Exhibit 4.2

**Unofficial English translation    of agreements originally drawn up in Spanish. In case of discrepancy the Spanish    language version prevails**

**NOVATION OF THE AGREEMENT OF JANUARY, 2000  BETWEEN REPSOL YPF AND “LA CAIXA”**

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 In Madrid, on May sixteenth, two thousand and two,

**BETWEEN**

 AS PARTY OF THE FIRST PART,      RAMÓN BLANCO BALÍN,in the name and on behalf REPSOL YPF, S.A.

 AS PARTY OF THE SECOND PART,      ANTONIO BRUFAU NIUBÓ, in the name andon behalf LA CAIXA DE PENSIONS I ESTALVIS DE BARCELONA (“LA CAIXA”).

 With both parties recognizing sufficient legal capacity in each other forissuance of this novation agreement,

**WHO DECLARED**

|   | 1. | That on January 11, 2000,        REPSOL YPF, S.A. and LA CAIXA DE PENSIONS I ESTALVIS DE BARCELONA (“LA        CAIXA”) signed an agreement to regulate their respective shareholding        interests in GAS NATURAL SDG, S.A. and ENAGAS, S.A., their representation        in the management bodies of both companies and to establish determined        principles for industrial activity, convening certain prior agreements        because of the privatization of REPSOL, S.A. and ENAGAS, the replacement        of the *Instituto Nacional de Hidrocarburos by the Sociedad Estatal        de Participaciones Industriales* (SEPI), the new regulation of gas        activities resulting from the Hydrocarbons Law, as well as the international        expansion of REPSOL YPF, S.A. and GAS NATURAL SDG, S.A. This agreement        permitted integration of GAS NATURAL SDG, S.A. (GAS NATURAL) into the        REPSOL YPF group for accounting purposes (Art. 42 of the Commercial Code)        and the securities market (Art. 4 of the Securities Market Law), with        its financial statements to be encompassed in that group's consolidated        statements through the system of full consolidation. |
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|   | 2.     | That        the agreement of January 11, 2000 was reported to the National Stock Market        Commission (*Comisión Nacional del Mercado de Valores*) and        the General Office of Economic Policy and Defense of Competition (*Dirección        General de Política Económica y Defensa de la Competencia*)        within the Economics Ministry and Treasury (*Ministerio de Economía        y Hacienda*), to query on the obligation of submitting notification        of the consolidation agreements since the status of GAS NATURAL, at that        date, was defined as a company under the joint control of REPSOL, S.A.        and LA CAIXA, with both partners having a significant participation in        its capital and having an equal number of members on the Board of Directors        of GAS NATURAL. The query was answered by a resolution from the General        Office of Economic Policy and Defense of Competition (*Dirección        General de Política Económica y Defensa de la Competencia*)        on March 10, 2000, establishing “that the aforementioned agreement        does not constitute a modification of the control structure of GAS NATURAL,        since it did not result in a concentration pursuant to the provisions        in Paragraph 2, Art. 14, Law 16/1989 of July 17, of Defense of Competition,        thus REPSOL does not have a notification obligation in application of        Art. 15 of the aforementioned Law.” |
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|   | 3.     | After this agreement,          the following events, among others, occurred which made it necessary    for its adjustments and novation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | a) |   | Promulgation        of Royal Decree Law 6/2000 of June 23, regarding urgent measures to intensify        the competition in the markets for goods and services affecting the gas        sector, and in particular ENAGAS S.A., classified as “the technical        manager of the gas system,” establishing determined limits to direct        or indirect participation in its share ownership, which was the reason        for submission of the plan of action to the *Secretaría de Estado        de Economía, de la Energía y de la Pequeña y Mediana        Empresa* covered in Art. 10 of Royal Decree Law 6/2000, as well as        the process presently underway of selling holdings in that company. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | b) |   | The agreements          in principle reached in March of this year, 2002, for reorganization          of the midstream activities of gas and integration of business in the    area of gas and electricity. |

 

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|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                              | c)     |   | The decision passed by the Board of Directors          of REPSOL YPF, S.A. to sell a significant part of the share ownership          of REPSOL YPF, S.A. in GAS NATURAL SDG, S.A. meaning exit of GAS NATURAL          SDG. S.A. from the consolidated REPSOL YPF group, along with both parties'          intention not to modify the shared control structure of GAS NATURAL,    as previously referenced. |
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|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | 4.     | In view of the          aforementioned antecedents, and since it is the will of both parties          to continue to create value for GAS NATURAL SDG, S.A. (which is the reason          for their holdings), and to maximize its possibility of competing in          the market in all of the business segments that are part of its public          strategy, they have agreed the novation of the agreement of January 11,    2000 pursuant to the following |

 

**STIPULATIONS**

**1.- GENERAL PRINCIPLES**

REPSOL YPF, S.A. and LA CAIXA will at all times maintain the principles of  transparency, independence and professionalism in the management of GAS NATURAL  SDG, S.A., after its exit from the REPSOL YPF Group, by maintaining joint control  over that company through a stable continued presence in its share ownership.

**II.- LINES OF INDUSTRIALACTIVITY**

In conformity with these principles, both parties support that GAS NATURAL  SDG, S.A. develop as lines of activity, those activities related to the business  of natural gas, but with the exclusion of ownership of reserves, as well as  electric generation and commercialization, telecommunications and any other  activities necessary or appropriate for the development of its multiproduct  strategy as indicated in its strategic plans and as explained to the markets,  and those as may be approved at any time by its Board of Directors - all from  activities within the scope of its corporate purpose and, specifically, the parity participation  with REPSOL YPF, S.A. in the SG Midstream Corporation for development of the  intermediate phase in the natural gas chain.

 

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**III. - MANAGEMENT OF THECORPORATION**

GAS NATURAL SDG, S.A. will be managed by its Board of Directors, which will  act through an Executive Commission and other specific bodies.

**a) Board of Directors of GAS NATURAL SDG, S.A.**

REPSOL YPF S.A. and “la Caixa” undertake    to exercise their voting rights at the general shareholders' meetings of    GAS NATURAL    SDG, S.A. to have  its Board of Directors composed as follows:

|   |   |   | – |   | There will be twelve directors. A general        shareholders' meeting will be convened to establish, among other things,        the number of directors at twelve, after which the composition of the    Board can be completed as established below.                                                                                                                                                                                                             |
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|   |   |   | – |   | Both parties will        try to appoint as many members as possible to the Board of Directors        from the total number established by the Board, in full compliance with        the rights recognized for other shareholders by Article 137 of the Law    on Corporations.                                                                                                                                                                                     |
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|   |   |   | – |   | REPSOL YPF, S.A.        will have the right to propose, and “la Caixa” will vote in        favor of this proposal, 4 members to the Board of Directors. “la        Caixa”, in turn, will have the right to propose, and REPSOL YPF,        S.A. will vote in favor of this proposal, another 4 members to the Board        of Directors. The remaining 4 members will be independent directors elected    by mutual agreement of both parties. |

 

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|   |   |   | – |   | In the event that        one shareholder or group of shareholders, exercising the right granted        by Article 137 of the Law on Corporations, in the manner set forth in        Royal Decree 821/1991, or by consensus with the other shareholders, should        appoint one or more directors, the parties, by mutual agreement, will        adjust the number of members and composition of the Board so that they        can fulfill the objective sought, and to the extent possible, keep the        equilibrium between the directors designated by REPSOL YPF, S.A. and    those designated by “la Caixa” |
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|   |   |   | – |   | If directors are        appointed by the Board of Directors itself to fill vacancies produced        during each fiscal year, the directors designated by each of the parties        will follow for such appointment the same criteria set forth in the preceding    paragraphs.                                                                                                                                                                                                                                                                                                                                               |

**b) Appointment to positions**

For the positions to be appointed by the Board    of Directors, “la Caixa” will  propose someone to fill the position of President from the directors it has  proposed, and REPSOL YPF, S.A. will propose someone to fill the position of  Managing Director from among the directors it has proposed, with both parties  agreeing that the directors proposed and appointed by each will vote in favor  of the designation of these positions within the Board pursuant to the appointment  power recognized herein.

**c) Executive Commission of GAS NATURAL SDG, S.A.**

The Executive Commission of GAS    NATURAL SDG, S.A. will be made up of four members, two of whom will be proposed    by REPSOL YPF,    S.A.    and the two remaining  by “la Caixa”. Those proposed by “la Caixa” must include  the President, who will also chair the Executive Commission, and those proposed  by REPSOL YPF, S.A., the Managing Director.

 

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**d)	Committees of the Board of    Directors of GAS NATURAL SDG, S.A.**

In addition to the Executive Commission of the Board of GAS NATURAL, SDG,  S.A., a Nomination and Compensation Committee and an Audit and Control Committee  will also be maintained on this company's Board of Directors. Neither of these  committees will have delegated powers. Their functions will be to make studies  and proposals.

The Nomination and Compensation Committee will    be chaired by one of the directors appointed at the proposal of “la Caixa”,    and the Audit and Control Commission will be chaired by one of the directors    appointed at the proposal  of REPSOL YPF, S.A.

The President of the Commissions cannot have the deciding vote.

**IV. ENAGÁS S.A.**

The arrangements of agreement of January 11, 2000 referred to ENAGAS, S.A.  are subordinated to development and execution of plans and effects derived  from Royal Decree Law 6/2000 of June 23, and acts and provisions arising from  its application.

**V. EFFECTIVE DATE OF THEAGREEMENT**

In all that it is not incompatible with the provisions herein, the agreement  of January 11, 2000 will remain in effect.

This novation agreement will take    effect on this day, upon contribution by REPSOL YPF, S.A. of a significant    part of its previous holdings. It is the  desire of both parties that this be extended over time to thus give a guarantee  of stability to the company. Thus its duration will extend as long as each  of the parties maintains or increases its actual share ownership, or keeps  it until it reaches at least 15% of the capital representative of GAS NATURAL  SDG, S.A. Furthermore, at the request of either of the parties, a change in  the control structure of either of the parties or of GAS NATURAL SDG, S.A. will    be grounds for termination of the agreement and mandatory waiver of the rights    recognized hereunder.

 

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**VI. - OBLIGATION TO REPORTRELEVANT CIRCUMSTANCES**

Both parties are required to inform each other, with sufficient advance notice,  of any fact or decision that might affect compliance with these stipulations,  or their efficacy, duration or effect.

Noncompliance with this obligation may be invoked by the other party as grounds  for rescission of the agreement.

**VII. - COMMUNICATION WITHTHE SECURITIES COMMISSION**

This novation agreement will be  reported to the National Stock Market Commission (*Comisión Nacional  del Mercado de Valores*) and the markets, and published as a significant  event. It will also be reported to the competent authorities in the area of  competition regulations, in whatever manner is necessary to indicate novation  of the agreement of January 11, 2000, but not a change in the shared control  structure, which is already reflected in the agreement novated herein.

As evidence of their conformity, both parties have signed on the indicated  date, May 16, 2002.

| REPSOL YPF, S.A.                         | LA CAIXA DE PENSIONS I ESTALVISDE BARCELONA (”THE FUND”) |
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| Signed: Ramón Blanco Balín | Signed: AntonioBrufau Niubó                                 |

 

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