In his speech at the CNN summit in Portugal, Andy Brown urged to debunk the myth that Galp takes advantage of Portuguese consumers and warned that prices in the regulated gas market could also rise.
Galp Energia’s executive chairman Andy Brown has rejected accusations that the company is making money from Portuguese consumers because of the energy crisis and high prices. In his speech this morning at the CNN Portugal summit in Lisbon, the manager emphasized that despite the global gains announced in the first half of the year, the company was losing money to supply gas to the Iberian Peninsula: “Unfortunately, we are doing a lot little money in Portugal,” said Andy Brown.
According to the CEO of Galp, there are three myths associated with the company that it is important to dismantle.
First myth: Galp’s profits are outrageous
Galp announced a profit of more than 400 million euros in the first half of 2022. But Andy Brown recalls that Galp had two years of major difficulties due to the pandemic and has invested more than eight billion in capital worldwide. “Profit represents 10% of what we have invested, which is much lower than the returns of most companies in Europe,” he said. In addition, “Galp is investing more than this amount this year in the construction of new infrastructure”. The manager also explains that 80% of the cash flow (resources released) comes from oil production, in countries such as Brazil and Angola.
Second myth: Galp benefits consumers in Portugal
“Unfortunately, we make very little money in Portugal,” said the company’s CEO. Portugal’s contribution is 3% of the profit. In addition, he explains, Galp lost “€135 million in gas imports to the Iberian Peninsula” in the first half of this year, due to power cuts in Nigeria, which the company had to compensate by buying energy on the market. higher prices. “And despite these losses, we have never been able to fulfill our contracts and deliver gas to our customers.”
Andy Brown took the opportunity to criticize the government for allowing the return of more than a million customers to the regulated gas market – a market supplied by Galp. “We are discussing this matter with the government,” he revealed. “We believe this move affects our rights” and is “a setback after years of moving towards market liberalization”.
Andy Brown admits that he understands the “frustration of the public” that cannot switch to the regulated market, but recalls that these companies only have 2% of gas consumption in Portugal. In addition, the law foresees the disappearance of the regulated market by 2024. “Companies do not have the capacity to welcome everyone who wants to change, we have to ask people to be patient,” he said. “I also need to warn the public that Nigeria’s supply-based regulated market is subject to regular price revisions, so prices could go up.”
Third myth: Galp makes big profits and therefore has to pay more tax
“We already pay a lot of taxes, taxes in Portugal are very high compared to other European countries, which puts us at a competitive disadvantage,” said the company’s CEO.
Between 2005 and 2022, Galp spent €2.7 billion on refineries in Portugal. “Galp financed the refineries for 18 years without any return. This year, for the first time, the refinery has made a profit, which Brussels says will have to pay higher taxes than it should, as the Commission proposes a 33% tax on profits in 2022 that is higher than 20% of the average profit for the previous year. three years.
“I recognize that the Portuguese are concerned about the coming winter and their ability to pay their energy bills. This is a difficult time. It is easy to blame the war in Ukraine, but let’s not forget that oil prices high before the war. This crisis has more to do with the lack of investment in traditional fossil energy sources (oil and gas) and the slow transition to renewable energy sources,” he said, underlining the importance of making much faster progress. in the exploration of copper and lithium.
“The pandemic was followed by an energy crisis, which is now being followed by a war in Europe. In times of crisis, it is very easy to focus on the short term,” said Andy Brown, underlining the need to focus on the maintain the energy sector. transition and in the climate emergency. According to him, for the energy system to work, energy must be accessible, available and sustainable. “I’m afraid the first two criteria take precedence over the third,” he said. “Clearly, 2022 was a year of setbacks” when it comes to sustainability. However, we know that “the only way to combat climate change is through massive and urgent change in renewable energy.”
So he called on governments to “make laws to encourage green investment and facilitate licensing. At the same time, we must work to reduce fossil fuels that make up 80% of the energy system.” This crisis has shown that we are still very dependent on fossil fuels, so “investments in oil and gas cannot be demonized. This is not a good way to accelerate the transition of our energy system.”
Galp will do his part, he assured. But governments and the European Union must work together with companies. This is “teamwork”. “Creating an attractive investment climate is the only way to solve energy and climate crises together,” he concluded.