Page 5 - Euroil Week 06 2020

EurOil COMMENTARY EurOil
and power rose by 17% to $794mn in the quar- ter, while marketing and services soared 42% to $474mn. Refining and chemicals slumped 36%, however, landing at $580mn.
Total also benefitted from relatively small impairments of only $248mn in the quarter, compared with $1.26bn a year earlier. Pouyanne noted that the group had been spared from the larger impairments suffered by its rivals because of its lack of exposure to US shale gas.
“Let me repeat, you will not see Total buying a shale oil company in the US,” Pouyanne told analysts in a presentation.
What next?
Moving forward, production is slated to rise by a further 2-4% in 2020, with capital expenditure that year anticipated at $18bn, up from $17.45bn in 2019. Pouyanne said the company was work- ing towards final investment decisions (FIDs) on projects in Uganda, the US Gulf of Mexico, Brazil, Myanmar and Mexico.
Total added it was on track to reach its goal of divesting $5bn of assets in 2019 and 2020. Last week it announced the sale of a 27.5% stake in France’s Fos Cavaou LNG terminal to French operator Elengy for $260mn. It also has plans to dispose of the Bongo field in Nigeria along with other mature assets. Since the start of last year it has already raised $3bn from divestments.
The oil industry is experiencing heightened pressure from governments to reduce its emis- sions. Total has expanded into solar power in recent years, and shifted its focus away from oil and towards gas, but it still faces calls to do more.
While many producers have responded to this pressure by making promises to cut their emissions drastically, Pouyanne reiterated on February 11 that it was up to governments to drive decarbonisation. Speaking to Reuters, he also said consumers would have to pay more for carbon neutrality, and that the company had no intention of moving away from oil and gas production.
“Suppose we announced today that we have stopped producing oil, do you think cars will suddenly be driven without gasoline? No, it doesn’t work. It is not black and white,” he said. “We don’t want to go away from oil and gas. We have all the financial capacities to be in the driv- ing seat [of the energy transition] and not to be the villains of the story.
Total recently faced a court case filed by French local authorities and several NGOs, who accused the company of failing to set out in enough detail how it intended to curb its emis- sions. However, judges at the court outside Paris said the company lacked the right to hear the complaint.
PIPELINES & TRANSPORT
Lithuania starts building gas pipe to Poland
LITHUANIA
The pipeline will plug the Baltic gas grid into the rest of the European network.
LITHUANIA has begun building a gas inter- connector with Poland – a project that will unite the Baltic states with the rest of the European gas grid.
The first kilometre of Lithuania’s 165-km sec- tion of the Gas Interconnection Poland-Lithua- nia (GIPL) has now been welded into place, the country’s transmission system operator (TSO) Amber Grid said on February 12. Amber’s target is to complete at least 100 km before year-end, putting it in a good position to complete the rest of the pipeline before its scheduled launch at the end of 2021.
“We set an ambitious task for ourselves and contractors...this project is important not only for Lithuania, therefore we have no time to waste, all our efforts are focused to ensure timely and quality construction of the interconnection,” Amber’s acting CEO Nemunas Biknius said in a statement.
Amber hired Polish company Izostal to sup- ply the required pipes in mid-2019, and a joint venture between Lithuanian firms Alvora and
Siauliu dujotiekio statyba was selected for con- struction services in December.
GIPL is set to enhance the region’s energy security and improve its gas market liquidity. It will provide the Baltic states with access to Poland’s Swinoujscie LNG terminal, supple- menting supplies from the Klaipeda import facility in Lithuania. Finland will also gain from the pipeline’s completion, after connecting its gas network with that of Estonia via a Baltic Sea link earlier this year.
Listed as an EU project of common interest (PCI), GIPL secured €266m ($289mn) in grant funds from the bloc’s Connecting Europe Facil- ity (CEF), covering more than half of its €500mn cost.
The pipeline will be capable of flowing 2.4bn cubic metres per year of gas in the direction of Lithuania, and 1.9 bcm of gas in the direction of Poland. Poland is yet to break ground on its 343-km section of the pipeline, having caused the project to fall more than two years behind schedule by making changes to its route.™
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