Eurogas Corporation
TSX VENTURE : EUG

Eurogas Corporation

December 21, 2006 16:59 ET

Eurogas Corporation: News Release

CALGARY, ALBERTA--(CCNMatthews - Dec. 21, 2006) - Eurogas Corporation ("Eurogas") (TSX VENTURE:EUG) is pleased to announce that it has broadened its cooperation with the leading industrial group in Spain, ACS Group, for the development of the Castor Underground Gas Storage project. The Corporation's 73% owned subsidiary, Escal UGS S.L., has entered into a Collaboration Agreement with ACS Group for the provision of services in addition to the previously awarded contract for the Front End Engineering and Design (FEED) Study. The scope of the additional services includes ACS acting on behalf of the company in discussions with government/regulatory bodies regarding project approval, implementation and remuneration.

In addition, ACS will subscribe for a 5% equity interest in Escal, subject to a redemption clause and a shareholders agreement. ACS will gain a seat on the Board of Directors of Escal. Final price will be determined at the close of the financing of the project.

ACS Group is the largest construction group in Spain and eighth largest in the world, with 2005 revenue in excess of US$15 billion. ACS Group is a global leader in the creation, construction and operation of infrastructure in a variety of industrial sectors such as: oil & gas, LNG and re-gasification, power generation and grids, railways and highways. Through its subsidiaries, Dragados Industrial, Dragados Off-shore and Cobra, it is one of the world leaders in the construction and installation of off-shore platforms and infrastructure topsides, and it offers extensive experience in natural gas pipelines and gas compression stations. Its industrial investments include a 40% stake in Union Fenosa, and a 10% stake in Iberdrola - both leading Spanish utility companies.

The Spanish Ministry of Industry has just circulated draft ministerial orders affecting the gas sector in Spain, including underground gas storage and LNG regasification. The explicit stated intent of the ministerial orders is to provide a transparent remuneration system, in accordance with risk, that will encourage investment in underground gas storage. The Ministry has started the consultation process and there has been broad industry input asking for clarification and modification to the orders. The draft orders have also been submitted to the National Energy Commission for formal review. The Commission is meeting today and will issue recommendations. The intention of the Ministry, as stated in their draft orders, appears to be a cooperative and immediate approach to clarifying and defining the remuneration regime for the Castor UGS Project, which is expected to be finalized by early 2007. Concurrently, the company is engaged with the Ministry in the formulation of the development roadmap and regulatory framework for the Castor Project. This is important, in order to establish the project implementation framework. The Ministry reiterated its belief in the urgent need for gas storage and is specifically supportive of the Castor gas storage project, which was awarded an "A Urgent" category in the most recent gas infrastructure plan.

Eurogas Corporation is an independent oil and gas exploration company listed on the TSX Venture Exchange under the symbol EUG and is 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. For more information on the Company, visit the website www.eurogascorp.com.

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.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

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