Spain’s Cepsa mulls chemicals divestment to raise funds for green transition

MADRID (ICIS)–Spanish energy and petrochemicals major Cepsa could divest or establish a joint venture for its profitable chemicals division to fund its green energy transition, sources with knowledge of the matter said.

The company could be set to raise around €3bn in the event of a sale of its chemicals operations, according to sources cited by news agency Reuters.

Cepsa said it has initiated a process to provide its core operations with “greater autonomy”, which would include the chemicals division.

Cepsa’s chemicals division has performed well since The Carlyle Group acquired a 37% stake in the company from Abu Dhabi’s investment fund Mubadala in 2019.

Cepsa has fallen behind in investing in greener energies relative to peers like Repsol, at a time when pressure is mounting for oil majors to shift further towards clean energy provision.

The company declined to comment on the record about a sale, but a spokesperson for the company stated that Cepsa has “initiated a process” to  bolster its core operations with a focus on enhancing its clean energy credentials.

In a statement, Cepsa said: “We are focused on enhancing the growth and leadership positions of our business units, including Cepsa Quimica, through the development of a new green offer.

“In order to respond quickly to the challenges of the green transition and provide the agility and flexibility to capture opportunities, we have initiated a process to provide our core businesses with greater autonomy.”

At the time of Carlyle’s investment, Cepsa was valued at around $12.0bn. The company was previously 100%-owned by Mubadala.

The company suffered greatly from Spain’s lockdown in the second quarter of 2020 to contain the pandemic, one of the strictest in Europe.

The chemicals division posted sharply higher earnings during the third quarter, year on year, although it suffered lower margins in its acetone and phenol business when compared to the prior quarter.

Cepsa is also a large producer of linear alkylbenzene (LAB), used in detergents, as well as many other petrochemicals. It has production facilities, apart from its domestic Spanish market, in Canada, Brazil, Germany, and China.

Cepsa appointed in October its second CEO in only two years; the appointment of Maarten Wetselaar, a former Shell executive, is to be effective on 1 January.

The sources cited by Reuters said Cepsa would be sounding out interest from both private equity funds as well as major European chemicals producer such Evonik and INEOS.

Front page picture: Cepsa headquarters in Madrid
Source: Cepsa

Clarification: Re-casts introduction