United States: TotalEnergies Signs Agreements with U.S. Department of Interior to End its U.S. Offshore Wind Projects

TotalEnergies will relinquish two 2022 U.S. offshore wind leases (OCS-A 0545 Carolina Long Bay and OCS-A 0538 New York Bight), renouncing U.S. offshore wind development in exchange for reimbursement of lease fees which it will reinvest equally into U.S. gas & power production and exports, including financing the 29 Mt Rio Grande LNG project. The company also signed an LOI to offtake 2 Mtpa of LNG for 20 years with Glenfarne (Alaska LNG), subject to FID; TotalEnergies says U.S. offshore wind is materially costlier than Europe and risks consumer affordability. TotalEnergies has invested nearly $12bn in the U.S. since 2022, exported 19 Mt of U.S. LNG in 2025 and will shift capital toward LNG and gas — a strategic pivot that is positive for its gas/export profile and for U.S. LNG supply, while negative for U.S. offshore wind development prospects.

Analysis

A large integrated energy player shifting U.S. growth capital out of high-CAPEX offshore wind and toward gas/LNG materially shortens the path to free cash flow and reduces project execution risk. Expect near-term funding flows into existing midstream and liquefaction projects to tighten capacity markets and increase the likelihood of FIDs on brownfield expansions within 6–24 months, which would compress some merchant risk and lift EBITDA visibility.

This repositioning raises the cost-of-capital and political risk for U.S. offshore wind developers and their equipment chain: a 200–400bp effective WACC increase for greenfield projects would raise LCOE enough to push many merchant/merchant-adjacent projects out of acceptable IRR bands, creating 12–36 month revenue shortfalls for turbine OEMs and fabrication yards. Conversely, U.S. pipeline and terminal providers stand to capture disproportionate EBITDA growth as incremental gas flows to export and data-center corridors re-route domestic baseload economics.

Macro second-order: greater U.S. LNG supply ambition increases cross-Atlantic gas arbitrage pressure and could shave north-of-seasonal European gas premiums within 12–18 months, but it also elevates trade/political friction that can produce tariff or approval shocks. Reversal catalysts include rapid declines in capex for floating foundations and turbines, or aggressive federal/state subsidy interventions that restore project IRRs; both would re-open offshore wind investment and unwind part of the repricing.

Key Decisions for Investors

• Buy TTE (12-month target): initiate a 6–12 month long position on TTE to capture re-rating from higher-margin LNG & gas cashflows. Risk/reward: upside ~20–30% if brownfield FIDs materialize; downside ~15% if global gas prices collapse or regulatory headwinds escalate. Size: core conviction (3–5% NAV).
• Long LNG exporters (LNG — Cheniere) via 9–18 month call spread: buy the 12–15 month call spread to play higher utilisation and incremental FIDs without full delta exposure. Risk/reward: asymmetric payoff (2:1) if utilisation rises; premium loss if European prices fall. Use 60–90% of planned option allocation as hedge to TTE long.
• Long U.S. midstream (WMB or KMI, 12–24 months): buy pipelines with clear links to Gulf Coast terminals to capture tariff-based EBITDA growth from incremental feedgas volumes. Risk/reward: steady yield (4–6%) plus 10–20% upside if demand ramps; downside 10% on policy/permit bottlenecks.
• Short selective offshore-exposed OEM/yard exposure (pair trade): enter a small, tactical short against names with concentrated U.S. offshore order books (e.g., large turbine/installation subsidiaries) while hedging with industrials — horizon 6–18 months. Risk/reward: trade-size small (1–2% NAV) due to execution and macro cyclicality risks.
• Catalyst monitor & stop rules: set alerts for (1) announcement of FIDs or offtake contracts within 6–24 months, (2) federal/state subsidy changes for offshore wind, and (3) 15% adverse move in gas benchmark prices — trim/stop positions accordingly.