Wednesday, 07 July 2021 12:13

TotalEnergies looks to oil growth amid conflicting energy transformation strategy, says GlobalData

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Total SE of old has recently gone through a rebranding to become TotalEnergies by an almost unanimous decision by shareholders. This rebranding is in the hopes that the company can pull itself away from the traditional business practices which focused on oil and gas developments and become more of an all-encompassing energy company. However, the company, unlike its peers, is forecast to see a material growth in its oil production over the near term, says GlobalData, a leading data and analytics company.

Conor Ward, Oil & Gas analyst at GlobalData, comments: “TotalEnergies has made significant strides to investing more heavily in its low carbon, renewables business, however, unlike most other major European oil and gas companies, TotalEnergies is forecast to see a rise in its oil production over the near term. Most of the European majors have made the commitment to pull back on oil developments and push their focus more towards gas and low carbon technologies, while TotalEnergies is proving to still be committed to large scale oil developments and within the next five years oil production is forecast to grow.”

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Despite its ageing fields declining, TotalEnergies is forecast to see a steady growth in crude oil and condensate production through to 2025 from 1.2 million barrels per day to 1.23 million barrels per day equivalent. The largest portion of this growth is expected to come from its recently approved Ugandan assets surrounding Lake Albert in the west of the country, where TotalEnergies holds a 66.6% stake in a 230,000 barrel per day project.

Ward continues: “The company has a significant amount of crude oil and condensate production, which could come from unsanctioned projects such as Cameia in Angola, North Platte in the USA, and Gato Do Mato in Brazil. However, based on the decision taken in Uganda and the company’s recent acquisition in Block 20 Angola, these projects may suffer delays if the company seeks to reduce its crude oil production.”

TotalEnergies has suggested that it does not intend to reduce its scope 1 and 2 emissions in the short-term at least, meaning that many of its projects currently on hold have a higher chance of going ahead than would have been thought otherwise. The company is then planning to reduce its net scope 1 and 2 emissions from 2025 onwards and reach net zero by 2050.

Ward concludes: “For the company to continue investing in low carbon and renewable technologies, the increase in oil production and continued investment in major oil developments sends a clear signal that these types of projects continue to showcase attractive economic returns that may help the company deliver its longer-term strategic transformation goals. It remains unlikely that the company can continue to develop large scale oil projects given its long term ESG commitments.”

About GlobalData

4,000 of the world’s largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData’s unique data, expert analysis and innovative solutions, all in one platform. GlobalData’s mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors. 

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