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AfrElec COMMENTARY AfrElec

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

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