Total has vowed to focus on liquefied natural gas and renewable power generation in a push towards cleaner energy as it sank to a full-year loss last year of more than $7 billion, but the French supermajor still pledged to grow oil and gas output in the near-term to underpin the transition.
Total — which in contrast to peers BP and Shell managed to remain in profit in the fourth quarter despite a drop in production — also announced plans to change its name to TotalEnergies to reflect its planned transformation into what chief executive Patrick Pouyanne called a “broad energy company”.
The Paris-based company is aiming to grow the total amount of energy it sells by about 30% from the current level of about 3 million barrels of oil equivalent per day to about 4 million boepd by 2030.
But the proportion that comes from oil products is due to fall from 55% currently to 35% by the start of the next decade, with a growing role for gas and renewable power generation.
However, in the short-term, Total is maintaining it will reach an upstream production target of 3.3 million boepd to 3.4 million boepd by 2025 from about 3 million boepd in 2019.
“In the context of achieving our climate ambitions while creating value, our strategy for profitable growth is focused on those two pillars — LNG and renewable generation,” Pouyanne told analysts during a presentation to discuss its financial results.
But he stressed that without revenues from oil and gas there will be “no way to make the transition”.
About 20% of Total’s planned 2021 capital expenditure of $12 billion is earmarked for low-carbon activity.
The company is, meanwhile, on track meet a 2025 renewables capacity target of 35 gigawatts.
However, Pouyanne ruled out an initial public offering (IPO) of its renewable business, saying he wanted it to remain within the current company structure.
“No, [an IPO] is not on the table today at all,” he said. “We changed our name to TotalEnergies not to suddenly IPO the ‘energies’.
“I want to keep the energies within the company.”
Pouyanne said that, where renewables are concerned, “we think it’s a question of patience”, adding that the bigger presence it comes to have in the company’s portfolio the better “it will be understood and valued”.
LNG sales are expected to surge by 10% this year over 2020, notably due to a ramp-up at the Cameron LNG project in the US.
Total has been facing security problems at the $23 billion Mozambique LNG scheme — one of the three major LNG schemes it is a partner in that are due on stream by the end of 2024.
Pouyanne said he is hopeful of work resuming by the end of the first quarter if Mozambique’s security forces can regain control at the Afungi construction site in the restive Cabo Delgado province after workers were evacuated this month after Islamist insurgent attacks within a few kilometres of the massive complex.
“That’s the objective we set to ourselves jointly with the government,” he said.
“What is very important is that when remobilise people we can really engage in sustainable work there.
“We don’t want to re-engage and then stop again. That would be very detrimental for the trust of all the partners in this project.”
Total also has interests the Nigeria LNG Train 7 scheme and the Novatek-operated Arctic LNG 2 project, both of which are also due to begin production within the next three years.
Analysts at Berenberg said Total has made a strong start to 2021 in terms of meeting its targets for renewable capacity growth, securing more than 10GW of future projects already this year though the Adani joint venture and acquisitions in the US.
Total's posted a full-year loss of $7.34 billion as it ran up depreciation, depletion and impairment charges of $22.26 billion during the year. The consolidated net profit in 2019 was $11.44 billion.
For the fourth quarter last year, Total posted consolidated net income of $903 million, down from $2.65 billion in the final period of 2019.
Revenues from sales were $32.35 billion in the final period of 2020 as against $43.39 billion a year earlier.
Production for the year averaged 2.87 million boepd, down 5% from the 3.01 million boepd in 2019.
Some 5% of this drop was due to compliance with quotes in Opec+ — a grouping of Opec and other major producers, such as Russia, that agreed to curtail output in an effort to buoy oil prices.