After bolstering oil, gas and renewables in 2022, TotalEnergies ramping up low-carbon investments in 2023

On a mission to become a major player in the energy transition while pursuing its net-zero by 2050 goals, France’s TotalEnergies has not only fortified its oil and gas portfolio with new acquisitions in 2022 but also boosted its renewables share of assets. In a bid to get closer to a sustainable energy future, the energy giant has decided to step up its investments in low-carbon energies to $5 billion in 2023.

TotalEnergies showcased the progress of its transformation strategy and the update on its climate ambition on Tuesday, 21 March 2023. This was done to mark the publication of its Sustainability & Climate – 2023 Progress Report, in accordance with the commitment made by the firm’s board of directors at the annual shareholders’ meeting on 25 May 2022 with respect to sustainable development and energy transition toward carbon neutrality.

As the firm’s board is committed to reporting on the progress made in implementing the ambition to the shareholders’ meeting, it will submit the Sustainability & Climate – 2023 Progress Report to a consultative vote of shareholders at the meeting on 26 May 2023. In line with this, the French oil major claims it remains committed to its multi-energy strategy of balancing profitable growth and sustainable development and strengthening its emission reduction objectives.

The company claims that it was “the most profitable major” among the five super-majors in 2022, with a ROACE of more than 28 per cent, allowing it to distribute 37.2 per cent of the $47 billion cash flow it generated to its shareholders while reducing its gearing to 7 per cent at year-end 2022.

TotalEnergies says it was “executing its transformation strategy to a multi-energy company” during 2022 and “investing the most among the majors to build the energy system of tomorrow.” Thanks to this renewed portfolio, with no stranded assets, the oil major highlights that it “now benefits from a more resilient and profitable oil portfolio.”

In lieu of this, the French giant continued to refocus its oil portfolio on a low cost – operating plus investment cost lower than $20/boe – and low emission assets and projects, as evidenced by the entry into the Sépia and Atapu producing fields in Brazil and more recently on the SARB/Umm Lulu concession in Abu Dhabi.

Since the French player sees natural gas as the energy of the transition, the firm strengthened its position as a major player in LNG during 2022 with its entry into the North Field East (NFE) and North Field South (NFS) projects in Qatar. The company also increased its sales by 15 per cent to reach 48 Mt, thanks to the strong call for LNG in Europe.

Furthermore, TotalEnergies explains that it contributed significantly to Europe’s security of supply by covering more than 20 per cent of the continent’s LNG needs due to its position as “the largest provider of LNG regasification in Europe.”

Aside from this, TotalEnergies invested $4 billion in low-carbon energies last year and increased its gross installed electricity generation capacity to 21 GW by the end of 2022, including 17 GW of renewables, in line with its objective to reach 35 GW of renewable capacity in 2025. These investments enable the company to show more than 30 per cent eligibility and alignment – in a proportional view – in 2022 under the European taxonomy.

Moreover, TotalEnergies underlines that it has gone after the implementation of its ambition to be “a major player in the energy transition” and to get to net-zero by 2050. According to the French oil major, the realisation of this ambition was marked by significant progress last year, as methane emissions from the company’s operated facilities were reduced by 34 per cent compared to the 2020 base year (compared to 23 per cent in 2021).

In addition, the lifecycle carbon intensity of energy products sold to the firm’s customers decreased by 12 per cent in 2022 compared to 2015 (compared to 10 per cent in 2021); and emissions related to petroleum products used by its customers (Scope 3 oil) decreased by 27 per cent compared to 2015 (compared to 19 per cent in 2021).

TotalEnergies disclosed that it had estimated, for the first time – “given its LNG growth strategy and convinced by the central role of gas in the energy transition” – the GHG reduction that its LNG sales could account for by displacing coal and fuel oil for electricity generation, depending on customer and destination. As a result, the company estimates that its LNG sales have helped to avoid about 70 Mt CO2 emissions globally.

Meanwhile, TotalEnergies has decided to strengthen its emission reduction objectives, buoyed by its progress in 2022. Therefore, the firm has set a new absolute emissions target of less than 38 Mt CO2 (Scope 1+2) on its operated facilities in 2025 versus 2015 – compared to < 40 Mt CO2 previously – thanks to a $1 billion global energy savings programme for 2023-24.

The company is reinforcing its objective of reducing the carbon intensity of the energy mix sold to its customers from -20 per cent to -25 per cent by 2030 compared to 2015, and to -15 per cent from 2025 (compared to -10 per cent previously). Additionally, the firm is reducing Scope 3 oil emissions from -30 per cent to -40 per cent in 2030 compared to 2015, and 30 per cent from 2025.

TotalEnergies underscores that its ambition is based on “a clear and disciplined through-cycle investment policy,” thus, it has opted to increase the share of investments in low-carbon energies by $1 billion to $5 billion in 2023 from the total planned range of $16-18 billion.

The French energy giant plans to invest $14 billion to $18 billion per year by 2030, depending on the cycle, of which a third will be in low-carbon energies, about 30 per cent will be dedicated to the development of new oil and gas projects, and the remainder devoted to the maintenance of the hydrocarbon portfolio.

Regarding TotalEnergies’ recent activities, it is worth noting that the oil major was is in the process of starting a multi-well appraisal and exploration drilling programme in Namibia at the end of last month.

This comes following the Venus light oil discovery in Block 2913B (PEL 56) located in the Orange Basin, offshore southern Namibia.