Galp Energia, SGPS, S.A. (GALP) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Galp's Virtual Capital Markets Day. Our team is thrilled to have so many of you joining us online. Today's agenda, we'll begin with a strategy presentation by our CEO, Andy Brown, which shall demonstrate how Galp plans to thrive through the energy transition. During the presentation, and he will be joined by our CFO, Filipe Silva, when covering on next 5 years financial plan. We will then have a short 5-minute break and open up our Q&A session, where the remaining executive members of the Board will also participate. At the Q&A, we invite analysts and investors to submit their questions by using the Share tool available on the streaming platform. The questions may be submitted during and after the presentation, and I will read them out in the Q&A session. We have invited all sell-side analysts that cover Galp to participate live in video, and therefore, we expect to have some of them joining at that time. We may need to limit the number of questions made during the session to control the total event's time line. Before we start, please note that today's presentation will include forward-looking statements based on the plans, estimates and projections. We refer you to our initial cautionary statement for further information. We will now start the presentation. Andy, the floor is yours.

Thank you, Otelo, and good day to all of you wherever you are. It's a pleasure for me to be able to present Galp's 2021 Capital Markets Day. I've been in the company for 4 months now, and I got to know the people, the assets, the opportunities and the challenges. And we've undertaken a comprehensive strategic review together with the Board of Directors. And I'm really pleased to be able to present our plans to you today. What I found in Galp are great assets, great people, great opportunities, a company that can grow and decarbonize and distribute competitively. What I'm going to do, I'm going to discuss some of the conclusions first from the strategy refresh before deep diving into the individual businesses. I'm going to touch on our ESG performance before handing to Filipe to talk about the financial framework. And I'm going to come back and make some concluding remarks. In our strategy refresh, we've really challenged ourselves to offer shareholders a resilient investment case against an accelerated energy transition but also one that offered an upside in the base case. If we look at the next decade, our industry is not going to be static. The pace of energy transition will accelerate. Our markets will change. So it's not just economically appropriate for us to change, it's also the right thing to do. And we're lucky that we have such a strong portfolio. It is resilient with a growing upstream. Actually, coupled with Galp's size, its agility, its innovation places us really strong for the energy transition. We are already a leading player in the markets we operate in, and we've already started to change. We have a leading position in solar in Iberia. We're a leader in sustainability. We have a very low CO2 emissions in our Upstream business. So we have a strong starting point for the energy transition. But our traditional markets in Iberia will decline in oil and gas. But every change is also an opportunity, an opportunity in renewable power generation, in renewable electricity sales, in renewable fuels, in hydrogen, in the battery value chain. So Galp can and will thrive through the energy transition. But we know this is going to require change. And that change will be about our portfolio but also about our culture. And that's why with the Board, we've agreed 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, a portfolio that would shift to lower-carbon products prudently, step-wise but will have made significant progress by the end of this decade. We want to refresh our relationships with our customers and with society, offering new products to the almost 0.5 million people that come to our forecourts every day or the hundreds of thousands of people we serve at home to expand our brand, to expand from quality and service, to also be innovative and caring. But thirdly, we want to reenergize our people, to develop and acquire new skills to thrive through the energy transition, to bring increased agility to the way we work, to motivate our staff, to allow everyone to achieve their potential. Today, we will cascade our new purpose. It will set a direction for us internally and externally for us to adapt into that future. And for me, regeneration means a new chapter in Galp, one that is refreshed and energetic. Now let's look at the businesses and how do we think about these businesses and how we allocate capital. We see 4 discrete themes which kind of reflects our thinking. The cornerstone of our business is still our upstream growth. It's high quality, it's high margin, it's cash generative and it's low CO2. We also have a downstream transformation business predominantly in Iberia. This is a business with an opportunity to grow and transform at the same time, moving to lower-carbon products. Thirdly, we've got our renewable growth business. We made an important step last year already in a material position, but we want to expand that in size, in geography, in technologies and to integrate down the electricity value chain. And fourthly, we have a new segment, our New Energies business. This is a business that will be fast moving, low CO2, with complementary skills and assets to what we hold today and particularly looking at hydrogen and the battery value chain. So we have 2 growth themes, 1 transformation theme and 1 new business theme. So what does this mean in capital investment? Well, firstly, it will be a disciplined net capital investment of between EUR 800 million and EUR 1 billion per year over the 5 years. 50% of that will be in traditional oil and gas and 50% will be in low- and zero-CO2 products. These low-carbon products will be fast-growing renewable energy, advanced biofuels, electrical mobility, convenience and other value pools in Commercial but also future opportunities like hydrogen and the battery value chain. Now our distribution of that capital will be 40% in our Upstream growth, 25% in our downstream transformation businesses, 30% in our renewables growth and about 5% in New Energies over the 5 years. We're expecting strong IRRs of more than 20% in our Upstream business at a $60 oil price, at between 10% and 20% in our Commercial business and about 15% in Industrial & Energy Management. And on a life cycle basis, above 9% and in our renewables growth business. And in New Energies, at least 10% IRRs. Over time, we see our Upstream growth business growing in cash flows. But Upstream's proportion of the total pie will reduce. And why is that? Because our low-CO2 businesses will grow even faster. So this is a strategy of growth and decarbonization. We want to set clear capital allocation guidelines. Our current leverage is close to around 1 net debt-to-EBITDA. We want to maintain this level of balance sheet strength. We want to allocate between EUR 200 million and EUR 1 billion net CapEx to grow and transform the business, and we may need to rotate some assets to stay in this range. But the quality of our investment portfolio means that we can marry growth and decarbonization but using less than 50% of our operational cash flows. We also want to offer a resilient base dividend of EUR 0.50 per share. And when there are additional cash flows and our balance sheet allows, we will distribute dividends up to 1/3 of our operational cash flows. And we'll distribute the base 2 times per year with a variable element after approval at the AGM and with full year results. So this is a unique investment opportunity to reshape the portfolio and to provide a competitive yield. We have growth from our established legacy businesses, our renewables growth business, our New Energies business, as well as competitive distributions with upsides. In our base case premise, we can grow our operational cash flows by 35% by 2025, and we can distribute 35% of our current market capitalization in dividends. And for the first time, we are committing to be a net zero CO2 emission company by 2050. So let's look at the individual businesses. Firstly, our Upstream growth business. This Upstream business is the envy of our industry. We built it up over the last decade, and this decade is a decade of free cash flow and growth. In my career in Upstream, I think this portfolio has all you want in an upstream portfolio. The core is the Brazilian pre-salt. Long life, high margin, low decline rates, large resource base with longevity and growth. This is also a resilient portfolio with low unit operating costs and low CO2 intensity. It also has an enviable growth funnel of opportunities that we are ready now to commit to. So it's a portfolio with medium-term growth and a lot of options for the future. So in numbers, we aim to grow our production by 25% by 2025, offering very low production costs around $3 a barrel of oil equivalent. We have a portfolio with IRRs at $60 or a more than 20%. And the operating cash flows from this business over 5 years will deliver more than $6 billion. And we have future growth opportunities beyond 2025. But we must extract value from these opportunities in a disciplined way. So putting this portfolio in graphical context, it is one of the most competitive, attractive, lower-CO2 portfolios in the world. The average NPV10 breakeven of our projects is around $25 a barrel. That puts us in the top quartile of all projects. And our CO2 intensity is less than 10 kilograms per barrel oil equivalent. This is half of the IOGP average. So as you can see, this is truly a leading portfolio. And the jewel in the crown of this is Tupi and Iracema. Almost 80% of our production comes from those fields. They've produced more than 2 billion barrels already but still just a fraction of the ultimate recovery that we can get from these fields. It is still early days in the full field development of 2P in Iracema, and there are attractive investment opportunities still to come. And this year, we will be submitting and agreeing a plan of development for the fields. And within that, there's possibility for a field lifetime extension. But we have other fields. Iara in particular with Berbigão, Sururu, Atapu. This is still ramping up this year. In Angola in Block 14 and 32, we're strongly in harvest and with strong cash flows from those fields. This year, we're going to start up Sépia in Brazil, 120 -- 180,000 barrel a day FPSO. And next year, we think Coral FLNG will also start up in Area 4 in Mozambique. Since last year in the COVID crisis, we're taking strong capital discipline in our Upstream. But still, we have a healthy production outlook from short-term cash engines alone. As I said, we have some significant growth opportunities ready to launch. And this week, you will have seen that we have FID-ed the Bacalhau project. This is an amazing project. It's a project which we have 20% stake in costing around $8 billion. It's a project we actually made good progress already with the 220,000 barrel a day FPSO. It's a project we'll recover more than 1 billion barrels of recoverable reserves. It is a low-CO2-intensity project, around 9 kilograms barrel oil equivalent with a break-even price well below $35 a barrel. We expect this project to come online in 2024 and yield a working interest volume for Galp of 40,000 barrels a day. This is really our next step in our Upstream growth story and a significant boost to our cash flows from 2025. But our opportunities don't stop there. Coral FLNG is just the tip of the iceberg in Area 4. There are significant gas resources. And we're working with our partners to reduce the cost of the Rovuma development. This is a multi-train development. And we see also potential to improve it further through synergies with Area 1. Of course, we're awaiting the security situation to stabilize before proceeding, but we're confident that the efforts are being made to engage the communities, to improve the security apparatus. And we expect the right conditions to emerge over the coming years. I've been really impressed with Galp's depth and quality of resources. But also, the exploration portfolio, the next 2 frontier wells in [ Jaka ] in São Tome and [ BOB ] in the deepwater in Brazil are world class and really want to drill these at the end of this year and perhaps into next. But such is the depth and quality of the resources discovered already that after these 2 wells and the follow-up, we are going to halt frontier exploration. We believe, because of the lead time to bring those online, that it's prudent to preserve our capital for the low-carbon opportunities that are emerging. Now our downstream transformation. And first, the Commercial business. This is a strong business, particularly in Portugal but also in Spain and some African countries. It's a project -- a business that spans all products: gas, LPG, renewable electricity sales but spans B2C and B2B. In Portugal, we are a market leader. We have a strong reputation as the flag carrier of Portugal. And we're known for the quality of our services. The merging of our gas and power and oil products business has allowed us to expand and cross-sell all types of projects, leveraging our digital tools, expanding and strengthening our brand to our loyal customers. And we believe we can expand our offer and our customer experience over time. There are almost 0.5 million people that come to our forecourts every day. These are unique touch points with customers, where we can sell more than traditional fuels. We're privileged to have such a great network, a network that can provide key convenience to customers, where already our nonfuel receipts exceed our fuel receipts. We are actually the largest coffee seller in Portugal. We want to modernize and expand our offering with a new hub concept, offering new products, new service, including EV charging, up to 10,000 EV charges by 2025. As a result, we believe we can double our nonfuel contribution to our operating cash flows by 2025. So we're strong today. We have a lot more to offer with relatively minor investments and innovative solutions. But not only can we expand on the forecourt, we can expand in the home as well. We have a strong position in gas, which we can expand, particularly in renewable electricity, both through the grid but also from solar panels through our new spin-off company, Energia Independente. We have an ability to cross-sell using digital tools. Just to give you an example. In April, we added 10,000 customers and a lot of those actually through what we call the 3-minute app. You can get it online, but you can also find it in our retail stations. And that app will allow you to switch just in 3 minutes. But also, we have an excellent B2B business and a strong market share in gas and oil products. Here also, we think we can expand our renewable electricity sales. And we think we can do this profitably. And we think we can more than double our electrical sales by 2025. The foundation of this is a competitive supply portfolio of renewable electricity and integrating potentially also to our renewable generation position. It's about cross-selling. It's about integrating customer solutions. Innovation and digital tools are going to be key in this journey, where we tailor individual consumer and business solutions. To give you an example in that area, we have a promising, new e-mobility application for fleets called Flow. That is also building our capabilities around accessing customers. So EI, Energia Independente, and Flow are demonstration of Galp's agility, ability to innovate, which has a very short time to market. We will continue to expand those innovative solutions to customers. As a result, we believe that we can grow contribution from Commercial up to EUR 400 million operational cash flows by 2025. We think we can do so in a capital-light way, a high-return way, growing the bottom line despite a shrinking oil product demand. And the cornerstone of this is going to be the nonfuel contribution expanding from 20% to 40% by 2025. The other half of our downstream transformation business is in Industrial & Energy Management. Within industrial and particularly in refining, improving resilience is going to be key but also decarbonizing the products that we produce. We want to focus on good, high-return projects with short paybacks. But also, energy management is key here to taking a full integrated approach across our oil, gas and renewable electricity value chains. Our decision to close Matosinhos in 2020 has significantly improved the resilience of our refinery position. It's allowed us to focus on the gradual conversion of Sines from a gray to a green energy hub. From 2017 to 2030, we aim to reduce the Scope 1 and 2 CO2 emissions from our refining business by 50%. We're going to do this prudently. We're going to do it step-wise. Decarbonizing Sines, whilst improving our refinery margin, expanding our proportion of low-carbon products, there will be low-hanging fruits in high-return efficiency projects but important additions, particularly in biofuels but also desulfurization, to improve the flexibility of our crude sourcing and to reposition Sines higher up the Iberian refinery league table. At the end of the decade, with hydrogen, we can decarbonize further. But this will also be a platform for new fuels. Sines is in an excellent location with low-cost renewable electricity, fundamental for green hydrogen in the long term. But more of that later. Looking specifically at our projects. Firstly, optimization. Optimization in energy and operational efficiency will allow us to reduce our underlying OpEx by 15% to around $1.70 a barrel by 2025. We're going to leverage the digital applications we're already installing to fully harvest the potential of fully digitalizing our refinery. But we're also going to put in a desulfurization project that will desulfurize the 20,000 barrels a day of fuel oil fraction. This will allow us to expand the crude diet. This is a high-return project costing a little less than EUR 300 million. But it improves our long-term resilience right into the next decade. But we want to do more than just survive with our refinery. We want to thrive. So we want to expand into biofuels, particularly developing a 270-kiloton HVO renewable fuel business -- unit, a unit that's aligned to RED II but also has capability to produce drop-in sustainable aviation fuels. We think this is going to be positioned as one of the most competitive HVO units in the world. Why? Because we can recycle equipment from Matosinhos. We can drive synergies and from Sines, particularly surplus hydrogen available there, a project we believe we can deliver for less than EUR 200 million. We fully appreciate that securing long-term feedstock is going to be crucial for this project, and we will do that ahead of FID, which we plan to have next year. Moving then to energy management. When we did this full strategy refresh, the recurrent theme in almost every work stream was energy management, whether it's how do we market associated gas in Brazil, it's about placing the very competitively priced LNG volumes we're going to pick up in 2023, how do we optimize our LNG from Nigeria or our gas from Sonatrach, how do we get competitive crude sourcing, what opportunities do we have to trade crude and products, particularly around Sines, which has a world-scale storage facility, around 3 million meters cubed, how do we source competitively feedstocks for the HVO unit, how do we place our renewable energy electricity with maximum value, trading off value and risk, looking at merchant and PPA solutions but also integrating to our own consumption, sourcing electricity competitively for our customers, also for our hydrogen business. There is an enormous opportunity to focus on that integrated margin and risk management, to deliver value through our supply and trading, to offer low-carbon and bundled solutions, to drive for driven products and services. We're currently reinforcing our energy management team considerably because we really think we can extract more value from Galp's asset and expanding customer base. And we believe we can deliver more than EUR 120 million operational cash flow on an annual basis. Moving to renewables growth. We made a really important move last year in our 75% acquisition of ACS. This is a material position. And today, here in Lisbon, the sun is shining. We have 1 gigawatt of capacity online. The solar capture price in the last weeks have been around EUR 70 per megawatt-hour. So we're happy with this new business we have. Of course, going forward, we have a much more conservative assumption on the solar capture prices. But we're making really good progress on the energy transition. We want to expand firstly in Iberia, and then diverse by our geographies but also the technology, moving to wind and storage -- battery storage that is, but also leveraging partnerships. At the same time, being very financially disciplined with project financing and selling down our positions once they are derisked and leveraging up our own equity returns but then, through integration of risk management, unlocking the most value from the electrons that we're producing. As I say, today, we've got around 1 gigawatt in operation. We actually have 2.8 gigawatts of deals done with projects under development, 2 gigawatts with ACS in the Zero-E joint venture and about 800 megawatts outside that joint venture in Spain and Portugal. The development funnel of opportunities we're looking at today is much bigger than that even. But today, we're focused mainly on Iberia but already exploring new geographies, recruiting a strong team with the global capabilities. By 2025, we want to have an operation with 4 gigawatts and then up to 12 gigawatts operating by 2030. Most of that growth in the second half of the decade will be outside of Iberia with a particular focus around the Americas. This is not about bragging about gigawatts, this is about returns and cash flow. As I said before, on a life cycle basis, we want to get more than 9% IRR contribution from our equity in this business. We've taken a more conservative solar capture price in our premises going forward. We think we can leverage up with financing 60%, 70%. And as I say, we want to rotate our assets around 50%. This means we keep real discipline with our net capital. But we will retain the energy and asset management for all these assets. We're also building some distinctive capabilities with behind-the-meter battery storage options around hybridization between solar and wind, particularly in Spain. We're taking a varied approach on risk management. In Iberia, we will have a mix of long- and short-term PPAs and merchant risk. Outside Iberia, we're more likely to take long-term PPAs early in the process, lowering our merchant risk. On a pro forma basis, we want to deliver in excess of EUR 100 million operational cash flow by 2025 and EUR 250 million to [ EUR 30 million ] by 2030. This business will be deconsolidated off our balance sheet. So this will take the form of cash injection or dividends. We hope to be free -- cash flow positive. In other words, receiving dividends in the second half of the decade, contributing income to Galp's bottom line but still growing at the same time. This will become a ratable long-term cash flow with, I think, increased options for value capture around energy management and storage all the time. Moving then to our New Energies business. In addition to our end-to-end renewable energy business, we have other exciting opportunities, particularly in New Energies, where there are value pools, whether adjacent to our assets or transferable skills, where Galp's innovation capabilities will come into play but more industrial in scale than what we were doing in Commercial. Two focus areas in new business development for us today is hydrogen and battery value chain. We believe this can be really important for Galp in the future but also aligns to what Portugal and Europe is really focusing on at the moment. Now we talk about around 5% capital in 5 years. This may be more in a success case. But in the second half of the decade, we do believe we will be ramping up more capital investment in these businesses. Let's look at those businesses. Firstly, green hydrogen. We believe we have everything that's needed for success in this business: low-cost renewable energy, cost-effective execution with a skilled workforce, an ability to build at scale and to come down the cost curve but also a conducive regulatory environment. Sines in South Portugal has all of these and allows us to move Sines over time from a gray to a green energy park. It does this by offsetting the cost of gas, the CO2 costs but also utilizing the RED II directive. So this decade, we hope to reduce or replace all of our gray hydrogen with green hydrogen. That's about 600 megawatts of electrolysis capacity, 60 kilotons of hydrogen. And we aim to have the first 100 megawatts already in the first half of this decade. Because we're building at scale, we think that's just a start because Sines is one of the most competitive places in Europe for green hydrogen. We see other opportunities like spiking hydrogen into the gas network, distributing to heavy-duty vehicles through our retail positions but also new opportunities for e-fuels or other green applications, such as ammonia, or industrial applications, particularly in hard-to-abate sectors of the global industry. In addition, we believe there's an opportunity in the battery value chain. The growth of battery demand, particularly because of the growth of EVs, is going to be more than tenfold in Europe by 2030. Securing a European battery value chain becomes actually a point of energy security in the European Union. An end-to-end back battery value chain with green credentials has a particularly important place in the thinking of European Union. Portugal is really well placed. Portugal and Northeast Iberia have both some of the best lithium geology in Europe. And Galp is already in discussions for an offtake of the raw materials from a mine here in Portugal. But our focus isn't mining. Our focus is going to be lithium processing. And today, in the whole of Europe, there are no lithium hydroxide processing facilities in a continent that looks to need 400 kilotons of what's called lithium carbonate equivalent demand by the end of the decade. Portugal, is a -- really well placed. It has the geology, it has the deep seaports, it has the competitive and skilled workforce but also the cost-effective renewable energy. And Galp as a company has transferable skills. But we're also building partnerships, and we're in advanced discussions with a leading EU battery manufacturer, considering a first lithium processing facility of at least 25 kilotons. Both the hydrogen and the battery value chain is in business development. But with the right condition, this could be fast moving. As I say, 5% of capital allocation in the first 5 years but gaining weight in the second half of the decade. Those were the 4 themes. Now to our decarbonization path. And if we look, Galp has a strong ESG performance, a strong track record. We think our business plans strengthen our ESG position. And we have an ambition to remain a leader in ESG. We've embraced transparent reporting on environmental and social issues. We have an active Board who has the desire to lead Galp through the energy transition. We've already been acknowledged in ESG by the Dow Jones Sustainable Index (sic) [ Dow Jones Sustainability Index ] to be the leader in our oil and gas sector in Europe. We aim to retain this lead. And in this regard, we are going to increase the number of decarbonization parameters we were going to disclose but also the pace in which we plan to decarbonize. Last year, we committed to a carbon intensity index of the products we sell to reduce by 15% by 2030. We're increasing that now to 20%. But in this update, we have 2 more parameters. Firstly is our Scope 1 and 2 CO2 emissions. The CO2 we're remitting in our operations from 2017 to 2030, we're going to reduce that by 40%. Now admittedly, the Matosinhos closure was a big step forward, but we are going to also decarbonize Sines. But we're also introducing a new parameter, and that's about the CO2 intensity of the energy we produce, whether it's -- this is Scope 1, 2 and 3 -- whether it's in Upstream or renewable energy. And by 2030, we want to have reduced that by 40%. We introduced this because this is where we're spending most of our money. We also, in this update, have moved from saying that we're going to move in line with Europe on getting to net zero by 2050 by unequivocally saying that we're fully committed to be net zero by 2050. And as you can see, by 2030, we will be already making good progress. I'll hand over now to Filipe, who will talk about the financial framework.

Thank you, Andy. Let's then see how this refreshed strategy translates into our 2021-'25 numbers. First, for reporting purposes, we are not changing the 4 business segments you guys already know. We have only renamed Refining & Midstream to Industrial & Energy Management. Now this new name serves to highlight we want to broaden the scope and to decarbonize our industrial activities beyond traditional refining. We also want to highlight the bigger role we want energy management to play going forward. Cash generation at group level. Our key guidance is based on operating cash flow, so OCF. That's our measure of clean CFFO without working capital variations, inventory effects and special items. And as most of renewables will be deconsolidated, we add here their pro forma OCF contribution as if renewables were consolidated. And that's proportionate to our equity stakes. Now this year, group OCF should be over EUR 1.7 billion with refining and Commercial still recovering from a rather difficult Q1. Group OCF should increase to over EUR 2.3 billion in 2025, and that's using our base case macro deck, which includes Brent at $60. Now be mindful that this growth in OCF is relatively back-ended, so with Bacalhau operating at close to full capacity in 2025. So we are not factoring in a lot of OCF growth over the next couple of years other than the growth we see coming from the gradual transformation of our downstream businesses. For 2021, we have revised up our EBITDA guidance to over EUR 2 billion, and this should be over $3 billion by 2025. CapEx guidance for this year, it remains unchanged at EUR 500 million to EUR 700 million, and that is net of the recent GGND divestment. Now the plan has an average of EUR 800 million to EUR 1 billion in net CapEx per year. This represents a 20% reduction versus the previous plan and mainly from project realignments and cash preservation measures. Now most of this CapEx is underway with a very good line of sight, I would say, such as Bacalhau and the existing solar pipeline in Iberia, plus the recurring investments in Tupi and Commercial. We will continue to keep our CapEx discipline. What is different in this plan is also that around 50% of net CapEx will be allocated to low to no carbon such as renewables, biofuels, convenience, hydrogen and the battery value chain. For renewables, we assume that we project finance off balance sheet at around the time of COD, so commercial operation date. And we monetize half of what we have just developed very soon thereafter. So we want to keep this business as reasonably asset light. Now if I zoom in on Upstream. We have over EUR 6 billion in OCF during the plan period. Until 2024, OCF should be stable within EUR 1.1 billion, EUR 1.3 billion, and this will increase to over EUR 1.4 billion in 2025 with Bacalhau. EBITDA follows a very similar trend, rather stable until 2024, EUR 1.7 billion, EUR 1.8 billion, and then increasing to over EUR 2 billion from 2025 onwards. Now we saw on the previous slide that Upstream had some 40% of group CapEx. This will have to be supported by potential portfolio management to control overall investment levels in the group and to keep the balance sheet strong. And given the current uncertainty around Rovuma LNG, we are not including much CapEx for the onshore projects within the plan period. Coral FLNG is on track, so that's obviously included in our plans. Commercial activities are picking up really nicely now. But after the slow Q1, we keep a prudent OCF of about EUR 300 million for the full year 2021. OCF should gradually rise to EUR 400 million or so and EBITDA to EUR 450 million by 2025. So -- and for the entire 5-year period, we have over EUR 1.6 billion in cumulative OCF in Commercial, and that's across all products and all geographies. Now diversifying the commercial offer is obviously important to offset declining hydrocarbon demand. By 2025, 40% of Commercial OCF should come from c-stores, convenience, gas and power sales, electric mobility and decentralized solar, for example. So this should continue to be a high-multiple business. And for that, we have allocated EUR 500 million to EUR 600 million in Commercial CapEx during the year. On Industrial & Energy Management, the plan is, as Andy said very clearly, to improve resilience and to decarbonize. So for now, OCF will be largely driven by refining margins, which currently are relatively weak. Hopefully, this will improve soon as jet fuel demand normalizes. In 2021, we also had the one-off costs related to the access to the regasification terminal in Portugal. So for this year, 2021, OCF from Industrial & Energy Management is expected to be only EUR 100 million to EUR 150 million, and EBITDA lower than that, about EUR 100 million as it does not include the associates' contribution from our stakes in the gas pipelines, which will expire anyway this year. Co-generation, logistics and other nonrefining industrial businesses should bring in some EUR 25 million to EUR 30 million per year in EBITDA. And HVO will add another EUR 50 million or so to EBITDA once it starts up in -- before 2025. Overall, Industrial & Energy Management OCF should be over EUR 350 million by 2025 with energy management contributing with over EUR 120 million. The majority of CapEx will be directed to transformation, HVO, desulfurization. These are investments which are adjacent to our very core operations. So it reinforces the competitiveness and the decarbonization of the overall Sines complex. On an accumulated basis, we have some EUR 1.2 billion in OCF during the period and some EUR 700 million in Capex. Now the CapEx bar on the right-hand side is already net of the recent divestment in GGND. On renewables, the plan is to keep this business fully deconsolidated with its own capital structure and project finance. And our pipeline is gradually built. By 2025, pro forma OCF should be about EUR 100 million. This assumes we have about 50% of the equity on the over 4 gigas we expect to have operating by 2025. Our share of the projects should generate over EUR 300 million in OCF during the plan period. But this, however, becomes very meaningfully higher from 2026 onwards. Renewables CapEx should total some EUR 1.2 billion during the 5-year plan, and that's already net of asset rotation. So the plan is to keep and fund 100% of the projects during the develop and build phases, project finance at about the time of COD and then rotate half of our equity very soon thereafter. So this supports our overall CapEx plan and leverages the returns of renewables. New Energies, green hydrogen, the battery value chain, this should make up, I'll say, about 5% of group net CapEx. This is ballpark. It will depend on how quickly these projects get off the ground. And most likely, we will have partners in some of these projects, and we'll be raising finance also at the asset level. So we expect OCF from new businesses to be positive in 2025. Now the OCF bar here doesn't show new businesses OCF as 2025 positive OCF is actually eaten up by negative flows during the initial years. Now putting it altogether, we have about EUR 9 billion in OCF over the 5 years. And here, OCF is as we report, so not with a pro rata OCF from the deconsolidated business. This is just with the dividend that we actually receive from, say, renewables after renewables has -- services its own project finance debt. So where are the EUR 9 billion going to? About 45% is going to CapEx; about 1/3 is going to dividends to the Galp shareholders, that's the base dividend and the variable component; about 10% to minorities; and the rest for finance costs; and there's a little bit of deleveraging in the plan as well. And because we have much lower sustained CapEx than our peers given the youth and the long-life nature of our Upstream portfolio, we have room to grow our business and decarbonize significantly faster. On the dividends, now we should be already under 1x net debt-to-EBITDA this year, so -- which would support the variable component of the dividend. And the way this will work is as follows. The base dividend of EUR 0.50 is paid semiannually, say, half is distributed this fall and half is paid in May after the AGM, and that is when the variable component is added as well. I will stop here, just highlighting that the plan has free cash flow covering 1.2x total distributions. So the quality of the dividend policy is quite robust, we think. Andy, back to you.

Thank you, Filipe, for that impressive deep dive into the financials. I'd like to make some concluding remarks before we go to the Q&A. I hope you've seen that we can thrive through the energy transition. We can and will accelerate the decarbonization of our portfolio. We will grow in a resilient and value-driven way whilst maintaining a robust financial position. But we will also offer competitive shareholder returns. Can I illustrate and compare with our peers? We're offering leading cash flow growth of 35% of operational cash flows through 2025, a strong pace of decarbonization versus our peers. We're growing in a capital disciplined way with only 45% of our operational cash flows put into that growth. And we're offering 1/3 of our CFFO in dividends. This is truly distinctive. We're going to work with the Board with the support of my ExCom colleagues, and we are committed to take on this challenge. So let's regenerate the future together. Thank you.

Thank you, Andy. Thank you, Filipe. So this concludes the presentation. I hope it was an insightful one for you. We will invite you to watch a small video now, and we will come back in 5 minutes. See you in a short while. [Break]

Welcome back. And firstly, thank you so much for listening to our presentation. We now have the Q&A, and hopefully, we can answer all your questions and explain our plans further. Before that, I have got some support, some colleagues from the ExCom. I want to just introduce them. Firstly, I think a lot of you know Otelo. He's going to be our Master of Ceremonies. He's in charge of IR. We've got Filipe, who is my CFO. He keeps me on the straight and narrow. We have Carlos Costa Pina. He's our CEO (sic) [ COO ], Corporate. He will answer questions around sustainability. We've got Susana. She's in charge of renewables and new business development. We got Thore. He's responsible for our upstream growth business. We've got Sofia. She's responsible for our Commercial business. And we've got Carlos Silva, who is responsible for our Industrial & Energy Management business. So I have the whole team here ready to answer your questions. And I'm going to hand to Otelo to actually introduce all those questions for us to answer. Otelo.

Thank you, Andy. Before we jump into Q&A, a couple of organizational questions. So we will having sell-side analysts connecting through video, and we will also read some questions made through the chat platform. Because we already have a lot of participants, we will need to limit some of the questions. [Operator Instructions] We will try to limit the Q&A up to 90 minutes. And I'm told that I already have the first in line for the questions, Joshua Stone for Barclays Capital. Josh, good to see you. Floor is yours.

Two questions, please. Firstly, you defined a base dividend level at EUR 0.50. Can you talk about why is that the right level for Galp? Should we consider it as sacrosanct regardless of the environment? Or is it defined by a particular oil price? And then my second question, on Brazil. You mentioned recovery rates. I have to see where we are today. You previously talked about a long-term addition of 40%. Is that still the case? Or has that now gone down the order of priority?

Okay. So thank you very much for that. And firstly, let's talk about the dividends. I've got Filipe to help me here. But I think you had a question about the base. And why do we say the base at EUR 0.50 and then have a variable component? Well, it was very much for as you explained. This is a base case, a resilience case. And in our planning, we actually looked, particularly if we have an accelerated transition, and I mentioned that at the start of the presentation, what kind of prices may we get in oil and other parts of our business? And what can we afford as a base dividend? And our conclusion was the EUR 0.50 was resilient through the cycle to keep our balance sheet in shape. And then the variable component is very much related to if we got the macro more like the base case, that, that would start to pay out. Do you want to add anything to that, Filipe?

Josh, so the EUR 0.50 is designed to withstand macro events. And we all learned our lesson last year, so we want to avoid this. Does EUR 0.50 stand if Brent is below $50, refining margins go down? Yes, it does. The upsides, and you see Andy said about 35% of our current market cap could be distributed. So if you do the math, that would be, on average, about EUR 0.20 across the period with Brent at $60. So EUR 0.50 is resilient, there is upside. One of the questions we also get asked a lot, Josh, is buybacks. And what -- we've kind of tried to provide this solution on having the variable component, working a bit like a variable dividend if we have excess cash flows. So that is the logic.

Joshua, then your second question around recovery factor, particularly of what we would now call the Tupi field, and what do we think that recovery factor is. That's something that we really leave to Petrobras to reveal to the market as the operator. But to answer your question, no, we haven't changed our view on how much oil we can recover from this field. As I said in my remarks, we are at -- really just produced a fraction. We're essentially in plateau now but with a lot of development opportunities still to come. So actually, it's kind of premature to really count on those last percentage of recovery, but there is -- because we're not announcing that number today, it is not because we've changed our view in the field. But it is contingent on green -- a plan of development and possibly a field lifetime extension, which will be part of discussions this year. I don't know if, Thore, you want to add any more to that.

I certainly would like. You guys that have followed Galp for many years know that I think the world about Tupi/Iracema, it's world class by any standard. Six years ago, Galp launched on its Capital Markets Day the ambition that we should really drive up the recovery on Lula and Tupi/Iracema. Actually, last year, there was a major breakthrough on this because then we agreed in the partnership that we should sign an MOU where the whole purpose is that we are working this year in order to agree a new plan of operation and development, which we have all the ambition to deliver by the end of this year. This will be a significant step in order to realize that long-term ambitions, which, I have to say, I'm extremely proud of what the Galp team have contributed and how they have been asserting into the partnership that we should really drive for this. I remind you, 1 percentage point increased recovery on Tupi/Iracema is nothing less than 200 million barrels. That's a good day at work for any explorationist.

Thank you, Thore. I think we can move on. We will now have Mehdi Ennebati from Bank of America, Mehdi, [Foreign Language] Mehdi. We are happy to take your question.

So 2 questions, please. One follow-up on the dividend that you detailed the little bit. I mean it seems that you are accepting for your dividend to be quite volatile. Let me give you an example. Imagine the oil price this year, we'll have $70 per barrel. So you will have a relatively strong cash flow from operation. And next year, we go to $60 per barrel. Then you might have to lower the dividend in order to respect your new dividend policy. So am I understanding well when you say that your dividend could be quite volatile in the coming years depending on the oil price? And just one very small question on that. You expect EUR 2.3 billion of CFFO by OCF, let's consider, which is roughly the same by 2025. So if I am understanding well, does that mean something like EUR 0.92 dividend in 2025? Next question regarding your production growth in 2025, okay? So you provided a 25% growth compared to 2021 production. So this gives around EUR 160 kboe/d guidance in 2025. However, currently, your production at plateau is around 140 kboe/d, excluding the pandemic impact. And Bacalhau will add another 40 kboe/d at plateau. So that mean -- that makes your production significantly above your guidance without even including Coral, Sépia production, which would add another 10,000 kboe/d. So my question is very simple. Are you expecting a significant deflation rate from your existing production in Brazil to justify 160 kboe/d and why? Do you already take into account some delays regarding Bacalhau start-up and ramp-up due to pandemic situation in Brazil?

Thank you very much, Mehdi. And so let's first answer your question around will this dividend be quite variable there. The answer to that is, yes, it will be, but it has the resilient EUR 0.50. And it has an ability -- and your calculations are right, in 2025 it could be up, and it could be more like EUR 0.90 or 9% yield at that point. As Filipe pointed out, on the average, if we look at our plan, it's around 7% over the 5 years. Clearly, if we have a real dip, we will use the balance sheet a little bit to smooth out and allow the debt to go up a little bit if -- and still pay the EUR 0.50. So it has a floor, and it has this flexible variable element that is very much aligned with the macro because we're pretty clear about how much capital we're going to spend, and we've got pretty clear ideas of how much cash our business can generate. So I think the answer is yes, you are right, it will have that variable. But it means our shareholders are enjoying the business when we're enjoying it. And as Filipe says, it avoids the situation, this boom and bust that we have to cut the dividend and everyone's disappointed and you don't have any understanding and predictability of where we're going. Now you understand steady base with variable that reflects the macro. I think, right, just leave it on the dividend and move on perhaps then to the -- and I'm going to get -- ask Thore to contribute here, the numbers. And so we've got Bacalhau. Is it, 40 in 2025? How do we think about that 25% increase? Does that mean our base is declining? Perhaps you can explain a few things around that, Thore.

Yes. Thank you. I think it's very important to factor in here that even in 2025, Bacalhau will be in a ramp-up state. We are expecting no delays to the start-up of Bacalhau. But as we have guided you to, this is second half 2024. 2025 will be a ramp-up year. And then we have put into and is in our plan that there will be a natural decline from the existing fields. In addition to that, we have put in an element of cautiousness, where we have sort of, in general, assumed on some of the Brazilian assets that we have a somewhat lower production efficiency because we see that the units will require more maintenance. So you can say it might be prudency. We think it is good business practice to put this in, and we're feeling comfortable, therefore, with the 25% growth target that we have put forward for 2025.

So I think -- so the base is pretty stable. I think that's the conclusion. And the Bacalhau comes up and is still in ramp-up in 2025. And that really fundamentally, I think, is the answer to that one. Yes, thank you for the question, Mehdi.

And the next in line will be as Oswald Clint from Bernstein. Oswald, good to see you. Please go ahead.

Andy, it's refreshing, I guess, to hear your enthusiasm about the Upstream, your developments and even exploration certainly in this day and age. But I wanted to ask you around what's the longer-term growth rate do you think is possible beyond. Or what should be targeted given your accelerated decarbonization targets today, please? And secondly, I wanted to ask around the retail network, the B2B and the cross-selling. It's -- this is new. I think this is a strategy -- it wasn't on the agenda before. It certainly felt very Shell-like listening to it. But we know the business through Repsol in Spain. But others like CEPSA, I think, have been less successful trying to replicate them there. So I can see why Galp should be successful, but why is it not done before? Why are you confident? And the 20% to 40% uplift here, is that back-end loaded? Or is that ratable across the next 5 years?

Yes. Thank you very much. Oswald. Let's -- I mean, we're not disclosing numbers beyond 2025. You can see that. The exploration, I have to be clear, and I think this is quite an important point. After the 2 wells that I have indicated with follow-ups, we are going to halt our exploration -- our frontier exploration program. This is very much saying we have enough in our resource base to stimulate growth for some time. 2.4 billion barrels of 2P and 2C resources, 50 years at current production rates. So that's a lot of oil and gas currently discovered, which gives us an ability to grow after 2025. Clearly, what happens to Mozambique when the LNG project is brought online is an important element in that. But we're not guiding on long-term production for very much the reason you indicate. We're taking a cautious approach today with growing our alternative businesses. We have the options in Upstream. And we will pursue those when, for instance, the security allows and when they become very attractive opportunities within our capital discipline. And we talked about our New Energies business, our hydrogen business, battery value chain. So we're going to have options for investment after 2025 that today, we can't be fully predictable. So it isn't appropriate for us to be giving you production numbers beyond 2025 when we really don't understand which are going to be the most attractive investments for Galp and which fits our long-term strategy. So we come to the Commercial business. And I think this realization that we can do so much more with customers, I think, is one that -- yes, I think it is a new, fresh approach in Galp. It's -- I brought something and -- but Sofia, who has only recently joined our executive, also has brought that sort of insight. I think in -- particularly -- I think particularly in Portugal, we have such a strong brand. We know we are the market leader. We have the opportunity to offer much more to our customers than we're offering today. And I think that this gives -- we're actually already on the journey. So this isn't just like, let's do that tomorrow. 2020, we actually started to do quite some exciting things. And we're going to have some of these new hubs online relatively soon. So we're going to lean into this quite quickly. And I'm going to hand over to Sofia to perhaps talk about a couple of things we're doing and just touch on how quickly we're going to be able to offer more services and hopefully make more money in the nonfuel space. Sofia?

Thank you, Andy. And thank you, Oswald, for your question. We are super excited to speed up on this transformation. I mean we believe that we have the right to be on this area. I mean actually, the c-stores represent EUR 60 million of EBITDA today, and we believe that we can double them until 2025. Why? Because we have -- and as Andy mentioned before, we have 0.5 million of people entering into our stores, customers that are engaged with our strong brands, that have -- but have been engaged with more digital tools that we are implementing. And on the other side, we can also cross-sell, as you mentioned, to these customers and touch them during their day not only on our ecosystem of e-mobility but also in our ecosystem of the home. And as Andy mentioned, we are rethinking and we just conceived 3 concept stores for the new service hubs around mobility and around lifestyle. With this, we are going to offer products and services totally different around these new trends, these community trends. And the world has been changing, so we are also changing. We believe that with this, we'll be able to go from 20% of low-carbon contribution into 40% in 2025. And it's true that it's something that it's new and it's something that other companies didn't succeed, but we believe that we have the right to do because we have such a broad portfolio that allows us to really cross-sell and to touch point with the customers on all of these journeys. And on top, we had recently launched new businesses like QI (sic) [ EI ] and like Flow that are also being speeding up towards our customers and towards the B2B. And with also these New Energies, we'll be able to cross-sell and to maximize the value towards our customers.

Yes. So, I mean -- and last year, I mean, we started to expand in Uber Eats and Glovo. And we found customers really like ice cream, particularly in the evenings. And so you get this array of products that we're able to offer customers that I think we hadn't really discovered previously that I think we'll be very successful for the future. So Otelo.

Next time you think of ice cream, just call us. So now next guest is Raphaël DuBois, [Foreign Language], Raphaël, from Societe Generale. Please, we are happy to take your question.

[Foreign Language] And you should not be talking about ice cream. I'm starving now. Anyway, 2 questions, please. You show on Slide 31 your expectation for EUR 100 million of OCF by 2025. Can you please share with us a little bit more your assumptions behind this number? What kind of power price is embedded? And also, what will be left once project finance, debt servicing is achieved? That's my first question. And the second one is on the offtake agreement that you mentioned in the New Energies business for lithium. I think you talked about a mine. Are you referring to the project of Savannah Resources? And if not, can you maybe share with us a bit more information? And what is the plan B if this mine of Savannah Resources is not up and running by 2025?

Okay. Thank you, Raphaël. I think we -- look, let's -- it's really important for us to perhaps explain a little bit around the cash flows around our renewable energy business. We have taken a more conservative approach. We have increased the number of PPAs and, therefore, the risk management of that. And perhaps, Filipe, can you explain how we manage the debt and how much of the EUR 100 million that we can recover?

The -- it's actually quite a simple business. The price at which you sell the electrons drives -- CapEx is relatively standardized certainly in Iberia now. So if you have a solid capture price, which we've now assumed at a deeper discount to baseload prices, oil prices, and you take EUR 35 to EUR 40 and you multiply by 20% yields on your installed capacity, and that's a net of 2 gigas, not 4, so because we're assuming we're rotating out of half of what we have, then you get that sort of number. So fairly straightforward. What is left of this is a deconsolidated business. So this money in 2025 is still not coming to Galp. We are servicing the debt of the project companies, and we're redeploying excess cash into new projects. So free cash flow positive only a few years after. What we are not factoring in, in this plan is dividend recaps, and that's a huge upside. So there's very little point in having this great business delevering quickly, not paying dividends. So most likely, given that it's such a low-risk business, that you would do a dividend recap and Upstream cash into Galp much earlier than we are building up in the plan.

So look, if I can perhaps then just address the whole issue around -- we are assuming a declining solar capture price of the pool prices. We are assuming we're going to take a fair amount of short and long-term PPAs. We got some merchant exposure as well. This is Iberia. Outside Iberia and the rest of the world, we think we will take a larger amount of PPAs. But some of these things, clearly, as time goes on, we see opportunities to leverage up returns more than perhaps just even the 9% that we put into the presentation. I'm going to ask Susana to say a little bit about how we might think about we might even get some more from this base plan, which I think we've conservatively set. So Susana?

Thank you, Andy. So of course, as Andy has mentioned, we have considered a larger share of PPAs in our portfolio. We are planning that by the end of this period, we'll have between 80% and 90% of all our projects under PPA, more outside Europe, of course, than in Iberia. But I think there's a lot of upsides that you can put on top of these returns with PPAs. Of course, you have financial returns, you have asset management fees -- returns, you have some short-term hedges returns that you can improve the economics of the projects. But I'm also especially excited about, let's say, 4. One of them is because of our integration with the Commercial business, we can take some merchant risk that can balance across our business. So we can take some of this upside. And I think for me, it's also very important, as Andy already mentioned, the asset management, where we will be able to anticipate some of the value of these projects and rotate the capital for further projects. And that will also increase the overall returns of these projects. But maybe for me, because I'm also into innovation, the 2 that I'm most excited about are storage, behind-the-meter batteries. We are already working on a pilot that we hope to have ready by Q1, where we see a huge upside about being able to balance the production curve and being able to capture the hours of the day with higher electricity prices. And of course, also hybridization with wind. This is an upside everywhere but especially here in Iberia, where you can get up to higher -- 50% more capacity on your connection point. And by combining solar and wind, you are able to create a much more baseload profile, more profitable for our clients. So this is a very conservative scenario, a lot of upsides, a lot of leverage that we can have in order to increase these IRRs going further.

Thank you, Susana. Let me now address the whole issue of the battery value chain. And I did mention that we are in discussions with a mine, and you will -- you may have well have seen a press release where our HoA lapsed at the end of last week. We don't like negotiating through our press releases. But we're in discussions with the mine still. So I have to confirm that. But this is a lithium-prone area that spans across North Portugal into Spain in Northeast Iberia. So it's an area where we believe there will be more opportunities. But because we're planning on the processing side over time to perhaps take a really big position, we also have to consider opportunities also to import some of the raw materials. So we're looking at all sorts of options, but our focus is on lithium processing. And for that, we're actually working with a leading European battery manufacturer on understanding how we can work together. As I said, there's no lithium processing in Europe. There's going to be an enormous demand. So we see a key opportunity. Obviously, sourcing renewable feedstocks is going to be crucial. Clearly, the mine in Portugal is one that we have been working, we've done some due diligence, and we need to work with them on how we could work that particular mine. These things have to come together for us to make this whole chain. But Galp really wants to be right in the middle of that chain, working from the sourcing of the spodumene through to the delivery to the [ cathode ] manufacturers on to the giga factories. So it's early days. It's by the week, things are moving fast. But I have to say, as a business leader looking at the future of Europe and the future battery demand in Europe and the geology of Portugal and the deep seaports and the capabilities of Galp, this is a business that I think could be really very big for Galp for the future and very much aligned with the energy transition.

So I will take the opportunity to read one of the questions that we received in the platform from Jorge Guimaraes from JB Capital Markets. Since Galp is not a renewable developer, how do you expect to create value in the development phase in order to fund down with the profit later to 50% you expect to fund down? I assume part will be capturing the margins of electricity supply from cheaper sourcing, but even so, the question remains.

Sorry, Filipe, you want to say something?

Yes. So we do have very significant capabilities and you will have noticed our CapEx into renewables has gone up compared with our previous plan. We are assuming we'll hold on to the projects during the build, develop, derisk phase, project-finance only at that stage and find partners, whilst before the plan had this monetization much before. So there is a significant to capture and using our skills, our balance sheet, derisking PPA commercial contracts so that we monetize the premium that comes with higher risk as well. And we have very significant demand by very low risk, very low cost of capital investors that would like to come in at that stage with a much lower cost of capital. So the rotation parts of the build derisk and sell-down is integral to our business case.

And our next question comes from Biraj Borkhataria from RBC Capital Markets.

Hope you can hear me. Two, please. The first one on decarbonization targets. The base year is 2017. Could you talk about the impact of the refinery closure on those targets as we -- in 2021? I would have thought that that's going to a significant step, both in an absolute basis and [indiscernible]. And the second question is on Bacalhau. At one point earlier on in the process, you were talking about 2 production units. Is that still being considered at all? Or is that completely opposite point?

I didn't quite hear...

Can you repeat the second question, Biraj? Sorry.

On Bacalhau?

At the Bacalhau, at one point you were considering 2 production units earlier on. Is that still being considered at all at some point? Or is that an [indiscernible]?

Thank you. Biraj, good to see you again. Clearly, Matosinhos closer has helped us with the overall Scope 1 and 2 decarbonization and also towards the 50% reduction in the refinery CO2 emissions that we have. I think on the refinery, of the 50%, around 27% is actually from the Matosinhos, if I'm right. So it's an important part of it. And clearly, refinery closures and the CO2 we save from that. But the rest of that, and I look at the 50% we're talking at Sines or the refineries in total is going to be various decarbonization projects that we're going to go through low-cost decarbonization projects but also then introduction of hydrogen over time in Sines. So that really are the key elements for us to -- on a whole Galp basis to reduce 40% from Scope 1 and 2. And so the second question was related to Bacalhau and the second unit and so what happened to it. Got the first phase, FID yesterday, great news. So Thore, where is the second unit?

First of all, I have to say that I'm so proud of Galp also in this case because we are the only original partner in Bacalhau. The others disappeared. Equinor and Exxon came in that really accelerated it. And yesterday, we have done the FID of something that is a world-class product by any standards. And yes, we think there are more. That will happen in the second phase. What we need to do before we decide on that is to do further appraisal work. And based on that appraisal work, we will then decide what will then be the best way of developing the next phase. Several options. It could be a tieback. It could be a stand-alone unit, but we need more appraisal. But the big, big triumphant day for the Galp team yesterday, that actually was the only original investor in the Bacalhau field.

Good. Thank you, Thore. So more news to come on further development to Bacalhau beyond Phase 1.

Okay. Next one from Peter Low from Redburn.