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Interview with the Chairman
and Chief Executive Officer

Is the sustainability agenda a lesser priority today?

Sustainability is an essential objective. It is true that there is great pressure to resolve pressing issues and that this can take attention away from the sustainability agenda. However, we have grave doubts about whether our planet has sufficient raw materials and natural resources to supply the new middle classes, and sufficient capacity to absorb the associated environmental impacts. Our ability to deliver long-term welfare and increased human development depends on the sustainable management of resources, particularly water, energy and land. Overcoming the crisis with more of the same would be a Pyrrhic victory; it would set us further away from resolving the fundamental problem. We must take advantage of the situation to make important changes to the growth paradigm, with a clear focus on the frugal use of resources.

Is the growing demand for energy the problem?

The development model of industrialized countries has been based on access to natural resources at highly economical costs. The inexorable process of urbanization throughout the world entails population growth and changes in consumption patterns. This is leading us to the threshold of a new global energy model, which must necessarily be more efficient. We must simultanously meet growing demand, deliver universal access to energy and ensure global climate stability. Against these variables, it is essential to reduce the energy associated with economic growth, reducing intensity and increasing energy efficiency, and decarbonizing our primary energy sources by using energy resources with a lower carbon content.

What are the consequences of inaction?

If we do not change our production and consumption patterns, there will be economic, social and environmental consequences. A 10% increase in the price per barrel of crude oil means 0.25% less global economic growth. Oil prices have increased by 400% since 2000, in line with other raw materials, and there are no indications that this trend will decline. Unfortunately this means that the countries that most need to grow are those that will find it most difficult. The social consequences are exemplified by the Arab Spring; a cry for freedom, yes, but precipitated in large measure by a major food crisis and persistent extreme poverty. The UN expects that we will continue to mourn the loss of 1.5 million children each year due to lack of sanitary infrastructure and drinking water. This is a real situation that exists alongside our development model based on the intensive use of resources. Regarding the environment, the stress caused by resource demand poses a serious risk to plans to rein in climate change, with consequences that are difficult to predict.

Are there any unexpected changes ahead?

Of course. Change in itself is the new scenario. In order to adapt, first we must accept that the usual way of doing things is no longer valid. We must transform ourselves to do them another way. Innovation is the key to resolving the dilemma of the environmental footprint of development. We must focus on concepts such as frugal innovation, which seeks to maintain and extend levels of welfare with the lowest possible use of natural resources. Truly transformative changes will come from creative people who are not afraid to take risks, people who understand the value of diversity, of multiculturalism, of flexibility. Companies must be diligent in finding and cultivating this talent. We must also base progress on cooperation as much as on competition, and regain society's trust by opening up to public scrutiny, committing ourselves to transparency and respect for human rights and the fight against corruption.

What would you highlight with regard to Repsol's sustainability performance in 2011?

We are currently the most sustainable oil and gas company in the world according to the Dow Jones sustainability index and, without wanting to be complacent, this annual report is full of data that point towards the consolidation of a positive trend in our contribution to sustainable development. We have created national Corporate Responsibility committees in Spain, Bolivia, Ecuador and Peru, which will be responsible for coordinating and promoting all matters related to sustainable development in these four countries. As regards safety, we are continuing to improve significantly, with a lost workday injury frequency index 20% lower than last year. In 2011 we have established impact assessments for all projects, which reflects our philosophy of operating with a preventative approach to the potential impacts of our activities. Moreover, at a time in which people value a job so much, the number of people who work at Repsol has increased and the percentage of women continues to improve, including among our executives. Finally, we must be grateful that our customer satisfaction rating has improved in all countries and all our businesses in 2011.