Repsol to Rein in Oil Output and Boost Renewables
(Bloomberg) -- Repsol SA outlined its plans for a greener future, saying it intends to wind down the search for oil and expand its renewable capacity fivefold during the next decade.
The Spanish company, which was the first oil major to set a net-zero emissions target a year ago, will put its projects into “harvest mode” as it refocuses on higher-value oil production in fewer countries. Cash flow from Repsol’s petroleum business will be funneled into an expansion of renewable capacity to 15 gigawatts -- including wind and solar -- from the current 2.95 gigawatts.
“By 2030, Repsol will be a company that is renewed, more sustainable, and more focused,” the company said in its strategic plan published on Thursday. “Our strategy is based on a multi-energy offering that combines all the technologies for decarbonization.”
Repsol’s decision last December to write down the value of its oil assets by 4.8 billion euros ($5.7 billion) and its promise to eliminate net emissions of greenhouse gases from its operations by 2050 was the first step in a dramatic shift for the oil industry. Larger European rivals, including Total SE, Royal Dutch Shell Plc and BP Plc, have since followed suit or gone even further with their green pledges, although the U.S. majors remain committed to fossil fuels.
Repsol’s new strategy also includes a concrete target for green-hydrogen production, setting it apart from other oil producers. Most companies argue this fuel is not yet cost-effective. Repsol is seeking to align itself with the Spanish government’s aim of transforming the country into a key European hub for hydrogen shipments, and the company aims to produce more than 1.2 gigawatts in 2030.
The energy producer set a new dividend policy, moving all payouts to cash and no longer offering a so-called scrip, which is paid in shares. Repsol said it doesn’t plan to increase debt in the next five years, and is targeting adjusted earnings before interest, taxes, depreciation and amortization of more than 8.2 billion euros by 2025.
Chairman Antonio Brufau started to publicly outline his intention to build a cleaner oil firm as far back as 2016. Central to the Catalan-native’s strategy is becoming what he calls an all-around “energy company” rather than an oil producer. Last month, Chief Executive Officer Jose Jon Imaz said he is already spending more on developing renewable projects than searching for oil.
© 2020 Bloomberg L.P.
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