe of estimated reserves.  Repsol YPF will thus become Brazil�s second largest refining company, with a capacity of nearly 60,000 barrels per day, and one of the country�s top players in marketing.

Via this operation, Petrobras will obtain control of Eg3, the fourth largest refining and marketing company in Argentina, with 700 service stations and a refinery in Bah�a Blanca, with a capacity of 30,500 barrels per day.

Repsol YPF will deliver on two strategic targets.  This deal fulfils the divestment commitment undertaken with the Argentina Government after the YPF acquisition and gives entry to a new competitor in that country�s fuel market.  In addition, Repsol YPF takes up a strategic position in a high growth market such as Brazil, and makes great progress in the integration of its upstream and downstream businesses there.

This agreement will be presented to the Brazilian and Argentine anti-trust authorities and the National Petroleum Agency of Brazil.  The transfer of assets will take effect once the relevant authorisations have been received.

ADDITIONAL INFORMATION

On closing this agreement, Repsol YPF has the following assets in Brazil:

UPSTREAM

Apart from a stake in a production concession and in 8 exploration concessions (5 in ultra-deep waters), Repsol YPF will now hold an interest in one of Brazil�s largest oil fields expected to go into development shortly, and where there is already one producing well.  This field is at a water depth of over 800 metres and 120 km off-shore, with reserves of more than 1,000 million boe.  Production is expected to reach 140,000 barrels per day by 2006.

DOWNSTREAM

In refining, Repsol YPF now becomes the second largest refining company in the country, with a capacity of nearly 60,000 barrels per day, and is the only foreign oil company conducting refining operations in Brazil.

In marketing, Repsol YPF already had sales of some 200 million litres per year of gasoline and gas-oil through service stations and large consumers.  Through this agreement, sales of these products increase to some 680 million litres per annum.  The service stations acquired by Repsol YPF in this asset swap are located within its strategic operating area, in the part of the country where consumption is highest, and in the area of influence of the two refineries in which it now holds a stake (Manguinhos in Rio de Janeiro and REFAP in Porto Alegre).

NATURAL GAS

Regarding the natural gas business area, Repsol YPF distributes gas through Gas Natural to approximately 600,000 customers in the metropolitan region and state of Rio de Janeiro.  In April of this year, the company won a concession to distribute natural gas in the important area of southern Sao Paolo.

Repsol YPF is the first company to export gas from Argentina to Brazil, by supplying the recently opened 600 MW thermo-electric power station at Uruguayana, in the state of Rio Grande do Sul.  The company also participates in a joint venture with Petrobras and other partners developing the 615 km gas pipeline from Uruguayana to Porto Alegre, to satisfy increased demand for natural gas in the region.