Repsol Reduces Geopolitical Risk Thanks To Talisman Buy, But They Still Mean €5 Bn

repsol-LNG

Apart from the over €2.273 billion euros (€2.414 billion in 2014) of assets it has in Venezuela, Repsol also has other geopolitical risks for a total of nearly €5 billion, according to the group’s 2016 consolidated accounts report. In Libya, for example, Repsol calculates its assets at €510 million. And in Algiers, the figure is €832 million. The Reggane gas project is Repsol’s most ambitious one yet. In Ecuador, Repsol has several tax disputes ongoing with that country’s government. The company doesn’t provide details of its assets in Ecuador, but explains “we have informed Ecuador of the possibility of lodging an international arbitrage.”

In the UK, its only investment is the joint venture which Talisman had with Sinopec. Repsol cancelled this susbsidiary’s business and ended up in the arbitration courts with Sinopec, its big partner in Brazil. Sinopec is claiming €5 billion. The arbitrage will be settled between now and February 2018. The oral hearing will take place between January 29 and February 20 2018. After cancelling the investment, Repsol made an over €1 billion provision.

According to ACF’s view,:

“One of the benefits of the Talisman acquisition has been precisely the reduction of geopolitical risk in Repsol’s Upstream business, given that the lion’s share of its Downstream activity is carried out in Europe. In Upstream, capital employed is €23.853 billion versus the €39.255 billion for the whole group. Of its Upstream EBITDA, 26% comes from North America, Asia and Russia contribute 24%, Europe, Africa and Brazil 20.5% and LatAm and the Caribbean 37%.