Cepsa will invest up to $ 8,000 million this decade to accelerate the energy transition

Ceps will invest up to $ 8,000 million this decade to “lead the energy transition in Spain and Portugal,” according to a new 2030 strategy unveiled by the oil company this Wednesday. The group will invest between 7,000 and 8,000 million by 2030, and “by 2023, more than 60% will be allocated to sustainable businesses.” The company expects this business to account for more than half of its total operating profit (Ebitda) by 2030, up from 14% in 2022.

As Cepsa CEO Marten Wetzler noted in a presentation to the press, the group is immersed in its “second” energy transition. “A hundred years ago it was part of the transition from horse to car” and now it has drawn up “an ambitious roadmap to reduce its emissions, among the leading companies in its sector”.

Asked whether there could be problems with diesel supply to Europe due to the war in Ukraine and Russia playing a key role as a supplier of this fuel to Europe, the Dutch executive did not rule out this scenario. He noted that “there is some disruption in the supply of diesel from Russia” and “it will be very difficult to maintain a balance in the market.” He recalled that Europe is heavily dependent on diesel from this country and “flows continue, but not at the same pace as before.” That is why prices have “risen” and this fuel is already more expensive in Spain than gasoline.

If the supply of diesel from Russia is “maintained”, the fundamental impact will be an increase in prices, “because it will be necessary to import from other parts.” But “in the hypothetical scenario that they stop completely, it will be difficult to answer at this point” and “we could have reached this situation.” “We look for imported goods when they are offered to make sure the supply is not compromised. Wetzler explained that they were still analyzing the effect of the discounts included in the government-approved war response plan on Tuesday and that “of course, this will have an impact on prices falling for consumers.”

Cepsa’s new strategic plan envisages that by 2030 the Group’s CO2 emissions (limits 1 and 2) will be reduced by 55% compared to 2019 and aims to reach zero net emissions in 2050 and move beyond the ‘limits’, which will make a positive contribution. “Reaching Net Positive, allowing users and the community to move in the right direction.”

The new strategy envisages the development of “the largest electric vehicle ecosystem in Spain and Portugal” through an alliance with Endesa, “the development of the widest ultra-fast charging network on the road”, which aims to achieve a minimum ratio of one charger. 150 kW for every 200 kilometers on major highways and intercity roads. “We are going to build one of the largest electric charging networks in Europe, starting in Spain and Portugal,” said Wetzellar.

Hydrogen amplifier

The group also aims to increase demand for green hydrogen in road transport. The goal is to have a fuel station every 300 kilometers in the corridors connecting Europe with Spain by 2030.

Cepsa service stations, which have the second largest network in Spain and Portugal, will be transformed into a digital space that will offer a variety of ultra-comfortable and restaurant services, including new food, parapharmacy, e-commerce, collection. “Parcel service and sustainable vehicle wash service points, as well as multi-energy refueling solutions on the road.”

In addition, Cepsa “will create a data-driven culture using advanced analytics to enhance customer experience conversion and loyalty program. And by making an artificial intelligence decision, the company will be able to offer comprehensive services in real time. ”

The second “large ecosystem” of Cepsa’s new strategy will focus on accelerating the decarbonisation of industrial users, air and sea transport, and the company itself, by producing green molecules, mainly renewable hydrogen and biofuels.

Cepsa, one of Spain’s leading hydrogen producers, “will lead green hydrogen production in Spain and Portugal by 2030” with a capacity of 2 GW, enabling it to become a “benchmark for the import and export of this product”. Energy thanks to the privileged location of its facilities on the continent of Europe, Africa and the Middle East, on the Iberian Peninsula. “Spain has a unique advantage over hydrogen,” said the Dutch executive.

The company also aims to lead the production of second generation biofuels by 2.5 million tonnes per year by 2030, which will help develop a circular economy. “In this area, Cepsa will become a supplier of sustainable aviation fuel (SAF) with an annual production of 800,000 tons. The company currently controls 35% of the aviation sector’s energy supply market in Spain.

To implement this new strategy, Cepsa is betting on turning its processing plants into “diversified and sustainable energy parks”. The group recalls that these facilities are “strategically located in southern Europe, next to major ports, providing large industrial clients with privileged access to key markets”.

The company will implement technologies based on artificial intelligence and advanced analytics to optimize its processes and reduce the environmental impact of its industrial centers.

In the field of renewable energy, Cepsa will develop a portfolio of solar and wind energy projects for its own consumption, with a capacity of 7 GW, of which 1.5 GW is already connected to the grid.

For its part, the strategy of the chemical and exploration-manufacturing business “remains unchanged.” Cepsa will give these departments more autonomy “to maximize values ​​and allow for more focus and faster solutions.”

Chemicals Division, another mature business for which Cepsa “continues to consider alternatives” to a possible sale or merger of a partner, said Cepsa CEO would “strengthen its global leadership in the LAB markets”, a key ingredient in biodegradable products. Detergents and number in the production of second phenol (used for the production of high-tech plastics), “through the development and production of chemical products from renewable and recycled raw materials”. This business aims to generate up to 30% of its sales in 2026 on low carbon products.

The third major phase of the business, research and production, will have “more autonomy in management” and “will provide the key to generating cash flow that will facilitate group transformation.” The company will continue to optimize E&P activity to reduce the intensity of CO2 emissions through various efficiency measures and the production of low-cost, low-carbon products.

In terms of sustainability and good governance, the company has linked the remuneration of its managers to ESG goals: 15-20% of their variable salaries will depend on meeting those goals.

Cepsa received a net profit of 661 million in 2021, compared with a loss of 919 million in 2020, the year of imprisonment as a result of the Covid-19 pandemic. The group, which is controlled by the Abu Dhabi Sovereign Wealth Fund and the Carlisle Foundation, presented this new strategic plan after it was announced in October and appointed to the post of CEO of the Wezler in January.