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Repsol Says $9.8 Billion Canaries Investment Needed

Repsol SA, Spain’s largest oil producer, will invest at least 7.5 billion euros ($9.8 billion) to produce the fuel off the Canary Islands near Morocco should exploration studies be successful.

Potential fields about 60 kilometers (37 miles) off the Canaries’ coastline could produce about 100,000 barrels a day, or about 10 percent of Spain’s daily consumption, Pedro Fernandez Frial, director of strategy, said in comments at a Madrid conference yesterday confirmed by the company.

Spain imports more than 95 percent of its oil and natural-gas needs from nations including Russia, Iran, Saudi Arabia and Nigeria. Jose Manuel Soria, the industry minister, said last year that discovering oil off the Spanish islands could be the “salvation” of the regional economy.

Repsol expects to receive environmental and project approvals in time to begin drilling before the end of 2014. The Madrid-based company has said the area off the Canaries holds 900 million to 2.2 billion barrels of prospective resources.

Those are deposits that might be pumped from yet-to-be-discovered fields, with no certainty that any portion will be found to be commercially viable.

The 900 million-barrel lower estimate compares with the 6 billion barrels Repsol and its partners are setting out to prospect in 2014 outside of the Canary Islands.

Trade Deficit Effect

Developing fields in the Canaries, which lie in the Atlantic Ocean channel between the islands and Morocco, potentially could reduce Spain’s trade deficit by 28 billion euros during their production years, based on estimates of barrels pumped at the average price of oil, Repsol spokesman Kristian Rix said today in a telephone interview.

The 7.5 billion-euro investment estimate was previously reported by Expansion newspaper.

Repsol’s shares rose 2.4 percent in Madrid today to 16.93 euros, beating the 0.7 percent gain in the Dow Jones Oil & Gas Titans index to which Repsol belongs.

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