Portugal's integrated Galp expects to grow its working interest oil and gas production by 25pc to 2025 while over the same period cutting capital expenditure (capex) and generating over €6bn of operating cash flow at its upstream division.
Galp's forecast, to increase production to 156,000-167,000 b/d of oil equivalent (boe/d) in 2025 from an expected 125,000-135,000 boe/d this year, implies growth of 5-6pc/yr, indicating that output will have to accelerate sharply beyond that to achieve the 10pc/yr increase to 2030 that it forecast last year.
The firm has cut annual capex by 20pc compared with its previous plan, and now sees investment of €800mn-€1.0bn/yr ($978mn-$1.2bn) in 2021-25. Its upstream division will account for 40pc of this, compared with 50pc previously, with Galp planning a shift to becoming more of a low-carbon energy supplier, in line with many of its European peers.
Galp will this year maintain the planned capex ceiling of €500mn-700mn it introduced in 2020 in response to the Covid-19 pandemic.
Its production growth will be centred in Brazil, where Galp has just taken a final investment decision (FID) with its partners to develop the offshore Bacalhau project. It expects first oil there in 2024 and 40,000 boe/d net when production reaches plateau.
Galp expects its downstream business to continue to be a major growth engine to 2025, with expected refining margins of around $4.0-5.0/bl during the period compared with the $2.0/bl it reported in the first quarter of this year, and earnings before interest, taxes, depreciation and amortisation (Ebitda) at the business increasing to €400mn in 2025 from an expected €100mn in 2021.
The firm expects its overall Ebitda to grow to more than €3.0bn in 2025 from the more-than €2.0bn it expects to generate this year, with upstream accounting for a third of this.

