LETTER FROM THE CHAIRMAN S.E. SUHAIL AL MAZROUEI CHAIRMAN OF CEPSA

It is a pleasure to address you and have the opportunity to present Cepsa s Annual and Corporate Responsibility Report, which summarises the main actions carried out by the Company during 2015.

I would like to start by saying that we continue to focus on our over- riding goal of making Cepsa, which is 100%-owned by the IPIC Group, a truly global energy company, characterised by its technical excellence.

Allow me to highlight the most impor- tant milestones achieved during 2015, namely moving forward in our strategy of growth and process improvement across our business activities and in- novating in products and processes, thanks to the support and commit- ment of Cepsa s professionals.

No doubt, 2015 was a challenging year for the oil industry, which had to face and overcome a number of adverse market conditions. Chief among them was the persistent slump in oil prices, which on average and taking Brent crude as a reference, were 47% lower than in 2014.

Despite this circumstance, Cepsa con- tinued to make strides in its Explora- tion & Production activities, such as the start-up of the new BMS oil field in Algeria, in addition to ongoing pro- duction from other major fields in that geographical area.

The Company achieved outstanding operational performance at its refine-

ries, with all-time high utilization rates, enhanced efficiencies and record out- put levels.

In its Petrochemicals segment, with the start-up of the new phenol plant in Asia, specifically in Shanghai, Cepsa has become the world s se- cond largest producer of phenol and acetone and the leading producer of cumene, all of which are used as raw materials for manufacturing a wide variety of products and components for the automotive, aeronautical and construction industries.

In this same business area, the Com- pany completed a number of major transactions, such as the sale of its polyester business, the acquisition of a sulphonation plant in Germany and the purchase of 49% of the LAB (raw material for biodegradable detergents) production plant in Bécancour, Canada, making us 100% owners of this facility.

These actions and decisions reflect our strategy of focusing our efforts on those products where we have strong leadership positions.

As one of the year s highlights, Cep- sa rolled out a new, more modern, efficient and sustainable model for its service stations, deploying innovative technologies and solutions developed at the Company s Research Centre.

Cepsa has undertaken all of these ac- tions and initiatives with the utmost care and respect for the environ- ment, convinced that its growth and

expansion must be based on sustain- ability, firmly upholding its values and commitments to its stakeholders. In this regard, the Company has moved forward in a number of plans and pro- jects to improve community relations and environmental management, de- monstrating its unwavering commit- ment to the Principles of the United Nations Global Compact, which it first joined back in 2005, by renewing its ad- herence.

Cepsa has a team of highly-qualified and talented professionals with expe- rience and excellence in management that bring value to the Company. Du- ring the year, Cepsa continued focu- sing on professional development pro- grams and schemes aimed at building employee pride, commitment and en- gagement, increasing motivation and fostering teamwork as a key corner- stone of our success.

I would like to end by underscoring the dedicated efforts of Cepsa s workforce to achieve the Company s Vision: to become a global energy company of choice, through a strategy based on driving profitable growth through its international businesses, while capi- talizing on any opportunities that arise to improve efficiency at its production centres, broadening its range of qua- lity product and service offerings and making the best and most efficient use of its diverse asset base across all its businesses and operations.

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