Spanish Oil Giant Cepsa Threatens to Prioritize Investments in Morocco Over Spain

Spanish oil company Cepsa is warning it may “prioritize” hydrogen investments in Morocco and other countries over Spain if the Spanish government makes a temporary energy tax permanent, according to reporting by Spanish newspaper El Mundo.

Doha – Spanish oil company Cepsa is warning it may “prioritize” hydrogen investments in Morocco and other countries over Spain if the Spanish government makes a temporary energy tax permanent, according to reporting by Spanish newspaper El Mundo.

Cepsa, the second largest oil company in Spain, said a permanent tax hike would have a “very significant effect on the profitability of hydrogen projects.” This could lead the company to slow planned investments in Spain and instead prioritize green hydrogen projects in Morocco, Algeria, Brazil and the United States that were initially slated for a later phase of its strategic plan.

The oil firm had announced €3 billion in hydrogen investments in Spain as part of its “Positive Motion” plan, including a major project in Andalusia. Those investments are now uncertain due to the tax dispute, Cepsa indicated.

Cepsa CEO Maarten Wetselaar has repeatedly stressed that the company’s projects are contingent on a “stable regulatory framework.” Making the temporary energy levy permanent, as the Spanish government has proposed, would undermine that stability, according to Cepsa.

The Andalusian regional government, which has strongly backed Cepsa’s hydrogen project in Huelva, has threatened legal action against the Basque Country if it is allowed a lower tax rate to attract investments away from other regions.

In response to Cepsa’s warnings, Spanish Deputy Prime Minister and Finance Minister María Jesús Montero accused the oil company of “overreacting and hyperventilating.” She said it was normal for the sector to react this way when facing higher taxes but argued the industry’s high profits justified a larger tax contribution to fund public services.

However, Montero said the government was open to providing incentives for continued investments in Spain’s energy transition, even with the higher tax.

Along with Repsol, Galp and BP, Cepsa estimates €16 billion in energy investments in Spain through 2030 are now at risk due to the tax uncertainty. Cepsa is 62% owned by Mubadala, the sovereign wealth fund of the United Arab Emirates, and 38% by US investment firm Carlyle.