Today, Repsol�s chairman, Alfonso Cortina, took part
in the conference on energy organized by the Spanish Energy Club by putting
forward his ideas on the future of the energy sector in general and the
development of competition in the fuel, heating oil, natural gas, LPG and
electricity markets. After this, Mr. Cortina made a brief reference to Repsol�s
strategy.
As far as the supply of energy is concerned, the Chairman
indicated that fossil fuels will play an important role internationally for many
years, and gas is to be the major player in this field for several decades. The
most optimistic forecasts for Spain predict that, by 2010, oil will account for
48% of the primary energy balance, and gas natural for 18%. The importance of
natural gas in this energy balance is growing all over the world and, according
to the speaker, is producing a change in strategy by energy companies, in that
oil companies seek new business lines in gas and electricity, gas companies do
the same in oil, and electricity companies in gas, all with a view to achieving
higher integration in the energy industry.
Mr. Cortina went on to analyse
the deregulation of the oil sector in Spain and recalled that, since its
foundation, Repsol has been firmly in favour of free competition on all markets,
although certain conditions were essential for the existence of fair competition
in our country. These are: where government control continued, this must be
absolutely foreseeable in the medium and long term; there must be a principle of
reciprocity; competition must be geographically and functionally generalized,
and the law must be respected without exception. In this respect, Repsol�s
Chairman offered his company�s entire cooperation with the autonomous and
central governments in order to suppress fraudulent practices which damage
consumers, the Tax Office and those companies scrupulously complying with all
legal stipulations.
According to Mr. Cortina, there is a high level of
competition in the oil products market, where over 30 companies with service
stations are operating at before-tax-prices on gasolines and gasoils which are
lower than the European average. Gross margins for the sector have fallen in
nominal terms since 1990, producing a negative effect on corporate income
statements. In Spain, service stations are being constructed at a higher rate
than that of economic growth, and profitability is insufficient. In the medium
term, the speaker noted, conditions are not expected to improve, but it is one
of Repsol�s priority objectives to hold or even increase its market share.
Adequate pricing and marketing policies will be applied to achieve this
end.
He concluded with a further reference to Repsol�s strategy, stating
that a high return for the shareholder is one of its permanent goals. On the
other hand, against the background of a rapidly matured Spanish market, where
margins are continuously narrower, Repsol has not only concentrated on
consolidating its share of the home market, but has orientated its growth
towards other sectors and geographical areas, with a clear expansion in Latin
America and North Africa, in oil, gas and electricity. Overall investment will
be of some 1.6 billion pesetas over the next five years. Around 50% is to be
invested in Latin America and in the exploration and production
sectors.
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