on energy transition - repsol · 2020-03-12 · 17% of retail shareholders 2 ~30% of institutional...
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on energy transition
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ALL RIGHTS ARE RESERVED© REPSOL, S.A. 2019
Repsol, S.A. is the exclusive owner of this document. No part of this document may be reproduced (including photocopying), stored, duplicated, copied, distributed or introduced into a retrieval system of any nature or transmitted in any form or by any means without the prior written permission of Repsol, S.A.
This document contains statements that Repsol believes constitute forward-looking statements which may include statements regarding the intent, belief, or current expectations of Repsol and its management, including statements with respect to trends affecting Repsol’s financial condition, financial ratios, results of operations, business, strategy, geographic concentration, production volume and reserves, capital expenditures, costs savings, investments and dividend payout policies. These forward-looking statements may also include assumptions regarding future economic and other conditions, such as future crude oil and other prices, refining and marketing margins and exchange rates and are generally identified by the words “expects”, “anticipates”, “forecasts”, “believes”, estimates”, “notices” and similar expressions. These statements are not guarantees of future performance, prices, margins, exchange rates or other events and are subject to material risks, uncertainties, changes and other factors which may be beyond Repsol’s control or may be difficult to predict. Within those risks are those factors and circumstances described in the filings made by Repsol and its affiliates with the Comisión Nacional del Mercado de Valores in Spain and with any other supervisory authority of those markets where the securities issued by Repsol and/or its affiliates are listed.
Repsol does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that the projected performance, conditions or events expressed or implied therein will not be realized.
Some of the figures included in this document may be considered Alternative Performance Measures (APM) in accordance with the guidelines of the European Securities and Markets Authority (ESMA. Further information on APMs (definition, purpose, reconciliation with financial statement figures) may be found on Repsol’s corporate Website.
This document does not constitute an offer or invitation to purchase or subscribe shares, pursuant to the provisions of the Royal Legislative Decree 4/2015 of the 23rd of October approving the recast text of the Spanish Securities Market Law and its implementing regulations. In addition, this document does not constitute an offer to purchase, sell, or exchange, neither a request for an offer of purchase, sale or exchange of securities in any other jurisdiction.
The information contained in the document has not been verified or revised by the Auditors of Repsol.
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Index02
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01Company
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Dividend per share 8% p.a. growth with full buyback of shares
Dividend target fully covered at $50/bbl
CFFO dividend coverage to grow from 3.9x in 2017 to 4.3x in 2020
Sustainable long term pay-out
1. Increasing shareholder returns Growth across all value-creation metrics, at any oil price
Downstream activated as asset-light growth engine
Upstream delivering performance improvement and portfolio
upgrade
Strong pipeline of attractive growth projects in both divisions
2. Growing our portfolio profitably
Develop long term options
Leverage our competitive advantages
Reduce carbon footprint
Build new capabilities
3. Thriving in the energy transition
Note: CFFO (Cash Flow from Operation) = EBITDA +/-Working Capital variation + Dividends from affiliates -taxes paid -abandonment cost and othersIn this document, economics shown under $50/bbl Brent and $3/MBtu HH flat in the period 2018-20, although it is not Repsol’s price deck
4. Financial flexibility
01 Company overviewDelivering value growth through the cycle
5
Multy-energy company
1 Million bbl/d refining capacity
~2.6 Millions tons of base chemicals3 capacity
~715 kboe/d production
~2.3 billion boe proved reserves1
~4,900 service stations
Gas to oil ratio: 73% of the reserves and 63% of the production
2.9 GW total installed capacity and additional planned projects for ~2.7 GW
Upstream Downstream Both
17% of retail shareholders 2
~30% of institutional shareholder base managed under ESG criteria
1. As of 31/12/2018. 2. May 2019. 3.Includes 1.2 Million tons of Ethylene and 1.4 Million tons of other base Chemicals
01 Company overviewRepsol: a unique, integrated Global Position
Sacyr
Free Float
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Note: EPS considering Adjusted Net Income. 1. 2017 values adjusted to $50/bbl Brent scenario and to exclude Spain extraordinary tax refund effect. EPS in 2017 €1.6/share without adjustment
Production2.6% CAGR
CFFO+€1.9B growth
EPS+€0.6/share growth
DPS8% CAGR
20202017 202020171 20202017202020171
695750
CAGR2.6%kboe/d
EPS€/share
DPS paidon year €/share
4.6
6.5
1.4
2.0
0.8
1.0
0.2
750€ Billion
CAGR+12%
CAGR+12%
CAGR+8%
+17% CAGR vs 2017w/o 2017 GNF results
Scrip dividends + buybacks
Cash dividend
Scrip dividend
01 Company overviewKey metrics to 2020 @ $50/Bbl Brent flat
While focusing on financial discipline with ROACE > WACC, maintaining investment
grade and keeping our zero accidents ambition based on operational excellence
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Expand & Lowcarbon business
Profitability impact
International Margins
RISE (efficiency & Digital Program)2
2020 CFFO @50 $/bbl
Corporate & others
New production
2017 CFFO1
@50 $/bbl
2019E (B€) +0.3 +0.33 +0.08 +0.133 +0.12 +0.06
UPSTREAM+1 B€
DOWNSTREAM+ 0.8 B€
CORPORATION+ 0.1 B€
+1.0
+3 %
1. Adjusting values to $50/bbl and excluding Spain extraordinary tax refund effect. CFFO in 2017 was €5.5 Bn.2. RISE production impact considered in new production3. Refers to sustainable savings
01 Company overviewGrowing our portfolio profitability
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Fully funded at $50/bbl keeping a strong financial position
17.0
3.8
11.0
1.6
4.2
4.0Expansioncapex1
2018-2020
GNF divestment
CFFO @50
Sources of cash Uses of cash
20.8 20.8€Bn
Financingcost2
54
50
2018 2018-20Guidance
2018 2018-2020
Ongoing efficiencies and digitalization initiatives will contribute with
further savings towards 50$/bbl target on average 2018-2020
Core portfolio
1. Downstream expand and Low carbon business. 2, Financing costs include leases, financial charges, dividends to minority, hybrids interests and other movements
01 Company overviewStrategic Plan fully funded at $50/bbl - Strategic progress
Total Group’s Free Cash Flow breakeven, excluding inorganic capex and divestments, was 54 $/bbl in
2018, in line with our strategic objective
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02Sustainability
as part of
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Repsol’s commitment to Sustainability is integrated in the company’s strategy, and supported by Senior Management
Repsol has implemented integrated reporting which also includes disclosure in-line withthe Task Force on Climate-related Financial Disclosures (TCFD). In fact, Repsol hasjoined TCFD recommendations in April 2018
Participation of the Senior Management in setting strategic objectives for social, safetyand environmental out to 2020
Existence of an Executive Managing Direction on Technology Development, Resources, andSustainability, reporting directly to the CEO
Establishment of objectives linked to social, safety and environmental targets, for allemployees with variable remuneration (weight between 10-20%)
We support the UN Agenda 2030 and its Sustainable Development Goals (SDG), takingthem as a reference to define our sustainability priorities
Established on May 27th, 2015
Approved by the Board of Directors on December 2015 and updated on 2017.
Existence of a Sustainability model approved by the Corporate Executive Committee on October 2016
Approved on June 2017 and it is reviewed annually. It establishes specific goals from 2020 to 2025
Aligned with the consecution of the Sustainable Development goals (SDG)
02 Sustainability as part of Repsol’s DNA
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Implementation of circular economy projects Excellence in spill prevention and response Optimized water & waste management
33,33% of women on the Board of Directors reaching our target of 30% by 2020.
Code of Ethics and Conduct updated following Talisman acquisition
Anticorruption policy No presence in tax havens
Our ambition: to achieve and maintain solid relationships with communities
Policy on respect for human rights based on the UN Guiding Principles on Business and Human Rights
Objective: proportion of women in leadership positions to 30% by 2020
Promoting innovation and development. 84 M € invested in 2018
Investing in Start ups and new Technologies: 85 M € committed for the period 2016-2020
1. A reduction of 13% on 2017 baseline.
SustainabilityMain axes
Our ambition: zero Accidents Embedded safety culture Strict asset integrity procedures
Repsol will be a net zero emissions company by 2050
Objective: reduction of 3 M tons of CO2 eq in the period 2018-20251
Repsol commits to reduce by 25% its methane emissions by 2025
50% reduction of the routine flaring by 2025 50 M € Social Investment fund specific for
energy transition
02 Sustainability as part of Repsol’s DNARepsol’s Global Sustainability Plan: main axes
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1
2
3
4
5
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
LTIFR
TRIFR
We have established targets to reduce PSIR1 and occupational safety (LTIFR2 and TRIR3)2 fatalities in 2018 (accidents in transport activities in Spain)
Occupational Safety 1-2 Process Safety Incident Rate3
Systemic Risk Management Risk assessment through the entire safety process lifecycle
to prevent impacts on people, environment and assets Operations control through work permits and identification
of critical elements of our facilitie
3,72
2,53
1,461,01
0,65 0,62 0,47
0
1
2
3
4
2012 2013 2014 2015 2016 2017 2018
PSIR
(1) LTIF: (Lost time injury frequency rate )number of lost time injuries and fatalities, including company employees and contractor staff, accumulated within the period, per million hours worked.(2) TRIR (Total Recordable Incident Rate): Total number of injuries (fatalities, lost time injuries, medical treatment and restricted work) , including company employees and contractor staff, accumulated within the period, per million hours worked.(3) PSIR (Process safety incident rate): Number of Tier 1 and Tier 2 process safety incidents which occurred within the period per million hours worked related to process.
Our ambition: zero accidents
Focus on Process Safety to prevent major industrial accidents:
Working with 2015-2020 specific goals
02 Sustainability as part of Repsol’s DNASafe operations
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Developed our own evaluation methodology on safety culture, aiming to identifying strong and weak points. The results enable the development of improvement plans to achieve the same level of safety culture for the whole company
Fifteen diagnostics have been carried out so far1
Workshops have also been conducted in Norway, Canada and the US Publish the White Paper on Safety Culture
Make headway with the implementation of the Company's Crisis Plan by carrying out a crisis management drill exercise in the Corporate area
Improve the quality of our incident investigations We are working on a global safety culture strategy seeking to
systematize the culture diagnostics, work on company transversal actions (fair culture, ...) and measure the evolution of the safety culture.
Applying both to employees and contractors
(1) Bolivia E&P business, LPG business in Spain, petrochemical business in Portugal (Sines facilities) Cartagena, A Coruña, Tarragona Puertollano refineries, Repsol Technology Center, La Pampilla refinery, Campsared Service Stations (Spain), Mobility Peru, Lubricants, Asphalts, and Specialized Products Business and Engineering Direction.
Culture Project:
Safety and environment training:
02 Sustainability as part of Repsol’s DNASafe operations
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A new Code of Ethics and Business Conduct was approved by the Board of Directors following the acquisition of Talisman Company.
It applies to all Repsol directors, executive personnel, employees and contractors.
Allows employees and third parties to ask questions and report concerns about the Code of Ethics and Business Conduct and Crime prevention model without fear of retaliation.
It is administered by an independent company (NAVEX Global) and it is available 24 hours a day, seven days a week, by telephone, online and in different languages.
60 concerns received during 2018.
A formal framework of regulations, procedures and controls, to monitor and control the risks of crimes being committed.
In 2017: a Crime Prevention Manual was designed and implemented.
2018: in situ training sessions for Repsol executives and directors, and an online course for those responsible for management of the Model's control features.
02 Sustainability as part of Repsol’s DNAEthics and Transparency
Our ambition: No cases of corruption in the activities carried out by the Repsol Group
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Its duty is to manage the compliance of the Repsol Group’s Ethics and Conduct Code
It is also Repsol’s Crime Prevention Body for the purposes of the Crime Prevention Model
Strengthening the role of compliance through the appointment of a Chief Compliance Officer in the CD legal affairs and CCO
Reinforcing our compliance commitments contributes to the strategic objectives of efficiency and control of the Company
It enshrines the company’s commitment to carrying out all its activities in accordance with current legislation wherever it operates
Anticorruption policy applies to employees, contractors and business partners
Repsol rejects all forms of corruption and will apply a zero-tolerance approach in respect to any breach of this policy
02 Sustainability as part of Repsol’s DNAEthics and Transparency
Our ambition: No cases of corruption in the activities carried out by the Repsol Group
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Responsible compliance
Application of the Spanish Code of Good Tax Practices
Streamlining of Group’s corporate structure, not using tax havens or non-transparent structures
First submission of country-by-country report (CBC) to the Spanish tax agency (AEAT)
Tax efficiency
Application of tax benefits in accordance with letter and spirit of law and accessible to all economic operators (R&D deductions, freedom of amortization, capitalization reserve, etc.)
Cooperative relations
Participation in joint work forums with authorities (Spain, Portugal, Singapore, United Kingdom, Netherlands)
Members of tax forums of the EU, OECD and the UN
Prevention of significant tax risks
Incorporation of tax risks to Group’s comprehensive risk management system
Reporting to Board of Directors of tax strategy and management during year. Submission to approval of Board of Directors of any transaction which may entail a special tax risk
Transparency
Publication of tax payments by country
Leaders in Spain in transparency and tax responsibility
Incorporation of tax objectives to Repsol Global Sustainability Plan
Active dialogue with NGO’s
Members of the Extractive Industries Transparency Initiative (EITI)
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04
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02 Sustainability as part of Repsol’s DNAEthics and Transparency
Our ambition: Achieve public recognition as a responsible and transparent company in tax matters
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Committed to UN Guiding Principles on Business and Human Rights “Protect, Respect and Remedy”.
Global Framework and management system, compliant with leading International Standards (International Finance Corporation, International Labor Organization, UN Guiding Principles, Organisation for Economic Co-operation and development guidelines).
Global (Sustainability Division) and local teams at country level for Human Rights and Community Relations. More than 70 people worldwide
100% of significant operations manage opportunities and risks by taking into account at least one of the following mechanisms: 1) development mechanisms, 2) impact assessments, 3) participation of stakeholders.
All impact assessments performed in 2018 included social and human rights issues.
100% of joint operations reviewed in 2018 included human rights clauses. Human rights performance of counterparties assessed in all asset
acquisition due diligence processes carried out in 2018.
02 Sustainability as part of Repsol’s DNAPeople: respect for Human Rights and community relations
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Repsol recognizes and respects the unique nature of
indigenous, tribal and aboriginal peoples and their rights, in
accordance with existing legislation, and the obligations
established by International Labour Organization (ILO)
Convention 169, whether incorporated into the national
legislation of the countries in which we operate or not.
Repsol establishes solid relationships with indigenous
communities in the area of influence of our projects and
assets, based on principles of respect, cultural
sensitivity, integrity, responsibility, transparency and
good faith.
Repsol carries out human rights impact assessments as
part of the due diligence process and develops community
grievance mechanisms adapted to distinctive features of
indigenous peoples.
Presence of Indigenous communities is identified before
starting a project, through social baseline studies.
Repsol performs with special preventive measures, such as
anthropological contingency plans, in operations close to
areas inhabited by indigenous peoples living in voluntary
isolation.
with an official policy explicitly supporting indigenous rights defined by ILO Covenant 169, including
right to free, prior and informed consultation (FPIC).
02 Sustainability as part of Repsol’s DNAPeople
Our ambition: to achieve and maintain strong relationships with communities based on trust
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Human Rights impact assessment is a key element of the due diligence process according to the “Guiding Principles on Business and Human Rights” by the United Nations.
Before initiating an exploratory project in Colombian territorial waters, Repsol carried out a human rights impact assessment.
The main outcome of this assessment revealed that the development project would impact the sacred areas of the Wayuu ethnic group without possible mitigation measures
Analyzed all factors, including prospectivity of this area, the final Company's decision was to not go through with the exploratory project.
No-go decision after performing a human rights impact assessment in La Guajira (Colombia)
UNDP signs its first global agreement with a company from the oil and gas sector
The global agreement facilitates cooperation for a period of two years in close to 20 countries where both entities operate.
Community development and the protection of human rights will be promoted through local economic and social progress, along with support for environmental protection.
Repsol and the United Nations Development Program will collaborate to promote sustainable development
Grievance Mechanisms established in our projects, to allow local communities, contractors and other stakeholders to communicate any queries related to our operations
In 2018 Repsol made improvements to grievance mechanisms for its most significant operations, following the United Nations Guiding Principles for Business and Human Rights
Community Grievance Mechanisms
02 Sustainability as part of Repsol’s DNAPeople: respect for Human Rights and community relations: Best practices
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Established contact with more than 300 external companies that can contribute to the definition and start-up of projects
Active participation in more than 10 national and international work groups on Circular Economy (CEOE1, Chamber of Commerce, CEPS2, World Economic Forum, Plastics Europe, CEFIC3, CONCAWE, European Commission)
Establishment of an internal network with experts of different businesses and areas from the Company (accounting more than 100 people)
Generation of new circular projects in the fields of water, waste, raw material and sharing services.
Execution of more than 40 projects with external partners
Develop of circular initiatives catalog (CIC) with ~200 initiatives for working in the coming years (~30% initiatives already on track and ~35% under study)
Already working on Polymer recovery after the end of its useful life
Keep on working on the development of Circular Economy projects that have a positive impact in society
1.- Confederación española de organizaciones empresariales 2.- CEPS: Fundación Centro de Estudios Políticos y Sociales. 3.- CEFIC: European Chemical Industry Council
02 Sustainability as part of Repsol’s DNAEnvironment
Our ambition: neutral environmental impact of natural resource management
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Repsol has defined the 2025 strategic actions to achieve a sustainable management of water :
• Efficient use of water• Encouragement of internal reuse• Analysis of options for alternative water sources • Minimize the impacts of our water discharge• Keep on working on the water risks analysis using the Repsol Water
Tool (RWT)1
• Quantification of the value of water
WATER
Robust safety management minimizes the probability and consequences of spills:
• Working in three phases: i) prevention of spills, ii) early detection and iii) emergency management
• Entered into agreements with different service providers: Oil Spill Response OSRL and Wild Well control
EXCELLENCE IN SPILL PREVENTION AND RESPONSE
1.- Repsol Water tool incorporates aspects of the Global Water tool adopted by IPIECA (Global Oil and Gas Industry Association for Environmental and Social Issues and Local Water Tool ,Adopted by GEMI (Global Environnemental Management Initiative). 2.- IPIECA: Global Oil and Gas Industry Association for Environmental and Social Issues. 3.- IOGP: International Association of OIL& Gas producers
Prevention and minimization of any negative environmental impact in all our operations:
• First O&G company to put into practice the IPIECA2 and IOGP3 management framework on biodiversity and ecosystem services (BES)
• Inclusion of ecosystem services criteria into the operational management system
• Development of a methodology for the valuation of environmental impacts and dependencies of its projects and operations worldwide
• In 2018: Repsol recognized with the award “Sustainable Development 2018” for its excellent environment and impacts management over biodiversity in Sagari (Peru)
BIODIVERSITY AND ECOSYSTEM SERVICES
Working to improve waste management through the lifecycle of ourprocesses :• Managing waste according the waste hierarchy principles: waste
prevention, as the preferred option, followed by reuse, recycling, recovery including energy recovery and as a last option, safe disposal
• Seek management alternatives through strategic Circular Economy projects
WASTE
02 Sustainability as part of Repsol’s DNAEnvironment
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RESEARCH AND DEVELOPMENT
200projects
+230researchers
20patents registered
in 2018
190partnerships
84M € invested in 2018
• Energy efficiency• Methane emissions• CCUS
13partners
1.3Billion $ 2017-2026
CORPORATE VENTURING: FUND 2016-2020
Circular Economy21%
85M€
Reliability in operations7%
New materials and products12%Energy diversification
31%
Advanced Mobility25%
New Technologies E&P4%
CAPTURE INNOVATION IN START-UPS
• Targeting to Invest in new innovative companies and key strategic business in order to speed up the development and implementation of new technologies and business models on behalf of Repsol.
• A reputational due diligence of the start up and its stakeholders is performed prior to any acquisition, to confirm its alignment with good business practices
02 Sustainability as part of Repsol’s DNAInnovation and technology
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03Repsol and the
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These programs pursue long- term targetswhich have been made public in order to facilitate their progress by the stakeholders.
At Repsol we believe that two global goals have to be pursued:
• To fight against climate change and
• To provide access to affordable energy in order to support economic growth and development
In this sense, our upstream portfolioevolves towards greater percentage of gas versus oil in production and in reserves)
Repsol supports the deployment of these technologies, working to allow projects to be technically andeconomically feasible, sustainable and socially acceptable
We have the ambition to develop a new operated position in where energyefficiency, gas, biofuels, CCUS and will be needed.
03 Repsol and the Low Carbon transitionOur view on energy transition
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The Board of Directors, at the proposal of theSustainability Committee, approves the strategy forsustainability and, specifically, for climate change
The Sustainability Committee’s duties include analyzingthe expectations of the Company’s stakeholders andreporting them to the Board, and orienting and monitoringthe Company’s sustainability objectives, action plans andpractices
Strategic decisions on climate change and lines of action areset at the highest executive level. The ExecutiveCommittee (EC) has direct responsibility in themanagement of matters related to climate change. The ECalso approves the multiyear objectives and annual targetsfor reduction of greenhouse gases (GHG)
At least twice a year, or as often as necessary, the CEC and theSustainability Committee review information on execution ofthe climate change and CO2 emission strategy
GHG emissions reduction targets weight between 10% and20% of the targets of the business of the Company, and havea direct impact on the variable remuneration of employees upto the Executive Directors
Refining business: GHG emissions reduction impact on variableremuneration of all employees including those participating intrade unions
In 2019, the weighting of the Sustainability objectives wasincreased to 25% both of the annual variable compensationand long-term incentives plans of the CEO and the GeneralCounsel
03 Repsol and the Low Carbon transitionGovernance
Sustainability Committee created in 2015
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Scenario AnalysisOur ambition: to position ourselves in a scenario compatible with Paris Agreement 2ºC
• Improving efficiency and saving energy: The most cost effectivemethod of reducing GHG emissions is to save energy
• Reducing emissions from power generation: In the near term, oneof the most cost-effective and impactful steps that society can takeis to switch from coal to gas. In this sense, at Repsol we are wellpositioned with respect to our competitors. 63% of our production and73% of our reserves are gas
• Reducing emissions from remaining end-use sectors. Alternativesto electrification include hydrogen, biofuels, industrial CCUS andbioenergy with CCUS
Scenario analysis is one of the recommendations of the Task Force onClimate- related financial disclosure (TFCD)
03 Repsol and the Low Carbon transitionStrategy
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2018- 2020: Thriving in the energy transition
Supply energy (GJ) with the lowest possible emissions (CO2)
t C
O2
/ G
J
Company “business as usual”Indicator
Reference scenario
Starting Point
Carbon intensity reduction
Main levers to mitigate risks
• Ratio Gas to Oil • Energy Efficiency• Methane emissions• Flaring• Chemicals• Renewables
• e-fuels, e-H2• Natural Sinks• CCUS• Biofuels• Carbon Pricing
03 Repsol and the Low Carbon transitionStrategy
28Net zero emissions by 2050
First company in its industry to set this ambitiousgoal in line with the Paris Agreement’s climate challenge
Repsol has stablished new goals for the reduction of itscarbon intensity indicator from a 2016 baseline:
10% by 2025,
20% by 2030,
40% by 2040,
and net zero CO2 emissions by 2050
01. WE PROMOTE THE ROLE OF NATURAL GAS• 63% of our production and 73% of our reserves are gas• Committed to mitigate methane emissions associated with our
production• Endorsed United Nations Climate and Clean Air Coalition O&G
Methane Partnership initiative• Working with OGCI partners to reduce by 2025 the collective average
methane intensity of its aggregated upstream gas and oil operations byone fifth to below 0.25%, with the ambition to achieve 0.20%,corresponding to a reduction by one third .
• Participating in PRI Initiative on Methane Emissions InstitutionalInvestors Group on Climate Change (IIGCC), Climate Action 100+
• Members of Methane Guiding Principles Roundtable
03. ENERGY EFFICIENCY• Our objective: to reduce 3 million tons CO2 eq for the period 2018–
2025 (a reduction of ~13% on the 2017 baseline)
• The current plan is a continuation of the plan for 2014–2020 in whichwe had a commitment to cut CO2 by 2.1 million metric tons (1.78million metric tons CO2 eq achieved by 2018, 85% of the goal set forthe entire period). It is aligned with the global initiatives that we haveendorsed the last years (OGCI, Zero Routine Flaring, CCAC-OGMP).
• Repsol has been the first Oil& Gas company issuing a Green Bond toinvest in energy efficiency measures
02. CARBON CAPTURE, USE AND STORAGE (CCUS)• Working with our OGCI partners on pathways for marketing
commercialization, capture technologies, cost reduction and availabilityof storage capacity
• Participate in some investments in the OGCI Climate Investments
04. INTERNAL CARBON PRICING• Repsol supports worldwide carbon pricing policies as a global policy
framework • Repsol includes a carbon pricing in their strategic plans:
252018
USD/ ton CO2 402025
USD/ ton CO2
Strategy03 Repsol and the Low Carbon transition
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702040
USD/ ton CO2
05. LOW-EMISSIONS BUSINESS
2.9 GW total installed capacity and additional planned projects for ~2.7 GW (1 GW in operation by 2022)
IBIL: (50% Repsol) first recharging operator for electric vehicles. Based on 100%renewable energy• More than 1,700 charging points (230 publicly accessible) 36 fast charging points• The only 2 ultra-fast charging points for EV on the Iberian Peninsula, both at
Repsol stations. 5-10 minutes charging time. Up to 400 kW Maximum power eachOther investments: WIBLE (hybrid car sharing company partnered by KIA and Repsol)and Scutum (Spanish manufacturer of SILENCE electric motorbikes),Ample,Drivesmart y WestSmartPark
• Helping to reduce CO2 emissions by using sustainable biofuels, addingbioethanol to gasoline and biodiesel and hydrotreated vegetable oil (HVO) todiesel. Repsol already produces ~0.38 M tons of HVO.
• Repsol will double the production of high-quality biofuels derived fromvegetable oils (HVO) to 600,000 tons per year in 2030, half of which will bederived from waste transformation before 2025.
• Focus on promoting advanced biofuel projects that use non-food raw materialssuch as lignocellulosic biomass.
• Developing high value-added products aimed atimproving people’s quality of life, well-being andsafety ( Pol polyols, Rubber, EVA)
• Capability for more than 35% light feedstocks( LPG)• These materials are used in non-energy
applications and therefore their use is decoupledfrom the emissions of CO2 into the atmosphere.
• Repsol is committed to a business that is efficientand oriented towards the circular economy,with the ambition of achieving a 20% recycledcontent in its total polyolefin output by 2030.
03 Repsol and the Low Carbon transitionStrategy
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• Create a successful wholesale gas business, ensuring a competitive gas supply
• Developing new business through gas flexibility
• Deliver a competitive gas offer for our future retail clients
Leverage our industrial self consumption as the largest gas consumer in Spain
• To become a relevant Spanish low carbon multi-energy retailer
• Progressively sophisticate our offer including advanced energy services and solutions
Strong brand and ~10M clients base with direct contact
• Develop a strong position in Spain achieving a low carbon integrated business
• Technological vocation oriented to solar, wind, CCGT and other low carbon technologies
• Diversify in emerging countries that yield higher returns
Technical capabilities and experience in managing large scale projects
Low emissions business: roadmap to 2025
>15%Market share 1 Clients2 Capacity
14%
2.5 M
>1 M ~ 2.9 GW
~ 7.5 GW
Spain market share including our refineries' consumption; Not adjusted for dual clients; Assuming an average financial leverage of ~50%
Investments in low carbon businesses with IRR above 10%3
03 Repsol and the Low Carbon transitionStrategy
31
installed capacity
MW
MW
retail customers
MW
wind farm in Zaragoza
wind farm in Palencia and Valladolid
solar project in Cadiz
solar project in Badajoz
Iberian Peninsula largest offshore wind farm
on the Iberian Peninsula.
03 Repsol and the Low Carbon transitionAccelerated delivery of 2025 objectives in low carbon generation
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new investments on two photovoltaic and one wind power project
Repsol operates in areas with strict
legislative requirements for energy
and carbon. Pursuant to the Paris
Agreement, countries’ commitments
will have a significant impact on
climate policies.
In Europe, current in force, includes a number of key
directives, notably the Directive that regulates the Emissions Trading System (EU-ETS). Specifically,
the EU-ETS scheme affects our refineries and chemical facilities in Europe
The 2020 Energy and Climate package also includes the that will
involve, among other things, incorporation by the year 2020 of up to of biofuels in automotive
fuels. This percentage will be increased by the additional incorporation of the Fuel Quality Directive
Legislation on the promotion of clean and efficient road transport vehicles sets a specific average
emissions target for the fleet of vehicles marketed by automotive companies. In particular, light
vehicles have to reduce their emissions to 95 gr of CO2/km by 2020
Repsol has invested in its Refining business to adopt an advanced scheme in its complexity and
flexibility to enable it to complete in future demand scenarios
Outside Europe, and in Canada specifically, it is important to consider the implementation of the
in which the federal government has set
a carbon price pathway that will reach
Repsol has an Integrated Risk Management Systemin place, enabling the Company to identify, manage and control risks arising fromclimate change
03 Repsol and the Low Carbon transitionRisk Management
33
European Commission has also introduced the 2030 Energy and Climate package with more demanding
regulations on EU ETS:
- by 2030: at least -40% below 1990 GHG levels
- by 2050: EU leaders have committed to reducing emissions by 80-95%
- Energy Efficiency (target for the EU for 2030 of 32.5% with an upwards revision clause by 2023)
- Renewables (overall EU target for Renewable Energy Sources consumption by 2030 to 32%
- Furthermore, it mandates member states to require fuel suppliers to supply a minimum of 14%
of the energy consumed in road and rail transport by 2030 as renewable energy)
Repsol is working to minimize physical risks and the magnitude of potential impacts of climate
change in natural resources, facilities and in the climate phenomena to which the Company is
exposed: drought, flooding, temperature change
Lastly, risks are analyzed in the category of reputation or market risks in order to establish how
changes affect consumer behavior and other variables that may affect the company. The company´s
ability to keep the social license to operate
Repsol operates in areas with strict
legislative requirements for energy
and carbon. Pursuant to the Paris
Agreement, countries’ commitments
will have a significant impact on
climate policies.
Repsol has an Integrated Risk Management Systemin place, enabling the Company to identify, manage and control risks arising fromclimate change
03 Repsol and the Low Carbon transitionRisk Management
34
Regulatory changes that may affect operations or future
investments
Changes in primary energy sources towards alternatives
that are less carbon-intensive
Green Bond applied to energy efficiency projects.
Creation of a Social Impact Investment Fund to
fighting climate change in Spain
Fundraising to finance the development of certain energy
projects, derived from the position that the financial sector
or the investor may adopt in relation to the energy sector.
Wide-ranging mobility offer including alternative fuels (e.g Autogas).
Already Incorporating sustainable biofuels into our products. Leaders in
recharging for electric mobility in Spain and participating in the car
sharing initiative WiBLE
Changes in the end use of energy, either as a result of
natural market dynamics, those driven by regulation or by a
greater awareness of society of climate change
The company is committed to natural gas, biofuels and new low-
emissions businesses, such as renewable electricity generation
Boosting the Company's resilience to the regulatory frameworks,
adapting its products and services to the evolution of the use of different
energy sources
Late or inadequate adoption of practices, processes, and / or
technologies not very developed to date, oriented to (1)
energy production, distribution and storage and (2) to the
development of new non-energy products, new materials
allowing the use of oil decoupled from CO2 emissions
Investment in new innovative projects and actively monitoring
technology in our Technology Lab. Participating in startups through
our Corporate Venture fund. Investments in the development of
advanced materials from petrochemicals and in the use of CO2 as
raw material.
01
02
03
04
05
03 Repsol and the Low Carbon transitionRisk Management
35
1.76 Mt GHG emissions avoided between 2014 and 2018
4.9 Mt GHG emissions avoidedbetween 2006 and 2018
-3 Mt CO2eq by 2025Baseline: 2017
-25% by 2025Baseline: 2017
SHARING BEST PRACTICES AND TECHNOLOGY DEVELOPMENT
Methane Guidance Principles Roundtable
-50% of routine flaring by 2025
Baseline: 2018
REPSOL ZERO ROUTINE FLARING ENDORSEMENT
Minimize routine flaring in E&P operations by 2030
Ensure that new fields include, from design phase, solutions to avoid routine flaring and venting
1 2
03 Repsol and the Low Carbon transitionMetrics and Targets
36
04Corporate
37
M shares as of December 2019
Sacyr
Free Float
of retail shareholders1
of institutional shareholder base managed under ESG criteria
As of May 2019
04 Corporate GovernanceShareholder structure
38
The company's Board of Directors recognizes that a solid commitment to corporate governance is critical to establishing trust and credibility with investors.
Independents make up 53.3% of the Board. Non Executive Directors make up 93,3% of the Board
• None of the Independent Directors has been on the Company’s board for more than 12 years
• Implementation of the international standard (12-years cap) in our internal Regulations of Board of the Directors1
- 8 Independent
- 3 Propietary
- 1 Executive
- 3 External
1.- According to Repsol’s internal regulations all mandates held in companies within the same group or held as proprietary director proposed by a company of the same group will beconsidered as one single mandate.
. The Annual Corporate Governance Report 2018 includes the Board’s skills matrix, to be updated annually
Audit and Control Committee: Composed exclusively of independent directors
Nomination Committee: Composed exclusively of independent directors
Compensation Committee: Majority independent / Chairman is independent
Sustainability Committee: Majority independent / Chairman is independent
Appointment of Mariano Marzo as Lead Independent Director as of March 27, 2019
04 Corporate GovernanceBoard of Directors
39
The roles of the CEO and Chairman have been fully separated since 2014
• Repsol recognizes that having a diverse Board in terms of gender, nationality and
skills can add value to the decision-taking process
• As to gender diversity and after the appointment of Aránzazu Estefanía and Teresa
García-Milá as Independent Directors by the 2019 AGM, female directors make up
33.33% of the Board, beyond the Spanish Code of Good Governance’s
recommendation of having at least 30% female representation at the Board by 2020
• About geographical diversity, non-Spanish directors make up 26.6% of the Board.
In line with the multinational nature of Repsol, the Board members have different
nationalities and solid international experience: Rene Dahan (Netherlands), Robinson
West and Maite Ballester (United States) and Henri Philippe Reichstul (Brazil)
• Repsol’s Board is also diverse in terms of skills, capabilities and professional
expertise: its members have solid experience in different fields related to oil & gas and
energy industry, accounting, finance, IT, strategic planning, corporate governance,
academic and institutional, among others
04 Corporate GovernanceBoard of Directors
40
The Company continues improving the disclosure on the remuneration issues and the
implementation of international best practices
The Remuneration Report is submitted annually to the General Shareholders Meeting. On 2019 AGM the Report
was approved by 95.6% of the share capital attending the meeting
The 2019 AGM also approved, with a majority of 95.4%, the Directors’ Remuneration Policy for years 2019-
2021. The Remuneration Policy reflects best practices on good governance and remuneration, as well as
Repsol's unflinching commitment to ensuring the utmost transparency
The remuneration for Board members for their supervisory duties has remain unchanged since 2009
The fixed remuneration of the CEO has remained unchanged since his appointment in 2014 and that of the
General Counsel since 2011
The Company applies the limit of 2 years severance payment when appointing any new Executive Directors
(as is in the case of the CEO)
Shareholding policy for Executive Directors equivalent to 2 times salary
Partial payment of the long-term variable remuneration in shares for Executive Directors
Increase of sustainability targets on short and long-term variable remuneration
04 Corporate GovernanceBoard of Directors
41
05Annexes
42
0
20
40
60
80
100
120
140
2012 2013 2014 2015 2016 2017 2018
Own Employees
Contractors Employees
Combined
0.6 0.92 1.12 0.73 0.78 0.76
0.58 0.78 0.79 0.66 0.63 1.01
0.59
0.85 0.92
0.69 0.71
0.89
2013 2014 2015 2016 2017 2018
2.95
2.382.25
1.46 1.431.59
0
0,5
1
1,5
2
2,5
3
3,5
2013 2014 2015 2016 2017 2018
TIER 1+ TIER 2
TIER 2
TIER 1
(1) LTIFR (Lost Time Injury Frequency Rate): number of lost time injuries and fatalities, including company employees and contractor staff, accumulated within the period, per million hours worked.
(2) TRIR (Total Recordable Incident Rate): Total number of injuries (fatalities, lost time injuries, medical treatment and restricted work) , including company employees and contractor staff, accumulated within the period, per million hours worked.
(3) PSIR (Process Safety Incident Rate): number of Tier 1 and Tier 2 process safety incidents which occurred within the period per million hours worked related to process. The process safety accident will be classified as Tier 1 or Tier 2 according to the defined thresholds.
05 AnnexesSafety indicators
43
2010 2011 2012 2013 2014 2015 2016 2017 2018
Transparencia (0-100) 88 89 98 98 96 100
A- A- B
Desempeño (A-D) A B A- B B B
Repsol has been recognized as one of the best O&G companies for its Carbon Strategy. Our company has been included in the group of “leaders” 8 times in the last 11 years. In 2016 and 2017, Repsol achieved an A- score and has attained the Leadership level.
Historical results
Moving from stakeholder engagement to partnerships
The global oil and gas industry association for
environmental and social issues. Repsol is actively
involved in several work streams:
OGCI is an industry-driven initiative officially launched at the UN Climate Summit in 2014. It aims to catalyze action on climate change.
• Low Emissions Pathways.• Methane emissions.• Adaptation and resilience.
• Energy efficiency.• Climate reporting.
Repsol joined the initiative in June 2015. We are working in 3 different focus areas:
• Low Emissions Roadmap: researching what scenarios intended to limit the globaltemperature rise to 2°C or below mean concretely for the oil and gas industry.
• Managing Methane Emissions: collaborating on research to fill the gaps in methanedata and detection technology
• Carbon Capture, Utilization and Storage: CCS projects are already underway, butlarge-scale deployment will require us to reduce costs, develop viable marketmechanisms and improve our understanding of geological storage capacity.
Repsol takes part at the OGCI Investment fund, 1 BN dollars investment over the nextdecade to accelerate the development of innovative technologies aiming to reduceGHG emissions on a significant scale.
A $15 trillion investor-backed Initiative assessed the carbon performance of 50 energy companies and 59 electric utilities, founding that Repsol is one of the two companies in oil and gas sector that comes into alignment with the Paris Agreement before 2050.
The TPI report also assessed carbon ‘Management Quality’ for 135 leading oil & gas, electric and coal mining firms. Repsol has been ranked as a leader, obtaining the maximum score (4/4).
Climate reporting and partnership05 Annexes
44
FTSE4Good Index and FTSE Russell ESG Rating
Ethibel Sustainability Index (ESI) Excellence Europe, and the EthibelSustainability Index (ESI) Excellence Global
Euronext Vigeo index (Europe 120) y Euronext Vigeo index (Eurozone 120)
MSCI Global Sustainability: Repsol scored AA (2018)
Sustainalitycs: Repsol scored 21/100, risk base scoring (2019)
ISS ESG Corporate Rating: B- (from D- to A+, no sector company above B) (2019)
2019-2018 IR Magazine Awards: Repsol recognised as one of the best five companies in Communication with ESG Investors
Extel Survey 2018: Best Firm for ESG and Sustainability (all sectors): Repsol #22 (there is no O&G specific ranking). Repsol ranks 2nd in sector just behind Shell and ahead of Statoil)
2017 Independent Research on Responsible Investment (IRRI) survey: Repsol ranks 19/308 (TOP 6%)
EXTEL Survey 2016- Investor Relations Rankings- Firms Best for ESG and Sustainability: Repsol ESG IR team #2 (out of 79 companies)
EXTEL 2015 Survey - SRI CONNECT
Repsol ESG team ranked by more than 700 companies and 1,300 PM, as the 3rd best company in communication with ESG investors
Main Sustainability Indexes and Initiatives05 Annexes
45
1.76 MtGHG avoided between 2014 and 2018. Achieved 85% of 2014-2020 objective
4.9 MtGHG avoided between 2006 and 2018
3 Mt CO2 eq emissions reduction target by 2025
GHG emissions reduction (Millions of Tons of C02)
Repsol and the Low Carbon transition: metrics and objectives05 Annexes
46
Antonio Brufau
Henri PhilippeReichstul
Maite Ballester
Rene Dahan
J. Robinson West
José Manuel Loureda
Luis Suárez de Lezo
Carmina Ganyet
Ignacio Martín
Mariano Marzo
Isabel Torremocha
Josu Jon Imaz
Manuel Manrique
Independent Director (53.33%)
Proprietary Director (20%)
Executive Director( 6,67%)
External Director (20%)
Sacyr
Temasek
Chairman
Vice Chairman
Member and Secretary of the Board of Directors
CEO
Board of Directors: composition05 Annexes
47
Teresa García-Milá
Aránzazu Estefanía
Lead IndependentDirector
Antonio Brufau
Henri PhilippeReichstul
Ignacio Martín
Josu Jon Imaz
Rene Dahan
J. Robinson West
Luis Suárez de Lezo
Manuel Manrique
Teresa García-Milá
Maite Ballester
Carmina Ganyet
Isabel Torremocha
Mariano Marzo
José Manuel Loureda Mariano
Marzo
Carmina Ganyet
Aránzazu Estefanía Teresa García-Milá
Chairwoman
Independent Director
Proprietary Director
Executive Director
External Director
Sacyr
Temasek
Isabel Torremocha
Chairman
Maite Ballester
Carmina Ganyet
José Manuel Loureda
Mariano Marzo
Chairwoman
Vicechairman
Aránzazu Estefanía
ChairwomanChairman
Board Committees: composition05 Annexes
48
Mr. Ramon Álvarez- Pedrosa, Director of Investor Relations
+ 34 91 7536315
Ms. Leticia Padura, Investor Relations ESG Manager
+34 91 7535988
Ms. Sara Elizalde, Investor Relations ESG Analyst
+34 91 7537468
Repsol Investor Relationscontact details:
49
December 2019
Walking the talk on energy transition
50