Full Year 2022 TotalEnergies SE Earnings Call
Speaker 2: Good morning. Welcome and thank you for joining the Total Energy's 2022 results. And 2022 We'll take a bit of a missed picture about the total impact of this event by this year,
Speaker 3: Good morning, good afternoon wherever you are. Welcome to Total Energy's 2022 results and 2023 objectives.
Speaker 4: We are presenting from Paris in all virtual modes. Our program today will start with a safety moment with Thierry Fimler, our president of marketing and services. And then Patrick and Jean-Pierre will drive us through the results of last year and the objective set for 2023.
Speaker 5: And then we'll have a Q&A session. But for now, a safety moment with Cheri.
Speaker 6: Good morning.
Speaker 7: I've chosen a safety moment to speak about the fatal accident which happened during rebranding work at service station in Burkina Faso last year.
Speaker 8: Let's start with a description of this sad accident.
Speaker 9: On April 27th, in our service station in Ouagadougou, two operators from a contracted company moved a mobile scaffolding between the totem and the station canopy in proximity of 15,000 volts overhead power line.
Speaker 10: The third operator, who was the sole victim, had them, but his leg hit a security barrier at the same time and he became a conductor of the current when the electrical arc occurred.
Speaker 11: This so-doperator collapsed due to electrocution. He died on the spot despite cardiac messages, messages performed.
Speaker 12: Cadet was 26 years old.
Speaker 13: The index inquiry made following
Speaker 14: This dramatic accident showed that the work procedure was respected before the start of the work including pre-visit and risk analysis, pointing on the nearby presence of the overhead power lines and the need to move the scaffolding in unmounted position.
Speaker 15: On the day of his accident the specific works permit has been signed.
Speaker 16: So what went wrong?
Speaker 17: The investigation of the accident identified two key non-compliancees with the work statement.
Speaker 18: In appropriate decision by the operator to reduce the hate,
Speaker 19: of this scaffolding rather than dismantle it in order to go safely under the abbiamo matrix on stage.
Speaker 20: And failing supervision at the moment of the accident because a person in charge of this supervision was distracted in a phone conversation.
Speaker 21: How did we react?
Speaker 22: We immediately suspended rebranding work worldwide.
Speaker 23: on a site with presence of overhead power lines.
Speaker 24: So return experience of this shoot and explain to define the conditions for restarting the works with four main points.
Speaker 25: First, the obligation to always consider as a priority isolation by the electrical network team is simple.
Speaker 26: So, on the guarantee of minimum lateral safety distances with specific surveillance, third
Speaker 27: The strict control with competent supervisors.
Speaker 28: And the last one, which is probably the most important one, no scaffolding under live power lines.
Speaker 29: However, this fatal accident shows that we must push further the appropriation in the field of our safety rules and programs. And this has to apply to our teams and to our partner companies.
Speaker 30: I'm convinced that we must pursue in this way to improve our safety culture.
Speaker 31: Thank you for your attention.
Speaker 32: Thank you, Teri, for this safety moment. I will come back, obviously, on safety. But before just to introduce on this presentation to this morning about our results in 2022 and the objectives for 23, I just...
I would like to underline that in fact this year 2022 has demonstrated once again the consistency of the multi-energy strategy that we are following consistently within total energies for many years.
On oil, we continue to invest in oil in order to maintain our production, to capture opportunities like the one in Brazil.
We have of course driven by the fundamental objective for many years to keep our breakeven under $25 per barrel, it was $24. And at $100 per barrel, like it was the price of a prash last year, we have the full benefit.
On LNG and GAZ we embarked in a bold strategy in order to become a very large player. We have by the way in 2022 managed 48 million tons of LNG which is more than 10% of the market which was 400 million tons, 12% exactly. We have strong positions in Europe and this strategy is delivering of course…
And last but not least, electricity, which I've demonstrated that there is room for price increase in these markets as well, in which we are investing for the future. Consistency, resiliency, integrations are the key of our strategy.
And today, in order to continue to demonstrate that with transparent and with profitability we want to deliver to all our investors, we have announcing that you will have from this beginning of 23 a clear transparency on two segments which are the pillars of our growth, including thefuture climbs technology and the less valuable blmasters Tamif
increase among all the major majors and by far and we have the strongest
Return on average capital employs more than 28%.
which demonstrates that we can
combine strong profitability and transition to new energies.
I would also say that VGA is giving us, we come back on it, but a big strong guarantee for the future by the de-veraging of the balance sheet, balance sheet, which allow us to express a very clear framework of return to shareholders in last September .
which is a clear framework of return to shareholders through the cycles. We announced 35-40%, we delivered 37% of cash payout to shareholders in 2022. Thanks to a policy which is clear and which we board of directors have decided to even reinforce.
First, a report to the ordinary dividend.
For the cycles thanks to the buybacks we execute but also to the underlying cash flow growth and we have announced that we will increase by 7.25%
the final dividend and the next quarterly dividend in 23.
But also continuing our buyback program with $2 billion as previously quoted, no decrease despite a lower environment, and find last but not least room for special dividends like we've done in 2022 if we have ex-super profits like people said.
So no zigzag in our strategy, consistency and that's the key for, I would say, the future results and profitability. And this is what we will demonstrate today together with Jean-Pierre.
If I move over first on safety after the safety moment, of course at Total Energies we repeat this message very often safety is a core value and comes first because safety requires discipline and discipline is at the core of operational excellence.
So that's this continuum that we insist on. I would say that on the one hand, we can be proud of implementing for the company of safety culture, which has led to a significant decrease in the accident rate as measured and shown here by what we call the total recordable engineering rate. And we are today.
managed in the last decade to become among the best in the major, if not the best, but there is a big but, however, on the other hand, we report with deep red, but there were three fatalities in 2022, which I consider an acceptable.
And that's here a sign and we see as a sign that we must do more to strengthen our safety culture. But to be sure that this culture is really embedded all over the world in all our operations, wherever they are, whatever they are.
We purposely show on this slide the details of the free fatalities as well as the steps we are taking on a continuous basis to address and mitigate these ever-present tricks.
We'll talk today about our strong 2022 results. It's a fact.
but understand that we carry the knowledge of this facility like a weight on our shoulders and therefore we as a company and I as a leader cannot be completely satisfied but we were as successful last year as we should have been.
The 2022 is definitely a year as I said where we have managed to get the most out of our assets.
in different businesses. Of course, first, this year was the year of LNG, which became a star in many around the world, because suddenly, because of our invasion.
For Ukraine, by Russia and the impact on the European gas, the European market needs more gas. We are in a strong position, the first US exporter, the first Europe gas holder, and we have used a lot with RIGAS.
gasification capacity is 0.86%. And we have increased our energy sales by 15% 14, 18, and so on.
Integrated and all the other success as I said is a very strong utilization rate of a refining system, more than 80%, 82% in the market which was really quite high thanks in particular to distillates.
We managed to capture the high refining margin and our downstream business as which are record cash for generation. But we have also been able to consolidate these assets through some smart M&A, like the one we've done in Brazil at the end of 21, where in a year after, it generated more than $700 million.
of cash flow. Of course, 22 successes are also to prepare the future in all these operations. Preparing the future is, yes, of course, and you will not see this presentation, the world Russia. Russia is behind us, but we have been able to build the future in LNG for the successes of becoming the largest international player.
profits. And last but not least, smart M&A to consolidate on integrity or integrated power businesses. Where is this smart M&A because both are characterized by the fact that it's direct negotiations to obtain in attractive conditions.
strong position in the US on one side with clear energy, in Brazil with the other side. All these successes about growing our production, growing our energies, is also we keep in mind that we have at the same time to lower our emissions and you will see the results knowing that we'll come back
end of March, we've also stated a climate report deeply in details over, I would say, net-zero ambition.
So at the end, this is a slide we introduced in September , but which is for me the result and give me again the strong comfort for the future. Is that yes, we had a record cache generation, but what is important to me is that we can come here.
The 22, 22 cash generation to 20, 10 years ago, 22 are with even higher oil price. We have more, we have increased of cash generation by more than 50%. Thanks to the strong decrease of the breakeven, and the challenge now is to maintain this breakeven under $25 a barrel.
by the selection of assets, by the action on cost, despite some inflationary environment, and we'll manage it. And of course, thanks to Viscache rules, we allocate quite a lot, like Jean-Pierre will tell you, to deliver it to the company and that's the best guarantee for the future.
I will then leave the floor to Jean-Pierre to describe in detail these 22 reserves.
Thank you, Patrick. So I will concentrate my comments on 2022, a year when we establish new records.
Thanks to perfect match between on one side are well position assets and we've no surprise We'll talk about gas and energy and on the other side very favorable markets which have set new
new record in 2022.
The 2022 environment provided favorable tail wheels for all our activities.
The 2022 environment provided favorable tellwills for all our activities. Normally there is a mix.
of positive and negative, it was not obviously the case in 2022. And so we were able to fully leverage the strength of our global integrated portfolio.
Patrick will cover the macro later on, so I will not come back on the rationale.
Our oil price sensitivity is sometimes underestimated, but clearly in 2022, we benefited strongly for the rise in oil prices thanks to our low-break-even local portfolio, which allows us to capture this price increase.
Please note, as Patrick already mentioned, that in 2022 we have a stronger increase.
of net cash flow per share among major. I will show you the data later on.
Refining margins are linked to oil, but we saw in 2022 massive supply disruption, particularly affecting middle distillates related to sanction in Russia and more recently to the European UndaGoes on both crude and oil products.
For GAS and LNG it is a similar story.
The Russia-Ukraine war drove gas and energy prices to never-before-seen levels.
as Europe scrambled to cut decouples from Russian pipe gas by importing additional 50 million tons of LNG last year. This represents more than 10% of the market.
So, clearly, across all our business in 2022, markets were favorable.
Here you see the list of key metrics demonstrating that for 2022 we talked the talk we worked the work.
A slight miss on production, mainly due to security issues in Niger Delta, some delays in project and the price effects on our PSCs.
Better than expected performance for refining you see 82% utilization rate 32 Ch Millinki serves
4 million-turn-targets, 4 million-turn-sub-o-targets because of the Fintens LNG spot business in Europe and we maximize the value of our regas capacities.
and of course in the world as well.
while at the same time meeting our scope 1 plus 2 emission in the directions.
despite high utilisation of CCGTs in Europe .
As announced in July , investment came in above 22 objectives at $16.3 billion. This reflects increased short-cycle activity to benefit from the strong price environment.
Higher net acquisition, mainly for our Brazil and renewable in the US.
but no meaningful impact from inflation.
And I think a great bottom line for shareholders.
plus one billion dollar off the line cash growth, a key element as you know supporting dividend growth and
$47 billion of debt at the cash flow in 2022.
So let's move to IDRP results.
So, IDFP-adjusted net operating income was $12,000,000 in 2022, almost doubling compared to 2021.
thanks again to fully integrated energy which positions us to maximize the capture of the high price environment but also thanks to strong growth in integrated power generation.
Cash flow globally at the level of IJRP was $11 billion, up 76% year on year.
You have your very important message on the slides.
To provide a better understanding of the growth strategies of LNG on one side and electricity renewable on the other side, the board has decided to split IJRP into two new segments from the first quarter, 23.
That means that from that date, we will report separately integrated LNG and integrated power.
So integrated LNG is comprised of our LNG assets, gas and energy trading plus bio gas and hydrogen. And integrated power is comprised of renewable and flexible power generation, power trading, plus power and gas marketing.
We provide you here with some metrics for these two segments 22 vs 21.
For I-L-NG, sales were up 15% to 48 million done in 2022, thanks to our number one position in European regards.
which allowed increased spot purchases and sales in the context of record LNG demand in Europe .
Cash flow increased to $10 billion, up nearly 80%, and adjusted net operating income was $11 billion, doubling the contribution compared to 21. High power generated $1 billion of cash flow and earnings over 2022.
Production was 33...
terawatt hour up 57% thanks to high utilization rate of CCGT in Europe and the 53% increase in power generation from renewables
At your hand 2022, we had 17 gigawatts of renewable capacity installed.
A lot of you have been asking for this split to better understand our two fastest growing activities, LNG and Integrative Power. I'm happy to do it from 2023.
Nearly every way, 2022 was a record setting year for hotel owners.
Benefitting from the favorable environment, we increase in diesel.
plus 15% and thanks to our unique position in Europe , total energy generated.
a very positive adjusted income at 36.2 billion dollars in 2022.
Includying nearly 15 billion dollars of impermanence related to our Russian upstream assets, our reported IFRS net income was 20.5 billion dollars in 2022. Return on equity was 32% and, watch it, return on capital employed 28% in 2022.
This demonstrating again the quality of our portfolio.
and the capacity of total energy to benefit from price increase.
with record learning, total energy generated $46 billion cash flow in 2022.
All-time high shown on the left side of the slide, split by segment.
All segments made from their casual contribution in 2022.
$26 billion from ENP, up 39% on higher oil and gas prices and despite the UK Winful tax profits which are presented in 2022 $1 billion.
$10 billion from LNG, a record I, that we covered on the previous slides.
$10 billion from downstream driven by the contribution from refining of close to $8 billion more than 2.5 times contribution in 2021.
thanks to higher refining utilization rates that allow us to capture high margins.
and $1 billion, an important milestone for integrated power.
On the right.
We show the cash flow allocation, which was pretty isn't really divided among shareholders, investments, and debt reduction.
$17 billion return to shareholders representing 37.2% per ounce delivering on a 35-40% commitment comprised of $7.3 billion for the ordinary dividends plus $7 billion.
of buybacks and $2.7 billion.
of special dividends that was paid in December .
$16.3 billion for investments, but we covered that in the next slides. And $14.5 billion of net debt reduction, which cuts our gearing by more than half.
7% end of 2022 compared to 15.3% end of 2021.
But 2002 environmentza Rawwa's.
for all our segments to demonstrate version underlying potential.
Typically, with an integrated model, we count on strength in one activity to offset possible market challenges in ANOVA, but in 2022, each segment had a chance to shine.
Capital investments came in at $16.3 billion in 2022 above the guidance, 14 to 15 billion million. Mainly due to an acceleration of short cycle projects in West African countries, but also in the North Sea, in order to benefit.
in 2023, 2024 from a good environment.
and 5.9 billion dollars of smart acquisition, notably in Brazil for oil and in the US for integrated power.
Also included here are the investments for 1.4 billion dollars, mainly from ongoing farm down activities which is key to the profitability of integrated power. For example, in that figure you have the farm down of 50%
of the 230 megawatt portfolio of renewable in France, but also the actual sales of our CCGT in individual, also in France. In that figure, you have also the sales of some EMP mature assets, notably our interest in block 14 in Angola, but also the second field in Iraq.
Important to note that inflation did not have meaningful impact on 2022 increase in GABEX.
We remain disciplines on capital. We strict criteria for sanctioning projects. I will give you more about that on the next slide.
But, important to say that we determined last year.
particularly in light of the rapid strengthening of our balance sheets.
that's passing on the opportunities noted here.
We will not serve our shareholders' best interests.
To the right we split 2022 investments by type of activities.
Oil generated most of our cash flow and we allocated about 60% of CapEx to it, split with the split between 60% and 40% between maintenance and growth. And a big piece, 2.8 billion dollar.
of that growth was for CEPIA and at the POO, the deep of your field in Brazil.
Integrated power and low carbon energy, including of course the Clearway acquisition, was $4 representing 25% globally of the capex in 2022.
integrated LNG represented the balance of roughly two billion dollars, reflecting the timing of a fixed expenditure as Qatar NFO and Qatar NFS was not regarding in 2022. It will be the case in the first quarter
When price is increased,
Cost might follow. However, 2022 cost inflation was not so severe in our key regions and activities.
except of course energy costs but will be benefited if price increases.
There are some upward pressures shown on the right.
in that site, but we effectively conscrolled it in 2022.
Using IC-1932 OPEX as a benchmark, total energy continues to be the lowest cost producer among the major at about 5.5 euro per barrel equivalent.
On an ongoing basis we benefit from a high quality global portfolio that allows us
to leverage on precious power.
to negotiate favorable contracts with suppliers and service companies.
On deep offshore derates we find medium duration contracts.
that largely insulitate us from inflation in 2022.
but nearly all of our rates are set at about the same level for 2023, with options taking us into 2024 at good prices.
For new projects, we adhere to strict selection criteria shown on the right.
to maintain the high quality of the portfolio in terms of average costs.
but also in terms of emission per barrel as well.
Important to note that our criteria on emissions per barrel will be more severe in the future as the portfolio average has lowered to 19 kg CO2 per barrel equivalent.
In terms of the constant progress of the high grading the portfolio, for example, adding Lucas-Barrell's in Brazil last year, at Appiaceplu, implementing the spin-off of our ENP subsidiaries in Canada, with higher cost barrels this year.
will reduce our overall cost per barrel in the future. To conclude the 2022 result presentation, where you have here the benchmark of performance of total energy versus the over four supermaid jobs.
In terms of growing net cash flow per share, you see here the data, we were the strongest by far.
Dablinging to almost $13.00 per share.
Similarly, total energy was best in class for profitability with 28% return on capital.
was best in class for profitability with 28% return on capital in broids.
For the three years, return to shareholders without performance, our European peers.
by maintaining the dividend in 2020, we haven't cut the dividend in the middle of the COVID crisis, and ended up trailing our US peers.
And to conclude, based on the sustainable analytics ranking, total energy has the highest EAG rating among the super modules.
We consider that this continues to be an important factor.
in terms of VEG leadership through this period of growth and transformation.
In summary, a necessary cure for the company, a big step up in terms of financial strength and flexibility.
In large part due to the strategic, that position us to fully benefit from the 2022 favorable market environment.
And with that I leave the floor to Patrick. Thank you.
Yeah, and this slide demonstrates that you can really deliver at the same time.
results and sustainability. There is no opposition between both of us. So the executive strategy of course will be the motto for 2023. And just some words about the environment. Of course the price today of oil is no more than $100 but more than $80. But I would say
When we look to the trends of the old markets, for me there are some uncertainty on the demand in particular because there is a feeling, even this feeling maybe is disappearing a little over the risk of what we call recession, global economy slow down. But again, this feeling today is a little erased because of the virus, because of the crisis Ukrainians said, President Trump started this apprisate successful
What we observe in China and of course on the energy markets, either oil or gas, the Chinese recovery, economy recovery will be fundamental easing of lockdown restrictions. What is clear by the way, and I know that in our world of oil and gas there is a new Bible which is a net zero scenario of the IAEA.
which is supposed to decrease the demand every year, because it is a supply, is that 420, 23 oil experts, including VAIA, are announcing a higher demand for oil, around 102 million bar of oil per day, which will be a record here. So the reality of our world is that the oil demand continue to grow.
and that we need to face in fast we have to supply. On the supply size we don't see a lot of margin. We see we are entering into this year with very low inventories of products in particular, very low compared to the last 10 years. We have the impact of the sanctions on Russian crude and refined products, crude oil.
Russian crude oil is finding its place in the market, China, India, but the refined products of Russia, it's less obvious where the diesel will go, Africa, South America, that's a mystery. And by the way, we have also, of course, the supply side is clearly supported by the OPEC discipline with the cut with Japan and the...
most speaking about returns than growth. So that means that when you look to this landscape, I think from off perspective, there is more support to, I would say, higher price than $80 and a lower one. And so looking to, we would not be surprised to see $100 above all coming back. By the way, the old market.
and this is very important to understand is also for me today there is no more a world old market in fact and that's for a big lesson of what's happening we are splitting the market between Europe which has banned there are some cap on the prices so we have today several world markets which does not help obviously
to ease the price and I think we did not have seen all the consequences of the growing grey market and for the supply of oil.
On the gas side, the slide is a little complex, but just today we can have a bit of vision, bit of view, and maybe driven through some lessons for what could happen in 23. In Europe , obviously, the European gas is driving the energy and power markets for Europe . So you have on the slide what happened in 22 compared to 21.
Right.
corner, bottom corner, that's the demand of gas. And we have all translated in this slide in Elmigiantone of LNG. The demand for, in 2021 for gas in Europe was the equivalent of 170 million tons. In fact, 100 million tons was delivered by PAP gas. It is a famous one of the 130 BCM from Russia.
more LNG and there is an increase up to 115 million tons of LNG. You can see by the way that the bar of 22 is a little lower than the bar of 21 because there was a decrease of demand around 15% because of the high prices.
So, to do that, we have done it at the expense of our regions, I would say, and as you can see, there was a sort of supply gap. So to attract these 50 million tons to Europe , we had, in fact, taken out 15 million tons, 16 exactly, from China.
China probably have because there was a slowdown in the Chinese economy, which went down from 80 million tons to 65, more or less. But also from other countries like Bangladesh has over. So in fact, the supplies of Europe has been possible because we took all the energy out of other countries, which by the way, have shifted to coal.
So, yes, the security of supply of Europe has been secured, but at the expense somewhere of the emissions of other countries. Of course, we have done that with a very higher price in order to attract this energy. So what is the perspective for 23?
Might be wrong, but there are some fundamental. First fundamental is that we expect Russian gas to be lower in 23 and in 22 because in fact we have been supplied by Russian gas and North Stream pipelines until mid of the year in 22 and these pipelines are down today.
So we expect that we say half, maybe up to 20 BCM, only mainly by the Eucridian pipeline. And so, even if there is a potential again.
destruction of demand, we expect more LNG being required by Europe than in 23 and 22. 15, 25 billion tonnes are our expectation depending on demand.
The increase of supply in 23 compared to 22 is only 10 million tons, 410. So this 15 to 25, which is more than what will be supplied worldwide. And we could expect, as well, against the same question mark, a recovery by China and an acceleration of the economy in China.
which is different, which is a small note on the bottom right corner, which is the storage level. The storage level where 54% last year by end of January , today they are 85% in Europe . We cannot stop more because there is a limited capacity of storage in Europe . This one today the price are lower. But again, we will consume this gas. And so we think that some tensions will appear by mid-autumn of the year.
between different markets for energy.
So, 23, our activity in front of this environment will continue to deploy our strategy. We have already announced, of course, on the LNG side we are adding some gas capacity in Europe . The one in Germany has been opened. It's operational. You know we have put the FSIU in Lubmin which is a...
the point where the North Stream is landing which is a perfect access to the German market. So our LNG traders are quite happy with this infrastructure. We have booked half of the infrastructure for our own business. We are adding another one in France where we intend also to book alphabets.
So that's LNG and we continue of course to trace opportunities in LNG. As you know we have ambition in the US and we'll come back to you later.
The second part of deploying our strategy, and it's important, is refining and chemicals, where we have Bernard and his team have worked out during years to consolidate these jubile platforms, the Sator platforms. You know our strategy is expanding fundamentally in an integrated way. We have been happy to take the FID of the Amural project, which is an $11 billion world capital.
So 70% remaining shares of Total Iran. We have exercised our options. It was, as you know, a transaction where the negotiation took place in 2016 at a time where the multi-poles on renewable assets were reasonable.
So that's already there, so it gives some work to our teams, but there is more to come. Of course, we will not just sleep during the year, but we'll continue to find smart developments in all our projects. Weave lowering of course of emissions, it's always a...
You know, our motor is more energy less emissions, so growing our energies for sure, and our delivery for energy, lowering our emissions. In particular, we have announced in September we have launched worldwide the energy saving plan in the company. The teams have been super reactive.
So the $1 billion has been distributed at an average by the record of $50 per ton. It begins to be spent in $23 for $400 million, spread over the two years. And it will allow us, by the way, to lower our targets on scope one and two emissions by 2 million tons for 2025. We'll come back on that in March.
Second point of 23 and I think it's important for all the investors is our cash allocation priorities. There is a scheme now has been put in place, remind you that we want to deliver 35-40% of cash payouts for the cycles, 37.2% in 22. So we have taken some first decisions with the board of directors on this first...
is supported by both. The share buybacks which we have done last year which were representing almost 5% of capital so of course this 5% is a return to shareholders only if we translate that in an increase of dividends which we'll do and we do more we go up.
because there is also an increase of the underlying cash flow growth. So this is the reason why we've done this increase, which is a larger one, but the one we have decided for the full year 2022, 6.5. I would like to remind all of you that the difference of some of the peers, we didn't cut the dividend in 2020.
And so we have the baby we have less room to increase the year but we increase the dividend here after year 22 6.5% the basis for more than 7% in 23 and so that's Or commitment the Capex I will come back on it. It's we gave you a range of 14 18 in September We'll be 16 18 in the I part of course
the future. Today we are A+, I think we want to target to better AA credit rating. It's an ambition for it's the objective of my CFO , no? So he told me it's aspirational, let only know it's a real objective for you and your team. So and I think it's true it's because again for me that is the best answer to ensure you that all our strategy
in Capex and return to Sheldon will be delivered through the cycles. And the surplus cash flows are, of course, allocated part of it first to buybacks, and last year we were on an average of a little less than 2 billion, it was $1.75 billion. We increased it to $2 billion in the last quarter for this 2020.
rewarded with a special dividend in kind as we will organize the spin-off over Canada upstream assets. I will come back on it. So I think this is a full program which demonstrates the real way we think to the future. When you look to in fact the column 1 and 4 are for the shareholders, column 2 and 3 are for the company.
And we think of that. Of course, we have to, we come back to the other stakeholders. So the capital investment of 23 will support the transition, 16, 18 billion dollar, at which out of which five billion dollar for low carbon energies.
Let's say a quarter full for integrated power and more than before on the new molecules because we grow our ambition in the various segments. In particular in carbon capture and storage we have been awarded new projects in Denmark now so we have Norway, Denmark, Netherlands. The new plant has not yet been built.
I would say our position in this business. Also included in this part is our energy savings, let me say the negative emissions that we can do. And you can see that we have also new projects of course coming into our hydrocarbon businesses or in gas. In gas it's growing because it's a category project.
So there is a lot of work on LNG, but of course on oil as well, because we have some new projects on which we work, like in particular in Brazil. We have Miro 2 will come on stream, we'll have Atapu 2 and Sepia 2 to sanction this year. We have also Uganda, so we have new projects coming. You can see that by the way we have as much new projects on both sides.
energy will grow, mainly coming from LNG again. There is no new project coming on stream, but last year we had some, I'd say, not a full utilization of Novit, which came back on stream by middle of the year and from ICTIS because there were some big overhauls in ICTIS.
So, 9% more production of LNG and by gas to Europe . All will benefit from the full year of Brazil, plus 5%. So it's good in this environment. The production will grow only by 2%. Because at the same time, we have some perimeter effect on domestic gas. We have exited from Myanmar. We have exited from Thermo Castovole. And we will exit from Thailand.
We don't have the volume, but the upside is more limited. So at the end, so what is more important for me are what we do in LNG and pipe gas to Europe because you see the upside of this market plus the oil. Start-ups in Oman, Vokten, are started, Merrill II, Brazil, mid of the year, and Afsheron in Azerbaijan for gas. Just to mention that that ...
We are quite, in our company, we don't speak about decrease of oil or decrease of gas, which is about
stabilizing, rolling, continuing to supply the market, being a key player of the energy supply and taking a role, even if we are not a very large player, but we do a role, which means that we continue to focus also on reserve replacement. You can see that the 22 reserve replacement ratios in the area are quite good.
108% at the same price, 85% with the price effect, around 100%. There are not so many major companies which have been able in the last year to maintain their replacement rates at 100%. And we are one of them. Without Russia, which was of course for us a source of reserves, but we can't do it without it, as it has been done in 20...
So let's continue. Integrated energy ports for you, the ambition as I just mentioned more production. So it helps if we help our colleagues of the downstream energy to sell more. Of course, there is a spot uncertainty, but opposition as I said before.
is strong in regards to Europe . We are increasing our regards capacity in Europe thanks to the Lubmin and the Loavre FSA use. So we have more than 20 million tonnes of LNG regards capacity, which is good, which is strong. It will help us to continue to monetize these capacities.
As you can see the split on this slide which is important, we split it into free pockets according to the margins. There is a pocket of I would say long term Asia, Latin America portfolio which is fundamentally giving us results and cash. It's a difference between brand and the cost of production. That's the idea. We have the European and flexible...
where we in fact we supply the NRIB gas energy from the US to the spot index. So where the profit will be with the spot minus NRIB. So today it's $20 more or less per million between you minus three or until less than three. So you can see the margin.
And then you have the spot once where it practice some sense of margin, but this activity helps us, of course, to, by the way, absorb the cost of the regards and to contribute to security of supply. We have put the top Yamal, because there is always a today Yamal, by the way, in Beclair. We have only, we have topped.
We have all the volumes, the four million tons of volume of the long-term contract, which we have committed, but we are strictly only these volumes, as all the activity which was linked to spot extra volumes, we don't take them anymore as per our commitment vis-à-vis or a shop business.
Integrated power will continue to grow clear because the gigawatt of capacity was saved by Jean Pierre, we have managed more than the 16 gigawatt by end of the 22 capacity, gross capacity we are at 16, 16.8, 17.7, 17.
By the way, I would like to tell you that there are not so many companies able to grow their renewable business by 7 gigawatts in a year.
You can look around. We are among the top. And so again when we do things in total, we are consistent We do that seriously and we are intent to deliver an atomic growth but value because it's why and this is a fundamental reason why we have decided To anticipate the split of IGF into two reporting segments By the way, there is no split of organizations. They find it's leading the world businesses
Just to be clear, it's the reporting. We have done it because I think now it's time not only to speak about volume but value and the best way to deliver the value is to report the results and to show it, how we will improve it. Of course, we have quite a lot of capital unemployed today but it will come on stream year after year. A lot of things get delegates on stream over the course of the upcoming year.
So we target an increase of production by around 30%, mainly from renewables. We benefit today from a very high rate of user utilization rate of the gas-fired power plant in Europe , but there are also some capture of special taxes in Europe on this gas-fired power plant.
I mean, you said that we expect an increase of or integrated power cash flow from 1 billion to let's say plus 30, 40 percent we'll see, but these capacities will move and we are, we will have to deliver this growth.
an increase of our integrated power cash flow from 1 billion to let's say plus 30, 40% we'll see, but these capacities will move and we will have to deliver this growth.
The year 2023 coming back on oil and I think it's important to tell you that we have decided to mobilize most 50% of our exploration budget on Namibia. We have maybe today in total energy and I hope it's true and I don't have wood but only plastic here but...
It's really, maybe, at the helm of, it's clearly according to, by the way, for Wood McKenzie, the largest discovery which has been done in 2022. We are maybe at the helm of a new golden block. So we decided to mobilize two ricks and $300 million in total energy.
share to, I would say, tell the tale, return the cards with
1, 2, 3 rigs with welds plus tests.
and to have dynamic tests to really know what we have in our hands, and with the idea that we accelerate the time to market, not to appraise everything and to be, I would say, to know everything, but if we have the chance to really confirm the volumes which seem to have been discovered.
We will be room to make fast-track developments like we've done on block 17, 25 years ago. And so this is from my by-person perspective, very important because this could be a new chapter of the old business in the company. So we mobilized the teams and all ENP teams and there's a supervision of Nicola.
and also the one tech teams are on these important projects. At the same time, we will divest some oil, the expensive oil. We know we have clearly set two years ago, we made some improvements, but we not only Canadian assets...
are not in line with climate but strategy but from the Metaniee they are IPEX assets and we are not fitting with all strategy and all portfolio. So we look to various options and we confirm today that we consider that the best way is to maximize value for shareholders is to introduce this independent candidate company on the market.
delivered more than 1.5 billion dollars of cash flow and from operations and almost 1.3 billion dollars of free cash flow. So it's quite interesting metrics. We have appointed a leadership team from Canadian lady which was the work you see working in the company will be the company of this company.
German ship as well by an ex-executive of the company. We know they well Canada. The idea after that is that in order to manage, I would say, the backthrow in this type of listing operation, will maintain more or less 30%.
Not more, it will be for some years in order to stabilize the company, but fundamentally the idea is we will not be a company controlled by the Italian agis, not at all. We think we'll have maybe one director out of it, but it has to be, it will be managed as an independent company. By the way, she's a reason why...
We just preempted for this company, not for Total Energy, I would say for Spinco, 6% of 40, there was a transaction between Sunco and TEC and we considered that if we were in charge of the independent company, obviously because these were attractive conditions.
We would have to pre-em, so we've done it in order to strengthen the company before it's listing. So for shareholders of the Tall Energy, they will have to approve this spin-off at the AGM of 2023 in May.
and they would receive distribution in Kine, so especially with that in Kine, of these new spin-pro company.
We will report to you, of course, along the coming months on the progress of this project.
Coming back to the 2023 objective, which is important, is a cash flow generation. I'm happy to tell you with the support of the growth in integrated energy, in integrated power, but also on the old production. The underlying cash flow growth will grow by another billion. I know we have announced one billion.
we are navigating between both and you can compare to 22 at $100 per barrel in the same condition we expect 1 billion more if $80 per barrel you have the sensitivity on the right it's 3 billion dollar extra cash for
It's a little lower than last year 3.2 because of the impact of the UK taxation. And also because we have deconsolidated, I would say, Novitek, which part in Yamal condensate. And because the Yamal is linked to Brent, for more or less. So we keep our shares in Yamal, but we have deconsolidated of all accounts.
all the share of Novitek in Yamal. So that's why this sensitivity is a little lower. The $4 billion for $2 million BTU is also lower than that here because of the UKitt taxation fundamentally. And for the margin sensitivity on the refining margin,
I would say it didn't change. Just to remind you that, and I would like to insist, is that very obviously for the total energy sales, quite a good potential for stock-free rating, a free cash flow yield in 22 was 19.4%.
And we have enterprise value by the ACF ratio of only less than four, multiple less than four. So this we're expecting, we hope that these strong results will be translated into value of the company.
Finally, I would like to tell you that of course the company I've shown you before that we are allocating your cash flows to the company by cap investments and debt production in a large way but also to share orders by way of the ordinary dividend, special dividend buybacks.
We are also thinking to over the other, that older. There is one stakeholder missing on this slide, which are the states.
The states are benefiting a lot of the only gas profits, you know, and people are complaining sometimes to times. But the total energies, we have double, more than double, the taxes and what we will deliver will have paid to states around around the world, $16 billion in 2022, $43 billion in 2023.
Of course they are mainly paid to producing countries but a country like the UK is 3.7 billion dollars, Norway is 7 billion dollars. And not to the consuming countries, that's clear. But this is a strong contribution I think to the public good for the taxes we deliver.
We are also thinking to our customers and to our employees. Our employees are, of course, the in-genre of all these results. We should never forget that the total strategy, what is, or one of the thousand world-world employees, which are delivering the strategy, we are rewarded with by a special one-month salary bonus. We are...
Taking into account the inflation in each country to increase the salary, so we share the value of our salaries which are also by the way shareholders and which 7% of the capital is a property of our employees so they are also receiving their part of the dividend. For the customers we have been probably...
follow the different routes and some of these we have decided to make proactively some sharing profit with our customers in order to I would say
take part of the pain of these high prices, high energy prices. You know, 2022 was in many of our countries a debate of energy, which was dominated by security of supply but of course affordability. So we have put in place some fuel rebates program, a massive one, more than 500 million euro for benefit.
of customers in France. We left to in 23. We had to face some also over energy crisis like the SMEs customers or SME customers suffering of very high electricity prices which were contracts because of the increase of electricity price to the sky in Europe .
second hour for 2022 so we take actions and we continue to take actions because we consider but it's part of our social responsibility to take care of our overall stakeholders, of course the shareholders, the company, the employees, the state and also our customers.
So I will stop there and thank you for the attention. We'll be happy to answer to your question.
Anyone who wishes to ask a question may press star and one on the telephone. Please pick up the receiver when asking questions. Anyone with a question may press star and one at this time. The first question is from Oswald Clint of Bernstein. Please go ahead.
back, we understand that too. But in the context of last, the long term where you've done, let's say, five or six percent growth for last, one, two, three decades, is if we can sustain the dividend and the commodity view cooperates as you seem to indicate could.
you know, six to seven or seven to eight percent become a new trend line, at least for that ordinary dividend, is the first question. And then thinking about future profits and Namibia, interesting slide you have. So do you think we could get some proper resource numbers in 2023?
risks further down the line that actually could delay things. Thank you.
Okay, on the dividend we didn't tell you we could don't do more. We have decided to do it at 7.5%, which is yes, you are right. A change of the past trends, but I think again for me it's also the translation of the fact that we have increased the buyback. So as we have bought back almost 5%, it gives some comfort. I think...
when people speak about return to shareholder for buybacks if we don't translate it in an higher increase of dividends I don't understand why it's a return to shareholder it's a saving for the company of dividends for sure so that's logic I think I've been very logic with what we declared and the board is logic will
we have and as long as we can allocate some cash to these buybacks because we have more cash flows and we are again we continue we did not decrease the buyback rate we maintain it despite the lower environment and I've seen some of our peers have decreased the buyback program for the
We don't do that. We maintain it and that's proof that so the answer is to you maintaining this buyback program Yes, we will help us to support a new normal which might be 7 to 8% and Will in the future so that's in the future years that again there are two and giant two
to feed the increase of the dividends. On one side this buybacks, on the other side it is the underlying casual growth and I am announcing again that we target 1 billion dollars. By the way I understand that the board among the new criteria for the viable pay of the CEO
the underlying cash flow growth. So we work the talk in the company. And so that's what I can answer to you. And again, don't forget, and then like you can compare it to companies we have increased by 10, but these companies have divided by two or more.
in 2020 which we could have more room to maneuver to increase, we didn't decrease at all so we are also starting from a much higher point from this perspective. You spoke about Namibia and let's keep Namibia we have a problem I just tell you we have one world one world. People are super excited they speak to me about billions of hours but we don't have the data we have no dynamic data.
And we all know that as long as we don't have a test and dynamic test, maybe if there is no good permeability, it could be complex. So let's, we are excited, clear, as we mobilize, and we have decided to mobilize a lot of our exploration resources visi at Namibia because we want to know what we have, and if we true that we have this type of size of resource,
Obviously, there will be a lot of room to develop. Honestly, unitization will not be, if we speak about billions, we can make a first project on our side, without making complex stories. I think that I can tell you on this project specifically, there is a very good cooperation between the share and total energy teams.
We share the data, we have an agreement, so we will discuss together. But the idea is really big is not to be a super optimization to appraise all the discoveries or there is another idea. Like we've done in Angola, let's see if there is a first development. Then we'll have time to optimize. I'll also remind you that there is the same partner on both sides of the license, which is Kato Energy. We're happy to do it. So.
Let's see, it's premature to speak of a size of a... I hope, is that when we have the real all this program, which has been organized in order to have free words and free tests, in fact, with two ricks, then we'll have a bit of clarity, and we can speak to you, but resources. Today is premature.
Let's do the job and we'll come back to you, but I can't tell you but as a CEO of the company We are quite excited like we were when I interned the company. I was lucky. I was assigned in Angola on the block 17 So I hope we'll have the same in our hand
for the next 35 years. Okay, next question. The next question is from Malek Christian of JP Morgan. Please go ahead.
Good morning. It's Christian Malik from JP Morgan. Two questions, Patrick. First, I know that we've shared a fairly similar view on the sort of super cycle prospect in oil over the coming years, a new position for that in the context of your portfolio. So can you walk us through what you've seen in the past?
projects and are you moving to short cycles, one of the bases of your increasing carpets, but it can provide us with what would be the upside risk of your volume growth, if you were to choose to sanction more projects and take a longer term view around investing in FIDs, a term that I think has become quite rare in this industry.
And the second question linked to that, linked to your Canada IPO, do you think this is a template going forward if the market's not going to recognize the value associated with oil, whether it's because of ESG, because of net zero? Could this be a rollout of other projects or other regions going forward where ultimately you IPO your oil business in a way that...
We have the office and we are working on it very hard in order to manage the course of the projects that's the key issue but we'll do it. We have in Brazil because of the acquisition we've done. We have two projects to sanction. One is at Apo 2. The other one is CP2. So this will feed the growth. And we are looking to opportunities to grow or portfolio.
consistent and there are opportunities and I hope we'll be able to announce you smart opportunities in the coming weeks in the next weeks. So again by the way we have also in our portfolio Serinam and Namibia. I just described Namibia. Serinam
As you know, it's a little more complex, but there was a good news by the end of the year because the Sakapa Rassaf Atrezo is positive so we have at least a first pool All pool of a potential project alpha bit is confirmed We are drilling wells on the crack-badoo and around discoveries no two wells. I think we have accelerated as
of rigs and gola, in particular, is delivering a lot, Nigeria, Congo. So these are the, because there we have already some infrastructures, PSOs, who we can build adding wealth on the infrastructures. So, by the way, we look at it. So the answer is super cycle, but what we will not do is investing in expensive oil just because today on the short term, the price is good.
Okay so this is the second question on Canada. It's why we think by the way that it's the right time. I don't know if the market will fully recognize the value but I'm sure that it's probably the best time so that it could recognize it you know so with the figures that we just announced and so you know we have been people knows that we we want to diverse these assets they are not fitting with the strategy.
We make money this year but this could disappear. So we have the ambition to get a good value out of it. The values acquisition offer we received were not in line with expectations. And so we are well-seated, but we are optimistic about the capacity of the market to, which is for us the best way to monetize these assets. And...
Is it a model to roll out over in PSS? No. No, it's a specific model because again these assets are I cost. They are not fitting for strategy. No, we are not the best shareholder, but the reality. There is a potential to go with these assets. Sure, I think it's a very high quality asset for this suffered, but could deliver more. But we are not the best ones because we don't want to put care-capex.
Please go ahead.
Thank you. Good afternoon, Patrick, and congratulations on these results. My first question is on the balance sheet. You obviously enjoy an exceptional balance sheet already with only 7 percent gearing, and you seem to want to strengthen it further with reference to reaching AA credit rating countries with higher makes than anyone in the country. I need to check on a couple of other questions.
I wonder what is the real significance of an AA credit rating, please? And then my second question on LNG sales, up very strongly last year, 22% in Q4, you're still selling YAML cargos, obviously. Can you let us know, please, how are you getting paid exactly in the middle of these sanctions? Thank you. If you want more information, subscribe to our YouTube channel. The Watches animation is available in the Eternal
Why is it important? I think just you know I'm trying to fill the gaps with the valuation of some of peers.
So we are quite systematic. We look to the different there is one gap which is that our US peers are rated double A we are Not yet rated double A and when I look and I may compare the Pretricks and the results of total energies with At least one of both I see very similar metrics. So maybe I'm so very something missing so I think
Again, I think it's also a message because for me, that means that AA AA would mean that your R shareholders and new investors could really believe in the future and the guarantee of the future return to shareholders. So I think it's a strong signal. Again, it's a way with a board we discussed. Can we express again a new objective of gearing? It seems to be difficult. Why minus five? Why minus ten? Keeping the mic.
Energy, Yamal, first.
yeamoun food.
Yamal, which is the only asset remaining, is the source of two.
the only asset remaining is a source of two cash flows.
There is the direct interest in Yamal as an asset.
20% and this company sell its energy to different buyers, one of them being total energies, on Brent basis. It is true that we have received some dividends from Le Mans in 2022, but some is becoming more complex.
We have, by the way, decided to book the cash flow from Yamal only when we receive, really, the dividend. By the way, this is one of the explanations because I've seen a question mark coming, why it seems there is a gap on the IJAP cash flow, no, there is no gap on energy cash flow, it is because...
We don't book the full result. We book, we have decided to be prudent. We book in our accounts cash flow for the Yaman, where we see the dividend in Paris or somewhere in our pockets. We are prudent, but you know, because again, there is a strengthening of sanctions. So that's the first part of the Yaman cash.
But there is another part which is this long-term energy contract which teams of Stefan and Ling, they acquire these energy on a brand basis and they sell it.
That's the TKF price when it comes to Europe or the GKM if it goes to Asi. So that's also quite a large source of cash. And by the way, it's even better, maybe a better, this is a, we don't edge anymore this contract.
Yama will really these volumes of these 4 million tons will reflect in our accounts the reality of the TTF spot market or the GK sport market compared to the brand in the year 23. So in fact Stefan most of his business is already done he has edge a lot then he can optimize around the aging but he has these
amount of these contracts which could deliver. And this is not Russian money. This is a European contract. So this long term contract and the cash we derived from this Yamal is today in Europe , there is no constraint and is reported in our account like the over-long term contract that we managed in our portfolio.
I hope it's clear where we are today. Thank you very much. The next question is from Christopher Couplan of Bank of America. Please go ahead.
Thank you very much and good afternoon gentlemen. Two quick ones please if I may. Patrick Jean-Pierre, if you are looking at your CapEx outlook, can you maybe give us a little more granularity in terms of your assumptions embedded in that 16 to 18 number for 2023 particularly looking for your assumptions regarding underlying...
Inflation, from here you said there wasn't really any to report in 2022. Just wondering what you're assuming for 23 and if you can maybe give us a hint as you usually do about how much of that you think will be inorganic. And then lastly, on your point, Patrick, regarding the eye power, the
business because you've got access to that pipeline you've worked hard to achieve. I think that would be probably a more important figure than your earnings progression into 2023 here. Thank you.
because you've got access to that pipeline you've worked hard to achieve. I think that would be probably a more important figure than your earnings progression into 2023 here. Thank you.
The graphics inflation embedded for inflation on the shorter is quite low, I think maybe the 2 to 5% which has been mentioned by the shorter but there is no real impact on the graphics, the graphics, the inflation for us, the edic for Nicolas and Namita.
is more about the new projects because of course the contractors want to embed higher costs in the new projects and we don't want. So very visit fundamentally the debate for the execution of the projects which are in most of the capex of the year you know are more of the old projects which are already sanctioned than the new ones, the new ones generally
about inflation with contractors is more for the new projects we want to sanction that I mentioned to you that's the point on which we need to be all serious otherwise we'll wait because we'll not repeat the mistake we've done in 2010-2014 we see to sanction whatever the cost is I will not do that
I think there is a net assumptions of an organic, which is around one to two billion dollars. It's a matter of buying and selling. We have some different options in the portfolio to buy and sell. And so we'll keep you aware. But this is, I would say, and it's part why we keep the range, because of course, when when you don't have the ranges for me.
Sometimes you know you have divestments which are done but you for example Dunga we work during one year but we will receive the proceeds only in 23 not in 22 so you might have some time of execution which in this
So most of the cap-ex we gave you are organic infracts, we clear most of it. We on iPover
So we have a full reporting by you have to be a little patient because Jean-Pierre and his teams are working and so from first quarter 2023 in April or in of March, no in April , sorry in of April , we'll deliver to you not only the quarterly results but the previous year.
non-shore wind farm is more two years than five four years, four years, and we say so, normally it's the cycle is quicker. Having said that, we also have offshore wind. And offshore wind is more like an exploration cycle than an ENP cycle than on a short cycle, I mean a non-shore renewable cycle. We have also in a-
This is what I have seen in some first figures and I think you have maybe probably a third of it which might be unproductive. Just round figures. But I think the exercise to oblige ourselves to make these new reporting is very important. I know that there are question marks about the profitability of this business and we have to deliver it to you. And when you report.
clearly, to be consistent with this strategy. And integrated power, all the words are important. It's not only renewables again, it's clearly the capacity to deliver value from volatile markets and from price which will go upwards because we need more and more electricity. So that's
Thank you very much. Look forward to it. The next question is from Lydia Rainforth of Barclays. Please go ahead. Thank you and good morning. Two questions if I could. And Patrick, thank you for the very competitive date around what you're seeing on the commodity markets at the moment.
Given everything you said, isn't the kind of cash payout ratio, do you expect that you'll be in a position or total will be in a position to pay a special dividend this year, later on in the year? And then secondly, if I could come back to Adani and a relatively small amount of capital employed there, but does it change anything in terms of how you think about your approach to
renewables in certain countries or JVs within that and the great prospects? Thank you. First there will be a special dividend which is a special dividend in kind with a spin-off of Canada so and it's not zero. When I see the figures it might represent
So don't underestimate that value so it will come for shareholders Again the special dividend is we are very clear we told you priority to buy back and then if we have
Again, an environment like we had last year, we might consider that, but that's my answer to you. It's premature. For, by the way, it's premature because today, what they observe in the beginning of the year is $80 a barrel. So I don't see an endless $20 a million bit use. So there is no reason. At this type of environment, we will not have a special dividend.
We'll prefer the buybacks. And this is why we maintain the $2 billion. We didn't decrease it. If we come back to an environment like this here, we might consider that again. There will be a special dividend for the kind for the Canada spin-off. At any, no, it does not change. I think, again, first on a dany, I see a lot of papers. And...
I thank some of you for having tried to calm down the market. We have an exposure which is quite limited, a $3 billion, $3.1 billion. Obviously, the hydrogen projects which we have discussed will be put on hold, as long as we don't have a clarity on all that fight. I'm confident in the fact that Danny and Dr. Maldonine is taking care of his business in a smart way.
as total energies, of course we have to form of prudence to understand. We are there, by the way all the companies in which we invest, we looked yesterday to Anthony Green, for example, it's a very safe company, you know they generate one billion dollars per year of revenues, they have a debt of five billion so it could be maybe
We could impose the growth, I'm not sure. But again, the equation is more strategic one. Do we need to do it by our own or not? Honestly, doing by our own. We knew we were business in India or even in Brazil. I think it's too complex. I prefer, again, I think finding the right partners.
is the right way. We have been pleased by the way that the Danias Delevent again, at any green energy limited or at any total gas limited, the companies which are managed by
independent CEOs, smart CEOs, we are happy with them and we are happy also with the partnership with Adani and of course then it's to explain what is the way they finance all that. But again for me fundamentally no, it does not change the approach we have.
It's true that, again, we knew that electricity is not really again renewable. Electricity business is more local, so you take more local risk. But maybe it's also local opportunities, you know, so I don't want to be too – don't look to the glass half empty, half full is better.
So again we will work on this one. Wonderful, thank you. The next question is from Mikhaila Delavina or Goldman Sachs. Please go ahead. Thank you very much for your insights today. I had two questions if I may. The first one is on your low carbon strategy. And I was wondering how much the IRA has changed your capital.
is an extensive low in order to support all drill infrastructures including renewable projects including by the way storage projects is. Storage as well is supported, you know and when we speak about for us it's very important because we speak renewable we want to be integrated so capacity to build some battery storage which capacity is important and energy storage capacity so the area is also supported.
Supportive of that so it's reinforced in fact The array has given even more value to the clearway acquisition. We have done this year So it's an up in you for me because we have we didn't integrate obviously This type of support to the full portfolio of clearway and we benefit from it So it's an upside which will be materialized because we have a very very large portfolio I think said that coming back to the molecule business Of course when you speak about that was in today, you know, I was asked
by the French Ministry of Economy in Abu Dhabi, do you want to invest in hydrogyne? I answered to him, yes, in the US. You know, I didn't say when it was not so happy with my questions, my answer, but you know that's the reality. I mean, you have $3 per kilogram. I think that that's the question, is that to make projects, you have no demand. So the rush to infrastructure is good, but we need to find the demand.
And I would like to be sure that the demand will follow beyond what is obvious. And I think because you have two types of demand for hydrogen, green hydrogen, no hydrogen, whatever it is, it is the, it is the, I would say, the R2A-8 industry, the refining industry, the local industry where we need to make local projects because we have a local case
the massive markets which just don't exist for the time being. So I would like to see where it is before to speak about it. I think he said that we begin to see or we could leverage the IRA, for example. We are looking to make sense to make e-mefane projects in the US in order to export synthetic methane in the future for the refaction plants. That could be a...
that could be a nice answer to these long-term investments and the US might be the place to make some investments, about type of things that we are working. We are working as CCS, there's another point, makes sense to look if there are some projects. I think the Director capture projects today obviously the place to try to test this technology is the US, thanks to Vizier Ray. So it's part of...
structure all over the world, but the answer to do. So I think so. I took it as a comfort to not only on I would say electricity strategy, but also of course to develop the new molecules you've seen in a budget it's coming upwards. I didn't mention of course the sustainable addition fuel which is the which is the obvious market that everybody is rushing to at the point that we do many projects but the
because it's not an infinite demand. The question, honestly, is not only demand, is demand not only in volume, but also in a four-divol demand, accepting to pay more, and regulations will be necessary for that. Exposure to Spot LNG
We gave you sun sensitivity on our but it's more the upstream asset. I'm not sure you have the LNG sensitivity in the figure we gave. Yes, okay, so Jean-Pierre will answer to that. The figures we gave for the sensitivity is a global sensitivity so on an oil portfolio but it impacts the impact of the sun sensitivity.
on the LNG portfolio as well, the portion that is linked to it, and the same for MVP, so the gaspie, plus the portion of the LNG sold on an index gas. In another way, what we age, let's skip, you take the 48 billion tons, you deduct your mile for million tons, you deduct the 13 million tons spot, so it makes 30 million tons, so if I'm not wrong, I see a step...
is a sensitive to the F-Rend. The next question is from the ground audit of the capillars. Please go ahead. Yes, thank you for taking my question. Two question if I may as a first. It is coming back on the cash distribution to shareholders. I understand the 35, 40% through cycle commitment.
I you indicated that you generally had over one year period. Last year my belief was that
You had probably hedged at lower prices than the forward curve.
Now, given the recent fall in natural gas spot prices and LNG prices and the forward curve, how should we think of your hedging position over the next 12 months?
Thank you. Well, first one, the board. I'm chairman of the board, so I had to convince myself. So just to answer fully, the board, I'm the chairman of the board. So I'm fully consistent with myself, I would say. And of course, we raise, we, no, I think honestly, don't be, again, don't, I mean, we are very, uh...
consistent for the cycle. We did not reduce this dividend at a time where there are many reasons to do it in 2020. More reasons to do it than to maintain it. We do it because we want to demonstrate our consistency and that we are fundamentally resilient. So if you compare the increase of a 7 to 8% that we propose today
to people who have cut the dividend, you say it's less, yes it's less, but okay that's a game that I will not play. I prefer to be consistent with the cycle. And again, I think it's an increase, so you should look to that. As it was asked to me by, I think, it was Oswald, the first question, if I remember, a long time, we were more at under 5%. We go in years and so we recognize it.
But again, for me, it's very important that it has to be supported for cycles. And we don't want to come to back sustainable. The balance is your right, give us more to support it. This is why we go up. But again, I think we have also the buybacks to continue to feed with the superior, with the higher.
in the future. It's difficult to anticipate what will happen fully in 23. So we have already good news to you and to your shareholders. You've seen that last year we did not hesitate to give a special dividend. We'll see what will be the price in 23. LNG was hedged in 22 with total price. I hope not.
Otherwise I will be super unhappy with Stephanie's news because the price in N22 were incredibly high. So normally, 23 will benefit from this aging. By the way, today we are lower. The present ETF level is lower than the average of last year.
So I should have more returns from 23, from this ageing in 22. I mean, so I don't fully understand your question. And we'll continue. We have a policy, which is not to edge everything, but we edge, we want to edge. Why don't we edge everything? Because we experience in 22, the free-port interruption.
on which we add to attack, because edging is fine unless you have a physical issue. So we don't age all the volumes. And in fact, in 22, we're quite lucky because we managed to, the report production was interrupted, but we had some no edge on other volumes, so we managed to get it. But it's, so we, we age a certain, I think it's 90, 90% and when we keep the rest open. But honestly, 22%
three years ago I would tell you we'd have signed immediately. We don't have been dreaming. So I think it's a policy that we need to manage these positions. We have long-term contracts, we have exposures to support markets, you know, and we want to manage this exposure not to keep it fully on a balance sheet because then you have mark to market stories and all that so we prefer to. So we are fine with the policy and we
but 23 will benefit from the aging of 22 and 24 might also benefit from the aging of 2023.
The next question is from Amy Wong of Credits, please. Please go ahead.
Hi there, good afternoon and thanks for taking my question. I had a question about your emissions targets. Recall in September 2022, you guys increased low carbon cap packs and then you teased us with the potential to introduce a scope three worldwide emission reduction target by 2025 and also a revision of the scope one, two net emission target. Now Patrick, in your prepared remarks, you did mention a few numbers and could I push you to...
when you know your emphasis on your cat pack is always on a value over a volume and you know very high hurdle rates for your capital investment so for something like low carbon cat packs that go specifically to reducing co2 i'd love to hear about how you think about the returns there
Okay, the emission target first, when we speak about 425, they be clear. The previous target was 40 million tons, a scope 1 and 2. I just mentioned that the plan of energy savings that we have put in place should deliver 2 million tons lower. So that means that the target will be reduced for 40 to 38 million tons. I mean, I'm anticipating on the board decision, but I think there is a logic there.
this criteria. Look at the vision targets that we have today. Lowering our mission today is not a matter of carbon capture by 25. A lot of projects which are being more efficient, technology to implement on methane, on everything. We could describe to you at the point the type of projects, maybe it will be a good idea by in September . We have a strategic day to come back on this topic if most of you are interested.
I think on the long term it's something which is maybe more sustainable but fiscal incentive which could which is sustainable for tennis could be the future. The key on TCS will be of course the size of the market because there is some infrastructure to amortize. So my view is that you need to reach at least 10 million turns, 15 million turns per year of storage if you want to have a profitable
to put into the projects. From this perspective, you know the Denmark project is well located, not far from Germany. It's shorter to make a pipeline from German industries to Denmark, but from Germans to Norway, just looking to a map. So that might be a bit of volumes. Norway, the Dutch project is good because you have the Rotterdam and Anvip, large industrial platform, which could give
some customers to these Dutch projects, Aramis, and that we are working on. So that's the idea. We don't cry. Again, we have to look to... We have to do it because it's part... For me, for the only gas industry, you know, it's a question of permit to operate, all right. We have to be serious about...
lowering or scope one into emissions. You know that I'm not very a big fan of the scope 3 debate but the scum one in two I'm very serious because it is a duty for us to do it. We have technologies, we have capacity. So it's a cost
It might become an opportunity if we can commercialize the technology to third parties and this is a one B2B entity is trying to develop that. We have a first project with all SIM in Belgium on these type of things. But again, for me, we will develop first this project because we have to do it for our own emissions. It's a question of permit to operate and are we only gas industry and this is embedded in the global strategy of the company.
But as I show you, we can be very profitable like we are, even the best, and at the same time, having capex for low carbon energies, carbon captures. We do it in a smart way. It's possible. It's building the future of the company. The $5 billion that we have mentioned for 2023, I think is a level which will be maintained for the following three years. We don't intend to grow it very much higher.
We have managed our 6 gigawatt per year with this type of amount. So for me, I have enough capex to make my 6 gigawatt per year, which is more or less the objective which I assign to the teams of Stefan. So I should not say yes, and the only point is coming back to Michael's question, is what is the size of the ambition of the new molecules.
And for me, the question on hydrogen and all that is more about where is the market, which will drive or expansion of capex.
The next question is from Jason Jebelman of Cohen. Please go ahead. Yes. Yes. Yes. This is Jason Jebelman from Cohen.
I have a couple questions. The first is you press released last week that you had farmed down a position in the renewable power asset at a high multiple, but it was a low overall cash contribution, and that's usually up to however much the energy kiln was added, though a completely
Uh, just reach the materiality of press releasing with a few 100Million dollars and I'm wondering why you decided to pressure was given. The thought was you had been farming down these assets all along and if that potentially indicates. That given the market environment, you're possibly accelerating the farm bounds.
of the developed renewable power business over the next year and what type of casual contribution that could bring. My second question is on the LMG portfolio. You're obviously undergoing the review and modes and beaks, but there's also been some reporting that you could take a large stake. Either off-taker equity in a US LMG project.
And I'm wondering if your case of growth in the US-LNG market is at all dependent on what happens in Mozambique. And if you still can give me the view, the US-LNG market has won in which you want to grow. Thanks.
complex question, but is it to answer first? No, there is no acceleration at all. We have been always very clear that to reach the double digit profitability we want to have in renewables. We will have to integrate far down. It's part of the business model. This one we have some growth capacity objectives that is 35.
But at the end, we'll keep more or less half of it. This is very clear. We stated that three or five years ago when we implemented the strategy, and we implemented, so there is no acceleration. It came on our desk. There was some assets in France, which were part of it to be found on. It has been done in very good way. And thanks to this found on, we are on this asset, more than a double.
and several times it's not only a matter for me of profitability, it's a matter of managing the risk. I prefer to have two times 50% of two projects than one times 100%. It's just a matter of if things could happen. So that's, yes, I can tell you by the way, it was 16 times EBITDA, if somebody gave me an indication, 16 times EBITDA. So I think 16 times EBITDA, I can tell you, is no problem.
I can continue to develop my renewable business with this type of return of 50% of my portfolio. And this gives the cash also to recirculate the cash and there is the project. So I think it's a smart way and we'll stick on this strategy. No, there is no link between Mozambique and the US. We like both. We like energy.
We want to continue to grow in a growing business which is energy. Energy is good, energy is international gas, energy is a way to decarbonize the coal fiber plants in Asia and elsewhere. So there is no fear about it. Maybe there are some cycles. Today it's at the top, if we could go down, because we are not able in the industries of course to plant all the plants very smartly. We invest. So we think that the U.S.
on the long term is competitive because you have the US gas price is about the lowest in the world so three to five dollars even it's five dollars per million BZU it will be very very profitable so that's the reason why so yes we have Camron LNG yes we have ECA in Barak, California phase one which is being built and phase two maybe in the near future we are looking to in the US
car, not an army, but a road, so we were only three of us, two cars. I want to go there, I want to check, I want in fact to go to see what if life is back to normal. I can tell you what I've seen from a security point of view is good, even life is back to normal, villages, people are back. But it's one step, there is more steps to be done. The two next steps in tourism and I, because I've been some, I would say.
controversies about human rights around the project, not because of us. We inherited that from an ADACO acquisition. So I want to clear view on the human rights issues which is a salient issue for me, it's important. I have given a mission to a specialist of human rights, a very well-known doctor in France, Mr. Rufin, who has accepted. He's making his
is report to understand exactly what is, I would say, with what are these issues, if there are things to be done, we'll execute the recommendation, we'll be transparent on it. We will share, obviously, with our partners, because it's a Mozambique energy decision to restart. It's not a total energy decision. All the partners should be on board. And there is a third step, which I can use with over and over again.
question to deliver is that of course we have to reengage with the contractors and one key condition to restart will be to maintain the costs that we add. If I see the costs going up and up we'll wait.
we have to wait, we can continue to wait and the contractors will wait as well. So I'm not in a hurry in this condition to restart. So there are the security conditions I think are okay. Human rights, I need a report. Costs?
I will need another report from my teams. We will probably have them to re-engage but smoothly, no hurry. Again, I can wait on Mozambique energy. If costs increase, we will repeat and we'll take the time. So that's where we are on these projects. So my message is positive but it will take time.
And it's not in competition in the US. We are ready to finance both. We have the capacity to finance both within our $16, $18,000,000. These are two good projects. It did all that, by the way, on the US projects, it could be the same. What I see when we discuss with some projects developers is that costs are increasing also. So it's good to rush for volumes, but if you destroy the value because costs are too high,
We know what is the impact at the end and we experience it. So that's the same for me a debate. It's more a question today on, we are very convinced by the US and the energy market, but we need to, to have cost-efficiency in the project.
The next question is from Luca Herman of Exxon. Please go ahead....
Patrick, simple one for you, I think. Contracting LNG long-term, not into portfolio, but out of portfolio. I mean, you've waited some time, I'd say, for the cycle to turn in terms of oil link contracts. The pricing has obviously improved quite significantly. Should we be expecting you to, you know, offload an increasing amount of your oil?
unhedged, or not unhedged is the wrong word, uncontracted volumes in to customers, and give yourself greater visibility in ways on duration and long-term people and oil linkage into the future. That was it. Thank you.
You're right Lucas, I can employ you if you want to manage my LNG business it's the right time to contract long term. Of course the buyers, there is a little more willingness by the way of buyers because suddenly they see some value. Of course when you contract long term it's linked to brand sometimes so it's an arbitration between Anriab and I mean
percent brand proposal from customers when you are going up to about 13 percent you can consider you are again there so that's the right time. Having said that I think the philosophy for us is more to keep this balance of 70 percent long term, 30 percent spot. We have the balance sheet we can use our balance sheet to keep part of the risk okay when you keep an
Sports index you take the risk like in 2020 but you take you keep the upside like this year. So I think this is for me the core of the of the business model of a company like Total Energies. The strong balance sheet must allow us to take this type of risk, but the 70-30 okay it's not a Bible but it is more or less we are comfortable with that in terms of management of risk.
in the company as we grow. So today there are some projects on which we will use the long-term contracts. And again, it's like by the way, we can also develop some project being spot-knowing that we can use these window opportunities to then sign long-term contracts. This is what we say even to our renewable people. You know, you want PPAs, but sometimes we could accept to develop a project.
not with the PPA, merchant projects, with the idea that tomorrow when we have the right opportunities, we will cover part of the exposure with a long term PPA, so that's the beauty of the balance sheet. Self-defying my CVs in the post, love to work with them.
Thank you. Good morning. Patrick, both VP and Cheryl have recently done a complete large acquisition in the BioGets area to jump stop.
get projected to US. Do you think bio gas would be a more important part of your low-carbon energy system going forward? And so do you think you need to have a larger platform, maybe more acquisition does?
to accelerate the growth day? That's the first question.
The second question. First, thank you for picking out the indigree power visits in the first quarter. Can you tell us that what is the return on that basis, that currently that you are chief? Your P is that I think BP and Shell seems to stop questioning the overall return on that basis. And just want to see that what?
We bought a platform in France. We just bought a new platform. It will be announced soon in Poland.
Why? Because it's quite a local business. It's like when you were born, you know. The way you manage this, the technology is not, I take, you know, okay, you can do larger ones, but there is no rocket science. So then it's becoming a question of local development. And I'm sorry to tell you, it's not because you are good.
in a Nordic country to develop biogas that you can be good in France where the agriculture organization, the agricultural ecosystem is quite different. And so at this stage we have not been convinced and we have studied some of these files that really these platforms will give us the edge to
the core country. So we prefer, maybe we are wrong, to go step by step, not being a lot of noise with billion dollars, but we prefer by the way to make smart direct negotiation but bidding with banks, which of course push price up in order to do that. There is a country where obviously we have more size in the US.
the US are more attractive for this perspective because by the way the system, all the SEFS system and all that is more liquid so you can not only produce but you can imagine to get more value of trading the volumes and mixing the biogas with other. So the systems of carbon...
systems and markets in the US give more liquidity to that. In Europe , its fragmented, all the regulations are not the same. It's one of my advocacy when I go to Brussels to tell them that even once this business to be developed, they could shoot the... I will hear you unique. You want European market and not the rules are different in all the countries, so it does not help to...
to grow it. So when you are in the gas, you look to biogas in particular because our customers looking for that, they want to if you have customers you know we have make the bet to go to energy for transportation which would love to have
So volume is not there so there is a good momentum for selling these molecules. Then the question is a scalability of all that to be clear and that's that's a question mark. So we are looking to I we have some options to know for you. We grow it more locally. If we do something larger it will be probably in the US rather than in Europe . But what part of it on?
I listen to my peers and again I respect them but what I think being consistent in a strategy is just fundamental. And we have decided a strategy which is clear. Again, we are...
With the business model I describe, we will be able to deliver a double budget business. And that's the commitment we took. But there is no reason for me today to derive from this objective and from the capacity to do it. Of course, we have to build that. We make very good projects, some are not as good, but I don't see what we should, and I think if we make zigzag on the strategy, we'll do nothing at the end of the day. So I prefer to keep on my strategy, which is, and again, we are very consistent, by the way.
I think the decision I have proposed was about to accelerate this segment, this reporting of the IP power, integrated power business, because having discussed with our shareholders after our road shows, after the presentation in New York in October and November , it is clear that there is a legitimate request from VamVam, you invest this amount of money in this business, we want you to demonstrate the clarity, giving clarity of these businesses. So I think this is a question.
I've been a CEO for nine years now. I think the lesson is you need to stick on the strategy and not to be otherwise in this new low-carbon business will never reach the size. And I prefer to reach a size which is consistent where we become a key player and again being able to grow a renewable business by six, seven gigawatts per year, we are among the largest ones compared to the large...
And so I think we can, and we've mixing that with our capacity to use the balance sheet, to integrate that in a larger platform, trading, et cetera, will allow us to deliver this profitability. So it's a commitment. It's also part, by the way, of on a zero ambition that we have, and on which we are serious about it. But...
At the end, for me, it's positioning the company on the long term on a profitable business because we are convinced that the world will need more electricity and more electricity means higher prices. Next question is from Alessandro Potzio, Maduro Bancar, please go ahead. Hi there. Thank you for taking my questions. I have two.
I think going back to the emissions, I think they became, they came in below target in 22, but they were still up near part of it. I think most of it was driven by the CGT and I was wondering if you can give us perhaps a target for. Uh, for 2023, how you see scope one scope to.
Emission evolving and also most of seeing the scope. So you have come down and I was wondering what are the main drivers for the reduction in scope 3? That's the 1st question. The 2nd question is on refining. Of course, the, the bank came into effect on the 6th of February . I was wondering how you see the market for diesel in Europe with a ban. We will be able to.
source mode is for more than a month or so it's going to be as tight as especially in the second part of last year and also on the thing on refining of course we are seeing protests in France. Is that going to have an impact on Q1 margins? That's all for me. Thank you. Thank you. Okay. Emission targets for 23.
As I announced that we will lower the 25 target to 38, I think the target for 23 should be something like under 40 million tons. So we'll have to repeat at least and lower the same performance from 2022 and no increase. So we are accelerating the target. There was a boat that made a linear decrease, I think, so probably 39.8. Exactly.
come to Europe . I'm not sure it's good for the climate, it's not good for the cost, it's not good for the customers, but that will happen. So I'm not worried about finding diesel, it will be just more expensive, but it's a cost. So question for is it Rio or does it have...
It's not good for the cost. It's not good for the customers, but that will happen. So I'm not worried about finding diesel. It will be just more expensive. But it's a cost. So question four, is it a real or does it has a?
Does the market have already anticipated or not the disruption of the Russian diesel in the spread of the diesel which were quite high? That's a question mark, I mean it's difficult to answer to this. Normally they anticipate, but there is a cost issue of transportation costs. The margin for the time being, I don't know, is difficult for me to predict on Q1 23, what I have observed since the beginning of the year.
is that the margin in January were higher than in the last quarter. They came by probably because the market was anticipating again this stress. So we see increasing and swarging. I think we are today at an average in the beginning of the year about one of the dollar per ton probably. So again this market is still stronger this week and I will see it again.
as it's difficult to understand what the operators in the market are taking into account or not. But this is what I think. Okay. All right, thank you. The next question is from Henry Patrico of UBS. Please go ahead. Yes, my one. Thank you for the presentation. I'm just one question left on your comments around the global LNG market and European gas in 23.
When you show European energy imports, potentially up to 25 million tons per year, can you extend on the assumptions around European gas events? Seems like we've been quite a rebound these years, and where is that coming from? Thank you.
I'm not sure to have understood the question. Is the European gas demand? Yeah in 2022 I think what we have observed is more or less minus 15 percent. I mean this is the figures I have in mind. I mean I'm controlling, Stefan confirms. The question for me is will it be accelerated in 23 you know because we see a trend. It was a shift mainly from gas by the way I go to oil.
A certain number of manufacturing industries shifted from gas to fuel, which we can understand. The gas was at $200 per barrel and the fuel was probably at $1.1, $120 per barrel. So there was an arbitration down.
Part of it has been too cool but less than what we were thinking. What will happen in 2023, I think again the price still today is $120 per barrel equivalent, $120 per million BTU, it's still high so it could damage it. We gave you, I think in the slide we are quite clear about what we and what we our expectation. We think that EU LNG import will be higher in 2023 than in 2023.
in 2022 by 15, 25 million tons. Maybe part of the demand structure will come back. I'm not fully convinced. It's really linked to the price of it. And again, I think people today, we are entering into new world in Europe , where energy prices are high. Energy costs are high. For energy consumers, I think the idea that they should be serious.
But the way they consume energy will be deeper in their mind and they will invest like we do. By the way, the thing is, if you want to lower your energy in voice, you have to consume less. And so to be efficient like we are doing in total energies with our energy saving platform, Refinese extraordrom.
Okay. This was the last question to you for the conclusion. Thank you. Thank you to all of you. I think that you have been a good attendance to this presentation. The next meeting will be in March, I will say 21st, 21st, will confirm you the date very soon. To make this presentation on strategic sustainability.
Thank you.
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