Real Madrid are "confident" that defender Pepe will sign a new contract at the club following positive talks with the Portugal international.
Though injuries and disciplinary issues have restricted his impact at times since a €30 million transfer from Porto in 2007, Pepe is one of La Liga's most accomplished defenders and Real are determined to retain his services.
The 28-year-old's current contract expires at the end of the 2011-12 season but director general Jorge Valdano believes a new agreement is not far away.
"The negotiations with Pepe are going well," Valdano said. "He is an excellent person and one of the best central defenders in the world.
"It is true that we have been talking for some time, but I am confident that he will choose to stay on at Real Madrid. "
In the face of dominance from great rivals Barcelona, Pepe and Real have not won any silverware since 2008 but they remain in the chase for La Liga, as well as being in the quarter-finals of the Champions League and the final of the Copa del Rey, where they will face the Catalans.
A derby victory over Atletico Madrid leaves Real five points behind Barca with nine games remaining, and Pepe is ready for a demanding finish to the season.
"The next two months will be intense," he said. "We will try to live up to the challenge and make our fans happy. Whilst there's a chance, we will fight to the very end. That's what the coach and our supporters ask us to do."