Good morning, ladies and gentlemen. Welcome to Galp's second quarter 2025 results presentation. I will now pass the floor to João Gonçalves Pereira, Head of Investor Relations.
Good morning, everyone, and welcome to Galp's second quarter of 2025 Q&A session. In the room with me, I have both our Co-CEOs, Maria João and João Diogo, as well as the executive team. Before passing the mic for some quick opening remarks, let me start by our usual disclaimer. During today's session, we will be making forward-looking statements that are based on our current estimates. Actual results could differ due to factors outlined in our cautionary statements within the published materials. João Diogo, the mic is yours.
Thank you, João, and good morning, everyone. The second quarter of 2025 was another strong quarter for Galp . Being resilient and having a strong asset base in a volatile macro context gave us comfort to execute our strategy. During the quarter, we saw strong performance with higher-than-anticipated upstream production, increased LNG trading flexibility, a good rebound in the Spanish oil products market, and new renewables capacity coming online. Production stood at 113,000 barrels per day, reflecting limited maintenance performed in the period. While remaining conscious of upcoming turnarounds, we upgraded our full-year production guidance to a range of 105,000-110,000 barrels. We are now fully including the LNG volumes from Venture Global on our guidance, following the successful lifting, all on schedule, of three cargoes in the quarter. The leadership team is focused on execution, and I see sound momentum ahead for Galp .
Now I'll let Maria João comment more on the financial guidance update.
Thank you, João Diogo. Indeed, a strong quarter across the board, with our operating performance overcoming a bit of a headwind from dollar depreciation and delivering strong cash generation. For 2025, we are revising our forex assumptions, but leaving Brent and the remaining macro unchanged. Overall, backed by the improved operating performance, full-year group EBITDA is now expected to surpass EUR 2.7 billion. This is an upward revision from EUR 2.5 billion. Consequently, operating cash flow is now expected to be over EUR 1.8 billion. As for Namibia, the partnership process is going according to plan. Late June, early July, we received non-binding offers—that is plural—all from highly credible players. I hope you understand that we will not elaborate more than this, as we will now progress further into negotiations.
Ultimately, the end game is very clear. We are seeking to secure a strong partnership with an experienced operator based on a solid alignment on how to progress with Mopane. Operator, shall we start the questions?
Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To ensure everyone has the opportunity to ask questions today, please limit yourself to just two questions. We will now go to our first question. Our first question today comes from the line of Matthew Smith from Bank of America. Please go ahead.
Hi there. Good morning. Thanks for taking my questions. A couple from me, please. The first would be on the production guidance. You noted you've upgraded that today. I just wanted to clarify whether Bacalhau featured as a moving part here at all. It sounds as though the project's on track for first oil in the third quarter, as I understand it, which would be a slightly quicker rate than anticipated back in February. The second question, perhaps turning to CapEx, you had a very light quarter for the group in 2Q without any Namibia exploration in there. Perhaps could you comment on the moving parts? It does feel as though ex-Namibia, your sort of CapEx run rate should be much lighter going forward in future years than it has done in recent history. Thank you.
Thank you, Matt. Starting with the production guidance update, and I think your question was fundamentally on Bacalhau. We are, indeed, we've had a good performance, a very good performance in terms of the first two quarters of 2025. Bacalhau is a very small piece in this. We are expecting very little, over 3,000 barrels. We continue to align with the operator's guidance on later this year for first oil. Other than that, our performance is fundamentally levered on the fact that we have sustained very high integrity levels across the fleet. We are, of course, keeping a bit of caution for unplanned events in the second half of 2025. The first half was really very good performance in that respect, nearly no unplanned events. Fundamentally, we are guiding based on our existing fleet and leaving a bit of room for Bacalhau, but very limited production contribution there. Thank you.
On CapEx, you are right, CapEx has a very different profile from 2025 and onward to 2026. 2025 is indeed a year where we've revised our CapEx to below the $1 billion that we had been guiding before. Our revised net CapEx for this year is $1.8 billion. This is considering the proceeds we've already collected. I think fundamentally, for the second half of 2025, we expect to have a bit of a heavier CapEx than the first half. We were a bit under $500 million in the first half. Upstream should be relatively flattish, but in industrial, the low carbon projects' CapEx will be accelerating. We have a 2026 online date for both projects. The second half of this year is going to be in the $100 million-$150 million expected CapEx. Commercial and renewables will continue to deliver. Commercial, as usual, we are fundamentally investing in transformation.
There are remaining investments in customer loyalty and in allowing our operations to move closer to our customer bases there. That overall should be $100 million by year-end. Renewables, again, we're maintaining our expectations. This should be around $200 million, fundamentally for capacity rollout. All in all, a slightly heavier second half of 2024. We expect 2026 to then be lighter as we complete a number of these investments.
Thank you.
Thank you very much for that. Happy to pass it on.
Thanks.
Thank you. Your next question comes from the line of Josh Stone from UBS. Please go ahead.
Thanks. Hi, and good morning. And congratulations on the strong results. Two, please. Firstly, on the midstream, I was hoping to unpick a bit more about the strength of that division this quarter. You received three cargoes from Venture Global. Are you able to maybe tell us the earnings contribution from those cargoes this quarter? And also, if I was to exclude Venture Global, how strong was the underlying midstream result this time around? I'm just trying to get to where we're going for the rest of the year. Should I be extrapolating to 2Q? It does look like if I were to do something like that, then even your guidance still looks quite conservative. Is there anything I could be missing inside the midstream? Second comment, or second question even, on Namibia, and I appreciate your additional comments made here and understand you're in the negotiating phase.
There's not an awful lot you're going to want to disclose. It's good to see plural on the bids. Instead, on the timeline, when do you think is the earliest you could agree a farm out of Namibia? And when we get that farm out, what information do you expect to be able to disclose? Thanks.
Thank you, Josh. Basically, it's clear. We've guided you through a number of cargoes during 2025. We are expecting to get 10 cargoes overall till the end of the year. We've received three cargoes up to now. It represents roughly 60% of what we are getting in terms of volume overall. Also consider that we are having an uptick on all commodities, on the power and on the oil side. Consider also that we are raising an increased business in Brazil and also sales in Liberia. Year- on- year, on a year-on-year basis, are also growing. That's what you need to consider overall. Mainly, 60% of the increase comes from Venture . You should expect it to continue like that till year-end with the 10 cargoes. Thank you.
Okay. Maybe if I pick up on your question on Namibia, Josh, and thank you for the question. Right now, we're very focused on making sure that this partnership that we are seeking, which we see as the natural next step for the asset, is successfully derived. This is clearly our priority now. Having received the non-binding offers, we're now naturally looking into analyzing those offers and, to a great extent, defining the next steps will come from that. The timeline for this part of the process remains clear. This is a timeline until the end of the year. It was good to deliver on time the non-binding offers step. It's good that we continue to deliver across these markings across the process. We will now somehow step into more bilateral conversations to analyze these offers. Fundamentally, we're very happy that we have credible players engaging with us.
We do see the year-end timelines as something that will be helpful. We are not in a rush. Again, we don't see rushing as value accretive for Galp. The year-end timeline remains as our reference so far. Thank you.
Thanks for the comments.
Your next question comes from the line of Biraj Borkhataria from RBC. Please go ahead.
Hi. Thanks for taking my questions up too as well, please. The first one is just to follow up on the Venture Global volumes. Could you say what proportion of those volumes you hedged for this year and if you've hedged anything for 2026? The second question is just a little bit more broadly about shareholder returns and capital allocation. Because if I look at the starting point of Q2 and I think some of the working capital build comes back into the second half of the year, you've previously said the Namibia deal. I assume you'd get part of the CapEx repaid as well. It looks like at that point, post-deal, you'd have close to no debt. Now you're saying CapEx will roll off into 2026, and you'll probably get some sort of carry on the development as well.
Where does all of that and a very strong balance sheet and the growth from Bacalhau leave sort of capital returns to shareholders as we're thinking about 2026 and beyond? Thank you.
Thank you, Biraj. I'll go with the first one. As you know, hedging strategy will always play a role within our overall Galp hedging policy. At this point, we have no material hedges set for the long term, and we will not guide you through the short-term hedge that we have already in place with a Venture contract. All in all, we will always assess options to protect value and de-risk trading activities. We will continue to reassure our portfolio diversification and flexibility. That's all for now. Thank you.
On the distributions and the capital allocation, thank you, Biraj. I think the fundamental notion there is, of course, we will not be sitting on a pile of cash. We do see the value in both having a very steady and what we believe performing distribution policy. We continue to guide on an overall distribution policy that is a through-the-cycle policy. That is the one-third of the OCF with a steady growth on cash dividends. We see extraordinary dividends as introducing a volatility in the distribution policy that we do not see as valuable. Fundamentally, what we are guiding on right now is based on the fact that we do see as very important to maintain optionality and flexibility. Everything in Namibia is going according to expectations and to plans.
Again, maintaining this flexibility and having the balance sheet work to give us leeway has been value accretive for Galp . We will continue to be disciplined in our usage of the balance sheet. We will continue to be disciplined in investment. For now, we see no need for a fundamental revision of our distribution policy at this point. Thank you.
Okay. Understood. Thank you both.
Thank you. Your next question comes from the line of Alejandro Vigil García from Santander. Please go ahead.
Yes. Hello. Thank you for taking my questions. The last time I asked you a question, there was a blackout in Namibia. Let's finger scrub for today. Yeah, congratulations for the results. My questions are one about the production profile. You mentioned that Bacalhau is not contributing this year. Can you give us an indication of next year's contribution and the plateau, when you're expecting the plateau of this project? The second question is about the expectations of net debt by the end of the year. You mentioned that you are expecting a heavier CapEx in the second half. What is your expectation of the level of net debt, if you are expecting it to be stable in comparison with the level of the first half? Thank you.
Thank you, Alejandro. Let's keep our fingers crossed, right? Our first quarter, we had a bit of an earthquake in Lisbon at the same day of the call, and then we had a blackout. We are keeping our fingers crossed for today. On the production profile for Bacalhau in 2026, I think we've mentioned this before. If we start activities in 2025—sorry, later this year—we do see a gradual ramp-up. We do not have operator references at this stage, so we have been using as a reference some of our previous experience in Brazil. That leads us to a ramp-up of over a year. Fundamentally, the plateau, and that will be at 40,000 barrels. This is a plateau that we expect not to be—we do not expect it to be achieved in 2026. At plateau, we do see this as being approximately EUR 400 million in OCF.
This is with a 70% rent, but that is beyond 2026. Our production profile right now is still very much geared on our current fleet. As for net debt, we do not guide to net debt by the end of the year. What you have seen happen with our net debt in the quarter is very much driven also by the fact that the first half of the year is rather intense. We have had our dividend payments and a rather accelerated buyback execution. Fundamentally, by the end of the year, we do expect some of the working capital effects we saw earlier this year to flow through the system. With our revised Forex calculations, that will, of course, continue to have some weight as we have over 60% of our cash held in dollars. We do not expect net debt to fluctuate significantly other than from these aspects. Thank you.
Thank you. Your next question comes from the line of Ignacio Doménech from JB Capital. Please go ahead.
Before taking my questions, the first one is on L&T trading. I'm sorry if I missed a question earlier. If you could help us understand the contribution from the trading division in the quarter, specifically, what is the approximate margin in EUR per megawatt hour? Looking ahead, how do you see the structural arbitrage opportunity evolving between FENREHAB and TTF over the long term? What would you highlight as the key drivers sustaining that spread? Secondly, I have a question on the special energy tax in Portugal, on CES. There was a recent constitutional court ruling in favor of another company regarding this application on gas distribution assets. I was wondering, given the provisions that you currently hold on your balance sheet above EUR 200 million, what's your view on the likelihood and potential timing of a reversal?
The third one, if I may, just if you could give us a quick update on the regulatory outlook in Brazil, if you can provide an update, particularly on any recent developments or discussions around changes to royalties or fiscal terms that we should be aware of. Thank you.
Thank you, Ignacio. I'll take the first one. Indeed, I made a couple of comments before about the contribution coming from Venture. We will not disclose any margins coming from LNG. For sure, at this point, we have already in the basket three contracts with volumes from the U.S. A couple of them will come until the end of the decade. At this point, the guidance I gave is that we will be receiving 10 cargoes from the Venture contract. Already kept three at this point. Those represent roughly 60% of the increasing guidance that we are mentioning at this point.
That's all for now. Thank you.
Now, on fiscal terms, so to say, so on CES, our specific Portuguese regime, we see the recent decision as helpful in as much as we continue to defend our position that these are not justified and undue taxation. This constitutional court decision is positive in that sense. It has very limited impact for Galp for starters because it concerns only gas infrastructure and in particular only regarding the year of 2019. On that year, we already had a view that the likelihood of this tax to be effectively due by Galp was very low. There are no provisions in our accounts for that. Very limited direct immediate impact on our accounts. We do see it as a very positive decision as it confirms our stance concerning this type of taxation and regime. On Brazil, again, a lot of moving parts there.
We do continue to see Brazil as a country where the checks and balances work rather well. We do understand that Brazil is very receptive to foreign investment. We've just seen a couple of new bid rounds happening there. That, to us, is a good balance versus what we see as fiscal requirements and the need for gathering fiscal revenue in the short term. We continue to monitor very attentively what we saw recently. We see as very little direct impact, if anything, slightly positive recent developments, as there are conversations that build on a notion that fiscal changes should actually boost earlier upstream projects. No direct impact for Galp at this moment. This is a time to continue with our close monitoring and to continue to engage with Brazilian authorities to preserve this balance and to make sure that long-term foreign investment continues to be welcome in Brazil.
Thank you.
Thank you. Your next question comes from the line of Alastair Syme from CITI. Please go ahead.
Yeah, hi. Two questions. On Namibia, can you explain to me why you run this as a non-binding offer process versus perhaps moving straight to a more competitive auction? Secondly, the adjacent joint venture PL85, the Rhino Block, looks to have had some exploration success. I guess right on your border just south of Mopane. How do these results feed into your thinking? Do you have a formal data sharing arrangement in place for this joint venture? Thank you.
Thanks, Alastair. The choice of the non-binding, I think, builds into the notion that, again, we're not in a rush. We do see the process as having as a critical element, finding a partnership where we are very, very much aligned with the operator. We want an experienced operator, and we want to make sure that there is alignment in terms of progressing Mopane. We wanted to make sure that we had the basis to start what we believe will now be good conversations and that we don't just go for a competitive process where we do get the objective quantitative terms, but we do not get a good engagement in terms of discussing the alignment moving forward and the perspectives on how to develop the assets. This is a significant asset for Galp.
We want to make sure that we come to a partnership that is indeed value accretive, not rushing into it at all, and taking the non-bindings as part of building on that dialogue. As for what's happening around us in Namibia, PEL85, Azule, all results feed into our understanding of the basin. This is a very young basin. Everyone we've been talking to is building on a perspective on how to best develop it. We don't comment much on what's happening with our competitors, but we do believe that everyone we engage with is very committed to making sure that there's a path ahead of us for the basin. Local authorities are also very committed in building that path. All of this fits in a way that, for now, and with the recent developments, we see as positive.
We've been sharing data with the potential partners engaged with us in the current process. We keep tabs on what's happening in the market, obviously, but no further data sharing arrangements other than those. Thank you.
Thank you.
Thank you. Your next question comes from the line of Giacomo Romeo from Jefferies. Please go ahead.
Yes, thank you. Two questions for me. The first one, if I can go back to Namibia and the process, what are the next steps here? I understand that you're guiding for the process to continue by the year-end. Is the next step moving into exclusive negotiation with one party? And what's the timing there? Second question is on—sorry about that—is on Brazil. I'm trying to understand what do you think, what caused the good uptime you had in the first half, if there's any particular change in what the operator has done, and whether we could actually see a structural improvement in uptime going forward, or if I understand this is not reflected in your guidance, but just trying to understand what caused this better performance in the first half. Thank you.
Thanks, Giacomo. On Namibia, again, we're guiding for end-of-year achieving the, concluding the negotiations towards a partnership. We're not guiding on any intermediate next steps. We are now in presence of several non-binding offers. We're going to have to look into those, make sure we understand them, make sure we engage on conversations with these potential partners, and assess the alignment that we are able to build with each of those. That's going to take us forward. This requires, of course, bilateral conversations, but we are not guiding as to when and how and if we are going to actually make this a one-party negotiation. We are still keeping the end-of-year reference as the one to adhere to. On Brazil, good uptime on the second quarter and overall in the first half.
I think the causes have indeed to do with the fact that we see the operator very committed to a steady schedule in terms of maintenance. We do see the value of having that maintenance regular and preemptive. We see that that then builds into the good health and the performance quality of the fleet. This is something that we continue to foster and we continue to work on. There were, of course, very few unplanned events. Those, by definition, are not something that we plan for. We try to prevent them as much as possible. Still, I think the underlying factor is around maintenance and how to manage it and how to drive it forward more proactively and more on a preventive tone. I think I would highlight that more than anything else. Thanks.
Thank you. Your next question comes from the line of Michele Della Vigna from Goldman Sachs. Please go ahead.
Thank you. Again, congratulations for the strong result. Two questions, if I may. The first one is on renewables. When I look at a lot of your integrated oil peers, they tend to rotate assets also to be able to take advantage of some of the project financing. I was wondering if that's something you would consider or if you think there could be a better market for that. Secondly, could you please remind us how much contingent payments you are still due on the Mozambique and Angola disposals and some of the key conditions there? Thank you.
Thank you. Thank you for the question. On renewables and asset rotation, that is, of course, one of the strategies to be considered. I think what we've been making sure is that we look at the stage in which our asset development is currently and also looking at what's happening in terms of market conditions, of course. We are very focused on making sure we're executing in our current fleet and that we are exploring opportunities for creating value to the fleet. There's a lot going on in terms of how we see aspects of asset development, such as hybridization, such as battery deployment. There's even ancillary services. There's a number of aspects that we're considering. Not to say that asset rotation is something outside of our radar.
We just feel that the current market moment and the current market circumstances are not those that would actually allow us to drive value out of that rotation. Something to keep in mind, but a lot happening in the fleet that has been taking our priorities. On Mozambique, we are continuing to discuss with the Mozambican authorities. We still have, for the conditions and terms, we still have contingent payments emerging. Angola has been fully completed, so that one is closed. On Mozambique, we have two additional contingency payments coming, one on Coral and then the other one on the onshore development. The first one to take place, and we are seeking to confirm the dates, but right now what we're getting is that the first one on Coral is approximately $100 million, and this one is positioned to take place in the more near future, later this year, eventually.
The one onshore is, of course, the one where force majeure events have been more determining. This is a $400 million to be received upon that FID taking place. What we're seeing is that this is on a lengthier time horizon, probably well into 2026. Again, $100 million probably in the shorter term, $400 million coming up. Both of these on Mozambique, Angola fully closed. Thank you.
Thank you. Your next question comes from the line of Paul Redman from BNP Paribas. Please go ahead.
Yeah, hello all, and thank you very much for your time. My first question is just on working capital. Looks like it remains a big build following 1Q and a little bit of a reduction this quarter, but still a lot of working capital on the balance sheet. I just wanted to see what your outlook is on that for the rest of the year. Secondly, just on Namibia, you've got these several non-binding offers, and the word you're using a lot is credible partners. Have you got any more detail on what you guys class as a credible partner? I know you've discussed things before. Does that remain the same? Thank you.
Thanks, Paul. First, let me deal with working capital. Full-year outlook. We've seen the first and second quarters, particularly the first one with the bad weather causing some increase in working capital. We've already seen a lot of that build-up, that initial build-up revert. Inventories that we built in the first quarter are already flowing through the production. That's going to be a natural reverse. What took place in the second quarter had fundamentally to do with dollar depreciation. There was a bit of reduced payables, but fundamentally, what you see is the impact from dollar depreciation. All in all, what happens is you also need to take into consideration that the end of 2024 was at particularly low levels. We do not expect those levels of the end of 2024 to be the steady cruise speed levels.
There will always be a volume slightly elevated from the end of 2024. Having said this, we do see the fundamental inventory build-up in the first quarter as coming through. We do expect some of that to continue. In terms of what is a credible partner, I think what we've been sharing with you fundamentally has to do with the nature of the asset, leading us to believe that we do expect someone with a strong operatorship record. This is a young basin with deep waters, strong pressures. We expect someone that has the operatorship track record to deal with that. Other than that, fundamentally, someone that has an active perspective on how to develop the asset and with whom we can engage in a dialogue that leaves us confident in terms of having full alignment on how to develop it. We've shared this with you before.
We see Namibia as an asset where, given its size for Galp, keeping pace and developing a strategy that actually makes sure we're value accretive in the way we explore it is important to us. It's important that we are aligning that with our partners, that Namibia is at the top of their priorities, and they have a strategy moving forward that speaks to what we would like to see in terms of pace and in terms of where does the asset stand in your list of priorities. If you'd like, credible to us is a number of conditions. Fundamentally, those conditions speak to the ability to fully explore the asset and to do so at a pace that we see as the one that we see feasible for the asset. Thank you.
Thank you. Your next question comes from the line of Irene Himona from Bernstein. Please go ahead.
Thank you very much. Good morning and congratulations on a strong quarter. My first question is on upstream unit production costs. $1.20 in Q2, $1.90 in the first half. As Bacalhau comes in and ramps up next year, how should we think of that average production cost, please, for fully identified and then 2026? My second question, back to Namibia, I wanted to ask. Operationally, is Galp engaged in any specific activity? Essentially, I'm trying to understand if by year-end, aside of announcing the actual deal, the disposal, is there any operational announcement that we may anticipate? Thank you.
Thanks, Irene. Let me take this in line. Production costs, indeed. Unusually low, if I may put it this way. We are still guiding overall for $3 per barrel. This we believe to be our more sustained level. Even as Bacalhau comes in, and again, we do not expect a significant impact from Bacalhau this year. Very little production expected this year. As we ramp up, of course, the numbers will still be reflecting the fact that ramp-up is not yet full numbers. You also need to take into consideration going forward that Bacalhau is not leased. You may expect a little bit more CapEx there. It is just an OpEx there, sorry. It is just the reflect of financial costs being shaped differently there. Other than that, I think this quarter, what we had was the combined effect of good production.
There is a bit of dilution effect there, of course. Also the fact that maintenance was performed according to plan, but there was quite a bit of it in Q1. Overall, when you take Q2, it was relatively reduced. This always has an additional impact in the fact that the bonus associated with performance, those were not there as we had limited maintenance. All in all, indeed, good OpEx performance, but let us keep the guidance at the $3. We believe those will be the value sustainable. It is still very reassuring in terms of our portfolio competitiveness. On Namibia, nothing happening this year. We do not have any further exploration activities this year. We received the seismic late March.
Now everything we have planned on and everything we are executing on is very much on analyzing the data we got, both on the seismic and on the data that we were getting from the wells. We had a very fast pace of drilling, so that left us with a bit of a, I will call it backlog, for lack of a better expression, but a lot of information to digest through. That is the focus. No CapEx expected there, no CapEx foreseen there through the end of the year. Thanks.
Thanks very much. Thank you.
Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To ensure everyone has the opportunity to ask questions today, please limit yourself to just two questions. We will now go to the next question. Your next question comes from the line of Matt Lofting from JP Morgan. Please go ahead.
Thanks for taking the questions and congratulations on a strong update. On Namibia, I wanted to just ask whether you could share Galp's latest views on the development concept of Mopane and the extent to which any views that Galp does have on that is directly feeding into the partnership negotiations or whether we should sort of think about that as something which follows establishing the partnership model into 2026 plus. And then secondly, going back to the earlier points on the midstream business and the strong performance through the last six months. It strikes me that that performance looks like it outperforms many industry trends through the first six months of the year. Could you just talk a bit about the underlying drivers behind that on a, let's say, on a sort of an ex-Venture Global basis? Thank you.
Thanks, Matt. Thanks for the congratulations on the results. On Namibia, we're not sharing views on the development concept. Actually, if anything, that is something where we will, of course, have a view, but we expect this view to also be built together with the partners. This is obviously something that will be part of these early partnership establishing discussions. More than that, we expect it to then be part of moving ahead with the assets and developing it together. We expect to set up the conditions for alignment to be present in the partnership towards a joint understanding of how to develop the asset. At this moment, the development concept is not closed and it's not something that we are guiding in any way on. Maybe on midstream, Sean?
Yeah, yeah. Let me jump in. Thank you, Matt. As I've mentioned, it's not only the Venture Global contract coming on stream, it's also across all commodities. We are having increased results, a strong set of results coming from our trading desk, from the oil side, on the power side. Of course, if we want to highlight something, it will come from the increased flexibility that we have built on our gas trading as a critical contributor at this point. We have quite a complex sales basket at this point with different tenures and indexations. Venture and the contracts that we will be adding till the end of the decade will expand that exposure to the U.S., and we see it as a very strong point.
Of course, I've also mentioned our positioning in Liberia with a strong performance also on the volume side and also building a natural gas business in Brazil. We need to cross all those territories, all those commodities to support and sustain the, let's call it, the continued outperformance that we have, and we are hoping to keep it. Thank you.
Thanks very much.
Thank you. Your next question comes from the line of James Carmichael from Berenberg. Please go ahead.
Hi. Morning, guys. Just a couple, I guess. Just firstly on Namibia, again, apologies. I think in the past, you've been very clear that the aim of the farm-out process was to minimize balance sheet exposure to the development, as well as obviously bringing in a credible partner, etc. I guess given the conversations we've had about the strength of your balance sheet this morning, I'm just wondering whether that and or the sort of integration interpretation of the well data and the seismic data is maybe making you sort of rethink that and maybe look to retain a bit more of the equity and a bit more of the upside as you go through this process. Just secondly on industrial midstream, you mentioned that the SAF and the green hydrogen projects will be decent drivers of CapEx through the second half of this year.
Just wondering if you could remind us how we should think about them or how you think about them sort of benefiting the business once they're on stream next year. Thanks.
Thanks. James, hi. On Namibia, I think we've been very clear on the fact that the way we look at this partnership and this farm down from our side is that this is the natural step for the asset moving forward. This is a step towards making sure we have the conditions to develop the assets at the right pace. We do like the risk. This is an asset and a basin. What we've seen so far, this is something that we do expect to keep a meaningful quota in, a meaningful share in it. We are balancing these two aspects, right? We like the risk. We want to keep it in our balance sheet, but we do see a partner as being absolutely critical to make sure that the aspects we like about the risk do come through.
At this stage, what we've seen so far confirms our views of the asset. We're developing through it. We're analyzing through it, but it has not changed our view in terms of what we see as our target exposure right now. We like the asset quality, but we want that asset quality to actually deliver in value. Concerning H2 and HVO contribution in 2026, Sean?
Yeah, I'll jump in. James, thank you. If we can call it. At this point, Galp has a two fold focus. At one side, we are ensuring that our legacy business runs as efficient as possible. We are performing quite well also on that side, on the refining side. On the other hand, as you asked, we are at this point planning well and preparing the future. On the H2, and specifically on the 100 MW electrolyzer, at this point, the site is ready to receive the electrolyzer in Q3. We are, let's call it, closely monitoring the works and execution that is being done specifically in Dubai. We are expecting the startup in late 2026. At that point, we will be replacing 20% of the grey hydrogen consumption. That is a bold move that we took when we decided this project. We still see very competitive returns.
We are quite balanced on that, and we're quite confident also. That is what we can expect. Thank you.
Thank you. Your next question comes from the line Naisheng Cui from Barclays. Please go ahead.
Hey, good morning, everyone. Thanks for taking my questions. I'll ask something else. I have two questions on refining business, if that's okay. The first one is. Refining margin has been strong, especially diesel refining margin. I wonder you can share some of your outlook for the second half of the year. I appreciate you may have some turnaround activities coming up in Q4, but still, the forward curve looks quite strong than your guidance. A bit of color on that, that will be good. The second question is on your Spanish blackout impact. I know you have about EUR 80 million impact. I wonder if you can comment on whether there's any possibility to get the money back from either third party or insurance. Thank you.
Thank you, Naisheng. Hopefully, we could. At this point, the second question, it's not, it's not clear at all, but let me guide you to what we are looking at this point. July to date, refining margins look really good at this point, near double digits, supported by the diesel and jet fuel, but also on the seasonal support also from the gasoline. Of course, we've saw some lower utilization rates from the Chinese independent refiners. It's also supporting us at this point. As you mentioned, we are maintaining our guidance through the year. We have a large planned maintenance in Q4, and that's the reason why we will not increase our guidance. Anyway, on 3 Q, we are expecting really good availability, and that's where we are focused at this point. Thank you.
Thank you very much.
Thank you. We will now take our final question for today. The final question comes from the line of Alessandro Pozzi from Mediob anca. Please go ahead.
Hi everyone. Thank you for taking the questions. The first one on Namibia, you received the first non-binding offers. I was wondering if we have a bit more clarity on how long it might take for the project to go to FID after you potentially announce the transaction. We're talking about 12-24 months, and therefore potentially an FID in 2027 could be likely, and also maybe in 2026, whether potentially you're looking to resume exploration activities there. Second question on Mozambique. I've been reading in the press some disagreement around capital gains assessment. Can you maybe give us an update on where you are in terms of the capital gains assessments and payments in Mozambique? Thank you.
Good morning, Alessandro. On Namibia, way too early to have any sort of guidance on FID. We are early stage. We would like to have that discussion with our partner. No further guidance at this time concerning FID there.
Thank you, Alessandro, on the Mozambique. We have a long-standing presence in the region, especially through a relevant downstream position that we keep. I can say that we've maintained a constructive relationship with the government until this point. The overall issue is on the capital gains on our recent deal completion. Ms. Jean just mentioned the numbers. The government's estimate was based only on the accounting book value, disregarding all the investments to date, which Galp evidently disagrees with. This assumption, we are quite confident on our position. At this point, we are prioritizing a diplomatic, let's call it, solution, and not yet pursuing legal resolutions. Of course, we will actively manage the situation and, of course, access all and consider all options, including a potential legal dispute. That is what we are not eager in, but we are really supporting on that.
We have an external assessment fully supporting it. That is where we are at this point. Thank you.
Are the contingent payments that we talked about already net of capital gains?
No, it's not. That's the contingent payments that we will get, and that's it.
Then we need to take out the capital gains. Okay. Thank you.
We are not expecting any capital gains at this point.
All right. All right. Thank you. And just on Namibia. Would it be fair to assume a resumption of exploration activities in 2026?
It will be discussed. At this time, we don't guide on that.
All right. Thank you.
Thank you.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.