Repsol Sa Sp/Adr

Good afternoon and welcome to REPSOL first quarter 2024 results conference call. Today's call will be hosted by Josue John Imath, our chief executive officer, with other members of the executive team joining us as well. Before we start, let me draw your attention to our disclaimer. During this presentation, we may make forward-looking statements based on estimates. Actual results may differ materially depending on the number of factors as indicated in the disclaimer. I will now hand the call over to the host.

Thank you, Ramon. Hello. Good afternoon to everybody, and thank you for joining us today. I begin this presentation with a review of the main infrastructure, followed by our business performance and results. After the presentation, we will be available, of course, to answer your questions. To begin with, last February, Repsol released its strategic update for the period 2024 to 2025, a story of value growth built on our strengths. This update roadmap preserves the foundation of our previous strategic plan, adapting then to a new energy context and a better positioning of Repsol. Our longer-term vision remains doubly unchanged, being committed to our decarbonization targets and the profitable business opportunities identified in the energy transition. The new plan prioritizes shareholder distributions in order to provide certainty, predictability, and upside to our dividends. In the next four years, our commitment is to allocate between 25% to 35% of the cash flow from operations to remunerate our shareholders, including dividends and share buybacks. We'll distribute 4.6 billion euros in cash dividends, guaranteed regardless of the scenario. This year, we'll increase the dividend by around 30% to 0.9 euros per share, And from 2025 to 2027, we'll increase the funds distributed as dividends by 3% per year. On top of this, in our central case, remember that we talked about our central case eight weeks ago, we will devote up to 5.4 billion euros to buybacks for a total of 10 billion in shareholder distributions in the four years of the plan. Hence... DPS, or distribution per share, will grow well above the 3% baseline, reaching, in the best scenario, up to a 12% annual growth from 2025 to 2027. Our second priority is to maintain our current rating and strong balance sheet, ensuring the delivery of our remuneration objectives and investment plans. And thirdly, we have our investment plan. will target a net capex figure after disposals and asset rotation of 16 to 19 billion euros, with around 35% deployed in low carbon. The total net capex, and this net capex is going to be delivered and fulfilled over the period, in the horizon of the plan, won't surpass this 16 to 19 billion euros threshold. So, in the case of slower portfolio rotations or lower levels of divestment, I don't have any doubt, we will slow investment plans to maintain ourselves within our capital framework. So, we are going to fulfill this net capex concept in many cases. Continuing now with our performance in the first quarter, the adjusted income reached 1.3 billion euros, 6% higher than in the previous quarter, and 33% below the same period a year ago. Persistent volatility derived from geopolitical tensions and inflation concerns continue to affect commodity prices, and in this scenario, oil prices remain well-supported at around $80, while the price of natural gas show further signs of decline. Refining margins remain solid, having improved strongly over the last quarter of 2023, and in chemicals, margins displayed a modest recovery. Cash flow from operations was 1.4 billion euros, 26% lower year over year. Cash generation was negatively impacted by a 0.9 billion euros working capital build-up, mostly associated to seasonally higher inventory levels. And remember that we have a plan turnaround in Porto Llano. And because it's a landlocked, an inland refinery, that requires a higher level of stocks. And also from La Pampilla. I mean, assuming the same level of prices as at the end of 2023, this working capital effect will be fully reversed as we advance towards the end of the year. Net debt stood at 3.9 billion euros by the end of March, a 1.8 billion increase compared to December. This increase was mostly driven by the closing of the ConnectGen acquisition, the low mentioned investment in working capital, the payment of the January dividend, and new leases associated to our trading fleet. Net capex was 2.1 billion euros in the quarter, of which 0.7 billion corresponds to ConnectGen, and the contribution of divestment and asset rotation was 0.1 billion euros in the quarter. The investment level of the first quarter is aligned, fully aligned, with our objective of achieving a net capex of 5 billion euros in the year. So, we have a net capex of 5 billion euros in the year after disposals and rotations. We don't expect capex to be backlogged towards the end of the year, and we plan further proceeds from the investment and rotation to materialize as we progress in 2021. We have launched all the processes and we have taken all the measures to materialize these divestments and rotations as we progress in 2024. With regards to shareholder remuneration, last month we started the 35 million shares buyback program approved in February. Remember that we have the objective of canceling 40 million shares before the end of July. This will be complemented with additional buybacks later in the year to comply with our 30-35% of cash flow from operations distribution commitment 4.24. On the operational side, we may make significant progress towards the development of a leading renewable fuel platform in Iberia. thanks to the strategic partnership with Bungie, the acquisition of a 40% stake in renewable gas producer Genia Bioenergy, and the start of operations of an advanced biofuels plant in Cartagena. In low-carbon generation, the acquisition of Conegen adds some material on shore wind platform in the U.S. that also includes solar and energy storage projects. Also in the U.S., we complete the construction of the Friar project, our largest solar facility to date, with almost 1 million panels, and we are working on closing our first renewable asset rotation in this country. Looking briefly to the main macroeconomic indicators of the quarter, Brent oil averaged $83 in the period, 1.3% below previous quarter, and 2.5% above the same quarter a year ago. The geopolitical tensions that drove the oil price in the first quarter have persisted in April. The heavy hop averaged $2.3 per million BQ, a 20% reduction over the previous quarter, and 32% lower than a year ago. The downward trend in gas prices has continued so far in the second quarter, driven by high production levels and technical restrictions limiting U.S. exports. Repsol's refining margin indicator averaged $11.4 per barrel in the quarter, 27% above the previous quarter, and 27% below the same period last year. Market dynamics reflected the threat of supply disruptions, intensifying geopolitical conflicts and heavy global refinery maintenance. The euro-dollar exchange rate averaged 1.09 in line with previous quarters. Moving on now to the performance of our businesses. Starting with the upstream, our focus remains on the efficient delivery of the next batch of projects that will contribute to the upgrade of our portfolio through new production and higher margins. In the U.S., we are closely monitoring the gas price situation to limit our exposure to the depressed Henry Hub. First quarter adjusted income was €442 million, 20% lower compared to the previous quarter and 7% lower than a year ago, mostly due to the lower gas price, realization and lower volumes. Production averaged 590,000 net bars of oil equivalent per day, 1% below the previous quarter, and 3% lower year over year. Compared to the same period in 2023, quarterly volumes were impacted by the sell last year of our Canadian position, and a lower working interest in corridor in Indonesia. following the extension of the PSE. These effects were partially offset by the full consolidation of the UK and the contribution of New Wales in the Marcellus. In Libya, production in El Shareda was temporarily shut down some days due to force majeure in January, with an impact of around 4,000 or 5,000 barrels per day compared to the first quarter of 2023. In unconventional production, we are currently running one rig in Eagle 4 and one rig in Marcellus. In the current gas price environment, the rig in Marcellus will be released in June. Our exposure to heavy half has been mitigated through the hedging of approximately 20% of our North American gas production in 2024. 50% in 2025 and 50% in 2026. On average, around 40% of our North American production in 2024-2026 has been hedged through derivatives. In Alaska, in the TICA project, we are approaching almost 50% of the development scope in order to reach, first of all, including seven wells already drilled. Finally, in Mexico, we have reached an agreement for the preservation of an offshore production facility, which will substantially contribute to reach FIE in 2025. Continuing with industrial, our strategy in this division is twofold. On the one hand, we aim to maximize the value capture in this cycle on the conventional side of the business, and on the other hand, we are developing new low-carbon platforms to generate a leading renewable fuels and materials platform in Iberia. Looking at the first quarter performance, the adjusted income was 731 million euros, 30% higher quarter-over-quarter, and 43% below the same quarter a year ago. Year-over-year, results were negatively impacted by a lower contribution of our refining businesses, trading and wholesale and gas trading. In refining, the average margin indicator stood at $11.4 per barrel, 27% below fourth quarter 2023, thanks to the strengthening of gasoline and NAFTA, the differentials, and lower energy costs, partially compensated by narrower middle-district spreads. The margin premium of the indicator was $2.4, mostly due to program optimizations, the contribution of buyers, and the availability of heavy crews. Our refineries continue to receive crews from Venezuela for around 2 million barrels processed in the first quarter, The average utilization of our distillation capacity was 89%, while the run rate of the conversion units reached 99%. Maintenance activity included the multi-annual turnaround of Porto Llano that is going to be finished next week, next Monday, next Tuesday, more or less. Refining margins have been softening over time. recent weeks as a steady inflow of imports into Europe has strengthened inventories ahead of maintenance season. In April, the indicator has averaged around $7 a barrel, impacted by weaker middle distillate and naphtha spreads. In chemicals, demand in Western Europe improved over the previous quarter due to lower imports and unplanned downtimes in some facilities. In this scenario, petrochemical margins recover from the historical lows achieved in the second half of 2023, mostly due to strengthening of intermediate products and lower energy costs. Rapsol's petrochemical margin indicator averaged 205 euros per ton, 24% over the previous quarter, and 3% over the same period last year. Still, the EBITDA contribution of the chemical business remained negative at minus 32 million euros. The margin improvement has continued in April, with the margin indicator surpassing 300 euros per tonne month to date. Let me now review the progress of our industrial transformation projects. Starting with Cartagena, the C43 project was complete and the new advanced biofuels plant reached large scale production in April. In Porto Llano, the project to retrofit an existing soil hydro-treater to produce HBO continues progressing as planned. Establishing strategic partnerships with key players to ensure feedstock availability will be critical for our plants in renewable fuels. In this sense, the agreement reached last quarter with Bungie that increases our access to a portfolio of low-carbon intensity feedstocks will support our transition from first-generation vegetable oils to other lipidic feedstocks. The agreement includes three plants operated by Benji in Spain, located near Repsol's industrial sites. Finally, in the biomethane route, we reached an agreement to purchase a 40% stake in Genia Bioenergy, a Spanish company integrating the entire biogas and biomethane value chain. The gas produced will be used both for Repsol's internal consumption and for marketing to customers. This agreement creates a growth platform in the emerging renewable gas industry, considered strategic by the European Union. Continuing now with the customer division, first quarter performance benefits from the resilience of the commercial businesses and the development of our multi-energy proposition, despite a less favorable market situation. First quarter, adjusted income was 156 million euros, 53% higher over the previous quarter, and 10% lower than in the same period a year ago. Year over year, the lower results in mobility and LPG couldn't be fully offset by the higher contribution of retail power and gas from lubricants and aviation. In mobility, sales in service stations and wholesale were partially affected by alleged fraud practices of some operators aiming to increase their market share. As controlled measures on fraud are effectively implemented by Spanish administration, market conditions should go back to normal during 2024. The number of digital clients, which includes the users of Wallet, grew to 8.3 million by the end of the quarter. In the electricity market in Spain, the average pull price was 45 euros per megawatt hour, 40% lower quarter over quarter, and 54% below the same period last year, due to increase of the contribution of renewable energy. In return power and gas, Repsol continues increasing its current base, reaching 2.3 million customers as of the end of March. The EBITDA contribution of this business remains solid in the quarter at 49 million euros despite the lower demand. Finally, in low carbon generation as part of our strategy to achieve double-digit return And to limit our financial exposure, we are currently working on our first asset rotation in the U.S. First quarter adjusted income was minus 6 million euros, which compares to a positive result of 34 million euros a year ago. Driven by a lower pool price in Spain, a lower contribution of combined cycles, and overall, the integration costs, I mean, they are one-off costs associated to the purchase of ConnectGen. The acquisition of ConnectGen adds some material on shore wind platform to our U.S. portfolio with a deep project pipeline that also includes solar and energy storage projects. In the U.S., we expect to achieve between 3 and 4 gigawatts of installed capacity by 2027. A major milestone in our growth plans in this country has been the completion last quarter of the Frye Solar Project in Texas, with a total installed capacity of 637 megawatts, of which more than 600 are already under operation. As part of our strategy to lock in returns, we have agreed a long-term PPA for 89% of the output from the project. We have two other major solar projects under construction in Texas. The 629 megawatts outpost with expected commercial date between 2024 and 2025, and the 825-megawatt spinning-ton facility with planned startup between 2025 and 2026. In global terms, In 2024, we expect to add 1.3 GW of the new renewable operating capacity thanks to new additions in Spain, the ramp-up of FRI and the start of production in outposts, reaching around 4 GW of total installed capacity by year-end. Moving now briefly to the financial results, in this slide you will find a summary of the figures that we have discussed when reviewing the performance of our businesses. And, of course, as usual, for further details, I encourage you to refer to the complete set of documents that were released this morning. Moving now to our outlook for the year, let me say that the full guidance provided in February remains unchanged. In terms of cash generation, we are respecting a cash flow from operation in the 6.5 to 7 billion euros range. We are comfortable with this figure. Net capex after disposals and asset rotation is forecast, as we did it in February, at 5 billion euros this year, 2024. In refining year-to-date, the indicator has hovered on average around $11 per barrel, and this is well above the assumption of $8 in our full-year budget. That is the guideline we have for the whole year, $8 a bar. Our shareholder remuneration objectives are also maintained with the commitment to distribute this year 30% to 35% of our cash flow operations in the higher end of our distribution range for 2024 to 2027. To conclude, we are Positive that our updated strategic plan for 2024 to 2027 will translate into an attractive story of value, with a clear and committed growing dividend proposal. During the next four years, we will lever on capital, discipline, and our integration advantage to evolve our portfolio, developing new business platforms that will contribute, no doubt about that, to the increase of cash flows and returns to our shareholders. We remain committed to our decarbonization ambitions on the energy transition, ensuring the efficient delivery of energy products, and providing affordable, reliable, and decarbonized energy to society. In 2024, we have started the year with a solid set of results, working along the guidelines of our updated strategy to maximize value in the current environment, helped by our robust operational performance across all divisions. The strategic partnerships agreed last month to boost our supply of renewable fuels and biogas are significant milestones towards the development of new industrial low-carbon platforms in Spain. And following the ramp-up of the C43 project, we have become the only player in Iberia with a plant fully dedicated to the production of renewable fuels on an industrial scale. Finally, in renewables, we are ramping up the development of our used platform, incorporating a higher share of wind to our portfolio, and deploying a new operating model. With this, I think we can move on to the Q&A session. Thank you.

Thank you. To ask a question, please press star, one, one on your telephone and wait for your name to be announced. To read through your question, please press star, one, and one again.

Thank you, operator.

We will move now to the Q&A session. Our first question comes from Sasikan Chilukuru at Morgan Stanley. Please, Sasi, go ahead. Hi, thanks for taking my questions.

I have two, please. The first was on refining. I was wondering if you could provide the margin levels that you're currently seeing. You highlighted the April average to be around $7 per barrel. If you could comment on the... two weeks and your expectations on how this would likely change over the next two to three months. That would be quite useful. The second one was on CapEx. You've expressed confidence in meeting your full year guidance through disposals and asset rotations. From an acquisitions perspective, you still have the $300 million payments for the stake in the Bungay partnership. I was just wondering between the 1Q and the full year guidance. Any color on the organic Apex levels or the assets that could potentially be sold, that would be useful. Thank you.

Thank you, Sashi. I mean, going to your first point, the cover refining margins are average $7 above over the whole April, at around $6 above this week. And we are firmly comfortable about the guidance of $8 a bottle in average for the whole year. But let me say, I still think that it's a prudent assumption for the whole year. What is behind? First of all, we are in April. I mean, you know that there is a seasonality in refining margins. If you check the sole refining margins last April, one year ago, we were at 4.7, 4.9 dollars a barrel. And the average of the whole year was $11 a barrel. What is the rationale about all that? I mean, first, the turnaround of the U.S., Refinery from the Gulf of Mexico is over, so that means that the products are on track of being produced. The driving season is not yet there, and there is a flow of products towards Europe, and the inventories in Europe are higher. So, you know, the diesel, gas oil, and so on consumption in winter also in Europe is over, and we are not still entering Europe. in the driving season. So, I think that there is a clear temporary effect. We don't see, let me say, structural threats to this refining margin. Seeing more, what I see are some threats on the supply side because, I mean, when we check The attack to Russia on Friday is around 1.3 million barrels a day, more or less, have been attacked over the last months. I mean, you know, Russia is a black box, but today we have some clue that probably one... I figure close to one million barrels a day are out of... of running today in Russia. So the threat is still there. The potential conflict in the Red Sea, I mean, you know, there is an addition of margins because the travel along the African coast for products coming from India, Middle East, and so on, And when we look at next year, two years ago, three years, even three into one year, two years to three years from now, what we are seeing taking the potential new capacity that is going to enter in the system, the potential closing processes of refineries in Europe and in the world and the increase of demand mean we are closer to see a tight supply-demand balance than the framework So we are comfortable with the figure. I think that $8 a bubble for the whole year is a prudent assumption, taking into account the best approach we have for our system. And seeing the performance of the business over the first quarter, let me say that I'm also quite comfortable with the assumption of two dollars above as a premium for the whole year so that means that ten dollars above is today the best approach we have for the whole refining margin figure for the whole year and i'm quite comfortable with this figure, let me say, in the lack of, I don't know, some kind of macroeconomic disruption in the world that we are not seeing now. Going to the capex, I mean, the full year guidance today, I mean, 5 billion euros of net capex this year. I mean, that is going to be written on stone. So, it's true that we have 2.1 billion euros of net capex this quarter, and that could be a bit surprising for you, but it's fully aligned with the guidance we have for the whole year. Why? Because we have seen, well, first of all, going to your question about Bungie, I mean, I... we are not going to have a cash out of Bungie this year. That is going to happen in 2025, this 300 million euros approach of this transaction. And, I mean, we have seen an asset rotation process this year that is going to be above 1 billion euros, including US and Spain. Diversment, all in all, are going to be at around 0.5, 0.6 billion euros. I mean, that is not a big figure, but even this quarter we were above 100 million euros of divestment. I mean, that is going to happen. And the gross capex is going to be, in any case, below 6.5. 4, 6.5 billion euros including the inorganic transaction of ConnectGen we mentioned before so I'm fully comfortable with the 5 billion capex and again and I said 8 weeks ago and of course I'm more committed to that even than 8 weeks ago I mean I can't control things that are not in our hands but I can control CapEx. And, over this strategic period, the net CapEx figure is going to be, in any case, in the range from 16 to 19 billion euros. And that is going to happen. And let me say, in any potential situation that I don't see today, that could hypothetically happen, of having any kind of difficulty to divest, or to rotate the asset, we will cut in a dramatic way the gross capex. So the net capex figure, in terms of the strategic plan we defined eight weeks ago, is going to happen. That is in our hands. I mean, let me say, Sashi, that I was talking about refining margin. That is my view, but that is not in my hands. I mean, I can't commit. What I'm saying over 5 million is because things could be in the business environment different, but CapEx is in my hands. And again, that is going to happen.

Thank you, Sasi. Thank you, Shashi. The next question comes from Viraj Borjataria at RBC. Please, Viraj, go ahead. Hi there.

Hi. Thanks for taking my question. It's just a couple of follow-ups actually on the same, similar topic. So on refining, you know, it's obviously been incredibly volatile. Over the last couple of years, we've seen a big tilt to diesel in terms of output from refiners as the market's tight. You know, how are you thinking about refining In your refineries, have you tilted your product now towards gasoline? Because you do see a big split in the cracks between diesel and gasoline. And maybe some broader perspectives on how you're seeing the two end products. And then just on the divestment front again, you threw out some numbers there. So you're planning on or have launch processes of a billion in terms of asset rotation and the divestments there. On the divestments for 500, 600 million, was that related to the upstream? Just could you help me understand the breakdown and how you're thinking about rotation within res and then the divestments? Was that primarily the upstream or they were mixed together? Thank you.

Thank you, Peter. I think going to the refining, it's true that, I mean, when we compare in historical terms, perhaps the gasoline trucks are performing in a better way than the in historical terms, comparing with diesel cracks at this moment. I mean, that is happening. But my point is, I mean, we have flexibility to cope with this potential, let me say, focus on diesel or gasoline. More or less 4 or 5% of our total production in the refineries, and that is a big figure, could be shifted from the current maximization of middle distillates towards gasoline. And this 5%, when you compare this figure with the current gasoline production that could be an 18% more or less of the total system, that means that we have the capacity to increase in that 25-30% the volumes of gasoline that we could put in the market in case of seeing higher gasoline cracks. I don't know what is going to happen. Seeing that we are not in the American driving season, hypothetically, that could happen. In that case, we have a bit of flexibility to shift from the current middle distillate production to more gasoline. I mean, with more investment, we are talking about operational... In our programming, we are, in some way, day after day, optimizing this system to optimize also the yields in economic terms of the production we have. When we go to do, I mean, roughly speaking, because things could be a bit different, but I would say if we take this year more or less 1.5 billion euros as a whole in terms of disposals, rotations and so on, more or less the figure related to low carbon generation rotations including the US and Spain will be close to 1 billion euros. And in the case of the disposals of the EMP, the total disposals will be 0.5, and let me say that probably 80% of this figure is going to be related to EMP. What you could see in this quarter, the first quarter, a figure that I think the total amount is around 120 million euros, something like that, is mainly the main part is related to the EMP and the main part is related to the disposals of a part of Eagle 4 in terms of optimizing the land we have in the area. So, again, 1.5 all in all. at around 1 billion euros asset rotation and 0.5 disposals and probably an 80% of the disposals coming from the EIP. But again, we could have higher opportunities in the way and be sure that we are going to try to do our best to take advantage of higher disposals of rotation opportunities. Thank you, William.

Thank you, Pilar. Our next question comes from Michele de la Viña at Goldman Sachs. Please, Michele, go ahead.

Thank you very much. It's Michele Della Vigna from Goldman. I wanted to ask you a couple of things. First of all, I've seen you taking a charge because of the Spanish temporary energy levy, which is proving to be less temporary than what it was supposed to be. I was wondering, what shall we assume in terms of cost this year and next year because of it? And are you benefiting from some of this green capex offset that the government was talking about? And then my second question is on biofuels. You are clearly the leader in Spain. You are accelerating that investment with an integrated strategy. There's also the Red 3 directive in Europe, which was approved last year, which now each country needs to put into place within 18 months. And I believe that should provide substantial upside to the renewable diesel blending in a variety of areas. European countries. Do you see that potentially as a tailwind for your market in Spain? Thank you very much.

Thank you.

Thank you, Michele. Going to your first question, I mean, I was sorry because I was thinking about what to answer to you today, Michele, because, I mean, I don't know if today is the best day to forecast political issues in Spain, but, I mean, saying that, trying to go rightly to your question. First of all, this year, the whole figure that is fully included in the piano already in the first quarter. And even the EBITDA has been reduced in this figure, the first quarter, because this effect, the total effect, is 335 million euros, our forecast for this year. Saying that, you know, over the last weeks, we have seen quite new developments moves from the political side. The first one coming from the European Commission at the end of November. Remember that in our report the European Commission said that there was no reason now for this kind of taxes. And the priority has to be to guarantee the security of supply and the investment in the energy sector. I mean, two or three weeks ago in a Spanish newspaper, I remember in an interview to the Spanish economy minister, Mr. Cuervo, the minister said that when we talk about this room for tax, thinking about the need of investments in the energy sector has to be taking into account. So, I think, first of all, that this task, this task, sorry, is going to have an end. I think that even from the legal point of view, I think that we can consider that there is no room in 2025 to have any kind of temporary levy, even from the legal point of view. And talking about 2024, and Seeing and listening to the statements from the political representatives, either in the European Commission or in the Spanish government, I think that there is room to have a framework where the investment is going to be prioritized on the payment of the levy. Saying that, we prefer to be prudent, and for that reason we have included this quarter the whole figure in the P&L, and in terms of cash, you know that a half has been paid in February, I think, 167, more or less, million euros, and the whole figure for the whole year has been deducted from the EBITDA of the year in this first quarter. Going to your second question, let me say that it is an interesting question because I like a lot what we are doing in terms of of spreading the renewable fuel concept in the Spanish market, because let me say that we have to decarbonize the whole economy in the world. And electrifying is important, no doubt about that, but when we see the Spanish economy, only 23% of the total, the final use of energy is electrified. That's important. And electrification is, let me say, doing pretty well in terms of decarbonizing this part of the economy. But we have to decarbonize the whole European and world economy. And we have to put our eyes on the 77% of this economy that is not electrified. And let me say that many of that is not going to be electrified in coming years. When we look at the Spanish conflict, I mean, electric vehicle is there. We are part of this growth in terms of electric vehicle infrastructure. But electric vehicle is today at 1.5% of the total Spanish car fleet. All in all, including plug-in hybrid plus pure electric vehicle. So it's also, let me say, our challenge, our responsibility to cope and to solve the problem of 98% 0.5% of cars that they are using combustion engines in Spanish roads. So for that reason we have a clear commitment to launch, to boost, to enhance this concept of renewable fuels. This quarter we already have 140 service stations providing to Spanish consumers 100% renewable fuel to fulfill the tank we are going to have 600 service stations by the end of December, no, by the end of the year, 2024, and 1,500 service stations at the end of 2027. That means that probably 60% of the total service stations of Australia and Spain, you know, we are leading this market, and we have the larger network of service stations in the country, At 65%, 60% by 2027, they are going to be providing 100% renewable fuels. And we are shifting the concept from premium diesel, that is the current concept we have in most of our service stations, to the premium renewable diesel with zero emissions. Going to the aviation, the mandatory is probably going to come in 2025 or 2025 on, and we think that the demand is going to improve, and we are preparing the ground for this evolution. And we will go on, Michele, in this. way in this pathway to fulfill this, let me say, not only a business commitment, but also a social responsibility. Thank you, Michele.

Thank you, Michele. Next question comes from Alistair Syme at Citi.

Please, Alistair, go ahead. I just had one question, and it's really about the Spanish power prices, which have pulled back a long way in recent months. I just wanted to get your perspective on that, but also trying to figure out how that impacts on your business. Is it a negative or a positive on a net basis? How does that feed towards the different business segments? Thank you.

Thank you. Let me say that the low-carbon generation, this water is being impacted by some impacts Most of them are one-off. The first one is the ConnectGen related to integration cost and so on. They have quite a huge figure comparing with the dimension of the P&L of this business. Secondly, going to the Spanish power ties, I want to remind you that the first quarter has been, in historical terms, a very rainy quarter in Spain. Today, the hydro capacity in Spain is clearly above the average of the last 10 years in historical terms. So, we have experienced two months, more or less, continuing with the low pressure rains entering from the south of Spain, from the Gulf of Cádiz and so on, towards the peninsula. And because of this particular weather, the renewable production has been very high and prices dropped over the quarter. So, I don't know what is going to happen with the coming quarter. But, I mean, taking into account decisionality and so on, it seems to me that that is not going to be the peak in coming quarters. So, from the point of view of prices, I want to also to remember two facts first. That probably in terms of... In terms of wind, 70% or less of the production is backed by PPAs. Even a higher figure in many of the assets, but we have an open asset that is a valuable one in terms of merchant. The hydro is open to the market. So we could have 35, 40% of the total Spanish production that is marketed. This is open at merchant prices. And I would like to underline the effect of the integration, the margin integration, because that is pretty clear this quarter. At these low prices, there is a negative impact on the low-carbon generation business, but at the same time, it's a huge opportunity in terms of growth and in terms of P&L for our retail power business. The retail power business, as you know, that is still a small business in Luxor, with 2.3 million customers, but clothing, has got an EBITDA of 50 million euros this quarter. For this business, historical terms, it's a pretty good figure. So, we are following, of course, these prices. I think that this one-off effect is important. I mean, it's quite one-off effect due to the special weather conditions this quarter. And on top of that, I mean, we are quite comfortable looking at the whole picture because what we have in Spain, and that is the great advantage of this business in Spain, is that we have a strong integrated position. So we are long and we are short. So in case of having this kind of price disruption, I mean, we have the right to capture in the production side and in the retail side.

Thank you, Alistair. Thank you, Alistair. Next question comes from Matt Loftin at J.P. Morgan. Please, Matt, go ahead.

Hi, thanks for taking the questions. Too pleased if I could. First, just coming back to refining, I think you sort of said earlier that you delivered a premium over the benchmark in excess of $2 in Q1. Can you just talk about the environment and the outlook for that premium Q2 and beyond and the extent to which sort of heavy crude availability is supporting or not that generation on a forward look? And then secondly, just on cash flows and working cap, I mean, you mentioned earlier the sizable build in working cap in the first quarter, which was probably higher than market expectations. Sounds like sort of Puerto Lino maintenance is an important part of that reversing. If we assume a flat price environment for the rest of the year, apart from that maintenance cycle, what are the other sort of key triggers that we should look to in terms of working cap normalizing and the timing around it. Thank you.

Thank you, Matt. I mean, probably you are right that it's quite, let me say, it could be normal conditions quite bold for me to forecast the premium over the whole year. But let me say that, I mean, I am more comfortable than some other quarters And I'm trying to explain that. The C43, the Cartagena's renewable fuels plant, is already operating. If we take, because I know that you have, I mean, the analysts and investors are reasonably concerned about margins for renewable energy. products and so on, if we take today's margins in terms of HBO minus UCO margins, that they could be at around $700 per ton, and take into account the break-even of Cartagena, in a normal year, the EBITDA coming from this project will be at these margins, that you know that are low margins in historical terms, at around 90-92 million euros a year. So, when I take this figure, I think that we could think that 0.4 dollars above or more or less of a new premium is going to come in coming quarters from this project. Since that we could add to this option, or this reality, better said, that we have some kind of clear visibility for coming months about the supply of heavy oils for two reasons. First of all, because, I mean, we anticipated some months ago the potential difficulty we could have in terms of a small production of Mexican Maya crude oil and so on, and we diversified. sources and I mean today we have a quite reliable supply from Canada from Colombia from places like Iraq even a small amount coming from the Mediterranean Albanian area but mainly from mainly I mean in terms of increase from Venezuela we have some clarity about the crude oil for coming months so all in all if I take into account the the The bio or the renewable field side plus the basket of heavy oils plus the optimization we are able to do quarter after quarter. And seeing the 2.4 from the first quarter, we are, let me say, quite comfortable about the indication of $2 above all of premium for the whole year. Going to your second question, the answer is yes. The main trigger is going to be the reduction of storage. I mentioned before, if we take the 900 million euros To be fully clear and transparent, 200 more or less could come from prices because the price is slightly below the price we had at the end of December. So, I mean, there is a positive effect. In business terms, because the brand price and so on, but in terms of building inventories, it's negative because we need more capital to maintain the same level of inventories. But the rest, 700, 750 million euros, they come from higher inventories. For this year, the largest turnaround process we had was in Puerto Llano, involving the COCA, the FCC, the vacuum unit, and the main part of the distillation. And Puerto Llano is a... Great refinery with a great market close to Porto Llano, that is the main Spanish market, that is Madrid. That is a landlocked refinery, more difficult than some others to be managed. And mainly when you have to provide the products you have when you have a turnaround process. So for that reason, the storage of products in Porto Llano used to be higher when we needed to shoot down the refinery. I think that some of the units are already producing. The last one is going to start producing next week. The figure I have in mind is at the end of April, next week. And you could expect, of course, a full normalization of working capital. The current prices would be 7, 750 million euros less of working capital

at the end of the year.

Thank you. the level of hedges in the U.S. gas market. You said you have 40%. You can give us an indication of which is the price level in which you are hedging the volumes there. And the second question is about Venezuela. You know, all this volatility of the sanctions from the U.S., how you are operating the business and which is the prospect for the next quarters. Thank you.

Thank you, Alejandro. I mean, going to American gas, I mean, seeing what is happening or what was happening, better said, in the American market in gas terms and having a price and so on, I mean, at the very beginning of the year, we started taking measures. The first one, to reduce the capex level in the Marcellus. So, As I mentioned before, we only have one rig operating in the area. This rig is going to be discontinued in June. We have reduced, in an important way, the capex level of the year. And as a consequence of this reduction, the free cash flow break-even for the Marcellus this year is going to be at $2 per million of BTU. So, I mean, it's not... They are a big figure taking into account current prices, but let me say that this is okay. I mean, Marcellus is not going to destroy cash for the company this year because the break-even in cash terms is $2 per million reduced. Saying that, what we are doing is also because we have... But a more positive view for gas prices for coming years. And what we are doing is guaranteeing that the production is going to be there. This year we are producing more or less 135,000 barrels a day in equivalent terms. I mean, we are talking about gas. Next year it's going to be 140, 135, 140 in 2026. But my view about the market prices is not relevant at all. What is important is what market is seeing today. And because market is having a more positive effect What we are doing over the last weeks, months, and even this last week, we are covering a hedging position for coming years. As I mentioned before, at 20% of the production of this year, 2024, for the whole American in gas, Marcellus and Eagle 4, including both sales, is covered with a color, put gold, 3% $4.6 million BTU, that means that we have a floor of $3 million BTU this year, and we have a core of 4.6, that means that all, let me say, this potential upside is in our hands. In 2025, a 50%, so a half of the total American production of gas is already a hedge. Again, with a call, a put call with no cost, a put of $3 million BTU and a call of 6.1 million BTU. And in 2026, a 50% of the total production, sorry, in 2025, I said a 50%, a 60% of the total production is hedged, and in 2026, it's a 50% of the total production. And in the case of 2026, the caller has a put of 3.2 and a call of $5 million BTUs. That means that... I mean, more than 40% of the total production of these three years is hedged with a minimum floor in all cases above $3 million BTU. So we are quite comfortable with this position. Going to Venezuela, I mean, we have had some news over the last weeks. The first one, we achieved an agreement with Pedereza. And this agreement incorporates two new fields. The name of the fields are Tomopolo and La Ceiba. And these fields are currently producing 20,000 barrels a day gross. So that means that we are... Thanks to this agreement, we are doubling the current production of Petrochirichiri. Remember that Petrochirichiri will have today a gross production of 20,000 barrels a day, 40% is the salt stake in the... In this asset, 60% is Pellevesa, so we are doubling the current production we have there. Of course, there are some positive effects. The first one, potential synergies regarding the operation. In Petrochiriquiri, we have different fields, Baruamo-Tatran and Ine Grande, that could, in some way, integrate some synergies with these two fields. And what is also important, the potential upside to improve the recovery factor of fields, which more, I mean the new fields, they have more than 5 billion barrels of oil in place. That means that last week we have increased in the Repsol assets the oil in place with a figure of 5 billion barrels. So, as a summary of this agreement, this transaction, we are Improving the resource position in oil production in Venezuela, first of all, allowing us to recover a past commercial debt thanks to this new production in the oil field. Secondly, a production increase that you are going to see in coming months because we are in the closing process and all that of these contracts. And third, we are going to improve, in an important way, the cash flow profile of Petrochiriquire, that is the JV, the oil JV we have with PDVSA in Venezuela, in order to pay the financial debt to Repsol. And of course, as I mentioned before, a collateral consequence is that we are improving the feedstock profile of our refining system. That's related to the oil production. If we go to Cardon, Cardon is gas production, you know, the JV we have with ENI. Let me say that we maintain the total normal conditions of Cardon under the comfort letter we have since 2022, providing us the proper framework to continue operations as we have been doing so far. even with sanctions enforced. So, in other words, the general license on the last decision of last week is not impacting, is not affecting our operations in Cardona. So, Rapsol leaves cargoes. And we go on in the process of that recovery of Cardon. And we continue with the liftings with SWAP. You know that PDVSA needs diluents for heavy crude oil production, so we swap and we lift cargoes and we swap, shipping some diluents to Venezuela in the framework of this operation. Let me underline, Alejandro, we are, and we will go on, of course, fulfilling the whole national and international legality regarding our operations in Venezuela as of today. But, again, the comfort letter that was issued by the American Department of State is giving us some kind of comfortability about the operations we have in Venezuela. In any case, we are in real time, in talks, in a very transparent way, in touch with Venezuelan authorities, with American authorities, with everybody. And we see today reasonable conditions to improve our position in Venezuela without further financial exposure and contributing to increased production, either in carbon gas production or in petrochemical oil production. Thank you, Alejandro. I'm sorry, I mean, expectations on the quarters. I mean, again, we are proud of it. We are not changing our metrics in terms of EBITDA, cash flows, and so on, because of this agreement. I mean, that is there. I think that that is going to happen. We are going to do our best to make these things happen, but we prefer to be prudent, and for this reason, we maintain, in the current terms, all the guidances we have for 2024. Thank you, Alejandro.

Thank you, Alejandro. Our next question comes from Alessandro Pozzi at Mediablanca. Please, Alessandro, go ahead.

Good afternoon, and thank you for taking my questions. The first one is on capital flexibility. It looks like you are fairly confident that you can achieve the net capex number of $5 billion, and therefore you're quite confident in closing those disposals. For any reason, they don't. Which are the projects where you can pull back some of the capex? I guess maybe in the upstream US, it could be an area you mentioned that you already you're giving back one rig. I was wondering maybe if in renewables or in industrial, what is the CapEx flexibility that you have there? And also, second question is on the industrial. I think wholesale and trading have a really strong result in Q1. Certainly, there's a bit of a seasonality there, but I was wondering whether you can give us more color behind those positive results. Thank you.

Yes, I'm confident about this figure of 5 billion euros of net capex. In terms of capex reduction, going to the divestment, let me say that the main divestments, they are going, as I mentioned before, from the E&P. I'm not going to put names to the assets from the countries where potentially we could invest, but I ask you to rely on our track record over the last five years. We have been able to dispose Vietnam, Malaysia, Ecuador, Canada, parts of exploration and productions in Romania, in Greece, in Papua New Guinea, in Australia, Russia, with production assets. So, I mean, we have a track record in terms of disposing assets. In the logical mindset I expressed when I presented the strategic plan some weeks ago of having better bubbles in terms of cash flow from operation. Now we are operating in 13 countries. We have a huge, you know, the scope of countries where we operate. And then we will be comfortable being in nine, 10 countries as a whole, and we are going to go. Of course, they are not names. We are going to analyze materiality. We are analyzing also the capacity we could have to create value, and at the same time, we are adding new barrels in better places with higher cash flow from operations, and we have a clear target and ambition of increasing from 14.4 to 18.5 more or less dollars a barrel, the cash flow from operations from any barrel coming from the EMP. But I'm quite comfortable. And again, I mean, if we don't fulfill the net capex figure, I'm ready to dispose. additional assets, also in some other businesses, because we have a lot of liquid assets in our portfolio. So what is going to happen is that we are going to fulfill the net capex figure, as I mentioned when I presented the strategic plan. Our priorities are distribution for shareholders, third priority. Second priority, transforming the company with a capex that is going to be, over the period, fully included in these 16 to 19 billion euros range, and third, doing that under a strong balance sheet and fulfilling our commitments with rating agencies. Going to the industrial trading businesses and so on, as I mentioned also eight weeks before when I presented the strategic plan, this, let me say, is hidden. businesses, I mean, hidden because, I mean, they are not in the front as some others like refining or EMP or renewable are. They have a combined EBITDA of 1 billion euros that year in 2024. So, two hidden businesses. Saying that, I think that, I mean, that was the EBITDA. If we go to the EBIT, I think that to, I mean, An approach for this year could be that the trading business could have an EBIT at around 400 million euros of EBIT this year, 2024. And the gas business is more volatile because, I mean, it depends sometimes on gas prices, the capacity we could have to operate St. John in Canada and so on. But we could think something close to 300 million euros of EBIT, 330 million euros of EBIT this year. In all, we will have over this year, 2024, more than 700 million euros of EBIT coming from this business. Going to this quarter, I mean... trading is aligned with the view for the whole year. And in the case of North America, because January is included, and it's generally a good month, the figure for the gas could be higher than the proportional part for the fourth quarter. Thank you, Alessandro.

Thank you, Alessandro. Next question comes from Andrej Patikot at UBS. Please, Andrej, go ahead.

Yes, everyone. Thank you for the presentation. Two questions from my side. The first one on the production outlook for the year. We did start to expect that you'd be in the upper half of that range given the current portfolio of assets that you have. And then secondly, you're at C43 and the ramp-up of that asset. So you're not really full capacity for the projects and I think it's developing in terms of SAF production? Should we expect a ramp-up in SAF over the next few months? And where do you think that can take the EBITDA contribution? You mentioned 90 million euros based on current margins. What could be realistic expectations for the following year? Thank you.

So, I mean, eight weeks ago, I had, I did, I expressed a guidance for the whole year, for the acting, something in between 570 to 600,000 barbers a day.

I mean, today, it seems to me that we are going to be in the upper part. So, something close to 590-600,000 barrels a day, with the best information I have today. So that would be the production of the aspirin for the whole year. The ramp-up of C43 is okay. I mean, there are always small operational problems, but the plant is performing at 80-85% already. And the sub-production is going to depend, of course, on the sub-market. So you know that we have the capacity to produce, more or less speaking, if we take 250,000 tons a year and exclude some bio-LPGs and things like that, or bio-naftas, we could have more or less the capacity to produce 100% diesel, renewable diesel with some kind of operation and shifting towards SAF, we could produce a 65%, 70% more or less of SAF with a third, a bit higher, I mean, probably 75% of SAF without 25% of renewable diesel. It seems to me that because today the renewable diesel market is higher, the plant in these first steps is going to be mainly focused to produce renewable diesel. And, I mean, we are going to produce a part of SAF, but this figure of SAF probably makes sense. to be increased from 2025 on when the mandatory regulation will come. The data contribution, I mean, if we take last year's margins, in our fourth year, The EBITDA will be something between 150-160 million euros for this plant. Taking today's margins, the EBITDA of this plant will be close to 90 million euros over the whole year, and take it into account that, I mean, if you have to take for 2024 that we put in operation the plant in March, and with the ramp-up and so on, I mean, I think that taking a 65% for the whole year of this figure will be accurate. For next year, I mean, something in between 100 and 150 million euros for the whole big duck coming from C43. Thank you.

Merci, Henri. Thank you, Henri. Next question comes from Pedro Alves at CaixaBank. Please, Pedro, go ahead.

Hi, good morning, and the whole team, thank you for taking my question. So it's a couple of qualifications on the CFA for guidance regarding the working capital. I think I heard you mentioned $700 million of recovery until year-end. So does this mean a recovery from the $900 million of outflow that you had in first quarter, so meaning that the movement that you are the full year, and also on the tax payments after this unusual inflow of taxes of almost $300 million. What is the expectation for the full year? And also, you mentioned the recovery of chemicals in April. What is your expectation in terms of a bid for the full year? And the second question is on schedule remuneration. You are working with the higher end of your target, 30 to 35. We had to come in month and go to July for the first off results. Just trying to understand what could be your timeframe to decide to be more into 35 instead of 30. with a macro scenario and operationally aligned with your targets in terms of CSFO, would you be eventually in a position to decide in July or indicate to the market to be more into 35% bailout?

Thank you. Gracias, Pedro. I mean, going to your first question, I mean, if we take... As I mentioned before, I mean, roughly speaking, if we have 900 million euros of the building process over this quarter in terms of working capital and 200 could come from the price side and 700 from the volume activity side, let me say that under the same assumptions, I mean, at these prices, today's prices, we will recover, roughly speaking, 700 million euros from now to the end of the year. because the price effect, roughly speaking. My point is that we are going to control the inventories and the activity over the whole year. Of course, the price effect is going to impact in one direction or in the other direction. If we see lower prices, of course, the effect will be negative in P&L terms, but it will be positive in terms of building working capital. So we could expect this working capital recovery you mentioned over the whole year. Going to the tax payment over the whole year, that is true that you have seen, let me say, a quite also one-off effect this quarter. That is mainly related to the repayment of some corporate tax that's coming from the Spanish administration. So what we could expect in terms of taxes for the whole year, let me say that is the normal tax rate For our activity, I mean, from the rest of the quarters, probably for the EMP, the tax rate will be something close to 45%, 42% more or less in the case of the abstinent activity, probably closer to 40% than to 45%. And in the case of Spanish activities, I mean, the tax rate would be at around 25% of the Spanish corporate tax. But again, in cash terms, we have a positive impact coming from the repayment of some concepts coming from the corporate tax and so on. Going to the chemical business, I mean, what we have seen, as I mentioned before, are a bit different. Probably higher demand and probably higher prices that mainly come from the shortage of import material in Western Europe. The demand for petrochemicals in Western Europe is stressing this quarter, but mainly because the supply of imports problems caused by the attacks on vessels in the Red Sea and so on. We are also seeing many coming from Asia. a better picture than we were being before. And let me say that in general terms, people from our business, they expect a better situation for 2024 compared with 2023. If current markets, for instance, in April, It seems to me, I'm betting in favor of that. I can't say that in 100%, but I think that the EBITDA of the business in April is going to be positive. And that is clearly good news, because if we take that year figure, the EBITDA was negative in 157 million euros, and this quarter... the EBITDA was negative in 32 million euros. So having a positive EBITDA in April, I think that is a quite positive shift in this business. And today, if the current market situation remains for the rest of 2024, I think that the EBITDA for 2024 could be positive for the whole year, even in a figure above 25-30 million euros. Let me remind you that we are also doing our best to to go on in our investment process of the chemical business because if we take, for instance, the potential impact of CNES that is going to be operating, the upgrading of CNES at the end of next year, CNES will be even at this point current margins, adding 100 million euros a year of EBITDA. The projects on track of cable, differentiated cable, plus the ultra-high molecular weight polyethylene from Puerto Llano, they will be a combined 40, 45 million euros of EBITDA. So all in all... Probably with these projects this year, even in this bad environment, we will have an EBITDA at around 200 million euros and a positive EBIT even in this negative environment arena. So we are doing our best to improve performance. of this chemical business. Going to the distribution, the timeline for the decision, probably, you know that we are now in the share buyback purchasing program we committed in February. This program is going to be finished and canceled in the second half of July, probably in the next quarter, a conference call, this program will be already redeemed, amortized, and probably Probably I will be announcing the second program for the second half of the year, taking into account that, I mean, we see that this cash flow for operation is on track, and this 30%, 35%, I mean, is giving us room for having a total shareholder distribution that could be taking our guidance. I'm not committing anything. I figure something between 2 and 2.1 billion euros. I mean, taking into account that the cash could be at around 190 million euros, the dividend in cash this year. So, I mean, I think that there is room for a second buyback program for the second half of the year. But I will be more comfortable taking this commitment So that is going to be the timeline for the decision. Thank you, Pedro.

Thank you, Pedro. Our next question comes from Kim Fustier at HSBC. Please, Kim, go ahead.

Hi. Good afternoon. Thanks for taking my questions. It's now started up, but I think there's been a delay for about a year because, if I'm correct, at one point it was meant to start up in the first quarter of last year. So what happened there at C43, and what have you learned from an execution standpoint that it could apply to future projects? Secondly, on the Bungie venture, how much of your biofuels feedstock moves have you now covered with this joint venture, and what level of internal coverage would you like to achieve in the medium term?

I mean, going to your first question, you are right.

When we approved this project... Three years ago, in the midst of the pandemic, because it was approved in 2020, the startup, the first oil, the first renewable oil, let me use the term, was forecast for October. And the four-month delay was caused mainly because the shortage and the break of supply chains over this period related to the Ukrainian crisis and so on, we have suffered. in these fractions in terms of raw materials, supply chain and so on. We have learned in some way to cope with quite challenging conditions when you are launching a project, because let me say what we have experienced in Europe. in the period 2023 has been quite unusual in terms of supply chain guarantee and so on in some sectors. And all that has impacted, of course, also the building process of this project. Going to Bungie, Bungie is going to cover more or less the 82-85% of the total needs we are going to have. as feedstock for the project we are going to put on track by 2030. When we talk about 2030, I mean, the indication I have in mind, we are talking about a production of renewable fuels, of biofuels, all in all, in that figure, 2.3 million euros, sorry, tons, by 2030. So, all in all, an 82%, 85% is going to be covered by 2030, thanks to this agreement we achieved with Bungie. Thank you, Kim.

Thank you, Kim. Our next question comes from Matt Smith at the Bank of America. Please, Matt, go ahead. Hi there, good afternoon.

Thanks for taking my questions. I had a couple, please. The first one was a clarification on the CFFO guidance for the full year, reiterated as before, the 6.5 to 7 billion, I understand. I just wanted to double-check, has the commodity price assumptions been... being refreshed in that view. I guess Brent is running ahead of what you presented eight weeks ago, but Henry Hub running lower. So I just wanted to clarify whether you had updated the commodity price deck that underpins that. Sorry if I missed that. And then the second question was back on refining. Thank you for all your comments so far and the indicator for April. I think that's all very useful. I just wanted to touch on any comments on demand specifically, if you could. because as I look at the margins throughout April, gasoline has been very strong, margins going up throughout April, and diesel the inverse. Some of the demand indicators we tracked seem to suggest that gasoline demand has been particularly strong, perhaps above expectations, and again, perhaps the inverse is true for diesel and middle distillates. I just wanted to see whether that was consistent with what you're seeing, or whether you would just characterize this as usual seasonal demand trends, please. Thank you.

Thank you, Matt. I mean, the general guidance was $80 above the Brent. $3 a bottle of Henry Hub. It seems to me that seeing what is happening in terms of the current oil price over the year and the part we have hedged of Henry Hub, I mean, there is no downside from this combination, 83%. And the refining margin, $8 a barrel indicator. And as I mentioned before, we have $2 a barrel of forecast premium. That is the guidance for getting this 6.57, this range of billion euros in terms of cash flow from operation. I mean, you are right. You said about refining. I think that there are both factors. One of them, going to the middle distillates, I think that there are seasonal factors. I mean, the weather in Europe over the last two winters has been a bit milder than it used to be. So that is impacting in a negative way in the demand side of middle distillates. From the other side, we have the tension on the supply side, I mentioned before, and the potential disruptions, many of them coming from Russia. And that is the most important one of the effects. But it's also true that there are some structural effects in the conflict. One of them is the desilization of the Europeans. fleet is changing, that means that more and more new cars, they are hybrid gasoline cars, and we are seeing less new middle-distillates of diesel cars, but it's also true that because The new retail and purchasing trends in the society, I mean, more Amazon, more online purchasing process and so on, the number of vans and trucks and so on using diesel is also increasing in some parts of some European geographies. But in general terms, I think that there are some kind of change from middle distillates to gasoline in structural terms in Europe. We are quite comfortable with that because we are gasoline exporters from Europe to America and we have a huge shortage of middle distillates in Europe. I mean, only in our own border markets. In France, the import figure of middle distilleries is higher than the total middle distilleries production of Repsol 5 refineries. And France is a market that is in our... I mean, we have two refineries, Tarragona and Bilbao, that are closer to all the southwest refineries. French market at any French refinery. So, I mean, that is happening. You are right. And we are, let me say, following and trying to react to adapt our own production and our own commercial activity to these trends. Thank you.

Thank you. Thank you, Matt. Our next question comes from Anis Kapadia at Policy Advisors. Please, Anis, go ahead.

Good afternoon. I just have one question about the renewables business, the power generation business in the U.S., I wanted to just get a sense of some of the current market trends and how they're kind of impacting the market. So we're seeing kind of interest rates stay quite sticky and higher for longer. There also seems to be some kind of pain amongst many of the solar developers in the U.S., So just wondering how that kind of market environment is impacting you. And also, you know, I suppose there's some positivity looking forward about electricity demand in the U.S. So if you could just talk about that, too.

Yes. Thank you, Anish. I mean, there are different effects we are seeing in the American market. The first one, demand is strongly growing. And mainly the demand for renewable energy. Why? Because all the new activities related to artificial intelligence, data center, new technologies, the transport of data and so on is growing. So there are even some... some trends, some forecasts that say that by 2030 the world is going to need more or less a power generation for all the activities related to the IT, closer to the total current American consumption. So a 13% of the total global. So a new United States, let me say, in terms of power consumption in the world. And what we have seen is that all these, let me say, agents or players in the IT, the new IA arena, they only want, mainly want to be provided with renewable energy, renewable power. So, demand is growing. What we are seeing is a very positive impact coming from the IRA. In the areas where we are developing our main projects, what we are seeing is that a figure with a floor of 30, and in many places even at 40% of the total capex, is supported either by ITCs or PTCs, depending on the different formulation, to be supported. At the same time, we are seeing a dramatic reduction in terms of capex, mainly in the solar sector. side panels, the panel side, because you know that you have the BOP and you have the panel. In the panel, the reduction has been closer to 40%, sorry, 40%, comparing with the prices we had two years ago in the States. And a negative effect, as you mentioned, coming from the interest rates. What is going to happen? I mean, I don't know what is going to decide the American Federal Reserve. In case of seeing some kind of easing the monetary policies from June on, as some analysts say, are forecasting, in that case the impact will be even positive because at the end of the year we have a better interest rates arena than what we have today. In any case, remember that even in the worst of these interest rates scenarios, In October, we were at the peak of our interest rates. We were able to rotate the last rotation we did in Spain with Ponte Gadea, including solar and wind assets. So, in general terms, we are quite comfortable with this. Some positive and some negative effects we are seeing in the American renewable business arena. Thank you, Anish.

Thank you, Anish. That was our last question. At this point, I'll bring our first quarter conference call to an end. Thank you very much for your attendance.