Page 14 - NorthAmOil Week 31

NorthAmOil INVESTMENT NorthAmOil

Fort Hills was one
of the two oil sands
projects affected by the
impairment related to
Total’s net zero goals.

Total writes down $7bn of

Canadian oil sands assets

NORTH AMERICA FRANCE’S Total has reported as part of its “It is disappointing that they would write
second-quarter results that it has written down down Canadian assets, and increase their
its Canadian oil sands assets by $7.0bn. This focus in Africa and Brazil and the Middle East,”
accounts for the bulk of an overall $8.1bn excep- CAPP’s CEO, Tim McMillan, told CBC News.
tional asset impairment reported by the French
major. Scaling down
In a July 29 statement, the company explained Separately, Total is reported to have scaled down
that it had revised its oil price assumptions for its participation in Tellurian and its proposed
the coming years as a result of this year’s collapse Driftwood LNG project. According to a regu-
in the crude price. It now anticipates the average latory filing made by the company with the US
Brent price over 2020-50 to be $56.8 per barrel Securities and Exchange Commission (SEC) this
and said it saw a $1.5bn impairment charge on week, Total has reduced its stake in Tellurian to
its oil sands assets in the second quarter as a 17.4%, from 19% when it first agreed to invest in
result of this adjustment. the latter’s LNG project. Total had said in an ear-
The remainder of the impairment stems from lier filing that it would continue to sell Tellurian
the fact that Total has adopted a net zero emis- shares “from time to time”. The remainder of
sions target for 2050. In line with this, the com- A Total executive, Eric Festa, resigned from
pany said it had reviewed oil assets that can be Tellurian’s board of directors on July 31 accord- the impairment
qualified as “stranded”, meaning those with high ing to the filing. Total said Festa’s resignation
production costs and anticipated to last beyond was not a result of any disagreement between stems from the
20 years, whose overall reserves may not be him and Tellurian, its management, its board
tapped by 2050. The only projects identified in of directors, or any committee of its board, but fact that Total
this category are Fort Hills and Surmont – both provided no further details on the reason for the has adopted a net
of which are in the Canada’s oil sands. move.
Total noted that for impairment calculations, Total still holds 44.9mn shares in Tellurian, zero emissions
its board of directors had decided to take into versus about 46mn in April 2019. The French
account only proven reserves on these two company agreed last year to invest $500mn in target for 2050.
assets – rather than proven and probable (2P) Driftwood Holdings, and also entered into a
reserves as is generally considered to be stand- definitive sales and purchase agreement (SPA)
ard practice. This has resulted in an additional for an additional 1.5mn tonnes per year (tpy) of
exceptional asset impairment of $5.5bn, for a LNG from the Driftwood terminal.
total of $7.0bn. However, Tellurian’s progress towards a final
In addition, Total announced that it had investment decision (FID) on Driftwood has
decided to withdraw from the Canadian Asso- been slowed by current market conditions.
ciation of Petroleum Producers (CAPP), an Nonetheless, the US company recently resumed
industry association, citing “misalignment” talks with India’s Petronet on a potential invest-
between the group’s position and its own on cli- ment in Driftwood after a previous memoran-
mate action. dum of understanding (MoU) expired in June.™

P14 www. NEWSBASE .com Week 31 06•August•2020