Galp targets 10% annual upstream growth through 2030

Barcelona — Portugal's Galp said it targets a compounded annual growth rate of 10% in upstream working interest production through 2030 from its assets that are already in production or development.

The company reported full-year upstream average working interest production of 121,800 b/d of oil equivalent in 2019, consisting of 108,300 boe/d in Brazil, up 9% year on year, and 11,700 boe/d in Angola, up 72% year on year.

The company's new targets would mean production of around 187,000 boe/d by 2025, for which it has a targeted 9% CAGR rate, and 316,000 boe/d by 2030.

Traditionally a refiner, Galp's upstream production has soared by tenfold over the last decade, supported by stakes in Brazil's major subsalt offshore oil boom. Galp's offshore projects in Brazil include the stakes in the prolific Santos basin, such as the massive Lula and Iracema developments. Much of its future growth is expected to come from further planned development phases at its Brazilian assets.

In its newly created refining and midstream unit, the company said it intends to optimize its refining system and build a strong supply and trading portfolio, without adding details.

The company saw its refining margin shrink to $3.10/b in 2019 from $5.00/b in 2018, reflecting a volatile global environment and operational restrictions in the refining system during the period mostly in Q1 and Q3, it said.

Refining costs increased $0.30/boe year on year to $2.90/boe as a result and overall throughput fell to 96.0 million boe from 100.7 million boe in 2018.

Crude oil accounted for 86% of raw materials processed in 2019, of which 87% was medium and heavy crudes.

Middle distillates (diesel and jet) accounted for 46% of production, gasoline for 23% and fuel oil for 16%. Consumption and losses accounted for 8% of raw materials processed.

In its other businesses, Galp said it will push a new multi-service and multi-product offer, leveraging a strong client and asset base in Iberia and Africa. This will be aided by a growing renewable portfolio, which was boosted by the acquisition of a solar PV pipeline in Spain this year.

Renewables push

Galp said it will divert 10% - 15% of its capital expenditure to renewables and is targeting 3.3 GW of installed capacity in Iberia by 2023 (from 914 MW already in operation) and targeting a longer-term 10 GW installed capacity by 2030.

For the 2020-22 period, the company said it has earmarked between Eur1 billion ($1.08 billion) and Eur1.2 billion per year for capex, which will be front-loaded.

During 2019, capex reached Eur856 million. Exploration and production accounted for 70% of that, with development and production activities accounting for 81% of total investment in the upstream.

Exploration capex was mainly related to works in the Bacalhau area and the acquisition of the final 3% stake in BM-S-8 in Brazil.

In Q4 upstream capex was mostly focused on Brazil's BM-S-11 and execution of Mozambique LNG projects Corl and Rovuma, Galp said. Investments in the downstream were mainly focused on the improvement of refining energy efficiency as well as to the renewal of the retail network.