By Barney Smith
Like BP and Shell, Totalenergies, the French Oil and Gas major, is engaged in transforming itself from an international oil and gas company to an integrated energy company. Like BP and Shell, it holds its AGM in May, on the 25th to be precise, in France of course. At first blush, the company looks to have made a real effort in renewables, with all that that implies in terms of outside perception (see Greenbarrel of 4 May for more detail). At the end of 2020, Totalenergies’ gross power generation capacity worldwide was around 12 GW, including 7 GW from renewable energy. The company aims to reach 35 GW of gross production capacity by 2025 and 100 GW by 2030, when it hopes to be one of the top five in the world in terms of electricity from renewables. The company has made a massive investment in solar and wind power and in energy storage, an indispensable part of the renewable landscape and a major challenge for the future of power grids. As part of its ambition to get to net zero by 2050, TotalEnergies is targeting activities in electricity that should account for up to 40 per cent of its sales by 2050.
A substantial portion of this activity will be in India, which, according to the UN, is expected to be the most populous country by 2027 and which already has the world’s third largest demand for energy. The challenge is to provide the same amount of energy with 40 per cent less emissions. India is a priority country for the company and a successful switch to renewables is part of the challenge. Building on a long-established partnership with Agani, one of India’s richest men, the company recently took a 20 per cent share in his renewables company Agani Green Energy Limited (AGEL). The Chairman of Totalenergies, Pouyanne, is on record as saying “our partnership with AGEL [is a] key contributor to the company’s objectives”.
Totalenergies is also strong in Russia, which accounted for 24 per cent of its oil and gas reserves and 17 per cent of product sold in 2020. Earlier this year after some adverse criticism, it issued a substantial clarification: it held a minority shareholding in a number of non-state-owned Russian companies: Novatek (19.4 per cent), Yamal LNG (20 per cent), Arctic LNG 2 (10 per cent) and TerNefteGaz (49 per cent). These companies are managed by their own staff with a limited number of secondees from TotalEnergies. The company is also a 20 per cent partner in the Kharyaga joint venture operated by Zarubezhneft. Totalenergies did indeed contribute to the construction phase of these projects, but it does not operate any oil and gas fields or any liquefied natural gas (LNG) plants in Russia today. On the contrary, Totalenergies is implementing Western sanctions against Russia – at some cost. A recent company announcement spoke of an impairment of $4.1 Billion.
Totalenergies is one of the 30 largest companies in the western world, active in more than 130 countries, with more than 100,000 employees, having absorbed both Elf Acquitaine and Fina. For the future, the plan is to spend up to 50 per cent of the development budget on renewables, electricity and other gases, essentially LNG. (Another target is to be No 2 LNG player in the world). The other 50 per cent will be spent on conventional oil and gas, but not necessarily conventionally. A critical objective will be to measure and then reduce the carbon intensity of products.
In terms of the forthcoming AGM, Totalenergies also has an immediate problem analogous to that of BP (Greenbarrel of 12 May) in that some shareholders wish to go faster than the Board deems wise. Apparently, the Board have sought the help of the regulator to thwart this.