REPSOL

CORPORATE STRATEGIES

1. Supply Chain Integration & Business Model

 Is your company vertically integrated along the supply chain (from extraction to
final distribution)?

Yes, Repsol is vertically integrated along the supply chain, which means they are
involved in multiple stages of the energy production and distribution process. Their
activities span from the exploration and extraction of raw materials (such as oil and
natural gas) to refining, marketing, and the distribution of petroleum products. This
integration allows Repsol to control various parts of the value chain, ensuring greater
efficiency, cost control, and market access.

In detail, Repsol's supply chain includes:

Upstream: Exploration and production of oil and gas reserves.

Midstream: Transportation and storage of raw materials.

Downstream: Refining of oil and gas into usable products (such as gasoline, diesel,
and petrochemicals), as well as marketing and distribution through retail outlets and
direct sales to industrial clients.

This level of integration gives Repsol a strategic advantage by enabling them to

manage costs and risks more effectively throughout the entire process.

 Do you rely on external companies for exploration, extraction, transportation,

refining, and/or distribution, or are these processes managed internally?

Repsol does rely on some external partnerships, even if it is largely self-sufficient

when it comes to manage key processes from exploration through to distribution.
External companies are more often used for risk-sharing, access to specific
technologies, or reaching markets where direct operations might not be cost-
effective or feasible.

2. Customers & Distribution Channels

 Does your company sell exclusively wholesale, or do you also have a direct network
of retail outlets? How many retail locations do you operate?

Repsol operates both wholesale and retail sales channels, meaning they sell their
products to other businesses (wholesale) as well as directly to consumers through
their own network of retail outlets.

Retail Network:
 Repsol has a direct network of retail outlets where it sells fuel, lubricants, and other
products to individual consumers. These outlets are primarily gas stations (service
stations), and Repsol's retail operations are an important part of its business strategy.
Repsol operates around 7,500 retail service stations in over 30 countries worldwide.

Wholesale:

Repsol also sells its refined products through wholesale channels to industrial clients,
retailers, and other businesses. This can include bulk sales of gasoline, diesel, jet fuel,
and lubricants to various sectors, including transportation, aviation, and agriculture.

 What percentage of revenue comes from retail sales compared to wholesale?

While retail sales play an important role in Repsol’s downstream business, they are
generally a smaller share compared to wholesale and refining. The precise figures
can vary, but retail sales are estimated to contribute around 10-20% of total
downstream revenue.

3. ESG, Sustainability & Net Zero Goal

 In which renewable energy sources are you investing (solar, wind, hydrogen,
biofuels, CCS - Carbon Capture Storage)?

These investments are part of Repsol's broader strategy to transition toward a more
sustainable energy future while continuing to serve the world’s energy needs.

Solar Energy: Significant investments in solar PV, aiming for 6 GW of renewable

capacity by 2025.

Wind Energy: Both onshore and offshore wind projects, targeting 5 GW of renewable
energy by 2025.

Green Hydrogen: Developing large-scale green hydrogen production with a target of

500,000 tons of hydrogen by 2030.

Biofuels: Expanding the production of advanced biofuels, including sustainable

aviation fuels.

Carbon Capture and Storage (CCS): Focus on scaling up CCS projects to store millions
of tons of CO2 annually by 2050.

 What percentage of your investments is allocated to the energy transition (in the
above-mentioned categories)?

Approximately 30% of Repsol’s capital expenditures are being allocated to the energy
transition by 2025, and this is expected to increase to 40% by 2030. This allocation
reflects Repsol’s commitment to renewable energy, decarbonization, and the
 development of sustainable technologies to meet future energy demands while
reducing its carbon footprint.

 What are your CO₂ emission reduction targets, and how do you plan to achieve
them?

Repsol has set ambitious CO₂ emission reduction targets as part of its strategy to
transition to a more sustainable, low-carbon energy model. These targets are aligned
with its goal to become a net-zero emitter by 2050. Below is an overview of Repsol's
emission reduction targets and the key strategies they plan to implement to achieve
them:

1. CO₂ Emission Reduction Targets

 Net-Zero Emissions by 2050: Repsol aims to achieve net-zero emissions by 2050

across its entire value chain, which includes not only direct emissions from its
operations (Scope 1) but also indirect emissions from energy use (Scope 2) and
emissions from the use of its products (Scope 3). This is part of its commitment to
the Paris Agreement and its efforts to limit global warming to 1.5°C.

2. Key Strategies to Achieve Emission Reduction Targets

 Renewable Energy: Repsol is shifting its focus toward renewable energy sources,
particularly solar, wind, and hydrogen. This will reduce the reliance on fossil fuels for
energy production. Target: 6 GW of renewable capacity by 2025 and 20 GW by 2030.

 Green Hydrogen: Green hydrogen (produced from renewable electricity) is key to

decarbonizing hard-to-electrify sectors such as heavy industry and transportation.
Target: 500,000 tons of green hydrogen annually by 2030.

 Energy Efficiency: Repsol is working to improve the energy efficiency of its

operations, including refineries, petrochemical plants, and other facilities. This
reduces energy consumption and emissions.

 Electrification: Repsol is transitioning its operations toward electrification, using

renewable electricity where possible to replace fossil fuels in its industrial processes.

 CCS Technology: Repsol is investing in carbon capture and storage (CCS)

technologies, which involve capturing CO₂ emissions from industrial processes and
storing them underground to prevent them from entering the atmosphere. Target:
Capture and store 3 million tons of CO₂ per year by 2025, with plans to scale up to 15
million tons annually by 2050.

 Biofuels: Repsol is investing in advanced biofuels (e.g., second-generation biofuels)

made from non-food biomass. These can replace fossil fuels in sectors like aviation,
heavy transportation, and marine.
  Low-Carbon Products: Repsol is working to reduce the carbon intensity of the
products it sells, including fuel, petrochemicals, and lubricants. This includes
developing sustainable products that have lower environmental footprints, such as
biofuels and low-carbon chemicals.

 Divestment from High-Carbon Assets: Repsol has begun divesting from high-carbon
assets (such as coal-fired power plants and oil fields with high emissions) to reduce
its exposure to fossil fuel-related emissions. The company has announced plans to
gradually reduce its oil and gas production over time as part of its strategy to pivot
toward cleaner energy sources.

Carbon Offsetting: Repsol may also engage in carbon offsetting projects to neutralize
residual emissions that cannot be fully eliminated by direct reductions. These offset
projects may involve activities like reforestation or investing in renewable energy
projects in developing countries.

4. Growth & Expansion

 Are you focusing on organic growth (internal development) or strategic acquisitions

(M&A transactions)?

Repsol is actively pursuing both organic growth and strategic acquisitions to achieve
its long-term goals, especially in the renewable energy and decarbonization sectors.
The company is developing new capabilities internally, such as renewable power
plants, green hydrogen production, and biofuels, while also acquiring assets and
businesses that complement its transition strategy. This dual approach allows Repsol
to grow its presence in the renewable energy market more rapidly while
simultaneously building out its internal infrastructure for a sustainable energy future.

 What are the most recent major acquisitions, and how do they integrate into your
business model?

Repsol has made several major acquisitions in recent years, with a particular focus on
expanding its renewable energy portfolio, advancing its energy transition strategy,
and positioning itself for the future of clean energy. These acquisitions are part of
Repsol’s plan to diversify its operations, reduce its carbon footprint, and integrate
more renewable energy and sustainability-focused technologies into its business
model. Here are the most notable recent major acquisitions:

1. Asterion Energies (2020): This acquisition helped Repsol significantly expand its
renewable energy capacity, contributing to its goal of achieving 6 GW of renewable
generation capacity by 2025. It also aligned with the company’s broader strategy of
shifting toward cleaner energy and reducing its reliance on fossil fuels.
 2. Viesgo (2020): The acquisition was a step in Repsol’s strategy to transition from
fossil fuels to cleaner energy sources. It expanded their renewable energy portfolio
and improved their presence in the electricity distribution and generation market. It
also provided Repsol with a greater ability to develop green energy solutions,
including renewable power generation and battery storage technologies.

3. HyHydro (2021): This acquisition fits into Repsol’s commitment to green hydrogen,
which is seen as a crucial element in achieving a low-carbon future for sectors that
are difficult to electrify, such as heavy industry and transportation. Repsol plans to
develop large-scale green hydrogen production through this acquisition, positioning
itself as a leader in hydrogen technologies.

4. Norwegian Offshore Wind Projects (2021): Repsol’s acquisition of offshore wind

assets in Norway aligns with its broader strategy to expand its offshore wind
capabilities and diversify its renewable energy portfolio. This acquisition is part of its
push to develop renewable power generation in strategically important areas,
particularly where offshore wind capacity is abundant.

5. Denmark's Largest Offshore Wind Farm (2021): This acquisition expands Repsol’s
offshore wind portfolio, particularly in Europe, and contributes to the company’s
renewable energy expansion. It also strengthens its commitment to offshore wind as
a key component of its net-zero emissions by 2050 strategy.

6. R2 (2022): This acquisition is aimed at enhancing Repsol's capabilities in

digitalizing and optimizing energy operations, particularly in the context of
sustainability and energy transition. The technology and solutions R2 offers are
crucial for enabling smarter, more efficient energy management.

 Are you investing in new geographic markets? If so, which ones?

Repsol is strategically investing in new geographic markets to accelerate its energy

transition and decarbonization goals. The company’s focus on regions like Europe,
Latin America, the Asia-Pacific, and the Middle East reflects its commitment to
expanding its renewable energy portfolio and integrating more low-carbon
technologies into its business model. By investing in markets with strong renewable
energy potential and government support for clean energy, Repsol is positioning
itself as a global leader in the renewable energy sector.

5. Community Engagement, D&I & Corporate Responsibility

 Do you have structured programs for diversity and inclusion (D&I)? If so, what
concrete initiatives have been implemented?
 Yes, Repsol has structured programs for Diversity and Inclusion (D&I) as part of its
broader commitment to creating a positive work environment and promoting
equality across its global operations. The company has implemented a range of
concrete initiatives to promote diversity and ensure inclusion within the workplace.

Here are some of the key D&I initiatives Repsol has rolled out:

1. Gender Equality and Women's Empowerment

 Gender Balance and Equality: Repsol is actively working toward achieving gender
balance across all levels of the organization. The company has set specific gender
diversity targets, such as increasing the number of women in leadership positions.
For example, Repsol has committed to increasing the number of women in
management positions to 30% by 2025.

 Women’s Mentorship and Leadership Programs: To empower women within the

company, Repsol has implemented mentorship programs, leadership development
initiatives, and career advancement training aimed specifically at women. These
programs are designed to build leadership skills and create career pathways for
women in technical and managerial roles.

 Equal Pay: Repsol has worked to ensure pay equality across genders. The company
conducts regular pay audits to ensure that men and women are paid equally for
equivalent work and has taken action to address any discrepancies.

2. LGBTQ+ Inclusion

 LGBTQ+ Rights and Policies: Repsol promotes an inclusive environment for LGBTQ+
employees through specific non-discrimination policies and practices. The company
is committed to ensuring that all employees, regardless of sexual orientation or
gender identity, feel supported and respected.

 Pride and LGBTQ+ Events: Repsol has supported initiatives for the LGBTQ+
community both within and outside the company, including participating in Pride
events and organizing internal campaigns to raise awareness about LGBTQ+ issues
and support LGBTQ+ inclusion in the workplace.

3. Cultural and International Diversity

 Global Workforce: With operations in over 30 countries, Repsol has a culturally

diverse workforce, and the company fosters an inclusive environment by promoting
cross-cultural understanding. This includes initiatives to celebrate cultural diversity
through events, educational programs, and team-building exercises.

 International Collaboration: Repsol encourages international collaboration and

teamwork among employees from different national and cultural backgrounds, which
is especially important given the global nature of its business.
 4. Disability Inclusion

 Accessibility: Repsol is committed to providing a work environment that is accessible

to all employees, including those with disabilities. This includes implementing
measures to ensure that offices and facilities are accessible, and that employees with
disabilities have the resources and support needed to perform their jobs.

 Partnerships and Collaborations: Repsol collaborates with disability organizations to

help integrate people with disabilities into the workforce. The company has set goals
to employ a certain percentage of workers with disabilities and has introduced
training programs aimed at improving accessibility in the workplace.

5. D&I Training and Education

 Diversity Training Programs: Repsol offers training programs to educate employees

at all levels about the importance of diversity and inclusion. These programs focus on
unconscious bias, inclusive leadership, and building diverse teams. Repsol works to
create awareness around how diversity contributes to innovation and success.

 Employee Resource Groups (ERGs): The company has established Employee

Resource Groups (ERGs) that focus on different areas of diversity, such as women,
LGBTQ+, and cultural diversity. These ERGs provide a space for employees to connect,
share experiences, and support one another.

6. Flexible Work Policies

 Work-life Balance: Repsol has introduced flexible work arrangements as part of its
broader commitment to diversity and inclusion. This includes offering remote work
options, flexible hours, and other programs that allow employees to better balance
their professional and personal lives. Such flexibility supports employees with
caregiving responsibilities, particularly for working parents or those with family
commitments.

 Parental Leave: The company has implemented generous parental leave policies for
both mothers and fathers, further supporting gender equality in caregiving roles.

7. Supplier Diversity

 Diverse Supply Chain: Repsol is committed to promoting diversity beyond its internal
workforce by encouraging supplier diversity. The company actively seeks to work
with diverse suppliers, including women-owned businesses, minority-owned
companies, and those that prioritize social and environmental sustainability.

8. Inclusive Leadership

 Leadership Commitment to D&I: Repsol’s senior leadership team plays a crucial role
in promoting diversity and inclusion across the company. The leadership regularly
 communicates the importance of D&I and has integrated these values into corporate
strategy and performance metrics. The company has established a D&I steering
committee that oversees the implementation of D&I initiatives and measures
progress toward diversity goals.

 Inclusive Recruitment Practices: Repsol has developed inclusive recruitment

processes to ensure that hiring practices are fair and open to candidates from diverse
backgrounds. This includes removing biases from the recruitment process and
promoting diversity in job advertisements and hiring panels.

9. Repsol’s D&I Awards and Recognition

 External Recognition: Repsol has received multiple external accolades for its efforts
in diversity and inclusion. The company’s work has been recognized by various D&I
ranking organizations, and it is regularly ranked as one of the best companies for
gender diversity and workplace equality in Spain and internationally.

 Employee Recognition: Repsol has internal recognition programs that highlight the
contributions of employees who champion diversity and inclusion initiatives. This
helps foster an inclusive corporate culture where employees feel valued for their
contributions to D&I efforts.

6. R&D and Innovative Technologies

 How much do you invest in Research & Development (R&D) as a percentage of

total revenue? Please provide the percentage.

Repsol allocates over €60 million annually to its Technology Lab, focusing on
research, development, and innovation. Notably, more than 55% of this investment is
directed toward low-carbon technologies. In 2022, Repsol's total revenue was
approximately €63.35 billion, so R&D investment represents about 0.09% of the
company's total revenue.

 What innovative technologies are you focusing on (AI, automation, advanced

drilling, supply chain digitalization, etc.)?

Repsol's innovation efforts span various cutting-edge technologies, emphasizing

sustainability and efficiency. Some of the main areas of focus include:

1. Low-Carbon Technologies: Repsol is heavily invested in technologies that contribute

to the decarbonization of its operations. This includes advancements in carbon
capture, utilization, and storage (CCUS), as well as renewable energy sources like
wind and solar.
 2. Artificial Intelligence (AI): AI plays a key role in improving efficiency and optimizing
operations across Repsol's value chain. For example, AI helps in predictive
maintenance, data analysis for better decision-making, and improving exploration
and production processes.

3. Automation: Repsol is advancing automation in drilling, production, and other

processes to increase safety, reduce human error, and improve operational efficiency.
This includes remote monitoring and control of facilities and equipment.

4. Advanced Drilling Technologies: The company continues to invest in advanced

drilling techniques to enhance resource extraction while minimizing environmental
impact. This includes innovations in drilling systems and tools that improve precision
and efficiency.

5. Digitalization of the Supply Chain: Repsol is working on digitizing its supply chain,
using data-driven insights to improve logistics, inventory management, and
distribution. This transformation aims to reduce costs and improve delivery times.

6. Energy Storage: Repsol is exploring cutting-edge energy storage technologies that

are essential for stabilizing renewable energy supply, such as battery technologies
and energy management systems.

7. Biofuels and Sustainable Mobility: The company is focusing on developing new

biofuels and other sustainable mobility solutions to reduce the carbon footprint of
transportation.

7. Scandals and Controversies

 Have there been any recent corporate, environmental, or legal scandals that have
impacted the company’s reputation, causing a drop in stock market value?

Repsol has faced several challenges in recent years that have impacted its reputation
and, at times, its stock market performance. Notable incidents include:

1. Antitrust Investigation: In December 2023, Spain's competition watchdog initiated

an investigation into Repsol over potential abuse of its dominant position in the
nation's wholesale fuel market.

2. Environmental Concerns: Repsol has been involved in environmental controversies,

including a significant oil spill in Peru in January 2022. The Peruvian regulator,
Indecopi, filed a multimillion-dollar lawsuit against the company, alleging
environmental damage. Repsol disputes these claims, considering them unfounded.
 3. Financial Performance: In the third quarter of 2024, Repsol reported a sharp decline
in profits, approximately 50% lower than the previous year, due to reduced crude
output and weaker refining margins.

4. Analyst Downgrade: In December 2024, JP Morgan downgraded Repsol's stock from

"neutral" to "underweight" and reduced its price target by 7.4%, citing concerns over
the company's strategic plan delays and increased exposure to refining operations.

8. SWOT Analysis

 What are the main strengths of your company compared to competitors?

Repsol stands out in several areas compared to its competitors, giving it a

competitive edge:

1. Diversified Energy Portfolio: Unlike many traditional oil and gas companies, Repsol
has significantly diversified its business. It is not just focused on fossil fuels; the
company is heavily investing in renewable energy, biofuels, and green hydrogen,
positioning itself well for the energy transition.

2. Commitment to Sustainability: Repsol has been a leader in setting ambitious

sustainability goals, such as achieving net-zero emissions by 2050. Its focus on low-
carbon technologies, like carbon capture and storage (CCS) and renewable energy,
gives it an edge as investors and governments increasingly prioritize climate-
conscious companies.

3. Technological Innovation: Repsol is heavily investing in advanced technologies like

AI, automation, and digitalization, especially in the areas of exploration, production,
and supply chain management. This helps the company operate more efficiently and
stay ahead of competitors in terms of innovation.

4. Strong R&D Focus: The company invests substantially in research and development,
with over €60 million directed toward its Technology Lab, which is focused on
innovations to support the energy transition. This is higher than many of its
competitors in terms of the proportion of revenue allocated to R&D.

5. Geographical Reach and Market Presence: Repsol has a solid market presence in
Europe and Latin America, with operations in 37 countries. This global reach allows
the company to access diverse markets and reduce risks related to regional instability
or market fluctuations.

6. Integrated Business Model: Repsol’s integrated model, which spans upstream

(exploration and production), downstream (refining and marketing), and renewable
energy, gives it flexibility to adjust to market changes. This also enhances its ability to
leverage synergies across its operations.
7. Financial Resilience: Repsol has a robust financial position, with strong cash flow
generation. Despite challenges in the market, the company has managed to maintain
steady profitability and a solid dividend payout, which helps attract investors.

 What are the key weaknesses and internal challenges?

Repsol faces several key weaknesses and internal challenges that could impact its
performance:

1. Exposure to Fossil Fuel Price Volatility: While Repsol is diversifying into renewables,
a significant portion of its revenue still comes from oil and gas. This leaves the
company vulnerable to fluctuations in global oil and gas prices, which can affect
profitability, especially during market downturns.

2. Transition to Low-Carbon Energy: Although Repsol has set ambitious goals for
carbon neutrality by 2050, the transition from fossil fuels to low-carbon energy
sources presents significant challenges. The company must navigate regulatory
complexities, high upfront investment costs, and technological hurdles in renewable
energy, making the shift both time-consuming and expensive.

3. Refining and Downstream Exposure: Repsol’s downstream operations, particularly

refining, are exposed to economic cycles and fluctuating demand for refined
products. As the global focus on reducing emissions grows, refining margins can be
squeezed, especially when refining capacity exceeds demand or when there is
increased regulatory pressure on emissions.

4. Regulatory and Legal Risks: Repsol operates in a heavily regulated industry, and legal
issues could arise, as seen in its recent environmental challenges. For example, the
company has faced lawsuits related to environmental damage from oil spills. Legal
actions, along with environmental and safety regulations, can lead to significant
financial penalties and reputational damage.

5. Sustainability and ESG Pressure: While Repsol has made strides in sustainability, it
still faces pressure from investors, environmental groups, and governments to do
more, particularly in terms of reducing its carbon footprint and aligning its operations
with global climate goals. The shift toward renewable energy could also lead to
resistance from stakeholders with vested interests in the traditional oil and gas
sector.

6. Debt and Financial Risk: Repsol’s debt levels, though manageable, could become a
concern if the company faces prolonged periods of low oil prices or if there are
setbacks in its renewable investments. The challenge of balancing debt repayments
with ongoing investments in transformation remains a key financial issue.
7. Innovation and Technological Adoption: While Repsol is investing heavily in R&D and
new technologies, the pace of innovation in energy technology (such as carbon
capture, storage, and battery storage) is uncertain. Repsol needs to continually
innovate and adapt to stay competitive, but there’s always the risk that investments
may not yield immediate returns.

8. Public Perception and Reputation Risks: Repsol has faced criticism in the past due to
its environmental record, such as oil spills and concerns over its role in contributing
to climate change. These reputational risks can undermine public trust and affect its
standing with consumers, regulators, and investors, particularly as public awareness
of climate change and sustainability grows.

 What are the best growth opportunities in the sector, and how do you plan to seize
them?

Repsol plans to leverage its strong position in both traditional energy and renewable
sources to drive growth in the following ways:

1. Expanding its renewable energy capacity (wind, solar, and biofuels).

2. Leading in the green hydrogen market.
3. Developing carbon capture technologies.
4. Driving operational efficiency through digital transformation and AI.
5. Growing its presence in emerging markets, particularly in renewable energy. By
focusing on these opportunities, Repsol is aiming to become a more sustainable,
diversified energy player while also staying competitive in the traditional energy
markets.

 What are the main external threats (regulations, competition, energy transition)?

Repsol, like other global energy companies, faces several external threats that can
impact its business operations. Here are some of the main challenges:

1. Regulatory Pressures and Policy Changes

 Environmental Regulations: Governments worldwide are tightening environmental

regulations, aiming to reduce carbon emissions and combat climate change. As a
major oil and gas company, Repsol is particularly vulnerable to increasing
environmental restrictions, especially in the EU and other regions with stringent
climate policies.

 Carbon Pricing and Taxes: Many countries are implementing or planning to

implement carbon taxes and cap-and-trade systems. This could impact Repsol’s
 operational costs, as they would need to account for their carbon emissions in
addition to their normal operational expenses.

 Energy Transition Policies: National and international policies pushing for a rapid
transition toward renewable energy sources pose a challenge for Repsol. The
company has to adapt to these changes, which might involve higher costs and
investments in cleaner technologies, while still managing its existing fossil fuel assets.

 Legal Risks: Ongoing litigation or future lawsuits related to environmental damage,

pollution, or climate change could result in financial liabilities or reputational
damage.

2. Competition

 Renewable Energy Companies: As the world shifts towards renewable energy, Repsol
faces growing competition from companies that specialize in solar, wind, and other
green energy technologies. This poses a threat to Repsol’s fossil fuel-based business
and increases the pressure to diversify its energy portfolio.

 Energy Giants and Diversified Players: Large multinational companies like Shell, BP,
and TotalEnergies are also undergoing transformations towards cleaner energy,
making the competition fiercer. These companies have more resources to invest in
green energy initiatives and innovation.

 Technological Innovation: Advances in energy technology, such as energy storage,

hydrogen production, and electric vehicle infrastructure, could disrupt the traditional
energy market. Repsol must keep pace with these innovations to maintain a
competitive edge.

3. Energy Transition

 Pressure to Diversify: As part of the global energy transition, Repsol is under

pressure to diversify away from oil and gas and increase investments in renewable
energy. This transition requires significant financial investment, innovation, and
strategic planning. There are risks associated with this shift, including the potential
failure to successfully develop or scale new energy sources.

 Public Perception and Reputation: Companies that are seen as not transitioning fast
enough to green energy sources may face reputational damage from activists,
investors, and customers. Public demand for cleaner energy can create a reputational
risk for traditional oil companies like Repsol if they are perceived as not doing
enough to reduce their carbon footprint.

 Oil Price Volatility: While the shift towards renewables is underway, oil and gas still
represent a significant portion of Repsol’s business. Fluctuations in global oil prices
(due to geopolitical tensions, OPEC+ decisions, and other factors) could impact
 Repsol’s revenue and profitability, making the transition to green energy more
challenging.

4. Geopolitical Risks

 Supply Chain and Operations: Repsol operates in several countries around the world,
and political instability, conflict, or changes in government policies can disrupt
operations, influence supply chains, and affect market access. For instance, changes
in the political climate in Latin America or the Middle East can impact their
operations in these regions.

 Energy Security Concerns: Global energy supply and demand dynamics, along with
concerns over energy security, especially after crises like the Ukraine war, influence
the demand for fossil fuels. Shifts in energy consumption patterns could affect
Repsol’s revenue streams.

5. Market and Economic Factors

 Energy Demand Fluctuations: Global economic cycles, technological advancements

(such as EV adoption), and shifts in consumer behaviour can impact energy demand.
A slowdown in global economic growth or lower demand for fossil fuels due to
alternatives like electric vehicles can hurt Repsol’s core business.

 Investors' Shift to ESG: There is increasing investor interest in companies with strong
environmental, social, and governance (ESG) strategies. Investors are increasingly
moving away from fossil fuel-dependent companies and seeking greener
investments, which could impact Repsol’s stock price and access to capital.

9. Impact of Tariffs, Regulations, and Compliance

 Are there trade barriers or tariffs that currently affect or could potentially impact
your business?

Here are some of the key trade barriers and tariffs that currently impact or could
potentially affect Repsol:

1. Tariffs on Oil and Gas Exports/Imports

 Tariffs on Oil and Gas Exports: Repsol, which has a significant presence in global oil
markets, may face tariffs imposed by countries on its oil exports. These tariffs can be
especially relevant in countries that have imposed trade restrictions or retaliatory
tariffs. For example, trade tensions between the EU and the US, or between the US
and certain oil-producing countries, could lead to increased costs for Repsol in
specific markets.
 Import Tariffs on Equipment and Materials: Repsol imports equipment and materials
for its exploration and production activities. Tariffs on critical oil and gas equipment,
such as drilling rigs, pipelines, and refining technologies, could increase capital costs
for projects.

2. Carbon Tariffs and Border Adjustment Mechanisms (BAM)

 Carbon Border Adjustment Mechanisms: As part of the global push for carbon
pricing, some countries, particularly in the EU, are exploring the use of carbon border
adjustment mechanisms (CBAM) to impose tariffs on goods imported from countries
with weaker carbon regulations. These mechanisms could potentially affect Repsol’s
exports, particularly if it faces trade with countries that do not have stringent carbon
emissions controls. As a company that is heavily invested in fossil fuels, Repsol could
be subject to higher costs if CBAMs are implemented on oil, gas, or refined products.

 European Union’s Carbon Price: Within the EU, there are ongoing efforts to
introduce stricter carbon pricing, which might indirectly impact Repsol by raising the
cost of doing business within the European market. If other regions or countries
follow suit with similar carbon pricing or emissions trading schemes, this could
further escalate costs for fossil fuel-related businesses.

3. Geopolitical Trade Barriers

 Sanctions and Trade Restrictions: Repsol operates in many countries, some of which
may face international sanctions or trade restrictions. For instance, trade sanctions
on countries like Venezuela and Iran have impacted energy companies with
operations in those regions. These sanctions can prevent Repsol from exporting oil or
gas from these countries or engaging in joint ventures with state-owned oil firms.
Restrictions on financial transactions with certain nations or companies can disrupt
their ability to move capital freely across borders.

 Expropriation Risk and Contract Disputes: In some developing regions, including

parts of Latin America and Africa, there is a risk of expropriation (when a government
takes control of foreign-owned assets). Repsol could face trade barriers in these
regions in the form of nationalization efforts or challenges to the terms of its
contracts.

4. Energy Import/Export Barriers

 Export Controls on Energy Products: Some countries, particularly energy exporters

like the US, have historically imposed controls on the export of energy products (like
liquefied natural gas or oil) for national security or economic reasons. If Repsol
operates in these markets, it may be affected by sudden changes in export
regulations or quotas. In cases of energy shortages or crises (like the one seen during
 the 2022 Ukraine crisis), countries may restrict exports of certain energy products,
which could impact Repsol’s ability to access markets.

 Supply Chain Disruptions: Trade barriers in the form of export restrictions or tariffs
could affect Repsol’s supply chain, particularly in countries that are key suppliers of
raw materials and technologies used in energy production. For example, disruptions
to trade routes, port access, or customs procedures could delay projects and add to
costs.

5. Intellectual Property and Licensing Barriers

 IP Protection and Licensing Barriers: As Repsol develops new technologies related to

renewable energy, carbon capture, or efficient refining, it relies on intellectual
property (IP) rights and licensing agreements to protect its innovations. In some
countries, the protection of IP rights is weaker, leading to potential risks of
technology theft or the imposition of restrictive licensing agreements that could
hamper Repsol’s ability to expand its market reach.

 Tech Transfer and Joint Ventures: Some countries, particularly in emerging markets,
require foreign companies to transfer technology or enter joint ventures with local
entities as a condition for market access. These rules can limit Repsol’s ability to
operate independently or fully control its operations in those regions.

6. Local Content Requirements

 Local Content Regulations: Many countries require foreign companies to use a

certain percentage of local goods and services in their energy projects. This can
increase costs for Repsol if local suppliers are less efficient or more expensive than
international alternatives. For example, in countries with significant oil reserves like
Brazil, local content laws can impact Repsol’s ability to import materials and
personnel for energy projects.

7. Trade Policy Changes Related to the Energy Transition

 Subsidies and Trade Distortions in Renewable Energy: The global energy transition is
causing countries to introduce new trade policies related to renewable energy. Some
nations may subsidize local renewable energy industries, such as solar, wind, or
hydrogen, potentially making it more difficult for Repsol to compete with local
producers in certain markets. Trade barriers could arise if a government imposes
tariffs on imported clean technologies or restricts market access to domestic
renewable energy players.

8. Brexit-Related Trade Barriers

 Post-Brexit Trade Barriers: Following Brexit, there are new trade barriers between
the UK and the EU that may affect Repsol's operations. Repsol, which has significant
 business in both Spain and the UK, may face challenges related to customs
procedures, tariffs, and regulatory compliance in both markets, especially concerning
the transportation of energy resources across borders.

 What strategies are you implementing to comply with new environmental

regulations (e.g., carbon tax, ESG compliance)?

Repsol is implementing several key strategies:

1. Net-Zero Emissions by 2050: Repsol has committed to achieving net-zero greenhouse

gas emissions by 2050, focusing on reducing carbon intensity and transforming its
energy mix to rely more on renewable and low-carbon technologies.

2. Carbon Capture, Utilization, and Storage (CCUS): The company is investing in CCUS
technologies to capture and store CO₂ emissions, aiming to reduce emissions from
hard-to-decarbonize sectors.

3. Renewable Energy Transition: Repsol is increasing investments in solar, wind, and

other renewable energy sources to diversify its portfolio and reduce reliance on fossil
fuels.

4. Low-Carbon Fuels and Energy: The company is developing low-carbon fuels,

including biofuels and hydrogen, to support sustainable mobility and decarbonize
energy-intensive sectors.

5. Carbon Pricing and Emissions Trading: Repsol is adapting to carbon pricing systems
(such as carbon taxes and emissions trading schemes) by reducing emissions and
improving energy efficiency.

6. Sustainable Finance and ESG Reporting: The company is raising capital through
sustainability-linked bonds and improving ESG reporting, aligning its financial and
operational strategies with long-term sustainability goals.

7. Digitalization for Efficiency: Repsol is leveraging digital technologies to optimize

operations, reduce energy consumption, and enhance sustainability.

8. Circular Economy Practices: Repsol is incorporating circular economy principles by

focusing on recycling, reducing waste, and developing sustainable products made
from renewable or recycled materials.

9. Collaboration with Stakeholders: Repsol is working with industry peers,

governments, and regulators to shape policies that support the energy transition and
meet climate commitments.