Good morning, and welcome to Eni strategy update and first half results. In February, we communicated the strategic roadmap towards 2050 that will take our company through the energy transition. In line with this strategy, in June, we announced the new organization, creating two 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 second 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 an 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&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-19 pandemic emphasized the need to accelerate along this path to deliver a more sustainable Eni.
These draw the capital allocation for the four-year plan and will deliver a significant reduction in our carbon footprint, where our targets imply also that Eni will be Scope one, two, and three net emission neutral in Europe by 2050. 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 one month, we declare 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 bbl Brent this year, growing to $60 per bbl Brent in 2023. The result is that today we are announcing our target both for CapEx reduction and cost optimization.
Overall, in 2020 and 2021, we aim at an average CapEx cut of over 30% and EUR 2.8 billion of overall cost optimization, of which 25%-30% are structural. Together, these represent almost EUR 8 billion 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 bbl in 2020, we will keep CapEx at just over EUR 5 billion. In line with our gradually rising expectation for Brent, our CapEx will flexibly increase from 2021 to reach around EUR 8 billion 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 an upstream and almost EUR 6 billion reduction.
By contrast, in the green businesses, CapEx will grow by EUR 0.8 billion, 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 original plan, reaching 26% in 2023 versus 20% in the original plan. The weight of green investment will become increasingly more important as we move toward the balancing of our portfolio. In upstream, production in 2020 is confirmed at around 1.71 million-1.76 million bbls 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 startups and ramp-ups for around 400,000 bbls 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 first two years as we postpone a number of FIDs. Exploration will target 2 billion bbls of new discoveries in the period at a leading cost of EUR 1.60 per bbl. In exploration, no activity has been canceled, but we have rephased 50% of the investment plan for 2020. 2021 will 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 context, characterized by an elevated volatility and the depressed level of prices expected in the next two years, and only after the radical revision of all our group's cost and CapEx, as just explained, Eni has decided to revise its shareholder remuneration policy to give clear visibility on the future dividend and buyback program. The new remuneration policy is valid for a Brent price of $45 per bbl or more.
The policy includes an annual dividend that has a floor value of EUR 0.36 in an annual Brent scenario of at least $45 per bbl, and an additional variable component that is dependent on the value of Brent above $45, and the buyback program of EUR 400 million for an annual Brent scenario between $61-$65, or EUR 800 million for an annual Brent 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 Brent forecast each year. This is calculated as a growing percentage between 30%-45% of the incremental free cash flow generated by a scenario between $45-$60.
The fixed free cash flow sensitivity incorporated in the remuneration policy is EUR 900 million for every $5 cha nge in Brent. Notwithstanding our Brent scenario at $40 this year, our dividend proposal for 2020 is EUR 0.36 per share. one third, or EUR 0.12, will be paid at the interim in September 2020, with the remaining 2/3 , or EUR 0.24, will be paid in May 2021. After 2020, if the Brent scenario assumption is below $45, Eni 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 Brent 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 bbl, we will pay the entire variable component of EUR 0.34 per share. Applying the current Brent scenario adopted by Eni and assuming no change in the floor dividend, the new remuneration policy will be deliver cash dividend of EUR 0.55, EUR 0.47, EUR 0.56, 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-19, Eni has performed well. Our action has focused on two principles.
Firstly, we acted strongly to protect the health of our people, contractors, and host communities. Secondly, we continued to implement our strategy. In terms of our businesses, in the first half, we discovered almost 200 million bbls of resources in Angola, Mexico, and the UAE. The recent Egyptian discovery and appraisal in Vietnam will further improve this figure. Upstream production was 1.74 million bbls per day, minus 5% year-on-year. The reduction was mainly driven by COVID-19 impact and OPEC+ cuts. Portfolio, price effect, and other positive elements were offset by lower gas demand, in particular in Egypt, and the effect of contractual trigger and force majeure in Libya. Mid-downstream performance proved to be robust. Notwithstanding the COVID-19 impact, both Gas & Power and R&M improved year-on-year, thanks to asset optimization, retail, and marketing segment resilience, and the growing contribution of low carbon products.
The Gas & Power result was driven by the wholesale business and portfolio optimization, which counterbalanced the weakness in LNG demand related to COVID-19. Retail also performed well, even in the context of lower demand and higher default risk. The R&M result was linked to the optimization of our industrial setup and the growth of biofuels, thanks to the Gela ramp-up, while marketing performance was impacted by lockdown. In Renewables, we started the Badamsha wind farm in Kazakhstan, expanded in the U.S., and made our first steps in the wind generation in Italy. Installed capacity at the end of the first semester was about 250 MW. Versalis experienced lower demand and ensuing lower margins due to the pandemic. Turning to financials, the company remained free cash positive with adjusted cash flow in excess of CapEx by EUR 0.4 billion.
In terms of economic results, upstream EBIT in the first half was EUR 0.2 billion, down by EUR 4.2 billion compared to 2019. This reduction is almost entirely explained by the scenario accounting for EUR 3.6 billion, while EUR 0.5 billion is due to the volume mix effect. Production in 2020 is confirmed at around 1.71 to 1.76 million bbl of oil equivalent per day. After the OPEC cuts, that account for around 40,000 bbl 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 million bbls of resources at less than $2 per bbl this year. Moving to mid downstream, the overall result has been very strong, improving by almost 70% compared to last year, more than doubling excluding scenario and COVID impact.
In particular, Gas & Power EBIT was robust at EUR 650 million, showing the best first half result of the last 11 years, up about 70% year-on-year, driven mainly by the GLP business unit with a result of EUR 166 million, more than double versus 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, Eni gas e luce delivered a result of over EUR 180 million, 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 million. Overall, the impact of the scenario and COVID on Gas & Power was around EUR 100 million in the period.
The refining and marketing result was EUR 174 million, almost two-third higher than last year, despite the challenging scenario both in term of margin and lower demand. In particular, refining was at breakeven due to the positive contribution of around EUR 50 million from the bio business, thanks to the Gela plant ramp-up. The resilient marketing result that helped counterbalance the demand reduction related to the lockdown measures. Finally, the Versalis result was impacted by depressed plastic demand, in particular in the automotive sector, by lower plant availability. Versalis first half result was negative for EUR 130 million. Overall, we expect for 2020 an EBIT contribution of around EUR 800 million from these three businesses together, one-third higher than the previous guidance. Gas & 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. R&M's guidance will improve to around EUR 350 million, in particular, thanks to the resilient result from the biorefineries. Versalis result will be impacted negatively by the depressed scenario for an additional EUR 100 million. Turning now to the cash position. In the first half, the adjusted cash flow from operation before working capital was at EUR 3.3 billion, exceeding our CapEx. Excluding scenario and COVID, our cash flow would have improved year-on-year by EUR 0.8 billion.
Looking at 2020 with new scenario assumptions, we expect a cash flow from operation before working capital in the range of EUR 6.5 billion, 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 billion, almost 4x our short-term debt. Our balance sheet remains 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 Eni to maximize value through the energy transition toward 2050. 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.
We now have a new financial framework that is resilient in a weaker environment and progressive as we execute our strategy and as Brent recovers. Together, the strategic organization and financial framework set out this year, will create more sustainable value for our company and all our stakeholders. Thank you very much. Now we are ready to answer your question.
Ladies and gentlemen, we will now begin the question and answer session. One moment for the first question, please. The first question comes from Oswald Clint of Bernstein. Please go ahead, sir.
Hi, good morning. Thank you. Just two questions. First, 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. Perhaps those three areas. I just wondered, in terms of the change in the dividend today, was it one of those in particular that's forced this action, or all three of them that's caused this change in the policy? Secondly, you mentioned the variable component. You'll decide that in July if oil's above $45. In terms of the floor dividend and the progressive nature of that, when do you decide on the shift in the EUR 0.36, please? Thank you.
Thank you. I think that, as you mentioned, all the context, all the different variables clearly gave us the opportunity to create a new dividend policy. The forecast for the next two years and the depressed prices that we forecast for the next two years and the COVID-19 impact and the uncertainty on the demand will create altogether the need to review our dividend. We didn't just review our dividend. That is a process that we started at the end of February when we changed, and we improved our strategy looking at the long term and create value in the long term. Immediately during the COVID-19, we reacted very rapidly, and we improved our efficiency in term of CapEx, in term of OpEx, in term of variable fixed cost, G&Gs. We had the opportunity to have a overall revision of all our cost base.
Only after that, considering the scenario, considering the context, considering the pandemic, we structure this new dividend policy. For the Massimo, maybe you can answer.
The timing.
floor dividend, the timing for the floor.
Okay. Oswald, the timing now we envisage is July. As far as the variable component, the Brent price, the average Brent price each year we envisage in July, it will be the reference to calculate the variable component. As Claudio said in the speaking notes, the variable component will be paid entirely in the year in which it can be accrued. If for 2021, for example, the average Brent price we envisage in 2021, sitting in July is EUR 16, we will pay entirely the variable component in September the same year, so 2021. 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 the implementation in our business plan, will be assessed at the same time.
To cut the long story short, in July, we'll define the dividend that will be paid in the same year.
Okay, super. Thank you.
The next question comes from Alastair Syme of Citi. Please go ahead.
Thank you. I just wanted to ask about the impairments and the price revisions you made. 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%. I just wanted to sort of understand why the cut to gas was much deeper. 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 view of deeper gas cuts to get more capital going into gas development? Thank you.
The market yields to the fact that on the Brent scenario, there is, let's say, a sustain which is coming from the OPEC activity, which is sustaining the Brent. 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, a difficult gas scenario. You see also that from the cut in the LNG exporting from the U.S., because the price environment is such that even the lowest, I would say, cost gas producing country needs to cut back on the production in order to be sustainable. Let's say that is actually explaining why in the short to medium term, we have a lower gas price scenario.
Can I ask on the CapEx and the four-year plan, are the cuts on gas in the upstream much deeper than the cuts in oil, in terms of the EUR 6 billion cut to upstream?
Sandro Puliti 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. They regard 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. If you look at our recent discovery, all the big giant project are gas. For that reason, the postponement cover more of these. It's not a question of gas and oil, but the question of postponing all the big capital allocation for the big project, and that is on gas. That is the main reason.
Yeah. Sorry, just finally, if I come back to the February presentation, you suggested that by 2030, the upstream business might be 60% weighted towards gas, I think was the number you quoted. Is that still roughly the-
Yeah. That is confirmed completely. We confirm our target, and this postponement, in any case, is not cancellation of the project. Is a postponement to bypass to be able to bridge these two couple of years. For example, as we presented in our presentation, we show in our presentation, the Indonesian project, that is gas, will restart in 2021. That is an example of postponement. The other project in term, IFD, is postponed of one or a couple of years. We'll deliver their production after the plan, but clearly before 2030. We have to consider that most of our discoveries are gas, so are gas-producing fields. That target is absolutely confirmed.
Thank you, Claudio.
The next question is from Alessandro Pozzi of Mediobanca. Please go ahead, sir.
Good morning, all. Thank you for taking my questions. I had one on the CapEx. You announced, actually, an increase in CapEx in for green projects. I was wondering if you can give us a bit more color on which projects you are thinking of accelerating. Remaining on this theme, clearly lots of talks about hydrogen. I believe you are involved in a big blue hydrogen projects in Italy with a carbon capture in Ravenna as well. I was wondering, how competitive do you think grey hydrogen is going to be versus green hydrogen? Thank you.
Thank you. 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, there is a reason. First of all, because that is one of the main pillars of our strategy. We had also the demonstration in the last four months with COVID, with these big discontinuities, where the biorefineries helped a lot to recover, also if the marketing was depressed because of the lockdown, helped a lot to recover the returns of the R&M. We had a very interesting internal rate of return of these refineries that is about 15%, that we believe 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 2023, we will not use any more of palm oil, but different kind of feedstocks. Our technology allow us to a really huge number of possible feedstocks that will reduce the logistics cost. This really is a key point. Clearly, the biorefineries that 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 more clear in our strategy, but we want to link our Eni gas e luce, our retail gas and power, to the renewables to be able to deliver and sell green products. The number of customer. Clearly, we are already a competitive advantage respect to the other oil and gas company because we are more than nine million client.
We want to reach about 11 million client in the next plan, and then growing to more than 20. That will be a key point in the new strategy, to improve the efficiency and to stay far from the fluctuation of the hydrocarbons. That is what we can say now. We will give more details in our strategy in 2021. Sorry, you talked about hydrogen. I was so focused on the first question that I forgot hydrogen. You know that we are one of the most important producer of hydrogen and consumer because all our refinery, all 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. At the moment, I really think that the blue hydrogen is cheaper than the green one. Maybe that will now be more true in 10 years. At the moment, having as 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 term of development. We are studying, 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.
The next question is from Jon Rigby of UBS. Please go ahead.
Thank you. Hello, 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, 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. 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.
I'm just interested in that and also whether there's any, you talk about the 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 of the following year 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 eight, and you've talked about some flexibility in that CapEx. 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 eight is your sort of through-cycle spending.
What is it that's making you decide on six and a half or lower than eight, especially when you're relatively constructive about an oil price and macro improvement over the coming years? Any euros spent now on CapEx are obviously going to remunerate at better value in two to three years when they come on stream. Thanks.
Okay. Your question about the floor and how the floor could be up or down based on the strategic improvement in our performance. The up of this floor is, I would say, strictly related to the second part of your question, so about the flexibility. Definitely the floor has been fixed based on the current level of production, the current level of investment. Both are based on the scenario as we assume the price will be in the near future. Definitely we are retaining some flexibility. How to use such a flexibility will depend on the scenario we can see in the next one, two years. For example, if the oil price will be higher than $48, that is our scenario assumption in 2021, definitely we are retaining some flexibility to push up our CapEx and push up production.
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 will be in the range of, in term of production, 50,000 bbl per day progressively from 2021 and 2023, investing something in the range of EUR 400 million-EUR 500 million in the next two years. If the price will be higher, definitely we will do it, and the cash flow contribution will be definitely positive.
This will be one of the key elements to evaluate how to progress the floor in our dividend. Definitely such an evaluation will be taken, as we said, every year, and the first evaluation is in July 2021. Such an assessment will be performed, we will see the scenario, we will use our flexibility in term of investment. If positive, we will definitely take into account the additional cash flow, the industrial additional cash flow, not the scenario one. In case of a higher scenario, the dividend will 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?
Certainly, such a 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. Definitely we should evaluate how that is the downturn, for how long we expect such a downturn could last. 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. Normally it's very simple, it's year by year or quarter by quarter. Here, 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, all the different value of our structure for the dividend to our investors. We gave a lot of details. It seemed complicated, it's not complicated. I think it's very transparent because we gave four years. We give a floor, so you know how you can calculate that, then we give all the different parameter on the flexible or on the other component that is as variable component and the buyback.
We aim really to be transparent and be clear in a situation that is very volatile because if we create a non-clear situation inside and we have no clear situation in terms 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, how we can calculate the increase of the floor in relation to our strategy plan and the implementation of our strategy, we will be very transparent because we will communicate when, July, and how, we are going to explain you how. You say we have six 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 three, four months, during a very difficult situation, so we can compensate.
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 terms of strategy, action, CapEx, OpEx, and capital allocation. That is one of the most important point.
Yeah, I think there's been a difficulty for investors to square up progressive dividends with the volatility that we've seen in oil markets. 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, et cetera. Dividends are a signaling device. What will you look at there? Sort of ongoing ROE, free cash flow generation, what? 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. This will be the basis to evaluate any potential increase. Certainly, each project, the one that Claudio mentioned, biorefinery, clients, renewables, will be evaluated on a standalone basis. As far as the remuneration policy, certainly the cash profile generated in the incoming years would be the most important one.
Okay. Thank you. Good luck in the new role, Massimo, by the way.
Thank you very much.
The next question is from Irene Himona of Société Générale. Please go ahead.
Thank you. Good morning. I have 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 cost, I presume, were down. Secondly, in the opposite direction in Q2, the downstream results, EUR 73 million profit are very, very strong. Maybe you did mention it, but what is the full year guidance not for Gas & Power, for the three downstream businesses, please, Refining, Marketing, Chemicals for EBIT? Then finally, any guidance for full year working capital and tax at your scenario? Thank you.
You can answer to the first question in the upstream losses and the main point, and then for the downstream, Pino can answer, and then Massimo answer for the forecast and the rest.
Regarding the losses for the upstream in second quarter 2020, we have to account the losses for the OPEC+ cuts that, in terms of production, are affecting us around 40,000 bbls of oil equivalent per day. Then we had also the full effect in the second quarter of the losses due to the COVID situation that are around 130,000 bbls of oil equivalent per day when compared to Q1 of this year. Those are the two main elements regarding the losses.
Okay. Irene, just to give you some additional color on the performance, the better performance we had on the Refining & Marketing, Gas & Power, and the effect, the headwind we had, mainly because of the COVID-19. Starting from R&M, the refinery had substantially a performance in line with the first semester 2019, notwithstanding, I would say, a worse scenario in term of margin, compensating also more or less an EUR 80 million-EUR 100 million of negative COVID effect because of definitely the utilization of our plants that in April, May, and June has been reduced even down to 60%, more or less, especially because of the oversupply in gasoline. The market has been affected as well, but some way, we succeeded in keeping the margin a bit lower than it was with the loss that has been in the range of EUR 40 million versus the first semester 2019.
Talking about the Eni gas e luce, 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 first semester. At the same time, we've 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. 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. The Eni gas e luce recorded an increase notwithstanding more or less a EUR 30 million-EUR 35 million of loss because of the COVID-19.
Without such a loss, you see the better result would have been even more important. Maybe Cristian could give some color on the GLP in the first semester, and I can elaborate on the guidance.
Sure. As we have said before, the first semester has been very volatile environment. 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. We have experienced an increased volatility, and so we were able, notwithstanding the negative impact of the COVID-19 pandemic on the demand, to re-optimize the asset base, the portfolio base, especially in the Gas & Power business. We anticipated all the, let's say, value extraction from the flexibility in the first semester, given exactly this volatility. We were able to capture these, 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.
Notwithstanding the scenario leveraging on the integration with our upstream production base in order to optimize the operations and to safeguard ourselves from possible losses.
Okay, in terms of full year guidance, I am making reference to slide number 11. The EUR 800 million are mainly based on the contribution from Gas & Power, EUR 650 and EUR 350 from Refining & Marketing. While we expect the chemical business still losing money, even with the lower pace versus the first semester, with a total loss on a yearly basis of EUR 200 million. As far as the Gas & Power, certainly, the Eni gas e luce will keep on growing on the same path. Likely even faster, if COVID-19 will allow us to take advantage fully from the client base growth. 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. You mentioned working capital.
On term of working capital on the full year, I can anticipate a number slightly worse than the one that I guided in the previous period. Previously, I said that we were envisaging a capital absorption in the range of EUR a few hundred million, in term of working capital. Likely, this number would be now assumed a bit higher, I would say in the range of EUR 600-700, because of the probability to have a lower pace in payment at the year-end because of the crisis, mainly from our partners in upstream, including the national oil companies. The performance in term of payment in our retail and the other businesses is performing even better than what we assumed at the very beginning of the crisis in March. The tax rate, the last question.
This year is very, I would say, is too volatile to measure the tax rate. I'm afraid to say that the tax rate in 2020 would be quite unreadable. The same exceptionality would be on the cash tax rate that has been guided in the past in the range of 30%. Now we are envisaging something in the range of 20% because of such an extraordinary period. No reason to imagine that on a more steady environment, more or less $60 per bbl Brent flat, 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%.
Very clear. Thank you.
The next question is from Lucas Herrmann of Exane. Please go ahead.
Yep. Good afternoon, gentlemen. Listen, thank you very much for breaking out the growth in decarbonized products and giving us some timeframe around delivery in terms of absolute volume. I wonder whether you could give us any comments on how you see cash flow from those businesses at an operating level developing over the same period, however. 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. Secondly, I wanted to ask you something on natural carbon solutions and just as an important part of your policy of offsets, an 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 to plant whatever to effectively decarbonize in a natural way as you all start to gravitate towards the same broad policy. Thanks very much.
On the first question on the cash flow from our green activities on. I think that will be more specific during the strategy in 2021. This is an update strategy. 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 years. For the cost of the forestry, I think Massimo or, sorry, Sandro Puliti can say something on the natural.
In 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 or lower cost for capture each tons of CO2 compared to the other techniques that can be applied. We are in a region below EUR 10 per million ton of CO2 captured.
Massimo, in terms of accessing land and forestry, is that changing at all? How do you see things there? I know it's a slightly abstract question.
Maybe Sandro then can complete. For the work of the last couple of years, more than a couple of years, our main target was the countries, in say Africa, we can say, or South America, but especially Africa, where we have all our operation. We are present. We have a presence in these countries. It's not problem having access, because it's not our land, it's not a concessions. It's nothing that of this kind. It's not like in the upstream. It's a portion of primary forestry that we protect. 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+, because it's not just a forestry conservation. It also is different other aspect, biodiversities and job creation. Is a question of different component.
We don't have any problem to have access because it is 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 part of the credit in terms of money to develop the area. That is the approach, and it's working very well. Clearly, we work with developers. We already set up different agreements in the different countries. It's something that we are developing. Our aim is to have, by 2030, about 20 million tons that will be captured by forestry. That is in progress and is working quite well.
Thank you.
The next question is from Massimo Bonisoli of Equita. Please go ahead.
Good morning. Two questions from me. One 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 these moving parts in the additional variable dividend, and additional free cash flow generation? If yes, would you provide a sensitivity to each KPI just to let us track those variables? 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. 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 Brent only. We are assuming that the Brent would be the more important proxy in term of cash flow variation. The number we will look at in order to assess the amount to be distributed as a variable component is the only Brent price. All the rest would be some way included and managed by the company.
You made another Okay. If there is something lost, please let me know.
No, it's all okay. Thank you, Massimo.
The amount, sorry. You mentioned the amount of the flexibility. We gave EUR 900 million each $5 Brent, and this is fixed. It's not depending on the sensitivity we can assess each year. The number has been set, and then the EUR 900 million will remain in place all along such a remuneration policy.
Okay. Thank you very much.
As a reminder, please press star and one for questions. For any further questions, please press star and one on your telephone. Mr. Descalzi, that was the last question. If you'd like to make some closing remarks, sir.
Thank you. First of all, I want to thank you, everybody who was listening to us. I want to thank you my colleague, because in the first time that I say that during this first half presentation, it was a very tough period. We work on different kind of issue and topics because was on the revision of CapEx, OpEx, and we organize different kind of teams worldwide. We work on the organization. We work on the capital location, in revision of the dividend policy that took about more than two months. I think that this exercise was very useful to test our robustness for the future in term of team and motivation. Especially, we had the courage and the vision to start a new kind of phase in term of approaching the dividend policy.
Clearly, as I said, our aim is to be transparent and give a clear reading of what we are doing, because outside is so confused and volatile that we want to be linear. Maybe you can think that this dividend or this policy is complicated. It is really simple, and in any case, much simpler than the world outside. That was our aim, and I hope that we succeeded. Thank you very much.
Okay. Just few words to say that this is my last conference call as a CFO, as an Eni CFO. 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.