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Galp Energia: Portugal's Energy Champion Goes Global
Introduction: From Gas Lamps to Global Giant
Picture Lisbon in 1848: horse-drawn carriages clattering over cobblestones, dim whale oil lamps flickering in windows, and a city on the cusp of modernization. That year, workers hoisted Lisbon's first gas street lamps into position—a moment that would plant the seed for what is now Portugal's largest energy company. Galp can trace its origins back to 1848 and the installation of Lisbon's first gas street lamps.
Fast forward nearly 180 years, and Galp Energia has transformed from a humble gas lighting operation into a multinational energy powerhouse. The company employs approximately 7,054 people worldwide and has a market capitalization of approximately $13 billion. Today the company annually turns over 17.9 billion euros, courtesy of 6,855 employees operating across 14 different countries around the globe.
The central question that makes Galp's story compelling for investors: How did a state-owned Portuguese gas utility evolve into a serious player in Brazil's pre-salt oil fields and Namibia's offshore frontier—potentially the most important exploration play of the decade?
This is a story told in four acts: first, the deep roots of Portugal's energy sector under dictatorship and colonial rule; second, the revolutionary transformation following the Carnation Revolution of 1974; third, the defining bet on Brazilian pre-salt that established Galp as a genuine exploration company; and finally, the Namibia discovery that could reshape the company's future and the energy transition balancing act that defines its present strategic dilemma.
Galp Energia, SGPS, S.A. is organized into four business units: Upstream, Refining & Midstream, Commercial, and Renewables & New Businesses. This integrated structure reflects a company that learned to play across the entire energy value chain—from drilling wells beneath two miles of Atlantic salt to pumping gasoline into motorists' cars across Iberia. Understanding how this structure emerged requires going back to the beginning.
I. The Deep Roots: From Gas Lamps to Oil (1846–1974)
The Birth of Portuguese Energy
The Galp Energia company history stretches back much further, with its origins in 1846 when Companhia de Gás de Lisboa began supplying gas lighting to Lisbon. Over the following decades, various companies like CRGE, Sonap, Sacor, Cidla, SPP, and Petrosul played crucial roles in shaping Portugal's energy sector.
These disparate companies operated under the umbrella of the Estado Novo—the authoritarian "New State" regime that governed Portugal from 1933 until 1974. Under António de Oliveira Salazar and later Marcello Caetano, Portugal's economy remained largely protected, corporatist, and deeply intertwined with its vast colonial empire stretching across Africa and Asia.
Colonial Energy Operations
Portugal's energy ambitions extended far beyond the Iberian Peninsula. The Portuguese discovered oil in their overseas province of Angola in the 1950s. SACOR set up the Sociedade de Lubrificantes e CombustĂveis (ANGOL) in 1953 as its branch in Angola. By the 1960s, it was also participating in the exploration for hydrocarbons.
The colonial connection wasn't merely commercial—it was legally mandated. In 1954, SACOR's activities extended to Portugal's overseas territories; 80% of the gasoline, kerosene, and gasoil transported into the Portuguese overseas province of Angola had to be refined on continental Portugal's territory.
In 1957, SACOR participated in the establishment of another oil company, MOÇACOR, in the Portuguese overseas province of Mozambique. This expansion into Mozambique demonstrated the regime's vision of building an integrated Lusophone energy network spanning three continents.
Portugal occupied a peculiar position among Western European nations: small, relatively poor, yet controlling territories many times larger than itself. The energy sector reflected this paradox—sophisticated enough to operate refineries but dependent on colonial resources and protected markets. The colonial wars that began in the early 1960s would eventually consume up to 40% of Portugal's budget, setting the stage for the revolution that would transform the entire energy landscape.
For investors studying Galp today, this colonial heritage matters for two reasons. First, it explains the company's comfort operating in African markets—Galp maintains operations in Angola, Mozambique, Cape Verde, Guinea-Bissau, SĂŁo TomĂ© and PrĂncipe, and now Namibia. Second, it illuminates why Portuguese energy companies were among the most heavily affected by the post-1974 nationalizations.
II. The Carnation Revolution & Birth of Petrogal (1974–1998)
The Morning that Changed Everything
On April 25, 1974, at 12:20 AM, Radio Renascença broadcast "Grândola, Vila Morena"—a haunting folk ballad by José Afonso. This wasn't entertainment; it was a signal. Within hours, junior military officers calling themselves the Armed Forces Movement (MFA) had seized control of strategic points across Lisbon. The Carnation Revolution was a military coup in Portugal by officers that overthrew the Estado Novo regime on 25 April 1974. The coup produced major social, economic, territorial, demographic, and political changes in the European country and its overseas colonies. It resulted in the Portuguese transition to democracy and the end of the Portuguese Colonial War.
The revolution got its name from the flowers citizens placed in soldiers' rifle barrels. The Carnation Revolution got its name from the fact that almost no shots were fired, and from restaurant worker Celeste Caeiro who offered carnations to soldiers when the population took to the streets to celebrate the end of the dictatorship. Other demonstrators followed suit and placed carnations in the muzzles of guns and on soldiers' uniforms.
What followed was less gentle than the flowers suggested. The revolution had a significant impact on Portugal's economy. It led to the nationalization of major sectors of the economy, including banking, transportation, heavy industries, and communications. It also led to land reform, with agricultural land being redistributed to the rural poor.
The Nationalization of Energy
After the Carnation Revolution 25 in April 1974, Portugal gave independence to its overseas provinces, with the ownership of the local SACOR branches being ceded to the new countries. SACOR was nationalized in 1975 by the new Portuguese regime.
The colonial retreat was swift and brutal for the energy sector. Overnight, SACOR lost its Angolan and Mozambican operations—assets that had taken decades to build. The retornados—Portuguese citizens fleeing the former colonies—arrived by the hundreds of thousands, straining social services while the newly nationalized economy struggled to find its footing.
Following the Carnation Revolution in 1974 and the nationalization of the petroleum sector in 1975, Petrogal was established in April 1976 by combining Sacor with three other nationalized oil companies. The 'GALP' brand itself emerged in 1976 as the trademark for Petrogal's products, with its distinctive 'G' logo first appearing in 1978.
Building the Domestic Infrastructure
With colonial revenues gone and international oil prices surging from the 1973 OPEC embargo, the newly formed Petrogal faced existential challenges. Rather than expanding abroad, the company turned inward, focusing on Portugal's domestic energy security.
With a distilling capacity of 10.9 million tonnes a year, or 220,000 barrels a day, the Sines refinery is one of the largest in Europe. The Sines refinery began operating in 1978. Covering an area of 320 hectares, the Sines refinery has a storage capacity of 3 million mÂł, of which 1.5 million mÂł is crude oil.
The Sines refinery became the crown jewel of Portuguese energy infrastructure. Located on the Atlantic coast south of Lisbon, it enjoyed deep-water port access ideal for receiving crude tankers. Galp's refinery in Sines is the second largest in the Iberian Peninsula and one of the largest in Europe. This unit consists of 3 factories that produce, among others, diesel, gasoline, jet, naphtha, sulfur and liquefied gas.
The early growth of Galp Energia centered on solidifying its domestic operations and expanding its refining and distribution capabilities. Following its formation in 1976, the company focused on optimizing its Sines refinery, a key asset for national fuel production.
Throughout the 1980s and early 1990s, as Portugal transitioned to democracy and eventually joined the European Economic Community in 1986, Petrogal remained a state-owned enterprise focused primarily on refining and distributing fuel to Portuguese consumers. The company had survived revolution, decolonization, and economic turmoil—but it had yet to become a true energy company with exploration and production capabilities.
For investors, this period established Galp's core domestic franchise: refining assets that would provide stable cash flows for decades, a branded retail network, and gas distribution infrastructure. These downstream assets continue to generate the majority of Galp's revenue today, even as upstream exploration captures most of the headlines.
III. Creation of Galp Energia & Privatization (1999–2007)
The Strategic Consolidation
By the late 1990s, Portugal had transformed. Democracy was stable, the economy was growing, and EU membership had opened new opportunities. The state decided it was time to consolidate and privatize its energy assets.
The modern incarnation of Galp Energia was officially established on April 22, 1999, in Lisbon, Portugal, as GALP – Petróleos e Gás de Portugal, SGPS, S.A. This pivotal moment arose from a strategic consolidation within Portugal's energy sector, merging Petrogal, the nation's primary oil refiner and distributor, with Gás de Portugal, responsible for natural gas importation and distribution. The official establishment of Galp Energia in 1999 marked a significant restructuring of Portugal's energy landscape.
In 1999, Galp Energia is created as the holding company for the Portuguese State-owned oil and gas business, controlling PETROGAL and Gás de Portugal (GDP). In the same year, the process of privatization of Galp Energia is initiated.
The merger created an integrated energy company covering the entire value chain: upstream exploration (though minimal at the time), refining, distribution, and retail for both oil products and natural gas. This vertical integration would prove essential for weathering commodity price volatility.
The Blocked Deal and Strategic Complexity
Privatization didn't proceed smoothly. The Portuguese government sought strategic investors while maintaining some degree of national control—a common tension in European energy privatizations.
In March 2004, Galp proposed selling a 51 percent stake in Gás de Portugal to EDP; Eni agreed to buy the remaining 49 percent. In December 2004, the European Commission blocked the transaction.
The blocked deal revealed the regulatory complexity of European energy markets. The Commission worried about market concentration and competition in the Iberian gas market. It also signaled that Galp's future expansion would need to look beyond Portugal's borders.
Italian oil giant Eni had emerged as a significant strategic shareholder, eventually holding a 33.34% stake. This partnership brought international expertise but also created tensions about Galp's strategic direction. Eni saw Galp primarily as a downstream European asset; Portuguese stakeholders envisioned something more ambitious.
The IPO and Iberian Expansion
Galp Energia's initial public offering on the Lisbon Stock Exchange took place in the second half of 2007. The IPO transformed Galp from a partially privatized state enterprise into a publicly traded company, providing capital for international expansion and imposing the discipline of public market scrutiny.
In 2007, Galp bought Eni's operations for marketing oil products in Portugal and Spain. This transaction, somewhat ironically, had Galp purchasing assets from its own major shareholder—a sign of the complex ownership relationships that would eventually need resolution.
In 2007, the company acquired Eni's oil product marketing operations in Portugal and Spain. This was followed by the acquisition of ExxonMobil's Iberian fuels and lubricants businesses in April 2008, adding 130 service stations and increasing petroleum product sales by approximately one million tons annually.
These acquisitions consolidated Galp's position across Iberia. The Iberian Peninsula also forms a focus for Galp's marketing activities, and 30 per cent of the company's sales to direct clients is accounted for by its retail network. In the region, the group has 1,367 branded service stations, becoming the third largest operator of this sort across Spain and Portugal.
The IPO year of 2007 was pivotal for another reason—one that would prove far more consequential than the public listing itself. Across the Atlantic, off the coast of Brazil, drilling rigs were probing beneath an ancient layer of salt, about to make one of the most significant oil discoveries of the century.
IV. The Brazil Pre-Salt Bonanza: The Company-Defining Bet (2007–2015)
The Discovery That Changed Everything
To understand why Brazil's pre-salt represents Galp's most important strategic decision, one must first understand the geology. Beneath the Atlantic Ocean off Brazil's coast lies the Santos Basin. And beneath the Santos Basin's sediments sits a layer of salt—in places, more than two kilometers thick. Below that salt layer, trapped for millions of years, rests oil.
In late 2007 Petrobras discovered a new offshore province crossing the EspĂrito Santo, Campos and Santos basins. This oil province lies under unusually large layers of salt, up to 2,000m in thickness.
The technical challenges were immense. Drilling through salt at depth is notoriously difficult—the salt behaves differently under extreme pressure, flowing like slow-moving sludge that can crush casings and close wellbores. The reservoirs sat in ultra-deepwater, requiring specialized floating equipment. The distances from shore meant long logistics chains. Most experts thought commercial development was years away, if not impossible.
Petroleo Brasileiro SA, Brazil's state-controlled oil company, estimated in November 2007 that Tupi may contain as many as 8 billion barrels of oil, the largest find in the Americas since Mexico's Cantarell field in 1976.
Galp was there from the beginning. The find, named Tupi, is in an area covering 800 sq km some 280 km from the south coast of Rio de Janeiro. Galp says studies of the initial well indicate 1.7 – 10 billion barrels of oil in place.
The Partnership Structure
For a mid-sized Portuguese company, participating in what would become one of the world's largest oil developments required the right partnerships. Petrobras (65% working interest) operates the field on behalf of partners BG Group (25%) and Galp Energia (10%).
A 10% stake might seem modest, but in a field of this magnitude, it represented transformational upside. The Tupi accumulation, in block BM-S-11 of the Santos basin, contains at least 5 billion barrels of recoverable oil which could increase Brazil's reserves by 62%. This would make it twice the size of the Roncador, previously Brazil's largest field. Tupi is a sub-salt discovery—held in rocks beneath a salt layer that, in places, reaches thicknesses of over 2,000 metres.
The Tupi field was renamed Lula in 2010—after the former Brazilian president Luiz Inácio Lula da Silva, though conveniently also the Portuguese word for squid. The field was originally named Tupi but in 2010 it was renamed Lula. The name 'Lula' means squid in Portuguese but also refers to Luiz Inácio Lula da Silva.
Production Ramp-Up
2010: Start of production at the Lula field in Brazil. The initial wells exceeded expectations. The wells in Lula are averaging 25,000 bopd of production per well.
The field produced 100,000 barrels a day (January 2013). The field produced 922,000 barrels per day and 1.48 billion cubic feet of gas in 2021.
The Carcará Discovery
Lula wasn't the only Brazilian success. Discovered in 2012, Carcara was found to have up to 400 meters of continuous and connected oil reserves with excellent porosity and permeability. At the time it was the biggest oil column ever found in Brazil's so-called subsalt region, an area where large oil resources are trapped deep beneath the seabed by a layer of mineral salts.
Galp Energia SGPS SA owns 14 percent. Later, through consortium restructuring, Galp's position evolved. The Norwegian oil company has a 40% interest in the asset, in partnership with ExxonMobil (40%) and Galp (20%).
Deepening the Petrobras Partnership
In 2016, Galp and Petrobras broadened an existing cooperation accord to include offshore oil research and development projects and exploration and production partnerships.
This expanded partnership recognized a mutual dependency. Petrobras needed partners to share the massive capital requirements of pre-salt development. Galp needed Petrobras's technical expertise in ultra-deepwater operations—expertise no Portuguese company could develop independently. The partnership also provided Galp with access to future exploration opportunities in Brazilian waters.
Galp's position in Brazil's pre-salt region represents one of its most valuable assets, with the company holding a 9.2% stake in the prolific Lula field, though this is significantly smaller than Petrobras's controlling interest.
The Brazil bet transformed Galp from a regional refiner into a genuine exploration and production company. It established the strategic template—partnering with state oil companies to access world-class resources while contributing capital and some technical expertise—that Galp would later apply in Mozambique and Namibia.
For investors, Brazil remains the production engine that funds Galp's broader ambitions. The low-carbon intensity of pre-salt oil (which requires less processing than heavier crudes) also fits the company's energy transition narrative. However, concentration risk is real: Galp's upstream fortunes are heavily tied to Petrobras's operational execution and Brazilian regulatory decisions.
V. The Eni Saga & Ownership Evolution (2011–2014)
The Failed Sale
While Galp was building its Brazilian position, a drama was unfolding in its shareholder register. Italian energy giant Eni had accumulated a 33.34% stake in Galp—a blocking position that gave it significant influence but not control.
In 2011, talks between Eni and Petrobras for the latter to buy Eni's 33.3 percent stake in Galp collapsed over the price of the stake.
The logic of a Petrobras acquisition made strategic sense: the Brazilian company could have secured direct ownership of its junior partner's stake in the pre-salt fields. But price negotiations failed, and the deal collapsed.
The Gradual Exit
With the Petrobras sale off the table, Eni began a methodical multi-year exit. From 2012 to 2014, Eni continuously reduced its stake in Galp.
Eni signed agreements with Amorim Energia and Caixa Geral de DepĂłsitos, according to which it will sell 5% of Galp Energia to Amorim Energia and, following the sale, will cease to be bound by the shareholders agreement. Amorim Energia has agreed to purchase the 5% stake in Galp Energia within 150 days. Additionally, Eni has the right to sell up to 18% of the share capital of Galp Energia in the market.
Gross proceeds from the Equity Offering amounted to approximately EUR 381 million. Following settlement of the Equity Offering, Eni's shareholding in Galp will decrease from 28.34 per cent to 24.34 per cent of the outstanding Galp share capital.
Since 2012, Eni raised EUR 3.28 billion selling its entire one-third stake in Galp in a series of transactions. Eni SpA sold its remaining 4% stake in Portugal's Galp Energia for 325 million euros as the Italian oil and gas company continues offloading peripheral assets to confront cheap crude prices and free up funds for its core exploration and production arm.
The New Ownership Structure
Eni's exit freed Galp to pursue its own strategic direction. The Amorim family—Portuguese cork magnates turned energy investors—emerged as the controlling shareholder through Amorim Energia. Partly owned (35.8%) by Amorim Energia and (8%) by the state-owned holding company Parpublica.
This ownership structure—a Portuguese family as controlling shareholder with the state maintaining a minority stake—provided strategic stability while preserving Galp's Portuguese identity. The company was no longer beholden to an Italian oil major's portfolio priorities.
VI. The Energy Transition Pivot (2019–2021)
The Wake-Up Call
By 2019, the energy transition was no longer a distant concept—it was reshaping investment flows, regulatory frameworks, and consumer preferences across Europe. Galp's management recognized that the company needed to evolve.
Last week, Portuguese gas and oil producer Galp EnergĂa held a meeting to present its new strategy and its 2019 financial results. The company's net profit fell 21% in 2019, which prompted it to launch an internal reorganization effort, with a new customer-centered approach and a new division dedicated to renewable energy. "Galp is committed to developing a sustainable portfolio based on the generation of electricity from renewable sources, with an investment of between 10% and 15% of the group destined to this energy source."
The ACS Solar Acquisition
The renewables pivot materialized dramatically in early 2020. In 2020, Galp partnered with Spanish engineering firm ACS to create Titan Solar, a renewable energy joint venture, and bought solar power projects from ACS for 2.2 billion euros ($2.38 billion).
Portuguese gas company Galp EnergĂa says it will become "the largest solar energy company in the Iberian peninsula". The agreement includes operating PV plants with an installed generation capacity of 900 MW plus a further 2.9 GW under development.
The company claims that the capital returns of the portfolio will be greater than 10%. Although its installed capacity in the coming years will be based on its existing portfolio, Galp's ambition is to expand its renewable footprint to 10 GW by 2030, with a particular focus on the Iberian Peninsula.
Portuguese oil and gas company Galp has acquired the 24.99% it did not already own in Titan, a solar joint venture it created with Spanish engineering company ACS Group in 2020.
The Matosinhos Refinery Closure
The most dramatic signal of Galp's strategic shift came in December 2020: the company announced it would permanently close one of its two Portuguese refineries.
Galp Energia SGPS SA is permanently ceasing crude oil refining operations in 2021 at subsidiary Petrogal's 110,000-b/d refinery in Matosinhos e Leça da Palmeira, Porto, on Portugal's northwest coast.
The decision to shut down the Matosinhos refinery follows negative impacts to Galp's downstream industrial activities precipitated by structural changes in demand for finished petroleum products resulting from the coronavirus pandemic as well as the European regulatory environment.
Galp has announced that the Matosinhos refinery, which is one of two refineries in Portugal, will close with the loss of more than 1,000 jobs, including those of several hundred employees working for sub-contractors.
The closure was controversial. Matosinhos is the 5th refinery in Europe to close due to 'lack of competitiveness'. It used to be responsible for providing a third of the nation's fuel needs.
With the shuttering of the Matosinhos refinery, Galp said it will now concentrate on future developments to enhance the resilience and competitiveness of its 220,000-b/d refinery at the Port of Sines. Without disclosing specific details of proposed future projects at Sines, Galp did confirm it is evaluating works to improve the refinery's energy and process efficiency, as well as potential projects to integrate the production of advanced biofuels.
The Sines refinery began operations in 1978. Following the EUR 1.4 billion upgrade project in 2013, the Sines refinery now has a hydrocracking unit and a fluid catalytic cracking unit. The Sines refinery is the main refinery in Portugal, accounting for approximately 70% of the country's total refining capacity.
The Northvolt Lithium Partnership
Galp's energy transition ambitions extended beyond solar. In December 2021, the company announced a bold venture into battery materials.
Portuguese oil company Galp and Swedish battery maker Northvolt announced a joint venture to invest 700 million euros ($790 million) to build a lithium ore processing plant in Portugal, which should start operating by the end of 2025.
Galp and Northvolt have agreed to set up a joint company, Aurora, that aims to become a steppingstone for the development of an integrated lithium-battery value-chain. With the main goal of establishing Europe's largest and most sustainable integrated lithium conversion plant, the JV will develop a plant set to have an initial annual production capacity of up to 35,000 tons of battery-grade lithium hydroxide.
Portugal hosts significant lithium deposits, making the country a potential hub for European battery supply chains. The partnership positioned Galp at the intersection of energy and mobility transitions.
However, the lithium venture hit obstacles. The project was initially conceived of as a 50/50 joint venture with Northvolt, the Swedish gigafactory manufacturer that filed for Chapter 11 bankruptcy in the US. Northvolt told Galp earlier this year it would no longer be investing.
Galp was left alone in early 2024, when Northvolt said it would not invest in the 50-50 joint venture set up in November 2021 to build a lithium processing plant in Setubal, on Portugal's coast.
The Northvolt setback illustrates the risks of energy transition bets. Galp must now decide whether to proceed alone, find new partners, or abandon the lithium project entirely—a decision that will reveal much about management's conviction in the broader diversification strategy.
VII. The Namibia Discovery: A New Chapter (2024–Present)
The Mopane Complex
While the lithium venture stumbled, another bet paid off spectacularly. In January 2024, Galp announced results from its Mopane-1X exploration well off the coast of Namibia that sent its stock surging.
Galp Energia SGPS SA's shares jumped after the Portuguese oil company said a well test "potentially" indicates Mopane could be an important commercial find in Namibia. The stock climbed as much as 21% in Lisbon to €19.37, the highest since 2007.
"The flows achieved during the well test have reached the maximum allowed limits of 14,000 boed, potentially positioning Mopane as an important commercial discovery," Galp said in a regulatory filing. "In the Mopane complex alone, and before drilling additional exploration and appraisal wells, hydrocarbon in-place estimates are 10 Bboe, or higher."
Ten billion barrels. To put this in context, that's roughly equivalent to the entire proven reserves of some OPEC member states. Even with recovery factors of 25-30%, the recoverable volumes could be transformational.
Galp is the operator of the Mopane license area with an 80% stake. Namcor, or National Petroleum Corp. of Namibia, and Custos each hold 10% stakes.
The Orange Basin Opportunity
Galp's Namibia success isn't isolated. Oil finds by Galp in Namibia have added to discoveries drilled off the southwest African nation. In the past two years, majors Shell Plc and TotalEnergies SE have made finds that turned the sparsely populated country into a hotspot for exploration on the continent.
Namibia recently emerged as a significant hotspot for oil exploration activity because of the discoveries made along its coast.
The Orange Basin, where Mopane sits, shares geological characteristics with Brazil's pre-salt province—not surprising, given that South America and Africa were once joined. This continental drift analogy means the exploration techniques and geological understanding developed in Brazil are directly applicable to Namibian waters.
Ongoing Exploration
Galp Energia recently announced a remarkable discovery of oil and gas in Namibia's Orange Basin under its Petroleum Exploration License 83. The Mopane-2A well, part of an ongoing exploration and appraisal campaign, discovered a hydrocarbon column of gas-condensate in the AVO-3 reservoir and a hydrocarbon column of light oil in the AVO-4 reservoir.
"In Namibia, together with our two local partners Namcor and Custos, we have significantly de-risked the Mopane complex after completing the first two wells and the DST in Mopane 1X," said Filipe Silva, CEO of Galp. He continued, "We have encountered significant light oil columns in high quality reservoir conditions, placing Mopane as a potential major commercial discovery. This should support the growth profile of Galp for the next decades to come."
Major Interest
The Mopane discovery attracted attention from the world's largest oil companies. Exxon Mobil Corp. and Shell Plc are among oil and gas giants evaluating bids for a stake in Galp Energia SGPS SA's major oil field offshore Namibia. TotalEnergies SE and Equinor ASA are also among those considering acquiring the 40% stake Galp is seeking to sell in the Mopane offshore discovery.
Based on Galp's recent "in place" estimates for 10 Bboe in the Mopane complex, the entire discovery could be worth around $20 billion, or potentially more.
Petrobras, Galp's longtime partner in Brazil, entered the bidding. Petrobras has made an offer to acquire a significant stake in Galp Energia's highly-anticipated oil and gas discovery offshore Namibia. If successful, Petrobras would become the operator of the Mopane oil and gas field, which holds an estimated 10 Bboe.
Speaking to Reuters, Petrobras exploration and production director Sylvia dos Anjos said: "We are the best deep-water operators. If [Galp] does not choose us, it is their loss."
More than 12 rivals, including Exxon and Shell, have expressed interest in buying a 40% stake in Galp Energia's oil field.
The competitive interest validates Galp's exploration success and creates options: the company can bring in a partner to share development costs and risk while monetizing a portion of its discovery value, or retain a larger stake and capture more upside.
VIII. Today's Galp: Business Model & Operations
Corporate Structure
Galp Energia, SGPS, S.A. is organized into four business units: Upstream, Refining & Midstream, Commercial, and Renewables & New Businesses. The company carries out these operations through four subsidiaries, including: Galp Energia E&P BV and its subsidiaries engage in the development, exploration and production of oil and gas and biofuels. PetrĂłleos de Portugal - Petrogal, S.A. and its subsidiaries carry out activities in the area of crude oil refining and marketing. Galp Gas & Power SGPS, S.A. and its subsidiaries operate in the natural gas, electricity and renewable energy sectors.
Scale of Operations
Its core focal points at present revolve around the exploration and production of oil, with around 45 projects ongoing; refining and marketing, with two refineries in Portugal and close to 1,500 service stations; and gas and power, which it sells to around 903,000 customers in Spain and Portugal.
Note that Galp's profile lists "two refineries"—this reflects historical documentation, as Matosinhos has since been closed, leaving only the Sines facility operational for crude processing.
In addition, it produces biodiesel, biofuel, and green hydrogen; and operates 1,480 service stations and 1,186 electric mobility charging points.
Energy Transition Progress
Galp aims to reach 4 gigawatts (GW) of installed renewable electricity capacity by 2025 and 12 GW by 2030. It is also engaged in the development of biofuels, hydrogen production, lithium processing and electric mobility.
Galp, already one of the leading producers of photovoltaic solar energy in the Iberian Peninsula, continues to expand its renewable energy portfolio with 1.5 GW of installed renewable generation capacity and plans to add an additional 400 MW of renewable capacity by 2026.
With these additions, Galp now has 1.7 GW of installed solar photovoltaic capacity.
The company plans to allocate about 70% of its net CapEx to low-carbon projects between 2023 and 2025.
Financial Performance
Portuguese oil and gas group Galp Energia made a profit of 337 million euros in the first quarter of 2024, a notable 35% increase on the previous year. "A robust set of results thanks to good performances in exploration and extraction activities, as well as in refining." Gross operating profit (Ebitda) was also up 13% year-on-year, reaching 974 million euros.
Total Revenue for 2024 was €21,311 million, compared to €20,768 million in 2023 and €26,839 million in 2022.
Leadership Transition
In January 2025, Galp experienced an unexpected leadership change. Galp announced Jan. 7 that Filipe Silva has resigned as CEO and vice president of the board of directors for family reasons. Galp plans to announce the new executive leadership soon.
Galp's former CEO Filipe Silva resigned earlier in January following reports of an alleged personal relationship between Silva and a company manager, which has been kept secret, and could potentially lead to conflicts of interest in the company.
On January 10, 2025, the BoD unanimously decided to appoint Maria JoĂŁo Carioca and JoĂŁo Diogo Marques da Silva as Co-Chairmen of the Executive Committee (Co-CEOs).
Marques da Silva, 49, has been at Galp since 1997 and heads the commercial division. They will maintain their current roles while serving as interim co-CEO. Nuno Holbech Bastos was named as a new executive board member and will oversee the upstream division.
The co-CEO structure is unusual and raises questions about long-term governance. Investors should monitor whether this represents a temporary arrangement or a permanent structure—and how decision-making proceeds on major strategic questions like the Namibia stake sale.
IX. Porter's Five Forces Analysis
1. Threat of New Entrants: LOW-MODERATE
Entering the integrated oil and gas industry requires massive capital. The €1.4 billion Sines refinery upgrade illustrates the investment scale for just one facility. Upstream exploration demands billions more—Galp's Namibia campaign has already consumed significant capital, and development will require multiples of exploration spending.
Regulatory complexity compounds capital barriers. Operating across EU, Brazilian, and African jurisdictions requires deep regulatory expertise and established government relationships. Environmental permitting alone can delay projects for years.
The Sines refinery is the main refinery in Portugal, accounting for approximately 70% of the country's total refining capacity. This incumbent position creates significant barriers in the domestic market.
However, the renewables segment presents lower barriers. Solar and wind development requires less capital than oil infrastructure, and new entrants are emerging throughout Iberia. Galp faces growing competition from pure-play renewable developers and diversifying utilities.
2. Bargaining Power of Suppliers: MODERATE
Crude oil is commoditized—Galp can source from multiple global suppliers. However, the company's Brazilian production creates a form of vertical integration, reducing external supplier dependence for a portion of its refining feedstock.
The Petrobras partnership is crucial for Brazil access but also creates dependence on a single operator. In the upstream exploration and production segment, particularly in Brazil, Galp competes with major international oil companies including TotalEnergies, Shell, and ExxonMobil, as well as with the Brazilian state-controlled Petrobras. Galp's position in Brazil's pre-salt region represents one of its most valuable assets.
LNG supply contracts provide some stability for gas operations, reducing spot market exposure and supplier power.
3. Bargaining Power of Buyers: MODERATE-HIGH
Retail fuel is essentially a commodity—consumers can easily switch between stations based on price and convenience. Brand loyalty exists but is limited.
30 per cent of the company's sales to direct clients is accounted for by its retail network, with 1,367 branded service stations making Galp the third largest operator across Spain and Portugal.
Industrial and B2B customers have even more alternatives, with EU energy market liberalization increasing buyer power over time. The competitive dynamics in Iberia involve strong players like Repsol and Cepsa.
Gas and electricity customers face switching costs and inertia, providing somewhat more pricing power, but regulatory oversight limits exploitation of market position.
4. Threat of Substitutes: HIGH (and rising)
This is the existential challenge for all European oil and gas companies. Electric vehicle adoption is accelerating across Europe, with EU regulations pushing toward internal combustion engine phase-outs. The structural decline in petroleum product demand drove Galp's Matosinhos closure decision.
The decision to shut down the Matosinhos refinery follows negative impacts precipitated by structural changes in demand for finished petroleum products resulting from the coronavirus pandemic as well as the European regulatory environment.
Galp is responding by expanding EV charging infrastructure and renewable energy. The company operates 1,480 service stations and 1,186 electric mobility charging points.
However, the transition timeline remains uncertain. Oil demand may prove more resilient than current projections suggest, particularly in transportation segments like aviation and maritime where electrification is technically challenging.
5. Competitive Rivalry: HIGH
The Iberian market is contested by multiple well-resourced competitors. In the renewable energy space, Galp faces competition from established utilities like Iberdrola and EDP, as well as from other oil majors transitioning to cleaner energy, such as BP, TotalEnergies, and Eni.
With approximately 4 GW of renewable capacity in its portfolio (primarily solar), Galp remains smaller than Iberdrola's 40+ GW and EDP's 25+ GW of renewable capacity, but has established itself as one of the faster-growing renewable players among European integrated energy companies.
Upstream competition for exploration blocks is fierce globally. The interest from majors in Galp's Namibia discovery—more than 12 rivals, including Exxon and Shell, have expressed interest—demonstrates both the value of successful exploration and the competitive intensity for quality assets.
X. Hamilton's 7 Powers Analysis
1. Scale Economies: MODERATE
The Company will focus on enhancing the resilience and competitiveness of the Sines industrial site, with a crude processing capacity of 220,000 barrels per day and equipped with deep conversion units.
Concentrating refining at a single, large-scale facility generates efficiency gains compared to operating multiple smaller refineries. However, Galp's scale remains modest compared to global majors—a constraint on certain upstream and downstream activities.
In renewables, scale matters less at the project level, though corporate overhead spreading provides some advantage.
2. Network Economies: LIMITED
Gas distribution creates some network effects—customers connected to Galp's gas infrastructure face switching costs. Gas and power sold to around 903,000 customers in Spain and Portugal.
The service station network provides convenience but generates limited true network effects. More stations don't inherently make each station more valuable to customers.
EV charging could develop network effects if Galp achieves sufficient scale and interoperability, but the company is early in building this network.
3. Counter-Positioning: STRONG
Galp is making bolder energy transition bets than many European majors of similar or larger size. The Matosinhos closure, aggressive solar expansion, and lithium ventures represent strategic choices that traditional oil companies find difficult to replicate due to their larger legacy asset bases and shareholder expectations.
The company's positioning as a "bridge" energy company—maintaining profitable upstream oil operations while building renewable capacity—may prove attractive if the energy transition proceeds at a pace between rapid disruption and slow evolution.
4. Switching Costs: LOW-MODERATE
Fuel retail has minimal switching costs. Industrial customers face moderate switching costs due to supply agreements and relationship-specific investments. Gas customers face higher switching costs due to infrastructure connections and contractual commitments.
5. Branding: MODERATE
The GALP brand is strong in Portugal but less recognized internationally. The 'GALP' brand itself emerged in 1976 as the trademark for Petrogal's products, with its distinctive 'G' logo first appearing in 1978.
Brand provides limited differentiation in commodity energy markets, though it supports retail customer acquisition and may facilitate renewable energy sales to environmentally conscious consumers.
6. Cornered Resource: POTENTIALLY STRONG
Galp's Brazilian pre-salt stakes represent cornered resources—positions that are difficult or impossible for competitors to replicate. The assets are finite, and new entrants cannot simply purchase equivalent positions.
The Namibia discovery, if it develops as projected, would represent a significant cornered resource. Galp is the operator of the Mopane license area with an 80% stake. However, the company's intention to sell 40% reduces this advantage while monetizing value.
7. Process Power: DEVELOPING
Galp is developing process power in renewable energy development, leveraging its experience from the ACS partnership to accelerate project execution. However, the company has not yet demonstrated sustainable advantages in solar development versus specialized competitors.
XI. Bull and Bear Cases
The Bull Case
Namibia Transforms the Story: The Mopane discovery could be generational. Based on Galp's recent "in place" estimates for 10 Bboe in the Mopane complex, the entire discovery could be worth around $20 billion, or potentially more. Even after selling 40%, Galp would retain exposure to 6 billion barrels of oil-in-place equivalent—enough to sustain decades of production and fundamentally revalue the company.
Brazil Continues Delivering: The pre-salt assets keep producing at low cost and low carbon intensity. The Portuguese company believes the oil and gas recovery factor in the Lula and Iracema projects could top 50%. If recovery factors exceed expectations, reserve life extends, and the assets become even more valuable.
Renewables Reach Critical Mass: Galp aims to reach 4 gigawatts of installed renewable electricity capacity by 2025 and 12 GW by 2030. Achieving these targets would create a meaningful, growing earnings stream less correlated with oil prices.
Energy Transition Timing Works: If the transition proceeds gradually—with oil demand remaining robust through 2030-2035 while renewable profitability improves—Galp's balanced portfolio could generate strong returns from both sides.
The Bear Case
Namibia Disappoints: Exploration success doesn't guarantee commercial success. Development costs in deepwater frontier basins can escalate dramatically. Infrastructure must be built from scratch. Political risk in a new jurisdiction is real. If Mopane proves smaller, more costly, or more technologically challenging than expected, the stock's premium for exploration upside evaporates.
Concentration Risk in Brazil: Galp depends heavily on Petrobras for operational execution. Brazilian regulatory changes, taxation shifts, or Petrobras operational problems could impair returns.
Energy Transition Accelerates: If EV adoption and renewable substitution occur faster than projected, Galp's refining and upstream oil assets could face stranded asset risk. The company's European downstream operations are already showing demand pressure.
Renewables Underperform: The contribution of the renewable energy division to the group's EBITDA remains limited, representing c. 5% in FY22. If renewables continue struggling to scale profitably, the transition strategy fails to offset oil decline.
Governance Uncertainty: The recent CEO resignation and co-CEO structure raise questions. Galp's former CEO Filipe Silva resigned earlier in January following reports of an alleged personal relationship between Silva and a company manager. Leadership transitions during critical strategic execution periods create execution risk.
XII. Key Performance Indicators for Investors
For long-term fundamental investors tracking Galp, three KPIs matter most:
1. Upstream Production Growth (barrels of oil equivalent per day, working interest)
This metric captures Galp's progress in transforming from a regional refiner into a genuine E&P company. Brazil provides the current base; Namibia represents the growth optionality. Watch quarterly production reports and guidance for trajectory. Declining production would signal Brazil maturation without Namibia delivery; strong growth validates the exploration-driven strategy.
2. Renewable Installed Capacity (GW in operation)
With these additions, Galp now has 1.7 GW of installed solar photovoltaic capacity. The target is 4 GW by 2025 and 12 GW by 2030. Track quarterly additions against these milestones. Significant shortfalls would indicate either execution problems or strategic retreat from the transition narrative.
3. EBITDA by Segment Contribution
Currently, upstream and refining dominate EBITDA. Watch how the Renewables segment grows as a percentage of total earnings. If renewables remain a small contributor while receiving significant capital allocation, the transition's economic logic becomes questionable. A rising renewables share would validate the strategy's premise.
XIII. Regulatory and Risk Considerations
Brazilian Political Risk: Pre-salt taxation and regulatory frameworks have changed with different administrations. The Lula government's policies toward Petrobras and the oil sector bear monitoring.
Namibian Development Uncertainty: No offshore field in Namibia has yet reached final investment decision. The country lacks production infrastructure, workforce, and regulatory track record for major developments. Timeline risks are significant.
EU Climate Regulation: The European Green Deal continues evolving. Tighter emissions standards, carbon pricing, and fuel mandates could accelerate the decline in refined product demand.
Portuguese State Relationship: The state is one of Galp's shareholders, with a 7 percent stake, through Parpública. Government decisions—on lithium mining permits, renewable subsidies, or refinery policy—directly impact Galp.
Accounting Considerations: Watch impairment tests on Matosinhos-related assets and carrying values of exploration assets. Pre-FID Namibia assets are essentially option values, not proven reserves.
XIV. Conclusion: The Next Chapter
Galp Energia stands at a remarkable inflection point. From its origins lighting Lisbon's streets with gas lamps in 1848, through nationalization and privatization, to its current position as a significant player in global exploration, the company has repeatedly reinvented itself to match Portugal's evolving national circumstances.
The company's Brazilian pre-salt position demonstrated that a mid-sized Portuguese company could compete alongside global majors for world-class oil resources—through smart partnerships, patient capital, and willingness to accept junior stakes in exchange for access.
The Namibia discovery suggests that lightning can strike twice. If Mopane develops as preliminary data indicates, Galp could find itself controlling one of the most significant oil discoveries of this decade—a remarkable outcome for a company that many still think of primarily as a Portuguese refiner and gas station operator.
Yet the company cannot escape the fundamental question facing all European oil and gas companies: what role does fossil fuel production play in a decarbonizing world? Galp's aggressive renewable expansion, refinery consolidation, and (attempted) lithium diversification represent genuine strategic adaptation, not mere greenwashing.
The next few years will prove decisive. Namibia drilling will either confirm a multi-billion barrel development opportunity or disappoint. Renewable capacity will either reach scale or stall. The co-CEO leadership structure will either stabilize or create confusion. And the broader energy transition will either validate Galp's balanced approach or punish its continued oil exposure.
For investors, Galp offers a rare combination: established cash-generating downstream assets, proven exploration track record, frontier optionality in Namibia, and a transition pathway that—if executed—could position the company for decades of relevance regardless of how the energy future unfolds.
The company that lit Lisbon's first gas lamps is still in the business of powering Portugal—and increasingly, the world. Whether that power comes from oil wells beneath Atlantic salt layers or solar panels across the Iberian sun belt, Galp's story continues to evolve.
Key Metrics at a Glance
| Metric | Value |
|---|---|
| Market Capitalization | ~$13 billion |
| Employees | ~7,054 |
| Countries of Operation | 14 |
| Sines Refinery Capacity | 220,000 bpd |
| Renewable Capacity (2025) | 1.7 GW operational, 4 GW target |
| Brazil Lula Stake | ~9.2% |
| Namibia Mopane Stake | 80% (operator) |
| Mopane Resource Estimate | 10 Bboe in-place |
| Service Stations | ~1,480 |
| EV Charging Points | ~1,186 |
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