Repsol YPF

Chemicals 2007

Operating income for the Chemicals business during 2007 reached €231 million, 34.6% less than the €353 million achieved in the previous year. EBITDA was €402 million, versus the €490 million of the previous year.

The decrease in income was due to the fall in the base chemicals margin, particularly during the last quarter of the year, as well as less activity in Argentina, due to the restrictions in the natural gas supply, which affected the production of urea and methanol.

In 2007, the base chemicals margin was 7.8% lower than that registered in 2006. The drop during the last quarter was particularly significant as it was reduced to almost half. This trend reflected the nafta price levels, caused by crude oil prices, which also led to an increase in the price of energy.

Total sales of petrochemical products during 2007 was 4,926 thousand tonnes versus 4,778 thousand tonnes in 2006, representing a 3.1 % increase.

Of all sales in 2007, base petrochemical products represented 968 thousand tonnes, an increase of 3.4% with respect to 2006. By market, in Spain 265,000 tonnes were sold, 195,000 tonnes were destined for the ABB market and 507,000 tonnes to the rest of the world.

Derivative petrochemical sales were 3,958 thousand tonnes, an increase of 3% compared with the previous year. By market, 1,267 thousand tonnes were sold on the Spanish market, 1,163 thousand tonnes in the ABB area and 1,528 thousand tonnes on other markets.

During 2007, investments in the chemicals area accounted for €176 million, 20.7% less than the ?222 million invested in 2006.

The most significant investments were made in the Tarragona complex for the extension of the cracker and the construction of a benzene plant with a capacity of 190,000 tonnes per year, which commenced operation during the last quarter of the year.

The 2008-2012 Strategic Plan contemplates as a key project for the company’s growth, the extension of the Sines petrochemical plant, where production will be doubled, making it one of the most technologically advanced complexes in the European petrochemical industry. The project includes the construction of three new plants - linear polyethylene, polypropylene and an electrical energy plant as well as the expansion of the cracker by 40% to reach a capacity of 570,000 tonnes per year.

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