LNG | Daily GPI | Earnings | International | NGI All News Access | NGI The Weekly Gas Market Report
TotalEnergies Says Exiting Russia Possible Amid Solid Growth in LNG Operations
TotalEnergies SE said Thursday it hasn’t ruled out exiting Russia entirely, a move management said would not disrupt the significant growth seen in the firm’s liquefied natural gas (LNG) operations.
The Paris-based supermajor again condemned Russia’s invasion of Ukraine during its first quarter earnings call. Management announced after the incursion that it would provide no more capital to projects in the country and began gradually suspending activity. For now, the company has no plans to make a full exit, but CEO Patrick Pouyanne said it is “a possible scenario.”
In the meantime, the company intends to continue honoring its contracts with Russia’s PAO Novatek and Yamal LNG, given the large sums of money involved. TotalEnergies also announced that it would book a $4.1 billion impairment related to the Arctic LNG 2 project in Russia’s Far North, which is hamstrung by sanctions against the country. Management said it was difficult to see how the project could be completed given the restrictions, but said volumes could be made up elsewhere if necessary.
[Want to know how global LNG demand impacts North American fundamentals? To find out, subscribe to LNG Insight.]
Increasing global demand for natural gas in the first quarter, particularly in Europe where storage inventories were low and buyers have stepped up efforts to displace Russian supplies, saw LNG sales surge. Sales jumped 34% year/year to 13.3 million tons (Mt).
European Regas Saturation
Management said the company “saturated its European regasification capacity thanks to record spot LNG purchases” of 4.7 Mt in the first quarter. It earned an average LNG price of $13.60/MMBtu during the period, more than double what it earned at the same time last year.
Realizations were up across the board as commodity prices soared during the first quarter. Average Brent crude prices were up 67% year/year to $102.20/bbl, while average global gas prices were more than three times higher than in the year-ago period at $12.27/MMBtu.
The company said it expects its average LNG selling price to remain above $14/MMBtu this year, given strong demand. The need for natural gas in Europe has also prompted the company to make investments in short-term natural gas production from the North Sea.
Oil and natural gas production dipped during the first quarter by 1% year/year to 2.8 million boe/d. The company said natural field declines, the end of its operating license in a Qatari liquefaction train and the sale of its Utica Shale assets in the United States led to the decline.
However, the integrated gas, renewables and power segment, which includes LNG, has been the main driver of its results in recent years.
TotalEnergies’ gross installed renewable power generation capacity again grew to 10.7 GW at the end of the first quarter, up by 400 MW sequentially. Management said it is considering expanding into the U.S. onshore wind sector as it continues to bolster its alternative energy assets.
The company also plans to add 4 GW to its renewable energy portfolio by acquiring Texas-based Core Solar LLC. Core has solar and energy storage projects across the United States. Terms of the transaction were not disclosed.
Despite the impairment related to Arctic 2 LNG, Total reported first quarter net income of $4.9 billion ($1.87/share), compared with net profits of $3.3 billion ($1.24) in the year-ago period.
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 | ISSN © 1532-1266 |