“We are set to not just navigate the energy transition, but to thrive in the transition,” was the main message of Technip Energies chief executive-elect Arnaud Pieton to analysts during a four-hour capital markets event on 28 January.
Describing itself as an energy and technology company, Technip Energies will be spun out of TechnipFMC — its shares are due to start trading on the Euronext market on 16 February — with about 15,000 employees and headquarters in Paris.
While liquefied natural gas projects will remain a core revenue and profit driver for the asset-light company in the short and medium term, it predicts major growth in the years and decades ahead in the hydrogen, sustainable chemistry, carbon-free energy solutions and decarbonisation markets.
As of June last year, its backlog stood at €13.2 billion ($15.8 billion), but has been augmented by a huge $13 billion dollar contract that a partnership of Japan's Chiyoda and Technip Energies secured this week to construct four LNG trains, each with a capacity of 8 million tonnes per annum, for Qatar Petroleum's North Field Expansion project.
Technip Energies is expected to command a BBB investment rating, with initial revenues of around €6.1 billion.
The company’s core message is that it aims to become an important player in the energy transition by making the most of its access — direct or indirect — to existing, emerging and new process technologies, backed up by its experience in project delivery.
“We are completely agnostic to feedstock,” said Pieton, highlighting oil, gas, hydrogen, carbon dioxide, biomass or, in future, electrons. “Our focus is on the process of the molecule’s transformation and the integration of technologies [to meet project objectives].”
Prior to the Qatar contract award, Pieton identified more than €100 billion of annual addressable market opportunities for Technip Energies — more than 70% in its core LNG, downstream and offshore markets, which in the medium term are expected to have compound annual growth rates (CAGR) of 1% to 5%.
In contrast, the hydrogen, sustainable chemistry and CO2 management sector, plus the broader carbon-free market (including green hydrogen) each have annual opportunities in excess of €15 billion, with both predicted to generate CAGRs of 5% to 15%.
Bruno Vibert, chief financial officer-elect, explained that for the new company, “growth in itself is not a strategic objective".
"We are targeting profitable work with an acceptable risk profile and the right cash flow profile,” he said.
Vibert stressed that for Technip Energies, “there’s no such thing as a must-win project — we need to be able to say no to any opportunities if the (right) conditions are not there.”
Vibert sees an “exponential acceleration” of opportunities in the energy transition space, beyond LNG.
“For 2021, we see opportunities with contract values over eight times the levels we were observing in 2018-2019 and, based on conversations with customers, we feel it is only the beginning,” he said.
Stan Knez, head of process technology, highlighted how growth in hydrogen demand will be a key driver for the company, with grey hydrogen dominating the estimated €90 billion market through to about 2030, after which blue and green sources will start to dominate.
“In the long term, hydrogen has the potential to be as important in the energy mix as is natural gas today," he said.
"We see a very bright future where we can leverage our leading market position.”
Knez described how, when a client initially approaches Technip about hydrogen possibilities, “they don’t care about colours, they want to understand optionality on hydrogen,” factoring in costs, supply constraints and facility size.
He believes Technip Energies is positioned well for the upcoming “wave of blue hydrogen” projects because of its significant experience with both grey hydrogen plants and retrofitting of CO2 removal systems.
He said up to 20 CO2 removal units need to be retrofitted in the medium term on existing hydrogen plants plus some opportunities for new facilities, highlighting the company’s strategic alliance with Shell Cansolv on CO2 capture.
The company is currently working on the Acorn carbon capture project in Scotland and, together with Kanfa, has also completed engineering studies on a full-scale, modular CO2 capture system that could handle about 400,000 tonnes of CO2. In addition, said Charles Cessot, head of strategy, Technip Energies' Offshore C-Hub concept is being evaluated by a North Sea operator.
This integrated offering captures and then liquefies CO2 onshore before exporting it by dedicated tankers to an offshore CO2 disposal hub — essentially a floating storage vessel with CO2 injection equipment — for permanent sequestration underground.
The C-Hub is designed to be “disconnectable” so the offshore vessel can be moved to another CO2 sequestration site.
As for the nascent green hydrogen sector, Knez said: “Our ambition is to act as a leading EPC services provider for green hydrogen projects (which) involve electrolysis and storage. Clients are coming to us and they want us to develop, engineer and construct a green hydrogen plant.”
The company’s two sector partners are France’s McPhy and US-based Chart Industries.
However, two factors are critical for this market to develop, he explained: government policy “where the momentum is strong,” and electrolytic costs, “which are expected to fall rapidly in the coming years”.
Cessot believes hydrogen “will be required in enormous quantities (and) offshore will become the natural home for hydrogen”, both as a source and for storage.