Repsol 2Q profit doubles but cash flow turns negative

: Crude oil, Electricity, Natural gas, Oil products
24/07/24

Spanish integrated Repsol's profit more than doubled on the year in the second quarter, as lower one-time losses and better results in the upstream and customer divisions more than offset a weaker refining performance.

But its cash flow turned negative as it completed the buyout of its UK joint venture with China's state-controlled Sinopec, raised investments and experienced weaker refining margins. Net debt was sharply higher, largely reflecting share buy-backs.

Repsol has said it will acquire and cancel a further 20mn of its own shares before the end of the year, which will probably further increase its debt. It completed a 40mn buy-back in the first half of the year.

Repsol's profit climbed to €657mn ($714mn) in April-June from €308mn a year earlier, when earnings were hit by a large provision against an arbitration ruling that obliged it to acquire Sinopec's stake in their UK joint venture. Excluding this and other special items, such as a near threefold reduction in the negative inventory effect to €85mn, Repsol's adjusted profit increased by 4pc on the year to €859mn.

Repsol confirmed the fall in refining margins and upstream production reported earlier in July. Liquids output increased by 3pc on the year to 214,000 b/d, and gas production fell by 4pc to 2.1bn ft³/d.

Adjusted upstream profit increased by 4pc on the year to €427mn. The higher crude production and a 13pc rise in realised prices to $78.6/bl more than offset lower gas production and prices, which fell by 6pc to $3.1/'000 ft³ over the same period.

Adjusted profit at Repsol's industrial division — which includes 1mn b/d of Spanish and Peruvian refining capacity, an olefins-focused petrochemicals division, and a gas and oil product trading business — was down by 16pc on the year at €288mn. Profit fell at the 117,000 b/d Pampilla refinery in Peru after a turnaround and weak refining margins, and there was lower income from gas trading. Spanish refining profit rose on a higher utilisation rate and gains in oil product trading.

Repsol's customer-focused division reported adjusted profit of €158mn in April-June, 7pc higher on the year thanks to higher retail electricity margins, a jump in sales from an expanded customer base, higher margins in aviation fuels and higher sales volumes in lubricants.

Repsol swung to a negative free cash flow, before shareholder remuneration and buy-backs, of €574mn in the second quarter, from a positive €392mn a year earlier. After shareholder remuneration, including the share buy-backs and dividends, Repsol had a negative cash position of €1.12bn compared with a positive €133mn a year earlier.

Repsol's net debt more than doubled to €4.595bn at the end of June from €2.096bn on 31 December 2023, reflecting the share buy-backs and new leases of equipment.

By Jonathan Gleave

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25/01/31

TTF front-month gas price highest since October 2023

London, 31 January (Argus) — The TTF front-month gas price on Thursday reached its highest for any day since 23 October 2023, driven by the forecast for cooler and stiller weather in northwest Europe, as well as buying in Ukraine and flooding in Malaysia. Argus assessed the benchmark TTF front-month at €51.81/MWh on Thursday, up from €51.25/MWh at the previous close. The contract had already jumped on Wednesday, rising by nearly €3/MWh from Tuesday. Traders pointed to recent forecasts for colder weather as key drivers, after February had been projected to be mild for much of January. ECMWF ensemble forecasts at midday on Wednesday showed much lower minimum temperatures across key population centres in northwest Europe than those from the previous day. The projection for overnight lows in Amsterdam fell most sharply, particularly from 7 February, dropping as much as 3°C below Tuesday's outlook and the 10-year average. Similarly large day-on-day drops in London, Essen and Berlin are forecast for the second week of February. Minimum temperature forecasts on Thursday edged slightly higher for most of these cities, but remained lower than they had on Tuesday. And forecasts were for a significant drop in wind generation, with load factors as low as 2pc over the coming weekend and on Monday in Germany. Gas-fired generation would probably have to ramp up to offset any up drop in wind output. Still weather pushing up power-sector gas demand and colder weather increasing heating demand would boost gas consumption. Weather aside, traders pointed to support from news that Ukraine's Naftogaz is seeking to import gas in February , having previously said it had no plans to import this winter. While it is unclear how much Naftogaz is seeking, several traders said it could be looking for up to 3bn m³ in preparation for the next heating season. Additionally, the breakaway Moldovan region of Transnistria is expected to start receiving 2mn-3mn m³/d from the beginning of February, although it is unclear which country will supply this. Purchases for Naftogaz and Transnistria will tighten supply in eastern Europe following the end of Russian gas transit through Ukraine, providing price support throughout Europe as firms in the east may be forced to source gas from the west. Traders also noted the risk of problems at Malaysia's 30mn t/yr Bintulu LNG export terminal as a result of flooding. Operator Petronas said operations had not been disrupted, and several vessels were loading at Bintulu on Thursday, although one analyst noted that it is difficult to judge the extent of any damages "until you have seen stable loadings excluding what was [already] in the tank". Another trader said if the previous outlook had been for stable production, the floods at least present a risk for LNG supply. This follows news earlier in the week that Indonesia might stop cargoes from being exported to cover shortfalls at home, which could further tighten the balance in Asia. Traders also pointed to continued price reaction to THE's plans to subsidise injections into German storage over summer — which many have taken to mean that storages are likely to be filled ‘at any cost' — as well as generally low inventories going into February across the EU. By Brendan A'Hearn Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Opec+ key panel meets in shadow of Trump

25/01/31

Opec+ key panel meets in shadow of Trump

Dubai, 31 January (Argus) — A group of key Opec+ ministers will hold their bi-monthly meeting next week to discuss the state of the market and, for the first time in four years, they will do so with an expectant and highly vocal US president watching from afar. The meeting of the Joint Ministerial Monitoring Committee (JMMC) on Monday, 3 February, will be its first since eight Opec+ members, led by Saudi Arabia, opted in December to again delay the gradual return of 2.2mn b/d of production to the market, this time by three months to April. They also agreed to slow the pace of the return, so the full amount would come back over 18 months rather than 12. The delay and slowdown were designed "to support market stability," the Opec secretariat said at the time, an implicit nod to an uncertain demand picture and projections of a looming supply surplus. One month on the market landscape looks much the same, with the IEA most recently estimating a 720,000 b/d excess in 2025 even if Opec+ does not begin unwinding its cuts. With the eight not due to begin returning any output for two months, little was expected of the 3 February meeting beyond a swift thumbs-up to the current policy. The JMMC remit is limited to making recommendations, with policy decisions made at full meetings of the Opec+ group — the next is scheduled for 28 May. But new US President Donald Trump, just three days into his new term, appeared to throw those expectations into disarray. "I'm… going to ask Saudi Arabia and Opec to bring down the cost of oil," Trump told the World Economic Forum in Davos on 23 January, something they could only realistically do by raising production. "I'm surprised they didn't [do that] before the [US] election," Trump said. Déjà vu all over again With that, Trump reverted to his tactic of negotiating with, and putting pressure on, the producer group through the media ꟷ a regular feature of his first term, albeit one that had mixed results. "Historically, when Trump speaks, [Opec] will hear him out. And more times than not, it will be discussed internally," a delegate source said. "That is the reality." Kazakhstan's energy minister Almasadam Satkaliev said as much this week, confirming the group "will attempt to reach a common position" on Trump's call. But some delegates said that listening to someone and acting on that are different things, and they stressed the group will ultimately do what is in the best interest of the oil market and of the collective. Opec+ "remains committed to its strategy, which is based on market fundamentals, rather than external political statements… [or] short-term remarks," one said. Another echoed this, saying Opec+ will always lean towards keeping the oil market balanced "regardless of what Trump says." A fourth delegate did say however that the group may ultimately be pressured into "compromising" with Trump, particularly if the US president makes good on his campaign promises to tighten the sanctions screws on the likes of Iran and Venezuela, which could in turn hit oil supply. "In this context, I feel Opec may have no choice but to compromise with Trump," the delegate said. That the group of eight plans to raise output steadily from the second quarter should keep Trump at bay for now, particularly with global crude prices below $80/bl. But if demand concerns persist, and spark debate among the eight about whether they should again delay the unwind, the Trump factor could tip the scales for proceeding. By Nader Itayim, Bachar Halabi and Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump tariffs most likely to bite US east coast market

25/01/31

Trump tariffs most likely to bite US east coast market

Houston, 30 January (Argus) — The prospect of the US imposing 25pc tariffs on imports from Canada and Mexico would most likely have the greatest impact on US Atlantic coast motor fuel markets. President Donald Trump repeated plans to impose the tariffs this weekend , although he said crude may be exempted from the plan. But a crude exemption would not matter in the case of Irving Oil's 320,000 b/d Saint John, New Brunswick, refinery, which is a regular source of gasoline and diesel to the US' upper Atlantic coast markets. The US imported roughly 595,000 b/d of oil products from Canada in October, according to the latest Energy Information Administration data, most of it bound for the Atlantic coast. New York Harbor spot market gasoline prices are currently around $2/USG, meaning a 25pc tariff on Canadian imports could up that price by as much as 50¢/USG. This could prompt buyers in New England or other East coast markets to look to other supply options. Canadian refiners could also start sending their product to west Africa or Latin America. In the US midcontinent, as much as 4.25mn b/d of US midcontinent refining capacity relies on heavy sour Canadian crudes for up to 70pc of their supplies. In theory, US midcontinent refiners could run lighter, US-produced grades. But there are relatively few pipelines serving the midcontinent with such grades and they would be much less profitable to refine compared to a pre-tariff WCS barrel. Chicago gasoline spot prices were just under $2/USG today, so a 25pc tariffs would also add 50¢/USG to prices. Chicago Buckeye Complex ultra low sulphur diesel (ULSD) prices were at $2.18/USG today while West Shore/Badger ULSD prices below that at $2.15/USG. Imports of Mexican refined products should be less of an issue as Mexico sent only 180,000 b/d of products to the US in October, according to the latest data. Counter tariffs on crude and oil products by Mexico or Canada would also be an issue for US refiners and blenders. US refiner Valero said today that the tariffs could cause a 10pc cut in refinery runs depending on how long the tariffs go and how fast they are implemented. By Dave Ruisard and Eunice Bridges Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Tariffs may throw Canada-US crude flows into turmoil

25/01/30

Tariffs may throw Canada-US crude flows into turmoil

Calgary, 30 January (Argus) — Impending US tariffs on Canadian and Mexican imports could mean significant changes for millions of barrels of daily cross-border crude flows between the countries. President Donald Trump on Thursday repeated his threat to impose 25pc tariffs on all trade with Canada and Mexico effective 1 February. Trump said the US "... may or may not" exclude oil" from the tariffs, depending on crude price levels. That decision could come later today. Canadian officials have also weighed targeted retaliatory tariffs on the US and even withholding crude outright. A long history of crude and refined products flows between the three countries under well-established trade agreements has tightly bound together operations on all sides. This means adaptations on short notice could be difficult, leading to higher road fuel prices for some US drivers and businesses. February volumes have already been purchased, but not yet moved across the border, so importers could still be on the hook for the added tax if tariffs are imposed on 1 February. Since Trump's initial pronouncement weeks ago, market participants on both sides of the border have been trying to determine potential impacts on movements and price. The Canadian trade cycle for March starts 3 February, with mixed opinions leading to volatility in the financial market for heavy Western Canadian Select (WCS) in Hardisty, Alberta. Thursday trading put March WCS at a $14.25-13.75/bl discount to the CMA Nymex WTI, after averaging a $12.25/bl discount to the benchmark during the February trade cycle. About 80pc of Canada's 5mn b/d of crude production flows downstream to US refiners, with US imports of Canadian crude reaching a record high of 4.42mn b/d in the week ending 3 January, according to Energy Information Administration (EIA) data. The single largest conduit is Enbridge's 3mn b/d Mainline system, which reaches into Chicago to serve midcontinent refiners and hands off crude to other lines that go to the US Gulf coast for refining or export. South Bow's 622,000 b/d Keystone pipeline also serves US markets via a more westerly route. Two-way dependence Alberta oil sands producers are highly dependent on those US customers, but the dependence is two-way, as 4.25mn b/d of US midcontinent refining capacity relies on heavy sour Canadian crudes for up to 70pc of their supplies. In theory, US midcontinent refiners could run lighter, US-produced grades. But there are relatively few pipelines serving the midcontinent with such grades and those grades would be much less profitable than using a pre-tariff WCS barrel. Canadian heavy crudes already have become less price advantaged relative to lighter grades in the wake of the startup of 590,000 b/d Trans Mountain Expansion (TMX) pipeline in May 2024 sending crude to Canada's west coast. The Argus WCS Cushing discount to the CMA Nymex averaged about $4.90/bl for February delivery, down from about $8/bl during the February 2024 trade month. Some market participants have already seen an uptick in demand for Canadian crude amid the uncertain impact of US import tariffs. US Gulf coast flows Canadian crude is also suited for many refineries on the US Gulf coast, but these refiners are less reliant on Canadian imports because of the region's access to alternative Latin American and Middle Eastern waterborne heavy sour supplies. Currently, Canadian crude makes up just over a quarter of crude imports to the US Gulf coast, with domestic US crude production encompassing a large majority of the refinery feedstock in the region. Canadian crude values at the Texas Gulf coast have also risen over the last year. The Argus WCS Houston discount to the CMA Nymex is roughly $4/bl for February delivery this year, tightening from over $7/bl a year earlier. Higher values have likely led some refineries to shift to lighter, sweeter crudes already as the price advantage for heavies decreased. But recent refinery operational issues and the pending closure of LyondellBassell's 268,000 b/d Houston refinery is weighing on Houston-area prices lately. West coast also has options On the US west coast, TMX's startup increased imports of Canadian grades in the region. Since May, west coast refiners have imported about 170,000 b/d of crude from Vancouver's Westridge Marine terminal, up from just under 40,000 b/d a year earlier according to data analytics firm Vortexa. But tariffs would make TMX cargoes less affordable from Vancouver and decrease its competitiveness relative to heavy sour alternatives. This could allow demand for Latin American medium and heavy sour crudes such as Napo and Oriente to recover after being displaced by cheaper and more convenient TMX supplies. Argus' fob Vancouver Cold Lake assessment is averaging a roughly $7.60/bl discount to Ice Brent during the January calendar month so far, narrower than the $8.70-$8.80/bl discounts to the international benchmark for November and December. Notwithstanding potential Canadian retaliatory tariffs, market participants also lack clarity on how Canadian imports of US diluent will be handled under potential US import tariffs once blended with Albertan bitumen and re-exported to US refiners. Although a majority of the diluent used for blending in Alberta is domestically sourced, considerable condensate demand is satisfied via Pembina's 110,000 b/d Cochin and Enbridge's 180,000 b/d Southern Lights pipelines, both of which transport condensate from Illinois to the Edmonton region. By Kyle Tsang and Amanda Smith Major Canada-to-US crude flows Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump to impose 25pc tariffs on Canada, Mexico

25/01/30

Trump to impose 25pc tariffs on Canada, Mexico

Washington, 30 January (Argus) — President Donald Trump said today he will proceed with plans to impose tariffs on imports from Canada and Mexico on 1 February and explicitly referenced their potential application to crude imports. "I'll be putting the tariff of 25pc on Canada, and separately, 25pc on Mexico," Trump told reporters at the White House. "We will really have to do that, because we have very big deficits with those countries. Those tariffs may or may not rise with time." Pressed to explain if his tariffs may exempt crude imports, Trump said he was not inclined to exclude them but has yet to make a decision. "We may or may not" exclude oil, Trump said. "It depends on what the price is, if the oil is properly priced, if they treat us properly." Trump added: "We're going to make that determination, probably tonight, on oil." The looming face-off on tariffs has unnerved US oil producers and refiners, which are warning of severe impacts to the integrated North American energy markets if taxes are imposed on flows from Canada and Mexico to the US. Industry trade group the American Petroleum Institute has lobbied the administration to exclude crude from tariffs. US refiner Valero said today that a 25pc tariff on Canadian imports would force it to find alternative sources of crude, potentially resulting in a 10pc cut to throughputs. Valero's refining footprint in the US Gulf coast allows it to source feedstocks from around the world, but there is a point where a limit on heavy feedstocks like those from Canada could affect production of refined products, said chief operating officer Gary Simmons. Nearly all of Mexico's roughly 500,000 b/d of crude shipments to the US in January-November 2024 were waterborne cargoes sent to US Gulf coast refiners. Those shipments in the future could be diverted to Asia or Europe. Canadian producers have much less flexibility, as more than 4mn b/d of Canada's exports are wholly dependent on pipeline routes to and through the US. Canadian crude that flows through the US for export from Gulf coast ports would be exempt from tariffs under current trade rules, providing another potential outlet for Alberta producers — unless Trump's potential executive action on Canada tariffs eliminates that loophole. Trump frequently makes the case that foreign suppliers are solely responsible for paying tariffs. In reality, US importers pay the tariffs, and such costs are typically passed on to consumers. In the case of Canadian and Mexican crude, the US refiners that buy from those countries would pay a tax on the value of crude imports. Whether the price of Canadian crude falls by a sufficient amount to offset the 25pc tariff would depend on the market power of individual US refiners and Canadian producers, as well as actions by the Alberta government, according to a recent report by the Congressional Research Service. US refineries with access to alternative suppliers could source crude from non-Canadian producers, potentially keeping their additional costs below 25pc. Conversely, import reductions could pressure prices for Western Canadian Select (WCS) crude. In turn, Alberta could reimpose a production curtailment policy in a bid to narrow WCS discounts, the report said. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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