TotalEnergies SE (TTE) Q1 2026 Earnings Call Transcript

So, good afternoon or good morning, everyone. Happy to be with you again today. So, before Jean-Pierre will go through the details of this first quarter financials, I would like first to make some few opening remarks, in particular on the conflict in the Middle East and its consequences. As you know, this region, Middle East, holds, of course, a very special place for Total It's deeply rooted in our DNA, in our history, in our identity, because it is where the company was born in 1924, in Iraq. And more importantly, this is a region where we have established, along the years, a prime position which differentiates ourselves. Since the very first day of the conflict on February 28th, our priority has been first the security of our teams and their families. and we have decided just through the two days after to organize the evacuation of employee families and as well as some non-essential employees out of the UAE, Qatar, Iraq, Saudi Arabia, Jordan and Lebanon. Thanks to the strong mobilization in all our affiliates in the regions but also around the globe and also at the quotas, more than 1,300 people have returned safely from the countries concerned by the conflict and I want to thank all the teams who participated to that strong effort. Safety of our staff will remain our utmost priority, but I want also to reiterate here our full solidarity and support for the population of these countries which suffer as a consequence of the conflicts. And I want to reaffirm Total Energy's commitment to all our local partners, contractors, and customers. From this point of view, I want to underline that we kept a presence in all the countries, aside of partners, for example, in Abu Dhabi, all our secondaries working for the ADNOC GVs are maintained on the ground. It's the same situation in Qatar. We have also, by the way, sent some experts to assist Qatar Energy in evaluating the damage and repair necessary to the two trains which were damaged during the conflict. We have maintained a team in Iraq, in Basra, of 20 Total Energy staff. which are supervising the progress of the GGI projects on the ground with around 5,000 workers there. And also, in Saudi Arabia, we have, of course, maintained on most of our second days in order to supervise the Amiral projects, which mobilize today 22,000 workers. So my message on this first is to thank all our teams, which are, again, working hard in the region facing the situation. I went myself last week to visit them, and I can tell you I feel I had a strong feeling of a high mobilization of everybody facing these adverse events, and also I met, of course, our partners and authorities to reaffirm our commitment to the region. Of course, we will have to draw some lessons from what happened, in particular, to envisage some alternative evacuation routes for the production of oil in the region that will come after the conflict. This conflict immediately has some impact on Total Energy's operations, and we have been, by the way, very transparent, I would say, since day one to disclose all the impacts on our activities. So at this stage, production is shut down in Qatar, Iraq, and UAE offshore, which represents approximately 15% of the total oil and gas production of the company. More precisely, 360,000 barrels per day, because we continue to produce onshore UAE production, oil productions, 210,000 barrels per day total energy sales, which is evacuated through Pujerra Terminal out of the Strait of Hormuz. And we also continue to produce dolphin gas between Qatar and UAE because it's, I would say, a domestic growth production. While this is a significant portion of our production upstream, these Middleston assets contribute less to our cash flow per barrel than the rest of our portfolio due to higher taxation in the regions. And this 15% of volumes, a little less, $360,000 per day, impact accounts only account for roughly 10% of upstream cash flow at $60 per barrel. The company's cash accretive growth expected for 2026 is largely outside the Middle East. And you've seen that through the results of the first quarter, meaning that a higher oil price observed since the start of the crisis, more than offsets, of course, the loss of production in the Middle East. An equivalent of $8 per barrel increase in the Brent is enough to offset the expected 2026 SSO from the shut-in production. And we are, of course, today of more of $100 per barrel, I think even $115 per barrel this morning, which in terms of our sensitivities to price represents substantial additional cash flows. The impact on the energy production shutdowns in Qatar or in Abu Dhabi on our energy trading activities are, in fact, very limited, as our exposure to our marketing portfolio is limited to 1.5 million tons for the remainder of 2026. I remind you that most of the energy produced by our GVs in Qatar are, in fact, marketed by Qatar Energy itself and not by Total Energy. Finally, on refining activities in the region, the setup site, which is owned jointly by Aramco and Total Energies, was impacted by strikes that occurred during the night of April 7 to April 8, causing damage to three units. No casualties were reported. As a safety precaution, the units were immediately shut down. A partial restart occurred on April 14, allowing to resume production at a 50% capacity 230,000 barrels per day, and the repair work on the first one of the units, the VDU units, are well underway, and we expect to restart and to increase the production to more than 300,000 barrels per day from the beginning of the early days of May, May 5th, or around. So that's the situation for assets. But this conflict, of course, has consequences beyond the only perimeter of total energies, and now will impact the course of 2026 very significantly in terms of markets. Although the damage to upstream assets has been limited so far, the closure of the Suede almost constitutes a major disruption to the world energy system, as it affects around 20% of worldwide oil, crude oil, refined products, and, of course, energy exports. And there is very limited spare capacity of production outside the Gulf, in reality. So the immediate consequence was a surge in all prices, which are now around $100, $115 per barrel, which have been extremely volatile, with major swings in the past week. Some days have been the highest days. I think we experienced eight of the ten highest volatile days in the last 25 years during the month of March and April. So given the time required to restart facilities, but also, and more importantly, to reach the markets, you know, because the oil tanker which will be loaded in Abu Dhabi or inside Arabia will take 25 days of shipping to reach its customers in Asia, Korea, Japan. And so there is a time lag. Even if the war was to end quickly, prices are expected to emerge at high levels. And in all the scenarios I can read, and I agree with the scenarios I'm reading, either from the IMF or from some banks, at least $80 per barrel is expected for 2026. In fact, the reality is that the 2026 surplus scenario that was anticipated by the markets and by ourselves, by the way, at the beginning of the year, is no other. is behind us, with global hydrocarbon inventories being materially drawn to balance the market, already at a pace of 10 to 13 million barrels per day. We have already consumed, I would say, 500 million barrels out of inventories. And with the phenomenon I described to restart and to break the market, It's probably more 1 billion barrels, which will at least be consumed from the inventories. And we would exit, even if the conflicts, and I hope so, will end in the month of May, we would exit the conflict with clearly some very low inventories. So this conflict also has some impacts on the energy markets and prices. We have seen that the European gas prices have established today at around $15 per million BTU. But again, we are facing now, by the summertime, the peak season for LNG because it's only the warm summer season in Asia, which will grow and which will call for more LNG demand. But also it will be a season where Europe will have to replenish its storage. and as you know at the end of the winter season we were at the lowest point of the last five years in terms of European gas storage around 25 percent and we anticipate as well and I was in Qatar that Qatar Energy will wait for a real stabilization of the Strait of Hormuz before to restart the quick perfection plants. We cannot turn off these plants easily so it will also impact, I would say, the time it will take to reach the market. So that's on LNG, and I would not be surprised to see some support from higher prices by summer season, considering this time lag that LNG could go back to the market, and Qatar LNG represents almost 20% of the world market. So in this context, the strategy of total energy demonstrates once again the ability of the company, to capture price subsides, thanks to major strategic strengths from the company. And also, I must say, and I compliment the team because of a strong operational performance, which, of course, is of essence in such markets during the first quarter. First, of course, we are integrated along the value chains of oil, gas, energy, electricity, and allows us to capture margins and prices all along the value chains and provide us with a unique combination of activities in oil, gas, electricity, being a low-cost producer, transforming them into added value products which can then be traded on the market and sold to our B2B, B2C customers. Secondly, we are a growing company and a strong organic growth. And then we are demonstrating quarter after quarter our ability to strongly grow our production We have seen a 4% year-on-year organic production growth for the oil and gas business and also, of course, electricity business. 4% for oil and gas was above our annual guidance of 3%, which, of course, helps to offset, if not completely, if it was completely during the first quarter, it will be partially during the second quarter, the impact of Middle East conflict. But more importantly, it allows us to capture the upside of the high prices because the incremental productions, the new production that we put on stream, is more accretive and generates more cash flows per barrel than the average of the portfolio. Third, we are diversified. And I think this is, again, a strong lesson of this crisis. A strong diversification, our rich and diversified portfolio allows us to compensate, again, the impact of the crisis in the Middle East for our geographically diversified portfolio of oil and energy outside of the region. It notably allows us to activate the flexibility of our energy portfolio to ensure the security of supply of all our customers and the diversity of energy portfolio. We are producing in 11 different countries, the lowest to serve our customers in Asia, rerouting some non-contracting volumes that we have in our portfolio to them, and not to declare any force majeure in our contracts. I can ensure you, because I visited some customers in Asia, but they appreciate very much the value of the contract commitment at Total Energy. We have also, I would say, and it's another example of the optionality of our diversified portfolio, I would say that more than ever, the decision to restart the Mozambique LNG construction in January could be fully appreciated because it's a way of diversification, which will be good for our portfolio by 2029. It was an article recently in a journal that the Mozambique will be the cutter of Africa, and we are proud to build these projects in Mozambique, and it will help us to diversify. And I would say as well, as we are working hard, these events are giving a good momentum to sanction Papua LNG before year end. So in this context, of course, and compared to the beginning of the year where we were all cautious. There are no reason not to fulfill all our commitments for strong returns to shareholders. And I think the board has taken decisions yesterday that I'm happy to report to you. And considering, of course, the strength of the balance sheet, but also the environment and taking into account the ability to demonstrate our growth, priority was again given to what I call the sacrosanct dividend by continuing to – it's a strong track record of dividend growth, and we have decided to increase the first interim dividend by 5.9 percent, above probably market's expectation, to 0.9 euro per share, compared to last year's interim dividend, which was 0.85. So we confirm, once again, the leadership of Tunnel Energy, not only in terms of dividend resiliency, but also a more important dividend growth among the oil and gas majors. Secondly, in view, and we are I would say very pragmatic and consistent once again in view of the current projections of the evolution of the prices not only the second quarter, but as I said, along the year 2026 the Board of Directors gave us the authorization to continue of course the share buyback program up to the high end of the range that we gave last February, which was $750 million to $1.5 billion per quarter. So we'll target the high end of this range up to $1.5 billion per quarter. The board also reiterates the objective to achieve the cash payout ratio above 40% for the full year 2026, and we will monitor buybacks accordingly along the year. keep as well in mind that in terms of capital allocation both attach great importance to deliver the balance sheet and we would be happy to see agreements in the low terms by the end of 26 if the crude oil price was remaining above $100 per barrel on that note and I will now turn now to call to Jean-Pierre we will go through the details of the first quarter financials

thank you Patrick So I will start by commenting on the price environment in the first quarter versus the first quarter 25. So Brent averaged $81 per barrel during the first quarter versus nearly $64 per barrel in the first quarter, up more than 25%. And average liquid price was up by $12.4 per barrel due to the time lag effect in particular in the Emirates. TTF averaged $13.7 per million BTU versus $10.3 per million BTU during the first quarter, And our average LNG price stayed at $8.5 per million BTU, all price increase impacting LNG prices with one or two months of like time according to LNG pricing formulas. Finally, the European refining margins remain at $11.4 per barrel, on average, over the quarter, with exceptional margins in March and poor margins in January and February. In this price environment, the company reported very strong financial results, with first quarter 26 cash flow of $8.6 billion, increasing by 20% compared to the first quarter, and adjusted net income, increasing by more than 40% to $5.4 billion. These results, as already highlighted by Patrick, were possible because of a strong operational performance of all businesses, which demonstrated the company's ability to fully capture the environment's upsides. Upstream delivered a 4% upstream underlying accretive production growth, offsetting the production loss due to a crisis in the Middle East, downstream a very good operational performance of our refinery with an utilization rate on average over the quarter above 90 percent that allow us to capture high refining margins in March. And trading was also able to take benefits from the high market volatility in March and deliver the high performance on crude petroleum products, but also energy. Total Energy has delivered a strong profitability this quarter, with return on equity at 14.4% and ROH at 12.7%. Now moving to the business segment and starting with hydrocarbons. On a year-year basis, excluding the impacts of the Middle East conflict, first quarter oil and gas production exceeded expectation and increased by more than 4% above the guidance provided of 3% for 26. As communicated by the company from the very beginning, the production was impacted by a conflict in the Middle East, with an impact of around 100,000 barrels per day on average for the quarter, which correspond on average to around 25 days of disruption during the month of March. E&P, exploration and production. So, turning to quarterly results and starting, so, with E&P division, the segment generated an adjusted net operating income of $2.6 billion this quarter, up by more than 40% quarter to quarter, fully capturing the increase in average liquid price of $12.4 per barrel over the quarter, and demonstrating the accretiveness of the new projects. This quarter, La Paz out west in Brazil, Mabouk in Libya started up, and we each, once ramped up, bring an additional production capacity of $25,000 per oil equivalent per day. Similarly, cash flow reached for E&P $4.6 billion, up 26% quarter to quarter. On the cost side, once again, we maintain our leadership with an average OPEX per barrel of oil equivalents below $5 in the first quarter, 26. On integrated LNG, so on the production side, LNG production, it has grown significantly by 12% quarter to quarter, mainly supported by growth in Australia, with it is back to food capacity during the quarter, the United States and Malaysia. First quarter LNG sales reached 12.4 million tons, supported by strong spot activity, giving us a strong start compared to our yearly guidance of more than 44 million tons. Supported by this growth and strong trading activity capturing market volatility, the adjusted net operating income of integrated energy was increased significantly quarter-to-quarter to $1.3 billion and cash flow to $1.8 billion. dollar. Given the evolution of the oil and gas prices in recent months and the lag effect on pricing formulas I already mentioned, the company anticipates an average energy selling price of around $10 per million BTU for the second quarter of 26. As we execute our consistent strategy in LNG, the main milestone of the quarter was the full restart of construction activity at our Mozambique Energy Project, with more than 6,000 people already on site as we speak. This project has broadened the diversification of our energy supply, a strength that the current crisis has put an additional emphasis on. Turning to integrated power now, so net power production increased year-on-year to 11.7 terawatt-hour, with a 20% growth of power generation from renewables, offsetting the lower utilization of gas-flexible capacities in the context of lower winter demand in Europe and in the United States. Total Energy has increased its renewable capacity by nearly 8 gigawatts over a 12-month period, on track to reach its objective of 42 gigawatts gross installed capacity at the end of the year. Cash flow from operation was $0.6 billion, as no firm downs were registered during the first quarter 26, unlike in the first quarter 25. This quarter, again, we provide more granularity in integrated power financial performance, with a split in cash flow between production assets on one side, renewable and gas fire plants, and sales activity on the other side, B2B, B2C, and trading. the former contributed 35% of the cash flow and the latter for 65% in line with the first quarter 25 due to the seasonal nature of the marketing business with more consumption, obviously, during the winter and given the closing of EPH deals that we announced this morning Total Energy has now 50% interest in a portfolio of flexible power generation assets in Europe And integrated power should then benefit in 26 from 10 terawatt hours of net production, net power production, in line with the 15 terawatt hours guidance given for the full year, and more than $500 million contribution to available cash flow in relation with this EPFG. Moving to downstream and during the first quarter, refining and chemicals was able to capture the exceptional margins in March, thanks again to the high availability of the refineries, which recovered their full operational performance. It was particularly the case in Port Arthur in the U.S. and also in France. Utilization rate reached 92% in the absence of planned tolerance, and trading activities was also very strong for crude and product, taking benefits of the market volatility. Overall, for ERC, adjusted net operating income was up nearly $600 million quarter-to-quarter to $1.6 billion, and cash flow reached $1.7 billion. In marketing and services, results remain consistently strong and reflect the seasonality of the business with higher margin activities offsetting lower volumes linked to the disposal of some assets in Brazil and in Africa. Moving to corporate, to company level and starting with working cap. So working cap increased by $5.1 billion during the first quarter, out of which $2.5 billion is related to guide business seasonality and $2.6 billion that reflects the impact of higher hydrocarbon prices at the end of the quarter, notably on inventories. While the context remains quite volatile, we deploy our investment program with discipline, with net investment that amounted to $4.5 billion in the first quarter, with a neutral balance between acquisition and disposal in line with our quarterly budget, and we therefore reiterate full year 26 net investment guidance of $15 billion. As a result, the gearing lands at 15.5% at the end of the quarter, with cash flow growth driven by higher energy prices, partially offsetting, in particular, the impact of high prices on the working cap bills. Looking forward now, we expect to maintain strong momentum, with hydrocarbon production excluding middle-east impacts in the second quarter expected to grow around 4% compared to the second quarter, 25, in line with first growth registered during the first quarter. As we speak, as mentioned by Patrick, production shutdown in the Middle East still represents around 15% of the company's total production, and we anticipate refining utilization in the range 80% to 85% in the second quarter, which accounts for a two-month scheduled maintenance at Donge and the impact of the capacity reduction of support commented by As I mentioned, the company confirmed it expects its yearly net investment to be at $15 million for the full year, in line with annual guidance. Therefore, this investment should trend downwards in the second quarter. Meanwhile, the company is evaluating options to accelerate short-cycle investment to capture current hydrocarbon price environments. To conclude, this set of growing ironics clearly demonstrates in our view the strength of our integrated model in oil, gas and power, which enables us to see price upside in the first quarter and put us in a strong position for the second quarter and the rest of the year. With that, I think with Patrick, we are now available to answer your question, so you can open up the line for questions, please.

Thank you ladies and gentlemen. We will now begin the question and answer session. As a reminder, if you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. Please kindly mute any audio sources while asking a question. If you wish to cancel your request, please press the star and two key. Once again, please press star and one if you wish to ask a question. The first question is from Michele Della Vigna, Goldman Sachs.

Thank you very much, and congratulations on the strong results. I wanted to ask two questions on LNG. The first one is about whether with all of this crisis, you're starting to see a resurgence of demand for oil-linked long-term contracts, and if that can unlock more LNG projects for you, like, for instance, PNG. But longer term, I was also wondering if this crisis may actually be a bit more concerning and reduce some of the dependence on hydrocarbons from Asia, for instance, turn some of those countries more towards coal, solar and energy storage as an alternative.

And if that could actually make perhaps what already looks like probably an oversupplied LNG market from 2028 last well into the next decade. okay we take the second one first uh it's quite clear you know for customers in asia a crisis in 22 another one in 26 the reliability i would say from an affordability point of view of the lng will be questioned and that's why by the way we think we will we have to promote to them the idea of long-term contracts not only related to spot price you know that's very clear that's what the Europeans because of their rule are not benefiting from I think it should influence put them more on this type of long term contract you are right but that way the whole planet is not only in Asia I think the government will look again to like we were in the 70s domestic production first I would say domestic energy first whatever it is coming from coal when you have coal coming from biofuels by the way Malaysia, Indonesia are beginning to raise their biodiesol content, you know, very logically, but coming to renewables, of course, as well, and from this position of company, Total Energies could benefit from it because we are also investing in electricity, I would say. So that would be, and I would say electrification would be also a global answer because it will give, you can produce electricity from various metals and not only from hydrocarbon. So that would be the other big trend, I think, we will see because security of supply, because, again, affordability of energy is of essence. So it's not a very good news, I agree, for the energy markets. As you said, probably the result of this crisis as well is that we pushed back some of the, I would say, the famous wave, I think, because there will be some delays in some projects, because we are, by the way, we don't know today how long will war will last, we have no idea. But I see, I was always, I will remain a good price. I think 27, which can be optimistic. Then, what you said, the oversupply LNG market will come from 2028. But I would say, by the way, that it's not bad for customers to have an oversupplied market. You know, one of the observations I've done when I observed what happened today with the crisis, and it's quite remarkable. I know only two markets today where there will be no impact on the crisis on the energy price. One was the U.S. domestic gas price, the Enriab, still remained. even lower, at $3 instead of $4 before, or $3.5. Why? Because there is an oversupply, there is overcapacity, the permanent gas, now it's connected through pipelines. And the other market I observe is the French electricity market, no impact at all, because also overcapacities of nuclear and renewables, by the way, both. So we produce too much. And so that means that it is a way to secure the affordability. So from this perspective, because of what you said, and the fear which could be generated to our energy customers, the fact that we'll enter at a certain point when, probably more summer 28 than before, or winter 28, to, I would say, a lower cycle, would be good to convince them to come to us. I make a link with your first question. Honestly, today, I think we were happy and lucky to have signed a lot of online contracts Because in this context, where there is sort of a bullish price of oil, we have always going to be bullish, but I think this context, the crisis, will also impact, I would say, this oil market. Because there will be now something which was completely even hypothetical, which in fact was only putting in the risk cartography, which was the closing of the Strait of Hormuz, became a real possibility. It's a materialized threat. This threat is materialized. And you have in the Gulf more than 20% of the 25, 30% of the oil resource, oil and gas resource. So clearly, I think this will have an impact on the way that the markets will, I would say, take this threat into, even if we go down to a stabilized situation for the Strait of Hormuz, will have an impact on the markers, on the Middle East markers, I would say. So today, I think we are happy to see that. We see appetite from Asian buyers for Papua Energy, not only because of the contract, but because of the geographical position, I would say. Of course, Papua Energy is perfectly located, not far from them, outside. So any diversity is good. But on our side as well, we think that we are, by the way, because of this geography, we will see if we sign long-term contracts for Papua LNG or if we keep some LNG for our own portfolio because we like this LNG as well for our own portfolio. So we'll be... But again, no problem from this perspective to sign and we might be, I would say, in this context a little tougher in the negotiation. What I've observed the last week, some Asian buyers come back to Unreal Plus because suddenly, because they just observed what happens and the stable, I would say, and affordable gas marker is the Enriev. I think there will be quite a lot of new popularity for the Enriev Plus if some energy off-takers want to sell their energy there. But definitely, this crisis has an impact on all these global energy markets. Having said that, you've seen our results during the first quarter where you have a strong, diversified portfolio, you can do good results when you have volatility. And I think we demonstrated that with our teams during the first quarter. I think we'll continue for the next quarter as well.

Thank you, Patrick.

The next question is from Biraj Borkataria, RBC.

Hi, thanks for taking my question, and thank you for the comprehensive overview of your operations. The first one was just on the comment in the release around accelerating short-cycle investments. Could you just unpack that a little bit more? What opportunities are you looking at? And secondly, what are you looking to see macro-wise or otherwise to put that capital to work? And then secondly, just a follow-up on Papua New Guinea. Could you just talk about the steps from here to FID? Are the fiscal terms all now agreed and tenders and so on? Just any uncertainties there ahead of FID?

First question. I mean, you would have been surprised that we didn't mention that. I'm sure I would have a question. So it's quite natural from the CEO of the company that I've asked to my ENP teams, okay, is there anything to accelerate on the short cycle to benefit from a higher price deck? because, again, on 26, I'm quite, I mean, to be confident, it's difficult in this world. But to see at least $80 per barrel, I don't think I would put quite a lot of my own money on it for the rest of the year. So, by the way, it's an exercise which is moving on. I know there are few countries, like Angola, for example, where they have some ideas. So, if we need to dedicate a few hundred million dollars to that, I would do it. It will be, maybe I will tell you at the end of the day, but it's not $15 billion, but $15 to $15.5 billion, but you will accept it if it's profitable on the short term. I think, honestly, I'm not sure it's so big because, in fact, when we built the budget, we did not arbitrate a lot of short-term cycles. In fact, we had a list of what we could cancel in case the price of all was going down to $50 per barrel. So we prepared in case of adverse market. but we have asked the questions and I know that because I visited some countries that I have some few ideas so I'm quite, I can be flexible on keeping the discipline but again, if we can generate some good free cash flow on the short term, everybody will appreciate it, so it's not probably as big as I just mentioned, it's probably some hundred, a few hundred million dollars that we could mobilize subject to capacity to have the rigs, etc So we are working on it with some countries. On P&G LNG, I think, you know, it's a big project, many partners. We have in parallel some, I would say, at least four workflows. So the CAPEX side, I would say, and the EPC are progressing very well. We have made some recommendations to our partners. We are waiting for the approval from one of them. So I hope we will get it soon so that we can move forward with these standards. In parallel to that, we have, I would say, the financing of the project because it is a project financing. Bo-filing, by the way, because as you know, selection of the nationality of some contractors have an impact of the involvement of export credit agencies. So we need to do – it's not – there is a little sequence there. So we need to have decided the contractors so that we can definitely confirm to the different credit export agencies. So that's also, I think, there is some appetite, clearly, from Asian credit export agencies, but also we discussed with the U.S. ones about it. And so we are moving on the financing of it as well. So it's a second workflow. The third workflow, as you said, is a discussion with the government. They have progressed, I would say. I could almost say finalized, but I didn't see the ink on the paper. But between the government and also, there is a good understanding on the agreement. So I consider, of course, it will have to be, again, approved by our partners. So we are, I would say, now in the process to final, to close the loop, I would say, between the partners, governments, on these final end terms. the idea there is somewhere to protect the projects. The capex will be around $14.5 billion, so it's not too cheap. It's much better than the $18 billion, but it's still cheap. So the idea is to protect the projects when the price of oil are low and to give back some when the prices are high above $90, I would say. So there is a sort of trade-off, which is good for the... which would be good. And the fourth one is marketing. On the marketing, there is some progress, quite a lot of progress. But again, on our side, the more we look to Papua LNG, the more we have appetite for the LNG located in that region and diversifying our portfolio. So it's possible that we could market, because we market not only all LNG, but the one of Kumul as well, we could market maybe 1 million tons on the long term and keep the other 1.5 to 2.4 on the portfolio. So we are looking to different options. So all that is progressing. I would say the target is to sanction the project for sure before the end of the validity of the offers, which is, I think, around November. So because in this market, I don't want to have to, we don't want to reopen and to negotiate to extend offers. You know, we could face some inflation there. but I think we are aligned with the partners on moving to the AFID second half of the year with the governments for sure there is a last point to clarify if I want to be exhaustive we need to be sure of the way that the Kumul financing, you know there is a Kumul back-in and we need to know exactly what is a back-in which will be exercised so there but all these workflow we try to we are working on them in parallel to converse to the AFID thank you very much the next question is from Lydia Rainforth Barclays

please go ahead thank you and good afternoon to you both two questions please could you just touch on the early closing of the EPH transaction and what options that now gives you and then secondly could I come back to the cash return side I just want to be clear about what the message is around where we see cash returns going through here because obviously you're at the top end of the guidance that you've given, but that was at $60 to $70. And I'm just trying to work out whether you would go beyond that or whether the priority then is the debt side coming down. So I just want to be clear on the messaging around cash returns for the rest of the year. Thanks.

So first point, EPH. First, I mean we have been, and teams have been very efficient. By the way, the antitrust supervisors also have been super efficient because even in Europe, we get three calls to get the approval on these transactions, which allow us to close at the end of April instead of the end of June. So that means that we are now entering into this new company, TTIP, at a time which, by the way, is not too bad because as the gas prices are higher in Europe and the electricity price in a country like Italy, we have a big exposure now to Italy. Italy is facing some increase of electricity price And so these gas-fripe-weapon fleets will have a little higher margin. In fact, from two euros per megawatt hour beyond, I would say, the normal average margin. So it's positive. The second good news, recently the EPH team managed to get very attractive new capacity contracts for some plants in Ireland, around 200 pounds per kilowatt hour. So we come with a time where it's good news. So first, I'm happy to join to make it earlier. And it gave us, of course, options, as you know. Now we will have access to 50% of the electrons of all this 50GT fleet. And so this will allow our teams to increase our trading business, but also to go to customers to sell them things from power with combining gas and electrons coming from the gas-type power plant, flexible electrons with the renewable electrons. So that's exactly the thing. So we will move forward. We gave you some indications, I think, in the facilities about the impact because it's from 1st of May. So I think we evaluated the impact on the production around 10 TWh, hour, and we told you that the cash flow should be at least two-thirds of an annual cash flow, which means at least $500 million of impact, maybe a little more. We see, let's enter in the venture. So I would say it gives a push to be integrated for a business, and you should see next quarter and third and fourth quarter, I would say, in the results and the cash stay priced compared to this level where we are today. Cash return, I mean, let me be clear, you know, we are going step by step. We gave you, yes, you're perfectly right on the buyback. We gave you at the beginning of the year 750 to 1.5 billion between 60 and 70 dollars. So we told you immediately on the second quarter, we'll monitor that quarter after quarter, to be clear. We go to the high end of the range to $1.5 billion for this quarter. And then I have added in my comments that we are guided by another objective, which is 40% of payout. So if you make the math, you will see that if we are at $90 per barrel, for example, as an average, it's an example, I will need to go beyond $1.5 for the second and third quarter. but I think the idea is to monitor it progressively because again, I don't know if we will be at 80, 90, 100 but we reiterate this commitment and the board reiterated the commitment in the press list to give you the guidance at least more than 40%. I have added to you because more than 40 could be 40, 45 I just added to you another guidance to tell you that if we were in a scenario of $90 or $100 per hour. If there is some cash, priority will be also to deliver to the company and if we are able to combine low terms of gearing and higher buybacks, we will do it. That's the idea. So I hope I'm being clear. I will not give you a precise scale, what happened at 75, 80, 85, 90, 95, this mathematical formula. You know, I'm I'm not a perfect engineer, so I prefer you to guess, no. That's perfect.

Thank you, Patrick.

Next question is from Martin Ratz and Morgan Stanley.

Yeah, thanks for taking my question. I've got two, if I may. I wanted to ask you about the two to three months sort of restart time that you mentioned in the release. And I was hoping you could elaborate a bit on what really happens in that period. What are the steps that are on the critical path that make this longer or shorter? Is it getting tankers back into the Persian Gulf? Is it well intervention? Are there critical components in some of the energy facilities? Can you please make that sort of operational, logistical, sort of what really drives that? And secondly, I wanted to ask you about Mozambique, where we are now with the total budget for the project and the start, the timeline. timeline. I remember a $15 billion, but I also heard a $20 billion. Can you just give an update on where we are now?

The second question is easy. $20 billion has been consistent for the last two years. $15 billion, it was a long time ago. We have told you that there was some interim costs because of force majeure. We have updated. We have been obliged to renegotiate some of the EPC contracts because four years after, of course, there was inflation. So I've repeated $20 billion in all my speech for the last two years. So I repeat, $20 billion today. And this is the budget on which we are and which will put the financing, by the way, on the basis of $20 billion. So the rest is rumors, but this is the point. So this one is easy. The timeline, we have restarted in January, so we have 6,000 or more people on the ground today. So they are, I mean, I've been there with the president of Mozambique, and they are already, construction has begun on the train, on first train and jetty. So the timeline is that the objective and the timing is to produce first energy by 2029, the first train. So that's where we are sticking to that timeline. And the mobilization is on its way to reach this target today. And, you know, on this project, we have, in fact, we spent some money not only to safeguard equipment, etc., during four years, but also to progress all the engineering and the procurement. So all that has been done. It's very advanced compared to, I would say, traditional projects. We have a progress at the end of March of the project. In fact, the global progress of the projects at the end of March is 42%, in fact. So we are not starting from crash. We have progressed on these projects, and so it's a matter to be able to construct. By the way, since January, the security situation in Cabo Delgado is quiet, I would say, and well under control, thanks to the support of both Bosambican forces, but also RANDA forces which are committed to remain in the area. Then, on the first time, so I mean, probably there is, I was reading the press at the same time because, in fact, to restart facilities, it does not take two to three months. The two to three months is covering the whole cycle that I described in my introduction speech. It's also the fact between the way you will restart all production, you will bring tankers. Because the tankers which are today in the Gulf are all full. So you have, I think, something like several hundred of tankers, so you need to exit, you need to bring some empty tanker back, then you need to ship the new oil to, I would say, some destination in Asia. Like I said, it's 20-day shipping. It's longer if you don't go to Europe. So it's a matter of the delay. It's not only because restarting the wealth, it's not very complex. In the Middle East, production is generally quite easy production. So we don't expect difficulties from restarting the wealth. It's more restarting the world system to to re-stabilize it, to come back to the flow where before the war, you had every day 50 old tankers moving in, moving out the Gulf, etc., and charging, loading oil or loading products. So that's this cycle where we estimate two to three months to have. So it's not exactly what the word is restarting, it's not restarting production facility, is restarting or coming back to, I would say, a normal mode, which should have been more correct in our statement. What I said on the LNG side, I spent some time in Qatar. On the Qatari side, it's clearly of course we cannot afford to start on again liquefaction plants and start off again as the crisis comes back. So I think Qatari very wisely wants to observe, I would say, some certain stability in the situation before to be able to restart. So that might take a little more time, knowing that energy tankers, the fleet is not as strong, I mean as big as oil tankers, so we need to move the energy tankers and then, you know, we don't use the Red Sea for example, with energy tankers, so the tour to the voyage to come from the Middle East, from Qatar to Europe is longer around Africa. So this is, again, an estimation more about the time that it will take to come back to, let's say, a normal situation. Thank you.

The next question is from Doug Legate, Wolf Research.

Good morning, everyone. I wonder if I could also squeeze in to Patrick and Jean-Pierre. Maybe first for Jean-Pierre or whichever one wants to answer this, you're getting an opportunity with these windfall oil prices, obviously, to address your capital structure, perhaps. Obviously, working capital bumped up your net debt, but you also, I guess, added another hybrid bond pending the redemption later this year. I'm just wondering, where would you like to see the capital structure? And in this environment, why hold any hybrid bonds, given those were something of an emergency issue during COVID. That's my first question. My follow-up is, very quickly, Patrick, I wonder if this environment, as it relates to the Fannie margins specifically, has changed your view on Port Arthur as a core asset.

So perhaps on hybrid, so we do not increase, the intention is not to increase the hybrid bond portfolio. We are opportunistic at Total Energy. The library market was very good in January and February. By the way, it was before the crisis, so before the $100 per barrel price. So we decided to do liability management, so just to anticipate, in fact, the bonds that will mature end of the year by replacing it at good condition. So it was 1.5 billion euros. So that's all. So it's not our intention to increase this portfolio. So just benefiting from good markets at the beginning of the year to, in fact, anticipate the redemption of the bonds.

What about the capital structure generally, Jean-Pierre? I mean, why not take the opportunity to lower the net debt?

I said that. I think I told you that I just told you that the objective, if I want to reach a gearing of low terms, that means lowering the net depth, fundamentally. So that's a way to reach low terms. So I told you that one of the primary objectives that will be if we are at $90, $100 per hour environment, the board, and I convey to you the message of the board, in the arbitration, we have on one side the 40% of payout to shareholder that will stick on, But if some of you ask me to go to 50%, I might answer to you, no, 40%, more than 40% is our commitment. And the other, the extra cash, we prefer to deleverage and to lower the net debt going down to gearings of 10% and maybe lower, in fact. So for me, that's clearly the trend of the direction we want to give you today. So we share your view. On Portafer, you have a buyer for Portafer, Doug, or what? You have an idea in the head? No, I mean, honestly, Portafer is a very good asset, you know. It's, by the way, today making good results, I can tell you. It's a very positive asset in this environment. It has a value for trading teams because it's the only asset. You know, trading is not only in our companies. It's, in fact, optimizing, I would say, of assets, molecules, and there are flows around of assets. They optimize molecules around of assets. So it's the anchor point for, and we have a strong trading arm in the U.S., and I would say an anchor point is a tool for them. So it's on one side for refiners, a profitable asset, where we have also, I remind you, integrated a lot of petrochemical assets with BTP and Baystar crackers. So it's an integrated platform, and today we benefit from good margins. You know, for example, today we have engaged and we are on the verge to sign some trading contracts with Venezuela, with PDVSR, and part of the destination of PDVSR heavy crude oil will be Port Arthur, and our traders are developing a trading scheme around flows from Venezuela to the U.S. Gulf Coast. So I think that's the idea on Port Arthur. So yes, it's a good asset delivering and contributing to the strong downstream results that we have experienced.

Very clear. Thank you, guys.

The next question is from Lucas Herrmann, BNP Paribasane.

Thanks very much. Patrick, I wondered if I could ask you about the UAE news overnight and the decision to exit OPEC. What your personal thoughts are, how it leaves you thinking perhaps about the future and the robustness or otherwise of oil prices, just general comments. And secondly, if I can be greedy, any observations on Namibia over the last three months or how your sentiment towards that opportunity may or may not have changed if you continue to look at the data. Thanks very much.

So the right decision by the state in which we are heavily involved. We knew for some, not today, but for some years that the UAE were not specifically happy with the quota which was allocated to them. I think it's quite public by the OPEC because the UAE have made, and we are contributing to it. to contributing to it. We are one of the most exposed companies to the UAE, onshore and offshore. They have involved, they have a program to raise their capacity from first to four and then to five million biovolts per day, where we have, by the way, there was a test in January, an official test for the OPEC, by the way, where we reached during a week five million biovolts per day. So it's, by the way, it's contributed before the war to the good production, which was, I mean, delivered by Total Energies in the first quarter. So, this is our decision. On our side, you know, as the CEO of an oil and gas company, we supported the OPEC role in the market. But I've seen that OPEC or OPEC+, I've seen that Russia will continue with OPEC, with Saudi Arabia in OPEC+. And I think the UAE has also said that they will coordinate with the OPEC on the market. So, I think clearly the statement, when you read the statement of the UAE, they are investing for growth and they want to benefit for the growth. I would say that's the way I'm reading the statement. Shoot you for oil prices? Honestly, Lucas, what happens today, you can see that the oil prices are not only relying on supply and demand, you know, and the pure logic. So I think after 11 years of CEO, I've seen more periods of, I would say, external events to the market than really the market itself. So we'll see the way that the different countries and the role that each country will want to play in that context. On Namibia, I would say good news for me in Namibia, you know, we have engaged in January with the authorities at the ILS level, I went myself, the chairwoman of GALT, together. For sure, I would say this combination of total energy in GALT in Namibia has been very welcome, locally, very welcome, and it will help everything. First, the sanction of Venice. Then on Venice, we have an agenda with the government, which is to make our best on both sides to sanction the project by, I would say, end of July, because we have there again some offers by end of July, tenders. So why is it positive? Because they see our company as being the operator of choice, and we can discuss with them not only on one project, but they see not only our commitment to one, but to at least two projects, if not more, with Mopane, behind Mopane, behind Venice. So the plan is clear. We want to sanction Venice this year. There is a discussion with the government to amend. This is a very old oil and gas law, in fact, from the beginning of the 2000s, which has never been really used in Namibia. In fact, we are the first, in fact, to be, I would say, to develop a very large project, an ultra-deepwater project, and that's the point on which I think the authorities understand that these ultra-leaf water projects require some, I would say, some amendments to the standard terms, so this is on what we work today with them. And again, there is a good dynamic because we are both sides in a win-win situation and both we see the perspective of the second project. So on the second project, Mopin, our plan, and again, it will be approved soon, the plan is to in fact to make an appraisal program with free wealth we want to do the first one but it's an appraisal program and be clear not to check if there is a development the question for us do we have 800 million barrels to develop or do we have 1.2 it's a question of reach and we need to appraise not to miss some resources by rushing to a first development which will be not optimal for getting, if there is more than 1 billion barrels, we might adapt geographically when you look to the map. It's linked to the last well, which was well by GAL, by the way, which opened some doors. But we want also to drill some seismic, OPN seismic, to be sure that there is some resources. The rock on Mopein is better. I would say the permeability is much better. So we are more on a standard development. which will not require some fiscal discussions, I would say. We could do that with the terms because it's more classic. So this one, I would say the idea and the plan which is approved with GALP is to drill 26, 27, finish the appraisal, and then to move to sanction by 28. So one sanction in mid-26, one in 28, and maybe more because on these licenses they are also still to explore so there is a for me Namibia will become for us a new anchor country I would say and by the way it's a good I know that I will have some questions about the Middle East but it's a good diversification again so to have options and to develop the options is a big lesson of what is happening and on Namibia we are on a good momentum, I hope I will be able to report to you by the end of July that we have really materialized the first project.

Is that still the completion date, Patrick, for the transaction?

The transaction should be completed at the same time or a little before, in fact. A little before.

Thank you.

It's more on the transaction, it's more paperwork, to be honest, because the partners have listed their preemption rights, so we are more on the paperwork with the Namibia government in order to move forward.

Thanks very much.

Next question is from Alistair Syme, City.

Hi, afternoon, everyone. Can I get you to talk to the profitability of chemicals in the current environment? I mean, oil and gas looks pretty clear, but I'm not sure how to think exactly about your chemicals business. And then my other question, and this might be a very, very short answer, but what is your trading business doing with tankers and the Straitsville moves? Do you have any traffic moving or do you see any arrangements where traffic can move? Thank you.

I have good news on the second one. We had 10 tankers before the last weekend stuck in the Gulf. No, we have nine because one of the tankers has moved out of the Gulf during the weekend. You know, when Friday evening, I think both parties announced that the Straits will be reopened We gave instructions immediately to our traders to try to get out. There were two tankers which were in the queue. The first one existed. The second one, unfortunately, was just after the Indian tankers which were attacked. So, you know, in fact, all that was governed, by the way, by the insurance company. Because, in fact, we get on the Friday evening the insurance. We are insured to go through the straits on the Friday evening. And when there was an attack in the Sunday afternoon on the Indian tanker, then the insurance company told us to raise no more insurance. So we went back to the Gulf. So this is the situation. Honestly, we are following on this one. Of course, if we can exit, it's the best. But we are following the news, and we depend completely on the discussions between the different parties to the conflict. That's the situation for us. So, this is where we are. We have done, we tried to do, we have done a small business within the Gulf, you know, we managed to upload one of the, because we had some, a refined products tanker which was stored. So, we managed to offload it in one country and then to load it with some other crude So, we tried to do what we can inside the Gulf, trading inside the Gulf with these two tankers, which is limited. On chemicals, obviously, in fact, there are two different impacts there. First one, NAFTA is more expensive because it's rare. And so it's because it's scarce. So we've seen that the cracker margin went down in March. But the good news is that at the same time, there is a scarcity globally of NAFTA on Asia. and as you have a scarcity of Asia you know you have some people in Asia with crackers looking for nafta then the price of the polymers have increased and in April for the first time for long I've seen positive results coming from my polymer business. So I would say by the way I've observed in April but on all our business including biofuels everywhere in fact the beginning of the scarcity implied by the crisis, is pushing all our products in the green, I would say. We are benefiting from that and that's the beauty of the integration we know we have. But I see that on the end product. So there are on the chemicals some downside with the cracker, but the polymers are much better. So let's, in particular, and in the U.S. as well, by the way, because when you are, and that's the advantage to be on the petrochemicals, not only on NAFTA, but you know, part of all chemicals in the U.S. is on gas and then when you have polymer price going up and you hurry up or is saying in the US is stable the margin is much better. So I see some good signals on the chemical business which are completely the consequence of this crisis.

So net positive of earnings and chemicals yeah thank you this question is from mark wilson jeffries thank you very much um i think one area we haven't covered jet is refining um you are the only company that breaks out you're refining very clearly in the annual report um in total it's grown to just under 1.5 million barrels a day and jet fuel aviation fuel is about 10 of that just over Could you give us a dynamic between the different main products? Do you have the ability or desire to move the amount, for instance, of aviation fuel that is produced versus diesel and others? And do you see cost headwinds as well as margin as we move through the year and into 2Q, as has been mentioned by other companies?

Very clearly. I mean, very clear. All refineries today have been, there was an instruction. with the limit of a refinery. A refinery, unfortunately, you know, you distillate and you distillate, you have a slate of products with various ways to optimize. So all of them in Europe, the instruction is max jet first, and then max diesel, and then results in gasoline. So we try to maximize the two cracks, and in particular these days, which are the better, jet fuel even is better than the paper jet fuel, it's really high. So maximizing jet and then maximizing diesel, in particular because in France we are a big consumer of diesel, and diesel track was quite high. And then gasoline, we know that we have enough. European refineries are producing a lot of gasoline, so there is less incentive to do it. So that we do at the max. We don't go from 10% to 20%. It's a matter of adding 2% to 3%, but each percent, of course, is good for the global refining margin. So that is clear, and we do it. We have done it immediately and systematically in order to be able, because these are the critical, I would say, products, jet fuel and diesel, which we are more relying on imports for the European continent. So, of course, the margin is better. So, it's very logic we've done that. I'm not sure to have understood the question of the cost at wins, what it is related to.

Well, there's obviously been a lot of talk about the availability of feedstock and competition for crudes and certain grades of crudes. So is that any impact?

Yeah, okay. In fact, today, yeah, I understand. Some feedstock are, I would say, yes, they are scarce and so they are more expensive. But again, yes, it's an impact. We see some, but there is a refining margin where I exceptionally are in March, around $25 per barrel. So I would say, I think Jean-Pierre told you that, that it was very poor in January, February, and the 11.4 margin was the result of a very non-linear, I would say, margin. But in April, there was some volatility in the margins, linked partly to more volatile, linked partially to the feedstock which were coming in the refinery. So that's true. That's true. But again, on this one, clearly, I will tell you, there is a very strong connection between refining in the company and trading. And all that is optimized between both of them. And in fact, they are completely, they are, by the way, the suppliers of a refinery are exactly on the same next desk next to the traders. And we interface between both of them in order to optimize the slate which will go to refineries and what we should sell among all our crude oil that our traders have access to on the market. And we make it as an optimization for the company. So it may be not optimal for the trading itself, but if it's optimized, if it's an optimum on the refining and trading as a combination, then we will take the fit stock to the refinery. So this is one of the advantages, I would say, to have this strong integration and to think in particular in this type of period. But I know some people were thinking that we might have a lack of crude or we will never have a lack of crude. And so we optimize the type of feedstock we need to have refineries according to the access to many flows that our trading can generate.

Thank you very much. I'll hand it over.

The next question is from Kim Fustier, HSBC.

Hi, good afternoon. Thanks for taking my questions. Firstly, on Qatar, how are you managing the force majeure situation in Qatar as it relates to your LNG portfolio and your commitments to customers, just noting that one of your IOC peers is also a partner in Qatar LNG. You had to declare force majeure. And related to that, what is your view on the timeline of the Qatari LNG expansion project? I also wanted to ask about Satorp. What's the repair timeline for the damaged units? And again, linked to that, what is the potential impact on the timeline of the Amaral project?

Okay, Qatar, I mean, again, I repeat, I don't know why people do not believe us. Qatar Energy has declared some measure to its customers. That means that, you know, in Qatar, we have some GVs with Qatar Energy, and the marketing of this GV is done by Qatar Energy. So all GVs, which are reported in the upstream part, which are, I would say, like the rest, but are not producing today, so there is no production, no revenue, and very logically and very professionally, I would say, Qatar Energy has immediately declared force measure to its customers. That's one point. From this perspective, Total Energy is a customer for canal energy only for our own offtake. The difference between our competitor and ourselves is that because we are very exposed and we know that to Qatar through VGV, we have some limited contracts with Qatar as for our own offtake, for our own portfolio. And so the amount is around 1.5 million tons per year. So we have this 1.5 million tons per year. We receive the force majeure from Qatar because we are a customer for them. But then we decide that we will not transfer it because, by the way, we don't... In the way we work, we bought energy portfolio. When we sign a contract with a Korean or Japanese buyer, we don't assign we don't tell them it is coming from Qatar because we are a portfolio company so we took on our set and by the way we told them we are a portfolio company we produce in 11 countries so we secure user supply so we decided yes we received a fourth measure but we will take it for us and we will not we could have done it probably but we decided but it was in terms of commercial in terms of what we advocate every day for their customers the best position, because probably 1.5 million tons is absorbable in a portfolio of 40 million tons, you know, that we will deliver. We will not transfer the force majeure to any of our customers. That's what we've done. I know that our competitor is more exposed, because if I read correctly in the press, it's more 6 or 7 million tons than 1 million tons, 1.2 or 1 to 2. So probably with 7 million tons, it was for them more logic. to be honest my energy traders were ready to exercise the force measure but the management said be careful what we do and so we've done it like that so no problem timeline on scatter expansion I think I can I think the Keturiv himself they have said that today the impact is evaluated to two months or something like that I would say on the expansion on NFE first train because NFE on the ground Technip and the teams are continuing to work, in fact, onshore. The offshore works have been stopped. I think it was planned for Q3 2026. So probably today we are more on Q4 2026. And again, there is a difference in all this wording between when you put the gas in and when you offtake the first energy. So if you want my bet in my plans, I would say first energy offloaded from NFE is probably right on the beginning, end 26, beginning 27. That's if I'm taking a bet on that. But you know, that's where we are. And again, this is completely linked to the, how long this war will last, because as long as we cannot restart works offshore, of course, this might impact the timeline. Setup. So there are three units. One, I told you, the first unit will be repaired very quickly, the VDF2. So that means that Satop is able to produce some VGO in 10 days. We could produce, in fact, full-capacity VGOs, but then you need to find somebody who buys VGO. And as we cannot expose VGO because the Gulf state of almost is closed, we will be limited to something like 300, 330,000 barrels per day. And then we need to recover the two other units. The two other units are the conversion units, which allow us to transform the BGO in, I would say, diesel, double products. This one, honestly, today, we don't know. We have sent some experts and we are working together with Aramco. There have been some damage to these units. So it's a matter of at least six months, maybe more. We don't know. We are working on it. And as we have been very transparent since the beginning of the conflict, When we'll have better news on it, but I would say not the Café du Commerce news, we will report to you. At this stage, the teams of Aramco and TotalEnergies are working to evaluate the damage and more to evaluate the repair that we need to do. By the way, TotalEnergies, we have an insurance on this type of war event, which we might activate if the damage are higher than $150 million. So this is our own limit, I would say, of threshold for ourselves.

Impact of Amiral?

No. Amiral, there are 22,000 people working in Amiral today, on the ground. That's why we have also again, I was I went in Riyadh, we discussed a lot about Amiral. We have the full support of the authorities for Amiral. So Amiral, again, is progressing, and the progress of Amiral is today at 70%, his project. The startup is planned by the end of 27, I would say, beginning 28. But again, of course, the context might, what I just tell you today, is the conflict was worsening, which I don't know, could change. So this is just an update today with validity, but this is the situation for Amiral.

Thank you very much. The next question is from Matt Lofting, JP Morgan.

Hi, thanks for taking the questions and congratulations on the performance of the integrated model in what's clearly been exceptional times. I wanted to ask you, you guys engage extensively with host governments globally. It's early days, but are you seeing any change in the tone of conversations as a result of recent events towards greater urgency, let's say, from some countries to develop domestic production and better secure energy supply? And then second, more specific to the financials, price and timing lags are an inherent part of several parts of Total Energy's business. I wondered if you could just talk a bit about how that impacted Q1 given the sort of surge in commodity prices more kicked in in March and how that then sort of plays out as we look forward to the coming quarters.

On the second question, the obvious case is the LNG because most of the contracts on LNG have a time lag of one, even two months. So obviously we don't see, by the way, the average price of the quarter was $8.5 per million, exactly what we planned in the trading statement on the guidance that we gave in February. So that means that there was no impact on the March oil prices or gas prices. So we expect to see the impact of the March high price clearly will be in the second quarter. That's why we gave you a guidance, by the way, of $10 per million BTU, which, again, is reflecting price of March, an assumption for the other amount of $80 per barrel, and the TTF around $40, $15 per million BTU. So, again, if the crude oil was higher and remained higher, that could impact positively the $10 per million BTU. So, this is the obvious case. On the crude oil, we have some few things. We have one country where, by the way, where we have a formula which is with one or two-month delay, is the UAE, which creates, by the way, some difficulties and we are trying to solve them because when we have a two-month delay, that means that we could face a day that it will reopen and the price could go down. We could have to pay with two-month delay, but not a good situation. We are discussing on that, but honestly, these are the main two. there are also some impacts on polymers and things like that in the plastic world generally it's also you have also some delays in all the formulas so for example answering I should have commented that in March we suffered the NAFTA that we bought was on the sport market but the polymers and all the pricing do not reflect immediately the increase of the NAFTA you know so that was negative from the NAFTA and this will be recouped in the second quarter But beyond one to two months, we don't have many time lags, but longer than that. It might be an exceptional situation with the six months. But it's very rare, in fact, in the portfolio. House governments, I think I answered in my first answer to the government, to Mikkele. It was more or less the same question. Yes, I said to Mikkele, look, it's quite clear, but today you begin to see for sure. So, again, the governments are looking to what could we develop for domestic production. Could we, that's obvious, securing the energy supply. I said electrification. I said more coal for countries who have coal, you know. They will develop their coal. India is more coal. Renewables as well. So that's positive for renewables, I think, in many countries, including in Europe. Nuclear will be, again, I would not be surprised to see there was already a good momentum, but to see a country like India again, China it's already done, but with nuclear programs, like some European countries, so we'll be new France, you know, after 73 we are French, and Japan we'll see new country coming to us, so that's obvious to me, which is, as I said, to fulfill a challenge for the gas, you know, because it's a competition, you produce electricity, so gas to electricity, gas is not only used for electricity it's also used for heating by the way but you know it will be for sure a challenge the other governments where I see a change of tone as I told you that I visited of course our friends in the Middle East it's clear that on the agenda today you have the question of can we get around the Strait of Hormuz or we are discussing again on projects to build some pipelines, to double the pipeline to Fujairah, to double pipelines through Saudi Arabia. Iraq, obviously, is in a situation where we need to revive some old pipelines which are stuck today. You know, there was a pipeline crossing Syria. You have the pipeline through Turkey. So it's, for me, these countries, for sure, today, the question of their own security of supply, the security of delivering and of evacuating and commercializing will become high on the agenda of all these countries. So yes, this crisis, and again, because it's not only an isolated one, we have 22, now we have 26, so you have this question of security of supply and affordability, which is linked to that, and again, for me, it means how do we remunerate more capacities, we need to invest more in all these energy capacities, will be high on the agenda and in many countries around the world.

Super. Thanks, Patrick.

Next question is from Jason Gableman, TD Cowan. Mr. Gableman, your line is open. Maybe you're in mute. Mr. Gableman's line got disconnected. So the next question is from Christopher Coupland, Bank of America.

Thank you very much. Good afternoon, everyone. Just two more questions remaining. You know, when we think back to February and you gave us your outlook for cash flow during the year, you were referencing a 60 to 70 Brent range, refining margins at five, et cetera. We're now in a different world. You've talked yourself about 80 as a, you know, good starting point for the year. What can you tell us? how should we adapt your sensitivities that you've published, which I believe were meant for a 60 to 70 world rather than for an 80 to 100 world. So where would you like to make some adjustments or give us some warnings, other than the volumes, of course, that you're not able to sell right now in terms of the validity of these sensitivities? And then maybe as a quick second question, considering you haven't been active in the farm-down market. Maybe I can ask you my favorite question, Patrick. What do you think is the current state of M&A? I know it's not one market. Power is very different from oil, from gas. But where would you rather be right now, a buyer or seller?

First question, Chris, I invite you to read page 13 of the press release, I think. and you have the stable sensitivity, and fundamentally they are between 60 and 80. You can extend 60-70 to 60-80. So I have no doubt about it. The only point is that as we have lost, if we remain in the situation of today, which without the Middle East production, then of course we must correct it. That's why we gave you a sensitivity of 10% on the Middle East production. but I've made the math if we were just for you just to give you if we were in an environment around $80 per barrel $15 per million BTU $7 per margin per refining margin without the Middle East we'd be around $32 billion cash flow $32 billion but it's again if the situation remains the same and if and my scenario is not good to be honest because if it remains the same will not be at $80 during the whole year. So if we lose really the production of the Middle East during the next nine months, I think you can correct my 80 to 100 or 110. So again, you can take around $3 billion for, it's 2.8 officially, but $3 billion for, and it's a little more, you're right, because in fact, when we go high at $100, dollar, the Middle East impact of the production, the loss of the 15% is no more 10%, it will go down to 6-7%, which means that the higher will go, the more the sensitivity will rely on the bowels outside of the Middle East. So, your question is good, but we need to make the math correctly at 100. we will do it and I think Renault and his team will give you we might publish it if you want because this information is important we might publish it on our internet site so there is less impact on the production of the Middle East at 100 that we have at $60 that's true as well so that's what I can comment so all that is to be honest any high scenario is good news for integrated companies like Total Energy great thank you looking forward to that renault your great work no no it's okay i mean it's not so complex but no he's not able to make the map but the budget guy is able so don't worry we just need to correct it with what i said he should be able to do it that's a joke between us okay No, M&A. M&A, you know, M&A on oil, honestly, today is difficult because where is the right price date for the oil assets in the next three years, you know? And there was a sort of consensus in the crisis. I think oil was more or less, assets were more or less exchanged around $70 per barrel, I would say, in the market. It was more or less a market, and There was some few we could debate, but it's always the average assumption today. And of course, to put $70 for the next, for $26, $27, $28, I wouldn't agree if my teams are proposing me to sell at $70. And it's very difficult because there is no certainty at all about where we'll establish the market. So you could say it's $80, $75. You could say also maybe it's $100. So I think M&A on oil today is not an easy game to play. And I'm sure neither from the, of course, the buyer would love to buy $70, but I think the seller would be a little more difficult to convince. So that's where I see that. On the gas, different. You know, we are looking on our side to the gas, U.S. gas business on the other side. The U.S. gas market has been stable. So I think that means that, by the way, when you look to the assets on this side, We didn't move a lot valuation, so that's more easier on this side. Power, you know, they are all crazy in the U.S. with gas-fired power plants. So it's not a good market to buy gas-fired power plants. They are more reasonable in Europe because, you know, we are not in love with gas in Europe. So it's good to continue to buy M&A, to make M&A on gas plants in Europe. And we are looking to some opportunities to complement the portfolio. well an obvious country for us to look at is germany in europe for from a power point of view so that is the situation and then if i continue emily on renewables uh by the way i have a good news for all of you didn't ask me the question but we got the money from the u.s government on our account yesterday so we have the the famous number 28 million dollars by the way the share for total energies out of the 928, because we had some bonus on one of the concession, is 550. So we'd have this cash incoming. It's already came. It's already came. So on renewables, the market is influenced by higher interest rates. So it's not so, but it's much, you know, the multiples in that field are quite high compared to boiling gas. But I see a sort of impact on raising interest rates on the valuation of these assets. Okay, thank you very much.

Next question is from Henri Patricot, UBS.

Yes, everyone, thank you for the update. Just one quick question left from me. Coming back to the trading, great performance in the first quarter in both oil and gas. Ron, again, if you have any comments on the second quarter, should be expecting a potential of a strong performance given we've seen already one month with significant volatility and maybe a full quarter of significant volatility in both markets.

I cannot answer that question. We just, you know, we have no idea. Trading is not a matter of running a plant and taking the production and multiplying by an assumption on the price minus the cost. It doesn't work like that. So I can only comment that there is a very volatile market, that the traders generally are quite happy when they see volatile fast markets. Up to a point when it's too volatile, there are some dangers. And when the volatility is not related to supply and demand, but to the tweets of some authorities in the world, it's even more dangerous because you could go, you could face suddenly a reverse situation. so we are not betting on price there is no trading of Total Energy is an asset-backed trading and it's fundamentally we are not betting on the oil price we are not exposed to flat price in the trading so no, it's impossible I wish we would reiterate a strong performance you know what we've done when we say in a press release that there is an exceptional performance a strong performance to qualify it compared to the normal run rate. The normal run rate of oil trading is quite good, by the way. Again, I have no information. They made their book, by the way. There was a lot of comments in the newspaper on one specific position which was taken by crude oil traders. But you know when they take a position on one side, they have some other position on the other side. So it's not one-sided. Yes, they made a position which was long in the girth at the beginning of the war, but there were other positions which were not as positive. And by the way, our product team, our product trading team, it was quite good to benefit from the fact that in Asia there was a scarcity of products. And so to be able to supply Asia with products, there were a strong performance there. So it's different markets, different flows. So we'll see, and we'll see. By the way, when I, just to confirm to you, I don't know, when I mentioned a figure to Chris, I think, I said $32 billion cash flows, I have normalized the trading to a normal run rate, run delivery, and not an exceptional one. So if there was repeating quarter after quarter same performance, then my 32 is a little short of the reality. Okay, so I cannot answer to you more than that, Henri, and a book of trading is plenty of trades, and we see the results at the end, but what I can confirm is that the trading division of TotalEnergies is quite successful, and I never see them underperforming the market, I really are, I would say, on the average, both in a strong performance.

Great, thank you.

This question is from Fergus Neven, Rothschild and Cole Redburn.

Yeah, hi there. Thank you very much for taking my question. Just one from me. I just hoped you might be able to provide us with a bit of an update on some of the key projects which are due to come online this year. Perhaps if you could comment on Rutawee Phase 1, which I imagine is affected by the current situation in the Middle East, and then maybe also Telenga due to come online later this year. That would be really helpful. Thanks.

You know, we have, I said, that we have 5,000 people working on the ground, but there is no way to explore the crude oil. We were planning to start up Q2. I would say logically what I can answer to you today is that Q2 is more Q3 than Q2. The question will be not only to build the plant, and the plant is almost done. In fact, it was a question of one month and a half on Rataway. But it's more a question to be able to produce the oil and to export it, which is today, I would say, the limit to start up Rataway. So as quick as we can, obviously, and no problem. The wells are drilled, easy oil to produce. So restarting Rataway, it's a matter of a few days. and we have teams on the ground, so it's easy. By the way, we have started up, just before the conflict, we started up the solar plant in Rataoui. The first project which came on stream was the solar plant and the 300 megawatt phase, and the authorities were quite happy because facing a lack of gas for making electricity, we are supplying some solar electrons to the Basra area now since the end of February. Tilinga, Tilinga is moving on. I mean, we told you that the start-up of production for Tilenga will be end of Q4, end of Q4, I would say. We were explicit in February, I think, so there is no change on this part. What is progressing well is IACOP. We think that IACOP might be completed September, October. And by the way, as Kingfisher, the other projects in Uganda where we are partner, is also, you will be probably ready by summertime. It's possible, but we'll begin to flow the oil from Kingfisher first through IACOP. It's a long pipeline to fill. So operations and crude oil productions from Uganda might start up just after summer. We'll say September end of Q3 and then Tilinga.

Brilliant. Thank you.

The next question is from Jean-Luc Romain, CICCIB.

Thank you for taking my question. It relates actually to the offshore U.S. where you just announced you had the cashback. Do you consider offshore wind U.S. as a dead zone for the foreseeable future, or do you still see it as a future development zone in case an administration would become more receptive to this kind of development?

No, I was clear. I commented that in a U.S. newspaper, I think. I could use the word of Darren Woods. It's non-investable. It's non-investable because the cycle of an offshore wind project is much longer than the duration of a U.S. administration. And, you know, offshore wind requires a long cycle of permitting, developing, negotiating. So if every four years you are stuck, you know, because you have a change, it's not possible. But more fundamentally than that. And, you know, the story is that we, when we studied all these projects in front of New York to Jersey, and frankly, it was very difficult. The offshore part was quite in line with what we expected, even if there was some cost increase from the, I would say, the turbine point of view. But what was very expensive was the subsea cable. And landing a subsea cable to serve a very urban city, New York, New Jersey, was much more expensive than planned. So at the end of the day, we would be able to deliver electricity of around $150 per megawatt hour. It's much more expensive than what you can do in the U.S. So in terms of allocation of capital and considering the various ways to produce electricity in the U.S. with plenty of gas, solar, onshore solar, onshore wind, it's better for us to develop our position in the U.S., but with the most efficient allocation of our own capital, and for consumers as well. So no, the answer is definitely it's not a matter to the U.S., but as Total Energies, we consider that it's not a good market for developing offshore wind. And in fact, what I also say, I think developing offshore wind requires some specific market. It's a question of cost-merit curve to produce electricity, and it's linked as well. So UK, Germany might be some interesting countries because they have less capacity to develop onshore renewables because of limited space, in fact. So there is a market there. So we will concentrate on these projects. And the other lesson we drew is that is that it needs to be big to be profitable. So we are cleaning our portfolio. We had a small project in Denmark. We are just exiting it because it does not fly. Market, and honestly, Brazil, Philippines, India, forget all that. There are no interest. There are plenty in Brazil. You can produce plenty on onshore wind in Nordeste with cathars of ventures, which costs much less than offshore wind. So offshore wind is more expensive, so it should be delegated to markets which could afford it and which need it. And that's the conclusion which we draw for ourselves. So we'll concentrate on some projects which are large, by the way, on which we believe that the fundamentals are good. And so that's the reality. So you will not see newspapers and press release but Total is back in the US, at least as long as I am CEO and chairman of the company.

Thank you.

Next question is from Anish Kapadia, Palissi.

Thanks. Good afternoon. I wanted to ask about battery storage, and especially in the context of seeing Europe having its earliest containments of renewables this year, this the record level that's expected this year and the extreme negative pricing so i just wanted to get what's your view um what's your view on um battery storage growth in europe um how you see the iran conflicts accelerating this and then you know what's the role of total and saft um within this context i will tell you fundamentally it's not linked to the conflict of when you develop renewables, you should put batteries.

So, good news for the last two years. In fact, the cost of batteries has dramatically lowered. They have been divided almost by two battery cells. Thanks again, by the way, to Chinese suppliers, but it's a reality. So, you have a strong decrease of batteries, and I think it's absolutely necessary, not only in order to avoid curtailment, but also it's a matter of urine management that when you develop a renewable farm, you should have some battery. I'm against the CFD scheme in Europe, because in the CFD scheme, the solar or wind developer has zero obligation to build a battery. He's securing a price from the state and he can so sometimes the states are smarter and say we don't pay you if it's negative, but But in fact, it's just a strange scheme. In fact, the scheme which is working in the U.S. where you have some fiscal support on your CapEx, ITC, or BTC is much better because, in fact, if you are facing the market and you develop your solar plant, and for sure you always build a battery storage with the solar plant. But once you are dead, then your profitability will be low. So I think it's obvious that, and the more we see, by the way, as you said, development of new solar farms, like in Spain, for example, but even in Germany, we begin to see the limits, and the curtailment is higher and higher because there are no batteries. So, yes, I think it's time to really incentivize in battery storage. So, on our side, we are investing in batteries. We have, in particular in Germany, where it's a good market because there's a lot of renewables. We have a company which we acquired two years ago, and we are developing two to three gigawatts of batteries. We just found out part of some of them at 50% to Allianz with a good profitability. So yes, we think that there is a real market, in particular in Europe, and not only because of the Iran conflict, it should be accelerated. If Europeans are serious about, I would say, developing the penetration of renewables in Europe, it's absolutely fundamental to do it together with batteries to stabilize the grid and to be able to absorb most of this renewable production. And SAFT, to come back, SAFT is good, is strong, is developing very well on the energy storage system business. I think we are number four, five in the world and they are making quite a lot, taking quite a lot of markets. So it was one of the reasons why we acquired SAFT, it was a little longer market to, I would say, to take off, but now it's really full speed on it. And there are also some technology improvements, which allowed to think that the cost could also, when we were discussing with SAFT CEO, he thinks that the battery storage has already diminished by 50% but over 30% decrease is possible on the cost thanks to a higher density of energy storage etc.

Thank you.

The next question is from Bertrand Audet, Kepler-Chevreux.

Yes, hello, sorry my mic was off.

It's a follow-up on my question on refining. One of your competitors explained yesterday that because of various factors, like major dislocation and crude differential, product yields, or freight costs, it's realized refining margin in April was about $5 less than its headline margin indicator. So do you see that? And can you also tell us what is the average of total refining margin indicator so far? Thank you.

I didn't see such a dislocation, to be honest. I know that the ERM, I was looking at what is... Normally we have an indicator internally, but my team does not have it. Okay, so there was in fact the realized refining margin in the first quarter was around 10.5 while the indicator we gave you was around 11.4 so there was a little lower but not 5.00 so we suffered less from that's true but honestly today one of the issues to be honest including today in April we have some yes and it's true I will tell you I'll give you another figure just because I want to be solidarity with my colleague in April the ERM was the indicator was around 25 and the MCV of refining the realized margin on variable cost was around 21.5 so you had not 5 but 3.5 dollars why? because honestly these paper markets today these indicators are difficult to follow difficult. But that is going that way, the other month it could be the other way. So we are trying to each of us are trying to trace an indicator to give a sense of what is happening on the market but there is a dislocation and it's perfectly true today between the products and by the way it was an extraordinary situation by the way the March where you've seen high oil price and high refining margins. Nobody do have if it's rebalancing, you know, it's counter-cyclical, but not the case. So, again, at the end, what I know is that I've never seen in my life such high margins on the paper, so it's good. And so that we can, even if there is a little difference between a paper indicator and a realization, it's still delivering very good and strong results about the situation. And, again, I know we have a debate internally but because the daily our teams are calculating this famous defining indicator based on the market and we have some big doubts because on the other side when we saw that we see that we can sell jet fuel at more than $200 per barrel we are not sure that all that is completely consistent you know so it's today you have in fact as you have a dislocation between the physical market and the paper market which is quite astonishing at some point it should converge. This type of indicators are not so reflecting the reality of what is happening on the day-to-day marketing of the products.

Thank you very much.

Very helpful answer. Thank you. Thank you, Bertrand.

As a reminder, if you wish to register for a question, please press star and 1 on your telephone. There are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Okay. So thank you for your assistance. Thank you for your comments. I think it was a quarter where once again we demonstrated the strength of our model. I think we will not disappoint you in terms of return to shareholders. The share of Total Energy, since we have been listed in the New York succession of December 8, I'm looking to that as a starting point of the renaissance of the company, has overperformed all of this by quite a margin. So I hope that this set of results will help to maintain it. And again, if we can attract more shareholders to Total Energy and to globalize the sector, it's good. So thank you for your attendance, and I think we'll have an opportunity to meet in the coming months. And our shareholders, for sure, will meet on the annual general meeting on May 29, I think, in Paris. So thank you again.