Spain's integrated Repsol said today that an extension of the country's windfall tax could threaten its investments.
The tax, 1.2pc of energy firms' sales, was to be charged against 2022 and 2023 revenues. But earlier this week Spain's ruling PSOE party agreed to an extension into 2024 with the Sumar coalition of far-left and environmental parties including the Socialist's coalition partners Podemos. An extension of the tax was among the conditions Sumar set in order to form an alliance to break the political deadlock in place since the elections on 23 July.
The extension "punishes companies that, like Repsol, are investing in industrial assets," the company said, adding that a lack of regulatory and fiscal stability "could affect the company's future industrial projects in the country." The continuation of the tax is not yet certain. A PSOE-Sumar coalition needs support from Basque and Catalan nationalist parties to form a government, but this looks likely after a failure of centre and far-right parties to win support from the regional independence parties.
Repsol's chief executive Josu Jon Imaz said in February that the company expects to pay about €450mn in windfall taxes against last years results in 2023, a small slice of its €10.89bn global tax bill in the first nine months of the year of which around 70pc was paid in Spain. Repsol is in the process of reforming its five Spanish refineries with the introduction of second-generation biofuels and hydrogen production, and plans to invest €19.3bn globally in 2021-25.
Also today Repsol said its profit doubled year on year to €1.37bn in the July-September period. This was up more than fourfold from April-June, reflecting higher values for crude and product inventories on the quarter, a reversal of impairments and lower provisioning.
Excluding these one-time items, adjusted CCS (current cost of supply) profit increased by 33pc on the quarter to €1.1bn. This was down by 27pc year on year after a combined improvement in the industrial and client divisions, largely refining and marketing of oil products, was offset by weaker upstream earnings.
Oil and gas production of 596,000 b/d of oil equivalent (boe/d), up by 9pc from a year earlier, was broadly in line with provisional figures released earlier in October, but failed to offset an 11pc fall in average sale prices for the firm's crude and a 60pc fall in sale prices for its gas. The latter accounts for over two-thirds of its total production.
Adjusted CCS earnings at Repsol's upstream division fell by 55pc on the year to €341mn in July-September. Taxes on operating profit more than doubled from the prior quarter to €361mn. Adjusted profit at Repsol's core industrial division was down by 17pc year on year at €550mn.
Net debt increased to €1.86bn as of 30 September, from €797mn at 30 June, reflecting share buybacks, a settlement referring to a long-standing legal battle in the US and the September instalment of the Spanish windfall energy tax against 2022 revenues.
