Will present our 3 year plan. In behalf of our top management to answer your question and add more details for each business. Before indicating our full year planning, I would like to give you an overview of the distinctive factors of today's earnings. In 2014, anticipating the downturn, we decided to transform our business model. We spread a new culture of integration and efficiency that has allowed us to accelerate time to market and unlock value in our business.
We grow organically by reinforcing and focusing our operating model and diversifying our geographical footprint. Today, our value chain is shorter and the synergies within our businesses have been optimized. In doing this, we moved the following levers, covering all our businesses. First, we focus on material exploration, improving plates and close to existing facilities. This model was so effectively that since 2014, we have discovered more than 5,000,000,000 barrels and we are placing excess of 130% of our production.
In Saixo, certain projects and further accelerate value generation by deploying our dual exploration model. 2nd, we completely restructure our development model, cutting time to market in our projects to high the industry average while reducing CapEx by 35%. In mid downstream, we successfully developed a strategy of restructuring and expansion, negotiating gas contracts, optimizing downstream capacity and opening new areas of growth in LNG and in refining through international joint ventures. In renewables, our distributed model is leveraging on our presence in producing countries to open new opportunities. The prevailing and distinguished factor here has been Hayley's ability to act swiftly and decisively.
And now let's move to the full year plan strategy implementation. Integration, efficiency and technology deployment are the main strategic levers of our operational model. These are the drivers of our new energy for the low point rate for one time value creation towards a low carbon future. First, we are developing our strong portfolio, diversifying our geographical position in 3 main areas: the Middle East, Somalia and the Mexico. In the Middle East, we have seen a massive set of new opportunities by adding fast track production, high potential resources and ultra low cost refining capacity.
The establishment of that energy model will create a platform for long term growth. While in Mexico, this year start up in just the first step in this promising region. Secondly, we will pursue more opportunities along with the value chain, growing LNG, giving greater value to our equity gas and developing 1 of the largest refineries in the world. 3rd, we are expanding our new goals and doing businesses and designing and implementing innovative solutions based on circular economy. Financially, we will maintain discipline, growing organically and pursuing farmer efficiency driven by technology and digitalization.
And now focus on technology, which underpins our business model. For us, new technologies are like exploration discoveries. Funding them is not enough. They need to be put rapidly in production to capture their full potential. Going forward, we want to capitalize on our technology even more, reducing the time to market from ideas to development.
Power innovations cover all businesses with 7,200 patents and 250 projects belonging to 3 different platforms. Operational excellence in terms of asset integrity, LTC efficiency and cost optimization. The big project in Egypt, Mozambique and Angola would have been impossible achieved without our technology. This organization where we are investing 1 third of our R and D expenditure and the circular economy for maximizing our industrial efficiency and using or extracting value from waste or byproducts. In the plan, we will spend €900,000,000 expecting benefits of up to €4,000,000 In upstream, we will continue to grow organically, keeping CapEx stable and generating large amount of free cash flow.
The target managed growth rate of 3.5% for the year till 2022 and thereafter. Also considering the new development in the Middle East, Mexico and Africa, we will keep our upstream CapEx at €6,500,000,000 per year and lower our cash flow strategy to $37 per barrel. In exploration, we have increased our full year target by 25% to 2,500,000,000 barrels of discovered resources. And finally, at our scenario, we generate accumulated debt to debt operating cash flow of EUR 50,000,000,000 equivalent to a free cash flow of EUR 22,000,000,000 almost double our dividend needs. Exploration is a key value driver for our company, and we are focused on highly prospective licenses in diversified areas.
In more than 460,000 square kilometers net acreage, which has enlarged our lead potential by 20% versus last year to more than $12,000,000 of resources. We are drilling around 40 wells per year, and we expect to discover $2,500,000,000 in the plan with the annual spending of €900,000,000 Our performance position is super including dairy. Primary target will be Mexico Shore, Middle East and high potential mature areas close to Ethiopian facilities in Norway, Angola, Ghana and Egypt. We will continue to generate early cash flow and swap assets through our dual exploration model. In 2019, we charged 600,000,000 barrels with a unit exploration cost of $1.8 per barrel.
Block 1506, Inangara is a great example of our effectiveness of the air distribution order and of the successful deployment of our technology. Specifically, this give us the major advantage of being able to recognize and discover complex sub salt exploration plays. After now, we have drilled 21 exploration wells with an 86% success rate, installing more than $4,000,000,000 of hydrocarbon in place and we have reached a gross production in excess of $150,000 per day. In the last few months, we made 3 material discoveries for light oil. The first 2, Carinda and Aforcho, are estimated to contain between $400,000,000 to $500,000,000 in oil in place.
In just few weeks ago, we discovered a new giant, Agogo, that is estimated to contain up to $650,000,000 of light oil with the farther outside. The development in this field will be fast tracked, relying on existing facilities. But it's not only yet in the next 2 years, we had additional 3 exploration wells, plus more driving work. Turning to production, we will deliver annual average growth rate of 3.5% in the end of the plan. New project startups and ramp ups will account for around 6 $1,000 per day by 2022.
Of this, 50% is related to ramp up of recent start ups. In addition, at 290,000 barrels per day are related to expansion projects of the existing field. In the period, we will put 18 100 projects into production and we will operate 77% of our equity. In 2019, we will grow at the rate of 2.5% versus 2018 as seen in the last scenario and excluding portfolio effect. Thanks to the long pipeline of projects in our portfolio, we are expecting to grow by 3.5% on average, but we are also to 2025.
In the last 12 months, we are strengthening our position in Norway. Yes, In the last month, we have strengthened our position in Norway, Chile and Mexico. In Norway, with Var Energy, we have our production capacity and found additional potential in exploration. Var is producing $110,000 per day equity and we expect it to grow to around $175,000 per day by 2,033. We moved development that had an average breakeven below $30 per barrel.
We had a significant exploration potential with more than 100 licenses that we are going to test over the next 4 years. In the UAE, we are involved in producing field, major development and further near field high potential restoration activities. Our recent expansion in the area has been driven by iron ore and technologies that suit with the development of the reservoir of the region. The existing equity production will be will grow from 40 1,000 to 100,000 barrels per day in the longer term. The major development in Russia, the largest gas hub in Abu Dhabi Offshore, where AIM is the technical leader, will add more than $100,000 per day of equity in the second half of the decade with the early production in 2022.
In Mexico, we will develop Area 1 with production starting up very soon in mid-twenty 19. Overall, these three initiatives will contribute a negative production of $260,000 a day at
the end of the plan.
We have a long list of proven projects accounted for 2,000,000,000 barrels of 3 pieces that are reaching FID in the plan. They are low cost, high value developments that will add stable cash flow and $470,000 per day of equity production in 2025. More than 70% of the FIDs in the plan are brownfield. And in 2019, we will sanction 8 projects. Turning to our upstream cash flow, after the RUB6.5 billion annual CapEx, RMB3.7 billion will be for development and RMB2.1 billion for the infilling and expansion of existing field.
OpEx paid flat of $6.6 per barrel and DD and A increased by about $1 per barrel over the plan as a consequence of the start ups in Mexico, Norway and Middle East. With the attractive contribution in new production, operating cash flow grew from EUR 11,500,000,000 in 2019 to EUR 15,600,000,000 in 2022 at the end of the scenario. Within the plan, we are expecting to generate EUR 22,000,000 of upstream free cash flow. Turning to our new downside. We will double our operating income last year to €2,000,000 generating an operating free cash flow of about €5,000,000,000 GNPC EBIT will grow to EUR 700,000,000 at the end of the period.
To RNN, we target further reduction of the heating margin and to reach an EBIT of €1,000,000,000 by 2022. In Versailles, we continue towards improved performance and we expect a EBIT of over €270,000,000 at the end of the plan. These team activities will deliver a stable contribution, increasing synergies with the rest of our businesses. This will enable an increase in LNG, LNG integration with the upstream to capitalize our equity gas. We continue to optimize our gas supply portfolio while initiating content and reducing reduced cost.
Thanks also to the continuous growth of the retail business, Q and P cumulated free cash flow will be EUR 2,300,000,000 during the plan. In retail gas, in retail, in retail, we have more than doubled last year's EBIT to around €500,000,000 by the end of the plan. We target to grow our customer base in core countries by 26% up to around 12,000,000, driven by doubling of power customers. We will expand the extra commodity services, which will account for 20% EBIT in 2022, driving more value per customer in the long term. In 4 years, we expect to generate around EUR 1,600,000,000 of organic free cash flow.
Energy repaid future roles in creating stronger gas and power in the longer term. We are accelerating the ramp up of our portfolio and expect to reach 14 NPPA of contracted volumes in 2022 and up to 16 NPPA in 2025, plus regards amongst the top players in the market. By the end of the trend, more than 70% of contracted volumes will come from our equity production, mainly in Africa and the institution. With the breakeven price of the underlying new gas projects of $22.5 per barrel, equivalent to less than $4 per 1,000,000 Btu. In refining and marketing, we expected our last year results reaching an EBITDA 1,000,000,000 including the Ruiz pro form a contribution.
We expect to generate EUR 2,600,000 organic strategic flow in the plan. In refining, the main drivers will be strengthening the refining asset base. In the recent acquisition of rates, we will increase our funding capacity by 40% by 2023. Optimization of our funding processes, we expect to benefit from IMO by increasing the reservoir yield to 55%, thanks to the after start by mid year and other existing deep conversion capacity in the current oil and electric refineries and green refineries in full operation. In few weeks, we expect to start up Jera and meet the circumstances of gains by 2021, our green production will grow to 1,000,000 points per year.
In marketing, we provided an increase in our market share in Italy to 25% with a growing contribution of premium products and green fuel and an organic increase in sales in Germany and France. And now renewables, a business where we will continue to grow organically during the plan. We have 60 brownfields and greenfield projects for a total of more than 1.6 gigawatts of new capacity by 2022, investing EUR 1,400,000,000 and up to 5 gigawatts by 2025. Overall, investments will be made also through partnerships and financing. Our portfolio is well diversified both in terms of geographical footprint and technology, where we will also deploy solution developed by our R and D.
In Italy, we will expand the project at Tavia, our industrial conversion project that generates power from renewals on retained industrial areas. We expect the Renewables business to deliver stable cash flow in the long term to deliver an internal rate return between 8% 12% and an additional upside by replacing gas flow functions in our operations. And now our new target on decarbonization. The energy world is at the crossroad of a major transformation, supplying more energy to more people while drastically reducing CO2 emissions. In the most 2 decades, global energy demand improved by around 30%.
But meanwhile, we had to reduce CO2 emission by 45%. In order to limit the growth of water temperature to below 2 degrees Celsius in accordance with the Paris Agreement goal. But with this new challenge, it is a strategic priority to our Board and a responsible action to all our stakeholders and environment. Today, we are announcing new targets of our decarbonization process to achieve net deal emission in our upstream business by 2,030. We will do this by increasing efficiency to minimize direct upstream CO2 emissions.
And by 2025, we will eliminate gas process clearing and reduce methane emissions by 80% and accepting residual upstream emission to large forestry projects. Other elements of our strategy are a growth in no carbon sources with an increasing share of gas and biodiesel in our portfolio an increase in zero carbon sources such as solar, wind and hybrid systems and a simpler approach to maximize the use of waste and reduce costs and to preserve and expand the life of industrial side. The key role will be played by the deployment of new technologies aimed at capturing and using carbon emission. Now let's talk about the 2 new pillars of our decarbonization strategy, forestry and circular economy. Money carbon credit is no longer enough.
We will use our scale in our geographical positions to take active participation in forestry initiatives that will bring wider community benefit such as new jobs and economic empowerment for local communities. This will become a structural component of why the private organization needs its model. We have already created the first partnership for REDD plus project development. Our final target is to reach a potential of more than 20 1,000,000 ton per year of CO2 sequestration by 2,030. Today, the 3rd quarter economy is a key driver in pathway to for sustainable growth towards the low carbon future.
During the 3 year plan, we will invest more than €915,000,000 and additional €220,000,000 in RMB to develop industrial circular economy solutions. Now, Green Earth Finance, a real process presents waste in value masses, not in competition with food to produce green diesel. This is also a good example of the pressure nation and life extension of our assets. We produce advanced biofuels and new volcanicals from biomass in waste and we interrogate from vegetable oil and the seedling to our unit crops to produce natural water. The first pilot of our property was Fuel Technology has started in CECI.
And we will be up to 3 industrial plants with a total treatment capacity of 330,000 tons earlier. In chemicals, we pursue an eco design approach to maximize project recycling and reduce consumption of raw materials. And all these initiatives have been implemented thanks to the fast deployment of our technology. And I will leave the floor to Massimo for the financial plan and distribution policy. Thank you, Claudia, and good morning to all of you.
So in the next 4 years, we will pursue a disciplined investment program. In 2019, we plan to invest around €8,000,000,000 of which 80% is related to E and P, deal, while the carbonization we see to our economy and the new growth will grow up to 5% on the overall budget. In the next 4 years, we plan to invest €23,000,000,000 77% is allocated to E&P, for which BRL15 billion for new developments, BRL8 1,000,000 for expansion projects of existing fields and maintenance and around $2,000,000,000 for exploration drilling. The upstream investment plan is also very well diversified in terms of geography, thanks to the development in Middle East, Norway and Mexico. While preserving our short term production growth, we also reinforced our pipeline of long term long water projects to new developments in Abu Dhabi, Angola and Nigeria that will further underpin our growth beyond the plan, improving our CAGR to 3.5 percent to 2025 versus the previous guidance of 2%.
9% of group CapEx will be devoted to further strengthen our decarbonization strategy, including down and increased energy efficiency projects, similar economic initiatives such as waste to fuel project and advanced fuel fuel and petrochemicals and renewables with €1,400,000,000 in more than 60 projects, for a total installed capacity of more than 1 point PicoWatt by 2022. The remaining CapEx refers to the legacy Mid downstream and in particular sustained business activities. We maintain substantial flexibility in this manner with around 50% of our CapEx uncommitted in 'twenty one, 'twenty two. Furthermore, we envisage a modest cost inflation impact all along the planned period. Our capital investment program is not only disciplined and flexible, but also valuable and resilient even in a stressed scenario.
Current portfolio of upstream projects in execution covering 2 thirds of the 660,000 meters per day production increase by 2022 is even more profitable than before, with the new breakeven price down to $25 per barrel and an overall internal return at any scenario of around 22%. A significant improvement versus the previous breakeven guidance of $40 per barrel and due to the quality of the incoming projects recently sanctioned as well as the contribution of fast track and phase development concept applied to the projects underway. This project portfolio is already forecasted positive, thanks to the proceeds from the illustration model. Excluding this contribution, the payout will be reached in 2021. Our project portfolio remains resilient and competitive under both weak and low carbon scenarios.
In case of 20% reduction of the hydrocarbon price, we said the internal rate of return remains above 19%. And when applying AME's low carbon sensitivity of $40 ton CO2 price in 2015 real term, internal rate return declined only marginally in the range of 0.5 percentage points. 2019 cash flow from operation and flow working capital is expected at €12,800,000,000 showing a slight increase versus the €12,700,000,000 recorded in 2018 despite the higher scenario of last year, that accounted for around €800,000,000 Considering the flat scenario 2019 that implies a Brent price of $62 per barrel and the gas price at Italian part of €266 per 1,000 cubic meters similar to 2018, our cash generation drove strongly over the next 4 years. In particular, 2019 cash flow from operation is expected to increase around BRL1 1,000,000,000 versus 2018, thanks to the upstream volumes growth and improved production mix, resulted in a cash flow per barrel increase of around $1 from 18.5 to 18.5 and the overall growing contribution from mid downstream, mainly driven by refining and marketing. 2022 cash flow will further increase by €2,600,000,000 on the strong contribution from all businesses.
The guidance will be the valuable production growth resulting in additional $1 per fuel per barrel to $20.5 per barrel, the retail Gas and Power capital base expansion, further business integration in retail stream as well as the growing contribution from the repositioned refinery capacity. Organic free cash flow at 2019 scenario will continue to grow at a robust pace with the average CAGR of 17%. As a result, the cash neutrality to cover working capital, CapEx and dividends will improve from $55 per barrel in 2019 to $50 per barrel by the end of the time period, demonstrating the increase in resilience of our business model and the portfolio has been remarkable as reflected in our 2018 figures. Looking ahead, we are targeting a partner material as well as growth that will drive the margin expansion in all businesses combined with a stronger balance sheet. On this basis, we are pleased to announce an increase in our 2019 dividend by 3.6% to EUR 0.86 per share, in line with our commitment to progressive remuneration policy.
In addition, we will start the 4 year buyback program, engaging in 2019 a capital allocation of BRL400 1,000,000. In the following 3 years, assuming the leverage is below 20%, the annual capital allocation will amount either to BRL400,000,000 in a $60,000,000 $65 Brent scenario or $800,000,000 in this scenario above $65,000,000 And now to conclude, some detail about the IFRS 16 impact. So you know that this new accounting principle is affected from 1st January 2019. The main impact on the new standard in 2019 would be the accounting of the opening lease liability of around 6 €1,000,000,000 that will imply a leverage increase of around 10 percentage points, an improvement of around €1,000,000,000 of free cash flow, reflecting the classification of the principal portion of the lease payments as financing cash flow. The leverage increase of around €200,000,000 as a result of the reclassification of interest component of the lease cost and interest expenses.
The adoption of the new accounting standard has been impacted some major performance disclosed in this presentation, such as leverage, the cash neutrality and the operating cost per barrel. To facilitate the full comprehension of such growth changes, in 2019, companies were brought in selected main metrics. We will disclose also excluding the effect of the IFRS 16 in particular from 2019 on. We will detail the lease liabilities accounted for in the financial terms in order to measure the leverage as it was before that remains the reference for our relation policy. Thank you very much.
Thank you, Massimo. And now our ambition for the next decade. In Nachtree, we will continue to grow organically and diversify our geographical footprint to a greater presence in Middle East, in East Africa and Asia. And we leverage our core competencies, in situation and development to maintain the project breakeven well below $30 per barrel. And in the lower carbon world, natural gas must play a greater role.
In 2013, up to 60% of our production will be gas. In GMP, we grew more than double our global LNG versus 2018, leveraging our integrated model with upstream. We're also well positioned to capture share in the European retail market, where we will continue to be a relevant player. In downstream, we will continue to improve overall asset efficiency, lowering the refining the fuel to less than $1.5 per barrel to a further balancing of our capacity. In Versace, we aim to increase our position in Renewable Chemistry.
In Renewable, we will focus on the development of new solar and wind capacity with a target of more than 10 gigawatts. And we will expand our biofuel capacity focusing on the 2nd and third generation feedstocks. This organization is structurally embedded in our overall strategy and ambitions. And Yes, I wanted to start on
the upstream, please, with this significant visibility here out to 2025, I guess 7 years of production growth. But when I look at Page 10 and I look at your little exhibit, at least in 2019 up to 2022, the gray shaded area still at least if I'm reading that correctly, still looks like it's at least a 10% decline rate coming through the base portfolio and really relies on executing the ramp up of this new pipeline. So I
just wanted to know, well, I guess and also in
the press release, you speak about enforcing the long plateau, long pipeline projects for the future. So my question is, is there a period between 'nineteen and 'twenty two where the base is pulling back a little bit harder before you layer in those longer term long plateau projects and in terms of risk here in terms of the production growth numbers? And secondly, just kind of linked to that Angola Block 150 6, significant resource business. You speak a lot about fast track and how we should expect that to be fast tracked as well. I guess some of your competitors are moving back into country.
This is properly deepwater, perhaps a little bit more challenging to execute a fast track program. Do you see that as a risk as you think about that country? Thank
you. So I'll start from the last questions. Angola, I want to talk about fast track in Angola, it's something that we already see. It was installed in West hub that are in the deep shore being executed in 3.6 year. That is half of all the time to market on the deep shore that we've been in the last 4 or 5 years.
So we plan to market from the discovery to the production was really, really fast. So it's something that's already been done in this country. So the new discoveries, how we are going to treat the new discovery. We are going to treat the first two discoveries that are small but big. They are going to be tying to the existing hubs.
So just early production since we have to test. And that means that can be they can put in production less than 3 years. In a 1 half year, a couple of years, we can put in production also less. But so the green discovery as well, we are going to have an early production. It's our phased approach to create the cash flow in the same PSC.
So there is a balance sheet with the others, so we can cover any of the investment. I think that for the 3rd one, we have to go for a 3rd half. But we are in debt and we and the time is back, we love it because we have new companies in the or new companies in the country that our clients and marketing is going worse. I think that for that, we are pretty sure. And that is new.
It clearly is so new that is not in this Toyota plan because I've discovered that we made recently. So the decline rate of our E and P dollars in the 5%, in the 12% that we had to also without production optimization on the existing sales. So that is stable. There is no reduction. We have so we confirmed 3.5%.
And the good news is that we are going to put in production and we are excited for these sit on the key PSF. Remember that in the past in the past 2 years also it's contingent to sales, that aspiration data, we can call it full sales. So as far as being tested, we have seen a lot of the appraisal phase and we are ready with the price of phase. So we are ready, ready for the Efendi. Clearly, the 3.5% from the 2025 because we are big projects, Saix, Mamba and the other projects that will be really start offset the plan.
And we did a lot. Also in this case, we talked about 3 PRS there. So we've never been so robust in terms of our growth because we had in our end really sure and assure ourselves. So that is so there is no up and down and the decline rate is 5%. Hi, thank you for taking my questions.
Christian Nye from JPMorgan. A couple of questions. First of all, your capital framework, when I think about the buyback targets that you've laid out and the incentives that's linked into gearing and oil price. And I just want to be clear, is this if you see an opportunity and we gear, again, we run-in the buyback, gets recalibrated. Is this one kind of relationship between the gearing, the oil price and your scale of the Quantrill buyback?
The second question is regarding your I think the Adnan, we didn't really talk about that for those presentations at length. But we do have the metric. I mean, across the Middle East, we're seeing Alampo and others, the significant export capacity and refining of that can slip into where countries are buying from them. What's the metric in terms of full cycle to now prolong additional capacity through understanding from the upstream understanding from a little full value chain perspective. But is this sort of capital cycle I'm just thinking regarding potential late cycle margin?
Okay. So Nastemar answered, right, you're right. I can ask about other stuff in the R and M in Upstream. Okay. So in terms of buyback, I guess the policy is clear.
So below $60 there will not be any buyback. So the difference between the $5 cash breakeven and 50 will be devoted to incremental dividend and the debt reduction. So buyback will start above 60 or from 60 only and the attempt is to stay in the 2 range that we have given. So 400,000,000 between 60, 65,000,000 and above 65,000,000. So this is the way linked the amount to the real price means to give a route to the flexibility that is underpinned in the buyback.
So our purpose is to distribute back cash to shareholders depending on the amount of the excess cash. So the best, I would say, indicator to figure out the available free cash flow would be the oil price, that's the logic. And in terms of, I would say, priority, the allocation of the additional cash. I would say a good example is what we are doing in 2019. So what I expect in 2019, assuming $52 per barrel as we are assuming in our forecast, the leverage we are taking our leverage not appearing is assumed to be slightly higher than 20%.
But our visibility to control is for a leverage below 20%. So notwithstanding the acquisition of the 30% of life that Claudio is going to talk about in one second, we are taking the promise that we are in the position to distribute this additional cash flow. So we have to bear in mind the balance between maybe a growth future growth that could be even not organic versus the remuneration of our shareholders. So talking about the yen rate in our recent entry loans, which is in EMEA and EMEA for 6 years. So that's the first time that we are in Abu Dhabi, Bahrain, Oman, South Asia.
So really the first reason is the quality of the assets, of course, of the assets. And when we talk about quality of the assets, we talk about the industry and industry. We are all the stakeholders because we are in a producing field. We are to develop and that is very strong point because WWW in the new strategic plan decides to deduct gas that we did before. We want to need help efficiency now to export.
And we became the technical in the joint venture, the technical leader of all the gas in the offshore. So we have to do the value in this, but we have also the exploration, all the exploration block offshore around this development that we are going to perform. Then we have other exploration. But our view was, first of all, we have the need to have some quality assets in the refinery that could be seen as a served way also to imbalance the upstream when the price is low. But also because our strategy and is one of the key words that we use, not now, but since long time, is for a long time integration.
So and in this case, we reached the target. We have a full integration from exploration to development the refinery and marketing because we have also constituted a joint venture for the marketing. So there is a way to create value. We don't want to buy something there, buying something there. We want to create a critical mass.
We want to quality assets. We want to be along the chain. And that clearly is giving a strong contribution also to leverage to our refineries. And from our point of view, when we knew that was possible also because we made some proposal on our technology. And because we have a complex refinery in Italy, we have to really optimize all our refinery systems and that's all the technology and budget that we developed in Italy to be to reach higher than the in the country where there is no oil and gas are very poor.
There we can apply and can give a good upside in terms of value to the system refinery to the extension and the future extension. So that's is why that is the reason why we're doing that. On top of what Claudio is saying, in addition of class, the rice refineries, brand new, but already production. So for us looking for rebalancing, the rebalancing of our portfolio is is a plus because we are getting some dividend from now, from 2019 on and the investment will be self pharmacy investment. So that's the best.
So it's really resilience in terms of cost that is well located in terms of geography towards the markets I referenced and capable to give since we're balancing our portfolio immediately. Thank you. Firstly, thank you
for your hospitality over the
last couple of days and this morning as well. It's Jason Kinney from Santander. I just had one question earlier about profitability and I want to know when the return on capital employed is going to be ahead of So the return of capital employed has been higher than the $72 per barrel. We expect it to be at 52 at the same level. So we are talking about the yield leverage cost of capital slightly higher than 30%.
We expect it to be higher than 10% in 2022. Among this, E and P would be always above the weighted average cost of capital that's referred to the E and P business, which is 7.7.6. So if you agree? Thank you. I had two questions on your sector leading targets to reduce net carbon emissions from upstream to 0 by 2,030.
And first, on the carbon capture of 30 and TPA, I was wondering of CO2, I was wondering how you think of reforestation versus carbon capture and storage there? And what costs per ton of CO2 you think you can achieve there? And then thinking about your biofuel strategy, you transformed 2 refineries, which were loss making, Venice and Jada, into profit making biofuel refineries. I was wondering how much more do you think you can scale up that business in the longer term beyond the 1M TPA? And how complex are the logistics to get all of the feedstock in place, if you look when it comes from waste?
Thank you. Thank you. So the first one was related to the so carbonate natural zinc gas, the natural zinc sequestration, the natural zinc Russian CCCUS or CCS, cost of about between $11.50 on average because that is the cost of the call in investment, investment are not so much, dollars 11 per tonne. So it's less activity and the massive sensing that is CCUS. Clearly, we are watching also on the CCUS in a different way, CCS and CCUS.
And I think that's due to the digital model for the new potential that have the opportunity. There are different kind of possible sequestration in the technology. But when you talk about the power plant, you're talking about your refinery or your chemical plant in the U. S. To kind of reset everything with the sourcing.
But really, it's worth it for us. Is more than acquire credit because you can buy and be more expensive sometimes, so less expensive, it depends. But it's really is impacting our communities. We are doing we are going to do we are doing and we are going to do in Africa. In the country where we operate, we are generally speaking in Africa because we do also in other countries like Zambia, like South Africa, we are not really in operation.
We are in Mozambique, in Guyana. So we have projects that are impacting the society. It's really creating a lot of jobs. It's creating a different kind of diversification in diversification in each agriculture that also is in the diversification. The model is quite strange because we are working with developers.
We are not elected developer. This part has developed a small area. We hear that small compared to what we are using now in Ghana. So we want to work there because we have a lot of community. But we also want to so we engage we are very committed to buy the credit.
And then we get back to the community samples, okay, that can go from 10% to 40% related to the meaning that you make from the credit device. So it's really good for the environment, it's really good for the communities and clearly for us because it's a way to offset our C1 upstream and scope 1 initiatives. So the other question about how we can expand this business. Clearly, this business is going to be quite big. We can cover all internal income, our consumption and maybe also exports.
The first point is really the logistic not the logistics to have the palm oil. The food is quite complex in this and we spent some money for that, but we are going to another direction because we want to use the 2nd generation. We are using at least 20 20%, 25% second generation. Our aim is to because the technology that we have that is our own technology allow us to use 100%. And Jira is going to use 100% the second and possible trade generation.
So we want to rapidly, first of all, refinery to stop using our palm oil. And in the future, if you want to profit expansion, expansion will be different scale because I think that you in Spring Valley, I think you saw the waste of your technology that is more like, it's getting smaller. We have already a plant in the SICC. That is much better to cover the local issue about waste material and biomass. So waste material that is organic.
And for the future of the smaller scale in regard to technology, we are working with staff in Italy in smaller scale to produce oil, oil or also to stock for our also for abroad because the production is about 30%, 35% oil and we have 65% of water. So from the Atlantic, so we're trying to imagine another part of the world where we're at the need for agriculture. Then the recent C2 that we use for sequestration, causing our idea. So I think that the development of the technology is so fast. And for that reason, we talk about employment, hard deployment of our R and D.
That the development of this part will be completely different. So we are going to make plans where we have waste, So to cut logistics also to improve the HSC and improve the reducing the sales related situations. And the San Gabriel, please. San Le Porte, Tidabane. I believe we've seen a reduction in the breakeven cost of projects in the upstream to it was $25 per barrel.
I was wondering how much of that is driven by numerator, so total CapEx intensity and how much is driven by just going after bigger projects with larger resources? That is our first one. The second one is on the buyback. I was wondering the €400,000,000 is going to be implemented maybe in the second half of this year. And then as you look at 'nineteen, when do you decide the buyback?
Is it on a quarter by quarter basis or 6 month by 6 months or yes, if you can look at how you're going to We talked about it, but here it's just because it's the reason why we can't pay the buyback. So the buyback the breakeven is really why because it's a new, I think, kind of model. So we discuss we are more efficient and also the quality of the project and also the phase of the project. So the overall package saving the project, reducing more efficient cost, working with a very good client to market. These new projects are also projects that armed reverse sales and on a following our model is close to the 2 facilities.
That helps a lot because there are big deposits that you are able to be more efficient in our CapEx. Clearly, we talked about giant projects, cost of lithium facilities, safe projects, all this is creating these good results in terms of the Chilean. So the buyback is we have to propose to general assembly. And then I think that EUR 400,000,000 that is this year we start immediately after it can be in July, June or almost another year. And then we start up using the model that Maximo's trying to do.
So and before we should pay every quarter or 6 months, I don't think they change a lot. So I think I know the year, I don't know Masimo can answer that. In order to avoid any kind of interference with the market. So starting from 2019, we will start to be bypassed the general assembly and in from 2020 on, we start at the beginning of the year. I would say the reference for the amount of that we applied for the loan year would be our scenario.
So the price we assume in our scenario would be the right order for the amount of share to be bought back this year.
It's John Riqui from UBS. Can I ask a couple
of questions on LNG? You referenced the volume improvement or expansion of the growth, where I think you indicated in Gas
and Power
actually. So can you just talk a little bit more articulate a little bit more what you're going to do with those volumes? What kind of EBIT impact you're expecting from them? And how you're using those volumes to generate EBIT in Gas and Power? The second question, just a point of clarification on your Scope 1 emissions in the upstream.
You talked about Scope 1 only. So do the LNG processing activities fall into that or is that in scope 2? And then thirdly, just a point of clarification for Massimo. I think you indicated there's a €300,000,000
EBIT benefit from IFRS 16. Where does that fall in the guidance on
the EBIT guidance that you've given on a segmental basis?
Okay. So for the LNG, it it became a very strong tool for our equity gas because we discovered a lot of gas, so give a strong flexibility to our upstream. So you have to look at it clearly from the presentation from the view to the aspirated that you have to look at the flexibility that the LNG, very strong LNG give to our upstream because we are already working and so we have been able to our production increase, increase production and use LNG to also for short cargo. So they gave us big possibility. As I said in the presentation, the EBIT growth will be long term because it's contracted with the base of another equity.
Our equity is strong now in, you can say, in Nigeria, in Angola, in Indonesia. We have to restart with Amienta. And we'll be very strong with coral and with the 2 trains that we are developing in Mamba and onshore. So clearly, the long term. The impact will be a strong drop, but just related to the commercial part because we don't see all the upstream.
I don't add down the figures for the long term, but we talk about very interesting figures clearly after this plane, by Lumumba and Cora, and the additional development in full gas in Egypt and the hands are using Danienta. The other question was Gulf Point. We are in the Gulf Point, we are saying that is a major first step and that is last year. Now we are working. We are not ready yet.
Just to reach this, we work 3 years because with clearly a message directly from the top, but then it's a bolt on us because we have to build the model and we have to work to be sure to take a so important commitment. We are working on to finalize the scope one for all our businesses and clearly we are also working on this COP2. And so we have we do not think to hear that we have about 42,000,000,000, 40,000,000 tons per year for our scope 1. And then when you look at the scope 3, we have 250 in the tonne. So the first step is to that the rest of the business is called 1 and then that we're already watching on the scope 3.
That implies differences to imply also policies and implies the market trend and implies also products. So it's more complicated, but we are very determined to reach this target. So first of all, in order to ensure that it's absolutely clear, all the numbers that has been disclosed this morning refer to the number before the implementation of the IFRS 16. And then the final slide is to reference about the magnitude that we bought. And that said that all along in 2018, we always present to you the double view before and after the IFRS 16 in order to allow you to understand to better understand which is the impact that is insignificant.
So for example, when we say that the free cash flow would be $1,000,000 higher means more or less $5 in terms of cash neutrality for us. It means that the most important metrics will change dramatically. So there is a and as far as the EBITDA that you mentioned, so the 0.3 due to the fastest advantage in terms of EBITDA that relates to the, I would say, reclassification of financial impact definitely disadvantage will fall in the industry that the upstream that's definitely the most important user of our
update? The first question is on the dual exploration strategy. It looks like a lot of the activity that is planned for 2019 is actually more near terms of generating early free cash flow or early cash flow is more early production systems tied back to infrastructure like with the Gogo rather than equity divestment of exploration and sales? And then the second question is on ADNOC refining and the dividend policy. I believe that you said at the time of the announcement that the dividend would be pretty attractive around 10% or so of investment, but it would be over the medium term.
And so I guess my question is, does the free cash flow that you've laid out for R and M include a dividend of Mannbark Refining in the latter part? And would that potentially be interrupted if there was a decision to further expand the Erloid facility?
Okay. And so on the dewel operation, Massimo can talk about the previous issues. So the exploration now, we will continue. We are building solar, continue to have been discovered. Recently, we use dual exploration and kind of swaps indirectly into investment for the future.
So it's continued in active tool, in active, because now we have the restoration when we're in the downturn and we need to enforce also our cash flow. In this case, we prefer to use a swap to get asset to work for our diversification. So that's what we the way. So the near field exploration is not new, is not just for today, this year, last year. We have been successful because we will do this kind of more than near fuel exploration.
So we go where we have the facilities, but especially where we know the environment that through different tools, especially in the pre salt and different kind of traps, I think that traps we a sub salt, we can't discover something that the other people discovered, but in very mature areas. So we have contractless situation, we have facilities and then we can do that. So we are in this stage. We are going to continue. We embedded more focus on swapping than cashing in.
So the number that we have shown as far as R and M do include the contribution that we expect from ADNOC Refinery, so around 3% of Alamo Refinery. You correctly mentioned the expectation in the range of 10 percent as a medium. That is what we expect around that even in terms of capacity, but even now, as I said, the advantage to is such a huge asset that's already producing, already running to have some cash flow anyway. So in the numbers I said, we already embedded in such a contribution that in the 1st year is not meaningless. So we are talking about something related to 200,000,000 each year, growing over 300,000,000 by 2023, 2024 when the configuration of the current asset will reach the scope that now we are envisaging and we are working for.
This additional activity would be self financed, There would be an additional growth expected. Definitely, we will evaluate it, but if we decide that this additional growth is viable, we'll be happy to give up some cash back to get invested in such an initiative because we believe that fixed refinery is a very nice, very good investment to stay in.
Thomas Arnold from Credit Suisse. I've got two questions, please. Firstly, on organic versus inorganic CapEx. In this presentation, you talked about organic growth, but you've been very busy doing inorganic things in the recent past. So I wonder what role will M and A play going forward?
Are there any particular gaps you still want to fill? Do you want to expand further into the Middle East, such as LNG? And the second question is just on capital intensity in the upstream. So by 2024, 2025, your upstream production will be about 25% higher than it is in 2018, but you still guide to a CapEx that is relatively flat over the full year plan period. So perhaps you can talk about capital efficiency or any other things you assume in that?
Thank you.
Thank you. So you said that recently, we have been very active recently. In the last 10 years, we did just raise. So we are not so active in general lending. We talked just about organic growth because We just aim at growing organically.
So that's reason we will talk clearly for 20 6 on assets. Maybe that it's not really because we have so many years as so many 3 peers have so many discoveries that we have to be focused on what we have. And if you look at the cost of our operation, Now we have input 1.8, but the average over the last 5, 6 years is less than $1 per barrel. And we have to buy something. It's always more expensive.
So clearly, we are organic. I think that we are going to resume M and A. We do some possible asset that we like. We have to we have to think that we have only to keep the right balance between our dividend and buyback system so that our investor and diversification or asset to farming. So we have a clear priority.
We don't need to buy something. We start we gave a clear indication about our policy, remuneration policy, and that is clear in front of us. And we want to really respect. When we start something, we are absolutely we expect what we promised and what we say. So we don't have to be worried about some competitions or land growth because we don't need it.
For the CapEx, the CapEx, if you look at the year, but our cycle is 4, 5 years. And our growth in growth that we are implementing now started maybe 4, 5, 3, 4, 5 years ago. So it's not really correct. We try to be really flat. That is very important to respect our efficiency in the edge winter.
And we try also to reduce the inactive capital. I remember that since assembly as well, we have 35%, 40% of inactive capital. Now we are in the line of 15%, 20%. That is intrinsic because the cycle is very long, but we try really to reduce the inactive capital in the year. And that how you can do that with the time to market.
As well as an example, Angola is an example, Jan Coutu is another example, Algeria is an example. So if you're able to reduce and exclude your time to market, you don't have enough capital. So that is the major size. That is really the main driver side of market with our structure and with the aim to confirm the free cash flow, reduce the market capital and optimize all the sets of our reinvestment. Thanks.
Thank you very much. Chris Kuplent from Bank of America. I've got a a few questions on VAR Energy. And the first one is if you could talk us through a little bit the rationale behind the merger and perhaps the role that you expect Y Energy to take within the E and I plan and future. I'm hopefully right that you've accessed some growth in Norway, thanks to this transaction.
But I wonder whether you can
give us a little bit more detail about how that growth is funded, how much free cash flow that new company is continuing to create in order to fund also the E and I dividend ultimately? And then related to that, just quickly, I saw on one of your slides that you referenced a proportional consolidation in the CFFO here in your guidance of raw energy. I just wanted to double check whether that applies to CapEx, production, etcetera, how you've treated that. Okay. And lastly, if you want to answer because it's more on dividend and the self financing and so the rationale, as you said, is to get access to additional growth in Norway.
So Norway is a place in which there is still a significant explosion upside. So merging the portfolio of companies now allow us to have a very well spread portfolio from the north of the Arctic to the south. So even in terms of operation, the situation is much better. The organization in place now is very solid and so comfortable to run the activity in Norway alone. Definitely, we are looking at what they are doing, but the contact are constant.
And merging the portfolio is allowing us to have a larger cash flow. For example, powder will be in the EFI deal this year and will come in production very soon. So this additional cash flow is allowing us to have, I would say, an additional comfort that we said that we announced the amount in the range of more or less $2 per barrel in terms of cash neutrality. So this will give you the dimension of the contribution. In terms of representation, some numbers we have shown this morning include a pro form a contribution from Var Energi because of the I will say the comparison between future numbers versus previous numbers.
For example, the dollar per barrel we have shown growing from $18,500,000 in 2018 that includes cash flow from operations from the Norwegian activity, while in 2019, 2022 do not include the contribution. So what we have done, we are including pro form a the contribution from water energy also in 2019 and 2022. So this is the adjustments we have made in our numbers, while all the other numbers presented, the deficit flow, polyfinish and the future flow will include the dividend that we expect from thermal energy. So on this regard, nothing changed. Okay.
The last one, Massimo, and then Massimo Bonioli from Equita. Thank you for the presentation. Two questions on the downstream. 1 on the refining margin assumption, which increased by 50% 50¢ per barrel over 2020, 2021. How much is coming from the IMO 2020 change in regulation?
And how much from maybe the inclusion of ABNOC in the new structure? The second question on Versalis. If I remember correctly, you earlier mentioned EUR 270,000,000 EBIT assumed
by the
end of the plan for Versalis. How much is coming from a scenario recovery? And how much from self help measures? Thank you. Okay.
We look forward to the audience here and then to Lucio, Verstav, Salis.
The increase of margin that you are seeing in the 2020 or 2021 is due to IMO. Due to IMO because we expect that the introduction of this new specification for bunker oil, we will have a depreciation of high sulfur crudes and an increase of appreciation of distillate to make the oil. And this is, in the least, an increase for at least a couple of years of the margins. The contribution of ADNOC will be for the breakeven. ADNOC will help us to reduce the breakeven below the $3
So the rest of this side, the results are mainly coming from the scenario about EUR 200,000,000 and the remaining is for our own agenda and As you know, increasing resilience of the rest of this is the mission that we have. We are doing that in a difficult situation because the market didn't help us over the last 6 months. And we are doing that with existing assets as well. So it's something that we consider to have done significant improvement from the past where we are losing €400,000,000 or €500,000,000 Now we are swing between breakeven and €200,000,000, €300,000,000 positive. And we do our best to continue to work on integration efficiency, changing our portfolio and renewable materials as well.
Thank you. Okay. Thank you. Thank you to all. We will return after 3 o'clock with the investor and analyst And we leave the room for the press conference.
Okay. Thank you very much. Thank you.