Galp invests €128 million on Sines refinery spruce-up
Portugal’s oil and gas giant Galp is to invest €128 million on keeping its refinery at Sines in tip-top operational condition.
Part of the industrial unit that houses the sole refinery left in Portugal after Matosinhos was deactivated this year, and which produces 220,000 barrels of petroleum per day, was closed for 48 days in January, costing Galp €41 million.
The refinery will also shut for the two months of October and November for maintenance with an estimated cost to the company of €87 million.
Despite the stoppage, the Sines refinery was never and will not be 100% paralysed with production continuing. Moreover, an official source at the company told the newspaper Negócios, “stoppages are part and parcel of normal operations for a refinery, so we can’t say it causes losses”.
Galp Energia’s refinery is one of the largest refineries in Europe, with an annual processing capacity of 10.8MT. It began operations in 1978 and has since been modified to add conversion units.
The refinery is spread across 320Ha and comprises of 25 process units. It produces gasoline, diesel, liquefied petroleum gas (LPG), fuel oil, naphtha, jet fuel, bitumen and sulphur. These products conform to the latest environmental requirements and contain very low levels of sulphur (10ppm).
In 2007, an expansion project, called the deep conversion project, which would add new conversion units to the refinery, was planned. The €1.4Bn project was completed in the third quarter of 2012. The hydro-cracker began commercial production operations in January 2013.
In its H1 results Galp had a net profit of €508 million, up 21% on the same period of 2022. Galp’s Resource Consumption Accounting (RCA) EBITDA was €1,781 million, while Operating Cash-Flow (OCF) was €1,065 million. Net Capital Expenditure (CAPEX) totalled €316 million, mostly directed towards Upstream’s developments and considering €77 million of initial proceeds from its Angolan upstream assets disposal. FCF amounted to €854 million, with robust cash generation driven by operating performance, although reflecting a high concentration of tax payments made in the first quarter (phasing effect) related to upstream activities in Brazil. Net debt was down 12% compared to the end of last year, already considering dividends paid to shareholders of €209 million and the €235 million share repurchase programme executed throughout the period, as well as dividends to non-controlling interests of €87 million.
In presenting its H1 results Galp referred to the “refinery’s good industrial performance at Sines” taking into account the “favourable environment”, while continuing preparatory work for its mega decarbonisation project for the refinery by switching to green hydrogen and sustainable fuels.
Between January and March 19.6 million barrels of oil were processed at Sines, a fall of 10% in relation to the same quarter in 2022 (21.8 million barrels) because of the maintenance works.