Ladies and gentlemen, my name is Paul Fernejo, Head of Investor Relations here at Repsol. I want to welcome everyone, especially those people following us online and those people present here in the auditorium. Thank you for joining us here in our headquarters, and thank you for taking the time to attend this strategic update. Today's presentation will be conducted by Josef Jean Imas, Repsol's Chief Executive Officer. And we have with us other members of the Corporate Executive Committee, Miguel Martinez, our CFO, Luis Cabana, Maria Vittoria Zingoni, Antonio Lorenzo.
And they will be joining us here throughout the presentation you to hold your questions until that time. For those following our webcast, we have enabled an option for you to ask your questions online. Please be advised that the Q and A session will only be open to sell side analysts at this time. Before we start, I invite you to read our disclaimer. During this presentation, we may make forward looking statements, which are identified by the use of words such as will, expect and similar phrases.
Please note that actual results may differ materially depending on a number of factors as indicated in the disclaimer. I'll now hand the presentation over to Jose John Emath, our CEO. Thank you.
Thank you, Paul. Thank you, everybody, attending this capital event here in the audience and also people attending by webcast for joining to this strategic update for the 2018 2020 event. We have chosen to limit this update to 3 years, in line with the remainder of our current strategic plan. And I want to emphasize that this is an update that means that perhaps most of what I will present here should be new to you. What we renew is increased confidence in what we believe that is our that our business can deliver over the coming period reflected in improved forecast results through 2020, which we will commit to on the assumption that Brent prices stay over $50 per barrel.
We have reformulated our tagline to delivering value growth through the cycle, which now introduces a new concept, the concept of growth. Until now, we were talking about value and resilience. And now growth is the new concept in the tagline of this strategic update. And today's presentation is organized in 3 main sections. The first, I will explain how anticipated delivery of objectives have happened over the last 3 years, and that is going to be the driver of this update.
Secondly, I take you through Repsol's value proposition for this period and our new goals for this 2018 2020 period. And finally, I'll try to wrap up with key financial targets for the 20 eighteen-twenty 20 period and with our conclusions. Before entering into the specifics of today's presentation, I'd like to start by reviewing what Repsol is today. But I suppose that most of you really know what Repsol is. We are an integrated company, upstream, downstream, producing 700,000 barrels per day in the upstream, 63% of gas production, 37 percent is oil.
You know the performance of our downstream business with a leading business in Europe and with commercial businesses in Spain, Portugal, Italy, Peru, and now developing the service station business in Mexico. So I'm not going to spend a lot of time in this slide that you know pretty well. Now let me introduce this first section of the presentation summarizing our recent journey. Repsol has been able to successfully navigate through this commodity cycle over the last 3 years. Since we presented the strategic plan in October 20 15 in this same plenary room.
Since then, we have achieved industry leading results with our EBITDA in 2017, a 52% larger than it was in 2015. At the same time, we have transformed our Upstream business, doubling the size of this business and integrated Talisman. Our upstream has been able to reduce its free cash flow breakeven to around $50 per barrel and gross €53 per barrel, that was the Brent price of last year, 2017, was free cash flow positive after paying its CapEx. And our European Union industry leading Downstream has delivered an average of over €2,200,000,000 per year in free cash flow since 2016. We have reduced in an extraordinary way our cost base, thanks to our focus on efficiency and synergies, and we have been able to reduce the net debt of the company by around €6,000,000,000 since the end of 2015, retaining our investment grade credit rating at BBB stable and building financial flexibility for the company.
Finally, we made some weeks ago a strategic move by divesting our historical non operated position in Gas Naturale Senosa with the ambition to build a low carbon operated business. When I closed out our 2017 results in February in the call we had together, I observed that in only 2 years, we have already met all the key commitments of our 2016 to 2020 strategic plan. We deliver as we always do as a company, but in this case, faster than we initially aim for, driven by the positive downstream environment and by unaccelerated upstream transformation. We increased in February, as you know, our shareholder compensation to €0.9 per share. We have reduced our group's free cash flow breakeven to around $40 per barrel by the end of 2017.
We dramatically reduced our net debt and stabilized our business at investment grade. We have reduced our CapEx from a figure close to €7,000,000,000 in 20.14 to €3,000,000,000 in 20 17 without compromising safety, production volumes, reserves, replacements or critical maintenance programs. We have divested non core assets, cashing in over €9,000,000,000 over the whole period. We have delivered synergies and efficiencies of 2.4 €1,000,000,000 per annum by the end of 2017, overcoming extending our initial target that you remember was €2,100,000,000 by 2018. And finally, we are on track to meet our CO2 reduction target, and we made significant progress towards our ultimate ambition of having 0 accidents.
We now, therefore, need to set new targets that will continue to stretch our delivery, and that is the final reason why we have prepared this strategic update. The second reason on top of this delivery of the targets is that we are in a complex environment in energy terms in the world. What are some of the key trends we are planning for? First, high price volatility. I mean, today, oil price Brent price is at around $74 $75 per barrel.
But you remember that 4, 5 months ago, the figure was fully different. So we are fully prepared for the lower for longer scenario. We are witnessing oil prices that are again reaching 2014 levels. Volatility is the DNA of this business. However, in the long run, in coming 2, 3, 4 years, seeing that demand is strong, that the cost of supply that the world is going to need to come in 2, 3, 4 years to overcome the decline of the wells, the natural decline is going to be in the range of $50 $60 per barrel.
We are taking in some way this price floor for our upstream production and for our, let me say, exit of floor scenario for coming 2, 3 years. Refining is experiencing a silver age. Demand is robust. And because the lack of investment in the refining sector in the world, utilization rate is going to be high in coming years. And on top of that, we'll talk later about that, but the International Maritime Organization, IMO, regulation is going to impact in a very positive way on a complex system as Repsol has today.
At the same time, a strong fundamental support, chemicals demand growth, and this is going to be increasingly a destination for the crude oil. Are we close to energy paradigm? I mean, we don't know that, but we believe that things are moving in that direction, and we want to be prepared for this scenario. Natural gas is a relevant part of our portfolio. We want to increase the whole value of the chain of natural gas.
And on top of that, we are prepared for these challenges. And we believe that Repsol offers a distinctive value proposition in the industry, thanks to our balanced integrated mobile and an attractive size. Let's move now to the value proposition for Repsol for this period. First, the tagline I underlined before, delivering value growth through the cycle. We have chosen 3 pillars for achieving this value growth: improve shareholders' returns, the growth of the profitability in our portfolio and thrive in the energy transition, all that over a strong foundation of financial flexibility of the company.
These pillars were chosen because they capture the 3 ways our company will generate value for our shareholders: the first, paying growing dividends the second one, share appreciation through profitable growth in the company and finally, keeping a sound balance sheet in Rexel. First, we are projecting that we will be able to increase our dividend per share by 8% per annum on average for the 20 eighteen-twenty 20 period, reaching €1 per share in 2020. Additionally, on top of that, we are going to maintain the strip option. We will fully buy back shares over the whole period to avoid any dilution, and these are our commitments even in a $50 per barrel scenario because we have the projected cash flow generation scenario support this commitment and these metrics. And it's going to give us the comfortability to results and value creation metrics across our portfolio at any old price, driven by both our downstream as an asset light growth engine and by our upstream, delivering production growth, performance improvement and portfolio optimization.
And finally, delivering value by striving in energy transition, building long term options for the company, leveraging our current competitive advantages in low carbon business, developing new capabilities in the company and reducing our carbon footprint as a main priority for Repsol. This plan is updated, the 2018 2020 update will put Repsol in a position of strong financial flexibility supported by high free cash flow generation and debt ratios reduction. We will maintain as a priority tight capital discipline in the company to ensure that every euro we generate will be leveraged to create value for our shareholders. We have clear priorities for the cash flow the company generates. Main ones are core portfolio CapEx and growing shareholder retribution via dividends and buybacks.
We also seek profitable growth in Downstream, and new low carbon business, always profitable. That is the condition that the growth needs to build the future of the company. And this target can be achieved at $50 per barrel flat scenario while maintaining the financial flexibility of the company. This is a key feature of our plan. Beyond dividend growth, our priority is to follow strict capital discipline with regards to investments in the company.
Let me elaborate a bit more our first important message of today's presentation. Focusing on improving shareholders' return, our plan is to increase dividends with an annual 8% growth, increasing dividend per share by €0.05 per share a year to achieve €1 per share in 2020. As already we announced in 20 for 2018, we will maintain the Strip dividend as an option to shareholders, and we will buy back shares to fully offset dilution over the whole period. We predict that will lead the industry in dividend per share growth in the next 3 years when compared to the medium of the consensus of our peers. I think that is also quite material to mention that this dividend growth is fully sustainable and in line with our results and cash generation even in a $50 per barrel, flat scenario.
And both payout ratios and dividends over cash flow from operations are in line with analyst consensus for our peers with some headroom on our side. And in fact, strong results growth in coming years will enable Repsol to increase the dividend coverage from 3.9 times in 2017 to 4.3 times in 2020, all while increasing the dividend amount. I'm comparing, of course, the dividend with the cash flow from operation. Let's move on to our plan to grow our portfolio in a profitable manner. A lot of our success navigating the low part of the commodity cycle is related to our focus on leveraging our operational capabilities to enhance the financial performance of the company.
I mean, here, we're describing 3 examples quite recent that I think that are worth mentioning. The first is the turnaround project of the UK assets we obtained and we acquired in the Talisman acquisition. By deploying our people, working with our partners and stealing the assets, we have been able to increase the asset net present value by €1,600,000,000 over the last 3, 4 years, reversing the decline and reducing in a dramatic way the OpEx in our operations there. The second one, it's implies simplifies, sorry, our continuous effort in improving refinery operation by leveraging technology. We have implemented a digital solution that is called CCLOS that allows the operators of the refineries to monitor real time the economic impact of the decision and act depending on this decision in any time.
This project has yielded a margin improvement of $0.4 per barrel a year on a recurring basis. That is a material figure for Repsol. The last one is the transforming while performing that combined the focus on the customer in the commercial businesses but at the same time using digital technologies as wallet is to improve this value that is around this profit pool around every client we have here in Repsol. Repsol is now a double year engine delivering growth and shareholders' return with 2 strong cash generating core businesses. For 2018 2020, for this period, our priorities in Upstream are to improve the economic return of our barrels, leverage the growth potential of our assets and high grading our portfolio.
For downstream, the priority is to consolidate our current industry leading performance, but at the same time, opening new avenues for growth, leveraging our strong capabilities in this business. And as part of this plan, we are also building a low carbon business to get ready and thrive in energy transition. In 2018, 2020, we will invest €11,000,000,000 in CapEx in the core portfolio of the company and broadly in line with the investment a bit more, I say, in the 20 fifteen-twenty 17 period. We will be investing €6,300,000,000 in maintaining our asset integrity, but also improving the efficiency of this asset integrity, the efficiency of these assets through operational performance, digital and so on, sustaining our current upstream based production level and supporting our downstream leadership position. On top of that, we will spend 4 or invest, better said, EUR 4 600,000,000 to grow our production levels and compensate the natural decline through both short term projects and order that will deliver new volumes beyond 2020.
In addition of that, we are going to invest in this period €4,000,000,000 new growth business or businesses. This new growth is funded by the Gas Natural FENOSA divestment and includes €1,500,000,000 to promote the growth and expansion in the Downstream businesses, focus on international asset light growth, service station, trading, the international lubricants and so on. And €2,500,000,000 over the whole period are going to be invested in low carbon businesses. Our total investment for the period will be €15,000,000,000 54%, 55% in the Upstream and 45% in the Downstream and Low Hair Bone Businesses. Because we are a balanced integrated company, we have the opportunity to assess projects from different businesses, resulting in a rich and attractive investment opportunity set that you can see here in the slide.
We can be highly selective and extremely disciplined in our project approval. Our main investment project for 2018, 2020 for the combined portfolio are grouped in 3 clear buckets. The first is the brownfield and short cycle investments in the upstream. The second one is the asset light expand initiatives in the downstream. And finally, we have our 5 longer term upstream projects: Alaska, CPO-nine, Duvernay, Campos 33 and Sagittario in Brazil.
Our 2018, 2020 CapEx is mainly concentrated in the first two buckets, which provide attractive rates of return on investment with immediate cash benefits in the 2018 2020 period. Following our plan and under a $50 per barrel flat scenario, I mean, let me stress that I'm not forecasting $50 for coming 3 years. We don't know what is going to happen with the oil price. I'm saying that I'm taking, let me say, the floor we see for this scenario. And in this scenario, flat, we will increase cash flow from operations by more than 40% or a double digit 13% cumulative annual growth rate per year between 2017 2020.
Please, I mean, if you compare your metrics and the figures, take into account that we have rebased the 2017 figure to adapt the oil price to the $50 per barrel for the year to compare our projection. Additionally, we have deducted the extraordinary tax refund of €600,000,000 recorded in 2017 than Juno. Growth cash flow from operations will be coming from both upstream, €1,000,000,000 and downstream, €800,000,000 and that is our double year engine, and that is what makes it possible to commit to a growing dividend path for Repsol. There is a strong visibility to this short term profit growth, which is grounded in projects with near term delivery and clear operational roadmaps. Results growth over the period will increase, of course, our return on average capital employed by 30 percentage points, going from around 6% in 2017 to that figure that you could be in the right on the right of this slide, that is something beyond 9% in 20 20.
In case of having $60 per barrel in the period, the figure will be at around 10 percent. Let's spend some time now reviewing specific on Upstream. Our Rafting business has a unique and differentiated business model and combines a competitive scale with the nimbleness of fund, small of being a small operator. Our model focuses on 4 key strengths for our Upstream business. First of all, a sustainable scale, growing production to 7 50 barrels per day in a sustainable manner, supported by a solid pipeline of development projects that is now on track, balancing core positions with targeted diversification.
And the scale we have allow us to grow with midsized and lower risk assets that sometimes are typically below the radar of a major company. So we could have access to opportunities that are, let me say, less material for some other companies. The second focus or strength of our Upstream business, access advantage. We have privileged relationship with governments in core areas, mainly Latin America and Southeast Asia. Our proven exploratory delivery and the lean development projects have resulted in a cost of supply that is lower than the cost of supply of our peers.
We have a flexible and low intensity CapEx. We have a low exposure to CapEx intensive assets, and we focus in our portfolio on phased and short cycle developments. And finally, we are an efficient operator. We have below average cost in most of our core positions. We deliver our operated development projects on time and below budget, and we have shown the ability to manage and turn around difficult assets.
And I think that the UK is a good example of growth I was underlining. Our rafting portfolio is based on 3 key pillars. The first, lean and long plateau gas, is our main sustained gas engine, mainly in assets in Latin America and in Southeast Asia, with gas prices that are mostly either linked to oil or fixed to good contracts. I'm sorry, excuse me. I forgot it.
Thank you, Miguel. You are always there. Secondly, the North American unconventional assets that provide us mainly flexibility, the flexibility of being in the shale. And finally, we have a significant production of all assets that provide us with high margins and exposure to oil price upside. The key ones are Brazil, Alaska.
They are the result of our own expirations, and these assets also have much further exploration potential around them. In summary, our portfolio results in a combination of resilience, flexibility and exposure to oil price upside. Having characterized our business model and asset portfolio, let me describe our upstream strategy in a simple manner. We will sustain and selectively make our assets grow in order to improve economic returns, mainly based on 3 pillars. The first one is keep focusing on efficiency and continuous improvement in technical terms secondly, high grading our portfolio prioritizing value over volume.
We are going to be very focused on the value we extract for every single barrel we are producing. And thirdly, selectively developing higher margin, good return organic projects. Now let us first take a closer look at our upstream CapEx allocation for 2018 2020. Around 60% of our CapEx is going to be invested in growth and exploration to get new production with improved margins and ensure the future sustainability of our business. This include, of course, the investment in the short term cycle projects, but also the CapEx we need for the long term growth assets such as Alaska, CPO9, Duvernay and Campos 33.
In terms of place, we are focusing our investment on onshore and shallow water conventional assets where we have a competitive advantage and, of course, also our core and conventional positions in North America, Canada and the United States. We will keep a limited exposure to deepwater place in our investment prospects for coming years. This focus on lean place, together with the significant weight of brownfield and short cycle projects. And all that is going to give us the opportunity to achieve substantial growth with development CapEx intensity lower than our peers. Our respiration intensity, because respiration is one of the main features and one of the main pillars of this company, is going to remain above our peers, in line with our recent year figures and below our historic levels where we targeted, as you know, a quite aggressive organic growth.
From today's production, in 2020, we will keep our current focus in terms of place and geographies. Indeed, our play mix will still be oriented toward lean place, with more than 90% in shallow waters and onshore conventional assets and unconventionals. In terms of geographies, more than 80% of our production will come from the 3 core areas: Southeast Asia, Latin America and North America. Our organic production growth over 3 years per annum is going to allow us to comfortably exceed the 750,000 barrels per day production target we have set for 2020. And our production target is lower than our full organic potential.
I mean, our potential is going to allow us to produce 30,000 or 40,000 barrels per day more in 2020. But we expect to exchange to swap some lower value barrels for fewer, higher value barrels as part of this trend of upgrading or high grading our upstream portfolio. More than the 85%, almost 90% of the production in 2020 is supported by reserves production and proven book reserves. And even in 2022, we are not going to depend on further exploration success to sustain our volumes. Production will grow selectively in our most profitable assets and short term projects.
And this new production coming from these light assets is going to deliver 95,000 new production barrels in 2020 comparing the figures of these assets and their production in 2017. Our short term projects show a healthy mix of brownfield developments in existing assets and short cycle new development projects. In addition to increasing production in profitable assets, we are also launching a new efficiency program to improve our portfolio metrics. This program is the evolution of the 2016, 2017 program focused on cost reduction, both OpEx and CapEx, which delivered $1,600,000,000 outperforming our target 1 year in advance. The new program is wider in scope.
I mean, it's not only focused on cost reduction and efficiency, but on top of that, we are looking for new margins, new revenues, logistic and HAP optimization, tax shields optimization, working capital optimization and so on. Our new program is in motion since late last year with more than 600 initiatives that Luis Cobran and his team are leading. And they are already planned or in execution with an estimated cash impact of $500,000,000 for 2018, and we plan to deliver $1,000,000,000 in yearly free cash flow by 2020. It is difficult to highlight the most relevant initiative of this program. Efficiency has been 1.
And on this slide, you can see what are just eutectic examples that I'd like to highlight, that there are a significant number of digital initiatives as part of this program, and digitalization of this company is going to be one of the main drivers looking for new revenues and looking for efficiency in coming years. To complement our organic growth, we are going to use portfolio retention for upgrading our business assets. Our goals are clear: enhance the value of our portfolio through increasing higher margin barrels and disposing lower value ounce, gain scale in our core regions and exit some of our more marginal positions in our portfolio. And for our unconventional portfolio, focus on the higher potential, more competitive operated assets. Combining our organic levers of short cycle investment and efficiency and digital program with our active portfolio rotation strategy, we aim to grow in cash flow from operations per barrel in the Downstream by more than 30% from 'twenty seven to 2020 at flat prices.
I mean, I'm stressing the fact that I'm talking in terms of cash flow for every barrel we produce. Now focusing on our long term projects with 1st production after 2020, we have key 5 key projects, you know them, with our net present value breakeven below $50 per barrel and phased developments. These projects are going to guarantee the sustainability of the production of Repsol and even the growth in coming years. And this analysis is not ours. It's from Bud Mackenzie that you know that is one of the most relevant technical analysts of the sector.
And Repsol is leading the industry in net present value breakeven for projects we have in our funnel, in our pipeline. Our projects, of course, in the analysis of Bud Mackenzie and comparing with the same metrics with the other companies, with our peers, we have a breakeven in full cycle net present value of $42 per barrel, much lower than industry average of $56 per barrel. In addition, Repsol's new projects have an attractive return with a return of over 20% above our peers' average of 15%. Let me now say a word about exploration. We've had delivered in the past and will be still key for the long term sustainability of the company.
We are very focused on the North and South America, Southeast Asia and lean exploration niches in Europe and North Africa. In North America, we leverage our 1st mover advantage in the Alaskan Nano Ship play, and we are going to move to the Mexican part of the Gulf. Let me finish the upstream part of my presentation by summarizing the key targets for 2020 at $50 per barrel flat scenario. Production will increase in an 8% from 2017 to 2020, 2.6 percent per annum. The cash flow from operations will increase from €2,000,000,000 in 2017 to EUR 3,000,000,000 in 2020, growing by 50% due to these two factors: growth in barrels and growth in the value extracted by every barrel.
And the free cash flow breakeven after CapEx is going to remain below $50 per barrel. Now it's time to move on to downstream. Repsol has a leading downstream business with world class assets and businesses. Moreover, we are exposed to attractive deficit rich regions such as Southwest Europe and West Latin America. Let me briefly summarize our downstream businesses.
1,000,000 barrels refining capacity in the 1st Solomon quartile for the European Union net cash margin and our current high conversion ratios are going to allow us to capture the benefits from the IMO 2020 regulations and growing requirements for cleaner products. In marketing, a strong position in Spanish markets, 37 market share, a leading position in some other markets as Portugal and Peru. APG, we have more than 70% market share in Spain. And in as summarized, we have a return on capital employed above 20% in our Downstream businesses. In chemicals, Repsol takes advantage of the integration among our refining and our chemical business, And we have a quite relevant position in the world in products that are high margin products.
I'm talking about the rubbers, the EVA copolymers and the polyols. In these three kind of products, we are 1 of the 10th largest producers in the world. Our lubricants are recognized worldwide and are in track of a significant international expansion project. Our trading business leverages our upstream and downstream assets and global product flows to deliver on a strong position in Europe. And in the Atlantic Basin, either in crude and in key oil products.
Across the portfolio, we have a highly integrated value chain with a position of leading European market in the Downstream. In terms of Repsol's leadership in the European Union Refining and Marketing, I mean, let me remind you that we have and we have had over the last 5 years a leadership position in margin terms. We are fully invested for upcoming the 2020 IMO regulation. We have today middle distillate yield in our refineries of above the 50% at around 55% of the total yield of our refineries, and less than 7% of our yield is full oil. And we own, as Repsol, the 25 percent of the total European coking capacity.
That means that we are fully prepared to capture the margins coming from the IMO regulation. Our downstream performance in terms of EBITDA and return on capital has been remarkable in the last years. We have been able to leverage our investment in refining and chemicals made and developed in the last in the lowest part of the cycle. And from the next few years, we expect positive fundamentals supported by this new regulation and driven by demand growth for chemicals that are going to be probably above the GDP growth in the world, oil products demand and growing especially not only in Europe, where we are also to see a growth in coming 2, 3 years, but mainly in emerging market and taking into account the limited new capacity addition that is going to support the margin. In general, it appears to be a good landscape for a player like Repsol.
We are going to invest in the period 1.5 €1,000,000,000 in new expand growth projects and €2,700,000,000 to sustain and to make more efficient our current downstream businesses, improving our core assets and trying to maintain our leadership position. In refining, we are going to pursue a sustained strategy improving our results, enhancing, fostering and boosting the efficiency in our refineries being fully prepared for the new IMO regulation. In the LPG, we are going to concentrate on maintaining our leadership position. In the chemicals, we are going to look for value in these niches where we have high margins. In Marketing, we are going to expand the businesses in new geographies which offer high growth.
Mexico is a good example. And at the same time, we are going to boost our transforming while performing program. And in the following slide, you could see this strategy of growing in this chemical niches of polyols, rubber and EVA copolymers, where we have the aim of being one of the top 5 worldwide in every of these niches. We have a clear strategy in Chemicals to achieve those targets. In commercialization, we will going to develop our asset light international growth.
We are going to target mainly 2 areas. One of them is our natural hinterland. I mean, we are talking about France, Western Mediterranean area, Morocco, Western European area, where we think that we have strong advantages coming from our refining position and the logistic platform we have here in Spain to have a good access to this market. In Latin America, our region with significant growth prospects, we already have commercial positions in Peru and more recently our entry into Mexico. Our strategy is to leverage our trading, lubricants and marketing capabilities with the knowledge we have in the region to develop material positions with critical mass.
To close this downstream section, I'd like to share with you the main financial targets in our plan for this Downstream business. The cash flow from operations is expected 27% growth On average free cash flow above €1,000,000,000 per year, excluding the impact of our low carbon business. And the return on capital is going to stay above the 18%. Now let's cover a distinctive pillar of our strategic update. Repsol's plan to build a material position in the energy transition.
Today, several trends are impacting our industry, and they are going to deeply change the way energy is consumed. Regulation towards a world less carbonized in every sector is going to be important. Technology is accelerating some of these trends. The habits of consumers are going to go in the same direction. And finally, we are going to compete with some other industries coming from some other sectors with a strong technological DNA that are starting to participate in the energy transition.
I mean, these trends are impacting the projection for energy consumption. And Repsol, I mean, will like and want to be a player in this new arena that is going to be designed and mainly building our products and our profit pool around the client and customer base we have today. In this context, we have decided to develop and operate it and synergistic position in low carbon businesses. You know that we sold gas nut some weeks ago. That was the first step for this road map.
And with this ambition defined, we have moved to swap this exposure to the Gas and Power in Gas Net that was a non operated position in a very regulated business, and 80% of the EBITDA coming from Gas Natural comes from regulated businesses to an operational position that we will start to build over the next 2 years. The transformation is clear. We are going to move from non operated, non controlled business to unoperated business and from having I mean, no capacity, no ability to exploit synergies to having it. From an 80% low return regulated business that Gasnaps grows, we are going to seek higher returns in the market arena. We will be active players in the future energy transition by building profitable, and I'm going to stress that we're profitable low carbon businesses, enhancing capabilities and reducing the emissions in our operations.
Our carbon business is going to be focused mainly in 3 kind of activities. The first, and it's going to be at the beginning, the most relevant, is the is the wholesale gas, where we have a position as gas producer all around the world. We have offtakes of gas in some parts of the Atlantic Basin as the Gulf of Mexico is, and we are the largest gas consumer in Spain. We consume in our own industrial sites the 12% of the total Spanish gas consumption. That is going to allow us to build our position combining these long and short positions in this market.
The second one is going to be the retail gas and power business, building on our strong brand and the 10,000,000 clients we have in Spain and finally, the low carbon generation taking advantage of our technical capabilities and experience in large scale projects. I mean, I want to underline that today, 600 megawatts of this long term target of 2025 is operational in our refineries. Today, we have 600 megawatts working. We are dispatching electricity every day. And even today, we have a consumption of the 1 4% of the total Spanish electricity market is consuming our own refinery.
So we are actors of this market. And when we are talking about low carbon generation, we are also talking about combined cycles because gas is our business. We know that we have to extract all the value we could do from the gas value chain. And in the energy transition scenario, renewable energy is going to be, of course, relevant, but renewable energy is intermittent and is going to need some other support to guarantee this activity of supply in coming decades. So gas and combined cycles are going to be a relevant part of this journey.
And on top of that, we are also ready to enter in the generation power renewable energy sector, But we are going to do that based on our own capabilities in an organic way and no, in any case, in an inorganic M and A operation building or buying assets. We want to build our own projects and always looking for profitability on them. I mean, we are going to ask at 10% of the return on equity to every project we are going to invest in. Below this target, we are not going to invest a single euro or a single dollar in this kind of business. So we are talking about being profitable in the energy transition scenario.
We want to be the players. We have a quite ambitious objective. By 2025, we want to have 15% of the Spanish gas market share, a 5% of the market share in the retail gas and power with 2,500,000 clients. And the key target in low carbon generation is 4.5 gigawatts of installed capacity across Spain and emerging countries. But let me remind again that we have already 600 megawatts of cogeneration plants today in our industrial sites.
Repsol is enhancing capabilities to be ready for the upcoming energy scenarios based on 4 main pillars. The main one is the technology side. I mean, we are investing hard in technology to be able to reduce the CO2 emission level of the company, increasing efficiency, leveraging the advanced simulation and mobile in our industrial and upstream operation and developing new materials in our chemical business. We are also promoting an ambitious digital program that is transforming all businesses across the group, either the upstream operations, industrial assets in the downstream and commercial businesses, and this program targets €1,000,000,000 per year of incremental free cash flow by 2022. With that target, we have today 85 actions on track to capture this target by 2020 of €300,000,000 by 2020.
In terms of talent, we are going to need talented people to develop this program, and we are investing hard to have these skills of future leaders of these businesses. And finally, we continue with our plans to reduce the corporate cost and to have a lean corporation. You know that we have reduced from 1.3 €1,000,000,000 to €900,000,000 in 3 years the corporate cost of Repsol. We are still on track. We are going to go on this effort, and we are going to reduce an additional 9% of our corporate cost in coming 3 years.
Repsol is fully committed to fight climate change. Remember that we were one of the first or perhaps the first oil and gas companies supporting the Kyoto Accord a lot of years ago. We support the Paris Accord, and we are fully committed to achieve the 2 degrees pathway scenario in the world. We want to be part of the future, an oil and gas company fully committed to this scenario. Let me experience a personal feeling because last week, Arturo, Luis and me, we were visiting our operations in Malaysia and analyzing the evolution of the energy market in Southeast Asia, I mean, I wonder about the power demand that is going to experience this area of the world: China, Southeast Asia, India and so on.
And the main part of this power is going to be supplied by coal based power plants. I mean, and natural gas is the only alternative we have to cope with this problem. Today, the playground for achieving these objectives and these targets of reduction of CO2 emissions in the world is going to be played mainly in Asia. And we are part of this narrative, and we want to be part of this solution. But that is not only our narrative.
It's also about metrics. Taking into account all that, we are taking a commitment. The world is going to need to reduce enough 40% the CO2 emission level per every single joule of energy we produce. Repsol is taking the commitment to reduce also in our operations this target in coming 3, 4 years decades. And to be on track to make the first step, we are committing to reduce this figure enough 3% in the coming 3 years.
We are going to do that with energy efficiency, reducing our CO2 emissions, lever on our gas production, increasing our biofuels production, reducing the methane emissions in our upstream operations in flaring, leakages and so on and also thanks to low carbon power generation. Repsol is enhancing the capabilities to achieve these targets. On top of that, we could shift to the financial flexibility, And let me stress that our plan is fully funded at $50 per barrel for this period. We have 20 point €8,000,000,000 in cash sources. We plan to spend the same amount of CapEx financing cost, dividends by backs, including the increase to €1 per share by 2020.
And this plan provides also a financial flexibility because our net debt EBITDA ratio is going to be at around 0.7x in 2020, and this figure is below the industry average. We want to maintain financial flexibility in these volatile years. I mean, in case prices are maintained in a recurring way above $60 per barrel, we plan to accelerate with this additional cash the potential new growth opportunities that may be present in our businesses. I mean, we have some projects that we could accelerate in this scenario. I'm talking about the Duvernay, for instance, in Canada, the opportunities we could have to proceed with the full development of the Bakken area, the North Sensei area in Mexico.
We could accelerate also some projects around PM3 and this area in Malaysia and so on and so. And we could also accelerate with this additional cash, some growing projects in the Downstream, mainly related to the service station expansion to some other geographies, the trading growth, the lubricants international site and building the trading capabilities we are going to develop in our natural hinterland around Spain. So we have projects to use this potential additional CapEx. Of course, we are going to ask a higher return to these projects. And in case of not having or not looking or not finding these high return opportunities, of course, we will proceed to an additional share buyback at the end of the period.
On top of the buyback, we need to fulfill the whole dilution coming from the option over the 3 years period. We are going to keep a strict support and a adherence to having a strong balance sheet and to deploy our capital with high discipline. That is going to be the commitment of this management team, and it's going to be my personal commitment. Financial discipline is going to be one of the main supports of this company over coming years. Now we will be moving to the end of this presentation, and I'm going to go to the main financial metrics and the conclusions.
For 20 eighteen-twenty 20 period, we expect material growth in all the key metrics. Production is going to grow an 8% in 3 years, 2.6% a year average. The cash flow from operations will grow from €4,600,000,000 in 2017 to 6.5 percent in 2020, 12% per annum in average growth. The earnings per share is going to grow from €1.4 per share to €2 per share or 12% per annum growth over the whole period. And the dividend per share, I mean, it was already announced, is going to grow from €0.8 per share this year in 2018 to €1 per share at a rate of an 8% per year.
And all that, as I stressed and underlined before, very focused on financial discipline, and we also expect and our key metric by 2020 is to deliver the return of capital in the company by 2020, evolve the cost of capital, the work and maintain, of course, the investment grade. The capital employed in low carbon businesses. So in this slide, you can see that the total shareholders' return over coming years is going to be above the 15%. We have chosen this metric to track our performance during this 2018 2020 period, and it's the addition of the dividend yield plus the growth in metrics, EBITDA, cash flow from operations and so on. So for 20 18, 2020 and under abstract $50 per barrel Brent, we expect to deliver an annual total shareholders' return above the 15%.
This total shareholders' return compares in a good way with the peer consensus forecast And additional growth in total shareholders' return may be possible if there are increases in oil prices, in commodity prices, driving higher fundamentals or the market raises current Repsol multiples. But we are taking the hypothesis of a flat scenario to commit with this total shareholder return history. I mean, I want to close this event, this speech, by extracting the 8 main conclusions from this equity story. The first, we are in a position of strength as a company with solid financial fundamentals and with a sound and good business performance. Secondly, Repsol will provide a superior total shareholder return of $50 per barrel flat price.
We are going to deliver strong value growth, leveraging our 2 engines, upstream and downstream. The upstream path is going to be very focused on growth and profitable performance. The downstream is going to own, leading the European industry. And the IMO regulation will have a positive and material impact on this business. Repsol is laying a solid foundation for be an actor in the energy transition, but always under the framework of profitability.
I mean, we are going to build profitable businesses. Otherwise, we are not going to build any kind of business. We are going to do that on our own organic capabilities in an organic way. And Repsol expect with all that to deliver strong growth of key financial metrics and a positive return on capital over with our profitability over the cost of capital for the company. And at the same time, I mean, we have taken advantage of this crisis in the sector to build a company that today, let me say, after this difficult journey we have experienced over the last 3, 4 years, is leaner, is more competitive, is fully focused on profitability and growth, is fully focused on sustainability, and we are going to combine the high returns and the profitability in the short term with building the fundamentals and the pillars to have a profitable business in a scenario in coming years that is going to be different, and that is going to be the success of our integrated model as a company.
So with that, I'll now hand you back, Paul, the floor, and we are and I personally am ready to answer all your questions, concerns, doubts that could appear after this presentation of this strategic update. Thank you very much.
Thank you, Jesse John. I'll now open this meeting for a question and answer session for sell side analysts only that will run till approximately 2 p. M. For those analysts joining us here in Madrid, I will be asking you to raise your hand. And once selected, one of my team will bring you a microphone.
For those analysts following our webcast, please feel free to use the online platform to submit your questions. Finally, can I ask you to limit yourself to a maximum of 2 questions at this time? And if there's spare time at the end, we will come back to you. One final thing. Those of you in the room, please can you state your name and the institution you represent before asking your question.
Okay. Let's begin. John, why don't we start with you?
It's John Rigby from UBS. Two questions. The first is around your ambitions around the low carbon business. I'm struck by the fact that you advertise that you're making over 20% rates of return in your Upstream of $50 and you're making or aiming to make 10% levered return in your Renewables business. So I'm guessing the underlying return on a like for like basis is probably 7%, 6%, something like that.
When you think about a value proposition to investors, how does that screen exactly? What's the logic behind that? The second question is just to go back sort of the whole cycle. As I understood it, the deal with the Talisman transaction was designed to rebalance the business between Upstream and Downstream. And if I look at this plan now, it seems to be reorientating the business back into the Downstream again.
So sort of philosophically, where do you want is that an interpretation a correct interpretation of how you're you see the evolution of the business? And is that a correction perhaps of a thought process that was in place 3 or 4 years ago? Thanks.
Thank you, John. I mean, first of all, let me stress the fact that we are going to ask to any business or any investment in the low carbon businesses the same criteria that we are going to ask to any investment in Repsol. That means covering the cost of capital plus an investment premium. And we we expect in some of these relevant businesses. Let me say, I mean, today perhaps it's a bit early to talk about that.
But when we are talking about the gas wholesale, the figure could be closer to 15%. When we are talking about the retail business, building services around the commercial and the customer base we have today, perhaps the profitabilities could be closer to a 20%, to a 10%. So that is my first approach. I could apply some similar approach perhaps to combine cycles or integrating the full chain value. I suppose that your concern could be more related perhaps to the potential investment in renewable energy.
I mean, my first approach is this investment over the whole period is going to be limited as a I mean, as a top enough figure that including the production of some other power sources is going to be limited to 1.5 €1,000,000,000 Secondly, we are going to always to find higher returns and higher risk. I mean, let me elaborate, John. Amoil and Gas Company is a company that takes high remunerated money capital from our shareholders. We manage a diversified portfolio, offsetting and balancing the risk we take, but all these assets are risk assets. Our investors, they think that we are able to manage this risk, but we have to obtain a higher return from them to remunerate the capital that is entering the company.
That is the rationale, in my opinion, of what is behind an oil and gas company in financial terms. So we can't be in low return assets. We are not going to be in regulated assets. We need to find and to look for risk to enter in the business. And we are going to do that either execution of risk, technological risk, geographical risk or trying to integrate the synergy with some commercial businesses that we could be developed.
Anyway, we are going to do that in an organic way and only if that is profitable for the company. And let me see, that is going to be my driver in this business. And I think that we have also that we have to do that in a profitable way. We have to buy in some way the license to operate in the future. And I think that a company, as Repsol, you have to take into account that we have joined in the past EUR 6,000,000,000 in the Gas and Power business.
And we were obtaining a return on equity of 6%, 7%. And a main part of those businesses were regulated businesses out of our scope. Now we are going to go to operate businesses with a more prudent capital employed figure and with higher returns. That is going to be our bet. But of course, profitability is going to be a must in this journey.
If you take the upstream, downstream balance, I mean, I think we still are investing hard in the upstream business. I mean, after doubling our production after the acquisition of Talisman, I mean, we are going to increase our production in 50000, 55000 barrels in coming 3 years and growth in upstream is October. I mean, we are going to go on in this pathway, trying to find opportunities. But I mean, putting always value and margins as a priority instead of growth. Growth is relevant, it's important, it's going to be there.
We are delivering growth, but margins per barrel has to be a must return on the capital we are employing in the upstream. But in this period, 55% of the capital we are going to invest is going to be in the upstream. And in the downstream, we are going to I mean and I think that that is important to underline. After years years of focusing on efficiency and efficiency, we have a relevant we have a quite material and significant position in downstream business, and we want to lever this position to extract more value. And that is what we are going to do in coming years and mainly basing asset light investment, trading lubricant international niches in the chemical business and trying to extend our service station business to some other geographies where we could have growth and additional capability.
So we are going to maintain this balance of an integrated upstream, downstream company. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Okay.
[SPEAKER JEAN FRANCOIS VAN
BOXMEER:] If I may, John, with the 25% I did it. With the 21% you mentioned, which is the boot Mac analysis, it's not considered all the exploration that didn't work out. Is not even considered the exploration on these five projects. So it's the perspective from Woodmac is something that has already been discovered. But if you take the whole cycle, it will not be a 21% versus step.
[SPEAKER
JEAN FRANCOIS VAN BOXMEER:] Anyway, John, no doubt. If I have an investment on my table, 20% return and an investment, 12% return, I'll take my decisions.
Thank you. Lydia, please.
It's Lydia Rainforth from Barclays. Two questions, if I could. The first one, just going back to the use of cash if we're in a higher than $50 environment, can you give us what that split might be between the accelerated project development and the buybacks coming through? And then secondly, on the digitization side, I think you talked about €300,000,000 for that period to 2020 and then €700,000,000 after for that 2022 period. At this stage, what how confident are you around that ability to get that to that the digitization to $1,000,000,000 And is there changes that need to be made in terms of the culture for Repsol and how it
works? I mean, first of all, Lydia, our commitment of $50 per barrel is going to guarantee, and let me say, even in a low price of barrels because we have, as you could see, the financial flexibility to do that. The buyback, we need to cover the dilution coming from the strip in any case. I mean, the use of additional cash, I mean, my duty as manager of this company to maximize the return to our shareholders is to try to look for projects where we could obtain a higher return to increase the metrics of the company and the remuneration of our shareholders. And the advantage we have is that we have in our pipeline, in the final of projects we have today, we have these projects today and we could accelerate them.
We could accelerate some of them. For instance, in Duvernay, after the production now, we are derisking in the area heavier and GLD. I mean, if all that is okay, we have the capacity to accelerate the Duvernay project. We could do the same thing, adding marginal numbers to prospect where we have the facilities closer. I mean, we are going to do that.
In case of not having or not finding or not having good returns on opportunities, we will proceed with these additional buybacks. But I'm not going to have any kind of difficulty to realize that I mean, our difficulty to find these projects. But I suppose, I presume that taking into account the pipeline and the funnel we have today, we are going to be able to accelerate this kind of projects in the close future with higher returns, giving more value to our shareholders. The digital, I mean, I'm going to be, let me say, perhaps a bit disruptive in this answer because you are talking about the culture and so on, and it's true. But I'm going to offset perhaps this comment later.
The big money in Dior and Gas Company in the digital is not around the customer, the client and so on. That is very relevant and perhaps very transformative. But the big money is in our industrial assets. I mean, I'm seeing here, for instance, the person in front of me that is leading the UK and the area assets and Norway and so on, and they are using the digital to optimize the to increase the operational efficiency of our platform of our plant. I mean, the money you could have in additional barrels is huge.
Same thing in the optimization of the maintenance, being able to take the right data of every signal we are receiving from the 1,000 and 1,000 of sensors we have in every platform and in every upstream production. Same thing when we take, let me say, some kind of images. And with this dark geology, we are able to bet in an exploration drilling project without geological probability or likelihood of being successful in that 25%. I mean, we are talking about big money. And the big money in the Upstream is there, is in all the modeling of the flow of our projection we are going to develop.
And we could and that's in gross figures, we could achieve combining all that and additional free cash flow coming from the Upstream by 2022, that could account at $400,000,000 $500,000,000 approximately. Where is the money in the downstream? It's in our industrial assets. Using the digital, for instance, to improve the anticipated maintenance of our refinery, increasing the reliability and the utilization rate of our our refinery, 0.3%, 0.4%, 0.5% is big money. Optimizing with digital tools, the programming of our refinery, taking into account where the oil price, the product price is going to be in every market, taking the future prices, taking the operational features of every refinery, optimizing all that is big money.
We are talking about $1 per barrel from the digital in refineries by 2022 and same thing for the chemicals and so on. And on top of that, we also have to go to the digital in the commercial side, building value around the clients, building value around the customer and also transforming our corporate processes. So I could say $400,000,000 $500,000,000 is going to be the target for the the E and P, dollars 300,000,000 $350,000,000 is the target for the industrial upstream downstream, sorry, dollars $200,000,000 $150,000,000 is going to be the target for the commercial businesses of the company and $50,000,000 $60,000,000 is going to be the target for the corporate side. So we are going to capture more free cash flow by 2020, 500, 600, something like that, but we are going to invest 200, 300 in the middle. So we are taking the figure of 300 by 2020 because it's the net figure of this digitalization program.
And we are going to need talent to do all that. We are recruiting people. We are training our own people. And we are also collaborating with the startups, suppliers and so on to be able to build all that.
Okay. Our next question will be from Thomas, please.
Thomas Adolff from Credit Suisse. Two questions now and two questions later on. Just to follow-up on digitalization, it's nice that you've quantified the benefits. Not many companies have done that. But I actually wonder whether all the benefits go to the industry and it doesn't get competed away in the form of lower prices to the consumers.
So in fact, it's really about what you do differently versus your peers that gets the free cash flow capture, if you will. And I wondered what you are doing differently versus the industry peers. Everyone is doing digitization. The second question I have is on the IMO and the potential benefit that you see in your refining system and what you assume in your refining system in 2020 and whether your view is that IMO is transient in nature, If not, why not? And what your view is also in regards to the gasoline crack because gasoline might be produced as a byproduct?
Thank you. I mean, first of all, I think that we have an up track record of delivering what we commit in terms of efficiency and so on. So let me say my most or the easiest answer for me is to say you are going to see that every quarter in our results, in our cost. What we are doing differently, I mean, first of all, we start the journey some time ago. I mean, we are not starting now.
When we launched, for instance, Nexus, that it was, I'm going to say, semi digital 4, 5 years ago to improve the programming of the refining business, capturing a significant amount of new margins. We were in some way quite pioneers in this sector. Cyclos, that is the initiative that we launched 2 years ago to using the digital initiatives to give to every operator of every single plant, a clear reference about how it's impacting what he's doing or she's doing at that moment on the economics of the plant and so on. I mean, it's quite, let me say, innovative. We have today 85 programs on track.
We are following and I'm personally following in a personal way with every responsible of every business, what is happening and what are the result of all that. We are quite significant achievements even in the commercial side. I mean, today, while it is a quite a recurrent tool in the Spanish market to buy fuels in our service stations for 500,000 users that I mean, taking into account that in one year, we have been able to translate the journey as a relevant figure. I mean, that is perhaps what we are doing is to put in charge of that projects people that are leading the business. I mean, the digital is not, let me say, something that is fully a part in the company.
I mean, we have an architecture. We have support either internal or external. We are buying, entering, incorporating some startups to the reality of our daily business. I mean, you could say I'm not going to try to convince you about that. I think that we were one of the first incomers.
We are a company fully focused on efficiency, fully focused on operational efficiency. We have the leadership, and we have the human talent and capabilities to go ahead. And I mean, my duty is to deliver and to show and to demonstrate with real facts what I'm saying now. Regarding the refining system and the IMO, let me say that we are very prudent in our estimation. I mean, if we take because here, we are going to have a twin effect for Repsol.
55% of our production is middle distillates, and we are going to see a significant spread increase due to this, as you say, transitory effect that is going to be there by in 2020, 2021, 2022 and perhaps is going to decline later. And secondly, I mean, the fuel oil discount is going to increase in a significant way, and 50% of our current feed stock is heavy oil that is going to be fully impacted. We don't have any significant fuel oil production. The only site or refinery where we produce fuel oil is Tarragona. We have 7% of our full deal in the whole system is fuel oil.
And we have already technical solutions, either low sulfur fuel oil. And in some way, this the bottom of the barrel of Tarragona is going to feed the coker of Colonia where we have enough capacity to receive this feedstock. For instance, I mean, if we take for the we are forecasting for the Repsol system in 2020 and one $500 per Parter Refining Margin IMC Improvement in 2020. I mean, if we take the gasoil future market and the fuel oil future market and we apply this metric to our yields, the average that market is expecting is 3.8 dollars per barrel. And if we take the average of the analysts, they or let me say, in some cases, you or no, not you personally, but I mean are taking $3.4 per barrel as an average, Taking to account the spread, that market is discounting or forecasting and applying all that in a simple metric to our business.
And we are taking the most prudent approach, posting or forecasting $1.5 per barrel for our whole system. That is going to be temporary. The gasoline crack, you are right. That is going to impact because installation is going to increase probably. We are going to have more gasoline in the market.
But let me say, I think that only an 18%, 19% of our production is a combination of naphtha and gasoline. And this we are, of course, forecasting a reduction of the spread of gasoline. And here in the figures that I applied, taking our own prudent approach, the approach of analysts and the approach of future market, this effect of gasoline is, of course, included.
I'm going to take a question from the webcast. So Matt Lofting from JPMorgan is asking about CapEx outlook. You're forecasting €15,000,000,000 in total CapEx between now and 2020. Can you give some guidance on spend by year? And what should we expect after 2020?
And following that, are further improvements in capital efficiency required to meet that framework? Or are they already embedded in the business?
Okay. If we take the CapEx outlook for 2020 and beyond, I mean, in this period, 2018, 2020, this 15, I mean, I want to decouple in some way the EUR 11,000,000,000 in our core businesses and these 4 that are going to be employed for growth, €1,500,000,000 percent in the downstream side and 2.5 percent either in the retail, wholesale gas or power generation. After that, I mean, we are thinking from 2020 beyond a figure that could be closer to €4,000,000,000 per year for our core businesses. So but I mean, we are not here in some way projecting figures by 2020 and beyond, but I think that we could be there in that period. Improvements in efficiency embedded in those figures, downstream and upstream.
I mean, if you take the figure, and I don't know if we can see here the figure where the EUR 1,900,000,000 of cash flow improvements. I mean, may I take the mouse? I mean, these figures you are going to see here are embedded in the 2020 figures, of course. If we take the downstream, I mean, €300,000,000 is the cash coming from the improvement of international margins, for instance, the improvement of the refining margin that we are considering this year, a figure of $6.7 per barrel, that is even lower than the figure we had last year, dollars 6 point $8 per barrel. And taking into account the development of the year, I think that is going to be higher for the full year for our system.
We are forecasting $8.4 per barrel taking into account this IMO effect by 2020. This plus some chemical margins explain the €300,000,000 you have the €200,000,000 worth, the efficiency, the digital energy efficiency, CO2 reduction, programming optimization, improvement of reliability of plants, predictive maintenance and so on, all that is included in this €200,000,000 plus all the efficiency in the commercial side. €300,000,000 is the money coming from the growth, trading lubricants mainly, Mexico in some ways adding some cash also to this and the growth of Repsol also in Peru in the downstream side, plus the cash coming from the Lau Car Bone businesses. Going to the upstream, euros 400,000,000 comes from the growth. And from this growth, €200,000,000 are new barrels.
I mean, we are simply adding new barrels. €100,000,000 are I mean, the decline of some prospects plus the new production coming from orders that they have higher barrels is adding €100,000,000 in cash in additional money. €100,000,000 I mean, completing this €400,000,000 of new production comes from the swaps we are forecasting to do, I mean, the new cash from the barrels we are going to buy comparing with the barrels we are going to sell. And this €600,000,000 of improvement is an addition of 600 or 580 projects we have now on track to improve the cash flow for the Upstream, Apart of them, €230,000,000 approximately are new revenues. I mean, new revenues come in from optimization of some halves, new clients, new prices not coming from commodities, but because mainly in Peru, in our gas production, we are able to achieve new markets and so on.
€180,000,000 comes from the efficiency. I mean, I have here, let me say, the whole book with all the measures we have to obtain this efficiency with the people in charge of every project and with the money that is going to come, even projects with 50,000 dollars $80,000 and so on as we have in 2015 for obtaining this €180,000,000 in efficiency and €170,000,000 comes from, I mean, a panoply of different measures that include mainly the taking advantage of the tax shields that we have in countries like Norway, U. S. And so on, where thanks to the increase of the production, we are going to have new cash flow. So all that is embedded.
Let me say that today, as 60% 62%, better said, of all this program has an owner. The people in charge of that has a calendar to be executed. And I mean, knowing Repsol and knowing our people, I am fully convinced that this money is going to be there in 20 20. But again, delivery every quarter is the only tool we have to demonstrate and to show that.
Let me go to Chris.
Chris Koopman from Bank of America Merrill Lynch. Two questions. First, you refer on many of your slides regarding your $50 per barrel assumption. And I think you also made reference somewhere that this is not necessarily your price deck. So I wonder whether you can give us a little bit more insight about your price deck and how future FIDs get evaluated and how you actually can give us a bit of an insight into CapEx discipline and how that works.
And perhaps even as a bonus, you can talk to us a little bit about which FIDs you're particularly excited about that you'll be able to tell us in the next 12 or 18 months? And the second question is a little separate, €15,000,000,000 CapEx for the 3 years. I've heard not much that I would assume is inorganic spend of that €15,000,000,000 But perhaps you can talk to us a little bit about your views regarding the M and A environment, build versus buy. You mentioned CCGTs. I think they're a lot cheaper if you go and buy them.
It depends a little bit on where. But I wonder whether you can give us a bit of insight how much of that €15,000,000,000 you think could be inorganic?
Thank you. I mean, first of all, my only forecast about the oil price is that the future scenario is going to be volatile. I mean, you know better than me what the forecast of people are for coming 2, 3 years. Today, people is talking about 60, 65, 70, but the sound, as you perfectly know, 5, 6 months ago was fully different. So let me say my duty is not to forecast what is going to happen with your price, is to be prepared for both or for any scenario and to say you in a clear way what we are going to do with the money.
So in this sense, my proposal is clear. I mean, we guarantee in the lower scenario what we are committing here. That is the remuneration the shareholder remuneration of dividend increase, the full buyback of all that and the growth metrics of 50% in terms of in the downstream in the upstream and a figure of 1 third in the downstream. So from EUR 4.6 billion to EUR 6.5 billion in terms €1,000,000,000 of cash flows in any old scenario. That is my commitment.
I mean, in case of seeing $60 per barrel in a recovering way, I mean, the sensitivity is clear. I mean, in that case, we'll have $700 more, dollars 1,000,000 more in cash in our hands. And we are going to apply this cash, I mean, when we I mean, seeing that all that is happening in a quite recurring way to accelerate the projects I defined before. So that is going to be our commitment. That is going to be the application and the use of the additional cash.
And I think that mainly upstream, the projects we have now in the funnel and also this growth in the asset light Downstream businesses, either in geographies in your own hinterland or worldwide as the trading and the lubricants business are going to be our main priorities to that. And of course, all these projects, they are going to compete in profitability. I mean, to approve an FID, I'm very tough because I mean, I can't approve a project for 20 years, taking into account what is happening today with the Brent BAG. That will be a big mistake, in my opinion. So we are only approving FIDs that over the whole life of the project, they are ready to create a net present value, I mean, paying the cost of capital at $50, dollars 55 per barrel.
I'm applying this criteria in because I think that we have to guarantee taking into account the situation in the market, the profitability of the future. And let me say, the 4 next projects we have in the funnel, they are going to fulfill these metrics. I'm talking about Alaska, CPO9, Campos 33 and Duvernay. Duvernay, you know that we have there a significant part of liquids that are going to allow us to compensate in some way the low gas market sound in Alberta and the 5th one that's in Sagittario. I mean, we have still to a price and to be sure before going ahead.
But we are going to ask for that, and we have enough projects in the pipeline to guarantee that this criteria is going to be fulfilled? Because I mean, I'm convinced that the in coming years, the oil consumption and demand in the world is going to grow. But I mean, that could happen in 10, 15 years, but perhaps sometimes a demand peak will arrive and we have to be prepared for this scenario. So being very lean in our projects is one strategy. Being gassy and mainly focused on local markets is another one.
If we take the recent FIDs, we took the back scheme, for instance, I mean, I'm fully excited seeing the figures of the breakeven of the back scheme because $40,000,000 $45 per barrel, we are making money. Same thing in the CPO-nine, early development where we are using the facilities of Ecopetrol to optimize our cost and so on. So we are going to be there. The M and A environment, I mean, I rely and I'm going to rely more on the organic than the inorganic or the M and A side. I mean, if some of you are thinking that Repsol could buy either a company or an asset, paying a value of our cash of dozens or maximum 100 of €1,000,000 to achieve the capabilities we need to enter in some new businesses.
We are not going to pay in a moment where there are a lot of fresh money in the world that people is looking for new investment, that the multiples of people are paying are huge. I mean, we are not going to go to this kind of huge M and A acquisitions. I mean, we could have, let me say, some opportunistic platforms to have a base of gas and power clients in our markets to leveraging their owing our 10,000,000 clients to build a profitable business in the retail? Yes, that could be a possibility, of course, but we are talking about that. We are talking about, as you said, about buying a combined cycle or something similar.
But I mean, in this kind of assets, we are not talking about this 1,000 of 1,000,000 of euros. That is not on an organic pipeline of projects, on our base of clients and on our own capabilities.
Why don't we go across to the far side of the room?
Rob Pulleyn from Morgan Stanley. May I ask on your cash flow guidance in the Downstream business out to 2020? Approximately how much of the cash generated from these investments in downstream and low carbon is actually going to appear by 2020? Because I imagine there's a lag between you spend
and
then you get the benefit. And secondly, if I may, could you provide a bit more color about how you're going to reach this 4.5 gigawatt power generation target. That's a very big number. You've repeatedly said that you will both invest in profitable businesses and low carbon will be above 10% ROCE. But to get to 4.5 gigawatts, and to your previous point, presumably, you're going to have to buy a few things.
And I believe CCGT is part of that, but utilization in the low double digit numbers would suggest that those power plants are not currently profitable. So could you maybe just provide some building blocks about how we get to 4.5 gigawatts? Thank you very much.
Well, first of all, you have in this slide, I think that how many cash come from the expansion of the downstream in 2020. €300,000,000 is the new cash coming from the expansion of the downstream by 2020. I mean, the numbers, they are going to depend on the kind of mix of technologies we could have. I mean, if you take and let me put an example. If you take 3 combined cycles plus the 600 megawatts we have today in our refineries, I mean, 3000 or 3 gigawatts, but yes, 3,000 megawatts or 3 gigawatts are there.
And I mean, I'm not fully aware of the M and A market today, but let me say that perhaps you could buy 2.4 gigawatts of combined cycles in some markets paying €200,000,000 €300,000,000 or €400,000,000 So the money of this investment is going to depend of what is going to be the mix of technologies. If we are talking about the wind or solar energy, of course, the multi ports you have to apply are different. It could be €1,000,000 per every megawatt you develop. If you take, let me say, the whole responsibility of the process and if you go to an M and A inorganic operation, that is not going to be the case for Repsol. Repsol.
I underlined again this message. In that case, you could have €1,300,000,000 1.4000000 or even 1.5 €1,000,000 per every megawatt. I mean, the low utilization number of the CCGT could be, let me say, a threat or one opportunity because perhaps for people that pay €500,000,000 or 600 €1,000,000 10 or 15 years ago to build this plant. And today, having this scar this scar flow, perhaps the investment is not okay for people having gas contracts and short retail position and medium to produce the power. I mean, we have to analyze it.
I'm not in condition today to give a general answer, but let me say that could be profitable. You have a good gas contract. You are buying the asset, paying a low amount of money, and you have a power short position in the market that will allow us perhaps to establish some kind of PPA or to hedge your position in the market. So it's going to depend. But we are not talking I mean, I wanted to put a bit more clarity on this 4.5% figure because depending on how you develop, the figures could be fully different.
I'm going to take a question from the webcast. Thipan Joklingham from Exane BNP Paribas has two questions around the Upstream. Firstly, how does Brazil now sit strategically in the Upstream portfolio as we think of progress through to 2020? Secondly, in the Duvernay, what type of production profile do you assume over the next 3 years as the base case and the associated capital profile for that asset?
I mean, let me say that Brazil is a relevant and profitable part of our portfolio. We are as you know, we have the production of oil today in Saphinha and in Lapa. We are working hard to have the 1st gas of Campos 33 by 2023, 2024. I think that the gas contracts and the commercialization of this gas in Brazil is going to be a relevant opportunity to increase the profitability of Campos 33. So a relevant part of the growth of Repsol is going to come from Brazil.
And as you know, we have a quite successful exploratory track record in the past, discovering the former projects that were the origin of the development of Sarpino and Lampa in the result. And we are going to try again in the new rounds because you know that we are part also of desperation there in Brazil. Talking about the Duvernay this year in 2018, in net terms, we are producing 4 1,000 barrels per day. And in these figures, we are taking as an estimation a production of 14,000 barrels per day. So from this net increase of 70 sorry, 85,000 barrels coming from new projects, 10,000 comes from or comes, sorry, from the Duvernay.
And we could accelerate that because in our estimation, Duvernay could have a potentiality of producing 66,000, 67,000 barrels per day equivalent, I mean, in combining here oil and gas. So we are ready to accelerate this process. And let me say that, that is going to be a relevant part in the Repsol portfolio in North America.
We're going to go to Fernando next, please.
Thank you so much. Good morning. It's Fernando La Fuente from Alantra. Two questions, please. The first one is on the 2020 targets.
I'm not sure if you could be a bit more specific in terms of EBITDA contribution at $50 and what makes each of the businesses? And then the second question, it's on this generation capacity because I was pretty sure that it was Spain, the country that you were looking at and was wondering if you could consider at some point buying something outside Spain buying or developing something outside Spain on this generation business. And related to these businesses, I guess, cash supply and retail are both focused in Spain? Thank you so much.
Thank you, Fernando. I mean, the first one. I mean, if you take our EBITDA in 2017, the figure was at around €6,700,000,000 €6,800,000,000 If you rebased this figure, taking it around the $50 per barrel to compare with the 2020, that will be €6,400,000,000 in 2017. And we are targeting €8,500,000,000 of EBITDA in 2020, a $50 per barrel. That means an increase of €2,100,000,000 under the same basis.
If you want to have the metrics of sensitivity, in case of $60 per barrel in 2020, we have to add more or less €700,000,000 or €800,000,000 to that EBITDA that year. The second one, why is Spain? First of all, I mean, we are happy in Spain. We are a Spanish company, proud of being a Spanish company, but that is not the only reason and because Spain is a stable country and so on, because I mean a relevant part of our competitive advantages are in Spain. We have 10,000,000 clients here.
In 5,000,000 either houses, small and medium businesses and clients we enter every month with our energy offer, the LPG, the gas oil and so on. I mean, that is an extraordinary commercial base to be very close to the client and to build this new business under our new capabilities. Anyway, I mean, Spain has to be, of course, our first experience, perhaps, let me say, the platform to launch this levered business on our own clients and capabilities, but we can't forget our position either in Portugal or in Peru. Jason?
Please. It's Jason Kenney from Santander. I'm going to try and get some more detail based on Chris' question and Thipan's question. With respect to is there a specific cash target for divestments? I know you've got a volume target and some assets you want to bring into the portfolio, but is there a specific cash target for divestments?
And here, I'm thinking, would you be using that kind of cash to reinvest in new licensing rounds in Brazil, in Mexico, in the U. S. Gulf? Or is new licensing and new acreage included in your CapEx assumption already? And then separately, how does depreciation move over the next 3 years, please?
And it wouldn't be a Repsol call if I didn't ask you about the tax assumption as well, one for Miguel there. I always ask you about tax. Where's tax going to be?
Okay. Talking, I mean, we don't have any divestment target. Saying that, I mean, we are going to try to be active managing the upstream portfolio. But I mean, doing let me say conceptually, I'm not that is not going to be an exact metric, but conceptually on a neutral basis. That means that we are going to try perhaps more barrels with less cash, less profit, buy less barrels perhaps, but with more value and more rationale in our portfolio in order to have a more competitive business for the future.
But I think that the production that is going to come from our pipeline is going to allow us to do that, But we are not putting on the table any divestment cash target. Of course, licenses in Brazil, Gulf of Mexico, all that is included in the exploration side. As I said before, we are investing less than we invested in the years where we have to explore to have a full organic growth in our upstream, but we are going to invest more in this period than the average of our peers. Finally, taxes. I mean, the rule of thumb, 50% could be the average for the upstream business, 20%, 25%, 27% for the downstream businesses, 33, 34 for the whole company, more or less as average.
They are passing me the paper and it's exactly what we said before or I said before. Talking about amortization, we go from EUR 3,300,000,000 in 2018 to EUR 3,700,000,000 in the whole company by 2020.
We'll take a question at the front of the hand, please.
This is Oswald Clint at Sanford Bernstein. Yes, I'd just like to ask another question on the upstream cash flow, the €1,000,000,000 increase between today 2020. 23 percent of your volumes by 2020 will be your unconventionals business, as you highlighted. But could at least when I look at North American companies, most of them in the Q1 seeing 9%, 10% OpEx inflation already. So I was just curious what are you betting in here for OpEx for the next 3 years, but also on the differential side where they're starting to weaken quite dramatically?
So what's embedded in this billion euros of uplift here? And then secondly, and almost related, you're implying almost €11,000,000 per barrel of cash flow in your upstream business here today. That's high. And I think apart from the period when oil was $100 you've never really done that magnitude of unit cash flow in this business. So a broader question, do you really think this upstream business is the best you've seen in almost Repsol's history?
I mean, it's a very high level of profitability. You seem to imply it's sustainable with your growth projects. And maybe why is it coming out of that very high unit margin level because it's quite impressive?
Thank you. I mean, you are right. I mean, we produce worldwide. We don't see any significant cost inflation in other places. But in America, that is happening and could happen.
But let me elaborate a bit more. I mean, is not going to happen, in my opinion, at $50 per barrel in the same dimension. That is going to happen at $60 $70 per barrel. And we consider and we have analyzed this effect. All that is included in our metrics.
And we consider that, for instance, in case of having a price of $70 per barrel over the whole cycle, we could have an additional cash of more or less €1,400,000,000 coming from our operations at that prices, but a 30%, 35% of this additional cash will be offset by this cost inflation you are you expressed before. So we are considering all that in our metrics. I share your view and that is happening and could happen in North America. It's not so evident in other places today, but that could happen in the future. Perhaps the collapse or the delay is going to be a bit longer in some other places.
I mean, we are here because we took the decisions in the past. I mean, Repsol, I think that has built a significant upstream business, thanks to the exploratory successes of the company. I mean, Brazil is there because we had an extraordinary success in the past. Alaska is there for that. The Gulf of Mexico is there for that.
And I think that 4 years later, the Talisman acquisition, I mean, we are here because we have a broader portfolio. We have incorporated new capabilities to the company. We have been able to gather along the over this tough period. I mean and perhaps we are in a better sound today, thanks to the performance, thanks to delivery, but also thanks to the decision we took in the past. But let me say, I think that we have still a lot of things to be improved.
I mean, we have to increase the efficiency and the revenues of our Upstream business. Today, in 2017, we have extracted 8 point $8 per every produced barrel. The figure we have at the same commodity price, of course, by 2020 is focused and aimed in $12.4 per barrel. We have to improve our efficiency. We have to improve our metrics.
We have to have our real cash engine because I mean Repsol, we don't have the legacy assets in the Upstream that some other companies own. We have let me say, our legacy asset in some ways our downstream business comparing with some other companies. So we have to develop with more effort than others this upstream rationale. But I think that we have still room over this period, 1st of all, to increase the profitability of the business secondly, perhaps to put a bit more rationale in our portfolio. I mean, taking advantage of this M and A opportunity to highlight the portfolio, perhaps to reduce a bit the scope of the perimeter for the countries where we operate, increasing our operations in places where we are really very competitive, focusing on the unconventional in places where we are a Tier 1 operator as the Marcellus and the Southwestern Canadian Basin, the Alberta and so on.
So there are still plenty of room to improve. Thank you.
Okay. We're going to have time for one more question, but I would like to remind you that after this session, we're going to have a casual reception where you'll have an opportunity to put questions to Jose and the team in that setting. So please.
It's Peter Low from Redburn. I just had one question on your Chemicals business. You've talked about growing high value products there. Are you able to give us any idea of what proportion of the Chemicals result today comes from those? And then what's your outlook from the base sorry, for the base petrochemical business going forward from here?
You are straight in the chemical business between could you repeat the question, please? Sure. So I think when you talk about growing your chemicals business, you're talking about growing more specialty type chemicals rather than your kind of core base petrochemicals. Could you give us an idea of kind of how much they're contributing today And then perhaps the outlook for the base petrochemical business? Okay.
Juan, we as the chemical business, I mean, I'll take the let me say the ethylene, propylene, butadiene, and I mean, cracker activity is a non differentiated activity, same thing for the low high density polyethylene and main parts of the polypropylene we produce. And if we take the high value we produce either in the low density polyethylene and in the propylene application that we produce with metallosthenes and so on so with higher values, plus the niches we have in polyols, rubbers and EVA polymers, we could be talking about a 25% more or less of the operational result and the margin that comes from these high added value products. Today, thanks to the good sound of the market, 70%, 75% could come from the more commoditized side. But I mean, in a period of low margins, this figure could be fully reversed. Perhaps you could have a 0% coming from the low differentiated products and 100% from these high value products.
Okay. Thank you very much. That brings to an end this strategy update here at Campus. I'd like to invite all of you to join us for a casual reception after this event, and I'd like to say thank you very much for all of you attending both here in person and those people on the webcast.