Spanish oil major Repsol YPF reported an unexpected fall in net profits on Tuesday as its new chief made big write-offs and prepared for new investments to improve oil and gas reserves. Reserves fell 9 percent last year to 4.93 billion barrels of oil equivalent (boe) and new finds added just 138.9 million boe to give a reserves replacement ratio of 32.5 percent of 2004 production.

The ratio was down from 142 percent for 2003, when Repsol bought 20 percent of BP's gas reserves in Trinidad & Tobago.

"We are aware that we have a low organic reserves replacement ratio," new Chairman Antonio Brufau told a conference call, noting that it was much stronger for gas than for oil. "2004 was not a good year for exploration," he added.

Copyright Reuters, 2005