The Company

FinancesResults Year 2006

ENAP produces earnings of US$ 104 million in 2006

The consolidated net income of Empresa Nacional del Petróleo (ENAP) in 2006 amounted to US$ 104 million, calculated after income tax at 17% and foreign taxes. In 2005, the figure was US$ 299 million and was strongly influenced by the international market
situation in the second half of that year, following the passage of hurricanes Katrina and Rita which implied an unusual rise in crude oil prices and in refining margins.

The pre-tax result in 2006 was US$ 163 million and comprises operating income of US$ 243 million and a non-operating loss of US$ 80 million, the latter mainly related to the Company’s financial expenses.

The reduction in operating income, which reached US$ 243 million, is mainly due to the heavy fall in hydrocarbon prices in the second half. At last June 30, the consolidated operating income was US$ 303 million, which led us to expect that the result for the year would be similar to that of 2005. But the downward trend in prices, especially if this is pronounced and persistent within the refining business cycle (of around 60 days), leads to nil or even negative margins, as happened in the second half of 2006.

The negative non-operating result of US$ 80 million in 2006 was practically the same as the previous year when it was US$ 79 million. Within this result, notable was the increase in other non-operating income as a result of the sale of Enap Sipetrol’s investments in Colombia, which was compensated by the increase in financial expenses of US$ 18 million, due to the greater use of supplier credit to finance purchases of crude and imports of products, plus the loss on exchange differences of US$ 9 million which compares negatively with a gain of US$ 4 million in 2005.

Assets

ENAP total assets at December 31, 2006 were US$ 3,805 million, 3.6% (US$ 134 million) more than at the end of 2005. The increase is mainly explained by the increase in current assets, by US$ 139 million, and in fixed assets, by US$ 38 million, partially compensated by a reduction of US$ 43 million in other assets. The higher current assets are explained by the rise in crude and products prices which led to an increase in trade debtors of US$ 79 million. There was also an increase of US$ 56 million in recoverable taxes due to the higher fiscal credit balance for VAT and the net credit generated by Law 20,063, regarding
the Oil Price Stabilization Fund. Inventories, for their part, remained practically constant between the two years. The increase in fixed assets is related to the investments made by ENAP.

Ebitda and financial debt

ENAP recorded Ebitda of US$ 482 million in 2006, 25.8% below the level of 2005, basically due to the reduction in operating income.

ENAP’ s financial debt (including notes payable to suppliers) amounted to US$ 1,031 million at December 2006, 13.7% lower than the debt level at the close of 2005, when it was US$ 1,194 million. The Debt/Ebitda ratio increased from 1.8x in 2005 to 2.1x in 2006,
a similar level to that of end 2004.

Crude prices

The WTI (West Texas Intermediate) reference price was highly volatile during 2006.
Throughout the first half and especially between April and August, prices showed a strong upward trend, reaching a peak of US$ 76.95 per barrel on August 7. The reasons for the rise were largely related to political instability in the Middle East, plus negative weather forecasts announcing a hurricane season similar to the year before.

However, the political instability began to reduce in August, and as in September the market to notice the absence of hurricanes on the coast of the Gulf of Mexico, international prices of hydrocarbons fell abruptly (in a period of approximately two months) by almost US$ 20 per barrel, to reach a minimum of US$ 55.86 per barrel on November 17, 2006. It then began to rise and ended the year at US$ 61.15 per barrel, practically the same level as December 30, 2005 (US$ 61.11 pert barrel), demonstrating the high volatility seen during the year.

Supply of Diesel Oil

During 2005, 2006 and 2007 to date, ENAP has had to cover the supply of diesel oil to replace cuts in natural gas supplies from Argentina, in order to supply the industrial sector and especially electricity generation. ENAP’s refineries produce a combination of products that in general lead to the need to import a minimum a volume of diesel under normal conditions. However, since the Argentine gas cuts, imports of diesel have had to be increased substantially. This industrial fuel supply policy fits in ENAP’s role as the country’s energy support.

Investments

During 2006 ENAP invested a total of US$ 274 million. Of this, 45% was allocated to the Refining and Logistics Division and 55% to the Exploration and Production Division, for investment both in Chile and abroad.

Investments

During 2006 ENAP invested a total of US$ 274 million. Of this, 45% was allocated to the Refining and Logistics Division and 55% to the Exploration and Production Division, for investment both in Chile and abroad.

Santiago, February 28, 2007.