MOSCOW (MRC) -- Spanish energy giant Repsol plans to buy and sell more assets in a drive to get stronger in a smaller number of markets, after weak energy prices prompted it to cut capital spending and core profits forecasts, reported Reuters with reference to its CEO's statement.
CEO Josu Jon Imaz said the company now expected capital spending (capex) for 2018-2020 to be EUR12.5-13.5 billion (USD13.9-15.0 billion), including EUR500 million on renewable energy assets. That is down from EUR15 billion previously.
"Our geographical scope is not the right one," Imaz said, "We have to reduce the scope of the countries where we operate, and become more active in M&A."
He said the company would reduce its presence in the countries where it is smallest, without giving details.
Though weak energy prices dragged down Repsol’s third quarter adjusted net profit, it still beat market expectations thanks to downstream businesses such as refining and marketing.
Repsol trimmed its 2019 core earnings forecast to EUR7.5 billion from EUR7.8 billion previously, and also lowered its production forecasts for 2019 and 2020.
In 2019, the company planned to produce 710,000 barrels per day (bpd), down from 720,000 previously. It expects to be somewhere between 720,000 and 750,000 bpd next year.
"We will prioritize price versus production," Imaz said.
As MRC wrote previously, in the last week of September 2019, Spain’s Repsol resumed operations at its cracker in Sines, Portugal. The news was not directly confirmed by the company while it was not clear as of the time of press whether or not Repsol lifted a force majeure at the site. The company had declared the force majeure on the output from its cracker due to a technical glitch in early September. The cracker has a production capacity of 410,000 tons/year of ethylene and 215,000 tons/year of propylene. The company also owns a butadiene unit with a production capacity of 45,000 tons/year at the same site.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
Repsol S.A is an integrated Spanish oil and gas company with operations in 28 countries. The bulk of its assets are located in Spain.
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