TotalEnergies - Q1 2024

Transcript

Operator (participant)

Ladies and gentlemen, welcome to TotalEnergies first quarter 2024 results conference call. I now hand you over to Mr. Patrick Pouyanné, Chairman and CEO, and Jean-Pierre Sbraire, CFO, who will lead you through this call. Sir, please go ahead.

Patrick Pouyanné (Chairman and CEO)

Good morning and good afternoon, everyone, for this quarterly results session. I'm happy to welcome you together with Jean-Pierre, who will go through all the details of these good or strong results of in first quarter 2024. But before to do it, I would like to highlight the way we have implemented our two-pillar strategy during this quarter. First, to celebrate these, to recognize that the company celebrated its 100-year anniversary on March 28. We have been celebrating this event all through the company in one of 20 countries where we are present. We have our company's ancestors were really pioneers when they discovered oil in Iraq in 1927.

Of course, it was the opportunity, this anniversary, to pay tribute to the hundreds of thousands of pioneers who have followed them, and who are, in fact, the past and the present employees of the company. We have decided, by the way, that the signature of this anniversary would be pioneers for 100 years. But today, I would say it's with the same pioneer spirit that we have decided in 2020 to embark in our journey, in the energy transition, and moving to TotalEnergies into an integrated multi-energy company with a clear and simple strategy anchored on two pillars. First, on oil and gas, and LNG, with the objective to continue producing hydrocarbons in a responsible way, producing and growing hydrocarbons in a responsible way in order to answer the growing demand.

Second, investing and developing integrated power, energy for future, with objective to become net cash positive by 2028. So this first quarter 2024 is really 2024 is about advancing this strategy. I would say we are off to a great start on both pillars. We have achieved several milestones during this quarter, that I would like to underline. First, on the oil upstream, we successfully started up some operated operations in Nigeria with Akpo West and Tyra development in Denmark. Both of which are additive to our overall corporate cash margins, as well as Mero-2 in Brazil, which started at the beginning of the year. We continue to have success on the exploration appraisal front.

We have recently finished a positive appraisal of the Venus oil discovery in Namibia, and we are now working towards FID, targeting in 2025 for the FID. We have also captured in these prolific Orange Basins, some new licenses of high interest on the South African side. We are making also, it's important, I told you, it's a matter of execution, our growth towards 2028. So we are also making good progress on some FIDs, which were planned for 2024. We will sanction this month of May, the Kaminho project in Angola, 80,000 barrels per day, operated by us with 40%. And, we also plan in May to first to place the LLI orders for our Suriname projects, and we confirm that we envisage to take the FID before year-end 2024 in Suriname.

Finally, I would like also to comment that we've done an interesting deal recently in Congo to increase our interest into a giant deepwater field, Moho, and divested at the same time some very mature assets. That's for oil. On the energy side, quite a big activity as well, during the quarter. First, we begin to benefit from a low Henry Hub trading below $2 per million BTU to see some opportunities to integrate, to further integrate our U.S. LNG value chain upstream with the first acquisitions from Lewis Energy Group of substantial gas assets in the Eagle Ford, operated by a strong operator, EOG.

Earlier this week, we announced the FID of the Marsa LNG project in Oman, which is really setting a new low carbon intensity standard for the next generation of LNG plants, three kilogram of CO2 per barrel, fully electrified, and the electricity coming from renewable sources. And it's a very good example of TotalEnergies deploying its integrated multi-energy model in a country. Thanks to that strategy, we reach a new scale in Oman, combining LNG and renewables, our two pillars. So it's a good example, again, of what we can achieve by moving on the two pillars. On LNG, I would also insist that we continue to work with Asian buyers, which have some appetite for medium and long-term contracts. And I would say oil-linked long-term contracts, which is important, of course.

In particular, for example, this quarter, we signed a contract with Sembcorp in Singapore, beginning 2027, just perfect when we have more production. And to cover it, I would say, or to hedge it, with some oil-linked contracts, that's the target. And there will be more to come, as our teams are quite active on the Asian fronts, China, Japan, Korea. So we are working, of course, it's important. We have a strong LNG position, and we know we have some perspective to sign some oil-linked LNG contracts as part of our strategy... And lastly, I would also mention on the integrated gas part that we have, we are acquiring the full of SapuraOMV in Malaysia. This is a gas business related to netback of energy pricing, with quite a good potential to increase.

In fact, there is quite a, it's a prolific, Sarawak is a prolific gas region with some potential to, to grow in the future. That's why we are interested to acquire these assets. Then moving to the second pillar, integrated power. We have, again, fourth time, fourth quarter in a row, an increasing adjusted net result income, operating income, and Jean-Pierre will come back on it. As you've noticed, we have implemented, we are advanced the implementation of the integrated strategy in Texas on the ERCOT, with acquisition, closing the acquisition of 1.5 GW CCGTs, and but good, the demand is growing in Texas, data centers, AI, we are right on the good market there, and also in Germany, which is another key market for us. We've we closed the Kyon Energy acquisition, which is a, a battery storage, storage developer.

So you will see through the results that or the relevance of our strategy continues to be demonstrated quarter after quarter, as a proof of concept that our differentiating model works, delivering strong results, which are fundamentals that allow us to grow our shareholder distribution in a sustainable way. We confirm again that we increased the interim dividend by 7% compared to last year, which I think will be appreciated by all our shareholders. By the way, it's also this proof of concept starting to pay off, as we can observe the positive evolution of the share price recently, which is, on our view, in the view of the board, a signal that the strategy is being increasingly recognized by the market as a good one or the right one, and also evidenced by our leading total shareholder return.

Finally, this value is not only shared with our shareholders, but also with the pioneers of TotalEnergies, and it's important, we're promoting employee shareholding plans. We are now, in Europe, the number one company in terms of amount of capital owned by employees, at more than EUR 11 billion, and a special grant of 100 shares to each of our 100,000 employees has been decided by the board to celebrate our 100-year anniversary. So I don't know if we will have $100 billion of results, Jean-Pierre, but not yet. So then, with that, I'll turn it over to Jean-Pierre, that was a transition, to go through the detailed financials this first quarter.

Jean-Pierre Sbraire (CFO)

Yeah, thank you. Good morning, good afternoon, everyone. As Patrick mentioned, our consistent strategy continued to deliver strong results, and we are well positioned to deliver on our 2024 objectives of more energy, less emissions, and growing cash flow. Brent prices were flat quarter-to-quarter, down only 1% to $83 per barrel, and refining margins were strong, +36% quarter-to-quarter. European gas prices declined by 35%, reflecting a mild winter and high storage levels. In this context, TotalEnergies reported first quarter 2024 adjusted net income of $5.1 billion, earnings down 2% sequentially, and cash flow from operations, excluding working cap, of $8.2 billion.

Profitability remains strong, with return on average capital employed of 16.5%, and we maintain discipline, confirming net investment guidance of $17 billion-$18 billion for 2024. Importantly, we continue to extend our track record of attractive shareholder distribution with $2 billion of buybacks executing during the first quarter, and nearly a 7% increase year-on-year of the first interim dividend for 2024, which is now at 20% compared to pre-COVID level. Moving now to the business segments results, and starting with hydrocarbons. Production was 2.46 million barrels of oil equivalent per day in the first quarter of 2024, stable quarter-to-quarter, and up 1.2%, excluding Canada.

Production benefited from oil startups at Mero-2 in deep offshore Brazil and Akpo West in Nigeria, as well as 6% growth quarter-to-quarter in LNG production, which helped offset the Canadian oil sands asset disposal that closed in the first quarter. Looking now forwards. Production for Q2 2024 is expected to be between 2.4 and 2.45 million barrels of oil equivalent per day, and reflects planned maintenance that is partially compensated by ramp-ups of Mero-2 in Brazil and Tyra in Denmark. We reiterate full year 2024 production guidance of 2.4-2.5 million barrels of oil equivalent per day, which is 2% growth year-on-year, excluding Canada. Exploration and production reported adjusted net operating income of $2.6 billion and cash flow of $4.5 billion.

Also, we continue our leadership as a low-cost producer, with first quarter 2024 upstream production cost at $4.6 per barrel. Moving now to integrated LNG. Hydrocarbons production for LNG was strong during the first quarter, up 6% quarter-over-quarter, thanks to higher availability, mainly at Curtis in Australia and QatarEnergy LNG 2 in Qatar, as well as increased supply of LNG in Nigeria. However, first quarter LNG sales decreased by 9% quarter-over-quarter, primarily due to lower demand in Europe, given a mild winter and high inventories. Volumes also reflected partial downtime in Freeport LNG in the U.S. this quarter. Integrated LNG adjusted net operating income was $1.2 billion during the quarter, reflecting lower LNG prices sales, but also low volatility in the markets.

Cash flow totaled $1.3 billion, impacted by the timing of dividend payments from some of our equity affiliates. Given the evolution of oil and gas prices in recent months and the lag effect on price formulas, we anticipate that TotalEnergies average LNG selling price should be between $9 and $10 per million BTU during the second quarter of 2024. Now moving on to our integrated power business segments. We are pleased to report that this business continues its profitable growth trajectory, with adjusted net operating income growing sequentially for the fourth quarter in a row as activity grows. Adjusted net operating income grew 16% quarter-over-quarter, to more than $600 million, and was supported by production growth in both renewable and flexible generation.

Flexible generation, as Mr. Patrick mentioned, now includes the 1.5-gigawatt CCGT acquisition in Texas, which closed during the quarter and further enhanced our integrated position to provide clean, firm power in the attractive and growing ERCOT markets. Cash flow from integrated power was $692 million for the first quarter, on track to achieve our target of $2.5-3 billion of cash flow for the full year 2024. Finally, return on average capital employed for the 12 months ending end of March 2024, reached 10%. Moving to downstream. The refinery utilization rate for the first quarter of 2024 was stable at close to 80%, with the restart of SATORP in Saudi Arabia following a planned turnaround during the first quarter of 2023, offsetting the impact of an unplanned shutdown at the Donges refinery in France.

R&C contributed $960 million adjusted net operating income in the first quarter of 2024, up 52% quarter-over-quarter, due to higher refining margins. R&C cash flow from operations, excluding working capital evolutions of $1.3 billion, also increased double digits quarter-over-quarter, although it was impacted by the timing effect in cash dividend payments from equity affiliates. Looking forward now, we anticipate that the Q2 2024 refining utilization rate will increase to around 85% as the Donges refinery progressively restarts, and because there are no major turnarounds planned.

On marketing and services, this quarter demonstrates the efficiency of the implementation of our value over volume selective strategy, with cash flow from operations increasing by 5% year-on-year to $480 million in the first quarter of 2024, despite a decrease in our sales of petroleum products. At the company level, we reported a working capital of $6 billion during the first quarter of 2024, and the main components behind this figure are, first, the reversal of the exceptional working capital release of $2 billion in the first quarter of 2023. We highlighted during our last earnings call.

Secondly, $1.5 billion relating to the effects of higher oil and petroleum product price on inventories at the end of the first quarter of 2024 compared to end of 2023, and $2 billion of seasonal effects, $1 billion related to the seasonal effect on tax liability, and an additional $1 billion related to the seasonal effect on gas and power distribution activities. Gearing at the company level increased to around 10% at the end of the first quarter, compared to 5% at the end of last year. And the just described $6 billion working capital led to a 4% increase in gearing, and the decision we made, given the interest rate environment, to exercise the call end of March on the EUR 1.5 billion hybrid bonds, resulted in an additional 1% increase in gearing.

Therefore, we expect gearing to structurally range around 7%-8%, as 2%-3% of the current gearing is related to seasonality impact on working capital at the end of the quarter. Our consistent and balanced strategy is paying off, as Patrick mentioned, and the first quarter has positioned us for continued success in 2024. In this context, the board of directors of TotalEnergies decided the distribution of the first interim dividend of EUR 0.79 per share for the fiscal year of 2024, representing an increase of close to 7% compared to 2023, and authorized an additional $2 billion of share buybacks for the second quarter 2024. And with that, I'll turn it over to Q&A.

Thank you.

Operator (participant)

... This is the conference operator. We will now begin the question and answer session. As a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Please kindly mute any audio sources while asking a question. If you wish to cancel your request, please press star two. Once again, please press star one if you wish to ask a question. The first question is from Chris, Christopher Kuplent with Bank of America. Please go ahead.

Christopher Kuplent (Head of European Energy Equity Research)

On working capital and your net debt outlook. I think that removes already a few questions, but maybe a broader one. I wanted to just double check with you, Patrick, the political temperature and your assessment as we go into not just AGM season, but the idea that petrol prices remain capped. There is talk about windfall taxes, should they be expanded or not? Whether there is a plan to tax buybacks, what your thoughts are, in terms of whether Europe has learned its lesson from the energy crisis that we're in, or whether it's still a dangerous thing to make too much money as an oil and gas company. I'll leave it there for you to go in whichever direction you would like. Thank you.

Patrick Pouyanné (Chairman and CEO)

Okay. Thank you, Chris. You know, for sure, European leaders, they don't want to have, again, a crisis on energy crisis on the price. You can see that in Europe, not only you have the German farmers, the French farmers, who are complaining as soon as you try to lift or to increase some taxes on the, on the tractors, fuel, fuel tractors, so it's not a good idea, that's very clear. We see, by the way, a global political temperature where a lot of people are calling, I would say, for a form, not of pause, but less regulation linked to the Green Deal, and we could think that the next mandate of the European Commission might be more about execution than increasing, increasing targets and, and regulations.

But, for petroleum price, obviously, European leaders can do nothing about it. It's more in the end, but, I would say, OPEC and OPEC+, which, by the way, today are probably, countries are probably quite fine with around $90 per barrel. They don't want as well to go back too high above $100, because they don't want to have some impact on customers. So clearly the price push was pushed up in the last months because of the crisis in the Middle East. But, I don't see the fundamental of the market, as we all know, we, there is not much inflows of new supply in the market. The demand continue to grow 1.2%.

So my view is that we have, we can expect this price above $80, $80+ in, for the year, I would say. So we are, that's fine. Having said that, you know, never know, we have observed some volatility. Windfall tax, no, not windfall tax, but, you know, there is a principle in OECD. We are in a state of law, and you have a territorial principle for taxes, you know, that's very anchored in most of the constitution. In, for France, it's in 120 or 30 treaties with other countries. We tax the profits where we are, which we deliver in a safe country, and we cannot be double taxed for the same profits. That's a fundamental principle. So that's, I'm not so, I don't think it will come.

The point is that, of course, the European politicians are looking to what has been done in the U.S. on the 1% tax on the buybacks. So honestly, this is a move which could cross the Atlantic this year. Having said that, honestly, it will not change the buyback policy of TotalEnergies, because, again, the buyback policy is sharing additional profits with our shareholders. Even if we have to pay 1% of EUR 8 billion, it makes EUR 80 million. So I think we'll absorb it, but will not encourage us to do it, but be clear. But that is something, you know, the debt in Europe have increased, so people, countries will look for some additional taxes.

We should learn them how we can cut costs as well, but that's not fair, honestly, the way to look at it. So globally, I mean, honestly, I think from this perspective, I think there is a, we must, you must make the difference between, I would say, all the statements during the European campaign and politicians and the reality of what is really executed.

Christopher Kuplent (Head of European Energy Equity Research)

Very clear. Thank you, Patrick. Maybe one day we'll see the U.S. companies talking about relisting in Europe, but I'll leave it there. Thanks for your time.

Operator (participant)

The next question is from Irene Himona with Bernstein. Please go ahead.

Irene Himona (Managing Director and Head of European Oil & Gas)

Thank you very much. Good afternoon. Question on maybe, if I may, you said, Patrick, you're working on an FID by year-end 2025. Can you say what the size of resource will be for that FID? And can you share with us, post your successful appraisal, what have you encountered in terms of reservoir thickness, the gas cap, flow rate, et cetera? Thank you.

Patrick Pouyanné (Chairman and CEO)

... Ryan, you go to details which, we pay a lot of money to get this data, and I will not share them publicly with all my colleagues, you know? Because we still have quite exploration to be done. Now, in fact, today, I will not answer by reserves, but I will answer. Reserves is more a question for us of dimension, the dimension of the production barrel per day, and it's linked, in fact, like in Suriname, this type of FPSOs. They are, the parameter, the key parameter will be the volume of gas we need to recycle, because there is a GOR. So we speak around, I would say, a development around between 150,000 barrels per day and 180.

It has to be now firm up through the reservoir engineering studies, but all the data are there. We have made the campaign, so Venus knows the priority is to go to production, I would say. And then, of course, Namibia for us, not only that, because our neighbor has just announced a new discovery in the southern part. We have the equivalent prospect on our side, so we'll drill it. So we are acquiring that seismic in order to make the acquisition. So for me, and Namibia, it's the first development, and we see others coming behind, but so let's explore. And as I said, as well, we continue to acquire some accuracy, in particular, on the Orange Basin.

We have two good licenses, prospective licenses on the South African side, which we might drill in 2025, according to the, I would say, to the process of authorization, which is prevailing in South Africa. So, that's where we are. So it's good news. We have, we will be probably the first to produce oil in Namibia, but the objective, so Suriname this year, Namibia, first development next year. That's the good news, I think, and so to answer your technical questions, first, I don't have the data, so I cannot share the secret. Second, to be honest, no, I have some.

Second, I think, if we launch, if we speak today about development, it's because data are good enough to make a profitable development fitting with our criteria, which is, as you know, less than $20 per barrel of CapEx plus OpEx, and or less than $30 per barrel breakeven.

Irene Himona (Managing Director and Head of European Oil & Gas)

Thank you very much, Patrick.

Operator (participant)

The next question is from Christyan Malek, from JPMorgan. Please go ahead.

Christyan Malek (Global Head of Energy Strategy)

Hi, good afternoon. Thanks for taking my questions. It's nice to be back on the call. Two questions. Just maybe just first on Namibia. I mean, I was quite shocked how the scale of the resource has been increased in as far as, you know, the Galp statement, and I say that because I've never seen such a massive move in sort of a way it's being presented.

But the question I have is, therefore, in the context of your execution plans and your discipline on spend and investment, how comfortable are you that as and when you do sanction the FID, you know, or sort of if and when, that this will stay within your CapEx envelope in terms of both cost per barrel and so on, given, you know, we've seen this movie before, as far as Angola, when we had major discoveries, and then sort of fast forward two-three years, and it wasn't as easy to get the volume online, for a number of reasons. So that's my first question. Even if you have line of sight on that from now, that would be good.

And the second question is, there's a lot of debate around listings, and I sort of find that we shouldn't blame everything apart from the actual valuation and why the valuation is where it is relative to the U.S. But the question I have for you, Patrick, is, electrons versus molecules. At what point do you potentially, in a stronger macro environment, reemphasize your molecules in as far as, re- either sort of rotating capital or investing more capital? Because as far as it sort of strikes me that the quantum of cash flows the U.S. majors can deliver versus Europeans, the main striking difference or the distinction is just the level of, you know, hydrocarbon as far as oil. And the cash flows generated from that, that oil volume.

I know energy transition is a whole other debate, but just purely on quantum of cash flow, is there anything that would make you reconsider a reallocation of capital? Thank you very much.

Patrick Pouyanné (Chairman and CEO)

Okay. First, on the first question, I'm very comfortable with FID in Namibia, first FPSO and the second one, and it will be within the $18 billion framework of capital per year, we can do it. It's profitable. You know, it's not a problem, and obviously, our priority is obviously when we is if we have good oil projects, with fitting with our criteria, they will be sanctioned. There is no doubt about it, and that we never arbitrated against oil project in the company, and that's why we have, and we express our strategy with two pillars, the first being oil and gas. The second one is is, I mean, integrated power, but it's clear.

So no, I'm not afraid to have one, two, or three developments to be done in Namibia. I think what is good for our company will be good for the shareholders, so if it's good projects, we will sanction them. And we have some space, and you know, we have been very agile in the company to arbitrate, and I prefer to have more options in my portfolio as a constant strategy, to arbitrate and then to give priority to some of them. We just demonstrated it with Marsa LNG. We postponed PNG because the costs were too high. We sanctioned Marsa LNG at 80% share. It's so big, but it's profitable because the CapEx were in line with our expectations. So we see the type of options-...

And so I prefer to have too many options, and to be selective on the most profitable ones, because this will contribute to enhance the cash flow per barrel, and so the cash flow per share, I would say. So that's fundamentally what we do. So this one, and if there is more to come, we will capture it, to be clear. By the way, you are right, but I never seen any way, anybody in 25 years in the history to speak about 10 billion barrels with one well or two wells. But, I mean, so, you know, but the media, the media said. So no, no, it's with two wells, no, never, but we'll see.

Then, on the stock listing, listen, by the way, when you go, it's nice to mention one of the U.S. companies, because I was looking to the results which have just been announced. They are exactly the same than us. So maybe it's not a matter of molecules or electrons, it's maybe that's why we have, I mentioned that we could. And as we have more and more U.S. shareholders, thinking to have a clear listing in New York is obviously a move on which the board asked me to look at it, because it makes sense. So we'll see what we can organize it.

But it's going into the direction of a growing U.S. shareholder base seems to be a nice, a normal thinking from a board of directors, independently, by the way, of the de-domiciliation of the company in Europe. That's clear, but that's the first one. I don't think so on reallocation of capital, no, I don't consider it. I think I prefer to stick and to be consistent with the strategy. I think it has a value in the energy field to have a consistent strategy and to because we know it's a long-term in industry, and if you don't should not navigate and thinking. So the integrated power business is continuing to grow to deliver cash flows.

We are on a roadmap to reach 12% and then to be net cash positive. So I don't see why I should suddenly reallocate capital because oil barrel barrel of oil is higher. And again, it's a matter of I prefer to stick on a strategy to be selective in terms of projects, including hydrocarbon projects, sticking on the low cash the cash the cash break even of the company, I think it's fundamental. Rather than suddenly having another race to volumes, which will not be positive. So I think it's we are generating as much dollars as one of the company you mentioned, so we need to, that's the reality.

So it's not a question, of course, of portfolio. It's a question fundamentally of convincing the shareholders who are willing to buy energy companies. And we are, we are more in-

Christyan Malek (Global Head of Energy Strategy)

So I'll just make

Patrick Pouyanné (Chairman and CEO)

Yeah?

Christyan Malek (Global Head of Energy Strategy)

Over the medium term, there could be a bifurcation of cash flow as their oil volumes grow, and others don't. That, that's what I meant more in the context of if and when prices move higher and there's more volume in oil, is the market starting to look so backwards for that in terms of valuing cash flow? That, that's what I meant more in the medium term.

Patrick Pouyanné (Chairman and CEO)

No, honestly, it will be a good problem if we have more cash flows because the price of oil is going higher. But I will not make the mistake to think that, yes, it's possible, the scenario you described is perfectly possible, Christyan. But at the same time, we shouldn't, don't say again, higher forever. You know, that's not true. I mean, we know that it's volatile, we know that when price of oil go up, then demand will slow, and then exactly same, so typical thing. So we must not forget the lessons of history.

Having said that, the best answer I tell you is that today we have a super strong oil and gas product business, which allow us to deliver the best return on capital employed among the majors. Despite the fact, I don't like the word despite, but we are also investing in integrated power with a lower return. So that means the best question is, if we have a portfolio and an efficient oil and gas operations, the proof again this weak quarter is the cost per barrel. OpEx per barrel is $4.6 per barrel. So that's we protect you. If the barrel is higher, we make more cash flows, for sure, because we maintain and we continue to steer this break even.

It's not only a matter of investment, it's also a matter of portfolio, quality of the portfolio.

Christyan Malek (Global Head of Energy Strategy)

Very clear. Thank you very much.

Operator (participant)

The next question is from Lydia Rainforth with Barclays. Please go ahead.

Lydia Rainforth (Managing Director of Energy and Energy Transition Equity Research)

Thank you, and good afternoon. Two questions, if I could, and one just to follow up on the, the U.S. listing. Patrick, I think you said that the board has asked you to look at the maybe listing. How long would that process take? And ultimately, sort of what would stop you from doing it at this point? And then the second question was on the LNG business. You talked earlier about the idea of having flexibility within the portfolio. I just wonder if you could talk us through what your outlook is at the moment on the LNG market. Because obviously, we've had some projects that have been delayed because of higher costs, but others that are coming in that are very competitive. So just your perspective on that market. Thank you.

Patrick Pouyanné (Chairman and CEO)

Okay, on the first one, to be clear, there was a discussion of the board with, with the board, clearly, on the matter of U.S. listing. We all agree that we have to seriously look at it, and so we are working on it, together with Jean-Pierre, and I plan to report to the board by September, and then we'll see. It's a pragmatic way forward, and we'll come back to you. But, we consider that, and I had discussions, by the way, with a number of, large shareholders in the U.S. about it, but, today, in fact, we have an ADR, which is not a real share. They come to buy shares on the Paris market, you have exchange rates, you have two...

When I look to the the behavior of the share during every day, you know, you have the Paris market, which is dictating the share until 3:00 P.M., and suddenly you have a drop or a hike because New York is leading it. By the way, the share at the closing in Paris is just the value in New York at 12:00 P.M. So all that is not is just. On top of it, which is more important, again, we have a. It's clear that in the energy and the oil and gas field, U.S. shareholders are buying the shares, and European shareholders are not so buying in the same way. So I think it's also a recognition to the growing part of the shareholding.

And so we must think, we must look at it, because, again, the board is keen to understand why—if there is a, is this a way to fill the gap that we see, if we can get easily, easier access to shares, to U.S. shareholders. So, that's where we are, and we'll keep you aware, don't worry, but I think it was time, the right time to mention it to our investors. On the LNG, well, you know the LNG, I will tell you, I'm positive for 2025, 2026, because you will not see much new capacities. Of course, like you and all of us, we are not naive, you know, we observe that from 2027... I not mention 2026 because some projects will be delayed, you know, I'm sure it's a big project.

You will see new capacities coming on stream from the U.S. and from Qatar, so this will have an impact on some, the market, that's clear. But for 2025, 2026, the price could be tensions, if some of the plants again could have some difficulties, that's possible. After that, okay, that will be good for the demand, you know, it will rebound. So, what we are trying, what we are doing together with the LNG teams, is to sign some oil-related medium-term contract, because the view that we have on this business is that the oil might remain, like Christian suggested it, might remain stronger. So that's what we can do.

Again, by the way, I'm not afraid because generally, and it was very well demonstrated by one of our peers, when you have some low cycle in energy, they are not very long because generally the demand is very reactive. You know, you have countries, clearly, we've seen it this year, in 2023, you've seen more China buyers coming back to the market at $8, $9, $10 dollar, $9, $10 dollar. Under $10 dollar, you see, China, and you will see, if it's dropping to $9, you will see India as well coming. So I think it's positive for the demand. So, and that would be, by the way, something important in this business, because somewhere with the events of 2022, customers are a little shy, you know, with this energy which went through the roof.

That's why, by the way, they are also interested themselves to sign more oil-related contract, because they see probably more stability in that, oil pricing, than in this, gas market, which has been very volatile. So I think, so it, again, maybe a lower price. Another comment on it, because sometimes I'm surprised by some analysis which are reported. You know, LNG, one of the interests of LNG, like you've seen in the results of TotalEnergies, when the price of gas is going down in Europe, we have some amortizer in the LNG pricing formula. You know, it's not, we are not a European gas, seller, I would say, and so the impact on our revenues, cash flows, and results are much lower because the formula LNG are amortizing these, products.

So I'm not worried. I continue to believe that it's a good business to invest because it's a growing demand, because we need gas and electric to produce to complement the intermittency of electricity. There is a climatization demand in the middle class in Asia. So all that is driving, I would say, electricity demand. Part might be covered by coal and renewable, but part also with gas. And you know, a country like India is very interesting. They are building a real gas infrastructure with big pipelines around the country. City gas is being developed, and so it's a reality. We are investing, by the way, in this business there.

It's a reality, and I think that, a lower price during two-three years might will be, would give a push to that demand. And when the demand is installed, it's difficult to stop, you know, because then gas become, your, your, your fuel for your house. So that's the perspective I see. But again, we are active in order to, I would say edge, not, edge is not right word, but to, to sign some medium-term contracts with oil-related, terms.

Lydia Rainforth (Managing Director of Energy and Energy Transition Equity Research)

Brilliant. Thank you.

Operator (participant)

The next question is from Martijn Rats with Morgan Stanley. Please go ahead.

Martijn Rats (Chief Commodity Strategist and Head of European Oil & Gas Equity Research)

Yeah. Hi, hello. If when oil prices are referred to as relatively stable, that does sort of... I find that a very, sort of, you know, very interesting comment. But anyway, I had two questions that I wanted to ask. The first is a relatively simple one on the buyback and oil prices. We started the year, of course, with EUR 2 billion a quarter in buybacks, but I think it's fair to say that oil prices are, you know, have been surprising to the upside so far this year. So I was wondering if there is a move in the quarterly buyback, perhaps later this year, if this oil price sticks, and under what conditions?

... we might see sort of the quarterly buyback much higher. I was hoping you could say a few words on what the prospect of that sort of might be. And then the other one is about the SapuraOMV so acquisition. You bought 100% in sort of two tranches. I know it's not as exciting as Namibia perhaps, but it's not entirely small. I was wondering if you could say a few words about the rationale of that transaction, what the attractions of the assets are, how it fits in the overall picture? Thank you.

Patrick Pouyanné (Chairman and CEO)

Good. No, it's not small. It's a, it's a good deal. We don't see, even if you don't make a lot of noise, even, you know, I prefer to pick some good assets, which fits with the strategy, the growth potential. And we don't want to make small, because in fact, it's giving us, with SapuraOMV, an operating position in Malaysia. We see that as many advantages. In fact, we have a strong partner, PETRONAS. Malaysia is a very, in fact, it's still a prolific basin, several gas basins, prolific ones. It's an opportunity to have a material position, 50,000 barrel per day, I think. So it's material, we can dedicate people. We see there, beyond the, these licenses, more to be done, so I cannot... There is a potential to expand in the gas business.

This is a business which related and which is priced as a net back from LNG, so you have different formulas. So it's part of also the interest of this business. You have some upside, and you can correlate it. And also, so a way, again, to strengthen the links with Malaysia with PETRONAS. Malaysia is an interesting location as well for other activities, like in particular, CO2 storage for Asian buyers. So it's there are some, a lot of Japanese companies are looking to that. So we see. And again, you know, I think for a company of our size, Total is new in Japan in Asia strategy, strategy in South Asia strategy. I think more fit in Asia is important for our future.

This is where the demand will come, and Malaysia is an interesting country. We have also some LNG business. So, this was a good opportunity, again, a material one, because what I don't want is to move from a, from a small asset. So this one was... So we were to have that, that materiality by making all this transaction together. On the buyback. Well, okay, I just want, you, in fact, you know the answer by asking the question, Martin, I think. You know, when we, we stated in the press release of the, in February, just reading it, "With $2 billion of share buybacks in the first quarter of 2021, which will remain the base level for quarterly buybacks in the current environment." I think the current environment in February were more or less $79-$80 per barrel.

We continue on this basis, but it's quite clear, you know, we have been clear about the cash allocation framework we follow. First, the dividend, the CapEx we are where we are, and we don't intend to expand them. And we said that we'd use share buyback to, if we have more cash flows, to share it with shareholders. So again, it was premature this quarter because we have only seen $90 for one month, so I will not conclude that the $90 will remain for the year. I know that when I was making some roadshows in London, people were speaking to me about $100, but in the meantime, it was at 95, it went down to 88 or 89, so it's volatile.

To be clear, it's clear in our minds that if we have more cash than the base case, then we'll look to share it through share buybacks with some shareholders. But we don't have a mathematical formula to give you, so you have to guess. And again, it's a monitoring. We'll see what will be the second quarter, and I expect some decision probably middle of the year or September by the board, when we'll have a better visibility of what could be the execution of the year. We have a good balance sheet, so we can. We will not wait the end of the year to announce you what we'll do.

But again, let's look to what is the reality of the market, because at the same time, oil price is better, gas price was low, a little lower than anticipated at the beginning of the year, even if it's going up in the last weeks to more like $9-$10 in Europe. And the spread with the U.S., because Henry Hub is going down to 1.5, is also a good, important indicator for us between the TTF and Henry Hub, so that's a good signal. So again, we will follow what we say to our investors and shareholders. I remind you as well that we said that we want to distribute more than the payout for more than 40%. This quarter is at 46%, I think.

So we are on the way to, not to disappoint you, but as it's like the strategy, we are consistent, and we go step by step, and when we have in a position to take decision, we'll take them.

Martijn Rats (Chief Commodity Strategist and Head of European Oil & Gas Equity Research)

Wonderful. Thank you very much.

Operator (participant)

The next question is from Lucas Herrmann with BNP Paribas. Please go ahead.

Lucas Herrmann (Managing Director)

Yeah, afternoon. Thanks very much for the time and interesting comments throughout, Patrick. Amazing, isn't it? We, we all focus on oil now and moved on a little bit. But I just wanted to, on the subject of FIDs, I wondered if you could talk a little bit about the offshore wind business and just how things have progressed for you over the last 6-12 months around cost, and what your thoughts are now on the timing of decisions, you know, Germany, U.K., possibly, North Asia, where you have opportunity. So just to give us some idea of, okay, I know what I'm doing on Namibia or Suriname, but what am I thinking around, you know, the allocation of capital to wind and timelines? Thanks a lot.

Patrick Pouyanné (Chairman and CEO)

... Okay, I will be transparent. There is no way. It's clear that, you know, we had the experience recently in New York, and in fact, it's an issue. You know, when you are in some markets which are more regulated or I would say more depending on some fiscal incentives, suddenly everybody wants to take the incentive for himself. So that if the supplier is increasing the price of his turbine because he wants to capture the ITC, then we don't have it, and then we cannot make the project. So it's a chicken and egg story, but we are not condemned to develop projects if they are too, too costly. You know, I'm, I'm very-

Lucas Herrmann (Managing Director)

Yeah.

Patrick Pouyanné (Chairman and CEO)

I'm CapEx driven, and, you know me, for long now, we have just recently said that on PNG, we are able to delay because the CapEx were not there and going to new contractors. On offshore wind, obviously, will be the same position. Because it's clear that, you know, this, this energy is more expensive than onshore wind or solar. You know, integrated power strategy, it has to find its place in a, in a merchant way, somewhere to be able to make money with a merchant, pricing as well. So if it's too costly, and that is going out of what could be expected as a merchant, pricing for electricity, then why, why should we do it? So, we are working on it. It's, there is no rush.

We will not be led by, I don't know which planning, or by a 2030 target. The 2030 target for TotalEnergies can be filled with plenty of onshore possibilities. We'll have some offshore projects because we have some in the portfolio which are good, on which we will give the priority. We have created many options, and what we were discussing between us, with Stéphane, was, okay, if we need to... we need to rank all these opportunities and to do the best ones, and not necessarily all of them. So, again, you have some heating there, but either we can have some cold weather on all this value chain; otherwise, we will wait and see. You know, we are at the position. But we work, we work, we work on...

Last comment, I would say for me, offshore wind is an energy for, again, you have to look carefully to what will be the electricity market prices. It's an energy where, for markets, where the electricity price will remain high. You know, it's not so you cannot deploy it everywhere. But Germany is a good fit. U.K. is potentially a good fit as well. And New York, we'll see, again, if we can obtain or not the right conditions to develop it. So we are monitoring it, but you know, in our capacity of integrated power, it should represent something like 10% by 2030, so it's not the core of the growth.

Lucas Herrmann (Managing Director)

Yeah.

Patrick Pouyanné (Chairman and CEO)

If the 10% are only seven or eight, I don't care, you know? It's no, firstly, priority is profitability, is a profitable growth, and so we will go and review this project one by one. If costs are rocketing, it's better to wait and see, or to allocate our capital to another project.

Lucas Herrmann (Managing Director)

Okay. Thanks very much.

Operator (participant)

The next question is from Biraj Borkhataria with RBC Capital Markets. Please go ahead.

Biraj Borkhataria (Global Head Energy Transition Research)

Hi, thanks for taking my questions. The first one is on LNG. There's been on-and-off news flow around potential E.U. sanctions on Russian LNG. And I'm just wondering what this would mean for your offtake at Yamal, in particular. And would you be able to divert the cargos and sell them elsewhere, or would you have to declare force majeure? And then the second question is on hydrogen. So late last year, you announced you know, a call for tender for across your refineries. And I don't think we've seen anything since. I was wondering if you could provide any insight on you know, the response from the industry and what you're seeing there. Thank you.

Patrick Pouyanné (Chairman and CEO)

Okay. I know you like Russia, Biraj, very much. Be clear, there is no, for Total, you know, if you... I will tell you, if E.U. sanctions Yamal LNG, the price of LNG will go up quickly and globally, our portfolio will benefit of it. So I'm not at all, it's a positive if there were sanctions, not a negative, because the cash from Yamal is quite limited, contrary to what you might all think. First, we don't receive dividends from Yamal LNG in 20-- since 2023. Second, the LNG business, because I remind you, but because of the risk of sanction, we decided not to hedge the volumes of Yamal. That means that this year, we have sold, we have sold Yamal in Europe at a TTF price, and we buy it at a Brent basis.

That means that it's not a very profitable operation. It became a basis contract. So honestly, it's not the point. So yes, if there are sanctions on Yamal by Europe or by EU, we'll have to exercise force majeure, for sure, on some of the contracts. There is two contracts: one is for Europe, which we can exercise, there is one for Asia, on which we'll have to look more carefully to the clause. So this is where we are, and but my view, to share with you, Biraj, I don't think because the European leaders understand that their gas security of supply today rely on the LNG, and they don't want, again, to see a price crisis in Europe until 2027. And what I understand is that they might have some ideas, but from 2027 on, not before.

So we'll see. Again, for TotalEnergies, it's a huge role. It's even a plus if there were some sanctions. So maybe people should think I'm a little provocative, but in fact, that's the reality when I look to this project and, you know, it's not billions of dollars in our cash flows, it's more as few hundreds of billion dollars, which we can absorb easily, which have already been largely absorbed since 2022 in the company by other projects. On the second one, no, I would like you to follow more carefully. We gave you some indications in February on hydrogen. We told you that we receive a lot of offers, more than 50 different offers to our tender.

We have been offered 5 million tons, and we are targeting 500,000 tons per year. So then all the maturity of all these projects are not the same. We are working on them. I'm quite optimistic, to be clear, that we'll get what we are targeting. It's important for us because these 500,000 tons will allow us to decrease our CO2 emissions by 5 million tons. 5 million tons, so emissions are, we have this year 38 million tons, so it's quite sensible on the roadmap. And, and again, within the European ETS framework and the famous REPowerEU, we can do it, I would say, in terms of neutrality compared to paying the taxes or eliminating emissions and getting some green hydrogen. So, I'm, I'm really, you know, it's quite attractive.

We are, in fact, becoming an anchor customer for some players, in particular in Henry Hub or Rotterdam, you know, and even Leuna in Germany, quite a long, strong interest. So... And we could benefit from being a first mover there, because, again, they are – as people, our projects are willing to develop the projects, thanks to such a 15-year contract that we could offer. So we'll come back to you when we have clarity. There are different tenders, a lot of discussions, but I think before this year end, we'll be able to come back to you with news. But I prefer the teams to work rather than giving more indications. But that we are. I'm convinced that we'll have the, we'll be able to execute the roadmap as planned.

Biraj Borkhataria (Global Head Energy Transition Research)

Okay. Thank you. Good luck.

Operator (participant)

The next question is from Michele Della Vigna with Goldman Sachs. Please go ahead.

Michele Della Vigna (Managing Director)

Thank you very much, and congratulations on the strong capital discipline and the ongoing upgrading of the portfolio. I think you mentioned PNG, that's definitely a great example where cost inflation has led you to rethink or at least delay the project. I was wondering which other projects in your portfolio you think should be delayed or perhaps reengineered a bit following some of the recent cost inflation? Mozambique is certainly one where it feels like some of the bids have come back a little bit on the high side. My second question goes back to the idea that you floated off a U.S. primary listing. Clearly, the big aim there is to be included in one of the major indices, like the S&P 500, which has so much passive and semi-passive following.

I was wondering if you've had any discussions there, and if you think it's actually something doable to be included in that index while being remaining headquartered in Europe? Thank you.

Patrick Pouyanné (Chairman and CEO)

Okay. Michele, you know the answer to the second question, and you know that, you cannot to be in S&P 500, you are not domesticated in the U.S. at all, so we don't intend, that's why we speak about primary listing. But again, when I see, when I will discuss with U.S. shareholders, the, for them, having access directly to real shares in New York would be a plus compared to going through this ADR or to the Paris market to buy shares. I think that's what we think about it. We see, clearly, more appetite on the, North American side for energy companies or gas companies than in Europe. So it's, we are studying what could be, again, to facilitate their appetite by offering them, easier access to our shares. That's the idea.

But the index might be a plus, but it's not in the agenda. Be clear, because we don't speak about the domestication; we speak about primary, and that's the point. On the first one, no. Honestly, on Mozambique, no, we don't face at all. I know one of my colleagues wants to float that idea, but it's not true. I mentioned that a few months ago that we were discussing with contractors on Mozambique because they raised their costs. We had good discussions with them. So the good news that I can confirm today is that, in fact, we are back to. We are on the good contract with all of them. We realign all the contractors because their interest is to be, that we can execute the contract project.

You know, their interest is not to force us to retender or redesign, or I don't know which strange idea. So we have a good concept, strong concept, resilient one. So we work with all of them, and today we have contracts which have been initialed to restart the project. But we are over-dimensioned in that project. And again, on the security side, I would say there have been a lot of things. The security in northern Cabo Delgado is okay. There is no incident, no event. It's well controlled. We will, I will meet soon President Nyusi from Mozambique to review it with himself. And so I would say on the southern part of Cabo Delgado, it's quite far from where we are.

There have been some incidents, but there again, they are redeploying some forces. And by the way, again, that part is first, I would say, you know, people are asking me, do you release the force majeure? But the first thing to be done is by the state of Mozambique, which is in charge of the sovereignty and security, to tell us if we could lift it before I decide. You know, let's do it in the right order, I would say. Don't try to ask privately owned companies to decide about something which is not fully in our hands. Security of that region is, is the first duty, is the, it is the duty of the state of Mozambique, and we are working with them. So I would say, we are, so it's not a matter of cost, this one.

It's more a matter of having the right conditions to lift the force majeure and to move on to move on progressively, probably because it has to be done to restart, you know, we'll try. We have to want to remobilizing the staff will take time, so, but it's not the cost. So yes, PNG was a cost discipline, frankly, and it's not really redesigned. It's more, I think we made, as we tried to explain, I will tell you, we, we're limited to our traditional engineering firms, partners, Western ones. I think what is new is that Western contractors have not so much appetite for many. It's like us, it's they do value over volume.

So they have a lot of plenty of projects in the U.S., probably easier to execute, you know? And so what we think is that, and we have begun to work with some Asian engineering firms, which are able to, which are also able to deliver upstream, good upstream projects. And we observe it, you know, in Uganda, most of the contractors who are working in Uganda, half of them are coming from Asian countries, and the executing, execution is very smooth, and they respect the costs, the budget, so we are happy with them. So I think it's more, we went to the traditional players. We want to open the tender. It will take time, and I'm optimistic that we can put this project back on track.

But again, as I answered before, within our portfolio, we have many options, and that's good to have many options. No, we are not discussing a lot of Marsa LNG. We have it, we introduce it, we know we might have another option, which is quarter 2024 in Rio Grande LNG project, which might be more efficient than others. So I prefer to have more option and then to organize the planning and to be able to resist to cost increase, to keep the discipline, while we will be able, despite this, to deliver the LNG growth we anticipate for 2028. So that's where we are, and again, we'll monitor the project one by one, and we'll see.

You know, in Suriname, clearly we have good costs, profiting somewhere from synergies for some contractors with all the projects in Guyana, that's clear. So there is a synergy somewhere. Contractors who are working on Guyana, they propose to come with us in Suriname because for them, it's just next, and so they can capitalize on what they've done. We'll see in Namibia, which is a new province, which will be for me the next, I would say, frontier from this perspective, is how do we establish an efficient oil and gas industry, in terms of servicing, et cetera, in Namibia?

Michele Della Vigna (Managing Director)

Thank you.

Operator (participant)

The next question is from Kim Fustier with HSBC. Please go ahead.

Kim Fustier (Senior Global Oil and Gas Analyst)

Good afternoon. Thanks for taking my question. I've got two on LNG, please. The first one is on U.S. LNG integration. I think your intention to extend into the upstream in U.S. gas has been well-telegraphed for a while, and now you've made a first step with the Lewis Energy deal. Are you able to say roughly what proportion of your U.S. LNG offtake you'd like to cover in the medium term? And secondly, you mentioned good appetite for new oil-linked LNG contracts from Asian customers. Are you able to say or give any color on the slopes embedded in these new contracts? And also, what share of your contracted LNG sale is up for renegotiation over the next few years? Thank you.

Patrick Pouyanné (Chairman and CEO)

Okay, on the first one, I think I've been clear, we want to protect or to hedge, I would say, our cost of gas or cost of production by having some some gas, some equity in gas productions in the U.S., so it's around one Bcfe, which we could target more or less. But then again, no rush. Today, it's the right time, the Henry Hub is low, so we've seen some dry gas producer quite keen to open the door, so we try to jump in. So it will not be a big acquisition. Probably it will be a sum of assets and, like we do, you know, you observe probably that I prefer to do that than rushing to make big M&A, which are expensive.

And so we have an opportunity to do it, and dry gas window, Eagle Ford is perfectly located next to Rio Grande. That was one of the advantage of Rio Grande LNG. And you know, there are not much appetite for this dry gas, Eagle Ford basin, so there are opportunities there to deploy, to develop a position on the long term. That's what we target. And the cost of acquisition is quite good. It's quite low, in fact, in particular today, because it's countercyclical. You know, it's always what I think to make good deals when it's countercyclical, and this is typically what we should do today. And here, but one point five or two is a good opportunity for us to advance. So if people are listening to me, they can come.

Then, on the LNG contract, no, I cannot give you some commercial discussions on the slopes. You know, it's protected. By the way, in most of my contracts. It's written, but I cannot disclose it, so I cannot do that. If we sign, it's because it's fitting with our expectations. That's all what I can tell you, but, no, I cannot do that. And, you know, we renegotiate contracts, you know, in most of the long-term contract, you have a clause which is, I would say, either five or 10 years, it depends. So I think it's more like seven years on an average. So, you know, every year, I would say, as we have a large portfolio, we have 30 million tons of LNG contracts.

We have one-seventh, I would say, more or less, of these volumes, we are being renegotiated. But, you know, renegotiation for us, it's also positive because the opportunity sometimes to have longer contracts, so it's a permanent, it's an exchange a bit in pricing and duration and volumes and optionalities. So in fact, when we are opening these contracts, this idea, there are many parameters which are on the table. You know, it's not just the pricing. And then you exchange, okay, maybe more optionality to redirect some volumes in favor of the seller or the buyer. So in fact, it's quite interesting, this negotiation. So I would say we renegotiate more or less. Again, you can take it as a rule of thumb, one-seventh of all, 30 million tons.

So it's what we are accustomed to do it, but it's also... I was in China recently, we also discussed through a new contract with the people. So it's a permanent give and take, and that's part of this of commerce, I would say. It's a commerce, it's a business, it's trade. Thank you.

Kim Fustier (Senior Global Oil and Gas Analyst)

Thank you.

Operator (participant)

The next question is from Alastair Syme with Citi. Please go ahead.

Alastair Syme (Managing Director)

Thanks. Hi, Patrick. Could you talk about how much of your integrated power business earnings comes out of Spain? You are, yeah, I think you've got a lot of the flexible generation, combined cycle capacity. And I, I'm really just interested in how, you know, current low Spanish power prices will, will eventually feed through into earnings, if, if they do at any point. And then my other question be, just, just back on Namibia, I mean, I mean, I think in the press, earlier in the week, you got pinned down to suggest it might hold similar potential to Guyana. You know, you, you talked about a 180,000 barrel a day development, which is something, but it's not huge.

I'm just sort of interested in what makes you connect the dots to something sort of Guyana-sized for the base. Thanks.

Patrick Pouyanné (Chairman and CEO)

No, but again, there are two. On the second point, there are two differences. One is each development, you know, how much is the size of one development, and again, it's dimensioned fundamentally by the facilities on the, the top side, on the FPSO, because including the GOR, you cannot oversize the gas handling facilities on the top side, on the FPSO, and that governs generally quite a lot of oil production. So I told you, again, the question will be: How many can we do it? And when I see my comments that I've done, it's just that when I observe, it's not only it will not be like in Guyana, when one FPSO will cover the full discoveries. Not the case.

So we will not have, I would say, from this perspective, the same efficiency to have one JV in charge of deploying the full resources, what it is the case for our friends in Guyana. In Namibia, you have different operators who are discovering oil and hydrocarbons, ourselves, Shell, Galp. So that means, but when I'm adding, and what we know about it, I'm adding it, I think the perspective to have six, seven FPSOs, or I don't know, is perfectly possible on the whole Orange Basin, and we're just at the beginning of exploration, including on our block, including, I mentioned, the Orange Basin on the South African side. So honestly, it will not be as efficient in terms of development because it's not, it's on one JV, but the several JVs could cover.

I mean, the potential of this area seems to be quite attractive. So again, you have different operators, different exploration programs to be executed. So but the second one. On the first one, though, Spain is around, by 2025, out of the 35 gigawatts, it will represent, I think, something like 1-2 gigawatts. So it's not a major country. It's the one we started quickly, because it was easy to have access to some solar projects next to France. But it appears, yes, you're right, but it's quite, it's not an easy country, because a lot of competition. From price, electricity is quite low. You have a lot of, but again, and you have some curtailment, so you have to be careful about the project.

It was an early mover to a renewable, so there is a lot of projects there. But I would say, in the plan, I would say by 2030, we could target something like four GW of 100, so 4%-5%. So it's not, in Europe, for me, it's not the number one country to deploy in terms of integrated power. Germany has more interest, and even I would say U.K., because again, for us, the driver will be where do we see the best combination between gas and renewables. Okay, next slide.

Alastair Syme (Managing Director)

But my question, Pat, which is really on today. I get a lot of your earnings in integrated power coming out of combined cycle gas in Spain.

Patrick Pouyanné (Chairman and CEO)

No, but, Spain is quite low. You don't use much of the combined cycle today in Spain.

Alastair Syme (Managing Director)

Okay, thank you.

Operator (participant)

The next question is from Bertrand Hodee with Kepler Cheuvreux. Please go ahead.

Bertrand Hodee (Head of Oil & Gas Research)

Yes, good afternoon, Patrick. Two questions. The first one is on U.S. offshore wind. There were recently your project, Attentive Energy, that was canceled. Can you share with us the reason of that cancellation? Because I understood there should have been a kind of, I would say, indexation clause linked to the cost. And so I'm struggling to really understand. And do you still see a way forward in U.S. offshore wind? And then the second question is on LNG related. You said in your introductory remarks that you've asked your team to sign long-term LNG contract with Asian buyers in the coming years. Do you have a volume in mind?

Patrick Pouyanné (Chairman and CEO)

The first question, in fact, Bertrand, I answered previously. I explained that, so one of the key contractor, which is making a lot of local content, that suddenly increases cost, probably trying to push the limit. He reached the limit, and in fact, it's, I would say, you have to wait and see the follow-up, but I cannot disclose it because, again, we have some contracts with the city of, and the state of New York, so I prefer not to comment it. The state of New York is managing this, this, I mean, contracts. Their intent is yet to have the projects, and so they will, probably, like they've done for the two old contracts with two competitors, they will retender it in the conditions which will allow us to launch a project.

But let's. You need to have a little more time, and you will understand. On the second one, let me say, it's not I don't want to hit, to put a target officially today in front, publicly with my teams. But, yeah, we know that we have some volumes available, you know, in our portfolio, so this volume might be marketed and it has to be marketed. When we took in Rio Grande, the commitment of 5 million tons, we don't want to market all of it, but part of it clearly has to be marketed. Yeah, it's part of the strategy. We have... Our balance sheet is strong enough, and we are trusting as our teams enough to do it without having the contract, but at the same time, it's good to deliver the contract.

So it's less than five, but it's not zero. So you have, you find your objective. It's not like that. Again, at the end, it's a question of negotiation, discussion, and having the right contracts in terms of value.

Bertrand Hodee (Head of Oil & Gas Research)

Thank you.

Operator (participant)

The next question is from Paul Cheng with Scotiabank. Please go ahead.

Paul Cheng (Managing Director)

Thank you. Patrick, you did the small deal buying 20% of the Dorado. With your LNG exposure in the Gulf Coast, is that sufficient or that you are seeking additional assets in the US?

Patrick Pouyanné (Chairman and CEO)

Okay. Paul, I think I answered to, to Kim. No, it's not enough. It's the first one. It's an opportunity. It's a first volume, and it's, I think, 100-200 million scf per day, and we target more one Bcf/d, so there will be more to come. But the Eagle Ford, as I said before, is a right, is a good, good basin. Dry gas in Eagle Ford is a good basin for us.

Paul Cheng (Managing Director)

I see. And that, your acquisition of Kyon, on the low carbon solution, with that, how that change the way, that your approach or that your pace on investment in that area, in the carbon storage?

Patrick Pouyanné (Chairman and CEO)

I think it's a complement. You know, I've been always clear on CO2 storage, that we were ready to develop a portfolio primarily in Europe because it's linked to our assets. In the U.S., we have some refineries and petrochemical assets, so we know that we'll have to store CO2. We had the opportunity to have access at, I would say, at cheap conditions, to these nice two nice projects, CO2 storage, one in Texas, very next to Port Arthur, where we are located, which is operated by Chevron, very committed, so a good operator next to our facilities, so that's matching our target. And another one, Louisiana, which is not ready, but we intend to divest a second one.

So again, we are driven fundamentally by securing some volumes on good projects for being able to store our own CO2, and if we have more capacity, we'll offer it to hard-to-abate industries in the vicinity. So that's, I think, strategy. And this one in the U.S., in the U.S., we have quite a vibrant CO2 economy, so it might be a nice place to have a good scheme, to have, I would say, a low-cost CO2 storage.

Paul Cheng (Managing Director)

Patrick, does that mean that you are-

Patrick Pouyanné (Chairman and CEO)

No, we have a new-

Paul Cheng (Managing Director)

Yeah.

Patrick Pouyanné (Chairman and CEO)

Yeah?

Paul Cheng (Managing Director)

Is it primarily that, use it for lower your carbon emission-

Patrick Pouyanné (Chairman and CEO)

Mm-hmm.

Paul Cheng (Managing Director)

or intensity of your own operation, or that you look at it as a gateway for a third-party revenue source, business?

Patrick Pouyanné (Chairman and CEO)

It's for both.

Paul Cheng (Managing Director)

Okay. All right, thank you.

Operator (participant)

The next question is from Henri Patricot with UBS. Please go ahead.

Henri Patricot (Executive Director of Equity Research)

Yes, hello, Patrick Jean-Pierre. Thank you for the update. Just one question on Integrated Power. You mentioned a strong first quarter in terms of cash flow from operation. If we analyze the first quarter, you're already in the upper half of the guidance range for the year, and you have more capacity coming on stream over the rest of the year. So at this point, expect that you are more likely to be at the upper end of the EUR 2.5 billion-EUR 3 billion cash flow range, maybe even slightly higher. Is that something to have in mind when it comes to the first quarter cash flow, which we expect that we may not expect exactly that run rate through the year? Thank you.

Patrick Pouyanné (Chairman and CEO)

... Thank you. No, no, we. I confirm the two point five-three. You can multiply by four, you will find something like two point seven, two point eight, but, you know, not sure. It's a permanent group. I'm not sure sometimes we not have the seasonality in this business and the – don't forget it, you consume more in winter than sometimes in summertime, depends on the region. Even if in Texas, it's contrary, you have more cash in summer times with hot weather than in Europe. But you have the seasonality aspect, so it's not so, I confirm two point five-three, and if we can be next to three rather than next to two point five, I will be happy.

Henri Patricot (Executive Director of Equity Research)

Okay, thank you.

Operator (participant)

The next question is from Jean-Luc Romain with CIC Market Solutions. Please go ahead.

Jean-Luc Romain (Equity Analyst)

Thank you for taking my question. It relates actually to CapEx in Integrated Power. You have had a strong start to the year. Should we expect the quarterly level of organic CapEx to continue about the same over the rest of 2024, to still accelerate?

Patrick Pouyanné (Chairman and CEO)

No, but I think, you have something very uneven during the year, because as you know, we, the guidelines we give you is a net CapEx. And you have, of course, with a growing, portfolio, a growing part of, farm downs, which will be booked probably more on the second half of the year than the first half. So you see more organic CapEx at the beginning, and then, you should, we should land to what was, planned for the year, I think $5 billion. That's what we mentioned to you. So I don't anticipate a higher, capital allocation to this segment.

By the way, I mean, as it was said by Christyan, as we have quite a number of good oil projects, our, the idea is not, again, we've told you that we have reached the right percentage of allocation, 30%, 33%, so that's a guideline. I'm sticking on this one for the years to come. It's part of, we came to that level quicker than expected, but, now it's also a matter of discipline. We have a lot of opportunities, but we are also selective, and it's important, because, again, it's not one, against the detriment of the other, so that's, but, we execute a strategy. So it's more a timing effect, like for the working capital, rather than the seasonal effects now, but you will see it landing during, the year. Okay?

Jean-Luc Romain (Equity Analyst)

Thank you very much.

Patrick Pouyanné (Chairman and CEO)

Thank you.

Operator (participant)

Gentlemen, there are no more questions registered at this time.

Patrick Pouyanné (Chairman and CEO)

Good. Thank you. Thank you to all of you. I think we were targeting to be on time in order for you to attend the Exxon call, if I understand, which is follow up in five or 10 minutes, so we respected it. Thank you for your attendance. Again, it's another quarter of strong delivery. Some people will say TotalEnergies is sometimes a little boring, but we are boring for the good, you know, and always going up, so as a share. So, I mean, I prefer to be in that situation, not to surprise, but to execute, to deliver, to be consistent, and I think it's probably one of the good... When you buy shares, you can trust that we will deliver. That's the message. Thank you.

Operator (participant)

Ladies and gentlemen, this concludes the conference call. Thank you for your participation. You may now disconnect.