S&P Global Ratings puts Repsol in ‘ESG Assessment’ after oil spill in Peru

S&P Global Ratings has placed Repsol’s ‘ESG Assessment’ under review after the oil spill that occurred on January 15 from the La Pamplilla refinery in Peru.

In a statement, the agency says it will “closely” monitor developments to assess the implications for its ‘ESG Assessment’, which is an S&P qualitative rating tool designed to measure the ability of companies to successfully meet related challenges. with environmental, social and good corporate governance risks.

S&P estimates that the incident in Peru could result in potential negative changes to some environmental aspects, based on its current strong assessment, as well as repercussions on other factors in its assessment, including communities and land use and biodiversity, “ if Repsol does not adequately manage the negative effects on nearby biodiversity hotspots and on various stakeholders, including fishermen, artisans and local vendors.”

Thus, the agency, which indicates that its objective is to complete the review in the coming months, considers that any possible negative effect on its score in Repsol’s ESG profile of 61 would probably be less than five points.

In this sense, S&P recognizes that the main cause of the accident, the extreme waves on the Peruvian coast after a volcanic eruption in the Tonga islands, “is exceptional”.

Repsol has quantified the size of the spill at 10,396 barrels of crude oil. Likewise, the agency considers that no more oil spills are expected because the transport valves and the respective barriers have been secured and the company has stopped pumping.

In addition, the group reported that 50% of the cleanup work had been completed and that it expected to complete the sea cleanup operation by mid-February and the shoreline cleanup by the end of February.

In addition, the company has reached agreements with local communities, fishermen and other merchants to provide immediate income to more than 2,400 people and is in talks about long-term agreements.

S&P Global Ratings: What is ESG assessment?

• The ESG assessment has a long-term focus, analyzes the capabilities of entities and is based on how environmental, social and governance (ESG) factors could affect their target audiences and potentially generate a significant financial impact.
• The ESG assessment is based on the views of S&P Global Ratings’ network of credit analysts, and data and information from Trucost and S&P Global Market Intelligence.