Annual Report 2012 2012 milestones...summarizing Repsol's experience as a pioneer in All milestones...

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2012-2016 Strategic Plan

Upstream, a growth driver

Defending shareholders' interests after the seizureof YPF

The best refineries in Europe

At the forefront of diversity and work-life balance

Repsol Campus, embodying corporate values

Investment in R&D and innovation, a drive tocontribute added value

Excellence in top-flight racing

2012 milestones

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On May 29, 2012, Repsol unveiled its 2012-2016Strategic Plan, which has four mainstays:achieving high Upstream growth, maximizingDownstream returns, remaining financially robust,and ensuring shareholders receive competitivereturns. The company plans to invest €19,100million over the period, which will be fundedthrough the company's ability to generate cashflow. Around 80% of these investments will beearmarked for the Upstream division; Repsol'sgrowth driver. The goal is to increase hydrocarbonproduction by an average annual rate of 7% to500,000 barrels of oil equivalent per day in 2016,while achieving a proven reserve replacement ratioof over 120% for the period. Exploration andproduction activity will center around ten keyexpansion projects, among which are some of themost significant oil finds in recent years, located inBrazil, the United States, Russia, Spain,Venezuela, Peru, Bolivia and Algeria. Five of theseten projects came on stream in March 2013.

As part of Repsol's strategy, it reached anagreement to sell LNG assets to Shell. The dealsees annual divestments of over €5,000 million,exceeding the targets established in the StrategicPlan, which sets out divestments of between

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Defending shareholders'interests after the seizureof YPF

The best refineries inEurope

At the forefront of diversityand work-life balance

Repsol Campus, embodyingcorporate values

Investment in R&D andinnovation, a drive tocontribute added value

Excellence in top-flightracing

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€4,000 million and €4,500 million over the2012-2016 horizon.


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The Upstream division has cemented its positionas the company's growth driver. In 2012, all itsfinancials improved significantly: production grewby 11.3%, five new finds were made, and a provenreserve replacement ratio of 204% was achieved,an all-time record for Repsol.

By March 2013, the company had already startedproduction at five of the ten key sites defined inthe 2012-2016 Strategic Plan, located in Bolivia,the United States, Spain, Russia and Brazil amajor step forward towards its production targets.

In five of the last six years, Repsol has made one ormore of the ten most important discoveries in theworld according to market intelligence companyIHS. In the case of 2012, this key find turned outto be Pao de Açúcar (Brazil).

At December 31, 2012, Repsol participated incrude oil and natural gas exploration andproduction blocks in 28 countries either directly orthrough its investees. As part of its geographicaldiversification strategy, the company expandedoperations to four new countries (Namibia,Australia, Bulgaria and Aruba), requiring it to setup high-potential exploration assets.

The Upstream workforce managed by Repsol has

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risen by close to 150% in eight years from 1,254 to3,043 individuals, while the discovery rate standsat 31%, above the sector average.


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Defending shareholders' interests after the

seizure of YPF

Following the seizure of 51% of its stake in YPF,Repsol called for due compensation, while alsoremaining open to negotiation.

The legal strategy since April 2012 has been todefend the interests and rights of all Repsolshareholders while claiming monetarycompensation up to the value of the seized assets.

To this end, Repsol has filed various legal claimsagainst the Republic of Argentina and YPF withthe Spanish, Argentine and US courts, and with anumber of supranational bodies, citing breaches ofthe obligations assumed by the Argentinegovernment in 1999.

These include arbitration proceedings initiated byRepsol against the Republic of Argentina at theInternational Centre for Settlement of InvestmentDisputes (ICSID) for breach of the BilateralInvestment Treaty entered into by Spain andArgentina, specifying, inter alia, the obligation toavoid hindering investor activity through arbitraryor discriminatory measures. The company alsosubmitted a claim in Argentina forunconstitutional intervention, as established underarticles 13 and 14 of the country's Expropriation

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Law. Repsol also brought action against YPF inSpain for unfair competition after YPF offered thirdparties the rights to exploit strategic assets,including the Vaca Muerta assets. Yet at the sametime, the company remains open to dialogue.

Despite the unlawful and discriminatoryexpropriation, Repsol's results were not impactedin 2012, demonstrating its ability to adapt to thenew circumstances, move forward with itsstrategic plans and draw up an ambitious programof investments, as set forth in the 2012-2016Strategic Plan.


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The best refineries in Europe

The refining margin in the Downstream divisionimproved, while production was optimizedthrough projects to expand the refineries inCartagena and Bilbao, which now rank among themost advanced facilities in the sector in Europe.

Repsol's six refineries processed 37 million tons ofcrude oil in 2012, representing an increase of17.4% on 2011. On average, 74% of Spain'srefining capacity was used, exceeding the 71%reported in 2011.

The upgrades to the Cartagena refinery, broughton stream at the end of 2011 and officially openedon April 18, 2012, gave a boost to the Valle deEscombreras as an energy and industrial hub inthe region of Murcia. The influence of themodernized facility, which involved the largestindustrial investment in the history of Spain, hasgenerated wealth and jobs in the area, evidencedby two examples: Cartagena achieved the greatestgrowth among Spanish ports in 2012, whileRepsol and the Korean company SKL laid thefoundation stone for a new lubricants plant inNovember 2012.

The expansion of the Petronor refinery, officiallyinaugurated on April 3, 2013, also drove up

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efficiency and improved refining margins.


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At the forefront of diversity and work-life

balance

All Repsol's work-life balance programs are aimedat building an attractive and flexible workingenvironment in which diversity stands out andbrings innovation and competitiveness to theorganization. One of the company's core prioritiesis therefore to promote and manage diversity.

Repsol's Diversity and Balance Committeecontinued to promote the latest in managementmodels throughout 2012, such as telecommuting,flexible working hours, efficient time management,recruiting people with different abilities, andfostering cultural diversity.

Throughout 2012, the telecommuting programwas extended to industrial complexes and salesoffices throughout Spain, while a telecommutingpilot project was launched in Peru and Ecuador.

At year-end, more than a thousand peopleworldwide had signed up to the scheme,representing an annual increase of 45% anddemonstrating positive progress towards acorporate culture based on commitment, efficiencyand reaching targets. On January 23, 2013, Repsolpresented the White Paper on Homeworking,summarizing Repsol's experience as a pioneer in

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At the forefront ofdiversity and work-lifebalance




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this field.


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Repsol Campus, embodying corporate

values

Company values such as flexibility, innovation,respect, responsibility, collaboration, transparency,technology and creativity are imbued in the RepsolCampus, which was opened by the Prince ofAsturias on January 31, 2013.

Repsol's new headquarters in the heart of Madridprovides an opportunity to work in a different way,illustrating Repsol's status as a diverse andtransparent business. The building's architecturaldesign - made to fit what the company stands forand aims to be - has allowed the company to rollout initiatives that revolve around people, such asflexible hours, the paperless office or theintroduction of advanced telecommuting posts, allof which contribute to a new work organizationpolicy.

Every day, over 3,700 people enjoy the benefits ofthe Repsol Campus; a space designed toencourage sharing ideas in line with thecompany's new vision and brand.

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Repsol Campus,embodying corporatevalues



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Investment in R&D and innovation, a drive to

contribute added value

In 2012, Repsol invested €83 million in R&D andinnovation projects and programs to help findsolutions to the greatest challenges of our time,such as constructing a more efficient andsustainable energy system.

Uncertainty about which will be the dominanttechnologies of the future and the remaining timeto maturity of R&D work has led Repsol to developa Strategic Technology Plan as part of its businessstrategy. The lines of work set out in the plan coverall the company's businesses: oil and gasexploration and production, the natural gas valuechain, oil refining, oil products andpetrochemicals, and the search for new types ofenergy to diversify energy production and use.

A large part of R&D&i programs are conducted atRepsol's Technology Center: a leader in innovationwith over 400 scientists which celebrated its tenthanniversary in 2012. Repsol has entered into 184agreements with universities, research centers andbusinesses to drive innovation.

Technology is one of Repsol's priority areas, asshown by initiatives such as the RepsolFoundation Entrepreneur Fund aimed at

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supporting the best business plans that providesolutions for boosting energy efficiency andsavings. This initiative forms part of Repsol'sstrategy to drive the development of innovativeprojects, and ranks among its commitments tobecoming more sustainable.


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Excellence in top-flight racing

Repsol raced in all categories of the WorldMotorcycling Championship in 2012, and beginsthe exciting 2013 season as one of the top teamsled by MotoGP riders Dani Pedrosa and MarcMárquez. Once again, Repsol took center stage inthe top motorcycling competition; the best testbed for the company's products. It is precisely theexperience acquired from developing specificproducts for top competitions that enables Repsolto remain a research leader, in turn enabling it tofulfill its customers' high expectations.

The results were a fair reflection of this: inMotoGP, the Repsol Honda Team was crownedworld champion while Dani Pedrosa came close towinning the championship. In the Moto2 category,Marc Márquez claimed the top prize, while inMoto3, Álex Rins was named best newcomer. Inorder to support grass-roots racing, Repsol jointlysponsors the Spain Speed Championship (CEV),which was won by the young rider, Álex Márquez,who is sponsored by the company. In 2012, Repsolwon the Indoor and Outdoor World TrialsChampionship in the men's category for anotheryear. Toni Bou has claimed 11 worldchampionships and at 27 years old, has won themost championships ever in the history of thesport. During the 2012 London Olympics, Repsol

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reaffirmed its commitment to the youngest sportsmen and women through its collaboration withthe Olympic Sport Support Plan (Plan ADO inSpanish).


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Annual Report 2012 2012 milestones...summarizing Repsol's experience as a pioneer in All milestones...

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