The party’s not over yet: TotalEnergies is once again expecting juicy profits in the first half of the year, against a backdrop of still buoyant energy prices, even if the trend is towards a lull after the stratospheric levels of 2022.
TotalEnergies’ record year in 2022: exceptional profits in a turbulent market
Last year was an exceptional year for the group, with annual net earnings of $20.5 billion (€19 billion), its absolute record after the $16 billion of 2021.
Like its competitors in the Western oil and gas majors, the French group benefited in 2022 from soaring oil and gas prices. The market was then shaken by the post-pandemic economic recovery, and even more so by the Russian offensive in Ukraine, followed by international sanctions aimed at drying up Putin’s oil and gas windfall.
Since then, countries dependent on fossil fuels from Moscow have reorganized their supply strategies, contributing to a downturn in prices. On the gas side, the Dutch TTF futures contract, considered the European benchmark, hovers around 30 euros per megawatt-hour (MWh), a far cry from last year’s highs of 342 euros per MWh in August, after 345 in March. Before the energy crisis, however, gas was only trading at around 20 euros per MWh.
On the oil front, a barrel of North Sea Brent crude was trading on Wednesday at a still-high $83.3, but below the peak of over $100 seen in 2022.
TotalEnergies: LNG boom
Ultimately, Bloomberg analysts expect TotalEnergies to post unadjusted quarterly earnings of $5.38 billion. The FactSet consensus is 5.12 billion. In Q2 2022, the major recorded profits of 5.7 billion euros, compared with 2.2 billion in the same quarter of 2021.
The Group is still counting on a very good year in 2023, thanks in particular to a successful strategy in liquefied natural gas, in which it is the world’s 3rd largest player. Sales of liquefied natural gas (LNG) soared by 15% last year as the world flocked – and continues to flock – to this ship-borne energy source, following Moscow’s decision to cut off its pipeline gas supplies.
TotalEnergies in search of a balanced energy future: renewable ambitions and environmental debates
The group, which aims to increase the share of gas in its sales mix to 50% by 2030 (compared with 30% for petroleum products), announced last month that it had joined forces with the American NextDecade and Global Infrastructure Partners in the Rio Grande terminal project in Texas, a gas liquefaction plant. This has fueled further criticism from environmental associations, who criticize the Group’s ongoing investments in fossil fuels, which are harmful to the climate.
In response, the Group has announced a series of billion-dollar investments in renewable electricity: for example, its intention to develop 3 GW of solar projects in Spain, or the equivalent in wind power in Germany.
As recently as Wednesday, it announced the acquisition of 100% of Total Eren, a leader in renewable electricity production, for 1.5 billion euros. At the same time, the Group also confirmed the start of oil well drilling in Uganda, as part of the Tilenga/Eacop megaproject, which has become a media symbol of the anti-oil struggle.