Repsol Decides To Complain

RepsolJon Josu Imaz CEO of Repsol and Chairman Antonio Brufau

Without doubt he has been thinking about it for many years, but the chairman of Repsol has waited patiently to show himself in the best light and make friends a few days ahead of today’s OPEC meeting taking place in Vienna, against a backdrop of highly volatile oil prices. He has protested against the very existence of OPEC as an oil cartel, as well as about the German government’s policy of subsidising electric cars with coal subsidies.

This means that vehicle is highly contaminating, given that 42% of electricity generation is from coal, although it’s the good kind. In Spain, this figure is about 20% due to the fact that coal production, although it’s the bad kind, has gradually declined.

Brufau is not wrong, but there are some who maintain that the truths about energy policy should be revealed when there is a fully-functioning government, and complaints should be made not only when market circumstances are not in the oil company’s favour.

Even so, Repsol’s chairman outdid himself with his complaint about Germany and other countries, by linking electric cars and CO2 emissions because of the massive subsidies to Germany’s powerful coal sector, contravening community policy. He similarly surpassed himself when he told shareholders that the best thing for the oil industry would be for OPEC to disappear and for the sector to function with pure market rules. He said everyone knows that our money moves according to the rules of supply and demand. And we should not put these at risk so that some people can decide what prices they need so that the world pays and they manipulate production to this end.

With the price of oil trying to get close to 50 dollars/barrel, today’s words are as significant as the silences of two or three years ago when the price was well over 105 dollars. Having been put in a difficult position at Repsol’s last AGM – he had to announce a 20% cut in the remuneration for shareholders – Brufau has tried to boost their spirits by leaving the door open for an upwards revision to the dividend if oil prices recover. This would presumably be when the price reaches, and maintains, the 50 dollars/barrel bar.

The average estimates of analysts puts crude at between 42,56 and 65 dollars/barrel in 2016/17/18, while the rating agencies are more conservative with levels of between 36,43 and 49 dollars for the same period. In 2015, Repsol posted net profit of 1.860 billion euros, up 9% from a year earlier. The oil company has left behind, like a bad dream, the figures registered in 2013 when profits stood at 195 million euros. This was the result of one-off restructuring due the expropriation of YPF.


About the Author

Carlos Díaz Guell
Editor at and, Carlos began his career in financial journalism as founding member of El País. He's been communications director of Bank of Spain, member of the ECC at the European Central Bank, Institutional Relations director at Iberia and editor at La Economía 16 magazine.