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* Fossil fuel companies under pressure in energy transition
* Galp eyes 40% capex for energy transition
* Share price eases
(Adds CEO comment, detail on oil and gas production)
By Catarina Demony and Sergio Goncalves
LISBON, Feb 18 (Reuters) - Portuguese oil company Galp
Energia said on Tuesday it would kick off its green
business by installing renewable energy capacity of 10 gigawatts
in the decade ahead, enough to power millions of homes.
Galp, which last month bought solar power projects from
Spain's ACS for 2.2 billion euros ($2.38 billion),
hopes to install 3.3 gigawatts of solar energy in Portugal and
Spain alone by 2023, generating more than 10% in equity returns.
Fossil fuel companies are racing to adapt to
investor-demands for more sustainable business models as public
awareness of climate change grows.
Galp sees itself as well-placed to "build a competitive
renewable business" from its location on the Iberian peninsula
with its 1,800 solar hours annually.
But its targets depend on the availability of good projects
on the market, Chief Executive Carlos Gomes da Silva said.
Galp also still aims to expand its oil and gas production at
least into 2030, which at 122,000 barrels of oil equivalent a
day last year has almost tripled in size since 2015.
From this year onwards, it said that more than 40% of Galp's
capital expenditure, between 1 billion to 1.2 billion euros,
will be spent on the energy transition, which includes renewable
energy and a natural gas project in Mozambique.
Galp is the largest oil and gas group in Portugal, where it
distributes gas and sells petrol.
Traditionally an oil refinery, Galp attracted interest from
investors due to its growth prospects in oil and gas production
in projects in Angola, Mozambique and Brazil, where China's
Sinopec has 30% of its assets.
'GROWTH TRAJECTORY'
Globally, it competes with majors such as Royal Dutch Shell
, BP, Total and Exxon.
BP last week set one of the oil sector's most ambitious
targets for curbing emissions, although some environmental
campaigners accused it of greenwash and said it had not given
enough detail on how it would achieve its targets.
Galp did not unveil any long-term climate targets on
Tuesday.
Its adjusted net profit rose by 44% in the fourth quarter of
2019, compared to the same period in 2018, boosted by the
operational performance of oil exploration and production,
despite an 8% drop in oil prices.
However, its adjusted net profit in 2019 as a whole fell 21%
to 560 million euros compared to the year before as a result of
weaker refining margins.
The oil firm posted earnings before interest, taxes,
depreciation, and amortisation of 653 million euros between
October and December 2019, a 32% jump compared to same period in
2018.
It added the firm's "growth trajectory" should lead its cash
flow from operating activities (CFFO) to surpass the 3 billion
euros mark from 2025 onwards, against 1.9 billion euros in 2019,
while the upstream CFFO is expected to exceed 2 billion euros.
Galp's shares weakened slightly following Tuesday's results
and by 1242 GMT, were around 0.8% lower, eroding the previous
session's modest gains.
($1 = 0.9234 euros)
(Reporting by Catarina Demony and Sergio Goncalves, additional
reporting by Shadia Nasralla in London; Editing by Barbara
Lewis)
