Repsol says it is making a “dramatic” cut to its renewable hydrogen investments and 2030 capacity target after being unconvinced about development of the market.
The company last year paused projects to make green hydrogen — produced using renewable electricity through an electrolyzer — in Spain, blaming a windfall tax on the energy sector. The expiry of the levy at the end of 2024 paved the way for a restart.
However, even without the tax, Repsol is still rowing back. “We are adjusting our road map due to a delay in the market development and the evolution of the regulatory framework and public funding,” CEO Josu Jon Imaz said during an earnings call on Thursday.
Repsol still plans to take final investment decisions (FIDs) on three electrolyzers in Spain this year — at its refining sites in Cartagena, Bilbao and Tarragona — which have all been selected for public funding.
But instead of a previous goal of having 1.9 gigawatts of renewable hydrogen capacity by the end of the decade, Imaz said the actual figure would end up being 600-700 megawatts. That includes 350 MW produced from biomethane via steam methane reforming.
At the start of the decade, Repsol had talked of having up to 2.4 GW of capacity by 2030.
“We are prioritizing returns and balancing the capital allocation over any capacity target,” Imaz said.
The hydrogen Repsol does produce will be used in its own refineries. Imaz said he doubted the ability of the steel, paper, cement and chemical sectors to substitute their natural gas usage with hydrogen.
“For that reason, we are phasing down in a dramatic way our hydrogen investment and our hydrogen expectation for 2030,” he told analysts, even saying Repsol “had some room” to delay the three FIDs if necessary.
Imaz’s words echoed his comments on Repsol’s low-carbon generation ambitions a year ago when he softened a 2030 renewable power capacity target, putting financial returns over megawatts.
On Thursday, the CEO said Repsol would achieve a maximum of 9 GW of operating renewable capacity by 2027 — the lower end of its target range for that year.
Accounting for the cuts in hydrogen and renewable spending, Repsol expects net capital expenditure of €3.5 billion-€4 billion ($3.7 billion-$3.9 billion) this year, down from €5.7 billion in 2024.
Sharing Success
Investors lapped up Repsol’s stronger-than-expected fourth-quarter performance as well as a pledge to return 30%-35% of operating cash flow to shareholders this year — higher than the 25%-35% stipulated range — including a minimum share buyback of €700 million.
The company’s Madrid-traded shares leapt more than 7% on Thursday to as much as €13.07, the highest in over six months.
Repsol had been planning a separate listing for its US upstream business but has more recently been referring to a “liquidity event” for the unit, which could happen by the first quarter of 2026.
Repsol prefers this term because a reverse takeover and a private placement are options as well as an initial public offering, Imaz explained.
Repsol sold a 25% stake in its upstream business to US private equity firm EIG in 2022. It also divested 25% of its renewables business, and Imaz said discussions with another potential investor in this unit — understood to be Saudi Aramco — remain active.
Repsol is guiding for 530,000-550,000 barrels of oil equivalent per day of production in 2025, down from 571,000 boe/d last year.
But the company expects to be producing more in 2026 and 2027 thanks to the start-up of its Pikka oil project in Alaska at the end of 2025 — which Imaz said would generate $40 of operating cash flow per barrel — as well as increased oil output from Libya.
Trump Impact
Repsol’s CEO was also positive on the impact of US President Donald Trump’s energy policies on the outlook for US natural gas.
The Trump administration is “going to be very positive for American gas” because new LNG export licenses will increase demand for US supplies, Imaz said.
Trump fully lifted former US President Joe Biden’s pause on new LNG exports when he took office in January, and the US Department of Energy granted its first such approval on Feb. 14.
Since these volumes would make additional LNG available on the global market, Europe — and its industrial sectors — would benefit from lower LNG prices, he added.
