* Exploration Capex to drop 35 percent in 2015
* Firm affirms dividend policy, works on new strategic plan (Adds details on Capex, strategy, Libya)
By Julien Toyer and Jose Elías Rodríguez
MADRID, Feb 26 (Reuters) - Spanish oil group Repsol said its 2014 adjusted clean net profit jumped 27 percent thanks to refining margins that more than offset the fall in revenue in its production business due to plummeting world oil prices.
Unlike other European competitors which are cutting back on spending and investments in the face of lower energy prices, Repsol last year announced the acquisition of Talisman Energy to grow its exploration and production arm.
However, it said on Thursday it would reduce its year-on-year exploration investments by 35 percent in 2015 to $2.7 billion, excluding the Talisman effect.
Repsol also expects to be hit this year, as in 2014, by stalled production in Libya, where Chief Executive Officer Jose Jon Imaz said he had little hope activity would restart soon.
Output was up 2.5 percent in 2014 to 355,000 barrels per day, although production revenue fell 40 percent due to weak oil prices. In the fourth quarter alone, production revenue was 4 million euros compared to 162 million euros in the same period last year.
This was offset by the refining unit, where revenues jumped 111 percent, boosted by a 24 percent increase in margins to $4.1/barrel and higher gasoline consumption in Spain where consumers used their cars more as the economy recovered.
Analysts said the results showed Repsol was capable of performing well despite lower oil prices.
"The underlying Repsol business continues to offer a number of attractive features and with the management commitment to the dividend we see the current valuation of the shares as compelling," said Barclays in a note to clients.
Imaz said the oil major would leave its "competitive" dividend policy unchanged. It paid a gross dividend of 1.96 euros per share last year, including an special dividend of 1 euros, and had paid a 0.96 euros dividend in 2013.
Shares in the firm were up 0.29 percent at 1430 GMT, slightly outperforming European peers and at their highest level in more than two months.
Clean net profit -- average recurring net profit, adjusted for one-time gains and inventory effects -- came in at 1.707 billion euros ($1.9 billion) for the whole of 2014, beating analysts' forecast.
For the fourth quarter alone, adjusted clean net profit was 370 million euros, three times what Repsol made in the October-December period a year earlier.
Repsol, which struggled for more than two years to fill a gap left by the seizure of its Argentine business YPF, was also helped by its 30 percent stake in Spain's Gas Natural, which contributed 441 million euros to earnings. ($1 = 0.8797 euros) (Editing by David Holmes/Ruth Pitchford)