Josu Jon Imaz acknowledges the risk of fuel shortages in the EU and assures that Spain is prepared

Good morning and thank you. I want to start by thanking Pedro and Cruz for this invitation. Sixth year in a row. For me it is an honor to be here, and just 10 seconds, Pedro, to thank you for your speech, thank you for your courage, thank you for your commitment and the role you play as a catalyst for this project of all of us here for a modern, competitive, innovative, open Spain, a questioned Europe, and what is also very brave today, and I absolutely share a clear commitment to Atlanticism. I know these are not the best times to defend it, but I think that betting on those of us who believe in democracy in this world is very important. Thank you.

Well, the figures you gave, Arturo, are all correct, but I want to start by saying that it's not that we are going to reach $150 as a hypothesis, we are practically there, because here we are seeing a decoupling between the financial world and the physical world. And those figures are for Brent, and Brent is like a theoretical crude that is practically non-existent from the North Sea. But last Thursday, the average of the physical transactions that were made, for those who need oil in three weeks, in a month, or in five weeks, those who need it now, we go. Last Thursday, an average of $132 per barrel was already done, last week there were many transactions at $140 per barrel. And what happens is that if I used to buy a crude, the reference to Brent was Brent minus 3, Brent minus 4, now it is being bought, especially in Asia, at Brent plus 20, plus 25. If we add that kerosene, for example, used to have a spread, a delta, a premium over Brent, well in December, January, it could be $60, $80, so we have been many days at Brent plus $90 per barrel, diesel at Brent plus $60, that is, kerosene has practically multiplied its price by 2.5, and diesel in international markets, for those looking for real physical product, beyond the financial markets, where today someone tweets and they drop 15%, another tweets and they rise 15%. Physical transactions are very strained.

Let's see, in a world of uncertainty like the one we are in, I don't dare to answer categorically, I don't know what would give peace of mind to everyone, including Repsol's communications department. [laughter] But well, later when they call me from the communications department to scold me, but I think we all have to be aware that we are living in uncharted territory. I mean, three months ago none of us here would have anticipated the situation we are living through. In this sense, after the uncertainty generated by my first comment, I do want to add a reflection of some calm. The best prepared country in Europe to face the situation we are in is Spain. First, because we have large and good refineries and good companies, and I will start by speaking well of my competitors, a BP, a Total, a Repsol with good refineries, with a high degree of conversion, that can largely supply the Spanish market, that made investments and did our homework on time. We also have a huge advantage: 60% of the oil that arrives in Spain comes from America, from the entire American continent, and practically 30% comes from Africa, North Africa and the West African coast, so only 6% or 7% comes from the Middle East, very little. Therefore, we have a greater supply advantage than others, and because we have very good refineries with a high degree of conversion, and I won't go into technicalities, we are capable of processing 60 different types of crude every year. Therefore, it is true that we cannot rule out that in the future there may be strong competition for crude, as is already beginning in Asia and some Asian countries. This is very different, it has nothing to do with the Ukrainian crisis, with the invasion of Ukraine. In the invasion of Ukraine, not a single barrel, not kerosene or diesel from Russia was ever missing. They were simply diverted to other environments. They went to India, they went to China, but the physical product was not lacking. Here the physical product is lacking. There are 15 million barrels, which is practically 20% of what is traded by ship in the world of crude that are no longer leaving from Iran. There may be 6 or 7 million that can leave via pipelines, either through Al Fujairah in the Emirates or through Yanbu on the Red Sea, on the other side of Saudi Arabia. 45% of the kerosene that Europe receives comes from the Persian Gulf, and all of this is not leaving. And if the conflict ended tomorrow, if everything stabilizes tomorrow, we will need many weeks for that product to reach the markets. So I anticipate, in the best case that everything is resolved tomorrow, about 10, 12, 14, 15 weeks that will not be easy from the point of view of prices and supply. And of course, if this continues, to the extent that there may be a part of demand that is very inelastic, that is, that destruction with price is not so evident, we can enter uncharted territories. Uncertainty, because none of us know what is going to happen. And if anyone knows, please raise your hand. Raise your hand and tell us. And tell us and come and I'll sit down. [laughter]

No, let's see, we have to move from words to action at some point. Enrique Coleta has spoken to us and I think the Leta report is magnificent. The Draghi report from July-September 2024 is magnificent. I say, 'Listen, we already know the diagnosis. Apply it. Why don't we apply everything it says?' And I'm going to give an example resulting from the fact that in Spain we are more protected because we have better refining. What have we done in Europe since the war in Ukraine with refining? Since the tensions began in the war in Ukraine, 11 of the 81 refineries that existed at that time have been closed in Europe. Since the financial crisis of 2008 began, 30 refineries have been closed in Europe out of the 100 that existed. What is happening? We have regulations that are suffocating European refining and we need it. So now, well, in the ideas we all must have, especially from the institutions, and I understand political representatives, their role is not easy now, especially because there is a lot of social tension, people are worried, people are worried about inflation, people see prices rising. And that in a society like today's of immediate responses, leads the politician to seek, to a certain extent, immediate responses to this situation that do not exist. I would say, let's bet on the future, and the future is betting. Look, renewables are absolutely necessary. We have to continue migrating to a more renewable system, the strategic autonomy of having renewable generation in our country, which has been done very well, but I think we all have to have an exercise in transparency and sincerity. We are going to coexist for the next 30, 40 years with oil and gas. Today, in the Spanish primary mix, more than 65% of the energy we need is oil and gas. Why don't we bet on having them and processing them? I still remember the current spokesperson of the Socialist Party in the Congress of Deputies, Pachi López, when he was the lehendakari and announced the discovery of Gran Enara from Dallas, a local gas field that could supply the gas needed in Spain for 6 years. We have quite a few of those, and we have a law approved in 2021 that prohibits exploring and producing hydrocarbons in Spain. Listen, is this sensible with the Persian Gulf? Is it sensible to say that refineries are part of the past? Is it sensible that when European refineries have difficulty competing, when their profitability is below the cost of capital, otherwise 11 refineries would not have closed in the last 5 years in Europe. Let's start thinking about what we do with refineries at a time or in a few weeks when they may do better than in the rest of recent years. I understand the reaction of political representatives because their position is very difficult with the society we have today. And also, look, Arturo, if you allow me, I trust you. I think the responses that will be given to this crisis situation will be sensible because we are all committed to the importance of guaranteeing supply. And I can tell you, look, Repsol today has only one obsession: to guarantee that in the coming months there is no shortage of product in Spain. We know the dependence of the Spanish economy on tourism. It is key, we cannot fail. This month of March, Repsol has increased its stock, its inventories, by 100 million euros. We have invested an additional 12 million euros in working capital because we do not want to experience that shortage. We are investing in Coruña, we are investing these weeks in Petronor so that we can transform products so that we have the capacity to reach the summer with 15% or 20% more kerosene than we produce now. Responsibility absolutely leads us to try, within the difficulty, to do everything possible to guarantee that we have product in Spain in the coming months. I think that is the challenge, and I must also say, from the conversations I have had with the administration, that on the part of the government that is also the absolute priority, and I am convinced that we will have all the support.

Well, I think the important thing about Venezuela is that a time has opened since January for a better Venezuela, better politically. I said a time has opened, many things remain, but a time has opened for a better Venezuela, for a Venezuela with greater economic development, greater social development. And the country basically has only one source of income: hydrocarbons. Therefore, the responsibility of those of us there is to increase production, to generate more tax revenue, to make the country have resources for its economic and social development. And that's what we are doing. We have had absolute support from the United States government. About five or six weeks ago we received all the licenses to be able to operate in dollars, to hire American companies that we need to move openly in that environment. We have everything in that sense and all the support from the American administration. Last week we signed a relevant gas agreement in which we are also going to bet on increasing natural gas production in Venezuela with the Venezuelan government, and that guarantees 50% of Venezuelan electricity production. Venezuela needs electricity now more than ever. We are guaranteeing electricity thanks to our gas production, and in the coming days we are going to take direct control of the oil operations that will allow us to fulfill that commitment we have made publicly and that we believe is feasible: to increase Venezuela's oil production by 50%, affecting the 45,000 gross barrels per day that Repsol produces, and triple production in 3 years. Today, among Western companies, the first oil producer in Venezuela is Chevron, and the second is Repsol. This means we have an important position, not only because we have suffered this position for many years, we have a responsibility to contribute to a better Venezuela.

Well, we have a history of more than two decades in the United States. First, because we have oil and gas resources in the United States. We are also investing in renewables and continue to do so in the United States, also because it is an environment from a regulatory point of view with very positive fiscal support for investing in the United States, and in addition to this, because we have growth. In the coming weeks we are going to start the operation of a project that has taken us years, the Pikka project in Alaska, discovered by Repsol. It is light oil that will change the history of oil in Alaska after many years of decline, increasing production. We are large gas producers in the United States. Gas that in large part comes to Europe. That is, we, for example, Repsol, with the contracts we have in the United States, supply all our refineries and all our chemical complexes with gas in Spain. I believe that US gas and fracking saved Europe in the Ukrainian gas crisis. I think this must be recognized, it is an important bet, and in that sense we continue working in this direction, investing heavily. I don't want to forget Spain and Portugal, where we invest more than 50% of Repsol's investments in the Iberian Peninsula, but 35% we have in the United States. Therefore, we trust Spain, we trust, of course, Portugal, and we trust the United States, which is a world that is making a very interesting energy bet, which sometimes from Europe we dismiss with a wave of the hand, right? Look, the United States is growing economically in an important way. When we look at what we have to do in Europe and it coincides with the Wake Up Europe that Pedro and Cruz lead, we have to think that 15 years ago Europe and the United States were approximately 21% or 22% of world GDP. Today the United States is 26% and we are 16%. We have done something wrong, as my good friend Fede would say, well, I don't know if this is an opportunity to grow, but we have had a problem, Fede. Secondly, the United States has enough energy. One can say, 'Man, CO2 is important.' Of course it is important. Let's take the data, less narrative and more data. Since 2010, per unit of GDP, the American economy has reduced its CO2 emissions more than Europe. If we look at absolute values, not quite. But if we look per unit of GDP generated, the United States has decarbonized more than Europe. And also with another component: in Europe, an important part of our decarbonization is done by closing industries that we make uncompetitive due to our environmental regulations, which move to India, Turkey, other places, emit more CO2 there, and then we import it, so we sweep it under the rug and don't count it. Therefore, I think the United States is a world that we have to follow closely in energy, and as Pedro said in his magnificent speech and as you said recently, I think it was a roar of a lion in Spanish: better with weak and imperfect democracies than with autocracies. Therefore, let's seek what unites us with these democracies, which are very criticizable, we are very weak, and we are also at odds, but what unites us is the most important: values, democracy, and freedom.

Thank you very much.