Total will strengthen its savings plan after a profit that collapsed in the first quarter with the fall in crude prices, the French oil giant also promising “ carbon neutrality ” in 2050.
Read also: How Total will reopen its Defense headquarters
Net profit fell 99 percent in the first quarter to $ 34 million from $ 3.1 billion a year earlier, the group said on Tuesday. Adjusted profit, which notably excludes the accounting effects linked to the valuation of stocks, fell by 35% to 1.78 billion.
" The group is facing very exceptional circumstances: the Covid-19 health crisis which is affecting the world economy and creating major uncertainties and the crisis in the oil markets with an oil price which has fallen sharply since March ", underlined the CEO, Patrick Pouyanné. The average price of a barrel of Brent from the North Sea was 50.1 dollars in the first quarter this year, against 63.1 a year earlier. Prices have collapsed even more since: a barrel is currently worth less than 30 dollars.
Savings
Faced with this crisis, the group announced new savings targets (with at least $ 1 billion on operating costs) and a reduction in its investments (less than $ 14 billion in 2020 compared to 18 initially planned). These measures go further than those already announced in March. The group now anticipates production between 2.95 and 3 million barrels of oil equivalent per day (Mbep / d) this year, a reduction of at least 5% compared to initial forecasts.
On the Paris Stock Exchange, investors welcomed this publication: the Total share took 5.56% to 32.1850 euros, in a market up 2.30% Tuesday morning around 10:00. Unlike its competitor Shell, Total has not lowered its dividend but offers shareholders to pay it in shares, analysts note. " Total is not immune to the difficulties of the sector " but " its balance sheet is stronger than that of most of its competitors, " welcomed Biraj Borkhataria, analyst at RBC Capital Markets.
" Carbon neutrality "
Pressed by investors and environmentalists to do more for the climate, Total also announced a new objective of “ carbon neutrality by 2050 ”, following the example of competitors like BP and Shell. This neutrality supposes a balance between emissions and removals by carbon sinks such as forests or CO2 capture and sequestration systems.
In detail, Total aims for carbon neutrality for its own global operations " in 2050 or before ". The objective also includes all “ Total energy products used by its customers ” (such as gasoline burned in cars) in Europe by this time. Total also wants to reduce by 60% or more the average carbon intensity (the quantity of greenhouse gases emitted per unit of energy produced) of the energy products used worldwide by its customers by 2050.
Read also: Total accelerates in solar in France
“ The energy markets are evolving, driven by climate change, technologies and the expectations of civil society. Total is committed to actively contributing to the dual challenge of providing more energy with fewer emissions, ”commented Patrick Pouyanné. These announcements were immediately qualified as “ half-measures ” by the NGO Reclaim Finance, which asked for the adoption of “ real climate commitments ” at the general meeting of shareholders at the end of May.
