Ladies and gentlemen, my name is Paul Ferneyhough, 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 Josu Jon Imaz, Repsol's Chief Executive Officer. We have with us other members of the corporate executive committee, Miguel Martínez, our CFO, Luis Cabra, María Victoria Zingoni, and Antonio Lorenzo. They will be joining us here throughout the presentation and for a question and answer session afterwards. The 45-minute to one-hour presentation will be followed by a question and answer session. I would ask 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&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 Josu Jon Imaz, our CEO. Thank you.
Thank you, Paul. Thank you everybody attending this capital event here in the audience. Also people attending by webcast for joining. To this strategic update for the 2018, 2020 event. We have chosen to limit this update to three years in line with the remainder of our current strategic plan. I want to emphasize that this is an update. That means that perhaps most of what I will present here shouldn't be new to you. What will be new is increased confidence in what we believe 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. Now growth is the new concept in the tagline of this strategic update. Today's presentation is organized in three main sections. The first, I will explain how anticipated delivery of objectives have happened over the last three years. 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. Finally, I'll try to wrap up with key financial targets for the 2018, 2020 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. 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% is oil. You know the performance of our downstream business with our leading business in Europe and with commercial businesses in Spain, Portugal, Italy, Peru, and now developing the service station business in Mexico. I'm not going to expand 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 three years. Since we presented the strategic plan in October 2015 in this same plenary room. Since then, we have achieved industry leading results with our EBITDA in 2017 at 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. Was $53 per barrel, that was the Brent price of last year, 2017, was free cash flow positive after paying its CapEx. Our European Union industry leading downstream has delivered an average of over EUR 2.2 billion 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. We have been able to reduce the net debt of the company by around EUR 6 billion 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 Natural Fenosa with the ambition to build a low carbon operated business. When I close out our 2017 results in February, in the call we had together, I observed that in only two 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. In this case, faster than we initially aimed for, driven by the positive downstream environment and by an accelerated upstream transformation. We increased, in February, as you know, our shareholder compensation to EUR 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 EUR 7 billion in 2014 to EUR 3 billion in 2017 without compromising safety, production volumes, reserves replacement, or critical maintenance programs. We have divested non-core assets, cashing in over EUR 9 billion over the whole period. We have delivered synergies and efficiencies of EUR 2.4 billion per annum by the end of 2017, overcoming exceeding our initial target that you remember was of EUR 2.1 billion by 2018. Finally, we are on track to meet our CO2 reduction target, and we made significant progress towards our ultimate ambition of having zero accidents. We now, therefore, need to set new targets that will continue to stretch our delivery. 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. Today, oil price, Brent price is at around $74, $75 per barrel. You remember that 4 or 5 months ago, the figure was fully different. 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 or in coming 2, 3, 4 years, seeing that demand is strong, that the cost of supply that the world is going to need in coming 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, asset or floor scenario for coming 2, 3 years. Refining is experiencing a silver age. Demand is robust. Because the lack of investment in the refining sector in the world, utilization rate is going to be high in coming years.
On top of that, we'll talk later about that, 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, this is going to be increasingly a destination for the crude oil. Are we close to an energy paradigm? We don't know that, we believe that things are moving in that direction, 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. On top of that, we are prepared for these challenges. We believe that Repsol offers a distinctive value proposition in the industry, thanks to our balanced, integrated model and our 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: improved 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. Finally, keeping a sound balance sheet in Repsol. First, we are projecting that we will be able to increase our dividend per share by 8% per annum on average for the 2018-2020 period, reaching EUR 1 per share in 2020.
Additionally, on top of that, we are going to maintain the scrip option. We will fully buy back shares over the whole period to avoid any dilution. 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. It's going to give us the comfortability to sustain this growth path for cash flow distribution to our shareholders. Second, delivering value by growing results and value creation metrics across our portfolio. At any oil price. Driven by both our downstream as an asset-like growth engine and by our upstream delivering production growth, performance improvement, and portfolio optimization.
Finally, delivering value by thriving 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, this update, the 2018, 2020 update, will put Repsol in a position of a 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 EUR 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. 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 a 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 EUR 0.05 per share a year to achieve EUR 1 per share in 2020. As already we announced for 2018, we will maintain the scrip dividend as an option to shareholders, we will buy back shares to fully offset dilution over the whole period.
We predict that Repsol will lead the industry in dividend per share growth in the next three 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. 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. 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 and comparing, of course, the dividend with the cash flow from operations. 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. Here we're describing three examples, quite recent, that I think that are worth mentioning. The first is the turnaround project of the U.K. assets we obtained or we acquired in the Talisman acquisition. By deploying our people, working with our partners, and steering the assets, we have been able to increase the asset net present value by EUR 1.6 billion over the last three, four years, reversing the decline and reducing in a dramatic way the OpEx in our operations there. The second one exemplifies our continuous effort in improving refinery operation by leveraging technology.
We have implemented a digital solution that is called Cyclos 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 EUR 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 combine the focus on the customer in the commercial businesses, at the same time, using digital technologies as well is to improve this value that is around or this profit pool around every client we have here in Repsol. Repsol is now a double-gear engine delivering growth and shareholders return with two 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, at the same time, opening new avenues for growth, leveraging our strong capabilities in this business. 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 EUR 11 billion in CapEx in the core portfolio of the company, broadly in line with investment, a bit more, I say, in the 2015, 2017 period.
We will be investing EUR 6.3 billion in maintaining our asset integrity, also improving the efficiency of this asset integrity, the efficiency of these assets through operational performance, digital and so on, sustaining our current upstream base production level and supporting our downstream leadership position. On top of that, we'll invest, better said, EUR 4.6 billion to grow our production levels and compensate the natural decline through both short-term projects and other that will deliver new volumes beyond 2020. In addition of that, we are going to invest in this period, EUR 4 billion in new growth businesses.
This new growth is funded by the Gas Natural Fenosa divestment, includes EUR 1.5 billion to promote the growth and expansion in the downstream businesses, focus on international asset-light growth, service station, trading, international lubricants and so on. EUR 2.5 billion over the whole period are going to be invested in low carbon businesses. Our total investment for the period will be EUR 15 billion, 54%-55% in the upstream and 45% in the downstream and low carbon businesses. 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 could 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 three 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. Finally, we have our five longer-term upstream projects, Alaska, CP-9, Duvernay, Campos 33, and Sagitario 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, let me stress that I'm not forecasting $50 for coming three 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.
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 and 2020. Please, 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 projections. Additionally, we have deducted the extraordinary tax refund of EUR 600 million recorded in 2017 than you know. Growth cash flow from operations will be coming from both upstream, EUR 1 billion and downstream, EUR 800 million. That is our double year ending, 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 three percentage points, going from around 6% in 2017 to that figure that you could be in the right of this slide. That is something beyond 9% in 2020. In case of having $60 per barrel in the period, the figure will be at around 10%. Let's spend some time now reviewing specific on upstream. Our upstream business has a unique and differentiated business model and combines a competitive scale with the nimbleness of being a small operator. Our model focuses on four key strengths for our upstream business. First of all, a sustainable scale, growing production to 750 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.
The scale we have allow us to grow with midsize and lower risk assets that sometimes are typically below the radar of a major company. We could have access to opportunities that are, let me say, less material for some other companies. A 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. 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. We have shown the ability to manage and turn around difficult assets. I think that the U.K. is a good example of what I was underlining. Our upstream portfolio is based on three 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. Finally, we have a significant production of oil 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 explorations. 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 three pillars. The first one is keep focusing on efficiency and continuous improvement in technical terms. Secondly, high grade in 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. Thirdly, selectively developing higher margin, good return organic projects. 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 includes, 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, CP-9, Duvernay, and Campos 33. In terms of plays, we are focusing our investment on onshore and shallow water conventional assets where we have a competitive advantage, and of course, also our core unconventional positions in North America, Canada, and the U.S. We will keep a limited exposure to deep water plays in our investment prospects for coming years. This focus on lean plays, together with the significant weight of brownfield and short cycle projects.
All that is going to give us the opportunity to achieve substantial growth with development CapEx intensity lower than our peers. Our exploration intensity, because exploration 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 production into 2020, we will keep our current focus in terms of place and geographies. Indeed, our play mix will still be oriented toward lean plays 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 three core areas, Southeast Asia, Latin America, and North America.
Our organic production growth over three years per annum is going to allow us to comfortably exceed the 750,000 barrels per day production target we have set for 2020. Our production target is lower than our full organic potential. Our organic potential is going to allow us to produce 30,000 or 40,000 barrels per day more in 2020. We expect 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 the 90% of the production in 2020 is supported by reserves production and proven book reserves. 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. 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 deliver EUR 1.6 billion, outperforming our target one year in advance. The new program is wider in scope.
It's not only focused on cost reduction and efficiency, but on top of that, we are looking for new margins, new revenues, logistics and hub 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 Cabra and his team are leading. They are already planned or in execution with an estimated cash impact of EUR 500 million for 2018. We plan to deliver 1 billion euros/dollar in yearly free cash flow by 2020. It is difficult to highlight the most relevant initiative of this program. Efficiency has been one, and on the slide you can see what are just the illustrative examples that I like to highlight, that there are a significant number of digital initiatives as part of this program.
Digitization in 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 efforts, we are going to use portfolio rotation for upgrading our business assets. Our goals are clear. Enhance the value of our portfolio through increasing higher margin barrels and disposing lower value ones, gain scale in our core regions, and exit some of our more marginal positions in our portfolio. 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 2027 to 2020 at flat prices.
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 first production after 2020. We have five key projects, you know them, with a 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. This analysis is not ours, it's from Wood Mackenzie, that you know that is one of the most relevant technical analysts of the sector. 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 Wood Mackenzie, and comparing with the same metrics with the other companies, with our peers, we have a breakeven in full cycle net present value at $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, which has 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 first mover advantage in the Alaskan Nanushuk 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% per annum. The cash flow from operations will increase from EUR 2 billion in 2017 to EUR 3 billion in 2020, growing by 50% due to these two factors, growth in barrels and growth in the value extracted by every barrel. The free cash flow breakeven after CapEx is going to remain below $15 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 million barrels refining capacity.
In the first 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 market, 37% market share, a leading position in some other markets as Portugal and Peru. LPG, we have more than 70% market share in Spain. As I summarize, we have a return on capital employed above 20% in our downstream businesses. In chemicals, Repsol takes advantage of 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 am talking about the rubbers, the EVA copolymers, and the polyols. In these three kind of products, we are one 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, let me remind you that we have and we have had over the last five 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 50%, at around 55% of the total yield of our refineries, and less than 7% of our yield is fuel oil.
We own, as Repsol, the 25% 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 lowest part of the cycle. For the next three 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 two, three 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 EUR 1.5 billion in new expand growth projects and EUR 2.7 billion 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.
At the same time, we are going to boost our Transforming While Performing program. In the following slide, you could see this strategy of growing in these chemical niches of polyols, rubber, and EVA copolymers, where we have the aim of being one of the top five 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 two areas. One of them is our natural hinterland. We are talking about France, the Western Mediterranean area, Morocco, the 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, a 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 to increase by EUR 700 million by 2020 versus 2017. That means a 27% growth. An average free cash flow above EUR 1 billion per year, excluding the impact of our low carbon business, and the return on capital is going to stay above the 18%. Let's cover a distinctive pillar of our strategic update. Repsol has planned to build a material position in the energy transition.
Today, several trends are impacting our industry, 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. 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. These trends are impacting the projection for energy consumption. Repsol, we would like and want to be a player in this new arena that is going to be designed. 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 an operated and synergistic position in low carbon businesses.
You know that we sold Gas Natural some weeks ago. That was the first step for this roadmap. With this ambition defined, we have moved to swap this exposure to the gas and power in Gas Natural that was a non-operated position in a very regulated business, 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 two years. The transformation is clear. We are going to move from non-operated, non-controlled business to an operated business, and from having no capacity, no ability to exploit synergies, to having it. From an 80% low return regulated business that Gas Natural was, 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 the word profitable, low carbon businesses, enhancing capabilities and reducing the emissions in our operations. Our carbon business is going to be focused mainly in three kind of activities. The first, and it's going to be at the beginning the most relevant, 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 million clients we have in Spain. Finally, the low carbon generation, taking advantage of our technical capabilities and experience in large-scale projects. 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, even today we have a consumption of the 1.4% of the total Spanish electricity market is consumed in our own refinery. We are actors of this market. 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.
In the energy transition scenario, renewable energy is going to be, of course, relevant. Renewable energy is intermittent, and it's going to need some other support to guarantee the security of supply in coming decades. Gas and combined cycles are going to be a relevant part of this journey. On top of that, we are also ready to enter in the generation power renewable energy sector. We are going to do that based on our own capabilities in an organic way. No, in any case, in organic M&A operation building or buying assets. We want to build our own projects and always looking for profitability on them. We are going to ask a 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 EUR or a single USD in this kind of business. We are talking about being profitable in the energy transition scenario. We want to be the player. We have a quite ambitious objective. By 2025, we want to have a 15% of the Spanish gas market share, a 5% of the market share in the retail gas and power, with 2.5 million clients. The key target in low carbon generation is 4.5 gigawatts of installed capacity across Spain and emerging countries. 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 four main pillars. The main one is the technology side.
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 modeling in our industrial and upstream operation, 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. This program targets EUR 1 billion 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 EUR 300 million by 2020. In terms of talent, we are going to need talented people to develop this program, we are investing hard to have these skills of future leaders of these businesses.
Finally, we continue with our plans to reduce the corporate cost to have a lean corporation. You know that we have reduced from EUR 1.3 billion to EUR 900 million in three years, the corporate cost of Repsol. We are still on track. We are going to go on this effort, we are going to reduce an additional 9% of our corporate cost in coming three years. Repsol is fully committed to fight climate change. Remember that we were one of the first, or perhaps the first oil and gas company supporting the Kyoto Protocol a lot of years ago. We support the Paris Agreement, 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 express a personal feeling, because last week, Arturo, Luis and me, we were visiting our operations in Malaysia. Analyzing the evolution of the energy market in Southeast Asia, I wonder about the power demand that is going to experience this area of the world, China, Southeast Asia, India, and so on. Part of this power is going to be supplied by coal-based power plants. 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. We are part of this narrative, we want to be part of this solution. That is not only our narrative, it is 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 three, four decades. To be on track to make the first step, we are committing to reduce this figure in a 3% in the coming three 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, also thanks to low carbon power generation. Repsol is enhancing the capabilities to achieve these targets. On top of that, we could switch shift to the financial flexibility. Let me stress that our plan is fully funded at $50 per barrel for this period.
We have EUR 20.8 billion in cash sources. We plan to spend the same amount of CapEx financing cost, dividends, buybacks, including increase to EUR 1 per share by 2020. This plan provides also a financial flexibility because our net debt/EBITDA ratio is going to be at around 0.7 times in 2020, and this figure is below the industry average. We want to maintain this financial flexibility in these volatile years. 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. 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 Buckskin area, the North Sensi area in Mexico.
We could accelerate also some projects around PM3 and this area in Malaysia and so on. 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 side, and building the trading capabilities we are going to develop in our natural hinterland around Spain. We have projects to use this potential additional CapEx. Of course, we are going to ask a high 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 scrip dividend option over the three-year period.
We are going to keep a strict support and 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 is going to be my personal commitment. Financial discipline is going to be one of the main supports of this company over coming years. 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 2018-2020 period, we expect material growth in all the key metrics. Production is going to grow on 8% in three years, 2.6% year average. The cash flow from operations will grow from EUR 4.6 billion in 2017 to EUR 6.5 billion in 2020, at 12% per annum in average growth.
The earnings per share is going to grow from EUR 1.4 per share to EUR 2 per share, at 12% per annum growth over the whole period. The dividend per share, it was already announced, is going to grow from EUR 0.8 per share this year in 2018 to EUR 1 per share at a rate of an 8% per year. All that, as I stressed and underlined before, very focused on financial discipline. We also expect, and our key metric by 2020, is to deliver the return of capital in the company by 2020 above the cost of capital, the ROC, and maintain, of course, the investment grade. The capital employed in low carbon businesses. In this slide, you could 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 is the addition of the dividend yield plus the growth in metrics, EBITDA, cash flow from operations, and so on. For 2018-2020, under a flat $50 per barrel Brent, we expect to deliver an annual total shareholders return above 15%. This total shareholders return compares in a good way with the peer consensus forecast. An 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. We are taking the hypothesis of a flat scenario to commit with this total shareholder return history. I want to close this event, this speech, by extracting the eight main conclusions from this equity story.
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 at $50 per barrel flat price. We are going to deliver a strong value growth leveraging our two engines, upstream and downstream. The upstream path is going to be very focused on growth and profitable performance. The downstream is going to go on 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, always under the framework of profitability. 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.
Repsol expect with all that to deliver a strong growth of key financial metrics and a Positive return on capital with our profitability over the cost of capital for the company. At the same time, 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 three, four years, is leaner, is more competitive, is fully focused on profitability and growth, is fully focused on sustainability. 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 any scenario in coming years that is going to be different. That is going to be the success of our integrated model as a company.
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, and doubts that could appear after this presentation of this strategic update. Thank you very much.
Thank you, Josu Jon. I'll now open this meeting for a question and answer session, for sell-side analysts only, that will run till approximately 2:00 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 two 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. Jon, why don't we start with you?
Thank you. It's Jon 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 a plot over 20% rates of return in your upstream at $50, and you're making or aiming to make 10% levered return in your renewables business. 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. If I look at this plan now, it seems to be reorientating the business back into the downstream again.
Philosophically, where do you want Is that an interpretation, a correct interpretation of how you see the evolution of the business? Is that a correction, perhaps, of a thought process that was in place three or four years ago? Thanks.
Thank you, Jon. 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. We talk about the profitability we expect in some of these relevant businesses. Let me say, today perhaps it's a bit early to talk about that. When we are talking about the gas wholesale, the figure could be closer to a 15%. When we are talking about the retail business, building services around the commercial and the customer base we have today, perhaps the profitability could be closer to a 20%-10%. That is my first approach. I could apply some similar approach, perhaps, to Combined Cycles or integrating the full chain value.
I suppose that your concern could be more related perhaps to the potential investment in renewable energy. My first approach is, this investment over the whole period is going to be limited as a top enough figure that including the production of some other power sources is going to be limited to EUR 1.5 billion. Secondly, we are going to always to find higher returns and higher risk. Let me elaborate, Jon. An oil and gas company is a company that takes a 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.
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. We are going to do that, either execution risk, technological risk, geographical risk, or trying to integrate the synergy with some commercial businesses that we could develop. Anyway, we are going to do that in an organic way and only if that is profitable for the company. Let me say, that is going to be my driver in this business. I think that we have also to do that in a profitable way. We have to buy, in some way, the license to operate in the future.
I think that a company as Repsol, you have to take into account that we have joined in the past EUR 6 billion in the gas and power business, and we were obtaining a return on equity of 6%, 7%. 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 think we still are investing hard in the upstream business. After doubling our production after the acquisition of Talisman, we are going to increase our production in 50,000-55,000 barrels in the coming three years. Growth in upstream is not over.
We are going to go on in this pathway, trying to find opportunities, but 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. In this period, 55% of the capital we are going to invest is going to be in the upstream. In the downstream, I think that is important to underline. After years and years of focusing on efficiency and efficiency, we have a quite material and significant position in downstream business, and we want to lever this position to extract more value. That is what we are going to do in coming years.
Mainly based in 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. We are going to maintain this balance of an integrated upstream, downstream company.
Okay.
If I may, Jon, with the 25%, I did it. With the 21% you mentioned, which is the Woodmac analysis, it does not consider all the exploration that didn't work out. It does not even consider the exploration on these five projects. The perspective from Woodmac is something that has already been discovered, but if you take the whole cycle, it would not be a 21% versus 10.
Anyway, Jon, no doubt. If I have an investment on my table, 20% return and an investment 12% return, I take my decisions.
Thank you. Lydia, please.
Thank you. It's Lydia Rainforth from Barclays here. Two questions, if I could. The first one, just going back to the use of cash if we're in a higher than EUR 50 environment. Can you give us what that split might be between the accelerated project development and the buybacks coming through? Secondly, on the digitization side, I think you talked about EUR 300 million for that period to 2020 and then EUR 700 million after for that 2022 period. At this stage, how confident are you around that ability to get the digitization to EUR 1 billion? Is there changes that need to be made in terms of the culture for Repsol and how it works?
First of all, Lydia, our commitment of EUR 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 scrip in any case. The use of additional cash. 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. The advantage we have is that we have in our pipeline, in the file of projects we have today, we have these projects today, and we could accelerate them. We could accelerate some of them.
For instance, in the Duvernay, after the production, now we are de-risking in the area of Ferrier and Gilby. If all that is okay, we have the capacity to accelerate the Duvernay project. We could do the same thing adding marginal barrels to prospect, where we have the facilities closer. We are going to do that. In case of not having or not finding and not having good returns on opportunities, we will proceed with these additional buybacks. I'm not going to have any kind of difficulty to realize Our difficulty to find these projects. 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'm going to be, let me say, perhaps a bit disruptive in this answer because you are talking about the character and so on, and it's true. I'm going to upset perhaps this comment later. The big money in the oil and gas company, the digital is not around the customer, the client, and so on. That is very relevant and perhaps it's very transformative. The big money is in our industrial assets. I'm seeing here, for instance, the person in front of me that is leading the U.K. and the area assets, and Norway and so on, and they are using the digital to increase the operational efficiency of a platform, of a plant. 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 thousand and thousand of sensors we have in every platform and in every upstream production. Same thing when we take, let me say, some kind of images. With this dark data, we are able to bet in an exploration drilling project without geological probability or likelihood of being successful in that 25%. We are talking about big money. The big money in the upstream is there, is in all the modeling of the flow of our projection we are going to develop. We could, in gross figures, we could achieve, combining all that, an additional free cash flow coming from the upstream by 2022, that could account as EUR 400 million-EUR 500 million 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 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 EUR 1 per barrel from the digital in refineries by 2022. Same thing for the chemicals and so on. On top of that, we also have to go to the digital in the commercial side. Building value around the client, building value around the customer, and also transforming our corporate processes. I could say EUR 400 million-EUR 500 million is going to be the target for the AMP.
EUR 300 million-EUR 350 million is the target for the industrial downstream. EUR 100 million-EUR 150 million is going to be the target for the commercial businesses of the company. EUR 50 million-EUR 60 million is going to be the target for the corporate side. We are going to capture more free cash flow by 2020, EUR 500 million, EUR 600 million, something like that. We are going to invest EUR 200 million-EUR 300 million in the middle. We are taking the figure of EUR 300 million by 2020 because it's the net figure of this digitalization program. 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.
Thank you. Thomas Adolff from Credit Suisse. Two questions now and two questions later on. To follow up on digitalization. It is nice that you have quantified the benefits. Not many companies have done that. I actually wonder whether all the benefits go to the industry and it does not get competed away in the form of lower prices to the consumers. In fact, it is really about what you do differently versus your peers that gets the free cash flow capture, if you will. I wonder what you are doing differently versus the industry peers. Everyone is doing digitalization. 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?
What your view is also in regards to the gasoline crack, because gasoline might be produced as a byproduct. Thank you.
Thank you. First of all, I think that we have a track record of delivering what we commit in terms of efficiency and so on. Let me say, the easiest answer for me is to say you are going to see that every quarter in our results, in our costs. What we are doing differently, first of all, we start the journey some time ago. We have not started now. When we launched, for instance, Nexus, that it was, I am going to say, semi-digital, four, five 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 two years ago to using the digital initiatives to give to every operator of every single plant, a clear reference about how it is impacting what he is doing or she is doing at that moment on the economics of the plant and so on. It is quite, let me say, innovative. We have, today, 85 programs on track. We are following, and I am 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. Today, Waylet is a quite recurrent tool in the Spanish market to buy fuels in our service stations for 500,000 users that, taking into account that in one year we have been able to [inaudible] a relevant figure.
Perhaps what we are doing is to put in charge of that projects people that are leading the business. The digital is not, let me say, something that is fully apart in the company. 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'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. 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.
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 in 2020, 2021, 2022, and perhaps it's going to decline later. Secondly, the fuel oil discount is going to increase in a significant way, and 50% of our current feedstock 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 yield in the whole system is fuel oil.
We have already technical solutions, either low sulfur fuel oil, and in some way, the bottom of the barrel of Tarragona is going to feed the coker of Coruña, where we have enough capacity to receive this feedstock. We are forecasting for the Repsol system in 2020, $1.5 per barrel refining margin IMC improvement in 2020. If we take the gas oil 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 per barrel. If we take the average of the analyst, they, or let me say in some cases, No, not you personally, but are taking $3.4 per barrel as an average, taking into account the spread that market is discounting or forecasting and applying all that in a simple metric to our business.
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 distillation is going to increase, probably. We are going to have more gasoline in the market. Let me say, I think that only an 18%-19% of our production is a combination of naphtha and gasoline. This, we are, of course, forecasting a reduction of the spread of gasoline. 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. Matthew Lofting from J.P. Morgan is asking about CapEx outlook. You're forecasting EUR 15 billion in total CapEx between now and 2020. Can you give some guidance on spend by year, and what should we expect after 2020? 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. In this period, 2018, 2020, this EUR 15 billion. I want to decouple in some way the EUR 11 billion applied in our core businesses, and these EUR 4 billion that are going to be employed for growth, EUR 1.5 billion in the downstream side and EUR 2.5 billion either in the retail, wholesale gas or power generation. After that, we are thinking from 2020 and beyond, a figure that could be closer to EUR 4 billion per year for our core businesses. 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. If you take the figure, and I don't know if we could see here the figure where the EUR 1.9 billion of cash flow improvements. May I take the mouse? 19.
19. Yeah.
These figures you are going to see here are embedded in the 2020 figures, of course. If we take the downstream, EUR 300 million 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 $6.7 per barrel. That is even lower than the figure we had last year, $6.8 per barrel. 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 EUR 300 million. You have the EUR 200 million 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 EUR 200 million, plus all the efficiency in the commercial side. EUR 300 million is the money coming from the growth. Trading lubricants, mainly. Mexico, in some ways, adding some cash also to this. The growth of Repsol also in Peru in the downstream side, plus the cash coming from the low carbon businesses. Going to the upstream, EUR 400 million comes from the growth. From this growth, EUR 200 million are new barrels. We are simply adding new barrels. EUR 100 million are the decline of some prospects plus the new production coming from others that they have higher barrels is adding EUR 100 million in cash in additional money.
EUR 100 million, completing this EUR 400 million of new production comes from the swaps we are forecasting to do, adding the new cash from the barrels we are going to buy comparing with the barrels we are going to sell. This EUR 600 million of improvement is an addition of 600 or 580 projects we have now on track to improve the cash flow for the upstream. A part of them, EUR 230 million approximately are new revenues. New revenues coming from optimization of some hubs, 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. EUR 180 million comes from the efficiency.
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 EUR 50,000, EUR 80,000 and so on, as we have in 2015, for obtaining this EUR 180 million in efficiency. EUR 170 million comes from 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. All that is embedded. Let me say that today at 60%, 62% better said, of all this program has an owner, the people in charge of that, has a calendar to be executed.
Knowing Repsol and knowing our people, I am fully convinced that this money is going to be there in 2020. Again, delivery every quarter is the only tool we have to demonstrate and to show that.
Why don't we go to Chris?
Hi. Chris Kuplent from Bank of America Merrill Lynch. Two questions. First, you refer on many of your slides, regarding your $50 per barrel assumption. I think you also made reference somewhere that this is not necessarily your price deck. 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. 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. The second question is a little separate, EUR 15 billion CapEx for the three years. I've heard not much that I would assume is inorganic spend of that EUR 15 billion.
Perhaps you can talk to us a little bit about your views regarding the M&A environment, build versus buy. You mentioned CCGTs. I think they're a lot cheaper if you go and buy them. Depends a little bit on where. I wonder whether you can give us a bit of insight how much of that EUR 15 billion you think could be inorganic. Thank you.
Thank you. First of all, my only forecast about the oil price is that the future scenario is going to be volatile. You know better than me what the forecast of people are for coming two, three years. Today, people is talking about $60, $65, $70, but the sound, as you perfectly know, five, six months ago, was fully different. Let me say, my duty is not to forecast what is going to happen with the oil price. It's to be prepared for both or for any scenario. To tell you in a clear way what we are going to do with the money. In this sense, my proposal is clear. We guarantee in the lower scenario what we are committing here.
That is the remuneration, the shareholder remuneration dividend increase, the full buyback of all that, and the growth metrics of a 50% in terms of the upstream and a figure of a third in the downstream. From EUR 4.6 billion to EUR 6.5 billion of cash flows in any oil scenario. That is my commitment. In case of seeing $60 per barrel in a recurring way, the sensitivity is clear. In that case, we'll have $700 million more Eurodollars more in cash in our hands. We are going to apply this cash, seeing that all that is happening in a quite recurring way to accelerate the projects I defined before. That is going to be our commitment. That is going to be the application and the use of the additional cash.
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 our own hinterland or worldwide as the trading and the lubricants business, are going to be our main priorities to that. Of course, all these projects, they are going to compete in profitability. To approve an FID, I'm very tough. Because I can't approve a project for 20 years taking into account what is happening today with the Brent barrel. That would be a big mistake in my opinion. We are only approving FIDs that over the whole life of the project they are ready to create a net present value, paying the cost of capital a $50, $55 per barrel.
I'm applying this criteria because I think that we have to guarantee, taking into account the situation in the market, the profitability of the future. Let me say, the four next projects we have in the funnel They are going to fulfill these metrics. I'm talking about Alaska, CP 09, Campos 33, and the 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 in Alberta. The fifth one, that is Sagitario, we have still to appraise and to be sure before going ahead. 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'm convinced that in coming years, the oil consumption and demand in the world is going to grow.
That could happen in 10, 15 years, perhaps sometimes a demand peak will arrive, and we have to be prepared for this scenario. 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 Buckskin, for instance, I'm fully excited seeing the figures of the breakeven of the Buckskin, because $40, $45 per barrel, we are making money. Same thing in the CP 09 early development, where we are using the facilities of Ecopetrol to optimize our cost and so on. We are going to be there. The M&A environment. I rely, I'm going to rely more on the organic than the inorganic on the M&A side.
If some of you are thinking that Repsol could buy either a company or an asset, paying a value of a cash of EUR 1 billion, EUR 2 billion, EUR 3 billion, EUR 4 billion, EUR 5 billion, please forget it. The acquisitions are going to be acquisition of dozens or maximum hundreds of million EUR 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 that people are paying are huge. We are not going to go to this kind of huge M&A acquisitions. We could have, let me say, some opportunistic platforms to have a base of gas and power clients in our markets to leveraging their, or in our 10 million clients to build a profitable business in the retail.
Yes, that could be a possibility, of course. We are talking about that, or we are talking about, as you said, about buying a combined cycle or something similar. But in this kind of assets, we are not talking about this thousand of million EUR. That is not going to be the way of Repsol in coming years. We are going to build the future 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?
Thank you. Robert Pullin 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. Secondly, if I may, could you provide a bit more color about how are you 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.
To get to 4.5 gigawatts, to your previous point, presumably you're going to have to buy a few things. I believe CCGT is part of that. Utilization in the low double-digit numbers would suggest that those power plants are not currently profitable. Could you maybe just provide some building blocks about how we get to 4.5 gigawatts? Thank you very much.
First of all, you have in this slide, I think that how much cash comes from the expansion of the downstream in 2020. EUR 300 million is the new cash coming from the expansion of the downstream by 2020. The numbers, they are going to depend on the kind of mix of technologies we could have. If you take, let me put an example, if you take 3 combined cycles plus the 600 megawatts we have today in our refineries, 3,000 megawatts or 3 gigawatts are there. I'm not fully aware of the M&A market today. Let me say that perhaps you could buy 2.4 gigawatts of combined cycles in some markets, paying EUR 200 million, EUR 300 million, or EUR 400 million. The money of this investment is going to depend on what is going to be the mix of technologies.
If we are talking about wind or solar energy, of course, the multiples you have to apply are different. It could be EUR 1 million per every megawatt you develop. If you take the, let me say, the whole responsibility of the process, if you go to an M&A inorganic operation, that is not going to be the case for Repsol. I underline again this message. In that case, you could have EUR 1.3 million, EUR 1.4 million, or even EUR 1.5 million per every megawatt. The low utilization number of the CCGT could be, let me say, a threat or an opportunity. Perhaps for people that pay EUR 500 million or EUR 600 million 10 or 15 years ago to build this plant, today having this scarce flow, perhaps the investment is not okay for people having gas contracts and short retail position and needing to produce the power.
We have to analyze it. I'm not in condition today to give a general answer. Let me say that could be profitable. If you have a good gas contract, you are buying the asset, paying a low amount of money, you have a power short position in the market that could allow us perhaps to establish some kind of PPA or to hedge your position in the market. It's going to depend. We are not talking. 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. Tapan Joglingham 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 three years as the base case and the associated capital profile for that asset?
Let me say that Brazil is a relevant and profitable part of our portfolio. As you know, we have the production of oil today in Sapinhoá and in Lapa. We are working hard to have the first gas of Campos 33 by 2023, 2024. A relevant part of the growth of Repsol is going to come from Brazil. As you know, we have a quite successful exploratory track record in the past, discovering the former pre-salt that were the origin of the development of Sapinhoá and Lapa in the result. We are going to try again in the new rounds, because you know that we are part also of the exploration there in Brazil.
Talking about the Duvernay, this year in 2018, in net terms, we are producing 4,000 barrels per day. In these figures, we are taking as an estimation a production of 14,000 barrels per day. From this net increase of 85,000 barrels coming from new projects, 10,000 comes from the Duvernay. We could accelerate that because in our estimation, Duvernay could have a potentiality of producing 66,000, 67,000 barrels per day equivalent. I'm combining here oil and gas. 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 is Fernando Lafuente from Alantra. Two quick questions, please. The first one is on the 2020 targets. Not sure if you could be a bit more specific in terms of EBITDA contribution at $50 and what makes each of the businesses. The second question, it is 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, or developing something outside Spain on this generation business. Related to these businesses, I guess gas supply and retail are both focused in Spain. Thank you so much.
Thank you, Fernando. The first one, if you take our EBITDA in 2017, the figure was at around EUR 6.7 billion, EUR 6.8 billion. If you rebased this figure, taking into account the $50 per barrel to compare with the 2020, that will be EUR 6.4 billion in 2017. We are targeting EUR 8.5 billion of EBITDA in 2020 at $50 per barrel. That means an increase of EUR 2.1 billion under the same basis. If you want to have the metrics of sensitivity in case of having $60 per barrel in 2020, we have to add more or less EUR 700 million or EUR 800 million to that EBITDA that year. The second one. First of all, we are happy in Spain. We are a Spanish company, proud of being a Spanish company. That is not the only reason. Because Spain is a stable country and so on.
Because a relevant part of our competitive advantages are in Spain. We have 10 million clients here. In 5 million either houses, small and medium businesses, and clients we enter every month with our energy offer, the LPG, the gas oil, and so on. That is an extraordinary commercial base to be very close to the client and to build this new business under our new capabilities. Anyway, 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 cannot forget our position either in Portugal or in Peru. Jason.
Please.
Thank you. It is Jason Kenney from Santander. I am going to try and get some more detail based on Chris's question and Theepan's question. With respect to, is there a specific cash target for divestments? I know you have got a volume target and some assets you want to bring into the portfolio, but is there a specific cash target for divestments? Here I am 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? Separately, how does the depreciation move over the next 3 years, please? It would not be a Repsol call if I did not ask you about the tax assumption as well. One for Miguel, though. I always ask you about tax. Where is tax going to be?
We don't have any divestment target. Saying that, we are going to try to be active managing the upstream portfolio. Doing, let me say conceptually, and that is not going to be an exact metric, but conceptually on a neutral base. 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 rational in our portfolio in order to have a more competitive business for the future. I think that the production that is going to come from our pipeline is going to allow us to do that. 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. We are going to invest more in this period than the average of our peers. Finally, taxes. The rule of thumb, 50% could be the average for the upstream business, 25%-27% for the downstream businesses, 33%-34% for the whole company, more or less as average. They are passing me the paper, this is exactly what we said before or I said before. Talking about amortization, we go from EUR 3.3 billion in 2018 to EUR 3.7 billion in the whole company by 2020.
We'll take a question at the front here, please.
Me?
[inaudible]
Hi. This is Oswald Clint at Sanford C. Bernstein. I'd just like to ask another question on the upstream cash flow, the EUR 1 billion increase between today and 2020. 23% of your volumes by 2020 will be your unconventionals business as you highlighted. At least when I look at North American companies, most of them in the Q1 seeing 9%-10% OpEx inflation already. I was just curious, what are you betting in here for OpEx over the next three years, but also on the differential side where they're starting to weaken quite dramatically? What's embedded in this EUR 1 billion of uplift here? Secondly, and almost related, you're implying almost EUR 11 per barrel of cash flow in your upstream business here today.
That's high. I think apart from the period when oil was $100, you've never really done that magnitude of unit cash flow in this business. A broader question, do you really think this upstream business is the best you've seen in almost Repsol's history? It's a very high level of profitability. You seem to imply it's sustainable with your growth projects. Maybe why is it coming out at that very high unit margin level? Because it's quite impressive. Thank you.
Thank you. You are right. We produce worldwide. We don't see any significant cost inflation in other places. In America, that is happening and could happen. Let me elaborate a bit more. That 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. We consider, we have analyzed this effect. All that is included in our metrics. 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 EUR 1.4 billion coming from our operations at that prices. At 30%-35% of this additional cash will be offset by this cost inflation you expressed before. We are considering all that in our metrics.
I share your view, that is happening and could happen in North America. It's not so evident in other places today. That could happen in the future. Perhaps the delay is going to be a bit longer in some other places. We are here because we took the decisions in the past. Repsol, I think that has built a significant upstream business, thanks to the exploratory successes of the company. Brazil is there because we had an exploratory success in the past. Alaska is there for that. The Gulf of Mexico is there for that. I think that four years later, the Talisman acquisition, we are here because we have a broader portfolio. We have incorporated new capabilities to the company. We have been able to weather over this tough period.
Perhaps we are in a better sound today, thanks to the performance, thanks to the delivery, but also thanks to the decision we took in the past. Let me say, I think that we have still a lot of things to be improved. We have to increase the efficiency and the revenues of our upstream business. Today, in 2017, we have extracted $8.8 per every produced barrel. The figure we have at the same commodity price, of course, by 2020, is focused on aim in $12.4 per barrel. We have to improve our efficiency. We have to improve our metrics. We have to have a real cash engine, because 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 way is our downstream business comparing with some other companies.
We have to develop with more effort than others, this upstream rational. I think that we have still room over this period, first of all, to increase the profitability of the business. Secondly, perhaps to put a bit more rational in our portfolio. Taking advantage of this M&A opportunity to highlight the portfolio, perhaps to reduce a bit the scope or the perimeter for the countries where we operate, increasing our operations in places where we are really very competitive, focusing on the non-conventional, in places where we are a tier 1 operator, as the Marcellus and the Southwestern Canadian basin, the Alberta and so on. There are still plenty of room to improve. Thank you.
Okay. We're going to have time for one more question, 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 Josu Jon and the team in that setting. Please.
Hi, 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? What's your outlook for the base petrochemical business going forward from here?
You are splitting the chemical business between Could you repeat the question, please?
Sure. I think when you talk about growing your chemicals business.
Yeah
You're talking about growing more specialty type chemicals.
Yeah
Rather than your core base petrochemicals. Could you give us an idea on how much they're contributing today, and then perhaps the outlook for the base petrochemical business?
Okay. One, we split the chemical business. I take the, let me say, the ethylene, propylene, butadiene, and the cracker activity as a non-differentiated activity. Same thing for the high density polyethylene and main parts of the polypropylene we produce. If we take the high value we produce, either in the low density polyethylene and in the propylene application that we produce with metallocenes 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. 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. I'd like to say thank you very much for all of you attending, both here in person and those people on the webcast. Thank you.