Unlock the editor’s summary for free
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
In a lunch with the head of Totalenergies, Patrick Pouyanné, in 2019, the perforators concerned about the future asked which their roles would see as a decade in the future. For the executive director it was “obvious”, they would still be drilling oil.
TotalEnergies further pushed renewable energies in 2021, since the rest of the industry responded to the pressure to adopt the green transition. But Pouyanné also made the crucial decision to increase oil and gas production, using earnings of its inherited business to finance the pivot in more green products.
Four years later, that bet seems to be paying off. Although BP and Shell rivals have retired from promises to reduce their fossil fuel businesses, the French company’s plan to build its future around oil, gas and its partially green electricity arm remain unchanged.
“We believe we can obtain the same level of profitability [from electricity] As oil and gas, ”said Olivier Jouny, head of the company’s renewable energy, Financial Times.
“If we can do that, there is no reason for our shareholders not to follow us. Others have made a change because they have not necessarily proven that.”
At a London energy conference in February, Pouyanné emphasized the point that oil and gas were key to their electricity ambitions. “I will not give up oil and gas … because I am not a magician. The only way I have to finance all my electricity investments … It is because I take the cash of oil and gas,” he said.
Although Totalenergies has suffered setbacks in some of its green initiatives, Pouyanné’s approach has helped the company avoid the forced turnings in its main European rivals BP and Shell.
In March, activist Elliott Investment Management took a participation of about 5 percent in BP, which forced him to abandon his ambitious climatic objectives. BP had promised in 2020 to reduce oil and gas production by 40 percent for the end of the decade before going back the goal two years ago and then discard it completely.
In Shell, executive president Wael Sawan said in January that the renewable energy business must begin to generate yields, since the company wrote its US windows in almost $ 1 billion. It has also ruled out its commitment made in 2023 to allow oil production to fall by 1-2 percent per year until 2030.
On the contrary, Totalgies constantly sought to increase oil and gas production by 3 percent per year, while investing $ 4 billion annually in its integrated energy division, which focuses on producing and supplying electricity through wind farms, solar farms and gas power plants.
“[TotalEnergies] They were very pragmatic and in practice the world was like this, ”said Irene Himona, oil and gas analyst in Bernstein.
The group’s integrated energy division is far from being completely green, remaining largely depending on the gas. It was the 37 percent source of the company’s electricity generation in 2024.
TotalEnergies says that gas energy is needed to balance the intermittency of renewable energy sources, and will represent approximately a quarter of the 100 hours of the Terawatt electricity of the division in 2030.
The division is now the largest in the sector. It will produce 35 renewable energy gigawatts this year, increasing 100GW in 2030. BP had only committed to reach 50GW by 2030 before its U -turn.
In an additional sign of its commitment, TotalEnergies completed an acquisition of 1.6 billion euros from the German wind and solar development developer VSB Group this month, while announcing agreements on hydroelectric energy and renewable energy in Uganda and Canada.
Some content could not be charged. Check the Internet connection or browser settings.
The key to the company’s strategy is the objective that the integrated energy division is as profitable as oil and gas.
The group expects to become positive in the cash flow in 2028, when it will generate around $ 4 billion with the objective of delivering a 12 percent yield on the capital used, a metric widely used to assess profitability in the industry.
This would be similar to the returns generated from oil and gas when Brent Crude has a price of about $ 60 per barrel, a level level described as a “long -term stabilized view.” The integrated energy division has delivered a return on the capital employed of approximately 10 percent, he said. TotalEnergies said in a commercial update on Tuesday that I expected to inform adjusted profits of between $ 450mn and $ 500mn for the first quarter.
Despite its successes, the Integrated Power Division has not avoided problems. A Wind Project on the high seas planned in New York and New Jersey has been waiting for at least four years, after the executive order of the Trump administration to stop permission for new projects.
He also faced difficulties with a high -seas wind farm in Taiwan, the Yunlin project of 640 megawatts, which was opened in March. Totalgies, as the main developer, was forced to request banks for additional financing, although Jouny did not reveal the scope of cost overflow.
However, the Totalgies strategy is not a commitment to renewable energy, but for the demand for electricity in general. The International Energy Agency predicts the demand for oil and natural gas to reach its maximum point by 2030, while the demand for electricity is expected to continue increasing, at least 4 percent per year until 2027.
“It is a strategy promoted by demand [and] It is very clear that the only energy that will grow in the 21st century is electricity, ”said Pouyanné at the London conference.
