Repsol was a company on a mission between 2008 and 2011. It focused strategically on many things, but one of its key goals was to develop an enviable position in some of the world’s most attractive basins. The company was involved in 30 discoveries in that period, 17 of which it operated. Of those, four were among the annual “top five” in terms of reserves size, according to IHS.

Impressively, the company also achieved a leading reserves replacement ratio (RRR) of 162% in 2011, a huge upswing in its fortunes from a relatively unremarkable RRR of just 65% in 2008.

In 2013 it is still so far, so good: The company is currently growing its production at around 3% to 4% per year until at least 2014, with that percentage expected to keep rising toward 2019. Around 90% of the production increase to 2014 is based on projects already under development. Between 2011 and 2016 Repsol expects to grow its production by a compound annual growth rate of 7%, with production expected to be around 500,000 b/d by the end of that period.

With its forecast RRP average for the same period expected to remain at least above 120%, Repsol is focusing on the upstream sector as its main growth engine.

The company is putting its money where its mouth is, too – the planned average upstream capex for 2012 to 2016 is put at US $3.9 billion per year. That is 120% higher than the average upstream capex it spent from 2008 to 2011. Or put another way, between 2008 and 2011 Repsol’s annual cumulative group capex of $4.3 million (including upstream, downstream, corporate, and LNG) saw 41% of the total spent on upstream activities. Between 2012 and 2016 that upstream figure will rise to 77% of the cumulative group capex of $5.1 billion per year – a massive change in emphasis, with at least $1 billion per year to be spent directly on exploration.

Mozetic explains Repsol’s strategic ambitions going forward and how the company is tackling the challenge.

What are Repsol’s exploration plans for 2013 to 2014, particularly for Brazil and West Africa?

2013 and 2014 will see strong activity in Brazil. This will consist of continued exploration in the nonoperated inventory in the presalt Santos basin, appraisals of discoveries in the operated post-salt Santos basin, and appraisal and exploration in the operated Campos 33 (Block BM-C-33) presalt, with a dedicated rig due to arrive before the end of 2013 and with a program that extends beyond the period.

In West Africa activity will be increased in 2014 with the incorporation of drilling activity in two new countries: Namibia and Angola, the latter of which is the site of an intensive drilling program commitment in three blocks, one of them operated by us.

Brazil and West Africa will see more activity in 2013 to 2014 compared to the previous two years.

What are the largest ‘flagship’ projects the company currently has in the development stage in these areas, and what are the total forecast or budgeted development expenditures?

The main flagship development projects in these areas are the two large strategic projects for crude oil in the deep waters of the Brazilian presalt: Sapinho? (formerly Guara) and Carioca. Both are located in Block BM-S-9 in the Santos basin. Another very important flagship project is in Block BM-C-33, operated by Repsol. It is currently in its evaluation phase after three big discoveries, which were made in the last three years (Seat in 2010, Gavea in 2011, and P?o de A??car in 2012). BM-C-33 is located in the ultra-deep waters of the Campos basin.

Production from the Sapinho? megafield, in the southern area began in January 2013. The first producer well (Guara-1), with potential production of more than 25,000 b/d, was connected to the FPSO Cidade de S?o Paulo to be produced. Over the coming months the development plan will see the connection of new production wells to the FPSO, reaching a total production of 120,000 b/d of crude oil in the first half of 2014.

In a second development phase of the Sapinho? field, the northern area will be onstream in the second half of 2014 via the Cidade de Ilhabela FPSO, with a daily production capacity of 150,000 bbl of crude oil and 6 MMcu m of gas.

The Carioca project is in the evaluation and development phase and is planned to start production in 2016 or 2017.

The net development expenditures forecast for the 2013 to 2016 period in Brazil and West Africa, according to our strategic plan, are approximately $3.5 billion. Of this amount, 95% will be in Brazil, and the rest will be mainly in Angola and Sierra Leone.

What is Repsol’s current and forecast oil and gas production levels from these areas?

Current production from these areas comes from daily production in Brazil in 2012 was around 4,500 boe/d, the majority being liquids (96%). The net daily production forecast in our 2012 to 2016 strategic plan for 2016 in these areas is 50,000 boe/d (in Brazil), 90% liquids. There is no production forecast from West Africa by 2016.

What is the longer term ambition for Repsol, not only in Africa and Brazil but elsewhere and including onshore as well as offshore? Can you give us some post-2016 planned growth areas?

The long-term goal for our E&P division is to continue to grow a resource base that increases the reserves replacement and production growth figures (amongst the best in its class). For this reason, Repsol has already been working on opening new growth platforms, replacing acreage with long-term goals. The plan is to continue being very active in new areas. This growth activity is supported by a strong commitment to realize the current pipeline of development projects in the safest and most efficient way.

What are the different challenges faced in Brazil and the various West African countries?

Each country brings different challenges. While the local content in Brazil has been an open issue, there are local resources and capabilities that, given some flexibility and a fair balance, will be able to provide. The challenge in other countries, on the other hand, is the lack of local capabilities.

How many of the company’s assets in these areas are operated by Repsol? Is there a plan to increase the level of operated blocks and projects by the company?

As of Dec. 31, 2012, Repsol had a participation in 12 blocks in Brazil. It is the operating company in five of them. Additionally, Repsol has an interest in 27 blocks in West Africa (10 operated by Repsol, including 12 services contracts operated by Sonangol). This includes Angola, Liberia, Sierra Leone, Namibia, Morocco, and Mauritania. Repsol plans to increase its presence as an operator company in this area.

What emerging technologies does Repsol consider most important in terms of its upcoming projects? What are those that it sees as holding the most potential in the subsurface, drilling, and production environment?

In terms of exploration, the second phase of our Kaleidoscope complex subsurface imaging project is fundamental to maintaining our success rates and opening previously unseen prospectivity. We also are devoting research efforts to updating and adapting potential geophysical methods. The combined use of several geophysical methods is still the only indirect way to close the gap with the uncertainties of the subsurface.

What areas of technology does Repsol see as most challenging and in need of further enhancement?

Our technological edge is one of the strongest in comparison to our competitors. A pioneering exploration strategy coupled with risk mitigating geological analyses will continue to help Repsol minimize the uncertainty involved with attempting to explore and cultivate new sources of oil.

How much does Repsol spend on upstream R&D?

Repsol spent Euros 12.5 million ($16.8 million) in 2012 on upstream research and development.

What is the breakdown of the company’s deepwater vs. shallow-water vs. onshore holdings? Of the offshore assets, what percentage lies in deepwater?

In terms of acreage, currently our net position is 44% onshore, 12% shallow offshore, and 45% deep offshore.

How does Repsol view its alliance with China’s Sinopec in Brazil? What is the long-term aim here, and is there a possibility that the alliance will be expanded to other regions?

Repsol is committed to see Repsol Sinopec grow in Brazil. The growing understanding derived from jointly overseeing the progress of this company will surely create other opportunities where our interests converge.