SHAREHOLDERS' GUIDE 2018 - Repsol
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SHAREHOLDERS’ GUIDE 2018 Number 5
EDITORIAL
Objectives surpassed
We were able to generate value in a low crude oil price
scenario. We are prepared to maintain this strength
and update our plans for the future.
Dear shareholders,
As you well know, the most recent years have been marked by highly
volatile markets and low crude oil and gas prices. In this environment,
Repsol’s efforts have focused on the creation of value, flexibility, and the
diversification gained through the integration of the businesses. In 2017,
we obtained the highest adjusted net income in the last six years —an
indicator that specifically measures business performance— with a
25% increase to 2.405 billion euros (€B).
In 2017, Repsol was able to meet, and at times surpass, the objectives Paul Ferneyhough
presented in the 2016–2020 Strategic Plan. We were able to create value Corporate Director of Finance
and Investor Relations of Repsol
with a $40/barrel Brent price, generate cash flow from business to pay
dividends to shareholders, reduce net debt, and maintain our credit rating
in line with the company’s expectations.
At the same time, Repsol reduced its net debt by 23% to €6.267 B at
year end, which sets the net debt to EBITDA at CSS ratio at 0.95, more
than sufficient to maintain the current triple B credit rating (BBB with
stable outlook).
We are pleased with what we have achieved up to now and have
met some of the targets established in our Strategic Plan ahead of
schedule. However, we know that now we are faced with the challenge of
maintaining this strength and capturing even more value now that crude oil
prices are recovering. To this end, we are working to update our Strategic
Plan, which will be published in June and establish new objectives for
2020. We will continue to work building on digitalization, technology, and
innovation in management as the key springboards of the company’s
current transformation.
We can only thank you for your support as shareholders and again ask for
your trust, so that we may continue to pursue Repsol’s great future plans.
2018 Shareholders’ Guide | 03
Summary In this Repsol Shareholders’ Guide,
you will find a summary of last
year’s most important events in
DISCOVER repsol the company and the sector.
The oil market 06
Outlook 12
Global and integrated 14
2017 milestones 16
Part of the solution 18
Innovation for the future 22
Culture of Innovation 24
Celebrating Mexico 26
Partnership with Microsoft 28
WiBLE is born 29
Awards received during the year 30
A year of success 32
BEING A SHAREHOLDER
Information and transparency 34
Interview with Miguel Martínez 36
A committed company 40
Repsol shares 42
Objective surpassed 44
repsol en acción
Side by side
with our shareholders 48
Wherever you are 50
New website and digital magazine 52
Your Advisory Committee 53
More and better benefits 54
Shareholder’s month 56
Together with Marc Márquez 57
Culture and history 58
Science day 59
More than words 60
Contact us 62
04 | 2018 Shareholders’ Guide
Discover REPSOL
SECTOR ANALYSIS
The oil market
2018 will be marked by strong growth in demand
and a focus on supply dynamics, especially on
OPEC’s ability to counter the threat of imbalance
posed by US non-conventional resources.
Antonio Merino, Director of Studies at Repsol
Between mid 2014, when the 2016, it is estimated that global OPEC’s actions
oil market entered the most activity expanded by 3.7% helped the market to
prolonged downcycle of recent in 2017. readjust and allowed
decades, and the second half of Developed economies
financial operators,
2017, the supply and demand grew 2.3% in 2017, significantly
dynamics needed to correct the higher than 2016’s 1.7%, along
for the first time
imbalance were mismatched. with the improvement of their
in quite a while, to
In 2017, we saw a significant internal demand in a context invest in a barrel
recovery of the prices, with the where private de-leveraging of oil on the rise
Brent crude oil price climbing to is already advanced and with and increase their
more than 67 dollars per barrel an increasingly expansive tax financial purchases
($/bl) in December. This price policy. In the meantime, the
level was not expected by the growth of developing economies
vast majority of analysts and accelerated to 4.7% in 2017 (vs.
67/bl
DISCOVER
market players before late 2018, 4.4% in 2016), propped up by the
or even by 2019.
The recovery in prices
recovery of raw materials prices
and the return of capital inflows. $
was accompanied by a more Two factors appear to Brent crude
favorable economic climate be key in understanding the oil price in
repsol
and, as already mentioned, by strength and sustainability of this December 2017
a more balanced market than in increased dynamism. On the one
previous years as a result of the hand, the fact that the recovery
3.7%
dynamics of demand and, above of activity is synchronized across
all, supply. In the end, OPEC’s different areas and sectors
actions helped the market to is promoting investment and
Estimated
readjust and allowed financial international trade, generating
global growth
operators, for the first time in important knock-on effects.
in 2017
We are a global company, quite a while, to invest in a barrel
of oil on the rise and increase
On the other hand, the fact
that the increased dynamism of
committed to a sustainable their financial purchases. activity and the closing of output
future that fosters new ECONOMIC ENVIRONMENT
gaps was not accompanied by
ways of generating energy.
a stronger increase in inflation
In 2017, the global economy allowed for a very gradual
We will present the key consolidated the recovery that normalization of monetary
events of the last year.
had begun in mid 2016. After policy, keeping global financial
growing by a modest 3.2% in conditions lenient.
2018 Shareholders’ Guide | 07
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The positive development of the global International Energy Agency was a key factor in the behavior The drop in oil demand in
economic environment underpinned the (IEA), last year global oil of demand in 2017, especially this region was considered to
increase of demand in 2017 demand grew by 1.6% and after a couple of years during be the baseline trend until a few
reached an average of 97.81 which low oil prices had a years ago, but now we see that
million barrels per day (bbl/d). particularly negative effect on the it depends on economic growth
Finally, in this context Increased oil demand was economic activity of developing and consumer preferences given
the dollar embarked on a a common characteristic of oil-exporting countries, which the renewed appetite for larger
downward trend, which can be market balance in the 2015– have significant weight in the cars and longer journeys.
explained by the improvement 2017 period. In that period, consumption of this region. This synchronism between
of economic activity which was the average growth was 60% The recovery of crude oil prices developing and developed
accompanied by a certain re- above the rate for the previous had a positive effect on the countries was a decisive factor
balancing from the US to the ten years —an average of 1% economies of these countries in the increase in oil demand for
Euro Zone. Since many of the per year between 2005 and and, consequently, on their the third consecutive year. This
benchmark prices are in dollars, 2014, compared to 1.6% per oil consumption. is not only making the analysts
this currency’s weakness was year between 2015 and 2017— Nevertheless, the increase review their short-term outlooks;
another factor bolstering trade which demonstrates the positive of demand in OCDE countries the IEA has also increased its
and the global economy. impact of a relatively low price is one of the most important global oil demand projections
environment on activity aspects of last year. 2017 marked for 2016–2040 by an average of
OIL DEMAND IN 2017 and consumption. the third consecutive year that 2 million bbl/d compared to its
This positive economic Regionally, 70% of the developed countries made 2016 estimates.
environment underpinned increase in demand in 2017 a positive contribution to the
the favorable evolution of oil came from non-OECD countries growth of demand, following a OIL SUPPLY IN 2017
demand in 2017. According and the remaining 30% from long period of continuous decline Although demand played a
to the latest estimates of the OECD countries. The first group in consumption. very important role, it would not
have been possible to restore
economic balance in 2017 if it
weren’t for supply dynamics.
Attendant at one of the service stations inaugurated by Repsol in Mexico.
The production cut agreement
Change in GDP between OPEC countries1 at
the end of 2016, supported initially expected. The low-price accumulated growth in demand
7 6.4
by a group of non-OPEC environment resulting from over those two years, the
exporters2 led by Russia, this dynamic had a significant dynamic created by OPEC led
6 5.4
5.1
represented a “before” and impact on the external and tax inventories to increase to record
5 4.7 4.6 “after” for market balance. balances of those countries, highs and consequently caused
4.3 4.3 4.3
3.6
“Before”: In late 2014, which affected their activity and a drop in prices, which reached
4 3.3 3.5 3.7
Growth in real GDP, %
3.4 3.2 OPEC abandoned its tacit role their ability to meet the needs $26/bl in early 2016.
3.2 3.1
3 as a key producer, expecting of a population highly reliant on “After”: Given the evident
2.1 2.2 7.5 2.3
1.7 1.7 that an unfettered competition government spending. need for a change in policy
2 1.3 1.4
1.2 dynamic based on market In the 2015–2016 period and after many months of
1 share gains would quickly taken as a whole, and largely negotiation, at the end of 2016,
force out producers with higher due to the lifting of sanctions OPEC and a group of non-
0
-1.0 overheads and benefit those against Iran and new production OPEC countries decided to
-1 -1.7 with lower costs, which includes in Iraq, OPEC production make a joint effort and remove
many of the cartel’s members. increased 2.53 million bbl/d 1.8 million bbl/d of crude oil from
-2
-2.9 However, the productivity and global production grew by the market starting in 2017, two
-3 gains felt by non-OPEC 3.32 million bbl/d. Despite the thirds of which were to be OPEC
2011 2012 2013 2014 2015 2016 2017 producers, aimed especially extraordinary 3.12 million bbl/d production. The success of this
at non-conventional resources
Global economy Developing countries Developed countries Spain in the US, made the dynamic 1. Libya and Nigeria were exempt from the production cuts.
enforced by OPEC longer and 2. The group of non-OPEC countries that reached an agreement in December 2016 was formed by
Source: International Monetary Fund (IMF, January 2018 WEO update) and Repsol’s Division of Studies. more grueling than the cartel Russia, Mexico, Kazakhstan, Azerbaijan, Oman, Malaysia, South Sudan, Sudan, Bahrain, and Brunei.
08 | 2018 Shareholders’ Guide 2018 Shareholders’ Guide | 09
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in combined supply by Libya shale oil in the US promises to negative effect of an increase in Compliance with the production
and Nigeria, in response to continue to contribute to market crude oil prices on consumption cuts and the production of
a more favorable geopolitical imbalance. The IEA estimates is offset to some degree by the non-conventional oils will be
situation than in the previous that the increase of US relative depreciation of the US
key factors in supply in 2018
year. Second, the 670,000 bbl/d production alone would counter dollar, the currency of these
increase in US production, a the growth in global demand prices. All signs suggest that if
recovery based on the improved projected for 2018. This does there is any surprise, it is more
crude oil price situation. This not imply that the US production likely to be an upward turn.
led to greater investment in its will increase at the same rate as In conclusion, 2018 will be
main source of supply growth in in 2014, which would not be free marked by strong growth in
recent years: non-conventional from doubts given the financial demand and a focus on supply
shale oil. sustainability of the companies dynamics, especially on OPEC’s
Despite this, in 2017 global involved and the imperative ability to counter the threat of
supply only increased by need to maintain the rate of imbalance posed by US non-
413,000 bbl/d, while demand productivity growth recorded in conventional resources. The
grew by 1.57 million bbl/d, recent years. difference is that inventory levels
triggering the first drop in As for demand, prospects are far lower than in previous
inventories since 2013. point to another year of positive years, and therefore any
growth in both OECD and non- excessive demand or insufficient
KEY ASPECTS OECD regions, despite the rise supply may have a greater
IN THE SHORT TERM in prices. Bear in mind that the impact on prices.
Now that balance has been
restored and the market has
even slipped into deficit, OPEC
members (especially Saudi
Arabia) believe that the group Main events affecting the Brent price
must persist with the production
Man working on an oil rig owned by Repsol.
cuts to achieve the goal of a b c d e f g h i j k l m n
reducing OECD inventories 70
new policy would depend on to the five-year average. The
65
Changes in the Brent the degree of compliance with
the agreement, which ended
production cut commitment is
valid until the end of 2018, but
crude oil pricet up becoming the main source Saudi Arabia has already pushed
60
Dollars per barrel
Brent of uncertainty in the market further and has publicly spoke of
55
in 2017. its intention to continue the joint
70
On average, the cartel effort, in some way, into 2019.
50
followed through on 95% of It’s well know that these
60 the cutbacks that had been countries’ level of commitment 45
agreed, and the non-OPEC to production cuts has
group on 82%. These figures historically not been the same 40
50 are much higher than for once prices have recovered.
JAN-1-17
JAN-16-17
JAN-31-17
FEB-15-17
MAR-2-17
MAR-17-17
APR-1-17
APR-16-17
MAY-1-17
MAY-16-17
MAY-31-17
JUN-15-17
JUN-30-17
JUL-15-17
JUL-30-17
AUG-14-17
AUG-29-17
SEPT-13-17
SEPT-28-17
OCT-13-17
OCT-28-17
NOV-12-17
NOV-27-17
DEC-12-17
DEC-27-17
$/bl
previous agreements, which But it should also be taken
never exceeded 75% in a into account that a significant
55 sustained manner. The market portion of the success achieved
was ultimately rebalanced as in 2017 was due to the natural Source: Bloomberg and Repsol’s Division of Studies.
a result of compliance with the decline of fields, especially in
40 production cuts. Venezuela, where the lack of a) Increase in US production and bad signs for demand. g) Significant changes to short positions in the market.
b) OPEC agreement extension forecast, but doubts over its effect on prices. h) Weakening of the dollar.
JAN
FEB
MAR
APR
MAY
JUNE
JULY
AUG
SEPT
OCT
NOV
DEC
The efforts of these investment has put the entire c) Uncertainty over economic growth in China. i) Strong hurricanes in the US.
producers were partially offset industry under severe stress. d) Expectations before the OPEC meeting. j) Tension in Iraqi Kurdistan.
2016 2017 e) OPEC meeting (Vienna). k) Shutdown of the Forties pipeline (North Sea) and decrease in US inventories.
by two occurrences. First, On the other hand, the
f) Concerns due to OPEC’s conclusions and the production increase in Libya. l) Shutdown of the Keystone XL pipeline (Canada and US).
Source: Bloomberg and Repsol’s Division of Studies. the 500,000 bbl/d increase production of non-conventional
10 | 2018 Shareholders’ Guide 2018 Shareholders’ Guide | 11
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OIL AND GAS
Outlook
We will explain the long-and short-term
evolution of the energy sector, according to
the International Energy Agency (IEA).
The energy sector in the short term
Short-term outlook for the global countries with the established
supply/demand balance production cuts, which will have
direct impact on crude oil prices.
2018 = 99.11 million bbl/d The increase in demand will
continue to be bolstered by non- One of Repsol’s assets in Canada.
OECD countries, with a projected
OPEC growth of +1.27 million bbl/d in
requirements
2017, while remaining practically
and var. inv.
unchanged in OECD countries. This
Non-OECD 32.3
scenario involves a 600,000 bbl/d The energy sector in the long term
51.8
reduction in demand for OPEC oil
OPEC NGL 7.0 (*)
and variations in 2017 inventories Hydrocarbons represent more than energy source. No major changes are drop by 4 percentage points in 2040
to 32.3 million bbl/d. half the primary energy consumed expected in the coming years. In its compared to 2016. In turn, natural gas
Overall, the IEA expects a worldwide. Specifically, 32% of primary 2017 World Energy Outlook baseline will account for 25% of the total energy
market deficit in 2018, with a drop energy consumption comes from scenario, the IEA predicted that oil’s demand, estimated at 17.584 billion
Non-OPEC in global inventories of around oil, making it the most widely used contribution to the energy mix will metric tons of oil equivalent.
59.8 100,000 bbl/d.
OECD
47.3
CHANGES IN PRICES Long-term projections for the global
In regard to short-term changes primary energy mix
in crude oil prices, the consensus
among analysts points to an 3%
32% 28%
Demand Supply average Brent crude oil price of 2% oil
hydroelectric
oil
hydroelectric
$58 and $64/bbl in 2018 and 2019, 6%
(*) Natural gas liquids from OPEC members that are not included in the production cuts. 2%
respectivelye. other renewables other renewables
Source: IEA and Repsol’s Division of Studies.
In regard to short-term 5% GLOBAL 2016 6% GLOBAL 2040
changes in gas prices, the nuclear
According to the International Energy
Agency (IEA), in the short term oil
in production in 2018 of about
+1.7 million barrels per day (bbl/d).
correction of the imbalance initiated
in 2017 is expected to continue in 10%
13,760 mtoe nuclear
17,584 mtoe
10%
supply/demand balance will primarily Almost all of this increase will be 2018 and 2019. biomass
biomass
be determined by the production concentrated in the United States The key to this correction will be
27% 25%
cut agreement involving OPEC and (+1.35 million bbl/d) and to a lesser production in a context where the coal natural gas
some non-OPEC countries. extent in Canada and Brazil. The recovery of crude oil prices could 22% 22%
natural gas coal
In non-OPEC countries, the market will keep a close eye on result in higher volumes of gas
IEA expects a significant recovery the level of compliance of OPEC associated to the production of oil. Source: IEA and Repsol’s Division of Studies.
12 | 2018 Shareholders’ Guide 2018 Shareholders’ Guide | 13
DISCOVER REPSOL DISCOVER REPSOL
REPSOL TODAY
Global e integrada 2.355
billion barrels of oil equivalent
695,000
barrels of oil equivalent in
in net proved reserves daily production
Repsol is an integrated energy company with extensive
experience in the sector and is present throughout the value
chain, from exploration to refining and marketing.
496 TBtu
of gas sold in North America
1,515
vessels chartered
37 countries
A company with assets around
25,000+
employees from 84 countries, a
47.4 M metric
tons 4.838 M metric
tons
the world diverse and multidisciplinary team of crude oil processed in 2017 of gross petrochemical capacity
63%
of production consists of gas
1,013,000
barrels of daily refining capacity
$6.8/bbl
Spanish refining margin indicator in 2017
1.375 M
of LPG sold in 2017
metric
tons
4.5 M
metric tons of CO2 emissions reduced
199,599 km2
of net undeveloped mineral rights
1.826 M metric
tons
of lubricants, asphalts, and specialized
4,709
service stations in Spain, Portugal,
between 2006 and 2017 as of December 31, 2017 products sold in 2017 Peru and Italy
14 | 2018 Shareholders’ Guide 2018 Shareholders’ Guide | 15
DISCOVER REPSOL DISCOVER REPSOL
EVENTs
2017 milestones Norway
These were the most
Alaska
important events in United Kingdom
Repsol’s businesses
in the last year.
Spain Greece
Algeria
United States
Mexico
New range of Repsol Moto
Vietnam lubricants, developed at the
Trinidad Repsol Technology Center. An
Kinabalu (Malaysia) and Tobago Malaysia important milestone to maintain
Upstream Working interest: 60%. a leading position in the Spanish
Sagari (Peru) lubricant market and develop the
Working interest: 53.84% international market. Agreements
KEY DISCOVERIES
(operator). have been signed for their use
Alaska with Honda and Kymco in Spain.
Lapa (Brazil)
The largest conventional oil In early 2018, Repsol entered the
Working interest: 15%.
discovery on American soil in Peru Mexican fuel market.
30 years. Reggane (Algeria)
Total contingent resources: Working interest: 29.25% Bolivia
1.2 billion barrels of light (co-operador). Brazil
crude oil. Upstream
Working interest: 25%. NEW DEVELOPMENT Downstream
Trinidad y Tobago PROJECTS Both
The largest volume of gas Phase I of Buckskin (Gulf Milestones
discovered by Repsol in the of Mexico, United States) in 2017
last five years, equivalent Working interest: 22.5%. Technology and
to two years worth of Downstream New Ventures
Ca Rong Do (Vietnam)
consumption in Spain.
Working interest: 51.75%
Estimated resources: 2 trillion (operator). Greece: Aitoloakarnania and LInstalled capacity increased with New Repsol Waylet Acquisition of 11.51% of
cubic feet of gas (2 Tcf).
YME (Norway) Ioannina blocks, working the new low-sulfur diesel unit at application (app) a disposición WesmartPark, a smart
Working interest 2 Tcf: 30%. Working interest: 55% (operator). interest: 60%. the La Pampilla refinery, in Peru. de los clienteavailable to all parking app.
Bolivia: Iñiguazu block, working Scheduled maintenance our service station customers. Acquisition of 15.65% of
Angelin (Trinidad and Tobago)
shutdowns in the A Coruña, It strengthens the company’s
MAJOR PROJECTS THAT Working interest: 30%. interest: 37.5%. Drivesmart, an app that
transformation in terms of
STARTED PRODUCTIOn United States (Gulf of Mexico): Cartagena, and Bilbao industrial improves driving skills.
facilities, with innovation, innovation, technology, and
Flyndre (United Kingdom) KEY AWARDs blocks 77, 78, 121, and 122 the digital environment. Kia Motors Iberia and Repsol create
located in the Garden Bank efficiency, and productivity WiBLE, a new carsharing operator.
Repsol Sinopec Resources UK: 27%. Alaska: 45 new blocks in North improvements.
offshore basin, working New range of polyolefins
Shaw and Cayley (United Kingdom) Slope, average working interest: Repsol enters into a partnership
interest: 50%. Partnership between Repsol under the Repsol Healthcare
Repsol Sinopec Resources UK: 28.72%. with Microsoft as part of its
and El Corte Inglés for the brand to supply the demanding
59% (operator). Mexico: exploratory block 11, digitalization and business
Brazil: block in the Espirito creation of the largest network pharmaceutical market, proof
working interest: 60%. transformation strategy.
Juniper (Trinidad and Tobago) Santo basin and area of local convenience stores in of Repsol’s commitment to
PWorking interest: 30%. around Sapinhoá. service stations in Spain. product differentiation.
16 | 2018 Shareholders’ Guide 2018 Shareholders’ Guide | 17
Discover REPSOL Discover REPSOL
metric tons of CO2 per year. under President Obama,
At present, we are designing a significantly reduced its CO2
new Energy and Carbon Plan emissions by using gas instead IN FIGURES…
consistent with the company’s of coal to fuel its power plants.
next Strategic Plan.
4.5
And we are taking it one CO2 EMISSIONS
step further. We advocate Complying with the million metric
the use of carbon pricing commitment set in the Paris tons of CO2
in all production sectors Agreement of limiting the emissions reduced between
worldwide as a key element average global temperature 2006 and 2017
in the fight against climate increase to 2°C above pre-
change. At Repsol, we have industrial levels means that, in
2020 target:
5
already adopted a carbon the second half of this century,
price in the assessment and
decision-making processes
net CO2 emissions to the
atmosphere must be zero.
million metric
for investments. With this, we How can we achieve this? tons of CO2e
Three key pillars: energy efficiency;
the use of natural gas; and the make Repsol resilient to future One possibility, the third pillar,
74%
capture, use and storage of CO2. climate scenarios in line with involves capturing CO2 to use
the Paris Agreement. it in carbonated drinks, for of our proved
Specifically, our company’s example, or to make polymers. reserves
internal carbon price will Instead of using the CO2,
CLIMATE CHANGE are natural gas
progressively increase from another option is geological
Part of the solution
$25/t in 2018 to $40/t in 2025. storage. Many new paths
375
will open up in the future as
KEY ROLE OF GAS innovation is restricted by our million
We support an increased current capabilities, but this is euros
percentage of natural gas in only a small part of what we already invested out of the total
We have a great At Repsol, we are committed to ENERGY EFFICIENCY the global energy mix. In this may be able to achieve in
challenge ahead of us:
500
the implementation of the Paris The lowest-emission and most regard, our company is clearly 20 years.
Agreement and, therefore, cost-effective energy is energy geared toward gas production. The race against million
being able to provide the to limiting the average global that we don’t consume. Our About 63% of Repsol’s current climate change will continue
euros
energy that society needs temperature increase by the challenge is to produce the production and 74% of its throughout the century and
pledged by 2020
end of this century to 2°C same amount, but with less reserves are natural gas. starts right now. This is only
without compromising above pre-industrial levels. energy. To this end, we review Renewable energies will made possible by technology
future generations. At Meeting this objectives does the energy consumption of all play an important role in this and innovation, in our sector
Repsol, we are part
not require decarbonizing the our businesses, of each facility future low-emission energy as much as in any other. All
economy, but instead requires and piece of equipment we model, once their technological energy sources will be required
of the solution. a significant reduction of operate, in order to increase maturity allows them to be to produce the energy that our
greenhouse gas emissions. efficiency as much as possible competitive. We think that society needs, but with the
Antonio López Rodríguez, To reduce our greenhouse with specific actions. natural gas already plays a key lowest emissions possible. emissions released throughout
Head of Energy Management gas emissions, we are working With our Energy and role and will continue to do so the life cycle of our products.
at Repsol primarily on three pillars: Carbon Plans, we have during the energy transition AT THE END OF THE CHAIN In other words, we are part of a
energy efficiency; the use of been able to reduce our CO2 in the medium term, because All these initiatives that we are processing sector that extracts
natural gas; and the capture, emissions by 4.5 million metric it can provide the energy carrying out at Repsol aim to raw materials and converts
use, and storage of CO2. tons (Mt) per year in the required with low emissions. reduce our direct emissions, them into end products, which
Naturally, all the initiatives 2006–2017 period. Our goal Ultimately, this is what we but we are also looking at the consumers will then use for
stem from our commitment to for 2020 is to reach the figure are seeking: an economy
innovation and technology, and of 5 million metric tons of CO2e that produces the lowest
this is crucial to move towards (carbon dioxide equivalent) possible emissions. To reduce our greenhouse gas emissions we are working
a new, more sustainable per year. In total, Repsol We have a recent example on three main pillars: energy efficiency; the use of natural
energy model. emits approximately 23 million in the United States, which, gas; and the capture, use and storage of CO2
18 | 2018 Shareholders’ Guide 2018 Shareholders’ Guide | 19Discover REPSOL discover REPSOL
Over 15 years working against climate change
GHG emission inventories 1st greenhouse gas 1st greenhouse gas verification
Energy efficiency improvement plans verification (ISO 14064-1) (ISO 14064-1) in offices
Energy management systems in Refining and Chemicals 1st greenhouse gas verification 98% of all emissions verified
CC strategy (ISO 14064-1) in E&P under ISO 14064-1
2006–2013 Carbon Plan
2014–2020 Energy and Carbon Plan
BEFORE 2004 2005 2013 2020
Key activities 1st energy management systems 1st energy management systems
from 2001 certification (ISO 50001) in Refining certification (ISO 50001) in E&P
to 2016
Repsol’s position Repsol’s policy on Top score in the Repsol’s energy and Repsol joins the Climate
on climate change energy efficiency Carbon Disclosure carbon strategy and Clean Air Coalition
1st carbon 2nd carbon Project Repsol joins the Oil and Repsol joins Zero Routine
strategy strategy Gas Climate Initiative Flaring by 2030
Initiatives against
climate change 2002 2015 2016
transportation or in their a cost of only $30 to $40 per fronts: reduce CO2 emissions geographical location, population that depends on the impact
homes from heating to the metric ton of CO2. and improve air quality. It is density, patterns of energy of those factors in each city.
cladding of buildings, or in the In transportation, as important to make one thing production and consumption. We must differentiate and
plastics needed for countless with energy from renewable very clear: we should not Therefore, while climate analyze each issue to
applications in our everyday sources, electric cars will play confuse climate change with air change is a global problem, air seek the most appropriate
lives. This final use also an important role once their quality in our cities. quality is a local phenomenon solutionsin each case.
releases greenhouse gases technological maturity allows CO2 emissions are causing
into the atmosphere. them to be competitive. Every the temperature of the planet to
By improving the quality metric ton of CO2 reduced by rise, but it is not harmful to our
of the products that leave using an electric car currently health and has nothing to do We work together
our facilities, we can reduce costs $1,000. Therefore, there with the worsening of air quality Together, we can do more. We have joined investing 1 billion dollars over the next decade
the emissions released by is a wide margin for emissions in cities. On the contrary, NOx international initiatives so that our coordinated to fast-track the development of innovative
products over their entire life reduction at a much lower and SOx (nitrogen and sulfur efforts can have greater impact. Together we technologies that, once brought to market,
cycle. Furthermore, we believe cost, simply by renewing the oxides) and particulate matter can develop better strategies at lower costs. We have the potential to significantly reduce
that the energy transition fleet of cars on the road in are harmful to our health and are one of the 10 companies in the oil and gas GHG emissions.
sector that form the OGCI (Oil and Gas Climate We are also members of the global oil and gas
should come at the lowest the short term. impact air quality in cities. They
Initiative), a voluntary initiative aimed at industry association for environmental and social
possible cost to society and are emitted by transportation,
cooperating in terms of climate action, sharing issues (IPIECA), the Climate and Clean Air Coalition’s
its members. In this regard, AIR QUALITY the residential sector, and best practices and technological solutions. In Oil & Gas Methane Partnership promoted by UN
by simply switching from The renewal of the vehicle industries located close to cities. addition to sharing knowledge and efforts, the Environment, and the World Bank Group’s Zero
coal to natural gas in energy fleet is currently a clear and There are many issues that initiative created an investment fund called Routine Flaring by 2030 initiative, in addition to
generation, we would reduce cost-effective measure to influence air quality in a city, OGCI Climate Investments with the goal of many other international organizations.
emissions by about 50% at act simultaneously on two including configuration, climate,
20 | 2018 Shareholders’ Guide 2018 Shareholders’ Guide | 21Discover REPSOL Discover REPSOL
We offer the entrepreneurs the IN FIGURES…
support they need to turn their
43
energy and mobility projects
144,000
into a reality Up to
team of mentors, specialized training,
startups
and access to potential investors.
The acceleration process is carried have been accelerated by
the Entrepreneurship Fund
euros awarded
out where the startup is located and
the entrepreneurs do not need to
since its launch
annually
relocate to a co-working space. to entrepreneurial projects
Currently, many of the projects
2,400
Over
supported by Fundación Repsol
are already present in the market, And ideas get a total of
24,000
selling products and creating jobs
proposals
and innovation, and are able to
attract investors to expand their
assessed euros
project. The survival rate of the
startups supported by Fundación over 12 months
Repsol exceeds 80%, a higher
percentage than other accelerators.
Antonio Brufau (left), Chairman of Repsol and Fundación Repsol, and Ignacio Egea (right),
Vice Chairman of the Repsol Foundation, alongside the representatives of the projects and
ideas selected in the sixth round of the Entrepreneurs Fund.
ENTREPRENEURS FUND Startups selected in the sixth round
Innovation for the future 4 projects
C2C - New Cap
Metal oxide superbatteries for energy storage, which
4 ideas
BulgeONE
The first tool to predict and determine any possible bulging
Since 2011, Fundación Repsol has ideas. Projects are startups that are
developing innovative technologies
allow larger amounts of energy to be stored more safely.
Origin: Lisbon (Portugal)
in refinery coker units in real time.
Origin: Cantabria (Spain)
promoted and supported entrepreneurship and/or business models that
through this acceleration program for have already been validated in a CE-BOND
A device to ensure uniform cementation in oil wells,
Finboot
A digital platform to manage smart contracts in a more
controlled environment (or even
energy and mobility startups. a real one) but have not yet fully improving their integrity. secure manner.
reached the commercial stage. Origin: Stavanger (Norway) Origin Barcelona (España)
Ideas are startups in the earlier
stages of technological development MUON systems Inanoenergy
Fundación Repsol created the and/or the business model. A system that uses muon tomography to reduce the Autonomous microgenerators that convert residual
Entrepreneurs Fund six years ago The selected projects are maintenance costs of industrial equipment, as well energy into electricity to power sensors that monitor
with the goal of supporting the most awarded up to €144,000 for one as increasing efficiency. piping in industrial facilities.
innovative projects in the areas of year, while ideas get up to €2,000 Origin: Bilbao (Spain) Origin: Porto (Portugal)
energy and mobility, helping them to per month for 12 months. This is
hit the market as early as possible. a non-repayable grant, without Place to plug Manganese Flow Batteries
any obligation to transfer capital or One-of-a-kind collaborative platform to help drivers Ultraefficient, manganese and hydrogen-based batteries
PROJECTS AND IDEAS intellectual property rights. In addition find electric car charging stations. that provide energy for longer at a lower cost.
The Entrepreneurs Fund has two to funding, the entrepreneurs also Origin: Tarragona (Spain Origin: London (United Kingdom)
categories of support: projects and receive support and advice from a
22 | 2018 Shareholders’ Guide 2018 Shareholders’ Guide | 23Discover REPSOL Discover REPSOL
IN AWARDS
Culture of Innovation 2017 IN Awards
Implemented Initiatives
These awards are a springboard to help us overcome broadcast via streaming. It was a This category acknowledges initiatives that were implemented in
the previous year and that are already adding value to the company.
true celebration, where engagement
future challenges and provide added value to the and satisfaction with a job well done WINNER: YME REMOVAL PROJECT
company. With the IN Awards, we are all winners! could be felt in the air. A milestone for international engineering in the Oil & Gas industry:
These are the projects that the removal and relocation to shore of the YME production platform
were acknowledged this year for in the North Sea, in a single lift.
their contribution to one of the
The IN Awards are aimed at taking on calculated risks, and presented their submissions and three categories of the IN Awards: RUNNER-UP: SICLOS
promoting team innovation through using unexpected results to learn, 4,700 Repsol employees voted Innovation Culture, Relevant Implementation of an operational management model in all of our
global collaboration between different innovate, and develop, without during the selection process. The Learning, and Implemented refineries that would help us achieve excellence in generating daily
Repsol areas and businesses, forgetting that any failures lead us awards ceremony took place on Initiatives. Congratulations to all margin and would require greater involvement of all members of
turning it into a springboard to to make decisions and are part and June 5th, 2017 at the Repsol the winners and participants in the organization in the group’s results
overcome our future challenges. parcel of the road to success. Campus Auditorium in Madrid, with this edition!
These awards also seek to do away At the fourth IN Awards in 2017, live connections to Peru, Calgary, Relevant Learning
with the fear of making mistakes, 239 teams from around the world and Houston. The event was also The IN Awards
ceremony, held at
This category answers the question, “what did we learn?” and rewards
the Repsol Campus initiatives that produced unexpected results.
in Madrid.
WINNER: ONE REPSOL
Creation of multipurpose and multiscale regional 3D models
through collaborative work and shared learning between specialists
from the Canada Business Unit and technical experts from Spain
and Houston (US).
RUNNERS-UP:
1) Restaurants in service stations: changes in the management
model, switching from a business models with restaurants owned by
the company to one with management leased by a third party and
the signing of an agreement for the opening of new restaurants.
2) SOS Asphalts: discovery of a healthier and more cost-effective
solvent to replace the one that was being used; in other words,
a more sustainable alternative.
Innovation Culture
This category answers the question on “how” the teams are innovating
through the implementation of new work methodologies.
WINNER: REPSOL WAYLET MOBILE CHANNEL
Development of a mobile app by a multidisciplinary and cross-
sectional team to maximize the business value and the usefulness
of the product for end-users.
RUNNER-UP: CONFÍA MOTOR TEAM
Cross-company collaboration initiative between industrial facilities,
which resulted in the adoption of an effective and comprehensive group
work methodology that also promotes a culture of knowledge-sharing.
24 | 2018 Shareholders’ Guide 2018 Shareholders’ Guide | 25Discover REPSOL Discover REPSOL
great opportunity and a strategic
market. We have a strong interest THE MEXICAN
in logistical infrastructure projects
to optimize the fuel supply model in
FUEL MARKET
the country. Opening these service Mexico is the sixth largest market in the
stations is merely the first step in a world in terms of gasoline and diesel
larger strategy that will allow us to consumption. With a population of close
play an important role throughout to 120 million, a growing economy, and
the sector value chain in Mexico.” a sector that’s just starting to open, this
The opening ceremony country holds great potential and has an
showcased Repsol’s strengths and increasing demand for fuel. According to
the benefits it offers customers, data from Mexico’s Energy Regulatory
such as its exclusive Neotech fuels, Commission (CRE), 40% of towns in the
developed by the company in its country do not have a single service station.
Technology Center, which extend The country has a total of 11,800 stations,
engine life and reduce engine failure or one for every 10,560 people and one for
and maintenance costs. every 23,165 residents in Mexico City, a lower
ratio than that of many countries, like Spain,
United States, Germany or Brazil.
Repsol service
station in Mexico.
NEW SERVICE STATIONS It employs 50 people and welcomes
Celebrating Mexico
more than 2,000 customers per day.
The event was lead by the
Mexican Secretary of Energy
Pedro Joaquín Coldwell, and was
also attended by the Spanish
The company has Repsol inaugurated its first service, aimed at meeting the needs Ambassador to Mexico, Luis
launched a long-
10 service stations in Mexico in of its customers. Fernández-Cid de las Alas, and
March 2018, marking the launch of The company continues to the Executive Managing Director
term project in its project that aims to achieve an receive multiple signs of interest of Downstream at Repsol, María
Mexico. Its goal is 8–10% market share over the next
five years.
from Mexican entrepreneurs in the
sector, seeking a partnership to
Victoria Zingoni, among other
public figures.
to open between To reach this goal, Repsol plans help Repsol expand its network in According to María Victoria
200 and 250 service to make an investment of around
400 million euros, excluding the
the country. The initial 10 service
stations will be joined by 40 new
Zingoni, ““Mexico has enormous
growth potential, which our
stations each year development of infrastructure, ones in the coming weeks, and new Company has recognized as a Employees of one of the first 10 Repsol service stations in the country.
until a significant which demonstrates the company’s
commitment to the country and
agreements are currently being
negotiated with local partners.
market share has its determination to become an The company is also considering
been secured. important player in the dynamization
of the Mexican energy and
opening its own service stations. Our presence in Mexico
hydrocarbon market. OPENING CEREMONY Repsol operates in multiple businesses in Mexico alongside Repsol also produces and distributes its lubricants in the
To mark the start of this new stage several local partners, creating value for the company country. This is the company’s most international business
200 POINTS OF SALE IN 2018 for the company in Mexico, Repsol and the country. It has a partnership with the KUO Group. and is present in 90 countries.
Repsol plans to close the year with organized an opening ceremony Together, they established Dynasol in 1999. This joint In the Upstream sector (exploration and production
200 service stations in the country, at the new Siete Banderas service venture is one of the world’s 10 largest synthetic rubber of hydrocarbons), Repsol was awarded exploratory blocks
which will all exemplify the highest station, one of the top 20 stations companies, with manufacturing plants in Altamira (Mexico), in Mexico’s latest bidding rounds, in some cases also in
standards of quality, trust, and with the highest fuel sales volumes Santander (Spain), and China.. partnership with local companies.
transparency that characterize its in the country, located in Mexico City.
26 | 2018 Shareholders’ Guide 2018 Shareholders’ Guide | 27Discover REPSOL Discover REPSOL
COLLABORATION AGREEMENT MOBILITY AND TRANSPORTATION
Partnership with Microsoft WiBLE is born
The agreement consolidates the use of Microsoft’s Kia Motors WiBLE (Widely accessiBLE) will Madrid was the city chosen for
the service’s European debut,
technological solutions to support Repsol in various Iberia and
strengthen sustainable mobility
in cities and their surroundings. which will be operational in
business transformation initiatives. Repsol join Madrid was the city chosen for the second half of the year
forces to WiBLE’s European debut, in line
with Kia’s strategy to expand
launch a new this service, which has been in favorite brand in Spain. Kia is
Microsoft will provide Repsol
preferential access to a specialized
car sharing operation in South Korea since
last year, to other markets.
strongly committed to sustainable
mobility, with 100% electric,
multidisciplinary team with extensive operator. The Spanish capital is a hybrid, and plug-in hybrid vehicles.
knowledge of the energy sector, as very appealing city to launch the The two companies are
well as the experience of its R&D project due to its geographical and working to establish the
unit, Microsoft Research, to work demographic characteristics and operational details of service,
on innovative projects. It will also the previous positive response which will be up and running in
provide information about future to this type of service. the second half ofthe year.
developments and technologies
in the beta stage to Repsol’s SUSTAINABLE MOBILITY
technical departments for testing The project combines Repsol’s
and evaluation purposes. extensive consumer knowledge
and experience in mobility
COORDINATION TEAM businesses with the know-how
The agreement establishes the of Kia, private customers’ fourth
creation of a Digital Projects
Coordination Team, which will
manage the partnership between
Repsol and Microsoft, promote
BOUNDLESS
joint initiatives, and work on the
identification of specific business The transportation sector is in the midst
Josu Jon Imaz, CEO of Repsol; Antonio Lorenzo, Corporate Director of Strategy, Control and Resources at Repsol; scenarios. The application of these of a rapid transition to new mobility
María Victoria Zingoni, Executive Managing Director of Downstream at Repsol; Jean-Philippe Courtois, President services, which include both new advanced
of Global Sales, Marketing & Operations at Microsoft Corp.; and Pilar López, General Manager of Microsoft Spain.
technologies which are at the
forefront of the digital domain will propulsion systems and developments
create a competitive advantage in terms of technology, connectivity, and
Repsol and Microsoft signed a next three years, Repsol plans to and will enable the companies to new collaborative consumption paradigms.
partnership agreement in 2017, transfer a significant portion of its successfully address future needs. WiBLE provides a solution to this scenario
which will allow the energy company processing capacity to smart cloud This working team will also provide with new user needs, and it is encompassed
to continue moving forward with the platforms. The company will also proofs of concept and develop in Kia’s view of the future of private
digitalization of its business and adopt the Office 365 communication, prototypes to evaluate the practical transportation — “Boundless for all” —
give the software and cloud services collaboration and productivity feasibility of innovative models in the which seeks to ensure that mobility and
company the opportunity to develop solution for its employees. areas of customer experience, talent transportation opportunities are unlimited
innovative solutions for the Additionally, the partnership management, and digital supply of and accessible to all. As a leading mobility
energy sector. includes a joint initiative to identify products and services. energy supplier, Repsol is always seeking
innovative solutions for the energy to promote innovative initiatives that
DIGITALIZATION AND INNOVATION sector based on cloud computing, represent a new alternative energy supply
Repsol will implement cloud artificial intelligence, the internet of for transportation and add value for its
computing-based technologies things (IoT), big data, mixed reality, customers, as is the case of WiBLE.
developed by Microsoft. Over the and more.
28 | 2018 Shareholders’ Guide 2018 Shareholders’ Guide | 29Discover REPSOL Discover REPSOL
AWARDS IN 2017
Awards received during the year
These are some of the awards we received over the year Repsol in the Extel Survey Sustainable
that push us to continue improving each and every day. The CEO of Repsol, Josu Jon Imaz, was recognized by the development award
prestigious 2017 Extel Survey as the second best oil and
gas CEO in Europe. Imaz topped this ranking in 2015 and Repsol Exploration Peru received an award
was third in 2016. In turn, Miguel Martínez was named as from Peru’s National Society of Mining,
the best CFO in the sector for the fourth year running. Petroleum and Energy (SNMPE) for its project
Additionally, the group led by Paul Ferneyhough was to conserve forest resources in the native
named best investors relations team while Pablo Bannatyne, communities of the Machiguenga Communal
Investors and Analysts Front Office Manager at Repsol, was Reserve buffer zone through the reforestation
recognized as the best IR professional in the oil and gas of 500 acres in seven communities.
sector in Europe, as well as the best IR professional in
Petroleum Economist Spain across all sectors.
acknowledges Repsol’s green bond CTR
The award recognized Repsol’s initiative as the first oil company in
the world to issue certified green bonds to reduce its environmental
footprint through efficiency initiatives. The panel of judges for the
Petroleum Economist Awards highlighted the company’s innovation Most collaborative
and commitment to reducing emissions in its operations and
improving the efficiency of its facilities by using the funds obtained company in R&D
from these bonds. The University of Alicante acknowledged the
long research partnership between Repsol
and the university by presenting it with the
Luis Cabra, Executive Managing Director
of Exploration & Production at Repsol.
2017 Impulso award for the “Most collaborative
company in R&D.” Scientists from the Repsol
Technology Center have been collaborating for
Josu Jon Imaz was named the sector’s best CEO in Europe in 2015. the past 25 years with various research groups
He came third in 2016 and second in 2017. in the field of energy.
Best Exploration CAMPAIGN
& Production
company in 2017 “Make yourself seen”
The prestigious international agency In July 2017, Repsol and the Spanish
Platts recognized Repsol with its Directorate-General of Traffic (DGT)
Exploration & Production Industry launched an awareness campaign to prevent
Leadership Award, for “demonstrating Paul Ferneyhough, Corporate Director of Finance & Investor Relations at Repsol, accidents involving cyclists on Spanish roads.
that its activities in exploration and accepted the award on behalf of the company.
The Repsol Honda Team MotoGP riders Marc
production set world-class standards” Márquez and Dani Pedrosa, took part in the
in the energy sector. campaign, alongside the trial riders Toni Bou,
Takahisa Fujinam, and Jaime Busto.
30 | 2018 Shareholders’ Guide 2017Discover REPSOL Discover REPSOL
Repsol Honda Team Trial
Toni Bou is the best rider in the history of trial.
He has been crowned trial world champion 23
times: 11 in the FIM Trial World Championship
(outdoor) and another 12 in the FIM X-Trial
World Championship (indoor). In 2017, his
teammate Jaime Busto finished the
season in the third spot in the
FIM Trial World Championship
and seventh in the FIM X-Trial
World Championship, while Repsol Rally Team
Takahisa Fujinami took the fifth
spot in both Trial and X-Trial. Isidre Esteve successfully completed the 2018
Dakar rally, the toughest in South America. The
Repsol Rally Team driver finished 21st overall
Dani Pedrosa and Marc
Márquez added another at the helm of his BV6 prototype with adapted
excellent season to the controls on the steering wheel. He was the
SPORTS SPONSORSHIP Repsol Honda MotoGP
Team’s record.
second best Spaniard in the overall car ranking
A year of success
Air sports and finished fourth in his category, T1.2.
sponsorships
BRAVO3 REPSOL AEROBATICS
The perfect combination between riders, engines, Cástor Fantoba, Repsol’s aerobatics pilot, won
three bronze medals in the Classic and Free Style
THE BEST TEST BED
fuels, and lubricants. Repsol is a pioneer and programs at the World Aerobatic Championships
Motorsports sponsorship is an excellent showcase for the Repsol
an important player in sports sponsorship. that were held in South Africa. The whole Bravo3
Repsol team made it to the podium at the Spanish
brand and it is our calling card throughout the world. However,
top-level racing is also the best test bed for the technological
Aerobatics Championship, with Cástor Fantoba
development of our fuels and lubricants. The products we offer
taking the gold, Juan Velarde the silver, and
our customers at our service stations incorporate the continuous
Anselmo Gámez the bronze.
improvements tested in the most demanding competitions.
Repsol Honda MotoGP Team RED BULL AIR RACE Also in the scope of competitive sports, we promote
Juan Velarde also participated in the Red Bull Air youth sports and are the title sponsor of the FIM CEV Repsol
Marc Márquez continues to make history. In
Race in the Master Class category, and finished championships, a springboard for young riders that aspire to
2017, he won the MotoGP World Championship
eighth in the Red Bull Air Race Championship, compete in the Motorcycle World Championship. We also support
title, bringing his total to four in the top class, the Monlau Repsol Technical School, where engineers, mechanics,
one in Moto2, and another in 125cc. His considered the fastest motor racing championship
and riders receive the best training for their professional future.
teammate, Dani Pedrosa, added a fourth place on the planet, as well as two podium finishes
finish in the MotoGP Championship to his two (second place in Abu Dabi and third in Indianapolis).
world titles in 250cc and one in 125cc. The
Repsol Honda Team also won the 2017 MotoGP
team World Championship.
32 | 2018 Shareholders’ Guide 2018 Shareholders’ Guide | 33Being a shareholder
OUR COMMITMENT
Information
and transparency
Repsol’s value is the responsibility of all those
who work in the company. With this in mind,
we aim to be accessible to the largest
possible number of shareholders.
Sixteen people make up other hand, Market Intelligence
Repsol’s Investors Relations monitors and analyzes
team. Our mission is to offer a information about the company
leading service to investors and and the sector to support the
analysts from around the world, rest of the Investors Relations
because we know that the team, as well as other company
market needs access to the best areas and upper management.
information to make investment The Shareholders Relations
decisions. Our transparency team is also tasked with
creates confidence, which is the providing Repsol’s more than
essence of financial markets 500,000 small investors with
and the reason why investors information that is just as
from around the world decide to rigorous, but adapted to your
Being a
invest in Repsol. needs. A good example of this is
Our team is structured so the Shareholders’ Guide. In this
that we are able to provide this section, Miguel Martínez goes “I admire Repsol’s
information to the different types over the company’s key events ability to overcome
of investors. The Front Office, last year. obstacles in such
shareholder
for example, is in close contact We also demonstrate a complicated
with institutional investors from Repsol’s commitment to social, political, and
around the world and with more sustainability and socially legal environment,
than 40 analysts that monitor responsible investors, the most
in addition to its
the company, visiting over important share performance
30 European and American figures and shareholder
sound financial
cities each year and carrying remuneration, as well as the
management
out over 120 international results obtained in the previous and its mindset
regarding
We work each and every day to
roadshows. On top of that, reporting period.
socially responsible investors corporate social
provide the best economic and financial (SRI) are an increasingly
important group within Repsol’s
responsibility and
the environment”
information to all our shareholders, shareholding structure who also
Josep María Barris
whether large or small.
require specifically designed Repsol shareholder and
information and events. On the Advisory Committee member
2018 Shareholders’ Guide | 35You can also read
