Hello, and welcome to the Repsol Third Quarter 2023 Results Conference Call. Today's conference will be conducted by Mr. Josu Jon Imaz, CEO, and a brief introduction will be given by Mr. Ramón Álvarez-Pedrosa, Head of Investor Relations. I would now like to hand the call over to Mr. Álvarez-Pedrosa. Sir, you may begin.
Thank you, operator. Good afternoon, and welcome to Repsol's third quarter 2023 results conference call. Today's call will be hosted by Josu Jon Imaz, our Chief Executive Officer, with other members of the executive team joining us as well. Before we start, let me draw your attention to our disclaimer. During this presentation, we may make forward-looking statements based on estimates. Actual results may differ materially depending on a number of factors, as indicated in the disclaimer. I will now hand the call over to Josu Jon.
Thank you very much, Ramón. Good afternoon to everyone, and thank you for joining us today. As usual, I'll start with a review of the key messages of the quarter before moving to the business performance and results. At the end, I'll update our outlook to the end of the year. After the presentation, of course, we will be available to answer your questions. Starting with the main messages this quarter, Repsol continued to deliver solid results and strategic progress through the current commodity cycle. 2023 has been, so far, a year of great transformation for Repsol. The strong cash contribution of our businesses on the cashing of asset disposals have been used to increase our organic CapEx, to capture inorganic growth opportunities, and to progress towards our strategic objectives.
We are in a very strong financial position, and this flexibility is being used to invest in our future. We are doing that within the clear disciplined capital allocation framework defined in our strategy. At the macro level, there is still uncertainty in the market, and the recent sad geopolitical events will probably increase volatility going forward. The third quarter was characterized by higher oil and gas commodity prices, together with a stronger refining environment. In our previous call, we were optimistic on the outlook for the refining business, and last quarter confirmed this view. Moreover, we announced two significant transactions in upstream and renewables that evidence our continued focus on transforming the business portfolio. Firstly, in Canada, we divested our remaining oil and gas assets there as part of the ongoing reorganization of our operations to concentrate E&P activity in core regions.
Secondly, in the United States, the agreement reached for the acquisition of developer ConnectGen reinforces our renewable portfolio, incorporating an important onshore wind platform in the country and underpinning our ambition to deliver 20 GW in 2030. Looking at the results, the third quarter adjusted income was EUR 1.1 billion, a 33% increase over the second quarter, mostly driven by the higher oil and gas realization and tighter markets for middle distillates. Cash flow from operations reached EUR 1.3 billion, 23% lower than in the previous quarter. As anticipated, the operating cash generation was negatively impacted by the settlement of the Maxus litigation and the payment of the second tranche of the Spanish windfall tax corresponding to 2022 activity. Additionally, the higher prices during the quarter and inventory buildup resulted in a working capital outflow of EUR 0.9 billion.
Net debt closed at EUR 1.9 billion, roughly EUR 1.1 billion higher compared to June, mainly due to elevated investment levels, the payment of July's dividends, and the purchase of treasury shares. During the quarter, we acquired 24.6, almost 25 million own shares through the buyback program in place since the end of July. Sorry. In addition, we secured another 10 million shares through the settlement of derivatives. With that, we are more than halfway towards our commitment to cancel a further 60 million shares before year-end, for a total 110 million shares canceled in 2023.
Adding to the EUR 0.70 dividend already paid in 2023, this means that we are on track to distribute the committed EUR 2.4 billion to our shareholders, above the higher end of the cash distribution range defined at the beginning of the year. Moreover, adjusting for the operating cash flow corresponding to our minority partners in upstream and low carbon generation, shareholder distribution will be in the higher end of our peer group. Finally, looking into 2024, the supportive scenario ahead of us and the solid financial position built this year, has allowed us to increase the dividend to be paid next January, the interim dividend to EUR 0.40 per share, as announced earlier this morning. Let me now briefly review the evolution of the main macroeconomic indicators in the quarter.
Brent crude averaged $87 per bbl, a $9 increase quarter-on-quarter, and $14 below the same period a year ago. The Henry Hub averaged $2.5 per million BTU, 19% higher than the previous quarter, and 70% lower than a year ago. The refining margin indicator averaged $13.6 per bbl, around $7 higher than in the second quarter, and $0.9 higher year-over-year, fundamentally due to the increase in the spreads of medium distillates. Lastly, the euro remained stable, changing for an average of $1.09 during the quarter. Moving on now to the performance of our four verticals. Starting in the upstream, the solid operational performance of previous months continued to September.
Aligned with our strategy, our business keeps emphasizing profitability and sustainability, with a focus on the efficient delivery of growth projects and portfolio transformation. The adjusted income was EUR 341 million, 17% lower quarter-over-quarter, mostly due to a normalization of the effective tax rate, that in the second quarter included tax regularization in several countries. Year- over- year, the result was 55% lower than in the same period of 2022, as the contribution of higher volumes and lower exploration costs was more than offset by lower oil and gas prices, comparing with the same quarter of last year. Quarterly production average 596,000 net bbl of oil equivalent per day, in line with the second quarter, and 9% higher than a year ago.
The accumulated production to September average 600,000 bbl a day, in line with our full year guidance. Year-over-year, third quarter volumes benefit from the startup of new wells in Eagle Ford and Marcellus, and a higher gas demand in Venezuela. These effects more than compensated the disposals of the Canadian assets executed in 2022. I mean, talking about Duvernay, Chauvin, Montney, and so on, and natural decline. In Canada, having disposed our oil production assets in 2022, in September, we divested our remaining E&P position for $468 million. This transaction helps us continue with the streamlining of our portfolio, focusing growth on core regions such as the United States and Brazil.
Production in Canada has averaged around 23,000 net bbl equivalents a day in 2023, mostly gas, and the transaction has been complete by mid-October. In Venezuela, we welcome the latest developments with regard to the easing of the U.S. sanctions affecting the oil sector. This is, let me say, good news for us, for Repsol, as it will translate into future development opportunities, increase the availability of heavy crude oil for our refineries, and also is improving the effectivity of debt collection. We reiterate again our commitment to Venezuela, and we reiterate that we are going to work, looking for any progress as an opportunity to create value in the country. In the Gulf of Mexico, the Shenzi North project started up production in September, ahead of its targeted first oil in 2024.
The project is a two-well subsea tieback that takes advantage of existing infrastructure in the area. The Shenzi field currently produces around 12,000 net bbl a day to Repsol, and the new development is going to add or will contribute with 4,000 net additional bpd . In Brazil, the execution phase of Campos 33 is progressing according to expectation. After having taken the FID in May last quarter, the consortium submitted the declaration of commerciality and plans of development for two of the areas in the concession. The pending approval by the ANP, the regulatory organization, the proposed name are Raia Manta for Pão de Açúcar , and Raia Pintada for Gávea and Seat. The project is expected to start production in 2028.
In exploration, an appraisal well of the Blackt ip deep water discovery in the Gulf of Mexico was declared positive. This result further proves the existence of a prolific Wilcox play that is, in some way, in geological terms, I'm not an expert on that, but is similar to Bakken or Leon- Castile in this prospect, supporting our growth plans in the area. Let me wrap up by saying that since the release of our strategic plan back in 2020, we have made significant progress towards the strategic priorities that were defined for our upstream business. And this has allowed us to make our portfolio more resilient and predictable in any potential scenario.
In addition to crystallizing value through the incorporation of a strategic partner, we have concentrated our geographical scope of spanning in 14 countries, and are focused on the development of 12 new projects with FIDs already, all of them taken. These projects contribute with low break-even barrels that support future volumes and offset decline. In parallel, we are evolving our business to develop geological low carbon solutions in CCS, geothermal energy, and hydrogen storage. Continuing now with the industrial division, the adjusted income was EUR 550 million, around 60% higher than in the second quarter, and 17% lower than the same period a year ago. Year-over-year, the lower results in refining chemicals and trading more than offset the better results in wholesale and gas trading.
In refining, third quarter margins benefit from a strong demand, low levels of inventories, the ban on Russian exports, and expansion project delays. The margin indicator more than doubled the $6.4 achieved in the second quarter, and was above this $12.7 of a year ago. Up to September, the indicator has averaged close to $12 in the first nine months of the year. Compared to the previous quarter, margins reflected the higher middle distillate spreads as a result of Russian sanctions, lower availability of sour crudes, and delays. In the year-over-year comparison, the improvement was mostly driven by higher gasolines and naphtha spreads, partially offset by lower middle distillate differentials.
Let me underline that despite the favorable margin environment of the third quarter, the results of the refining business were partially held back by negative pricing lag effect in kerosene sales. This compares with an analogous positive effect for this reason in third quarter of 2022. But again, I mean, that is a temporary effect. The premium generated in the CS, CCS margin reached $2.9 over the indicator, positively impacted by a higher availability of heavy crudes, the contribution of biofuels, and higher utilization rates. The average utilization of distillation and conversion units was 87% and 102%, respectively. Plant availability was maximized during the quarter after having complete all plant refinery maintenance during the first half of the year.
Finally, last quarter, our refineries continued to process Venezuelan crude, which accounted to around 4% of the total crude inputs. During the quarter, we received four new cargos, or a total 3 million bbl of oil. In chemicals, our margin indicator was 43% lower than the previous quarter, and 14% lower than in the same period a year ago, reflecting an ongoing weak demand situation for petrochemical products. The adverse economic situation for this business remain mostly unchanged, as inflation and higher interest rates continue to restrain consumer spending. Low demand is affecting nearly all chemical sectors in Europe, and the market expects roughly this situation to extend into the end of 2023.
With regards to the transformation of our industrial sites, the construction of the C43 biofuel project in Cartagena is reaching its final stages, with the startup of operations planned in the next few weeks, months. This new unit has an annual production capacity of up to 250,000 tons of HVO, or 195,000 tons of sustainable aviation fuel, SAF, depending on market conditions. Combined with the 240,000 tons a year capacity coming from the retrofitting of Puertollano, that, I mean, we talked about this project in our last conference in July, we expect to generate around 350-650 EUR of EBITDA per ton of feedstock processed from these two projects. I mean, a figure that will be close to EUR 250 million of annual EBITDA.
In sustainable aviation fuels, we keep working on strategic supply agreements with key airlines. Last quarter, our growth plans received further regulatory support with the approval of the ReFuelEU Aviation initiative by the European Union. In renewable hydrogen, production began in the 2.5 MW pilot electrolyzer in Bilbao, a relevant milestone in our decarbonization route, where green hydrogen will play probably a pivotal role. The hydrogen produced through the pilot will be used in the industrial processes of the Petronor refinery in Bilbao. Finally, as discussed in our recent ESG day, we have increased our target for Biomethane projects in the Galicia region, so the northwest part of Spain, where we have Coruña's refinery, in several plants that will use agricultural and livestock waste as feedstock.
In the customer vertical, the stability and resilience of this division keeps us on track to deliver record levels of EBITDA in 2023. The adjusted EBITDA reached EUR 190 million, 28% higher than in the previous quarter, and 74% higher than the same period a year ago. Quarter-over-quarter, the mobility business was the main driver of the improvement, partially offset by a lower result in LPG due to temperature and seasonality. Third quarter performance reflected the shift from generic broad market discounts to customer-specific. The new multi-energy strategy launched in April, built around Waylet, is helping us capture new clients, retain the previous customer base, and generate cross-selling opportunities through personalized discounts.
I mean, I'm proud of saying that the Waylet app reached another milestone this month, surpassing 7 million users, helping us to progress towards achieving 8 million digital clients in 2025. Moving now to low carbon generation, the power generated by Repsol reached 2.7 terawatt-hours, 43% higher than in the previous quarter. The adjusted income was EUR 13 million, 8% higher than the previous quarter, and 78% lower than a year ago. Year-over-year, the higher production in wind and solar couldn't compensate for the lower power price and lower production in combined cycles. The development of our pipeline continued with the startup of the first 100 MW of Frye Solar in Texas.
The phase development of this project, which was acquired from Hecate, the pipeline, I mean, in 2022, is expected to reach 600 MW in 2024. The agreement reached last quarter to purchase renewable developer ConnectGen for $768 million reinforces the United States as a core region for Repsol. The transaction, which is expected to be complete this quarter, allows us to incorporate a 20 GW pipeline of wind, solar, and energy storage projects. In particular, we are adding an onshore wind platform in the U.S. that complements the solar and storage development capabilities acquired through our stake in Hecate. Repsol currently has 2.3 GW of renewable capacity in operation, including Spain, the U.S., Chile, and Italy.
We have a further 1.1 GW under construction and remain confident on, on surpassing the 2.7 GW of installed capacity targeted to the end of this year. If the acquisition of Asterion closed at the beginning of the year, allow us to basically ensure the delivery of the 6 GW targeted by 2025, the purchase of ConnectGen closes the gap to guarantee the delivery of the 20 GW targeted at the end of 2030. Our team remains focused on the efficient delivery of our pipeline and generating the appropriate returns in this business. Looking ahead, our deep project portfolio across different countries, technologies, and stages of development will allow us to deliver the capacity targets defined in our strategy while preserving profitability objectives. Moving now briefly to the financial results.
In this slide, you may have a summary of the figures that we have discussed when reviewing the performance of our businesses. For further details, I encourage you to refer to the complete documents that were released this morning. Let me now review our update outlook to the end of the year, starting with refining. The consolidation of the margin recovery experienced since April is allowing us to revise our full year margin indicator assumption. The new figure is $11 per bbl. Short and medium term, we remain positive on the outlook for this business, as the resilience of demand can cope with the uncertainties coming from the supply side. In the upstream, the full year production guidance remains unchanged, at around 600,000 bpd on an annual basis.
This figure already factors since November for the disposal of our position in Canada. The expected cash flow from operations in 2023 remains above EUR 7 billion. In broad terms, the positive contribution of higher refining margins is expected to be partially offset by the negative evolution of our gas prices, lower results in chemicals, and a weaker dollar. The estimated organic CapEx for the year is around EUR 5 billion, I mean, the guidance we had in July. With regards to shareholder remuneration, we confirm our commitment to distribute this year EUR 2.4 billion to our shareholders, surpassing the higher end of our initial cash flow distribution guidance.
This figure will be equivalent to 35% of the cash flow from operations of 2023, and, as discussed earlier, if we adjusted for the minority stakes in upstream and low carbon generation, we will be in the higher end of our sector. In addition, the performance of our businesses and expected cash flow generation has allowed us to increase the first, dividend, so the interim dividend, in technical terms, to be paid in 2024. In this sense, this morning, we announced an increase of the dividend plan to be paid in January to EUR 0.4 per share. This is equivalent to a 14% increase compared to the dividend paid in January 2023.
Before moving to the conclusions, let me share some thoughts about the agreement announced last Tuesday between two of the political parties negotiating to form the future Spanish government, to extend and reinforce the extraordinary tax currently imposed on banks and energy companies. I mean, first of all, let me say that this agreement is just part of the negotiation between two parties that intend to form a coalition government after the inconclusive elections held in July. The announcement is not in any way based on any kind of law or draft of a law. The extraordinary tax currently enforced in Spain, I mean, that is unfair, is illegal, is unconstitutional, and is discriminatory, impacting and punishing, in a negative term, energy companies that invest in industrial assets and that create industrial jobs in the country.
Its extension will penalize this company even further, with a clear repercussion on their investors and in their capacity to invest in the energy transition. I mean, let me explain that, in a crystal clear way. Today, businesses like our chemicals unit in Spain, are paying this windfall tax based on this turnover figure, when at the net level, they are incurring in losses, and they are having difficulties to compete in the international market. Looking ahead, Repsol plans large investment in our Spanish industrial complexes, focused on reducing the carbon footprint. But again, I will be crystal clear about that. The lack of stability in the regulatory and fiscal framework could condition future investments in our industrial projects in the country.
Before taking a new FID for any investment in Spain, we will analyze if the required conditions are stable and are attractive enough to guarantee the returns of those projects. To conclude, our third quarter performance demonstrated once again the soundness of Repsol's business model. We keep managing our legacy businesses in the most reliable and safer manner, ensuring that we capture the current favorable macro to accelerate the transformation of our portfolio and improve the remuneration to our shareholders. Our decarbonization pathway remains in place as we aim for a balanced approach to the energy transition. The solid financial position built in previous quarters allow us to tackle the future with great flexibility, allocating capital according to our priorities without major constraints.
In 2023, we have made significant advances towards building the multi-energy portfolio that is going to help us decarbonize our operations and support future cash generation. Capital discipline will remain at the center of our decision making. We see volatility and uncertainty to persist in the current situation, increasing the importance of sanctioning new projects that can be profitable in any potential future scenario. We keep committed to growing the distributions to our shareholders through a combination of dividend increases and additional share capital reductions. This year, despite a somewhat weaker commodity price scenario comparing to last year and our initial expectations, we expect to surpass our targeted distribution range. Finally, looking back to the five years, the strategic plan released in November 2020, with most of our strategic objectives already delivered, we expect to host you on...
I mean, next time, next conference call, probably the February 22nd, to provide on a strategic update, along with our full year results. With this, I hand now the call over to Ramón. Thank you.
Thank you very much, Josu Jon Imaz. Before moving on to the Q&A session, I'd like the operator to remind us of the process to ask a question. Please go ahead.
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again.
Thank you, operator. Our first question comes from Oswald Clint at Bernstein. Oswald?
Can you hear me?
Yes. Yes.
Oh, thank you. Thank you. Good afternoon. Thank you, Ramón. Thank you, Josu Jon. I wanted to ask about the acquisition of the ConnectGen wind portfolio in the U.S. I see the logic of matching that up against the Hecate solar portfolio. You said it's now a core portfolio, targeting obviously double-digit returns, but perhaps you could just walk through, you know, some of the assumptions in order to maybe provide a bit more clarity on securing that double-digit level of returns. So how important tax credits are or do they really bolster your view that you can reach that level comfortably? And I mean, should we expect you to deepen in the U.S. now with the low carbon CapEx, given what you just said about the Spanish tax environment? That's the first question.
Secondly, I wanted to ask about the customer business and those discounts which have doubled, and they seem to be extended into 2024, the EUR 0.40 per liter and the free electric vehicle charging. It seems quite generous. So I just wanted to make sure, I mean, overall, you still make money on these customers through the gas and power contract side of the equation. Could you just talk about that, please? Thank you.
Thank you, Oswald. I mean, first of all, I always talk about double digits, and I see that, and I know that some investors, they don't... I mean, they have some concerns and some doubts about that. Let me say, I'm going to be very clear. Now, we are in the midst of the process of the disposal, the asset rotation of the 49% of the Ebro project. Ebro project, we are talking about 600 MW in Spain, 400 of them more or less, wind, 200, solar. And we are going to see in two-three weeks, the conclusion, the closing of this process.
Again, we are going to demonstrate through this portfolio rotation process that the double-digit return is there, even in this financial environment. I know that there was, let me say, in the market, a reasonable concern about we would be able to go on in this asset rotation process in this context. Okay, we are going ahead, and we are going to see in two-three weeks that the results are there. We are taking, as you know, the whole risk of the project from the early pipeline and on top of that we are also taking all the construction, the operation, the maintenance of the asset.
After securing a significant part of this production for coming years, we are looking for an investor that could, in some way, have the same appetite to take up the risk project, and is ready, of course, to pay a different multiple. That is happening even in this scenario. Going to your question, let me say that today, we have the advantage of being or entering at the right moment in the States, because we have the pipeline to accelerate these projects in the country. Of course, as you mentioned, these projects are eligible in terms of the tax energy investment that could be at around 30%, more or less 30, plus the...
In many cases, these projects are eligible because the geographical situation they have in communities that they have suffered, let me say, in the past, some decline coming from, I don't know, coal mines or projects linked to some other forms of energy, and they have an eligible support of additional 10% of the local community. So in most cases, we are talking about a total tax support coming from the IRA, something between the 40% and the 50% of the total CapEx of the project. Of course, we have good placement for these projects in good regions, it's a good pipeline.
We have the right team to push forward these projects, and we are, let me say, somewhat confident with a clear expectation and somewhat comfortable about the way to reproduce in the States, to replicate, better said, the same model of portfolio rotation we have developed in Spain, and that is going to allow us to get this double-digit return target we have. And again, in two-three weeks, we are going to see the results, and we are comfortable about the project we are involved in. Going to your second question about the customer business. But first of all, it's clear that we are making money.
In this year, I have to check the figure, but in the electricity and power business, we have, in these nine months, a positive EBITDA of EUR 70 million. But I have to say that we are investing hard in an organic way, mainly organic, I mean, with some small inorganic transactions to increase the number of customers. At the end of September, we have already 2.15 million customers in Spain, and this October, we have overcome the figure of 2.2 million customers. Remember that we have the target of 2 million customers by 2025 in our strategic plan. That means that we are already the fourth operator in the power business in Spain, and we are approaching the third one.
We are building this position, as I mentioned, with the figures I show, in a profitable way. On top of that, you could see the result of our customer business, where year- after- year, the EBITDA is growing. That means that this multi-energy approach, focused on clients, is working. Because it's true, last year we had discounts and so on, but we were in some way, we had a general framework. Now we are very focused on our customers, adding value to every customer of Repsol.
With more focus, let me say that the total figure of the discount is also less, is lower than it was last year in terms of the P&L, but it's focused on the customers of Repsol we are interested in. So that's important. We are leveraging this position. The non-oil is also growing, it's also an important part of this business. And the proof of what I'm saying is that year- after- year, the EBITDA in the customer business in Repsol is growing. So also going to your question, yes, we are making money in this new business.
Excellent color. Thank you.
Thank you, Oswald. Our next question comes from Biraj Borkhataria at RBC. Biraj?
Thanks for taking my questions. The first one is just a follow-up on the windfall taxes. I hear you, and it's quite strange to be paying windfall taxes on a loss-making business. But I wanted to think, you know, looking forward, as you think about 2024 CapEx and plans, could you just talk a little bit about, you know, the projects that may or may not be at risk, and how you're thinking about, you know, the sort of uncertain portion of your CapEx if this was to be enacted? And then the second question is on the dividend. You said, you've said multiple times that you wanna be the most boring CEO in the industry, and you're gonna host the strategic update in early 2024.
I suppose we'll get a more formal update on the distribution framework then. So I'm just wondering why you felt the need to increase the dividend at this point. And then finally, just on the corporate cost line, your cash, and now that's obviously starting to earn interest, and that seems to be making quite a material impact on that line. I was just wondering on the debt side, could you comment on what proportion of your gross debt is on, you know, fixed rates and termed out? Thank you.
Thank you, Biraj. I mean, first of all, why are we increasing the dividend at this point? Because the good performance of our businesses. I mean, we have seen a good performance on cash generation in our businesses, and we are comfortable with this figure. That is the interim one. I'm not going to commit today the complementary one that is going to be paid in July 2024. But let me say that never the complementary has been lower than the interim in our history. So, we will put more color on that in February, because we are going to present our strategic plan.
But, I mean, you could expect a complementary in July that is not going to be, in any case, lower than the interim dividend we are anticipating this January 2024, related to the interim dividend from the result from 2023. So we are today very comfortable with the cash generation, with the figures we have seen in terms of preparing the strategic plan, with the financial situation of the company to be comfortable with this dividend we are committing today. Windfall taxes, but again, I will be clear: this year, 40-45% of our CapEx has been invested in Spain. Spain is the main geography where we are investing.
And to go on developing this huge investment effort in our industrial assets, where we have to take sometimes even technological risk, because we are entering new technologies to decarbonize our assets, we need to have a clear, predictable, and a stable regulatory and fiscal framework. Otherwise, I mean, we have other alternatives, of course. We have industrial sites. Portugal, we could have international activity in our industrial business, but again, we are going to analyze carefully what is the regulatory and fiscal framework before taking new FIDs in the Spanish geography. Because we have to protect, first of all, our shareholders, our employees, but at the same time, we have to defend the concept of industrial job.
I mean, this unfair, this illegal, and this discriminatory tax is favoring importers, people that is coming to Spanish market, not creating a single industrial job in Spain. And it's punishing companies that we are investing in Spain. We are creating industry in Spain. We are developing and increasing our jobs in Spain, and that is unfair. So we have to analyze in a very careful way what is going to be the regulatory and tax framework, and in case of not seeing a clear, stable, and fair framework, we are going to take different decisions in the close future. So, I think that I, Viras, am answering in a very crystal clear way to your question. When you say the net debt, good proportion of the debt is fixed, more or less...
I mean, first of all, let me say that our debt level is pretty low. If you reduce the impact of leases, today we have a negative debt, so that means that we have a positive cash position of the company in net terms. Saying that, 80% of the gross debt we have, 86 exactly. I'm checking the figure, sorry. I had in mind the figure of 80, but now I'm checking the figure. It's exactly the 86% of the debt has a fixed interest rate. More or less, the average of this debt is something in between 2-2.5%. That is the range of this gross debt we have.
But again, we have a strong liquidity position, but because I know that probably some of you are surprised, because we have a positive corporate result this quarter. A part of that comes from the market exposure to the shares we have, and the evolution of the stock price. But apart comes from the positive financial result of Repsol, because we have a net liquidity position and the interest rate of this liquidity is above 4%. So that is curious, but this, let me say, financial environment today, this macro environment, is favoring Repsol in terms of being a company with a net cash exposure company. So we have, in real terms, a positive financial result. Thank you, Biraj.
Thank you very much.
And the dividend, why we are increasing now the dividend? Yes, it, I think that I mentioned that because we are, I mean, we are seeing a cash flow from operation that is supporting that, and we have to approve the dividend, the interim, by next January. Thank you.
Thank you, Biraj. Next question comes from Michele Della Vigna at Goldman Sachs. Michele?
Thank you very much, and congratulations on the dividend increase. I wanted to ask two questions. First, I wanted to come back to the comment you made on Venezuela, and just wondered if you could give us perhaps a little bit more color on the opportunities you could see for Repsol if the sanctions are lifted, both in terms of further recovery of your receivables, but also in terms of future profitable growth opportunities. And secondly, I wanted to come back to a more strategic issue, which is the opportunity to potentially list the EMP business in the U.S. over the coming years. You're clearly recharging your project pipeline there, you're cleaning up the portfolio.
I was wondering, what do you think, you know, still needs to be done or still can be done on the EMP business to really prepare it to be a very successful potential IPO? Thank you.
... Michele." So going to Venezuela, you know that we have maintained in the country. So, we are a good operator in Venezuela. We are producing in a good way and with possibilities of increasing our production, gas, that could be in a, of course, could go on fulfilling the needs of the country, could be in the close future, even be exported. On top of that, we have oil production. I mean, the total, the gross production of Petroquiriquire and Petrocarabobo, where we are, could be at around 22,000-23,000 bbl a day, last year. Now we are entering in a time of opportunity.
Let me say that this time started for Repsol last May, in 2022, when we were allowed by the American administration to start lifting again oil cargoes to pay the gas bills. An example of that is that this quarter, we have received 3 million bbl of oil from Venezuela in our refineries, so that's approved, that is happening. But now we have, I think that, always under the principle of a financial currency and so on, but we have the opportunity to create value there, and to improve our operation. To start reversing the old production in our assets, improving the operations, I mean, and trying to operate them in a better way.
We have also room to increase the speed of the debt payment from the past, and in general terms, from a commitment with the country, a commitment with the operations there, and respecting always, of course, the legal framework. I think that we have an opportunity to create value for Repsol in the country. Going to the IPO, you know that when we close in our agreement some months ago with EIG, we expressed and we stated a common aim. We have the ambition, and we are going to prepare the E&P JV to be prepared by the end of 2025 to go to the to be a listed company in an Anglo-Saxon market, probably the U.S. That is the target we have to be prepared.
The decision will depend on the market situation at that time and so on, but we are going to prepare the company. And that means that we have... And let me say, Michele, for me, it's as important the journey as the result of the product we are going to prepare, because in the journey, we have to build a more understandable EMP for our investors. We have to go on having more material positions in the countries and place where we operate. We have to increase the efficiency of this business. We have to improve, in ESG terms, the CO2 emissions we have as scope one and two.
We have to reduce in that, and go on, and we are improving in a dramatic way our methane emissions, but we have to go on in this way. On top of that, we have to consolidate the growing periods we have now, because we took, in the, in the recent period, a strong FID decisions, Leon- Castile, Alaska, Campos 33, Shenzi North, Lapa South, so all that is on track. We have to deliver, and we have to, to demonstrate that we have a cash generator business with a clear free cash flow, maintaining the production above 600,000 bbl a day, this figure, having the scale required, and I think that if we are going to do that, we will be prepared to leave the company at the end of 2025.
But what is more important, we are going to have a more, let me say, valuable business for our investors and for our analysts, for the market. Grazie, Michele.
Thank you, Michele. Our next question comes from Alastair Syme at Citi. Alastair?
I wonder if you can just talk about, in the comments on windfall tax, you talked about being illegal and unconstitutional. So I just wanted to understand what you mean by that, and whether that means you will look to challenge in the Spanish or the European courts. And then secondly, I wonder if I can just come back to ConnectGen, which I think you talked about in the first question. Can you just talk about sort of the due diligence or how you go about trying to price an asset like this? So, you know, I kind of understand how you price an oil and gas asset, but I guess in this case, you know, it's a pipeline, and you've got to take a view on different asset quality. Can you just talk about the process that sits behind that decision? Thank you.
Thank you, Alastair. Going to your first question, I mean, let me first of all say that there is a quite important difference between the European temporary decision and the Spanish one, and that is very important. The first one, the European Council defined this tax, first of all, as temporary, and only responding to the, at that time, the special conditions of the market. Secondly, this European decision was related to the concept of benefit. We could discuss, and we are going to discuss, and we are going to challenge in legal terms, the European one. But what, what we are talking in Spain is not something linked to the, to the benefit or the profit concept.
It's based on sales, and that is a huge and important difference because, as I said before, you could see companies that are losing money, and they are paying this theoretical, let me say, unfair, temporary tax, because theoretically they are having a windfall benefit, so it's a nonsense. And you said, and you are right, if it's unfair, it's illegal, it's discriminatory, and it's unconstitutional, as we firmly think. What are we doing? What we are doing is, first of all, we fight a contentious administrative appeal against the ministerial order. I think that it was in February, more or less, that approved this temporary tax before the Spanish National Court. It's now in the Spanish National Court.
Secondly, we also went to the European Court because we think that it's unfair also in European level, because it's, in some way, punishing people like Repsol or some others, that we are investing in European refining, and it's favoring people that is exporting from some other geographies, not creating a single job, industrial job in Europe, it's exporting diesel or gasoline to the European market. For that reason, Repsol has launched an application to intervene in support of an appeal that, before the, the European, what is called in Spanish, the Tribunal de Luxembourg, or the General Court of the European Union, was presented by ExxonMobil requesting the annulment of the temporary solidarity contribution that was approved last year in Europe. So we are in both jurisdictions. We are legally working to work in this direction.
Of course, in case of, let me say, finishing the procedure in what is called the Spanish, what is the Audiencia Nacional, that could be something like the National Court, of course, we will go to the Constitutional Spanish Court, because we think that it's unconstitutional, and it's also breaking the European competition market. So we are going to fulfill always, and I'm convinced that we are going to gain at the end of the road, because something that is unfair, illegal, discriminatory, and this impacting in negative terms, that can't be, in any case, be approved or be fulfilled, and we have to try to solve the problem, of course, in legal terms. And we rely on our judicial system, and we also rely on the constitutional framework.
Saying that, I mean, the ConnectGen, of course, we have, let me say, a team with a strong experience in this business. I mean, the people that in Repsol has developed 2.3 GW that are today operating, and that is constructing 1.2 GW and is securing 3.1 GW, is a people with experience in some other companies for years, and some of them, they have worked in the United States renewable arena for years, people that today are leading the this business in Repsol.
What we have analyzed in a deep way is, of course, the land or the permitting linked to the land of these 20 GW of pipeline, or the environmental areas, permits, and the potential evolution of all the environmental permits. I mean, with the granularity for every project on place, the availability of offtake agreements in the area. Of course, the estimation of CapEx. It depends, of course, on not only the turbines market and so on, also your geographical place, the difficulty of access to the area, and so on.
All that has been, in a granular way, analyzed for the 20 GW of pipeline that we are acquired, the financial costs, and of course, we are analyzed in a very careful way, as I answered. I think that it was to Oswald or to Biraj, the IRA eligibility of these projects. And not only that, we are also analyzing this due diligence process, project by project, the potential eligibility of these projects for this energy community addition, that could add a 10% of subsidy or tax support, better said, from local communities to this project. So that has been part of the due diligence we launched. Thank you, Alastair.
Thank you, Imaz sir.
Thank you, Alastair. Next question comes from Sasikanth Chilukuru, Morgan Stanley. Please go ahead, Sasi.
Thanks for taking my questions. I had two, please. The first was related to the refining business. The premium of $2.9 per bbl over the indicator margin was good to see this quarter. I was just wondering if you could talk about whether this is a sustainable level if the current market conditions persist? Also, slightly related to this, I was just wondering if you could quantify the negative effect in million euros from the price lag effect that you have seen in certain oil products, such as kerosene this quarter. The second question was more on the asset rotation within the renewable segment as well. I... Remember last quarter, you mentioned the potential launch of an asset rotation program in Chile by the year end. I was just wondering if this is still the case?
Excuse me, Sasi, I have some difficulties to listen to you. Could you repeat your last question about Chile, please?
You had mentioned that a possible launch of an asset rotation program in Chile by the end of-
Sorry, I'm going to start by the asset rotation. We launched some weeks ago, or some months ago, and we are going to close the process in two-three weeks, and we also have binding offers and so on. In Spain, 600 MW, 400 of them are green projects. Many of them in what we call Delta areas, so the region of Aragon, some of them in Castile, what we call the Project Pi, and 200 MW, more or less, roughly speaking, of solar projects. So that is going to be closed in two-three weeks. Going to Chile, we are... And we expect to launch the asset rotation process next year, in 2024.
That is the, today, the assumption and the target we have because, I mean, we, we always try, and, and sometimes it's true that, in the Spanish case, this year, probably we anticipated a bit, our, our view, depending on market conditions and so on. But we try, first of all, to secure the, the projects, to have a PPA, and to have, let me say, more attractive for our financial investors. So when we have all the package, we launch the asset, rotation. And, and, and let me say that also, investors, they like, big, big, big packages of, of assets. So as you could say, in Spain, we launched 600 MW, so we are in some way trying to have a material position in Chile to, to launch this process, next year. Going to the refine...
First of all, let me, because I know that has been very controversial, this effect of price lag effect. The price lag effect, conceptually, is zero, when prices are stable or when prices are, have ups and downs, going to the infinite. Let me use this expression. That means that, of course, if you are in the last days of a month, you are seeing a high price, or prices are increasing, you are going to have, because the way you are pricing some of your products, mainly kerosene, that it's...
I remember that I think that we have 45 days, something like that, of lag in the kerosene, two weeks, sorry, 15 days in the kerosene, in the kerosene pricing. So the impact in this case is negative. When prices are going down, you have the opposite effect. If you translate at the scenario with, let me say, flat prices to infinite, there is no any kind of impact in the long term from the price lag effect. So that's, let me say, there is no in some way impacting the refining business premium, where we are taking a consideration linked to the market, the operation, the use of refineries and so on.
Going to the premium, seems to me that today the guidance we have for the whole year is going to be slightly above $2 a bbl. A 40% of this premium is going to come mainly from the optimization related to advance to biofuels, variable fuels, advanced biofuels, and so on. Probably a 30-35% comes from an additional optimization of the slate of oil. And in this case, I think that having more heavy oil coming from Venezuela is good news, not only for the E&P business in terms of being paid by the bills produced in Venezuela. It's also good news for the refining system of Repsol in terms of optimizing the slate of goods we use.
Of course, all the operational surplus of problems they impact on the refining business premium. So $2 a bbl, slightly above $2 a bbl, will be our best guidance for the whole year 2023. Thank you, Sasi.
Thank you very much, Sasi. Our next question comes from Lydia Rainforth at Barclays. Lydia?
Thanks, Ramón, and good morning, everybody. Two questions if I could. Actually, John, if I can go back to the tax issue, at what point do you actually expect the decision to come through? 'Cause I'm thinking you do have hydrogen projects, you do have a lot of investments go through. At what point do you need to make the decision whether you go ahead with those or not? And then the second one, if I could come back to the net debt side, when you're thinking about where you want the balance sheet to be, can you just walk me through kind of where, where you would ideally like the debt position to be? Thanks.
Okay. So Lydia, the first decision related to the national court could come in. I mean, it's not easy to have a clear clue about that. That's something in between one or two years. And of course, we expect to win this case, but otherwise, we will go either to the European Court, where we are directly there, but because we are appealing against the European rule, but we will have the opportunity to go ahead in the Spanish internal jurisdiction, going after a potential decision of the national court to the European Court. And of course, we are not going to forget the constitutional Spanish court.
So, we have, let me say, a journey that is not going to be short at all, but we rely on the fairness of the position we have, and we rely on the result at the end of the road. Net debt, you are talking about what is the... I mean, I think that in December 2023 is going to be in line with what we have in the third semester. Of course, we have probably to add, in case of closing in coming weeks, the Sinopec settlement deal, where we are acquiring the, also the UK 49% of Repsol Sinopec UK, a joint venture. In this case, we'll have to add the potential payment to Sinopec.
But I mean, decoupling this effect, the net debt will be, at the end of this year, at the same level as we have in the third, at the end of the third quarter. Thank you, Lydia.
Thanks.
Thank you, Lydia. Our next question comes from Alessandro Pozzi at Mediobanca. Alessandro?
Yep, thank you for taking my questions. I have two. When you look at 2024, of course, there are a lot of moving parts, but it feels like the economic outlook is somewhat deteriorating. And if you look at the result season, not just in oils, but across different sector, there's a lot of downgrades in guidance. So I was wondering, what is your view as we go into 2024 for commodities? Are you concerned, and do you think that the total shareholder distribution of 30% of the cash flow still can still withstand the potentially lower commodity environment? And I appreciate that we're gonna have a bigger update in February.
The second question on refining margins, you upgraded the guidance, but just more recently, refining margins have fallen into single digit, I believe, in October. I was wondering, what is your maybe outlook for there in the short term, and do you expect a rebound or this level into year-end? Thank you.
Gotcha, Alessandro. I mean, we see a healthy price context for 2024. Either for oil, we're supported by demand, by the restriction of supply we are seeing. And in the gas case, I mean, if we analyze the future market for how we have and so on, it's clearly above the figures we have had on 2023. So the market could be something close to $3.3-$3.4 million BTU by 2024. So first point, we are seeing a healthy price context. Secondly, we are seeing a pretty sound refining margin. The refining margin this year in 2024 we think that is going to be, in some way, supported by demand.
We don't see, let me say, a relevant addition of supply capacity in 2024. So, of course, you have ups and downs. We have a bit lower figure this October, where our margin is something between $8-$9 a bbl in October, because after the decision of the first week of October of Russia to start again exporting diesel. And so you- we are going to see ups and downs coming from the Russian situation, coming from the perception about the Chinese economic growth. I think that winter is always a good time to support high cracks for middle distillates, in general terms.
It's going to be very important temperature, because, I mean, in case of having, let me say, a cold winter in Europe, the gas prices could spike or could go up. What we have seen those days with the NBP and the TTF are close to $15-$16 million BTU is a picture fully different from the picture we had, for instance, in August or September. All that could influence the diesel market, because remember, last winter, when high gas prices shift fuel from gas to diesel in many power production, in many heating facilities, even in some cases, gas to LPG, that could have also, in some other parts of the business, an impact. So, I'm pretty positive about the refining margin for coming months and for 2024.
Of course, I'm not going to give you an exact answer about the distribution proposal, because that is going to be part of, I mean, part of my presentation in 2024, in February. But let me say that broadly speaking, I think that your indication about 25-30% of cash flow from operation, I mean, it's not going to be conceptually very far, probably, from the final approach we are going to have in our strategic approach. But again, we have to wait till February to have an exact approach to this distribution to our shareholder percentage of the cash flow of operation. Gracias, Alessandro.
Thank you.
Thank you, Alessandro. Next question comes from Matt Lofting at JP Morgan. Matt?
Hi. Hi, gents. Thanks for taking the questions. Two, two quick follow-ups, if I could. First, just to come back on, on the earlier comments around Venezuela, could you just talk specifically about what you'd need to see in order to consider meaningful additional investment into Venezuela, and how you risk assess, perhaps, appropriate capital employed exposure in a region like that within the, the broader portfolio? And then secondly, on the upstream business, factoring in the Canada disposals, et cetera, that are coming through in the second half of the year, perhaps where you see the production range for 2024. Thank you.
So, thank you very much, Matt. Going to Venezuela, I mean, we are talking to PDVSA, that is our partner in the oil assets, and is our client in our gas facilities. I mean, we are working in the direction to have satisfactory agreements for both parts. And it seems to me that if we are able to do that, and probably we will be, because I think that there is a value creation framework for both parts. We could go on working in some directions that in our current financial way, we could in some way create value there. Of course, to try to debottleneck the gas production facilities in the country could be a way.
And on top of that, it seems to me that with our prevalent CapEx exposure, there is room to start reversing the oil production in the country. We are working in this direction. Let me say that we need now some strong technical work to develop the best options to start doing that, and it's going to be key, this kind of a framework we have to or we are working in with our partner and our client, that is, PDVSA. I prefer to be prudent about future production curves and so on, because it seems to me, you know, the quality of the asset is very good.
I mean, Venezuela has a strong and positive quality of assets, and it seems to me that we could have positive surprises, but I prefer to be prudent in terms of anticipating new productions and so on. Going to the production, the production range by 2024 is the guidance is 600,000 bbl a day. Because we are going to see more or less at the same time or with some weeks of difference, the reduction of the production of gas in Canada, after the disposals of the Greater Edson, that we are going to take, at the same time, the 49% of our UK assets.
All in all, taking into account a higher nomination gas in Peru, higher production in Marcellus, and so on, I think that we are going to be slightly above 600,000 bbl a day this year, 2023, and that is the figure more or less we have in mind for 2024, and we put more color in the strategic update presentation in February. Thank you, Matt.
See you then. Thanks very much.
Thank you, Matt. Our next question comes from Alejandro Vigil at Santander. Alejandro?
Yes, hello? Can you hear me?
Yes, Alejandro, go ahead.
Hi. Hello, thank you. Thank you, Ramón and Josu, for taking my question. I have just one question about the low carbon generation business. The capital employed now is almost EUR 3.5 billion, which is material in the context of the company's total. My question is, which is the potential contribution of this capital employed in terms of EBITDA, for example, for the next 12 months, when we are going to start this contribution? Thank you.
Gracias, Alejandro. Yes, you are right, the figure EUR 3.5 billion of capital employed is right, but we have to take... I have to check the figure, but we have to take into account that more or less EUR 2.5 billion could be in operation today, and EUR 1 billion could be on tracking, construction or development. That means that what we have in production could be at around EUR 2.5 billion. If we analyze the EBITDA, roughly speaking, of this business this year, is going to be at around EUR 200 million this year, 2023, and EUR 300 million 2024.
I mean, when you take the multiple, capital employed, EBITDA, using, of course, the capital employed that is in operation, I think that that is a proof of the good multiple comparing with this sector that this business has. Thank you. Gracias, Alejandro.
Thank you.
Thank you, Alejandro. Our next question comes from Irene Himona at Société Générale. Irene?
Thanks very much. Going back to the windfall tax, I mean, the current tax is applicable to two years, 2023, 2024. Obviously, profit this year will be lower, so the tax will be lower. But can you say approximately what you're budgeting or what you expect to pay for this year's windfall tax next year, please? And then my second question on the timing of the $1.1 billion litigation agreement with Sinopec, when do you think that will actually happen? Thank you.
Thank you, Irene. I mean, first clue, the, you know that the tax based on sales in 2023 is going to be paid in 2024. I can't give you a figure, but it's going to be clearly lower than in 2022, I mean the figure paid in 2023, and then the main reason is because prices are lower. So, in an environment of lower prices, if you have something that is related to the turnover, the figure is going to be lower. I mean, something in between EUR 300 million and EUR 350 million probably next year in 2024. That it will be the tax based on 2023, so the second year, and the end, because there is no any legal base to go on with this tax.
What I mentioned is an agreement of two parties that they are trying to build a coalition to govern Spain. That is not happening today. And of course, any new, let me say, tax would need a new bill, a new discussion in the parliament and eventually a new approval. It's true that these two parties, they don't have the majority to do that. But again, when you have to take decisions about the future of the company and decisions about the future investment in Spanish industrial assets, you have to be prudent, and we are going to wait, and after seeing what is the regulatory and the tax framework that is going to stay for coming years, we will take eventually our investment decisions.
Otherwise, we were not going protecting the interest of our shareholders and the interest of our employees. Thank you very much, Irene. Sinopec, it seems to me that we are going to close, more or less, next week, in 10 days, and the cash out will come in 2024. Of course, it's going to appear as a debt at the end of 2023. For that reason, I mentioned that, roughly speaking, EUR 1 billion is going to appear added to the net debt at the end of the year, but the cash out is going to come in 2024. Thank you, Irene.
Thank you very much.
Thank you, Irene. Our next question comes from Paul Redman at BNP Paribas. Paul?
Hi, guys, and thank you very much for your time. I've got two quickly. Firstly, it's on renewables and acquisitions. You look like you're well on track with a portfolio to get to 20 GW by 2030. Does that mean we should assume that most of your inorganic spend on renewables is complete at this point? And then if that's the case, with a healthy balance sheet, how should we think about future acquisitions? You just mentioned when you think about IPO growing in the countries you're already in, in the upstream, should we think that you're looking for assets in the upstream at the moment? Just trying to get some confirmation about inorganic spend. And then secondly, you give quite a big range on EBITDA per ton for your biofuels positions.
I just wanted to ask about sustainable aviation fuel, and is it that portion that pushes you up towards the 650 guidance? And currently, how are you pricing EBITDA in your negotiations? Thank you.
Thank you very much. I mean, first of all, you know that I like to repeat that I like to be the most boring CEO in the world in terms of stability, predictability, strength of the balance sheet, and so on. So, we don't have, let me say, any large inorganic acquisition on track. I think that we have a strong bet in terms of transforming the company, building the multi-energy business, and we are going to require a strong balance sheet and cash generation to do all that, because at the same time, we are fully focused on distributing the right dividend to our shareholders. So I'm comfortable with the solid balance sheet I have.
I mean, the money is not burning in our hands, and as I mentioned before, we even have a pretty positive financial return. Saying that, it seems to me that the renewable acquisition, ConnectGen, is giving us the floor we needed to, in some way, to guarantee that we are going to deliver this 20 GW by 2030. So we are not going to need any large inorganic acquisition. I mean, we could have, let me say, small opportunistic platforms in, probably in a country or something like that, but nothing large. And going to the upstream, I think that is not time, from my point of view, it is a personal view for upstream acquisition in this price environment.
We want to maintain the materiality of the business, the scale, the 600,000 bbl a day. All that is compatible with what we are doing in terms of portfolio improvement. Remember that we acquired a small position in Marcellus one and a half years ago. Last year, we disposed of a part of Eagle Ford, we acquired another part of Eagle Ford. I mean, we are going to go on doing things like that, but if you are thinking about large upstream acquisitions in Repsol, I mean, we have to forget it. That is not going to happen.
So, it's true that we are in the industrial transformation business. We are going to go on building this biofuels position, and so on. And, when we are talking about SAF, we have to think that, for instance, the Cartagena plant, the C43, that is going to start in operation in some weeks, is a plant is going to produce 250,000 tons a year.
The number I have in mind is that depending on the operational requirement and the feedstock, we could operate till 180,000-190,000 tons a year in most SAF production, and eventually changing the operation, we could produce 250,000 tons of HVO. When we take the EBITDA estimate for these new projects, the project of Cartagena and the retrofitting decision, the FID we took in Puertollano, and that is going to be operational in 2025.
All in all, I mean, an average that is going to depend on the market prices and so on, but combining both projects, we are going to produce a figure close to 500,000 tons a year, and the average margin could be something in between 450-500 EUR a ton of advanced biofuel. So all in all, we could be talking about an EBITDA combining both of 220-250 million EUR, combining both the projects on an annual basis, of course. Thank you.
Thank you, Paul. Next question comes from Ignacio Doménech at JB Capital. Ignacio?
Yes, hi, Josu and team. Thank you, thanks for taking my question. Just one from my side, which is related with the unfulfilled cargos from Venture Global LNG. I believe you have been looking to start arbitration, so I was wondering if you could walk us a bit through the process and quantify any compensation you could receive from the missed LNG cargos?
... If you expect any volumes coming through 2024 or in 2025? Thank you.
Gracias, gracias, Ignacio. Buenas tardes. So, I mean, you know that, we request, to the Federal Energy Regulatory Commission and to the Department of, of Energy, to intervene in this, Ventures or Calcasieu Pass, authorization, proceedings, and because, we were not granted in terms of the access to these, docks, we launched, an arbitration process that is ongoing. I'm sorry, Ignacio, because I tried to answer to your, your questions, but due to the sensitivity of the matter, and due to the legal restrictions, we have, to, deliver information about this, arbitration process. I can't share, any, update, at this, point. But it seems to me that we are not going to have cargoes in 2024, coming from, from Ventures. But, I'm sorry, Ignacio, but I'm not going to deliver any kind of additional information, because the legal restrictions I have to do that. Gracias, Ignacio.
Thank you, Ignacio. Next question comes from Henry Tarr at Berenberg. Henry?
Hi there, and thanks for taking my questions. Two, two really, one just back on Venezuela. Forgive me if you've already answered it, but is there a sort of a total figure that I know a lot of the debt, et cetera, has probably been written off, but is there a total amount of receivables from Venezuela that you could potentially get access to if things open up there? And then just on that again, has the Venezuelan crude helped materially on the refining margin premium coming through? I guess there's transfer pricing on that crude coming in, but I just would like to confirm that.
Then secondly, on the renewables business, you're clearly sort of focusing on the US currently through the acquisitions, rather than in Europe. Do you see returns, et cetera, being better in the US versus Europe, or for a particular technology, solar versus wind? Thanks very much.
So, thank you, I mean, Henry, first of all, going to Venezuela, I mean, some, I don't want to create confusion, but I'm going to put some numbers on the table. First of all, the total equity and financial exposure we have to the country in our books is at around EUR 280-EUR 285 million. On top of that, the... If we take the debt, including the financial debt from the financing Petroquiriquire project, plus the commercial bills, we could have a total debt close to $4 billion. But let me say that this figure is in a main part provision in our books.
Going to the benefit of the premium, I mean, the Venezuelan, first of all, as I mentioned before, we have a total premium in our refining system that could be at around $2 a bbl over the whole year, this year. I mentioned that more or less how 40% could come from the optimization of bios and so on. Up 30% could come from operational improvements, or in some cases, losses. Another 30% could come from the optimization of the slate of crude oil. Let me say that the Venezuelan crude oil is one of the heavy oils that is contributing to this optimization that could be behind the 30% of this margin improvement.
But it's not only Venezuela, I mean, it's also any kind of optimization that we try today, day after day, is also behind this premium. Going to the renewable business, and we see today, let me say, if you have a clear focus in good areas to produce energy, or you have either restrictions or markets, first of all, you are going to guarantee the access to PPA markets. And what we are seeing now, because it's true that, I mean, the IRA is there, and probably in five, six years, a lot of people is going to be in the States after building positions in the country. But we have a very clear and advanced pipeline that is going to allow us to build these projects in a short, medium term.
So, in this period, we see a very strong PPA market, and on top of that, we are seeing a clear visibility for the long-term support coming from the IRA. That said, let me say that all in all, we see the possibility to have good returns in the U.S., but on top of that, we are also, of course, to take advantage of any opportunity we could have in Europe. Thank you.
Thank you, Henry. Our next question comes from Matt Smith at Bank of America. Matt?
Hey there. Thanks for all the color so far. I think that just leaves me with one, a fairly straightforward question, I think, and that's on the latest CFFO-
Sorry, Matt, we don't hear you very loudly. Can you speak loudly, please?
Sure. Hopefully that's better. So I could say, just, just one question from me to clarify now on the EUR 7 billion, or more than EUR 7 billion, sorry, CFFO guidance for the full year. I just wanted to ask if you were able to call out the working capital assumptions embedded there. I think previously, you pointed to over EUR 600 million inflows for the second half. Of course, that was under stable, commodity price conditions. So just wonder what the latest is there, please?
Thank you, Matt. I mean, the assumptions behind this figure that could be above EUR 7 billion are $80 a bbl Brent, $2.7 per million BTU Henry Hub, $11 a bbl for the whole year, the average for the refining margin, and we are considering that we are recovering more or less a figure in terms of working capital that could be a half more or less of what we increased in the third quarter. So all in all, we will have a working capital close to the figure we had at the end of December 2022, and with under these assumptions, we will be above EUR 7 billion of cash flow from operations in terms of the whole year, 2023. Thank you, Matt.
Thank you, Matt. That was our last question. At this point, I'll bring our third quarter conference call to an end. Thank you very much for your attendance.