And gentlemen, thank you for standing by, and welcome to the Brexol 4th Quarter and Full Year 2018 Preliminary Results Conference Call. Today's conference will be conducted by Mr. Josu Yon Emaz, CEO. However, a brief interaction will be given by Ramon Alvarez Pedrosa, Head of Investor Relations. I would now like to hand the call over to Mr.
Alvarez Pedrosa. Please go ahead, sir.
Thank you very much, operator. Good afternoon. This is Ramon Alvarez Pedrosa, Head of Investor Relations. Welcome to Repsol 4th quarter and full year 2018 results conference call. As already mentioned, today's call will be hosted by Josef Jon Imaf, our Chief Executive Officer, with other members of the executive team joining us here in Madrid.
Before we start, I advise 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, spec or similar phrases. Please note that actual results may differ materially depending on a number of factors as indicated in the disclaimer. I will now hand over the conference call to Joshua John.
Thank you, Ramon, and thank you to everyone online for attending this conference call. Today, I'd like to cover the following main topics. First, I'll start by reviewing Repsol's strategic progress in 2018. Next, I'll go through the financial results and main operational highlights. And finally, an update on the outlook for our objectives through 20 20.
Let me begin by reviewing the progress towards our strategic objectives and the key messages of our 2018 results. Last June, we presented an updated strategy for the period 2018 to 2020, focused on delivering value growth in any oil price scenario, mainly founded on a strong company position with solid financials and a strong operating performance. 2018 was a strong year of strategic delivery for Repsol. We met all the key commitments laid out for the 1st year of our roadmap, putting us firmly on track to deliver on our objectives through 2020. Our distinctive value proposition leverages financial flexibility and the strength of Repsol's integrated model to provide value in a volatile environment.
Our results in 2018 validate our conviction to continue managing the company regardless of the oil price scenario, delivering on our short term targets while working on our long term opportunities. The first pillar of our strategy is to increase the returns to our shareholders. In 2018, we have increased the dividend pay by 14.7% and we have implemented a a successful buyback program to compensate any dilution associated with the scrip option. The second pillar is to continue growing our portfolio in a profitable way, delivering higher volumes and better operational performance in upstream, while activating downstream as an asset light growth engine. In 2018, upstream volumes increased by 3% to 700 and 15,000 barrels of oil equivalent per day, our record production level since 2011 despite ongoing uncertainties in Libya and Venezuela.
This is aligned with our objective to grow production to 750,000 barrels per day in 2020, with 2.6% growth per annum. Moreover, tight capital discipline and stronger contribution from efficiency measures allow us to achieve an upstream cash breakeven below $50 per bar. Compared to 2017, Upstream division generated around €1,100,000,000 of additional operating cash flow from higher realization prices, higher production and from efficiency and digitalization that were in line with the plan, partially offset by higher working capital. In downstream, we continue building on our strengths. The company worked to optimize its refining operations ahead of the new IMO regulation to maximize the value to be captured from 2020 on.
We also made important progress international expansion of our marketing in Mexico and Peru and in our advanced mobility solutions in Spain. The 3rd pillar of our strategy is to become a player in the energy transition, developing an operated low carbon business with full synergies with our portfolio. In 2018, we took a significant step in this direction with acquisition of the low emissions assets and retail business of Fiesco, becoming Spain's 5th largest gas and power player with 2.9 gigawatts of low carbon generation capacity. Finally, consistent with our commitment to maintaining a sound financial position, we achieved a net debt reduction of 40% 45%, sorry, and an improved credit outlook as recognized by the rating agencies. Moody's upgraded Repsol's long term rating by 1 notch and Standard and Poor's and Fitch improve their credit outlook.
To summarize, we faced 2019 confidence in delivering on our objectives to 2020 and with a clear path to grow our cash flow generation in an increasingly complex and volatile energy sector. I mean, but let me underline the energy sector is always complex and volatile. I mean before going into the financial results, let me take you briefly through the macroeconomic environment in 2018. Starting with oil price, we saw significant volatility throughout the year. As steady recovery took Brent to almost $85 per barrel in October, but geopolitical uncertainties and concerns on the global economic outlook resulted in the oil price closing 2018 at around $50 below its price at the beginning of the year.
In the gas market, Henry Hub finished roughly flat compared to 2017 despite fluctuations linked to weather conditions and inventories. Repsol's gas realization price increased 17% year on year, averaging around $0.30 above 100 and 18. And I think that this figure shows our limited exposure to North American gas prices, reflecting that most of our production is linked to Brent and other liquids and gas references. Let us move now to the financial and operational results that underline the strong strategic delivery achieved in 2018. We met, as you could see in the figure, all the commitments set out for the 1st year of our plan.
Adjusted net income stood at EUR 2,400,000,000, 10% higher year on year. EBITDA at CCS was €7,600,000,000 a 16% increase compared with 2017. €4,800,000,000 were generated in the downstream sorry, in the upstream and €2,900,000,000 in the downstream, while the corporation contributed with €100,000,000 negative. Capital expenditure amounted to €3,900,000,000 with €2,000,000,000 invested in the upstream, €1,800,000,000 in the downstream and €0,100,000,000 in the corporate center. Inorganic CapEx amounted to €900,000,000 which €800,000,000 corresponded to the new low carbon business.
Net debt stood at 3.4 €1,000,000,000 by the end of the year, a €2,800,000,000 reduction compared with 2017. In 2018, the cash flow generated by our operations more than covered, organic CapEx, dividend payments, share buybacks and financing costs. At the operating level, we achieved our 715 1,000 barrels per day production target for the year, around 21,000 barrels higher than 2017. Full year production was positively impacted by new projects coming on the stream, the ramp up of our projects started in 2017, the acquisition of Bison in Norway, higher volumes in Marcellus and a higher production in Libya. This was partially offset by asset disposals and the lower sales in Venezuela.
Munga Pacma in Malaysia reached 1st gas in April with an expected plateau of EUR 160,000,000 gross standard cubic feet of cash per day. This project will enable the PM3 assets to meet its cash delivery commitments for the coming years. In North America, Marcellus contributed with higher volumes following the connection of new wells in 2018. 4th quarter production averaged 722,000 barrels of oil equivalent per day, a 4.5 percent increase from the 3rd quarter. Daily production in Libya averaged 31,000 barrels in the 4th quarter and 36,000 barrels for the full year 2018.
As you know, production has been interrupted since December 9 following the shutdown of El Salada field due to a deterioration of the security situation over the last weeks. In Venezuela, production averaged 53,000 barrels per day in the Q4 62,000 barrels per day in full year 2018. The lower output compared to 2017 was mainly due to lower gas sales in the domestic market. Our exposure to Venezuela stood at €456,000,000 as of the end of 2018, representing less than 1 point 5% of our capital employed. This accounts for a €1,000,000,000 reduction from our exposure at the end of 2017.
And during the year, we were able to partially recover the outstanding receivables helping us achieve our cash neutrality target in the country. Moving to the development activity in our projects in 2018. In the Gulf of Mexico, progress continuing backscaling towards achieving first oil in the second half of twenty nineteen. The 2 wells of the first stage were successfully drilled and the subsea installation campaign is on track. In Norway, the redevelopment of IME received the approval from local authorities and today first oil remains planned for the first half of twenty twenty.
In Colombia, the development of the first phase of Akacias in CPO-nine block was approved in January of 2018 with the objective of doubling production in 2019. In Trinidad and Tobago, the ramp up of Juniper progress as planned and as planned, sorry, and the development of Angelin continued towards its first cash that has been achieved this week. Moreover, during the last quarter of 2018, 2 additional projects in Trinidad and Tobago were approved, Cascia and Matapal, aimed at developing the gas reserves in the Savannah discovery. Exploration activity included the completion of 21 exploratory and 1 appraisal well in 2018. 5 wells were declared positive, one remains under evaluation and the rest were deemed negative.
An additional 4 wells remain ongoing as of the end of December. Of this, last week, we received, let me say, great news from the Repsol operated Calibera Udalam well in the Sakakemang block in Indonesia. Our preliminary estimation is of at least 2 TCFs, so 2,000,000,000 cubic feet of recoverable resources, the largest discovery in Indonesia in 18 years. The consumption will continue its preparatory work, of course, with an additional appraisal well planned in the coming months in 2019 probably. Indonesia, the focus of Repsol's exploration investments in Southeast Asia.
In addition, the acquisition of in 2018 of new Accurates in Mexico, Brazil and Alaska reinforces our strategy of building a strong, proprietary portfolio to 2020 and beyond, centered around our core strengths. Our portfolio management has been active and also included the sale of our stake in Mid Continent and the exit of our exploration positions in Angola, Romania and Gabon. Moreover, the acquisition of Vison in Norway has been followed by the purchase in 2019 of a stake in the Mikkel field, also in the same country in Norway. The reserve replacement ratio in 2018 was 94%. 3 year average reserve replacement ratio stood at 96%, that is 101% in organic terms.
Turning now to the operational highlights of the downstream business, beginning with refining. The margin indicator averaged $6.70 in 2018, roughly in line with 2017. The strength of middle distillate spreads accentuated since September and the widening of heavy to light crude differentials were offset by higher energy costs and weaker gasoline prices. During the Q4, the margin indicator decreased by $0.50 compared to the Q3 of the year, averaging $6.20 This decrease is explained by the weakening of gasolines and the narrowing of the medium crude crack spreads. And this effect was partially offset by stronger middle districts and the drop in the crude oil price.
Let me highlight or underline that despite the worst environment, our unit CCS margin generated a $1.2 premium to the indicator in this quarter. In chemicals, we met our latest EBIT guidance for 2018. Full year results were negatively impacted by worse international margins, the higher price of naphtha and lower utilization due to unexpected capacity disruption in Tarragona and Sines, mainly in the second and the third quarter already fully solved during the year. In the commercial businesses, the operating results were in line year on year, mainly due to a higher contribution from the regulated part of LPG, offset by the building up of our position in Mexico. Our internationalization strategy in Mexico included progress in our service station network and the agreement achieved this year to manufacture and market lubricants through Vardal.
In new mobility trends, significant progress was made with the launch of Waylet and Wibol services in Spain. In low carbon businesses, we completed the acquisition of the unregulated low emission electricity generation assets of Biesgo as well of its gas and electricity retail base for €732,000,000 Furthermore, in 2018, we acquired the Greenfield Balde Solar project with permits to develop a 2 64 Megawatts solar project in Spain, and we started developing Europe's largest floating wind park in Portugal. Focusing now on the financial results, I'll summarize the main figures for the Q4 and full year of 2018 and how they compare with the same periods of 2017. 4th quarter 2018 CCS adjusted net income was €632,000,000 a 7% increase from the Q4 of 2017. Full year 2018 CCS adjusted net income was €2,400,000,000 a 10% year on year increase.
Going to the Upstream. Upstream adjusted net income in the Q4 was €310,000,000, 116 5,000,000 higher than in the same period of 2017. And full year adjusted net income amounted to 1.3 1,000,000,000, a 100% increase compared to 2017, mostly due to higher realization prices, higher volumes and lower technical amortization, partially offset by the depreciation of the dollar against the euro and the hiker taxes. Downstream adjusted net income in the 4th quarter was EUR 485,000,000, EUR 39,000,000 higher than in the same period of 2017. Full year adjusted net income amounted to EUR 1,600,000,000, 16% below the previous year, mainly due to the results in chemicals and the lower contribution from the refining businesses in Spain and Peru.
These effects were partially offset by better results in the commercial businesses and a strong contribution from the trading and gas businesses. In corporate and others, the adjusted net income of the 4th quarter was €163,000,000 negative, a €160,000,000 decrease quarter on quarter due to the higher impact from exchange rate positions in the same period of 2017. Full year adjusted net income accounted for a net expense of €56,000,000 compared to €378,000,000 in 2017. For further detail on Repsol's results, I encourage you to refer to the financial statements and accompanying documents that were released today this morning. At this point, I'd like to review our reaffirm outlook through 2020.
Our strategic update defines a clear path to grow our cash generation based on 6 levels. Under a flat $50 per barrel scenario, we will increase the cash flow from our operations by more than 40% from €4,600,000,000 in 2017 to €6,500,000,000 in 2020. This accounts for a 12% cumulative annual growth rate. In 2018, upstream new production contributed with 0 point €2,000,000,000 homogenized to the price deck of our strategic planning assumptions. This is roughly half way to the €400,000,000 we expect to obtain from production growth and portfolio management by 2020.
Upstream efficiency and digital measures deliver around 0 point €25,000,000,000 of sustainable operating cash flow. Our ambition is to generate €600,000,000 in sustainable savings through efficiencies and digital initiatives by 2020. In the Downstream Unit, international margins didn't have any effect in 2018. The €300,000,000 of incremental cash flow in this lever correspond entirely to the impact of IMO expected from 2020 onward in our projections. Profitability improvement measures in the downstream businesses basically linked to efficiency and digital initiatives contributed €100,000,000 of additional operating cash flow in 2018, roughly 50% of our objective through 2020.
The recently launched downstream expansion plans and low carbon business will impact the 2019 2020 results. Finally, corporate made good progress towards its target, reducing its cost perimeter by 6% in 2018. In total, progress in 2018 was €600,000,000 of the €1,900,000,000 objective to 2020. The company has a well defined CapEx plan to allocate €4,000,000,000 to expand the Downstream business and build a new low carbon position. The €11,000,000,000 to be invested in our core upstream and downstream portfolios will be funded by the cash flow generated from our operations.
The remaining €4,000,000,000 will be fully funded by the proceeds obtained from the sale of Gas Naturale. Our organic CapEx budget for 2019 is €3,800,000,000 The total CapEx invested in our core portfolio in 2018 2019 will amount to €6,800,000,000 out of the €11,000,000,000 to be invested through 2020. Let me now go briefly through our roadmap to increase shareholder remuneration to €1 per share in 2020. Last year, our Board of Directors approved a dividend increase to $0.90 and I'll propose to the Board and increased to $0.95 in 2019, in line with our plan. The acceptance of the script option remained high in 2018 with more than 75% of our shareholders opting to receive the dividend in shares and aligned with our commitment to avoid any dilution over the whole 2018 to 2020 period, we implemented a buyback program to repurchase and amortize the 68,800,000 shares issued with the scrip with a cash impact of €1,100,000,000 in 2018.
Our CapEx, dividends and buybacks will be fully financed at $50 per barrel to 2020. The overall group's free cash flow breakeven excluding inorganic CapEx and divestments, was $54 in 20.18, in line with our strategic objective. Ongoing efficiencies from digitalization initiatives, new production and additional portfolio management actions will contribute with further saving towards our objective of being cash neutral at $50 on average in 2018 to 2020. At this point, I'd like I want to review the outlook of our businesses to 2020 and beyond. In Upstream, we are building a differentiated position that combines the strength of our nimble operator with a significant scale.
The free cash flow breakeven in 2018 stood below our reaffirming long term target of reaching cash neutrality of $50 in this business unit. We maintain our objective to reach a production level of 750 coming from short cycle projects and portfolio management actions, coming from short cycle projects and portfolio management actions in which we will trade volume for value. Short cycle projects contributed 28,000 barrels per day in 2018. Compared to 2017, our pipeline of short cycle projects has the potential to deliver 95,000 barrels per day of incremental production to 2020. Oil by us new volumes will combine with incremental low cost production coming from scaled gas breaks.
Around 37,000 of new barrels coming on stream between 2019 2020 will come from North America, 21,000 from Europe and Africa, and 9,000 from Latin America and Asia. Looking at our value growth beyond 2020, our coal ACDC projects continue progressing according to plan. In Alaska, our 2 well appraisal campaign started on December 31 and is currently underway with encouraging early results. 1st oil is expected from 2023 to 2024 more or less. In the CPL-nine block in Colombia, the FID for the full development of Akacias is currently expected for the second half of 2019 with potential start of production between 2021 2022.
In Duvernay in Canada, a total of 10 wells were drilled in 2018 and the current activity focuses on the risk in the Ferrier East area with a potential final investment decision within the next 12 months. Campus 33 in Brazil is already fully appraised and the conceptualization of the project continues towards potential initial production between 20242026. Finally, also in Brazil, the appraisal campaign of Sagittario will start shortly with a well plan to start during the Q2 of 2019. The modular ACDCs of Alaska Campus 63, Duvernay, CPO 9 plus Sagittario projects give us long term flexibility around CapEx levels and production volumes. This is all in line with maintaining low overall breakevens and growing margins per barrel.
Moving now into the downstream unit. Our view on the impact of the new IMO regulation entering into force on January 1, 2020 remains broadly unchanged. Our strategic plan projections continue factoring in a $1.4 increase in our refining margin indicator no earlier than 2020 due to IMO. In our view, this continues to be a prudent approach considering the current forward curve. Our refining scheme is fully invested for IMO with no additional integration or investment required.
Repsol is very well prepared to capture a higher margin and imposition of competitive advantage compared with other European refiners. Our main goal now is in this period is maximizing conversion availability through among others minimizing the turnaround impact since 2020, mainly in 2020, 2021 and 22 years. The turnaround days in our refineries in 2019 will be more than double the average of the last 4 years with no major expected impact in our distillation and conversion capacity expand our downstream businesses and we have made good progress in 2018, the last weeks of 2018 mainly to activate this division as an asset light growth engine. Progress included new international growth opportunities, leveraging our competitive In marketing, Repsol has more than 180 service stations operating in Mexico out of the 2 40 contracts already signed. Our objective is reaching an 8% to 10 percent market share in 5 years.
In Peru, we added Puma Energy Services stations to our network, increasing the sales volumes in that country by 10%. In lubricants, Repsol team up with Vardal to produce and distribute lubricants in Mexico, bolstering our internationalization strategy in this business. We are already producing lubes under the Repsol brand there. The identification of new growth levers included progress in our advanced mobility initiatives. First, Wallet.
Wallet is our free mobile payment app and was launched in 2017, reached 1,000,000 users in 2018 and process around 7,000,000 registered payments in our service stations. Agreements have been signed with 2,400 stores and 3,300 service stations. Weibo, the new car sharing service that Repsol and Kia launched in Madrid ended 2018 with more than 500 hybrid cars active. Looking forward, growing our chemicals business will be a focus of our expansion to 2020. Our performance in 2018, as you know, was affected by operational issues, but the overall outlook in the business continues to be promising.
Our growth in chemicals will be focused on being a high performance integrated and regional leader and on building a key position in high value products like rubbers, EVA polymers and propylene oxide and polyols. Finally, in low carbon business, we are quickly delivering on our growth targets to advance in the energy transition. Our ambition is to be relevant players in the future, fostering sustainability and energy efficiency. The recently acquired assets are the platform on which we are building our new position in this business. And let me say that we are in some ways swapping our former exposure to a medium carbon business through cash natural FENOSA into an operated business with synergies with the rest of our portfolio.
Our plan expects to invest €2,500,000,000 from 2018 to 2020, and we have set our long term goals to be achieved by 20 25. The 3 main areas in which we want to operate are 1st, low carbon generation, where we will leverage our current capabilities to manage large scale projects. Secondly, retail gas and power, where we have a competitive advantage of strong brand and a 10,000,000 client base. And finally, wholesale gas leveraging our industrial self consumption as the largest gas consumer in Spain. Our objective is to achieve 4.5 year awards of unregulated low carbon generation by 2025, of which more than 70% has already been achieved with the Piesco and Valdez Solar transactions.
In retail, our ambition is to have a 5% market share or 2,500,000 clients of the Spanish market by 2025. As of today, we have added 60,000 new users to the client portfolio, I mean, over the last 12 weeks since the acquisition of the asset of Biesgo to reach a total of 810,000 clients. This represents an 8% increase as I underlined in 12 weeks. Let me now briefly elaborate on our digitalization and efficiency programs that are already showing as the important levers for cash flow growth that we envision in our strategic update. In 2018, both programs delivered combined EUR 350,000,000 of incremental sustainable Upstream business accounted for €250,000,000 of incremental sustainable cash flow from operations, thanks to the improvement in its maintenance logistic and cost together with initiatives in gas commercialization.
Moreover, there were additional upstream CapEx savings of around €200,000,000 to €250,000,000 compared to our budget for 2018. In the Downstream business, the digitalization of several processes as well as initiatives aimed to improve the integrated margin resulted in €100,000,000 of sustainable operating cash flow generation. At the corporate level, we are working in more efficient ways that are enabling us to do more with less. That is the target. And in 2018, we achieved a 6% reduction of our corporate costs.
Along the economic impact, digitalization has a key role in the cultural transformation of the company. Today, I mean, that is let me underline one of the main targets for coming years. Today, 130 initiatives framing our digitalization program are ongoing across the company, involving every area, every business and every corporate function of the company. Among others, digitalization is enabling new business models, operational excellence and robot process automation that will translate in €300,000,000 of free cash flow generation per tax in 2020. So looking ahead, we are confident we will meet our ambitious target of €900,000,000 of operating cash flow coming from these programs by 2022.
And let me underline that we are on track of achieve this figure. Now moving on to what we expect in 2019. As discussed before, the organic CapEx budget for the year is €3,800,000,000 Around €2,400,000,000 corresponds to the Downstream division sorry, the Upstream division. Downstream is expected to invest €1,300,000,000 and the remaining €100,000,000 will be invested in the corporation. Upstream production is budgeted to reach 720,000 barrels per day, subject to fluctuations in volumes from Libya and Venezuela.
Main drivers will be the increase of development activity in the Marcellus and projects coming on the stream during the year such as intermediates and tobacco, Pajaquin and Akacias. In downstream, we are budgeting for our refining margin indicator of $7.60 per barrel. As commented before, we are not anticipating a decrease in our refinery utilization despite the maintenance work brought forward from 2020. Remember that over the last 2 years, we have coke with the maintenance of 3 of the 4 cokers of the company. So that is the reason behind that we are not going to decrease the utilization of our refineries despite the maintenance work we are going to develop this year.
Planned maintenance of the FCC unit in our Bilbao refinery started in January and is expected to end in coming days in March. The acute unit in Bilbao will stop by mid June to complete all the major maintenance expected in this refinery in 2019. A turnaround work in the coker is the only coker that is going to be maintained this year. The Coker of La Coruna will start in April and work on the hydrocracker and hydro skimming units of Cartagena will commence will start in September. The planned maintenance schedule will finish with work in Puerto Liano starting at the beginning of November.
On the chemicals business, there is planned maintenance in Tarragona during the Q4. Under these assumptions, we expect to deliver around €8,000,000,000 of EBITDA at CCS for the group, of which around 3,400,000,000 of course will come from the Downstream division and 4,700,000,000 from the upstream. Finally, as a part of our commitment to reduce 3%, our carbon intensity, I mean, that is the CO2 emission level per every energy unit in euros we produce, allow me to say that we are budgeting at 2.25% reduction by 2019. So we are on track of being a more sustainable company in the future, aligning ourselves with the parties accord. Finally, I want to conclude reaffirming our path to meet our targets to 2020.
With regards to improving the remuneration to our shareholders, in 2019, we will increase our dividends to $0.95 per share and we will implement a buyback program to purchase and redeem the shares issued with the script subject of course that will be my proposal, but all that will be subject to the authorization from our annual shareholders meeting. We will continue growing the profitability of our businesses, improving the operational performance of our upstream assets, putting on stream our pipeline of growth projects and managing our portfolio to meet our production target to 2020. Ahead of the implementation of the IMO in January 2020, we will accelerate the planned maintenance in our refineries to ensure value capture from the new regulation. We will take new steps into the internationalization and growth of the rest of our downstream businesses in which chemicals, Bijir, will play an important part. We will continue transforming our company and as I said before, preparing for the energy transition towards a less carbon intensive world.
We will work on our path to reduce our total carbon emissions on the CO2 intensity of the energy we produce and transform. The position we are building in low carbon is our opportunity to thrive in this transition. Sustainability is in the DNA of Repsol as is recognized by investors with roughly 30% of our institutional shareholder base managed under SRI or ESG criteria. We will continue progressing in our digital and efficiency ambitions with a clear commitment to deliver on our path for cash flow growth through 2020. Thank you.
Thank you very much, Josie Young. In case you run into technical problems during the wake ups of conference call, please address any problems to our email address investorrelationsrepsol.com, and we will contact you immediately to try to solve it. Before moving on to the Q and A session, I would like the operator to remind us of the process to ask a question. Please, operator, go ahead.
Thank you very much.
Thank you very much, operator. Let's move on to the
Q and A session.
Our first question comes from Flora Trindade at Caixabank.
Yes, hello. Good morning and thank you very much for taking my questions. I will start with some details on 2018 numbers. I think you had mentioned before that during 2018, you could advance taxes related with the sale of the stake in Inatoshi that would then be recovered in 2020. Can you just explain this was not the case effectively and can you explain us whether this has changed?
And also a detail on the consolidation of Viesco. In the P and L, there was no contribution from Viesco in 2018. And then secondly, on the guidance for 2019, can you just give us an idea of what is behind the 720,000 barrels per day of production for Libya and for Venezuela? And then finally, there was some press news around the potential interest of Repsol in a renewable energy company that could mean around €1,000,000,000 of the investment. I think you had mentioned before that following Viesgo, you would be focused on acquisitions of smaller size.
Can you just confirm if this is still the case? Thank you.
Thank you, Froba. I mean going to the first question, I mean we anticipated the payment, the prepayment better set of because the acquisition in tax terms of or the sorry, the disposal of Gas Natural Fenusa and we anticipated or we prepared €500,000,000 roughly over this year, in this quarter. And I mean, this figure is in our information is under the paragraph or the line of divestment. I mean, it's a reduction of the divestment figure. So this figure of exactly I think that is €463,000,000 I mean, is going to be repaid to Repsol the Q1 more or less January of 2020.
So we are anticipating a tax payment because the disposal and the capital gain coming from Gas Naturale that we are going to recover this figure, this amount of money the 1st month of 2020. I mean, going to your question about the P and L of the asset, I mean, it's no material and there is no any clue about that because we integrated in November these assets. I mean, we'll have in 2019, I mean, the close and of course, P and L and so on of these new businesses. But I mean, we integrated these assets 12 weeks ago, and there is nothing material in 2018 about that. I mean, going to the production, roughly Venezuela, we are taking into account 50,000 barrels per day or in all combining the gas and the oil production is a lower figure that we have in 2018 and it could be 25,000 or 26,000 barrels per day, a lower figure that we had 2 years ago in Venezuela.
In Libya, we are taking 35,000 barrels Libya, we are taking 35,000 barrels per day. I know that today is quite challenging figure because you know that we have been we haven't been able to produce since the shutdown of the field, 9th December due to the blockage of El Sadara field. But I mean, last Monday, we had good news coming from there. The NOC and the triple East government leader, El Sadra, they achieved an agreement to lift the force majeure current situation in El Sarra. So we expect to have some news probably in coming days from the NOC about the potential reopening of the production in the field.
And today, in our current guidance, I mean, this figure of about Libya is still there. Going to the investment in low carbon businesses and so on, I mean, I like to underline again that the main growth and the growth in this business is going to be mainly organic. I mean, we are not going to buy assets in operation. We are we could as we did or we have analyzed in the past to buy, let me say, developer teams, we could buy pipeline, we could buy capabilities. But I mean, we are not going to overpay buying companies with assets in operation.
Our financial approach to this business is going to be fully present. We are an industrial company. We want to buy and to sorry, we want to build this business fully based in organic capabilities, I mean, including or cross pollination in some way, new capabilities coming from developers and so on. But the industrial capabilities and the construction software skills is going to be the key driver for Repsol to build this new business. I mean, returns is going to be a must.
We are not going to invest and we are not going to grow without the returns that we could expect from a company like Repsol. Always evolve the capital cost of Repsol. And I'm going to be very clear about that. That is our target, That is our aim, and we are going to look for these objectives. But if we are not able to achieve these targets, we are not going to invest destroying value for our shareholders.
Thank you, Flora.
Thank you, Flora. Our next question comes from Thomas Adolff at Credit Suisse.
Good afternoon. Two questions from me. Firstly, also on the low carbon business. You've mentioned in the release, also
in the
presentations that the acquisition basically means you've already reached more than 70% of the generation capacity targeted by 2025. And then you also talked about making good progress on adding what does that mean for What does that mean for the budget as a whole? Surely, you'll find it hard to spend 1.6 organically in 2019 2020? Secondly, on the production guidance in 2020 of 750,000 barrels per day, I wondered what you also assumed for Venezuela and Libya, whether it's the same as in 2019? And presumably, since versus the initial guidance, Venezuela has been lowered.
So I wondered which areas have been revised upwards? Thank
you. Thank you, Thomas. I mean, you are right. As you said, we have the 70 percent of installed capacity we committed by 2022. We are on track.
And you also said that it's not going to be easy to invest the rest of the money in this kind of project. I mean, let me say, I agree with your point. It's not going to be an easy task, but we are going to do 1st organically. Secondly, as I said, we could inorganically acquire small developers, I mean, to acquire the capabilities to push in favor of this kind of projects. And of course, we could buy pipeline in an early stage of development to develop our own projects as we did in the case of Baldesolar.
So taking into account all that, taking into account that we also have the development of Valdesolar on track where you know that we are going to invest at around €200,000,000 So we could in some way repeat this kind of operation of acquiring pipeline, investing from ourselves and so on. And I mean, your point is right, Thomas. I mean, it's going to be a tough and difficult task, but let me underline again that I'm going to prioritize return over growth. I mean, expanding CapEx in this company is not a target, is a guideline. But the most important thing is the internal returns of these projects.
If we are able to be evolve our capital cost, of course, and creating value for our shareholders. And with projects that compete with some others of the company, we will go on. Otherwise, I mean, I'm not going to invest in this kind of projects, be sure about that. I mean, expanding capital is not a target for Repsol. Venezuela and Libya, production lowered during the year.
Yes, but mainly Venezuela. I mean Libya, as I said, today, I mean, we could reduce in 3000, 4000 barrels per day the average expected for the year, but we think that we will be on track. Venezuela is producing the production, as you said, and we are increasing, first of all, with projects that started in 2017 over the year in 2018, sorry, over the year and now they are entering in the full year. I'm thinking for instance about the Regan, I'm thinking about Kinabalu, the increase that we experienced in 2018 in the Marcellus. And this year in 2019 on top of that, we are going to see the 1st toll of the Bakken.
We are going to I mean, as I mentioned before, this week we are starting with the first gas in Angelin, Trinidad and Tobago that is going to increase. Also the production in Trinidad and Tobago, we have the start of the southern compression project in corridor in Indonesia in the Q2, I think I remember the date of the 2nd quarter of this year. On top of that, we are this year, we expect to have a higher production in Peru, because in 2018, we have a lot of problems with the TGP pipeline and so on and that is over. Today, we are going to increase with I can't remember the figure 14 or 15 new wells. The production in the CPO-nine in Akacias, in Colombia, on top of that in 2020, we are going to have the effect of a second rig of Marcellus.
We are going to have the full effect of the back skin that is going to start with the first toll, the second half of the year. So that means that in 2020, you are going to see the full effect. In the first half of twenty twenty, we are going to see also the effect of the first oil of IME. On top of that, this year, we are also starting with Mikkel in Norway that was acquired some weeks ago. And on top of that, we have to take into account in slightly in 2019 and mainly in 2020, the growth of Duvernay.
Be sure that I'm forgetting some projects because that was the projects I had in mind, Thomas. But this new projects and this additional production is going to offset and to increase the production of Repsol, giving us today some capability about the target of 750,000 barrels per day in 2020. Thank you.
Thank you. Thank you, Thomas. Our next question comes from Joshua Stone at Barclays.
Hi, good afternoon. I was hoping to focus on refining margins. It looks like you achieved a very good level of additional refining margin in the Q4. I was hoping you could talk about that and also how refining margins trended for Repsol in the Q1 and what you're thinking about additional refining margin over that period. And then related to that, you have the guidance of 7.4%.
I presume that includes some IMO upside. If maybe you could try and desegregate first half versus second half refining margins within that number? Thank you.
Thank you, Joshua. You know that I'm always happy talking about the refining business because my past. So I know that for I mean, for some of you this morning was quite amazing and surprising seeing that the spread of the gain above the IMC margin was so high this quarter, dollars 1,200,000,000 per barrel. I mean taking into account that the Q3 of this year, the Q3 of 2018 was also I mean, a good month with no so much and no too much turnarounds and so on, because all that was concentrated in the first half of the year. And there, I remember that we obtained a gain of 0.4.
Dollars So what is the difference? What is behind this $400,000,000 in the 3rd quarter and $1.2 per barrel in the Q4. I mean, there is first of all, in operational terms was a great quarter. That is the first reason, but this could explain in some way, let me say $0.2 per barrel more than the $0.4 figure we had in the Q3. What is behind this $0.6 I mean, if you analyze the Q4, we see that after the month of September, we experienced a huge drop in the gasoline spreads.
So what did we do after this drop? React, how? 1st of all, trying to adapt the basket of crude supply of our units. I mean, being, let me say, more efficient, adding a feed stock with a lower yield in gasoline. In operational terms, minimizing the gasoline and maximizing to the limit we could in operational terms the middle distillate production of our refineries because over this quarter, the middle distillate spread was quite positive.
So all in all, this flexibility, additional flexibility because you have to understand that the IMC, the index of the margin is calculated for the whole year with fixed yield, without fixed supply, I mean, with some kind, let me say, of fixed parameters or factors, but I mean operation is very flexible. When we are saying that we are optimizing programming that we are we have entering a new project like cyclos and so on that we are thanks to the digital, having a more flexible programming and planning in Repsol that we are reacting day after day that we are forgetting the old times where we program for the whole month that we are fully flexible and so on. We are talking about that. So thanks to this flexibility, thanks to having the reaction capacity to change the feedstock, thanks to the capacity to change day after day in a flexible way. The operation of our refineries, we have increased in 0.6 percent, the additional of the refining.
For this year, our guidance for the whole year is 7.6%. What is behind this refining margin? I mean, first of all, let me say that January February, they have been historically, they are bad months in margin terms. I mean, but even today, we are above 6.5% of MC in our refining system. And let me say that this $1 per barrel of spread, I have checked this morning the development and the performance of our refining business in February, and we are gaining over the whole month $1 per barrel to the figure of the IMC.
I mean, that means that we expect I said 7.6, sorry, 7.4, the guidance. And here, we are including, of course, to the current situation, first of all, the start of the maintenance in refineries. So that means that there is room to have better spreads. Secondly, driving season, I mean, I'm not saying that gasoline is going to have good or scenario in coming months for Gasoline. And on top of that, I mean, people is going to start in the second half of the year to adapt to the new reality of the IMO.
That means that we have a room for an improvement of margins in the second half of the year. I mean, all in all, today our best guidance and I correct again the figure, I'm going to the first figure I said in my speech is $7.6 per barrel of refining index margin for the whole year. Thank you, Joshua.
Thank you. Thank you,
Joshua. Next question comes from Alessandro Pozzi of Mediobanca.
Thank you for taking my two questions. The first one is on CapEx. I believe you're spending 1,300,000 in the Downstream. I was wondering if you can give us maybe a bit of a breakdown between maintenance and growth opportunity CapEx within that number. And also going back to the crack spreads, the and IMO, can you tell us when you're planning to have like a fuel oil fully compliant?
I think it's going to be at some point maybe Q3 or Q4 later on this year? And also final question on the working capital. I believe you have a working capital release in Q4. Just wondering how should we think about working capital as we go into 2019? Thank you.
Yes. Thank you, Alessandro. I mean, our CapEx guidance for the year, as I said, is €3,800,000,000 in organic terms, €1,340,000,000 the downstream. I mean, roughly speaking, I could say that €400,000,000 of this CapEx will be for growth. When I'm talking about growth, I'm talking about Mexico, I'm talking about Mexico service station, I mean, I'm talking about some CapEx for rolled cardboard.
I'm talking about some CapEx for lubricants expansion and so on. And 8, 900 more or less this year will be a running business. I mean, running business means what we need for the running the chemical service station and the refining business plus the additional maintenance program we have in the turnaround of our refineries this year. And not only refineries, also the Tarragona's tracker, the last quarter of the year. And finally, also here we have included, I mean, at Panopia, a lot of small investments that we apply in our Refining and Chemical business to improve efficiencies, digital and so on.
So I mean that will be more or less the best opening or summarize of our CapEx for our downstream for this year. I mean related to MIO, it seems to me that when you are talking about the full compliance fuel oil this year, you are talking about our own system as Repsol. I mean, let me say that we don't need any additional investment today to fulfill in our European refining system the IMO regulation, because Coruna is fully prepared. And the turnaround we are going to have in Coruna's coker this year is also to have the refinery prepared to transport the bottom of the barrel from Tarragona to Colonia to reduce to 0, if we like, the fuel oil production there. And from in Petronor in Bilbao, the coker of Bilbao is also prepared to take as feedstock the bottom of the barrel there.
So we are not going to have high sulfur fuel oil at the end of this year. We are prepared to have this deal and we are in some way we have a prudent guidance about the effect of the IMO in our system of $1.5 per barrel. I mean, if you take today's future markets and you apply to the yields of our refining system, I mean, the 50 percent of middle distillates, the 45%, 50% of heavy oil as crude stock, feedstock, sorry, if you take the yield of gasoline and so on, you could see that today the future markets is anticipating a higher figure that we are taking as guidance at around $2.5 per barrel. Going to the working capital release, I mean, taking the case of seeing the oil price flat for the rest of the year, I mean, under this assumption, today my best approach will be to see an increase of €200,000,000,000 of working capital over the whole year, mainly driven by Venezuela. That will be my best guidance for the working
Alastair Syme at Citigroup.
Hi. I'm still a little bit confused in the little discussion about the CapEx guidance. There does seem to be sort of building up this large sort of residual for acquisition spend. And I know you've talked a bit about the low carbon, but can you maybe sort of update us on what you're thinking around chemicals acquisitions? I mean you did allude to sort of where you're at and where you think timing might be.
And I wonder just also with that if I could get you to break out what you think the Chemicals EBITDA might be in 2019? Thank you.
I mean, Alastair, perhaps I'm the root of the reason of your confusion because perhaps my explanation was not so clear. When I'm talking about the CapEx for 2019, I'm talking exclusively of organic CapEx. I mean, any additional inorganic potential acquisition and so on. But I mean, disclaimer, as I said before, we are going to be fully prudent about the inorganic acquisitions. We are not talking about large acquisition.
We are only to buy in case of being needed capabilities and so on. In case of having something inorganic, it will be additional to this figure I said before. In the chemical case, I mean, we analyze, of course, every time the market, we analyze potential growth in our businesses and so on. But today, we don't have any relevant inorganic acquisition in the chemical business on track. That could be different, I mean, in some months, but today, we don't have unfortunately, I say because in case of having, let me say, a great opportunity to create value for our shareholders will be great.
But always in the niche as we define before and in case of having good opportunities. Otherwise, we are going to go on in the organic way. As a guidance of our chemical business for this year, my best approach is at around EUR 370,000,000 of EBIT this year. And we think that international margins are going to be slightly, as I underline, slightly lower than last year in 2018, because new capacity is coming on stream this year in the world and perhaps this capacity is going to be a bit larger than the growth that is happening of course of demand growth in the world, but it's going to be a bit larger. And from the performance point of view, I mean, last year, as you know, we had a penalty non expected in mainly in the Sines cracker.
But Alastair, we have, I mean, an expectation of having a good performance in our plants this year. You know that when you are operating industrial plants, it's hard to say that, but I mean, I don't see any special concern today. Thank you, Alastair. Thank you.
Thank you, Alastair. Our next question comes from Chris Coupland from Bank of America.
Yes, thank you very much for taking my questions. I hope you can hear me okay. Again, you've mentioned some of these subjects before. Two questions, please. Firstly, can you remind us the underlying refining margin indicator in your 2020 guidance?
And to me, it looks like your 2019, 7 dollars per barrel indication is already incredibly close. So I wonder whether you feel tempted at some stage to increase your guidance for 2020 as we get quite close to that time frame. And the second question is again on CapEx. You've highlighted CapEx efficiencies you've already achieved during 2018, yet the overall envelope has stayed the same. And as a number of other questions have already highlighted, you've left yourself quite a bit of room in your CapEx envelope.
So again, just wanting to put you under a little bit of pressure and ask, at what stage are you going to tighten your guidance, both upside in terms of refining margins regarding IMO? And second, CapEx guidance considering the efficiencies you've already achieved? Thank you.
Thank you, Chris. I when I said before that we forecast a premium of $1.5 per barrel coming from the IMO, I have to underline that we are taking as basis the 2017 refining margin, because I mean that was the base before presenting our strategic update. So at that time in 2017, dollars 6.8 per barrel was the refining the IMC, the refining margin of Repsol the index and we are forecasting $8.3 per barrel in 2020. So the premium is there. And when we say that this year, we are expecting EUR 7.6 billion is because we have seen, let me say, up a small part or a light part of this premium coming in the last months of the year.
So related to the refining margin and of course, if you like, Chris, we call elaborate a bit more all that, but that will be the answer to your first question. I mean, when we are talking about the efficiencies in the CapEx, I mean, the CapEx guidance for 2019, the best guidance is 3.8, as I said before. I mean, you are right. You are right in some point, because I mean, when we see the investment figure of 2018, mainly the downstream, because the downstream, you know that is affected by the acquisition of Biesco, of the assets of Biesco, you could see that the investment was $500,000,000 more or less below our guidance at the beginning of the year. Dollars 250,000,000 comes from additional efficiencies we got maintaining the perimeter and the execution of the CapEx project we have in the E and P.
Apart comes from sorry, dollars 350,000,000 I mistook. Dollars 300,000,000 comes from this efficiency. The rest is because the deferral of projects or apart coming from the Project Carbon Boat that you know that is on hold. So you are right because if you take the organic figures in 2018 2019 and you add these two figures, you could see that we are talking about EUR 6,800,000,000 out of EUR 11,000,000,000 Perhaps, I mean, today it's hard to give you a guidance for the whole period of the 2018, 2020, the guidance was €11,000,000,000 for the whole organic investment of the downstream and upstream businesses by 2020. But taking into account these gains and efficiencies and so on, I mean, perhaps today, I will be being perhaps too early to say that more comfortable with that figure at around EUR 10,500,000,000 or something like that.
But I mean, that will be my best guidance for the year and for 2020. I think that I'm not forgetting anything from Chris.
No, that's good.
Thank you very much. Thank you, Chris.
Thank you, Chris. Next question comes from Jason Kenney at Santander.
Hi, good morning. Thanks. When do you think that your annual return on capital employed will hit double digit? Have we got to wait for the expansion CapEx to finish? So we're looking at 2021?
Or on your base $50 a barrel assumption, do you think you can get there within the 2020 time frame? And then on the associates' number, please, in the Q4, just looking at the impact of the Downstream, I'm wondering if you could maybe explain some of the main reason for the difference in the loss there. And then finally, just on tax. Is there a common pattern of higher tax generally in the Q4 every year? Why would that be?
Is this something I'm just reading too much into? Thanks.
Sorry, Jason, we didn't capture your second question. Can you repeat that again, please?
Yes. Looking at the associates loss, it looks like that downstream is the main reason. I'm trying to dig in to find out what was in the associates' number, please.
So yes, going to the return on average capital employed, the target we have for the whole company, it was committed and expressed in the strategic update is a 9%, I mean, evolve the capital cost of the company at $50 per barrel. That is the return for the whole company and we maintain our target and our guidance for the return on average capital employed for 2020. Seeing the expansion of the downstream and low carbon business, I mean, I think that I mean, we don't have to wait. We are on track after the acquisition of Biesco assets. We expect to have higher returns that the cost of capital will result in the assets we acquire from Biesco.
We are on track of having ready to build the Baldessolar project at the end of the year. In Baldessolar, we expect to have returns evoke the cost of capital of the company and in equity terms they are going to be double digit returns and we are today analyzing projects, pipeline and so on. And I think that we could have and we could get these returns always based on organic growth and having the whole value chain of this project. I mean, you know that in this low carbon generation businesses, I mean, if you are the operator, you have the maintenance, you have the developer, you could have and you are selling the power taking the merchant risk, you could have 2, 3 points a higher, a larger return that acquiring or buying assets in operation. So for that reason, our growth is going to be mainly organic and we expect to be able to fulfill our plan.
But as I said before, I'm going to prioritize return over the speed of growth, but we have projects on track to do that, Jason. Associates in the downstream business in the Q4 2018, I mean, it seems to me that that is linked to the good results in Vuelapasa in Peru, the good profit in refining and mainly in Petronor. And you know that we have a minority associated in both projects, a Cutia Bank in Petronor and also minority shareholders in Vreda Pasa. And it seems to me that this figure is related to this associated in these businesses. But I mean, but be sure that they are going to be I mean that is going to be in line what we could expect.
Tax, let me say that the effective tax rate in the Q4, I mean, it's hard to say that something is normal or average. But I think that this 41% is the normal the average of the current basket of mix of downstream and upstream businesses. You could see that in our downstream business, the average is always around the 25% and the downs in the upstream business, of course, depends on the countries and the productions of the countries where we are producing at every time that could be at around 46%, 47%, 48%. So this 41%, 41% of average could be normal. But it's true that if you compare with the figure in the Q4 of 2017, there was an extraordinary tax benefit there that give us a very, very low tax rate this quarter.
I don't have now the figure in mind, but of course, we could check it, Jason. Thank you. [SPEAKER RAMON
ALVAREZ PEDROSA:] Thanks.
Thank you, Jason. Our next question comes from Biraj Borkhataria at RBC.
Hi, thanks for taking my questions. I had a few. So firstly, could you just clarify what the volume contribution you expect from Buckskin over the next couple of years once it's online? Secondly, and linked to the upstream, I think in the past you've talked about wanting clean up the upstream portfolio. Can you give us a bit of insight on where in the upstream you would like more exposure than you currently have?
And then finally, just a clarification, because I think I missed your comments, but what is the Chemicals EBIT guidance for 2019? Thanks.
So, Biraj, I have in mind the figure, but I'm checking the figure now because I have something like 7,000 barrels per day in mind, but checking the figure is exactly 7,100 barrels per day in the back scheme. Taking into account that the production is going to start in the second half of the year, I'm not sure about that, but around October something like that, I mean, you have to take this year a quarter of this figure, but you could take the whole figure for the year 2020. I mean, the upstream business, we will be comfortable having more exposure perhaps. I mean, we are happy being in the areas where we are, clearly speaking. Secondly, North America, mainly United States will be okay because we have, I mean, tax shields and tax credits in the area that could in some way give us more profitability to the growth of our production.
In Southeast Asia, we are really comfortable and let me say happy seeing the expectation we could have not only in Malaysia, also in Vietnam, where we are seeing our country and our government very committed with the rule of law and fulfilling their commitments, but also in Indonesia. And Indonesia, of course, the last discovery of Sakakemang is giving us some, I mean, a growth opportunity in the area. On top of that, I mean, the North Sea is okay. We are performing in a spectacular way either in the U. K.
And in Norway. In the U. K, we have reduced from $114,000,000 $116 per barrel the OpEx cost in 2014 to a figure close to $30 per barrel now. So we have plenty of room to go on increasing the efficiency in the UK and perhaps having additional production bolt on projects and so on could be always an option. And same thing in Norway where we are happy seeing the next potential production coming from the INI.
Talking about the EBIT of the chemical business, I mean, the EBIT was EUR 350,000,000 and the EBITDA that I think that you I'm not sure if you were asking me, I mean, I'm going to give you the both guidances. The EBIT will be at around €350,000,000, 370,000,000 this year. And the EBITDA, I mean, you could take into account a depreciation of €100,000,000 to €120,000,000 for the chemical business. So the figure of the EBITDA will be at around EUR 480,000,000 more or less this year. Thank you, Biras.
I don't think I think that I'm
not Yes. Thank you very much, Biras. Thank you. Our next question comes from Matt Loftin at JPMorgan.
Thanks for taking the questions. I had 2, please. Firstly, just overviewing the strategic objectives to 2020. You've been clear that aggregate delivery is on track. If you sort of characterize execution today, are there standout areas that have meaningfully out or underperformed initial expectations?
And within that, how much of the 300,000,000 dollars 2020 cash flow increment from low carbon can be delivered from the platform Repsol already has in place, inclusive of Faiesco and what additional key steps are required or should we look to over the next 12 months? Secondly, if I could just come back to refining margins and your outlook for this year and to clarify what you talked about previously, do either of the current $6.5 a barrel margin you're seeing or the $7.6 for the full year include or exclude Repsol's usual premium over the benchmark? I wasn't fully clear from your early comments. Thank you.
Thank you, Matt. I mean, I'm not going to say that I don't have any concern. I don't have any focus and so on, because when you have a tough commitments on the table, you have to be always focused on pushing in favor of achieving these targets. I mean, I think that we are showing a good track record of delivering what we committed in the past. So looking at the future, you are right about the expansion on the low carbon businesses, but let me remind that this €3,000,000 of cash flow from operations were, let me say, at the end of the period, they were forecast for 2020, because we have to build the business between 2018, 2019 and this cash flows from operations are going to come.
I mean today, I have the guidance and I maintain the guidance this EUR 300,000,000 of cash flow from operations in 2020. But as I said before, that is not going to be a must if we don't see clear returns in every investment we push forward or we develop. But today, I think that we are going to get it. Torqueen, I mean, the IMO is not as you know in our hands from the point of view environment, we have the system fully prepared to take the tailwinds for our refining business. But seeing how the future market and the spreads are for 2020.
I think that the EUR 300,000,000 of additional cash flows coming from the IMO, I mean, is a quite realistic and prudent approach, and I'm comfortable with this guidance. Trying to be short in my last answer to you, Matt, when I said 7.6, dollars I'm excluding any kind of premium. So premium, I mean, because the operation, I mean, of Repsol. We are talking about the IMC, dollars 7.6 per barrel as a guidance for this year. Let me also underline that the guidance of the premium for the whole year is not $1 per barrel, is at around $0.4, dollars 0.5 per barrel $0.5, $0.6 per barrel more or less.
Today, we are overcoming this figure, but the best guidance we are taking for the whole year is below this premium I said before. Thank you, Matt.
Clear. Thank you.
Thank you, Matt. Our next question comes from Yuri Kotanik at Deutsche Bank.
Yes. Thank you. Two questions for me, please. Could you please discuss your plans around the new exploration blocks that you acquired in the Q4 in Alaska? And whether you have any commitments on these blocks for this year or 2020?
And the second question is about Peruvian refinery. In Q4 2018, there were new gasoline production units initiated there. And if you could just tell us what it means for utilization and contribution from that refinery going forward? Thank you.
So thank you, Yuri. I mean, in Alaska, let me say that the idea, but today we are following the PICA B and PICA C. Well, from the PICA B, we have had I mean, good we have good expectation. We have to see the evolution of Pikka C. And after having the results of these two wells, I mean, we will have it seems to me the information we need to prepare the future investment project for Alaska.
The idea we have for the future and the commitment with the new blocks you said before, I mean today our commitment is for this year are 3 d seismic that we are going to develop in 2019, 2020. And that is the only commitment we have related to these new blocks in Alaska. I mean, all in all, I think that as a general framework of idea, we are going to drill in coming years 2 wells per year more or less in Alaska. Related to Lima's refinery of Repsol. The guidance, as you said, because the investment we developed over the last 3 years to in the jet filtration plants for middle distillates and gasolines, we have improved the margins of our refinery.
And I mean, it's on a smaller refinery than the system we have in Spain. The distillation capacity is at around 100,000 to 110,000 barrels per day. And the IMC for the year, the guidance for 2019 is $6.1 per barrel. And let me underline that what is important in Peruvian refineries is that the utilization rates are now higher than they were in the past. Why?
Because in the past till 2018, 2017, 2018, we have some restrictions to supply the internal market with the required sulfur content specification. Now because the new units we have, we don't have these restrictions. We are reducing the import of products to supply our wholesale and retail market in Peru and we are increasing the distillation capacity to our guideline more or less of a 90% that is going to depend, of course, of the margin day after day. But at 90% of utilization rate this year in La Pampaia with a guidance of 6.1 in dollars per barrel as IMC. Thank you very much, Yuri.
That's right. Thank you.
Thank you very much, Yuri. Well, that was our last question. At this point, I would like to bring our 4th quarter conference call to a close. Thank you very much for everybody for your attention.
Thank you very much. That does conclude the conference for today. Thank you for participating. You may all disconnect.