What the Galp–Moeve deal could mean for Portugal’s Sines refinery

Portugal’s fuel-refining landscape may be reshaped in the coming months. A transaction currently being negotiated between Galp and the Spanish group Moeve would set up a major Iberian player in refining and fuel distribution, with the Portuguese company holding a minority stake of roughly 20%.

The Galp–Moeve deal and the Sines refinery

The package under discussion includes the Sines refinery, which would be transferred into this new vehicle. As a result, effective control of the country’s only refining facility would no longer be entirely in Portuguese hands, as it has been up to now. In return, Galp - in which the state holds an 8% stake via Parpública - would gain greater scale in Spain, tighter commercial integration, and access to two refineries across the border.

Why scale matters in Iberian refining and distribution

From a corporate perspective, the industrial logic is easy to follow. The sector is facing intense pressure: the energy transition, squeezed margins, refinery closures across Europe, and the need for heavy investment in decarbonisation. In a European market where scale has once again become a condition for survival, the prospect of building a “European champion” in the industry is appealing - even if Repsol’s leadership does not appear to be under threat.

Timing, defence spending and energy supply security

Even so, the timing could hardly be worse. The world has changed - or is changing - at breakneck speed. Europe is bracing for a scenario it believed it had left behind: the possibility of war in its own geographic space, beyond Ukraine’s borders.

EU member states are debating defence spending on the order of 5% of GDP. Phrases such as strategic autonomy, industrial resilience and security of energy supply are being heard again. All of this has returned to the centre of state policy - though, in truth, it never really left.

This raises strategic questions that I hope we never have to answer. In a serious breakdown - conflict, prolonged shortages, a state of emergency, and so on - whose interests would guide that infrastructure: Portugal’s or Spain’s?

Manuel Castro Almeida, the Minister of the Economy, has also acknowledged how important it is for control of the Sines refinery to remain on Portuguese soil. “It would be better to have a refinery fully controlled from Lisbon. It is the only Portuguese refinery that carries relevant weight in our economy and in the country’s sovereignty,” he said last week at the “Conversa Capital” conference organised by “Jornal de Negócios/Antena 1”.

Responsibility for steering and monitoring this portfolio is being handled by the Minister for Environment and Energy, Maria da Graça Carvalho, whose CV in these areas is highly relevant. She says she is “aware of the advantages and the possible disadvantages” of the deal.

Asked whether national energy sovereignty is at risk, she dismisses that notion. “I am very much in favour of an open market. We have a great deal to gain from an open market. Those who shut themselves away do so because they are afraid.” I would not be quite so categorical. The minister’s confidence and experience ought to reassure us, but it should not lull us into complacency.

In extreme scenarios, history has shown that states almost always prioritise their own interests. And while we are talking about fuel here, we could just as well be talking about water. We all remember the recurring tensions and disputes between Portugal and Spain over the management of dams on shared rivers (the Douro, Tagus and Guadiana), with Portugal accusing Spain of holding back water for hydroelectric purposes and failing to comply with the minimum flows agreed under the Albufeira Convention.

That is why, whatever happens next, it matters to keep in mind that the Sines refinery is not merely an industrial asset. It is also an instrument of sovereignty - a dimension that becomes more significant as we try to anticipate the problems that will trouble Europe’s future. There are many of them, and energy security is one.