TotalEnergies selected to partner with QatarEnergy in the North Field East mega LNG project – 06/13/2022 at 08:52


(AOF) – Following a tender process for the selection of partners for the North Field East (NFE) liquefied natural gas (LNG) project, TotalEnergies has been awarded a stake of 25% in a new joint venture (JV), alongside the national company QatarEnergy (75%). This JV will hold 25% in the NFE project of 32 million tonnes per year of LNG (Mtpa), equivalent to an 8 Mtpa train.

The NFE project, launched by QatarEnergy in the summer of 2019, is under construction. It aims to increase Qatar’s total LNG export capacity from 77 to approximately 110 Mtpa by 2027, through the construction of 4 trains of 8 Mtpa each. The upstream part of the project will develop the southeast area of ​​the field, via eight platforms, 80 wells and gas pipelines to the onshore plant.

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Key points

– Integrated energy group, 3

th

world oil company, 2nd gas company and world number in solar energy with Sun Power;

– Activity of $141 billion organized into 4 branches: 45% for marketing & services (distribution networks, etc.), 40% in refining & chemicals, 11% in renewables, gas and electricity, then exploration- production ;

– Economic model of transformation in ten years into a multi-energy group, producer of oil & LNG (liquefied natural gas), renewable energies & electricity and hydrogen & biomass;

– Open capital (6.4% held by employees), the 12-member Board of Directors being chaired by Patrick Pouyanné, also Chief Executive Officer;

– Solid balance sheet with $104 billion in equity and $15.8 billion in free cash flow and a debt ratio of 15.3%, well below the 20% target.

Challenges

– 2020-2030 strategy to respond to the challenge of energy transition, more energy, – emissions: 30% growth in energy production, 50% supplied by renewable electricity, 50% by LNG , the share of oil falling from 55 to 30% / change in the distribution of sales -30% of petroleum products, 50% of gas, 15% of electricity and 5% of biomass and hydrogen / discipline in investments – $13 to $15 billion per year over 2022-2025, of which 50% allocated to new energies – renewables and electricity – and 50% to natural gas;

– Innovation strategy led by One Tech, endowed with 850 M$ for 18 R&D centers: 3 hubs: industrial, development and support / 5 programs: production, CO2 and sustainability, operational efficiency of upstream, downstream & polymers, fuel and lubricants / recycling and biofuels / a digital factory to generate $1.5 billion in savings by 2025;

– Environmental strategy: by 2050, carbon neutrality for group operations, neutrality of products used by customers in Europe, reduction of 60% or more in the carbon intensity of products used by customers outside Europe;

– 4 areas: growth in the gas value chains (natural, biogas and hydrogen), in low-carbon electricity (annual envelope of $1.5 to $2 billion), in low breakeven oil and in biofuels and, finally, in activities contributing to carbon neutrality (natural wells, forests, etc.) / solar and renewables: production capacity of 25 Gw by 2025 / carbon fund endowed with $400 million to be invested by 2025;

– In renewables & electricity, capacity portfolio of 35 GW by 2025, including +20 GW secured by long-term purchase contracts;

– Industrial excellence in oil production with a breakeven point of -20 $/b.

Challenges

– Sensitivity to the price of a barrel of oil and to the dollar, an increase of $10 per barrel having an impact on operating profit of $2.7 billion; a decline of $10 affecting it by $100 million;

– Exposure to geopolitical risks in Africa (30% of the group’s production);

– Impact of the Russia-Ukraine war: stoppage of capital contributions to new projects and the Arctic project, stoppage of oil and diesel purchases, maintenance of stakes in Novatek (19.4%), Yamal (20%), Arctic LNG (10%) and Terneftegaz (49%), selling them would enrich Russian investors and maintain Yamal’s LNG supply;

– Prospects for 2022 of hydrocarbon production up 2% with high selling prices, renewable and electricity capacities of more than 16 GW thanks to dedicated investments of $3.5 billion (¼ of the investments total), a downstream contribution (petrochemicals, biofuels and electric mobility) of €6 billion to free cash flow.

Pressure on the oil majors to achieve carbon neutrality by 2050

About twenty institutional investors, such as Allianz or the Caisse des dépôts, have defined a climate reporting standard to assess the ability of the oil and gas majors to achieve carbon neutrality objectives by 2050. These institutional investors are members of the Groupe d Investors on Climate Change (IIGCC). Companies must commit and report on their performance on a range of indicators, such as capital expenditure or governance. The implementation of these requirements will be tested with several oil and gas companies such as BP, Eni, Repsol, Shell or Total to then apply to other companies in the sector.



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