Fossil-Fuel Giant Repsol Targets Net-Zero Emissions in Strategic Shift
December 03 2019 - 3:08AM
Dow Jones News
By Max Bernhard
Spanish oil, gas and chemical company Repsol S.A. (REP.MC) is
aiming to cut emissions to net-zero by 2050 and said it would take
a multibillion euro impairment charge against its oil and gas
assets.
The company said late Monday that its management analyzed the
company's role "in the fight against climate change," which
triggered the strategic shift. "It is possible to achieve at least
70% of this target with the technology that can currently be
foreseen, and the company is committed to applying the best
available technologies to increase this figure, including carbon
capture, use and storage," it said. Repsol would, if necessary,
additionally offset emissions through reforestation and other
natural climate sinks to achieve zero net emissions by 2050, it
added.
Repsol said it would also tie at least 40% of the long-term
variable pay of its management and senior executives, to the goals,
which will form the basis for its 2021-25 strategic plan.
It now "expects a gradual decarbonization of the economy, a
reduction in the expectations of future oil and gas prices and the
increase of expected costs for future CO2 emissions," it said.
Its exploration and production business would thus prioritize
cash and value generation over a production increase, while its
industrial businesses will keep their current position in "refining
profitability together with more challenging decarbonization
goals," as well as an increase their production of biofuels and
chemical products with a low carbon footprint. New businesses would
take on "a more ambitious objective of low carbon power generation
by 2025," the company said.
Repsol said it expects to book an after-tax impairment charge of
about 4.8 billion euros ($5.3 billion) in some assets in 2019.
"This valuation adjustment will mainly affect exploration and
production assets located in the United States of America and
Canada, due to the reduction in the expectations of future gas
prices," it said.
The charge will hit specific reported income for 2019 but
doesn't impact cash flow or shareholder remuneration, it said.
Write to Max Bernhard at max.bernhard@dowjones.com;
@mxbernhard
(END) Dow Jones Newswires
December 03, 2019 02:53 ET (07:53 GMT)
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