TotalEnergies SE (TTE) Q4 2023 Earnings Report, Transcript and Summary

Good morning. Welcome to TotalEnergies 2023 Results and 2024 Objectives Presentation. We are today in London from the Tate Modern Art Museum. Thanks for coming today and I hope that you will enjoy the view on the city and sample. You can also follow us live on our website, totalenergies.com. We will start today with a safety sequence with Bernard Pinatel, who is our President Refining & Chemicals and then we will have the presentation from Jean-Pierre and Patrick for around 1 hour. And then we’ll move to the Q&A session, we should be finished around 11:30, 11:45. [Operator Instructions] But without further delay, I invite Bernard to come on stage to launch the meeting with the safety sequence. Bernard?

Thank you, Renaud. Good morning. Last year, I had to deploy two fatalities. As you know, in these two tragic events remind us that our first duty, of course, is to make sure that everyone returns home safe everyday. One fatality occurred in France in a retail station, where a contractor is either passed away when performing some acceleration work. The safety moment I’ve chosen this morning is about the second fatality, the one which occurred in the Silane refinery in the Netherlands, of course, not to describe – just to describe what happened, but most importantly, to share with you what we learned from this tragic event to improve our operations. On February 3, a contractor passed away while he was performing a catalyst and loading operation inside the reactor. His name was Torsten. He was 50 years old. Changing a catalyst is a very sensitive operation as the catalyst is flammable in the presence of oxygen of air. So you must first inert the reactor with nitrogen before the intervention. The catalyst and loading operation is performed, as you see on the slide, by a team of 3 people led by a supervisor. First, there is a diver who is the one entering into the reactor, fully equipped, of course, including with a lifeline to be pulled out in case of emergency. The second one is the second diver who is ready to dive in case of emergency and there is also a controller who monitors the level of nitrogen of air and keeps constant contact by radio and by video. And before entering into the reactor, of course, there is a video inspection to make sure that the situation is safe. At 11:15 on that day, the alarm was given by the personnel and we learned that the diver was trapped by the collapse of some catalysts. Of course, the risk team reinforced by additional members fully equipped tried in turn to pull him out of the reactor, which you may guess from the slide is 30-meter high. When the body went out, the team found that the diver passed away. One thing is clear. We couldn’t keep operating this way with a human entry into an inert atmosphere, even if it is the industry standard practice. So, immediately to free actions, of course, we immediately stopped worldwide, all similar operations in the company. Secondly, with our contractors, HSE specialists, technical experts, we reviewed alternative operating modes to avoid any entry, human entry inside reactors for that kind of operation. And eventually, we identified and selected an alternative operating mode where you change the catalyst by water flooding. What does that mean? It means that you fill the reactor with water and then you emptied together with a catalyst. Of course, this is more costly, because you cannot recover the catalyst to recycle it. And you have to dispose of the waste water, but you will understand this is not really what is at stake. From February 2023, all replacements were performed without any injury. We carried out 21 replacement using water in 2023 and we will have another 14 on the first year of 2024. We also keep working on further improvements in terms of vessel modification, because you will understand that this vessel has now to support the additional weight of water. And of course, we are looking at the utilization of robots. And naturally, we have shared these new operating modes with our peers. So, let me now switch to – after the safety moment to the overall company safety performance. At TotalEnergy, we keep repeating this message. Safety is more than a priority. It’s a value. It’s a core value. Of course, safety is a matter of culture. It’s a matter of leadership. It’s also a matter of permanent improvement. And to track it, we measure several leading indicators that you see on the slide in terms of occupational safety and in terms of prevention of technological risks. So on the left hand side, in terms of occupational safety, you see that we track the total recordable injury rate and that this rate at 0.63 has been reduced over the last 5 years consistently and that represents a reduction of close to 30%. Having an injury rate well below 1 is not a given, believe me, notably, when you see the industry trend since 2020. So we have been able to consolidate our position as a frontrunner on this indicator in our industry. How did we do it? Some key initiatives, I would like to highlight one which is our ability to engage our contractors with our teams to promote shared safety values. We have done it notably through what we call a program of joint safety tools between TotalEnergies management and contractor partners. These two are coming of course in addition to the daily visits we do with our local team on the field. In 2023, we recorded 10,000 of such joint safety tools across the company. Regarding the prevention of major accident and accident pollution on the right hand side, we are also progressing. Over the last 5 years, we have reduced the number of primary losses of contentment you see on the side by 50%. And here again, we have been focusing on two main areas. Of course, first, this is the management of the technical integrity through our maintenance inspection program but also through the implementation of digital tools to anticipate and prevent potential equipment failures. The second area of focus has been the implementation of what we call the safe operating principle, the SOPs where we constantly train our operators on the basic rules to comply with when they perform very standard operations. So of course, to conclude, I just would like to say that we all know that safety is a daily button, but that we are all committed to do our best to protect our people, the environment and our assets. And now, I hand over to Jean-Pierre.

Thank you, Bernard. So good morning, everyone. This year is a special year for TotalEnergies because TotalEnergies is celebrating in 2024 its 100 years birthday. So the company was founded so 100 years ago in Iraq at that time, the name was [indiscernible]. And since that time, over time, the company has diversified, has adapted itself to deal with the environment, to deal with the society, to deal with the market. And it’s, I think, with the same pioneer spirit that we use at the time in Iraq in oil exploration that we will build the energy system of the future. Indeed, over the last couple of years, we have engaged in balanced energy transition strategy, as you know, incurred on two pillars. So oil and gas on one side and mainly LNG, as you know and on the other side, integrated power. On the oil and side business, TotalEnergies plans to responsibly grow its oil and gas production by 2% to 3% per year, predominantly from LNG, thanks to its rich low-cost, low-emission portfolio. In the LNG business, we will leverage our top three global LNG integrated portfolio with leading position in Regas in Europe, in U.S. exports to develop a top-tier LNG pipeline. And Patrick will come back on that later. In Integrated Power business, the company is building a world class cost competitive portfolio, combining renewable, so solar, offshore winds with flexible assets, CCGT and storage to deliver clean firm power to our customers and as you know, with the objective to be positive net cash flow by 2028 with ROCE at 12%. So let’s move now to the figures. So this consistent two-pillar strategy has delivered, I think, strong results in 2023. In a robust environment, but softer price environment compared to the environment we benefited in 2022. We deliver, as you see here, a net – adjusted net income TotalEnergies share above $23 billion and an IFRS net income above $21 billion. In terms of profitability, we had ROCE, return on capital employed at 19% in 2023 and a return on equity, 20%. So that means that once again, TotalEnergies in 2023 was the most profitable major. In terms of cash flow in 2023, we managed to deliver cash flow at $36 million with a strong contribution of all the different business segments. So E&P contributed to more than $18 million, $18.5 billion, integrated Power, 7.3 – integrated energy, sorry, 7.3, integrated power, above $2 billion, $2.2 billion, I will come back on that later, and downstream at $8.2 billion. On top of that, we benefited last year from a strong working cap release, so cash in coming from our working cap around $5 billion, but to be very transparent with you, some of this capital – working cap variation came includes $2 billion of exceptional fiscal debt variation that will disappear in 2024. So, how this cash has been used? So, this $36 billion plus this $5 billion of working cap has been used. So, $16.8 billion has been devoted to capital investment. I will comment later on this figure. $16.5 billion has been contributed to our shareholder return with cash flow distribution, so payouts above 40%. Indeed, payouts increased from 37% in 2022 to 46% in 2023 and it consisted in 7.1% increase in the ordinary dividend that we paid in 2023 plus $9 billion of buyback. Out of this $9 billion, I remind you that $1.5 billion are directly linked to the Canadian disposal assets. And the remaining parts of the cash flow we generated last year contributed continue to deleverage the company. We now net debt at $6 billion and leading to gearing end of last year at 5%. So now, the scorecard for 2023, I think it’s clear that we deliver on our objectives. So for upstream production, the production increased, excluding Novatek by 2%, to 2.48 million barrels per oil equivalent, with a strong contribution in terms of LNG production that grew by 9%, in line with the objective we had on that topic. Refining has a slightly better than expected utilization rates at more than 80%. So we guide at 80%. And so the final figure was 81%. In terms of renewable growth installed capacity, so this capacity grew by almost 6 gigawatts between 22 and 23 at more than 22 gigawatts at the end of the year, leading and contributing to produce more electricity. So, it’s an increase compared to last year by more than 80% at 19 terawatt hour broadly in line with the objective we had. So now on the emission side front, we reduced scope 1 and 2 from operated facilities to 34.6 million ton last year with two main drivers. So first, we continue to be successful in our efforts in oil and gas businesses to reduce gas flaring. I’ll give you the example, that in Nigeria, for example, we completely stop gas flaring at the end of 2023 and we are successful in developing energy efficiency projects. On top of that, in 2023, 2023 was a more normal year in terms of CCGT utilization rates in 2022 for obvious reasons. We had a very strong decision rate for CCGT until 2023. It’s back to normal. And this contributes, of course, to lower the Scope 1 and 2 ‘22 versus ‘23. Methane from operated facilities were reduced by 47% compared to 2022, surpassing our reduction targets. And another very important key factor, which translates into figure our transition strategy is the lifecycle carbon intensity with a reduction compared to 2015 by 13%, with a target we posted at 12%, so more energy, less emission, but also growing cash flow. We exceeded our CFFO guidance by more than – by about $1 billion. The guidance restated using the same price deck as for 2023 was at $35 billion and so the final figure, as I already mentioned, is at $36 billion. In terms of investments, we invested $16.8 billion last year within the guidance and I will come back on that later. And CFFO payouts already commented, above 40% at 46%. CapEx. So we remain disciplined in our CapEx, in our investments with a total of $16.8 billion in ‘23. We were very active in ‘23 on the M&A side. We have a very active portfolio management allowing to continue to enhance -- to upgrade our portfolio. Because in this figure, $16.8 billion, of course, you had – it’s a net between organic CapEx, around $18 billion plus acquisition, so $6.4 billion of acquisition and $7.7 billion of divestments. So this figure, this $6.4 billion acquisition. So on the oil and gas side we have our entry for a 20% interest in SARB and Umm Lulu fields in Abu Dhabi. We have, on the LNG side, our effective entry in a furnace in Qatar and Rio Grande Project in Texas [indiscernible] for LNG. On the integrated power side, the acquisition of the remaining 70% stake in Total Eren as well a 34% stake in a joint venture with Casa dos Ventos renewable developer in Brazil. And as you know, the main divestments are our exit or disposal of our Canadian assets with sales to Suncor and the sales to Conoco and the sale of our retail network in Germany to Alimentation Couche-Tard. So very strong portfolio management last year with strong figures. In 2023, in line with our balanced energy transition strategy, I remind you previously, we invested more or less the same amount of money in low carbon molecules, so mainly integrated power compared to what we did in oil. So, it’s the red part of the pie compared to the green part of the pie. Another way we can look at it is that we invested as much in integrated and low carbon molecules as we did in new projects in oil or in gas new projects. For integrated power, the figure was $5 billion in ‘23. Progressing, in particular, in implementing our strategy in the regulated markets, particularly in the U.S. and in Europe. So, now moving to the highlights of ‘23. On our two pillars, all segments has big achievements and a strong performance last year, in line with our strategy and objectives. In upstream and gas, our production reached 2.48 million barrels of oil equivalents per day, benefiting from a startup in January of the Block 10 in Oman, Absheron in Azerbaijan in July as well as already mentioned, our entry in SARB and Umm Lulu in Abu Dhabi and our effective entry in the GGIP project in Iraq. The company completed the divestment of its Canadian oil assets in line with the strategy to focus on low breakeven assets. For downstream, we generated $8 billion of cash flow last year. And so we kept – we were able this result is – or this figure is a result of the fact that we were able to capture high refining margins that averaged $69 per ton last year. In 2023, we awarded EPC contracts for the Amiral project, $11 billion contract. So it’s our petrochemical integrated complex in Saudi Arabia with Saudi Aramco that will come on stream in 2027. The company also announced the sale of some European retail network to Alimentation Couche-Tard. And so we completed the German portion before the closure and the remaining parts. So in Netherlands, in Belgium and in Luxembourg, it was completed early January 2024. So we pursued our growing strategy in LNG, especially in the U.S., where we, once again, were the largest LNG exporter last year with more than 10 million tons of capacity and increased our future position to more than 15 million tons per year through our entry into the Rio Grande LNG project and its FID in July. We also reinforced our leading position in Europe ReGas with the startup of two additional FSRUs, so one in Germany, one in France. In Integrated Power business segments, we pursue our profitable growth strategy with an additional 6 gigawatts of renewable capacity. And we are able to generate more than $2 billion of CFFO, $2.2 billion compared to one – something like one last year. That means that we are able to more than double the CFFO generated by this activity over 2023. In 2023 as well, we accelerated the development of our integrated business model in 2 key deregulated markets. the U.S. on one side, with the announcement of an acquisition of 3 CCGTs for 1.5 gigawatt capacity in Texas and in Germany on the other side, announcing the acquisition of 2 German companies, one the top-tier renewable energy aggregator and a leading battery storage developer. So we have built our upstream portfolio through the years with low-cost and sustainable way as illustrated, I think, by these 2 charts. So starting from the left, we’ll go back to 2018. We are consistently reporting the lowest upstream production costs among all the majors, which is, I think, a structural advantage and call us to be resilient even in a low price environment. Our upstream production cost averaged $5.5 per barrel in 2023. It was $5.1 per barrel during – in the fourth quarter, benefiting from the divestments of the high-cost Canadian assets. And that’s why we targeted for this year, production cost at $5 up above. So our portfolio is a low-cost portfolio, but it’s also built to last and so in this illustration of the second graph on the slide. We have, I think, demonstrated the same consistency with our reserve that we had with production costs as shown in that chart. We continue to replace our reserves, maintaining a strong and steady proved reserve life index of around €12 over the last 5 years. And this positions us as the second among the majors. And in 2023, we achieved a strong reserve replacement ratio, well in excess of our production, so 141% and to be approved probable reserve life index at €18. So now moving to the integrated LNG and integrated power segment. That’s the 2 growth segments in our portfolio. That together contributed to almost $10 billion of cash flow in 2023. So we provide you some metrics comparing 2023 figures with 2021. For obvious reason, 2022 was an exceptional year in relation with the crisis between Ukraine and Russia, the war between Ukraine and Russia. And so that’s main rationale behind the fact that we made this comparison ‘21 and ‘23. So in ‘23, integrated LNG generated $6.2 million of net operating income, $7.3 million of CFFO. With all the metrics, in fact, is growing compared to 2021, thanks to the growth to our portfolio, so 44 million ton sales in 2023 and benefiting for higher LNG price environment. All in all, the integration – the integrated LNG profitability improved at 18% in 2023. So for integrated power, adjusted net operating income was $1.9 billion last year and CFFO, slightly above $2.2 billion. So that means that the gap between the NOE and CFFO is directly linked to the fact that during the fourth quarter, benefited from some dividends paid by some of our equity affiliates and mainly a fair way. So that means that the cash flow almost tripled between 2021 and 2023. And you see the production it was 21 terawatt in 2021, 33 in 2023 with power generation from renewable nearly tripling at 7 in 2023, 19 in 2023. OHA was at 10% in 2023, in line with our objectives that was set last year. So the last slide is a benchmark of the TotalEnergies performance compared to our peers using three main metrics which are proved reserves life index, TSA and sustainability rating. So thanks, I think, to the consistency of our strategy, the strength of our delivery, we are competitively positioned versus our peers. So once again, TotalEnergies, you see here on the slide, was the most profitable super major with OHA at 19% in 2023. On the reserve side, our proved reserves life index was 12 years, as I already mentioned, in 2023, which puts us #2 among the majors. This is, I think, really a testimony to our continued success in exploration, result development and active M&A and selective M&A. On the different note, TotalEnergies at once again the best-in-class static rating among the major demonstration that it’s possible to be the most profitable major on one side and to be a leader in the energy transition on the other side. And lastly, our 5-year total shareholder return has averaged about 13% per year, ranking on par with our U.S. peers and outperforming clearly our U.K. peers by a wide margin. Our ability to set and execute a consistent strategy, sustain a rich portfolio of opportunities, maintain the dividend through the cycle like during the COVID crisis in 2020 when other cut it. And more recently, significantly increasing shareholder distribution have all contributed to our strong TSA. So in summary, to terminate on this section, 2023 was a strong year for TotalEnergies. Another big step in terms of shareholder distribution and balanced strategy. And on this positive note, I think I will leave the floor to Patrick. Patrick Pouyanné: Good morning, everybody, for this event. I just – as always, I’d like to see that slide because I think I should insist on the fact that we demonstrate. And I think it’s because we are the most profitable, but we have the right to implement the energy transition strategy that we have decided. But it’s visible to remain at the top of profitability and to transition as well and including to invest of further our investments in electricity. And also, by the way, and I think it’s important to keep a sustainable portfolio of oil and gas projects like we want to do. So it’s an end strategy. It’s oil and gas and low carbon energy, in particular, electricity. So just this time, I will not repeat the strategy, but in fact, it’s true that the best way to execute, to speak about stage to execute it. So ’23 I think Jean-Pierre show you how we have executed it and positively and ‘24 will maintain that strategy, and we’ll have no big news. Sometimes, I think TotalEnergies is a little bothering you, but it’s better to be consistent and to – for continued success. So – and it’s true that we have another way to demonstrate that – and I mentioned that 1.5 years ago, [indiscernible] and we have reinforced the message. In fact, we have a company which delivering much higher cash flows with the same brand than in the previous decade. You can see on this chart that the dot points of the last 5 years are quite well aligned by the way, but the $1 billion per barrel is much higher in terms of acuity. It’s more accretive than it was in the past. And I think that’s – the result of all the repositioning of the portfolio, the oil and gas portfolio, what we call high-grading the portfolio, that’s a reality. And we can see that, in fact, in the results as – and I think it’s one of the new TotalEnergies. TotalEnergies was perceived as a defensive shares, I would say, which was, in fact, amortizing the low price of hydrocarbons, but now it’s TotalEnergies is also benefiting from high oil prices. And that’s why we can have a more aggressive distribution policy to our shareholders. At the same time, the result is, of course, because we have – this high grading of the portfolio. It’s a breakeven of the portfolio. It’s – there, again, it’s under ‘25. It was ‘22 and ‘23, but it’s one of the clear strong characteristics of our portfolio and the strategy. And all that has translated in something which is very new for us. It’s a very low gearing, 5% gearing, so net debt of only $6 billion. And that offer, of course, a lot of capacity to engage in our growth strategy, 5 – more 5 – we want to grow our energy production by more than 5%, 2 to 3 metro carbons and more on the electric side. It’s also offer us a capacity that’s the next cycle to be able to maintain the strategy for cycles and this is what I think shareholders should expect from a company like TotalEnergies. Just a few words about the market we’ll face in ‘24. ‘23 was strong in terms of oil market plus to an increase of more than 2 million barrels of oil per day. Part of it was a recovery of the previously, the COVID recovery, in particular, in jet fuel and aviation and also in China because in ‘22, in fact, China was still under the impact of the COVID, they exited from COVID policies long later than other countries. And in fact, so 2 million was quite high. The IA is announcing plus 1.2% for ‘24. We share that view, which is people will comment is lower, but in fact, it’s normal. I would say it’s back to normal. When you look to the increase of the oil demand from 2000 to 2023, the average is 1.2% per year. 1.2% per year, by the way, it is the average growth of the population of the planet. So there is direct link because population and oil demand. So it’s back to normality. So some people will comment because China is lower [indiscernible]. In fact, it’s back to normality. There is nothing surprising. And in fact – and so we don’t see still, even if some people want to – want to see a deterioration of your old growth. No, in fact, the reality is that we are back to directing the population growth. And that’s one of the key challenge for the energy transition. On the supply side, that’s true that we have some non-OPEC countries, particularly in the Americas, it’s the U.S., it’s Brazil. Guyana, which are bringing some new oil. The OPEC is managing that new supply and demand. I would say we have done very well in ‘23, in fact, more or less stabilizing the price around $80 per barrel. Today, probably the market is supported by the geopolitical tensions in the Middle East. That’s true. There is a more bearish thinking. But OPEC is still there, and I think the move of Saudi Arabia, but they are sealing there. Sealing a 12 million barrels per day is contributing to stabilizing this market as well. On the LNG side, I would say, of course, we’ve seen with high prices, a lower growth, but still 6% per year as an average from 15% to 23%. I’m convinced we will see a good year in ‘24, again, coming back, in particular, we see China. China grew has grown is imposed by 11% in ‘23 compared to ‘22. Not yet at 71 million tons. They are not yet at the level where we are there in ‘21. We are at 81. So there is still room to grow. We see today the Chinese buyer is quite aggressive. You’ve seen them signing a number of long-term contracts. They still have to have a mandate to continue to sign. Some of them, we have ourselves some discussion with some of these players to engage. So they are willing to diversify. By the way, there are source of LNG. And I would not be surprised to see, in particular, when GKM is around $10 per million BTU like it is today. It’s a good driver and I will not be surprised to see China coming back to 80 million tons like they were in ‘21, in ‘24. At the same time, in the meantime’s, Europe has grown a lot from 65 to 113, 114, 22, 113, imports of LNG because we had to replace the Russian gas so that has been a big shock in the market, which is being absorbed. ‘24, so we don’t – we expect a better demand. In fact, the tension will remain because the LNG capacity increase is limited. Not much new capacities coming on stream. We identified something like 8 million tons part of it being arctic too, which will have a limited market, I would say. So in fact, you have attention in the market. And if any of this plant as a problem like we had report 2 years ago, again, the tension will be come back in the market. So there is not a message on LNG. Prices are lower, good for mark – for demand, in particular, in Asia and China. Limited additional supply ‘24. And in fact, I think these metrics will be repeated for ‘25 is the same. It’s only by mid-’26, ‘27, but really we’ll see more supply coming on stream. So that’s for the environment, which is globally positive for TotalEnergy. The key targets, you’ve seen the scorecard for ‘23. So what are the key targets for ‘24 in this summer slide summarize it. Upstream production, 2.4, 2.5, plus 2%, excluding Canada. We come back on that. Production costs, it was mentioned, we will consolidate our advantage $5 per barrel. LNG sales above 40 million tons. It’s 30% equity, 40% long-term supplies and 50% spot. So spot of good value of a variation. We will have a good utilization rate in refining because we have lower program of turnarounds. So we are target 85%. The renewable cost installed capacity will continue to grow. We are under 6 gigawatts per year since last year, and we intend to execute. I remind you that the key meeting we have 35 in mind in ‘25. So we will need to accelerate to 7 gigawatts. But we are on the right pace, I would say, that we wanted to reach. And more importantly to us because it will impact, of course, the results. It’s electricity net production. I will come back on it more than 45 terawatt hour compared to 33 in ‘23. The emissions we want them to continue to go down. So that’s the 38.8 seems to be a little high, but I remind you that when we acquire gas power plant in Texas, it will add some CO2. So it’s a choice. The methane, it’s a strong fight leading the – we are one of the leading company in this site. Objective is 80%, about 2030 reduction compared to 2020. The 50% were supposed to be achieved in ‘25. We are at minus 47%. So we’ll see if we have the ambition to reach it 50%. It’s not linear because in fact, it’s project by project. So you could – so for E&P, it’s not a linear, but 50% seems to – is the ambition to reach it 1 year in advance. And then the last indicator for me is the most important one. It’s what we call the life cycle carbon intensity of our sales. In fact, there should be sales on the paper because, in fact, it’s a way to – its strategy, it translates in our sales to customers. It’s recovering Scope 1 plus 2 plus 3. And we have an objective to decarbonize, I would say, to have low carbon energies in – to sell energies with a lower carbon content fundamentally, it’s 25% by 2030. We are each year progressing. So this year, it was minus 13%. Next year, minus 14%, more or less 1% per year. We will – it’s linked directly linked to the – of course, the more we will sell electrons, the better it is. Project cash flow, I will come back $34 billion in $80 Brent, $10 per [indiscernible]. It’s very – it’s $50 per ton and not $60 per ton, $34 billion. Net investments of 17 million, 18 billion will come back on it, third in integrated power and low carbon molecules and the commitment we take too to our shareholders more in September, more than 40% of cash flow payout. So that’s the objective. So coming on the CapEx. On the CapEx side, now we have a rich portfolio of projects, either on hydrocarbons or LNG and also on the integrated power side. So we want to grow our energy production by 5% between ‘23 and ‘28 and 2% to 3% for hydrocarbon. So there is no – we need to invest to put this to all these nice projects into production. So we had a guidance of $16 billion, $18 billion for the 5 years. This ‘24, we announced 17 billion to 18 billion. All segments benefiting from 1 billion increase, I would say, which is – so we keep the discipline and a third in the integrated power and low carbon molecule, one-third in new projects, oil and gas projects, 1 in LNG projects and one-third in maintenance. So the guidance is the same than what we announced in September. So what do we intend to do? On the oil side, we continue the ideas to continue to deliver, to work to deliver all this growth and midterm growth. So we are there on this slide a summary of our different actions and which are, of course, Nicola teams, I would say, focus on delivery. On the major projects, we have progressing, in particular, in Brazil, somewhere in our portfolio. Brazil is replacing Russia. In fact, when you look to in E&P, we had Narrow 2, which came on stream the last day of the year. It’s a Petrobras way to celebrate the new year. For me, the first year of ‘24 – first day of ‘24 is the last day of ‘22, first one well. So we expect more production. But we are working on [indiscernible] where Petrobras is planning to start up by end ‘24. Then we have [indiscernible], which was also on his way, which will be second half ‘25. And then in the U.S., we are working with [ Sharon] Ballymore. So that’s a non-operated asset. For the operated ones, we have, of course, very important one is Ugana in company share. It’s almost 130,000 barrels per day. So it’s a big impact. So we progress and with the target is end ‘25. So we should be by end ‘24, around 60% of progress. It has already been launched. And [indiscernible], of course, our teams are on the ground. I visited them for, say, 3, 2 times, twice in the last quarter in – where we have operations have been handed over to us, and we are executing the first phase of the project to grow the production from 60,000 barrel per day to 110,000 barrels per day. So that’s the first phase. Then we will go to 200 and more than 200. At the same time, as you know, we work on the gas firing and on the solar part. So that’s, I would say, the major projects. We follow that carefully. We have in ‘24 as well quite a big, I would say, agenda on sanctioning new projects. In Brazil, again, we are embarked. We have been successful in both TOR. So we are embarked to sanction Sepia 2 and Atapu 2 on which Petrobras, I think, is making a joint – sort of joint tender. We are lucky to be on both sides. We have also Cameia, which is a name which has been selected for the development on Block 20. It’s an 80,000 barrel per day development on Block 20. We are operator. We should be able to sanction that by middle of the year. We have the last, I would say, the last discussions. And on Block 58, at Suriname this one is not yet a name, maybe it’s [indiscernible] or I don’t know if there are 2 discoveries. We have [indiscernible], maybe will give us a name. We are – it’s not yet there. But this one, of course, is important because it’s a 200,000 barrel per day project. We have 50% of it. So it’s an important project. The objective being to sanction it before year-end 2024, and we are working on it. All these, I remind you, the criteria to sanction projects. We assess a profitability at $50 per barrel, $1 per ton and each project should respect 2 conditions: one, cost or I would say, economics is less than $20 per barrel or less than $30 of breakeven after tax. And the other one is emissions less than our portfolio average. And the portfolio average is lower. It was 20-kilogram per barrel into 2020. The portfolio average emission intensity is 18. So the new criteria is less than 18 kilograms per barrel of CO2. And so we progress. It’s a virtuous criteria and this will be the case of the 4 projects, which are just mentioned. An innovation that we announced yesterday or today, I don’t know, but we need to continue to work on the CapEx costs. Of course, we face an environment which have more inflation. In particular, in the drilling rigs for deepwater, we’ve seen the market moving from $200,000 per day to more than $400,000 barrel per day. So we decided to take an innovative action, which is to acquire part of a rig because to control the cost, in fact, for us, with Vantage, 75%. It’s a way to hedge in fact, our costs on drilling the company will benefit from, but I can tell you the costs are not $400,000 barrel per day. They are much lower than that. I know it’s some people – but we know we are using a fleet of 8 to 10 deepwater rigs per year. So to try to manage one. Maybe it’s only the first one of the fleet, but it’s a way to hedge the costs because we cannot just accept that because of less competition. The costs are increasing because the market is not really there. It’s more less competition. So we have decided to move. It was frustrating during 15 years. I have realized one of my personal objectives not to let these guys taking plenty of one of us without participating on getting it. So, yes, it’s a way to control the cost. In ‘24, another comment I want to make – these are the new productions coming on stream, Mero 2, Tyra in Denmark, the redevelopment in Tyra that we generated for Maersk. It’s planned for end of March, beginning of April. Anchor in the U.S. with Chevron. It’s important comment, and we just announced a new production coming in the portfolio. Of case, we need to close it by end of the first half, probably, gas in Malaysia. We are acquiring this year on this field with quite a good potential to deploy beyond the asset. There are a lot of other opportunities in Malaysia. It’s also a way for us to consolidate our partnership with Petrobras working there. All these additions including the ones which have been put into production in ‘23. When you look at them, which is Absheron, which is SARB and Umm Lulu, Iraq as well. When you look to the cash flow per barrel, they are all accretive compared to our portfolio. And so – and it’s important. They have an average, I would say, of cash flow per barrel around $30 per barrel compared to our portfolio, which is around $22. So it’s again back to my comment, but we continue to high-grade the portfolio, and that’s very pragmatic. It’s true for acquisition and divestment, what we acquired in SARB Umm Lulu and Sapura, but compared to what we diverse, by the way, in Canada. Make accretive part of the barrels that we produce. It’s as well for the organic part of the portfolio. So that’s an important message. In particular, at a time where, in fact, the declining part of our portfolio, for example, in the Northern U.K. have a little much lower CFFO per barrel because of the taxation. So we continue to high-grade the portfolio for this new project. Exploration. It has been for TotalEnergies a successful story for the last year. We did not mention there Nigeria and [indiscernible] or Cyprus, by the way, where we are confirming with Eni. We have 50% of these discoveries with Eni in Cyprus. We have the gas in Cyprus for sure. So we will find a way to have an efficient development process. And I think being partnered with Eni will obviously have some capacities neighboring country is a nice way too. And I love the fact that Eni is keen to go to shorten the time to market. We are fully supportive on that, in particular, and this part of the military NMC. Here, I interested, I just mentioned Sapakara South and Krabdagu. So I will not come back on [indiscernible]. On Namibia, we continue to drill. So Mangetti, I can tell you is we find again some hydrocarbons in Mangetti. We find against the hydrocarbon level of Venus or the extension to the north. As it was commented on what the mind of my peers and we share the data with our neighboring peer, we – in the different appraisal wells and the test, there is clearly not an heterogeneous. It’s not homogeneous field. There are a lot of hydrocarbons, but we need to – there are some sweet spots in terms of productivity, permeability. There are some areas which have less good characteristics. I repeat that on our side, we see a first development clearly, in our hand, if no question of optimizing, we will continue to dwell for how many debates in the company because everybody is excited. We have another exploration potential well on the south of Venus, called [indiscernible], and we can also continue to appraise what has been discovered. So clearly, in Namibia is on the top of our spending in exploration and appraisal we will spend around 30% of our budget exploration upgrades in Namibia again in ‘24 because we have the continue to see what is the best way to develop that. LNG, the other part, so several message on the Slide 4 ‘24. First, the projects we have quite a big portfolio of four projects fundamentally in the U.S. in Qatar. In the U.S., in fact, Energia Costa Azul is not in the U.S. and Mexico, but it’s a gas coming from the U.S. that we valorize. This project is progressing well. We should be able to produce by mid ‘25, I think that’s more or less a target we have with Sempra. For us, it’s important, I remind you because we have access to – we have only 16% of the projects, but we have access to almost 55% of the production, 1.7 million tons, very well located to go to Asia. We have North Field East as well in Qatar and North Field South, two large projects. It’s 2 million tons for the first one, 1.5 million tons for the second one, for TotalEnergies. They are on his way? No. Things have been sanctioned and contractors are mobilized. And then the last one is Rio Grande. We, I think, selected a good project. South Texas. We have a good contractor Bechtel, very committed. We have all the authorizations. So no problem of temporary ban. And so we are moving on. Of course, it’s quite a large project. So our target is 27, but it’s on its way and even a little in advance compared to planning curve. Two of our projects important, which will – on which we work is Mozambique. So Mozambique, we have, I think, the security report, the human rights report. Now, we are remobilizing the contractors. And I think we are not far from having everything set with them. The last part is [indiscernible] a large project financing, which was, I would say, put on hold when the events came in ‘21. And so we need now to – we are reactivating with all these financial institutions around the world, this project financing and when all that will be done, we will start again the project. On Papua LNG, we are working as well on all the France marketing. It’s a project which is well perceived in Asia but also the financing because we need to put the financing in place and the EPC contracts we work with contractors. So that’s on LNG, six projects I would say, in parallel. A comment on the results that I want just to clarify, I know we had the question mark. 2023 somewhere, we benefited from the fact that we are hedging 1 year in advance part of our portfolio, except Russia. So this was represent in the $7.3 billion, I think, that were mentioned by Jean-Pierre, $500 million. So this $500 million were exceptional. We could not hedge at the same level for ‘24 and ‘23. Having said that, and what we target is $7 billion, I would say, of cash flow from LNG because we have a better – we have a growth, as we mentioned, 9% in the growth production in ‘23. So we will benefit of it. So we should be around $7 billion. So we expect a stable, I would say, cash flow coming from LNG. We took an environment for this figure, which is a little lower than in ‘23 and TTF, $10 instead of $13, just to – as an average. Integrated power for ‘24, we commented already the increase of capacity plus 6 gigawatts, the electricity generation more than 45, 25 coming from renewables. And for the cash flow, we continue – the idea is that we should grow to reach the net cash flow positive by 2020. We need to grow by $500 million per year, more or less. So the idea is that our objective is to be able to deliver $2.5 billion to $3 billion out of a portfolio of which will be by end of ‘24 around $125 billion of cash capital employed more is $24 billion, $25 billion. So that’s continued growth and all businesses contributing to this increase. Of course, it’s important to demonstrate the profitability and the 10% ROACE, the ambition is to grow to 12% by ‘28. Just a word about what we are building in Texas, it’s one of the announcements that we’ve done during the last quarter. Texas is a very interesting market because it’s a growing market, growing population in Texas. People in the U.S. are moving to Texas. So – and it’s with quite a lot of imbalances and bottlenecks in the infrastructure, which create a lot of opportunities for renewables but also for flexible generation. And in particular, it’s quite nice for us because it’s – during the summer, but the spark spread in the U.S. is very positive, in Europe in our portfolio, the gas plants are more in the winter instead of summer. And it could reach very high level. So even if the use of these gas plants is maybe only third of the year. So cash – the profit generation can be very high. And we need to have these assets. We’ve done that in good conditions in terms of accessing $600 million for 1.5 gigawatt is a good price. A direct negotiation with a private equity firm, which allow us to have access to these capacities. And it’s important because fundamentally, our customers corporate PPA. What they want to have is not only a green electricity, they want a firm electricity and to deliver a firm, if we don’t have a firm power, if we don’t have enough in our portfolio, some gas plants or flexible assets like batteries. We have also some batteries in Texas. We are already 300 megawatts installed. We continue to grow it. If we don’t have these type of assets, it’s difficult to make trading and to make offers which are competitive. So that’s the whole objective that we are pursuing. And you will see us continuing to be very active in Texas because it’s a good market to develop – to deploy our integrated power strategy. On the downstream for ‘24. We anticipate the market to be a little lower than ‘23. ‘22, ‘23 in refining has been quite a strong market, supported by the ban on Russian crudes, the geopolitical tensions. We see some ease in the markets on refining, coming back to something like $50, $60 per ton, which is still quite high compared to what we experienced in the year 2015, 2020, but probably, I would say, a sort of softer environment in ‘24. It’s also true in petrochemicals, where clearly there is a lower demand in Europe. We see the impact of European economic crisis, the macro crisis and in the U.S. as well. So in Asia, it’s still good. But – so that impacts the margins on polymers. We were, I would say, during the first half or first three quarters of the year quite preserved because of our position now it is an impact of these lower margins. So that’s why we – the $8 billion of cash flow we had in – we performed in ‘23. We think it could be around $7 billion in ‘24 as a guidance. In the Refining & Chemicals and Marketing which cause here in downstream, we cover the three segments. We are also working on the transition, in particular, on the South market will deliver multiplied by two of production in ‘24. It’s in-line with what we – our customers are expecting because the mandates begin to grow in some countries. And we don’t have yet a big conversion of Grandpuits, which will bring 200,000 tons per year, but we are using part of the HVO we have in La Mede in order to convert it in some soft products to meet some expectations. It’s a good business. And again, that’s a transition. Transition is also, of course, in the marketing part on the electric mobility. We have a strategy we explained to you in September to concentrate most of our efforts, I would say, on EV hubs, on scarce prime locations, however, on motorways, and urban locations. We have built by the end of ‘23, 300, 350 hubs. We plan to have more than 600 in ‘24. And this also focusing as well is on HPC because the customers, they don’t like these low charging. It’s maybe good in the Swiss of London or Paris. But honestly, if you want to really meet the real market for us is professional customers or, I would say, long discount customers, they are ready to spend 15 maybe 25 minutes, but more. So HPC, we have deployed already more than 1,000 HPC, and it will be more than 3,000. So rather that’s a number of charging points, for us, the real metric is of many HPCs and hubs, electric hubs do we deploy in Europe. It’s more – I think it makes more sense by just counting the number of charging points because the profitability of each of them will not be the same at the end of the day. And in terms of strategy. So that’s what I could say. So I’m coming back to the share – to our shareholders, which is the most important and the cash flow generation. So we anticipate in this environment at $80 Brent, $10 TTF and 50 European refining margin market. We could answer some questions what we move this market, around $34 billion is in-line with the $36 billion we delivered, you make the math with the sensitivity. You are adding an additional growth of 500 in power and 500 in overall businesses, and you will find 34. So it’s very in-line with our or I would say, our strategic plan and road map. We will invest 17, 18. So we have free cash flow around $17 billion. And the Board in that context has decided to continue to grow the dividend by 7% and those remain as the final dividend will be €79 – €0.79 per share instead of the quarterly interim dividend were €74. And this €0.79 per share will be the next quarterly interim dividend which the Board will support. So that’s for the dividend. And so this is – I will come back on it in 1 minute. And on the buyback, we have announced that we will maintain $2 billion for the next quarter, and that’s $2 billion per quarter where remains, I would say, the base of the Board discussion for the coming quarters and next quarters in this type of environment. And that’s, I think, the next slide, which illustrates this, I would say, steady strategy or steady policy, I would say, as a shareholder distribution. We – the quarterly dividend, which were at 66% during 2019, 2020, no decrease, 2021. We used the balance sheet. You can see it on the chart in the middle, the gearing ratio went up in 2020 because we decided to use our balance sheet, we were in order to maintain this distribution policy. As begun to grow in ‘22, then ‘23, 7%, again, 7% of ‘24. So an increase of 20% in the last 3 years. And that, as you know, we did not decrease this quarterly dividend for more than – I was when I became CEO, it was 30 years or today it’s 40 years. And so it’s one of the age we maintain. And the buyback, we are a little stubborn as well. We increased to 2 since the second quarter ‘22. And so you can continue 22. But we increased it in last quarter because we decided to give back part of the Canadian divestment proceeds to the shareholders as a sort of exceptional. But – so it’s very consistent. By the way, as the number of shares diminish, I would say the buyback per share is growing, in fact, just even if the share is going up. And just one comment about the dividend, I didn’t mention the 7%. We bought back in ‘23, 5.8%, 5.9% of our – I would say, of our shares. So for me, it’s the basis, as I always said, to return to shareholders, you need to at least increase the dividend by what you bought back. So the 6% were for me secured just because we have added 1% because there is a growth – it was a discussion of the Board of 7% because we’ve made 7%, it’s consistent with what we could maintain on the long-term. And so that’s the last slide because as I said, we know we have a gap in the multiple with our U.S. peers, but again, in terms of TSR, we are in the ballpark. Our ambition is to be able – is to continue to convince the market that we – so multiple of TotalEnergies should be higher. And that’s why we continue to buy back despite the fact that the share at €60 per share is more or less not far from the historic eye, but we strongly believe the strategy will deliver more value and we demonstrate that we can do it while transitioning. And again, there is no contradiction. And so we hope to see that shareholder return to be translated in the company valuation in the coming months. And the last slide is to celebrate the one of the years, pioneers for one of the years, that is logo, as a slogan. We have decided the motto, we have decided to select. I will not comment all the photo only one, the first one in the top – in the left top corner is the first well in Iraq. By the way, in Ratawi, I visited Ratawi and we discovered Ratawi, I discovered that Ratawi backed [indiscernible]. It was discovered in 1938 by TotalEnergies teams and the wealth of discovery exist. The number one, the take a photo on it. Not this one in Kaminho because it’s a little unsafe [indiscernible] today. So my adviser, my security guys don’t go there, but in Rataw way, right? So we are back to our routes. The photo in the left bottom corner is Arzu in Algeria, part of our history. You have Tyra in Denmark. It’s more recent history. You have Lapa in Brazil, more recent history as well. On the photo, the other ones and the location is in France for two of them. And you have also these small [indiscernible] with a symbol of the technology that we of the technology-driven company and engineers that we use for measuring methane around all our assets today. So thank you for your attention, and now we can answer to your question. Who wants to start? Irene?

Thank you very much. Irene Himona, Societe Generale. So Patrick, you’ve built the integrated power portfolio through M&A. You’ve been very active on that. Your targets are for gross capacity. Would you contemplate something a little bit more radical or different like bringing in a partner, selling down part of that portfolio like some of your peers have done? And then secondly, on the buyback, the $2 billion quarterly buyback, your balance sheet is very ungeared now. If the environment were to deteriorate, and we’ve had tremendous volatility in recent years, how far would you lean into the balance sheet to sustain that buyback? Thank you. Patrick Pouyanné: Okay. First question. We do it, in fact. We don’t have one partner, because it’s not some – but each asset, the policy is clear. We develop the assets when we are operator, 100%, but at COD, we divest 50% of them because I prefer, it’s a question of management of risk, I prefer to have 2x 50%, 1x 100%. It’s also a question of profitability. What is difficult is to find one partner for all the geographies. You have some people who are financial partners – because we don’t want to have too much people bothering our teams. We like to have financial partners. They love it. But it’s not the same market when you are divesting 50% of an asset in Texas, when you go to Greece. So it’s a different portfolio. Even if reach a point where, as we increase the capacity by 6 gigawatts, we have more gigawatts to farm down. So we will need to find a way to industrialize, I would say, the way we farm down. So [indiscernible] but it’s not an easy task. If you go asset by asset, so for example, in ‘24 I think we have 2 gigawatts, something like that, in new assets, or 1.2 gigawatts in Texas. So we will make a package and find – and by the way, it’s better to farm down, because then you have larger institutions which are interested. When it’s one asset, sometimes it’s more, they don’t want to spend too much time. So we try to do it like that. We have some assets as well. Greece is a different country, but we negative from [indiscernible] or in South Iberia. So we need to be active on that and to find a way to industrialize it. It’s not one partner. But again, that’s very good. I prefer to have some partners as well in order to challenge us tomorrow in the way we – it’s the same, I would say, philosophy that we have. We’ve done one divestment we announced in – on Seagreen in offshore wind in Scotland where PTTEP wanted to have experience in offshore wind. They like TotalEnergies. You’ve seen, I can tell you, if you make the rate of return of the M&A activity, acquiring this 25% from SCC in 2020 and selling in 2023 to PTTEP, is more than 15% return. So you can make this type of activity. It’s good because we don’t want to be just – we want to share the risk between different assets, and we will continue that philosophy.

It’s a very good question. I think my message was positive. I think we have a good band. The slide is for purpose, a slide that I show you about the dividend, the gearing. And it’s true that at 5% gearing, as we’ve done in 2020, the situation was much more critical in 2020 than today, at 5% gearing. And when I mentioned that we announced $2 billion for the next quarter, but we – $2 billion is the basis for the coming quarters. I think it’s also because I have in mind that we can use the balance sheet and unless the price going down again to something like less than $50, we can resist over [indiscernible]. But for me, so as a discussion of the Board, so we find in the press release there is a positive message. But we don’t want to commit about $20 billion of buyback because we have no visibility. But fundamentally, the balance sheet gives us quite a strong support to this policy and to be – the word, important word, is steady policy, and either on the dividend 7%, 7%, or on the buyback. And so you could hear 222 for several quarters.

We can go this table as well. Gentlemen here.

Thank you very much, everyone. Oswald Clint, Bernstein. I wanted to ask on LNG, and I wanted to ask about appetite into your portfolio from new demand from Biden’s policy recently from the Red Sea disruption. I think you answered that already by saying China is having some discussions with you, etcetera. So perhaps I’ll change it to, are you, I mean, really leveraging – and I know Stephane is behind me, but leveraging the LNG trading and optimization piece, I mean, a couple of your peers this last quarter here in Europe, even in Texas, are now delivering gas and LNG trading profits on top. It doesn’t look like you captured a lot. It looks like the others are a bit more aggressive, potentially a lot more capital financing is being allocated to trading, and it’s coming through. So perhaps your business is more tightly controlled. Just to get your thoughts on, are you happy with that? Is there more you could do around the LNG optimization pace, please? Patrick Pouyanné: I’m very happy with what we do. And by the way, maybe when you look to our peers this quarter is better, the previous quarter was not so good. So we are more consistent in the trading part quarterly after quarterly. We know our policy, and Stephane can elaborate, but we have no – we are, honestly, I think, are doing a lot with that. It’s [indiscernible] we are managing 40 million tons. So of course, a part of it and the number of spot deals which have been done 16 million tons. So again, it’s quite active and our traders are doing a lot around it. But I will deliver the message that they can do better when I see their bonus. I think they have done well. You can ask to Jean-Pierre what he thinks about that. No. I think, honestly, we are not more. We are very active on that. It’s completely in the business model of LNG trading. Again, we benefited from the fact – we have this policy to hedge most of the portfolio 1 year in advance. It’s true. But because we have quite an open position, and I think it’s – so we benefited from that in ‘23. Next year $7 billion. Again, I think one message of the slide, by the way, when you look to the improvement of what we were delivering in ‘21 to ‘23, it’s quite a big improvement. And it’s coming fundamentally, in particular, the European position. In Europe, we have access, we control 16% of regas capacities. We have added these two FSRUs. So it help us to trade around that. So maybe we make less noise when we have good results, but we don’t have any bad results in the quarter. So I’m fine. No, we are fine.

Thank you. And maybe my second question is just on Iraq, 100 years. When you spoke about your new Iraqi project there, did you say it’s also a $30 per barrel cash margin? Patrick Pouyanné: It’s much more than that.

Okay. And really, the bigger question was that my favorite chart is the one on cash flow relative to the oil price. Is there anything as we look out for the next 5 years that would be decreasing the slope of that with production sharing contracts, slopes in LNG contracts? Patrick Pouyanné: It’s a good question. We have done it in the last 2 years, we can project it. I think it’s a good – Olivier, which is behind the door there, he is expert of making this type of charts. He is super good economist and engineer. No. But I think the point, but we can demonstrate that on the portfolio. Fundamentally, our new portfolio is much more accretive to [indiscernible] because we look to projects and we select the projects to find this, I would say, to improve not only – we were perceived, as I said, as a resilient company, we want to have also the upside. And Iraq is one of them, by the way, where we have quite a good upside. But I take the point and we can illustrate that maybe September next strategy. We had that slide. It was too complex last time. So we need to prepare it in a better way. But this one, I think, that we had, which has been imagined by our colleagues, it’s a good illustration about this change of slope and which means higher upside to capture from the brand.

We can go Michele, please.

Thank you. Congratulations on the strong results and being almost net debt-free. I wanted to ask two questions. The first one is more industry-wide. We are getting a lot of very conflicting messages on EV uptake across the world. On one side, it seems to be accelerating in China, but then it’s decelerating in Europe and in the U.S. as some of the more generous incentives roll off. What are you seeing on the ground? And does that in any way change your strategy in terms of EV charging? And then secondly, I wanted to ask you on LNG. You clearly hedge 12 months forward your spot LNG exposure. But I was wondering, is there a way to quantify the sensitivity to spot LNG prices beyond that 12-month of hedging? Thank you. Patrick Pouyanné: What is important in our portfolio is the difference between TTF and GKM, I think you can elaborate on that, Stephane, the second question, maybe you can answer too. On the first one, that’s one of the unknown. But we know, in fact, our strategy is centered on Europe, the EU, which has a clear plan, 2035. And in EU, it’s fundamentally the five, the core of the countries, France, Germany, Netherlands, the UK, Spain. In the U.S., I agree, but when you go to the U.S., you don’t see a big move. And when you observe in the streets and don’t see a huge move. So more – we are more careful. So we are more on the EV strategy is more Europe, where there is a clear regulation plan, where we think that it will happen, maybe not as quick as before, but as the government seems to be, even if they have less money, but they will be obliged. At the end, maybe [indiscernible] of the car manufacturers, maybe there will be plenty of Chinese EV cars in the streets in Europe, the trend today, but it’s not my issue to me. So for us, EV equals Europe where we have a clear, I would say, [indiscernible] regulations. But I think, honestly, this transition is not only a question of offer. If you don’t have an incentive on the demand and a clear, I would say, policymakers, policy, low chance that people will accept. It’s a revolution, it’s a kind of revolution. You ask people to spend more money to get a car to have the same function, but I see car. Why should they spend more money? Tell me. So we have to lower – they have to lower the cost of the cars and somewhere to be supported, so without policy. So you’re right. China is good, but China is using their own market in order to – but it’s, again, more for car manufacturing industry, is a challenge to bring all these cars to deploy their manufacturing capacities on the planet, in fact, which is what is happening, in fact, in particular, in Europe. So for us, does it change? No, fundamentally. But we will not deploy EV in Africa, where we have retail today, it’s Africa, I will continue to continue to develop our, I would say, traditional business in Africa. In Europe, you see that change, even if we are happy with the position in France. Again, as I commented, we sold our retail station in Germany and the Netherlands to Couche-Tard because the financial proposal was for us quite a good one. So we had to – in a way to change. In terms of CapEx, it’s a matter today of $150 million, $200 million per year. So it’s not a huge commitment compared to what we spent. So Europe, yes. The rest, I will observe, just to go in your way. And what I’m observing is again, let’s see, depending on the policies. And particularly in the U.S., I have few doubts. Okay, another one? Stephane should answer. Sorry. Stephane, please, answer.

Yes. On your question, so our LNG portfolio is globally a mix of long-term supply coming from our assets for third party, and of long-term sales, mostly in Asia. So if we look at that, we purchased fixed costs and [indiscernible] and we sell mostly Brent and TTF, GKM. And as we mentioned already in the past, globally, our portfolio is around 70%, 80% more long-term Brent and the rest is TTF GKM. By the way, as we do in electricity, where we try to fill that 70% long-term fixed, 30% merchant. And the last point which is important is the fact that we can sell either GKM or TTF because – and we have the flexibility to choose our index because of the supply logistics chain that we have with the regas capacity and the vessels. Patrick Pouyanné: So we arbitrate between both.

So we arbitrate between both. Patrick Pouyanné: LNG tankers.

Martijn, go ahead.

Yes. Good morning. Two questions, if I may. First of all, a slightly technical modeling question. But in terms of modeling the balance sheet for the next couple of quarters, I was wondering if you could say a few words about how much of the working capital that was sort of released in the fourth quarter will build up over the next couple of quarters. I think you said that some of it was sort of a bit of a one-off. And then secondly, I wanted to ask about refining. Because I get the sort of $50 to $60 per ton sort of base case, but I was wondering what your views were about sort of the risks around that, in the sense that, if you do global refining analysis, you get to the conclusion that, no, market should soften a little bit. But then again, on the other hand, like all the capacity that’s being built is in the East, so the Atlantic Basin is actually quite short products. We have all the freight issues and the freight issues support the Atlantic base refining margins. We stumble from disruption to disruption. All these refineries are old. It’s cold weather, we have disruptions. It’s cold weather, we have disruptions. Couldn’t we end up in a situation where actually this turns out to be surprisingly tight and the risks to that are actually to the upside? Patrick Pouyanné: You are right to separate both. Having said that – and it’s good if we have – we took an assumption of $50 per ton. If it’s $80, I’m happy. You have the sensitivity, I think it’s $500 million for $10 per ton. So again, maybe we are a little cautious. We see some softening in the market, because, again, price – crude price remain high. But you’re right, our fundamental analysis, it’s true that on the Atlantic Basin you have some bottlenecks in the system, the famous [indiscernible] in particular and all these type of things, which help the margins. But there is also an element of the Russian system in that, which begins – the market begin to absorb it at a certain point. So we have to be a little – I’m a little cautious about it, but that’s what we observed. So I share your view, but up to which point can we quantify the upside, that’s more complex. That’s the difficulty. It’s margins of different products. And again, the last year also supported by the fact that the jet fuel recovery was – so jet fuel margins were quite good. So jet fuel recovery is down now. So we are more in, I would say, balance and normal growth, is not this hike linked to the recovery that we had before. On the working capital, I would say, $3 billion, no, more or less? Yes, something like that, I think. Because honestly, I will tell you, the story is the following. We had – last year, we had a release of $3 billion because of margin growth. So we are expecting to see the $3 billion being recovered. We struggled during the year to see them. They came in the last quarter. We had more than that, the last quarter was a bit around globally $5 billion. But out of the 5, 2 are clearly exceptional. It’s linked to the taxation we should pay on the Couche-Tard deal, capital gain tax that we didn’t pay, we need to pay it. And it’s linked to part of these exceptional taxes but which we have put in Europe on refining. I don’t know if you know this war taxes, which has built a taxation, which will be paid, in fact, in ‘24. So $2 billion of [indiscernible] working capital, I don’t consider them as – the $3 billion came and go back and forth, so we could expect them to be released again during the year and coming back by the end of the year. That’s the anticipation.

And of course, we will continue to put pressure on the – on our manager to maintain with working cap as well as possible because... Patrick Pouyanné: We want to come back – you want us to give us back of $3 billion, they gave us $5 billion, so almost $6 billion, so I’m – don’t put too much question. So that’s good. No, but it’s – so there is a little exceptional there, $2 billion, I said, which makes 1 point of gearing, I would say. If you want to translate it in – compared to what you said, we have $2 billion which came at the end of the year which could disappear. But I hope the year can also be executed in a good way and we will have again some cash flow, which will strengthen the balance sheet.

We can go there. Lucas?

Lucas, BNP Exane. Two, if I might, as well. The first was just on divestments and whether you’ve got – last year was a very large year for divestments. There is a lot going on in the business in terms of organic investment now as you build up in LNG, you start to build more aggressively at high-grading the upstream, obviously, integrated power. So I just wondered what you’re thinking in terms of scale of divestments this year, absolute figure as you move towards that net $17 billion to $18 billion. And the second question, Patrick, I guess, is a little more personal. It’s a big year for – centenary for Total. It’s also quite a big year for you in some respects in that this is year 10. And I’m conscious of amongst all the assets, etcetera, this company has, you’re also a very large asset. The question is really how you’re thinking about your own lifecycle progression. I know Thierry Desmarest was CEO for 12 years. We hope you’re with us for a lot longer. But just thoughts on where you’re at, Patrick? Patrick Pouyanné: Thierry was 15 years.

Including – I thought it was 12 CEO and 15 Chairman. Patrick Pouyanné: But on this personal note, I said to the Board, as long as they are for, I will continue the job, as long as you consider that I’m positive for the company. The Board has decided to ask me to continue to renew my mandate, it has been announced in September, for the next 3 years. So I will continue. And again, I think I’m committed to the company. I think what we do is we have a very clear strategy. I’m happy to execute it. I’m part of this – it’s not only me, but all the executive committee, which is executing that. So I’m there. I will continue to be in the landscape of this company for many years. Okay? But we still have a lot of things to do. Then on the first one. In fact, we’ve done a lot in divestment. That’s true, $4 billion, $4.5 billion from Canada, Kuchar, $7 billion. But we acquired a lot as well. You should not – it was a huge year, in fact. Because [indiscernible] Casa dos Ventos when you add – NFE – NFS. When you add all of that, we divested $7 billion, we add $6 billion. I said to my team, we don’t – we have done a lot. In fact, we invested $17 billion. And when you acquire $6 billion and you divest $7 billion, it’s at the end, we moved $30 billion of assets, which is an historic year. And so it’s quite an active company. It’s very active. And I think we will continue to do that. Because if I want to high grade, I need also to finance it. And I’m stick – I think one of my big lesson is the net CapEx investment maximum 18 is a good metric for us. It’s a good metric because you see the – all the balance we generate, 34, we invest 17, we delivered 16 to [indiscernible]. It’s a good balance. And so one way is to continue to divest. Divestments will come part of it, by the way, from what discussed about the farm-down of renewables. Because we, it’s not a divestment, it’s more we divest because we reinvest part of it. So when we have, at the end, $5 billion, it’s – in fact, it’s plus $7 billion, minus $2 billion, etcetera. So we have to – this machine of divestments has to be put in place. And that’s one of the target for Stephane teams in the year. But we have also some assets in the Upstream, but it’s no secret. But in Nigeria, for example, these onshore assets are complex. We want to divest our share of SPDC, and we are looking to reshape the portfolio. So it’s a permanent, for me, good philosophy to oblige ourselves. We buy in Malaysia, where do we divest on the other side? By the way, in – you noticed that in ‘24 we will benefit from the divestment to Couche-Tard to the Netherlands and Belgium because we didn’t sell it in ‘23 but in ‘24. So I think we are fine. And the level of activity should be around about $5 billion on one side, $5 billion on the other side, and I think it’s part of the strategy, is also to benefit from – and we have the balance sheet to do that. Not too big, big M&A. I don’t – I’m not consolidator of Shell in the U.S., I’m not there, so – but I can perfectly understand what our peers have done. But we are not in that business. But we can – we have the balance sheet in order to be, I would say, to be active on both sides, both selling and divesting. That’s the philosophy. That’s I would say what I would say.

Lydia?

Thank you. It’s Lydia Rainforth from Barclays. The 100-year milestone is a great chance to look forward and back as well. When you think about the structure of the industry, it’s been – it has been remarkably stable for the next – for the last 20 years. How do you see it going forward? Because it does seem that we’ve got a lot more volatility, a lot more regionalization. And almost back to that chart of Olivier’s of CFFO versus Brent. Is there opportunity for that to kind of diverge more as we go forward? And then if I think basically a little bit looking back this story around the safety side, there is obviously changes in processes that are being put in place. Do you think you can make those changes both quickly and safely in terms of just the – there is going to be more and more processes that need changing in a world where there is more digitalization? Patrick Pouyanné: Okay, safety. It’s a little frustrating to discover that you need to have a fatality to put into question – honestly, this example is a good example. Myself, I’m a little frustrated, but it’s because we have a fatality, but we take the topic and we say, I remember, I said, you stop and we find a way, and it was provocative from us at the top, why are we obliged to put somebody in these reactors? The reality is that it’s a whole industry is working. It’s the most efficient in terms of cost because it’s shorter. And we have the feeling it’s safe. But it’s not safe. And I think, okay, it’s a decision. It’s where safety is a value. That means that maybe it’s longer to go with the water and etcetera, but at least you’d have nobody inside a reactor, I feel much more comfortable. And it’s good to see that we are sharing that and our colleagues in the sense our big peers are thinking on the same[indiscernible]. So that’s true, that is quite frustrating, but we could have done that before. The reality – and I think at least what is positive, that we have reacted in a way which forced our team because of initial reaction, they just know, there is no other way. No, no, we told them, if you give us a target, no human being inside these reactors, what do you do? They came with a solution. Honestly, I’m not an expert on this type of technologies. And we say, okay, let’s push on it. Yes, it’s a little more costly because it takes a little more time. Okay. It’s an arbitration. But I feel more safe. So this is a good question, but maybe we should look to other processes where we expose people in this type of environment. And again, people always think that it’s a question of putting in – it is a good element. So we think we share it because we need to look again to avoid any, I would say, unsafe situation we could avoid, even if it has a cost. But at the end, it’s safety first. So thank you for the remarks, and it’s true that there is positive point we’ve done it, but we could have maybe done it before. On the first one, so volatility of the structure of the industry. You mean the strategies or you mean – I’m not sure to have captured fully...

Just in terms of – obviously, we’ve had – it’s been relatively stable in terms of the structure of the industry. And now as we go forward for the next 20 years, it seems like there is a lot more volatility as we add more renewable... Patrick Pouyanné: With more M&A, more renewables, more...

More renewables, yes. But just in terms of that chart of cash flow versus brand, that kind of – that’s the point that I was making, that ultimately we’re getting more that do you end up having to be able to break that successfully longer-term, that that you continue to get more upside from that part. Patrick Pouyanné: I think it’s a question of, again, continuing to have – if you keep in mind that your portfolio on the oil and gas will be on one side, breakeven, you maintain it, and that you look to what is the right assets in order to capture a part of the upside, you can continue to build any time. I’m absolutely conveying there is opportunities to do that. If you keep that in mind as a real target, yes, you – it’s a question of being focused. So what do I want to achieve, including it’s a case, it’s always the same discussion between growth and value. And that’s the arbitration. We should not be suddenly obsessed by the 2% growth, even if we have declared 2% growth, or 2% to 3%, because we have the portfolio to execute. Now it’s a matter of execution, including on the LNG part where it’s part of the – keeping part of the upside, that’s part of it. I agree with this. Do we see more diversions because of the renewables? I would say it’s another business. You see some strategies diverging. I think some other companies will come 1 day of electricity even when you want to produce, no. When you decide to produce your green molecules, the famous molecules, what is hydrogen when it’s green? It’s electricity. It’s electricity. So you have to manage this energy as a fundamental feedstock even when you want to produce these e-methanol or whatever it is, e-fuel tomorrow. So I think it’s part of – and from my perspective, I think all the efforts we have done, we are doing to be – to manage the cost of electricity, the process of producing the electricity will help us tomorrow to go to these feeder molecules, knowing that today the demand for this molecule is not big. You were speaking about EVs, I could say the same, but hydrogen, there is a lot of enthusiasm in media. When you look to the reality of the demand. By the way, we got $500,000 a ton per year that we are putting on the market. It’s quite a good success, by the way. We have 50 offers. I’m not sure if we will need to qualify that. But we have 7x more of the volume, which is offered, is 7x more than what we are ready to buy. So we will see the competition in the price now, because that’s really a question of volume of price and probably part of these offers are not completely in-line. But we are optimistic that we could get some good products, including maybe investing in some of the project ourselves. We will see as a way too. So I think it’s question the demand there is, so, yes, there is some divergence. But honestly, we are very comfortable. And as long and as I said that we can remain at the top of profitability globally in the company, building the second pillar, this pillar on electricity, is okay. I would be worried if I were a shareholder, I see a decrease of the profitability. That would be more questionable. We are comfortable at the Board with that.

We can go there, Henri.

The first question is on the dividend growth you mentioned earlier. We’ve done $2 billion buyback per quarter. You have this 5%, 6% base growth, and then an additional 1%. Could that additional 1% become larger in the future as you get more underlying cash flow growth, integrated power, integrated LNG? Are you more comfortable with the 7%? Patrick Pouyanné: It will come larger if the share is going up. Because we are looking also to the yield, the yield is at 5.1%, which is on the top of the majors. And we are – it’s linked. You will say maybe the dividend growth [indiscernible] put the price of. It’s a chicken and egg, that story. But no, we are, honestly – there is room to do more, but we are comfortable because, again, we want to – we prefer to increase the dividend in a way that we can secure it even if the cycles go down. So 7%, 8%, $0.01, okay. That’s the type of discussion. But we prefer to have a steady policy of increasing the dividend several years in a row rather than suddenly go down. And so that was the discussion, the philosophy. When we benchmark to our peers, we felt that the 7% is quite on the good side. And again, we have – I think the big news for TotalEnergies is we’re changing our story, is that we have really enhanced the payout policy to shareholders. We were at 30% a few years ago, went down to up more than 40%. In fact, this year, we’re at 45%. So this is a big change. And including – and this is clearly anchored in the mindset of the Board today, but we need to monitor that because it’s also part, I would say, of the energy transition strategy. We can execute it if we are profitable. And if we return to shareholders a big – a higher share of that. Otherwise, people will tell us why do you invest in this transition? Is it profitable? The fact that we remain very profitable and that we return to shareholders is a way as well to execute the strategy, the transition strategy we want to execute. And we strongly believe we will deliver cash flows for the future for our shareholders. So that’s the equation. There is no – somebody asked, is it a mathematical formula? There is not a mathematical formula. We are looking to what we think is the right balance.

Understood. And then secondly, I wanted to follow-up on a couple of LNG projects that you mentioned. Just firstly on Mozambique LNG, if you can give an update on security situation, and how quickly you think you could get back to the construction there. And secondly, on Artic LNG 2, I mean how do you see that project ramping up? And what have you factored in for your guidance? Patrick Pouyanné: Arctic LNG 2 is quite easy. It’s under sanctions. So, I would say I would be clear. I never – honestly, I am – unfortunately, I mean not surprised what was happening. We were very cautious in ‘22 when we announced that we have written off all that. It will – so projects has been – has moved on because these Novatek guys are quite incredible. We are able to put into production a new train despite all the sanctions and etcetera. So, in fact, in terms of engineering, it’s quite really a remarkable achievement. I am not surprised, because it was difficult to – the Europeans need to have this Yamal LNG, 20 million tons. But to add more Ocean LNG in the mix is a little politically complex, to add more. So, I am not super surprised on that. So, that’s where we are. So, honestly, today we are not more in the governance. We have no – we have put in force measure everything. So, I cannot give you more information because we are not there anymore. And of course, I mean trading team or LNG teams were in contact, but we have put forth measure because it’s – that’s the reality. No way to expose the company to any type of secondary sanction. That’s clear to me. So, we are in the process. On what I understand, just to share with you, is that they are willing to install the second train. The third train for me is on hold, which I understand. But the second train seems to move. Where is the market, not in Europe. So, there is only one possible market, one or two. But it’s not in our assets anymore. On Mozambique LNG, listen, I mean we have made – we make them – we monitor permanently the situation on the ground. As you know, there are some – the Mozambique State is helped by another African state, namely Rwanda, to control the situation today. And more importantly to us, the civil population is back in the area. Life is back to normality. There have been a few incidents recently linked to the Gaza tensions, I would say. We can observe in the planet that you have some gas sales which are being reactivated, just to – not only there, in many countries, we have seen some. So, that’s unfortunate. But there is a link. So, we have to monitor that. But today, in fact, it’s more to reactivate your contract, there is still some engineering to be done, so that’s part. So, construction, I hope it will come back by middle of the year. We monitor that. Again, what I don’t want to do is to take a decision to bring back people to be obliged to get out again, because that would be too complex, so. But again, today, the discussion with – we have progressed a lot with the suppliers, I mean the different contractors. In a good way, I mean including on the costs, we had some debate. They have listened to our messages. They want to reactivate it. But no, the final point again is to put back, it’s Jean-Pierre, work, we have team and so global financing, it was a big financing CapEx that we need to reactivate. We are working on it. It should come in the coming months.

It’s Alastair Syme at Citi. Patrick, are you more or less optimistic on Namibia than you were last September? And I guess you are putting a third of your exploration budgeting, so I am guessing you are optimistic, but... Patrick Pouyanné: No, I have said the same. I told you. I think I am completely optimistic.

I kind of have the impression… Patrick Pouyanné: I am more optimistic than my colleague, because we don’t have the same license.

But what does Mangetti do? I was certainly under the impression that would add another resource base. Patrick Pouyanné: No, it’s – we find back the revenues [ph] horizon, I can say. So, it’s adding additional resources. It’s not huge.

And the DST results that you had? Patrick Pouyanné: We don’t have the DST yet.

The two venous wells. Patrick Pouyanné: Yes. But on venous, again, we had one very good DST. The second one, again, the location of the well isn’t perfect. It demonstrates some heterogeneity. That’s why we need to find to be sure that when we develop, we develop and we locate the FPSO on the right spot, not to be too far from the sweet spot we want to develop. It will be a little like Suriname. It will be a combination of different sweet spots. So, the location where you put, because then you have the length of your pipeline, the subsea system. So, if you want to minimize the cost of the subsea system, you have to look at it properly to operate in order to be at the optimum for location.

Okay. But bigger than Suriname? Patrick Pouyanné: Wait and see.

Okay. My second question is just on German power prices. I think when you did the auction last year, you sort of indicated a view the €70 to €80 a megawatt hour. It’s kind of where we have now pulled back to. In Germany, prices have pulled back a long way. But what’s been remarkable is there is no real demand elasticity, like the industrial demand is still really weak. Does that worry you that the economy can’t support these power prices? Patrick Pouyanné: No. Because again, Germany has decided that they exit from nuclear and they exit from coal. So, the poor price in Germany will be fundamentally driven, on one side by these renewables, but also by, fundamentally, gas plus ETS. Don’t forget the ETS. So, the fundamental element in fact, in the electricity economy in Europe is also the ETS price. And think to that because at the end the marginal price will be done by the ETS on the top of the gap. So, when you are a country which decide that they will go from a gas plus – gas plants plus renewables, the price will remain a good price. So, today, I am – I think the full worth curve in Europe today in ‘25 is €79 per megawatt hour. Okay. That’s okay. We are fine with that. So, I am – no, we are comfortable with developing this offshore wind in Germany. And we will find customers who are ready to commit on the long-term because it’s a question of, what the industries don’t like is the volatility of the price. So, we were afraid. So, it helped us to consider that, when we say €70 to €80 per megawatt hour to some of these industries, it’s okay, we can find them. Let’s see, Germany from this perspective, again, because of the choice of the policymakers is I think one of the good market to take this type of bet to keep some wind – offshore wind merchant in Germany. But it’s also a good market to have some batteries, because when people say, we want 70% of renewables, if you don’t have plenty of batteries everywhere, I can tell you, it will be difficult. Yes.

Chris Kuplent from Bank of America. Patrick, congratulations on closing that drillship deal. I do think it’s quite a departure for the industry. Maybe you can give us a little bit of an insight what you are hearing from your partners in all those projects. Are you also frustrated that you think their capital discipline is waning a little bit, because I share your view, there isn’t a huge amount of competition out there in that part of the industry. And do you think others will follow in this step. How many more are you going to buy? Patrick Pouyanné: It was a situation. But I think it’s true that it’s a breakthrough, including in the company, with the ID, but we know because this industry has – it’s a story of the ‘90s. In the ‘90s, it’s old story, but this industry, ‘90s the companies were owning ships. But then suddenly, the price went down, they were stuck with the rigs and blah, blah. And so they decided it’s not our business. In the meantime, we are not a $10 per barrel, we are $80, even at $50. What I have observed for the last 25 years in this industry is that the low bottom of the deepwater rigs is $200,000 per day. It could go up to $500,000, $600,000. Honestly, the cost of the rig is around $800 million. When you pay $500,000 per day, you pay the rig in 4 years, 5 years. We have done this type of mistake from 2010 to 2015. I was super frustrated, to be honest. But we have paid the rigs, and in fact, fully, and in fact, at the end of the day. So, we are beginning against the same history, and so the only way is to edge our things. Why don’t we – we will not operate the rigs. That rigs will be operated by Vantage, so we wanted to have a partner, we will not operate. But we have 75, so at the end, we will receive the cost, and we will sell it. And to be clear, this rig will be sold to a partnership at a market rate. So, that’s a way, that’s the game. Should we follow, I know that I have announced that to some of – they look to us. I think it’s just nothing new. Putting $200 million in advance on the rig in order to secure a 10-year, etcetera, I see that, at the size of the scale of our operations, is nothing. In fact, when you – okay, it’s innovative. I think, yes, my only point, I don’t want all my teams to be super excited, we own a rig, so it will be managed by Vantage, we know. But no, we don’t own, we don’t operate. And again – but it’s – we need to do something, we cannot just look, see the cost going up and complaining. So what can we do, so this action. It’s true that with Vantage, it was a company which was the financial stress, so we had a good discussion. But it’s more in our heads, but we need to be innovative sometimes. So, I am comfortable. Again, 1 is nothing compared to my 8 to 10, I could have 2 or 3. At certain point, I need to keep flexibility. But if I have other opportunities, I will look at it. So, it’s a question of opportunities. But I mean it’s a lesson of the year 2010, 2015. We cannot just repeat the same mistake. We have some projects. But if the CapEx going up, why should be – I want to do the project, but I need to find ways to control my cost. And this is one way to hedge our drilling cost.

Thank you. Can I have a quick second question, Patrick? You commented earlier that you don’t really see looseness in the global LNG pool before mid-2026. Is that close enough for your customers in Asia, in particular, that they are already telling you, you know what, I am not signing these Brent slopes, etcetera, there is plenty more to come in the latter half of the decade? Patrick Pouyanné: No. In fact, no, because, in fact, they – what we observed is that when we marketed P&G, we had quite a number of offers, not at 14% Brent, and to be clear, but quite reasonable Brent, where we are ready to sign. We have signed some HOA. We consider they are good for the project on the long-term. So, today, they keep – they still have in mind what happened in ‘22. So, they see the shock of ‘22, make them think, okay, it’s maybe long-term, because in fact, to avoid this huge volatility, the only way is to make long-term. So, there is a long-term. And again, we have been approached by some Chinese LNG buyers, which are really keen to go in the longer term. I would say that from this perspective, what has been done in the U.S. on the temporary ban is helping the other projects in the world, because in fact, honestly, I am not suffering of it on our portfolio. The problem of this type of move even is for electoral campaign, and we know the story behind it, is that it’s a question of trust in the capacity of the projects we deliver. And that’s not very good. So, it pushed these other buyers, these Asian buyers, not only to rely on the U.S. LNG, but to look to other locations, which is good for Mozambique tomorrow. You know we have 1 million tons, which have been – which will not be renewed by one of the buyer. We are – we TotalEnergies will take part of it, and we can sell that. So, it’s good for Qatar. It’s good for all these projects. So, I see that the long-term is still there, and that’s not disappeared. Despite the fact that, you are right, we could anticipate a certain lower price on the spot, they are willing to cover. So, today it’s more than the way to think. Not only in China, it’s true in Japan, it’s true in Korea, so Asian buyers are there. Okay. We have people on the phone as well.

Yes. We have Jason. I think Jason Gabelman, who is online. Patrick Pouyanné: They want to ask a question, we can take the question.

Yes. They woke up early.

Yes. Can you guys hear me?

Yes.

Alright. Great. I had two questions. First, I just wanted to clarify an earlier answer discussing net debt. I don’t know if you gave an actual gearing target, but it’s moved across the past number of years. So, just wondering if you could provide an updated gearing target moving forward? And then secondly, going back to LNG trading, it seems like the past few years you have benefited quite a bit from the spread in global gas prices versus Henry Hub gas prices just given your position in U.S. LNG. Are you able to kind of optimize global LNG flows to replicate kind of the upside you have seen from the U.S. to global gas price spreads as the market kind of expects that spread to tighten over the next few years? Thanks. Patrick Pouyanné: Okay. No, we don’t express a gearing target. We are very comfortable with 5%. I think the CEO salary variable pay target is under 10%, if I remind, this is a dot, so you have an idea what I should control, is under 10%. I am very comfortable to go down to zero. I mean I am very comfortable. There is no problem. But it’s more, again, in terms of today at 5%, we have reached a very strong balance sheet. So, my CFO is comfortable. It does not show to go lower. So, the priority is more in the way we allocate the capital. First, to capital – the dividend, the capital expenditures and the return to shareholders with more than 40% of cash flows, I would say that’s the main commitment. So, no, we don’t have – less than 10% is okay, I think. But we can go down to zero, no problem if we have zero debt, or even a positive treasury. Again, I am not sure – so I will go to Stephane to answer to the question, which is, if I understood, can we optimize the global LNG flows to replicate the upside we have seen in the past. So, explain again what you are doing with your portfolio.

So, as I have said, the portfolio is basically we have a long-term portfolio where we buy in rehab and fixed cost and we sell partly Brent, partly GKM and TTF. And then we have a global optimization with plenty of optionality in the portfolio. One of the big one being to be able to switch from Europe to Asia and from Asia to Europe. But you have as well plenty of other plays like the [indiscernible], the Contango, the arbitrage of timing, the possibility between Africa, LatAm and Asia, and so on. It’s clear that in ‘22, we have benefited from the spread increase between HH and GKM and TTF. And that going forward, we are going to less benefit from that. You have seen, because it’s partly already in the level of the edge, we have been able to realize, and Patrick mentioned it, that the difference of edge between ‘24 and ‘25 in terms of cash going to be $500 million, and that’s done. As for the optionality of the portfolio, we are confident that we have plenty of ideas to continue to sustain the good performance we have done in the past, even if you noticed the… Patrick Pouyanné: No. But again, ‘22 was absolutely exceptional. We don’t – and I don’t hope, by the way, to see again, $30 per million BTU. $50, it’s very detrimental for the demand in the market, you can destroy the market by this type of price. So, it’s why, so I am not willing to swim in. Okay, we benefit 1 year, but it’s a one-off, and I hope we will not come back. It’s not a normal market to see this type of prices, $200 per barrel for gas. That’s absolutely abnormal. But in fact, fundamentally, what the strong belief I have is that Eni will remain quite low. That’s why we built on the LNG in the U.S. because we have a huge amount of gas there. You have some domestic demand, but it’s – so you have, okay, it could go from 3 to 5. But so the question is, how do you position the export market compared to Henry Hub, between the Brent and Henry Hub, and GKM and Henry Hub. So, that’s a way of optimizing the flow. To optimize the flows, by the way, what you need is LNG tankers, and we are growing our fleet. I think we are going to 30, more or less, we are targeting 30 LNG tankers or 20. So, growing our fleet helps us to optimize all these flows when the arbitrage is open between the U.S. and Asia, we can go to Asia. Of course, location of ECA in Mexico is good from this perspective, and we are looking to over activity. So, it’s a question of optimizing. The Panama channel from this perspective is more a problem for us than the Red Sea. Because the Red Sea, when you look at to Qatar to Europe through the Red Sea or through South Africa, it’s only four days of difference. So, it’s not a big event. Four days, you can manage it. When you have to go from the Gulf of Mexico through the South America, to Argentina back, it’s 20 days of difference if you avoid. So, it’s a big impact on the cost and all the system is $0.5 per million BTU more or less. So, it has an impact on the arbitrage between Asia and Europe. But again, one of the big assets we have is not only the fleet, but it’s the gas in Europe. Because we have a lot of gas in Europe around 20 million tons per year, so we can easily make the arbitration between Europe and the rest of the world. That’s also important to optimize the flows. So, that’s our questions.

We can go, Giacomo. Patrick Pouyanné: Welcome to Giacomo.

Thank you. Patrick, sorry for asking this question, or it comes every meeting. You have added to your position in terms of, if you want gas in the U.S. with this CCGT deal. You have talked in the past that you have been looking at increasing your upstream position there. Maybe can you talk about the market you are seeing for deals on gas assets, what type of assets you are looking in terms of plays? And whether that’s one of the acquisitions we could see in 2024? Patrick Pouyanné: No, being clear, it’s not as you see one, it could be several. So, you will see soon one, small one. It could be a sum of small assets. The question for me is the M&A is good if you buy at such a good price, cheap price. That’s all. So, we have time. I need the gas by ‘27. I don’t need the gas tomorrow morning. So, we are building. No, it’s part of which we are clear. We want to hedge our LNG position in the U.S. with more upstream gas. So, we have opportunities. But don’t expect us to make a giant acquisition. We are shy people in the U.S., we want people.

Just one on cost inflation, you talked about rigs. Can you perhaps talk to other areas where you are seeing cost inflation? And perhaps related to that, there have been headlines suggesting you are seeing some cost increases in Uganda with – relating to the pipeline, so perhaps just if you can talk about what you are seeing there. Patrick Pouyanné: No, this one, we observed it in – when was it. When the teams wanted to order for steel and I refused to pay. ‘22, remember the teams came to us with a huge increase on the steel, which was in March or April. I say, no panic, relax, we will be late. I say, okay, we will be late. No, we will not be late because we have other events, by the way, in this project. And in fact, towards the end, we put the order on the steel, I think beginning of ‘23 and it was a very reasonable price. So, sometimes it’s just a question of arbitration between the planning and the cost. And so – and that’s true that sometimes our project managers, they have a clear – they want to be within the planning. I told them no, within the planning, within the budget, it’s both. So, sometimes it’s just a question for the management to, okay, to arbitrate between both. And again, if on some of the projects we have – today, we have a debate on some of them. But I mentioned, we want to sanction Sepea 2 [ph], Tapu 2, Suriname, and Camino. We need to – if we have to delay one, we will delay one. But on Suriname, I can tell you, we are trying to work on an innovative solution. By the way, looking carefully to what our big friend in Guyana is doing, to benefit from their own way to develop that. So, we try to transfer part of their way to manage some of the leased FPSO in order to be efficient on the cost. So, the cost for me are fundamental. What we should not be is replicating some mistake we have done in 2010 by being driven more than volume than value, so managing the cost. And so you have to look to different options. Our teams love to operate. We want to operate. But does it mean that we own all the lease, there are alternatives in the market, which have been developed. So, it’s not because we are at $80, we should forget them. So, we are working on it very clearly. So, if I have to choose, sometimes, I will prefer to delay. The oil will not disappear. So, if I need to delay a project, we can wait a little.

Kim?

Thank you. I had a follow-up on hydrogen. I was wondering in which parts of the world you are seeing the most attractive bids on your 500,000 ton green hydrogen tender. And I seem to remember your comments in New York a few months ago were a lot less positive on hydrogen back then. And then my second question is on short-cycle upstream CapEx. I see it’s $1.5 billion this year. Is that an increase on the previous run rate of about $1 billion, or is it about the same? And is there enough runway to continue with this level of short-cycle activity going forward?

Thank you for the second question because I forget to comment it. On this slide, there were four messages where I forget one. So, thank you. No, we – no, it’s not an increase. We keep this flexibility. I mentioned 1.5 to 2. It’s a good way, however, to arbitrate if we have to – suddenly, we have another COVID epidemic, which I don’t hope, pandemic, I don’t hope. No, we have that. In fact, positively, it’s more – no, we just announced, I think it’s tomorrow, we put into production Akpo West in Nigeria. It typically is the type of a tie-back which we have been able to do, deciding that 1 year ago, 1.5 year ago, and to put it into production, benefiting from a high price. So, it’s – I think we have in our portfolio, either in Nigeria and Angola, but also in the North Sea, on [indiscernible] for example, in Denmark, and also, by the way, we have few share in our production in Argentina, in the U.S. We can make this type of short cycle. So, we decided that we need to have 1.5 billion to 2 billion of short cycle every year in order in case of, again, cash to be able to arbitrate, and also today is more a positive way to benefit from a good price. So, they are very profitable – they are profitable at 50. Of course, when we launch Akpo West with production at $80, profitability is very high. So, this is very important in the way we appreciate to keep this flexibility in CapEx that we mentioned in September. Patrick Pouyanné: Now, on hydrogen, don’t – I mean im still on the – there. In fact, all that is linked to where is the demand. The demand exists in Europe, and we are refiner in Europe, because there is a policy, which is quite a complex one where you have some ETS advantage on credits, when you are, I would say, using green hydrogen in your refined products. So, as we are paying quite high, an increased CO2 burden in Europe, you can find a way to not only promote green hydrogen, but having some credit, so it makes things economically viable. Again, it’s completely linked to these framework, European framework. Is there today demand for green hydrogen as itself without this type of framework, no. The reality is no. So, that’s why you have more supply than demand. The question for us is, today, I mentioned the volume, we will see what will be the price at which it can be delivered, knowing that we don’t want ammonia, we want hydrogen, which is a little you have to transform ammonia. Where does it come from, at the end of the day, my view is that it will mainly come from local European producers, U.S., will be a mix. It’s not so easy to manage all these. We will see because there are also today some uncertainty because the regulation, for example, in the U.S. is not truly completely approved. So, is a green hydrogen produced in the U.S. exactly acceptable as a green hydrogen in Europe, there is a regulatory debate. That’s one of the debate. We also know that there are some big plants being built in the Middle East. So, for me, it’s a good way to see at which price we can deliver these volumes to Europe. So, we cannot say you more because we have received all of this, we are working on it. It will take six months probably to better qualify them. But we are working actively. And you have different type of producers. You have the large hydrogen producers, but you have also a lot of developers. So, we are looking to that. And we will give you more information. I know a lot of people are looking to our tender to better understand where is the market. So, we will give more information when we have them. We will not get it at $3 per kilogram, just to – but – and under $6, it will be okay. We will see if they find a challenge.

Okay. Maybe one of the last one. Bertrand?

Bertrand Hodee, Kepler Cheuvreux. Two small questions left. Can you update us on the progress you are making on your Oman LNG bunkering project and how this project is innovative? If I remember well, it is fully electrified. And the second question is on Shell SPDC exit in Nigeria. I haven’t seen any press release from Total following that decision. I assume that you will exit as well. Can we assume it is under the same terms, or the negotiations that needs to be done for Total, to TotalEnergies? Patrick Pouyanné: No. We are on the same way. We want to keep the control of the – we had the difficulty to be – the oil part we want to exit. We have the gas. The gas resource needs to be – are very important for the expansion of an LNG. So, we need to find a way to be sure where the gas is developed. So, I think the Shell scheme, which is in fact to create a sort of SPV for the gas, where we will keep the economic price, but the cost as well, is a good scheme. The difficulty came that SPDC as a company, it’s super complex to carve out. The idea initially was to carve out the gas license, it’s super complex in the Nigerian system. So, we have to be more innovative to do that. But fundamentally, the exit is clear. And we will be able probably to announce soon what we will do. But we are aligned, same view when Shell to try to maintain an SPV on the gas. And it’s aligned with the NNPC, I would say, GMD, they want. And again, it’s consistent. We cannot launch a new train in LNG and not taking care of the upstream gas and relying on others. We will never manage that because in the Nigerian system, most of the value is in the downstream, not on the upstream. This is where today we have some disconnect with some of our partners. But we are aligned on it. Fundamentally because producing this oil in the Niger delta, is not in line with our HSE policies. It’s a real difficulty. So, we have some buyers, but we want to put that in order. And we were waiting to see – we wanted to respect Shell first before to move ourselves, with – in connection with Nigerian authorities, because at the end, we need the approval. So, I went to Nigeria and to Lagos. We discussed. And we want to do that in, I would say in partnership, not aggressively. If you are aggressive, they can stop you or not then, it’s a mess. So, we want to do that in good intelligence with the Nigerian authorities. Oman LNG, you are the one who follow us very carefully. It’s a decision we have to take in ‘24, do we proceed or not. The reality is that we have that option, of course, and which is a good and attractive option. But Oman has other plans as well to develop another train on Oman LNG. So, there is a debate of allocation of the gas today. We will do that as well in connection with the Omani authorities.

A very small one. It’s a follow-up on Nigeria, on Train 7. Do you believe there will be enough gas, or the other way to say that is that the plant will be delayed if there is no enough gas, and when do you anticipate Train 7 in Nigeria to start up? Patrick Pouyanné: I think I answered to you in my previous answer. Okay. It’s part of the story of the gas. There is – I said clearly to my colleagues and to Nadia [ph], it will be crazy to have a train with no gas. So, I want gas. But the gas is part of all these developments. And okay, that’s one of the complexity. We are working actively on this one.

Okay. I think we covered everything. Patrick Pouyanné: Yes. So, it’s exactly 11:45. I know that we have our Norwegian friends this afternoon in London, that you will rush to listen to – no, we are in good connections. We have put our sequence before earlier this morning, we asked you to come, not to have any overlap. So, we take care of you. So, it’s – the two teams are connecting regularly in order to organize it for you. So, thank you for your attendance this morning. Thank you for – I think you know honestly, as a conclusion, I would say we have a clear strategy. We are consistent in terms of execution. We don’t change. I think it’s a clear message. And I think in this energy business, maybe because I am there for 10 years and for some years, my lesson is, let’s be – stick on what you think. And including in the distribution policy, try to establish a clear framework rather than moving around permanently. I think it took time to me to understand it, but no, I am there and I am sticking on it. So, maybe for the hedge funds, it’s not a lot of fun, but for our long-term shareholders, it’s a lot of fun. It’s better. And we are more targeting this type of shareholders for making these companies a success. Thank you.