Page 5 - EurOil Week 40

EurOil COMMENTARY EurOil

means of ensuring power grid stability and flexi-
bility at an affordable cost, Total said. Under that
scenario, demand for natural gas will peak in
2040, but consumption will continue climbing
beyond 2050 if hydrogen and other green gases
are included in the mix.
“To fully play its role in the energy transi-
tion, gas has to become much greener and much
cleaner,” Kristoffersen explained. “That will
come at a cost, at least in the early years.”
In Momentum, the share of green gas will be
limited by its higher cost and a lack of sufficient
carbon regulation. Even so, it should rise to 8%
of total gas supply by 2050, versus 0.1% in 2018.
But in Rupture, the share of green gas will exceed challenge – more energy and less carbon,” Pouy-
25% within three decades. anne explained. “The time is right to accelerate
growth in low carbon. The real risk is not partic-
LNG plans ipating in the transition and being left behind.”
CEO Patrick Pouyanne outlined Total’s long- Total wants to ramp up its overall energy
term strategy the following day, which demon- production from 3 to 4mn barrels of oil equiv-
strated the company’s confidence in gas. alent per day (boepd) with increased LNG and
Total plans to double its LNG sales within a mostly renewable electricity generation. It wants
decade, from the current 35mn tonnes per year to expand investments in renewables and gen-
to 50mn tpy by 2025 and 70mn tpy by 2030, eral power from $2bn to $3bn annually, so that
Pouyanne announced in a presentation. Its inte- they represent more than 20% of its total capital
grated LNG business is expected to earn over spending.
$4bn in cash in 2025, up 40% from the present Total is targeting 50 TWh of net power gener-
annual level, assuming an average oil price of $50 ation and 80 TWh of sales by 2025 from gas-fired
per barrel. power and renewables. It is striving to become a
The global LNG market is currently experi- “world leader” in renewables, with plans to have
encing a glut, as a result of extra capacity coming 35 GW of gross capacity in operation by 2025. It
on stream, weaker demand in key markets last will add 10 GW per year beyond that point.
year and the coronavirus (COVID-19) pan- Oil and gas production will be vital for fund-
demic. But Total predicts that the market will ing these investments, although Total will work
tighten as early as 2023, owing to projects being to decarbonise its gas by developing biogas and
delayed because of current conditions. hydrogen production, Pouyanne said. The com-
The oil major has three liquefaction projects pany also plans to scale back its oil product sales,
– the Novatek-operated Arctic LNG-2 in Rus- partially replacing them with sales of biofuels.
sia, Mozambique LNG and a seventh train at Total recently announced it would convert its
Nigeria LNG – due online in 2023-2024. These 93,000 barrel per day (bpd) Grandpuits oil refin-
three schemes, all of which have been sanctioned ery near Paris to produce biofuel and bioplastics.
already, will capture a share of the improved Meanwhile, it does not intend to build any new
market. conventional refineries, instead scaling back
“We are in a good position to benefit from the its European refining capacity to better match
evolution of the LNG market,” Pouyanne said, demand.
adding that Total would not need acquisitions to Europe’s refining sector has struggled with
realise its growth goals. “We will not spend a lot overcapacity for years, especially in France. The
on M&A in the next 10 years because we have COVID-19 pandemic has put unprecedented
what we need in our hands.” pressure on the sector, however, and will likely
The CEO noted Total had access to additional spur rationalisation.
undeveloped resources in Mozambique, and While the oil industry is set to reach its peak
options to expand the Cameron LNG terminal in just 10 years, Total will continue advancing
in the US and the Papua LNG facility in Papua low-cost oil projects that are resilient to price
New Guinea. volatility, Pouyanne said. He said the Middle
East and North Africa offered the lowest costs,
Other areas and would therefore be Total’s main focuses for
Total has also made new commitments as part upstream opportunities.
of its decarbonisation efforts. It is now targeting “Oil and gas is the engine of the energy tran-
a 30% cut to the Scope 3 emissions of its Euro- sition,” he said. “Oil and gas will continue to
pean customers within the next decade. It has receive a major part of [investment] because we
also pledged to lower the Scope 3 emissions of its need to deliver cash flow from oil and gas to fund
customers elsewhere to under the level in 2015. the growth we want to deliver in renewables and
These goals build on the promise it made in May electricity,” he said.
to bring its Scope 1, 2 and 3 emissions to net zero Capital spending will be capped at a “cau-
in Europe by 2050, and slash emissions in the rest tious” $12bn in 2021, versus $14bn this year, but
of the world by 60%. will climb to $13-16bn annually between 2022
“We want to transform Total to meet a dual and 2025, Pouyanne said. ™

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