TotalEnergies Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
April 26, 2024

There are 17 speakers on the call.

Operator

Ladies gentlemen, welcome to Total Energy's First Quarter 2024 Results Conference Call. I now hand you over to Mr. Patrick Poillenet, Chairman and CEO and Jean Pierre Steyr, CFO, who will lead you through this call.

Operator

Sir, please go ahead.

Speaker 1

Good morning and good afternoon everyone for this quarterly results session. I'm happy to welcome you together with Jean Pierre, who will go through all the details of this good or strong results in Q1 2024. But before to do it, I would like to highlight the way we have implemented our 2 pillar strategy during this quarter. And first, to celebrate these to recognize that the company celebrated its 100 year anniversary on March 28. We have been celebrating this event all through the company in 120 countries where we are present.

Speaker 1

We have companies, ancestors were really pioneers when they discovered oil in Iraq in 1927. And of course, it was the opportunity, this anniversary, to pay tribute to the hundreds of thousands of pioneers who had followed them and were in fact the past and the present employees of the company. And we have decided by the way that the signature of his anniversary would be pioneers for 100 years. So, but today I would say it's with the same pioneer spirit, but we have decided in 2020 to embark in our journey in the energy transition and moving to total energy into an 1st on Oil and Gas, mainly LNG, First on oil and gas, mainly LNG, with the objective to continue producing hydrocarbons in a responsible way, producing and growing hydrocarbons in a responsible way in order to answer the growing demand. And second, investing and developing integrated power, energy for the future, with objective to become net cash positive by 2028.

Speaker 1

So this Q1 2024 is really 2024 is about advancing this strategy. I would say we are off to a great start on both pillars. We have achieved several milestones during this quarter that I would like to underline. First on the oil upstream, we successfully started up some operated operations in Nigeria with Agfa West and Tiara redevelopment in Denmark, both of which are additive to our overall corporate cash margins as well as Mero 2 in Brazil, which started at the beginning of the year. We continue to have success on the exploration appraisal front.

Speaker 1

We recently finished the positive appraisal of the Venus oil discovery in Namibia, and we are now working towards FID targeting end 2025 for the FID. We have also captured in this prolific Orange Basin some new licenses of Ion Tourette on the South African side. We are making also it's important, I told you it's a matter of execution of growth towards 2028. So we are also making good progress on some FIDs which we have planned for 2024. We will sanction this month of May as a Camino project in Angola, 80,000 barrels per day operated by us with 40 percent.

Speaker 1

And we also plan in May to first to place the LLI orders for our Suriname projects. And we confirm that we envisage to take the FID before year end 2024 in Suriname. Finally, I would like also to comment that we've done an interesting deal recently in Congo to increase our interest into our giant Deepwater Fillmore and divested at same time some very mature assets. That's for oil. On the energy side, quite a big activity as well during the quarter.

Speaker 1

First, we begin to benefit from low and re up trading below $2 per 1,000,000 BTU to see some opportunities to integrate to further integrate our U. S. LNG value chain upstream with the first acquisitions from Lewy Synergies Group subsidiary all gas assets in the Eagle Ford operated by a strong operator EOG. Earlier this week, we announced the FID of the Marsa LNG project in Oman, which is really setting a new low carbon intensity standard for the next generation of LNG plants, 3 kilogram of CO2 per barrel fully electrified and the electricity coming from renewable sources. And it's a very good example of TotalEnergies deploying its integrated multi energy model in the country.

Speaker 1

Thanks to that strategy, we reach a new scale in Oman, combining LNG and Renewables, our 2 pillars. So it's good example again of what we can achieve by moving on the 2 pillars. On LNG, I would also insist that we continue to work with Asian buyers, which have some appetite for medium and long term contracts. And I would say all linked long term contracts, which is important, of course, in particular, for example, this quarter, we signed a contract with SimCorp in Singapore beginning 2027 just perfect when we have more production. And to cover it, I would say, or to hedge it with some oil linked contracts, that's the target.

Speaker 1

And there will be more to come as our teams are quite active on the Asian France, China, Japan, Korea. So we are working. Of course, it's important. We have a strong LNG position and we know we have some perspective to sign some oil linked LNG contract is on part of our strategy. And lastly, I would also mention on the integrated gas part that we have we are acquiring the rule of SapuraOMV in Malaysia.

Speaker 1

This is a gas business related to netback of LNG pricing with quite a good potential to increase. And in fact, there is quite a it's a prolific Sarawak is a prolific gas region with some potential to grow in the future. That's why we're very interested to acquire these assets. Then moving to the 2nd pillar, Integrated Power. We have again 4th time 4th quarter in a row an increasing adjusted net result income operating income and Jean Pierre will come back on it.

Speaker 1

As you've noticed, we have implemented we have advanced implementation of the integrated strategy in Texas on the aircraft with acquisition closing the acquisition of 1.5 Gigawatt CCGTs. And that's good. The demand is growing in Texas data centers, AI. We are right on the good market there. And also in Germany, which is another key market for us, we closed the Kaion Energy acquisition, which is a battery storage developer.

Speaker 1

So you will see it through the results that or the relevance of our strategy continues to be demonstrated quarter after quarter as a proof of concept that our differentiated model works, delivering strong results, which are fundamentals that allow us to grow our shareholder distribution in a sustainable way, we confirm again that we increased the interim dividend by 7% compared to last year, which I think will be appreciated by all our shareholders. And by the way, it's also this proof of concept starting to pay off as we kind of saw the positive evolution of the share price recently, which is in our view in the view of the Board's signal that it strategically is being increasingly recognized by the market as a good one or the right one and also evidenced by the leading total shareholder return. Finally, this value is not only shared with our shareholders, but also with the pioneers of Total Energy and it's important, who are promoting employee shareholding plans. We are now in Europe the number one company in terms of amount of capital owned by employee more than €11,000,000,000 and a special grant of 100 shares to each of our 100,000 employees has been decided by the Board to celebrate our 100 year anniversary.

Speaker 1

So I don't know if we'll have $100,000,000,000 of results, Jean Pierre, but not yet. So then with that, I'll turn it over to Jean Pierre, that was the transition, to go through the detailed financials this Q1.

Speaker 2

Thank you, and good morning, good afternoon, everyone. So as Patrick mentioned, our consistent strategy continued to deliver strong results, and we are well positioned to deliver on our 24 objectives of more energy, less emissions and growing cash flow. Land prices were flat quarter to quarter, down only 1% to 83 dollars per barrel and refining margin was strong plus 36% quarter to quarter. But European gas prices declined by 35%, reflecting mild winter and high storage levels. In this context, Total Energy reported Q1 2024 adjusted net income of $5,100,000,000 earning down 2% sequentially and cash flow from operational excluding working cap of $8,200,000,000 Profitability remains strong with return on average capital employed of 16.5% and we maintain discipline, confirming net investment guidance of $17,000,000 to $18,000,000 for 24.

Speaker 2

Importantly, we continue to extend our track record of attractive shareholder distribution with $2,000,000,000 of buybacks executing in the Q1 and nearly a 7% increase year on year of the 1st interim dividend for 2024, which is now at 20% compared to pre COVID level. Moving now to the business segment results and starting with hydrocarbons. Production was 2,460,000 barrels of oil equivalent per day in the Q1 of 2024, stable quarter to quarter and up 1.2 percent excluding Canada. Production benefited from oil start ups at Merutu in deep offshore Brazil and APO West in Nigeria as well as 6% growth quarter to quarter in LNG production, which helped offset the Canadian oil sands asset disposal that closed in the Q4. Looking now forwards.

Speaker 2

Production for Q2 2024 is expected to be between 2,400,000 and 2,450,000 barrels of oil equivalent per day and reflects planned maintenance that's partially compensated by ramp ups of Berunto in Brazil and Tiara in Denmark. We reiterated full year 2024 production guidance of 2,400,000 to 2,500,000 barrels of poly equivalent per day, which is 2% growth year on year excluding Canada. Exploration and production reported adjusted net operating income of $2,600,000,000 and cash flow of $4,500,000,000 Also, we continue our leadership as a low cost producer with Q1 2024 upstream production cost at $4.6 per barrel. Moving now to integrated LAG. Hydrocarbons production for LNG was strong during the Q1, up 6% quarter to quarter, thanks to higher availability, mainly Addictis in Australia and Qatar Energy LNGN2 in Qatar as well as increased supply of energy in Nigeria.

Speaker 2

However, 1st quarter LNG sales decreased by 9% quarter to quarter, primarily due to lower demand in Europe given the mild winter and high inventories. Volumes also reflected partial downtime in Freeport LNG in the U. S. This quarter. Integrated LNG adjusted net operating income was $1,200,000,000 during the quarter, reflecting lower LNG prices sales, but also low volatility in the markets.

Speaker 2

Cash flow totaled DKK1.3 billion impacted by the timing of dividend payments from some of our equity affiliates. Given the evolution of oil and gas prices in recent months and the lag effect on price formulas, we anticipate that total energy average LNG selling price should be between $9 $10 per annuityu during the Q2 of 2024. Now moving on our Integrated Power business segments. We are pleased to report that this business continues its profitable growth trajectory with adjusted net operating income growing sequentially for the Q4 in a row as activity grows. Adjusted net operating income grew 16% quarter to quarter to $600,000,000 and was supported by production growth in both renewable and flexible generation.

Speaker 2

So flexible generation, as Patrick mentioned, now includes the 1.5 Gigawatt CCVT acquisition in Texas, which closed during the quarter and further enhanced our integrated position to provide clean firm power in the attractive and growing aircraft markets. Cash flow from Integrated Power was $692,000,000 for the first quarter on track to achieve our target of $2,530,000,000 of cash flow for the full year 2024. Finally, return on average capital employed for the 12 months ending end of March 2024 reached 10%. Moving to downstream. The refinery utilization rates for the Q1 of 2024 was stable at close to 80%, with the restart of Qatar in Saudi Arabia following a planned turnaround during the Q4 of 2023, offsetting the impact of the non planned shutdown at the Dons refinery in France.

Speaker 2

NSE contributed $960,000,000 of adjusted net operating income in the Q1 of 2024, up 52% quarter to quarter due to higher refining margins. Air free cash flow from from operations excluding working GAAP evolutions of $1,300,000,000 also increased double digits quarter to quarter, although it was impacted by the timing effect in cash dividend payments from equity affiliates. Looking forward now, we anticipate that the Q2 2024 refining utilization rates will increase to around 85% as the Domo's refinery progressively restarts and because there are no major terminals planned. On marketing and services, this quarter demonstrates the efficiency of the implementation of our value over volume selective strategy with cash flow from operations increasing by 5% year on year to $480,000,000 in the Q1 of 2024, despite the decrease in our sales of petroleum products. At the company level, we reported a working capital of $6,000,000 during the Q1 of 2024.

Speaker 2

And the main components behind this figure are, first, the reversal of the exceptional working capital release of $2,000,000,000 in the Q1 of 2023 we highlighted during our last earnings call. Secondly, dollars 1,500,000,000 related to the effects of higher oil and petroleum product price on inventories at the end of the Q1 of 2024 compared to end of 2023 and $2,000,000,000 of seasonal effects, dollars 1,000,000,000 related to the seasonal effect on tax liability and an additional $1,000,000,000 related to the seasonal effect on gas and power distribution activities. Gearing at the company level increased to around 10% at the end of the Q1 compared to 5% at the end of last year. And the just described $6,000,000,000 working capital led to a 4% increase in gearing and the decision we made given the interest rate environment to exercise the call end of March on the €1,500,000,000 hybrid bonds resulted in an additional 1% increase in gearing. Therefore, we expect gearing to structurally range around 7% to 8% as 2% to 3% of the current gearing is related to seasonality impact on working GAAP at the end of the quarter.

Speaker 2

Our consistent and balanced strategy is paying off, as Patrick mentioned, and the Q1 has positioned us for continued success in 2024. In this context, the Board of Directors of Total Energy decided a distribution of the 1st interim dividend of €0.79 per share for the fiscal year of 2024, representing an increase of close to 7% compared to 20 fish and authorized an additional $2,000,000,000 of share buybacks for the Q2 2024. And with that, I'll turn it over to Q and

Operator

A. Thank you. This is the conference operator. We will now begin the question and answer session. The first question is from Christopher Copeland with Bank of America.

Operator

Please go ahead.

Speaker 3

On net working capital and your net debt outlook. I think that removes already a few questions. But maybe a broader one, I wanted to just double check with you, Patrick, the political temperature and your assessment as we go into not just AGM season, but the idea that petrol prices remain capped. There is talk about windfall taxes, should they be expanded or not, whether there is a plan to tax buybacks? What your thoughts are in terms of whether Europe has learned its lesson from the energy crisis that we're in or whether it's still a dangerous thing to make too much money as an oil and gas company.

Speaker 3

I'll leave it there for you to go in whichever direction you would like. Thank you.

Speaker 1

Okay. Thank you, Chris. You know, sure European leaders, they don't want to have again a crisis, an energy crisis on the price. You can see that in Europe, not only you have the German farmers, the French farmers who are complaining as soon as we try to lift or to increase some taxes on the tractors fuel tractors. So it's not a good idea, but very clear.

Speaker 1

We see by the way a global political temperature where a lot of people are calling I would say for a form not opposed but less regulation linked to the Green Deal and we could think that the next mandate of the European Commission might be more about execution than increasing targets and regulations. But the raw petroleum price obviously European leaders can do nothing about it. It's more in the end. But I would say OPEC and OPEC plus which by the way today are probably countries are probably quite fine with around $90 per barrel. They don't want as well to go back too high above one another because they don't want to have some impact on customers.

Speaker 1

So clearly, the price push was pushed up in the last months because of the crisis in the Middle East. But I don't see the fundamentals of the market. As we all know, there is not much inflows of new supply in the market. The demand continue to grow 1%, 1.2%. So my view is that we have we can expect this price above $80 $80 plus for the year, I would say.

Speaker 1

So we are that's fine. Having said that, you never know. We have observed some volatility. With full tax, no, not with full tax. But there is a principle in EBITDA.

Speaker 1

We are in a state of law and you have a territorial principle for taxes. That's very anchored in most of the constitution. For France, it's in 120 of 30 treaties with other countries. We tax profits where we are what we deliver in a safe country and we cannot be double taxed for the same profit. That's a fundamental principle.

Speaker 1

So that's I'm not so I don't think it will come. The point is that, of course, the European politicians are looking to what has been done in the U. S. On the 1% of tax on the buybacks. So, honestly, this is a music which could cross the Atlantic this year.

Speaker 1

Having said that, honestly, it will not change the buyback policy of TotalEnergies, because again the buyback policy is sharing additional profits with our shareholders. And even if we have to pay 1% of €8,000,000,000 makes €80,000,000 So I think it's we'll absorb it. We'll not encourage them to do it, but to be clear. But back to something, the debt in Europe have increased, so people can't please look for some additional taxes. We should learn them and we can cut costs as well, but that's not fair Honestly, there's a way to look at it.

Speaker 1

So globally, I mean, honestly, I think from this perspective, I think there is we must you must make the difference between, I would say, all the statements during the European campaign and politicians and the reality of what is really executed.

Speaker 3

Very clear. Thank you, Patrick. Maybe one day we'll see the U. S. Companies talking about relisting in Europe, but I'll leave it there.

Speaker 3

Thanks for your time.

Operator

The next question is from Irene Himona with Bernstein. Please go ahead.

Speaker 4

Thank you very much. Good afternoon. Question on Mebbia, if I may. You said, Patrick, you're working on an FID by year end 2025. Can you say what the size of resource will be for that FID?

Speaker 4

And can you share with us, post your successful appraisal, what have you encountered in terms of reservoir thickness, the gas cut flow rates, etcetera? Thank you.

Speaker 1

Eran, you go to details, which we pay a lot of money to get this data and I will not share them publicly all my colleagues, because we still have quite exploration to be done. Now in fact today, I will not answer by reserves, but since I will answer, reserves more question for us of dimension there's a dimension of the production per barrel per day. And it's linked in fact like in Suriname this type of FPSOs, they are the parameters the key parameter would be the volume of gas we need to recycle because there is a GOR. So we speak around, I would say, a development around between 150,000 barrels per day and 180,000. It has to be now firm up for the reservoir engineering studies, but all the data are there.

Speaker 1

We have made the campaign so Venus knows the priority is to go to production, I would say. And then, of course, Namibia for us, not only that, because our neighbor has just announced a new discovery in the southern part. Southern part, we have the equivalent prospect on our side, so we'll drill it. We are acquiring that seismic in order to make the acquisition. So for me, Namibia, it's a first development and we see others coming behind.

Speaker 1

But let's explore. And as I said as well, we continue to acquire some acreage in particular on the Orange Basin. We have 2 good licenses prospective licenses on the South African side, which we might drill in 2025 according to the I would say through the process of authorization, which is prevailing in South Africa. So but where we are, so it's good news. We have we will be probably the first to produce oil in Namibia.

Speaker 1

But the objective so Suriname, this year Namibia first development next year. That's a good news, I think. And so to answer your technical questions, first, I don't have the data, so I cannot share the secrets. 2nd, to be honest, no, I have some. 2nd, I think if we launch if we speak today about developments because that are good enough to make a profitable development fitting with our criteria, which is as you know less than $20 per barrel of CapEx plus OpEx or less than $30 per barrel per equivalent.

Speaker 4

Thank you very much, Patrick.

Operator

The next question is from Christian Malek from JPMorgan. Morgan. Please go ahead.

Speaker 5

Hi, good afternoon. Thanks for taking my questions. It's nice to be back on the call. Two questions. Just maybe just first on Namibia.

Speaker 5

I mean, I was quite shocked how the scale of the resource has been increased in as far as the Galp statement. And I say that because I've never seen such a massive move in sort of the way it's been presented. But the question I have is, therefore, in the context of your execution plans and your discipline on spend and investment, how comfortable are you that as and when you do sanction the FID, sort of this and when that this will stay within your CapEx envelope in terms of both cost per barrel and so on, given we've seen this movie before as far as Angola when we had major discoveries and then sort of fast forward 2, 3 years and it wasn't as easy to get the volume online for a number of reasons. That's my first question. Even if you have line of sight on that from now, that would be good.

Speaker 5

And the second question is, there's a lot of debate around listings. And I sort of find that we can certainly blame everything apart from the actual valuation and why the valuation is where it is relative to the U. S. But the question I have for you, Patrick, is electrons versus molecules. At what point do you potentially, in a stronger macro environment, reemphasize your molecules and as far as either sort of rotating capital or investing more capital because it sort of strikes me that the quantum of cash flows the U.

Speaker 5

S. Majors can deliver versus Europeans, the main striking difference or the distinction is just the level of hydrocarbon as far as oil and the cash flows generated from that oil volume. And I know that energy transition is a whole debate, but just purely on quantum of cash flow. Is there anything that would make you reconsider a reallocation of capital? Thank you very much.

Speaker 1

Okay. First, on the first question, I'm very comfortable to FID in Aimivia, first FPSO and the second one, it will be within the $18,000,000,000 of framework of capital per year. We can do it. It's profitable. It's not a problem.

Speaker 1

And obviously, our priority is a big deal when we if we have good oil projects with fitting with our criteria, they will be sanctioned. There is no doubt about it. And that's we never arbitrated against our oil project in the company. And that's why we have expressed our strategy with 2 pillars. The first being oil and gas.

Speaker 1

The second one is, I mean, integrated power, but it's clear. So no, I'm not afraid to have 1, 2 or 3 developments to be done in Namibia. I think what is good for our company will be good for shareholders. So, if it's good projects, we will sanction them. And we have some space and we have been very agile in the company to arbitrate and to I prefer to have more options in my portfolio, but it's a constant strategy to arbitrate and then to give priority to some of them.

Speaker 1

We just demonstrated it with Maasai LNG. We postponed P and G because the costs were too high. We sanctioned Maasai LNG 80% share. It's not big, but it's profitable because the CapEx were in line with our expectations. So we see the type of options.

Speaker 1

And so I prefer to have too many options and to be selective on the most profitable ones because this will contribute to enhance the cash flow per barrel and so the cash flow per share, I would say. So that's fundamentally what we do. So this one, I'm and if there is more to come, we will capture it to be clear. By the way, you are right, but I never seen any way anybody in 25 years in the history to speak about 10,000,000,000 barrels with 1 well or 2 wells. But I mean just so but the media, so no, no, it's with 2 wells, no, never.

Speaker 1

But we'll see. Then on the stock listing, listen, by the way, when you call it's nice to mention one of the U. S. Companies because I was looking to the results which has just been announced. They are exactly the same than us.

Speaker 1

So maybe it's not a matter of molecules or electrons. It's maybe that's why we have I mentioned that we could as we have more and more U. S. Shareholders, thinking to have a clear listing in New York is, obviously, a move on which the Board asked me to look at it, because it makes sense. So we'll see what we can organize it.

Speaker 1

But it's going into the direction of a growing U. S. Shareholder base seems to be a nice a normal thinking from a Board of Directors independently by the way of the misdommitiation of the company in Europe. That's clear, but that's the first one. I don't think so on reallocation of capital, no, I don't consider it.

Speaker 1

I think we prefer to stick and to be consistent with the strategy. I think it has a value in the energy field to have a consistent strategy and to because we know it's a long term industry and if you don't should not navigate and thinking. So the Integrated Power business is continuing to grow to deliver cash flows. We are on the road map to be to reach 12% and then to be net cash positive. So I don't see why I should suddenly relocate capital because oil bar, barrel of oil is higher.

Speaker 1

And again, it's a matter of I prefer to stick on our strategy to be selective in terms of projects, including hydrocarbon projects, sticking on the and low cash the cash breakeven of the company, I think it's fundamental. However, by suddenly having another raise to volumes, which will not be positive. So I think it's we are generating as much dollars as one of the company you mentioned. So we need perhaps a reality. So it's not a question of course of portfolio.

Speaker 1

It's a question fundamentally of finding going to the shareholders who are willing to buy energy companies. And we are more

Speaker 5

Sure. And over the medium term, there could be a bifurcation of cash flow as their oil volumes grow and others don't. That's what I meant more in the context of if and when prices move higher and there's more volume in oil. Is the market starting to look so backwards for that in terms of valuing cash flow. That's what I meant more in the medium term.

Speaker 1

Okay. But okay. Okay. No, honestly, it will be a good problem if we have more cash flows because the price of ore going higher. But I will not make the mistake to think that, yes, it's possible.

Speaker 1

The scenario you described is perfectly possible, Christian. But at the same time, we should don't say again higher forever. That's not true. I mean, we know that it's volatile. We know that when price of all go up, then demand will slow and then exactly same.

Speaker 1

It's a typical thing. So we must not forget the sense of the story. Having said that, the best answer I tell you is that today, we have a very good not a good, super strong oil and gas business, which allow us to deliver the best return on capital employed among the majors. Despite the fact, I don't like the word despite, but we are also investing in integrated power with a lower return. So that means the best question is if we have a portfolio and an efficient oil and gas operations, the proof again this week quarter is the cost per barrel or OpEx per barrel is $4.6 per barrel.

Speaker 1

So that's we protect you. If the barrel is higher, we'll make more cash flows for sure because we maintain and we continue to steer this breakeven. So and it's not only a matter of investment, it's also a matter of portfolio, quality of the portfolio.

Speaker 5

Very clear. Thank you very much.

Operator

The next question is from Lydia Rainforth with Barclays. Please go ahead.

Speaker 6

Thank you and good afternoon. Two questions, if I could. And one just to follow-up on the U. S. Listing.

Speaker 6

Patrick, I think you said that the Board has asked you to look at the Midland listing. How long would that process take? And ultimately, what would stop you from doing it at this point? And then the second question was on the LNG business. You talked earlier about the, I guess, having flexibility within the portfolio.

Speaker 6

I just wonder if you could talk us through what your outlook is at the moment on the LNG market? So obviously, we've had some projects that have been delayed because of higher cost, but others that are coming in that are very competitive. So just your perspective on that market. Thank you.

Speaker 1

Okay. On the first one, to be clear, there was a discussion of the Board with with the Board clearly on the matter of U. S. Listing. We all agree that we have to seriously look at it.

Speaker 1

And so we are working on it together with Jean Pierre. And I plan to report to the Board by September and then we'll see the pragmatic straightforward and we'll come back to you. But we consider that and I had discussions by the way with a number of large shareholders in the U. S. About it.

Speaker 1

But today, in fact, we have an ADR, which is not a real share. They come to buy shares on the Paris market. You have exchange rates. You have 2. And when I look to the behavior of the share during each every day, you have the Paris market, which is dictating the share until 3 p.

Speaker 1

M. And suddenly, you have a drop or a hike because New York is leading it. And by the way, the share at the closing in Paris is just the value in New York at 12%. So all that is not and on the top of it, which is more important, again, we have it's clear that in the energy and the oil and gas field, U. S.

Speaker 1

Shareholders are buying the shares and European shareholders are not so buying the same way. So I think it's also recognition to the growing part of the shareholding. And so we must think we must look at it, because again the Board is keen to understand why if there is a I see it's a way to fill the gap that we see if we can get easily access to shares to U. S. Shareholders.

Speaker 1

So that's where we are. I will keep you aware, not fully, but I think it was time the right time to mention it to our investors. On the LNG, you know the LNG I would tell you, I'm positive for 2025, 26, because you will not see much new capacities. Of course, like you and all of us, we are not naive. We observe that from 27 percent, I did not mention 26 percent because some projects will be delayed.

Speaker 1

I'm sure it's a big project. You will see new capacities coming onstream from the U. S. And from Qatar. So this will have an impact on some on the market.

Speaker 1

That's clear. But for 2025, 26 the price could be tension since some of the plants again could have some difficulties, that's possible. After that, okay, that will be good for the demand. It will rebound. So what we are trying what we are doing together with the LNGT is to sign some oil related medium term contract because the view that we have on this business is that the oil might remain like Christian on question suggested it, might remain stronger.

Speaker 1

So that's what we can do. And again, by the way, I'm not afraid because generally and it was very well demonstrated by one of our peers, when you have some low cycle in ENGIE, they are not very long because generally the demand is very reactive. You have countries clearly, we've seen it this year. In 2023, you've seen more China buyers coming back to the market at $8,000,000 $9,000,000 $9,000,000 $10 Under $10 you see China and you will see if it's dropping to $9,000,000 you will see India as well coming. So I think it's positive for the demand.

Speaker 1

So and that would be by the way something important in this business because somewhere with the events of 2022 customers are a little shy with this energy which went to the roof. That's why by the way they are also interested themselves to sign more oil related contract base, because they see more stability in that oil pricing but in these gas markets, which has been very volatile. So I think so again, maybe a lower price. Another comment on it, because sometimes I'm surprised by some analysis which are reported. LNG, one of the interest of LNG, like you've seen in the results of Total Energy is when the price of gas is going down in Europe, we have some amortizer in the LNG pricing formula.

Speaker 1

It's not we are not a European gas seller, I would say. And so, the impact on our revenues, cash flows and results are much lower because the Formula LNG are amortizing these follow ups. So I'm again, we are I'm not I'm not worried. I continue to believe that it's a good business to invest because it's a growing demand because we need gas and electric to produce to complement the intermittency of electricity. There is a climatization demand when in the middle class in Asia.

Speaker 1

So all that is driving, I would say, electricity demand. Parts might be covered by coal and renewables, but part also with gas. And a country like India is very interesting. They are building a real gas

Speaker 7

infrastructure with big truck lines around

Speaker 1

the country. Reality we are investing by the way in this business. It's a reality. It's a reality we are investing by the way in this business. It's a reality and I think that's so a lower price during 2, 3 years might will be would give a push to that demand.

Speaker 1

And when the demand is stored, it's difficult to stop, because then gas becomes your fuel for your house. So that's the perspective I see. But again, we are active in order to, I would say, edge, not edge is not right word, but to sign some medium term contracts with all related terms.

Speaker 6

Brilliant. Thank you.

Operator

The next question is from Martin Ratz with Morgan Stanley.

Speaker 8

When oil prices are referred to as relatively stable, that does sort of I find that a very sort of very interesting comment. But anyway, I had 2 questions that I wanted to ask. The first is a relatively simple one on the buyback in oil prices. We started the year, of course, with €2,000,000,000 a quarter in buybacks, but I think it's fair to say that oil prices are have been surprising to the upside so far this year. So I was wondering if there is some move in the quarterly buyback perhaps later this year if this oil price ticks and under what conditions we might see sort of the quarterly buyback much higher.

Speaker 8

I was hoping you could say a few words on what the prospect of that sort of might be. And then the other one is about the Sapura OMV sort of acquisition. You bought 100% in sort of 2 tranches. I know it's not as exciting as Namibia perhaps, but it's not entirely small. And I was wondering if you could say a few words about the rationale of that transaction, what the attractions of the assets are, how it fits in the overall picture?

Speaker 8

Thank you.

Speaker 1

Good. No, it's not small. It's a good deal. We don't see even if we don't make a lot of noise, even I prefer to pick some good assets, which fits with the strategy, the growth potential. And we don't really make small because, in fact, it's giving us with Sapura, we believe, an operating position in Malaysia.

Speaker 1

We see that as many advantages. In fact, we have a strong bond of Petronas. Malaysia is a very in fact, it's still a prolific basin, several gas basins prolific ones. It's an opportunity to have a material position, 50,000 barrel per day, I think. So it's material.

Speaker 1

We can dedicate people. We see there beyond these licenses more to be done. So I cannot there is a potential to expand in the gas business. This is a business which is related and which is priced as a netback from LNG. So you have different formula.

Speaker 1

So it's part of the also the interest of this business. You have some upside and you can correlate it. And it's also a way, again, to strengthen the links with Petronas. Malaysia is an interesting location as well for other activities like in particular CO2 storage for Asian buyers. So it's there are some a lot of Japanese companies are looking to that.

Speaker 1

So we see and again, I think for a company of those size, Hello is now in Asia strategy in South Asia strategy. Having more fit in Asia is important for future. This is where the demand will come and Malaysia is an interesting country. We have also some LNG business. So this was a good opportunity, again, a material one, because what I don't want is to move from a small asset.

Speaker 1

So this one was so we work to have materiality by making all these transactions together. On the buyback, okay, I just want you in fact, you know the answer by asking the question, Martin, I think. When we stated in the press release of the in February, just reading it, with €2,000,000,000 of share buyback in the Q1 of 2024, which will remain the base level for quarterly buybacks in the current environment. I think the current environment in February were more or less $79 $80 per barrel. We continue on this basis, but it's quite clear.

Speaker 1

We have been clear about the cash allocation framework we follow. First, the dividend, the CapEx we are where we are and we don't intend to expand that. And we said that we'll use share buyback to if we have more cash flows to share it with shareholders. So again, it was premature this quarter because we have only seen $90 for 1 month. So I will not conclude that the $90 will remain for the year.

Speaker 1

I know that when I was making some roadshows in London, people were speaking to me about $100 But in the meantime, it wasn't $95 it went down to $88 or $89 So it's volatile. To be clear, it's clear that in our minds that if we have more cash than the base case, then we'll look to share it through share buybacks with some shareholders. But we don't have a mathematical formula to give you, so you have to guess. And again, it's a monitoring. We'll see what will be the Q2.

Speaker 1

And I expect some decision probably middle of the year or September by the Board when we'll have a better visibility of what could be the execution of the year. We have a good balance sheet, so we are very we can we will not wait the end of the year to announce you what we'll do. But again, let's look to what is the reality of the market, because in the same time, oil price is better, gas price was a little lower than anticipated at the beginning of the year, even if it's going up in the last weeks to more $19 in Europe. And the spread with the U. S.

Speaker 1

Because ENRIQUE up is going down at 1.5 is also a good important indicator for us between the TTF and Enreve. So that's a good signal. So again, we will follow what we say to investors and shareholders. I remind you as well that we said that we want to distribute more than payouts for more for 40%. This quarter is at 46%, I think.

Speaker 1

So, we are on the way to not to disappoint you, but as it's like the strategy, we are consistent and we go step by step. And when we are in a position to take decision, we'll take them.

Speaker 8

Wonderful. Thank you very much.

Operator

The next question is from Lucas Hermann with BNP Paribas. Please go ahead.

Speaker 9

Yes, afternoon. Thanks very much for the time and interesting comments throughout, Patrick. Amazing, isn't it? We all focus on oil now and moved on a little bit. But I just wanted to turn on the subject of FIDs.

Speaker 9

I wondered if you could talk a little bit about the offshore wind business and just how things have progressed for you over the last 6 to 12 months around costs and what your thoughts are now on the timing of decisions, Germany, UK, possibly North Asia where you have opportunity. So just to give us some idea of, okay, I know what I'm doing on Namibia or Asturinam, but what am I thinking around the allocation of capital to wind and time lines? Thanks a lot.

Speaker 1

Okay. I will be transparent. There is no way. It's clear that we had the experience recently in New York where and in fact it's an issue. When you are in some markets which are more regulated or I would say more depending on some fiscal incentives, suddenly everybody wants to take the incentive for himself.

Speaker 1

But if the supplier is increasing the price of his turbine because he wants to capture the ITC, then we don't have it and then we cannot make the project. So it's a chicken and egg story, but we are not condemned to develop projects if they are costly. I'm very CapEx driven and you know me for long now, we have just recently said that on PNG we are able to delay because the CapEx went out there and going to new contractors. And on offshoring, obviously, we'll be the same position because it's clear that this energy is more expensive than onshore wind or solar. And in our integrated power strategy, it has to find its place in a merchant way somewhere to be able to make money with a merchant pricing as well.

Speaker 1

So if it's too costly and that is going out of what could be expected as a merchant pricing for electricity, then why should we do it? So we are working on it. It's there is no rush. We will not be led by, I don't know which planning, but by a 2,030 target. The 2,030 target for TotalEnergies can be filled with plenty of onshore possibilities.

Speaker 1

We'll have some offshore projects because we have some in the portfolio which are good, on which we will give the priority. We have created many options. And what we were discussing between us with Stephane was okay, if we need to we need to rank all these opportunities and to do the best ones and not necessarily all of them. So again, you have some heating there, but either we can have some cold water on all this value chain, otherwise we will wait and see. We are at the position.

Speaker 1

But we work. We work. We work on last comment, I would say, for me, offshore wind is an energy for again. And you have to look carefully to what will be the electricity market prices. It's an energy where for markets where the electricity price will remain high.

Speaker 1

It's not so you cannot deploy it everywhere. But Germany is a good fit. U. K. Is potentially a good fit as well.

Speaker 1

And New York, we'll see again if we can obtain or not the right conditions to develop it. So we are monitoring it. But in our capacity of Integrated Power, it should represent something like 10% by 2,030. So it's not the core of the growth. And so if the 10% are only 7% or 8%, I don't care.

Speaker 1

It's no, it's priority is profitability. It's a profitable growth. And so we will go and review these projects 1 by 1. And if costs are rocketing, it's better to wait and see and to allocate our capital to another project.

Speaker 9

Okay. Thanks very much.

Operator

The next question is from Biraj Borkhataria with Bank of Canada. Please go ahead.

Speaker 10

Hi, thanks for taking my questions. The first one is on LNG. There's been on and off news still around potential EU sanctions on Russian LNG. And I was just wondering what this would mean for your the offtake at Yamal in particular. And would you be able to divert the cargoes and sell them elsewhere?

Speaker 10

Or would you have to declare force majeure? And then the second question is on hydrogen. So late last year, you announced a call for tender for across your refineries. And I don't think we've seen anything since. I was wondering if you could provide any insight on the response from the industry and what you're seeing there.

Speaker 10

Thank you.

Speaker 1

Okay. I know you like Russia, Biraj, very much. To be clear, there is no for Total, if you I will tell you, if EU sanctions Yamal LNG, the price of LNG will go up quickly and globally our portfolio will benefit of it. So I'm not at all it's a positive if there were sanctions, not a negative because the cash from Yamal is quite limited, contrary to what you might all think. First, we don't receive dividends from Yamal LNG since 2023.

Speaker 1

2nd, the LNG business, because I remind you, that because of the risk of sanction, we decided not to edge the volumes of Yamal. That means that this year, we have sold Yamal in Europe at a TTF price, and we buy it at a brand basis. That means that it's not a very profitable operation. It came from busier contract. So honestly, it's not a point.

Speaker 1

So yes, if our sanctions on Yamal by Europe or by EU will have to exercise force majeure for sure. On some of the contracts, there is 2 contracts, one is for Europe, which we can exercise. There is one for Asia, on which we'll have to look more carefully to the close. So this is where we are. And but my view to share with you Biraj, I don't think because the European leaders understand that their gas security of supply today rely on the LNG and they don't want again to see a price crisis in Europe until 2027.

Speaker 1

And what I understand is that they might have some ideas, but from 2027 front not before. So we'll see. Again, for TotalEnergies, it's neutral. It's even a plus if there were some sanctions. So maybe people should think I'm a little provocative, but in fact, that's the reality when I look to this project.

Speaker 1

And you know, it's not 1,000,000,000 of dollars in our cash flows. It's more as few 100 of $1,000,000 which we can absorb easily, which have already been largely absorbed since 2022 in the company by other projects. On the second one, no, I would like you to follow more carefully. We gave you some indications in February on hydrogen. We told you that we received a lot of offers, more than 50 different offers to our tender.

Speaker 1

We have been offered 5,000,000 tons and we are targeting 500,000 tons per year. So then all the maturity of all these projects are not the same. We are working on them. I'm quite optimistic to be clear that we'll get what we are targeting. It's important for us because these 500,000 tons will allow us to decrease our CO2 emissions by 5,000,000 tons.

Speaker 1

5,000,000 tons, so emissions we have this year 38,000,000 tons. So it's quite sensible on the road map. And again, within the European ETS framework and the famous rate free, We can do it, I would say, in terms of neutrality compared to paying the taxes or eliminating emissions and getting some green hydrogen. So I'm really it's quite attractive. We are in fact becoming an anchor customer for some players, in particular in Antwerp or Rotterdam, and even Rohena in Germany, quite a long strong interest.

Speaker 1

So we could benefit from being a first mover there, because again, there are as people, our projects are willing to develop the projects, thanks to such a 15 year contract that we could offer. So we'll come back to you when we'll have clarity. There are different tenders, a lot of discussions. But I think But we are I'm convinced that we'll have the we'll be able to execute the road map as planned.

Speaker 10

Okay. Thank you. Good luck.

Operator

The next question is from Michele Della Vigna with Goldman Sachs. Please go ahead.

Speaker 11

Congratulations on the strong capital discipline and the ongoing upgrading of the portfolio. I think you mentioned P and G. That's definitely a great example where cost inflation has led you to rethink or at least delay the project. I was wondering which other projects in your portfolio you think should be delayed or perhaps reengineered a bit following some of the recent cost inflation? Mozambique is certainly one where it feels like some of the bids have come back a little bit on the high side.

Speaker 11

And my second question is goes back to the idea that you floated off a U. S. Primary listing. Clearly, the big aim there is to be included in one of the major indices like the S and P 500, which has so much passive and semi passive following. I was wondering if you've had any discussions there and if you think it's actually something doable to be included in that index while being remaining headquartered in Europe?

Speaker 11

Thank you.

Speaker 1

Okay. Michele, you know the answer to the second question. And you know that you cannot it will be in SP500, you are not going to be seated in the U. S. That's all.

Speaker 1

So we don't intend. That's why we speak about primary listing. But again, when I see when I will discuss with U. S. Shareholders, being for them having access directly to real shares in New York would be a plus compared to going through this ADR or to the Paris market to buy shares.

Speaker 1

I think that's what we think about it. We hear clearly more appetite on the North American side for energy companies, oil and gas companies, but in Europe. So it's we are studying what could be, again, to facilitate their appetite by offering them easier access or share. That's the idea. But the index might be a bit, but it's not in the agenda to be clear because we don't speak about the miscommunication.

Speaker 1

We speak about primary listing. That's point. On the first one, no, honestly, on Mozambique, no, we don't face at all. I know one of my colleagues wants to float that I leave, but it's not true. I mentioned that a few months ago that we were discussing with contractors on Mozambique because they raised their costs.

Speaker 1

We had good discussions with them. So the good news that I can confirm today is that in fact we are back to we are on the good contract with all of them. We realign all the contractors because their interest is truly that we can execute the contract project. Their interest is not to force us to re tender or redesign or I don't know which strange idea. So we have a good concept, strong concept, resilient one.

Speaker 1

So we worked with all of them. And today, we have contracts which have been initial to restart the project. But we have over dimension in that project. And again, on the security side, I would say, there have been a lot of things. The security in Northern, Del Cabo, Delgado is okay.

Speaker 1

There is no incidents, no events. It's well controlled. We will meet soon President Nussey from Mozambique to review it with himself. And so I would say on the southern part of Cabo Delgado, it's quite far from where we are. There have been some incidents, but there again they are redeploying some forces.

Speaker 1

And by the way, again, that part is first, I would say, people are asking me, do you release the force majeure? But the first thing to be done is by the State of Mozambique, which is in charge of the sovereignty and security to tell us if we could lift it before I decide. Let's do it in the right order. I would say, don't try to ask privately owned companies to decide about something which is not fully in our hand. Security of Asthmael is the first duty.

Speaker 1

It is the duty of the state of Mozambique and we are working with them. So I would say we are so it's not a matter of cost, this one. It's more a matter of having the right conditions to lift the force majeure and to move on progressively probably because it has to be done to the restart. We'll try we have to want to remobilizing this stuff will take time. So but it's not a cost.

Speaker 1

So the SP and G was of course disciplined frankly. And it's not really a redesign. It's more I think we made as we tried to explain I will tell you we're limited to our traditional engineering firms partners, Western ones. I think what is new is that Western contractors are not so much appetite for many visits like us. They do value over volume.

Speaker 1

So we have a lot of plenty of projects in the U. S. For the easier to execute. And so what we think is that we have begun to work with some Asian engineering firms, which are able to which are also able to deliver upstream good upstream projects. And we observe it.

Speaker 1

In Uganda, most of the contractors who are working in Uganda, all of them are coming from Asian countries and the execution is very smooth and we respect the cost of budget, so we are happy with them. So I think it's more we went to the traditional players. We want to open the tender. It will take time. And I'm optimistic that we can put this project back on track.

Speaker 1

But again, as I answered before, within our portfolio, we have many options. And that's good to have many options. No, we are not discussing a lot of Marsa LNG. We have it. We introduced it.

Speaker 1

We know we might have another option, which is called 24 in Rio Grande LNG project, which might be more efficient than others. So I prefer to have more option and then to organize the planning and to be able to resist to cost increase, to keep the discipline, while we will be able despite this to deliver the LNG growth we anticipate for 2028. So that's where we are. And again, we'll monitor the project 1 by 1. And we see in Syngina, clearly, we have good costs, probably benefiting somewhere from synergies for some contractors with all the projects in Guyana.

Speaker 1

That's clear. So there is a synergy somewhere. Contractors who are working on Guyana, they propose to come with us in Suriname because for them, it's just next. And so they can capitalize on what they've done. We'll see Namibia, which is a new province of which will be for me.

Speaker 1

The next, I would say, frontier from this perspective is how do we establish an efficient oil and gas industry, etcetera in Namibia.

Speaker 12

Thank you.

Operator

The next question is from Kim Fustier with HSBC. Please go ahead.

Speaker 13

Good afternoon. Thanks for taking my question. I've got 2 in LNG, please. The first one is on U. S.

Speaker 13

LNG integration. I think your intention to extend into the upstream in U. S. Gas has been well telegraphed for a while and now you've made a first step with the Lewis Energy deal. Are you able to say roughly what proportion of your U.

Speaker 13

S. LNG offtake you'd like to cover in the medium term? And secondly, you mentioned good appetite for new oil linked LNG contracts from Asian customers. Are you able to say or give any color on the slopes embedded in these new contracts? And also what share of your contracted LNG sale is up for renegotiation over the next few years?

Speaker 13

Thank you.

Speaker 1

Okay. On the first one, I think I've been clear. We want to protect or to hedge, I would say, of cost of production by having some gas some equity in gas productions in the U. S. So it's around 1 Bcfe, which we could target more or less.

Speaker 1

But then again, no rush. Today, it's the right time. The unreal is low. So we've seen some dry gas producer quite keen to open the door. So we try to jump in.

Speaker 1

So it will not be a big acquisition. Probably, it will be a sum of assets. And like we do, you observe probably that I prefer to do that than rushing to make big M and A, which are expensive. And so we have an opportunity to do it and dry gas window. Eagle Ford is perfectly located next to Rio Grande, which was one of the advantage of Rio Grande LNG.

Speaker 1

And you know, we have not much appetite for this dry gas. To deploy, to develop a position on the long term. But to deploy, to develop a position on the long term. That's what we target. And the cost of acquisition is quite good.

Speaker 1

It's quite low, in particular today because it's countercyclical. It's always what I explained to make good deals when it's countercyclical and this is typically what we should do today. And we have about 1.5 or 2 is a good opportunity for us to advance. So if people are listening to me, they can come. Then on the LNG contracts, no, I cannot give you some commercial discussions on the slopes.

Speaker 1

It's protective. By the way, in most of my contracts, it's written, but I cannot disclose it. So I cannot do that. If we sign it because it's fitting with our expectations. That's all what I can tell you.

Speaker 1

But I cannot do that. And we renegotiate contracts. In most of the long term contracts, you have a close, which is, I would say, either 5 or 10 years. It depends. So I think it's more than 7 years than that average.

Speaker 1

So every year, I would say, as we have a large portfolio, we have 30,000,000 tons of LNG contracts. We have one seventh, I would say, more or less of these volumes. We are being renegotiated. But negotiation for us is also positive because of the opportunity sometimes to have longer contracts. So it's a permanent it's an exchange of building pricing and duration and volumes and optionality.

Speaker 1

So in fact, when we are opening this contract, this idea, there are many parameters which are on the table. It's not just the pricing and value exchange, okay, maybe more optionality to redirect some volumes in favor of the seller or the buyer. So it's quite interesting this negotiation. So I would say we negotiate more or less. Again, you can take it as a whole of 1,000,000,000 tons.

Speaker 1

So we are accustomed to do it, but it's also I was in China recently. We also discussed new contracts with the people. So, it's a permanent give and take and that's part of this of commerce, I would say. It's a commerce. It's a business trade.

Speaker 1

Thank you.

Operator

The next question is from Alastair Heim with Citi. Please go ahead.

Speaker 1

Thanks. Hi, Patrick. Could you

Speaker 7

talk about how much of your integrated power business earnings comes out of Spain? I think you've got a lot of flexible generation combined cycle capacity. I'm really just interested in how current low Spanish power prices will eventually feed through into earnings if they do at any point. And then my other question just back on Namibia. I mean, I think in the press earlier in the week you got pinned down to suggest that it might hold similar potential to Guyana.

Speaker 7

You've talked about 180,000 barrel a day development, which is something that is not huge. I'm just sort of interested in what makes you connect the dots to something sort of Guyana size for the basin? Thanks.

Speaker 1

It's again there are 2 on the second point, there are 2 differences. 1 is each development, how much is the size of one development. And again, it's dimension fundamentally by the facilities on the top side on behalf FPSO because including the GOR, you cannot oversize the gas handling facilities on the top side on the FPSO. And that governs generally quite a lot of oil production. So I told you, again, the question will be how many can we do it.

Speaker 1

And when I see my comments what I've done, it's just what we now observe. It's not only it will not be like in Vienna when 1 GB will cover the full discovery. It's not the case. So we'll not have, I would say, from this perspective, the same efficiency to have 1 GB in charge of deploying the full resources, which is the case for France in Guyana. In Nabila, you have different operators who are discovering oil and hydrocarbons, ourselves, Shell, Galp.

Speaker 1

So that means but when I'm adding and what we know about it, I'm adding it. I think the perspective to have 6, 7 FPSOs or I don't know is perfectly possible on the whole Orange Basin. And we're just at the beginning of exploration, including on our block, including I mentioned the Orange Basin on the South African side. So honestly, it will not be as efficient in terms of development because it's on 1 JV, but several JVs could cover. I mean, the potential of this area seems to be quite attractive.

Speaker 1

So again, you let's you have different operators, different exploration programs to be executed. So that's the second one. On the first one though, Spain is around by 2025 out of the 35 gigawatt, which would represent I think something like 1 to 2 gigawatts. So it's not a major country. It's the one we started quickly because it was easy to have access to some solar projects next to France.

Speaker 1

But it appears, yes, you're right, but it's quite a it's not an easy country because a lot of competition. From price, electricity is quite low. You have a lot of but again and you have some curtailment. So you have to be careful about the projects. It was an early mover to renewables.

Speaker 1

So there is a lot of projects there. But I would say in the plan, I would say by 2,030, we could target something like 4 gigawatt of 400, so 4%, 5%. So it's not in Europe, for me, it's not the number one country to deploy in terms of integrated power. Germany has more interest than even, I would say, U. K.

Speaker 1

Because again for us the driver will be where do we see the best combination between gas and renewables. Okay?

Speaker 7

My question, Patrick, which is really on today, I think a lot of your earnings integrated power coming out of combined cycle in the gas in spite

Speaker 1

of the Spain is quite low. You don't use much of this combined cycle today in Spain. Okay. Thank you.

Operator

The next question is from Bertrand Hode with Kepler Cheuvreux. Please go ahead.

Speaker 14

Yes. Good afternoon, Patrick. Two questions. The first one is on the U. S.

Speaker 14

Offshore wind. There were recently your project, Atento Venergy, that was canceled. Can you share with us the reason of that cancellation? Because I understood there were there should have been a one off, I would say, index and section close linked to the cost. And so I'm struggling to really understand.

Speaker 14

And do you still see a way forward in U. S. Offshore wind? And then the second question is on is LNG related. You said in your introductory remarks that you've asked your team to sign long term LNG contract with Asian buyers in the coming years.

Speaker 14

Do you have a volume in mind?

Speaker 1

The first question, in fact, Bertrand, I answered previously. I explained that one of the key contractor, which is making a lot of local content that suddenly increases costs, probably trying to push the limit. He reached the limit. And in fact, it's, I would say, you have to wait and see the follow-up. But I cannot disclose it because again, we have some contracts with the city of and the state of New York, so I prefer not to comment it.

Speaker 1

The state of New York is managing these, I mean, contracts. Their intent is yet to have the projects. And so they will probably like that done for the 2 old contracts with 2 competitors. They will re tender it in the conditions which will allow us to launch a project. But let's you need to have a little more time and you will understand.

Speaker 1

On the second one, you say it's not I don't want to put a target officially today in front publicly with my teams. We know that we have some volumes available in our portfolio. So this volume might be marketed and it has to be marketed When we took in Rio Grande the commitment of 5,000,000 tons, we don't want to market all of it, but part of it clearly has to be marketed. It's clear it's part of the strategy. We have our balance sheet is strong enough and we are trusting as our teams enough to do it without having the contracts.

Speaker 1

But at the same time, it's good to deliver the contracts. So it's less than 5%, but it's not 0. So you find the objective. And it's not like that. Again, at the end, it's a question of negotiation, discussion and I think the right contracts in terms of value.

Speaker 8

Thank you.

Operator

The next question is from Paul Cheng with Scotiabank. Please go ahead.

Speaker 12

Thank you. Patrick, you did a small deal buying 20% of the Dorado. With your LNG exposure in the Gulf Coast, is that sufficient or that you are seeking additional assets in the U. S?

Speaker 1

Okay. Paul, I think I answered to King. No, it's not enough. It's the first one. It's an opportunity.

Speaker 1

It's a first volume. And it's I think 100,000,000 square feet per day and we target more 1 Bcfe. So there will be more to come. But the Eagle Ford, as I said before, is a right is a good basin. Dry gas in Eagle Ford is a good basin for us.

Speaker 12

I see. And that your acquisition of Talos on the low carbon solution, With that, how that changed the way that your approach or that your pace on investment in that area in the carbon storage?

Speaker 1

I think it's a complement. I've been obviously on CO2 storage that we were ready to develop a portfolio primarily in Europe because it's linked to our assets. In the U. S, we have some refineries and petrochemical assets. So we know that we'll have to store CO2.

Speaker 1

We had the opportunity to have access, I would say, at cheap conditions to these nice 2 nice projects, CO2 storage, 1 in Texax, very next support offer where we are located, which is operated by Chevron, very committed. So a good operator next to our facilities. So that's matching our targets. And the number 1, Louisiana, which is not really what we intend to divest the second one. So again, we are driven fundamentally by securing some volumes on good projects for being able to store our own CO2.

Speaker 1

And if we have more capacity, our 2 abate industries in the vicinity. So that's I think strategy and this one in the U. S. In the U. S, we have quite a vibrant CO2 economy.

Speaker 1

So it might be a nice place to have a good scheme to have, I would say, a low cost CO2 storage.

Speaker 12

Patrick, Yes. It's primarily that you said for lower your carbon emission or the intensity of your own operation or that you look at it as a gateway for a 3rd party revenue source business?

Speaker 1

It's for both.

Speaker 12

Okay. All right. Thank you.

Operator

The next question is from Henri Patricotte with UBS. Please go ahead.

Speaker 15

Yes. Hello, Patrick. Jean Pierre. Thank you for the update. Just one question on Integrated Power.

Speaker 15

You mentioned you had strong Q1 in terms of cash flow from operation. If we analyze the Q1, you're already in the half of the guidance range for the year and you'll have more capacity coming on stream over the rest of the year. So it's at this point to expect that you're more likely to be at the upper end of the €2,500,000,000,000 3,000,000,000 cash flow range, maybe even slightly higher? Is that something to have in mind when it comes to the Q1 cash flow, which we expect that we may not expect exactly that run rate through the year? Thank you.

Speaker 1

Thank you. No, I confirm the 2.5 to 3. You can multiply by 4. You will find something like 2.7, 2.8. But I'm not sure it's a permanent growth.

Speaker 1

I'm not sure. Sometimes we not have the seasonality in this business. And don't forget it. You consume more in winter, but sometimes in summertime, it depends on the region. Even if in Texas, it's a country, you have more cash in summertimes with hot weather than in Europe.

Speaker 1

But we have this seasonality aspect, so it's not so I confirm 2.5% to 3%. And if we can be next to 3% rather than next to 2.5%, I will be happy.

Speaker 15

Okay. Thank you.

Operator

The next question is from Jean Luc Romain with CIC Market Solutions. Please go ahead.

Speaker 16

Thank you for taking my question. It relates to CapEx in Integrated Power. You have had a strong start to the year. Should we expect the quarterly level of organic CapEx to continue about the same over the rest of 2024 to still accelerate? No.

Speaker 1

But I think you have something very uneven during the year because as you know, the guidelines we give you is the net CapEx. And you have, of course, with a growing portfolio, a growing part of farm downs, which will be booked probably more on the second half of the year than the first half. So you see more organic CapEx at the beginning and when you should we should land to what was planned for the year, I think $5,000,000,000 that's what we mentioned to you. So I don't anticipate higher capital allocation to this segment. And by the way, I mean, as it was said by Christian, we have quite a number of good oil projects.

Speaker 1

The idea is not again, we told you, but we have reached the right percentage of allocation, 30%, 33%. So that's the guideline. And I'm sticking on this one for the years to come. It's part of we came to that level quicker than expected. But now it's also a matter of discipline.

Speaker 1

We have a lot of opportunities, but we are also selective and it's important because again it's not one, I guess, the discriminant or the other. So that's we execute the strategy. It's more a timing effect like for the working capital rather than seasonal effects now, but you will see it landing during the year. Okay?

Speaker 16

Thank you very much.

Speaker 15

Thank you.

Operator

Gentlemen, there are no more questions registered at this time.

Speaker 1

And thank you. Thank you to all of you. I think we were targeting to be on time in order for you to attend the Exxon call, if I understand, which is follow-up in 5 or 10 minutes. So we respected it. Thank you for your attendance.

Speaker 1

And again, it's another quarter of strong deliveries. Some people will say total in this is sometimes a little boring, but we are going for the good and always going up as a share. So I mean, I prefer to be in bad situation, not to surprise, but to execute, to deliver, to be consistent. And I think it's probably one of the good when you buy shares, you can trust that we will deliver. That's the message.

Speaker 1

Thank you.

Operator

Ladies and gentlemen, this concludes the conference

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Earnings Conference Call
TotalEnergies Q1 2024
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