TotalEnergies SE (TTE) Q1 2022 Earnings Report, Transcript and Summary

Thank you, Patrick. So reported IFRS net income for the first quarter of '22 was $4.9 million, which takes into account the EUR 4.1 billion impairment related to our Russian exposure. So adjusted net income was $9 billion for this quarter, the highest quarterly result in history of the company, up 32% from the previous quarter, mainly due to the 24% increase in our average realized oil price as well as an 8% increase in our average realized gas price and strong results from our midstream and downstream activities. Adjusted earnings per share was $2.40 in the first quarter, a 1/3 increase from the fourth quarter. Debt-adjusted cash flow was $12 billion, up 23% from the previous quarter, ahead of expectations. Patrick explained to you how we will allocate the strong cash flow. Going now through the results by segment. The integrated Gas, Renewables & Power segment reported adjusted net operating income of more than $3 billion in the first quarter, up 11% from the previous quarter, and a threefold increase from a year ago. Thanks to its ability to capture higher LNG prices and leverage strong performance from gas, LNG and electricity trading activities, operating cash flow before working capital changes was $2.6 billion, up 6% from the previous quarter and 2.4x higher than the first quarter last year. Cash flow from operations was $315 million, reflecting the increase in working cap linked to the seasonability and to the price effect on receivables for the gas and power supply business. LNG sales were 13.3 million tons in the first quarter, up 15% from the previous quarter and more than 30% from a year ago. LNG sales from our equity production were stable at 4.4 million tons. So the main driver was record-level third-party volumes sold on the spot markets, notably in Europe, as Patrick mentioned. Our average price for LNG in the first quarter remained strong at $13.6 per million BTU, and we anticipate that it will be above $14 per million BTU in the second quarter. Our ability to execute and deliver along the entire gas value chain, including our midstream and trading activities, has continued to outperform expectations. iGRP increased gross renewable power generation to 10.7 gigawatts at the end of the first quarter, up 400 million watts from the previous quarter, thanks in part to start-ups in India. Gross power generation capacity under development increased to nearly 25 gigawatts, mainly due to the award of concession for offshore wind farms, including 3 gigawatts of the cost of New York and New Jersey and 2 gigawatts of the cost of Scotland. Net electricity generation grew to 7.6 terawatt hour in the first quarter, up 61% year-on-year, thanks to higher utilization from our feasibility power plants in a strong margin environment as well as continued growth in electricity generation from renewable sources. EBITDA from the renewable electricity business was $175 million in the first quarter in the context of power price volatilities and the mechanism for setting the regulated electricity sales tariff in France. The E&P segment reported adjusted net operating income of $5 billion, up 42% from the previous quarter and 2.5x higher than the same quarter last year, far above the increase in oil and gas prices, demonstrating strong leverage to the environment. Operating cash flow before working capital changes was $7.3 billion in the first quarter, up 28% from the previous quarter and nearly double the same quarter last year, reflecting the higher commodity price environment. Operationally, the E&P segments oil and gas production grew by 3% compared to the previous quarter and was stable compared to the year ago. Start-ups and ramp-ups of projects, mainly in Angola and Brazil, plus an increase in OPEC production quotas offset the natural decline, the price effect and other negative impacts including the 25,000 barrels per day equivalent decrease in Nigeria related to security concerns about SPDC, which we are considering for divestments, as Patrick explained. Looking ahead, including the startup of Mero 1 and our entry in Atapu and Sepia, we expect production in Brazil to grow by 30,000 barrels per day in the second quarter and then by 60,000 barrels per day in the fourth quarter. Our downstream activities generated $1.4 billion of adjusted net operating income in the first quarter, up 35% from the previous quarter and 2.6x higher than the same quarter a year ago. Operating cash flow before working cap changes was $1.9 billion, up 22% from the previous quarter and more than 2x higher than renewable. The strong downstream performance was mainly due to higher distillate margins in Europe in the context of reduced imports of Russian petroleum products, as well as outperformance of around $400 million compared to standard results in the quarter by our crude and product trading activities. Refinery throughput increased to 1.1 million barrels per day in the first quarter, reflecting demand recovery, particularly in the U.S. and in Europe and the restart of the distillation unit at the normal refinery. Petrochemical production volumes were stable. Petroleum product sales were 1.4 million barrels per day equivalent in the first quarter, stable compared to year ago, as the demand recovery in aviation was offset by lower sales in Asia due to pandemic lockdowns. At the company level, operating cash flow before working cap changes was $11.6 billion in the first quarter. This was a working capital build of $3.5 billion in the first quarter, mainly due to price effects on inventory, an increase in inventories level to ensure the security of supply for refineries, and the seasonality of the gas and electricity business. This was partially offset by $0.9 billion release of margin growth and $1.9 billion of receivable payable valuation, including an increase in tax payables. Net investments were $2.9 billion in the first quarter, including $900 million for renewable and equity, in line with the '22 targets of 25% of our CapEx for the full year. We are maintaining capital discipline and full year CapEx may trend toward $15 billion, still inside the previous guidance of $14 billion to $15 billion, as Patrick mentioned. Including the mobilization of additional investment to support short-term gas prices -- gas production, sorry, in the North Sea and additional opportunities that may rise in line with our strategy of transformation. We reduced net debt by $3.7 million, which lowered the gearing ratio to 12.5% at the end of the first quarter. And we bought back $1 million of our shares during the quarter. We reaffirmed the company's priority in terms of cash flow allocation in this context of higher oil and gas prices, investing in profitable projects to implement the strategy to transform TotalEnergies into a sustainable multi-energy company, linking dividend growth to structural cash flow growth, maintaining a strong balance sheet and a long-term debt rating with a minimum A level by permanently anchoring gearing below 20%, and allocating a share of the surplus cash flow from high hydrocarbon prices to share buybacks. Let me conclude my remarks, and so we are ready with Patrick to begin the Q&A.

[Operator Instructions] And the first question comes from the line of Irene Himona from Societe Generale.

Congratulations on these exceptional results. I have 2 questions, please. Firstly, on the actual results, Refining & Chemicals benefited from a rather low adjusted tax rate this quarter compared with [Norman] with last year. Was this a one-off and do you expect it to move back up again over the rest of the year? And then secondly, the balance sheet deleveraging obviously continues. And arguably at the top of the cycle, this is quite normal to enable you to then withstand the eventual price downturn. But as you stated, Patrick, prices may well remain elevated for a bit longer. Do you see this rapid deleveraging as creating options for you for large-scale M&A, particularly in new energies and low carbon?

So I will take the first question in regards to the tax rate. So globally, that's true that globally, the group, the company benefited from a lower tax rate due to the higher contribution of LNG. And I mentioned to you the overperformance of the trading and is part of the explanation. Patrick Pouyanné: Yes. The trading benefits from a lower tax rate than the traditional activity. There is no more one-off on the refining and petrochemicals part of the business. Considering your second question, I mean, priority, as we said, I think we have been very clear with the Board. I think I said it. We consider that this might be an opportunity to accelerate the transition by accessing to some countercyclical businesses. I said in my speech you have to be patient. So I think we have demonstrated in the last 6, 7 years that we were able to capture these type of opportunities. Obviously, if we move, it will be primarily in either the LNG fields and/or electricity and renewables. Will it be large scale. I'm not a big fan of very large-scale M&A. I think you can also -- the matter is more about integration is important. And I think what we have done in the last 7 years, with, I would say, $8 billion, $10 billion like we've done on Maersk Oil or on Mozambique and Anadarko assets. Well done. So we'll see. Again, there is nothing specific in our mind, let's be clear. Just the will from the Board to use part of this exceptional cash flows to accelerate our strategy in line with what we said before. But again, as you know, in that field of renewables in particular, as I said often, there is a big bubble. So patience will be of essence in order to make some -- create value, and it's not a matter of volume for us, it's a matter of value. You've seen that we have announced a first recent deal in the U.S. with Core Solar. There will be more to come in the coming months. Be patient.

Next question comes from the line of Christyan Malek from JPMorgan.

Two questions, please. First, regarding the exposure to Russia and the impact of your industrial strategy to grow LNG. Sorry, so maybe slight sensitive, in a worst case scenario where you have to allow it altogether. Could you frame the impact to sort of just think, just qualitatively, the ability to grow your energy business? And what would be the second and third order impacts in your transition in light of this being a very important cash machine as well as an enabler to deliver more renewables? And for example, would you need to raise more investments elsewhere? The second question, and I sort of realize the way you framed software energy triangle of access, climate security, Patrick. It's interesting you can frame oil and gas investment as a key enabler in order to deliver on the other 2 and in a similar conclusion we came to in our energy study. But it does seem these 3 variables have different weightings depending on the stakeholders involved. So assuming there is a super cycle that takes hold in the decade, should we expect you to raise CapEx in oil in order to take advantage and underwrite, obviously, the diversification across energy in the other parts of your business? Patrick Pouyanné: Okay. The first one, to be clear. Russia exposure today to LNG, in fact, in our portfolio, is Yamal LNG. Full point. Artic LNG 2, as we said, will be difficult to believe that it can be built with the sanctions, and we do not -- we will not provide more capital to this project. So Yamal is, in fact, we have 20% of Yamal LNG, which represents around 4 million, 5 million tons of LNG in our portfolio. Can we find other opportunities to replace these volumes? I think the answer is quite clear, yes. And we have already in our portfolio some assets to be developed. We just accelerated with our partners, Cameron LNG. We have PNG, we have Mozambique, and we'll be patient. We will have maybe in 2 weeks, some other news to explain you how we will replace and ensure the growth for LNG in our portfolio. So I don't expect a direction and disruption of growth profile in LNG, even if we will add to fully exit Russia, which is not today, but which is a possible scenario. The impact on our -- I would say on the volume part, the impact will come fundamentally more on the gas ratio as we will lose the Novatek gas production. But as you know, it's not a lot of value. And so having said that, it's not -- when I speak about our transition strategy, it's fundamentally based on LNG more than on domestic gas and that has always been very clear in our strategy. The energy triangles. I think let's be clear, it's a triangle and the -- I think, a lot of European political leaders will discover it. The climate is fundamental. We know all that. It's a question of, I would say, survival for the planet according to the scientist. So there is no way to forget this one, and we are very clear. So it will not change fundamentally. It's not because suddenly we have a surge of oil and gas prices that will change our strategy. The strategy is fundamentally linked to a long-term energy market evolution, which is that if we want to decarbonize, electricity is fundamental as well as new molecules. Having said that, it's reinforced our views as well that on the next decade, 2020, 2030, we never -- we have announced that we will continue to have a sort of stable oil production. To make it stable, as you know, with a decline of 3% to 5%, 4% per year, you need to invest. So -- and we did not -- we announced to invest in oil, look what we've done in Brazil. And by the way, we will benefit immediately from '22 from this increase of price of oil in Brazil. We are starting [M1]. We include in our portfolio, Sepia and Atapu. It will represent in the fourth quarter, 60,000 barrels per day of additional oil. And with the fiscal terms of Brazil, it will be beneficial to the company. We have also launched the Uganda project. So I mean -- and we are looking -- as you know as well, we have signed a deal in Iraq last year, which is financed with gas and renewable and oil. So we will continue to look for all opportunities in order -- because to maintain again on 10 years a decline of 3%, 4%, you need to find ideas. I'm very pleased as the CEO of the company, that our exploration teams are going back on the road map of success with Surinam and Namibia. Namibia, we need to -- it's a promising discovery. I say promising because it's only one well. I've seen incredible numbers of newspapers. We need to do the appraisal. We've decided to accelerate the appraisal well August, September and to test. And then we will be able to communicate larger. But if we are able to generate by ourselves all these oil discoveries, let's be clear, it's part of the strategy, and we will develop them and it's in line with what we have announced. So all CapEx increase, it's linked to not -- it's -- no, my answer is no, but they're again linked to opportunities that we find.

Just to be clear, Patrick, you're not going to raise all CapEx beyond what you planned. I just want to make sure I understand. It's essentially part of the budget, but there's no plan to raise it. Patrick Pouyanné: Or CapEx represent -- 50% of the CapEx, if I understand, if I remember correctly, and I think it's the right measure. Because there is 1 point in which we need to be super vigilant and I will be vigilant is a risk of inflation. And I don't want to enter into the mistakes we have done on the previous super cycles where inflation costs rise and because any barrels might be profitable, we'll begin to drill anything. So let's focus on short-cycle projects and let's continue to focus on our strategy for oil, which is accessing to low-cost barrels. And I think we have been -- there are opportunities. And if the opportunities are there, we'll seize them. At the same time, as I said in my speech, it's also an opportunity for us to clean the portfolio -- oil portfolio with the remaining high-cost barrels and I would say [higher-meeting] barrels that we have in mature fields in the portfolio. When you have counter-cycle, you have to be countercyclical in both ways, selling when the price is high and buying when the price is low.

Next question comes from the line of Oswald Clint from Bernstein.

Just 2 as well, please. Firstly, just on LNG again. As I think about Cameron LNG, obviously, we know it's one of the cheapest built plants in the last decade. So you're going into feed, you're going to engage with the EPC contractors. There's going to be a scramble for LNG. You spoke just about inflation in the last cycle. So is there a rough sort of unit CapEx number you're thinking about here for this project? But also the feedstock assumptions, clearly, Henry Hub is a lot higher than it has been over the last 5 or 6 years. So any description you could talk would actually be interesting. And then Secondly, we're waiting for a peace in Ukraine, but it feels like the ceasefire in Yemen is actually holding up here. I know you've protected the plant pretty well in the last 7 years during that particular war. But is there a probability you could place on a scenario where that plant Yamal LNG starts up in the next 12 to 24 months? Patrick Pouyanné: Thank you, Oswald, for the second question. I forget it in my speech because I know we have been long to wait for the ceasefire in Yemen, and we are not part at all of its political discussions and difficult discussions. But obviously, the plant is preserved, let's be clear. I remember -- I remind you, a 7 million-ton plant. According to our assumptions, it could take 6 months to restart the plant, to remobilize and to have a full plant for 6 months. So these 7 million tons might be available quite quickly if, again, but it's conditional to the ceasefire. But it's one of the options. By the way, when we lost it, I remind you that the cash flow per year of Yemen for TotalEnergies was around $1 billion when we lost it in year 2015. And so it was very [Yayol] and it could replace easily part of the cash flows from Russia. So that's, I think, one of the advantage, we have a very large portfolio up and down, but let's see. Cameron LNG cost advantage. Now fundamentally, yes, it's an interesting project and it's because it's a brownfield project, there is no logistics at all, no JV, no additional storage tanks. It's -- we have -- everything is there. It's a matter of building a new train. I would say yes, of course, today, there are more -- on LNG in the U.S., there are more, I would say, projects. So we might have some inflation. But fundamentally, the fundamentals are good. And we also, by the way, will debottleneck the first 3 trains, so we have an additional advantage in terms of profitability. So this is a very high -- it's a good, very good profitable project. In terms of your second question, it's quite interesting. And in fact, it's back to integration for me. And you know we have this production in the Barnett shale, and I'm happy to have this production in Barnett shale of Shell gas because it's a way to cover part of the gas that we transform in the LNG plants, even if it's not the same molecules, but economically, it work. And obviously, I think I've always been convinced that this is integration strategy. So it might be -- maybe not today because price is high. But on the medium term, I would say that the strategy where the more we develop in LNG in the U.S., the more we'll produce, we'll have to find access to asset gas in the gas shale. Gas in the U.S. will be part of the strategy in order to economically integrate this LNG chain. So it's an answer to your question. I don't give you the assumption, I just give you the way to cope with this, I would say, volatility of the gas price in the U.S.

Next question comes from the line of Michele Della Vigna from Goldman Sachs.

Patrick, Jean-Pierre, and really, congratulations. I wanted to ask 2 questions on your view on future returns in some of the renewable investments. Because we're seeing strong conflicting forces. On one side, tremendous cost inflation, in some cases, up to 30%. But on the other side, we're seeing higher power prices and also much higher volatility. And I was wondering, compared with your view 1 year ago, do you see higher or lower return investment opportunities in that space? And has this changed your view of what's the right balance between PPAs and merchant on power? And then staying on low carbon hydrogen is really at the forefront of repower EU major upgrade to 2030 target. Huge support. But I was wondering, is this really coming through a more attractive set of incentives? And do you see large-scale green hydrogen development in Europe actually showing improved profitability and support for the coming years? Patrick Pouyanné: So first question, I think we -- it's an excellent question. I think during the March 24 presentation, we told you that, yes, we have the view that the price -- power prices are going on, I would say, higher trends structurally because of intermittency, because of storage, because of all the system to ensure firm power is more costly, and it's not only a question of cost inflation of renewables. And this is why we have taken the decision that -- I don't know if it's, I would say, rough idea, but we want to keep 30% of renewable assets open to the market to ensure the risk of volatility. Our balance sheet can support it. I think it can make the difference with others. And by the way, also, it's a way to enhance potentially the profitability of these assets on the long term. So for me, it's clear and this is, I would say, compared to what we said a few years ago, where we are entering in that field with the idea we need to secure. No, we are more -- we are -- we have a better understanding. Of course, this needs some integration along the value chain. And renewable is only a production mean. Then it's a matter if you want to make value on such a commodity, you need to be able to store and you need to be able to trade, you need to be able to supply and like in all these commodities business. So today, it doesn't give more -- for me, it's not a bad news, this inflation, because it will cool down a little some of the -- some players who are really in the tenders going to very, very low price that we are not on our side participating. We have not been successful, for example, in all the tenders in the Middle East, except one in Qatar. But the rest is we have not been successful because for us, everybody was anticipating deflation, thanks to the new technology. It's a world where you input in your model, you anticipate. Today, you have inflation. So my view is that it will -- it's better. It's coming down this business. And so I'm optimistic about the policy to have good returns. And again, we continue to sanction projects, as we said to you, more than ROE of 10%, including by the fact that we might consider keeping and not only selling down some assets when they are quite good, and we have some in mind. Hydrogen in Europe, I will tell you, green hydrogen, my view is that it's -- I'm not fully convinced that it is in Europe, but you'll have to prove to produce green hydrogen. For the time being, the incentives are not so high. There are some projects, but a little bit of scale. It's -- we have 1 project that we will develop, which we have doubled the size, around 150 megawatts, but it's still small. If you really want to drive the green hydrogen price done, you need to invest at a very large scale. There again, be patient, we will announce soon a project in that field at a large scale. It will not be in Europe because fundamentally, we think that green hydrogen is a matter of cost of electricity. And so we are looking to where we could locate very large-scale. We have a very low cost of electricity on the long term in order to engage into this business.

Next question comes from the line of Lydia Rainforth from Barclays.

Two questions, if I could. The first one, Patrick, can you just talk us through the thinking of the Board in terms of the share repurchase level and how that changed versus February? And just any thoughts around sort of what happens for the second half? And then secondly, on Russia and the impairment, is that the sort of a retreat from Russia? And effectively, what would it take now in terms of Yamal to say actually this isn't working for Total anymore? And then also, one final one, if I could. Just a comment on the diesel market, just given that it's how tight those markets seem to be and we've seen tracked move up very quickly. Patrick Pouyanné: Well, first, the share buyback, I will tell you, it's -- there is no surprise to you. It does no surprise. We -- you should just believe what we said. We said that we will share the higher price -- the benefits from higher hydrocarbon prices with the shareholders through buybacks. So it's clear that when you have a cash flow from operations of $11.6 billion, it's much higher and you can compare to what we've done in the fourth quarter, which was $9 billion. So obviously, when we said the $2 billion buyback level for first half, it was not done on an assumption of 11.6. So you have $1 billion, it was not a mathematical exercise by the Board towards more the ID. And you can just remark that it's post calculation. It was nothing like that discussion. But $1 billion is 40% of additional $2.5 billion of cash flow compared to Q4 cash flow, but just to -- so I think that's logic. And we will continue to monitor that quarter after quarter at the board level. And we'll not make a big announcement. I think it's also a matter to manage all the stakeholders on that matter. And again, but at the same time, the Board is consistent and reaffirm its strategy to accelerate, if possible, the strategy of transition of the company as a priority. On the gradual suspension. I think something is wrong, it was sometimes on Russia. I never think -- we never stated we will stay in Russia. We just not stated that we will exit from Russia, which is a little different. And there are the many reasons that we explained in our principle of concepts of March 22. So we are looking step after step about what the sanction might be. We are, the sanctions are. We try to even -- and we take the conclusions on Arctic 2, but obviously and other assets. You have your suspension, by the way, you know it's that we have other activities. For example, we have in Russia a lubricant activity. It's not a big business, but we have a lack of additives. So we are suspending and not only suspending, yes, production will be stopped and our activity in lubricant, for example, will be stopped by the end of this month. That's another example in suspension. And we have other assets that we are looking around. On Novatek and Yamal, our position is clear. We have some contracts. We don't know these contracts. These contracts represent a huge amount of money. The volume of the 20 LNG contract is huge. And so we'll have to honor the contract as long as sanctions allow us to do it. And if it's not possible, we'll take the actions as well. So again, you have to -- the Board of Directors of TotalEnergies has decided to face the Russian situation in a responsible way. And in particular, to try to protect as much as we can the value of our assets for our shareholders' interest. And so we are monitoring that, but you can observe that we have no [board] as well, had no I would say hesitation to say we need to make this impairment, we make the impairment according to what is happening. This year accelerated outlook for diesel. Yes, it's clear, it's huge. I was looking this morning, I think we are about $200 per ton, I think. So I've never seen such a diesel crack. It's clear that sanctions on Russia for petroleum products will obviously impact this market, because Europe is relying on Russian diesel, we import from Russian diesel. Because the European refining system is more designed for gasoline than diesel. It's not new, it was before. So obviously, the market is anticipating such a ban. For our activity and for refining businesses, of course, it's even more important that our refineries in Europe are all running. It will be the case very soon. We had unfortunately -- those were stopped, but now it's coming back on stream after 1.5 year of voluntary stoppage. It's restart. So all our refineries will be run at full capacity for the second quarter very soon. So that's positive for the company.

Next question comes from the line of Christopher Kuplent from Bank of America.

Two quick questions for me as well, Patrick. Can you go a little bit more into detail and tell us what the missing parts are that are delaying Arctic 2 and your assessment of how long it would take to source these parts circumventing sanctions that are now imposed? And the second question is a bit of a wider question. You used $70 Brent and $20 for your gas price assumption when you gave us a 2022 cash flow outlook earlier this year. And it looks like the $20 per BTU, at least it looks like that to me, has now become more of a floor than anything else, whereas at the time you said that might be a little bullish here relative to $70 Brent. Can you give us a little summary of your assessment following your introductory remarks around the price of energy security, particularly gas security that Europe, you think, will have to pay in order to redirect volumes over the coming years as contracts with Gazprom expire? Patrick Pouyanné: On Artic LNG 2, the situation is the following one. In fact, there is a list of LNG technologies and critical elements, which have been put on the list. I think [Technip] and other contractors are looking for all this list to identify which critical elements might miss. These sanctions will be in place from May 27. So in the meantime, I think Novatek is mobilizing with its contractors in order to be able to get as much as equipment they can and transferring the teams if they can in order to achieve, I would say, the first GBS one, if possible. We'll see what it is, if they can do that. I think it's a question more for Novatek and for the contractors, which are involved in these activity, in particular, Technip Energy and [Baker Hughes]. On our side, we have decided to take, I would say, a cautious approach in our accounts and to impair the value of Arctic 2. On the economic assumptions, I think I'm not fully convinced that $20 per million BTU will remain. Because this $20 -- because at the end, it's a question of competition between Europe and other markets. And what I have noticed in particular in this first quarter is that the demand for LNG from China has diminished quite a lot, around 10%, even more than 10%. And only linked to these high prices. So there is, I think, on the LNG business, we must be careful because I see quite a big risk of demand restructuring, in particular, on the Asian side. You know where the demand is coming from, fundamentally. So there was an exceptional situation. I would not take $20 as a floor for the long term in our economic macro assumptions. We are more around $8 to $10 per million BTU, but maybe I'm too cautious. For this year, it's quite clear that, yes, there is a good chance that we might end the range of the year by around $20 if we -- and in particular, if Russia begins to stop themselves on their side to provide gas through pipeline, that means that in order to refill the gas storage for next winter, LNG will continue to have to flow through Europe. So LNG prices will probably -- is competing against with other parts of the world. And we'll see, and it's a good test for me what will happen this summer because remember, last year, it was during summertime, but the Asian gas went to the roof, because of the strong demand for climatization and also linked to the economic recovery. So I don't know what is exactly the situation today in China. There are a lot of uncertainties around these lockdowns linked to COVID. We are a little surprised. I think today in western side. But we'll see if China is coming back into the market because they need years like last year. Of course, the price will not go down, it will remain quite high. On the longer term, you have to be careful, because high gas of LNG is not only destroying demand in Asia, but might be really, I would say, might slow down, will slow down, in my view, the use of gas in Europe. And because it could accelerate the manufacturing industry in Europe, which was benefiting somewhere from the Russian gas, which was a lot of gas, will not be able to resist if we provide that gas $20 per million BTU. It's not possible. So that means that I think that some industries will begin to accelerate to electrify the supply in order to try to get a cheaper energy with long-term contracts. So I think I don't see how we could keep such $20 for the long term because the demand will -- the customers will not take this type of prices. So it's why outlook for projects, we use more -- we have given internal instruction to use $8. But again, by the way, it's enough to relaunch to, I would say, to some North Sea gas projects, which at $5 where stock was trended at $8, $10 profitability. We have a good example in our portfolio about the 0.9 blowdown gas cap, which is a 1 TCF gas, which was branded and which today is coming -- is revived. So I have asked the teams to look to these projects, so we could make it pretty onstream. So -- but we don't need $20 for this type of opportunity. So -- that's my answer to your nice question, please.

Very clear, Patrick. I think 8% to 10% is already, as you say, enough and would simply be a very important message to recap all gas prices to Brent equivalent levels. Patrick Pouyanné: I fully agree. And by the way, in our commercial part of LNG sales, we have given instruction to our LNG people not to try to go back to the famous 16%, but to be reasonable because for me, today, the priority is to maintain a demand, and it's an opportunity for us to sign long-term contracts. But of course, offering long-term acceptable prices, affordable prices. It could help, by the way, to launch additional LNG projects with these type of contracts.

Next question comes from Bertrand Hodee from Kepler Cheuvreux.

Yes, congratulations again for this very strong set of results as well as your transparencies on the Russia contribution this quarter. Two questions, if I may. So the first one is related to Namibia. There are external industry reports that suggests that your Venus discovery could potentially exceed 10 billion of recoverable oil reserves, making it the largest ever deep offshore discovery. I know it is early stage and you referred to it in your earlier remarks, but can you elaborate a bit more on this potential massive find and share with us your initial thoughts on this discovery and any color on a potential fast track development? That was the first question. And second question on Russia, do you expect any dividend from Novatek in 2022? Patrick Pouyanné: The first question I already answered. And do you believe in -- stop reading newspapers. Just listen to me, it's better. I think you see in your long history in the oil and gas industry, 1 world discovering 10 billion. I don't think it exists. But no, let's be serious about all that. It's -- all that are fantasy. I say it's a promising discovery. Let's drill the appraisal well, let's test the 2 wells and then we will come. And when will -- if really we had such levels, which I don't think, we'll be happy, and you will be happy shareholders. So -- but again, I think, by the way, this figure is more referring to the Namibia province rather than just our license. But again, I don't want -- don't entrain me. Let's wait. It's a promising discovery. It's enough. Russia dividend, Novatek has improved. I think general assembly shareholders has approved dividend last week. We are shareholders. So these dividends are -- will be available. I don't know when in ruble somewhere. Could we, yes or not, transfer them to TotalEnergies? That's another question, which depends not only on us, but on all the counter sanctions from Russia. And so like the European sanctions, which are moving targets, the counter sanctions are also moving ones. So we will, by the way, honestly, it's not so big. It represents, I think, $250 million for TotalEnergies. So again, this is not what will change. Look the picture of TotalEnergies. It's why we are very transparent. But I don't know if we'll have access or we'll keep the ruble somewhere in an account in Russia.

Maybe I can -- if I can squeeze one more on your impairment in Russia. You disclosed the book value of Arctic 2 was $2.5 billion. Can you help me reconcile this figure with the $4.1 billion impairment you took in Q1? Patrick Pouyanné: No. You have the information, which was transferred to you. We said notably. And I think if you look to the slide, which was distributed in March 24, you could find along the answer.

Next question comes from the line of Alastair Syme from Citi.

Patrick, Jean-Pierre, a couple of questions just on sort of state of markets and negotiations. So you've already touched on U.S. LNG. I'm just intrigued to know whether economics are changing. It used to be sort of Henry Hub processes. Clearly, LNG developers see the same opportunity as you do out here. So just wondering if those negotiations are getting tougher? And then secondly, could you just sort of explain how the market for acquisitions in renewables works? I mean, you touched on the core solar deal. I'm just trying to understand if that's a competitive option and sort of how competitive these options are? Patrick Pouyanné: As you know, for the second question, I'd be clear, Core Solar was a deal which was a direct negotiation. And I have a very strong view on this market, and I say to our team, stop looking and stop spending your time or losing your time on competitive opportunities because you are always in front of you, I would say, financial investors, which is obviously do not have all the same views on these type of assets. So they have money with negative return. So they are accepting retail which are too low. We are not in that field. So the only way for us to continue to build the portfolio, but the Core Solar is an excellent example is to have a direct negotiation and to be able to convince, I would say, the promoter that partnering with TotalEnergies will give you more added value. And so that's why we compete. We have over I would say, opportunities in our portfolio in which we work. And there again, be patient, will really understand what I just said in the coming weeks on which we work in different countries. On the first one, I don't know which opportunities you are thinking to. If it is a matter of taking, no. So your question is a little mysterious for me because -- so if you have maybe topping in mind. But on the contrary, I would say, on the Cameron Energy, it helped to accelerate, I would say, the decisions process with all Chinese -- Japanese partners. On this step as difficult, it's more of a [indiscernible]. I don't know to which opportunity you refer, which might be impacted by the energy economy is changing.

Well, I mean sort of deals on the U.S. Gulf Coast or Mexico, indeed, is it still sort of basically Henry Hub processes? Are you still inherently taking Henry Hub price risk? Patrick Pouyanné: Yes, yes, it's linked to Henry Hub. Yes. If it is your question, the answer is yes.

Next question comes from the lien of Peter Low from Redburn.

The first question was just a clarification on the cash flow from Russia in 1Q that, I guess, relates to Yamal. Can you confirm that, that has been repatriated from Russia? I appreciate it can change, just to understand the current situation. And then secondly, you talked about your willingness to explore countercyclical opportunities to accelerate the transformation. Can you clarify, would that be aside the $13 billion to $15 billion net investment range you have previously given to 2025 or would you stick with that range and try to make disposals alongside any larger acquisitions you are to make? Patrick Pouyanné: On the first one, it's clear, in fact, you have the figure. Most of the cash we received this year is linked to the Yamal. So it's the access in Yamal.

Yes. Yes, it's is getting back to TotalEnergies. So the figures we get, we have -- I have the that in my desk. Patrick Pouyanné: So it's yes. If we get the cash -- yes. By the way, the war only was declared in the second part of the quarter. But the Yamal cash system works until now. The second question, the range is valid for '22 $14 billion, $15 billion -- we said $14 billion, $15 billion. So the answer to your question is yes, in fact. If we accelerate on one site, we might divest on the other side, because, again, we have -- yes, the answer is yes.

Next question comes from the line of Biraj Borkhataria from RBC.

I have two questions, please. The first one is on the Cameron LNG and the debottlenecking there for the existing trains. Do you have an idea of what time line that debottlenecking is supposed to be delivered on? And then the second question is just on Mozambique LNG. Do you have an update on activities there when you expect to restart and a view on start-up and construction there? Patrick Pouyanné: Thank you, Biraj. The plan is to make you feel busy, to sanction next year in '23. So it takes 3 years to build the train, so '26 from Cameron LNG the new train. Mozambique LNG, maybe not you, but some others of your colleagues asked me the question on March 24. There are not a lot of news in March 24 and today. So as I said, there is an activity on the ground, not from us, but from the government of Mozambique initialized to recover the security. And then to bring back the population in peace to have a normal life. These are the 2 conditions we agreed with the Mozambique government. My view is that all that will take at least 2022 and then what we plan on our side is to go back there. And as I said last time, we will restart all the activity the day that I will myself be able to visit Afungi, Palma and Mocimboa da Praia because if my security people told me not to go, I will not send any of my people or contractors to face a difficult situation. So I think it's a matter of, as I said before, there is good revenues on the ground and the security has much improved, and there are less -- much less, I would say, attack. It's not yet fully recovered. I think the government of Mozambique communicated that they -- their objective is to recover the security by June of the year. But then we want -- we don't want to restart our activity surrounded by refugee camps. We want the situation to be stabilized, because peace is going as well with, I would say, the stabilization of the local population and economic activities, on which we contribute, by the way, with others to -- but there are a number of positive signs for the people who are going. Some of my senior officers went there and so I've got some reports. But it's a question of patience. And then once we will consider that the situation is really under control, that this is back, we'll be able to remobilize and we know that it will take us more or less 6 months to come back to, I would say, a stabilized construction level. So the opportunity there, the progress are well, but it's not in our hand. It depends again on the actions of the Mozambique government and its line.

On the first question, the question I was asking was for the 5% increase in the debottlenecking for the first 3 trains at Cameron LNG. What time line do you expect to deliver that one? Patrick Pouyanné: I think it's -- technically, it's linked to the building of the trains. I mean we will -- it's 25. I think 25 is the third debottlenecking. 25 for the first one. Sorry, I didn't catch it. But it was the first debottlenecking for the first, 2025 and each train will come.

Next question comes from the line of Henri Patricot from UBS.

Question on trading and a couple on downstream. The first one on trading, so very strong performance in the first quarter. We continue to see significant volatility in the second quarter. So I was wondering to what extent you think you can replicate the very strong performance in the first quarter -- of the first quarter and the second quarter in both gas LNG trading and the RC trading? And then secondly, you talked earlier about the risk of demand destruction for gas. And it was interesting to draw your views on the risk for oil demand at the current level of prices that we're seeing and whether you're starting to see some weaker demand in your own network? And then finally, can you give us an update on the impact of the discounts of the pump and whether you would expect these to be extended? Patrick Pouyanné: Yes. When we say it's exceptional, it's exceptional. That means that, of course, our traders are willing to do it regularly, that they are motivated directly and personally for that. But I would say, on the oil trading, it was this quarter was as exceptional more or less in the second quarter 2020 volatility. And so again, this type of additional, what we mentioned, let's say, $500 million extra cash is linked fundamentally to a specific situation of volatility of the market when they are in the right sense. So it's okay. For the gas, what I observe is that obviously, it's the second quarter in a row. But we have a strong results. This volatility is there. And I think it's a matter also for our teams to -- we see better position, in particular on the LNG and that gave us an advantage to be able to, I would say, get some good strong results. So let's see if they can replicate it. I just want also to mention that we are also benefiting from good and strong electricity trading. And it's also the second quarter in the road. So I think the reality is that, I would say, performance of trading is generally linked to volatility of the market. They like volatility. Of course, it's a matter to have a good analysis of what is the market trends because it could reverse. So I will touch wood, but that's what we observed. On the demand disruption for -- no, I think all is a little different, by the way. Honestly, in our network today, no, we have seen an impact because the COVID. Still, in the first quarter, I remind you that even in Europe, there was some COVID measures and like in Asia today in China. So we don't -- I cannot link oil demand to oil price today. I cannot -- we do not see that -- and I've seen -- I read some statistics on the month of April, where there is no real recovery impact. I cannot tell you that. So it seems that we come back to the levels of 2019 with a small plus. But so we don't observe it even if it's not really in Europe, but the impact might be strong when we remember the super cycle, it was more in emerging countries where the government has to subsidize. And of course, everything is expensive, and so we begin to take actions in order to be more efficient into my efficiency. So it's not exactly like gas. I was my remark was more on LNG because LNG is competing with coal. So now it's a relative price of energy to call when LNG is very expensive. I'm afraid that some Asian countries will come back to coal quite easily, and which is not good for climate, but that's what will happen. On all the alternative is not so obvious. It's liquid. And so you don't know because oil is not for electricity, oil is for transportation. So we don't that much -- the impact on oil demand might come from the economic growth. That means this war, unfortunately, begins to really have some impact on some supply chains. And then we begin -- and I'm not an expert, whether I'm reading the papers from AMF and some central banks, they begin to speak about even a growth which might be either low or negative. So you have a direct link between, I would say, oil demand and macroeconomic environment. The discount on pump. I think it's -- for me, we have taken some decisions on this one to be voluntary to make the voluntary discount, because we think it's important, and I think it's normal that we take care of our customers, and it's a period where it's a matter of solidarity. We have, as you've seen, a very exceptional results. And frankly, I prefer and it's a discussion with good intelligence with the German French government, which prefers us to act by taking actions directly with our customers. We've done it for gas. We'll do it for gasoline or other full taxes, and I perfectly agree with this philosophy. So probably, yes, we will take some initiatives for the summer where people are driving a lot. There is an idea around discount on motorways, but we need to elaborate on this one before we announce it. So I think it's part of, I would say, again, it's a good way to share part of our profits directly to our customers.

Next question comes from the line of Martin Rats from Morgan Stanley.

All my questions have been answered. It's been very comprehensive.

Next question comes from the line of Jason Gabelman from Cowen.

Two quick ones, because I agree, the call has been quite comprehensive. The first on the Brazil payments for Sepia and Atapu. Are there any payments left after whatever you disclosed for 1Q? Because it looks, at least on our numbers a bit light, and I'm not sure if there's any additional payments coming for those PSCs for the rest of the year beyond what was booked for 1Q. And then secondly, I was wondering if you have any update on your views on when the Qatar LNG project when they can award those contracts. It seems like this is about as good as an environment as we'll get to fully sanction the project. So any update there would be helpful. Patrick Pouyanné: Yes, it will be helpful for me as well. But I will let the authorities communicating on that. It's a competitive process. We are part, of course, of the parties. I led the Qatar authorities communicating base leading the process, and we are a long partner with them. So of course, we are a dominant to be able to contribute to these projects. On the first one, your question is the right question, because we are -- it's true that the bonus there is a earn-out I think, linked to the oil price, but it's not, I would say, I don't think it will be paid very immediately. It's on a yearly basis and some years, the mechanism can be described to you by our teams, if you want the details. But -- so today, yes, we have paid, in fact, yesterday. In fact, all the initial bonuses, which were representing something like $2.5 billion, I think, has been paid. So the treasury of Jean-Pierre has been lower yesterday, but it was worried to have too much money and so all that has been done because there was, on the 1 side, the bonus to the state, and I would say the compensation to Petrobras, which was paid yesterday. So in our cash flows, I think you had in the first quarter the bonus to the state and the compensation has been -- yet first, the main part of the compensation to Petrobras was paid yesterday. And then on this part, there are some earn-outs linked to the oil price, but which are coming, I think, by not before beginning of next year because it's a yearly mechanism, if I remember well, which is triggering at $70 per barrel, if I remember the contract. So for this year, I think everything has been paid and then we'll enjoy to get some production flowing 30,000 barrel per day, more or less at an average in second quarter, growing to 60,000 by the end of the year additional production. If it remains at $100 per barrel, it's positive for investments in terms of profitability. Patrick Pouyanné: So I understand there are no more questions. And so I would like to thank you all of you for attending this meeting, and we'll be happy to have been happy to answer to your questions. Obviously, we benefit from very strong environment, but I'm really, as Chairman and CEO, I'm very pleased that all the teams of TotalEnergies have been able in all the segments to capture this upside. Production was good, 2.85, higher than your consensus, so congratulations to NP teams. iGRP, I think iGRP trading arms have performed again very well, and the result is even beating record compared to the fourth quarter. On Refining & Chemicals, they come back from red to green in Europe. And I think there is more to come with the diesel crack and all refinery running the second quarter will be probably better than the first one. And marketing and services is stable. But business is suffering a little, of course, from all the upstream chain because when margins are strong and refining and prices are high, the margins become to be squeezed on the marketing and services, but we have high-quality assets. And so I think that our second quarter should be more or less in the same view in the same or even a little better that what we just down. And as you have noticed, the Board of TotalEnergies is fully committed to continue to enhance the returns to shareholders as well as to implement our growth strategy in our transformation of the company. Thank you.

Thank you.