TotalEnergies SE has insisted it is committed to cutting emissions while planning to raise oil and gas production by as much as three percent over the next five years.
“The Oil & Gas business is expected to generate more than $3 billion of additional underlying cash flow in 2028 compared to 2023 at constant prices”, the French energy giant noted in an outlook press release posted on its website Wednesday.
TotalEnergies said it targets to raise production by two to three percent in the next five years, most of which would be liquefied natural gas (LNG), considered to have lower emissions than other fossil fuels. “The Company will notably develop a top-tier pipeline of LNG projects (Qatar North Field Expansion, Papua LNG, ECA LNG and Rio Grande in US, Mozambique LNG) while leveraging its competitive advantage with leading positions in Europe regasification and in US exports”, it said.
“TotalEnergies will also concentrate efforts to develop its portfolio of high-return oil projects (Brazil, Gulf of Mexico, Iraq, Uganda) recently enriched with exploration successes in Suriname and Namibia”.
While growing LNG as part of its energy transition strategy, TotalEnergies plans increasing investment in the power sector amid the eventual shift away from oil and gas to ensure profitability. “TotalEnergies is replicating its integrated Oil & Gas business model into electricity to achieve a ROACE [return on average capital employed] of ~12 percent, equivalent to upstream Oil & Gas ROACE at 60 $/b [dollars per barrel], above the ‘utility’ model traditional returns”, the news release said. The company plans to raise its electricity generation to over 100 terawatt hours by 2030 with investments of $4 billion a year.
“The Company is building a world class cost-competitive portfolio combining renewable (solar, onshore wind, offshore wind) and flexible assets (CCGT, storage) to deliver clean firm power to its customers”, it said.
TotalEnergies had 19 GW in installed capacity for renewable power generation as of July, according to a company press release September 20 announcing $300 million in equity investment to form an Indian joint venture with Adani Green Energy Ltd. targeting a wind and solar electricity portfolio of 1,050 megawatts of alternating current. TotalEnergies has set a target of hitting 35 GW in gross renewable power generation capacity by 2025 and 100 GW by 2030 toward net zero emissions by 2050.
In reassurance to investors, TotalEnergies said in the outlook report it “is leveraging its purchasing power to optimize its investment costs and industrialize its renewable assets through digital to lower operating costs”.
“By utilizing its fortress balance sheet, TotalEnergies will capture additional value from price volatility through merchant exposure”.
“Thanks to refocusing the oil and gas portfolio on assets and projects with low breakeven and low greenhouse gas emissions, and to the diversification into electricity, notably renewable, through an integrated strategy from production to customer, the Company is in a very favorable position to take advantage of changing energy markets and prices”, it said in an earlier media release announcing its board had reviewed its strategic outlook at an annual strategic gathering September 20 and 21.
“TotalEnergies is therefore pursuing its ambition to become a major player in the energy transition, committed to carbon neutrality in 2050, together with society”, TotalEnergies added. “As a result, the lifecycle carbon intensity of energy products sold to its customers has been reduced by 12 percent in 2022 compared with 2015, with the ambition of reducing it by 25 percent by 2030, and the Company is committed to reducing Scope 1+2 emissions from its oil & gas operations by 40 percent by 2030 and by 80 percent for methane”.
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