Even the difficult circumstances in which Repsol carried out its activities in 2020 did not prevent the company from working on the design of its future. The new Strategic Plan will allow it to transform into a stronger, more profitable, and more competitive company that already now has the energy transition and the customers at the core of its strategy, with legacy businesses capable of financing the plan.
In 2020, the Exploration and Production business achieved earnings of €195 million, in a period in which it established cost-reduction measures and redefined its plans for the development of assets to address the drop in hydrocarbon prices. The successful management by the business was particularly clear in the fourth quarter of 2020 in which it improved its year-on-year result. Additionally, through a number of initiatives the business reduced the emissions from its operations by 269,500 tons of CO2e.
Average production totaled 648,000 barrels of oil equivalent per day, in line with the new Strategic Plan that prioritizes value over volume. As for exploration, in 2020 the drilling of nine wells was completed, seven of them successful. This figure represents the highest number of commercial wells discovered in a single year in the company's history.
Hydrocarbon discoveries were made in the United States, Colombia, and Mexico. Two discoveries in the month of April in waters off the coast of Mexico are especially noteworthy. Both were explored with lower costs and shorter timeframes than estimated.
The 2021-2025 Strategic Plan also identifies the pillars of this business: a focus on key geographic areas and a reduction of emissions in its portfolio which will continue to be subject to active management. The company has defined 14 short-cycle projects with attractive returns that make them able to generate cash flow quickly. The business will rely on its strengths, such as flexibility, efficiency, and a high technological level, to increase its contribution to the Group. Exploration and Production will generate €4.500 billion in cash flow between 2021 and 2025, and it will reduce its cash flow breakeven target by 20% over the period, to under $40 per barrel. At the same time, it will reduce its emissions of CO2e per produced barrel by 75% by 2025.
The Industrial area posted earnings of €297 million due to the reduced activity and the fall in refining margins. It continued to evolve to transform its facilities into multi-energy hubs capable of generating products with a low, zero, or even a negative carbon footprint, promoting new business models based on digitalization and technology. As laid out in the 2021-2025 Strategic Plan, the company will rely on four main pillars to address this transformation process: energy efficiency, the circular economy, renewable hydrogen, and capture and use of CO2.
The innovative projects launched by Repsol in 2020 demonstrate the importance of technological neutrality when looking for solutions for decarbonization as well as the prominence that should be given to Spanish industry, both in the economic recovery and in the fight against climate change.
In mid-June, the company presented two major decarbonization projects that will be developed at its Petronor refinery in Bilbao. The first of these is one of the world’s largest net-zero emissions synthetic fuel plants using renewable hydrogen. The second is a plant for the generation of gas from urban waste.
Renewable hydrogen is a clear growth vector for Repsol that aims to be a leader in its production in the Iberian Peninsula, producing the equivalent of 400 MW by 2025 and with the ambition of surpassing 1,200 MW by 2030. At the end of January 2021, Repsol presented the H24All project that aims to develop the first 100 MW alkaline electrolyzer plant in Europe to be connected to the Petronor refinery. Repsol is leading the consortium of 15 entities that presented an application for funding as part of the European Green Deal.
Repsol has also set ambitious goals for the biofuels segment where it aims to have a production capacity of 1.3 million tons by 2025 and more than two million by 2030. On October 22 of last year, the company took an important step in this direction with the announcement of the construction of the first advanced biofuels plant in Spain at its Cartagena refinery. This new plant, involving an investment of €188 million, will supply 250,000 tons of advanced biofuels for aircraft, trucks, and cars every year, thus enabling a reduction of 900,000 tons of CO2 annually.
Along the same lines, at the beginning of August, the first batch of biofuel for aviation in the Spanish market was successfully manufactured at the Puertollano refinery. This milestone found continuity in the . Este hito ha tenido continuidad en enero de 2021 con la producción en production in Tarragona of a second batch of 10,000 tons in January 2021.
The Chemicals business adjusted its operations since the start of the pandemic to respond to an increase in demand from sectors linked to healthcare and food, essential in the fight against COVID-19. In line with its focus on innovation, Repsol launched several cutting-edge projects, such as as the first plant in the Iberian Peninsula for the manufacture of high-impact resistant polymers that will be operational in Tarragona in 2021. The company is committed to efficiency in the industrial processes of its Chemicals business, oriented towards a circular economy with the goal of recycling the equivalent of 20% of its polyolefin production by 2030.
The Commercial and Renewables unit achieved earnings of €485 million. The business remained faithful to its philosophy of innovating its customer service, introducing new digital products and services at its service stations. This has enabled it to respond to the needs generated by the pandemic by offering cutting-edge energy solutions to continue progressing in the energy transition.
One of the main digital solutions for this business is Waylet, Repsol’s app that can be used for payment at the company’s service stations and in the more than 8,000 stores that have adhered to this payment system. The growth in the number of users has been exponential over the last three years. At the end of 2020, it had more than two million registered users, up from 927,000 at the end of 2018. Waylet is a key lever in the strategy of Repsol’s new Client business and in the growth of its digital user base. The Strategic Plan 2021-2025 outlines the goal of surpassing eight million 100% digital users by the end of the period.
Repsol already has 1.13 million power and gas customers. In 2020, it launched innovative self-consumption alternatives, such as Solify and Solmatch, the first major solar community in Spain.
The company currently has a total installed low-emissions generation capacity of almost 3,300 MW. In line with the Strategic Plan, it will continue increasing its asset portfolio with the goal of becoming a global operator and reaching a generation capacity of 7,500 MW by 2025 and 15,000 MW by 2030.
The development and commissioning of renewable assets are among the most notable aspects of the company’s activity in 2020. In Spain, Repsol is developing six renewables projects: three wind (Delta, with 335 MW; Delta 2, with 860 MW; and PI, with 175 MW) and three solar (Valdesolar, 264 MW; Kappa, 126 MW; and Sigma, 204 MW). In 2020, the first wind turbines of the Delta project were connected to the grid while construction works began at Valdesolar and Kappa.
The company also gave a major boost to the international expansion of this business, creating a joint venture with the Ibereólica Renovables Group. This gives Repsol access to a portfolio of projects in Chile that are currently in operation, under construction, or under development, totaling over 1,600 MW by the year 2025 and with the possibility of surpassing 2,600 MW by 2030 through this partnership.
