Total Profits Surge on Prices, Ramp-Ups, Maersk (Update)
adds new 5th para, outlining remarks from spokesperson on absence of definitive decision re South Pars.
Total has agreed to buy two gas-fired combined-cycle power plants (CCGTs) in France to boost its European power generation presence and has announced a strong increase in earnings.
Its adjusted net income, reported July 26, increased by 44% year on year to $3.6bn in 2Q 2018; its net profit was 83% higher at $3.7bn. Higher prices and production were key factors.
Production increased by 8.7% to 2.7mn barrels of oil equivalent/day, thanks to the contribution from Maersk Oil, and the ramp up of Yamal LNG in Russia and Edradour-Glenlivet (UK), plus Angolan and US oil projects Moho Nord and Fort Hills. It also completed in July the acquisition of Engie’s upstream LNG business and announced its 10% equity entry into Novatek-led Arctic LNG 2 venture.
But there was no indication in its official results statement of whether it is to exit the giant South Pars phase 11 gas project in Iran – something that looks near-certain given the lack of a US waiver.
A Total spokesperson told NGW later: "There are no changes since May. November 4 is still our deadline." In its statement issued May 16, Total said it would not be in a position to continue the SP11 project and would have to unwind all related operations before November 4 2018, unless Total were granted a specific project waiver by the US authorities with the support of French and European authorities.
The 2Q 2018 production of 2.717mn boe/d split out as 6.18bn ft³/d gas (down 5% year on year) and 1.582mn boe/d liquids (up 22%), so a gas to liquids split of 42% to 58%. Refining income fell 5% but oil marketing was up 10%. Average realised 2Q2018 upstream prices were $69.5/b for liquids (+54%) and $4.49/mn Btu (+14%).
Pre-tax adjusted income from E&P was up 98% at $2.69bn, gas and power was up 103% at $193mn. Total also noted it agreed to sell its 9.99% interest in the Dunkirk LNG terminal.
Agreement to buy two CCGTs
It also announced July 26 its signature of an agreement with KKR-Energas to acquire the two CCGTs in northern and eastern France, which have a total combined generation capacity of 825 MW. It did not disclose the purchase price.
With the addition of two gas plants from KKR-Energas, and a growing portfolio of renewable power, Total will have the capacity to generate over one-third of the cumulated consumption of its industrial and retail customers, said Total’s gas power and renewables chief Philippe Sauquet.
He noted that, through its 73% stake acquired in French energy marketer Direct Energie, Total already has two CCGTs each of 400 MW, one in France and the other in Belgium, with a third (in Brittany, northwest France) planned. Total is targeting a 15% share of the industrial energy market in France and Belgium by 2023.