TotalEnergies SE (TTE) Q4 2018 Earnings Report, Transcript and Summary

For our results outlook that I will present you, together with your preferred to and I will say together as well with all the executive committee members who are today in the room and will join us for the Q&A session. This tradition will be a little, there will be some novelty, like always, into town because this afternoon, afterward, you’re going to stay with us. After lunch, we’ll innovate by presenting you our first ever energy outlook 2040 markets, on all markets, gas – natural gas markets and power markets; and will be followed by our climate presentation, which logically comes after those market trends. So – but let’s begin, first, of course, with this results and outlook presentation. You will have no surprise, I think, as always, in line with our message. We think we have demonstrated in the last years, and 2018 was another proof, that we are consistently executing and delivering onto our strategy. And so it’s another year, I would say, of strong delivery on most if not all our objectives; and in particular, outstanding production growth, more than 8%, finally. So you were right last year when you told me you’re a little shy on your growth. So we’ll not be shy for next year, you will see. But also, not only – and there is no change in our speech today. It’s not volume above value. Its value over volume, and – but also, a strong profitability ratio. And we are pleased to see that our return on capital employed is next to 12% this year. Of course, we are at $71 per barrel, but it’s a strong improvement. And all that has been done because we also managed to – we maintained also a strong discipline of spendings and CapEx and OpEx. This growth and discipline allows us to have growing cash flows, and it underpins the plan we delivered to you last year in the same room, in February 2018, about shareholder returns. We executed it and then we have a strong visibility, which will be the main message again today, like I delivered it to you in last September, strong visibility, a better growth – cash flow growth, which underpins our higher shareholder returns. We have also, of course, in 2018, continued to build the future of the company. And we have this strategy, which is to integrate the value chain of all – of natural gas and our low-carbon electricity, which is more material today after the various M&A business we have done last year. And so we have in our hand an attractive portfolio to deliver this strategy post-2020, and one of the – you will see, by the way, that our renewables or reserves has been quite – is quite high. So no parity for the next year, for 2019. We’ll, of course, deliver this production, and with most of the projects that we’ll launch, projects should deliver the cash flows, shareholders returns; but also, to launch the new wave of future projects. Just before I let the floor to Patrick to describe you the results, few words, as always, first on safety. I liked the films that you’ve seen. Safety, of course, is a question of human behavior, but it’s also a matter of technology. And it’s nice to see that all these AI technology can be applied to safety, and I think, not only in a smart way. And there is a strong enthusiasm about the – among the teams in the company. So question for us now of this AI story and digital stories is to be able to scale it, this proof of concept. But in terms of safety, I think this slide is interesting. As we – on the right-hand side, you can see. And we took the example of Saft. We acquired this battery company in 2016. Around 4,000 people are working there. You can’t see, but the total recordable injury rate was quite high, above 12. And in fact, if you would have put on the slide 2014, 2015, 2016; it was 12, 12, 12, so no improvement in Saft. We came in. We told them this is clearly not acceptable. We need to implement in your company the same way we work and the same recourse, by the way, one of them being that total recordable injury rate is an objective and has an incentive to people. And you can see, and when you speak about safety culture in the company, I think this is a very good example and demonstration, but in two years, it went down from 12 to less than 3. It seems to be impossible when we told them that last week, I remember, but it’s a strong discussion every year and I’m convinced they will reach a level of one that we have in the company. Because a company like Hutchison, which is another manufacturing company in the group, is less than one. So there is no reason to – so let’s prove it. When we speak about value and culture, this is really our view. And so those are the results. And like you can see, at the group level, we are plateauing at 0.9. We have set a target of lower than that for next year because we think there is no reason to stay at this level. There are some peers, which are a little better than us. These businesses are good, but there were some shadows. In particular, we suffered an accident or four fatalities this year: one driver in Ethiopia in marketing business; two operators in an explosion of a storage on the depot in Egypt, clearly about mismanagement, mis-operation; and one carriage type in Congo, in E&P activities. So this is much too high. We have – and of course, it’s proof that we need to permanently remind to everybody and to – that safety is a value and is a top priority. So after that, few or two words about the markets to set the scene. All markets – I will not give you any guess about what will be the oil price. Everybody is wrong in this market. We have also the strong volatility in 2018, pricing going up to $85 and in one month going down to $55. I think there are some fundamentals, which makes me optimistic, I would say. First is that the demand is continuing to grow at a high pace, in particular, because we observed a sensitivity to the price and saw $50, $60 per barrel. The International Energy Agency is announcing 1.4 million for next year. By the way, we just reached 100 million barrels of oil per day in the last quarter of demand. So the demand is there. Of course, there are some, I would say, question marks about the impact of trade wars on the emerging market growth and in stability of financial markets. But fundamentally, what we observed is that when the price is reasonable in the $50, $60 range, emerging markets which need more energy, in particular, Southeast Asia, Africa, are – we have a strong demand. On the supply side, it’s of course, I would say there’s some trends there, opposing trends. I think OPEC countries, Russia have taken a good lesson in 2018. In June, they tried – they thought they were able to stop quota of being – relaxing the quota. We’ve seen the impact there, also the impact on the market. So the decision we announced in the end of November on breakdown with Saudi Arabia, we executed, we have already implemented, but also with other countries. Of course, we have some – we have key countries like Venezuela, we’ll not comment on it now, which are not in a very good shape to increase our production; or export from Iran. People have been surprised on the hindsight, but the decision of the U.S., maybe we’ll be able to see some restrictions coming by May. Libya is up and down. The industry, globally speaking, still does not invest a lot even if it’s true that $1 today is, in terms of volume of investments, is much more than the dollar yesterday because, of course, have been driven down by 30%, 40%. And we have, of course, the U.S. shale supply, which today, as – we’ve seen a big growth in 2018. There are bottlenecks to the pipeline. Bottlenecks will be out by second half of 2019, most of them. So we should see more U.S. shale oil coming into the market. So we are opposing trends. So it’s difficult to anticipate. I will not do it. We continue to drive the company by sanctioning the projects at $50 per barrel. We are keeping our permanent eye on the breakeven and the $30 per barrel, $50 with dividend. So there our fundamentals are strong because it’s our jobs to – we’d like to be excellent of what we control. And then as the prices are higher, we will be able to deliver, of course, higher returns. One market which is clearer to us is the LNG market, where, clearly, we are always short of forecasting the increase of demand. And when I look to the last three years, this year has been again 10% versus 11% last year. So it was 5.9% as an average. We always say it will be 5% for the next five to 10 years, but in fact, for the time being the markets are growing very quickly, in particular, driven by, of course, the policy in China. China has grown again this year by 40%. It was 40% last year. It was almost 40%, two years ago. So I don’t know if it’s permanent, but it is anticipation we are still very strong. Natural gas and the LNG mix of China is still low. But for, I will say, environmental issues, air quality in the cities of big Chinese cities, very strong momentum for LNG. 55 million tons have been imported there this year. Japan, still stable at around 80 million tons despite the fact that nuclear is a little more available. It should be stable. But we have other countries, like India, which have seen a growth also of more than 30% this year and reaching 25 million tons. So we have a strong momentum there. And with all the environmental trends and the fact that LNG is more and more a commodity, many points of productions, so easier to also, to be cost-efficient in term of delivery to the customers, makes us still quite optimistic about this market; by the way, it’s an axis of the strategy of the company. And you can see that, on this, on the other side, that there is, by 2025, if you want to continue this demand – to match this demand, we have room for another 100 million tons of projects and another 150 million by 2030. So of course, there are many projects around the world, but it’s – there’s obviously room there to develop low-breakeven projects in LNG. So having said that, to set the scene for the markets, I will leave the floor now to Patrick to give you the results of 2018. Patrick de La Chevardière: Good morning, everyone. I’m quite happy to be here once again. The news is good, and you know when the news is good, the job is easier. Let’s have a look to the strong results. We are continuing to deliver consistently strong result, with 2018 adjusted net income increasing by 28% to $13.6 billion. The E&P segment at the bottom of the chart on the left, increased its contribution by 71%, while Brent increased by 32%. And this reflect, of course, the benefit of the 8% production growth, and also, the benefit of our portfolio management. You can see on the left, also, the new integrated Gas, Renewables and Power segment that we will give you the data quarter-after-quarter. It’s a new reporting format. It increased its contribution largely on the strength of better result for integrated LNG and natural gas. But we can also say that GRP, Gas, Renewables & Power, without the LNG, delivered a result 56% higher in 2018 compared to 2017. In contrast, of course, the environment for Downstream was weaker. Nevertheless, we are well-positioned. And the combined Downstream generated $5 billion of adjusted net income with the ROACE above 25%. And basically, TOTAL Downstream is the best-in-class. I did not comment the right side of the slide. On the right, you have the average capital employed, where TOTAL is close to 12%. And once again, it’s the best-in-class. This reflects, in part, our efforts to reduce our non-producing asset and capital employed by Alf from 2014. We are around 24% today. Let’s move to the cash. Cash flow is an important metric for us. Our new high-margin Upstream project are making a strong contribution. We generated $24.7 billion of cash flow from ops, coming from Upstream, of course, an increase of 54%; and Downstream, up to $6.5 billion. Working capital, reversed in the fourth quarter and basically is neutral over the year. Our portfolio is quite resilient to the long time, you saw that in the past year, and is increasingly able to capture the upside. The cash outlay, we are bound in line with the guidance. CapEx was $15.6 billion; first-year buyback was $1.5 billion; dividend with the 3.2% increase was at $7.7 billion. And of course, we are investing in the future. On an organic pre-dividend basis, we have reduced breakeven to less than $30 per barrel. Let’s move to exploration. From the left to the right, we start with some positive news this year from exploration. The budget is stable at $1.2 billion, and in 2019, with the same amount. We will give thanks to cost structure. We will do more well in 2019 than in 2018. On the left, following the Glendronach discovery last year, we announced the Glengorm discovery in January, which appears to be the largest gas discovery made in the U.K. over the past 10 years. And remember that Glengorm, we acquired it from Maersk, which is adding value, of course, to this acquisition. Next, we opened a new world-class play offshore of South Africa with the Brulpadda gas condensate and light oil discovery, with the potential resources of about 1 billion barrels. On the right, thanks to our partnership with Novatek, where we own close to 20%, 19.6% exactly – 19.4%. Novatek made one of the largest discovery of the industry in 2018 on the Yamal Peninsula. This underlines the importance of Russia as an LNG supplier. While exploration was playing a great role, we highlight the significant success achieved through M&A. 2018 was extremely active in term of M&A, and we grew in high grades of two periods of base. The Maersk Oil acquisition, which we did with shares, was by far the largest for us last year, $7.5 billion. It contributed strongly to the 2018 1P reserve replacement that we will show you. In term of M&A for E&P, we sold $3.2 billion of assets with the breakeven at around $40 per barrel, and we acquired by $4.5 billion in cash of assets of higher-quality, low-breakeven, below $30 per barrel assets. We basically reallocate capital employed from asset with a breakeven above $40 to asset with a breakeven below $30. This is including Maersk Oil. We move at the right time and at the right price. The net effect was to contribute to the 1.4 billion barrel increase in 2P reserve, which represent for us 20 years of production. Our portfolio management has played a role in concentrating our 2P reserve within eight countries, including four OECD countries, which are Australia, Canada, Norway and the U.S. Then have a look to the Downstream. Downstream, I remind you, it’s a best-in-class downstream among the major reserve oil players, above 25%. We show a cash flow contribution of $6.5 billion, in line with our guidance of about $7 billion, despite the volatilities, weaker environment. And I’d like also to remind you that since 2015, we already sold $8 billion of assets in the Downstream. So achieving $6.5 billion in a weaker environment after having sold $8 billion of assets is quite an achievement. You can see the well-balanced split on the right between Refining, Chemicals and Marketing & Services of the cash flow. We are managing this balance of diversity and resilience from the future by investing in advanced feedstock petrochemicals in core area for the Refining & Chemicals and fast-growing new market for Marketing & Services. We believe that we have the best-in-class downstream, and I’d like to point out that in 2018, the profitability of Refining & Chemicals was 31%; Marketing & Services was at 25%. I do consider that the balance sheet, the strong balance sheet is an important part of supporting our strategy. We have a very strong balance sheet despite of all the acquisition we have made, gearing, far below 20% at 15.5%. I’ll remind you, also, it’s an element of the executive composition scheme. I am happy to report that this gearing is completely under control. On the right, you see and you know that there will be a new IFRS 16 to be put in place by 2019. Side effect of this IFRS 2016, the gearing will increase by around 3%; capital employed by $5 billion to $6 billion; and the cash flow by about $1 billion. So this is a summary of all the objectives we set and what we have delivered. 2018 was highlighted by very successful portfolio management in a very volatile environment. Two points I’d like to have – to show you specifically: We outperformed on cost reduction. We were a little short on OpEx, at $5.7 per boe instead of $5.5, which was the target. This is due to the integration of Maersk, but we will have this $5.5 target for 2019. Downstream cash flow, still strong in term of free cash flow generation; and profitability was good, also, due to good operational performance. The strongest performance obviously was the production growth at 8%. And now the stage is to set for 2019 to be an even more impressing year. And of course, we started our share buyback program by buying $1.5 billion. So once again, it’s a slide we show you every year where TOTAL is obviously the best. We specifically, dedicatedly chose the criteria: Production, Downstream ROACE, group ROACE, which is the best-in-class; gearing, of course. And that’s a great achievement to be made and made by TOTAL for the past three years, every year we show you this slide. Compared to our peers, I’d like to say that the story had been largely derisked. The executional risk for production growth is minimal at that point. I remind you that our objective is to create value and that the increase of volume is a secondary effect. So the 9% production growth we post for 2018 is a secondary effect of our main target to create value. And of course, we are on track to the shareholder return program. As you know I am retiring this coming summer. This will be my last presentation. I became CFO in 2008, so it was a long time ago, 11 years. I think I’m done at that time. So it’s time to pass the floor to Patrick, and tentatively, Jean-Pierre Sbraire in the future.

Patrick is not gone. He’s still there. I still have to say yes. But I will [indiscernible] for the next year and our future results. But yes, it’s true. Because there was news in the newspapers, it’s March, they said December. No, it’s during summertime. And Jean-Pierre, which you’ll begin to know – think he should probably be the room, he’s there – will, yes, will be the next CFO of TOTAL. It’s clear. It’s approved by the board and it will be made public very soon. But let’s work. And we’ll have more opportunity to say to Patrick all – but we appreciate, all of us, and I know also our shareholders. Obviously, we have been fortunate to have him during the financial crisis, when he took his job and then the collapse of the oil price with myself. And so we’ll have opportunity to celebrate that, even if we’ll be sad to see him leaving the company. So I’m coming back to – so for two parts: the first part will be to tell you what is exactly the – I already described it in my introduction, but the program for the next year; and then to give you –to update about the strategy for 2020. So the keywords, like we said just before, is discipline and cash flow growth. I would say it’s growth – production growth and profitability, again. But this is our cash flow, of course. Our production growth is feeding our cash flow growth, and so it will feed or return to shareholders. The cash flow, yes, it’s outstanding, and like Patrick said, it’s derisked. So we are, in fact, comfortable to say – to tell you that we’ll be more than the growth of 9% because most of the key projects are started by end of the year: Egina, December 30, that sits very nice with us; Kaombo North – and it will be followed by Kaombo South by middle of the year. The FPSO of Kaombo South is already anchored on the site, so we are on time; and of course, the two large projects, LNG projects: Yamal, which has managed to start the last trains, a third train, one year in advance compared to our plans. So of course – and this is done in a very smooth way. It’s a remarkable achievement by Novatek teams, together with our engineers, which were there in Yamal; and Ichthys was a little long, but now it’s done. At a higher cost, but it’s started. So for us, this represents more than 100,000 barrels per day, Ichthys, or 26%. And the ramp-up is moved today. So that means that most of this growth is in our hand. We have some few start-ups of giant projects coming in front of us: Kaombo South, I’ve mentioned; Culzean from the Maersk Oil portfolio in the North sea; Johan Sverdrup, our operator is better informed than myself, but I’m confident they will deliver this project by – as they said, by their timetable; and Iara 1 is in Brazil, on which we expect also as a start-up in this year. One of the characteristics is that we’ll have a strong growth of LNG production, more than 40% increase in LNG, which is the reason why we decided to change our reporting, to give more clarity on the LNG figures. And so you will see the production being reported to you through E&P tomorrow and from iGRP, E&P being most fundamentally all the oil production plus the domestic gas; iGRP being all the integrated gas LNG. But we will give you more information about this growing business as it is one of the key areas of growth and investment for us in the future. I think it’s good that you have a better – more data about this segment. Another characteristic which is underlying the production growth of more than 9% is that, as we told you, we have some short-cycle projects and we begin to sanction some of them. It will contribute 60,000 barrels per day, which is a way, in fact, to manage our decline rates, in fact; and which were quite low, around 3%. So this is an outstanding production growth. We’re confident of 5%, 17, 22 but I will come back on this later in the presentation. It’s combined with keeping the capital investment discipline. I got some questions from you in September, do you change your discipline with all you know? And by the way, we’re right because then we see the price going down. So we keep the guideline of $15 billion $17 billion. In fact, for 2019, we are on $15 billion, $16 billion, including $1 billion to $2 billion net acquisition for 2019. Last year, we told you it was an average of net acquisitions, so I mean, acquisition minus sale, around $2 million as an average. We’ve done three this year. So we target a little lower this year of $1 billion to $2 billion, giving priority to more organic CapEx. You can see with the split – and this is one of interest, I think, of the new reporting we put in place, is that you have a more balanced vision of the CapEx figures. And in fact, we invest more than 20%, $3 billion into Downstream. It’s quite stable. We invest $4 billion in iGRP, integrated Gas, Renewables and Power. It’s $2 billion to $3 billion for LNG and $1 billion to $2 billion for low-carbon electricity, more or less, depends on the year. And E&P, traditional E&P, represents around 55% of the investments. So we are in line with the guidance. We’ve maintained the discipline, and this will allow us to prepare the future growth of the company, as I will show you. We keep in place all our cost-savings program where, again, despite some discussions, where the price was higher. We are right to do that. In fact, we even delivered more than what we showed you last year. We were – our target was above $4 billion. We have delivered $4.2 billion. We are confident for 2019 with the target of $4.7 billion, which means that our program was targeting globally $5 billion of savings between 2020 and 2014. We’ll probably, at the end, land above the $5 billion. And Upstream and Downstream are both contributing to these efficiency gains. And it’s obvious results in fact. Because in our industry, again, so margin – the defining margins or the marketing margins or trading price, we do not – does not follow the inflation. And so as we have some costs, in particular, our salary base, which takes inflation, we need to permanently look for more efficiency. And it’s possible from – for also, by the way, all this digital technologies can help us and will help us in the future to manage these savings. You can see that we are best-in-class in OpEx per barrel. It’s – we are around $5.5 per barrel. It’s true that Maersk Oil in the North Sea was more expensive, but it’s minimal, in fact, when you look at the impact. And we have internal targets that because of the savings but also because of the synergies on Maersk Oil, on which we are online and in line to deliver the $300 million cost synergies, which will help us to go down to reach 5.5% again. We have a competitive advantage that we want to maintain. It’s also a choice, as Patrick told you, in our M&A activity of selecting the assets which are fitting with the strategy and fundamentally, which is to permanently look carefully to a breakeven of the company – price of the company. So we have, thanks to this growth and thanks to this discipline, a very clear visibility on the cash flow growth. I’ll just update the figure we gave you in September for 2019. You can see on this chart that we’ll have more debt-adjusted cash flow at $60 per barrel in 2019, but what we – so $26 billion we delivered in 2018 at $71 per barrel, in fact, more or less – a little less than $2 billion above the figures of this year. In fact, there is an increase of $6 billion of cash flows between 2017 and 2019 at $60. And 2020 will be $8 billion. So this is why we are confident and we put in place a more active and often dynamic shareholder return policy. This cash flows is coming again. It’s visible from projects which started already. Kaombo, Ichthys, Egina represent, in 2019, $3 billion of additional cash flows at $60. Like the acquisition, which have been completed now, represent $2.5 billion, it will increase to $3 billion next year with some start-ups, which I’ve been mentioning. And we have a sensitivity to the oil price, which is increasing. If we realize on liquid price an increase of $10, we have $3.2 billion extra cash flows. So this – coming to this slide that we introduced to you last year for the first time with the board discussions and approval, which is priorities the cash flow location. There is no change. We execute it, and we gave you that picture for the next three years. So we are in this plan. Capital investments, again, we are in the range. It’s a priority of the company. Then the dividend increase, second priority. So we announced that for 2019, we intend to – we have – we will increase our quarterly interim dividends and then to buy another 3.1%, 3.2%, EUR 0.08 per year, which will make 6.5% globally from 2017 to 2019. And we will reach the 10%, as planned by 2020. Gearing is, of a sense, part of a strong balance sheet, our third priority. Patrick explained to you that gearing is under 20%, under strong control. And I hope Jean-Pierre will keep the same policy. And of course, the board is adamant to maintain our Grade A credit rating. And as Patrick said, by the way, it’s one of the key parameters of the executives’ valuable pay. And then the share buyback, which has been introduced last year as a way to return more to shareholders. If the price is higher – we told you beginning of February that we were planning to buy back $1 billion at $60. The price was obviously higher, it was $71, so we increased the buyback to $1.5 billion. And by the way, you’ve seen in the chart of cash flow allocation that Patrick showed you that we generated $26 billion, $1 billion for payments of interest payments. So $25 billion. And the $25 billion were perfectly split to $16 billion for capital intensity – $15.6 billion for capital investments; and all the rest returned to shareholders. So this was executed exactly like planned. So we increased it. And this year, in 2019, at $60, we’ll buy back the same amount that we’ve done in 2018 at $71 for $1.5 billion. If the price is different, we’ll have the same flexibility for returning more to shareholders through share buybacks. At this stage, there is no reason to change the $5 billion program. We’ll see what the price will be in 2019, but again, the last three months have demonstrated to us that we need to be humble about this type of forecast. But we are exactly executing the shareholder return plan as explained last year. So having said that, so there is a strong visibility again and confidence of the Board of Directors and myself as Chairman and CEO, and of course, all the executive team about what will happen in the company for the next two years. We look forward for our duty today and – to prepare the future growth. And of course, this future growth – again, you know that slide. I would present it again this afternoon, but it doesn’t change. It’s fundamentally, the strategy of the group is in line to potential anticipated market trends. We don’t know if the world will be able to make a two-degree scenario. There are some doubts around the world. But in – whatever will happen, there are some market trends in term of new technologies, which we need to take into account. And that means that we need to focus on oil, which is, again, low-breakeven oil because we could face some situation where the oil demand will be slower than decline. On the contrary, there is a strong space for seeing a growth for the gas, natural gas. That’s why we invest more and more in all the chain of the gas value chain. And the overall characteristics of the demand of energy is about electricity. Demand should almost double in the next 20 years, coming either from natural gas or from renewables. So it’s why we invest in this low-carbon electricity business. We also play to our strengths when we speak about oil and gas, and we have some areas of expertise. We want to stay an integrated company business model, so we are of course producing – in particular, we have a strong footprint in deepwater, and I will come back on it; but also, LNG or natural gas; and then petrochemical, which is the integration of Downstream and retail and lubricants. And we have some key geographic areas where we have put most of our efforts, where we are very confident and our teams have the right skills to develop projects in a profitable way, which is Africa where we are market leader; Middle East and North Africa, for the last three, four years, have demonstrated that we are a partner of choice; and the North Sea, which we have enforced with the Maersk Oil acquisition. We have been, that’s true, very active in the last three, four years. We acquired $24 billion of assets. We sold $16 billion or $17 billion of assets in cash, by the way. It was – we bought $16 billion, $17 billion. We sold $16 billion, $17 billion. But on the top of it, we had the shares and debt acquisition of Maersk Oil, which allowed us to make quite a lot of move or rotation in our portfolio. And among the – in the production, the E&P production, the [indiscernible] production of 2019, more than 20% of this production has been acquired during the last three years, but some have been sold as well. So we acquired 7 billion barrels of reserves of less than $2.5 per barrel as an average, where we generated more than $4 billion of cash flows, so it’s what I showed you on the slide; and with a ROACE of $60, around 10%. A word about the Engie LNG deal, which was also a landmark deal on this activity – of M&A activity in 2018 because it allowed us to become, by far, the second publicly traded company in the LNG world. We have a portfolio of 20 million tons per year. Of this, we generate $300 million, $400 million per year and a ROACE of 20%. And payout is around three to four years. So – and we begin to see a positive effect on our portfolio, LNG portfolio trading management since middle of the year in 2018. But all of that, of course, all this activity has given us, and Patrick showed you this big improvement of the portfolio of 2P reserves and the 1P renewable rate of 157% is very high. Now we are – mainly of the activity for us – the main focus we have in 2019 will be to clearly sanction all these projects, to transform these reserves and production in order to feed the growth. We have – and you know this slide, and I will go through, you have more than 700,000 barrels per day of potential production to be launched by 2020. Just by sanctioning all of that, we have already, in our portfolio, a growth between 2020 and 2025 of more than 2%. Do not misinterpret but it’s a minimum growth that we will do, but I don’t think we’ll stop getting to slip. And so we will have opportunity to select more new projects, if they are value accretive I would say. So we have already embedded more than 2% growth, which is more than the hydrocarbon markets. When you look to – at these projects as we can see have a weighted average, I told you that we manage the company at $50 per barrel to sanction the projects, about 15%. Not all of them are by 15% because I would lie to you if I would tell you, but LNG projects are above 15% or LNG projects are quite capital-intensive. But we – they are – cash generation is also very strong and stable. So we sanctioned them in all the parameters. But globally speaking, we are adding this global project would be – we have a profitability of about 15%, which will enhance, of course, the return on capital employed in the future. When you look to the map, you can see that we have sanctioned in 2018 around seven projects: three in the North Sea, two in Africa and some in Al-Shaheen Phase 2 in Argentina. In front of us, what are the characteristics for the year to come, we have a lot of projects in Brazil. So it will be a deepwater Brazilian year. The Mero 2 which should be sanctioned by the middle of the year, it’s a Phase 2 of Libra. You know we have $3 billion to $4 billion of reserves in Libra to be developed, with at least four FPSOs. We have Iara 3, which is a new phase of development of its license in which we have entered this year for the strategic year with Petrobras. And Lapa 3, which is a new phase of development of the presold field that TOTAL operates now in Brazil, first – we are the first presold operator. And we will build on it to extend its life of the field. So this is Brazil in the quarter. We have also characteristic, there are some projects in the deepwater in the Gulf of Mexico, North Platte that we operate since we made the acquisition at nice value of the Cobalt assets. But also the projects where we are partnered with Chevron. We made a strong alliance on exploring together with Chevron, which is a successful operator in the Gulf of Mexico. We have discovered Ballymore. We should be able to – we are launching – we should be able to connect in the first phase Ballymore to existing Chevron infrastructure. Anchor as well that we – is another discovery on which we have launched engineering studies and going to sanction that in 2020. So they are good projects. And the other characteristics as we say is LNG on this map, where – and I will come back on the LNG projects. We have five projects in the NLNG business that we want also to sanction. So this will be the priority for all of us, for all the teams to put in action and to transform all these resources into production. On the top of it, it’s not only this, I would say, medium and long-term projects, we have also some – we focus also in some short cycle developments which are very flexible. We have sanctioned and we plan – we have and we plan to sanction around 400 million barrels of reserves. We identified more than 1 billion. These are highly profitable projects, more than 20% of $50 per barrel because they are marginal in existing infrastructures. And the CapEx under $7 per barrel. We have some few examples there on this chart. And it helps, of course, to manage the decline rate, which is again the 3% probably one of the best-in-class. Integration is important. And by the way, this is the way to illustrate it in this company. In TOTAL, we produced 1.6 million barrel of oil per day, we refine 1.9 million and we market 1.8 million. When we speak about integration, it’s not physical integration. It’s economic integration. We are a little of a refiner, but you can see that economically, we are well-balanced and we intend to maintain this balance along the value chain – oil value chain. One field that Patrick, I think, mentioned of areas of interest is to grow in petrochemicals and in particular, I would say in advantaged feedstock petrochemicals. You don’t see TOTAL investing in any new naphtha cracker because there is no competitive advantage. But you see us moving and being quite aggressive. And 2018 has been an excellent year, by the way, for the refining and chemical business unit led by Pinatel, Bernard because not only we delivered $4.3 billion of cash flows and ROACE of 31%, but also we have been able to launch new projects. So new cracker in the U.S. It has been sanctioned together with Borealis and Nova. It’s not only a new cracker, it is also a big increase of PE capacity. Our success story in Korea with Hanwha, each year, we make – we built on a new capacity, PE and PP base there on propane extension. The propane will be imported from the U.S. And then we have two new projects in the Middle East North Africa region where we can have access to advantaged feedstock. One being in Saudi Arabia, the strong and big – or rather large extension of SATORP, we speak about the $5 billion projects investments. It’s a mixed feed cracker with some ethane and some advantaged liquids and stuff, which we benefit from the policy of Saudi Arabia together with Saudi Aramco. And then in Algeria where we have launched this engineering study together with SONATRACH of a new propane dehydrogenation unit to build on polypropylene business, which will be new for Algeria. Part of it being for the domestic market, but the other part being exported with the knowledge of the teams in TOTAL. I would not mention petrochemical without saying a word about this alliance which has been just announced recently with 30 other companies on the end of plastic waste. I think it’s very important when we speak about being responsible. And I think a sustainable development in petrochemical by the whole industry, not only the production producing industry but also our customers together with us think seriously about the way to manage all these plastic waste is a matter of recycling. But this is a decision we cannot take alone because we need – for example, when the plastics a, to be recycled is in colors. So we need to convince Procter & Gamble to stop selling to the women of the world pink shampoo bottles because we cannot recycle that. That’s very strong. But it’s a question of – just an example of – and I think this alliance will be strong – a strong commitment. Clearly in the world today, it could be I think when we speak about petrochemicals and we speak about the growth of around 44%, one of safehold could be this issue of plastic waste. So it’s a strong commitment within the company and for the refining and chemical division to develop more projects in recycling also bioplastics as we’ve done recently in Thailand. A word about Marketing & Services. 2018 has also been a great year for them because they delivered $2.2 billion of cash flow from operation growing another $100 million as they promised to us. So net result is stable but the cash flow is a little higher. But also because we’ve implemented, and there’s a leadership of Momar, the strategy, we see to enter into some large growing markets in retail. And we are there making some in particular Mexico, Brazil and India. So in Mexico, now we have I think 200 stations with an alliance with local partners we increased the growth to 400. In Brazil, we make an acquisition. It’s an interesting market, biofuel dominated market. We have made 300 stations. We intend to grow in Brazil. It’s not only an upstream business but this is a large market with source of us downstream market but more to benefit of. India, we have identified an Indian private partner, the Adani Group, which has been very active and successful in India. And in order to set the JV, which will in fact encompasses some LNG regas terminals but also retail network of more than 1,000 stations over the next 10 years in India. And last but not least, we are everywhere in marketing and services in Africa except the country which is one of the most important one for us in Angola. It’s a sign by the way, it’s a sign of the opening policy of the new President of Angola, the fact that we have been able to set this JV downstream and 50 stations will be shared with Sonangol and more to come. It’s a positive signal for investors, I think, for investments in Angola. So M&S is steadily growing. The target is around 2.5, 2.6 CFFO by 2022. It’s not – less cyclical – or non-cyclical which is of course, good for the company. When I come to the last part, which is not the oil and gas, it’s more of the – even if we speak, again, about the LNG, this new gas renewables and power business, which is a combination again of LNG and gas value chain, I would say, integrated gas value chain and low carbon electricity. So it’s true that it’s important for me that we can disclose you this type of more precise data because it’s an area where we will continue to invest. So growth investment will be around $4 billion per year for the next two years. But it’s also an area where the growth with cash flow are growing quite quickly. And you can see that between 2019 and 2018, if you take the high side which is $70, the white line is at $60, you can see that there is an increase of more than 60%, which is of course, led mainly by the increase of the LNG production, but also by the growing volume of LNG trading we can do since we acquired the ENGIE portfolio. So we will reach by 2020 a sort of balanced situation, where we should be able to invest new segments, growth segments around more than $4 billion of cash flows and investing more or less $4 billion. This is now our plan for the future. LNG focus more precise data with integrated LNG. Again, we grow from a $2 billion, $3 billion in 2020. It’s a 60% growth. It’s a strong contribution from the 2018 start-ups, Yamal, Ichthys, Cameron will come on stream by middle of the year for the first train. But we have in our portfolio. And you can see that we have also was mentioning five projects to be sanctioned, which are all – which are just quite, I would say, a large task to be done. Two of them in the U.S. together with Sempra. We managed to enter into a discussion and that’s one of the good consequence of the deal with ENGIE is that it’s not only joining Sempra and Cameron and Trains one to three, but it’s entering, where it is now utility company in the U.S. to more projects. And in particular, this Energia Costa Azul project which will give us in the position in the Pacific Coast, we would avoid a lot of logistic costs by those train the Gulf Coast to Panama channel but directly for the Pacific coast to China, Japan or Korea to Asia. We will save a little less than $1 per million BTU, so it’s quite interesting. But we have also the extension there, of course, of Cameron LNG’s train four and five, which could have mentioned Tellurian which is taking shape. We are 20% shareholder of Tellurian. And I know that our colleagues are progressing on this project. And then we have Arctic 2 together with Novatek, which is moving forward. Feed and the sanction is planned by the second half of the year. And then we have Papua LNG, together with Exxon and Oil Search, which is the key target to be able to finalize the agreements and we announced the feed as well there in November. We have the technicals team which has today agreed, which is efficient in particular because we will expand in fact the existing plan and not create a new LNG plan. And then Nigeria LNG extension is probably one of the best projects because there, again, some brownfield projects and it’s a question of the sanction in Nigeria, which might be complex but all partners are today in line to move on with this project for 7.5 million ton per year. About low carbon electricity business. So 2018 has been a year where we really shape it in a sizable way, and we have a better visibility in what we want to do. It’s a segment where we will invest $1 billion – $1.5 billion to $2 billion per year. It will depend on the opportunities. Fundamentally, we have on one side the production capacities because we want to be integrated. So a few words on of gas to electricity are in fact in our hand because we have signed a deal with Tata. We have a new deal coming with Uniper, EPH by the end of the year. And the rest of the portfolio, so it’s 30% natural gas, 70% renewable production capacity worldwide. We have many – we have several subsidiaries working on that in order to make profitable business. I will come back on that. Then we have some supply training activities. And the marketing, the distribution, we have now 4 million customers in France and Belgium in 2018. We want to grow this base in France and Belgium to 7 million customers with the full direct LNG, which is a very active company. We managed to get this year a number of new customers and to reach our objectives. A word about renewables because there are many, many questions in my roadshows about how do you make money with renewables? So let me guess, so it’s the business model we apply in the company in TOTAL. It is clear that when you bid to make a large solar farm or an offshore wind farm or onshore wind farm, generally, it’s a utility business, a project is around 5% to 6%, 7%. That’s true. That’s the basis. Then of course, price in particular in this environment to which we’ll leverage all these projects because when you have 15, 20 years PPA, you can leverage these projects. And so you can enhance the profitability for this leverage. And you can also – if you are ready to take on your balance sheet the CapEx until completion of the projects, you can then farm down in a very efficient way to financial investors. We’ve done that on many projects and we managed to reach this 15 – more than 15% rate of return. That means at the end of the day we are to keep 50% more or less of the project. So if I want to reach my 7 gigawatt capacity, I need to in fact develop 15 to get 7. But this way to leverage financial interest rate and then to farm down to other investors, we see some interest to get 7% instead of – is the way for us to get an acceptable equity return, which is matching the rest of our portfolio because, of course, for a company, we intend and we have some objective of return on equity of 12%, $60. This activity should not be of course a burden. So this is a way we want to develop for this renewable business. I hope clarifies to you how we will manage the portfolio that we have in our hand. All of these strategies are contributing to – and we want to be a positive player to tackle the climate challenge. We showed you this figure. We’ll come back this afternoon on this climate section because I know that this is a lot of interest in many investors. We showed you this slide last September. Our ambition is to diminish gradually the carbon intensity of all the products, LNG products we sold to our customers. Obviously, our sales got free approach for all of you who understand, who knows that. We want to – we have the ambition to reduce this by 15% between 2015 and 2030 to grow by 2040, 25%, 35%, difficult to anticipate because there are new technology. It depends also on the government policies. We will come back on that. But fundamentally, the roadmap is a matter of, of course, being accountable about our own emissions. And this afternoon, I will give you we will set the target to our own emissions in order to decrease them and to be committed to that. But also natural gas is part of the future mix and is a positive add-on to the LNG mix. It’s a good complement to renewables; low carbon electricity business; biofuels, which are also contributing positively to this roadmap of lowering the carbon electricity of our products. And last but not least, to invest in carbon sink businesses, either natural carbon sinks or CCUS. I will come back also on it. And being responsible is also a question of and we have also quite a lot of this question during the roadshow, do you share the added value of TOTAL? So this is the image of the company, and I think there are many debates today around the world. A company like TOTAL will take an average of 2010, 2018. We generated $50 billion more or less, better than average of added value. Half of it has been reinvested in the company. We are highly capitalist – capital-intensive business. So priority is clearly to invest in the company, to continue to be able to deliver more LNG to our customers, affordable and clean LNG. The second – and then the other half is more or less a split into 3/3. So 1/6 for each of them. In fact, the salaries of employees are a little higher than that, $12 billion were given back to employees but the employees are fundamental because without them, there would be no profits and no dividends. So that’s – we are not very a business, which is highly intensive in terms of number of people, but they got 1/6 of that. The states on this period have taken another 1/6 of it. So we are a business where we delivered around $10 billion per year in the rate of tax issues which was lower the last three years, but it’s increase again this year. And then the dividends, which is the last share, 1/6 of it, around 8 to 9 – 8 billion per year as an average. So this is the image of the way we share the company. This company added value and cash flows through our various stakeholders for the benefit of all our 15 million customers that we serve daily around the world. So finally, as a conclusion to this presentation, I think you are not probably surprised by the message. It’s also good to be consistent. It’s a message we deliver to investors. We don’t try to surprise you. You began to know our strategy well, so it’s a question of execution and deliver. The next years will be clearly a benefit of an outstanding production growth. We maintain our discipline because it’s fundamental to look at breakeven permanently. But we are also doing at the same time growth and profits – and profitability, which is we’re able to combine both because the discipline of course helping us with this ROACE of 12% that we manage to reach this year. We have strong cash flows that underpins our shareholder returns. So maintaining the policy on increasing dividend, ending scrip option and maintain – and developing the buyback program. And of course, the activity will be also to shape the company for the future beyond 2020 with an attractive portfolio we have in our hands. Thank you for your attention. And so I propose that Patrick, Arnaud, Momar, Bernard and Namita will join me on the stage.

So while the executive committee join Patrick on the stage, we got about an hour of questioning time before we pause for lunch at 12:00. If I could remind you we’re going to have a lot of questions. If we could have one primary question and then a follow-up. Everyone’s available for answering. I’m going to start at the left-hand corner. If I start with Oswald, and then followed by Michele and then Thomas.

Thank you very much Brendan. Patrick, you just mentioned you don’t like to surprise investors and you haven’t today. But I guess, the one number that’s missing through this presentation is the CapEx after 2020. You’ve shown significant growth projects. All of them fit in your LNG deepwater portfolio. The returns are attractive but there’s no line of sight on the 2021 CapEx, which could be a surprise. So hopefully, you could just talk about where you’re thinking at least the Upstream CapEx might end up as we look into the next decades, please. And then just secondly, quickly, on the LNG portfolio perhaps it’s one for Philippe, the $2 billion cash flow going to $3 billion by 2020, the 40% increase in production volumes coming through this year is, it looks like it’s just the volume driving that cash flow up, so therefore, are – you’re not assuming any arbitrage contribution. And as you scale out this portfolio, perhaps you could talk about is that additional upside we should start to think about as the portfolio gets bigger just in terms of modeling.

Okay. The CapEx. The more I give you, the more you want, of course. So this will be for September this year, more precise. But you know we have better clarity on the production. Again, it’s – but to be clear, this 2%, the math is still the same. And you will maybe end to ‘17 and not to ‘16 but not far from that, so it’s still the range more or less. We will invest, I would say, Downstream of $3 billion stable fundamentally. $4 billion for iGRP, I think is the right figure. And with that, we can deliver the projects there. You have some leverage on these projects or its part. And then we have to grow if you want to grow by at least 2%. We will be a company that, what we have, we have 3.1 million barrels of oil per day, so it makes – takes declined five and we need to make 5% per year, 150,000 barrels per day. We take a metrics more or less of 40,000 – 50,000 barrel per day per dollar per barrel per day. You take – you find $6 billion to $7 billion, plus some maintenance costs, renewable at the end – renewable of reserves. We will reach more or less $17 billion. So it’s maybe that $15 billion, more $17 billion but it’s not very far different from it. And there’s something fundamental to that is because I mentioned it during this presentation. $1 of CapEx this year, it’s not $1 that we spend in the last five years. With $1 of CapEx, I make 30% more volume, or 40% more volume because the costs are down. And one of the key targets why I say we want to focus now to sanction the project because we – in the international oil and gas business where we are mainly very syndicated in the U.S. shale, but the costs are quite low. We made the tenders recently for Uganda and for other projects. We have been always surprised with what we obtain because there is strong competition there. And so if we can’t sanction this project today, we capture this 30%, 40% lower cost. And so when we spend $1, we make the 15 – I would say, in E&P if we spend $12 billion, it’s the equivalent of $16 billion, $17 billion of yesterday. So when we give you a range of $15 billion, $17 billion, it’s $21 billion to $22 billion compared to the yesterday. So that’s a fundamental driver. Why? I’m confident that we will stay around this type of figures. But again, I take your point, and again – but to be clear, we told you we have at least 2%, we can do more, we’ll see. But I take it point, we’ll have better clarity. But again, this is for me the timing is of essence. We need to sanction now to capture these low costs. That’s the key priority for Arnaud and his teams. And I can tell you, we are all working hard to launch this Uganda projects, and we will take time on this PNG project because it’s the right time to do it. And then we’ll keep the discipline. Philippe, about additional upside portfolio?

Yes, so on LNG, our portfolio, as you noted, is nearly doubling between 2018 and 2020. The equity part, so traditional, let’s say, liquefaction project are increasing from $11 billion close to $20 billion. And our portfolio is nearly doubling, so the pure – LNG trading portfolio from $10 billion to $20 billion. What is clear is that in the figure that you see, the increase from $2 billion to $3 billion is coming in cash, is coming from the E&P liquefaction project. And we have for the time being be rather cautious in term of additional LNG optimization. There is some that have been included, but yes, we try to be cautious on that. You know that the optimization arise from market conditions. The second half of 2018 was very profitable in term of optimization from – at the time when we speak, market is favoring all LNG deliveries coming to Europe in a great way, next time, there is additional demand in Asia or additional cold front in Asia, you will see additional opportunity to optimize. So some optimization, yes, we can hope that it will be much more.

But for example, maybe you’ve seen that in the paper there was a tender in Taiwan for delivering more LNG and the two companies who makes the win are Shell and TOTAL. But why? Because there’s more – we are able to do with the portfolio to offer flexible contracts to our customers. And we can optimize the sources of productions and the destinations. So for me, it’s just a point, but this market is commoditizing and so larger player are added value, we will be able to gain more contracts. So that’s an example of what just happened very recently. Other questions?

Michele Della Vigna from Goldman Sachs. Patrick, two questions, if I may. The first one is on CapEx. If I look at your budget, it looks like organically you will spend about $2 billion more in 2019 than in 2018, and I was wondering if you could give us some of the moving parts there. In particular, how much more you will spend on high profitability short cycle developments. And then the second question is on the LNG market. You project a very bullish view long-term. But I was wondering over the next one to two years as the U.S. export projects are ramping up very fast after a few years of delays and the Chinese demand growth in gas continues but slows down from the exceptional level in 2017 and 2018. If you feel that actually for one to two years, we could face an oversupply in LNG market before tightening again in the early 2020s?

So the first CapEx. It’s true, your calculations are very good. It’s going from 12.5 to 14, that’s clear. I will say in fact, the 14 is not only in particular in LNG because in the figure – in LNG figures, iGRP will benefit for another $1 billion this year, so it’s part of this increase. So you show it on the map. You see two to three in terms of organic CapEx. The E&P that Arnaud can comment on it, but that’s true that we have sanctions from, I would say, short cycle projects. Do you have any indications to give to Michele on it?

Yes, I mean, just to put things in perspective, when we put the break on investment, two or three years ago, the first CapEx project we could put on the back burner we have the short cycle infill drilling. So we have all of them on stock. And as you know now, drilling rigs are half the price it were three, four years ago. And we have optimized the developments, all of this. So we have as what shown in the presentation actually a stock of very good infill projects that we can sanction. And now it’s really the time countercyclically to sanction them. So we see them in East Africa – in West Africa with we have [indiscernible] we see them of course, in the North sea. We are doing some mongering in Southern Gabon in the Northern North Sea assets. We see them in the U.S. ground, so we have plenty of opportunities to do very efficient tiebacks. That clearly now we are taking sanction. And as you saw, we are going to be sanctioning between 2018 and 2019 about $400 million barrel of oil that will be – oil equivalent that will be sanctioned during the period.

But LNG, I mean, I’m optimistic about this market. I think I see – we are moving our thinking about LNG, 1.5 years ago it was oversupplied then booming. I think the Chinese policy is very strong. It’s fundamental to them. It’s not totally a question of price, it’s a question of quality or social investments in China. So that’s true that we benefited from huge increase, 40% during the last three years, so maybe that’s 40%. But they are at 55 million tons. I think Japanese are at 80 million. I would not be surprised to see them even importing more by – to Japan by end of next year. I think it’s clearly 2020. I think it’s clearly a strong policy. And even I’m surprised – to be honest, it seems that there is no real impact of the higher prices that we observe this year on this policy. So this country I think, it’s really embedded into very strong governmental policy. Of course, the U.S. will ramp up, but these are the only projects which will ramp up by the way, during the next two, three years. In fact, the rest of the world, Australia is down. Russia is down. Qatar is the best. So yes, that’s true that there will be some ramp-ups from the U.S. But I think it’s also – there is also a market today, which is more gas which is Europe by the way. And Europe is – production in Europe declines. So you have potential for gas. Philippe, you’re optimistic or not?

I do admit, I’m very optimistic. I’ve always been.

I’m not, but I will...

But as you’ve seen, we are forecasting and planning our assumption on the 5% increase between 2015 and 2030. And as you know, the three last years, we’ve been way above – we’ve got at 10%, but so again, in 2018. So yes, I remain optimistic, cautiously optimistic, but very optimistic on LNG Gulf [ph].

Thomas Adolff from Crédit Suisse. I’ve got two questions as well. Firstly, Patrick, you’ve been the CEO of TOTAL for now just over four years and you started at a very interesting time in the industry. If we go back to the start of the period and think about the ideas you’ve had for the company, have they all gone according to plan? What are the key lessons learned from the past four years? Secondly, also going back to LNG, if we say LNG demand grow doubles by 2035 from 2017 levels, that’s roughly 16 million, 17 million tons per annum of demand growth. Over the past three months, we’ve seen around 30 million tons of product FID. And you plan to sanction about 30 million tons in 2019. The math doesn’t quite add up. So the question I have is do you intend to take FID without project funding and signing long-term contract? And does the service industry has the capacity to do so many projects at the same time? Thank you.

Two good questions. The first one, no, not everything was planned to be honest. By the way, because – as we said, the environment changed very dramatically, so we had to focus to get together with and all the executive committee on changing the momentum in the company from pure growth story to a more value and cost and discipline story. To be honest, one of the strong lesson is that this company is able to react in a very strong way, maybe people discussed. But once it’s done, they execute in an absolutely superb way. And the fact that we are able to continue to deliver these cost savings programs, reminder first discussion has been even better than what I was expecting. So, I’m very confident in the capacity of execution of this company and the group everywhere in all businesses. I think it’s a trademark today of capacity to execute in terms of – its a lesson for me because again, we are an industry at the financial holding. So we need to be able to execute. That’s the first characteristic. The second one, I would say is that yes, we had in mind, I had in mind that this could be the nice time to make M&As if you are able to be countercyclical, right? I learned that when I was in this company that it’s better to move when it’s – we are really countercyclical. I remind that one of my colleagues by the way, one day we will give you the name, said that during an executive committee beginning of 2015, I keep that in mind. The question is when to be able to be opportunistic. That’s more. You don’t plan that. It’s a question of looking around. And from this perspective, we have been able and again, one of the lesson, which was mentioned by Patrick, the strong balance sheet is absolutely fundamental, because we could have been more active beginning of 2016 when the price went down to $30. If we had the balance sheet. We didn’t have that at bad time, so we waited and I know it’s the first two years we said, okay, priority is to have a stronger balance sheet and then when we use it in 2017 for Maersk Oil and other deals. That’s the second lesson there. But it isn’t – there, again, we have been able to do it and to manage this balance sheet, including by the way, you’ve seen this year we have some increase on working capital. Finally at the end of the day everything came back into the leadership of the executive committee members and Patrick. So these are the two lessons. And so it gave me confidence that we can – we have a strong basis to move forward to be offensive. And I would like to tell you that I would have seen the company being today at having increased its production by 40%. The Total which have been down – but it has been down. The part which has been – which was not clear to be fully honest was this low carbon electricity and renewables. We are only in one solar plant business. We have, I think, clarified today that we want to do and what we don’t want to. And so I’m much more comfortable and I think we are more comfortable with the strategy we want to develop in that diversification area, but I was probably away because four years ago it wasn’t [ph] clear to me. But in the same time, I think I have decided that to be a progressive player in this climate change, I think it’s more and more clear to us that future of the oil and gas companies is to be oil and gas and contributing to be active if we want to offer to investors longer future. That’s what I think the investors are waiting from us. Second, question was about LNG. Too many projects being sanctioned. Some are right, some are wrong. But I agree with your point. I see that. But there was a lack of sanction during five years not today you have another way. It’s clear that there is risks to be honest. It’s a question that I’m asking to Philippe. He’s tackled these projects. I hope that some of them will not take off. Because it’s a question of, again, being able to be disciplined in terms of what type of project do you sanction in terms of breakeven for each of them. I think that we have – and the question is, do we have a long-term contracts for them? Yes, for some of them I would say and we want to maintain this discipline to have – we are ready because we have changed our position with the portfolio we have. And we are building as well a portfolio company, who are ready to take part of the risk ourselves in the portfolio but not all of it. So – and it depends of course of the risk of the costs of the project. But I think a project like PNG probably will be launched if it’s sold. And we have enough buyers to sell. It’s very attractive to many Asian buyers. There is a discussion today about Arctic 2 with Novatek about what is the amount of LNG we want to sell. But you will see partners coming into the project from Asia, because they want also the LNG and as part of it. And then you have a question about the U.S. projects. Honestly, on Energia Costa Azul, we want to keep the volumes for us, they are very good volumes. We prefer to market them ourselves. On Cameron LNG, we’ll have to see if we want also to find some buyers. So it’s a mix I think as the market is changing, it’s moving to more commodity projects from a pure long-term contract and ourselves, we consider that we have the people and the capacity to take value out of managing a larger portfolio like another peer that I mentioned already. I think it’s a question of balancing the risk. But we are ready to probably to take – we are ready to take more risk than before, not on all the full projects. This could change by the way, I think when you look around the world, the various projects which are being developed, probably it will be a question mark for some of them, the pace of development.

Okay, before move to the right-hand side of the room, we’ll pick up Irene and then followed by Jon.

Thank you. Irene Himona, Societe Generale. One question on effectively costs and CapEx. Your CapEx discipline has been very strong and commendable. But some of your peers are saying that the industry has a lot of very material potential ahead for costs to continue to step down. In fact, one of them refers to the field of the future as having 30% lower capital costs and 50% lower operating costs. If all the available technologies today were to be utilized such as automation, digitalization, do you share that view, Patrick? And if that is the case, where is Total? What are the obstacles standing in the way to implement that today and to step down further?

You should ask to the guy who said that because for the time being, the people who have the lower OpEx per barrel is Total. So maybe we are not magenius, but at least we deliver. Now, I think of course, honestly, I think we should not exaggerate that. Of course, these technologies are more – have some potential and we are looking to that. I said to my colleagues, I want LNG CapEx per ton to go back to 500. We’re still not there. We’re at 600, 700 even in the U.S. I remember that we delivered Yemen LNG for $300 million per ton and not for 500 or 700. So the question is, of course, and it’s back to your question by the way, is because probably in the LNG business, you have quite a lot of projects, so you are – at the end it’s a question of for service, of course, services companies who are able to deliver your projects, to build the projects. We answered – I don’t know where the magic come from, the 30%. Maybe we are more cautious. But again, we think that we can reach to 15%, 20%. But again, it’s – I think that why don’t we implement today, it’s a question of being able to scale it or not. We have plenty of proof-of-concepts like we’ve seen the robotics that are in the company. And one, for example, we delivered an AI system in the UK. You can – about optimizing the maintenance costs and the way we managed all the mature wells on the manual wells, so it’s – and it’s proven it works. The question that I asked when I discovered that, it’s beautiful, okay, nicer, I said to Arnaud, okay, why don’t we do that everywhere? And then it’s a question I think the talents in the company. And one of the different ways is to attract in the oil and gas industry all these guys with LNG to a world. If you are a new digital engineer, I think you prefer to work for Google or for Samsung maybe than for Total. We have one chance in France. We have a strong basis of engineers who are doing it still. So we intend, one of the decision we have taken very recently, beginning of the year, we decided that with Arnaud and Bernard, we will establish a real digital division aside your exploitation and project teams. Because as well – as long as we don’t have a strong team, 40, 50 people who are able to move forward to scale up, this will remain only the nice examples but not at the large case. So I think the question for us is to scale up. To do that, we need to attract the people and to establish strong teams and not to leave to the traditional method. The fact that you need to work on it so they do things but not quick enough to answer. So it will not be today, maybe it will be tomorrow. But I will – I ask my colleague what is his recipe to go by 30%, but at least being disciplined. And again, it’s not a question – by the way, on digital, one figure, we increased our budget on digital. I think we are spending – it was $400 million? $400 million on digital technologies and developments in the company. So it begins to be quite sizeable in fact in the company.

Thank you.

Thanks. It’s Jon Rigby from UBS. Your CapEx, the way you describe CapEx sort of acknowledges that there is portfolio churn going on the whole time with the net number that you talk about. Can I just look at two areas? The first is on the disposal side. It felt to me over the last maybe three or four years, you’ve got less enthusiastic about Canada. And I just wonder with the effect that it had on the Upstream in the fourth quarter and the fact that you didn’t get the benefit in the Downstream that a number of your peers did through light-heavy spreads in North America, whether that encourages you further to think that ultimately, you need to exit that region? The second is it seems to me that there are two examples of you addressing a strategic gap in your portfolio over the last couple of years that have been addressed differently. So the Gulf of Mexico, where you had an obvious shortfall for a long period of time, you seem to have been able to address within the scope of the organic process. But LNG, you decided to step out of that organic and went inorganic. So I just wondered whether the other obvious gap in your portfolio, which is shale, you think you can do within the organic in a slow, measured fashion or whether it requires a somewhat more daring move? And if I could treat that as the first question, just 1 very quick one is on Papau LNG, is it my impression that it’s slipped back a little bit? It seemed to me that it was probably the best brownfield project globally at one stage and it seems to have slipped out of 2019. You’re shaking your head, so I guess I know the answer to that.

No, no, it doesn’t step back . It’s just a matter of again, we made a – it’s a little far away from Europe and from the U.S. I think so to go there and you have – in Papua New Guinea, you face a country where not so many people are being able to decide. So, I mean we need to be involved with a high level. But we made a strong move forward in November when we signed Head of Terms because we solve fundamental points about the future framework. And we are drafting all the agreements. Next target is by April. I think I plan to be there again. So I’m – no, I think we have – 2018 was a very important year on this project, because we have in mind the views, technical views of Total and Exxon on the same projects. We know what we want to do and I can tell you between Darren and myself, we perfectly agree. We know that we want to expand the plant with three additional trains, two trains for the gas coming from our reserves, one train for the gas coming from their reserves. Discussions are the government wants to have two discussions, one, the Total leader, one the Exxon leader. We’ll do it like that but we are aligned fundamentally. And when we went there, we, together with some of the colleagues of Exxon, we were agreeing. So since that’s done between us, no, this is only a discussion with the government. And we settled most fundamental issues last time. So no, we need to drive. But in some countries, there’s some difficulties when you need to draft complex papers, because we speak about billions of dollars and you have fiscal issues and it takes a little time sometime to align the people. So – but we have a – it’s one of the projects I don’t think we have been slower. I think we spent some time that we tell you I said that Total and between ourselves, between both companies, we could have saved six months between us. But it’s done. So – and no, let’s move on fundamentally. And all the share cost issue between Exxon and Total has been settled. So that’s good. We are behind that. So maybe we could have been a little earlier, quicker between the two majors, but it’s done. So I’m positive. Then coming back on your points, you are not surprised by my – we make the same answer on the second question, which is very easy. Where do you find that it can be organic in shale oil? You see some people of Total in the field. So, there is nothing organic. And I will not begin to buy some land pieces by pieces in the middle of Permian would be. So obviously, and this is again, I hope so what happens, but you know my answer. It is clear that you have there some sizeable resource and potential production. The question for us is the cost of access. And the cost of access, I mean notionally, cost of access, capacity will develop having access to a machine, human resource machine. So if we move, it can be only done in quite a sizable way. Otherwise, it makes no sense for me to make an acquisition of 5 billion to have 30,000 barrel per day in the Permian just to fill the gaps and to tell you I’m there. What is the added value for Total? So, it’s either sizable or no. having said that it’s a question mark for the – I’m the CEO of the company and with us, all of us, is this the best way to allocate the capital expenditure of Total? Is this that or should as we have other opportunities? We keep a little bit clear. I would not tell you we don’t like it, it’s not a question to like or not to like. It’s a question of best allocation of capital. We keep a permanent eye. What I have observed by the way is that the value of the assets begin to diminish there. I don’t know if it’s for long. So maybe we have to be patient to wait for the next cycle. But again, for me, it’s not a question of just filling a gap. It’s a question of doing it in a proper way and comparing that option to other options. And in the U.S., where we are investing quite heavily and Patrick mentioned to you that the U.S. are becoming one sort of top eight country in terms of reserves, are more comfortable to invest in LNG like we are doing in several projects, because where we know what we want to do, it’s fitting well with strategy and there. But again, I’m not in the same situation like some of my peers, who will inherit from some lands, which is very prolific so that’s the point. So let’s – organically, no, I don’t think it’s our best way to do that. Then Canada, I don’t know what you want us to say on Canada. But I mean it’s a permanent question. Of course, we have an issue with Canada. We have 100,000 barrel per day, I think I in Canada. We invested quite a lot of money. The integration by the way is not so right. We have a capacity to treat 50,000-barrel per day in Port Arthur if we want to do that. And we have the logistics to go down to Port Arthur. So we have half of integration in fact. So it’s not true that we are not fully integrated. We do it, we don’t do it, depends on the market issues. But that’s true that the oil price in Canada was quite low. By the way, various issues in Canada. In Venezuela, maybe it will give, again, a good or a better valorization to Canada to feed all these refineries in the Gulf Coast if we stop exporting from Venezuela to the U.S. Gulf Coast. We are not in a hurry and there is no way for me to accept to – I’m not desperate to sell Canada. We have invested. So, if there is a good value proposition, we will study it. But for the time being, it’s not the case. So we are in a waiting mode.

Okay. The next question, we’re going to start on the right-hand side here with Jason Gammel and then Shannon, if we can then follow with Chris, please. Chris Kuplent.

Okay, thanks Brendan. It’s Jason Gammel of Jefferies. I had two on the Upstream, please. First, you’ve got a pretty deep inventory of deepwater projects sitting in the Q. I was hoping you could address how the cost structure has improved in the deepwater over the last couple of years; where we’re at on break-evens and discover for further cost reduction through standardization et cetera? And the second question I had was on the exploration program. Clearly, been an area that has added quite a bit of value this year. Can you talk about the level of investment you’ll be making in exploration in 2019 and where your activity will be directed please?

Okay, Arnaud will answer to you on the deepwater projects. On exploration, we are at $1.2 billion.

Yes.

We maintain that. We think it’s a good level of effort. There is no scale effect, but we’re – I’m very – and to be honest, it’s one of the good news of the year that we had last year discovered Glendronach, now Glengorm, now South Africa. So maybe, we are enjoying positive cycles. Again, it’s not a question of spending more and more money. In fact, it’s more a question of having the right ideas. I think we have been able to – we have some areas of interest in our portfolio. I think about the Guyana licenses that we will begin to drill around the discoveries of Exxon and Essence [ph] in this year. And we have other projects, but we are – Arnaud is more able to me. We plan to drill 20, 25 wells this year. So again, the fact that this discovery in South Africa is interesting, it’s a new province. And we have, by the way, quite a large acreage, which was acquired. So, we will look at it. We will have some opportunities. We have also – the Gulf of Mexico portfolio, which has been rebuilt is of interest. With – we have – together with Chevron; I think we have quite two new wells being this year. So Gulf of Mexico, Guyana, we’ll begin. We have also taken some acreage on West Africa in Senegal and Mauritania were quite large. And we intend to begin also to drill there. So, we have prospective areas, but I would say what changed is not the pure giant quite low probability that we try to target during a certain period. It’s more around identified prolific areas like Senegal and Mauritania, like Guyana to try to put more money there. We will see. It’s exploration, so I’m always prudent on that. But I see all that as a positive sign and if on the top of what we have been able to do and being demonstrated we have been very active and demonstrating our capacities in having access to – and develop a discovered resource, we are able at the top of it to also have a positive exploration enjoined, then it will, of course, make our future even more brilliant. Arnaud, about deepwater improvement, Brazil, Gulf of Mexico?

Yes. most of you will remember that at the last meeting, we had in September, there was actually a focus on deepwater and we were able to explain to you that in our portfolio, in fact, we’ve been able in the last few years to work on either design the standardization as you mentioned. We happened to have also in our portfolio a lot of subsea tieback opportunities to existing deepwater infrastructure. So what we see in deepwater is a repeat in a way of the story we had successfully in the North Sea or in the U.S. Gulf, where we can tie back to existing infrastructure discoveries. And we see that in Nigeria with the Preowei that will be tied back to Egina. We have almost also these very significant discoveries that will be developed as subsea deepwater development, subsea tieback very efficient, very profitable. And clearly, we have also worked; we are working on optimizing deepwater developments. Brazil, which is, as was mentioned in the presentation, the coming next wave of large FPSO development. Libra is a – the field is called Mero now, but it is a case in study, because this is 3 billion to 4 billion barrels of the same oil from the same reservoir with excellent characteristics and I remind you up to 50,000 barrel of oil per well. So this here, we see again economies of scale. And so we can see that we have been able to make a deepwater extremely competitive in terms of return on investment.

Yes. I think Brazil is around $35 per barrel of break-even more or less. I mean, we learned a lot by the way, from Petrobras in order to be able to be efficient, cost efficiency. I mean, it is – I can tell you these teams are quite good in the way also to replicate FPSOs and what for me one of the lessons, coming back to your question, is that all teams in charge of deepwater have really been able to put themselves into question. If we want to make these projects now, we need to simplify the well structure and we’ve seen Egina from this point of view. We managed to save $1.5 billion on the drilling program by simplifying all the wells. And I think our duty now as management is to keep them being stable, being simple. We have a program in the company, Be Simple, but we need to be sure that they stay simple. And the same on FPSO, when we look, for example, the way we imagine to develop with – in the Gulf of Mexico, the North Plateau discovery, the way our teams are thinking through that, it’s a very simple platform to try to – it’s not the giant nice-to-have platform. It’s much more simple they know that if we want to develop this 350 million barrel of oil, we need to be able to simplify and to make it efficient. And that’s the thing, a mindset as well. So that’s a good lesson. Other question maybe?

The next question’s going to be Chris Kuplent and then followed by Lydia. Q – Chris Kuplent: Thank you. Chris Kuplent from Bank of America Merrill Lynch. I think I only want to ask you one question but you’re probably going to tell me there is three questions in that. And it’s about your 2030 and 2040 carbon footprint targets. It sounds quite far away, but even just a 15% cut from here to 2030, doesn’t leave you a lot of time. And I wonder whether you could fill the void a little bit. Your presentation today is focused on next year and 2020. You’re spending around $2 billion on your low carbon electricity efforts. Is that something that makes you confident that level that you achieved already a 15% cut in your carbon footprint out to 2030? Or is there a message that within the next 10 years, actually, your – well, I suppose, ambition to keep at the very least replacing your black oil production at some stage will go? Because you gave us earlier a calculation that Upstream $8 billion to $10 billion of CapEx, you’ve got Downstream commitments in Refining & Chemicals, That in the end doesn’t leave you a lot more room to actually step up your low carbon budget. So I know it’s a convoluted way of asking you how you feel about the next decade and perhaps a slight shift in priorities in terms of capital allocation. Patrick Pouyanné: No, I mean, we come back this afternoon on that. But if we came – you can imagine, that the way we manage the company, if we came out in September with such schematic it’s because behind that, there was a lot of work how does it fit with a growing oil and gas company but being also able to manage these covered footprints. So there is no message, I said that in September but we intend to stop growing in oil and gas that’s not at all the case. But by being and it’s a lot of work behind it. It’s a combination. And we will - on all operations, finding new scheme of development, for example, one of our peers is in advance from this point of view, electrification of the process, developing the fields in another way. So you can slash down easily 5 million tonnes to 10 million tonnes of CO2. We will announce the target this afternoon, but if you are focusing on your own operation. So there are ways to do it internally, stop flaring, but electrification of process so it’s mixed by the way the technology. And that we need to be active now, to stop – to integrate this technology and not waiting by through 2025 to begin, that’s one point. The second point is natural gas is helping us to reach the target because if we are – in natural gas and one key target will be to be more efficient in the energy technologies in terms of efficiency, energy efficiency. Low carbon electricity is part of it, but with $2 billion per year during 10 years, it’s fine. I can do a lot with $20 billion if you make the math. And that’s true but there is an ambition which is to grow in this area, but I don’t think we’ll do much more with that math, it’s okay we can do that. When we have biofuels, which are something which it could be efficient, it’s why we move in Brazil. There are ways to do to improve our mix of products. And the last thing, but not last – last but not least is what we mentioned about natural carbon things. We have less than $10 per ton. You can do a lot in developing some businesses within the rainforests, wetted lands and that scenario in which we will invest; we intend to invest $100 million per year. And with that, we can generate also some offset of our footprint. So it’s a mix of a combination. So what I can do, no, there is no message that we intend to stop our growth in oil and gas. We are – maybe we’ll produce probably more gas than oil, but its linked to the market. But it’s a combination of gas, oil and low carbon electricity. To describe you, one of your colleague asked me, you didn’t give me the CapEx for 2021, so I will not describe you the CapEx between 2021 and 2040. I will make sure by September to give more clarity over the next what is beyond 2020, that’s clear. But then honestly, the 15% is an ambition. We have decided yesterday at the Board of Directors that we’ll have an objective on the Scope 1 and 2 to reduce our CO2 footprint and that’s a variable pay of the CEO and the top executive will be linked to the Scope 1 and 2 reduction. Scope 3 in a different matters because there are some, but this is something on which we believe and 15% are achievable without shifting the dramatic strategy. But keeping in parallel the five routes and I will come back on it this afternoon.

Lydia, what was your question?

Thank you. It’s Lydia Rainforth from Barclays here. Two questions, please. On the capital allocation side, clearly, over the last couple of years, production has been better than expected, costs have been better, cash flow has been better. But as an observation, it does appear that those incremental improvements are going into higher CapEx in the portfolio development side. Can I just ask what is the right balance between those and looking at whether you would increase the share repurchase scheme and at what point that might trigger? And then secondly, probably another one for Patrick, can you just comment on the Venezuela sanctions and the impacts there? Thank you. Patrick Pouyanné: Good. Patrick will speak – will answer you on the first question because I spoke a lot. Venezuela, just – Venezuela for us is 50,000 barrel per day, $200 million of cash in 2018. So you have the magnitude of the problem. It’s not huge. At $60, it’s 150. But we will obviously observe the sanction very strictly. We are in this and trying to understand what it means legally. Probably we’ll have to manage Venezuela not from the U.S. but from Europe, but for the time being, the priority has been clearly the safety of all our people and everybody has been evacuated since last Monday. So that’s the first priority. So in terms of impact of Total, it’s not very big. I write papers so I prefer to give you the figures, so took care because of somebody with papers that we were the very hit, no, we’ll not be very hit, so we’ll have to manage it within the portfolio. Patrick, the first question? Patrick de La Chevardière: Yes, okay let’s answer on buyback first. The idea we are at the Executive Committee level 1.5 years ago was to return more cash to the shareholder in order to re-rate the share price of Total in comparison to the other. That was the objective. Then how much will we return? So we designed the $5 billion buyback program in a sense that at $60, we can make it first. Second, that the cash payout of the company, dividend plus share buyback was consistent with what we can see on the market from the other. But I remind you that the main objective for us is CapEx. So we designed our capability to share buyback $5 billion because we have in our portfolio enough to develop $16 billion, $15 billion of CapEx. So one, then there are two linked. And obviously, at $60, the math works. We can invest $15 billion, $16 billion a year, then having our share buyback program, plus the increase of the dividend. So it’s all an equilibrium. It worked at $60. Of course, if we are at $80, we could review our targets but that’s another story, something I learned within the past 11 years, if all of our forecasts are wrong. So... Patrick Pouyanné: We will not reduce the target despite all your push because the Board of Directors is comfortable with that level. And again, it’s not the end of the world in 2020. There is a follow-up and the cash flow will continue to be there after that. So obviously, like you said, it was one, 1.5, 2.5. That means that this policy, and I think we have fundamental idea we use the buyback in order to share with you the additional upside of the price. And we keep steady the dividend because we never – none of us – that is a strong commitment, when we increase the dividend, there’s a permanent commitment. We don’t, there is no willingness at all to cut the dividend where we didn’t do it in 30 years. So I will not begin to do that. And so it’s a combination. And – but again, the table I showed you, like Patrick said, priority is investments in the company. So if we have the feeling that we can do – we have a better opportunity to – because at a low cycle, there is something to be done, to answer to some question of Jon, we will do it. We will explain. It’s a matter of discussion. If we can demonstrate to investors that it’s better value creation. But again, I think also one of the objectives goal is when we analyzed Patrick’s guidance why these shares may be undervalued, one of the objective, we observed that, the return in term of cash. The cash out to shareholder was lower than most of peers. So we have an objective to increase the cash out to our shareholders, to come back into the back I will say of our colleagues or you have done the math, so that’s what is driving our increase of dividend and our buyback. We will have a cash out to be – not to have to be undervalued because of that.

Okay. The next question’s coming from the central middle here, Christyan Malek, before coming back over for Al Syme.

Christyan Malek from JP Morgan. Two questions, please. First of all, just want to come back on your production growth outlook of a minimum of 2% beyond 2022, as a minimum. How do you think about balancing that against your cash return target? And is there a case being considered ahead of your September CMD that you move away from a pro volume strategy to one that is pro cash return? I mean, that balance seems to me – or put another way, if the world’s got too many barrels, why do you need to grow at above 5% volumes in the long run? And the second question is your gearing is the best – one of the best of the super majors now at 15%. The only reason I can see it wanting to go lower is if you were going to do a large deal or M&A. Can you talk about why you need to do a deal when you’ve got such a fantastic pipeline of projects? And put another way, does that mean that you’re prioritizing something away from oil and gas? Because you’ve got all these projects, you don’t need to do a deal. You can continue to sanctioning them and, therefore, it’s more likely you do something in power or something else. So just talk about that prioritization and the need to take advantage of opportunities, please. Patrick Pouyanné: I think that you’re right, we never said that we want to make a deal, a big deal. We’ve just told you that the priority was to sanction all the projects to deliver what we have in our hands. So it was my strong message 2019. So when I answered to a question from Jon but don’t misinterpret what I told you. Again, there is no – and just to know, but, I mean, the strong balance sheet, again, it’s the first reason is to face the volatility is fundamental. Again, we managed to face this period with Patrick because we had to put the scrip dividend in place. We had to sell 10 billion of assets. And those assets which have been sold are sold. I don’t have this weapon in my hand if it a low cycle come back again. So the lesson for me, fundamental reason, is to have a strong balance sheet is the best way to face the volatility of the oil price in, I would say, a more quiet way because then I don’t need to sell. I have that. I can use like some of my two U.S. peers have done that when I observe it and they are back again to our level. I think it’s a lesson. So keeping a low – quite a low gearing even if the price is at 60, 70, it’s the best policy because when we are comfortable to face the low cycle, maybe we can use it, the balance sheet, but then at least we don’t have to make a scrip dividend again. We don’t have to – we are obliged to take action so that, I agree with you. So that’s a fundamental reason. So don’t misinterpret it. We are not – we don’t read this stuff because Patrick will go, but certainly will change the disciplined policy and – but we have in mind to make a big – we have not in mind to make a big deal. All the bankers are coming to our office but, of course, the fact that we have been active, thinks that we will continue to be active but we have been active on things where we were thinking we want to deliver value to our shareholders and I’m convinced that Maersk Oil was a good move. But there is no maybe, there is no Maersk Oil every day in your – and so it’s not a main target. The first point was about the 2%, no? Patrick de La Chevardière: Yes, moving from volume to value. Patrick Pouyanné: Yes, but I mean, no surprise. I think I told you that four years ago and our – I mean, no. By the way, let me be clear, I didn’t tell you that our target is two. Don’t misinterpret. Again, I was very precise in my wording. I told you that with all what we have there, the 700,000-barrel per day are to be sanctioned. We have at least a growth of 2% and I added that we’ll not sleep during five years in time. So it’s just the fact that we have already embedded a growth of 2% if we develop all these projects and we intend to develop it. So it’s not a target of 2%. But it’s more than 2%. Keeping in mind that we want to main – to continue with capacity on the one side to grow; on the other side, to be profitable. So it’s a question of choice of projects. Is the projects – that if we can add new projects to this portfolio which are 15% the oil at $50, why not? I will be happy to put them on board. But it’s not 2%. By the way, again, making at least 2% is more than the hydrocarbon markets but probably room for more. But no, the 5% we gave you was an average of 2017 to 2022 which is still there. But if 2018 and 2019 we make 17%, we have the room for 2020, 2021, 2022 for eight so we divide by three, you will find 3% to 2%. So we are – that means that in years to come, we are landing but again, we don’t have the same CapEx intensity as well. Okay. And it’s true that from 2015 to 2018, we were able to spend all the money to achieve all these projects. But not with that sanction a lot of projects obviously, with – so we have a momentum but we cannot grow it. Okay? Is it clear or – thank you.

Alastair Syme.

lastair Syme at Citi. I wanted to ask about the 2P resource base of 20 billion. Really, two questions. One is how much of that is, do you think, economic at $60? Is it all of the economic or is there some sort of element of price assumptions built into it? And secondly related, is 20 billion the right number? How do you think what the right size of the resource base should be for this company? Patrick Pouyanné: $20 billion is 20 years. It’s quite – I mean, it’s a permanent [indiscernible] system. You need to replenish, which we have been successful. Let’s be clear, 2P means that everybody’s developed [indiscernible] not at $60, at $50. The definition of – for us in the company if we put it in our proved and probable reserves, that means that everything which is there will be – is developable at $50 per barrel. This is the way we manage it. So you have 20 billion barrels in front of you, which are developed and it’s a question to scale. Some of them are being already developed. What are the key countries there, the eight? You have Russia, you have Abu Dhabi, you have Qatar. So we have some long-term resource which are being developed and we cannot accelerate that development in some of the countries. Some of us, it’s up to us to accelerate that. So $20 billion are fully economically developable, otherwise we’ll not mention that, we’ll not put them there. If it’s not, we put them in another category which is called resource. So we have 2P reserves and then we have resource, which some of them are not yet developable. For example, the discovery in South Africa at this stage is resource because we did not work yet on the development scheme, maybe we shift to 2P reserves. That was the first point. And what was the second? What was your question? It was your question I think?

[indiscernible]

There is no bible in the oil industry. We have 20 years. I mean our figure is fine. I mean an horizon of 20 years of 2P reserves, it’s not too bad. I’m not Saudi Arabia. But I could give you another figure. I could give you I have a 40 years of resource base which is true, but again, 40 years of resource that in this resource, there is a lot of – it maybe will never be developed so I prefer to give you a sense of. The metrics of 20 years, not too bad, maybe is an average, We were a little aware. Of course, when we grow, we have to think to that permanently. We had that metrics in the company, since I joined the company 20 years ago, with some targets around 12 years of proven and 20 years of 2P. I don’t know where it comes from. I should ask my predecessor. By the way, the majors are more [indiscernible]

Okay. And in terms of the last question, it will be Martijn Rats down the front here, before we pause for lunch.

Hi, hello. It’s Martijn Rats from Morgan Stanley. I’ve two questions. Just to check on Slide 19 at the bottom, it says $8 billion in incremental cash flow between 2017 and 2020. Is the math as simple as saying you expect to generate more than $30 billion in operating cash flow in 2020 at $60?

Which slide is it, 19?

Slide 19 at the bottom.

The math are very easy. We expect $22 billion plus $8 billion makes for $31 billion.

Yes, more than $30 billion, right? That is...

Yes, it’s very easy.

Finally, it’s a punchy number. I just...

I know. You have the figures, so you can fill it in your spreadsheet. It’s done. All right and you have everything, so I help you.

Yes. I think they’re low forecasts on there, but that’s...

No, but – then why did we give you? Because it’s – we are very – well, 99% sure of that. We have everything is clear. It’s clear visibility is why we gave you the figure.

Okay, good. And the second question I wanted to ask you briefly, Slide 25, which shows your project map, used to have Uganda up there. And I know there’s been some delays, but it’s now not even on there any more in terms of sanctioning before the end of 2020. I was wondering if you have an update on your plans.

I can tell you we have decided that it will be the task of the year for the CEO of Total together with Arnaud, so I went to Entebbe, Arnaud, I met President Museveni in Davos. So I’m the committed – no, there was a lot – it’s a difficult project because it’s landlocked. So we have to – this pipeline going through Tanzania, two lines into us. It’s a new country to all. There is no regulations. We need to create everything but I’m optimistic. I think we had some good meetings. We have settled many things about the refinery, about the pipeline tariff, about the transaction with Tullow, which has been delayed and a lot of – there is – no, we [indiscernible] there, but there are many corporate eyes in the lake, so we need to... Patrick de La Chevardière: Goodwill.

To domestic the crocodiles and in order to move forward. So I don’t know if I will fight with the crocodiles but no, I think it’s a – I consider that we have – it’s too long all that and now it’s a priority, and the – we have – the project’s engineering is done. We have even some tenders. We have made the tenders. The price in term of cost is very acceptable. So we need to fine-tune and as I said to President Museveni, I think I will come back again to your country several times, but we’ll manage that. We need to solve it. It’s again like P&G. It’s a problem when you have new country to all to align many people who are – we think that the discussion with major public traded company is in balance. So they are not very comfortable because with CEOs managing different concepts and they think that fundamentally they are prudent but I told him okay, no, we are in the same boat. It’s a project we can deliver to you around $1 billion per year. More than $2 million, in fact, but if we move – so I think – so again, it’s establishing good relationship and it’s a priority. So I hope we’ll be able – I mean, an objective to deliver you new news next year I’m committed and Momar is helping, Arnaud is helping, we are all on the board; we want to solve this issue, otherwise, Momar will not retire, so he will stay, which is a good idea as a way to stick with it.

Okay. That was the last question, Patrick.

It was the last question, okay. So thank you for this attention. We’ll have the lunch with you. I mean I hope we’ll have a continuing discussion. And again, this afternoon, you will have another topic. So presentation this afternoon will be done first by Helle and Ladislas, our two strategy and strategy for natural gas and power; and Ladislas, strategy at the group level. And then we’ll come back on the climate. Sorry, my idea, I will not deliver you all the strategy on the next year-by-year of the climate but you will have a better insight of what we want to do. Thank you.

Okay, thank you. And like we said, we’re going to be resuming again at 1:00, but the lunch is in this room. Thank you.