BAKU, Azerbaijan, May 15
By Leman Zeynalova – Trend:
The upstream business of French Total is well positioned to handle the market volatility and industry disruption this year, Trend reports citing GlobalData, a leading data and analytics company.
This is due to the company’s limited exposure to the US shale business, strong exploration performance over the recent years, and a comparably low debt to equity coming into 2020, according to GlobalData.
Total’s Upstream production grew by 5 percent year-on-year, driven by ramp-ups on projects, such as Culzean in the UK, Johan Sverdrup in Norway and Yamal in Russia. Impacted by lower prices, Exploration & Production cash flow was $2.6 billion, down 39 percent year-on-year. Notably Exploration & Production made two discoveries in Surinam.
In Upstream, the Group now anticipates 2020 production of between 2.95 and 3 Mboe/d, at least a 5 percent reduction compared to the previous 2020 forecasts, taking into account the voluntary reductions in Canada, the exceptional quotas announced by OPEC+, lower local demand for gas and the situation in Libya.
Confirming its strategy to grow in the integrated gas and low-carbon electricity chain, the Group maintains its planned investment level of $1.5 to $2 billion a year in low-carbon electricity and continues to grow in LNG with the anticipated start-up of Cameron LNG Train 3. Taking into consideration the lower demand due to the global economic slowdown, Total anticipates deferments in LNG uplifts during the second and third quarters of the year. Furthermore, the decrease in oil prices will negatively impact the LNG long-term contract prices from the second half.
“The company’s upstream impact scorecard highlights the relative resilience compared to its peers in areas such as reserve replacement, debt to equity ratio and budget revisions for 2020. However, the company’s upstream cashflow is particularly sensitive to weakened oil prices due to operational footprints in countries that offer less downside oil price protection in their fiscal regimes, such as Nigeria,” said GlobalData.
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