RIO DE JANEIRO Repsol (REP.MC), Spain's biggest oil company, said on Sunday it should be adding more oil and gas to its reserves than it produces by 2010, but did not include declining Argentine fields into this calculation.
Repsol's recent success with offshore oil and gas exploration will boost the rate at which new reserves excluding Argentina are added (Reserve Replacement Ratio) to over 100 percent of those that it uses outside the country by next year.
"Our reserve replacement ratio (RRR) grew to 90 percent in 2009 and will probably exceed 100 percent in 2010," the group's director of upstream activities, Nemesio Fernandez Cuesta, said at a meeting with journalists.
Repsol hopes recent exploration success in Brazil, the Gulf of Mexico and Venezuela, and its stakes in some of the largest oil and gas strikes in 2008 and 2009 will boost a reserve replacement ratio that was at just 65 percent of production in 2008.
"The fridge was empty and is starting to fill up so in the mid- to long-term, the recovery of Repsol's reserves should not be a problem," Fernandez Cuesta said.
Repsol decided to invest 9 billion euros in its upstream division as part of its 2008 to 2012 strategic plan after the company was obliged to slash its reserves due to regulatory changes in Bolivia in 2006.
After strikes like its largest gas find to date at the Perla exploration in Venezuela and stakes like that in the huge Guara field in Brazil, Repsol's contingent reserves (those pending a final decision to start extracting them) are higher than its proven ones.
Repsol's contingent reserves are estimated at 1.219 billion barrels of oil equivalent (boe) for the end of 2009, compared with reserves proven, according to U.S. Securities and Exchange Commission, or SEC, criteria of 1.054 billion boe.
The company estimates that its possible, probable and proven reserves will have risen to 2.053 billion boe by the end of 2009 from 1.986 billion at the end of 2008, with production
excluding Argentina flat at 122 million boe.
NO PRESSURE TO DIVEST
Repsol is sticking to the general lines of its 2008-2012 strategy, but will not rush into a hasty sale of a stake in its Argentine YPF unit to meet its target of 6 billion euros of divestments over the period, Chairman Antonio Brufau said.
Repsol's shareholders are reported to be pressuring the company to speed up planned divestments in order to boost its net cash position at a time when its earnings are suffering from weak refining margins and oil prices.
"A company does not divest for other reasons than its own, We are not going to sell YPF for less than it is worth," Brufau told journalists, adding that a YPF stake could be placed with investors in Argentina, Brazil or the United States.
A sale of the company's 30 percent stake in Spanish utility Gas Natural (GAS.MC) is also out of the question, the chairman said.
Brufau said on Saturday that Repsol might also partly list its upstream-focused Brazilian division to extract value from the assets.
(Reporting by Clara Vilar; Writing by Jonathan Gleave; Editing by Jan Paschal)