The Portuguese government Thursday said it has approved, in its weekly cabinet meeting, a EUR1.1 billion investment program to convert two refineries of Portuguese oil and gas company Galp Energia SGPS (GALP.LB).

In a subsequent regulatory filing, Galp said the government had also granted it a tax relief of around 15% of the investment.

Galp also said the investment contract must still be approved by the European Commission, as it involves E.U.

The investment is aimed at enlarging the company's Oporto and Sines refineries to increase diesel production by 2.5 million metric tons per year.

The expansion is part of Galp's 2007-2010 investment plan, which will help it improve its refining margins by $3 a barrel.

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