Q2 2024 TotalEnergies SE Earnings Call
Ladies and gentlemen, welcome to TotalEnergies second quarter and first half 2024 results conference call.
Speaker Change: I'll now hand over to Patrick Pouyanné, Chairman and CEO , and Jean-Pierre Zbraer, CFO , who will lead you through this call. Sir, please go ahead.
Patrick Pouyann: Transcription by CastingWords Good morning or good afternoon, everyone. Patrick Pouyann is speaking. So before Jean-Pierre goes through the second quarter financials, I thought that this year would be a good time to check in on the progress that we have been making. I would say great progress in just the last 10 months since we presented our strategy last September at Auto Investor Day in New York. Or I would say a balanced transition strategy, which is anchored on two fundamental pillars, oil and gas on one side, with a perspective of growth, and Integrated Power on the other side, and Boat Park will now be available for the company.
Patrick Pouyanné: Good morning or good afternoon everyone, Patrick Pouyann here speaking.
Patrick Pouyanné: So before Jean-Pierre will go through the second quarter financials, I've put...
Speaker Change: But mid-year would be a good time to check in on the progress that we have been making. I would say the great progress in just the last 10 months since we presented our strategy last September , Auto Investor Day in New York, or I would say Balanced Transition Strategy.
Speaker Change: which is anchored on two fundamental pillars, the oil and gas on one side, with a perspective of growth, and integrated power on the other side, and both are growth pillars that are visible for the company.
Patrick Pouyann: So, during this last first semester and last quarter, beyond the excellent operational performance which was delivered on our O-Ring ESP-1, we have sanctioned several major upstream projects, as I would like to remind you on the website, with financial decisions on three large PSOs, Camino in Angola, Sipiatu, and Ataputu, both of which are world-class productivity projects with low technical operating costs. Under the $20 per barrel sanctioning criteria, Angola is under $30 per barrel breakeven.
Speaker Change: So during this last first semester and last quarter, beyond the excellent operational performance which was delivered on our oil and gas pilot, we have sanctioned several major upstream projects.
Speaker Change: I would like to remind your side with the financial decisions on the
Speaker Change: Three large PSOs, Camino in Angola, CPI2 and Atapu2, and both which are world class for productivity projects with low technical operating costs.
Speaker Change: Under $20 per barrel sanctioning criteria, Angola is under $30 per barrel breakeven.
Patrick Pouyann: So these are three major oil projects, but we also have sanctions on the LNG side. Two important projects, the Marsa plant in Oman, Marsa LNG, which is a very ultra-low emissions plant, and the Obetagas project in Nigeria, which will supply Nigerian energy.
Speaker Change: So these are three major old projects, but we also have sanctions on the LNG side.
Speaker Change: Two important projects, the Marsa plant in Oman.
Speaker Change: Martha LNG, which is a very ultra-low emissions plant.
Speaker Change: and the UBETAGAS project in Nigeria which will supply Nigeria Energy.
Patrick Pouyann: So these projects will not only contribute to the objective to grow our upstream by 2-3% per year in the next 5 years, but they will also boost the underlying free cash regeneration and, ultimately, shareholder distribution. On the second pillar, Integrated Polar, where we have reached a competing ROACH of above 10% this quarter, and Jean-Pierre will come back on that. We have also made some strong progress towards deploying and completing our Integrated Polar business model by acquiring flexible assets that allow us to extract maximum value from the renewable assets in the UK and Germany. We closed all CCGTs here in Texas and also announced the acquisition of a CCGT in the UK.
Speaker Change: So these projects will not only contribute to the objectives to grow our upstream by 2-3% per year in the next 5 years, but they will also boost the underlying free cash regeneration and ultimately shareholder distributions.
Speaker Change: on
Speaker Change: On the second pillar, Integrated Polar, where we have reached quite a competing Voace above 10% this quarter, and Jean-Pierre will come back on it.
Jean-Pierre Zbraer: We have also made some strong progress towards deploying and completing our integrated power business model by acquiring flexible assets that allows us to extract maximum value from the renewable assets in free key markets in Texas,
Jean-Pierre Zbraer: In the UK and Germany. We closed all CCGTs here in Texas and also announced the acquisition of a CCGT in the UK. Both of its markets
Patrick Pouyann: In both of these markets, we now have all the building blocks that define our integrated power model, renewable, flexible assets, and, of course, trading, and customers as well, in order to deliver clean, firm power, which prices at a premium compared to green, intermittent, renewable power. We also acquired Flexible Assets in Germany for our acquisition of Xion Energy, a leading battery storage developer, and, by the way, we just sanctioned the first 100 MW battery storage project developed by. This complements our leading position in offshore wind in that country, as well as the acquisition of Quadram, a renewable energy aggregator with a 9 gigawatt pipeline of aggregation to commercialize. So we are clearly, I would say, in this first half in a strong execution mode of the strategy.
Jean-Pierre Zbraer: We now have all building blocks that define our integrated program model, renewables, flexible assets.
Jean-Pierre Zbraer: and of course trading and customers as well in order to deliver clean firm power which prices at a premium compared to a green intermittent renewable power.
Jean-Pierre Zbraer: We also acquired Flexible Assets in Germany for our acquisition of Kion Energy, a leading battery storage developer. And by the way, we just sanctioned the first 100 MW battery storage project developed by Kion.
Jean-Pierre Zbraer: This complements our leading position in offshore wind in that country as well as the acquisition of Quadra, a renewable energy aggregator with a 9 gigawatt pipeline of aggregation to commercialize.
Patrick Pouyann: So, we are clearly, I would say, this first half in a strong execution mode of the strategy. So, don't expect any change. We are very, of course, still more to come, particular. We have also announced the incentive that we made some important steps towards the FID, of also in our block 58 projects, 5 years of the year. Which is, of course, a key milestone for us, upon us and Serena. And, as I remind her, this is an operating 12,000-bipolar development with more than 700 million dollars of estimated recoverable oil. We have achieved a set of key steps, including the agreements on the development area, with the authorities, but also securing the oil of the FID.
Jean-Pierre Zbraer: So, we are clearly, I would say, this first half in a strong execution mode of the strategy.
Patrick Pouyann: So don't expect any change; we are, and there is of course still more to come. In particular, we have recently announced that we have made some important steps towards the FID of our Suriname Block 58 projects by the end of the year, which is, of course, a key milestone for us, our partners, and Suriname. And as a reminder, this is an operated 200,000-barrel oil development with more than 700 million barrels of estimated recoverable oil.
Jean-Pierre Zbraer: So don't expect any change. We are, and there is of course still more to come. In particular, we have also announced recently that we made some...
Jean-Pierre Zbraer: Important steps towards the FID of our Suriname Block 58 projects by the end of the year, which is of course a key milestone for us, our partners, and Suriname.
Jean-Pierre Zbraer: And as a reminder, this is an operated 200,000-barrel-a-day oil development with more than 700 million barrels of estimated recoverable oil.
Patrick Pouyann: We have achieved the six key steps, including agreements on the field development area with the authorities, but also securing the EARL of the FSO to be able to sanction the projects and should be, I would say, end of the first quarter and beginning of the fourth quarter.
Jean-Pierre Zbraer: We have achieved, as I said, key steps.
Jean-Pierre Zbraer: including the agreements on the disability development area with the authorities but also securing the EARL of VFPSO to be able to sanction the projects and it should be, I would say, end of the first quarter, beginning of the fourth quarter.
Patrick Pouyann: So, we have to be able to sanction the projects and should be, I would say, end of the third quarter of the beginning of the fourth quarter. I will wrap up my introduction by just saying that our balance strategy is so clearly in motion, but we are pushing on all fronts. We are making progress, delivering and executing our plan. We feel the rest of each of our mission targets VG, and delivering top tier performance, but also preparing the future of the company. So, we position the company to lead the park, and we are determined to deliver to assure all those of premium returns.
Patrick Pouyann: I'll wrap up my introduction by just saying that our balance strategy is so clearly in motion that we are pushing on all fronts. We are making progress delivering and executing our plan, which will allow us to reach our ambitious targets this year and deliver top-tier performance while also preparing the future of the company. So we have positioned the company to lead the pack, and we are determined to deliver a premium return to all shareholders.
Jean-Pierre Zbraer: I'll wrap up my introduction by just saying that our balance strategy is so clearly in motion, but we are pushing...
Jean-Pierre Zbraer: On all fronts, we are making progress delivering and executing our plan, which will allow us to reach our ambitious target this year and delivering top-tier performance, but also preparing the future of the company.
Jean-Pierre Zbraer: So, we positioned the company to lead the pack and we are determined to deliver to our shareholders our premium returns.
Patrick Pouyann: And that's the program that I propose to show you at our next Investor Day, which this year will be in New York on October 2nd. Put that date in your calendar. And so I look forward to meeting you there, but in the meantime, Jean-Pierre will give you all the details of the second quarter results, and I will be happy to answer your questions today, together with Jean-Pierre. Thank you, Patrick.
Patrick Pouyann: And that's the program that I propose you to show you at our next investor day, which, with VG, will be in New York on October 2nd. You put that can put that date in your calendar.
Jean-Pierre Zbraer: And that's the program that I propose you to show you at our next Investor Day, which will be here, will be in New York on October 2nd.
Patrick Pouyann: And so, I look forward to meeting you there, but in the meantime, Jean Pierre, we give you all the details of the second quarter of results, and I will be happy to answer on such a question today to give a very brief answer.
Jean-Pierre Zbraer: You can put that date in your calendar. And so, I look forward to meeting you there, but in the meantime, Jean-Pierre will give you all the details of the second quarter results, and I will be happy to answer your questions today, together with Jean-Pierre.
Unknown Executive: Thank you, Patrick, so let's move to the side of the course.
Jean-Pierre: So let's move to the final. The crude market remained supportive in the second quarter, with breadth slightly increasing by 2% quarter to quarter, to average 80%. Why has the company's average LNG price decreased by 3% over the last 5 years? In refining margins, however, continue to normalize with our European Refining Margin Map, down 37% quarter-to-quarter.
Unknown Executive: So, the roadmap gave me a supportive in the second quarter. We've breached slightly, increasing by 2% quarter to quarter to quarter. You had raised 18 to 5 dollars.
Jean-Pierre Zbraer: Thank you Patrick, so let's move to the final shows.
Jean-Pierre Zbraer: So the crude market remained supportive in the second quarter, with Brent slightly increasing by 2%, quarter to quarter, to average $85.00 per barrel, while the company average LNG price decreased by 3%.
Unknown Executive: Why the company had raised an energy price in 3% by 3%? In refining about this, continue to normalize with our European refining market, down 37% quarter to quarter. In this context, total energy reported 2nd quarter of 24, adjusting the income of 4.7 billion dollars, with the first half 24 totaling close to 10 billion dollars. The company generated 7.8 billion dollars cash flow during the second quarter of the day, and close to 16 billion dollars for the first half of the year. Importantly, profitability remains robust. We've watched return on capital average capital employees of close to 16% close to 17% at 16.6%.
Jean-Pierre Zbraer: In refining margins continue to normalize with our European refining margin marker down 37% quarter to quarter.
Jean-Pierre: In this context, TotalEnergies reported second quarter 2014 adjusted net income of $4.7 billion, with the first half of 2014 totaling close to $10 billion. The company generated $7.8 billion of cash flow during the second quarter of 2024 and close to $16 billion for the first half of the year. Importantly, profitability remains robust with ROAC return on capital, average capital employed of close to 16% at close to 17% at 16.6%. And we maintain strong CAPEX discipline and reiterate 24 net investment guidance of 17 to 18 billion dollars for the year. Last but not least, we continue to build on our strong track record of attractive shareholder distribution with $2 billion of buybacks executed during the second quarter and up to $2 billion of buybacks authorized for the first for the third Also, the board has maintained the second interim dividend at $0.79.
Jean-Pierre Zbraer: In this context, TotalEnergies reported second quarter 2014 adjusted net income of $4.7 billion, with the first half of 2014 totaling close to $10 billion.
Jean-Pierre Zbraer: The company generated $7.8 billion of cash flow during the second quarter of 2024 and close to $16 billion for the first half of the year.
Jean-Pierre Zbraer: Importantly, profitability remains robust with ROAC return on average capital employed of close to 17% at 16.6%.
Unknown Executive: And we maintain strong capital discipline and rich area 24 net investment guidance of 17 to 18 billion dollars for the year.
Jean-Pierre Zbraer: And we maintain strong CAPEX discipline and reiterate 24 net investment guidance of $17 to $18 billion for the year.
Jean-Pierre Zbraer: Thanks.
Jean-Pierre Zbraer: Last but not least, we continue to build on our strong track record of attractive shareholder distribution with $2 billion buybacks executed during the second quarter and up to $2 billion of buybacks authorized for the third quarter 2024.
Speaker Change: Also, the board has maintained the second interim dividend at €0.79 per share, which is nearly a 7% increase year-over-year and is 20% higher compared to pre-COVID levels.
Jean-Pierre: Euro per share, which is nearly a 7% increase year over year and is 20% higher compared to the pre-COVID level. First half 2014 shareholder payout stands at 45% of the final payout. Moving to the business segment, starting with hydrocarbons, production was 2. 44 million barils per hour equivalent per day in the second quarter of 2014, close to the high end of the guidance range.
Speaker Change: Firstpart24 shareholder payout stands at 45% of CFFO.
Speaker Change: Moving to the business segment, starting with hydrocarbons.
Speaker Change: So production was 2.44 million barils per hour equivalent per day in the second quarter of 24, close to the high end of the guidance range.
Jean-Pierre: We continue to see good performance from project startups and roundups, including Meru2 in Brazil, AquaWest in Nigeria, Block10 in Oman, Absheron in Azerbaijan, and multiple projects in Norway. Looking forward, production for the third quarter of 2024 is expected to be stable, between 2.4 and 2.49 million barrels of load equivalent per day, with the expected start-up of the ANCOR project in the US Gulf of Mexico in the third Expiration and production continues to perform well, with reported adjusted net operating income of $2.7 billion and cash flow of $4.4 billion. The company maintains its cost leadership, with upstream TopEx probability below $5 during the second quarter.
Jean-Pierre Zbraer: We continue to see good performance from project startups and ramp-ups, including Meru2 in Brazil, ACPO West in Nigeria, Block10 in Oman, AppShare Run in Azerbaijan, and multiple projects in Norway.
Jean-Pierre Zbraer: Looking forward, production for the third quarter of 2024 is expected to be stable.
Jean-Pierre Zbraer: Between 2.4 and 2.49 million values for a logical inventor day. We, the expected startup of the ANCORE project in the US Gulf of Mexico.
Jean-Pierre Zbraer: in the third quarter.
Jean-Pierre Zbraer: Exploration and production continues to perform well, with reported adjusted net operating income of $2.7 billion and cash flow of $4.4 billion.
Jean-Pierre Zbraer: The company maintained its cost leadership with upstream POPx per barrel below $5 per barrel during the second quarter.
Jean-Pierre: In the integrated LNG business, we continue to increase our structural resiliency by advancing commercialization of LNG through new medium-term brand-linked contracts with Asian buyers, having recently signed two contracts for a total of 1.3 million tonnes a year. Turning to the results now, hydrocarbon production for LNG increased 1%, quarter to quarter, which included entry into the Dorado upstream gas field in the Eagleford Basin in the United States, and we progressed on our objective to increase upstream integration in the U.S. to further improve resilience. LNG sales decreased by 18% quarter to quarter, notably due to lower spot purchases in a context of lower LNG demand in Europe.
Jean-Pierre Zbraer: in Integrated LNG Business.
Jean-Pierre Zbraer: We continue to increase our structural resiliency by advancing commercialization of LNG.
Jean-Pierre Zbraer: New medium-term brand-linked contracts with Asian buyers, having recently signed two contracts for a total of 1.3 million tonnes a year.
Jean-Pierre Zbraer: Turning to the results now, hydrocarbons production for LNG increased 1%, quarter to quarter, which includes entry into the Dorado upstream gas field in the Eagleford Basin.
Jean-Pierre Zbraer: in the United States, and we progress on our objective to increase upstream integration in the U.S. to further improve resiliency.
Jean-Pierre Zbraer: LNG sales decreased by 18% quarter to quarter, notably due to lower spot purchases in a context of lower LNG demand in Europe .
Jean-Pierre: Integrated LNG Adjusted Net Operating Income and Cash Flow were both $1.2 billion in the second quarter. The results reflect a lower average LNG price and lower sales, as well as the impact of gas trading not fully beneficial in the Continued Low Volatility Environment. Energy trading continues to perform well. Even with the evolution of oil and gas prices in recent months and the lag effect on price formula, we anticipate that our average LNG selling price should be around $10 per million BTU in the first quarter of 2024, which is higher compared to the second. Moving now to Integrated Power.
Jean-Pierre Zbraer: Integrated LNG Adjusted Net Operating Income and Cash Flow were both $1.2 billion in the second quarter.
Jean-Pierre Zbraer: The results reflect a lower average LNG price and lower sales, as well as the impact of gas trading not fully benefiting in the continued low volatility environment.
Jean-Pierre Zbraer: LNG trading continues to perform well.
Jean-Pierre Zbraer: Even with the evolution of oil and gas prices in the recent months and the lag effect on price formula, we anticipate that our average LNG selling price should be around $10 per million BTU in the first quarter of 2024, which is higher compared to the second quarter.
Gordon: Gordon, Marina O. To integrate power, as mentioned by Patrick, we recently announced our asset integration with several flexible capacity additions. Integrating power once again delivered a profitable growth with first half 24 adjusting net of the rating income of $1.2 billion, 36% compared to the first half of 23, due to activity growth. First half 24 cash flow total 1.3 billion dollars, which is in line with annual guidance of more than 2.5 billion dollars. In addition, return of capital employed for the first of the 12 months ending June 13 increased to those 10%. In downstream, refining and chemicals reported 60, with 40 million dollars of adjusted net of rating income and 1.9 billion dollars of cash flow during the second quarter.
Jean-Pierre: As mentioned by Patrick, we recently enhanced our asset integration with several flexible capacity additions. Integrated Power once again delivered profitable growth with first half 24 adjusted net operating income of $1.1 billion, up 36% compared to the first half of 23, due to activity growth. First half 24 cash flow, total 1.3 billion dollars, which is in line with the annual guidance of more than 2.5 billion dollars. In addition, return of capital employed for the first time for the 12 months ending June. Inderpreet, Refining, and Chemicals reported $640 million of adjusted net operating income and $1.9 billion of cash flow during the second quarter.
Jean-Pierre Zbraer: Moving now to integrated power. As mentioned by Patrick, we recently enhanced our asset integration with several flexible capacity additions.
Speaker Change: Integrated Power once again delivered profitable growth with first half 2024 adjusted net operating income of 1.1 billion dollars, up 36% compared to the first half of 2023 due to activity growth.
Jean-Pierre Zbraer: First half 24 cash flow, total $1.3 billion, which is in line with the annual guidance of more than $2.5 billion.
Jean-Pierre Zbraer: In addition, return on capital employed for the first 12 months ending June 13 increased to about 10%.
Jean-Pierre Zbraer: [inaudible]
Jean-Pierre Zbraer: Refining and Chemicals reported $640 million of adjusted net operating income and $1.9 billion of cash flow during the second quarter.
Jean-Pierre: Results reflect a sharp decrease in global refining margins since the end of the first quarter, which remained impacted by low diesel demand in Europe and market normalization following the disruption in Russian supply. However, the company's utilization rates improved, to 84.5% from 79% in the first quarter of 2014, mainly due to lower plant maintenance, which partially compensated for the decrease in refining margins. For the third quarter 24, we anticipate that the refining utilization rates will benefit from the restart of the Donge refinery in France and will average above. Marketing and services benefited from the lower refining margin environment in the second quarter with adjusted net operating net operating income increasing to $380 million and cash flow increasing by 38% sequentially to $660 million at the company level.
Unknown Executive: Results reflect the chart decreased in global refining margins since the end of the first quarter, which remained parted by the loss of the amount in Europe and market normalization following the disruption in Russia and supply. The company uses rates improved to 84.5% from 79% in the first quarter of 24, mainly due to lower plant maintenance, which partially compensated the decrease in refining margins.
Jean-Pierre Zbraer: Results reflect the sharp decrease in global refining margins since the end of the first quarter, which remained impacted by low diesel demand in Europe and market normalization following the disruption in Russian supply.
Jean-Pierre Zbraer: The company's utilization rate improved to 84.5% from 79% in the first quarter of 2014.
Jean-Pierre Zbraer: Mainly due to lower plant maintenance, which partially compensated the decrease in refining margins.
Unknown Executive: For the fourth quarter of the default, we anticipate that the refining utilization rates will benefit from the rest of the donor refinery in France and will average above 85%. Marketing and services benefit from the lower refining margins in the second quarter. We'd have just seen an operating income increasing to 3.8 million dollars, and cash flow increased by 38% to 65.6 million dollars. At the company level, we have been, as usual, active in a minute on both sides, with 1.9 billion dollars of diamonds and 1.6 billion dollars of acquisition of the first half of 24. Our net investment stands at 8.2 billion dollars at a million, and we confirm our 24 net investment guidance of 17 to 18 billion dollars.
Jean-Pierre Zbraer: For the third quarter of 2024, we anticipate that the refining utilization rate will benefit from the restart of the Donge refinery in France and will average above 85%.
Jean-Pierre Zbraer: Marketing and services benefited from the lower refining margins environment in the second quarter with adjusting net operating
Jean-Pierre Zbraer: Net operating income increasing to $380 million and cash flow increased by 38% sequentially to $660 million.
Jean-Pierre: We have been, as usual, active in M&A on both sides, with $1.9 billion of divestments and $1.6 billion of acquisitions over the first half of 2020. Our net investment stands at $8.2 billion at mid-year, and we confirm our 24 net investment guidance of $17 to $18 billion. During the second quarter, we reported a $1.2 billion working-cap release.
Jean-Pierre Zbraer: at the company level.
Jean-Pierre Zbraer: We have been, as usual, active in M&A on both sides, with $1.9 billion of divestments and $1.6 billion of acquisitions over the first half of 2024.
Jean-Pierre Zbraer: Our net investment stands at $8.2 billion at mid-year, and we confirm our 24 net investment guidance of $17 to $18 billion.
Unknown Executive: During the second quarter, we report to the 1.2 billion dollars working cap release, and we anticipate that the working cap builds reporting during the first quarter will continue to reverse over the coming quarters. During the stable quarter of the quarter, and we prove by nearly 1% year, at 10.2% at the end of the second quarter of the default. As a reminder, we continue to anticipate short-year-olds during, over around 7.8% all else being equal. During the short-year-olds, we report to the 1.2 billion dollars working cap release, and we report to the 1.2 billion dollars working cap release, and we report to the 1.2 billion dollars working cap release.
Jean-Pierre Zbraer: During the second quarter, we reported a $1.2 billion working-cap release, and we anticipate that the working-cap bills reported during the first quarter will continue to reverse over the coming quarters.
Jean-Pierre: And we anticipate that the working cap bills reported during the first quarter will continue to reverse over the coming quarters. Dealing was stable quarter to quarter and improved by nearly 1% year on year to 10.2% at the end of the second quarter. As a reminder, we continue to anticipate structural gearing of around 7% to 8%, all else being equal. During the quarter, TotalEnergies successfully issued Senior Bonds on the U.S. market, totaling $25 billion using conventional formats and privileging long maturity.
Jean-Pierre Zbraer: Gearing was stable quarter to quarter, and improved by nearly 1% year on year, at 10.2%, at the end of the second quarter, 24.
Jean-Pierre Zbraer: As a reminder, we continue to anticipate structural gearing of around 7 to 8% all health being equal.
Speaker Change: During the quarter, TotalEnergies successfully issued 10 outbounds on the U.S. market, totaling 4.5% of the market share.
Speaker Change: $25 billion using conventional formats and privileging long maturity. The average maturity of this influence was indeed...
Jean-Pierre: The average maturity of this influence was 27 years. Indeed, the Board of Directors decided to return flexibility on the format of the bone insurance and to give priority to long maturation. Lastly, I'm pleased to announce that after the capital increase reserves for employees earlier this year, employee ownership in the company is now more than 8%. As a reminder, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Thank you and good afternoon.
Speaker Change: 27 years. Indeed, the Board of Directors decided to return flexibility on the format of the bond insurance and to give priority to long maturity.
Speaker Change: Lastly, I am pleased to announce that after the capital increase reserved for employees earlier this year, employee ownership in the company is now more than 8%.
Speaker Change: We also have strong support from our shareholders who supported all resolutions submitted to the vote at the recent Annual General Meeting.
Jean-Pierre Zbraer: I will stop here and let the floor for the Q&A.
Speaker Change: Thank you. Thank you. Ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: As a reminder, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced.
Speaker Change: Please kindly mute any audio sources while asking a question. If you wish to cancel your request, please press star 2. Once again, please press star 1 if you wish to ask a question.
Speaker Change: The first question is from Lydia Rainforth of Barclays. Please go ahead.
Unknown Attendee: Two questions, if I could. The first one, Patrick, I think it's obviously a 100-year anniversary for Total, and I know that you've been very good at giving shares to the employees and things like that. Would you consider a special dividend for 100 years to celebrate for Total? And then the second one, actually, if I could just do more macro stuff at the moment, clearly, because there's a lot of moving parts as to the cash flows towards the end of the year. Can you just walk us through both where refining is and where you see that going? And then also on LNG, just where you're signing some of the slopes on the contracts? Thank you. Unknown Speaker.
Lydia Rainforth: Thank you and good afternoon.
Lydia Rainforth: Two questions if I could. The first one, Patrick, I think it's obviously a 100 year anniversary for Total. And I know that you've kind of been very good at giving shares to the employees and things like that. Would you consider a special dividend for 100 years to celebrate for Total? And then the second one, actually, if I could just do more macro stuff at the moment, clearly, there's a lot of moving parts as to the cash flow towards the end of the year. Can you just walk us through both where refining is and where you see that going? And then also on LNG, just where you're signing some of the slopes on the contracts.
Speaker Change: Thank you.
Patrick: Good question, Lydia. Maybe I should give to you a special gift of one other share.
Speaker Change: who has a question, but I'm afraid that today we are not, as we already set up in our cash for allocation.
Speaker Change: So privilege is dividend and buyback more than special dividend. We don't consider today we are in an exceptional environment.
Speaker Change: as the one which we are...
Speaker Change: benefited in 2022.
Speaker Change: So it was exceptional. We are not there.
Speaker Change: It's a good environment, but...
Speaker Change: Not exceptional. So I would say, sorry to disappoint you, but I'm afraid...
Speaker Change: We prefer to continue to maintain to increase the dividend year after year and to have a good buyback program.
Speaker Change: Second, where do we go? Refining. Refining, I think, it's clear that I think there is a form of
Speaker Change: It benefited during the last two years of some imbalances in the market created by, you know, the Russian flows, which were distracted from Europe , from the U.S., from the normal flows. We have the feeling that now, in fact, the market has more or less...
Speaker Change: restabilizing the sort of normalization mode from this perspective even if
Speaker Change: We can observe that the U.S. are more and more chasing against all these great fleets of Russian oil, so it could have, again, some influence, you know.
Speaker Change: So that's one part. The other part is that the demand was lower this year than the last two years, in fact, so the inventories are not so exceptional, in fact.
Speaker Change: I expect that with the driving season, during summertime generally, there is more demand.
Speaker Change: a better margin. Today it's quite low, and in fact we are, and when I say quite low, in fact it's back to what it was normal before all these exceptional years.
Speaker Change: So I think our refiners know they have to come back to reality and to deliver good results with lower margins.
Speaker Change: But again, it's part, at the same time, it's true that we benefit.
Speaker Change: From a good oil price, in fact, $84, $85 per barrel, it's good.
Speaker Change: [inaudible]
Speaker Change: I would say I think we are more going in a normalization of refining margins and you know when we make a long-term plan we are more on $35-$40 per ton than $70-$80 per ton.
Speaker Change: So, maybe because I was in charge of this segment, I know what is the hard reality from time to time. But again, this is typically the type of business which is...
Speaker Change: You need to have your machine, your refineries running when the margin is good, and then you make the cash-in, and then you need to be resilient when the margin is more normal.
Speaker Change: On DLNV, I would say...
Speaker Change: Again, on the LNG, no, we negotiate quite a lot of new LNG contracts because all the strategy of the company is to buy and rehab and to sell rent, in fact, so we are in the middle of that.
Speaker Change: It's difficult to answer to you because there is a lot of discussions around the world. I would say it's more of a commercial secret.
Speaker Change: So, but again, the transformation of Unreal to the brand is good for the cash flow of the company, including in the market, we can think that at the end of the decade, it will be a softener market, so this is all the strategy of the company.
Speaker Change: Brilliant, thank you very much.
Speaker Change: The next question is from Doug Legate of Wolf Research. Please go ahead.
Operator: The next question is from Doug Legate of Wolf Research. Please go ahead. Thank you. Good morning. Good afternoon, everyone. Thanks for having me on.
Patrick Pouyann: Patrick and Jean-Pierre, I wonder if I could ask you about your Suriname business. Seems to me that Suriname could be a meaningful step up in your cash flow in 2028. That's true, but in fact, we have decided, as I said last year, that Suriname, we try to execute it in a quick mode, I would say, moving from the end of the appraisal by September last year to the FID. My objective is one year from appraisal to FID.
Doug Legate: Thank you. Good morning, good afternoon, everyone. Thanks for having me on. Patrick and Jean-Pierre, I wonder if I could ask you about your surname.
Speaker Change: Progress.
Doug Legate: My understanding is that when you laid out the strategy last year, Suriname did not have a meaningful contribution to your 2028 cash flow.
Speaker Change: But now you have an SPM fast-forward hull and obviously things look like they're moving a little quicker It seems to me that Suriname could be a meaningful step up in your cash flow in 2028
Speaker Change: Full calendar year at current oil prices probably around four billion dollars. Can you give us some color as to what you think the progress is?
Speaker Change: That's true, but in fact we have decided, as I said last year, that Suriname will try to execute it in a quick mode, I would say, moving from the end of the appraisal by September last year to the FID. My objective is one year.
Patrick Pouyann: All the teams are being mobilized, but we are using innovative approaches, including using the design of a good operator, which is developing projects next to Suriname. Of course, they have a good design, so trying to build on this FDSO, in fact, taking the design of Guyana, in fact, to apply it, and it's quite efficient, so we move forward quickly. And so that means that the first store in Suriname is targeted by, I would say, somewhere in mid-28, beginning of Q1.
Speaker Change: All the teams are being mobilized by the way we are using innovative approach including using the design.
Speaker Change: of a good operator which is developing projects next to Suriname, which first they have a good design. So trying to build on this FESO, in fact, taking the design of Guyana, in fact, to apply it, and it's quite efficient. So we move forward quickly.
Speaker Change: And so that means that the first sort of Suriname is targeted by, I would say, somewhere in the mid-28s, or beginning of the 28s. So it could be quite significant, you know.
Patrick Pouyann: So it could be quite significant, to be clear. Cash flows from Suriname, as you know, will be big, because we have, in fact, financing almost full of it, so we'll benefit from the cash flows in a very large way. So the contribution of Suriname, not only to 28, but 29, 20, 30, 30, 31, 20, 32, will be important. That's why I'm insisting.
Castro: Be clear, Castro from Suriname
Speaker Change: As you know, we'll be big, because we have...
Speaker Change: In fact, finance is almost full of it.
Speaker Change: So we'll benefit from the cash flows in a very large way. So the contribution of Suriname, not only to 28, but 29, 20, 30, 30, 31, 20, 32 will be important. That's why I'm insisting.
Patrick Pouyann: By the way, I can tell you that in September, we will extend our guidance up to 2030, because with the rich portfolio we have, we can extend it, and Suriname, of course, will be part of the new, bright color we'll give to our prospects by 2030, a potential action by the French state that might be against the company's interests. Thank you. This has obliged the French government, which previously had the golden share in TotalEnergies equity, to cancel it because it was against the fundamental principle of the free movement of capital within the European Union. So it has already been judged.
Speaker Change: By the way, I can tell you that in September , we will extend our guidance up to 2030, because with the rich portfolio we have, we can extend it, and Suriname, of course, will be part of the good color we'll give to our perspectives by 2030.
Unknown Executive: Christopher, that is very helpful.
Mark Cutifani: Cutifani is a quick follow-up on a separate topic in the US. After your Lewis energy acquisition, but you know comfortable that you have enough hedge to get exposure for your LNG, or you still intend to do further acquisition in the world for 48. We don't have enough; we are clear. You know, we can make the master. We will take something like almost 10 million tons. We are five in the Rio Grande, so we need to increase.
Speaker Change: [inaudible]
Speaker Change: That is very helpful. Can I ask a quick follow-up on a separate topic in the U.S.? After your Lewis Energy acquisition, are you now comfortable that you have enough?
Speaker Change: Hedge the gas exposure for your LNG or do you still intend to do it?
Speaker Change: for the right positions in World War 48.
Speaker Change: You know, we don't have enough. We are clear, you know, we can't make them up. We will, we will take something like almost, we have 10 million tons, we have five in Rio Grande, so we need to increase. And by the way, I can tell you that we are working on another deal, so it will be...
Mark Cutifani: And by the way, I can say to you, we are working on another deal, so it will be step-by-step deals. It's not a big one, but we are working on another one, and we should have used as well for you, but we will give more color to you, but set them to as well.
Speaker Change: Step-by-step this is not a big one, but we are working on another one and
Speaker Change: We should have news as well for you by and we'll give more color to you by
Mark Cutifani: I think an important topic on which, for me, is important, is to show you how we, in fact, all the LNG position, on one path, on the upstream, but on the other side, on the downstream, will be resilient and the very, whatever, and the price and performance will be, I think it's very important to demonstrate it, and we are acting on it, and on the upstream, there will be more to come, for sure.
Speaker Change: I think an important topic on which for me is important is to show you how we in fact all these energy positions on one spot on the upstream but on the other side.
Speaker Change: On the downstream will be resilience and whatever the price environment will be, I think it's very important to demonstrate it and we are acting on it. And on the upstream there will be more to come for sure.
Unknown Executive: Thank you so much, guys.
Irene Himona: The next question is from Irene Hymona of Bernstein. Please go ahead. Thank you, good afternoon. My first question is on marketing. In the second quarter, no, but declined about 16% year and year for a 2% lower sales volume. How should we think around the impact of your disposal to co-star versus underline performance? So what happened if we exclude the sold assets?
Speaker Change: Thank you so much, guys.
Speaker Change: For more information visit www.FEMA.gov
Speaker Change: The next question is from Irene Himona of Bernstein. Please go ahead.
Irene Himona: Thank you, good afternoon. My first question is on marketing. In the second quarter, NOPAD declined about 16% year-on-year,
Irene Himona: for a 2% lower sales volume, how should we think around the impact of your disposal to kush start versus underlying performance? So what happened if we exclude the sold assets?
Irene Himona: And my second question, Patrick, French politics has been quite volatile recently, and sovereign states can do a lot of things, impose windfall taxes, even golden chairs. So I want to ask, is there something in particular that concerns you in terms of potential action by the French state that might be against the company's interest?
Speaker Change: And my second question, Patrick, French politics has been quite volatile recently and...
Speaker Change: Sovereign states can do a lot of things, impose windfall taxes, even golden shares, so I wanted to ask, is there something in particular that concerns you in terms of
Speaker Change: A potential action by the French state that might be against the company's interests. Thank you
Unknown Executive: Thank you. The first question is quite easy. In fact, it was more or less 20 million dollars per month, so on a quarter or 60 million.
Patrick: First question is quite easy. In fact, it's worth more or less $20 million per month, so in a quarter it's $60 million.
Unknown Executive: In fact, of co-star, the assets in Germany and the Netherlands and the Alpha of Bedroom. So you can make the math, and in fact, we manage in terms of cash through more or less to, we are okay. It's cash through, it's, let's get out. 20 million, what do we do? It's in that result, so it's not cash through, that's result, so it's 20 million per month. So you can find that you are; it would be reduced to 3% to 3%, so it's in line, in fact.
Speaker Change: The impact of KUSHTA, the assets in Germany and the Netherlands and half of Belgium. So you can make the math and in fact we managed in terms of cash flow more or less to, we are okay. It's cash flow or it's net results, 20 million, what is it?
Speaker Change: You see net results, sorry not cash flow, net results, so 20 million per month. So you can find that you are, it will be reduced to 3%, so it's in line in fact. So globally the marketing is, I would say, a very performance equivalent to the one of last year, if you deduct.
Unknown Executive: So globally, the marketing, as I would say, a very performance equivalent of one of last year, if you deduct, is cost time.
Unknown Executive: Okay, first point, thank you.
Unknown Executive: I'm still on one, honestly, the French politics. I'm saying, first I would say, but the energy is more stable, which is good, or is stable company.
Speaker Change: how it packs well.
Speaker Change: Thank you very much.
Unknown Executive: Honestly, I think there is a lot of noise around all that.
Speaker Change: which is good. It's a stable company. Honestly, I think there is a lot of noise around all that. On the Golden Share, by the way, to be very clear on it, there was a judgment, which was in 2002 by the European Courts of Justice.
Unknown Executive: On the golden share, by the way, as it could be very clear, on it there was a judgment, which was in 2002, by the European Courts of Justice, which has obliged the French government, which previously had the golden share in Total Energy equity to cancel it, because it was against the fundamental principle rule of, to remove of capital within the European Union. So it has been already judged, so I know that some politicians are picking to thinking against the party, and by the way, with the prison flow in France, just to clarify with you, it would require at least.
Speaker Change: which has obliged the French government which previously had the golden share in TotalEnergies equity to cancel it.
Speaker Change: because it was against a fundamental principle of free move of capital within the European Union. So it has been already judged, so I know that some politicians are speaking against about it. And by the way, with the present law in France, just to clarify with you, it would require at least...
Patrick Pouyann: So I know that some politicians are speaking against it. And by the way, with the present law in France, just to clarify with you, it would require at least, I'm just wondering if there's any potential here to integrate yourself into the LNG facility and whether that's being discussed. And if not, could you just talk a bit about your growth plans there? And then the second question is just about projects and energy. So Mozambique, there was an article recently around... Potential Cost Escalations. Could you just give us an update on...
Speaker Change: The French state to invest 5% of shares in TotalEnergies.
Speaker Change: I understand that they have more, better use of their...
Speaker Change: Money than investing billions in the company.
Speaker Change: So that's politics, but again I'm a...
Speaker Change: This is not the point. I think as I told you before already...
Speaker Change: You could see ideas like the one in the U.S., by the way, which is taxation on the buyback, you know, the French politicians have all read, but something is happening there, so sometimes it's a little difficult to argue for us against.
Speaker Change: Even if we have done it, but again, we will engage with whoever the new government is. And that's, I think, again, I don't think you should consider it will fundamentally affect the interest of TotalEnergies.
Patrick: Thank you, Patrick.
Patrick: The next question is from Biraj Borkhataria of RBC, please go ahead.
Biraj Borkhataria: Hi, thanks for taking my questions. My first one was on the...
Speaker Change: Pouyann, Bernard Pinatel, Renaud Lions
Speaker Change: But in the press release you mentioned the deal would be an anchor for future growth in the country.
Speaker Change: Just wondering if there's any potential here to integrate yourselves into the LNG facility and whether that's being discussed and if not, could you just talk a bit about your growth plans there and the strategic rationale for that deal if you can't integrate into LNG?
Speaker Change: And then the second question is just, again, on projects and on LNG. So Mozambique, there was an article recently around potential cost escalations. Could you just give us an update on, you know, where we are and the expected budget and what the next steps are from here? Thank you.
Speaker Change: On Malaysia, no, I think maybe it will be fundamentally the gas.
Patrick Pouyann: Revenues from the license in Malaysia is an energy netback. We have confirmation that the new president will follow the same policy regarding these last projects. And so that's where we are.
Speaker Change: Revenues from the license in Malaysia is an energy netback.
Speaker Change: Just to be clear. So for me, it's integrated to the energy value chain.
Speaker Change: Just to be clear, even if we don't have a... so it's a way that the price, gas price...
Speaker Change: is settled. So first clarification. So the idea, of course, is to continue beyond it to have access to, and we are already in discussions with some other actors, players, including by the way Petronas.
Speaker Change: to beyond, and they just started by the way, the Gérôme.
Speaker Change: Gasfield, which just started this week, last week, so...
Speaker Change: It's quite a large field. It's producing 600 million stuff per day, I think, so we will have a nice share of it.
Speaker Change: And so, beyond it, there is more opportunities to develop, and so we have some.
Speaker Change: And of course, at the end, the more we can link that to the LNG world and to LNG pricing, this is the objective of the company.
Speaker Change: So we'll work on it.
Speaker Change: On the Mozambique, I can tell you that everything has been settled with the contractors, so we are clear, we know where we are. In fact, it was more a matter, to be honest, of the cost of the, I would say,
Speaker Change: Frozen period, which was to be absorbed and discussed.
Speaker Change: Because since 2020 to 2024, we have frozen some works, we have some equipments which were, I would say, kept in different locations, so all that has been discussed, all that is settled with them.
Speaker Change: And so we are on the way to move forward and we will, as soon as we can update you, we will do it. But the progress has been done in many directions, including on security. Now we try to regroup all the financial finances around the project.
Speaker Change: And as you know as well, there are some presidential elections in Mozambique coming soon. And so, of course, for us, it's important to be...
Speaker Change: to have the confirmation that the new president will follow the same policy regarding these large projects and so that's where we are. So say by end of the year we should clarify all that, we should be able to move forward.
Unknown Attendee: So, say, by the end of the year, we should clarify all that. We should be able to move forward. Yeah, hi, hello. I have two, if I may.
Speaker Change: Okay, thank you.
Speaker Change: The next question is from Martijn Rats of Morgan Stanley . Please go ahead.
Unknown Attendee: My attention was drawn to the comments in the Outlook statement where you talked about European gas prices in the range of $8 to $10 per MMBTU for the third quarter. And that struck me as somewhat of an unusual comment because I don't know Total well enough to call that often on near-term commodity prices. So from that perspective, it stood out, but it also stood out, "Wonderful, that's crystal clear." The next question is from Michele de la Vigna of Goldman Sachs. Thank you very much for your time.
Martijn Rats: Yeah, hi, hello. I have two, if I may. My attention was drawn to the comments in the Outlook statement where you talked about European gas prices in the range of $8 to $10 per MMBTU for the third quarter.
Speaker Change: And that struck me as somewhat of an unusual comment because I don't know Total to call that often on near-term commodity prices. So from that perspective, it stood out. But it also stood out.
Speaker Change: because it seems low. TTF is a little bit more than $10 prime MBTU at the moment. So I was wondering if you could elaborate a bit on
Speaker Change: , and the second thing I wanted to ask is on the previous earnings call we talked a lot of course about the potential to either move to listing to the US or
Speaker Change: Maybe not for the full headquarters, but at least you have to move the main listing to the U.S. in a quarter as fast, and I was wondering if you have an update on those thoughts.
Speaker Change: Okay.
Speaker Change: I'm sorry to surprise you, sometimes you tell me that we are a boring company so today we try to make it funnier.
Speaker Change: Honestly, there is no reason why we made a statement. Beginning of the year was $8, we moved up to $10, $10.5.
Speaker Change: So to give you a range of 8 to 10 in summer time, there is nothing extraordinary because it's not the best season.
Speaker Change: The first quarter is not the peak of the demand, generally, and so, as you know, the inventories and storages in Europe are quite full. We don't anticipate
Speaker Change: a big rebound unless there is an event so what I think giving you this guidance is more reflecting what happens
Speaker Change: In the beginning of the year, so it's a way to tell you, but again, when you say it's low...
Speaker Change: 8$ is quite high compared to what we were experiencing before 2021. It was more. We had years at around 4 to 6$ per BTU. So 8$ for a European gas price. Even today it's 10.3$ yesterday evening.
Speaker Change: It's a good prize, not only for us, including for all the Norwegian operations and UK operations. So I would say...
Speaker Change: It's good, it's okay. It's lower than what you were, we had in 22 and 23, but we made no miracle on that, but there has been a landing, and unless the weather will come again
Speaker Change: Cool next winter, we don't anticipate any pointer. Having said that...
Speaker Change: We could have other disruptions coming from other parts of the world because the main driver today would be, if there is any tension, the energy supply.
Speaker Change: Because a plant could have a problem somewhere in the world, then this market is very volatile because we don't have much margins between the supply and the demand on the LNG.
Speaker Change: So...
Speaker Change: Sorry to have surprised you, Martin.
Martin: On the U.S. listing, no, I mean, it's not, I clarified that in the French.
Speaker Change: Newspaper, maybe it was in French, so we should translate it and distribute it to everybody, which I will ask Renaud and his team to do, because we clarify what we want to do. What we want to do is fundamentally to transform the ADRs in shares, in ordinary shares. That's all.
Speaker Change: And that means, at the end, and we want these shares to be cross-listed, I would say, if you want, between Paris and New York.
Speaker Change: That's fundamentally what I would like to do. There is nothing else. So transforming the ADRs in shares. The ADRs, we made a test.
Speaker Change: We had questions, we have a quiz or questions to almost 40 long-term investors in the U.S.
Martin: They see
Martin: Nothing negative because some investors did not like the complexity of the ADRs in terms of back office, in terms of managing it.
Martin: Investors could prefer to invest directly on the New York market and not going to the European market.
Speaker Change: Paris or London or Brussels
Speaker Change: So that's what we do. So we are more in a technical, we are in a technical group. We progress, as I told you, we progress positively.
Jean-Pierre Zbraer: Until now, and Jean-Pierre and his team will work on it. We will update you probably end of September . But technically, there is some technical matters between the different...
Martin: Depository, in fact, firms between Europe on the front side.
Martin: DTCC on the other side, and so we made progress and we'll be able to have a scheme.
Martin: It's fundamentally transforming the ideas in shares and so having giving more liquidity to the shares which the shares could be in fact
Martin: acquired either in Paris or in the New York market. That's what we want to do. It will help the liquidity and so it will help attracting more US investors. And as you know, today we have a larger, a stronger...
Unknown Executive: Wonderful, that's good to clear.
Martin: flow of U.S. buyers than on the European side. That's what we want to do.
Michele Vigna: The next question is from Michele de la Vigna of Goldman Sachs; please go ahead. Thank you very much for the time. I've seen that you've been very active in adding more low-costal engines apply to your portfolio in the last few months with the whole vibe, with Marcia LNG. I'm wondering, you must be marketing these volumes to customers at the moment. How do you find the demand appetite for more LNG? And are you comfortable to add more support volumes to your portfolio, especially if the market has become more supplied in 2627? Thank you.
Martin: Wonderful, that's crystal clear.
Speaker Change: The next question is from Michele de la Vigna of Goldman Sachs. Please go ahead.
Patrick Pouyann: I've seen that you've been very active in adding more low-cost LNG supply to your portfolio in the last few months with Ruvise and Marsa LNG. I'm wondering if you must be marketing these volumes to customers at the moment. How do you find the demand?
Mark Cutifani: Yeah, good question. Thank you, Michele. I'm telling you, we have been successful in the last months, and I answered to the question, or worse, practically.
Patrick Pouyann: Clearly, we have been successful in the last month, and the answer to a previous question, or worse, right? for all shareholders and for the future cash flows of the company. The next question is from Lucas Herrmann of BNP Paribas. Oh, thanks very much for your time. Two, if I might.
Speaker Change: Clearly, we have been successful in the last month and the answer to a previous question or worst strategy.
Mark Cutifani: It's to be able, in fact, to transform some gas, which is gas volumes, into brand volumes. And so, we are active on the Asian market. We have already announced two million tons of new LNG companies since the beginning of the year to different, and there will be more to come. So, you will be here. I can tell you more of those to be announced in the next months. We are quite active, as I said, to, as I said, you know, look, you have more than 10 million tons today of US LNG, which is in to an area.
Speaker Change: is to be able, in fact, to transform some gas, I would say gas volumes, into brand volumes.
Speaker Change: and so we are active on the Asian markets we have already announced two million tons of new LNG contracts since the beginning of the year to different and there will be more to come so you will be you will see I can tell you more deals to be announced in the next month
Martin: We are quite active. As I said, as I said, you know, look, we have more or less 10 million tons today of US LNG, which is linked to Henri Hub. We sell part of it on the Henri Hub formula, and we want the rest to be sold on the brand formula, in fact.
Mark Cutifani: So, we sell part of it on the area formula, and we want the rest to be sold on the brand formula. And the brand formula, and so the answer to the question, there is an appetite to be all million buyers. And still, for the good percentage, we don't, we don't, we'll say discount or LNG, you know, why? Because I think the lesson of these Asian buyers is that they have been afraid, but what happened in 2022, 23. So, even if they could anticipate that they would be suffering on the market by 20, 20, 30, they think for them it's better to edge part of their own.
Martin: and the Brain Formula. And so the answer to your first question, there is an appetite today.
Speaker Change: omission values
Speaker Change: and still at a good...
Speaker Change: percentage. We don't...
Speaker Change: We don't, I would say, discount OralNG, you know. Why? Because I think the lesson of these Asian buyers is that...
Speaker Change: They have been afraid of what happened in 22-23.
Speaker Change: So, even if they could anticipate that there would be a softening of the market by 2027-2030, they think for them it's better to edge part of their own.
Mark Cutifani: I would say purchase, link to the brand. In fact, I think today, there is more confidence in the buyers' side on the brand and the stability of your market, on the LNG, GKEM index, which is, by the way, don't have the same depth for the TTF. So, I think this is why you have some appetite on different countries.
Speaker Change: I would say purchase.
Speaker Change: So I think this is why you have some appetite on different countries. There are more countries buying energy, in fact, not only China, Japan, and Korea, Taiwan, Vietnam, India. India has a good appetite.
Mark Cutifani: Our more country is buying energy, in fact, so, on the China, Japan and Korea, Taiwan and Vietnam, India is a bon appetit. So, I think most of what we have had it already. You know, we have had it with Rio Grande; we took five million tons.
Speaker Change: So, adding more spots, we have added already, you know, we have added Rio Grande, we took 5 million tons.
Mark Cutifani: Massage is more like one million tons, but this is one where we want also to develop a local barging market within the world, with a specific market.
Speaker Change: Marsa is smaller, it's 1 million tons, but this is the one where we want also to develop a local barging, I would say, market within the Gulf.
Mark Cutifani: And so, yet, we are comfortable with that. I think, I will tell you, Michele, what on the objective we love in the end of September is to show you exactly what you said, or do we manage with the potentially suffering of the market for 27, 20, 30. What is remaining is for real, for the total energy. And you will realize that downstream, in fact, on the monthly, we will transform and we are transforming, and we have it in two ways. And I think this is good for all of us. For offshore news and for the future cash flows of the country.
Speaker Change: with a specific market.
Michele: And so, yes, we are comfortable, but I think, I will give you, I will tell you, Michele, what the objective we'll have in end of September is to show you exactly what you said. How do we manage?
Speaker Change: with potentially softening of the market from 2027 to 2030. What is the remaining exposure from TotalEnergies?
Speaker Change: And you will realize that downstream, in fact, fundamentally, we will transform.
Speaker Change: and we are transforming Enreo into brand and I think this is good for all of us.
Speaker Change: for our shareholders and for the future cash flows of the company.
Lucas Herrmann: The next question is from Lucas Herrmann of the NP-Paliba. Please go ahead. Thanks very much for your time.
Speaker Change: Very clear, thank you.
Speaker Change: The next question is from Lucas Herrmann of BNP Paribas. Please go ahead.
Unknown Executive: Two of my, one, the first is just to J.P. Hi Britsy, Pradeem, the portion again, this quarter. Can you just remind us what the redemption possibilities are going towards, what the timeframes are?
Lucas Herrmann: Oh, thanks very much for your time. Two, if I might. One...
Lucas Herrmann: The first is just to J.P. Hybrids, you've redeemed a portion again this quarter. Can you just remind us what the redemption possibilities are going forward, what the time frames are?
Unknown Executive: Patrick, apologies, but a general question for you on your own thoughts on China and Chinese oil demand development to look out over the next few years. I guess I've been; it's been fascinating to see the extent to which gasoline demand is that's coming to come on the pressure for me. The, obviously, had a thermal switching, you know, diesel into gas, Melendry, trucks, etc., etc., and you know, demand increasing the fields. So it's coming from the chemical of industry, and perhaps me gazing through, but just your own thoughts and insight into how you see Chinese oil demand developing next few years.
Speaker Change: And Patrick, apologies, but a general question for you, just on your own thoughts on China and Chinese oil demand development as you look out over the...
Speaker Change: next few years. I guess I've been It's been a fascination to see the extent to which you know gasoline demand is perhaps carbon to come under pressure from EV You've obviously had a fair amount of switching, you know diesel into gas
Patrick Pouyann: LNG trucks etc. etc., and you know demand increasingly feels as though it's coming from the chemical industry and perhaps negating crude but just your, I mean just your own thoughts and insights into how you see Chinese oil demand developing over the next few years. Thank you. We'll see because we have another 2.5 billion euros next year in our hybrid portfolio, so we have to discuss with the rating agency what we can do and if we can again continue to lower the hybrid portfolio. Thank you. On the China North, having insights on the forecast of the Chinese market. It's not so easy when you are out.
Speaker Change: LNG trucks etc etc and you know demand increasingly feels as though it's coming from the chemical industry and perhaps negating crude but just your I mean just your own thoughts and insights into how you see Chinese oil demand developing next few years. Thank you.
Unknown Executive: Thank you.
Unknown Executive: Yes, so continuing the operation right, so we decided not to renew one point five billion year old in the second quarter, because we use the flexibility of her by the critical, critical rating agencies. If you can demonstrate that, without renewing your upgrades, your rating, your credit is not affected, so you can use the flexibility. We see, because we have another two points, two points five billion year old next year, as in, in, we upgrade in our upgrade for you, so we have to discuss with the rating agencies to see what we can do and so if again continue to lower the upgrade for you.
Speaker Change: Yes, so concerning the IRA, so you're right, so we decided not to renew 1.5 billion euros.
Speaker Change: In the second quarter, because we use the flexibility offered by the rating agencies, if you can demonstrate that without renewing your rating, your credit is not affected, so you can use this flexibility.
Speaker Change: We have another 2.5 billion euros next year in our hybrid portfolio, so we have to discuss with the rating agencies to see.
Speaker Change: Thank you.
Unknown Executive: Thank you.
Unknown Executive: Okay.
Patrick Pouyann: On the China, no, I think insights on the forecast of the Chinese markets is not so easy. For, for when you are out, I would say, I think we should not exaggerate as well what happens. I think my view is that the old market for the timing, your demand globally continue to be driven by China. Even if India is part also is a growing country, I would take the assumption of 0.81% per year is a good assumption until we will see a real reverse. Does it affect China? I think we are, to the little, the western side over, I would say, a little of China bashing, I would say, to try to, to try to save as a economy in China is slowing down. My view is that it's continuing to, to be quite active and it's true that you have there, some more, the EV cells are impressive.
Speaker Change: Thank you.
Noah: Okay. On the China, Noah, having insights on the forecast of the Chinese markets.
Patrick Pouyann: I would say, I think we should not exaggerate as well what will happen. I think my view is that the old market, for the time being, old demand globally will continue to be driven by China. Even if India is part also is a growing country, I would take the assumption of 0.81% per year is a good assumption until we see a real reverse. Does it affect China?
Noah: It's not so easy for when you are out. I would say I think we should not exaggerate as well what happens. I think
Speaker Change: My view is that the oil market for the time being, oil demand globally
Speaker Change: continue to be driven by China.
Speaker Change: Even if India is part also is a growing country, I would take the assumption of 0.81% per year is a good assumption until we will see a real reverse.
Patrick Pouyann: I think we are today a little on the western side over, I would say there's a little China bashing going on to try to say that the economy in China is slowing down. My view is that it's continuing to be quite active. And it's true that you have some more, the EV sales are impressive, but I recently discussed this with the CEO of the number five car manufacturer company, and when I asked him his figures, he was still at 20, 30%. He's not yet at 70%.
Speaker Change #100: Does it affect China? I think we are today a little on the western side over, I would say...
Speaker Change #102: There's a little of China bashing, I would say, to try to say that the economy in China is slowing down. My view is that it's continuing to be quite active.
Speaker Change #100: And it's true that you have there...
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Speaker Change #105: Some more, the EV sales are impressive.
Speaker Change #105: But I was recently discussing with the CEO of the number five car manufacturer company and when I asked you his figures...
Speaker Change #104: He was still of 20-30%, he's not at 70%.
Patrick Pouyann: And in fact, it's a little like in Europe; there are EVs, but there are also hybrid cars. And the hybrid cars are because the customers, in fact, are looking for the same things wherever they are in China or in Europe. In fact, they want to have a, I would say, a reliable car for most of the time.
Speaker Change #104: And in fact, it's a little like in Europe , there are EVs, there are also hybrid cars.
Speaker Change #100: And the hybrid cars are also, because the customers, in fact, are looking to the same issues wherever they are, in China or in Europe .
Patrick Pouyann: That's important to keep in mind. So, yes, there is a trend. That's true.
Speaker Change #100: In fact, they want to have a, I would say, a reliable car for most of the time. That's important to keep in mind.
Patrick Pouyann: We also see LNG becoming a new market for trucks. But fundamentally, I think for me, it will not affect the old market quickly. So keeping 1% of demand off per year is reasonable. This is where we are, more or less. That's what we think, what we take into account. Okay, thanks very much for the comments. The next question is from Alastair Syme of Citigroup, please go ahead. There was a German lease bid auction recently where you were one of the two bidders, the winning bidders. But it was quite strange, I think, you know, your German partner... you know where that difference lies.
Speaker Change #100: So, yes, there is a trend, that's true, we see also LNG becoming for trucks a new market.
Speaker Change #100: But fundamentally, I think, for me, it will not affect quickly the whole market. So keeping 1% of demand off per year, I think, is reasonable, which is where we are more or less. That's what we think, what we take into account.
Unknown Executive: Okay. Thanks very much for the comment.
Speaker Change #107: Okay, thanks very much for the comments.
Alastair Syme: The next question is from Alessair Syme. I'll put you to group A. Please go ahead. Thank you, Patrick. Just one question. I just wanted to get you a sense on the competitiveness of opportunities and renewables. You know, I know there is another German lease bed auction recently that you are one of the two that is a winning bitters. But it was quite strange, I think, you know, your German partner probably pulled out because before the auction they come to the expense of it. You know, I get at the market. It's market is always at the difference of the opinion that you could have a sense of, you know, where that difference lies.
Speaker Change #107: The next question is from Alastair Syme of Citigroup. Please go ahead.
Alastair Syme: Thank you. Patrick, just one question. I just wanted to get your sense on the competitiveness of opportunities in renewables. I know there was another German lease bid auction recently that you were one of the two bidders, the winning bidders.
Speaker Change #103: But it was quite strange. I think, you know, your German partner probably pulled out because they thought the auction had become too expensive.
Speaker Change #106: I get it, the markets always have a difference of opinion, but can you give us a sense of where that difference lies?
Patrick Pouyann: You know, if we made the business, if you think it's competitive, otherwise we don't do it. First comment. Second comment. In fact, when you look, you will understand what we've done in few weeks. We are trying to just, I think, one of my colleagues in Germany has made it public in an interview. In fact, from the momentary, we think that this block that we have acquired is just his license. It's just next to the one we acquired in the first round. So, we want to make synergies of development, you know, that would be more efficient.
Patrick Pouyann: You know, if we make the bid, but only if we think it's competitive; otherwise, we don't do it. First comment. Second comment. In fact, when you look at what we've done in a few weeks, you will understand what we are trying to just... I think one of my colleagues in Germany has made it public in an interview.
Patrick: Okay, you know, if we make the bid, but if you think it's competitive, otherwise we don't do it. First comment. Second comment. In fact, when you look and you will understand what we've done in a few weeks.
Speaker Change #108: We are trying to just I think one of my colleagues in Germany has made it public in an interview
Patrick Pouyann: In fact, fundamentally, we think that this block that we have acquired is just... its license is just next to the one we acquired in the first round. So we want to make synergies of development in order to be more efficient. And so that's the objective. And this could go by the way, but the fact that we restructure all the properties we have in offshore wind in Germany. So you will see the story coming later.
Speaker Change #112: In fact, fundamentally, we think that this block that we have acquired is just next to the one we acquired in the first round. So we want to make synergies of development in order to be more efficient.
Patrick Pouyann: And so that's the objective. And this could go by the way, but the fact that we've lost structure, all the properties we have in offshore wins in Germany. So, you will see the story coming later. So, but again, what we think from the mentally and the German partner, by the way, is a nice partner. But we have announced yesterday that we went with him in the Netherlands. So, for example, the Netherlands are good and Germany. In fact, he has a different view because he has another passport for you in Germany. So, we are building the portfolio, not exactly the same approach.
Speaker Change #112: And so that's the objective, and this could go by the way that the fact that we restructure all the properties we have in offshore wind in Germany.
Speaker Change #118: So you will see the story coming soon coming later, so but again, what we're seeing from the months of him and the German partner by the way is a nice partner because we have announced yesterday that we went with him in Netherlands, So probably isn't it around soft goods in Germany and in fact, he has a different view because he has another.
Patrick Pouyann: So but again, fundamentally, and the German partner, by the way, is a nice partner, but we announced yesterday that we went with him to the Netherlands. So, probably, the Netherlands are good and Germany is too. In fact, he has a different view because he has another past portfolio in Germany. So we are building the portfolio, not exactly with the same approach. But if we do it, it's because... And it's linked to the German power market, in fact. Because in Germany, you know, the German government has decided on a policy with no nuclear waste coal.
Speaker Change #108: <unk> portfolio in Germany. So we are building a portfolio that's exactly the same approach Ah, but if we do it is because and it's literally linked to the German market in fact.
Patrick Pouyann: But if we do it, it's because, and it's little linked to the German power market, in fact. Because in Germany, you know, the German government has decided the policy. We've no nuclear, anything called. So, it's fundamentally renewable and gas markets. So, the gas, the poor price, we've been driven by the gas in fact. And when you flew to the first picture of the gas price in Europe, you can be optimistic on the electricity price in Germany. So, that's part of the link that we want to do. And so, that's why we are building today a fully integrated portfolio in Germany.
Speaker Change #109: In Germany, you know German government has decided a policy we've no nuclear exiting pool. So it's fundamentally a renewable and gas markets was again.
Patrick Pouyann: So it's a fundamentally renewable and gas market. So the gas price will be driven by gas, in fact. And when you look at the perspective of the gas price in Europe... So you need to listen to me a little more. Okay. Thank you very much.
Speaker Change #109: This will be driven by the guests in fact, and when you flip to the perspectives of the gas price in Europe, you can be optimistic on the electricity price in Germany.
Speaker Change #109: So that's part of the of the League Festival to do and so that's why we are building today.
Speaker Change #109: Our fully integrated portfolio.
Speaker Change #109: Portfolio in Germany subtle immediate offshore wind and so you should never and I know it is too difficult for me to convince you, but you will see why we have.
Patrick Pouyann: It's not only the offshore wind. And so, we should never, and I know, unless there are difficult for me to convince you. But you will see, and why we are more of a third business, because we should not go to the field with all the opportunity. It doesn't look like that. A green intermittent electron has no value or little value. What is good is to have a clean firm power for customer. That's what we do in Germany. Yes, we need some renewable sources to have the clean part. But we need to combine them with flexible assets, and flexible assets are batteries.
Patrick: Okay.
Patrick: Sure.
Patrick: Okay.
Speaker Change #110: You're starting to look like.
Speaker Change #116: Green Interbody synthetics, one that has no value literally what is good is to have a clean some forward forecast of it that's what we do in Germany, Yes, we need some when you weigh boats will cease to have the clean path, but we need to combine them with flexible assets and flexible assets all batteries, but that he knows he should participate too.
Patrick Pouyann: So, telling us this should participate to have a, we will find a way to have access to gas, five poor plants in Germany; otherwise, my speech will not be consistent.
Speaker Change #120: We'll find a way to have access to gas fired power plants in Germany, or otherwise my speech would not be consistent and so you can see I can announce who the next steps are what we want to do block. That's why also we bought exactly gauge of window way both to get flexibility Wade so the fundamental.
Patrick Pouyann: And so, you can, again, announce to you the next step of what we want to do, plot. But, why also we both, with aggregator, do we both to deflect stability system. So, the fundamental business model we have is not renewable. Or renewable profitability, it is what it is, and you know it. But when you make money, if when you combine these green electrons with the flexible assets, customers, and you deliver to the customer, a clean firm power, when you increase a lot of value. And the renewable, so, do you allocate this profit with value to the renewable or to the gas plants or to the batteries?
Speaker Change #116: There's this one that we have.
Speaker Change #110: Yeah.
Speaker Change #110: Well.
Speaker Change #115: Debilitating diseases.
Speaker Change #119: But where do you make money when you combine these green electrons, we've so flexible assets and you devote to the cost of a clean simple when you infuse a lots of value and so anyway. So do you allocate these profits to be valuable to the renewables onto the gas plants or to the batteries.
Patrick Pouyann: I don't care; at the end, this is the integrated model. And this is what we deliver to you, puter, up to puter, and we increase it.
Speaker Change #122: I don't care at the edge, which is the integrated model and this is what we deliver to you quarter after.
Speaker Change #122: We're doing willing to visit so that's the business plan. So it's not the only opportunity.
Patrick Pouyann: So, that's the business plant. So, it's not the matter only of an opportunity of renewable, it's a matter of integration. And that's why, today, we have a return of capital and production. So, that's why we have a return of capital. So, we have a return of capital.
Speaker Change #117: It's a matter of integration and that's why today, we have a return on capital employed of about 10%.
Speaker Change #117: Renewable assets alone will not be there I admit it but it's not what we are looking to.
Unknown Executive: Okay, I look forward to October and the mid-term of Georgia Olympics. So I need to listen to me a little more.
Speaker Change #114: Okay. When I look forward to October and in the meantime, Agility Olympics, so you need to listen to me.
Christyan Malek: Okay. The next question is from Christa for Kaplent of Bank of America. Please go ahead. Thank you very much. Let's see whether I've listened enough, Patrick. Can I come back to the topic of green hydrogen and that deal that you've just announced with RWE? Can you comment a little bit about the competitiveness of the industry? You were instrumental in trying to create a clean hydrogen market, and it seems that deal in the Netherlands suggests you feel you're better off creating the value chain yourself rather than buying it at currently available prices. So be interested to see what you feel you can give to us here, and if I may go back to the US and ask you a little bit around the idea of M&A and how attractive or not you feel your current acquisition currency is if it's not cash in terms of being able to do deals.
Speaker Change #110: Okay.
Speaker Change #110: Okay.
Speaker Change #110: Yeah.
Speaker Change #113: The next question is from Christopher Copeland of Bank of America. Please go ahead.
Unknown Attendee: Let's see whether I've listened enough, Patrick. I'm sure. Can I, can I, can I come back?
Speaker Change #113: Thank you very much let's see whether I've listened enough Patrick.
Patrick: Sure can I can I can I come back.
Christopher Copeland: Can I come back to the topic of a green hydrogen and that deal that you've just announced with ought to be we can you comment a little bit about the competitiveness of the industry are you were instrumental in trying to create a clean hydrogen market and it seems that deal in.
Patrick: The Netherlands suggests you feel you're better off creating.
Patrick: The value chain yourself, rather than buying it at currently.
Patrick: Available prices so be interested to see what what you feel are you.
Speaker Change #126: You can you can give to us yet and if if I may.
Speaker Change #121: Go back to the U S. A and ask you a little bit around the idea of M&A and how attractive or not.
Patrick: Your current acquisition currency.
Patrick Pouyann: [inaudible] is, if it's not cash, in terms of being able to do deals, is that one element behind, let's say, improving the currency that you have. Again, no, I think you are of your supplier, and they will take part in more risk, probably because we are off taking, but that's part of the discussion we have with some suppliers. So, I can tell you at the end that all the deals we will sign will allow us to create value not only to avoid the ETS but, on top of that, to capture part of the added value of these RFNBO products, which is the result of the European regulation. And again, this matches well with that.
Patrick: If it's not cash them in terms of being able to do deals.
Christyan Malek: Is that one element behind, let's say, improving the currency that you have in New York? And if it's the third constraint, what do you expect? And that's the full ads and networking capital position into EORN. How much room do you give yourself to be able to provide us with more than 40 percent at the FFO meeting in terms of shower distributions? Thank you.
Speaker Change #127: Is that right.
Patrick: Okay.
Speaker Change #123: That's right.
Patrick: Let's see.
Patrick: Okay.
Patrick: Hum.
Patrick: I'm sorry.
Patrick: Sure.
Patrick: We expect.
Patrick: The net working capital position.
Patrick: Yeah.
Patrick: How much room do you get.
Patrick: Okay.
Patrick: Yeah.
Patrick: Childhood distributions. Thank you.
Jean-Pierre: On the last question, I think you have the answer in this speech of Jean-Pierre. Jean-Pierre told you that we are confident we could come back to a bearing of 78 percent. So that's in part of the working capital built in the first quarter, which would be released along the year. More than 40 percent, more than 40 percent. I think you have the figure for this quarter, whether it's 40, 45 percent, more than 40 percent, 45 today. So the guidance will not be changed, but the delivery will be real. You will see it.
Speaker Change #130: So the question I think you have yet to the speech of gel appears on here. So we'll do but we are confident we could come back to a gearing of seven 8%. So that's part of the working capital build during the first quarter, which would be released.
Patrick: So long as a year.
Speaker Change #135: More than 40% and more than 40% more than 40%.
Speaker Change #125: I think you have the figure for this quarter what is it 40 45 per cent for more than 40% 45 today. So it's a the guidance would not be would not be changed but so then it really would be real.
Speaker Change #132: Let's see first question. So again, no I think it's.
Patrick Pouyann: First question, so again, no, I think you are; it's more complex on that. When we have different ways to provide green hydrogen to refineries, which again, because of the RFNBO regulation in Europe, creates an economic scope to make an added value because you avoid the ETS on one side and you create an additional new product, and these new products are according to the RFNBO regulation in Europe as the added value. The question is about you play for the hydrogen, obviously green hydrogen. In fact, we are looking to both ways. Either we pass it on the way, by the way.
Speaker Change #129: It's more it's more complex when you we have different ways to provide the weeknights eventual refineries, which again because of E. L. F in view of regulation in Europe suites.
Speaker Change #125: And they couldn't be scope.
Speaker Change #141: To make to make an edit value because you avoid the epa's on one side and you create new.
Speaker Change #125: New products and new products.
Speaker Change #125: Linked to visa RF in view of regulation in Europe.
Speaker Change #136: So question is on budget for the annual meeting of you'll see a green hydrogen in fact, we are looking to both ways either we oh by the way nobody in France, we have made with Turing.
Patrick Pouyann: In normally in France, we have made the tooling of green electrons. It was a tooling agreement with our liquid. We took green electrons. We don't invest in the electrolyzer. They do very run it, and we told it we have a tooling fee, and we will get the green hydrogen out of the hydrogen. That's a tooling one. We could have, as we explained by the way yesterday, we have again just made it without the WI to share the invests of Schroin and NASA and to get 50 percent of the electrons in order to conform them into electrolyzers.
Speaker Change #131: So it wasn't a monetary value.
Speaker Change #128: We didn't we don't invest in.
Speaker Change #128: Equalizer, they do they're on it and we toured it so we have a tolling fee and we would get to green hydrogen outside for hours.
Speaker Change #133: So that's a tough one we could have.
Speaker Change #133: Yesterday, we have again just made the deal with other buoyed.
Speaker Change #133: Fifth we invest offshore wind and that's it.
Speaker Change #128: 50% of the.
Speaker Change #128: Electrons.
Speaker Change #128: Form them each week.
Patrick Pouyann: It could be a local electrolyzer either through tooling, or we are looking to maybe part of it could be invests by ourselves in order to compare the different, because it's an infant industry. We want to invest and to compare the different ways between tooling investing and that's where the electrons will go. When you have a third route, just to purchase green electrons from abroad. Then it's a question purely of competition, market, and being the first mover; we announce a deal with our products. Being the first mover from this perspective, I think gives us access to the price.
Speaker Change #128: It could be it will be in local expertise.
Speaker Change #134: We are looking to maybe part of it could be in this university by all cells in order to two compares are different because it's a it's an infant industry. So we want to invest in two compares with different ways between tolling investing and that's what these headaches ones will go and then you have a third route which is to just to put.
Speaker Change #139: Screen that exports from abroad, and then its a question Judy of competition market and being the first mover, we announced the deal with air products being the first mover from this perspective, I think give us access to good price and so when a one day today, it's premature because all these discussions are moving on.
Patrick Pouyann: When one day today is premature, because all these discussions are moving on, but when we compare the different routes, and again, it's more or less equivalent. Of course, the question of when you input is the question of competitiveness of your supplier, and they will take part more risk, probably, because we are taking, but that's part of the discussion we have with some suppliers. So, but I can tell you, at the end, all the deals we will sign will allow us to create value, not only to avoid VTS, but on the top of it, to capture part of the added value of these RFNBO products, which are the results of your European regulation.
Speaker Change #137: But when we compare the different routes and again.
Speaker Change #134: It's more or less equivalent of course is a question of when do we important just a quick question of competitiveness.
Speaker Change #134: Fuel supplier and they would take more risk probably because we all sticky, but that's part of the discussion we had with some suppliers so but I can't tell you a D. In order to do this we will sign we didn't do is to create value not only to avoid beach, yes, but on the top of it to capture part of the added value of.
Speaker Change #134: Elephant view products, which are so reserves of European regulations.
Patrick Pouyann: , and again, this match well with this RFNBO framework, which is a sort of a regulated economy that creates a bubble where you can develop some green hydrogen. I don't tell you through my demonstration that green hydrogen is cheap, but you can create an economic framework and some value for refineries, and at least reducing the emissions and avoiding to pay this EPS. That's where we think about it. No, thank you very much. You have to respond. I hope you just want to impose a value of the shares for you. There is obviously enough to make it an ADF directly; the other aspect of the point.
Speaker Change #134: And again this match well with this.
Patrick Pouyann: RFSBO framework, you know, which is a sort of regulated economy that creates a bubble where you can develop some green hydrogen. But I don't tell you, through my demonstration, that green hydrogen is cheap. But you can create an economic framework and some value for refineries, and at least reduce the emissions and avoid paying these EPS. That's how we think about it. Okay, on the first one, thank you for the question. No, I think again, we set these objectives for the next five years on September 23, at 2-3%. We knew, and we were very clear about the number of projects we had to sanction.
Speaker Change #143: Do you have a framework, which is a sort of a regulated economy, which creates a bug or where you can develop some green hydrogen.
Speaker Change #140: I'll tell you what my demonstration that we never have any cheap, but you can create an economic framework and some value for four refineries and at least reducing the emissions and avoiding to babies.
Speaker Change #140: Yes.
Speaker Change #138: That's the way we think about it.
Speaker Change #134: No.
Speaker Change #146: Just want to go.
Speaker Change #147: For Ya.
Speaker Change #149: So he is not to make given a directive.
Patrick Pouyann: Again, if you know we have a larger range portfolio of projects, why would I like to make more M&A with shares? So it's not the main drivers; the main driver is fundamentally at the end of the year. This will transform the ADFs in shares because it could be attractive to some new investors, to best have an ADF into your unknown shares. And it's just giving more liquidity, and if it's more attractive, it could help; we could think that it could not feel the famous gap, but part of it. So that's contribution to, I would say the TSR on the company, which is already one of the best of the, if not the best, is a number one or two or one, I think since December 23, December 24.
Speaker Change #134: Yeah.
Speaker Change #134: Yes.
Speaker Change #134: And rich portfolio of projects.
Speaker Change #156: I would like to make more M&A we've shares so it's not the main driver was the main driver is fundamentally yes answered if you reach your plans for the season.
Speaker Change #134: Because of this.
Speaker Change #144: Suffolk and Vista.
Speaker Change #134: Alright.
Speaker Change #134: Okay.
Speaker Change #134: It's just getting more liquidity and if it's more attractive.
Speaker Change #134: You'd think that it could not.
Speaker Change #134: So it feels a famous gap, but possibly so that's contribution.
Speaker Change #148: I would say that you saw on.
Speaker Change #150: The company, which is already one of the best.
Speaker Change #160: He said the best is a number one or two well want I think since the December 23 December 24, so it's improving yourself.
Unknown Executive: So it's improving the TSR of the energy to be more attractive from the eventually of this move.
Speaker Change #154: Pardon me.
Speaker Change #134: Fundamentally.
Speaker Change #134: Cool.
Unknown Executive: Thanks very much, Patrick. Thank you.
Speaker Change #134: Thank you very much Patrick thank you.
Speaker Change #134: Okay.
Matt Lofting: The next question is from Matt Lofting of JP Morgan. Please go ahead. Hi, thanks for taking the questions. I'm too pleased if I could.
Speaker Change #134: The next question is from Matt Lofting of Jpmorgan. Please go ahead.
Matt Lofting: Hi, Thanks for taking the questions two please if I could.
Matt Lofting: First, just coming back to the longer-term growth proposition of the company. I think you highlighted earlier some of the strides that you've made during the first half of the year in advancing projects and strategic execution. If you think about it in the context of oil and gas growth, 2%, 2% to 3% KGAR to 28% or all the 4% energy production growth to 2030, how significant is the de-risking of those objectives being through the last sort of six, nine months, more sort of key projects apart from Surnama Outstanding for the second half of the year.
Speaker Change #155: Just coming back to sort of longer term growth proposition.
Speaker Change #152: The company I think he highlighted earlier some of the strides you've made during the first half of the year and advancing projects and strategic execution.
Speaker Change #157: If you think about it in the context of its oil and gas growth, 2% to 2% to 3% CAGR 28, or the 4% energy production growth to 2030 how.
Speaker Change #158: And as the Derisking of those objective speeding them through the last six nine months, what sort of key projects apart from Surinam and outstanding for the second half of the year.
Patrick Pouyann: And then secondly, I wanted to just come back on gas and LNG. I think in the press release this morning you called out sort of strength around sort of China and India from a demand perspective. To what degrees is Total Energy? See that strength as sees no versus structural. Thank you. Okay, on the first one, thank you for the question first. Now, I think again, we set this objective for the next 5 years in September 23 to 2%. We knew when we put, we were very clear about the number of projects we had to sanction.
Speaker Change #145: And then secondly I.
Speaker Change #153: I Wonder if you just come back on on gas and LNG I think in the press release. This morning, you called out sort of strengths around sort of China and India from a demand perspective, just to what degree your just total energy see that strength is seasonal versus structural thank you.
Speaker Change #145: <unk>.
Patrick Pouyann: And I think we've done a lot. I think most of the work has been done during the first six months. It's important because it's for us, it's clear, but it's a way to quickly capture costs and not see more inflation coming tomorrow. So it was a key priority.
Speaker Change #151: Okay on the first one thank you pose the question first no I think again, we are we set this objective for the next five years in September 23 to two 3% and we knew when we were very clear, but there's a number of projects we had to sanction a and I think we've done a lot I think most of the well.
Patrick Pouyann: And I think we've done a lot. I think most of the work has been done during the six months. It's important because it's for us it's clear. But it's a way to capture quickies, of course, and not to see more inflation coming tomorrow. So it was a key priority. So we had the two projects in Brazil, the one in Angola. Serena will come soon again. So I would say, and you have also part I could add that on Iraq. We are also progressing, but the other one on which we progress quickly to go to the first phase of Iraq.
Speaker Change #151: It has been done joins a six plus six months, it's important because it's a for us it's clear, but it's a way to capture a quickie is of course not to see more inflation coming tomorrow. So it was a key priority. So we have the two projects in Brazil, one in Angola, Suriname will come soon again, so I would say and you are.
Patrick Pouyann: So we have the two projects in Brazil, the one in Angola, and Suriname will come soon again. So I would say, and you also part, I could add that in Iraq we are also progressing. But the other one on which we are progressing quickly to go to the first phase of Iraq.
Speaker Change #151: It's also part of it.
Speaker Change #151: But on the Iraq. We are also progressing but you'll go one of those which we call. This quickly to go to the first phase of Iraq.
Patrick Pouyann: So that for the old on the on the LNG, we postpone PNG Papua LNG because it was too expensive for not the volume driven, but we had the opportunity to sanction mass LNG to rebound. But we just don't be wise and NG projects for 10%. So all that being less. So we have multiple options in the portfolio. And so I'm very confident to deliver this. But I'm even more confident in June by 24 and September 23 because most of the work of sanction has been done. And so it's progressing. And again, I think in September in October, October 2. It's October 2 in New York.
Speaker Change #169: So that's four yard on the on the LNG, we postpone P&G, but why didn't you because it was too expensive for them must be volume driven but we have the opportunity to sanction mouse that LNG to rebound, but we just don't view, who wants an LNG projects for 10%. So all of us being less so we have good support options.
Patrick Pouyann: So that's for the oil on the LNG; we postponed PNG, Papua LNG, because it was too expensive to be volume driven. But we had the opportunity to sanction mass LNG to rebound. But we just joined the Ruwais LNG projects for 10%. So all that being less, we have multiple options in the portfolio. And so I'm very confident that we can deliver this cash flow. But I'm even more confident on July 24, and September 23, because most of the work of sanction has been done.
Speaker Change #168: Before doing so I'm very confident to deliver these guests progress I'm, even more confident in June by 24, one symptom, but put your feet because most of the work of sanction has been done and so it's progressing and again I think in September and in October October six outlets at September it's up to the second in New York of course, it will be part of the present.
Patrick Pouyann: Of course, it will be part of the presentation to update you on the progress to the objective of 2 to 3%. And even again, to speak to you about after 2030 because we have a portfolio which is rich. And so we can can we are confident about the growth we can deliver, but these past these timeline. So at the point.
Patrick Pouyann: And so it's progressing. And again, I think in September, in October, October 2, I said, September, October 2 in New York, of course, it will be part of the presentation to update you on the progress to the objective of two to 3%. And even, again, to speak to you about up to 2030, because we have a portfolio that is rich. And so we can, and we are confident about the growth we can deliver on this timeline.
Speaker Change #165: Tissue and to update you on the progress, but we still keep a 2% to 3% and even again to speak to you about the up to 20, Fuji because we have a portfolio, which is rich and so we can convey our confidence about the growth we can deliver but these are but these timeline so vantage point so sugar.
Patrick Pouyann: So Suriname is a big one. Honestly, I think we are the main one would to come in 24, I think in mind. And there Iraq phase one, we are going to one of the 10,000. Which progress, which is progressing very quickly as well. And by the way, very well. So the teams are doing an excellent job in Iraq. All the LNG in China's strength is no, I think you see something more fundamental in India, investment, you see a industry demand in India, in fact coming, you see the government in India government as early, I would say, invested in some gas infrastructure around the country, and you have more and more industries, not only refineries but others who are going to come to LNG and to gas, I think it's a trend, it's a trend surprisingly, at higher price than the 2021, so in 2021, I think I had some questions, say you, but in India is difficult to sell the 16, $7 million to do, in fact, we need to be able to business at the end of the year, so I think there is a fundamental structural demand coming up, and we have come in for the Indian market, we'll take Joveelae, and we take from the traditional Korea, Japan, and India.
Speaker Change #170: One honestly I think we are the main one would come in in 'twenty, four thinking mud and Iraq phase. One we are going to one of the 10000 Bucks, which program, which is progressing very quickly as well and by the way.
Patrick Pouyann: So that's the point. So Suriname is a big one. Honestly, I think we are the main one to come in 24, I think in my and Iraq phase one, going to 110,000, which is progressing very quickly as well. And, by the way, very well.
Speaker Change #166: Very well so the teams are doing an excellent job in Iraq.
Patrick Pouyann: So the teams are doing an excellent job in Iraq. On the LNG India-China strength, no, I think you see something more fundamental in India. The investment, you see, is an industry demand in India, in fact. The Indian government has really, I would say, invested in some gas infrastructure around the country. And you have more and more industries, not only refineries but others, who are going to come to energy and to gas. I think it's a trend, even surprisingly, at a higher price than before 2021.
Speaker Change #166: All of the LNG inkjet China's plan, because as you know I think you'll see something more fundamental in India.
Wendy: Wendy you see and industry demands.
Speaker Change #164: I mean, you were the Israeli government U S. Government is really a I would say are invested in some gas infrastructure around the country and you have more and more industries. That's only refineries with all those who are going to come to LNG into cost.
Speaker Change #171: I think it's a trend.
Speaker Change #159: Not surprisingly.
Patrick Pouyann: In 2021, I think I have answered questions, but in India, it's difficult to sell beyond $6, $7 per million BTU. In fact, we continue to develop businesses at $8, $9 per million BTU. So, I think there is fundamental structural demand coming from India, and we are convinced that the Indian market will take the relay, I would say, from the traditional Korea, Japan, and even China. For China, it's probably more seasonal today, I think, because they already have a lot of infrastructure.
Speaker Change #161: 'twenty one 'twenty one.
Speaker Change #161: Yeah, that's all the questions that you need.
Speaker Change #163: That'd be 167.
Speaker Change #159: We.
Speaker Change #159: Okay.
Speaker Change #159: Okay.
Speaker Change #159: Okay.
Speaker Change #159: So I think that is.
Speaker Change #159: Sure.
Speaker Change #159: Yeah.
Speaker Change #174: The market thinks of you lay out what type of potential North Korea or Japan.
Patrick Pouyann: China, probably it's more seasonal today, I think, because they have already a lot of infrastructure. China is moving very quickly on these new levels, continue to increase its coal production, and again, the gas is more driven by transportation, like it was mentioned by the gas, or by industries. So the gas demand, NG demand China is not really driven by power today, because the power is mainly coal and renewable. So, but there are some decisions, so Chinese recently have again spoke again about the equivalent of ETS CO2 market, but today it's quite small and limited, but they want to expand it to all the industries. So this type of driver could really have an impact, so we see more of the Chinese market growing thanks to energy industry and transportation more than power, in fact, on the energy.
Speaker Change #162: Even China, China, probably it's more seasonal today I think about it is because they have already a lot of infrastructure. China is moving very quickly on these boards continued to increase its CT production and against the gas is more driven by transportation that keeps was mentioned by ucas or <unk>.
Patrick Pouyann: China is moving very quickly on these renewables, and it continues to increase its coal production. And again, gas is more driven by transportation, like it was mentioned by Lucas, or by industries. So the gas demand, energy demand in China, is not really driven by power. The Chinese recently spoke again about their equivalent of the ETS CO2 market, but today it's quite small and limited, but they want to expand it to all industries. So this type of driver, you know, could really have an impact.
Speaker Change #182: By industry. So it was a guest demand and LNG demand in China is not really driven by Poland today, because it is mainly coal and renewables. So so that's but they're also some decisions.
Speaker Change #209: So Chinese he says you have against spoke again about the equivalent of ETS shoot to market, but today, it's quite small and limited, but they want to expand it to all be industries. So this type of drivers you know it could really have an impact so we see movies the Chinese market.
Patrick Pouyann: So we see more of the Chinese market growing thanks to LNG, industry, and transportation more than power, in fact. Super. Thanks very much. The next question is from Henri Patricot of UBS. Please go ahead. PNG, LNG.
Speaker Change #178: Wing things to our LNG industry and transportation more than four and five of the LNG.
Patrick Pouyann: So, honestly, I think today we have 400 million ton market; it will become 600 million ton market, because this 250% of demand increase will be absorbed quickly in 4.5 days. I think part of it today will always be being absorbed in Southeast Asia, if we are not constrained by supply. Today we are, because I remind you that we took 50 million tons from Asia to Europe, and since 2022 we did not increase the energy production; it's quite stable, so this would be easy to grow. Also, this growth will come, and you have also many more countries open to NG, a visitor Vietnam, as a terminal, Philippines, we have a terminal, so in fact in Southeast Asia, most of the countries will have to be able to receive energy.
Speaker Change #172: So honestly I think today, we have 400 million market will become 600 wouldn't be until the market vis vis a.
Speaker Change #181: At least 50% of demand increase we'd be absorbed quickly for five years I think part of it today with already being absorbed in southeast Asia.
Speaker Change #179: Basic blocking in fact.
Speaker Change #177: Today, we are because I'll remind you of is we took 50 million tonnes from Asia to Europe and since 2022, we did nothing really there that energy production quite stable. So this would be easy to do so.
Speaker Change #172: These schools will go up and you have also minimal taxes open to LNG.
Speaker Change #172: Now as a turbine or Philippines, where at the time and also youre in and in fact in Southeast Asia. Most of your countries will be.
Speaker Change #162: Be able to to receive LNG. So then and if you can think that we'd have a good supply so possibly suffered it would even incentivize the demand and accelerated the demand by the end of this decade.
Patrick Pouyann: So then, and if you can think that you will have a good supply, so price will soften; it will even incentivize the demand and accelerate the demand by the idea of this decay. So, I think, and it's not just these other purposes, for sure. Thank you very much.
Speaker Change #162: So I think and it's not just these are notable abuses virtual.
Speaker Change #162: Super Thanks very much.
Henri Patricot: The next question is from Henri Patrico of UBS. Please go.
Betsy cool: The next question is from Betsy cool.
Betsy cool: <unk> of UBS. Please go ahead.
Betsy cool: Yes, I want to thank you for the update two questions. Please.
Betsy cool: First one I'm just going back on the cost I'm wondering if you can comment on the inflationary pressure that you're seeing and you mentioned.
Patrick Pouyann: We saw a cost and then postponed the project. Is that quite specific, or are you seeing more poorly under some inflationary pressure? And then secondly, just a quick question on the CAPEX guidance for the year and whether we should still expect the cash outflows rated to acquisitions to be offset by cash inflows from this. So, yes, there is inflation, but we manage it, and we'll come back on that topic as well at the beginning of October.
Speaker Change #175: PNG LNG, where we show them, our costing and postpone the project.
Speaker Change #176: If people are you seeing them 40 up some inflationary pressure and then secondly, just a quick question on the Capex guidance for the year and whether we should expect the cash outflows related to the accretion to be offset by cash inflows from disposals. This year. Thank you.
Speaker Change #180: The first question.
Speaker Change #183: There's nothing to watch as an inflation in all this week I imagine that was a low point, where we were in 2022, there I would say we are 20% a year and most of the costs, but at 20% and we can manage it and that's why we can sanction the projects like the once we have done even if we can also take some innovative measure.
Speaker Change #198: Like are you, making a G D on the rig in order to manage these costs for the future.
Speaker Change #184: I think you said, that's a but for LNG poverty as a form of specificity because it's isolated projecting a I would say remote areas not really projecting about Bob so probably as we said before we can sell to the traditional wisdom sick suppliers, they almost getting entrusted.
Speaker Change #189: Or are there, perhaps some limited to these rules they think they could deliver more margins for them to make a project in the U S. But you know and they're all running well. So what we are doing is looking to we havent decided to go to larger.
Speaker Change #189: I would say supply Oh go suppliers in particular Asian ones in young Chinese so we could I think we should be able to come back to it.
Speaker Change #191: Something more capex, which would be a resort in this environment, but again by the way I never pointed but it wasn't inflation, but today, it's more stabilizing in fact, because pfizer like never before in the indirect market and just reading market, you'll begin to the drilling contractors because to be.
Speaker Change #188: Are facing also some supply chain equipment problems. So it does look in burden they Simpson breaks, which all accused itself. So it's so in fact, we don't have them. They don't have the full value chain.
Speaker Change #187: The supply chain ready to execute towards whether they would like so yesterdays inflation, but we manage it.
Speaker Change #187: And we will come back on that topic as well.
Speaker Change #187: The just taken a while yes, we always gave a guidance of $17 billion to $18 billion that our capex and we should be against the others. All geared toward you we reiterate visa.
Patrick Pouyann: The second one, yes, we always gave a guidance of $17-18 billion of net capex, and this will be, again, as Jean-Pierre told you, we reiterate this guidance. And I would say last year, for the five-year business plan, we gave you $16-18 billion. I remember mine well, and I would be surprised that we will not confirm $16-18 billion on October 2nd. (inaudible) The next question is from Paul Cheng of Scotiabank. Please go ahead.
Speaker Change #187: With our guidance and I would say last year for the five years.
Speaker Change #187: This brand. We gave you was 16 18 billion barrels I remember well.
Speaker Change #187: I would be surprised if we would not come through 16 18 billion, but also on October 2nd.
Speaker Change #187: Okay.
Speaker Change #187: Okay.
Speaker Change #185: Capex you should be able so we didn't have that range.
Speaker Change #185: Okay.
Speaker Change #185: Thank you.
Speaker Change #185: The next question is from Paul Cheng of Scotiabank. Please go ahead.
Paul Cheng: Hi, good morning.
Paul Cheng: Two question piece I think that's the first one is for John P. It in your press release, you said that the.
Speaker Change #196: Integrated power, we saw was impacted by some seasonality.
Speaker Change #193: In Europe, there yeah Chesapeake.
Speaker Change #190: Seasonal demand.
Speaker Change #194: How much do I understand that how big is that didn't pay and maybe in general with that.
Kyle: What Kyle I think be supposed seasonal pattern.
Kyle: We shouldn't expect that the integrated power business Oh Gee.
Patrick: Second question I think this is Patrick any update for business. Thank you.
Patrick: The main driver behind my comment is in relation with the CCT.
Speaker Change #195: Catalyst used in summer phobia, Sweden compared to winter.
Speaker Change #199: That's true.
Speaker Change #199: Excellent.
Speaker Change #195: Right.
Speaker Change #192: Can you quantify at.
Speaker Change #207: Oh, yes that impact and also other thing that is there any of that.
Speaker Change #213: Seasonal pattern in the other quarters that we should be aware.
Speaker Change #200: We are young in the integrated full work. So we don't have enough long beach studio preserves to answer precisely to your question. So we just we have to explain why five although it is a it's a real live under the previous quarter and when we looked at it because one of the main explanation was just that he's got supply the gas Farquhar plant labor abuse.
Speaker Change #192: Europe with very little work, there's been 10% as compared to something around 40%. So that's one explanation we've listed the physics.
Speaker Change #201: And the first <unk>.
Speaker Change #202: Initially this one okay.
Speaker Change #205: No I mean, yeah, I mean on the.
Speaker Change #206: It's just would tell you I know.
Speaker Change #210: We are again finish the appraisal will finish so nobody has a.
Speaker Change #206: You have some reserves, we all know working on the development scheme as.
Speaker Change #204: As you know we have been quite good with you. It's positive we have a lot of work with data.
Speaker Change #203: Yes, so the question will be.
Patrick Pouyann: Can we find a way to develop this oil pool, manage the gas, and I would say re-injection in an economical way? Because, of course, all that at the end needs to fit with our criteria of breakeven less than $30 per barrel or cost less than $20. On business, I would say, I know the comments of one of my peers who said there is a lot of heterogeneity and that it is difficult to find an oil pool.
Speaker Change #208: Can we find a way to develop these oh poorer managing as a guess and I would say of injection.
Speaker Change #217: Economic wait because of course all of us at the end needs to fit with our criteria of a breakeven of less than $40, a bone or costless on 'twenty.
Speaker Change #211: Our engineers are working on it.
Speaker Change #208: A little more complex to develop the news on the Cogs baidu in Suriname to be clear because the gas quantity to manage these larger.
Speaker Change #219: I think we have a key.
Speaker Change #208: The objective for the teams to deliver some value and so we'll update you there.
Speaker Change #212: <unk> is again by end of 'twenty, we are in the mid <unk> 20 or by the end of 'twenty five.
Speaker Change #221: Whoever carry people would be before to see what where we all of a piece of the Brooklyn. So.
Speaker Change #212: So we are working on it.
Patrick: Patrick that.
Patrick: We know that's enough gas that you mentioned.
Patrick: Yes. Thank you a logical structure, yes, compacts or that just lumpiness strict Poland.
Speaker Change #229: Let's say painted.
Speaker Change #212: Yeah.
Speaker Change #216: So I would say <unk> to commence a one might be as we sit here.
Speaker Change #216: Intelligent and see if he can.
Patrick Pouyann: We have the oil pool. Of course, we have the core of the pool, which is of better quality, like always in all the fields that I know since I've been in the industry. And then you have the flanks of the pool, which are of degraded quality, but it's always like that.
Speaker Change #228: So to find out where we are in your pool of course is we have a cool pool, which is a better quality like always in order to feel that they know sometime in the spring and then you have the fracs of SKU childhood degraded quality, but it's always like that but I think we have to pool, we shouldn't it's more again the capex diminishment of the so we have a pool of board.
Patrick Pouyann: But I think we have the pool. The question is more, again, the capacity management of the... So we have a pool of oil that is big enough to make a development. The question is to manage, at acceptable costs, all the gas that will come with the oil and to be able to re-inject it in good conditions, knowing that we are, I remind you, about 3,000 meters deep. So it's not... Now, it's part of the challenge, you know, and the deeper it is, the more expensive it will be. So that's the link.
Speaker Change #224: Is it big enough to make us at last month's two question to manage with acceptable cost all the gas, which we'll talk with you all and to be able to inject it into come in good conditions. Knowing that we are I'll remind you bought back 2008.
Speaker Change: It doesn't matter, whether that's so it's not.
Speaker Change #215: So now it's part of the challenge.
Speaker Change #212: Hum.
Speaker Change #214: It would be useful.
Speaker Change: So that's more now today for my two questions.
Patrick Pouyann: So that's more. Now, today, for me, it's a question of commerce. Finding a way to make it profitable as per our criteria. And I think I'm always optimistic, but I'm optimistic. So, we have this right.
Speaker Change #214: The commercial.
Speaker Change #214: Finding a way to make it profitable.
Speaker Change #212: Right.
Speaker Change #227: Uh huh.
Speaker Change #218: I forgot.
Speaker Change #218: But I'm optimistic we are.
Speaker Change #212: Right.
Speaker Change: Very good thank you.
Speaker Change #222: The next question is from that.
Speaker Change #212: Desktop anymore.
Scott: Sorry, Oh, Dear Oh Scott.
Speaker Change #220: Please go ahead.
Speaker Change: Yeah. Thanks for taking my question two if I may 1st on them on on Suriname.
Patrick Pouyann: Uh, can you confirm and suggest, uh, suppose your earlier comment points to an FIT for 2024. But can you, do you believe you can still achieve the $9 billion budget? You penciled last year that you had taken a lot of their commitment in the last, let's say, 15 months, including your one day for five billion turns, uh, and now, do you have a target in terms of volumes you would like to predict? For the Suriname part, we are in the process of making the FIEs, so I don't have the figure I can tell you.
Kidney Chairman: Ah kidney chairman I suggest I suppose your earlier comment.
Speaker Change #233: Once you're in it and that's it for our 2024.
Speaker Change #220: But.
Speaker Change: Can you do you believe you can achieve still 9 billion dollar budget.
Speaker Change #212: Elliot.
Speaker Change #212: Yep.
Speaker Change #212: And the second question is on.
Speaker Change #226: He's on LNG.
Speaker Change #226: You sign a long term contract to Asian customers.
Speaker Change #223: But you have to take a lot of uptake.
Speaker Change #225: Off take commitments.
Speaker Change: Last night's safety nonsense.
At April 5 billion Gan G.
Speaker Change #232: He was he QSS.
Speaker Change: And now who is do you have a target in terms of volumes you would like to.
Speaker Change #225: To see Q on a long term basis still Asian customers.
Patrick Pouyann: On on the Suriname blocks, we are in the process.
Speaker Change: So I don't have today.
Speaker Change #230: You know what.
Patrick Pouyann: In the end, it's a peace development, will be sanctioned because the cost of FXPX will be lower than $20 per barrel. But the strict price data, we are committed to it. So we'll meet that target. And if I say that to you, that is because I'm optimistic with you, Richard.
Speaker Change #223:
Speaker Change #212: Sure.
Speaker Change: Perfect for the basically below FY 'twenty the lifeboat.
Speaker Change: We are committed to it.
Speaker Change #212: Right.
Speaker Change: It's hard to say.
Patrick Pouyann: Because I'm optimistic about it Richard.
Richard: That's it.
Patrick Pouyann: Secondly.
Patrick Pouyann: You know, I described what we want to do. Fundamentally, we have some energy of exposure. Part of it, we can reset it as energy up. In particular, we have a good exposure. We have a good customer in South America.
Speaker Change #212: No.
Speaker Change #212: Yeah.
Speaker Change: So basically kind of a study.
Patrick Pouyann: In particular.
Speaker Change #212: Yeah.
Speaker Change #212: Yes.
Patrick Pouyann: They buy an energy piece. We found energy up, energy up, and many others.
Speaker Change #212: Okay.
Speaker Change #212: Okay.
Speaker Change #212: Yep.
Speaker Change: It's fine.
Patrick Pouyann: The objective is to be able to secure as much as we can on a grand basis and a medium-long basis if we want to transform R&D into a plant. So, to reach 20% per pack, to reach 80%, 80% is the minimum we want to reach in this conversion, just to be clear. Because as we analyze the market, we want to protect the company; it's not necessarily a 50% market, it's a
Speaker Change #212: Yep.
Speaker Change #212: Okay.
Speaker Change #212: Sure.
Speaker Change #212: Grain basis in a big jump.
Speaker Change #212: Hum.
Speaker Change: We want to transform.
Speaker Change #212: So.
Patrick Pouyann: Wanted to put some capex to reach 80% 80%.
Patrick Pouyann: Rich.
Patrick Pouyann: Just to be clear because.
Patrick Pouyann: Because.
Speaker Change #212: Is the market.
Speaker Change #212: Yes.
Speaker Change #212: Okay.
Patrick Pouyann: Okay.
Speaker Change #212: No.
Patrick Pouyann: We could have a 70% contract, which will help us to swallow a smaller market and then rebound. So, that's more about the idea, fundamentally. And it's true that what is behind is my view and our view is that the old market, because of our tech position, is probably more stable than the gas market from this perspective of the medium-long term. So, we are more bullish on the old and on the brand, and I would say on some of the volatility we have in this energy market. Very clear, thank you. The next question is from Jean-Luc Romain of CIC Market Solutions. Please go ahead.
Okay.
Speaker Change #212: Okay.
Speaker Change #212: Okay.
Speaker Change #212: That's helpful.
Patrick Pouyann: Yes.
Patrick Pouyann: So that's the idea.
Unknown Attendee: Sure.
Speaker Change: It would be higher is that.
Patrick Pouyann: The market because they position before really are more stable.
Speaker Change: The gas market from his perspective of medium long term. So we are more bullish on Florida.
Patrick Pouyann: The Brent.
Patrick Pouyann: Yeah.
Patrick Pouyann: Alright.
Speaker Change #231: Got it.
Patrick Pouyann: Yeah.
Jean-Luc Romain: Very clear thank you well we liked the ore.
Speaker Change: The next question.
Speaker Change: Got it.
Speaker Change: Oh yeah.
Jean-Pierre: Solutions. Please go ahead.
Jean-Luc Romain: Thank you for taking my question.
Jean-Luc Romain: Thank you.
Speaker Change: You've changed.
Speaker Change: Oh boy.
Speaker Change: That's cool.
Speaker Change #231: Okay.
Speaker Change: Uh huh.
Unknown Attendee: See you., Aurelien Hamelle, Chulantha Silva, Matthias Pedersen, Power Plants was very low, or was it in the US? No, I think on the contrary, you know, we know that the gas-fired power plants that we have acquired, most of their use is when they need climatization. It's heating, it's a heat wave. And the heat wave today in the U.S. has been very strong for the last month.
Patrick Pouyann: Yeah.
Speaker Change: They'd be warm days that was really Oh, you can capture of US no question was.
Unknown Attendee: Sure sure.
Speaker Change: For the European that's true yes.
Unknown Attendee: That's one thing we know.
Speaker Change: Ooh Ah was it in the U S.
Unknown Attendee: No I think in the country you know we know that these gas fired power plant, which we have acquired most of their use easy when we need the climate position is.
Unknown Attendee: It's a it's each wave in the each waves today in the U S has been very strong in the last months and so I think the results of the suite of support so it would be even better. So I can tell you is guest friend so I used at the very high rate today. So it was an excellent acquisition and by the way they are.
Patrick Pouyann: And so I think the results of the first quarter will be even better. And I can tell you that these gas plants are being used at a very high rate today. So it was an excellent acquisition. And by the way, they are used, and they are driving the price at a point where the price of electricity is quite good. So that's really, I think, the demonstration. And, of course, we have some solar plants, we have some batteries, and we can also benefit from the batteries in the integration.
Speaker Change: Our youth.
Speaker Change: Hi, there.
Speaker Change: Whereas the price of electricity is quite good. So that's really I think we are demonstration and of course, we have some oh solar plants. We have some batteries and also we can benefit with the batteries and deep integration. So you will see the positive impact of these are I would say a flexible asset.
Patrick Pouyann: So you will see the positive impact of these, I would say, flexible assets, I think even more in the third quarter because in the second quarter, I think we closed the deal. We don't have a full quarter yet. And by the way, the heat wave did not come in April but a little later in June and July. So that's clear, but it was clear in the model that when we studied this acquisition, that the summertime was the best part of the year, which by the way is counter-intuitive compared to the wintertime in Europe, you know, is a sort of paradox. Conscious seasonal effect between Texas and Europe from this gas-fired power plant point of view.
Patrick Pouyann: I feel even more in the fourth quarter because of seasonal food too I think we close the deal are you don't have a full quarter, yet and by the way it was each wave that's coming.
Speaker Change: It's a little later.
Patrick Pouyann: Yeah.
Patrick Pouyann: So that's good but it was in the model.
Speaker Change: So D visa acquisition, but a similar thought was the best part of the year, which by the way, it's going to compare to the winter time in Europe as they just sort of come to the console seasonal effects between the takes us in Europe from these guests five footprints point of view.
Speaker Change: Thank you very much.
Speaker Change: The last question is from Jason Gabriel Mann of T. D. Cohen. Please go ahead.
Patrick Pouyann: Thank you very much. Hey, thanks for squeezing me in. I wanted to ask two questions. The first one is about the gearing level.
Speaker Change: Hey, Thanks for squeezing me in I wanted to ask two questions. The first one is on the gearing level. It was stable quarter over quarter and I know you discussed an expectation it's got a decline, but I'm wondering if it stays at this level for a longer.
Speaker Change: Or is there a level that it increases do that impacts the disc.
Unknown Attendee: It was stable quarter over quarter, and I know you discussed an expectation that it's going to decline. But I'm wondering if it stays at this level for longer? Or is there a level that it increases to that impacts the decisions around the distributions that you're paying out, specifically the buy-back pay. And then my other question is, just in the quarter, we saw E&P and OPEX move a few hundred million dollars higher quarter over quarter despite production being relatively flat. I was wondering what drove that, if that's structural or if that's going to reverse next quarter?
Speaker Change: Decisions around the distributions.
Speaker Change: Paying out specifically the buyback pace and then my other question is just on the quarter. We saw E. M. P. Opex move a few hundred million dollars higher quarter over quarter. Despite.
Speaker Change: Despite production being relatively flat.
Unknown Attendee: Okay.
Speaker Change: That's structural or if that should reverse next quarter. Thanks.
Patrick Pouyann: The OPEX of ENP, we are lower than $5 per barrel, and I think, I will come back to you. On the gearing, no, honestly, 10%, 8%, it has no impact on the decision about the buyback. Be clear. So 10% gearing or 8% gearing, it's not making a difference.
Speaker Change: The Opex will be in a few we are lower than $5, a barrel and I think oh, we can come back to you I think oh on the gearing no well, let's see 10%, 8% you have zero impact on the decision on the buyback.
Patrick Pouyann: Be clear.
Patrick Pouyann: So 10%, 8% gearing.
Patrick Pouyann: The 8% is more like, again, we had a working capital buildup, which was quite big. We know there are some fiscal and other matters behind it. So we know that throughout the year, it will come back. So that's why Jean-Pierre told you 8%. Last year, it was 6%, but the 5%, 6% was really exceptional from a very big working capital release, which is very exceptional. The more than 40%, the more than 40% is what is driving it. More than 40% Unknown Speaker Is there a Gehrig level?
Patrick Pouyann: Making a difference at 8%. This morning again, we had to.
Patrick Pouyann: Our working capital build which was quite big we know about some few school and over matches behind it. So we know what the rooms are you always going to come back. So much why don't appear to do 8% last year. It was six but the five 6% was really exceptional.
Speaker Change: Some of the big working capital release, which is very exceptional so for me, but again from the Board's point of view, we don't make a difference for the buyback.
Speaker Change: Point of view 810, 12 weeks of July I think we are.
Speaker Change: The balance sheet is strong enough to maintain that policy.
Speaker Change: Are there anymore.
Speaker Change: 40% to more than 40 percentage is what is driving us.
Speaker Change: More than 40%.
Speaker Change: Got it.
Speaker Change: Nobody's know getting into a gearing level, yeah, no, okay, alright like more than 40%.
Unknown Speaker: Yeah. No. Okay. All right. Unknown Speaker It's more than 40% Payout.
Unknown Speaker: That's the objective. Okay, thanks. Yeah, no, just, I have the answer to your OPEX question more precisely. My team wrote it on paper that, in fact, it's linked to some seasonality. We have some more work programs with seasonal effects in the North Sea, generally in the second quarter. That's the reason why.
Speaker Change: Payout that's the objective.
Speaker Change: Okay. Thanks.
Unknown Speaker: Yeah, No just I have the answer to your Opex question more precisely.
Unknown Speaker: My team's world brought me on paper.
Unknown Speaker: It's linked to some we have some.
Unknown Speaker: I think in the UK and so forth.
Speaker Change: I'm so sorry.
Speaker Change: It's amazing to see.
Speaker Change: That's the reason I've been noticing you guys doing.
Speaker Change: Don't see inflation.
Unknown Speaker: We'll be able to deliver that satisfy build up of our opex.
Speaker Change: Between today and I can't even commit that we will maintain these are big so $5 per barrel until the end of the D cases is deeply.
Unknown Speaker: In the portfolio and into projects in which we invest.
Patrick Pouyann: But no, honestly, there is no inflation, the we'll be able to deliver less than $5 per barrel on OPEX. Between today and I can't even commit that we'll maintain this OPEX rate of $5 per barrel until the end of the decade. It's deeply rooted in the portfolio and in the projects in which we invest. Great, thanks. That was the last question. Back to you for any closing remarks. Well, thank you again
Speaker Change: Great. Thanks.
Speaker Change: This was the last question.
Patrick Pouyann: Back to you for any closing remarks, you may have.
Patrick Pouyann: I think, again, this quarter, I think we have delivered our roadmap for the year. As I insisted, we have made a lot of progress on our strategy and the execution of our growth from 23 to 2028, and we'll be able to demonstrate to you how the portfolio is growing but also is resilient to volatility. Fundamentally, these are the two drivers of the strategy. It's resilient to the volatility of LNG, of inflation, of cost, etc.
Patrick Pouyann: Well. Thank you again and I think again this will be school too I think we have delivered oh roadmap for the year.
Patrick Pouyann: We insisted we have made a lot of progress on though I would say on a strategy and the execution of our growth.
Patrick Pouyann: 23% to 2028, and we love and we'd be able to demonstrate to you of the portfolio is growing with those suites resilience with the volatility and Scott Bruce.
Patrick Pouyann: So fundamentally the two drivers of the strategies, because again to the volatility of LNG of inflation of cost et cetera, and so I guess I wish, but who will or meet you on October <unk> in New York in the morning, So that we could have some good discussions and presentations. So thank you.
Patrick Pouyann: And so I wish that we could all meet you on October 2nd in New York, in the morning, so that we can have some good discussions and presentations. So, thank you. I wish you all a good holiday and am happy to meet you in New York. Ladies and gentlemen, this concludes. Thank you for your participation. You may now go.
Operator: ....
Speaker Change: Sure tore the good old days.
Operator: And happy to meet you in New York.
Operator: Right.
Speaker Change: Ladies and gentlemen.
Speaker Change: The conference call. Thank you for your participation you may now disconnect.
Operator: Yeah.
Operator: [music].