Eurogas Corporation
TSX VENTURE : EUG

Eurogas Corporation

April 05, 2006 18:30 ET

Eurogas Announces Key Regulatory Approval in Spain

CALGARY, ALBERTA--(CCNMatthews - April 5, 2006) - Eurogas (TSX VENTURE:EUG) is pleased to announce it has achieved a key milestone in the development of the Castor Underground Natural Gas Storage ("Castor UGS") project. On March 31, 2006, Spain's Council of Ministers approved the latest revision of the Spanish Electricity and Gas Infrastructure Plan (Planificacion de los Sectores de Electricidad y Gas, Revision 2005-2011). Castor UGS has received an "A Urgent" rating, the highest category available.

To be accepted and recognized for remuneration within Spain's natural gas system, a project must be approved in the Spanish government's Electricity and Gas Infrastructure Plan. The Castor project was first recognized in the 2002 Plan, receiving a "C" rating. This acknowledged the merits of the project, but classified it as not ready for approval and construction. Category "A" means the project has been unconditionally approved and "Urgent" means that the project is essential to maintain the integrity of the gas system or to meet rising gas demand.

Further regulatory approvals are needed. To commence construction of the project, the Corporation requires the granting of a Development Concession from Spain's Department of Energy. Eurogas submitted the application for this concession, which included both the oil and gas phases of the project, in January 2006. The government is currently engaged in the final technical and financial review of the project. Eurogas will await receipt of this approval before committing to major contracts or expenditures.

Environmental approval from the Ministry of the Environment is required before the granting of the Development Concession. Eurogas began this process in early 2005 and submitted the Environmental Summary in August 2005. The Ministry then disseminated the information to 50 stakeholders, including non-governmental environmental protection organizations, for comments and questions. The Corporation addressed these issues in a detailed Environmental Impact Study, which was submitted in March 2006. The next step is for the Ministry to make the project information available for 30 days for public review. The final step is the preparation by the Ministry of the Environmental Impact Statement, which once issued, will allow the formal approval of the Castor UGS project's Development Concession.

CASTOR UGS PROJECT QUALIFIED BY EUROPEAN INVESTMENT BANK

Eurogas is also pleased to announce that the European Investment Bank, a key lender to infrastructure projects of strategic importance in Europe, has qualified the Castor UGS Project, and has provided a 'Letter of Interest' to finance up to 50% of the capital cost of the project, currently estimated at $800 million. Designing and obtaining a suitable financing package is a priority for the current year. Eurogas intends to finalize the options in the coming months, with a view to having a financial structure ready upon completion of the FEED study.

CASTOR UGS FEED STUDY GAZETTED

A third important event occurred this week when the Front End Engineering and Design ("FEED") study was gazetted in the Official Journal of the European Union (OJ/S). The FEED study is the set of key engineering documents that serve as blueprints for development, including design, specifications, detailed cost estimates and project scheduling. The gazetting of the FEED study complies with the European Investment Bank's procurement procedures. The FEED study is a crucial building block in the Castor UGS development and is a prerequisite for project financing and for the Corporation to select and appoint an engineering, procurement and construction contractor. The FEED study is a major undertaking, with an expected completion date of early 2007.

Eurogas is a Canadian oil and gas exploration and development company engaged in development of a major underground storage facility offshore the east coast of Spain, and the exploration and development of oil and gas in Tunisia's Gulf of Gabes.

Jaffar Khan

President & CEO

Certain information set forth in this document, including management's assessment of the Corporation's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Corporation's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The Corporation's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Corporation will derive from there. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise


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Contact Information

  • Eurogas Corporation
    Jaffar Khan
    President & CEO
    (403) 264-4985
    or
    Eurogas Corporation
    Andrew Constantinidis
    Vice President & CFO
    (403) 264-4985
    (403) 262-8299 (FAX)
    Email: eurogas@eurogascorp.com
    Website: www.eurogascorp.com
    or
    Eurogas Corporation
    250, 435 - 4 Avenue S.W.
    Calgary, Alberta, Canada
    T2P 3A8