Good morning, and welcome to any strategy update and first half results. In February, we communicated the strategic road map towards 2,050 that will take our company through the energy transition. In line with this strategy, in June, we announced the new organization, creating 2 new integrated business groups. Natural Resources will develop the upstream oil and gas portfolio sustainably, promoting energy efficiency and carbon capture. The business group will be integrated along the gas value chain from exploration to development to wholesale via pipeline or LNG, leveraging our technical and commercial competencies.
In addition, this business will lead CCUS Forestry Sustainability and Environmental Remediation, key activities for the sustainable delivery of decarbonized products. The 2nd business group, Energy Evolution, is dedicated to supporting the evolution of the company's power generation, product transformation and marketing from fossil to bio, blue and green. Thanks to the business group's coordination, the company will be able to develop these activities in integrated way, both geographically and in terms of business lines, maximizing results in terms of product development, customer service and profitability. Alongside corporate functions, the business group will be supported by a new technology R and D and digital function. Our organization will deliver a better balanced portfolio, reducing the exposure to volatility of hydrocarbon prices to become a leader in the decarbonization process.
Turning to our long term strategy. This remains unchanged and our transformation is irreversible. The recent event related to COVID-nineteen pandemic emphasized the need to accelerate along this path to deliver a more sustainable earning. This drove the capital allocation for the 4 year plan and will deliver a significant reduction in our carbon footprint, where our target imply also that any will be scope 1, 2 and 3 net emission neutral in Europe by 2,050. Let's now turn to the action we have taken on CapEx and cost for 2020, 2021.
We reacted to the pandemic immediately. In just 1 month, we declared our first set of actions and have conducted a deep analysis to further cut our costs. In the meantime, we have also reviewed our scenario, assuming $40 per barrel Brent this year, growing to $60 per barrel Brent in 2023. The result is that today we are announcing our target both for CapEx reduction and cost optimization. Overall, in 2020 2021, we aim at an average CapEx cut of over 30% and EUR 2,800,000,000 of overall cost optimization, of which 25% to 30% are structural.
Together, these represent almost EUR 8,000,000,000 of reductions compared to the original plan. In our group's CapEx plan, rigorous capital discipline is key. With the expectation of Brent at $40 per barrel in 2020, we will keep CapEx at just over EUR 5,000,000,000. In line with our gradually rising expectation for Brent, our CapEx will flexibly increase from 2021 to reach around EUR 8,000,000,000 in 2022, comparable to our original pre COVID plan. The mix inside the CapEx plan will change, accelerating the energy transition.
The new plan versus the original one envisages in Upstream an almost EUR 6,000,000,000 reduction. By contrast, in the green businesses, CapEx will grow by EUR 8,000,000,000 mainly dedicated to biorefining, renewables and expansion in the retail segment. Overall, in the plan, green CapEx will account for 17% of the total versus 12% in the regional plan, reaching 26% in 2023 versus 20% in the regional plan. The weight of green investment will become increasingly more important as we move toward the rebalancing of our portfolio. In Upstream, production in 2020 is confirmed at around 1.71000000 to 1.76000000 barrel of oil equivalent per day after the OpEx cut.
The 2019, 2023 average growth rate will be in the range of 2%, driven in 2023 by start ups and ramp ups for around 400,000 barrels per day and production optimization for over 200,000 per day. If the scenario proves to be stronger than expected in 2021, we will have the flexibility to reactivate some production optimization actions. Growth in the medium to long term is a function of the upstream CapEx profile. In terms of project development, the new 2020, 2023 CapEx plan includes a number of revisions, impacting especially the 1st 2 years as we postponed a number of FIDs. Exploration will target 2,000,000,000 barrels of new discoveries in the period at a leading cost of $1.6 per barrel.
In exploration, no activity has been canceled, but we have rephased 50% of the investment plan for 2020. 2021, we'll see the drilling of parts of the wells we postponed this year. Turning to the mid downstream, we confirm the development of our decarbonized businesses, further accelerated by the increase in green CapEx mentioned before, mainly dedicated to biorefining, renewables and retail expansion. At the next 2021 strategy, we will give further details on the specific upgraded target within these green businesses. Turning now to our shareholders' remuneration policy.
In light of the unprecedented change market contest characterized by an elevated volatility and the depressed level of prices expected in the next 2 years and only after the radical revision of all our group's cost and CapEx, as just explained, Henley has decided to revise its shareholder remuneration policy to give clear visibility on the future dividend and buyback program. The new remuneration policies is valid for a brand price of $45 per barrel or more. The policy includes an annual dividend that has a floor value of EUR 0.36 in an annual band scenario of at least $45 per barrel and an additional variable component that is dependent of on the value of brand above $45 and the buyback program of EUR 400,000,000 for an annual brand scenario between $61,000,000 $65 or €800,000,000 for an annual brand scenario above €65 In more detail, the dividend floor value of EUR 0.36 will grow as the company realize its strategic plan and this will be evaluated each year. The variable component of the dividend is determined by the value of our brand forecast each year. This is calculated as a growing percentage between 30% to 45% of the incremental free cash flow generated by a scenario between 45 dollars 60 dollars The fixed free cash flow sensitivity incorporated in the remuneration policy is €900,000,000 for every $5 change in brand.
Notwithstanding our brand scenario at $40 this year, our dividend proposal for 2020 is 0.36 per share. EUR 1 third or EUR 0.12 will be paid at the interim in September 2020, with the remaining 2 thirds or EUR0.24 will be paid in May 2021. After 2020, if the brand scenario assumption is below $45 and we will evaluate the floor dividend considering the expected duration and depth of the downturn. From 2021, the floor dividend will be paid 50% in the interim payment in September and 50% in the final payment the following May, while the variable component will be paid entirely with the interim payment. The variable component will be paid for the due amount applying the policy if the envisaged yearly brand price in July each year is above $45 regardless of the progressive growth now assumed in our scenario.
To be even more clear, in the case next year of Brent being $60 per barrel, we will pay the entire variable component of €0.34 per share. Applying the current branch scenario adopted by any and assuming no change in the flow of dividend, the new remuneration policy will be deliver cash dividend of EUR 55, EUR 47, EUR 57, 56 and EUR 0.70, respectively, in the year 2020 to 2023. Turning now to our first half result. In the context of unprecedented discontinuities in the hydrocarbon scenario due to the COVID-nineteen, Henley has performed well. Our action has focused on 2 principles.
Firstly, we acted strongly to protect the health of our people, contractors and house communities. And secondly, we continue to implement our strategy. In terms of our businesses, in the first half, we discovered almost 200,000,000 barrels of resources in Angola, Mexico and the U. A. The recent Egyptian discovery and appraisal in Vietnam will further improve this figure.
Upstream production was 1,740,000 barrels per day, minus 5% year on year. The reduction was mainly driven by COVID-nineteen impact and OpEx plus cuts. Portfolio price effect and other positive elements were offset by lower gas demand, in particular in Egypt and the effect of contract for trigger and force majeure in Libya. Mid Downstream performance proved to be robust. Notwithstanding the COVID-nineteen impact, both Gas and Power and R and M improved year on year, thanks to asset optimization, retail and market disable resilience and the growing contribution of low carbon products.
The Gas and Power result was driven by the wholesale sale business and portfolio optimization, which counterbalanced the weakness in LNG demand related to COVID. Retail also performed well even in a context of lower demand and higher default risk. The R and M result was linked to the optimization of our industrial setup and the growth of biofuels, thanks to the GLI ramp up, while marketing pro form a was impacted by lockdown. In renewables, we started the Babanca wind firm in Kazakhstan, expanded in the U. S.
And made our first steps in the wind generation in Italy. Install capacity at the end of the first semester was about 250 Megawatt. Versalis experienced lower demand and ensuring lower margins due to the pandemic. Turning to financials, the company remained free cash positive with adjusted cash flow in excess of capital expenditure by EUR 400,000,000. In terms of economic results, upstream EBIT in the first half was EUR 200,000,000, down by EUR 4,200,000,000 compared to 2019.
This reduction is almost entirely explained by the scenario accounting for EUR 3,600,000,000 while EUR 500,000,000 is due to the volume mix effect. Production in 2020 is confirmed at around 1.71 to 1.76000000barrel of oil equivalent per day. After the OPEC cuts, the count for that account for around 40,000 barrel per day in line with previous guidance. In the second half of this year, we will continue the drilling of near field exploration wells, mainly in Egypt and Norway. In total, we expect to discover over 300,000,000 barrels of resources at less than $2 per barrel this year.
Moving to Mid Downstreams, overall result have been very strong, improving by almost 70% compared to last year, more than doubling excluding scenario and COVID impact. In particular, Gas and Power EBIT was robust EUR 650,000,000 showing the best first half result of the last 11 years, up above 70% year on year, driven mainly by the GLP business unit with a result of EUR 166,000,000, more than double Verso's last year's, thanks to contract optimization, which benefited from high price volatility and the higher contribution for the power business. This strong performance was only partially offset by the lower contribution of LNG business. In Retail, Enel Gas in Lucha delivered a result of over EUR 180,000,000, plus 10% in the period, driven by the growth of the customer base and the higher contribution from non commodity activities, which more than offset COVID and mild climate that impacted for more than EUR 60,000,000. Overall, the impact of the scenario and COVID on Gas and Power was around EUR 100,000,000 in the period.
The refining and marketing result was €174,000,000 almost twothree higher than last year, despite the challenging scenario, both in term of margin and lower demand. In particular, our refinery was at breakeven due to the positive contribution of around EUR 50,000,000 from the Bayer business, thanks to the JERA plant ramp up and the resilient marketing result that helped counterbalance the demand reduction related to the lockdown measures. Finally, the Versace result was impacted by the pressed plastic demand, in particular in the automotive sector by lower plant availability. Versalis' first half result was negative for EUR 130,000,000 Overall, we expect for 2020 EBIT contribution of around EUR 800,000,000 from these three businesses together, 1 third higher than the previous guidance. Gas and Power guidance increases by over 60%, thanks to the strong performance in the first half.
The second half result is expected to be broadly neutral, given a positive retail contribution where non commodity business will reach 20% of EBIT. This will be offset by a weaker result from GLP business, impacted by reduced optimization opportunity as these were realized in the first half. Our NAMs guidance will improve to around EUR 350,000,000 in particular, thanks to the resilient result from the biorefineries. While Versalis results will be impacted negatively by the depressed scenario for an additional €100,000,000 Turning now to the cash position. In the first half, the adjusted cash flow from operation before working capital was at EUR 3,300,000,000 exceeding our CapEx.
Excluding scenario COVID, our cash flow would have improved year on year by €800,000,000 Looking at 2020 with the new with new scenario assumptions, we expect a cash flow from operation before working capital in the range of EUR 6,500,000,000 in line with our previous guidance. This cash flow generation will more than cover our 2020 CapEx. We will maintain a sizable reserves of liquidity, which are currently around EUR 18,000,000,000, almost 4 times our short term debt. Our balance sheet remained robust with the leverage at 37% at the end of June. To conclude, this year, we have set out a clear strategic framework for the new ENE to maximize value through the energy transition toward 2,050.
We have a new organizational framework and a motivated and highly skilled team that will enable us to deliver this strategy with natural resources focused on selective and sustainable production and Energy Evolution transforming its product mix to sell more decarbonized products to more customers. And we now have a new financial framework that is resilient in a weaker environment and progressive as we execute our strategy and as brand recovers. Together, the strategic organizational and financial framework set out this year, will create more sustainable value for our company and all our stakeholders. Thank you very much. And now we are ready to answer your question.
Ladies and gentlemen, we will now begin the question and answer session. The first question comes from Oswald Clint of Bernstein. Please go ahead, sir.
Hi, good morning. Thank you. Yes, just two questions. First, I mean, I guess, when you think about dividends, I imagine you're looking at buckets like the macro environment, your own liquidity and underlying business performance, so perhaps those three areas. So I just wondered in terms of the change in the dividend today, is it was there one of those in particular that's forced this action or all three of them that's caused this change in the policy?
And then secondly, you mentioned the variable component, you'll decide that in July if oil is above $45 But in terms of the floor dividend and the progressive nature of that, when do you decide on the shift in the 0.36, please? Thank you.
Thank you. I think that, as you mentioned, all the all the different variables clearly gave us the opportunity to create a new dividend policy. Clearly, the forecast for the next 2 years and the press prices that we forecast for the next two years and the COVID impact and the uncertainty on the demand will create altogether the need to review our dividend. But clearly, we didn't just review our dividend. That is a process that we started at the end of February when we changed or and we improved our strategy looking at the long term and create value in the long term.
And then immediately during the COVID, we reacted very rapidly, and we improved our efficiency in term of CapEx, in term of OpEx, in term of variable fixed cost, G and G. So we had the opportunity to have a overall revision of our cost base. And only after that, considering the scenario, considering the context, considering the pandemic, we structure this new dividend policy. For the maximum maybe you can answer for the floor, given the timing for the floor. Okay.
So Oswald, the timing now we envisage is July. So as far as the variable component, the brand price, the average brand price each year we envisage in July, it will be the reference to calculate the variable component. And as Claudio said in the speaking notes, the variable component will be paid entirely in the year in which it can be accrued. So if for 2021, for example, the average Brent price we envisaged in 2021 sitting at July is we will pay entirely the variable component in September the same year, so 2021. And even the fixed component that is progressive as it was in the past in the previous version in our dividend related mainly to the strategic progress in our the implementation in our business plan will be assessed at the same time.
So to cut the long story short, in July, we will define the dividend that will be paid in the same year.
Okay, super. Thank you.
The next question comes from Aleister Syme of Siti. Please go ahead.
Thank you. I just wanted to ask about the impairments and the price revisions you made. And one observation I had is that the price revision you made on gas was about 30%, whereas the price revision you made on oil was about 15%. So I just wanted to sort of understand why the cut to gas was much deeper. And just to try and relate that back to the point you made earlier and also back in February around the business increasingly migrating the weighting towards gas?
How can we sort of align this deeper gas cuts, get more capital going into gas development?
The market yields to the fact that on the Brent scenario, there is, let's say, a sustain which is coming from the OpEx activity, which is sustaining the Brent. And this is actually giving us confidence on the Brent scenario. On the gas, the current supply and demand dynamics, as you can appreciate, are broadly indicating, at least for the next couple of years, difficult gas scenario. And you see also that from the cut in the LNG exporting from U. S.
Because, I mean, the prices environment is such that even the lower even the lowest, I would say, cost gas producing country needs to cut back on the production in order to be sustainable. So let's say that is actually explaining why in the short to medium term, we have, let's say, a lower gas price scenario.
Can I ask on the CapEx and the full year plan? Are the cuts on gas in the Upstream much deeper than the cuts in oil in terms of the $6,000,000,000 cut to Upstream?
Sandro Polizzi will answer the question.
Okay. Regarding the cuts on the CapEx that have been applied in 2020, they are mainly located in our projects in Mozambique. So they are certainly related
to the gas. And but with regards also several other projects in most of our countries where there is a mix of gas and oil. Just to complete the answer. Clearly, we had a mix of cuts in our capital revision, and we reduced or we postponed the giant or the big projects where we have a strong capital allocation. And if you look at our discovery, our recent discovery, all the big giant project accounts.
So for that reason, they postponed and cover more this. So it's not a question of gas in Norway, but it's a question of postponing all the big capital allocation for the big project, and that is on gas. So that is the main reason.
Yes. Sorry, just finally, if I come back to the February presentation, you suggested that by 2,030, the upstream business might be sort of 60% weighted towards gas. I think, is the number you quoted. Is that still roughly the
Yes, yes. That is confirmed completely. So we confirm our target. And this postponement, in any case, is not it is not cancellation of the project. So it's a postponement to bypass to be able to bridge these couple of years.
So then, for example, as we presented in our presentation we show in our presentation, the Indonesian project, Addis Gas, will restart in 2021. So that is an example of postponement. And then the other project in Thermo FAD is postponed of 1 or a couple of years. So we'll deliver their production in the after the plan, but clearly before 2030. And we have to consider that most of our discoveries are gas, so as gas producing field.
So that target is absolutely confirmed.
Yes. Thank you, Claudia.
The next question is from Alessandro Cozzi of Mediobanca.
I have one on the CapEx. You announced actually an increase in CapEx in for drilling projects. I was wondering if you can give us a bit more color on which projects you are thinking of accelerating. Also remaining on this theme clearly lots of talks about hydrogen, I believe you're involved in big low hydrogen projects in Italy with a capture cabin capture in Avin as well. I was wondering how do you think how competitive do you think green hydrogen is going to be versus green hydrogen?
Thank you.
So thank you. So the first question was related to the green investment. Clearly, what we said during the presentation, we allocate and we gave the main categories, that is biorefineries, renewables and then increase on customers on client. Clearly, that is there is a reason. 1st of all, because that is one of the main pillars of our strategy.
But we had also the demonstration in the last 4 months with COVID with these big discontinuities, where they the biorefineries helped a lot to recover also if the marketing was not it was depressed because of the lockdown, helped a lot to recover the returns of the R and We had a very interesting internal rate of return of these refineries that is about 15% that will we believe that we can increase, especially with the feedstock that will be more closer to the refinery in the future and different kind of feedstock, as you know, by 2020 but different kind of feedstocks. And our technology allow us to a really huge number of possible feedstocks that will reduce the logistics cost. So this really is a key point. So clearly, the biorefineries that are funding and are getting good results, especially in the North Europe market, will be one of the capital allocation. Renewable, we confirm.
And for renewables, we want to link, as we said before, and we accelerate on that. We will be clear more clear in our strategy, but we want to link our any gas luchas, our retail gas and power to the renewables to be able to deliver and sell green products and the number of customers. Clearly, we are already a competitive advantage with respect to the other oil and gas company because we are more than 9,000,000 clients. We want to reach about 11,000,000 clients in the NEST plan and then growing to more than 20,000,000. And that will be a key, a key point in the new strategy to improve the efficiency and to stay far from the fluctuation of the hydrocarbons.
So that is what we can say now. Then we will give more details in our strategy in 2021. Sorry, you talked about hydrogen. So I was so focused on the first question, therefore, got hydrogen. No, I you know that we are one of the most important producer of hydrogen and consumer because all our refinery or our industrial system use hydrogen.
We are working on hydrogen, especially on the blue one because we have this big opportunity to have a CCS that is very, we can say, cheap because we have everything in place and it's huge. And that will allow us to have a blue hydrogen at very low cost. For at the moment, I really think that the blue hydrogen is cheaper than the green one. Maybe that will not be more true in 10 years. But at the moment, adding us all the facilities, all the CCS and the know how of produced hydrogen and we have also our internal market and future external market, I think that is something where we are putting our effort in thermal development.
We are starting. We are starting and we are going to test also hydrogen in term of feedstock for turbine and for power plant that is a part of the future. And that clearly is in the cycle of decarbonization of our gas and getting a clean energy.
All right. Thank you. Thank you.
The next question is from John Rigby of UBS. Please go ahead.
Thank you. Hi, Claudio.
Can I just ask on the dividend and the way you're looking at the floor? I think is the mechanism you've come up with, I mean, it's unusual, but it has been talked about in terms of you're trying to move to an element of fixed and variable remuneration. But I'm interested in how you will think about calculating the improvement in the underlying business that generates a raise in the floor. And that's always seemed to me the challenge for oil companies is trying to understand what their sort of through cycle economic generation, value generation and the resiliency of that. So I'm just interested in that and also whether there's any you talk about a floor, whether there's any risk to that floor if you're making a decision in July and then as is often the want of the oil market, is you get some intense volatility in the second half of the year or the first couple of months or the following year when before you make a decision about your final dividend?
The second question is sort of linked, I guess, is you're obviously running at a lower CapEx figure at the moment, but with an expectation that you raise CapEx back to 8%. And you've talked about some flexibility in that CapEx. So can you just revisit what considerations you have in terms of the annual CapEx figure that you use given that there's sort of an implication that 8% is your sort of through cycle spending. But what is it that's making you decide on 6.5% or lower than 8%, especially when you're relatively constructive about an oil price and macro improvement over the coming years. And so any dollars spent now on CapEx are obviously going to remunerate at better value in 2 to 3 years when they come on stream?
Thanks.
Okay. So your question about the floor and how the floor could be up or down based on the strategic improvement in our performance. So the floor the app of this floor is, I would say, strictly related to the second part of your question, so about the flexibility, because definitely the floor has been fixed based on the current level of production, the current level of investment. And both are based on the scenario as we assume the price will be in the near future. But definitely, we are retaining some flexibility.
And how to use such a flexibility will depend on the scenario we can see in the next 1, 2 years. So for example, if the oil price will be higher than 48,000,000 that is our scenario assumption in 2021, definitely, we are retaining some flexibility to push up our CapEx and push up production. So more or less so it's difficult to give you now an exact figure. But the flexibility we believe we can have in order to react immediately to a better scenario, we're doing the range of, in terms of production, 50,000 barrels per day progressively from 2021 2023, investing something in the range of €400,000,000 500,000,000 euros in the next 2 years. So if the price will be higher, definitely, we will do it and the cash flow contribution will be definitely positive.
And this will be one of the key elements to evaluate how to progress the floor in our dividend. And definitely, such an evaluation would be taken, as we said, every year. And the first evaluation is in July 2021. So such an assessment will be performed. We will see the scenario.
We will use our flexibility in terms of investment. If positive, we will definitely take into account the additional cash flow, the industrial additional cash flow, not the scenario 1. So in case of a higher scenario, the dividend will be take advantage on both sides on the scenario and performance, and we will release the annual amount of the dividend. As far as the down, you said, but what about an oil price below 45? So certainly, such remuneration policy, the one that we are announcing today, is based on the scenario we are assuming or higher scenario than that.
In case of a Brent price lower than 45%, certainly, I don't have a clear answer right now. But definitely, we should evaluate how that is the downturn. For how long we expect such a downturn could last. But definitely, we will use the same flexibility I mentioned for an increase in the dividend floor. Definitely, we can use the same flexibility in order to resist, if it's the case, and to keep the floor at the same level, maybe giving up some additional investment to grow as we are anyway envisaging in 2022 and 2023.
I want to add something as a comment on what you said that this is an unconventional approach when we look at the dividend because normally, it's very simple and it's year by year or quarter by quarter. Here, we our effort this time in a so volatile and not clear environment was to give or is to give the maximum vision and clear vision and transparency and all the different value of our structure for the dividend to our investors. We gave a lot of details. It seems complicated, but it's not complicated. I think it's very transparent, because we talk for we give for 4 years.
We give a floor, so you know how you can calculate that. And then we give all the different parliament on the flexible or on the other component that is a variable component and the buyback. So our we aim really to be transparent and be clear in a situation that is very volatile because if we create we create this no clear situation inside and we have no clear situation in term of perspective outside, It's not easy for our investor. Now you know exactly step by step. In July, when you talk about what happened to the floor, are you how we can calculate the increase of the floor in relation to our strategy plan and implementation of our strategy, we will be very transparent because we will communicate when July and how we are going to explain you how.
We have you said, we have 6 months where we can take a risk. But as Massimo said, we have the flexibility to react, especially very rapidly, as we did in the last 3, 4 months during a very difficult situation, so we can compensate. But it's clearly a small risk compared to the big effort to be clear and give you a really solid platform to understand what is going to happen to our company in the next years in term of strategy, action, CapEx, OpEx and capital allocation. That is one of the most important point.
Yes. I think there's been a difficulty for investors to square up progressive dividends with the volatility that we've seen in oil markets. So I mean, this is one of the solutions to that. Can I just ask a follow-up? As you increase your investment into non upstream, then clearly, an increasing component of what pays the dividend will be your midstream, downstream, your renewables businesses, etcetera.
And dividends are a signaling device. So what will you look at there, sort of ongoing ROE, free cash flow generation? What I mean, it's that's obviously going to be an important element to the decision on your dividend floor, I would guess.
The more important element will be the cash flow. So this will be the basis to evaluate any potential increase. Certainly, each of our each project, the one that Claudio mentioned, so biorefinery clients, renewables would be evaluated on a stand alone basis. But as far as the remuneration policy, certainly, the cash profile generated in the incoming years would be the most important one.
Okay. Thank you and good luck in the new role Massimo by the way.
Thank you very much.
The next question is from Eileen Verma of Societe Generale. Please go ahead. Thank you. Good morning. I had a couple
of questions on the second quarter specifically. Upstream loss was actually deeper than anticipated. I wonder if you can just talk around the key drivers in that, splitting it between volume price. Obviously, the costs, I presume, were down. Then secondly, in the opposite direction, in Q2, the downstream results, EUR 73,000,000 profit, very, very strong.
Maybe you did mention it, but what is the full year guidance for not for Gas and Power, for the 3 Downstream businesses, please, Refining, Marketing Chemicals for EBIT? And then finally, any guidance for full year working capital and tax at your scenario? Thank you.
[SPEAKER MARCO TRONCHETTI PROVERA:]
You can answer to the first question in the Upstream losses and the main point. And then for the Downstream, Bino can answer and then Massimo answer for the forecast and the rest.
Okay. Regarding the losses for the Upstream in 2nd quarter 2020, we have to account the losses for the OPEC plus cut that in terms of production are affecting us around 40,000 barrels of oil equivalent per day. And then we had also the full effect in the second quarter of the losses due to the COVID situation that are around 1 130,000 barrels of oil equivalent per day when compared to Q1 of this year. So those are the 2 main elements regarding the losses.
So Irene, just to give you some color, some additional color on the performance, the better performance we had on the Refining and Marketing Gas and Power. So and the effect, the headwind we had mainly because of the COVID-nineteen. So starting from R and M, the refinery had substantially a performance in line with the 1st semester 19, notwithstanding, I would say, a worse scenario in term of margin, compensating also more or less €800,000,000 of COVID and negative COVID effect because of definitely the utilization of our plants that in April, May June has been reduced even down to 60%, more or less, especially because of the oversupply in gasoline. While the market has been affected as well, but we some way, we succeeded in keeping the margin a bit lower than it was with a loss that has been in the range of €40,000,000 €40,000,000 versus the 1st semester 2019. Talking about the Retail Gas and Power.
So the better performance has been due to the fact that, first of all, we succeeded in increase our client base. We added up something in the range of 150,000 clients in the 1st semester. And at the same time, we have been capable to increase the amount of services sold to our customers. Also thanks to the subsidies that now are available mainly in Italy for investment in energy saving. That is something that is becoming more and more an additional business in our retail.
So retail would be more and more, as we said during our strategy, more and more, I would say, complemented with services that will be aside the sale of just commodities. And the retail, Gasoluche, recorded an increase, notwithstanding more or less €30,000,000 €35,000,000 of loss because of the COVID. So without such a loss, you see the better result that would have been even more important. Maybe Christian could give some color on the GLP in the 1st semester and then can elaborate on the guidance.
Sure. So as we have said before, the 1st semester has been very volatile environment. So just to name a few, the gas price vis a vis last year is 50% downwards and also the oil has been downwards and then upwards. So we have experienced an increased volatility. And so we were able, notwithstanding the negative impact of the COVID pandemic on the demand, to re optimize the asset base, the portfolio base, especially in the Gas and Power business.
And we anticipated all the, let's say, value extraction from the flexibility in the first semester, given exactly this volatility. And so we're able to capture this, let's say, trading margins, so to speak, mainly in Europe. To the contrary, let's say, the LNG environment has been pretty complex. And so we were able to broadly, let's say, be in line vis a vis last year in terms of results. Also leveraging notwithstanding the leveraging on the integration with our upstream production base in order to optimize the operations and to safeguard ourselves from possible losses.
Okay. So in term of full year guidance, I'm making reference to the Slide 11. So the €800,000,000 are mainly based on the contribution from Gas and Power, €650,000,000 €350,000,000 from Refining and Marketing, while we expect the Chemical business still losing money even with a lower pace versus the 1st semester with a total loss on a yearly basis of €200,000,000 So as far as the Gas and Power, certainly, the Enigas eluche will keep on growing on the same path, likely even faster if COVID will allow us to take advantage fully from the client base growth. And at the same time, we expect that the refinery, mainly the biorefinery, the positive effect that we recorded in the first half will continue even in the second part of the year. And then you mentioned working capital.
So in terms of working capital in the full year, I can anticipate a number slightly worse than the one that I guided in the previous period. So previously, I said that we were envisaging a capital absorption in the range of a few €100,000,000 in term of working capital. Likely, this number would be now assumed a bit higher, I would say, in the range of €600,000,000 €700,000,000 because of the probability to have a lower pace in payment at year end because of the crisis, mainly from our partners in Upstream, including the National Oil Companies, while the performance in terms of payment in our retail and the other businesses is performing even better than what we assume at the very beginning of the crisis in March. And the tax rate, the last question. This year is very, I would say, it's too volatile to measure the tax rate.
So I'm afraid to say that the tax rate in 2020 would be quite unreadable. And but the same exceptionality would be on the cash that has been guided in the past in the range of 30%. Now we envisage something in the range of 20% because of such an extraordinary period. No reason to imagine that on a more steady environment, so more or less $60 per barrel flat, the tax rate the adjusted tax rate will be 60% as has been guided in the past, and the cash tax rate will be back in the range of 30%.
The next question is from Lucas Herman of Exane.
Listen, I mean, thank you very much for breaking out the growth in deep carbonized products and giving us some time frame around delivery in terms of absolute volume. I wonder whether you could give us any comment on how you see cash flow from those businesses as an operating level developing over the same period, however. So try and put some financial numbers at a cash flow level, not a free cash level, around the progress that you see in decarbonized products overall. And secondly, I wanted to ask you something on Natural Carbon Solutions and just as an important part of your policy of offsets and important part of others' policies, I just wonder whether you could give us any indication of how the costs are moving as much as anything, the capturing acreage in which the plant whatever to effectively decarbonize in a natural way as you all start to gravitate towards the same broad policy?
So on the first question on the cash flow from our green activities, I think that will be more specific during the strategy due to the strategy in 2021. This is an update strategy. Clearly, we when we run our exercise, we run an exercise for all the industrial development, but we'll be more specific later on at the beginning of the next year. For the cost of the forestry, I think Massimo or sorry, Sandro Polite can say something on the natural forest.
Okay. So on the natural capture of CO2 to forestry preservation activity, In terms of cost, it is an activity that is certainly give us a very good opportunity of lower cost for capture each tons of CO2 compared to the other technique that can be applied. And we are in a region below the $10 per 1,000,000 tonne of CO2 captured.
And Massimo, in terms of accessing land and forestry, how is that changing at all? How do you see things there? I know it's a slightly abstract question, but
So maybe Sandrodon can complete. What we over the work over the last couple of years, more than a couple of years, our main target was the countries or in, say, Africa, we can say your South America, but especially Africa, where we have all our operation. We are present. We have a presence in these countries. So it's not problem access to having access because it's not our land, it's not a concessions, it's nothing that of this kind is not like in the upstream, is a portion of primary forestry that we protect.
So it's a question to training people, to define standards, to give a certification, to get in connection with the UN authorities to implement all the process of the REDD plus because it's not just Forestry Conservation, but it also is also different other aspect, biodiversity and job creation. So it's a question of different component. So we don't have any problem to have access because it's a different kind of process. There is a forest. We have an agreement with the government, and we implement a process to train people, to pay people, to give back parts of the credit in term of money to develop the area, and that is the approach, and it's working very well.
Clearly, we work with developers. We already set up different agreement in the different countries, and this is something that we are developing. And our aim is to have by 2,030 about 20,000,000 of 10,000,000 of ton that will be captured by forestry. And that is in progress and is working quite well.
Thank you.
The next question is from Massimo Bonasoli of Equita. Please go ahead.
Good morning. Two questions from me. 1 on the dividend again. Sorry if I'm still confused about the new policy. Since there are many moving parts in the scenario, not only related to Brent, but also gas prices, refining and chemical margins, production levels, euro dollar exchange rate.
Do you include this moving parts in the additional variable dividend and free cash flow and additional free cash flow generation? If yes, would you provide a sensitivity to each KPI just to let us track those variables? And the second question is on green CapEx. How much of the CapEx related to the energy transition projects may be funded through the scheme of the European Green Deal? Did you already consider the access to that budget?
Okay. Starting from the second question, the answer is yes. Definitely, we are working on the innovation fund, the recovery fund in order to get access to such a fund. So we are working to package our project and to follow-up the procedure. This is definitely a very good occasion that could be taken as an advantage in order to speed up, if possibly, this improvement and this transformation.
As far as the dividend policy, to simplify, yes, the variable component is linked to the brand only. So we are assuming that the brand would be the more important proxy in term of cash flow variation. So the number we will look at in order to assess the amount to be distributed as a variable component is the only brand price. So all the rest would be some way included and matched by the company. And you made another just okay.
If okay. So if there is something lost, please let me know.
No, no. It's all okay. Thank you, Marcel.
The amount, sorry. And the amount you mentioned the amount of the flexibility. So we gave €900,000,000 of €5,000,000 each €5 brand, and this is fixed. So it's not depending on the sensitivity we can assess each year, But the number has been set and the number, the €900,000,000 will remain in place all along as such a remuneration policy.
Mr. Scorsese, that was the last question. If you'd like to make some closing remarks, sir.
No. Yes. Thank you. So first of all, I want to thank you, everybody, who was listening to us, but I want to thank my colleagues because in the first time that I say they say that during this half presentation first half presentation, but it was a very tough period. And we work on different kind of of issue and topics because it was on the revision of CapEx, OpEx.
And we organize different kind of teams worldwide. Then we work on the organization, then we work on the capital allocation and the revision of the dividend policy that took about more than 2 months. I think that this exercise was very useful to test our robustness for the future in term of team and motivation. And especially, we had the really we had the courage and the vision to start a new kind of phase in terms of approaching the dividend policy. And clearly, as I said, our aim is to be transparent and give a clear reading of what we are doing because our side is so confused and volatile that we want to be linear.
So maybe you can think that this dividend or this policy is complicated, is really simple and in the case, much simpler than the world outside. And that was our aim, and I hope that we succeeded. Thank you very much.
Okay. Just a few words to say that this is my last conference call as CFO, as an E and E CFO. So thank you very much, everybody, for the good interaction we had all along this time. Thank you.
You're going to continue. Okay. Thank you.