Spain’s Repsol is targeting further cost savings following the loss in the third quarter of 2020.
The capital expenditure (CAPEX) for this year is estimated to be down by EUR1.2 billion (USD1.4 billion) from the initial plan. In the previous guidance, the cut was EUR1.1 billion (USD1.29 billion).
Operating expenditure (OPEX) cut target is also being increased this year, from the previous EUR450 million (USD527 million) to EUR500 million (USD585.5 million). As of September, the company had captured more than EUR350 million (USD409.8 million) in savings.
The adjustments followed the company’s EUR94 million (USD110 million) loss in the third quarter of the year due to weaker energy prices, a drop in upstream output, and the other one-off charges related to workforce restructuring.
The company posted an adjusted profit of EUR7 million (USD8.2 million) in the third quarter excluding one-off items and inventory effects. In the corresponding period of 2019, the reading was at EUR522 million (USD611.2 million).
However, compared to the previous quarter, Repsol’s upstream division performed better in the July-September period, propped up by the improvement in crude prices. Nevertheless, the adjusted upstream profit was still 77% lower than the same period a year earlier. Affecting the reading was the output fall in Libya, the North Sea, and North America.
In the third quarter of the year, the company’s industrial division comprised of refining and petrochemicals posted an adjusted loss with refining profitability being pressed by the narrower spreads of middle distillates, gasoline, and light-to-heavy crude oil, which were transferred into weaker distillation and refining margins.
The benchmark refining margin indicator slumped into negative territory in the period. Refinery runs also fell to 8.5 million tons or 677,000 bpd, compared to 11.2 million tons a year earlier.
On the other hand, Repsol’s petrochemical activities benefited from improved sales. However, the lower margins on the back of the falls in petrochemical product prices, mainly in those linked to the auto sector has offset the benefit.
