FEED study completed

The FEED study was completed in October 2007, providing detailed design specifications of the facilities and determining the expected cost of the project. The FEED study calls for two platforms offshore in 60 metres of water. The wellhead platform, from which all wells are to be drilled, will be built and installed first. This will enable the partnership to drill wells while the larger processing platform is under construction. Based on the FEED study, the Castor project is estimated to cost approximately $2 billion.

Tripartite Agreement

Eurogas in December 2007 secured a tripartite agreement with ACS, the largest construction company in Spain, with extensive experience in the construction of infrastructure projects, and Enagas, the largest company in the gas transportation and distribution industry in Spain. This agreement was instrumental in gaining regulatory approval and for arranging project financing and construction of the Castor project. Following the agreement Eurogas will retain an indirect 24.6% non-operating interest in Castor. This interest will be held through Eurogas' 73.7% interest in the Castor Limited Partnership (CLP). CLP will own 33.3% of Escal UGS S.L., which is the operating company developing the Castor project.

Castor development permit granted

The Castor development permit was granted by Spain's Ministry of Industry, Tourism and Trade in May 2008. It has a term of 30 years with provision for two extensions of 10 years each. This crucial regulatory approval paves the way for Castor to be constructed and to generate up to 50 years of steady cash flow. The regulated revenue flow would consist primarily of three components: the repayment of capital over 10 years followed by an ongoing payment equal to half that amount for the life of the concession; a return on net investment equal to the Spanish 10-year bond rate plus 3.5% and a payment for operating expenses that should on average be equal to actual operating costs.