Total to Double LNG Business by 2030
France's Total plans to double LNG sales over the next decade, its CEO Patrick Pouyanne said on September 30, framing the move as part of its transition towards net-zero emissions by 2050.
Sales will rise from 35mn metric tons/year at present to 50mn mt/yr by 2025 and to 70mn mt/yr by 2030, Pouyanne said in a corporate strategy update. Cashflow from its integrated LNG business is expected to grow by 40% to over $4bn in 2025, assuming a $50/barrel oil price.
There is a glut in global LNG supply, but Total expects the market to tighten by as early as 2023 in response to project delays. The major has shares in three liquefaction projects due on stream in 2023-24 where final investment decisions have been taken: the Novatek-operated Arctic LNG-2, Mozambique LNG and a seventh train at Nigeria LNG.
"We are in a good position to benefit from the evolution of the LNG market," Pouyanne said, noting that Total would not need acquisitions to support its growth plans. It had been considering an investment in Tellurian's planned US Driftwood LNG plant, but Tellurian has not yet taken final investment decision.
"We will not spend a lot on M&A in the next 10 years because we have what we need in our hands," he said, pointing to additional resources in Mozambique, a possible expansion at the Cameron LNG terminal in the US and its Papua LNG project in Papua New Guinea.
Total also made a new commitment to reduce the Scope 3 emissions of its European customers by 30% by 2030, and lower the Scope 3 emissions of its customers elsewhere to under the level in 2015. In May it pledged to bring its Scope 1, 2 and 3 emissions to net zero in Europe by 2050, while targeting a 60% cut in emissions for its operations in the rest of the world.
"We want to transform Total to meet a dual challenge – more energy and less carbon," Pouyanne said. "The time is right to accelerate growth in low carbon. The real risk is not participating in the transition and being left behind."
The company plans to expand its overall energy production from 3 to 4mn barrels of oil equivalent/day, supported by growth in LNG and mainly renewable electricity. Investments in renewables and general power will climb from $2bn to $3bn annually, coming to represent over 20% of its overall capital expenditure.
While oil and gas production will continue, helping to fund these investments, Total will seek to decarbonise its gas by developing biogas and hydrogen businesses. Oil product sales will also be reduced and partly replaced with biofuels, Pouyanne said. The company will not build any conventional refineries and will scale back its refining capacity in Europe to better match demand.
Total has predicted that oil demand will peak at 2030, while consumption of gas will continue rising until 2040 at the least. It will therefore focus on low-cost oil projects "resilient" to low prices in the Middle East and North Africa, Pouyanne said.
"Oil and gas is the engine of the energy transition. Oil and gas will continue to receive a major part of [investment] because we need to deliver cash flow from oil and gas to fund the growth we want to deliver in renewables and electricity," he said.
Capital expenditure will be limited to a "cautious" $12bn in 2021, down from $14bn this year, but will rise to $13-16bn/yr between 2022 and 2025.