Q1 2026 Repsol SA Earnings Call

April 30, 2026

Operator: Hello, welcome to Q1 2026 Results Conference Call. Today's conference will be conducted by Mr. Josu Jon Imaz, CEO, and a brief introduction will be given by Mr. Pablo Bannatyne, Head of Investor Relations. I would now like to hand the call over to Mr. Bannatyne. Sir, you may begin.

Speaker #1: Hello and welcome. First quarter 2026 results conference call. Today's conference will be conducted by Mr. Joseon Imas, CEO, and a brief introduction will be given by Mr. Pablo Banatine, Head of Investor Relations.

Speaker #1: I will now like to hand the call over to Mr. Banatine, sir, you may begin.

Speaker #2: Thank you, Operator, and good morning to everyone joining us today. Welcome to Repsol's first quarter 2026 results presentation. Today's conference call will be hosted by Josu Jon Imaz, our Chief Executive Officer, with other members of the executive team joining us as well.

Pablo Bannatyne: Thank you, operator, and good morning to everyone joining us today. Welcome to Repsol's Q1 2026 Results Presentation. Today's e-conference call will be hosted by Josu Jon Imaz, our Chief Executive Officer, with other members of the executive team joining us as well. At the end of the presentation, we will be available for a Q&A session. Before we begin, let me remind you that during this presentation we may make forward-looking statements based on estimates. Actual results may differ materially depending on a number of factors, as indicated on our disclaimer. With that, I will hand the conference call over to Josu Jon.

Speaker #2: At the end of the presentation, we will be available for a Q&A session. Before we begin, let me remind you that during this presentation, we may make forward-looking statements based on estimates.

Speaker #2: Actual results may differ materially depending on a number of factors, as indicated in our disclaimer. With that, I will hand the conference call over to Joseon.

Speaker #3: Thank you, Pablo and good morning. And welcome to everyone. Last quarter marked a solid start to the first year of our update 2026-2028 strategic roadmap that we present six weeks ago in March here in Madrid.

Josu Jon Imaz: Thank you, Pablo. Good morning and welcome to everyone. Last quarter marked a solid start to the first year of our update 2026, 2028 strategic roadmap that we present, 6 weeks ago in March here in Madrid, and most of you were present here. This strategic roadmap is built on three clear pillars: increased cash flow generation, higher shareholder returns, and disciplined capital allocation, always preserving the strength of our balance sheet. Since then, since our Capital Markets Day, the escalation of the conflict in the Middle East has had global implications for our industry, increasing volatility across commodities and reinforcing uncertainty around the near-term economic outlook. Our market environment has since become more complex, shifting from concerns about oversupply risk to a very different context of actual physical disruptions.

Speaker #3: And most of you were present here. This strategic roadmap is built on three clear pillars, increase cash flow generation, higher shareholder returns, and disciplined capital allocation, always preserving the strength of our balance sheet.

Speaker #3: Since then, since our Capital Markets Day, the escalation of the conflict in the Middle East has had global implications for our industry, increasing volatility across commodities and reinforcing uncertainty around the near-term economic outlook.

Josu Jon Imaz: Since our Capital Markets Day, the escalation of the conflict in the Middle East has had global implications for our industry, increasing volatility across commodities and reinforcing uncertainty around the near-term economic outlook. Our market environment has since become more complex, shifting from concerns about oversupply risk to a very different context of actual physical disruptions.

Speaker #3: Our market environment has since become more complex, shifting from concerns about oversupply risk to a very different context of actual physical disruptions. The closure of key energy routes has led to a significant tightening of oil, gas, and products markets, increasing price fluctuations and reshaping global trade flows.

Josu Jon Imaz: The closure of key energy routes has led to a significant tightening of oil, gas, and product markets, increasing price fluctuations and reshaping global trade flows. In this situation, Repsol has remained focused on the safe and efficient operation of its assets, ensuring continuity of energy supply while taking timely and disciplined actions to help mitigate the impact of fuel price volatility to our customers. As of today, across our assets, remain stable and reliable. All the operations, I mean. With no material exposure to the Middle East, we are well-positioned to navigate the current environment and benefit from commodity market dynamics, all that supported by a diversified and resilient portfolio.

Speaker #3: In this situation, Repsol has remained focused on the safe and efficient operation of its assets, ensuring continuity of energy supply while taking timely and disciplined actions to help mitigate the impact of fuel price volatility through our customers.

Speaker #3: As of today, across our assets, operations remain stable and reliable. All the operations, I mean—with no material exposure to the Middle East—we are well positioned to navigate the current environment and benefit from commodity market dynamics.

Josu Jon Imaz: With no material exposure to the Middle East, we are well-positioned to navigate the current environment and benefit from commodity market dynamics, all that supported by a diversified and resilient portfolio. Looking at the main developments of Q1, in the upstream, we complete the agreement to incorporate TotalEnergies to our UK JV, creating the largest independent oil and gas producer on the UK continental shelf. In addition, we continue moving forward with our project pipeline, starting production at Lapa Southwest and reaching the latest stages of development in Pikka, Alaska.

Speaker #3: All that is supported by a diversified and resilient portfolio. Looking at the main developments of the first quarter, in the upstream, we completed the agreement to incorporate TotalEnergies into our UK JV, creating the largest independent oil and gas producer in the UK continental shelf.

Josu Jon Imaz: Looking at the main developments of Q1, in the upstream, we complete the agreement to incorporate TotalEnergies to our UK JV, creating the largest independent oil and gas producer on the UK continental shelf. In addition, we continue moving forward with our project pipeline, starting production at Lapa Southwest and reaching the latest stages of development in Pikka, Alaska. In Venezuela, the recent updates in the country could provide a material upside within the portfolio. In the industrial side, the performance benefit from the strong refining environment in March and increased contribution from trading businesses. Results were partially held back by non-transferred results and time lag effects on products pricing, which are expected to flow through the P&L in coming months, in the next quarter. In customer, activity remained resilient, supported by higher mobility sales and the continued growth of our customer base.

Speaker #3: In addition, we continue moving forward with our project pipeline, starting production at Lapa Southwest and reaching the latest stages of development in PICA, Alaska.

Speaker #3: In Venezuela, the recent updates in the country could provide a material upside within the portfolio. On the industrial side, the performance benefits from the strong refining environment in March and the increased contribution from trading businesses.

Josu Jon Imaz: In Venezuela, the recent updates in the country could provide a material upside within the portfolio. In the industrial side, the performance benefit from the strong refining environment in March and increased contribution from trading businesses. Results were partially held back by non-transferred results and time lag effects on products pricing, which are expected to flow through the P&L in coming months, in the next quarter. In customer, activity remained resilient, supported by higher mobility sales and the continued growth of our customer base.

Speaker #3: Results were partially held back by non-transcendent results and time lag effects on product pricing, which are expected to flow through the P&L in the coming months, in the next quarter.

Speaker #3: Customer activity remained resilient, supported by higher mobility sales and the continued growth of our customer base. In terms of results, first quarter adjusted net income reached €873 million, a 57% increase over the same period in 2025, mostly due to a stronger contribution from industrial.

Josu Jon Imaz: In terms of results, Q1 adjusted net income reached EUR 873 million, a 57% increase over the same period in 2025, mostly due to a stronger contribution from industrial. Cash flow from operations stood at EUR 1 billion, 2% higher than in Q1 last year. Cash generation was impacted by a EUR 1.4 billion working capital build-up, mainly related to inventories linked to higher prices and volumes as we ensure full security of supply to our refining system in this complex and volatile environment. Excluding working capital movements, operating cash flow generation amounted to EUR 2.4 billion, more than covering investments, interest, and shareholder remuneration in Q1. Net debt closed at EUR 4.8 billion, a EUR 0.3 billion increase over December.

Speaker #3: Cash flow from operations stood at €1 billion, 2% higher than in the first quarter last year. Cash generation was impacted by a €1.4 billion working capital buildup, mainly related to inventories linked to higher prices and volumes, as we ensure full security of supply to our refining system in this complex and volatile environment.

Speaker #3: Excluding working capital movements operating cash flow generation amounted to 2.4 billion euros, more than covering investments, interest, and shareholder remuneration in the quarter. Net debt closed at 4.8 billion euros, a 0.3 billion increase over December, yielding ratio stood at 14.3% and 6.5% if we exclude leases.

Josu Jon Imaz: Excluding working capital movements, operating cash flow generation amounted to EUR 2.4 billion, more than covering investments, interest, and shareholder remuneration in Q1. Net debt closed at EUR 4.8 billion, a EUR 0.3 billion increase over December. Gearing ratio stood at 14.3%, and 6.5% if we exclude leases. Shareholder remuneration was aligned with our distribution objectives. The first cash dividend of 2026 was paid in January, amounting to EUR 0.5 per share.

Josu Jon Imaz: Gearing ratio stood at 14.3%, and 6.5% if we exclude leases. Shareholder remuneration was aligned with our distribution objectives. The first cash dividend of 2026 was paid in January, amounting to EUR 0.5 per share. The second dividend will be paid in July to reach a total dividend of EUR 1.051 per share in the full year. Thus, this figure is, roughly speaking, an 8% increase compared to 2025. Dividends will be complemented with share buybacks to reach our committed 30% to 40% cash flow from operation distribution objective. Aligned with this, the first buyback program of 2026 was launched in March for up to EUR 350 million, with additional buybacks to be implemented in H2.

Speaker #3: Shareholder remuneration was aligned with our distribution objectives. The first cash dividend of 2026 was paid in January, amounting to €0.50 per share. The second dividend will be paid in July to reach a total dividend of €1.051 per share for the full year.

Josu Jon Imaz: The second dividend will be paid in July to reach a total dividend of EUR 1.051 per share in the full year. Thus, this figure is, roughly speaking, an 8% increase compared to 2025. Dividends will be complemented with share buybacks to reach our committed 30%-40% cash flow from operation distribution objective. Aligned with this, the first buyback program of 2026 was launched in March for up to EUR 350 million, with additional buybacks to be implemented in H2.

Speaker #3: And that's this figure is roughly speaking an 8% increase compared to 2025. Dividends will be complemented to this year by BACS S to reach our committed 30 to 40% cash flow from operation distribution objective, and aligned with this, the first BYBAC program of 2026 was launched in March for up to 350 million euros, with additional BYBACs to be implemented in the second half of the year.

Speaker #3: Looking briefly at the evolution of the main macroeconomic indicators in the period, Brent oil average 81 dollars per barrel, 7% higher year on year, moving within a range between 61 and 127 dollars through the quarter.

Josu Jon Imaz: Looking briefly at the evolution of the main macroeconomic indicators in the period. Brent oil averaged $81 per barrel, 7% higher year on year, moving within a range between $61 and $127 through the quarter, so a strong volatility in the period. The Henry Hub averaged $5.1 per million BTU, 13% higher than in the same period in 2025, driven by severe weather at the beginning of the year and the ongoing ramp-up of new LNG export facilities in the US. Repsol's refining margin indicator was 106% higher compared to the same period in 2025, mostly driven by higher middle distillate spreads since March, particularly diesel and jet fuel.

Josu Jon Imaz: Looking briefly at the evolution of the main macroeconomic indicators in the period. Brent oil averaged $81 per barrel, 7% higher year-on-year, moving within a range between $61 and $127 through the quarter, so a strong volatility in the period. The Henry Hub averaged $5.1 per million BTU, 13% higher than in the same period in 2025, driven by severe weather at the beginning of the year and the ongoing ramp-up of new LNG export facilities in the US.

Speaker #3: So strong volatility in the period. The Henry Happe average 5.1 dollar per million BTU, 38% higher than in the same period in 2025, driven by severe weather at the beginning of the year, and the ongoing ramp-up of new LNG export facilities in the US.

Speaker #3: REPSOL's refining margin indicator was 106% higher compared to the same period in 2025, mostly driven by higher middle-distributed spreads since March, particularly diesel and jet fuel.

Josu Jon Imaz: Repsol's refining margin indicator was 106% higher compared to the same period in 2025, mostly driven by higher middle distillate spreads since March, particularly diesel and jet fuel. At the exchange rate, the dollar averaged 1.17 in the quarter, an 11% depreciation compared to Q1 last year in 2025. Turning now to upstream performance. Adjusted net income was EUR 302 million, 5% lower year-over-year, driven by a weaker dollar, as I mentioned before, and the divestments executed in 2025.

Speaker #3: At the exchange rate, the dollar averaged 1.17 in the quarter, an 11% depreciation compared to the first quarter last year in 2025. Turning now to upstream performance, adjusted net income was €302 million, 5% lower year over year, driven by a weaker dollar, as I mentioned before, and the divestment executed in 2025.

Josu Jon Imaz: At the exchange rate, the dollar averaged 1.17 in the quarter, an 11% depreciation compared to Q1 last year in 2025. Turning now to upstream performance. Adjusted net income was EUR 302 million, 5% lower year over year, driven by a weaker dollar, as I mentioned before, and the divestments executed in 2025. This was partially compensated by higher gas realization prices and a stronger contribution from equity affiliates. Production averaged 539,000 barrels equivalent per day, in line with Q1 in 2025.

Speaker #3: This was partially compensated by higher gas realization prices and a stronger contribution from equity affiliates. Production averaged 539,000 barrels equivalent per day, in line with the first quarter in 2025. The higher contribution in the UK, the Gulf of America, and Trinidad and Tobago was partially offset by disposals, a force majeure situation in Peru, and lower unconventional production due to the extreme weather conditions we had in the US, mainly in January and February.

Josu Jon Imaz: This was partially compensated by higher gas realization prices and a stronger contribution from equity affiliates. Production averaged 539,000 barrels equivalent per day, in line with Q1 in 2025. The higher contribution in the UK, the Gulf of America, and Trinidad and Tobago was partially offset by disposals, a force majeure situation in Peru, and the lower unconventional production due to the extreme, sorry, weather conditions we had in the US, mainly in January and February.

Josu Jon Imaz: The higher contribution in the UK, the Gulf of America, and Trinidad and Tobago was partially offset by disposals, a force majeure situation in Peru, and the lower unconventional production due to the extreme, sorry, weather conditions we had in the US, mainly in January and February. Excluding this disposal, as I mentioned before, production was 4% higher year-over-year. In the UK, on 13 March, we complete the agreement to incorporate TotalEnergies assets into our North Sea JV. The resulting entity, that is named NEO Next+, is projected to produce around 250,000 barrels per day in 2026, of which around 60,000 are net to Repsol.

Speaker #3: Excluding this disposal, as I mentioned before, production was 4% higher year over year. In the UK, on the 13th of March, we completed the agreement to incorporate total energy assets into our North Sea JV.

Josu Jon Imaz: Excluding this disposal, as I mentioned before, production was 4% higher year-over-year. In the UK, on 13th March, we complete the agreement to incorporate TotalEnergies assets into our North Sea JV. The resulting entity, that is named NEO Next+, is projected to produce around 250,000 barrels per day in 2026, of which around 60,000 are net to Repsol.

Speaker #3: The resulting entity that is named NeoNext Plus is projected to produce around 250,000 barrels per day in 2026, of which around 60,000 are net to Repsol.

Speaker #3: In Libya, first-quarter production reached 42,000 net barrels per day, 11% above the same period in 2025, demonstrating the resilience of our operations despite a localized disruption in March.

Josu Jon Imaz: In Libya, Q1 production reached 42,000 net barrels per day, 11% above the same period in 2025, demonstrating the resilience of our operations despite a localized disruption in March. Furthermore, we have strengthened our position after being awarded with 2 new exploration blocks in the 1st licensing round held in the country in nearly 2 decades. In our development pipeline, the volume growth forecast to 2028 will be supported by the risked projects that are already producing or close to first oil. In Brazil, in the Santos Basin, the development of Lapa Southwest reached first oil in March. The project features 3 wells tied back to the existing FPSO, contributing to increase the total production in the Lapa field to 60,000 gross barrels of oil per day, where Repsol holds a 15% interest. Furthermore, the development of Raya.

Speaker #3: Furthermore, we strengthened our position after being awarded with two new exploration blocks in the first licensing round held in the country in the early two decades.

Speaker #3: In our development pipeline, the volume growth forecast to 2028 will be supported by the risked projects that are already producing or close to first orders.

Josu Jon Imaz: In our development pipeline, the volume growth forecast to 2028 will be supported by the risked projects that are already producing or close to first oil. In Brazil, in the Santos Basin, the development of Lapa Southwest reached first oil in March. The project features three wells tied back to the existing FPSO, contributing to increase the total production in the Lapa field to 60,000 gross barrels of oil per day, where Repsol holds a 15% interest. Furthermore, the development of Raya.

Speaker #3: In Brazil, in the Santos Basin, the development of Lapa Southwest reached first oil in March. The project features three wells tied back to existing FPSO, contributing to increase the total production in the Lapa field to 60,000 gross.

Speaker #3: Barrels of oil per day were REPSOL holds a 15% interest. Furthermore, the development of RAIA, RAIA remember that is the former Campos 33 in the Campos Basin, entered its sixth well drilling phase, representing an important milestone towards the planned startup in 2028.

Josu Jon Imaz: Raya, remember that is the former Campos 33 in the Campos Basin enter its sixth well drilling phase, representing an important milestone towards the planned startup in 2028. In Alaska, the first phase of Pikka is mechanically complete and undergoing final commissioning. First oil is expected in, I mean, in an immediate period, coming days, coming weeks. Key facilities are being integrated with the objective of reaching a plateau production capacity of 80,000 gross barrels per day by the end of July, early Q3. In the Croca unit that is located in the Nanushuk area, to the east of Pikka, the successful completion of the first appraisal well earlier this month in April, has further delineated the potential of all this Nanushuk reservoir.

Speaker #3: In Alaska, the first phase of PKS mechanically complete, and undergoing final commissioning. First oil is expected in I mean, in an immediate period, coming days, coming weeks, and key facilities are being integrated with the objective of reaching a plateau production capacity of 80,000 gross barrels per day, by the end of July, early third quarter.

Josu Jon Imaz: Key facilities are being integrated with the objective of reaching a plateau production capacity of 80,000 gross barrels per day by the end of July, early Q3. In the Croca unit that is located in the Nanushuk area, to the east of Pikka, the successful completion of the first appraisal well earlier this month in April, has further delineated the potential of all this Nanushuk reservoir.

Speaker #3: In the COCA unit, that is located in the Nanushuk area to the east of Pika, the successful completion of the first appraisal well earlier this month, in April, has further delineated the potential of all these Nanushuk reservoirs.

Speaker #3: In addition, our commitment to Alaska was reinforced after securing 42 new exploration licenses in the latest federal round, supporting future developments plans in the area.

Josu Jon Imaz: An additional commitment to Alaska was reinforced after securing 42 new exploration licenses in the latest federal round, supporting future developments plans in the area. Finally, in Venezuela last Q, we reached a strategic agreement to ensure the continuity of natural gas production in Cardón IV. Moreover, after Q end, we signed an agreement to resume operational control of the Petroquiriquire oil asset. This includes plans to increase gross crude oil production in the country by 50% within 12 months, and to triple it over the next 3 years, all under a disciplined free cash flow positive framework for capital allocation. Our priorities in the country are clear: monetizing current production and increasing our volumes.

Speaker #3: Finally, in Venezuela, last quarter, we reached a strategic agreement to ensure the continuity of natural gas production in Carbon 4. Moreover, after quarter-end, we signed an agreement to resume operational control of the petrochemical oil asset, and this includes plans to increase gross crude oil production in the country by 50% within 12 months, and to triple it over the next three years, all under a disciplined, free cash flow positive framework for capital allocation.

Josu Jon Imaz: This includes plans to increase gross crude oil production in the country by 50% within 12 months, and to triple it over the next three years, all under a disciplined free cash flow positive framework for capital allocation. Our priorities in the country are clear: monetizing current production and increasing our volumes.

Speaker #3: Our priorities in the country are clear: monetizing current production and increasing our volumes. Within this framework, next week our Cartagena refinery will receive the first oil cargo linked to—associated to—the gas production of Cardone, since the east runs of the new US export licenses that, remember, we received, we were allowed to.

Josu Jon Imaz: Within this framework, next week, our Cartagena refinery will receive the first oil cargo, linked to, associated to the gas production of Cardón since the issuance of the new US export licenses that remember we received. We were allowed to, with these licenses, at the end of February. Additional cargos are expected going forward. Continuing with industrial, Q1 adjusted net income was EUR 440 million, 233% higher than in the same period a year ago. The improvement was driven by higher contributions in refining, Peru, and the trading businesses, partially offset by weaker chemicals and non-transferred sales. In refining, the better results due to higher refining margins were partially offset by non-transferred sales adjustments, as I mentioned before, and a negative price lag effect, mainly in kerosene sales.

Speaker #3: With these licenses, at the end of February. Additional cargoes are expected going forward. Continuing with industrial, first quarter adjusted net income was 440 million euros to 133% higher than in the same period a year ago, the improvement goes driven by higher contributions in refining, Peru, and the trading businesses, partially offset by weaker chemicals and non-transcended sales.

Josu Jon Imaz: The improvement was driven by higher contributions in refining, Peru, and the trading businesses, partially offset by weaker chemicals and non-transferred sales. In refining, the better results due to higher refining margins were partially offset by non-transferred sales adjustments, as I mentioned before, and a negative price lag effect, mainly in kerosene sales.

Speaker #3: In refining, the better results due to higher refining margins were partially offset by non-transcended sales adjustments, as I mentioned before, and the negative price lag effect, mainly in kerosene sales.

Speaker #3: I mean, this adjustments are expected to be fully reverted in coming quarter. The refining margin indicator average 10.9 dollars per barrel, roughly in line with the fourth quarter of 2025, and 5.6 dollars higher than in the first quarter last year.

Josu Jon Imaz: I mean, these adjustments are expected to be fully reverted in coming quarter. The refining margin indicator averaged EUR 10.9 per barrel, roughly in line with the Q4 of 2025, and EUR 5.6 higher than the Q1 last year. The indicator averaged EUR 6 per barrel through January and February, rising in March to an average of EUR 20, driven by stronger middle distillates as a result of the conflict in Iran. Since the closure of the Strait of Hormuz, diesel and jet fuel spreads have suffered extreme volatility resulting from interruption of products flows and tight global inventories. HVO and SAF margins have also experienced a material increase due to the escalation of the mineral alternatives, and also because the increase of the regulatory demand of these kind of products.

Speaker #3: The indicator averaged $6 per barrel through January and February, rising in March to an average of $20, driven by stronger middle distillates as a result of the conflict in Iran.

Speaker #3: Since the closure of the Strait of Hormuz, diesel and jet fuel spreads have suffered extreme volatility resulting from the interruption of product flows and tight global inventories.

Josu Jon Imaz: Since the closure of the Strait of Hormuz, diesel and jet fuel spreads have suffered extreme volatility resulting from interruption of products flows and tight global inventories. HVO and SAF margins have also experienced a material increase due to the escalation of the mineral alternatives, and also because the increase of the regulatory demand of these kind of products.

Speaker #3: HVO and SAF margins have also experienced a material increase due to the escalation of the mineral alternatives and also because the increase of the regulatory demand of this kind of products.

Speaker #3: The premium generated over the indicator averaged $5.7 per barrel in the quarter, mainly due to a better crude and products balance optimization on the contribution of buyers.

Josu Jon Imaz: The premium generated over the indicator, average, $5.7 per barrel in the quarter, mainly due to a better crude and products balance optimization on the contribution of buyers. Let me say that in this disrupted and complex situation, I mean, the margin indicator in some way is losing the capacity to define what is happening in margin terms in a refining system. We are going to see this kind of, let me say exceptional premiums because with the high flexibility of the assets we have, all that is enabling us to efficiently adapt the crude diet and our products yield to this kind of exceptional situations and disruptions that are happening in the market. That is the explanation, let me say, for this exceptional situation.

Speaker #3: Let me say that in this disrupted and complex situation, I mean, the margin indicator in some way is losing the capacity to define what is happening in margin terms in a refining system.

Speaker #3: So we are going to see this kind of, let me say, exceptional premiums because of the high flexibility of the assets we have, which is enabling us to efficiently adapt the crude diet and our products yield to this kind of exceptional situations and disruptions that are happening in the market.

Josu Jon Imaz: We are going to see this kind of, let me say exceptional premiums because with the high flexibility of the assets we have, all that is enabling us to efficiently adapt the crude diet and our products yield to this kind of exceptional situations and disruptions that are happening in the market. That is the explanation, let me say, for this exceptional situation.

Speaker #3: That is the explanation, let me say, for this exceptional situation. Utilization of distillation capacity reached 79% in the quarter, while conversion units operated at 86%.

Josu Jon Imaz: A utilization of distillation capacity reached 79% in the quarter, while conversion units operated at 86%. Crude throughputs were negatively impacted by the reduced availability of the topping unit in Cartagena. Remember, the fire we had in January, together with crude supply constraints in January and February due to the severe weather and the storms that were preventing vessels from docking at some of our refineries, mainly Tarragona, Petronor, and Coruña. The trading businesses deliver a very strong performance in the first quarter.

Speaker #3: Crude throughputs were negatively impacted by the reduced availability of the topping unit in Cartagena remember the fire we had in January. Together with crude supply constraints in January and February, two due to the severe weather and the storms that were preventing vessels from docking at some of our refineries, mainly Tarragona, Petronor, and Coruña.

Speaker #3: The trading businesses delivered a very strong performance in the first quarter; operating income was €343 million higher year over year, reflecting a solid contribution from both crude and gas trading activities.

Josu Jon Imaz: The operating income was EUR 343 million higher year over year, reflecting a solid contribution from both crude and gas trading activities. In chemicals, Repsol's margin indicator averaged EUR 174 per ton in Q1, negatively impacted by the sharp increase of raw material costs in March, which was not yet reflected in selling prices. The situation in the Middle East has tightened the global petrochemical market due to supply constraints and the consequent reduction of production in Asia and Europe. Margins are going through a period of exceptional volatility, especially affecting naphtha-dependent producers with limited feedstock flexibility. Regarding the transformation projects within our industrial portfolio, the new HVO unit in Puertollano is this week starting the production, becoming our second facility in Spain for the production of 100% renewable fuels.

Josu Jon Imaz: The operating income was EUR 343 million higher year-over-year, reflecting a solid contribution from both crude and gas trading activities. In chemicals, Repsol's margin indicator averaged EUR 174 per tonne in Q1, negatively impacted by the sharp increase of raw material costs in March, which was not yet reflected in selling prices. The situation in the Middle East has tightened the global petrochemical market due to supply constraints and the consequent reduction of production in Asia and Europe.

Speaker #3: In Chemicals, Repsol's margin indicator averaged €174 per tonne in the first quarter, negatively impacted by the sharp increase of raw material costs in March, which was not yet reflected in selling prices.

Speaker #3: The situation in the Middle East has tightened the global petrochemical market due to supply constraints and the consequent reduction of production in Asia and Europe.

Speaker #3: Margins are going through a period of exceptional volatility, especially affecting NAFTA-dependent producers with limited feedstock flexibility. Regarding the transformation projects within our industrial portfolio, the new HVO unit in Portogano is this week starting production, becoming our second facility in Spain for the production of 100% renewable fuels.

Josu Jon Imaz: Margins are going through a period of exceptional volatility, especially affecting naphtha-dependent producers with limited feedstock flexibility. Regarding the transformation projects within our industrial portfolio, the new HVO unit in Puertollano is this week starting the production, becoming our second facility in Spain for the production of 100% renewable fuels.

Speaker #3: In renewable hydrogen, we approved the construction of our second large-scale electrolyzer to be built in Bilbao at our Petronor refinery and expected to start up in 2029.

Josu Jon Imaz: In renewable hydrogen, we approved the construction of our second large-scale electrolyzer to be built in Bilbao at our Petronor refinery and is expected to start up in 2029. Remember that the project has received EUR 160 million in funding from the European Union. Going on now with customer division. Q1 adjusted net income was EUR 160 million, a 3% increase over the same period in 2025, this result was mostly driven by a higher contribution from mobility. Cash flow from operations amounted to EUR 429 million in the quarter. Sales of road transportation fuels in Spain were 11% higher compared to the same period last year. Non-oil contribution margin in our service stations was 11% higher year over year.

Speaker #3: Remember that the project has received €160 million in funding from the European Union. Going on now with the Customer division, first quarter adjusted net income was €160 million, a 3% increase over the same period in 2025, and this result was mostly driven by a higher contribution from Mobility.

Speaker #3: Cash flow from operations amounted to €429 million in the quarter. Sales of raw transportation fuels in Spain were 11% higher compared to the same period last year.

Josu Jon Imaz: Cash flow from operations amounted to EUR 429 million in the quarter. Sales of road transportation fuels in Spain were 11% higher compared to the same period last year. Non-oil contribution margin in our service stations was 11% higher year-over-year. Non-oil is increasing, step by step, its contribution margin to our service station business. In a complex environment of higher fuel prices and significant daily volatility, Repsol strengthened its customer value proposition by doubling discounts that are applied through the Waylet app, as well as increasing discounts to professionals and self-employed workers.

Speaker #3: Non-oil contribution margin in our service stations was 11% higher year over year. So, non-oil is increasing step by step its contribution margin to our service station business.

Josu Jon Imaz: Non-oil is increasing, step by step, its contribution margin to our service station business. In a complex environment of higher fuel prices and significant daily volatility, Repsol strengthened its customer value proposition by doubling discounts that are applied through the Waylet app, as well as increasing discounts to professionals and self-employed workers. These initiatives had a direct and positive effect on Waylet registrations and fuel sales. In power and gas retail, we added 129,000 customers in Q1 2026, reaching 3.2 million clients. That is equivalent to a 20% increase year-over-year. As a result of the larger customer base, the power commercialized by Repsol was 26% higher compared to Q1 2025.

Speaker #3: In a complex environment of higher fuel prices and significant daily volatility, Repsol's strength is its customer value proposition by doubling discounts that are applied through the wallet app, as well as increasing discounts to professionals and self-employed workers.

Speaker #3: This initiative had a direct and positive effect on wallet registrations and fuel sales. In power and gas retail, we had a 129,000 customers in the first three months of 2026 reaching 3.2 million clients.

Josu Jon Imaz: These initiatives had a direct and positive effect on Waylet registrations and fuel sales. In power and gas retail, we added 129,000 customers in Q1 2026, reaching 3.2 million clients. That is equivalent to a 20% increase year-over-year. As a result of the larger customer base, the power commercialized by Repsol was 26% higher compared to Q1 2025.

Speaker #3: That is equivalent to a 20% increase year over year. And as a result of the larger customer base, the power commercialized by Repsol was 26% higher compared to the first quarter in 2025.

Speaker #3: The number of digital clients reached 11.2 million at the end of the quarter. A 17% increase over the same period of 2025 with wallet as the main contributor.

Josu Jon Imaz: The number of digital clients reached 11.2 million at the end of the quarter, a 17% increase over the same period of 2025, with Waylet as the main contributor. Finally, around 1,600 service stations offer 100% renewable fuels as of the end of March, with 62% of our Spanish network already providing multi-energy solutions. Turning now to low carbon generation. The adjusted net income was EUR -4 million, a EUR 6 million decrease compared to the first quarter in 2025, and results were negatively impacted by lower electricity prices in Spain that more than compensated the higher power production. The average pool price in Spain was EUR 43 per megawatt hour, roughly 50% below the same period last year due to an exceptionally rainy quarter.

Speaker #3: Finally, around 1,600 service stations offer 100% renewable fuels as of the end of March, with 62% of our Spanish network already providing multi-energy solutions.

Speaker #3: Turning now to low-carbon generation, the adjusted net income was negative €4 million, a €6 million decrease compared to the first quarter in 2025.

Josu Jon Imaz: The adjusted net income was EUR -4 million, a EUR 6 million decrease compared to the Q1 in 2025, and results were negatively impacted by lower electricity prices in Spain that more than compensated the higher power production. The average pool price in Spain was EUR 43 per MWh, roughly 50% below the same period last year due to an exceptionally rainy quarter.

Speaker #3: And results were negatively impacted by Spain, which more than compensated for the higher power production. The average full price in Spain was €43 per megawatt hour, roughly 50% below the same period last year due to an exceptionally rainy quarter.

Speaker #3: The power generated by Repsol increased by 57% year over year. Due to a higher contribution from combined cycles and renewables, wind and solar production reached 2.3 gigawatt hour, 80% higher comparing with compared to 2025.

Josu Jon Imaz: The power generated by Repsol increased by 57% year over year due to a higher contribution from combined cycles and renewables. Wind and solar production reached 2.3 GWh, 80% higher compared to 2025. Renewable generation capacity under operation reached 6 GW by the end of the quarter, thanks to the start-up of new capacity in Spain and the addition of the last part, 133 MW of Pinnington Solar Farm in the US that is now reaching its maximum capacity of 825 MW. Finally, we continue to execute our asset rotation strategy.

Josu Jon Imaz: The power generated by Repsol increased by 57% year-over-year due to a higher contribution from combined cycles and renewables. Wind and solar production reached 2.3 GWh, 80% higher compared to 2025. Renewable generation capacity under operation reached 6GW by the end of the quarter, thanks to the start-up of new capacity in Spain and the addition of the last part, 133 MW of Pinnington Solar Farm in the US that is now reaching its maximum capacity of 825 MW. Finally, we continue to execute our asset rotation strategy.

Speaker #3: Renewable generation capacity under operation reached 6 gigawatts by the end of the quarter, thanks to the startup of new capacity in Spain and the addition of the last part—133 megawatts—of the Pennington Solar firm in the US, which is now reaching its maximum capacity of 825 megawatts.

Speaker #3: Finally, we continue to execute our asset rotation strategy in the US. The divestment of the high-staking outpost agreed in December was cashed in the first quarter.

Josu Jon Imaz: In the US, the divestment of our stake in Outpost, agreed in December, was cashed in in Q1, and the rotation of Pinnington is expected to be launched over the course of 2026. In Spain, we are progressing with the second phase of the rotation that was launched in 2025. Moving now briefly to a summary of the financial results. In this slide, you may find an overview of the figures that we covered today, and for further details, I encourage you to refer to the complete set of documents released this morning.

Josu Jon Imaz: In the US, the divestment of our stake in Outpost, agreed in December, was cashed in in Q1, and the rotation of Pinnington is expected to be launched over the course of 2026. In Spain, we are progressing with the phase II of the rotation that was launched in 2025. Moving now briefly to a summary of the financial results. In this slide, you may find an overview of the figures that we covered today, and for further details, I encourage you to refer to the complete set of documents released this morning.

Speaker #3: And the rotation of Pennington is expected to be launched over the course of 2026. And in Spain, we are progressing with the second phase of the rotation that was launched in 2025.

Speaker #3: Moving now briefly to a summary of the financial results in this slide, you may find an overview of the figures that we covered today.

Speaker #3: And for further details, I encourage you to refer to the complete set of documents released this morning. Regarding the outlook for the rest of the year, let me say that this is the most complex part of my speech because, first—I mean, what is known—April production has been impacted by the planned turnaround of the Peru LNG liquefaction plant.

Josu Jon Imaz: Regarding the outlook for the rest of the year, let me say that it is the most, complex part of my speech because, first, I mean, what is known, April production has been impacted by the planned turnaround of Peru LNG liquefaction plant, and now almost complete, which is factored in our budget. Full year production guidance remains in the range between 560 and 570,000 barrels per day, that is driven by the increased production in conventional, that is already happening, and the start-up of Alaska. In refining, diesel and jet prices are expected to remain strong in Q2 and Q3, even in the case of the reopening of the Strait tomorrow.

Josu Jon Imaz: Regarding the outlook for the rest of the year, let me say that it is the most, complex part of my speech because, first, I mean, what is known, April production has been impacted by the planned turnaround of Peru LNG liquefaction plant, and now almost complete, which is factored in our budget. Full year production guidance remains in the range between 560,000 and 570,000 barrels per day, that is driven by the increased production in conventional, that is already happening, and the start-up of Alaska.

Speaker #3: And now, almost complete, which is a factor in our budget. Full-year production guidance remains in the range between 560,000 and 570,000 barrels per day.

Speaker #3: And that is driven by the increased production in conventional that is already happening, and the startup of Alaska. In refining, diesel and jet prices are expected to remain strong in the second and third quarters, even in the case of the reopening of the strait tomorrow.

Josu Jon Imaz: In refining, diesel and jet prices are expected to remain strong in Q2 and Q3, even in the case of the reopening of the Strait tomorrow. Moreover, the drawdown of strategic reserves implies that inventories will need to be refiled, boosting European diesel demand into the H2 of the year. The refining margin indicator has averaged $11 in April, and the current scenario refinery maintenance plan for 2026 has been adjusted to prioritize production and feedstock flexibility.

Speaker #3: Moreover, the drawdown of strategic reserves implies that inventories will need to be refilled, boosting European diesel demand into the second half of the year.

Josu Jon Imaz: Moreover, the drawdown of strategic reserves implies that inventories will need to be refiled, boosting European diesel demand into the H2 of the year. The refining margin indicator has averaged $11 in April, and the current scenario refinery maintenance plan for 2026 has been adjusted to prioritize production and feedstock flexibility. The premium over the indicator has averaged above $10 this month, underpinned by the higher share of middle distillates in our mix and increased sales to our domestic market in Iberia. A strong disruptions in the spreads and discounts of our crude slate and products are allowing optimization of our planning and programming, increasing our refining premium to high figures.

Speaker #3: The refining margin indicator has averaged 11 dollars in April. And in the current scenario of refinery maintenance plan for 2026 has been adjusted to prioritize production and feedstock flexibility the premium over the indicator has averaged above 10 dollars this month.

Josu Jon Imaz: The premium over the indicator has averaged above $10 this month, underpinned by the higher share of middle distillates in our mix and increased sales to our domestic market in Iberia. A strong disruptions in the spreads and discounts of our crude slate and products are allowing optimization of our planning and programming, increasing our refining premium to high figures.

Speaker #3: Underpinned by the higher share of middle distillates in our mix and increased sales to our domestic market in Iberia, strong disruptions in the spreads and discounts of our crude slate and products are allowing optimization of our planning and programming, increasing our refining premium to high figures.

Speaker #3: And with respect to the cash flow from operations outlook and I was referring to this outlook when I said that that is the most complex part of my speech I mean, in light of the extreme level of uncertainty and volatility we are not providing a revised guidance at this point.

Josu Jon Imaz: With respect to the cash flow from operations outlook, and I was referring to this outlook when I said that that is the most complex part of my speech. I mean, in light of the extreme level of uncertainty and volatility, we are not providing a revised guidance at this point. I mean, let me remind you that based on the update sensitivities under the new reporting model, every $10 increase in the Brent price would translate into roughly EUR 250 million of incremental annual operating cash flow on average for the period of 2026, 2028, roughly speaking, is a bit higher, EUR 285 million.

Speaker #3: I mean, let me remind you that based on the update sensitivities under the new reporting model every 10 dollars increase in the brent price would translate into roughly 250 million euros of incremental annual operating cash flow on average for on average for the period of 2026-2028 roughly speaking it's a bit higher 285 but I mean this year because the gas component in the production is a bit higher let me approach saying that could be roughly speaking 250 million euros similarly for every one dollar per barrel increase in the refining margin indicator the cash flow from operation would increase by around 200 million euros.

Josu Jon Imaz: I mean, this year, because the gas component in the production is a bit higher, let me approach saying that could be, roughly speaking, EUR 250 million. Similarly, for every $1 per barrel increase in the refining margin indicator, the cash flow from operation will increase by around EUR 200 million. You may apply those sensitivities to estimate the expected cash flow from operation under the commodity scenario you deem appropriate. I mean, I don't have the crystal ball that is needed to give you a guidance about the evolution of the commodities over this year in this disrupted scenario.

Speaker #3: You may apply those sensitivities to estimate the expected cash flow from operations under the commodity scenario you deem appropriate. I mean, I don't have the crystal ball that is needed to give you guidance about the evolution of the commodities over this year in this disrupted scenario.

Speaker #3: And that being said, we can confirm that between 30 to 40 percent of the additional cash generated will be allocated to shareholder remuneration in any case as I said in the speech of the capital markets day last month in line with our capital allocation policy.

Josu Jon Imaz: That being said, we can confirm that between 30% to 40% of the additional cash generated will be allocated to shareholder remuneration in any case, as I said in the speech of the Capital Markets Day last month, in line with our capital allocation policy. To conclude, this Q1 marks a solid start to the first year of our updated strategic roadmap. Our recent Capital Markets Day established a robust framework to deliver cash flow growth with great visibility, increase shareholder remuneration, and maintain a rigorous capital discipline. Even though the current market environment is clearly more uncertain than what we had at the beginning of the year, as the closure of the Strait of Hormuz has altered international trade flows.

Josu Jon Imaz: That being said, we can confirm that between 30%-40% of the additional cash generated will be allocated to shareholder remuneration in any case, as I said in the speech of the Capital Markets Day last month, in line with our capital allocation policy. To conclude, this Q1 marks a solid start to the first year of our updated strategic roadmap.

Speaker #3: To conclude, this first quarter marks a solid start to the first year of our update strategic roadmap. Our recent capital markets day established a robust framework to deliver cash flow growth with great visibility.

Josu Jon Imaz: Our recent Capital Markets Day established a robust framework to deliver cash flow growth with great visibility, increase shareholder remuneration, and maintain a rigorous capital discipline. Even though the current market environment is clearly more uncertain than what we had at the beginning of the year, as the closure of the Strait of Hormuz has altered international trade flows.

Speaker #3: Increased shareholder remuneration and maintain a rigorous capital discipline. Even though the current market environment is clearly more uncertain that what we had at the beginning of the year as the closure of the Strait of Hormuz has altered international trade flows the economic impact of the conflict of the conflict sorry will depend on its duration the damage to energy infrastructure that we don't know in the whole dimension and indirect effects through industrial value change and financial conditions.

Josu Jon Imaz: The economic impact of the conflict, sorry, will depend on its duration, the damage to energy infrastructure that we don't know in the whole dimension, and indirect effects through industrial value chains and financial conditions. In this scenario, Repsol benefits by a limited exposure to the Middle East and our Tier 1 refining system in Europe, heavily weighted towards middle distillates outputs and production, with flexibility to adapt our crude oil diet. In addition, our advantage location in the Iberian Peninsula provides access to feedstocks and markets in the Atlantic Basin. The startup of Pikka will provide near-term growth to our upstream volumes while adding a world-class asset to our portfolio with a long-term production plateau. The improved situation in Venezuela, not factored in our projections, is another material upside to our strategic plan.

Speaker #3: In this scenario Repsol benefits by unlimited exposure to the Middle East and our tier one refining system in Europe heavily weighted towards middle distillates outputs and production with flexibility to adapt our crude oil diet.

Speaker #3: In addition, our advantageous location in the Iberian Peninsula provides access to feedstocks and markets in the Atlantic basin. The startup of PICA will provide near-term growth to our upstream volumes while adding a world-class asset to our portfolio with a long-term production plateau.

Josu Jon Imaz: In addition, our advantage location in the Iberian Peninsula provides access to feedstocks and markets in the Atlantic Basin. The startup of Pikka will provide near-term growth to our upstream volumes while adding a world-class asset to our portfolio with a long-term production plateau. The improved situation in Venezuela, not factored in our projections, is another material upside to our strategic plan.

Speaker #3: The improved situation in Venezuela, not factored into our projections, is another material upside to our strategic plan. At this moment, we are prudent in our financial outlook, as I mentioned before, subject to the evolution of the macroeconomic scenario in the coming months, always maintaining our commitment to distribute 30% to 40% of the cash from operations to our shareholders.

Josu Jon Imaz: At this moment, we are prudent in our financial outlook, as I mentioned before, subject to the evolution of the macroeconomic scenario in coming months, always maintaining our commitment to distribute 30% to 40% of the cash from operations to our shareholders. With this, I will turn it over to Pablo as we move on the Q&A, and thank you very much for your attention.

Josu Jon Imaz: At this moment, we are prudent in our financial outlook, as I mentioned before, subject to the evolution of the macroeconomic scenario in coming months, always maintaining our commitment to distribute 30%-40% of the cash from operations to our shareholders. With this, I will turn it over to Pablo as we move on the Q&A, and thank you very much for your attention.

Speaker #3: With this, I will turn it over to Pablo as we move on to the Q&A. Thank you very much for your attention, and thank you very much, Jesuan.

Pablo Bannatyne: Thank you very much, Josu Jon. Before opening the Q&A, I would kindly ask participants to limit yourselves to a maximum of two questions. If time permits, we will try to cover more in a second round. To begin, I would like the operator to remind us of the process to ask a question. Please, operator, will you go ahead.

Speaker #3: Before opening the Q&A, I would kindly ask participants to limit yourselves to a maximum of two questions. If time permits, we will try to cover more in a second round.

Speaker #3: To begin I would like the operator to remind us of the process to ask a question. Please operator. We'll go ahead. Thank you. To ask a question please press star 11 on your telephone and wait for your name to be announced.

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

Speaker #3: To withdraw your question, please press star 1 and 1 again. Thank you, operator. Let's get started. Our first question comes from Vidas Borcataria at RBC.

Pablo Bannatyne: Thank you, operator. Let's get it started. Our first question comes from Biraj Borkhataria at RBC. Please, Biraj, go ahead with your question.

Speaker #3: Please, Vidas, go ahead with your question. Hi, thanks for taking my question and thanks for the presentation. Just the first one on refining—there is obviously a lot of volatility in that. You're very well set up to benefit.

Biraj Borkhataria: Hi. Thanks for taking my question, and thanks for the presentation. Just the first one on refining. There's obviously a lot of volatility in that, and you're very well set up to benefit. Could you just unpack, you know, the premium as you see it? Can you talk about the biofuels contribution in the quarter and anything else to note? Just on the maintenance point you made, should we assume that refining is running at full capacity through Q2 and Q3 through the summer? Second question is just on the Pikka ramp-up, which you mentioned. I've noticed that those barrels, the Alaskan or slope barrels have been in particular bid and trade at very strong premiums relative to other benchmarks. Could you just highlight when you expect to get that project to plateau? Thank you.

Speaker #3: Could you just unpack the premium as you see it? Can you talk about the biofuels contribution in the quarter, and anything else to note?

Speaker #3: And just on the maintenance point you made, should we assume that refining is running at full capacity through Q2 and Q3, through the summer?

Biraj Borkhataria: Just on the maintenance point you made, should we assume that refining is running at full capacity through Q2 and Q3 through the summer? Second question is just on the Pikka ramp-up, which you mentioned. I've noticed that those barrels, the Alaskan or slope barrels have been in particular bid and trade at very strong premiums relative to other benchmarks. Could you just highlight when you expect to get that project to plateau? Thank you.

Speaker #3: And then, second question is just on the Pikka ramp-up, which you mentioned. I’ve noticed that those barrels—the Alaska North Slope barrels—have in particular been bid and traded at very strong premiums relative to other benchmarks.

Speaker #3: So, could you just highlight when you expect to get that project to plateau? Thank you. Thank you, Vidas. So, first, our refining system is running at full capacity.

Josu Jon Imaz: Thank you, Biraj. First, our refining system is running at full capacity. The distillation percentage average in April is 85% and 86%. That is the average of last years. You know that we try to refine or to distillate, better said, the last barrel, giving us a positive margin, looking for the full coverage of the conversion. We move as far as we could, the turnaround, the maintenance period. For instance, we had a turnaround period in May in Cartagena, to change the catalyst of the hydrocracker, and we moved this maintenance to October, November. That was done.

Speaker #3: The distillation percentage average in April is 85, 86 percent—that is the average last year. You know that we try to refine, or to distillate, better said, the last barrel, giving us a positive margin.

Speaker #3: Looking for the full coverage of the conversion, and we moved as far as we could the turnaround, the maintenance period. For instance, we had a turnaround period in May in Cartagena to change the catalyst of the hydrocracker, and we moved this maintenance to October–November, so that was done.

Josu Jon Imaz: On top of that, we also had in Tarragona a turnaround that was replaced also to Q1 2027. We are going to operate, because now, I mean, it's not only a financial approach. I think that now we have the responsibility as a responsible operator to guarantee that we could provide the products that our hinterland and our customers they need. You know that for instance, kerosene production is very important for the Spanish economy because mainly in summer it's very dependent on the aviation and the tourism season. We have been able, over the last weeks, over the last two months, to invest and to change logistics in our refineries to increase our historical kerosene production. We have increased in a 25%.

Speaker #3: On top of that, we also had in Tarragona a turnaround that was replaced, also to the first quarter of 2027. So, we are going to operate, because now, I mean, it's not only a financial approach.

Speaker #3: I think that now we have the responsibility as a responsible operator to guarantee that we could provide the products that are hinterland and our customers they need.

Speaker #3: So you know that for instance kerosene production is very important for the Spanish economy because mainly in summer it's very dependent on the aviation and the tourism season we have been able over the last weeks over the last two months to invest and to change logistics in our refineries to increase our historical kerosene production and we have increased in a 25 percent I mean May better said we are going to be prepared to increase in a 25 percent of level the level of kerosene we had three months ago in February we are going to be able to produce 95,000 barrels a day of kerosene in our refining system from May on.

Josu Jon Imaz: You know that for instance, kerosene production is very important for the Spanish economy because mainly in summer it's very dependent on the aviation and the tourism season. We have been able, over the last weeks, over the last two months, to invest and to change logistics in our refineries to increase our historical kerosene production. We have increased in a 25%.

Josu Jon Imaz: I mean, in May, better said, we are going to be prepared to increase in a 25% of level, the level of kerosene we had, 3 months ago in February. We are going to be able to produce 95,000 barrels a day of kerosene in our refining system from May on. That means that, we are going to not only to be able to provide our customers, but even more, we are going to be able to offer an additional production to any problem or disruption that could come in the Spanish market from some other operators. I mean, we are going to be able to provide a 25%, roughly speaking, of the demand we had last year from our kerosene customers.

Josu Jon Imaz: I mean, in May, better said, we are going to be prepared to increase in a 25% of level, the level of kerosene we had, three months ago in February. We are going to be able to produce 95,000 barrels a day of kerosene in our refining system from May on. That means that, we are going to not only to be able to provide our customers, but even more, we are going to be able to offer an additional production to any problem or disruption that could come in the Spanish market from some other operators.

Speaker #3: That means that we are going to not only to be able to provide our customers but even more we are going to be able to offer an additional production to any problem or disruption that could come in the Spanish market from some other operators.

Speaker #3: I mean we are going to be able to provide a 25 percent roughly speaking of the demand we had last year from our kerosene customers.

Josu Jon Imaz: I mean, we are going to be able to provide a 25%, roughly speaking, of the demand we had last year from our kerosene customers. I'm not saying that the game is over because, I mean, we could have tensions in the market. We could have tensions because first, the countries sending tourists to Spain, they could have problems to fuel their planes in their countries of origin.

Speaker #3: I'm not saying that the game is over. Because I mean we could have tensions in the market and we could have tensions because first the countries sending tourists to Spain they could have problems to fuel their planes in their countries in their countries of origin perhaps some of our competitors I mean I don't know the situation so I can't speak of course on behalf of them but saying that we are developing all the four to let me say squeeze the production capacity we have in this second quarter with our refining system.

Josu Jon Imaz: I'm not saying that the game is over because, I mean, we could have tensions in the market. We could have tensions because first, the countries sending tourists to Spain, they could have problems to fuel their planes in their countries of origin. Perhaps some of our competitors, I mean, I don't know the situation, so I can't speak of course, on behalf of them. Saying that we are developing all the effort to, let me say, squeeze the production capacity we have in this Q2 with our refining system. You could assume that, Biraj Borkhataria, that the refining system is going to work at this full, not only capacity, I mean, adapting the products to the main needs in the market.

Josu Jon Imaz: Perhaps some of our competitors, I mean, I don't know the situation, so I can't speak of course, on behalf of them. Saying that we are developing all the effort to, let me say, squeeze the production capacity we have in this Q2 with our refining system. You could assume that, Biraj, that the refining system is going to work at this full, not only capacity, I mean, adapting the products to the main needs in the market.

Speaker #3: So you could assume that Vidas that the refining system is going to work at this full not only capacity I mean adapting their products to the main needs in the market.

Speaker #3: I mean again as I said before now the margin is not exactly the best the best indicator or the best KPI to follow what is happening but I mean even if tomorrow and that would be great to see that the state of our mood is getting fully operational I mean I think that this year as average we are going to see even in a full normalization of the situation in a quick way a refining indicator that is going to be probably above nine dollars a barrel for the whole year and a premium that's seeing the figures that we are experiencing now and even seeing a normalization in two months probably the premium is going to be above five dollars for the whole year.

Josu Jon Imaz: I mean, again, as I said before, now the margin is not exactly the best indicator or the best KPI to follow what is happening. I mean, even if tomorrow, and that would be great to see that the Strait of Hormuz is getting fully operational. I mean, I think that this year as average, we are going to see even in a full normalization of the situation in a good way, a refining indicator that is going to be probably above $9 a barrel for the whole year. A premium that seeing the figures that we are experiencing now and even seeing a normalization in 2 months, probably the premium is going to be above $5 for the whole year.

Josu Jon Imaz: I mean, again, as I said before, now the margin is not exactly the best indicator or the best KPI to follow what is happening. I mean, even if tomorrow, and that would be great to see that the Strait of Hormuz is getting fully operational. I mean, I think that this year as average, we are going to see even in a full normalization of the situation in a good way, a refining indicator that is going to be probably above $9 a barrel for the whole year. A premium that seeing the figures that we are experiencing now and even seeing a normalization in two months, probably the premium is going to be above $5 for the whole year.

Speaker #3: So and we are of course prepared to take and to capture this margins I mean going to PICA I rely on the operator Santos I can't add more to the information that was provided last week by Santos we fully agree with because I mean our technical people is engaged in the technical team of the operations I mean all the mechanical part of Alaska the mechanical is fully completed.

Josu Jon Imaz: And we are of course prepared to take and to capture these margins. I mean, going to Pikka, I rely on the operator, Santos. I can't add more to the information that was provided last week by Santos. We fully agree with, because I mean, our technical people is, is engaged in the technical team of the operations. I mean, all the mechanical parts of Alaska, mechanical is fully completed. Commissioning activities are almost finished. They are progressing well. First sales revenues are expected, roughly speaking in 2 months. And the plateau capacity of 80,000 barrels a day gross, of course, is expected in July.

Speaker #3: Commissioning activities are almost finished. They are progressing well. First sales revenues are expected roughly speaking in two months and the plateau capacity of 80,000 barrels a day gross of course is expected in July.

Josu Jon Imaz: Commissioning activities are almost finished. They are progressing well. First sales revenues are expected, roughly speaking in two months. And the plateau capacity of 80,000 barrels a day gross, of course, is expected in July. That is, roughly speaking, the approach I could give you about Pikka, and let me say that the first oil is imminent. Thank you, Biraj.

Speaker #3: So that is roughly speaking the approach I could give you about PICA and let me say that the first oil is imminent. Thank you Vidas.

Josu Jon Imaz: That is, roughly speaking, the approach I could give you about Pikka, and let me say that the first oil is imminent. Thank you, Biraj.

Speaker #3: Thank you very much. Thank you very much Vidas. Our next question comes from Sasikan Chilicuro at Jefferies. Please Sasi go ahead with your question.

Biraj Borkhataria: Thank you very much.

Pablo Bannatyne: Thank you very much, Biraj. Our next question comes from Sasikanth Chilukuru at Jefferies. Please, Sasi, go ahead with your question.

Speaker #3: Hi. I’d also like to add a question about the ten-dollar premium to the indicator refining margin. Specifically, I wanted to check on one key factor that you had highlighted.

Sasikanth Chilukuru: Hi. I, Fred, also had a question on the $10 premium to the indicator refining margin. I specifically wanted to check on one key factor that you had highlighted. You talked about spreads on the discount and discounts to the crude slate. It seems a little different from what we are hearing from your peers. I just wanted to understand what your crude slate was, how this, you're getting these discounts, I suppose. Also if the Venezuelan barrels and the cargoes are going to make any material impact or they're already factored in this. Yeah, thanks.

Speaker #3: You talked about spreads on the discount and discounts to the crude slate. It seems a little different from what we are hearing from your peers.

Speaker #3: I just wanted to understand what your crude slate was how this you getting these discounts I suppose and also if the Venezuelan barrels and the cargoes are going to make any material impact or they're already factored in this thanks.

Speaker #3: Thank you, Sasi. I mean, I know that it's perhaps an 'I'm sorry,' because, I mean, the complexity of what I'm going to explain—and that is my problem, it's not yours.

Josu Jon Imaz: Thank you, Sasi. I mean, I know that it's perhaps I'm sorry, because I mean, the complexity of what I'm going to explain, and that is my problem, it's not yours, is not easy at all. Again, I mean, when we take the refining margin indicator, what we are taking is the structure of a slate and the structure of yield of products and the conditions we have and we see in the market, and we budget that for the whole year. What is happening now, for instance? I mean, you know that our exposure to Middle East is tiny, but we have a 6% of Basrah oil.

Speaker #3: It's not easy at all, but again, I mean, when we take the refining margin indicator, what we are taking is the structure of a slate and the structure of yield of products, and the conditions we have and we see in the market, and we budget that for the whole year.

Speaker #3: What is happening now for instance I mean you know that our exposure to Middle East is tiny but we have a six percent of habasra oil that I mean when you introduce in our refining margin the habasra I mean because it's very complex crude oil to be bought today in the market I mean the premium over this crude oil is extremely high.

Josu Jon Imaz: I mean, when you introduce in our refining margin the Basrah, I mean, because it's very complex crude oil to be bought today in the market, I mean, the premium over this crude oil is extremely high. We are not, of course, using Basrah in our system. We substitute the Basrah by heavy oils with strong discounts coming from Latin America. All that is improving in a dramatic way. I mean, we are taking in a very volatile situation, we have extreme opportunities to optimize the refining margin indicator that are not there every day. Because you have, let me say, very heavy oil, you have residues. Because the Brent price is very high, you have heavy oils that are competing probably with fuels and some other products that today could be, in relative terms, extremely cheap.

Speaker #3: So we are not of course using habasra in our system. We substitute the habasra by heavy oils with a strong discounts coming from Latin America.

Speaker #3: So all that is improving in a dramatic way. I mean we are taking in a very volatile situation we have extreme opportunities to optimize the refining margin indicator that are not there every day because you have let me say very heavy oil you have residues with because the brent price is very high you have heavy oils that are competing probably with fuels and some other products that today could be in relative terms extremely cheap and because the high conversion capacity we have in our refining system we are taking advantage of this crude oil.

Josu Jon Imaz: I mean, we are taking in a very volatile situation, we have extreme opportunities to optimize the refining margin indicator that are not there every day. Because you have, let me say, very heavy oil, you have residues. Because the Brent price is very high, you have heavy oils that are competing probably with fuels and some other products that today could be, in relative terms, extremely cheap.

Josu Jon Imaz: Because the high conversion capacity we have in our refining system, we are taking advantage of this crude oil. We are, let me say, beating in a clear way the refining margin indicator. Going to the yield of products. Again, I mean, remember, we were producing, roughly speaking, I mean, don't take the exact figures, but we could be producing 350, 360,000 cubic meters of kerosene per month at the beginning of this year, and that was budgeted in our refining margin indicator. What is happening now? Thanks to the investment we developed over the last two months, either operational, either logistics in some of our refineries. In May, June, from May on, we are going to be able to produce 560,000 cubic meters of jet per month.

Speaker #3: So we are, let me say, beating in a clear way the refining margin indicator. Going to the yield of products—again, I mean, remember we were producing, roughly speaking—I mean, don't take the exact figures—but we could be producing 350,000 to 360,000 cubic meters of kerosene per month at the beginning of this year.

Speaker #3: And that goes budgeted in our refining margin indicator. What is happening now, thanks to the investment we developed over the last two months, either operational or logistics, in some of our refineries in May and June, we are, going from May on, we are going to be able to produce 560,000 cubic meters of jet per month.

Josu Jon Imaz: What is happening now? Thanks to the investment we developed over the last two months, either operational, either logistics in some of our refineries. In May, June, from May on, we are going to be able to produce 560,000 cubic meters of jet per month. What is happening with these figures? Because the spread of the jet is significantly higher than the spread of the alternative products we were producing in our refining margin indicator, we are going to improve in a dramatic way the refining margin indicator through the premium.

Speaker #3: What is happening with these figures is that, because the spread of the jet is significantly higher than the spread of the alternative products we were producing in our refining margin indicator, we are going to improve in a dramatic way the refining margin indicator through the premium.

Josu Jon Imaz: What is happening with these figures? Because the spread of the jet is significantly higher than the spread of the alternative products we were producing in our refining margin indicator, we are going to improve in a dramatic way the refining margin indicator through the premium. I mean, you are seeing this premium. I mean, EUR 1 per barrel of this premium is coming from this change or this increase in the jet production. You could say, Okay, please change the margin indicator because all that is going to be more simple. That could be an option, but I'm even discussing with my own team because we don't know in this volatile situation what will happen in May or in June. Perhaps we have to change twice the refining margin indicator over the quarter.

Speaker #3: I mean, you are seeing this premium. I mean, one dollar per barrel of this premium is coming from this change, or this increase in the jet production.

Josu Jon Imaz: I mean, you are seeing this premium. I mean, $ 1 per barrel of this premium is coming from this change or this increase in the jet production. You could say, Okay, please change the margin indicator because all that is going to be more simple. That could be an option, but I'm even discussing with my own team because we don't know in this volatile situation what will happen in May or in June. Perhaps we have to change twice the refining margin indicator over the quarter.

Speaker #3: So, if you could say, 'Okay, please change the margin indicator,' because all that is going to be more simple. That could be an option, but I'm even discussing with my own team because we don't know, in this volatile situation, what could happen in May or in June.

Speaker #3: So perhaps we have to change twice the refining margin indicator over the quarter. So, at the moment, what is real is that the refining margin indicator plus the premium is reflecting the real margin we are capturing.

Josu Jon Imaz: At the moment, please, what is real is that the refining margin indicator plus the premium is reflecting the real margin we are capturing. The refining margin indicator is, let me say, the theoretical construction that works in a normal situation, in a normal way, and the premium is what we are capturing above this, let me say, refining margin indicator. I know that is complex, but again, I don't have another way to explain that. Saying that, when I said before to Biraj that even in the case of opening tomorrow or Moeve, we are seeing a minimum of 9 plus 5. That means that we are seeing a total refining margin over the year, even if situation is normalized tomorrow, probably above $14 a barrel for the average of the whole year. Thank you, Sasi. I'm going to Venezuela.

Speaker #3: The refining margin indicator is let me say the theoretical construction that works in a normal situation in a normal way and the premium is what we are capturing above this let me say refining margin indicator.

Speaker #3: I know that it is complex, but again, I don't have another way to explain that. Saying that, when I said before to Vidas that even in the case of opening tomorrow or most, we are seeing a minimum of 9 plus 5, that means that we are seeing a total refining margin over the year—even if the situation is normalized tomorrow—probably above $14 a barrel for the average of the whole year.

Josu Jon Imaz: I know that is complex, but again, I don't have another way to explain that. Saying that, when I said before to Biraj that even in the case of opening tomorrow or Moeve, we are seeing a minimum of 9+5. That means that we are seeing a total refining margin over the year, even if situation is normalized tomorrow, probably above $14 a barrel for the average of the whole year. Thank you, Sasi. I'm going to Venezuela.

Speaker #3: Thank you Sasi. I'm going to Venezuela I mean again the Venezuela cargoes structurally they don't improve the refining margin because if I have to assume that we are buying the Venezuela cargoes at the same let me say fair discount first fair value that the Colombian Castile Castilla sorry or the Mexican Maya or the Canadian heavy oil.

Josu Jon Imaz: I mean, again, the Venezuela cargos, structurally, they don't improve, the refining margin because if... I have to assume that we are buying the Venezuela cargos at the same, let me say, fair discount, fair value that the Colombian Castilla, sorry, or the Mexican Maya or the Canadian heavy oil. That is theoretical, of course. If there is more heavy oil in the Atlantic Basin, I mean, from Venezuela, from Canada, from Colombia, from Brazil, from Mexico and so on, the equation supply-demand of heavy oil, is not so tight, so the discounts are higher. Let me say that not because one or two cargos are coming to a refining system, but because there are more heavy oils, thanks to the Venezuela recovery.

Speaker #3: That is theoretical, of course. But if there is more heavy oil in the Atlantic basin—I mean from Venezuela, from Canada, from Colombia, from Brazil, from Mexico, and so on—the supply-demand equation for heavy oil is not so tight.

Speaker #3: So the discounts are higher. So let me say that it is not because one or two cargoes are coming to our refining system, but because there are more heavy oils, thanks to the Venezuela recovery. And I think that is important, to see that Venezuela, in social, economic, and production terms, is starting to recover.

Josu Jon Imaz: Let me say that not because one or two cargos are coming to a refining system, but because there are more heavy oils, thanks to the Venezuela recovery. I think that is important to see that Venezuela in social, in economic, in production terms, is starting to recover about after January, where a new opportunity for Venezuela started. I have to assume that in some way, having a good access to heavy oils is good for our refining system. Thank you, Sasi.

Josu Jon Imaz: I think that is important to see that Venezuela in social, in economic, in production terms, is starting to recover about after January, where a new opportunity for Venezuela started. I have to assume that in some way, having a good access to heavy oils is good for our refining system. Thank you, Sasi.

Speaker #3: About after January were a new opportunity for Venezuela started. So I have to assume that in some way having a good access to heavy oils is good for our refining system.

Speaker #3: Thank you Sasi. Thank you very much Sasir. Our next question comes from Alaster Saim at Citi. Alaster please go ahead with your question. Yeah thanks Pablo.

Pablo Bannatyne: Thank you very much, Sasi. Our next question comes from Alastair Syme at Citi. Alastair, please go ahead with your question.

Alastair Syme: Yeah, thanks, Pablo. Josu Jon Imaz, I wanted to ask about biofuels. I think from memory, your biofuels investments are based on a 15% hurdle rate and a, and a EUR 275 ton of HVO versus feedstock. I just really wanted to confirm those assumptions and ask, you know, with current margins, I guess around 5 times that level, if that's having any impact or discussion in Spain about how RED III gets implemented. Thank you.

Alastair Syme: Yeah, thanks, Pablo. Josu Jon Imaz, I wanted to ask about biofuels. I think from memory, your biofuels investments are based on a 15% hurdle rate and a, and a EUR 275 tonne of HVO versus feedstock. I just really wanted to confirm those assumptions and ask, you know, with current margins, I guess around 5x that level, if that's having any impact or discussion in Spain about how RED III gets implemented. Thank you.

Speaker #3: Jesse John I wanted to ask about biofuels I think from memory your biofuels investments are based on a 15% hurdle rate and a 275 euro tonne of HVO versus feedstock.

Speaker #3: I just really wanted to confirm those assumptions and ask with current margins I guess around five times that level if that's having any impact or discussion in Spain about how Red III gets implemented.

Speaker #3: Thank you. Thank you. Alaster, first, I didn't say before but in this premium, a part of this premium is also coming from the bio component that nowadays, you know, is included in this premium.

Josu Jon Imaz: Thank you, Alastair. First, I didn't say before, but in this premium, a part of this premium is also coming from the bio component that nowadays you know that is included in this premium. As I mentioned before, is significant. I mean, when we prepare the budget of the year, we assume, roughly speaking, for this year, that the HVO minus UCO margin could be at around USD 875 per ton. At those figure, roughly speaking, the margin for this year, I mean, we have to take into account that Puertollano is starting the production this week. I mean, we missed, from January to April the Puertollano's production.

Josu Jon Imaz: Thank you, Alastair. First, I didn't say before, but in this premium, a part of this premium is also coming from the bio component that nowadays you know that is included in this premium. As I mentioned before, is significant. I mean, when we prepare the budget of the year, we assume, roughly speaking, for this year, that the HVO minus UCO margin could be at around USD 875 per tonne. At those figure, roughly speaking, the margin for this year, I mean, we have to take into account that Puertollano is starting the production this week. I mean, we missed, from January to April the Puertollano's production.

Speaker #3: And as I mentioned before is significant. I mean when we prepare the budget of the year we assume roughly speaking for this year that the HVO minus UCO margin could be at around 850 875 dollars per tonne.

Speaker #3: Those figure roughly speaking the margin for this year I mean we have to take into account that Puerto Llano is starting the production. This week so I mean we missed from January to April that Puerto Llano's production the bidda for this biofuel industrial business could be at around 90 million euros.

Josu Jon Imaz: The EBITDA for this biofuel industrial business could be at around EUR 90 million. We have to add another 25 from the trading area and 25 from the client renewable fuel EBITDA. Roughly speaking, we had budgeted EUR 140 million for the bio business as a whole. I mean, taking, let me say, the comprehensive view of the business for this year. We have to take into account that today we could have EUR 570 million, roughly speaking, of capital employed in this business. That is important.

Speaker #3: And we have to add another €25 million from the trading area and €25 million from the client renewable fuel bidda, so roughly speaking, we had a budgeted €140 million for the bio business as a whole—I mean, taking, let me say, the comprehensive view of the business for this year.

Speaker #3: We have to take into account that today we could have 570 million euros roughly speaking of capital employed in this business that is important.

Josu Jon Imaz: You know that when we talk about 570, we are taking the C43, I mean, Cartagena, Puertollano, plus what is now in the investment pipeline in the Ecoplanta. That is of course is not still producing. If we take the average as of today, it could be EUR 1,450 per ton of HVO minus UCO. At those prices, roughly speaking, the industrial EBITDA, I mean, if we maintain this average over the whole year, could be at around EUR 220 million, roughly speaking. If we include trading plus the commercial side, we will be talking about EUR 270 million of EBITDA.

Josu Jon Imaz: You know that when we talk about 570, we are taking the C43, I mean, Cartagena, Puertollano, plus what is now in the investment pipeline in the Ecoplanta. That is of course is not still producing. If we take the average as of today, it could be EUR 1,450 per tonne of HVO minus UCO. At those prices, roughly speaking, the industrial EBITDA, I mean, if we maintain this average over the whole year, could be at around EUR 220 million, roughly speaking.

Speaker #3: You know that when we talk about 570 we are taking the C43 I mean Cartagena Puerto Llano plus what is now in the investment pipeline in the Ecoplanta and that is of course it's not still producing and if we take the average as of today so it could be 1,450 dollars per tonne of HVO minus UCO at those prices roughly speaking the industrial bidda I mean if we maintain this average over the whole year could be at around 220 million euros roughly speaking and if we include trading plus the commercial side we will be talking about 270 million euros of a bidda that is roughly speaking almost close to a half of the capital employed in this business.

Josu Jon Imaz: If we include trading plus the commercial side, we will be talking about EUR 270 million of EBITDA. That is, roughly speaking, almost close to a half of the capital employed in this business. That is the best picture I could provide you today, Alastair. Thank you.

Josu Jon Imaz: That is, roughly speaking, almost close to a half of the capital employed in this business. That is the best picture I could provide you today, Alastair. Thank you.

Speaker #3: So that is the best picture I could provide you today, Alaster. Thank you. Jesse John, but I mean, obviously the return on investment—that's the return on investment of—that's huge, and does that provoke any discussion in Spain about Red III?

Alastair Syme: Josu Jon, but I mean, obviously the return on investment-

Josu Jon Imaz: Of course.

Alastair Syme: That's the return on investment of that's huge. You know, does that provoke any discussion in Spain about RED III?

Josu Jon Imaz: Discussion about what? RED III? Yeah.

Speaker #3: Discussion about what? Red III? Yeah. Well just implementing I mean. So first Alaster you are right. I mean let me say that there is a roadmap to increase this demand that is mainly linked to mandates in the framework of the Red III.

Josu Jon Imaz: Discussion about what? RED III? Yeah.

Alastair Syme: Well, just implementing, you know what I mean.

Josu Jon Imaz: I mean, yeah. First, Alastair Syme, you are right. I mean, let me say that there is a road map to increase this demand that is mainly linked to mandates in the framework of the RED III. I mean, I don't have all the figures in mind, Alastair Syme, but Alastair Syme, sorry. If we take the potential demand in Europe this year could be a 30%, 35% higher than the demand we had last year due to the application of the European Directive. On top of that, we could expect some additional impacts coming from the change of the concept of the double counting in Germany, that they are also to increase the real demand and so on.

Speaker #3: I mean if we take I don't have all the figures in mind Alaster but if Alaster sorry but if we take the potential demand in Europe this year could be a 30 35% higher than the demand we had last year due to the application of the European directive.

Speaker #3: On top of that, we could expect some additional impacts coming from the change of the concept of double counting in Germany, that they are also to increase the real demand, and so on.

Josu Jon Imaz: On top of that, we could expect some additional impacts coming from the change of the concept of the double counting in Germany, that they are also to increase the real demand and so on. On the other hand, you are going to have also, I mean, new capacity entering in the system that in some way is going to balance all that.

Speaker #3: So on the other hand you are going to have also I mean new capacity entering in the system that in some way is going to balance all that.

Josu Jon Imaz: On the other hand, you are going to have also, I mean, new capacity entering in the system that in some way is going to balance all that. We have to take into consideration, Alastair, that the price of the HVO is in some way depending on 2 factors. The first, we can't forget that the HVO is also competing with the mineral diesel. There is a component coming from the mineral diesel that is also, in some way, contributing to forming the price of the HVO. You have a premium delta that comes from this, let me say, from the nature of the bio market.

Speaker #3: We have to take into consideration Alaster that the price of the HVO is in some way depending on two factors. The first we can't forget that the HVO is also competing with the mineral diesel so there is a component coming from the mineral diesel that is also in some way contributing to forming the price of the HVO and you have a premium delta that comes from this let me say from the nature of the bio market.

Josu Jon Imaz: We have to take into consideration, Alastair, that the price of the HVO is in some way depending on two factors. The first, we can't forget that the HVO is also competing with the mineral diesel. There is a component coming from the mineral diesel that is also, in some way, contributing to forming the price of the HVO. You have a premium delta that comes from this, let me say, from the nature of the bio market.

Speaker #3: So, in this sense about Red III, I think that increasing the mandates of Red III could in some way increase this delta. From the Repsol point of view, let me remind you that with the new plant at Puertollano, we are only providing 70% of our own sales with our customers of biofuel.

Josu Jon Imaz: In this sense, about RED III, I think that increasing the mandates of RED III, could in some way increase this delta. From the Repsol point of view, let me remind you that with the new plant of Puertollano, we are only providing a 70% of our own sales with our customers of biofuel. We could have even in a prudent way some kind of room to increase a bit, our production taking, let me say, a limited risk. Thank you, Alastair.

Speaker #3: So we could have even in a prudent way some kind of room to increase a bit our production taking let me say a limited risk.

Speaker #3: Thank you Alaster. Thank you. Thank you very much Alaster. Our next question comes from Michele de la Viña at Goma Sax. Please Michele go ahead with your question.

Alastair Syme: Thank you.

Pablo Bannatyne: Thank you very much, Alastair. Our next question comes from Michele Della Vigna at Goldman Sachs. Please, Michele, go ahead with your question.

Speaker #3: Thank you and congratulations on the strong results in such a volatile environment. I wanted to ask two questions Jesse John. First of all I was wondering if the current better macro environment makes a potential liquidity event over your EMP business more or less likely?

Michele Della Vigna: Thank you. Congratulations on the strong results in such a volatile environment. I wanted to ask two questions, Josu Jon. First of all, I was wondering if the current better macro environment makes a potential liquidity event over your E&P business more or less likely. On one side, you will probably get a better valuation. On the other one, the company is able to generate a higher free cash flow in the near term. I was just wondering how you're thinking about that. Second, perhaps a bit of a difficult and unfair question, but I was wondering, do you have in mind a number of months, whether if the strait remains closed, you would end up finding it difficult to have enough feedstock to feed into your refiners?

Speaker #3: On one side, you will probably get a better valuation; on the other one, the company is able to generate a higher free cash flow in the near term.

Michele Della Vigna: On the other one, the company is able to generate a higher free cash flow in the near term. I was just wondering how you're thinking about that. Second, perhaps a bit of a difficult and unfair question, but I was wondering, do you have in mind a number of months, whether if the strait remains closed, you would end up finding it difficult to have enough feedstock to feed into your refiners? Clearly, this is not just about your refiners, it is more about the global balances. Do you have in mind a kind of duration that would really start to put the feedstock to the refining system at risk of shortages? Thank you, Josu Jon.

Speaker #3: So I was just wondering how you are thinking about that. And then second perhaps a bit of a difficult and unfair question but I was wondering do you have in mind a number of months whether if the square if the straight remains closed you would end up finding it difficult to have enough feedstock to feed into your refiners?

Speaker #3: Kelly this is not just about your refiners it's more about the global balances. But do you have in mind a kind of duration that would really start to put the feedstock to the refining system at risk of shortages?

Michele Della Vigna: Clearly, this is not just about your refiners, it is more about the global balances. Do you have in mind a kind of duration that would really start to put the feedstock to the refining system at risk of shortages? Thank you, Josu Jon.

Speaker #3: Thank you, Jesse John. Grazie mille, Michele. Going to your first question, I mean, I'm going to be crystal clear about that. Now, I'm not in a hurry to jump into a liquidity event.

Josu Jon Imaz: Della Vigna, Michele. Going to your first question, I mean, I'm going to be crystal clear about that. Now, I'm not in a hurry to jump into a liquidity event in this context. We have, let me say that, the two partners of the business, Repsol and EIG, we are fully aligned on this perception. In technical terms, we are fully prepared. All the, I mean, reporting, adaptation to SOX, I mean, all this, let me say, this burden we have to work in to prepare the company, to be prepared to go to the American market.

Josu Jon Imaz: Grazie mille, Michele. Going to your first question, I mean, I'm going to be crystal clear about that. Now, I'm not in a hurry to jump into a liquidity event in this context. We have, let me say that, the two partners of the business, Repsol and EIG, we are fully aligned on this perception. In technical terms, we are fully prepared. All the, I mean, reporting, adaptation to SOX, I mean, all this, let me say, this burden we have to work in to prepare the company, to be prepared to go to the American market. All that was done. Going to the fundamentals, I mean, I think that we are very comfortable in this 2026 year not jumping into this liquidity event. I try to elaborate.

Speaker #3: In this context we have and let me say that the two partners of the business REPSOL and EIG we are fully aligned on this perception.

Speaker #3: In technical terms, we are fully prepared—all the, I mean, reporting adaptation to SOX, I mean all this, let me say, this burden we have to work in to prepare the company to be prepared to go to the American market.

Speaker #3: All that was done but going to the fundamentals I mean I think that we are very comfortable in this 2026 year not jumping into this liquidity event.

Josu Jon Imaz: All that was done. Going to the fundamentals, I mean, I think that we are very comfortable in this 2026 year not jumping into this liquidity event. I try to elaborate. We are convinced that the upstream, the quality of the upstream we have, and not because the commodity prices and so on is better than what we had three months ago, six months ago.

Speaker #3: I try to elaborate. We are convinced that the upstream the quality of the upstream we have and not because the commodity prices and so on is better than what we had three months ago six months ago I mean with Venezuela the risk with any significant increase showing to the market that we are increasing the production oil production in Venezuela with all the support of Venezuelan government and all the support also of the American authorities.

Josu Jon Imaz: We are convinced that the upstream, the quality of the upstream we have, and not because the commodity prices and so on is better than what we had three months ago, six months ago. I mean, with Venezuela, the risk it with any significant increase showing to the market that we are increasing the production in Venezuela with all the support of Venezuelan government and all the support also of the American authorities. With seeing that the payments of the gas we produce in Venezuela to help to stabilize the country, they are going in a regular and good way. With Alaska producing in a good way.

Josu Jon Imaz: I mean, with Venezuela, the risk it with any significant increase showing to the market that we are increasing the production in Venezuela with all the support of Venezuelan government and all the support also of the American authorities. With seeing that the payments of the gas we produce in Venezuela to help to stabilize the country, they are going in a regular and good way. With Alaska producing in a good way.

Speaker #3: With seeing that the payments of the gas we produce in Venezuela to help to establish the country they are and got in a regular and good way.

Speaker #3: With Alaska producing in a good way, with Cuoca, the results we are seeing in the wells in Cuoca in Alaska are giving us new expectations about Alaska.

Josu Jon Imaz: With Quokka, the results we have seen in the wells in Quokka, in Alaska, giving us new expectations about Alaska. Preparing the FID of Pikka 2 for the beginning of 2027. I mean, when we take all that, the perception we have is that, I mean, decoupling the commodity scenario, we are going to have a better up-upstream in 3 months, in 6 months, and probably in 1 year from now. If we take this analysis, I am not saying that is right. I am saying that is our analysis and is our expectation. We are comfortable in the current situation. Let me say that we are not going to jump to a liquidity event in the short term, Michele.

Speaker #3: Preparing the FID of PICA2 for the beginning of 2027. I mean when we take all that the perception we have is that I mean decoupling the commodity scenario we are going to have a better upstream in three months in six months and probably in one year on from now.

Speaker #3: So if we take this analysis, I'm not saying that that is right. I'm saying that is how our analysis is—our expectation. So we are comfortable in the current situation, and let me say that we are not going to jump to a liquidity event in the short term.

Josu Jon Imaz: If we take this analysis, I am not saying that is right. I am saying that is our analysis and is our expectation. We are comfortable in the current situation. Let me say that we are not going to jump to a liquidity event in the short term, Michele. Going, and, I mean, the better valuation, you know, the M&A world probably, as far as I know, or better probably.

Speaker #3: Michele. Going and I mean the better valuation you know the M&A wall probably as far as I know or better probably. And you know that I mean this temporary circumstances have not changed in a dramatic way the valuation of our business because an investor is seeing the long term view of the business.

Josu Jon Imaz: Going, and, I mean, the better valuation, you know, the M&A world probably, as far as I know, or better probably. You know that, I mean, these temporary circumstances have not changed in a dramatic way the valuation of our business because an investor is seeing the long-term view of the business. We are improving the fundamentals. I think that this view is in our mind more important than taking, let me say, the opportunistic advantage of seeing the oil price high to jump into the market. That's our view. Going to your second question.

Josu Jon Imaz: You know that, I mean, these temporary circumstances have not changed in a dramatic way the valuation of our business because an investor is seeing the long-term view of the business. We are improving the fundamentals. I think that this view is in our mind more important than taking, let me say, the opportunistic advantage of seeing the oil price high to jump into the market. That's our view. Going to your second question.

Speaker #3: So we are improving the fundamentals. So I think that this view is, in our mind, more important than taking, let me say, the opportunistic advantage of seeing the oil price high to jump into the market.

Speaker #3: So that's our view. Going to your second question, I mean, probably, and I have had the opportunity to talk to most of you—in most of you, I say the analysts—you are today following this conference in a personal way over the last eight weeks, even when most of you were here in Madrid and we were having a coffee after the Capital Market Day, and so on.

Josu Jon Imaz: I mean, probably, I have had the opportunity to talk to most of you, I say the analysts you are today following this conference, in a personal way over the last eight weeks, even when most of you were here in Madrid, and we were having a coffee after the capital market day and so on. You know that my view has been, let me say, I have had from the very beginning a concern about what is happening in the market related to the situation in the Middle East. I mean, I'm going to say that quote of never say never. I think that what we are seeing in the market is so disruptive, is.

Speaker #3: And you know that my view has been, let me say, I have had from the very beginning a concern about what is happening in the market related to the situation in the Middle East.

Speaker #3: I mean and I'm going to say that quote of never say never. I think that what we are seeing in the market is so disruptive is I mean is unprecedented.

Josu Jon Imaz: I mean, it is unprecedented that we could see, let me say, disruptions that probably we haven't experienced in any time in our lives. Saying that, we are more protected. I mean, I'm not going to say never, we are more protected than others, Michele. The reason is, first, because, I mean, in logistic terms, we are fully dependent on the Atlantic basin, North America, Latin America, West Africa, and a bit of Northern Africa, Algeria and Libya, and a bit of North Sea. We are, let me say, in the most robust and safest part of the supply chain. I could imagine a war with a crude oil disruption, yes, because, I mean, we are missing, probably today 11.

Speaker #3: That we could see, let me say, disruptions that probably we haven't experienced at any time in our lives. Saying that, we are more protected.

Speaker #3: I mean I'm not going to say never. But we are more protected than others. Michele. And the reason is first because I mean in logistic terms we are fully dependent on the Atlantic basin North America Latin America West Africa and a bit of Northern Africa Algeria and Libya and a bit of North Sea.

Speaker #3: So we are let me say in the more robust and safest part of the supply chain. I could imagine a war with a crude oil disruption yes because I mean we are missing probably today 11 I mean following your company own estimations 11 11.5 million barrels a day adding crude oil plus products and I mean we can't sustain the world situation.

Josu Jon Imaz: We are, let me say, in the most robust and safest part of the supply chain. I could imagine a war with a crude oil disruption, yes, because, I mean, we are missing, probably today 11. I mean, following your company own estimations, 11.5 million barrels a day are being crude oil plus products. I mean, we can't sustain the world situation. We have to.

Josu Jon Imaz: I mean, following your company own estimations, 11.5 million barrels a day are being crude oil plus products. I mean, we can't sustain the world situation. We have to. If this situation goes on, the only solution is the destruction of demand. Probably, we are going to see in this case, you are analyzing, I mean, the an almost that could remain closed for a more time, probably the demand is going to show some kind of elasticity to price. In that case, perhaps countries or areas, and I'm thinking mainly in Asian countries, they could have more difficulties to get the supply, not only because the logistics, also because the price.

Speaker #3: So we have to if this situation goes on the only solution is the destruction of demand. And probably we are going to see in this case you are analyzing I mean the or most that could remain close for more time probably the demand is going to show some kind of elasticity to price.

Josu Jon Imaz: If this situation goes on, the only solution is the destruction of demand. Probably, we are going to see in this case, you are analyzing, I mean, the an almost that could remain closed for a more time, probably the demand is going to show some kind of elasticity to price. In that case, perhaps countries or areas, and I'm thinking mainly in Asian countries, they could have more difficulties to get the supply, not only because the logistics, also because the price.

Speaker #3: So in that case perhaps countries or areas and I think mainly in Asian countries they could have more difficulties to get the supply not only because the logistic also because the price because I mean today we are seeing countries like Pakistan Bangladesh Philippines and some others that they have real difficulties to provide or to have the oil.

Josu Jon Imaz: I mean, today we are seeing countries like Pakistan, Bangladesh, Philippines, and some others that they have real difficulties to provide or to have the oil. I think that we are not going to suffer this oil restriction because we have a strong refining system. I'm not only talking about, of course, Repsol, but in Spain, I only have positive words to my competitors like Moeve, BP, and the other companies with assets in Spain or Galp in Portugal. I think that in the Iberian Peninsula, we have a real privileged situation to resist the situation of guaranteeing the supply in a better way than some other countries in Europe.

Speaker #3: So I think that we are not going to suffer this oil restriction. And because we have a strong refining system and I'm not only talking about of course Repsol but in Spain I have to I only have positive words to my competitors like Moebi BP and the other companies with assets in Spain or GALP in Portugal I think that in the Iberian Peninsula we have a real privileged situation to resist the situation of guaranteeing the supply in a better way than some others countries in Europe.

Josu Jon Imaz: I think that in the Iberian Peninsula, we have a real privileged situation to resist the situation of guaranteeing the supply in a better way than some other countries in Europe. Saying that, I mean, I can't say never because it's going to depend on the evolution of the situation.

Speaker #3: Saying that, I mean I can't say never, because it's going to depend on the evolution of the situation. Thank you, Joseph John. Thank you.

Josu Jon Imaz: Saying that, I mean, I can't say never because it's going to depend on the evolution of the situation.

Michele Della Vigna: Thank you, Josu Jon.

Josu Jon Imaz: Thank you. Grazie, grazie Michele.

Speaker #3: Grazie Michele. Thank you very much Michele. Our next question comes from Alejandro Vigil at Santander. Please Alejandro go ahead with your question. Yes hello good morning.

Pablo Bannatyne: Thank you, very much, Michele. Our next question comes from Alejandro Vigil at Santander. Please, Alejandro, go ahead with your question.

Alejandro Vigil: Yes, hello, good morning. Thank you for taking my questions. The first question is in continuation with these comments about this second energy crisis in 5 years. In the previous one, there were several European countries taking a interventionist view, market intervention, price caps. If you are seeing a similar potential risk of market intervention in this context? That will be the first one. The second one is about the blackout in Spain last year. How is the situation in terms of potential compensation or which is the amount you are claiming insurance? What can you tell us about that? Thank you.

Alejandro Vigil: Yes, hello, good morning. Thank you for taking my questions. The first question is in continuation with these comments about this second energy crisis in five years. In the previous one, there were several European countries taking a interventionist view, market intervention, price caps. If you are seeing a similar potential risk of market intervention in this context? That will be the first one. The second one is about the blackout in Spain last year. How is the situation in terms of potential compensation or which is the amount you are claiming insurance? What can you tell us about that? Thank you.

Speaker #3: Thank you for taking my questions. The first question is in continuation with these comments about this second energy crisis in five years. In the previous one, there were several European countries taking an interventionist view—market intervention, price caps.

Speaker #3: If you are seeing a similar potential risk of market intervention in this context, that would be the first one. And the second one is about the blackout in Spain.

Speaker #3: Last year how is the situation in terms of potential compensation or which is the amount you are claiming insurance. What can you tell us about that.

Speaker #3: Thank you. Gracias. Alejandro, thank you so much. I mean, you mentioned the previous crisis of 2022. First, let me say that the nature of both crises is fully different.

Josu Jon Imaz: Gracias, Alejandro. Thank you so much. I mean, you mentioned the previous crisis of 2022. First, I mean, let me say that the nature of both crises is fully different, mainly for our market, for Repsol. Because in the Ukrainian crisis, or the Ukrainian invasion crisis, better said, we didn't lack in Europe a single drop of oil products over this crisis because all the Russian products were diverted towards China, Asia, India, I mean, some other geographies. Now what we have is a real problem of supply, a product restriction. Remember that at that time, you probably know because you are as a Spaniard, in November 2024, there were proposals at the Spanish Congress to reintroduce similar mechanisms for the energy sector from 2025 onwards.

Speaker #3: Mainly for our market, for Repsol, because in the Ukrainian crisis—the Ukrainian invasion crisis, better said—we didn't lack in Europe a single drop of oil products over this crisis.

Speaker #3: Because all the Russian products were diverted towards China, Asia, India—I mean, some other geographies. And now what we have is a real problem of supply, of product restriction.

Josu Jon Imaz: Now what we have is a real problem of supply, a product restriction. Remember that at that time, you probably know because you are as a Spaniard, in November 2024, there were proposals at the Spanish Congress to reintroduce similar mechanisms for the energy sector from 2025 onwards. These proposals, they didn't succeed because they lacked the parliamentary support in Spain.

Speaker #3: Remember that, at that time, you probably know because you are a Spaniard—in November 2024, there were proposals at the Spanish Congress to reintroduce similar mechanisms for the energy sector from 2025 onwards.

Speaker #3: And these proposals, they didn't succeed, because they lack the parliamentary support in Spain. At the European level, remember that at that time there was some kind of approval of some kind of windfall tax that was called 'contribution.'

Josu Jon Imaz: These proposals, they didn't succeed because they lacked the parliamentary support in Spain. In the European level, remember that at that time, there was some kind of approval of some kind of windfall tax that was called contribution, and we have not seen at the moment a real aim to approve such a measure in the European level. Let me elaborate perhaps a bit more. We are now in Spain, as I said to Michele, some weeks ago, we have reinforced supply system thanks to companies like Repsol, Moeve, BP, Galp, that Galp in Portugal, that invested hard in the refining system. In the case of Repsol, we have invested EUR 15 billion in our industrial business in Spain since the financial crisis of 2008.

Josu Jon Imaz: In the European level, remember that at that time, there was some kind of approval of some kind of windfall tax that was called contribution, and we have not seen at the moment a real aim to approve such a measure in the European level. Let me elaborate perhaps a bit more. We are now in Spain, as I said to Michele, some weeks ago, we have reinforced supply system thanks to companies like Repsol, Moeve, BP, Galp, that Galp in Portugal, that invested hard in the refining system. In the case of Repsol, we have invested EUR 15 billion in our industrial business in Spain since the financial crisis of 2008.

Speaker #3: And we have not seen at the moment a real aim to approve such a measure in the European level. But let me elaborate perhaps a bit more.

Speaker #3: We are now in Spain. As I said to Michele some minutes ago, we have reinforced the supply system thanks to companies like Repsol, Moebi, BP, and GALP—GALP in Portugal—that invested hard in the refining system.

Speaker #3: So in the case of Repsol we have invested in 15 billion euros in our industrial business in Spain since the financial crisis of 2008.

Josu Jon Imaz: On top of that, I have to mention that we have invested more than EUR 1.4 billion in the last weeks to guarantee the supply of kerosene, to guarantee the Spanish tourism season. If you suffer the losses from time to time, and every time you have profits, you suffer from confiscation, you are not going to invest anymore, of course. You are not going to invest in working capital to guarantee the supply if you don't have the incentive of profits, the legitimate incentive of making money. It seems to me that introducing an extraordinary levy on the energy sector will be not only unjustified and counterproductive, I think that it will undermine the security of supply and erode the competitiveness of European industry at this critical moment.

Speaker #3: And on top of that I have to mention that we have invested more than 1.4 billion euros in the last weeks to guarantee the supply of kerosene to guarantee the Spanish tourism season.

Speaker #3: I mean, if you suffer the losses from time to time, and every time you have profits you suffer from confiscation, I mean, you are not going to invest anymore, of course.

Speaker #3: You are not going to invest in working capital to guarantee the supply. If you don't have the incentive of profits the legitimate incentive of making money.

Josu Jon Imaz: You are not going to invest in working capital to guarantee the supply if you don't have the incentive of profits, the legitimate incentive of making money. It seems to me that introducing an extraordinary levy on the energy sector will be not only unjustified and counterproductive, I think that it will undermine the security of supply and erode the competitiveness of European industry at this critical moment.

Speaker #3: So, it seems to me that introducing an extraordinary levy on the energy sector would be not only unjustified and counterproductive. I think that it will undermine the security of supply and erode the competitiveness of European industry at this critical moment.

Speaker #3: I mean if we take also into account that over the last 15 years at 20 percent of European refining capacity has been shut down or idle.

Josu Jon Imaz: I mean, if we take also into account that, over the last 15 years, 20% of European refining capacity has been shut down or idle. I mean, a new levy will accelerate this trend, increasing the dependence on imports and in some way also reducing the security of supply. From my point of view, this kind of debates, they create regulatory uncertainty. They divert resources away from investment, also they put at risk the projects we need to decarbonize our industry and our economy. Of course, the risk is worsening the risk of security of supply in coming months in Europe. I tend to think, Alejandro, that this kind of confiscatory levies are not going to appear this time, neither in Europe nor in Spain.

Speaker #3: I mean a new levy will accelerate this trend increasing the dependence on imports and in some way also reducing the security of supply. So from my point of view this kind of debates they create regulatory uncertainty they divert resources away from investment and also they put at risk the projects we need for the carbonized our industry and our economy and of course the risk is worsening the risk of security of supply in coming months in Europe.

Josu Jon Imaz: They divert resources away from investment, also they put at risk the projects we need to decarbonize our industry and our economy. Of course, the risk is worsening the risk of security of supply in coming months in Europe. I tend to think, Alejandro, that this kind of confiscatory levies are not going to appear this time, neither in Europe nor in Spain.

Speaker #3: So I tend to think Alejandro that this kind of confiscatory levies are not going to appear this time neither in Europe nor in Spain.

Speaker #3: Going to your second question about the blackout that you know that is a trending topic in the Spanish media these days. I mean we know exactly I mean what the consequences of the blackout were for Repsol.

Josu Jon Imaz: Going to your, to your second question about the blackout that you know, that is a trending topic in the Spanish media these days. I mean, we know exactly, I mean, what the consequences of the blackout were for Repsol. Remember that we talk about different incidents, a first blackout impacting in Cartagena, another disruption, nothing to do with that in Puertollano related to a distributor. I mean, if we go to the major blackout on 28 April, one year ago, which shut down our operation for days at 5 refineries and 3 petrochemical sites. Remember that I explained before that we experienced a similar event in 2016 in Bilbao in the Petronor refinery. In 2022, the Spanish Supreme Court issued a decision confirming full compensation for Repsol's affiliate Petronor.

Speaker #3: Remember that we talk about different incidents a first blackout impacting in Cartagena another disruption nothing to do with that in Puerto Llano related to the distributor.

Speaker #3: I mean if we go to the mayor blackout on April 28th one year ago which shut down our operations for days at five refineries and three petrochemical sites remember that I explained before that we experienced a similar event in 2016 in Bilbao in the petrol refinery and in 2022 the Spanish Supreme Court issued a decision confirming full compensation for Repsol's affiliate Petronor.

Josu Jon Imaz: I mean, if we go to the major blackout on 28th April, one year ago, which shut down our operation for days at five refineries and three petrochemical sites. Remember that I explained before that we experienced a similar event in 2016 in Bilbao in the Petronor refinery. In 2022, the Spanish Supreme Court issued a decision confirming full compensation for Repsol's affiliate Petronor.

Speaker #3: That was 18 million euros for the 12 minute blackout we suffer at that time. That stopped our operations in the refinery for four days.

Josu Jon Imaz: That was EUR 18 million for the 12-minute blackout we suffered at that time. That stopped our operations in the refinery for days, we were fully compensated. I mean, roughly speaking, this EUR 18 million is close to the impact of, on each of our refineries from the blackout we suffered in April. We estimate a recoverable amount of EUR 105 million in the legal claim we are entering in. We are fully committed, Alejandro Vigil, to seeking legal accountability from those responsible for these events, we initiated this legal process last week. I mean, before entering in any lawsuit, the law requires the opposite party to be invited to seek a settlement.

Speaker #3: And we were fully compensated. I mean roughly speaking these 18 million euros is close to the impact of on each of our refineries from the blackout we suffer in April.

Speaker #3: We estimate a recoverable amount of 105 million euros in the legal claim we are entering in. So we are fully committed Alejandro to seeking legal accountability from those responsible for this events.

Josu Jon Imaz: We are fully committed, Alejandro Vigil, to seeking legal accountability from those responsible for these events, we initiated this legal process last week. I mean, before entering in any lawsuit, the law requires the opposite party to be invited to seek a settlement. In this sense, last week, Repsol already was complying with this legal requirement, and we sent formal notices, what is called a burofaxes, to Red Eléctrica and to the distributors with which our industrial centers they have contracts.

Speaker #3: And we initiated this legal process last week. And I mean, before entering into any lawsuit, the law requires the opposite party to be invited to seek a settlement.

Speaker #3: And in this sense, I mean, last week Repsol already was complying with this legal requirement. And we sent formal notices—what is called a bulletin of access—to Red Eléctrica and to the distributors with which our industrial centers have contracts.

Josu Jon Imaz: In this sense, last week, Repsol already was complying with this legal requirement, and we sent formal notices, what is called a burofaxes, to Red Eléctrica and to the distributors with which our industrial centers they have contracts. If this prior attempt at dispute resolution is not satisfactory, Repsol will formally file the corresponding lawsuits to all these companies. Let me tell you, I rely on the Spanish justice system. I believe we have a solid, reliable judiciary. In the end, we will be compensated as we were in the Petronor case. Let me say, I finish, Alejandro, that probably the court task may be somewhat more complex this time because the regulator, the CNMC, didn't fulfill, from my point of view, its duties in an efficient way.

Speaker #3: And if this prior attempt at dispute resolution is not satisfactory, Repsol will formally file the corresponding lawsuit to all these companies. And let me say, I rely on the Spanish justice system; I believe we have a solid and reliable judiciary.

Josu Jon Imaz: If this prior attempt at dispute resolution is not satisfactory, Repsol will formally file the corresponding lawsuits to all these companies. Let me tell you, I rely on the Spanish justice system. I believe we have a solid, reliable judiciary. In the end, we will be compensated as we were in the Petronor case. Let me say, I finish, Alejandro, that probably the court task may be somewhat more complex this time because the regulator, the CNMC, didn't fulfill, from my point of view, its duties in an efficient way.

Speaker #3: In the end, we will be compensated, as we were in the Petronor case. But let me say—and I finish, Alejandro—that probably the court task may be somewhat more complex this time.

Speaker #3: Because the regulator the CNFMC didn't fulfill from my point of view its duties in an efficient way. Because I have the impression that the regulator the CNFMC has applied what is called in Spanish the la teoría del ventilador we could say or describe that in English as an scattergun approach.

Josu Jon Imaz: I have the impression that the regulator of the CNMC has applied what is called in Spanish, la teoria del ventilador. We could say or describe that in English as a scattergun approach. It has mixed very serious issues that affected the supply, allegedly caused by the system operator with dozens of alleged deficiencies over a 2-year period. All that is creating confusion. Perhaps that is what the regulator intended. I mean, to give the impression that he's distributing blame. I mean, however, a technical reading makes the responsibilities much clearer. Again, we have a solid judiciary. Spanish are democratic and solid state, where the rule of law works, I'm convinced that the truth will prevail and Repsol will be, at the end of the road, fully compensated. Gracias, Alejandro. Gracias, José.

Speaker #3: And it has mixed very serious issues that affected the supply. Allegedly caused by the system operator. With those sense of alleged deficiencies over a two year period.

Speaker #3: And all that is creating confusion. Perhaps that is what the regulator intended—I mean, to give the impression that it’s distributing blame. I mean, however, a technical reading makes the responsibilities much clearer.

Josu Jon Imaz: All that is creating confusion. Perhaps that is what the regulator intended. I mean, to give the impression that he's distributing blame. I mean, however, a technical reading makes the responsibilities much clearer. Again, we have a solid judiciary. Spanish are democratic and solid state, where the rule of law works, I'm convinced that the truth will prevail and Repsol will be, at the end of the road, fully compensated. Gracias, Alejandro.

Speaker #3: So again we have a solid judiciary Spanish a democratic and solid state where the rule of law works. And I'm convinced that the truth will prevail and Repsol will be at the end of the road fully compensated.

Speaker #3: Gracias, Alejandro. Gracias, José. Thank you very much, Alejandro. Our next question comes from Guilherme Levy at Morgan Stanley. Guilherme, please go ahead with your question.

Alejandro Vigil: Gracias, José.

Pablo Bannatyne: Thank you very much, Alejandro. Our next question comes from Guilherme Levi at Morgan Stanley. Guilherme, please go ahead with your question.

Speaker #3: Hi hello thank you for taking my questions. Maybe she won't refining crude procurement debate could you perhaps even if just qualitatively share with us how much of your crude supplies currently come from purely spot transactions versus how much they are coming from perhaps the benefits of your long term relationships with different players in LATAM because I wonder if that's also playing a role here in your ability to source crude maybe better than peers.

Guilherme Levi: Hi. Hello. Thank you for taking my questions. Maybe, given the refining crude procurement debate, could you perhaps, even if just qualitatively, share with us how much of your crude supplies currently come from purely spot transactions versus how much they are coming from perhaps the benefits of your long-term relationships with different players in Latin? Because I wonder if that's also playing a role here in your ability to source crude maybe better than peers. Secondly, thinking a bit more about upstream, perhaps pick your brain about short cycle investment opportunities that you could now pull the trigger on in light of the higher oil and gas price environment. Thank you.

Guilherme Levi: Because I wonder if that's also playing a role here in your ability to source crude maybe better than peers. Secondly, thinking a bit more about upstream, perhaps pick your brain about short cycle investment opportunities that you could now pull the trigger on in light of the higher oil and gas price environment. Thank you.

Speaker #3: And then secondly thinking a bit more about upstream perhaps pick your brain about short cycle investment opportunities that you could now pull the trigger on in light of the higher oil and gas price environment.

Speaker #3: Thank you. Obrigado, Guilherme. Going to refining, roughly speaking, 80 percent of our supply comes from long-term contracts, and 20 percent is spot. But, I mean, saying that, we don’t see—I mean, that is not our main, mainstream case.

Josu Jon Imaz: Obrigado, Guilherme. Going to the refining, roughly speaking, 80% of our supply comes from long-term contracts and 20% is spot. I mean, saying that, we don't see, I mean, that is not our main mainstream case. We don't see any kind of concern to supply our refineries. I answered before, I think that it was to Michele. I mean, we could see disruptions. I'm not going to say never because things could be worse. I mean, the current situation, I think that price is going to be the concern. Price is going to be the problem. We are going to be able to supply our refineries, I mean, in our central case, in a normal way. Going to the upstream, only...

Speaker #3: We don't see any kind of concern to supply our refineries. I answered before—I think that it was to Michele—I mean, we could see disruptions.

Speaker #3: I'm not going to say never because things could be worse but I mean the current situation I think that price is going to be the concern.

Speaker #3: Price is going to be the problem. But we are going to be able to supply our refineries I mean in our central case in a normal way.

Josu Jon Imaz: Price is going to be the problem. We are going to be able to supply our refineries, I mean, in our central case, in a normal way. Going to the upstream, only... I mean, you mentioned that we have a short cycle opportunities to invest due to these prices. I mean, you have three ways, let me say, to increase your production in a structural way. First, M&A, and today is not the best moment to buy. Secondly, exploration.

Speaker #3: Going to the upstream only, I mean, you mentioned that if we have short-cycle opportunities to invest due to these prices. I mean, you have three ways, let me say, to increase your production in an unstructured way.

Josu Jon Imaz: I mean, you mentioned that we have a short cycle opportunities to invest due to these prices. I mean, you have three ways, let me say, to increase your production in a structural way. First, M&A, and today is not the best moment to buy. Secondly, exploration. Exploration, the results are going to come, and we continue exploring as we demonstrated with the Alaska bid, where we were granted with 43 new leases, new licenses. The third one is the unconventional. Of course, in the unconventional, we are taking flexibility to improve our position. If we take the figures for Q1 and we compare with what we have over the whole year, we are going to increase in 22,000 barrels a day our unconventional production.

Speaker #3: First M&A and today is not the best moment to buy. Secondly exploration or exploration of the results are going to come. And we continue exploring as we demonstrated with the Alaska bid where we were granted with 43 new leases new licenses.

Josu Jon Imaz: Exploration, the results are going to come, and we continue exploring as we demonstrated with the Alaska bid, where we were granted with 43 new leases, new licenses. The third one is the unconventional. Of course, in the unconventional, we are taking flexibility to improve our position. If we take the figures for Q1 and we compare with what we have over the whole year, we are going to increase in 22,000 barrels a day our unconventional production.

Speaker #3: And the third one is the unconventional. And of course, in the unconventional, we are taking flexibility to improve our position. So if we take the figures of the first quarter and we compare with what we have over the whole year, we are going to increase by 22,000 barrels a day our unconventional production.

Speaker #3: But you have to take into account that there are two effects here. First, because of the cold weather, we were probably producing 10,000 barrels a day less in the first quarter because of the cold we had in Marcelo San Miguel. And second, the increase of new parts that we are going to take advantage of to increase our production over the year.

Josu Jon Imaz: You have to take into account that there are two effects here. First, because the cold weather, probably we were producing 10,000 barrels a day less in Q1 because the cold we had in Marcellus and Eagle Ford, and the increase of new pads that we are going to take advantage of them to increase our production over the year. All in all, 22,000 barrels a day of increase over the whole year in the unconventional if we compare with Q1. If we take that, we take the Peru incident, we take the ramp-up of Leon-Castile, plus Alaska that is going to come, plus Lapa Southwest. For that reason, we are quite comfortable with the guidance of 560,000, 570,000 barrels a day for the whole year.

Speaker #3: All in all 22,000 barrels a day of increase over the whole year in the unconventional if we compare with the first quarter. If we take that we take the Peru incident we take the ramp up of León Castillo plus Alaska that is going to come plus La Paz southwest for that reason we are quite comfortable with the guidance of 560 570 thousand barrels a day for the whole year.

Josu Jon Imaz: For that reason, we are quite comfortable with the guidance of 560,000, 570,000 barrels a day for the whole year. Thank you, Guilherme. Today, I mean, this morning, that is not, I'm not going to extrapolate today's production to the whole year. This morning, we are producing 570,000 barrels a day in our system. Obrigado, Guilherme.

Speaker #3: Thank you Guilherme. And today I mean this morning that is not I'm not going to extrapolate today's production to the whole year but this morning we are producing 570 thousand barrels a day in our system.

Josu Jon Imaz: Thank you, Guilherme. Today, I mean, this morning, that is not, I'm not going to extrapolate today's production to the whole year. This morning, we are producing 570,000 barrels a day in our system. Obrigado, Guilherme.

Speaker #3: Obrigado Guilherme. Perfect. Gracias. Thank you very much Guilherme. Our next question comes from Fergus Neff at Rothschild and Redburn. Please Fergus go ahead with your question.

Guilherme Levi: Perfect. Gracias.

Pablo Bannatyne: Thank you very much, Guilherme. Our next question comes from Fergus Neff at Rothschild and Redburn. Please, Fergus, go ahead with your question.

Speaker #3: Yeah, hi there. Thank you very much for taking my question. Two from me, if I might, please. Just first, on chemicals, you talked to a tighter petrochemical market in your slides.

Fergus Neff: Yeah. Hi there. Thank you very much for taking my question. Two from me, if I might, please. Just first on chemicals, you talked to a tighter petrochemical market in your slides. Could you just give us any color on how the chemicals business has been performing this month and whether it's been able to start capturing those margins, please? Secondly, can I just ask what you're seeing in Iberia in terms of fuel demand at your retail sites, given the current price environment? Do you expect to start seeing demand disruption if prices remain at current levels, or do you think they need to move higher before you would see any meaningful disruption start coming through? Thanks.

Speaker #3: Could you just give us any color on how the chemicals business has been performing this month and whether it's been able to kind of start capturing those margins, please?

Speaker #3: And then secondly can I just ask what you're seeing in Iberia in terms of fuel demand at your retail sites given the current price environment.

Fergus Neff: Secondly, can I just ask what you're seeing in Iberia in terms of fuel demand at your retail sites, given the current price environment? Do you expect to start seeing demand disruption if prices remain at current levels, or do you think they need to move higher before you would see any meaningful disruption start coming through? Thanks.

Speaker #3: Do you expect to start seeing demand destruction if prices remain at current levels or do you think they need to move higher before you would see any meaningful destruction start coming through.

Speaker #3: Thanks. Thank you, Fergus. So, going to your question. First, in the short term, the chemical business is performing in a bad way. And I’ll try to elaborate.

Josu Jon Imaz: Thank you, Fergus. Going to your question, first, in the short term, the chemical business is performing in a bad way, and I tried to elaborate. And that is behind also the impairment we have introduced in a prevalent way in our P&L this quarter. I mean, the huge increase of raw materials, naphtha, LPG, energy, natural gas, plus, I mean, we are not able to translate these prices to our customers. I mean, the plastic producers from the, I don't know, the automotive sector, the food sector and so on.

Speaker #3: And that is behind also the you could see the impairment we have introduced in a prudent way in our P&L this quarter. Because I mean the huge increase of raw materials nafta LPG energy natural gas plus I mean we are not able to translate these prices to our customers.

Speaker #3: I mean the plastic producers from the—I don't know—the automotive sector, the food sector, and so on. So, what we are seeing in the short term is a worsening of these margins because of this short-term situation that has, in some way, pushed us to be prudent in terms of the book value of the chemical business in our company.

Josu Jon Imaz: What we are seeing in the short term is a worsening of these margins because this short-term situation that has in some way pushed us to be prevalent in terms of the value of the chemical business in our company. In saying that, we are fully focused on putting in operation the new projects that are going to give us additional margin. The ultrahigh molecular weight polyethylene plant in Puertollano, the derivative chemical business in Sines, plus the electrification of the crackers, as I mentioned before, plus the splitter of propylene in Petronor that is starting this Q2 its operation. With all the cost measures, improving the logistics and so on, we are enforcing.

Speaker #3: We are fully focused on putting into operation the new projects that are going to give us additional margin: the ultra high molecular weight polyethylene plant in Puertollano, and the derivative chemical business in Sines.

Josu Jon Imaz: The ultrahigh molecular weight polyethylene plant in Puertollano, the derivative chemical business in Sines, plus the electrification of the crackers, as I mentioned before, plus the splitter of propylene in Petronor that is starting this Q2 its operation. With all the cost measures, improving the logistics and so on, we are enforcing.

Speaker #3: Plus the electrification of the crackers, as I mentioned before. Plus the splitter of propylene in Petronor that is starting this second quarter its operation.

Speaker #3: With all the cost measures, improving the logistics, and so on, we are enforcing—I mean, yesterday we had the board meeting, and I maintained my commitment to the board yesterday that in 2026 we aim to have a zero EBITDA, a neutrality of EBITDA, in our business, in our chemical business.

Josu Jon Imaz: I mean, yesterday we had the board meeting, and I maintained my commitment to the board yesterday that in 2026, we aim to have a zero EBITDA, a neutrality of EBITDA in our business, in our chemical business. We aim to be positive in our operational result in the EBIT in 2027. We are fully focused on that. When we go to the Iberia fuel demand, what we have seen in Q1 and in March and in April is an increase of a figure that is close to 10%. 10% in Q1 and 3-4% in April, roughly speaking. That is curious, Fergus, because it is counterintuitive.

Josu Jon Imaz: I mean, yesterday we had the board meeting, and I maintained my commitment to the board yesterday that in 2026, we aim to have a zero EBITDA, a neutrality of EBITDA in our business, in our chemical business. We aim to be positive in our operational result in the EBIT in 2027. We are fully focused on that. When we go to the Iberia fuel demand, what we have seen in Q1 and in March and in April is an increase of a figure that is close to 10%. 10% in Q1 and 3%-4% in April, roughly speaking. That is curious, Fergus, because it is counterintuitive.

Speaker #3: And we aim to be positive in our operational result in the EBIT in 2027. So we are fully focused on that. And when we go to the Iberia fuel demand what we are seeing the first quarter and in March and in April is an increase of a figure that is close to a 10 percent 10 percent in the first quarter and three four percent in April roughly speaking.

Speaker #3: And that is curious, Fergus, because it's counterintuitive. But remember, I don't know what is going to happen, so I don't want to—I don't have a crystal ball.

Josu Jon Imaz: Remember, I don't know what is going to happen, so I don't want to. I don't have a crystal ball, but I only introduce a variable in the debate. Spain receive 100 million visitors a year. We are, after France, the second country receiving visitors in the world, and in revenues, the second one behind the US. I think that we are going to see a twin phenomenon this summer in Spain, and I don't know what is going to prevail. I think that the global tourism probably is going to suffer because, I mean, aviation prices, the lack of security in the world and so on. On the other hand, Spain is a tourism destination more secure, safer than some others.

Speaker #3: But I only introduced a variable in the debate we have when Spain received 100 million visitors a year. We are, after France, the second country receiving visitors in the world.

Speaker #3: And in revenues, the second one behind the US. So I think that we are going to see a twin phenomenon this summer in Spain.

Speaker #3: And I don't know what is going to prevail in—I think that global tourism probably is going to suffer because, I mean, aviation prices, the lack of security in the world, and so on.

Josu Jon Imaz: I think that the global tourism probably is going to suffer because, I mean, aviation prices, the lack of security in the world and so on. On the other hand, Spain is a tourism destination more secure, safer than some others. It seems to me that many Northern European citizen, they are going to take the decision instead of going, I don't know where, and you could imagine places, and I don't know, I'm not going to mention any country, to come to Spain.

Speaker #3: But on the other hand Spain is a tourism destination more secure safer than some others. And it seems to me that many northern European citizens they are going to take the decision instead of going I don't know where and you could imagine places and I don't know I'm not going to mention any country to come to Spain.

Josu Jon Imaz: It seems to me that many Northern European citizen, they are going to take the decision instead of going, I don't know where, and you could imagine places, and I don't know, I'm not going to mention any country, to come to Spain. We could have a positive effect on the Spanish tourism. I don't know what is going to prevail, but taking into account this reflection, we don't see today a reduction of volumes in our Iberian business. What I'm saying for Spain, I mean, is also applicable for Portugal. That is, I mean, as attractive as Spain in tourism terms. Thank you.

Speaker #3: So, we could have a positive effect on the Spanish tourism. I don't know what is going to prevail, but taking into account these reflections, we don't see today a reduction of volumes in our Iberian business.

Josu Jon Imaz: We could have a positive effect on the Spanish tourism. I don't know what is going to prevail, but taking into account this reflection, we don't see today a reduction of volumes in our Iberian business. What I'm saying for Spain, I mean, is also applicable for Portugal. That is, I mean, as attractive as Spain in tourism terms. Thank you.

Speaker #3: What I'm saying for Spain I mean is also replicable for Portugal—that is, I mean, as attractive as Spain in tourism terms. Thank you.

Speaker #3: Brilliant. Thank you very much. Thank you very much, Fergus. Our next question comes from Enric Patricot at UBS. Enric, please go ahead with your question.

Fergus Neff: Brilliant. Thank you very much.

Pablo Bannatyne: Thank you very much, Fergus. Our next question comes from Henri Patricot at UBS. Henri, please go ahead with your questions.

Speaker #3: Thank you, Fergus. Everyone, I have two questions, please. The first one I wanted to ask is on Venezuela—I can see the progress with the Department for Carbon Four.

Henri Patricot: Thank you, Pablo. Hello, everyone. Yeah, two questions, please. The first one I wanted to ask on Venezuela. Good to see the progress with the payments for Q4. I was wondering if you have had any more discussions regarding the payments for the past production and over the past year in particular. Secondly, coming back to a question around the short cycle, potential upside due to production. I wanted to check on Libya. What's your latest outlook on the production potential, coming near and medium term? Thank you.

Speaker #3: I was wondering if you have had any more discussions regarding the payments for the past production over the past year in particular. And secondly, going back to a question around short-cycle potential upside to production.

Speaker #3: I wanted to check on Libya what's your latest outlook on the production potential company near and medium term. Thank you. Merci Enric. I mean Venezuela I'm going to be crystal clear about that.

Josu Jon Imaz: Merci, Henri. I mean, Venezuela. I'm going to be crystal clear about that. Step by step. Now, we are fully committed to collaborate, to contribute to the recovery of Venezuela. Our main contribution to recover Venezuela, taking advantage the opportunity we have in our hands, is first to stabilize the gas production. We are going to increase in at 10% in coming months, thanks to the bottlenecking process, the gas production in Cardón. Of course, all that under the agreement we achieved three weeks ago, about the sustainability of this production. That means that this year, we have a clear commitment from PDVSA to receive the cargoes that are going to pay the full gas we are producing in Venezuela.

Speaker #3: Step by step. Now we are fully committed to collaborate to contribute to the recovery of Venezuela. And our main contribution to recover Venezuela, taking advantage of the opportunity we have in our hands, is first to stabilize the gas production. We are going to increase by 10% in the coming months, thanks to the bottlenecking process, the gas production in Cardon. Of course, all that is under the agreement we achieved three weeks ago about the sustainability of this production. That means that this year we have a clear commitment from PDVSA to receive the cargoes that are going to pay for the full gas we are producing in Venezuela. And in petrochemicals, last week we signed an agreement where, as paying agents, Repsol, we could be able to manage the oil production, of course paying the royalties, paying taxes, paying the OPEX and CAPEX. Petrochemical needs to increase the production and have a percentage, a fair percentage, for the service that the operators, the shareholders, PDVSA, and Repsol provide to the petrochemical assets.

Josu Jon Imaz: We are going to increase in at 10% in coming months, thanks to the bottlenecking process, the gas production in Cardón. Of course, all that under the agreement we achieved three weeks ago, about the sustainability of this production. That means that this year, we have a clear commitment from PDVSA to receive the cargoes that are going to pay the full gas we are producing in Venezuela.

Josu Jon Imaz: In Petroquiriquire, last week we signed an agreement where as a paying agent, Repsol, we could be able to manage the oil production, of course, paying the royalties, paying taxes, paying the OpEx and CapEx Petroquiriquire needs to increase the production and having a percentage, a fair percentage for the service that the operators, the shareholders, PDVSA, and Repsol will provide to the Petroquiriquire assets. That means more cargoes to be paid and increasing production, more taxes and royalties for the country, a contribution to the recovery of Venezuela and the social and economic recovery of Venezuela, and the political stabilization in a win-win strategy. From my point of view now, of course, we know what is the debt we have with PDVSA. PDVSA knows that.

Speaker #3: So that means more cargoes to be paid, an increase in production, more taxes and royalties for the country, a contribution to the recovery of Venezuela and the social and economic recovery of Venezuela, the political stabilization in a win-win strategy.

Josu Jon Imaz: That means more cargoes to be paid and increasing production, more taxes and royalties for the country, a contribution to the recovery of Venezuela and the social and economic recovery of Venezuela, and the political stabilization in a win-win strategy. From my point of view now, of course, we know what is the debt we have with PDVSA. PDVSA knows that.

Speaker #3: From my point of view now, and of course we know what is the debt we have with PDVSA. PDVSA knows that. I think that, I mean, a time for that will be open in the future—no doubt about that.

Josu Jon Imaz: I think that, I mean, a time for that will be open in the future, no doubt about that. Now, from our point of view, it's time to do what I mentioned before. If Venezuela recover from the current situation, if there is, I mean, higher production, more revenues, I'm sure that we are going to find windows of opportunity to talk and to try to readdress this question. Going to the Libya. I mean, Libya, remember that this quarter we have been producing 42,000 barrels a day. Even taking into account that we have an event of 2, 3 days, an operational event in a pipe, that is the.

Josu Jon Imaz: I think that, I mean, a time for that will be open in the future, no doubt about that. Now, from our point of view, it's time to do what I mentioned before. If Venezuela recover from the current situation, if there is, I mean, higher production, more revenues, I'm sure that we are going to find windows of opportunity to talk and to try to readdress this question. Going to the Libya. I mean, Libya, remember that this quarter we have been producing 42,000 barrels a day. Even taking into account that we have an event of two, three days, an operational event in a pipe, that is the.

Speaker #3: But now, from our point of view, it's time to do what I mentioned before. And if Venezuela recovers from the current situation, if there is, let me say, higher production and more revenues, I'm sure that we are going to find windows of opportunity to talk and to try to redress this question.

Speaker #3: Going to the Libya. I mean Libya remember that this quarter we have been producing 42,000 barrels a day even taking into account that we have an event of two three days an operational event in a pipe that is I mean transporting the crude oil from El Salada to Alsace and the refinery in the Libyan coast.

Josu Jon Imaz: I mean, transporting the crude oil from El Sharara to Es Sider and the refinery in the Libyan coast. I mean, 42,000 barrels a day could fit, roughly speaking, and I could, I mean, perhaps, make a mistake with the figure, but 320,000 to 325,000, 327,000 barrels a day. The best expectation I have today, gross, I mean, the figure I mentioned now is gross, that we could finish 2026 with 350,000 barrels a day. That means an 8%, roughly speaking, of the current production increase. That means that we could be producing something net Repsol 45,000, 46,000 barrels a day in Libya. An important improvement comparing with the 32, 34 we produced 2 years ago.

Josu Jon Imaz: I mean, transporting the crude oil from El Sharara to Es Sider and the refinery in the Libyan coast. I mean, 42,000 barrels a day could fit, roughly speaking, and I could, I mean, perhaps, make a mistake with the figure, but 320,000-325,000, 327,000 barrels a day. The best expectation I have today, gross, I mean, the figure I mentioned now is gross, that we could finish 2026 with 350,000 barrels a day. That means an 8%, roughly speaking, of the current production increase.

Speaker #3: I mean 42,000 barrels a day could fit, roughly speaking, and I could, I mean, perhaps make a mistake with the figure, but 320 to 325, 327 thousand barrels a day, and the best expectation I have today—gross, I mean, the figure I mentioned now is gross—is that we could finish 2026 with 350,000 barrels a day. That means an 8 percent, roughly speaking, of the current production increase.

Speaker #3: That means that we could be producing something net Repsol—45,000, 46,000 barrels a day in Libya. So, an important improvement compared with the 32,000, 34,000 we produced two years ago.

Josu Jon Imaz: That means that we could be producing something net Repsol 45,000, 46,000 barrels a day in Libya. An important improvement comparing with the 32, 34 we produced two years ago. On top of that, connecting new wells, of course, is the magic for getting these figures. We are exploring. We are now engaging in an appraisal in a drilling well in Libya.

Speaker #3: On top of that, connecting in Wales, of course, is the magic for getting these figures. We are exploring, we are now engaging in an appraisal in a drilling well in Libya, and on top of that, you know that this quarter was a quarter with two new exploration opportunities.

Josu Jon Imaz: On top of that, connecting new wells, of course, is the magic for getting these figures. We are exploring. We are now engaging in an appraisal in a drilling well in Libya. On top of that, you know that this quarter we were awarded with two new exploration opportunities. One of them onshore in the Sirte basin, and the second one offshore in front of Benghazi in the east part of Libya. Again, we rely on Libya. Stability is there. I think that the job that, I mean, General Haftar and the Libyan army is developing, I mean, to stabilize the country, to, I mean, to reduce over the last year the impact of any security disruption in the country, including terrorism and so on.

Josu Jon Imaz: On top of that, you know that this quarter we were awarded with two new exploration opportunities. One of them onshore in the Sirte basin, and the second one offshore in front of Benghazi in the east part of Libya. Again, we rely on Libya. Stability is there. I think that the job that, I mean, General Haftar and the Libyan army is developing, I mean, to stabilize the country, to, I mean, to reduce over the last year the impact of any security disruption in the country, including terrorism and so on.

Speaker #3: One of them onshore in the Sirte basin and the second one offshore in front of Benghazi in the east part of Libya. So again we rely on Libya stability is there I think that the job that I mean General Hatter and the Libyan army is developing I mean to establish the country to I mean to reduce over the last year the impact of any security disruption in the country including terrorism and so on is very important not only for Libya not only for the stability of the country but also for the stability of Europe and the Mediterranean basin.

Josu Jon Imaz: It's very important not only for Libya, not only for the stability of the country, but also for the stability of Europe and the Mediterranean basin. We rely on Libya, and I think that we are going to have in the country, I mean, good news step by step in terms of political and social stabilization. merci, Henri.

Speaker #3: So we rely on Libya and I think that we are going to have in the country I mean good news step by step in terms of political and social stabilization.

Speaker #3: Merci Enric. Thank ank you. Thank you very much Enric. Our next question comes from James Carmichael at Bergamer. Please James go ahead with your question.

Pablo Bannatyne: Thank you very much, Henri. Our next question comes from James Carmichael at Berenberg. Please, James, go ahead with your question.

Speaker #3: Hi Guy. Thanks for taking my question. Just wanted to come back on Alaska for a second. I'm just wondering obviously people look to be going well.

James Carmichael: Hi, guys. Thanks for taking my questions. Wanted to come back on Alaska for a second. Wondering, obviously, Pikka looks to be going well. Wondering if you can provide a bit more detail on that, the Quokka appraisal. The operators' commentary seemed to indicate some positive results there. Obviously you flagged winning sort of just over 40 exploration licenses. How important, I guess, do you think Alaska could be to growth going forwards? Then coming back on refining. Not to sort of underestimate the achievement, in terms of that 25% increase in kerosene production you flagged February to May.

Speaker #3: I'm just wondering if you can provide a bit more detail on the Quokka appraisal. The operators' commentary seems to indicate some positive results there.

Speaker #3: And obviously, you've flagged winning, sort of, the step of 40 exploration licenses. How important, I guess, do you think Alaska could be to growth going forward?

James Carmichael: How important, I guess, do you think Alaska could be to growth going forwards? Then coming back on refining. Not to sort of underestimate the achievement, in terms of that 25% increase in kerosene production you flagged February-May. I mean, is that as far as you can push it, or is there potentially sort of more upside if you see that as the right way to go further in the year? Thanks.

Speaker #3: And then, just coming back on refining—not to sort of underestimate the achievement—but in terms of that 25% increase in kerosene production, you've flagged February to May.

Speaker #3: I mean, is that as far as you can push it, or is there potentially sort of more upside if you see that as the right way to go further in the year?

James Carmichael: I mean, is that as far as you can push it, or is there potentially sort of more upside if you see that as the right way to go further in the year? Thanks.

Speaker #3: Thanks. Thank you, James. I mean, Quokka, the test of the well was really very, very positive. I think that the production was at around 2,800 barrels a day—that, for a test, is an impressive figure.

Josu Jon Imaz: Thank you, James. I mean, Quokka, the test of the well was really very, very positive. I think that the production was at around 2,800 barrels a day. That for a test is an impressive figure. I mean, it is perhaps too early to comment that, but our perception today is that in gross production, Quokka is a new Pikka Phase 1. I mean, what we have in our hands in Quokka is something equivalent to a Pikka Phase 1. If we take into account, of course, we have to drill new wells to maintain the plateau in Pikka Phase 1 in coming years and so on. We take that. We take what we have seen in the prospect of Pikka Phase 2.

Josu Jon Imaz: Thank you, James. I mean, Quokka, the test of the well was really very, very positive. I think that the production was at around 2,800 barrels a day. That for a test is an impressive figure. I mean, it is perhaps too early to comment that, but our perception today is that in gross production, Quokka is a new Pikka 1. I mean, what we have in our hands in Quokka is something equivalent to a Pikka 1. If we take into account, of course, we have to drill new wells to maintain the plateau in Pikka 1 in coming years and so on. We take that. We take what we have seen in the prospect of Pikka 2.

Speaker #3: I mean, it's perhaps too early to comment on that, but our perception today is that, in gross production, Quokka is a new PICA-1. I mean, what we have in our hands in Quokka is something equivalent to a PICA-1.

Speaker #3: If we take into account, of course, we'll have to drill new wells to maintain the plateau in PICA One in coming years and so on. But we take that—we take what we are seeing in the prospect of PICA Two.

Speaker #3: PICA two we are working in fact in the feed the preparation on the engineering preparation of the FID but of course our approach fully shared with Santos is that I mean it's important to analyze to see the behavior of the production of the wells of PICA one I mean to incorporate to use all this information to improve the engineering of PICA two.

Josu Jon Imaz: Pikka Phase 2, we are working, in fact, in the feed, the preparation, the engineering preparation of the FID. Of course, our approach fully shared with Santos, is that, I mean, it's important to analyze, to see the behavior of the production of the wells of Pikka Phase 1. I mean, to incorporate, to use all this information to improve the engineering of Pikka Phase 2. When we take Pikka Phase 1, Pikka Phase 2, where we take FID next year, plus Cuca, and we put and project this development, I mean, we are seeing in 2032, 2033, a gross production of around 150,000, 160,000 barrels a day in Alaska. Where we retain a 49%.

Josu Jon Imaz: Pikka 2, we are working, in fact, in the feed, the preparation, the engineering preparation of the FID. Of course, our approach fully shared with Santos, is that, I mean, it's important to analyze, to see the behaviour of the production of the wells of Pikka 1. I mean, to incorporate, to use all this information to improve the engineering of Pikka 2.

Speaker #3: When we take Pikka One, Pikka Two, where we take FID in a year, plus Quokka, and we put and project this development—I mean, we are seeing in 2032, 2033 a gross production at around 150,000 to 160,000 barrels a day in Alaska.

Josu Jon Imaz: When we take Pikka 1, Pikka 2, where we take FID next year, plus Quokka, and we put and project this development, I mean, we are seeing in 2032, 2033, a gross production of around 150,000, 160,000 barrels a day in Alaska. Where we retain a 49%. In some way, Alaska is for Repsol could be, let me use the term I know that perhaps could be a bit, I mean, big words, but a bit a company maker for Repsol.

Speaker #3: So where we retain a 49 percent. So in some way Alaska is for Repsol could be let me use the term I know that perhaps could be a bit I mean big words but a bit a company maker for Repsol because what we are growing the way we are growing we are going to grow in Alaska is going to add a lot of value to our company.

Josu Jon Imaz: In some way, Alaska is for Repsol could be, let me use the term I know that perhaps could be a bit, I mean, big words, but a bit a company maker for Repsol. What we are growing, the way we are growing, we are going to grow in Alaska is going to add a lot of value to our company. I mean, I prefer not to say and not to answer to your question in front of my refining team, because when I ask to them four weeks ago, they developed a huge effort to increase in a 15% the production in Coruña and Petronor.

Josu Jon Imaz: What we are growing, the way we are growing, we are going to grow in Alaska is going to add a lot of value to our company. I mean, I prefer not to say and not to answer to your question in front of my refining team, because when I ask to them four weeks ago, they developed a huge effort to increase in a 15% the production in Coruña and Petronor.

Speaker #3: I mean I prefer not to say and not to answer to your question in front of my refining team because when I ask to them four weeks ago they developed a huge effort to increase enough 15 percent the production in Coruña and Petronor and when I asked to them about going on with this effort they answered just that is impossible.

Josu Jon Imaz: When I ask to them, about going on with this effort, they answered, Josu Jon, that is impossible. I mean, we are achieving the limit. 3, 4 days ago, this extraordinary team came to me saying, We have been able, and we are going to be able in May to increase in an additional, 10% this production. That means that all in all, we are going to increase in at 20% to 25% the previous production we have. Now my answer is no, we got the limit, because I mean, in technical terms, it's not easy. Let me say that we increase the logistics. We in operational terms, we change things and so on.

Josu Jon Imaz: When I ask to them, about going on with this effort, they answered, Josu Jon, that is impossible. I mean, we are achieving the limit. Three, four days ago, this extraordinary team came to me saying, We have been able, and we are going to be able in May to increase in an additional, 10% this production. That means that all in all, we are going to increase in at 20%-25% the previous production we have. Now my answer is no, we got the limit, because I mean, in technical terms, it's not easy.

Speaker #3: I mean, we are achieving the limit. Three or four days ago, this extraordinary team came to me saying, 'We have been able, and we are going to be able in May, to increase by an additional 10 percent this production.'

Speaker #3: That means that all in all, we are going to increase by 22 to 25 percent over the previous production we have. So now, my answer is no.

Speaker #3: We had the, and we got the limit. Because, I mean, in technical terms it's not easy. Let me say that we increase the logistics.

Josu Jon Imaz: Let me say that we increase the logistics. We in operational terms, we change things and so on. I mean, 95,000 barrels a day of kerosene, it means that is a figure close to a 12%, 13% of our total production. It's a very high figure. My answer will be we can't do more, but again, we are going to do our best to increase this figure, James. Thank you.

Speaker #3: In operational terms we change things and so on. But I mean 95,000 barrels a day of kerosene it means that it's a figure close to a 12, 13 percent of our total production is a very high figure.

Josu Jon Imaz: I mean, 95,000 barrels a day of kerosene, it means that is a figure close to a 12%, 13% of our total production. It's a very high figure. My answer will be we can't do more, but again, we are going to do our best to increase this figure, James. Thank you.

Speaker #3: So my answer will be, we can't do more, but again, we are going to do our best to increase this figure. James, thank you.

Speaker #3: Thanks. Thank you very much, James. Our next question comes from Nasqui at Barclays. Nas, please go ahead with your question. Hey, good afternoon, everyone.

James Carmichael: Thank you.

Pablo Bannatyne: Thank you very much, James. Our next question comes from Naisheng Cui at Barclays. Nash, please go ahead with your question.

Naisheng Cui: Hey, good afternoon, everyone. Thanks for taking my questions. Two, please. The first one, you delivered very strong trading results in Q1. I wonder if you could provide some color on the trading performance in April and perhaps some of your expectation for Q2, please. My second question is, Josu Jon, I agree we are in a very volatile environment, but could you just update us on Repsol's current oil and gas hedging positions and how the current volatile environment could lead you to change your hedging strategy? Thank you.

Speaker #3: Thank you for taking my questions. I have two, please. The first one: you delivered very strong trading results in Q1. I wonder if you could provide some color on the trading performance in April and perhaps some of your expectations for Q2, please.

Speaker #3: My second question is just to draw—gray, we are in a very volatile environment, but could you just update us on Repsol's current oil and gas hedging positions?

Speaker #3: And how the current volatile environment could lead you to change your hedging strategy. Thank you. Thank you, Nash. I mean, as far as I know, April—I don't, of course, talk about the whole second quarter—April is going to be close to March.

Josu Jon Imaz: Thank you, Nash. I mean, as far as I know, April, I don't, of course, talk about the whole second quarter. April is going to be close to March in terms of solid results in trading. The second quarter, probably because it's going to be probably even better than the first one. I'm talking about the trading of liquids because if we go to gas, you know that the gas trading business of Repsol is fully impacted by the American winter. You know that January, February, depending on weather, we captured a lot of positive margins because we are able to replace the gas from Canaport towards the New England area, capturing the high margins in the area.

Josu Jon Imaz: Thank you, Nash. I mean, as far as I know, April, I don't, of course, talk about the whole Q2. April is going to be close to March in terms of solid results in trading. The Q2, probably because it's going to be probably even better than the first one. I'm talking about the trading of liquids because if we go to gas, you know that the gas trading business of Repsol is fully impacted by the American winter.

Speaker #3: In terms of solid results in trading and the second quarter probably because it's going to be probably even better than the first one. I'm talking about the trading of liquids because if we go to gas you know that the gas trading business of Repsol is fully impacted by the American winter.

Speaker #3: So you know that January February depending on weather we capture a lot of positive margins because we are able to replace the gas from Canapa towards the New England area capturing the high margins in the area.

Josu Jon Imaz: You know that January, February, depending on weather, we captured a lot of positive margins because we are able to replace the gas from Canaport towards the New England area, capturing the high margins in the area. As always, gas is going to be lower in Q2, Q3, and Q4 is going to depend on the December weather.

Speaker #3: So, as always, gas is going to be lower in the second and third quarters, and the fourth quarter is going to depend on the December weather. And liquids, probably the second quarter is going to be even better than the first one.

Josu Jon Imaz: As always, gas is going to be lower in Q2, Q3, and Q4 is going to depend on the December weather. Liquids probably Q2 are going to be even better than the Q1. Hedging, we don't use to hedge the oil. The only exception we have in EUR 2 per million BTUs, roughly speaking, and 5.2 or something similar, as a call. We have a similar collar covering at 20% of the 2027 production with no cost, but only related to Henry Hub production. Thank you, Nash.

Josu Jon Imaz: Liquids probably Q2 are going to be even better than the Q1. Hedging, we don't use to hedge the oil. The only exception we have in EUR 2 per million BTUs, roughly speaking, and 5.2 or something similar, as a call. We have a similar collar covering at 20% of the 2027 production with no cost, but only related to Henry Hub production. Thank you, Nash.

Speaker #3: Hedging we don't use to hedge the oil the only exception we have. The debt of the bank. $2 per million BTUs roughly speaking and 5.2 or something similar as a call.

Speaker #3: And we have a similar caller covering a 20 percent of the 2027 production with no cost but only related to how we have production.

Speaker #3: Thank you, Nash. Very helpful. Seth Jostrom. Thank you, Nash. Our next question comes from Matt Loftin at JP Morgan. Please, Matt, go ahead with your question.

Naisheng Cui: Very helpful. Thanks, José.

Pablo Bannatyne: Thank you, Nash. Our next question comes from Matthew Lofting at JPMorgan. Please, Matt, go ahead with your question.

Matthew Lofting: Hi. Thanks for taking the questions and doing the presentation. Can I just ask, I mean, obviously, the refining environment's exceptionally volatile. When you look at April, perhaps as an example, could you share a sense of the range in the realized margin that you've seen around the sort of the average that you've mentioned earlier? If the sort of the daily range is too volatile and too wide, perhaps, for example, as a 5-day moving average or whatever you think is most appropriate. Second, I just wanted to ask you on cash flows. Generation in operating cash flow in Q1 is very strong.

Matthew Lofting: Hi. Thanks for taking the questions and doing the presentation. Can I just ask, I mean, obviously, the refining environment's exceptionally volatile. When you look at April, perhaps as an example, could you share a sense of the range in the realized margin that you've seen around the sort of the average that you've mentioned earlier? If the sort of the daily range is too volatile and too wide, perhaps, for example, as a five-day moving average or whatever you think is most appropriate.

Speaker #3: Hi. Thanks for taking the questions and doing the presentation. Can I just ask I mean obviously the refining environment exceptionally volatile when you look at April perhaps as an example could you share a sense of the range in the realized margin that you've seen around the sort of the average that you mentioned earlier.

Speaker #3: If the sort of the daily range is too volatile and too wide perhaps for example as a five day moving average or whatever you think's most appropriate.

Speaker #3: And then second I just wanted to ask you on cash flows generation in operating cash flow in the first quarter is very very strong.

Matthew Lofting: Second, I just wanted to ask you on cash flows. Generation in operating cash flow in Q1 is very strong. I just wondered if you could share the extent to which there's positive timing effects in there, perhaps linked to inventory gains that we should be aware of as we think about the cash flow trajectory for the rest of the year. Thank you.

Speaker #3: I just wondered if you could share the extent to which there's positive timing effects in there, perhaps linked to inventory gains, that we should be aware of as we think about the cash flow trajectory for the rest of the year.

Matthew Lofting: I just wondered if you could share the extent to which there's positive timing effects in there, perhaps linked to inventory gains that we should be aware of as we think about the cash flow trajectory for the rest of the year. Thank you.

Speaker #3: Thank you. So Matt I mean it's not I mean I agree with your point about volatility. Many if you analyze the margin indicator then day after day when we see the whole picture of the margin I mean the indicator plus the premium is no so volatile.

Josu Jon Imaz: Matt, I mean, it's not, I mean, I, I agree with your point about volatility, mainly if you analyze the margin indicator. When day after day, when we see the whole picture of the margin, I mean, the indicator plus the premium is not so volatile. I'm going to give you the real figures. April, we have an indicator of $12 a barrel and a premium that is going to be at around $15 a barrel. That means that we could have $25, $27 a barrel for the whole system. Some days we have seen, and I mean, probably I have to deep a bit more on or to dive, sorry, a bit more on that.

Josu Jon Imaz: Matt, I mean, it's not, I mean, I agree with your point about volatility, mainly if you analyze the margin indicator. When day after day, when we see the whole picture of the margin, I mean, the indicator plus the premium is not so volatile. I'm going to give you the real figures. April, we have an indicator of $12 a barrel and a premium that is going to be at around $15 a barrel. That means that we could have $25, $27 a barrel for the whole system. Some days we have seen, and I mean, probably I have to deep a bit more on or to dive, sorry, a bit more on that.

Speaker #3: So I'm going to give you the real figures. April we have an indicator of 12 dollars a barrel and a premium that is going to be at around 15 dollars a barrel.

Speaker #3: So that means that we could have a 25, 27 dollars a barrel for the whole system. And some days we have seen and I mean probably I have to dip a bit more or to dive sorry a bit more on that but some days because the decoupling between the physical brent and the financial one we saw a strong decreases of these refining margin indicator but those days in real terms the premium we were capturing was significantly higher.

Josu Jon Imaz: Some days, because the decoupling between the physical Brent and the financial one, we saw strong decreases of this refining margin indicator. Those days, in real terms, the premium we were capturing was significantly higher. All in all, I mean, there is some volatility as always, but we have seen a quite constant margin in April. That all in all, as I mentioned before, could be at around $12 a barrel indicator and 15 the premium. We are entering May tomorrow, I mean, under this scenario. I don't know what could happen. Because as I mentioned before, we could have concerns about the supply and so on worldwide. The situation today is there. Cash flow.

Speaker #3: So all in all I mean there is some volatility as always but we are seeing a quite constant margin in April that all in all as I mentioned before could be at around 12 dollars a barrel indicator and 15 the premium.

Josu Jon Imaz: uThat all in all, as I mentioned before, could be at around $12 a barrel indicator and 15 the premium. We are entering May tomorrow, I mean, under this scenario. I don't know what could happen. Because as I mentioned before, we could have concerns about the supply and so on worldwide. The situation today is there. Cash flow.

Speaker #3: And we are entering in May tomorrow I mean under this scenario. I don't know what could happen. It would be great I mean to see some kind of because as I mentioned before we could have concerns about the supply and so on worldwide but the situation today is there.

Speaker #3: Cash flow you are right the cash flow generation in first quarter was high. You know and we were very transparent about that that we took advantage of to increase our working capital.

Josu Jon Imaz: You are right, the cash flow generation in Q1 was high. you know, and we were very transparent about that we took advantage to increase our working capital. First, in physical terms, let me say that we have fulfilled all the capacity we have to store crude oil products in our refining system. I mean, we even contracting new capacity and so on. That means that it is not going to be easy for us to increase the physical exposure over the year. I mean, the working capital is going, of course, to evolve depending the evolution of the price, and that is not in our hands.

Speaker #3: First in a physical terms let me say that we have fulfilled all the capacity we have to store crude oil products in our refining system and I mean even contracting new capacity and so on that means that it's not going to be easy for us to increase the physical exposure over the year.

Speaker #3: I mean the working capital is going of course to evolve depending the evolution of the price and that is not in our hands. But if we I mean decouple this effect that is of course important to guarantee the supply of our customers in this complex and volatile time we could think that the inventory effect is not going to have any negative influence over the year in terms of tons of volume.

Josu Jon Imaz: I mean, the working capital is going, of course, to evolve depending the evolution of the price, and that is not in our hands. If we, I mean, decouple this effect, that is of course important to guarantee the supply of our customers in this complex and volatile time, we could think that the inventory effect is not going to have any negative influence over the year in terms of tonnes, of volume. I mean, we are not going to see changes, and the changes could be only positive, that means, or neutral. I mean, maintaining the current storage or reducing the level of physical storage, depending on the evolution of events.

Josu Jon Imaz: If we, I mean, decouple this effect, that is of course important to guarantee the supply of our customers in this complex and volatile time, we could think that the inventory effect is not going to have any negative influence over the year in terms of tons, of volume. I mean, we are not going to see changes, and the changes could be only positive, that means, or neutral. I mean, maintaining the current storage or reducing the level of physical storage, depending on the evolution of events. If we talk about prices, Matt, I mean, I can't give you a clue because that is going to depend on the evolution of crude oil price and products price. That is not in our hands.

Speaker #3: I mean we are not going to see changes and the changes could be only positive that means or neutral I mean maintaining the current storage or reducing the level of physical storage depending of the evolution of events.

Speaker #3: If we talk about prices Matt I mean I don't I can't give you a clue because that is going to depend on the evolution of crude oil price and products price.

Josu Jon Imaz: If we talk about prices, Matt, I mean, I can't give you a clue because that is going to depend on the evolution of crude oil price and products price. That is not in our hands. I could imagine that the cash flow from operation is going to be pretty good over the year. As I mentioned before, I'm not going to give you a guidance because I'm not able to do that. Remember, we had something between 5.5-6 in an environment where we were talking about $7.5 a barrel of refining margin and $1.5 of premium for the whole year, and $65 a barrel for the Brent oil for the whole year.

Speaker #3: And that is not in our hands. But I could imagine that the cash flow from operation is going to be pretty good over the year as I mentioned before.

Josu Jon Imaz: I could imagine that the cash flow from operation is going to be pretty good over the year. As I mentioned before, I'm not going to give you a guidance because I'm not able to do that. Remember, we had something between 5.5 to 6 in an environment where we were talking about $7.5 a barrel of refining margin and $1.5 of premium for the whole year, and $65 a barrel for the Brent oil for the whole year.

Speaker #3: I'm not going to give you a guidance because I'm not able to do that but remember we had something in between 5.5 to 6 in an environment where we were talking about 7.5 dollars a barrel of refining margin and 1.5 dollars of premium for the whole year.

Speaker #3: And 65 dollars a barrel for the brent oil for the whole year so if you take the sensitivities that you perfectly know of course Pablo and the team will be ready to work this figure with you and you take the consideration I developed in this conference probably you are going to have some kind of real clue about the cash flow from operations for the year that again is not going to have any negative effect in terms of inventory coming from the volume side if we talk about prices again I could give you additional clues.

Josu Jon Imaz: If you take the sensitivities that you perfectly know, or of course, Pablo and the team will be ready to work this figure with you, and you take the consideration I developed in this conference, probably you are going to have some kind of a real clue about the cash flows from operations for the year, that again, it is not going to have any negative effect in terms of inventory coming from the volume side. If we talk about prices again, I could give you additional clues. Thank you, Matt.

Speaker #3: Thank you Matt. Thank you. Thank you very much Matt. Our next question comes from Paul Redman at BNP Paribas Excel. Go ahead with your question Paul.

Matthew Lofting: Thank you.

Pablo Bannatyne: Thank you very much, Matt. Our next question comes from Paul Redman at BNP Paribas Exane. Go ahead with your question, Paul. Thank you.

Speaker #3: Thank you. Hi, guys. Thank you very much for your time. Yeah, two questions. First was just on CAPEX. You've guided to €2.7 billion for the year.

Paul Redman: Hi, guys. Thank you very much for your time. Yeah, two questions. First one is on CapEx. You've guided to EUR 2.7 billion for the year on a net CapEx basis. I just wanted to ask how much divestment or acquisition you're including in that number. Secondly, ACCELERATE.EU has come out. I wanted to see whether you're getting any or having any conversations with governments about. Sounds like you're running as hard as you can around jet fuel, but whether there's any more pressure on Repsol from governments to see if you can go further.

Speaker #3: On a net CAPEX basis, I just wanted to ask how much divestment or acquisition you're including in that number. And then secondly, Accelerate EU has come out.

Speaker #3: I wanted to see whether you're getting any or having any conversations with governments about sounds like you're running as hard as you can around jet fuel but whether there's any more pressure on Repsol from governments to see if further.

Josu Jon Imaz: Thank you, Paul. I mean, the exact figure I give in the capital market day, you are right, it was EUR 2.7 billion. I mean, I'm working under the range 2.5, 3. I mean, that's in the middle. I think that 2.7, as you mentioned, could be today our best approach to the net CapEx of the year. There is no any disposal or acquisition included in that figure. That means that the only, let me say, inorganic thing in this figure is the rotation, the recurrent rotation of the assets of low carbon. Let me say that it's working in the right way.

Speaker #3: Thank you Paul. So I mean the exact figure I give in the capital market day you are right it was 2.7 billion euros. I mean I'm working under the range 2.5 3.

Speaker #3: I mean that's in the middle. I think that 2.5 2.7 as you mentioned could be today. Our best approach to the net CAPEX of the year there is no any disposal or acquisition included in that figure.

Speaker #3: That means that the only the only let me say inorganic thing in this figure is the rotation the recurrent rotation of the assets of low carbon.

Speaker #3: And let me say that is working in the right way. If you analyze the cash figure we released this morning with the papers of the results and so on you could see that even the renewable business the low carbon business has a positive free cash flow this quarter because this model of cash flow from operations plus investment we are growing in this business of course minus the in this case the cash in coming from the output rotation.

Josu Jon Imaz: If you analyze the cash figure we released this morning with the papers of the results and so on, you could see that even the renewable business, the low carbon business, has a positive free cash flow this quarter. Because this model of cash flow from operations plus investment, we are growing this business, of course, minus the in this case, the cash incoming from the output rotation. Now we are engaged in the final part of another rotation of 700 megawatts of assets in Spain, and we expect to have a positive result of this process. Things are going to work in the right direction, and we are comfortable with the EUR 2.7 billion for the year net CapEx you mentioned before.

Speaker #3: So now we are engaged in the final part of another rotation of 700 megawatts of assets in Spain and we expect to have a positive result of this of this process.

Josu Jon Imaz: Now we are engaged in the final part of another rotation of 700MW of assets in Spain, and we expect to have a positive result of this process. Things are going to work in the right direction, and we are comfortable with the EUR 2.7 billion for the year net CapEx you mentioned before. We have a very transparent, direct, and positive dialogue with the Spanish government. Because, of course, the Spanish government knows that, I mean, in any European country, jet is important.

Speaker #3: So things are going to work in the right direction and we are comfortable with the 2.7 billion euros for the year net CAPEX you mentioned before.

Josu Jon Imaz: We have a very transparent, direct, and positive dialogue with the Spanish government. Because, of course, the Spanish government knows that, I mean, in any European country, jet is important. I mentioned before, if you analyze the percentage of the gross domestic product that tourism represents in Spain, and if we go to areas like Balearic Islands or Canary Islands that are fully dependent on aviation, I mean, that is, let me say, in national terms, it's fully strategic for Spain, the jet production. We have a very positive dialogue with, in this case, with Environment Transition Ministry and with the vice president that is leading this ministry. We are informing them of all this evolution.

Speaker #3: We have a very transparent direct and positive dialogue with the Spanish government. Because of course the Spanish government knows that I mean in any European country jet is important but I mentioned before if you analyze the percentage of the gross domestic product that tourism represents in Spain and if we go to areas like Balearic Islands or Canary Islands that are fully dependent on aviation I mean that is let me say in national terms is fully a strategic for Spain the jet production.

Josu Jon Imaz: I mentioned before, if you analyze the percentage of the gross domestic product that tourism represents in Spain, and if we go to areas like Balearic Islands or Canary Islands that are fully dependent on aviation, I mean, that is, let me say, in national terms, it's fully strategic for Spain, the jet production. We have a very positive dialogue with, in this case, with Environment Transition Ministry and with the vice president that is leading this ministry. We are informing them of all this evolution.

Speaker #3: We have a very positive dialogue with the in this case with the environment transition ministry and with the vice president that is leading this ministry.

Speaker #3: And we are informing them of all this evolution the effort we are developing the robustness of the refining system in Spain and in this sense again as I mentioned before I can't say that the game is over because it's not depending only on Repsol but Repsol today is ready and could say that we are going to provide all the jet that we provide to our customers last year over the whole summer and we have an excess of a 30% of this figure that we are ready to work in terms of trying to solve another problems that could appear.

Josu Jon Imaz: The third, we are developing the robustness of the refining system in Spain. In this sense, again, as I mentioned before, I can't say that the game is over because it's not depending only on Repsol. Repsol today is ready and could say that we are going to provide all the jet that we provide to our customers last year over the whole summer. We have an excess of a 30% of this figure that we are ready to work in terms of trying to solve another problems that could appear. When I say another problems, I'm talking of, for instance, I mean, some other operators, that they could have a gap between production and demand, or what could happen as imagine a flight, Birmingham-Málaga, transporting British tourists to Málaga.

Josu Jon Imaz: We have an excess of a 30% of this figure that we are ready to work in terms of trying to solve another problems that could appear. When I say another problems, I'm talking of, for instance, I mean, some other operators, that they could have a gap between production and demand, or what could happen as imagine a flight, Birmingham-Málaga, transporting British tourists to Málaga.

Speaker #3: And when I say another problems I'm talking of for instance I mean some other operators that they could have a gap between production and demand or what could happen as I imagine a flight Birmingham Malaga transporting British tourist to Malaga that is quite normal in summer.

Josu Jon Imaz: That is quite normal in summer. Nice city, Malaga. I mean, if we have the product in Malaga to provide the fuel, the refueling this company needs to go to Birmingham, it's okay. Perhaps this company could have in Birmingham a problem to be refueled. When I say that I don't know if this 25% and 30% of excess capacity is enough, I'm talking about that. It's true that now there are some kind of restriction in regulation in European level that every airport has to refuel a minimum of a 90% of the fuel this plane needs for this flight.

Speaker #3: Nice city Malaga. And I mean if we have the product in Malaga to provide the fuel or the refueling this company needs to go to Birmingham is okay.

Speaker #3: But perhaps this company could have in Birmingham a problem to be refueled. So when I say that I don't know if this 25 30% of excess capacity is enough I'm talking about that.

Speaker #3: It's true that now there are some kind of restriction in regulation in European level that every airport has to refuel a minimum of a 90% of the fuel this plane needs for this for this flight.

Speaker #3: It seems to me that we are talking with the administration about that that in European level probably they'll have to change this rule because otherwise we could have problems in some European countries not able to fulfill or to enforce this rule.

Josu Jon Imaz: It seems to me that, and we are talking with administration about that in European level, probably they have to change this rule, because otherwise we could have problems in some European countries not able to fulfill or to enforce this rule. Again, Repsol is going to do its best to contribute to the Spanish society in terms of guaranteeing the maximum security of supply, not only with our customers, but also thanks to the efforts we develop to provide additional needs. Is that going to be enough? I don't have a full answer, but we are going to do our best in this direction. Thank you.

Speaker #3: But again Repsol is going to do its best to contribute to the Spanish society in terms of guaranteeing the maximum security of supply not only with our customers but also thanks to the efforts we develop to provide additional needs.

Speaker #3: Is that going to be enough? I don't have a full answer. But we are going to do our best in this direction. Thank you.

Speaker #3: Thank you Josh John. I'll put my Malaga flight. I mean I'm from San Sebastián but from the other side of the peninsula but again Malaga is a fantastic destination.

Paul Redman: Thank you, Josu Jon Imaz. I'll book my Malaga flight.

Josu Jon Imaz: I mean, I'm from San Sebastian, but from the other side of the peninsula. Again, Malaga is a fantastic destination. Thank you, Matt.

Speaker #3: Thank you Matt. Thank you very much Paul. Our next question comes from Christopher Copeland at Bank of America Maryland's Please please please please go ahead with your question.

Pablo Bannatyne: Thank you very much, Paul. Our next question comes from Christopher Kuplent at Bank of America Merrill Lynch. Please, Christopher, please go ahead with your question.

Speaker #3: Thank you, Pablo. Just two more questions, please, and maybe a view as well. Josh, John, you were mentioning potentially having to change definitions of indicators versus premium.

Christopher Kuplent: Thank you, Pablo. Just two more questions, please, and maybe a view as well. Josu Jon Imaz, you were mentioning potentially having to change definitions of indicators versus premium. I hope you don't, as long as you give us the transparency that you're giving us on both, I'm very happy with sticking to the existing definition. To that point, if I could ask 1 more question on your March data. You told us about the indicator being as high as 20 then. Do you have the data for how high the premium was in March that you were able to extract? That's question number 1.

Speaker #3: I hope you don't. As long as you give us the transparency that you're giving us on both I'm very happy with sticking to the existing definitions.

Speaker #3: And to that point if I could ask one more question on your March data. You told us about the indicator being as high as 20 then.

Speaker #3: Do you have the data for how high the premium was in March that you were able to extract? That's a question number one. And question number two sorry a tiny detail but just wanted to see whether you could give us some insight into the extra central costs that you have recorded in industrial EBITDA in Q1.

Christopher Kuplent: Do you have the data for how high the premium was in March that you were able to extract? That's question number one. Question number two, sorry, a tiny detail, but just wanted to see whether you could give us some insight into the extra central costs that you have recorded in industrial EBITDA in Q1. That sounds like a, like a one-off in your spreadsheet at EUR 250 million. If not now, we can revisit after the call as well. Thank you.

Christopher Kuplent: Question number two, sorry, a tiny detail, but just wanted to see whether you could give us some insight into the extra central costs that you have recorded in industrial EBITDA in Q1. That sounds like a, like a one-off in your spreadsheet at EUR 250 million. If not now, we can revisit after the call as well. Thank you.

Speaker #3: That sounds like a one off in your spreadsheet at 250 million. But if not now we can revisit after the call as well. Thank you.

Josu Jon Imaz: Thank you, Chris. First, you are right. Again, I have to excuse myself because, I mean, the indicator is working in a normal situation. What we are seeing is fully disruptive and is not working. Of course, we are fully transparent, Chris, and you have, on top of the indication from the figures I could provide you here, you have the team of Pablo Bannatyne ready to work with you in terms of providing all the figures you need to follow what is happening. In March, roughly speaking, the indicator was at around EUR 20 a barrel, and the premium was at around EUR 10 a barrel. In the case of April, as I said before, we could be talking about EUR 12 and EUR 15, roughly speaking.

Speaker #3: Thank you Chris. So first you are right and again I have to excuse myself because I mean the indicator is working in a normal situation.

Speaker #3: But what we are seeing is fully disruptive and is not working. So we of course we are fully transparent Chris and you have on top of the indication on the figures I could provide you here you have the team of Pablo Bonatine ready to work with you in terms of providing all the figures you need to follow what is roughly speaking the indicator was at around 20 dollars a barrel and the premium was at around 10 dollars a barrel.

Josu Jon Imaz: In March, roughly speaking, the indicator was at around $20 a barrel, and the premium was at around $10 a barrel. In the case of April, as I said before, we could be talking about EUR 12 and EUR 15, roughly speaking. The total figure is similar in both months. Behind this $10 of indicator of premiums over in March is the 5.7 average I mentioned before.

Speaker #3: In the case of April as I said before we could be talking about 12 and 15 roughly speaking. So the total figure is similar in both months.

Josu Jon Imaz: The total figure is similar in both months. Behind this EUR 10 of indicator of premiums over in March is the 5.7 average I mentioned before. This extra negative central cost that we reflect in industrial, I'm going to try to elaborate. I mean, this is happening every quarter. What is happening now, again, that because the price differences are so high, the impact in the P&L is significantly material this time. For that reason, we have to explain that. I mean, imagine that our refining is selling in 30 March the product to our service station network or to our trading business. The refining business is, of course, taking the price of this product at what the market is refining that day.

Speaker #3: And behind this $10 indicator of premiums over in March is the $5.7 average I mentioned before. This extra negative central cost that we reflect in Industrial, I'm going to try to elaborate.

Josu Jon Imaz: This extra negative central cost that we reflect in industrial, I'm going to try to elaborate. I mean, this is happening every quarter. What is happening now, again, that because the price differences are so high, the impact in the P&L is significantly material this time. For that reason, we have to explain that. I mean, imagine that our refining is selling in 30th March the product to our service station network or to our trading business. The refining business is, of course, taking the price of this product at what the market is refining that day.

Speaker #3: I mean this is happening every quarter. What is happening now again that because the price differences are so high the impact in the P&L is significantly material this time.

Speaker #3: And for that reason we have to explain that. I mean imagine that our refining is selling in March 30th the product to our service station network or to our trading business and the refining business is of course taking the price of this product at go-to-market is defining that day.

Speaker #3: But because in March 31st the last day of the quarter the product is still in a company included in Repsol Group I mean we can't in the consolidated figures of the company we can't take this market price.

Josu Jon Imaz: Because in 31 March, the last day of the quarter, the product is still in a company included in Repsol group, in the consolidated figures of the company, we can't take this market price. We have to discount or to reduce the real price in the market till we are able to sell this product in the market. That probably is going to happen in the service station case in 1 or 2 April, and in the trading, perhaps 10 or 15 days later. That is happening. It's a rule that is working every quarter. This quarter, because the high increase of prices, the effect of this, let me say, extra negative cost is included as a non-transferred operation that is included in the central cost of the industrial area.

Josu Jon Imaz: Because in 31st March, the last day of the quarter, the product is still in a company included in Repsol group, in the consolidated figures of the company, we can't take this market price. We have to discount or to reduce the real price in the market till we are able to sell this product in the market. That probably is going to happen in the service station case in 1st or 2nd April, and in the trading, perhaps 10 or 15 days later.

Speaker #3: We have to discount or to reduce the real price in the market till we are able to sell this product in the market. That probably is going to happen in the service station case in April 1 or 2 and in the trading perhaps 10 or 15 days later.

Speaker #3: So that it's happening I mean it's a rule that is working every quarter but this quarter because the high increase of prices the effect of this let me say extra negative cost is included as a non transcended operation that is included in the central cost of the industrial area.

Josu Jon Imaz: That is happening. It's a rule that is working every quarter. This quarter, because the high increase of prices, the effect of this, let me say, extra negative cost is included as a non-transferred operation that is included in the central cost of the industrial area. Be sure that this 200, roughly speaking, EUR 250 million in March, EUR 250 million we take not only Spain, but also Peru, they are going to appear in Q2.

Speaker #3: Be sure that this 200 roughly speaking 250 million euros in March are 250 we take not only Spain but also Peru they are going to appear in the second quarter.

Josu Jon Imaz: Be sure that this 200, roughly speaking, EUR 250 million in March, EUR 250 million we take not only Spain, but also Peru, they are going to appear in Q2. If they don't appear in Q2, it's because at the end of June, we are still seeing, let me say, a higher increase of prices. Probably that is not going to happen. The central scenario is that this 200, EUR 250 million of negative central cost, plus an additional EUR 200 million that they comes from the lack in the pricing for the aviation sector, that you know that this industry is working with the prices of the month before, are also going to appear in the result of April.

Speaker #3: And if they don't appear in the second quarter it's because at the end of June we are still seeing let me say a higher increase of prices.

Josu Jon Imaz: If they don't appear in Q2, it's because at the end of June, we are still seeing, let me say, a higher increase of prices. Probably that is not going to happen. The central scenario is that this 200, EUR 250 million of negative central cost, plus an additional EUR 200 million that they comes from the lack in the pricing for the aviation sector, that you know that this industry is working with the prices of the month before, are also going to appear in the result of April.

Speaker #3: Probably that is not going to happen the central scenario is that this 200 250 million euros of negative central cost plus an additional 200 million euros that they come from the lag in the pricing for the aviation sector that you know that is industry is working with the prices of the month before are also going to appear in the result of April.

Speaker #3: And that is perhaps behind the comments that in a right way some of you did this morning saying that probably the industrial area result the adjusted net income was below the slightly below the expectation.

Josu Jon Imaz: That is perhaps behind The comments that in a right way some of you did this morning saying that probably the industrial area result, the adjusted net income was below the ex- or slightly below the expectation. If you add these EUR 400, 450 million that are going to appear in Q2, perhaps you have an answer to your reasonable doubt. Thank you, Chris.

Speaker #3: If you add these 400 450 million euros that are going to appear in the second quarter perhaps you have an answer to your reasonable doubt.

Speaker #3: Thank you Chris.

Speaker #1: That's great. Very helpful. Thank you.

Christopher Kuplent: That's great. Very helpful. Thank you.

Speaker #2: Thank you Chris. That was our last question today with this we will be bringing our first quarter conference call to an end. Thank you very much for your attendance.

Pablo Bannatyne: Thank you, Chris. That was our last question today. With this, we will be bringing our Q1 conference call to an end. Thank you very much for your attendance.

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