Ladies and gentlemen, thank you for standing by and welcome to the Total Q1 2020 Results Conference Call. At this time, all participants are in a listen only mode. Today, there will be two presentations. Total's first quarter results, and 2020 action plan update followed by a question-and-answer session. Then a presentation on Total's climate ambition, followed by another question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today. And I would now like to hand the conference over to Mr. Patrick Pouyanne, Chairman and CEO of Total. Please go ahead, sir.

Good afternoon, everybody. Welcome to our Q1 conference call, and let me start by saying that I hope that all of you and your families are safe in front of this pandemic, which is COVID-19 and that you are coping well in these extraordinary times. I really think that the word, extraordinary is the right word to literally sense, I would say, as none of us never thought we could experience such macro environment, such an oil price crisis at the same time. So we have a lot of ground to cover this afternoon for this call. So it's why I joined Jean-Pierre, not to leave him alone and to cover virus crisis that we are facing. We are facing again this healthcare crisis and our priorities of the health of all our people and the continuity of our operations. And I would like to just to say, to pay a tribute to all the efforts and commitment and responsiveness of all our teams around the world. We are working together to ensure the continuity of our operations during the crisis, really, they are doing a great job. So thank you to them, all of them. The second price is, the oil price crisis, it's unprecedented, I would say. I had in my speech, I always say there is volatility and we experienced volatility is difficult. I know that the oil industry would like to see a stable world. I think we are absolutely enabled in this industry to stabilize anything. We will come back on it and it has of course some consequence that is, which is financial framework of our company and we will come back on it with the update of the action plan. But I just would like to tell you, that of course for the…

Thank you, Patrick. So, as you know, the first quarter environment was marked by a 30% drop in oil and gas prices, a 20% decrease in European refining margins and a collapse in project demand in line with the COVID-19 crisis. In this context, Total, nonetheless reported resilient results. The debt adjusted cash flow was $4.5 billion, down 31% year-on-year and the adjusted net income was $1.8 billion, a decrease of 35% year-on-year. Let's move to the production. So the Upstream production was 3.1 million barrels of oil equivalent per day during the first quarter, an increase of 5% compared to a year ago and stable compared to the previous quarter. So we continue to benefit from ramp-ups, mainly for the major offshore fields in the North Sea, Culzean and Johan Sverdrup and Egina in Nigeria, as well as our LNG giant fields like Yamal and Ichthys. So, the contribution of these ramp-ups were partially offset by the security situation in Libya, the redevelopment of the Tyra Field in Denmark, and natural decline although 3% per year. Our Integrated Gas, Renewables and Power segment, so IGRP reported again strong first quarter results. Adjusted net operating income was $0.9 billion, an increase of more than 50% year-on-year. In addition to higher volumes, this strong results reflects the resilient pricing of LNG in our portfolio notably, the contract sales. It reflect as well the value of global integration including the increased use of European regas capacity and the strong performance of LNG trading. Renewable activities increased their contribution as well during this quarter. As you know, we are committed to procuring high quality growth for this IGRP segment, which is key to the energy transition and to further diversifying our integrated model, notably into low-carbon electricity and I know that Patrick will…

Okay, thank you JP2. We are good like the results, which were quite resilient in this difficult environment. But the Q1 results, let me be clear, may be the best of the year and we don't know where we go, but I can anticipate that the Q2 results will be much lower because in fact in Q1 when we look to the impact of the COVID-19 it was mainly for business in China and M&S during the first two months. And I would say since March 6, for the rest of the Group, so it's more or less one month, I would say, which has been really impacted plus some inventories effect by the end of the quarter. But I think Q2 will be more complex and it's why by the way we made something today, I will make something today, which is quite unusual, which is to give you more guidance. But all we can see the year to be honest, is not a very good easy exercise because with extraordinary circumstances are characterized by a lot of uncertainty and the way we can, the economy can exit, European economy, U.S. economy will exit from this special period of confining will be as quick as in China or not. A lot of question marks. But I think it was good to give you more guidance and to correct a certain number of anticipation compared to what we told you in February. So first I will you use few slides. The first slide is of course to tell you that we are facing with all teams of the Group around the world, this COVID-19 challenge and priority being of course the health of all our people and again the continuity of our operations in safe - in a safe way.…

[Operator Instructions] And your first question comes from the line of Michele Della Vigna of Goldman Sachs. Please go ahead. Your line is open.

Thank you very much and congratulations on the resilient results in such a difficult environment. I had two questions, if I may. The first one is about LNG. We are seeing a clear divergence between LNG prices and Henry Hub, which are leading to legacy margins at least do some. I was wondering if some of these movements perhaps have made you more wary in terms of increasing the exposure to U.S. LNG and have made other projects like the one you're developing in Mozambique actually more resilient and less risky from a basis perspective? And then the second question I wanted to ask you is, if possible, to break down organic versus inorganic in the $14 billion budget and to clarify on the Occidental Africa acquisition if effectively the second part of the transaction with Algeria and Ghana have been canceled or just delayed at this point in time? Thank you.

Okay. Thank you, Michele for you questions; always interesting and challenging. I would take the first one on LNG first, you have noticed that our LNG activity has been quite resilient. By the way second quarter from this perspective will be, should be quite resilient as well because in fact on a long-term price we have a sort of six months of delay between the oil price and the LNG formulas. So it's the second half of the year, we should see more impact of the lower oil price. It is clear that yes we face today people talk lot about the oil market, but the gas markets are suffering a lot. It was already because since last year. So we have an exposure to the area but clear. We will, by the way probably we are on the way to I would say cancel some of the of the LNG tankers during summer time in order to limit some losses. It's true that we have on our side, I would say we have projects. We are working still on one project, the ECA projects in Mexico because it's on the Pacific Coast and together how we see a lot of value. You save more than $1 per million BTU of just the trip to Asia. So this one - such a big project. So, this one I think and I think we are in line with Sempra and Mitsui we should move forward coming months. Other projects like the answer is, no. I mean I'll be clear, we are not in a, I mean I'm not very - we are not, today is a priority not to invest more in merchant projects in the U.S. So clearly, we have the extension in Cameron. We'll see with Sempra where we…

And your next question comes from the line of Jon Rigby of UBS. Please go ahead. Your line is open.

Yes, just a follow-up on those two questions. Is it possible - there's obviously a lot of moving parts in iGRP and results held up very well in 1Q. Assuming everything else is held flat, what would you estimate would be the effect on 3Q or 4Q results from the fall in oil prices in 1Q, I guess as a way of you being able to make that estimate just arithmetically? And then also just to follow up on the comments you made about Ghana, is that deal still alive even with you not being able to complete on Algeria and particularly, I guess with all the other things that are going out and they were not conceived of in the original contract, it would seem to me is that what you're attempting to call what Occi will be attempting to complete on is a very different transactions, the one that you thought you were getting into a little over a year ago? Thank you.

Okay. On iGRP, I mean, the part of the result the part of the reserves, which is linked to the LNG plants, LNG assets is around out of the 900s, around 400 more or less, so this part will be impacted. And you can imagine that if the oil price divided by two which will be impacted in a way, which has to be evaluated for more proportionately. I don't have exactly the figures that is less will come back to you but more or the order of magnitude. So it's not, it's not so big, in fact, but there will be an impact, mainly on the results of the LNG assets on the second half of the year. On Ghana, I think I just answered to you again, a lot of things have changed, including the new environment. So we are working with Occi on it. And as I said before, I think all that is also linked to position of the Ghana authorities and also linked to the environment. But, you knew and you know very well I think that the main - the attractiveness of Ghana was not at the same level when the other assets because it's non-operated assets and so we have less appetite for this one than we had for the other one.

And your next question comes from the line of Irene Himona of Société Générale. Please go ahead. Your line is open.

I had two questions Patrick and firstly, if oil were to average not $30, but around $25 for the rest of the year and given the lack of visibility and if you needed environment today, another $2 billion, $3 billion. What is the process of introducing a further dividend scrip, would you call an extraordinary meeting and why not get authorization now given the uncertainties just in case it is needed. And then my second question, just in terms of short-term guidance in the second quarter what can we anticipate for the Group tax rate in Q2, in the current environment compared with 30% you had in Q1 please? Thank you.

Okay. I will lead to second one to my CFO, expert in tax and for the first one, now let be clear, now I'm very clear. We know the negative impact of the scrip. We know that there is a dilution that our institutional investors do not like it. We know that we have used it from 2015, 2017, maybe by the way, we keep it too long. I know you take some lessons from the past. And by the way today at when the price, the share price is around EUR42 or EUR40 per share, the dilution effect is even larger. So I mean, it's not for us the right tool. So be clear, the decision is clear. We will not convene any special AGM to introduce the scrip. So it's why it has been very clear and clearly in fact for us it's not the right tool if we have to face, I mean a higher storm like you described. But again, we think that the fundamentals of the Company are good - strong enough and we are comfortable with what we said. I think we have other flexibilities like the one we discussed just before about M&A, which could come to help the company if we need to help more the company. So, I think - so that's clearly for me, it has clearly been a negative decision from the Board about this ID, because again we - the dilution is too odd and has as a negative effect and by the way, you - in fact, at the end you borrow money at 8% or 9%. So I mean - so it's quite expensive. So, no, it's not the right way to reorganize the shareholder returns.

And so...

The tax rates, Jean-Pierre.

I'll take the tax rate question, Irene. So at $30, $35 per barrel, we could expect Group tax rate around 15% taken into account E&P tax rates in the range 25% to 30%.

Thank you very much. Very clear.

And just to complement, Irene, you know that in France when we put a resolution, it's not an option for the Board, we are obliged to use it, so its complex. So it's why we don't want to be tricked to be trapped. We just keep for one year, because once it's voted in France, we cannot decide not to use it, it's not like some of our colleagues in U.K., have the authorization in option, but we don't have it like that.

And your next question comes from the line of Biraj Borkhataria of RBC. Please go ahead. Your line is open.

Two, please. The first one is on some of the details you provided. So thanks for all the comments on the levers you're pulling. One of the big ones is obviously the balance sheet. So you'll be adding to debt over this period. So I was wondering how you think about the upper limit on the balance sheet. I think within your compensation scorecard, there is a 30% ceiling on your net debt ratio. So should we consider that as a hard ceiling? And then the second question is on production volumes. Regarding the shut-ins that you referenced in the near-term, can you comment on what this means for your production capacity into 2021 and how much you lose there? Thank you.

Okay, good clear. I think, I mean if the Board puts this, no, it's not the right time to change the variable pay of the CEO, to be honest. So these criteria, we have put in place a few years ago when I took my job on the gearing, incentivizing the management to take to pay attention to that level of debt. So 20% maximum, 30% zero. Again, I'm not, so, I think the objective was clearly under 20%, we do our - or best to be under 20%. And I think we are far from going to 30%. I mean I'm, I have some, we have some room to maneuver there. I think in the simulation with what we said about the working capital release and despite by the year end, at $30 per barrel, we should be around 21%. I think this is what we have simulated, so maybe higher than that. So yes, 30% is more than our feeling, but with my personal objective is to maintain it lower than that, but again we don't take decision and the Board, does not take decision only linked to one of the criteria of the CEO. You know when we came to use the balance sheet and in this exceptional circumstances, we are able to take decisions independently of the criteria. Production guidance, I think, yes, there will be some impacts, in fact, that we when you decide to not to drill some short cycle wells but we don't have the benefit last year, so it's probably around I don't have the figure, I think I read something around 50,000 barrel per day. But again, we saw short cycle, so if we want to reactivate them we will be able to do it as well. So, that's clear, but where could - this could have an impact let's say around 50,000 barrels per day to give you an idea.

And your next question comes from the line of Lydia Rainforth of Barclays. Please go ahead. Your line is open.

Just one quick question. In terms of the approach that you're taking around new energy CapEx and I know we'll talk a little bit later but also the digital recruitment going. Can you just talk about how you actually seeing that whether that's changing in terms of the update that you gave this morning? Is the intention still to keep those two businesses largely unimpacted? Thanks.

Again, yes, new energy CapEx, which means, what I call low-carbon electricity and it's fundamentally it's either renewables or marketing - marketing B2C or B2B business like the one we have invested in India. We have a budget, which was announced between 1.5 to 2. I can give you probably it will be near 2 and from 1.5 and this year in 2020, because we have already done some deals and certainly organic is also inorganic, we are building a business. So we need to be serious about it. I think it's part of the future of the company. So we'll keep that. And again, we should be around $2 billion, because we have done already these investments in at any and the first quarter has been very active when you read the, if you read the key facts of the press release, there is more key facts on the farm than on the rest of the company. I think 2 gigawatts in India, 2 gigawatts in Spain, 1 gigawatt in Qatar, 1 gigawatt in France. So yes, we think is part of the strategy and this one is - could be considered as flexible, but we don't consider it as flexible, because we are building the broader energy company that Total wants to become. So it's and by the way, I would add another element, which is important. When you look to this type of business, I know that we have a reputation not to offer the same profitability. When I see 10% of return, which is what we are able to do today after in our lower CapEx model when you know we invest in 100% of an asset a renewable asset and when we sell 50% of it and we leverage from this, I would say, farm-down part of the profitability. This type of assets 9%, 10%-plus compared to an upstream asset which is volatile at $30, it's good to have this type of assets as well in the business. So fundamentally, I see these new low carbon energy low carbon electricity assets are bringing to the company and to the Group a sort of more stable balance of revenue. It will take time before it will be at the size will influence fundamentally the global business model. But so, that's all the reasons why we intend to stick to this investment. So that means that if we make $2 billion by the way this year out of 14% it's make something like 13%. So people, I think, so we are slowly growing the investment, the share of investments in this business unit.

And your next question comes from the line of Christyan Malek of JPMorgan. Please go ahead. Your line is open.

And also I hope you and JP too are staying healthy, especially with the [indiscernible] company through this crisis. So a couple of questions, first, regards to the capital frame, the logic of sustaining dividend at these levels in the context of CFFO. And the second question is on the impact of the CapEx cuts in the future oil production. So regarding the level of the dividend now your dividend is substantial if those on the highest it appears the European oil is just under 40%. Regardless of the impact from this current crisis, do you think this is a relatively high level and it limits your ability to spend more energy transition and you will growth to some of your peers have argued that cutting the dividend is a key enabler. But the second question is sort of links into that which is to understand how much oil production has been deferred as a result of the CapEx cuts this year and if you were to just raise CapEx so flipping it around if oil moves higher, would you allocate into new energies or oil? Can you give us a sense of how you sort of reallocate that marginal growth in CapEx? I'm just trying to understand on whether the updated energy transition policy comes at the expense of lower market share and oil all over the medium term. Thank you.

I think by the way today, again, we have to as I said in my, in my presentation, we are very comfortable, first. We know that in the oil and gas company, we'll have some volatility and we have to accept a certainty this time to use to leverage its balance sheet in order to maintain a certain level of returns of shareholders. At the same time, again as I said is barrel at the $30 or longer for very long, there is a certain limit to what we can do, you know, but at $40 per borrower, the cash flow generation, if in a stable activity I would say is around $19 billion per year, $19, $7 billion of dividend I have $12 billion for investing, I think we are fine with that. We have - that means, but yes, we have to make some choices and for this perspective on the second question, I think $1.5 billion to $2 billion as an average. We are fine to grow it steadily. This morning you notice probably in the - I will come back on it in the climate statement that we said, that we reached 20% of our capital allocation by 2030 or sooner, which means we have time to grow it. We think that there is also a certain level to build. Is it - so I don't think that these and I understand perfectly the question that we but these dividend at this level is impairing the execution of our strategy. The CapEx cuts impact on this year projection are really minimum. I mean when you have a CapEx program of infill wells that you cater to the second quarter and third quarter, the production could produce is I think matter of 10,000 by the way, this…

And your next question comes from the line of Martijn Rats of Morgan Stanley. Please go ahead. Your line is open.

It's Martijn Rats of Morgan Stanley. I had two questions as well. I wanted to ask about the Downstream guidance. This figure of cash flow of $5 billion to $6 billion for the year, last year, I think both the various Downstream divisions together generated $7 billion. And this year, we still have multi-millions of barrels a day of demand destruction. I know like 2Q was particularly weak, but across the year it seems like a very small drop for the dramatic events that have just unfold, which I was hoping you could sort of explain that to us. Why isn't the Downstream weaker given the level of demand destruction? In 2009, we saw very, very weak Downstream results across the industry and that was based on just 1 million barrels a day of demand destruction. Honestly I generally sort of don't fully understand how that works. So if you can explain that that would be much appreciated. And secondly, I wanted to ask JP to, what his estimate is of the amount of headroom that exists within the current credit rating that would also be very useful.

Okay. So on the Downstream, I think, the Downstream is a mix of different cash flow, as you know, we have the refining where clearly we'll have lower cash flow, a lower utilization, which is directly impacted by the lower demand. The M&S business, you know what we observe in China is one month after the end of I would say the full close of the country, we have reached levels of business, which are around 80%, 85% back to the normality. So if we are back level or coming back quickly in Europe this why I told you, when we think that we could, we could, I would say after we are generating normally yearly around $2.5 billion of CFFO, we give you, but we could lose 600. So maybe we are missing thereby 100, 200 not more. Petrochemicals could do good very well. I mean, so we are optimistic on it. And don't forget that in refining and all these business in downstream are also traders. The trading business, the trading business loves times when you have a lot of volatility and contango, by the way they have borrowed some money from the Group, part of the increase of the working capital is linked to our traders we are storing. So I'm more optimistic than JP2 I think that so working capital of today will be a big benefits of the tomorrow before year-end. So we have to deliver. So all in all, my view Martin is that to be, to give you the full story. I was the one who puts 5 to 6, my Downstream people are little more optimistic, they look more to the 6 to 5, but I am little like you, but I would be surprised to have less than the guidance that we propose you.

So regarding credit rating, as Patrick mentioned to you, of course, having a good credit rating is very important for us and to maintain A credit rating is part of our priorities. What I notice is that despite the revised from both S&P and Moody's that was, this was revised in March or in April, we maintain our rating. So that's from our perspective changes from stable or positive to negative on both S&P and Moody's side. It was, it was, by the way the same for all our peers. So it's true that either the prices remains at $30 per barrel, I think as of years we lose one probably. But it's, it's not what has been confirmed as you know by the agencies and so we have to wait and see. At present time S&P it's minus, make makes it calculation using $30 per barrel price deck for 2020. That's would, that's for 2020, 2021 we use higher price stake. So once again if we remain at $30 per barrel over a long-term period, probably we'll not be in a position to maintain this rating, but we will definitely keep A rating. So that's once again it's one of priority.

Yes, the A rating has always been linked to the gearing and all these business. So it's important for us, but we have some room there to manage that.

And your next question comes from the line of Oswald Clint of Bernstein. Please go ahead. Your line is open.

Yes, obviously, very tricky to call demand recoveries. Let's think about next year, over the next five years, I guess, and some of your peers are finding it obviously very tricky and some of them have a bit more comfort around the path for demand recovery. So I just wanted to know if you as a team have with your experts and with your people on the ground have formed some view of how demand might recover from here. I mean, jet fuel traveling, people flying, people traveling by car and public transport, et cetera. That's my first question. And then secondly, obviously, quite impressive to see another countercyclical acquisition here in terms of Uganda, it's characterized as low cost barrels. I just wanted to maybe test that assertion. Is it truly low cost including transportation and pipelines? Is it - I mean, at least at the forward curve, I seem to be getting around 10% return. I just wonder what I might be doing wrong there or is there some type of expression of oil prices recovering potentially back up to the $50 or $60 level, please. Thank you.

So recovery, I would love to be able to answer to your question, but part of the uncertainty. To be honest, I'm more optimistic about cars and the Jets. The cars, if you observe, in many - in China, is that in fact people are using more their cars because they are afraid to use public transportation than before. So I think once again, people are free to move and that's a question mark. I think, they will come back to use their cars and we expect, I would say, the retail business to come back to certain normality. The jets, I'm more afraid, but for me, as long as we don't find a vaccine or I don't know which medicines, I'm afraid the countries will with close our borders and that there will be limited - it will be difficult to fly again around the world. I mean, because each country, each government will have a first priority to safeguard the health of their people. So I'm more pessimistic about the jet fuel business than for the gasoline and diesel business which is more, I would say continental business than our oil business, but I would love to have a precise answer to your question. On the second one, yes, I mean there is a big huge amount of $1.5 billion to $2 billion, so it's onshore, it's not very difficult to produce. Yes, there is a pipeline, it's true as well. We all know that but we know that when we look to this type of projects, we have some threshold and if we have done this acquisition, which is quite good compared to the previous deal, we have done, we have divided almost by two the cost of acquisition. So it was a, and we have been quick to find a solution which is too low. If we have done it is because we expect at least 10% return on this, even at a lower price.

Okay, fair enough. Thank you.

I will take just last question and maybe we - after the second session of Q&A, we could take the ones but I would like to move on climate. The last question maybe.

And your last question comes from the line of Thomas Adolff of Credit Suisse. Please go ahead, your line is open.

Sure. Thank you. Just one clarification on the dividend, I guess the decision on the dividend today, it's not of some of the commentary you made on the call, suggest to me that your view on the macro for the medium and longer term has not changed. So basically, what you're saying today is, let's wait and see COVID-19 may not have any structural implication on how oil is consumed and I want to wait until maybe 3Q 2020, to see how economies recover and what the outlook may be for 2021 before making a fundamental decision on the dividend. Is that how I should think about the dividend and the dividend decision? And then secondly, just going back quickly on LNG and LNG or Integrated Gas contributed very strongly again and it did so in the fourth quarter as well. I wanted to know a little bit more about the U.S. LNG, did they contributed positively in the first quarter and how we should think about the rest of the year? Clearly, when you look at prices today it's out of the money. Thank you.

Okay. I mean Thomas, you did not listen everything what I said. I told you, that we have strong fundamentals and what we have time we can use and leverage the balance sheet to maintain the dividend. I think it was a more fundamental message, that I delivered. I also told you that we think that and Board think, that it's premature to take decisions when we see nothing because you could, which means that we'll take, but we put a question mark on the dividend policy on the Q3, I just told you that we think that we'll have a better visibility by Q3 and that it change some fundamental. I mean I'm reading like you a lot of papers. Again, it can change the visibility and the price could remain as I said, because of our inventory, at $30, $40 per barrel, but as I told you also, $40 is very different from $30. So it's a question of appraisal of how long it will take to recover this oil price. On the medium and long-term, no, I think, again, what we said about oil, of course linked to the demand, but you know when you don't invest or your invest - the investments in E&P will again be lower than before the shale oil which was the way to ensure the production will be impacted and quite quickly. According to our model when we, if you have a decrease of shale oil production by 2 million of oil per day this year, and people are more or less reducing their investment it could become 4 million next year. And so, it could accelerate the miss in terms of production. Of course all that is linked to the pace at which demand will come back and that I…

[Operator Instructions] And your first question comes from the line of Bertrand Hodee of Kepler Cheuvreux. Please go ahead. Your line is open.

Two, if I may. One, on LNG, you disclosed some very useful new indicators for the Q1 and it is your LNG average selling price. It is something that is quite difficult for us to model given the some S-curve on long-term oil pricing contract. Can you give us a flavor of what could be assuming spot LNG seen at the same price basically your average LNG selling price in Q4 let's say with $30 of about in Q2. And then the second question is on LNG, but that relates now to the energy transition and your ambition of getting to a zero - net zero for one and two. LNG activities are quite, I would say CO2-intensive [indiscernible] and also liquefaction process highly energy intensive, how can you improve the carbon effectiveness of your existing LNG plant and what is - do you have a view of the LNG plant of the future? Thank you.

So the first question I already tried to answer before. I told you that, in fact, is indicative by the way. Yes, we thought it was important due to the size of the LNG business to give you more information because of gas price, honestly, that is the average of for many local business LNG business. So you will have this indicator from now on every quarter. As I said before, we see a very little impact and think should stay around $6 more or less for the next quarter because there is a time lag within the formula are more or less a six month. And then after, of course, we will have to see the impact and let's say around $4 from the second-half probably, because the impact will be - will come from the lower oil prices from the second-half. So $6 during the quarter and then $4, average for the year should be around $5. And the second question LNG it's is a very important question, of course. By the way when you I'm always assumed about the debate about LNG is CO2 intensive by all its form. You know LNG plant is like a refinery for oil. So when you compare both chain you should compare oil and a refinery to gas and LNG. That's true, but for the existing plants, to be honest they are already built. It's not easy, you can work in particular, wells and the plant itself, the plant itself are designed. So it will not be improved. You can also improve and lower the emissions from the transportation part from the LNG tanker part, there is still some, it's easy to improve the technology, it's an industry where we are losing. We are, you know we can do better. And there are really some improvements on the way with LNG tankers are designed and that's part of what we work on it. The new plant should be electrified. You see the one we want to build in Oman. We have a small project in Oman of LNG plant for bunkering and the beauty of this plant for me the big interest in this plant is not only to produce an additional 1 million tonne of LNG and to develop bunkering business, it's a full electric plant, designed like that and it's a way to test this technology and the full electric LNG plant is lowering the LNG emissions by lot. And so, I mean that type of and again example from is the best way in most of the processing of gas industry to eliminate CO2 emission is to go to electrify is a processes like what is done in the North Sea by one of our colleague. I think it's a future of this industry and this is - our engineers in the E&P are working on this type of technologies.

Your next question comes from the line of Christopher Kuplent of Bank of America. Please go ahead.

Just a few more questions and perhaps clarifications, if I may. Patrick, your CapEx cuts that you've announced for 2020, how quickly do you think you will go back towards let's say originally intended $14 billion organic CapEx number? How related is that trajectory to the macro environment? And in other words what can you do in 2020 - I'm sorry 2021 and particularly thinking about FIDs that I suppose will be coming up over that timeframe, whether it's Uganda, whether it's Papua New Guinea, Suriname, Nigeria. If you could, give us a little bit of labor there? And the second question, linked to your net carbon footprint outlook a little bit longer term, it wasn't so long ago you talked about a DPS CAGR commitment of more than 5% per year. I'm assuming that when you look beyond the next one, two, maybe even three years, that's still something that you will remember in a few years' time. If you could, let us know where you stand on that dividend outlook. Thank you.

It's quite easy to answer your question. You make the math. If you want me to spend $14 billion, I have $7 billion to $8 billion shareholder return. So I need $21 billion, $22 billion and I need something like $45 per barrel, so I will come back to this level of investments when we'll have this type of outlook for the price, let's part of it. And again, keeping some flexibility on the organic CapEx. So I mean for 2021 honestly I have no idea today premature. We are, I know what figure we had in our long-term plan last year, but we will do again the business plan, we'll do again the exercise with some - we are very comfortable, like I said before at $40 per barrel. And again, you would tell me today, it was the discussion of the Board. What would be your guess for next year. I answered, if I had to give to my teams and assumption for the budget, but thank God, I don't have to deliver it today in March or in April. I will give us in July. I will probably give something like $40. So at this level, we know what we can, what type of capital allocation we can make, that's the first answer. On the second question, what was the question? I don't - I lose the second question, sorry.

It was regarding your longer term outlook, regarding the DPS.

No. Okay. Little bit clear. It was clearly the dividend. Now, the dividend was clearly linked to both, I mean, we are more in a stable environment. It was above $50 per barrel, it was linked to the growth of the volume, as well remember we are speaking about the production growing from 3.1 to 3.2, 3.3 and stable during two years of his outlook today. Today we have, we are no more about $50 and we are no more at the same level of production, because of quota. So I have two sources of lack of growth. So a little bit lack of, I would say, cash growth. So it's affected - it's not affected by Net Zero at all, let's be clear, no, Net Zero will not influence that, to answer to your question. So I'm still committed to it, but obviously we stopped and you have observed that we - the Board has decided to stick to the stability decided to stick to the stability of the interim dividend compared to the one last year ago because it makes no sense in this type of environment to grow by 5% something that there is no more growth, which would have been very odd to take such a decision when others are just deciding to decrease it by more - far more. So I mean it's still there, it's still in my mind, but for the time being, honestly in this market conditions, maybe it's slower, let's wait 2022 or 2023. I'm optimistic, one day or the other, where we will come back to normality. And then lack of investment could translate in - will translate in higher oil price.

Thank you, Patrick. Can I just quickly double check on your first answer. What is a lower budget. Let's assume $40, as you said, into 2021. What does it mean for a number of those flagship projects and how quickly you think you'll be able to FID them?

Again, it's $40 per barrel, I have $19 billion of cash flows. I serve you $7 billion, so we have $12 billion for CapEx. Then if I want to invest more, I will have to divest more.

I guess I may not have been clear, but maybe you can prioritize a little bit. Those projects that haven't been FID's, I guess were meant - yeah?

Yes, sorry, I missed that part of the question. So top projects, honestly, let be clear, the projects we have sanctioned we don't stop them, so Mozambique is moving on in the right path. I think for me, among the top projects, we will have obviously Uganda, we are investing in Uganda, so the idea is fundamentally to move on Uganda and as soon as we can. I think we made that investment to deliver it now. And I would say also we have to look to projects like our discoveries in Suriname, could - which seems to be quite promising. So it could become as well, but the way to run the project will be obviously like always in Total, by the - I would say, breakeven cost of each of them and will invest the money on the ones which are the most efficient. On the other side, as I answered before to Michele, I don't think we'll have a lot of LNG projects except maybe ECAs in the coming year in terms of sanction.

Thank you. And your next question comes from the line of Lucas Herrmann of Exane. Please go ahead. Your line is open.

Patrick, afternoon. Thanks very much for the opportunity and I'm glad you are all well. To ask one on the former presentation and then move on to climate. On the - in you presentation earlier on, I just wondered to what extent what we've seen over the course of the last three months, particularly the behavior of suppliers not least the commencement of the price war at a time when it really don't seem hugely appropriate there is influence the way you think about the commodity in the Upstream business going forward. And I guess that becomes increasingly relevant given everything around climate change, shifting in portfolios, there's clearly the growth opportunity in hydrocarbon starts to moderate you'd expect the competition for the business that is actually available to intensify. So, sorry long way of putting it, but first question just how what's happened in recent months to month suppliers has influenced your thinking? And then moving to the portfolio going forward, just a couple of simple questions, if I might. When you talk about, you say, sales to customers, I'm never quite sure whether that the products that you source for that you produce yourself or whether it's increase of products that brought in whether it be electrons or whether it be oil barrels itself. And do you expect to grow energy supplied to the market? I guess, own energy supply to the market over the period to 2050. And the question simple, it's purely that there is an awful lot of energy associated with an oil molecule. You need an awful lot of electrons to substitute. Thanks, Patrick.

Lucas is also with very good questions to make - allows me to think. Thank you, Lucas. I would say, the first one, it's clear that honestly what I've observed in my first reaction is that this industry, the oil industry, obviously has a real difficult to manage itself, and has a good capacity to create huge volatility and frankly when you observe that at a time where the demand declines, people decide to increase the supply. You are a little - you say to yourself we have an issue, and I'm not in control. We are not in control of it we are as a company. And so that means that it's clear that it obliges us to think. And the conclusion I first way I said to my colleague, when we said that we sanction at $50, it's clear that we sanction at $50 and stock coming sometimes to me we have a $55 or $60, because that means that all this math that we do in economic models, we have a $50 flat are just wrong. And you can be it when you start a project we suddenly $20 per barrel price and it's the value is not the same. So I think, the first lesson for me is, yes, there is a strong volatility. And what I said before when I answered to one of your colleague, from this perspective to one of your colleagues. From this perspective, it's clear that in the business model of groups, energy companies to try to find. So our less volatile businesses which are offering for profitability, acceptable profitability could make sense and you know when you have access to some long-term renewables PPAs, there may be less, less volatile and give a balance within the business for that of…

And energy growth, will you be selling more energy?

Yes, we are selling more energy in our model. Yes, if I want to, yes, it's a good question and I gave - I gave you the percentage of the portfolio, but in fact, if you want to reduce by, by 60% at the end you sell more energy, you sell more energy.

Thank you. And your next question…

We have to wait until September to have more clarity on this sentence. Okay. Next question.

Your next question comes from the line of Lydia Rainforth of Barclays. Please go ahead.

And just two from me as actually. The first one is just in terms of the interim target that you set of let's say 15% for 2030, there seems to be slower pace [technical difficulty] the 6% reduction in carbon intensity for 2015 to 2019. Is there any of the end of the 9% over the next 10 years and again the ambition for your Scope 1, Scope 2 emissions doesn't seem have the same pace of improvement coming through. So is that just as an effect of you did the easy stuff very early on and it now gets more difficult. I'm just trying to work out whether that's a cautious assumption around where they carbon emission reductions come through or whether it's just got more difficult. And then the second question was in terms of the net zero ambition for Europe, does this work without a material step up in carbon prices? And I know you talked about $100 a tonne in terms of that 20 - from 2013 onwards. But do you actually think that's a realistic policy chance of getting that through in Europe to make those changes? Thanks.

Good questions. The first one is you are observing our figures. At the end the fact that we are already at 6% it will become a detrimental to us. In fact, no. We had some easy, so low-hanging fruit. You know, we decided in 2015-2016 to exit coal. So when you exit a business like coal, it give me immediately 2% or 3% but it was a decision, which we decided also to eliminate some, some cash flow from operation because we are making more or less $50 million or $80 million per year. So that's the reason why. At the end no, we don't slow the pace of CO2 reduction. It's more again capacity of allocation of capital. I don't think we are cautious. I mean, even when some people around the table, look through the figures they think we could - we should really continue to work like we have done. If we can do better quicker we can do it, we'll do it, but you know, we are not alone in this business, you know. I think we are facing competition and bigger we will become in this business, the more the competitors will also be aggressive. There are quite a lot of people working on the same IDs around energy - I mean, decarbonize energy, renewable business. So we have to also to be pragmatic. So, no, it's some step of it is done, we have already made some investments, we'll have to do more, obviously, to continue to develop to grow the business. And so, it's a more or less, as if you remember the figures I gave you, I told you that we should have - it's increasing every year an additional 1% per year of Village Farms in the portfolio, in fact. So…

Thank you. Are you ready for next question.

Yes.

And it comes from the line of Martijn Rats of Morgan Stanley. Please go ahead.

I had two, both related to the discussion on the climate and the move into low-carbon electricity. I was wondering if you could talk, perhaps a bit what you think are transferable competitive advantages from your traditional oil and gas business into this new business as in electricity markets like oil markets. What is more global, what is more local, regulatory changes, but then again in many, many businesses, I was wondering what's your view on, on this, on this issue is? And the second question I wanted to ask, when it comes to this transition, I was wondering if you, if you, if you regards your own cost of capital as a disadvantage building out a New Energies business? Does it require lot of money sort of chasing these, these renewables opportunity and it seems very, very competitive and quite a lot of auctions for offshore wind projects for example, seem to be simply won by people that have very low - very low levels of cost of capital, and I was wondering whether you believe that with a coming from a traditional oil and gas back backdrop, cost of capital is a source of competitive disadvantage?

So, I would think the advantage of one of the advantage maybe what we have done in the last quarter is a good example, is that oil company like us we are - is able to deploy of this business in many, many different countries. Finding the best opportunities. Look what we have done. We have been able to have access to 2 gigawatts in India, 1 gigawatt in Qatar, some in Europe. So I think the capacity that we have because we have a world footprint to work on many geographies and to identify the right opportunities because we have several oil linked by the way in India it's interesting because we developed this relationship because of the natural gas, LNG and then we move to renewables. So I think that's something that many when you look to people, who are more dedicated to these electricity business they are quite the leaders are more focused on Europe plus Americas, south or north, so maybe very - so I think there we have access to Qatar story of course wobbling to all the capacity to develop in Qatar. So I mean I think that's an advantage. I think you said that when you speak about the offshore with this is very obvious, but there are some technologies and in Total for example, what we have decided is that the offshore wind team is embedded in terms of technology and projects within the E&P division, although it's very good because the E&P guys we are afraid to have less jobs. Today, we are very excited by developing all their knowledge, but floating units for this offshore wind floating offshore wind. So there is some links, which can be done, the scalability of it also. So I'm, I think there is okay…

And your next question comes from the line of Anish Kapadia of Palissy Advisors. Please go ahead.

I have a question on the impacts of COVID obviously you're seeing some short-term impacts. But I really wanted to know what you think some of the structural shift will be on the supply side for oil and gas and how you see that influencing your longer term strategy. So things like decline rates, the change in production from the U.S.-based gas and oil, any permanent supply destruction and kind of LNG market. So how is your thinking on those effects in your longer-term investment strategy? And then the second question was on your earlier presentation. If you're talking about $100 per tonne carbon price in terms of the testing price, can you talk about how you get to that kind of price? And with the assumption of 50 million to 100 million tonnes of carbon zinc, is that implying a kind of cost of that of $5 billion to $10 billion over the long term?

The first question, we can take a lot of time to answer to that. I think - okay, COVID first as an impact of short-term impact on the demand, but once we will find the vaccine or other tools I think we'll exhibit. I think this will have clearly an influence on the things a development of shale oil in the U.S. I think my view is that over the last year since the last two years we've seen investors more prudent about investing in shale oil requiring cash flows out of it. Obviously on the top of it today, it appears to be that this - it may be flexible, but it's not a low-cost source of oil. So I think this could influence the global landscape of the oil supply in the world more fundamentally, but just during the COVID period, people forget, but maybe not and I think it could impact the way that people would be ready to invest in this industry does not change a lot at all, my view it's even gone more comfort to the views of Total, but we will not invest in this one. On the gas in the U.S., it could have a different effect if you have a lower production of shale oil, which means that the gas as a shaky too low to shale oil could diminish then it could influence the same times of price of gas in the U.S. in view of the way. So we have to look at it and in particular, because as we are investing in LNG in the U.S., should we integrate on the gas for the longer time, that's for the longer term. That's a question mark. I'm not sure to have implied to have fully understood your question about $100 per tonne. The idea, fundamentally idea is to ask our colleagues when they present an investment case in particular on hydrocarbon, which we go beyond 2030 to test towards base case for Total, but to check, what it gives is a carbon prices reaching $100 per tonne, to see the influence and it's a way to test them against I would say, carbon neutrality business. So what was the - I'm not sure if I capture for correctly Anish, your question?

Yes, it was more given that you will need to invest around 50 million tonnes plus of carbon zincs, what's the expected cost that you're thinking that will be associated with that based on carbon, could that be kind of $5 billion per annum in terms of cost…

No, no, no, it's not that because 50 million tonnes of carbon zincs, there horizon some saw I would say a natural based solutions and the natural based solutions we begin to work on it more on [indiscernible] you have plenty of projects of natural based solution. So if you consider that half of them are natural basis something like $250 million, over half is around - are coming from CC U.S. that means that you will use 25 million tonne, let's say, $100 per tonne because the technology should, more or less, be at this level, is at 2.5 billion. So it's more around 2.5 to 3 billion in 2050, we have time.

Your next question comes from the line of Irene Himona of Société Générale. Please go ahead, your line is open.

Thank you. Patrick, I had one question on climate. As you said, you cannot control the emissions of industries like cement, autos, and so on. Do you see any advantage in partnering with some of these energy in terms customers let's say to help them address their emissions, the emissions produced when they, when they use products that they buy from Total, it is something that one of your peers is to you. Thank you.

Thank you. Hello? Who is there?

[Operator Instructions]

Is it okay?

You are in conference, sir. [Operator Instructions] And the line appears to have disconnected sir. There are no further questions.

So the game is over.

We have no other question. The floor is back to you for closing.

Okay. I will close. So Irene, I understand you ask a question, sorry we have been disconnected, I'm afraid. It was a mistake. My mistake. So Irene your question about partnering with industrial clients cement producers. Yeah, I think it's fundamental idea, we have engaged in many, we need to act on demand, so to act demand, we need to work with others and I have pushed my teams to take some time for example with plane manufacturers or marine industry and still we are working with still companies to see how we could think and change the way they produce energy and looking through of a source of energy rather than on the oil. So that's part of what we want to proactively work on and the commitment we take, by the way it's well expressed in the joint statement that we have signed with the climate action one plus is also part of the commitment, which is to bring some of our competencies and capabilities to help to change the energy use of our customers. So thank you for this long call. I think it's was the last questions. I know we have been quite long this afternoon, we've covered many topics. Maybe in this extraordinary circumstances we need to have a solid recourse. I hope we have answered to most of your questions. And again, I think the message that we want to deliver to you is that, Total, I think even if this time saw very turbulence, we need to stick to our strategy. The fundamentals of our strategy and I think more than ever the fundamentals of actions are clear for commodity company like Total, looking to our delivery, looking to our costs, managing our cash. And things are course for the long-term strategy and I think it's a good signal, but today, not only we speak about the short-term and also about the medium and long-term strategy for this climate condition. So thank you again for your listening, for your support, and we hope to meet you soon all of you. Thank you.

Thank you very much, gentlemen. Ladies and gentlemen, that does conclude your conference call for today. Thank you for participating. And you may now disconnect.