Cepsa 2020 upstream oil output falls 18% on OPEC+ cuts

Spain-based integrated energy group Cepsa's upstream production fell by 18% to 75,800 b/d in 2020 after OPEC+ cuts affected output in Algeria and Abu Dhabi, the company said March 5.

Fourth-quarter 2020 output was roughly in line, declining 19% year on year to 72,700 b/d, the company said, without providing a breakdown. Natural decline at fields in South America and Southeast Asia was also a factor, Cepsa said.

Prior to the cuts, the breakdown of Cepsa's production was around 50% for Algeria, 32% for Abu Dhabi, 14% for Latin America, and 4% for other regions.

Despite the reduced production and a 35% drop in its realized crude price to $64/b in 2020, the upstream unit remained in profit, albeit with a 52% drop in EBITDA to Eur458 million ($545 million).

The downstream unit, by contrast, only just turned a profit, with an EBITDA of Eur10 million versus Eur433 million in 2019.

Spain has been among the European countries worst-hit by the COVID-19 pandemic, necessitating extended lockdowns.

"The renewed travel restrictions imposed to fight a third wave of COVID-19 infections had a negative impact on sales volumes in the marketing business," Cepsa said.

"Demand for oil products in Iberia continues to be negatively impacted by the effects of COVID-19. In January, new travel restrictions came into force in both Spain and Portugal, which has translated into a decrease of 20% in the sales volumes of the marketing business versus December," the company said.

One of the two distillation units at the 220,000 b/d La Rabida refinery has been taken offline to await a rebound in the market while the 240,000 b/d San Roque refinery is running as planned.

Cepsa's refinery throughput was reduced by 10% in 2020 to 19.3 million mt (387,000 b/d), or a 78% utilization rate, the company said.

This contraction was accompanied by a 42% narrowing of the refining margin to $2.50/b, although this full-year average was much better than a decade-long low in the third quarter of 50 cents/b.

Sales volume of refined products was resilient, dropping just 4% in the full year to 14.8 million mt, partly buoyed by chemical and asphalt sales.