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Spain's Repsol Raises Clean Energy Targets

Copyright © 2021 Energy Intelligence Group

Repsol has set higher targets for the amount of low-carbon energy it plans to produce in the coming years from its portfolio of renewable power and hydrogen projects. The Spanish company raised its renewable hydrogen capacity target from 1.2 gigawatts to 1.9 GW in 2030 and plans to have 550 megawatts of capacity by 2025, up from a previous goal of 400 MW, CEO Josu Jon Imaz told investors. "We have a clear ambition to lead this market in Spain and Repsol is going to play the card of being one of the European leaders in the new hydrogen market," Imaz said. "Spain is going to lead this market in Europe because we have a lower cost of renewable power production than some other European countries." Repsol has raised its renewable power capacity target to 6 GW by 2025 from 5.2 GW previously and its 2030 goal to 8.3 GW from 7.5 GW. Imaz said the increase reflected the strength of its project pipeline in Spain, the US and Chile. Earlier in the quarter, Repsol entered the US renewable power generation market with the purchase of a 40% stake in project developer Hecate Energy (IOD May13'21). The deal gave Repsol the option to acquire projects from Hecate's pipeline and it is now bringing forward its first two operated projects in the US -- a pair of solar farms in New Mexico with a combined capacity of 125 MW, Imaz said. Tapping Shale to Offset Dip in Output Repsol's oil and gas production tumbled in the second quarter because of unplanned downtime at its Peru LNG facility and gas production issues in Trinidad and Tobago, where it holds a stake in the BPTT joint venture with BP that feeds the Atlantic LNG terminal. Upstream production declined 12% versus the first quarter, coming in below guidance of 625,000 boe/d. Downtime at Peru LNG cost Repsol 10,000 barrels of oil equivalent per day in the first half of the year, while production issues in Trinidad shaved another 7,000 boe/d off its output. The company lowered its production guidance for the year by 5% to 590,000-600,00 boe/d. To offset some of the dip in LNG-related volumes -- and take advantage of higher US oil and gas prices -- Repsol is ramping up its short-cycle US shale activities even further (OD Apr.29'21). Repsol has already put a rig to work on its assets in the Eagle Ford Shale play in South Texas and another in the Marcellus Shale in Pennsylvania, Imaz said. It plans to add a second rig in each play later this year and two in Canada. The Eagle Ford and Marcellus rigs are expected to add 30,000 boe/d to Repsol’s production profile, "showing the optionality, the flexibility we have to use the unconventionals in this way, depending on the evolution of prices," Imaz said. The Repsol CEO ruled out making acquisitions to boost its upstream production, saying such deals rarely made sense at current prices. "At these prices, an M&A acquisition is very difficult to be accretive for the company or for our shareholders," he said. Imaz said he would prefer Repsol to produce slightly less, "instead of destroying the cash and the money of our shareholders." Noah Brenner, London Repsol Q2'21 Earnings Results (€ million) Q2'21 Q2'20 %Chg. Q1'21 Revenues €11,395 €6,381 79% €10,592 Operating Cash Flow 902 268 237 1,030 Net Income 587 -1,997 -- 648 Adjusted Income €488 -€258 -289 €471 Production ('000 boe/d) 561 640 -12% 638 Source: Repsol

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