Repsol YPF

Gas & Power 2007

Income from the Gas and Power area in 2007 totalled €516 million, 10% more than the €469 million achieved in the previous year. These figures reflect the favourable development of income from Gas Natural SDG, underlining the growth in distribution in Spain and Latin America and, particularly, the commercialisation of natural gas in Spain.

With regard to income from electricity, moderate growth was maintained as it was affected by the lower prices of the Spanish electricity pool, which recovered in the second half of the year. 

EBITDA of this business area was ?717 million, 21.1% more than in 2006.

Due to its 30.8474% share in Gas Natural SDG, Repsol YPF participates in the whole gas value chain, from supply through to distribution and sales. Gas Natural SDG is the market leader in Spain and Latin America and together with Repsol YPF is the world's third largest company in terms of transported gas volume. It is also one of the world’s main operators of combined cycles with a strong presence in Spain and as of 2007 in Mexico, where it is the second largest private electricity generation operator.

Total sales of natural gas in 2007 reached 36.41 bcm (thousands of millions of m3). In Spain, sales were 22.15 bcm, slightly lower than in 2006, as a consequence of the modest growth of the Spanish market, in which conventional demand was affected by high prices and the gas demand for the electricity sector was less vigorous due to greater hydraulicity.

Natural gas sales in Spain were very favourable as a consequence of the commercial line developed by the
company, based on the optimisation of the portfolio of gas contracts in the liberalised market and a price policy adapted to market conditions.

The number of clients in Spain rose by 246,000 reaching 5.7 million.

The growth in income in Latin America was mainly due to the strong distribution in Colombia and Brazil. This increase is even more significant if we take into account the fall in value of the dollar and of local currencies against the euro.

Sales in Latin America in 2007 reached 9.92 bcm, 8.0% higher than in 2006. The number of clients in Latin America reached 5.1 million following the incorporation of 170,000 new supply points.

Despite the lower prices of the Spanish electricity pool, electricity activity in Spain developed in a positive manner. With regard to generation, the total of the combined cycle, together with the power capacity in co-generation and wind power generators, produced 16,975 GWh in 2007, 4.8% less than in 2006. The power capacity in Spain in combined cycle reached 3,600 MW following the start up of Plana del Vent (800 MW) and in Malaga 400 MW is under construction. In the port of Barcelona another 800 MW combined cycle is in the final stages of obtaining the relevant permits and an 800 MW project is being developed in Lantarón (Álava).

International expansion continued in 2007. In December, Gas Natural purchased five combined cycle plants and a gas pipeline from EDF and Mitsubishi in Mexico. This operation has allowed the company to enter the Mexican electricity generation market as the second-largest private operator. The five combined cycle plants acquired have a total power capacity of 2,233 MW and the gas pipeline is 54 kilometres in length. These assets are valued at $1,448 million.

Following this acquisition, the company operates 6,373 MW of electricity generation power capacity in Spain (3,600 MW), Puerto Rico (540 MW) and Mexico (2,233 MW).

Regarding gas distribution and sales, presence in the Italian market has been consolidated through the purchase of the Italmeco group, which operates in four regions in central and southern Italy. With this operation, the number of customers in Italy exceeds 350,000.

Investments in Gas and Power in 2007 reached a total of €651 million, 98.5% higher than in 2006. This increase is mainly due to the acquisition of the aforementioned assets in Mexico. Other investments were centred on natural gas distribution and electricity generation projects in Spain.

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