Letter from
the Chairman

The energy transition entails evolving towards
a more sustainable energy future
capable of preserving the planet
Antonio Brufau Niubó

Dear shareholders,

As you have seen over the last year, the future of energy is at the center of public debate. I would like to take this opportunity to share our vision about the energy transition with you and, in particular, explain Repsol's contribution to this common goal.

Perhaps some of you may be asking yourselves why it is necessary to review an energy model that has led society to levels of progress and welfare, which were unimaginable just a century ago. The reason is that, among several factors, intense human activity is causing different adverse phenomena, such as the decline in air quality and global warming.

Our mission is to find new ways to reconcile taking care of the planet with the development of economic activities, since the latter makes it possible to generate wealth and improve the quality of people's life. Over the next few years, the world will require even more energy to cover the needs of its growing population, which will exceed 9 billion people by 2050, and we must be able to provide it in a manner that is efficient and environmentally sustainable.

As a global company, Repsol became a committed player in this energy transition long ago, a process which, in our opinion, entails evolving towards a more sustainable energy future compatible with preserving the planet.

With this aim in mind, our company continues to back energy efficiency in all its endeavors and support its core business, while it keeps developing low-emission businesses.

For example, through technological innovations, we are improving the efficiency of our industrial processes. Thanks to the work of people at Repsol, between 2006 and 2018, we have reduced our emissions by 4.9 million tons of CO2 per year and, by 2025, we aim to reduce them by an additional three million tons.

The best example of the company's commitment to the energy transition can be found in our Strategic Plan updated, approved in June 2018, where we set our sights on natural gas as a key energy player in the coming decades, and on developing low-emission businesses.

Natural gas in as affordable source of energy, sufficiently abundant and with lower emissions, which may become essential to electricity generation. According to the International Energy Agency, substituting coal with gas in electricity generation would reduce emissions by 50% for each kilowatt produced. Furthermore, it is the perfect way to solve the problems currently presented by renewable energy sources all over the world, namely their storage or the fact that they are intermittent energy sources.

Regarding development of low-emission businesses, we have acquired Viesgo's unregulated low-emission generation businesses and its electricity and gas retail business. Once this acquisition was completed, we launched our new subsidiary, Repsol Electricidad y Gas, which already boasts a generation capacity of 2,952 megawatts and 830,000 customers.

As part of this evolution of our company, we are also providing new solutions to sectors we have traditionally been leaders in –such as mobility– participating in its change process from different perspectives. Currently, we remain at the forefront of mobility energy supply in Spain and, in the future, we will be involved with any type of energy present on the market, adapting to our customers' and society's needs and requirements.

Our company is continuously innovating to offer the most advanced fuels, with formulations that improve engine efficiency and reduce emissions. At the same time, we are leaders in the development of low-emission fuels such as AutoGas and participate in the largest public electrical vehicle-charging network in Spain.

Beyond the use of new energy sources, at Repsol we consider that improving mobility inescapably requires renewing the vehicle fleet, especially in a country like Spain, which has one of the oldest fleets in Europe, with each vehicle averaging more than 12 years.

The latest-generation engines have made it possible to reduce polluting emissions by 90% over the last 25 years, for both gasoline and diesel. To better understand the magnitude of such improvements, we could state as an example that ten cars from the year 2005 produce the same emissions as 48 current cars.

If, by 2030, we manage to replace the oldest vehicles of the Spanish vehicle fleet by the latest-generation ones currently available on the market, our country would reduce its emissions by 20 million tons of CO2 equivalent.

We find ourselves at the perfect crossroads to face this evolution head-on. Over the next few years, every environment will need to design its own route towards energy transition, which needs to be environmentally sustainable and as efficient as possible in terms of the cost and equity to its citizens.

This is why we must be rigorous when deciding which solutions will help us achieve our goals. For instance, we currently do not know the technological changes that will take place over the next few years, so we cannot make the mistake of basing our energy transition on immature technologies that may not be useful in the long term.

To avoid this, designing an energy transition with medium- and long-term goals that can include new solutions is a key element, prioritizing the most competitive technologies at each time.

Authorities need to uphold the principle of technological neutrality at all times, providing citizens, through public incentives, with access to mature technologies that help improve the energy efficiency of their homes or provide more sustainable mobility.

So, how will the energy world look like in 20 years? All forecasts indicate that, by 2040, the energy mix of each country will be made up of a mosaic of different energy sources. This implies that all energy sources will have a part to play in meeting the population’s needs. According to the different scenarios contemplated by the International Energy Agency, oil and natural gas will cover about half of the world’s demand at that time.

Repsol remains committed to being a multi-energy global supplier capable of offering its customers the energy they need at any time. To do so, we rely on the strength of some traditional businesses which are becoming increasingly efficient, such as oil refining and the sale of derivative products, as well as new variants, such as our commitment to natural gas and the development of low-emission businesses.

All this supported by innovation, technology, and digitalization, drivers of our strategy, which will be key to new developments and to continue to improve efficiency in our operations in the coming years.

The talent of the people who make up Repsol is essential in order to face all these challenges and make progress in the energy transition we are currently undertaking; they are the people who drive us, every day, to continue to lead the future of energy. On my behalf, and on behalf of all of them, we would like to thank you for your trust.


The President Sign

Antonio Brufau

Antonio Brufau
All energy sources will play a role in covering the population's needs by 2040