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Eurogas Corporation: Update on Castor UGS Project, Spain

May 16, 2008

CALGARY, ALBERTA--(Marketwire - May 16, 2008) - Eurogas Corporation (TSX VENTURE:EUG) is pleased to announce that on May 16, 2008 the Development Concession for the Castor Underground Gas Storage ("UGS") project received official approval from the Council of Ministers of the Spanish government. Eurogas has developed the Castor project over a period of many years, guiding it through numerous technical and regulatory steps, and this approval is a key milestone for Eurogas and its shareholders in becoming a major partner in a large Spanish utility project. The Castor UGS project, in which Eurogas has a 24.6% working interest, consists of an underground gas storage reservoir that lies at a depth of 1800 meters approximately 21 kilometers off the east coast of Spain in the Mediterranean Sea; two offshore platforms for 13 wells and processing facilities; an onshore compression and processing plant located in the municipality of Vinaroz; and an adjoining 30-inch pipeline. Project approval signals the start of detailed engineering, procurement of equipment and contracts, and construction of facilities and pipelines. The estimated cost of the Castor project is C$2 billion with a completion date scheduled for the end of 2010. Because of its large storage capacity and high deliverability Castor UGS is recognised as being fundamental to the efficiency and security of the Spanish gas system. In accordance with previously announced agreements with ACS Servicios Comunicaciones y Energia, S.L. ("ACS"), ACS increased its ownership of the operating company Escal to 66.66%. Control of Escal and the Castor project has passed to ACS who will provide and/or arrange for the funding of the project, including any guarantees, through to the inclusion of the project into the Spanish gas system. ACS has also been granted the EPC contract. Under the terms of the agreements, within 25 days of the grant of the Development Concession, ACS will repay to Eurogas most of the amount of its prior investment in the Castor project which is approximately $42 million at current exchange rates. At start-up of the Castor UGS facility, ACS, Enagas and the Castor Limited Partnership ("CLP") will each own 33.33% of the Castor project. Eurogas controls CLP through its 73.7% ownership. ACS Group is the largest construction group in Spain and eighth largest in the world. 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. 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.
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