Abu Dhabi’s Spanish refiner aims to be global hydrogen behemoth

(Bloomberg) — Cepsa SA, the Spanish refiner controlled by Abu Dhabi’s sovereign wealth fund, announced a sweeping clean-energy strategy as the European oil industry races to find new fuel sources.

In an attempt to differentiate itself from other European oil firms that have announced similar transitions, Madrid-based Cepsa will focus on developing energy for heavy transportation and industries. This includes green hydrogen and biofuels for trucking, shipping, airlines and other industries, according to Chief Executive Officer Maarten Wetselaar. 

“We have decided to take on the toughest challenge to de-carbonize,” Wetselaar said during a strategy presentation Wednesday in Madrid. “The solution is not as clear” for heavy industry and heavy transports, he added.  

Cepsa aims to produce 2 gigawatts of green hydrogen by 2030 as well as 2.5 million tons of non-food based biofuels, according to Wetselaar.

Betting on hydrogen and biofuels is risky because the two fuels are still not widely adopted. However, as the war in Ukraine upends energy policy across Europe, governments and companies are rushing to develop new sources and accelerating the energy transition. The increased focus on energy security is opening a window of opportunity for new initiatives such as those outlined by Cepsa.

Focus on Spain

Wetselaar, a 53-year old Dutchman, joined Cepsa on Jan. 1 from Shell Plc, where he was head of gas and new energies, leading the company’s push into clean energy. The executive aims to build the biggest network of hydrogen filling stations on the Iberian peninsula over the next eight years, with 100 sites. He also sees an opportunity in Spain’s aspiration to become Europe’s main hydrogen hub. 

One reason Cepsa is betting on the country is because the southern region of Andalusia has Europe’s cheapest solar production, which can be used to make green hydrogen, Wetselaar said. The company will develop renewable energy production plants, mainly for its own consumption.

To achieve its 2030 goals, Cepsa aims to invest between 7-8 billion euros ($7.8 billion to $8.9 billion). The company said sustainable energy will account for the majority of its profits by the turn of the decade. Today, this is mostly from fossil fuels. 

As part of the strategy, the company aims to reduce its carbon footprint. It will retain its chemicals unit, which will shift to being cleaner. Its oil exploration and production division will aim to grow and be self-funding. 

Cepsa is owned by Mubadala Investment Co. and The Carlyle Group Inc.