By Pietro Lombardi

MADRID (Reuters) - Spanish energy company Repsol <REP .MC> promised on Thursday to ramp up its dividend and buy back shares worth at least 700 million euros ($729.8 million) this year, funding the plans from increased cash flow and lower investment.

Like larger oil industry peers, Repsol has been hit by a significant decline in refining margins amid weaker global economic activity and as new refineries come online.

Its net profit fell 45% in 2024 to 1.8 billion euros, hit by lower oil, gas and electricity prices and a sharp drop in oil refining margins.

The higher dividend is a pillar of the company's broader strategy, and CEO Josu Jon Imaz has said repeatedly that rewarding shareholders is a priority. A year ago, Repsol pledged to buy back up to 5.4 billion euros in shares from 2024-2027.

On top of the share buy-back announced for this year, Repsol said shareholders would get 0.975 euros a share paid out of the 2024 results, an 8.3% increase from the 0.90 euros a year earlier.

Overall remuneration will thus be within the company's target of 30% to 35% of cash flow from operations, which for 2025 is seen at between 6 billion euros and 6.5 billion euros.

In 2024, it was 5.4 billion euros.

Repsol's net investment for the year will not exceed 4 billion euros, down from the 5.7 billion euros of 2024.

As part of its pivot towards low carbon businesses, the company said it plans to increase its renewable capacity - currently standing at almost 3.7 gigawatt (GW) - adding more than 1.5 GW of renewable capacity in Spain, the U.S. and Chile.

Repsol's shares traded 4.8% higher at 0832 GMT.

($1 = 0.9590 euros)

(This story has been corrected to clarify that the CEO's name is Josu Jon Imaz, not Josu Jon Imam, in paragraph 4)

(Reporting by Pietro Lombardi; Editing by Inti Landauro and Helen Popper)