Spain's Repsol plans to boost kerosene production by 15 per cent to 20 per cent amid a disruption in global supply of jet fuel caused by the Iran war, it said on Thursday, as first-quarter adjusted net profit rose nearly 57 per cent on soaring oil refining margins.
Spain's main refiner and oil producer booked an adjusted net income of €873 million ($1.02 billion), still undershooting a company-provided average forecast of €897 million because of price lag effects in its downstream unit.
Its refining margin in Spain more than doubled from a year ago, to $10.9 per barrel.
The company said global volatility from the Middle East conflict influenced the result and it allocated €1.2 billion in the quarter to beef up crude oil inventories and maximise the available feedstock.
The company expects to produce between 560,000 and 570,000 barrels of oil equivalent per day by 2026, which could increase, depending on improvement in Venezuela, it added.
Venezuela has recently signed exploration and other deals with international producers, including Repsol and Italy's Eni, as it opens its oil industry to foreign investment following the ouster of President Nicolas Maduro by US forces in January.
Repsol will receive the first ship with crude from Venezuela as payment for production this week, with additional cargoes expected going forward, it said.
Repsol, which has no assets in the Middle East, has applied discounts amounting to €35 million to date at its more than 3,300 service stations in Spain to mitigate the effect of fuel price volatility on customers, the company added.
Adjusted earnings before interest tax, depreciation and amortisation (EBITDA) soared 110 per cent to €2.61 billion.
Repsol also said it was on track to meet full-year commitments on shareholder remuneration. The company is targeting shareholder distribution of 30 per cent to 40 per cent of operating cash flow.
TotalEnergies and Eni both roughly doubled share buybacks recently, with Eni saying its decision stemmed from expectations that the war would keep energy prices higher for longer. British major BP declined to boost investor returns with its war-related trading profits.
"In terms of guidance, Repsol has elected to maintain all guidance as a prudent approach to a volatile macro," RBC analysts said in a note.
"We would anticipate an update on the distributions plan alongside two Q results, although clearly this will be a topic for the call later today."
(Reporting by Madrid and Gdansk bureaus and Stephanie Kelly in London; Editing by Andrei Khalip and Clarence Fernandez)