Strategy

Thrive through the energy transition

The upcoming decade is expected to be of deep transformation. Regulatory impositions, technological developments and the decreasing costs of low carbon options will drive society to progressively accelerate towards a cleaner future. Galp wants not only to follow this trend, but to take an active role.

We believe the change should start in our culture, and that's why we've agreed on a new purpose in Galp: ‘Let's regenerate the future together’. This is a purpose that will be about our portfolio, about our relationships but also about our people, and it will set a direction for us, internally and externally, to adapt into the future.

All these changes will be translated into our portfolio. In the first half of the decade we intend to allocate 50% of our net capital to low and zero CO2 products. By 2030, we aim to have a more electrified, diversified and decarbonised global portfolio, offering our shareholders a combination of long-term growth and value opportunities in the energy sector. Additionally, our strategy relies on a clear capital allocation framework, with a firm investment plan and a competitive shareholder remuneration, supported by strict financial discipline.

We have 4 key business pillars, built upon solid foundations, to help us thrive through the energy transition. Upstream growth will continue to be the cornstone of our business, given its unique high-quality cash generative projects. At the same time, we aim to transform our downstream businesses, adapting them to energy transition and new consumer trends while leveraging on a strong asset base. Thirdly, we will continue to invest on our renewable business, expanding our portfolio to deliver continued growth and value. Finally, we will continue to develop future options and value pools on new energies businesses, leveraging on existing portfolio and skills.

Lastly, we want to continue being a top performer in ESG metrics. Our decarbonisation path is already underway and we’ve increased our 2030 carbon reduction targets. Additionally, and for the first time, we are committing to be a net zero CO2 emission company by 2050, reflecting our commitment to regenerate the future.

Upstream

As the company transitions to lower carbon energies and solutions, the Upstream segment will be the main cash generator to support these investments, leveraging on a world class portfolio and a highly competent and knowledgeable team.

Looking into the future, our top tier low breakeven and environmentally efficient portfolio will allow a differentiated production growth of c.25% by 2025. Our strategy will be focused on free cash flow maximisation, with a strict investment plan targeting the development of our existing high-return projects and supported by potential portfolio management initiatives.

Industrial & Energy Management

During the next decade, we will be focused on transforming our Sines refinery into a Green Energy Hub. Through selective investments, we are assessing the implementation of energy efficiency initiatives and desulphurisation projects, as well as the incorporation of a biofuels unit.

The gradual transformation of the Sines industrial site into a green energy hub is also expected to be leveraged on the access to green hydrogen, which will allow further industrial and mobility applications, such as synthetic fuels, and support an operational carbon footprint reduction of c.50%by 2030.

Furthermore, we will enhance the role of Energy Management in our organisation in order to obtain additional value from integrating across the value chain, while managing a highly complex and diversified portfolio.

Commercial

Galp has a strong multi-product and multi-geography commercial business. A business that spans across oil products, gas, LPG, renewable electricity, spread through the B2C and B2B segments.

We want to go from product-centred to customer-centred. In the future we will continue to expand the customer experience, leveraging on our strong brand and digitalisation to capture additional value. We want to transform our non-fuel solutions towards innovative, multi-energy and convenience concepts, by modernising and expanding our products and services offering with a new hub concept.

Beyond forecourt expansion, we also want to be increasingly present at our customers’ homes. We want to expand our power retail business, particularly with renewable electricity, not only through the grid but also from decentralised generation.

Renewables & New Energies

Galp is already one of the leading solar PV players in Iberia, having c. 1GW in operation and 2.8 GW of projects under development. While focused on developing and maximising the returns from the existing solar PV pipeline, we also intend to continue to expand our portfolio and diversify geographies and technologies, through a dynamic and flexible business model to balance risk and returns.

We are targeting a gross renewable operating capacity of c.12 GW by 2030, of which we expect to maintain a 50% stake. To promote this growth and support value creation, Galp will continue to use a levered capital structure, as well as a partnership model and asset rotation. We are also building some distinctive capabilities, as behind the meter battery storage options, hybridization between solar and wind, particularly in Spain, and taking a varied approach on risk management in Iberia, through a mix of long- and short-term PPAs and merchant risk.

On New Energies, we are evaluating the development of green hydrogen solutions, taking advantage of our privileged position and industrial skills. Additionally, we are also assessing entry opportunities in the fast-growing battery value chain, namely in lithium processing, capturing an early mover advantage in Europe.

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