Page 7 - MEOG Week 40

MEOG COMMENTARY MEOG

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

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