Day, ladies and gentlemen, and welcome to the Repsol Fourth Quarter and Full Year 2017 Results Conference Call. Today's conference will be conducted with Mr. Jozseu, John Emad's CEO. A brief introduction will be given by Mr. Paul Fernejo, Head of Investor Relations.
I'd like to hand the call over to Mr. Fernejo. Sir, you may begin.
Thank you, operator. Good afternoon. This is Paul Foniho, Head of Investor Relations at Repsol. On behalf of the company, I'd like to thank you for taking time to attend this conference call, setting out the company's Q4 and full year results for 2017. This conference call and associated webcast will be delivered by Jose Jonimath, Revsol's Chief Executive Officer, with 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, expect and 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 the conference call over to Mr. Jose Jonimath.
Thank you, Paul, and thank you to those online for attending this conference call covering our Q4 and full year 2017 results. In today's call, I'd like to cover the following principal topics. 1st, a review of our progress towards our current strategic objectives. Secondly, I'll take you through our main operating highlights for the quarter and the full year 2017. 3rd, a high level summary of our financial results.
And finally, I'll provide some comments on our recent disposal of Gas Naturale and an outlook for 2018 together with some guidance for our upcoming strategic update. Let me start by taking you through our progress towards the strategic objectives from our current plan. 2017 has been another year focused on delivery and operational performance. We have continued to transform our company, meeting targets and operating our business in an efficient and sustainable manner. At the same time, we were experiencing volatile but improving commodity prices.
Repsol has delivered on its targets for financial and operational performance, capturing value from the increase in oil prices in our upstream, whilst maintaining cash flow generation from our downstream businesses. Building on our achievements in 2016, we have met in just 2 years all the key commitments of our 2016 to 2025 year plan. We have delivered synergies and efficiencies of €2,400,000,000 per annum by the end of 2017, exceeding our original target and delivering our savings 12 months earlier than promised. We have reduced CapEx from a pro form a high close to €7,000,000,000 in 20.14 to €3,000,000,000 in 2017 without compromising safety, production volumes, reserve replacement or critical maintenance programs. We have divested of non core assets securing over €5,000,000,000 by the end of 2016.
We have reduced our group's free cash flow breakeven to around $40 per barrel by the end of 2017. And finally, we dramatically reduced our net debt and stabilized our business at investment grade. By achieving all of these, we have become a leaner and more efficient company, fully committed to sustainability and focus on increasing the value of our asset base. We've built a business that has the financial flexibility to improve shareholder remuneration funded from sustainable organic cash flow. We are achieving our objectives and taking part in the leadership of our industry in its drive towards lower carbon emissions.
In upstream, our focus on lowering cost and expanding margins, leveraged by improving commodity prices and the return of production in Libya, generated positive free cash flow in the year. We have moved closer to our strategic objective of an upstream portfolio that breaks even in the long term at $50 per barrel. In the downstream, our assets generated €1,800,000,000 of free cash flow, supported by a strong fundamentals in refining and chemicals and the strength of our commercial businesses. In anticipation of completing our strategic objectives earlier than planned, we have been working on an update to our strategy that will set out revised targets through 2020. My current plan is to host a capital markets event where we will explain revised targets on the 7th June this year.
Now let me move on to describing our operational highlights for the Q4 and full year 2017. Starting with the Upstream division, 4th quarter production averaged 715,000 barrels of oil equivalent per day, 3% higher than in the previous quarter, primarily due to volumes in Libya, which averaged 33,000 barrels a day and the ramp up in Trinidad and Tobago. The full year average production stood at 695,000 barrels per day. Compared to the previous year, the resumption of production in Libya together with the ramp up of new projects more than offset divested volumes, the impact of higher prices in production sharing contracts and of course, the natural decline of our assets. 3 projects started up in the Q1.
The redevelopment of Kinabalu in Malaysia and the Sagari project in Peru commenced production in October November respectively, while Regan in Nigeria reached 1st gas in December. A total of 6 new projects have start up production in 2017 and annual volumes were also supported by the ramp up to plateau of Lapa and Saphignon in Brazil. Development activity in 2017 included investment sanctions for Bakken in the Gulf of Mexico, Carondeau, Red Emperor in Vietnam, YME in Norway, Angelan in Trinidad and Tobago and for a new phase in the MLM field in Algeria. These are all economically attractive projects that will contribute to further reductions in the breakeven of the overall upstream portfolio. Let me highlight that the average reserve replacement ratio for 2016 to 2017 has been in line with our long term 100% target, supporting our commitment to sustain production and reserves at lower capital investment levels.
Finally, exploration generated a number of discoveries in 2017, most notably at Horseshoe in Alaska and Savannah and Macadamia in Trinidad and Tobago. A total of 6 wells were declared positive in the year. Now moving to downstream and starting with refining. The margin indicator remained above our long term target at $6.90 in the 4th quarter. The high complexity of our refining system allow us to benefit from the wider heavy to light crude differentials.
Overall for the full year, the average refining margin indicator stood at $6.80 with product spreads offsetting the impact of higher overall energy costs and narrower heavy to light differentials compared to 2016. Absolute processed crude oil volumes increased by 10% compared to the previous year, mostly due to high topping utilizations taking advantage of unusually positive hydro steaming margins. Major plant maintenance was complete on schedule and on budget, allowing us to run our conversion units at very high rates, especially during the second half of the year. Despite focusing on higher topping volumes where we chase absolute cash generation for the business, the CCS margin averaged a premium to the indicator of around $0.20 per barrel in the year. The chemicals business experienced a favorable trading environment that was partially offset by the gradual increase in the price of naphtha and of course the associated energy costs.
Full year operating income reached €600,000,000 in this business. And finally, the results of our commercial businesses were in line with 2016, thanks to increasing revenues being offset by higher prices. Our strategy of transforming while performing continue to focus on maintaining competitiveness in our retail business, while adapting to changes in demand patterns. Overall, sales in our service station registered an increase in volume compared to the prior year. Moving on now to the financial results.
I briefly summarize the main figures for the Q4 and the full year. Q4 2017 CCS adjusted net income was €703,000,000 in line with the 6.90 €8,000,000 achieved in the same quarter of 2016. Full year 2017 CCS adjusted net income stood at €2,400,000,000 a 25% increase and half €1,000,000,000 higher compared to 2016. EBITDA CCS stood at €6,600,000,000 for the year, a 31% increase year on year. Upstream adjusted net income in the 4th quarter was €128,000,000 higher than the same period in 2016.
Full year adjusted net income amount to €632,000,000 a €580,000,000 increase compared to 2016, reflecting cost reductions, the resumption of production in Libya and higher commodity prices. In the downstream businesses, CCS adjusted net income in the quarter was €446,000,000 €108,000,000 lower than in the Q4 of 2016. Adjusted net income for the full year 2017 was €1,900,000,000 in line with the result achieved in 20 16. As in previous quarters, for further detail on Repsol's results, along with a detailed variance analysis, I of course encourage you to refer to the financial statements and accompanying documents that were released today. At this point, before moving on to our plans for 2018, I like to comment on the agreement reached last week to sell our 20% stake in Gas Natural to CBC.
This is a transaction that allows Repsol to crystallize the value of our stake in Gasnatt at a price in line with our disposal to GIP in 2016, an opportunity that might not be available to us in the future perhaps. In Gas Net, we had a non operated asset that has provided a stable income with a return on equity of around 5% during a period of low commodity prices. However, the potential for growth was limited and the disposal provides us with greater financial flexibility and the opportunity to redeploy investment into operated assets. We are looking to obtain higher returns and greater levels of control through investment in our existing core businesses such as gas commercialization activities and growth in our exposure to diversified energies. We aim to build higher return portfolio and directly manage markets, execution, technology and geographical risk as well as providing new growth engines for the company.
While holding our stake in Gasnad, competition rules have prevented Repsol from investing and growing in some areas such as gas commercialization that we believe will be fundamental to us in coming years. Additionally, we know that the supply of energy for mobility is going to evolve in the coming decades and Repsol will be prepared to maintain our leadership in this sector. Repsol already has material exposure in these areas. For example, our upstream production is over 65% gas and we are major consumers of gas and generators of electricity here today in Spain through our industrial facilities. Our priorities will be to invest where we see clear synergies and where we are able to build on core competencies and competitive advantages of Repsol.
Therefore, the majority of our reinvestment is likely to be organic in nature. Nevertheless, we will be open first to new opportunities and acquisitions always guided by the principle of delivering accretive returns. As such, the proceeds are not linked to a specific follow-up transaction and the funds received will be invested prudently and for positive net returns over the coming years, all within the guidelines that will be set out in detail during our strategic update in June. Now moving on to what we expect in 2018. We have built our budget for the year on the assumption of average Brent and Harry Potter prices of around $59, dollars 60 and $3.50 respectively.
The CapEx budget for 2018 is €3,400,000,000 of which around €2,400,000,000 corresponds to the upstream division. Nowstream CapEx is expected to increase by 10% to around €900,000,000 mostly due to plant turnarounds in our petrochemical plants and the investment in retail facilities following our entry into the Mexican domestic market. Upstream production is budgeted to stay above our 700,000 barrels reference level per day of course, subject to fluctuations in volumes from Libya. The full year impact of volumes coming from projects that reached first oil in 2017 together with the recently acquired stake in the Wissum field in Norway will more than compensate for recent divestments and the natural decline in the portfolio. We expect this year to reach 1st production at Bunkapacma in Malaysia during the first half of the year.
Additionally, at the Akacias development in CPO-nine in Colombia, we have already taken in the Q1 the final investment decision for the first stage of the development and we expect to take the investment decision for the full development of this area early next year. Industrial, we are budgeting for our refining margin indicator of 6 point $8.0 per barrel. Today, we are above this figure, supported by continuing strong economic fundamentals and the flexibility of our refining system. Major scheduled maintenance in our refineries includes the currently in progress turnaround at Porto Lano expected to be completed early in March and work in the hydrocracker and some changes of catalysts at the Tarragona refinery in the Q2. In chemicals, we are budgeting for results marginally lower than 2017 due to some margin erosion from higher energy and feedstock costs.
Activity and volumes will also be impacted by scheduled maintenance in Synes and Tarragona. Under these assumptions, I explained before, we expect to deliver around €7,000,000,000 of EBITDA CCS for the group, of which €3,100,000,000 will come from the Downstream division. With regard to shareholder remuneration, the Board of Directors, with my strong encouragement, is considering the submission to the Annual General Meeting of our proposal to buy back and redeem shares issued through the strip dividend program. Our current year plan and my proposal to the Board, of course, assumes a full buyback of the shares issued in the recent January dividend payment, with an intention to maintain this methodology in coming years. The Board will make final decision based on this proposal in coming weeks.
Furthermore, considering the increased financial flexibility not only following the disposal of our stake in Gas Nut, but mainly based in the organic recurrent cash generation of the company, I will propose to the Board a dividend increase to $0.90 per share, the dividend of 20.17 of course. At this point, I think it's worth providing some guidance around our upcoming strategy update. As I mentioned before in June, I will set out the key aspects of our updated strategy along with targets for our company through 2020. In an industry that is evolving at an ever faster pace, we need to fully take into account and apply the concepts of environment and sustainability as we develop our direction for not only the next 3 years, but in fact the next few decades. We are monitoring our CO2 emissions per energy unit we produce, and we aim to reduce this footprint in coming years.
Our strategy and plans for investment are fully aligned with this objective and demonstrate a clear move by Repsol to focus our future business plans on supporting the parties' COP21 agreements and the delivery of the 2 degree scenario. On this background, I offer these thoughts on where I see Repsol's business heading. Firstly, in the upstream, we remain focused on growing margins rather than just volumes. However, the strength in our existing portfolio along with barrels from short investment cycle projects will allow us to grow overall production by around 50,000 barrels a day between now 2020, while keeping our investment at broadly current levels. This growth doesn't require significant production volume from any of the ACDC projects.
I mean, I remind you that ACDC is Alaska, Campus 33, Duvernay and CPO9. Our pace and level of participation in these projects will be carefully managed and they will form the backbone of the upstream portfolio post 2020. The ACDC projects give us long term flexibility around levels of capital spend and ultimately overall production volumes. This is all on the background of maintaining low overall precedence and growing margin and value per barrel. Secondly, in our Downstream, we will continue to optimize our refining and petrochemical businesses to ensure we deliver industry leading margins and we are able to take advantage of the strong trading conditions we are forecasting over the medium term.
Our revised strategy will set out in detail our growth plans for chemicals. I'm talking about growth, growth for chemicals, marketing, trading and the rest of our commercial business. These are the businesses that we believe are ready for expansion and where we can grow our Downstream division profitably and with low overall capital investment. For Repsol as a whole, digitalization will become increasingly important over the coming years and that is not blah, blah, blah. I have recently taken to the Board a digitalization plan that is forecast to deliver up to €300,000,000 of cash flow benefit per annum by 2020.
Upfront investment will be required and the long term price is material. Digitalization is touching every part of Repsol. Upstream, including the development projects, exploration, downstream, the corporate center, and it will change how we plan, we develop, we monitor and we are managing our businesses while we are at the same time improving margins and efficiency, lowering costs and delivering long term value. And I mean, I could follow, but that is just a taste of growth is going to come in our strategy update and we have far more detail and time to develop and to share all that with you in June when we are ready to brief the market. In conclusion, 2017 closed with Repsol delivering an outstanding set of financial results and completing strategic objectives ahead of schedule.
Adjusted net income increased year over year by 25% to €2,400,000,000 and grows at its highest level in the last 6 years. And let me say Repsol is ready to tackle the future and the divestment of Gas Naturale will accelerate our transition. Our company has complete not only on a strategic plan, we have completed transformation, a transformation that has seen us lower our free cash flow breakeven to $40 a barrel, or more importantly, deliver a cash flow breakeven of $50 a barrel while being able to cover in full our dividend payments was stripped by Bax from organic cash flow from 2018 onwards. A transformation that has seen us more than half capital investment while maintaining upstream volumes and reserves and without compromising downstream maintenance program. A transformation that has seen us generate reputable savings from efficiencies and synergies that are delivering €2,400,000,000 in benefits compared to our 2015 baseline.
Repsol today is a company with a secure investment grade credit rating and financial flexibility to fight the future, a future that continues to evolve and I'm convinced will require us to fully integrate the concepts of sustainability and environment into how, what and where we invest our capital. Rapsol is a company that is ready to set itself new strategic targets and I look forward to sharing this with you in detail in June this year. With that, I'll now hand the call back to Paul, who will lead us through a question and answer session with you. Thank you, Paul.
Thank you, Joseph John. In case anyone on the line runs into technical problems during the webcast or conference call, please address any problems through our e mail address at investorrelationsrevsol.com, and we will contact you immediately to try and resolve it. Let's now move to the Q and A. Operator, can you please remind us of the process to place a question?
Most certainly, sir.
Our first question comes from Flora Trindare at BPI. Flora, please go ahead.
Yes. Hello. Good afternoon. My first question is on the use of proceeds from Ghaznat stake sale. Do you have a budget for new acquisitions within the total proceeds?
And also, can you give us some insight on what could be the organic investments you mentioned, just for us to know? And then secondly, a more broad question on the impact of the IMO regulation. If you could give us your expectations on the impact it could have basically in your downstream business, I would assume, but also if you see it in the upstream as well? And also which measures are you taking to address it? Thank you.
Thank you. I mean, first of all, no, we don't have any budget for new acquisitions. I was to put this point very clear. Of course, we have a rationale to apply the financial flexibility we have now. And the rationale is that we are going to find and we are going to look for investments with higher returns that the cost of our capital employed.
I mean and let me say, we are going to apply our financial flexibility more in CapEx than in acquisitions. In CapEx with higher returns, looking for profitability and taking the growth opportunities in our current businesses and in a potential diversification of businesses. I mean, let me explain the rationale for that. I mean, due to the competition rules, we have limits to enter into the gas commercialization activity in the past. And in some other businesses related to the gas and power, I mean, and Repsol has today strong capabilities and competencies to enter in this kind of businesses.
I mean, a significant part of our current production is gas. Gas accounts for 2 thirds more than 2 thirds of our current production. We are in relevant parts of the gas value chain. We commercialize natural gas in the U. S.
We manage gas off takes from the Gulf of Mexico. We have in our own plants a 13% of the whole Spaniard market consumption in our sites. So we have a purchase and supply capacity taking into account our own consumption. And we are going to take advantage of this opportunity. We want to create and find opportunities in an integrated way and of course looking for higher returns.
And we don't have only this commercial capillarity in Spain. We have some capillarity in Portugal, in Peru. We can forget that one of our main development projects Campos 33 in Brazil is going to allow us to enter in the gas value chain in Brazil. So all that is going to be there in our new reflections. And at the same time, we have a customer base today with 1,000,000 of clients, either in energy or in mobility, and we are going to look for opportunities in our portfolio.
But always, I mean, under some basis, the first one is obvious, financial prudency, financial flexibility. We are going to keep going this The secondly the second point, we are going to look for high returns. I mean, that is our business. We are not in the regulated business. I mean, don't forget that 2 thirds I mean, Gas Natural is a great company, but 2 thirds of the business and the EBITDA of Gas Natural comes from regulated businesses.
That is not our business. I mean, we were there because you know over the last 2, 3 years in financial terms, I mean, to have this return on equity at around 5% in any scenario of low commodity prices was okay. But today, we have to try to find growth opportunities. And we are going to try to develop that in higher return businesses, of course, evoke the cost of capital of Repsol. And Bezure is going to be more organic based on our own capabilities, is going to be integrated and trying to diversify our current businesses.
And of course, in the middle, perhaps, we could try to acquire some capabilities or some skills. And I don't discard anything, but it's going to be mainly organic. Your second point, I mean, we don't need to invest to be prepared for the IMO sorry, the new rule for the sulfur in shipping. I mean, if you analyze the 4th quarter results for the refining business and the margins of Repsol and you compare these margins with the Q3, you could see that we sustain these margins in a better way than some other companies that they are reported their margins to the market over the last days. Why?
I mean, because our refining system is different from the others. It's different because we are fully invested in conversion. We have the highest conversion rate in Europe. And that means that we are able to process heavy crude oils and having 40% could be the feedstock of heavy crude oils in our system and 55% of our productions are middle distillates, gasoil and diesel. And what is going to happen probably with the impact of IMO that we are going to see larger spreads for the fuel oil and for the heavy oils and same thing for light products like diesel.
So we are going to take advantage of this new margin in a significant way because our system is fully prepared to do that. Our fuel oil production is, I'm not going to say negligible, but this has around 4%, 5% of our full production in Repsol. And I mean, we have and we are preparing some logistic analysis to take a part of the bottom of the barrel in Tarragona, that is the only place where we don't have a full conversion refinery and to use this bottom of the barrel to feed some other refineries where we could have because we are reducing the cycle of our cokers, we could have spare capacity in the future. So we are fully ready and we think that I mean today our margins are okay, as I said before. But I think that we are going to experience 2, 3, 4 good years for the refining system of Rexol due to the capacities we have in our refining system.
Thank you, Flora. Our next question comes from Biraj Borkhataria at Royal Bank of Canada. Biraj, please go ahead.
Hi, thanks for taking my questions. I had a few. Firstly, on Venezuela, could you just talk us through the triggers for the impairment today? It looks like it's quite significant. Maybe you could just run us through some of the latest conversations you're having or any changes there?
The second question is on some of the hybrids you issued a couple of years ago when you had, obviously, the credit rating concerns. Are you considering to repurchase those hybrids and issue straight bonds in order to save some interest costs? And then finally, could you highlight if you have any significant maintenance in the Downstream in 2018 outside of the Synes and Tarragona you mentioned? Thanks.
So Venezuela, I mean, first of all, let me say that Venezuela is probably one of the 2 or 3 countries in the world with more oil reserves and Repsol has a solid position built in the country. We have a solid and fluid relationship with Televisa and within the difficulties known to all, we will continue to be involved in the country because we are convinced that we are going to have opportunities in the future in Venezuela. And we are going to try to maintain and increase our operations in our country in the current size. So we think that that is the best option for investors in Repsol. But at the same time, we have to combine this approach of maintaining our operations in the country with the principle of financial problems.
And we are guiding our Venezuela business under this principle. I mean today, the total financial exposure we have to the country, including equity, including financial credits, including the commercial side is $1,300,000,000 Why such a significant low figure? I mean, because we have incurred some of our Venezuela's assets in 2017 in the last quarter. The total amount of this incurred in the Q4 before taxes has been, I mean, I could accurate a bit more of the figure later if you like, but at around $1,000,000,000 $1,000,000,000 that after taxes is at around 750,000,000 dollars more or less. And in euros 640,000,000 is the figure of this impairment in the 4th quarter.
On top of that, that was the figure for December 31st where we maintain at that date a total exposure of $1,600,000,000 $1,700,000,000 in January 1st or 2nd, I don't know exactly the date, the adoption of the IFRS 9, the financial instruments ruling will reduce disposal to 1,300,000,000 dollars due to the impact of the potential risk of commercial bills in Venezuela. So and you know that, I mean in this ruling, this reduction of the risk is supported by the equity. So $1,300,000,000 is today the whole exposure we have to Venezuela. Related to the hybrid, no. I mean, you know that we try to optimize every time and we'll do every time that the financial portfolio repsol, but the answer today is no.
In 2018, in the Chemical business, as you said, we are going to we have the turn around of Tarragona, the OPSM, the propylene oxide plant that I think that is going to be finished at around 10 March more or less. On top of that, we have the maintenance of Sines. And in the refining today, we have the shutdown of because we are turning around the plant of Porto Lano is mainly affecting to the conversion FCC mild and Coker. I think that the refinery is going to be fully prepared after the maintenance period at the 20 March more or less 20th March. And on top of that, we don't see any relevant in Bilbao, no in Coruna, now in Cartagena.
And in Tarragona, we are going to change catalyst and we are going to shoot down the hydrocracker in the Q2. That is the full maintenance program. It's lower than the program we had last year. You remember that last year, we had the full conversion shutdown program for our 2 main refineries in volumes that are Cartagena and Bilbao. And this year is going to be a bit later.
I mean, taking into account that probably the maintenance period and season is going to be quite strong in Europe. In the spring, I think that we are well prepared to take advantage of the potential margins we will see in the middle. Thank you, Brianca.
Thank you very much.
Thank you, Biraj. Our next question comes from Hamish Clegg of Bank of America Merrill Lynch. Hamish, please go ahead.
Hi, guys. Good morning. Hamish Clegg of Bank of America. Questions kind of on track with some of the things we've been discussing. But so number 1, been exploring your legacy competence in LNG trading.
You cleverly sold your LNG business at the top of the market in 2013. Is this something you would consider as part of the Gas and Power driven strategy to Gas Nat, publicly talking about or at least we've Gasnat, publicly talking about or at least we've seen press talking about them selling? Or how would you consider organically building that? My second question is just on the buybacks, just to be very, very clear indeed. It's obvious it's clear that you're buying back stock to offset any scrip going forward.
But in the slides, you talked about 2017 2018. Can you confirm whether or not you'd buy the entirety of 2017 kind of scrip dilution back in the form of buybacks? And would you consider going beyond that?
Thanks guys. Yes. Hamish, sorry. I'm going to start from the final part of your question. Yes.
Solidity, yes. We are going to buy back the integrity of the 100% of the new shares issued or redeemed because the effect of the script of the dividend of 2017. That means the part that was redeemed in December January and of course, the second one that is going to come in June, July. The whole dividend of 2017, I mean, that is my proposal of the CEO that I'm going to present and is fully supported by me to the next Board before the AGM. And my idea will be to maintain, to keep going this methodology for coming years.
And as I said before, I mean, the rationale for that is not the disposal of gas nut. The rationale for that is the good sound and the good flavor of the recurrent organic cash generation of the company. We are able to do that at $50 per barrel, including the increase from $80 to $90 So we are going to buy the integrity of the capital of January 2018 July 2018. Going to your first question about the LNG, I mean, no, we are not going to buy an LNG business in this rationale because I mean, we are fully convinced that we have to try to orientate the company to lean projects in terms of capital employed. And the LNG plants are I mean, they need an intensive large capital application.
You know that when we define the previously strategic plan, we say that in the upstream going to shallow waters, going to the unconventional, going to the onshore and getting rid of the LNG plants, getting rid of the ultra liquid water as operators had a rationale behind. All that is still there. I mean, saying that, we have capabilities in part of the chain value of the gas to find opportunities in the middle. We are in the gas trading. We have a strong purchase capacity in the Iberian Peninsula that could allow us to have better contracts than others.
We have uptakes in the States. We have a strong commercialization experience in New England and some other parts of North America. We have a 5,000,000 energy based client base in Spain related to LPG, gasoil and some other businesses. And on top of that, we have 4,500,000 clients in our mobility businesses in Spain. On top of that, we have Portugal, Peru.
I mean, we are going to find opportunities to have an integrated view on all that around the gas and why not power related to this gas where we could have levers and where we could underpin the profitability of these businesses in our current competencies and that is going to be the rationale of this growth in the future. Of course, not forgetting, as I said before, the target of the reduction of the carbon footprint of the company. We are following our CO2 emission level per energy, joule unit we produce, and we aim to reduce this footprint in coming years. We are convinced that Repsol is part of the problem in terms of CO2 emissions, but we want to be part of the solution. And that means that we are going to fit our future revolution towards the parties agreement commitments and with the 2 degrees path needs in order to reduce the footprint for every the footprint in emission terms, I mean, for every energy unit we produce.
Thank you very much.
Thank you, Hamish.
Our next question comes from Lydia Rainforth at Barclays. Lydia, please go ahead.
Thanks, Phil, and good afternoon, everyone. Two questions, if I could. The first one, could you just talk through on the UK how that actually progresses to your plans this year and when were you looking at sort of in terms of that going forward? And then the second one, I'm not sure if you want this until June, but when you talk about the margin uplift on the sectional margin uplift as well as volume numbers, are you able to give us what sort of number you're looking at on that? Thank
you. Lydia, could you repeat your second one? Excuse me, Lydia.
Yes. So just in terms of when the presentation went out, outlook for the strategy presentation that you're talking about higher margins in the upstream. What are you able to actually give us what that sort of uplift is at this stage?
Yes. Okay. Thank you, Lilia. Related to the UK, I mean, first of all, let me stress the point that we have increased our production in 2017 in the area, thanks to the Monarch project and so on and a higher efficiency of our assets in the area in a 24% from 2016 versus 2016. We have reduced in a significant way.
I mean, I'm not going to remind you the figures of 2014 that were very high. But in 2017, we have reduced the OpEx per barrel from $53 we have in 2016 to $42 per barrel in 2017, with a CapEx reduction of 52% in the year and an improvement in free cash flow of 65%. I mean, main metrics for the year, for 2018, I mean, we are budgeting $32 per barrel in OpEx cost. So $70 in 2015, dollars 53 in 2016, dollars 42 in 2017 and 32 in 2018. About the production, we are forecasting 10,500,000 barrels that is at around 30,000 barrels per day net rep sold.
I mean, that is not the JV. The JV will be more or less twice this figure. So 30,000 barrels per day, The CapEx we have we are going to apply this year is at around $75,000,000 $50,000,000 OpEx, I can't remember the exact figure, but I think that was below $100,000,000 $90,000,000 something like that. And we are going to have a free cash flow in the UK this year. So I mean, our best approach in terms of free cash flow breakeven from those assets is at around $48, dollars 49 per barrel.
That means that if we take the $59 per barrel, that is the assumption we have in our budget. I mean, I don't know what is going to happen, but I'm taking our budget assumption. We are going to have a free cash flow positive business in the UK this year after CapEx and after AbEx. Going to your question about the margins in the upstream. I mean, first of all, I mean, I'd like to underline the great effort we are developing in our upstream to reduce our breakevens and at the same time to increase the efficiency of this business.
I mean, I want to remind you that in 2014, I mean, in Repsol, we had an OpEx cost per barrel as an average for the whole business of $21 per barrel. In 2015, we were at $18 per barrel. Dollars 14 per barrel was the figure for 2016, dollars 12.3 so has been the delivery in 2017 with a reduction of 12% of OpEx per barrel from 1 year versus the other. And the budget we have in 2018 increased this efficiency, reducing the OpEx per barrel in a 2%. I mean, we are budgeting $12 per barrel for this year.
And I mean, in this sense, I'd like to stress the fact that what we are saying, what we are developing and what we are doing in a Upstream business and in the whole company is not only related to commercial renegotiation, deflation of cost in the industry and so on. I mean, it's something deeper because you could see that we are, of course, not with such a significant figure, but we are seeing something similar in the downstream businesses and in the corporate side. I mean, we are optimizing all our processes. We are reducing our G and A. We are fooling and developing a great effort to modify our technical specification, trying to have leaner processes, leaner projects and making a great effort to reduce the dimension and the cost of our corporation.
I mean, I want to stress the fact because finally, all that is also cost for our businesses. I want to stress the fact that we have reduced in 1 third the corporate cost of Repsol from 2014, 2015 to the current figures. When we acquired Talisman, we said at that time that if we had a size of €800,000,000 €900,000,000 of corporate cost for Repsol And more or less, the figure for Talisman could be €400,000,000 3 years later or 4 years later, our target was to go back to the previous figure we had before the acquisition. So we are there and probably in 2018 we are going to be below this figure.
That's Peter. Thank you
very much. In terms sorry, Lydia, in terms of breakevens, I also want to remind the fact that the average now I'm going to talk about cash that I think that is also relevant. The average of the oil price in 2017, I think that was $54 per barrel for the whole year for the Brent. So at these prices $54 per barrel, our upstream after paying its CapEx has a positive free cash flow. I mean, our target is to have a business that at 50, I mean, I'm going to be even a bit harder.
It could have a breakeven in cash terms after CapEx of $50 or even below $50 per barrel. Of course, the breakeven in terms of P and L is significantly lower.
Thank you, Lydia. Our next question comes from Oswald Clint from Bernstein. Oswald, please go ahead.
Thank you. Good afternoon. Yes, just on the North American business, it looks like it's just about breaking even there in the 4th quarter at $55 WTI or that sort of price. As WTI is obviously much higher than that above the $60 today, should we expect that all to fall to your bottom line in the North American upstream business? Or are you seeing or expecting some cost inflation, which might take some of that away?
That's the first question. And then maybe staying with North America, just wouldn't mind getting an update on Alaska, the activity that you're planning for 2018. Also the quite large acreage position you've picked up recently in quite close proximity to your recent discoveries. Do you see anything in those new blocks that's particularly exciting? Thank you.
[SPEAKER
JOSE RAFAEL FERNANDEZ:] Talking about the inflation of cost, I mean, we don't see a general trend in the industry worldwide, but it's true that you said that for 2018, we could see some price increments in unconventional North America taking into account the sound in that business in that area. I mean, I'd like to stress the fact that only 35%, 37% of our costs are related to the commercial part. The rest is, I mean, linear processes, technical specification, innovative ways of collaboration with our suppliers, G and A and so on. So we like and we have the target to offset the increase that we could see in this commercial part over 2018 with the efficiencies we are going to be able to capture, thanks to the other parts of the cost and the value chain. In this sense, we have a quite powerful program that is called RISE in the upstream business, mainly focused on lowering the breakevens on this business, increasing the efficiency and adding marginal barrels at lower cost.
Talking about the North American businesses, I mean, we have to take into account that I mean, 55 is Brent, but the reality of the main part of our American businesses, North American businesses is not Brent, but is gas, it's Henry Hub. So we have to see what is happening with the and what will happen with the Henry Hub and the gas price in Canada. In this sense, I mean, we have a Marcellus business that is the main production in gas terms in North America with a quite significant low breakeven in heavy hub terms in free cash flow at around $2.6 per 1,000,000 of BTUs more or less. The EBITDA of this business in 2017 has been €670,000,000 And in 2018, we are budgeting a significant increase in this EBITDA of more or less €100,000,000 for this year. Alaska, excuse me.
This year, we have budgeted the acquisition of new blocks in the area. The extension of the Nanushuk project towards the East and I mean, the potential grossing of the reservoir, but that is still exploring. I mean, I think that for 2018, the target has to be to explore and to appraise what we have in the area to confirm all the volumes we have and to prepare the potential FID for the future. That, I mean, could be that will be possibly a target for 2019 something like that. But this year, the objective is to uprise, to explore and to know exactly the amount of resources we have in the area to develop the project.
Thank you, Oswald.
Thank you. Thank you.
Thank you, Oswald. Our next question comes from Irene Himona at Societe Generale. Irene, please go ahead.
Thank you, Paul. Good afternoon, Jose John. I had three quick questions, if I may. So firstly, Libya, can you remind us what the contribution of Libya was to your 2017 Upstream EBIT, net income, etcetera? Secondly, on your 2017 cash flow, the cash tax rate was exceptionally low.
It was less than 6% and exactly the same the case for the year before. I wonder if there's any guidance for us for 2018. I understand you utilize deferred tax assets. I just wonder if that will remain as low as that in 2018. Or if not, what would be a sort of longer term normal cash tax rate?
And finally, on the balance sheet, I see that in 2017, you had a very material 20% plus drop in your long term provisions from over €6,000,000,000 You're down to €4,800,000,000 Was that mostly driven by tax? Or did other categories of provisions change as well? Thank you.
I mean, talking about Libya. Talking about Libya, the production average in 2017 has been 25,000 barrels per day. The free cash flow of Libya after CapEx over the whole year has been at around EUR 100,000,000 EUR 110,000,000 more or less net repsol. So the figures for 2017 are those 1. The tax rate, I mean, in the tax, we have to take into account that last year, we anticipate a figure of EUR 680,000,000 in Spain as a tax anticipation credit.
But you remember that we said that we were going to recover this figure. So in net terms, this year in 2017, we have received EUR 450,000,000 more or less as a devolution of this amount of money we anticipate in the last year. So you have a positive effect of EUR 450,000,000 in cash terms that of course is going to be neutral in next year in 2018. So that is in some way over. The 3rd issue related to the reversal of the UK, I mean, the main reversal of provision that perhaps could impact the balance sheet focus on what you are asking, Irene, is the reversal of the UK provision we had in our balance sheet.
I mean, taking into account that the sum of the business in the UK is significantly different from our provision we had in 2015 when we acquired Talisman that today UK business is a free cash flow positive business of Repsol. Of course, we have changed the forecast of future flows coming from this activity, from these assets, from this business and the reversal of the provision is the main effect that is impacting in what you asked in your third question, Irene. Thank you.
Perfect. Thank you very much. Thank you.
Thank you, Irene. Our next question comes from Alastair Syme at Citigroup. Alastair, please go ahead.
Thanks, Paul. Just back on the sort of the use of proceeds question. Can you discuss whether an integrated gas and power business, as you see it, needs to have a large component of renewables in it? And how would you sort of contextualize the size of that business?
I mean, I think that there is not a single answer for that. I think that an energy company, an oil and gas company has to drive to find the best return opportunities, fitting with each portfolio or increase the competitiveness of its business. That is our rationale. So you have in this Gas and Power, let me say, value chain some parts that are closer to some others. The first one is clearly gas.
Gas is going to be play or a player, relevant, a key player. In coming years, in the energy transition scenario, a company like Repsol that is fully exposed to gas has to try to find opportunities to obtain higher returns in a more integrated vision about gas businesses. We have to protect our own businesses. And I have to underline that we have an LPG business, that we have 5,000,000 clients of this business in Spain and Portugal, and we have to offer energy to these clients. So this same thing in some other countries where we could have some kind of capillarity.
Portugal, why not Peru or some others. And in this kind of capillarity, it's quite logical to think about the potential for the future of offering a multi energy approach to our customers, taking into account that we could have a quite significant value pool there with a quite reduced capital intensity to obtain high returns. Let me say that to sell power to some of your customers, for instance, in the mobility side, I mean, the electric vehicle is going to be slow, but it's going to be there. And it's going to be part of the mobility business in coming years. I mean, you know that we are in the electric vehicle recharging services business since 2010.
And I think that is quite logical to think that we could offset or hedge this electricity supply with power production. But going to your question, I mean, I don't see Repsol and I think that is not adequate for an oil and gas company being in renewable assets where they are low risk, low return, fully dependent on regulation, fully dependent on governments and so on. I mean, annual and gas companies are huge machine, in our case, not so huge. We are a medium sized machine, let me joke, that has a high capital cost and is has some competencies managing risks and trying to thanks to the competencies we have. And the diversification of our portfolio managing these rigs and obtaining higher returns able to be above our capital cost.
So we could find opportunities in the power sector there, where we could see merchant risks, technological risks, geographical risk, execution risk. So I mean, we could see that in the future in an oil and gas company. Why not? But let me say, today, Repsol is looking for inorganic acquisitions related to this kind of businesses. But we think that mainly based in our commercial businesses, we could acquire capabilities and we could build an opportunity for the future always looking higher returns of our capital cost.
And I'm going to be very clear and I'm going to be very tough about this statement. I mean, if I don't see in a clear way, higher returns that are capital cost, we are not going to go to this business. Thank you, Alastair.
Can I just clarify that you are also looking using the same capital cost across any opportunity? It's a corporate capital cost.
[SPEAKER JOSE ANTONIO ALVAREZ ALVAREZ:] No, I mean, I have to be always above our capital cost. And I mean, I'm going to ask to this any kind of business. I mean, the same filters and the same parameters we are asking to all the business of Repsol. But I'm going to add more. We are going to try to build our future portfolio in the energy sector always based in an integration with our current businesses and always focus on creating value in our logic of being efficient and being competitive and being accretive.
I mean, we are not going to go to businesses to say that we are clean, not at all. I mean, we are fully committed with the CO2 footprint reduction, but we have a lot of tools to do that. I mean, to have a gasier portfolio is our way to do that, to be more efficient refineries and chemical plants is another way to fix the CO2 to produce polymers as we are doing now in Puertoiano is another tool. Biofuels where we are present is another tool. And let me say diversifying our energy production, including some power price could be another tool.
But our commitment is that we are going to be focused on reducing the CO2 portfolio of the company. We have a lot of levers to do that and we are going to find the cheapest and the most efficient and the most profitable one.
Okay. Thank you very much for your time.
Thank you, Alastair.
Thank you, Alastair. Our next question comes from Giacomo Romeo at Macquarie. Giacomo, please go ahead.
Hello. Thanks for taking my question. First question is on your indication for 50,000 barrels growth through 2020. Just wondering what sort of if you would assume the same level of CapEx you're guiding for 2018 in order to achieve that. And the second question is back to the point you were again discussing on the potential for new investments.
Do you see scopes for investment in the new areas where Repsol is not present at the moment? Or it would just be investments in AF that were leveraged where Repsol can leverage their existing capabilities? And I think that's and the last question is on the more on the divestment side. If you see any additional assets not being core and that you think do not fit the, say, the Repsol in your current vision?
Thank you, Giacomo. I mean, going to your first question, I mean, my upstream business is saying in a repeated way that they are going to need perhaps €200,000,000, €300,000,000 more per year in coming 2 years to achieve that figure. My duty is to try to maintain the CapEx, but I have to be realistic. I think that perhaps with our CapEx in the upstream business at around, I mean, something in euros something in between €2,600,000,000 €2,930,000,000 I mean, we could achieve in a right way this figure. Anyway, I'm going to do all my best to try to reduce this CapEx being more efficient executing this kind of projects.
Anyway, I think that we are going to need some light increase in 2019, 2020 perhaps. And with this figure, we are quite comfortable not only producing 750,000 barrels per day. These barrels or those barrels are going to be more profitable because we are going to take advantage in the middle to manage our portfolio. And I'm going to link this question with the third one. I mean, we don't see any divestment in non core assets because the disposal time is over.
But let me say, we are going to be very active managing our portfolio. That means that today, we could buy something and tomorrow, we could sell something. In our rolling strategy, mainly in the upstream business, trying to put more rationale in our portfolio. We know that we are we have a large scope of countries where we operate, trying to be mainly in places where we have capabilities to be there. And we are going to be very active over the next 3 years on that.
I mean, if there is value in some other areas and we could see higher returns, why don't we have to go there to find it? Anyway, normally it's easier to find these returns and to find these values in places where we are, where we have competencies, we have capabilities. But sometimes, I mean, we have to think that growth has to be a must for a company. And growth is going to be from now on for Repsol a must. And in the downstream business, for instance, going to Mexico is growth.
I mean, we think that we have capabilities to be involved in the marketing business in Mexico. Being more international in our lubricant business is also an opportunity growing in the trading business where we have a larger base of barrels and products to grow in a profitable way, will be an opportunity And we are going to lever our position either in our commercial client base and trying to find some other opportunities in the energy sector, always under 2 principles. The first one, profitability and the second one, prudency. Thank you, Yakumo.
Thank you.
Thank you, Yakumo. Our next question comes from Thomas Adolff at Credit Suisse. Thomas, please go ahead.
Hey, Paul. Thank you. Three questions as well. The first one, I want to get Miguel Martinez involved, if that's okay. I think back in December, the Miguel I think if it was up to Miguel, the first step would have been to buy back 50% of the dilution before going to 100%.
Now with today's update, you're going to 100% and there's a dividend hike as well. So what's driven that level of confidence in the span of just 2 months? Is it just a function of Miguel being a bit more conservative and the CEO being a bit more upbeat? The second question on digitalization, I'm just curious how you go about implementing digitization. Is it divisionally implemented or do you have a separate entity with their own KPIs?
And just finally, just kind of going back to Alastair's question on gas and power and the use of proceeds, not sure if I've listened carefully enough. So if my understanding is correct, so you're looking to also enter the electricity and power market. And if you do that, I wonder whether it makes sense to really be exposed to the entire value chain simply because that way you capture the margin where it rises and that would actually also include having some generation capacity even if it is small in nature. So it would be great if you can elaborate on that. Thank you.
Thank you so much. First of all, I mean Miguel, he's a very clever guy and you know him. He's the best CFO of the oil and gas sector in Europe. And I think that's also worldwide, but I mean that is not proven. But Miguel is also a prudent person.
And our first approach, I have to say that was I mean, we have to try and we have to go to reverse the current dilution coming from the script. And we thought that 60% could be the 1st step towards a ramp up to go on in next and coming 2 years to 100%. I have to say, I mean, it wasn't Miguel. Miguel had, of course, my full support in his statement in December, as always. Seeing the organic cash generation of the company, seeing that I mean, we are comfortable at $50 per barrel being able to make cash in organic terms after paying the whole dividend in cash, I mean, with the scrip full buyback option.
Seeing that at the same time, we are able to reduce more and more the cost of the company and increase the efficiency that we are in the middle of a transformation process that is not over, that is going to go on. I mean, we are fully comfortable with 100% in organic terms. I stress and I underline the fact that and I know that everything is mixed and even in I mean, in our company sometimes and we could mix this remuneration policy with the disposal of cash not I mean, nothing to do. We are going to pay the 100% of our dividend in cash because Repsol is able to make inorganic terms the cash we need to do that, maintaining at the same time the principle of financial prudency and financial flexibility. Going to the digital, I mean, we have 2 different approach.
1 of them is a button up. That means that every business, I mean, the exploration team, the technical E and P team, refining, chemicals, the commercial sites and so on is working hard and has worked over the last year identifying, I mean, quick wins and very relevant projects for that business. I'm going to put you as an example. For instance, the application to the digital to the maintenance of our refinery, trying to use the panoply and the thousands of data we have in the refinery, anticipating and increasing the reliability of our refinery. Secondly, the energy efficiency in our furnaces in our refinery.
3rd, trying to optimize the programming. 4th, trying to increase the geological probability of knowing what is behind the seismic data we have in our hands 5th, the flow simulation of the production of A and E and P well and how to optimize that flow. Commercial businesses, trying to know what our clients want and where they are. I mean, all that is bottom up, but at the same time, we have a coordination group that is led by the people in the digital side. We have a Chief Digital Officer that is providing these people of all the tools they need to catalyze and to push these projects.
And I personally, every month, I'm following the whole business because I have a commitment with my board that every quarter, I'm going to go to the board to explain to the board their results and the gain in margins and efficiencies coming from these projects that are at the very heart of our businesses. And on top of that, we are also including in our safety and environmental issues, the use of digital technologies in some way at the core of the improvement we have to develop in the company in these issues. Going to the gas and power, I mean, we are in the Gas Nut business. We are not in the whole chain, but we have to find the niches and the geographies where we could add value. I'm going to put you an example.
I mean, that is an it's only an example, it's not a reality. I mean, if we have gas in Brazil, if we are exporting gas to Brazil from Bolivia, we are going to develop gas in Campos 33. Is rational perhaps to analyze. I'm not going to say to go, but to analyze being involved in the wholesale gas business in Brazil. I mean, I could have some other examples like that.
And talking about the power, I mean, I got to underline that today we have 600 megawatts in operation in Spain producing power in Repsol in our sites. And we are in the power trading business every morning, every single morning. So if we see some opportunities to have a higher return, new opportunities linking, let me say, this production to places where we can obtain a higher value, I mean, we are going to analyze it. And if the return size are clearly higher than the cost of our capital, we will go there. If not, I mean, I'm going to underline, I can say that louder, but not in a tougher way.
We are not going to owe to places where the return is not clearly higher than the cost of our capital. And we are not going to go to regulated businesses because low risk, low return is not our business. And we are not going to be there, because we can't compete with pension funds, with infrastructure funds and so on. That is not our business. Thank you.
Very clear. Thank you.
Thank you, Thomas. Our next question comes from Michele Della Vigna at Goldman Sachs. Michele, please go ahead. Jason, John, thank you for
the presentation. I had a quick question. When I think about where Repsol has gone in the last couple of years, it's made tremendous advances on the balance sheet, the dividend is growing again, the dilution of the scrip has been stopped. And yet you're still assuming a quite conservative oil price in your planning for 2018. If the oil price stayed higher, if your free cash flow generation was even more abundant than what you're forecasting, Would you push your buyback to actually buyback the dilution of the previous years beyond 2017?
Or would you prefer to use the extra free cash flow for future investment or to further de gear the balance sheet?
Michel, first of all, Michele, sorry.
I mean, I don't know
what is going to happen in the future, but I agree with your point that perhaps coming 2, 3 years are going to be good years for Repsol. First of all, because we are getting more and more efficient and that is not going to I mean, that is not a picture that is stopped at and is over in December 31. Secondly, because commodity prices is going to I mean, to be sound, I don't know that is going to be 60, 65. I mean, that is up to analyst. Secondly thirdly, because the IMO is going to be there and be sure that for the refining of Repsol in coming 3, 4 years that is going to be a huge opportunity and a significant cash.
But first of all, we are going to the financial flexibility and prudency we have developed over these years. We are going to try to find opportunities to grow and to have a return that is going to be higher than the cost of capital and be sure that we are going to be able to do that and to prepare the company. But because now my main concern, of course, is not 2020. I know that I can say that when I'm going to present in 3 months the strategic update, but my concern is 2,030. And I think that we have to prepare this company to be a winner and to be a player in 2,030.
A 14% of our investors base today are investors that they only invest with ESG criteria and that is because they rely on the management of Repsol and on Repsol to be able to prepare this company in terms of be compatible and to cope with the challenges and the fights we have related to the CO2 reduction and with the Paris agreement and the 2 Degrees path. I mean, and we are going to develop this portfolio of businesses, main base in our core and diversifying where we could have capabilities and higher returns. And in this scenario today, I don't see room for what you were saying about additional. But I mean, in the future, we will decide. I mean, but today, we are not there.
In 1 year, in 2 years, we will take our decisions depending where we are at that moment. Thank you, Michele.
Thank you.
Thank you, Michele. Our next question comes from Rob Pulleyn at Morgan Stanley. Rob, please go ahead.
Thank you. Just three quick questions, if I may. Firstly, given the use of the Gasnap proceeds largely through an organic route, net debt will fall once you actually receive the cash from that disposal. I was just wondering whether that would deliver a further credit rating upgrade given your net debt would be substantially lower. The second question, I hate to come back to the use of these proceeds again and again, but I was just wondering how the pace of investment in these new businesses may play out, particularly for 2018.
Do you have anything you want to invest in immediately? Or is this really sort of beyond 2018? And finally, you've talked a lot about returns and how these new investments need to meet certain criteria, which is reassuring. But may I ask, if you cannot find opportunities to the quantum of how much you will receive from Gas Naturale, then what would you do with that capital you've released if you don't find the right opportunities to invest in? Thank you.
[SPEAKER RAMON ALVAREZ PEDROSA:] I mean, you are right. Without any proceeds coming from Gas Naturals, my best approach or guidance for the debt of the year at the end of 2018 will be at around €6,000,000,000 I mean with no proceeds coming from Gas Net. And I mean, it's easier to calculate what could happen after these disposals. But I mean, a company like Repsol in the oil and gas sector is quite comfortable with our debt at around 1.1 times the EBITDA of the company. But I mean, being at 0.5, being at 0.6 for a while or for some months or for 1 year, I mean, nothing happens.
I mean, some of our competitors, they are there, where other competitors are at 1.3 or 1.4. And if you take the average of the European majors, I think that the average could be at around 1, 1.1. So I mean, the rating is not now our target. This debate for the management of Repsol, of course, respecting the key role of the rating agencies for the financial community and for companies, but this debate is over. So we are now in the next step.
Are we going to invest in methadone, some businesses? I mean, I'm not in a hurry to invest anything. I'm going to find high returns and profitability. That is going to be the only driver I'm going to have. And nothing happens if we are not able to find for 3, 6, 9 months any relevant CapEx opportunity to develop this proceed.
I mean, we will see. And in the meantime, be sure that we are analyzing all the portfolio potential opportunities. I want to underline that for instance, in the chemical business of Repsol, in businesses like rubber, like polyols, like EVA, we are either a worldwide or one European leader. We could have we could find opportunities to invest and to grow in some niches. We are expanding and enlarging the geographies of our marketing businesses.
We are going to try to increase the value. We are building around the current clients we have now in our current businesses. We are going to develop all the related to the multi energy mobility to be prepared for 2,030. We are in the electric recharging. We are in the LPG.
We are going to develop the gas nut for mobility. I mean, that is our business. We are going to find opportunities, but I'm not in a hurry to do that. I mean, I'm comfortable with the cash we have now in our hands, better said we are going to have in some weeks in our hands. Thank you.
Thank you. Thank you, Rob. Our next question comes from Jon Rigby at UBS. Jon, please go ahead.
Yes, thanks. Two questions. The first is on the dividend policy. The dividend has been a bit all over the place in the last few years. Can you just remind me now you or clarify, now you're moving it to 0.90 for 2017.
How does that work through in 2018? Do you as an interim dividend take half of that? I know therefore we use the interim as half the final or half the year before? Or do we work off the 50 that is the final and work forward like that? Sorry, it's minutiae, but just to clarify.
And the second is, is on your CapEx budget for 2018, does that include the Vistund acquisition, I think, was announced in February early February? Thanks.
[SPEAKER JOSE RAFAEL FERNANDEZ:] Okay, John. I mean, first of all, I mean, I'm going to propose to the Board the dividend policy for 2017. That means that we are not going now to decide that. Anyway, I suppose that in November, more or less, the Board will decide what is going to happen with the dividend of 20 18. But I mean, let me say, companies, we change our policies sometimes because we could see or we could experience hard or difficult or complex environment issues like all that related to the oil price drop from 2014 on.
But I mean, we try to be in some way coherent. And I suppose that the Board is going to be coherent in November on what they are approving now. Anyway, it's up to the Board to take that decision in November. And my proposal is going to be for the whole dividend of 2017 to be remunerated at $0.90 per share. But as I said, I mean, Repsol, I mean, excluding tough times where we could see, let me say, complex enter into environmental situation trends to be a coherent company.
And I suppose that our Board is going to be coherent in the future. I mean, talking about Vision. Vision is included in the CapEx, but it's not material or relevant. I mean, we are talking I don't have the whole figure here, but it's included in this CapEx, yes, because the transaction was closed in January.
Right. So it's in the 2.4.
Thank you, John.
Thank you, John. Our next question comes from Matt Lofting at JPMorgan. Matt, please go ahead.
Thanks, Paul. Two questions, if I could, please. I mean, first, just coming back to the CapEx framework, dollars 3,400,000,000 CapEx for this year. I mean, I think, Jossy, you sort of referenced earlier directionally higher upstream spend into 20 19, 2020 to deliver the volumes. When you layer on top of that the upfront investment requirements in terms of the digitization drive that you layered out earlier and think about extending the production plateau firmly into the 2020s.
Can you just talk about where you see the medium term organic CapEx range beyond 2018? And what medium term ore price range you sort of pivoting that view around or to put it a different way? To what extent you see flex in that CapEx plan in the context of the new strategic plan if we do see oil prices reverse lower than or meaningfully lower than current levels? And second, I mean, just in the context of the new strategic plan and on an ex gas nat basis, what do you think is the right level or range for balance sheet gearing on a medium term basis? Thanks.
Thank you, Matt. I mean, I have in mind that the upstream CapEx, if we take the development CapEx for the year 2018, a 51% of this CapEx is growth. I mean, growth projects, I mean, YME, Carondeaux, the Bangapug mine in Malaysia, the Bakken, the project in Trinidad and Tobago, the ramp up of some projects like Regan that they are still there. So 51 is growth if we take the development. If we add the exploration and we take the whole figure of this CapEx, 63% of the total CapEx of the E and P this year is growth.
I mean, flexibility, you know that it was higher in January 1, that is in March, and is going to be lower in June. But I could say today that if I have to reduce that is not the case because as you are asking in your last question, we are not in a bad financial situation. But if I had to reduce CapEx in the upstream, I think that they could reduce the year without perhaps hurting too much to lose Capra, euros 200,000,000 in dollars 200,000,000 sorry, in exploration and perhaps a figure close to $400,000,000 something like that in the development side. Anyway, that is not going to happen. The main 400,000,000 let me say flexibility a half or a bit more than a half in the development projects in the unconventional in North America.
And going to the future, of course, I'd like to stress the fact that this production of 2020 of 750,000 barrels is not taking into account any barrel coming from the ICDC projects. I mean, where is the right level? I mean, that's I think that the right level is the level that could guarantee to Repsol a BBB stable for the rating agencies. That is the right level. And we are going to have, let me say, ups and downs in the middle because I mean, we manage a company and my duty is to try to obtain higher returns and a high competitiveness for now and for the future in our company.
But I think that having the BBB stable, I'm quite comfortable in balance sheet terms. Thank you, Matt.
Thank you, Matt. Our next question comes from Fernando La Fuente at Alantra Equities. Fernando, please go ahead.
Hi, Paul. All my questions have been already answered. Thank you so much.
Thank you, Fernando, and have a nice day.
That brings our questions to an
end at this stage. So let me thank you for all of you for attending this Q and A and have a nice day. Thank you. All of you.
Ladies and gentlemen, that will conclude today's presentation. We thank you much for your participation. You may now disconnect. Thank you.