Upstream: growing flexibility and results
Average hydrocarbon production up by 23%
In 2016, the Upstream area demonstrated its great ability to adapt to lower prices, achieving profits of 52 million euros, a 977 million euro increase compared to 2015.
This progress was made possible by the proven flexibility of its assets portfolio, which allowed this business to focus on projects capable of generating value, even in the depressed crude and gas price scenario of 2016.
Within its efficiency and synergies program, the area obtained savings of 900 million euros, significantly exceeding the objective established for 2016. This program includes commercial actions, techniques, and processes which, in addition to improving cash generation capacity, increase sustainability and efficiency in the medium-and long-term.
By December 31st, net hydrocarbon production had grown 23% to 690,200 barrels of oil equivalent per day on average, mainly due to the assets from the purchase of Repsol Oil & Gas company (ROGCI) — whose production was included from the effective purchase date, May 8th, 2015 — and increased production in Venezuela (Cardón IV), Brazil (Spainhoá), Norway (Gudrum), and Peru (Block 57). Proven reserves grew in 2016 to 2,382 barrels of oil equivalent, with a replacement ratio of 103%.
In 2016, gas production grew 27%, thereby reinforcing the presence of this energy source, key to the future energy mix, in our assets portfolio. At present, gas accounts for 65% of our production and 75% of our reserves.
The Upstream strategy focuses on ensuring long-term sustainability in this area, always with a firm commitment to safety and the environment. The objective is to guarantee an average production of approximately 700,000 barrels per day and a reserve replacement ratio of more than 100% until 2020, on the back of recent discoveries that will be developed over the coming years.