Good morning. Good morning, everybody, for traditional Union State, State of Union. It's a season here in Saint Patrick's. For results, our outlook that I will present you together with your preferred P2 and I will say together as well with all the executive committee members who are today in the room who will join us for the Q and A session. This tradition will be a little there will be some novelty like always into town because this afternoon after if you agree to stay with us after the lunch, we will innovate by presenting you our first ever Energy Outlook 2,040 Markets on oil markets, gas natural gas markets and power markets.
And will be followed by our climate presentation, which logically came after market trends. So let's begin first, of course, with this results and outlook presentation. You will have no surprise, I think, as our results are in line with our message, we think we have demonstrated in the last years and 2018 was another proof that we are consistently executing and delivering onto our strategy. And so it's another year, I would say, of strong delivery on most, if not all, our objectives, and in particular, outstanding production growth, more than 8%, finally. So you were right last year when you told me you're a little shy on your growth.
So we'll not be shy for next year, you will see. But also not only and there is no change in our speech today, it's not volume above value, it's value over volume, but also a strong profitability ratio. And we are pleased to see that our return on capital employed is next to 12% this year. Of course, we are at $71 per barrel, but it's a strong improvement and all that has been done because we also managed to maintain also a strong discipline on our spendings in CapEx and OpEx. This growth and discipline allows us to have growing cash flows and it underpins the plan we delivered to you last year in the same room in February 2018 about shareholder returns.
We executed and we have a strong visibility, which will be the main message again today like I delivered to you in last September, strong visibility about our cash flow growth, which underpins our higher shareholder returns. We have also, of course, in 2018 continued to build the future of the company and with this strategy, which is to integrate the value chain of oil, of natural gas and our low carbon electricity, which is more material today after the bios M and A business we have done last year. And so we have in our hand an attractive portfolio to deliver this strategy post 2020 and one of the you will see by the way that our renewal of reserves has been quite is quite high. So no priority for the next year for 2019 will be, of course, to deliver this production and with most of the projects that we launched, which will deliver the cash flows, shareholder returns, but also to launch the new wave of future projects. Just before I leave the floor to Patrick to describe you the results, a few words as always.
First of safety, I like the films that you've seen. Safety, of course, is a question of human behavior, but it's also a matter of technologies, and it's nice to see that all these AI technology can be applied to safety, and I think not only in a smart way, and there is a strong enthusiasm about the team among the teams in the company. So question for us now on these AI stories and digital stories is to be able to scale up all these proof of concept. But in terms of safety, I think this slide is interesting as we on the right hand side, you can see that we took the example of Saft. We acquired this battery company in 2016.
There are 4,000 people working there. We can see that the total recordable injury rate was quite high, above 12. In fact, if we would have put on the slide the 2014, 2015, 2016, it was 12%, 12%, so no improvement in SLAFT. We came in. We told them this is clearly not acceptable.
We need to implement in your company the same way we work and the same recourse, by the way, one of them being that total recordable reinsurance rate is an objective and as an incentive to people. And you can see and when you speak about safety culture in the company, I think this will be a good example and demonstration, but in 2 years, they went down from 12% to less than 3%. It seems to be impossible when we told them that last 2%, if I remember, there is a strong discussion every year and I'm convinced that we'll reach a level of 1 that we have in the company because a company like Hutchinson, which is another manufacturing company in the group, is less than 1. So there is no reason to so that's proved that when we speak about value and culture, this is really this view. And based on the results, like you can see, at the Group level, we are plateauing at 0.9%.
We have set a target of lower than that for next year because we think there is no reason to stay there at this level. There are some peers which are a little better than us. Was these results are good, but there was some shadows. In particular, we suffered and it's in the next several 4 fatalities this year. One driver in Ethiopia in marketing business, 2 operators in an explosion of storage on a depot in Egypt, clearly about mismanagement, misoperation and one car risk I think in Congo in E and P activities.
So this is much too high. We have and of course, it's proof that we need to permanently remind to everybody that safety is a value and is a top priority. So after that few words about the markets to see the scene. All markets, I will not give you any guess about what will be the oil price. Everybody is wrong in this market.
We have also the strong volatility in 2018, pricing going up to 85% and in 1 month going down to 55%. I think there are some fundamentals, which makes me optimistic, I would say. First is that the demand is continuing to grow at a high pace, in particular because we observe a sensitivity to the price. And so at $50, dollars 60 per barrel, the International Energy Agency is announcing plus 1.4 for next year. By the way, we just reached 100,000,000 rollover per day in the last quarter of demand.
So the demand is there. Of course, there are some, I would say, question marks about impact of trade wars on the emerging market growth and stability of financial markets. But fundamentally, what we observe is that when the price is reasonable in the $50 $60 range, Emerging markets, which need more energy, in particular, Southeast Asia, Africa, we have a strong demand. On the supply side, it's of course, I would say, some trends there, opposing trends. I think OPEC countries and Russia have taken a good lesson in 2018.
In June, they tried they thought they were able to stop quota, being relaxing the quota. We've seen the impact they observed the impact on the market. So the decision by announcing end of November, I'm very convinced that Saudi Arabia is determined to execute it. They already implemented, but also the other countries. Of course, we have some other we have key countries like Venezuela, I will not comment on it now, which are not in a very good shape to increase their production or export from Iran.
People have been surprised on the high side, but the decision of the U. S, maybe we'll see some restrictions coming by May. Libya is up and down. The industry, globally speaking, still does not invest a lot, even if it's true that $1 today is in terms of volume of investments is much more than the dollar yesterday, because the costs have been driven down by 30%, 40%. And we have, of course, the U.
S. Shale supply, which today we've seen a big growth in 2018. The bottlenecks, the pipeline bottlenecks will be out by second half of twenty nineteen, most of them. So we should see more U. S.
Shale oil coming into the market. So we are opposing trends. So it's difficult to anticipate. I will not do it. We continue to drive the company by sanctioning the projects at $50 per barrel.
We are keeping our permanent eyes on the breakeven and the $30 per barrel, dollars 50 with dividend. So these fundamentals are strong because it's our job to we like to be excellent of what we control. And then as the prices are higher, we will be able to deliver, of course, higher returns. One market which is clearer to us is the LNG market, where clearly we are always short of forecasting the increase of demand. And when I look to the last 3 years, it was this year has been again 10%, was 11% last year.
So it was 5%, 9% as an average. We always say it will be 5% for the next 5 to 10 years. But in fact, for the time being, the market is growing very quickly, in particular driven by, of course, the policy in China. China has grown again this year by 40%. It was 40% last year.
It was almost 40% 2 years ago. So I don't know if it's permanent, but its anticipation is still very strong that oil gas in the energy mix of China is still low. But for, I would say, environmental issues, air quality in the cities of China big Chinese cities, very strong momentum for LNG, 55,000,000 tons have been imported there this year. Japan stays stable at around 80,000,000 tons despite the fact that nuclear is a little more available and should be stable. But you have other countries like India, which have seen a growth also of more than 30% this year and reaching 25,000,000 tons.
So we have a strong momentum there. And with all the environmental trends and the fact that LNG is more and more a commodity, many points of productions, so easier to be cost efficient in terms of delivery to the customers makes us still quite optimistic about this market. It's why, by the way, it's an axis of the strategy of the company. And you can see that on this, on the other side, that there is by 2025, if we want to continue this demand to match this demand, you have room for another 100,000,000 tonne of projects and 150 by 2,030. So of course, there are many projects around the world, but there is room there to develop low breakeven projects in LNG.
So, having said that, to set the scene for the markets, I will leave the floor now to Patrick to give you the results of 2018.
Good morning, everyone. I'm quite happy to be there once again. The news is good, and you know when the news is good, the job is easier. Let's have a look to the strong result. We are continuing to deliver consistently strong result with 2018 adjusted net income increasing by 28% to $13,600,000,000 The E and P segment at the bottom of the chart on the left increased its contribution by 71%, while Brent increased by 32%.
And this reflect, of course, the benefit of the 8% production growth. And also the benefit of our portfolio management. You can see on the left also the new integrated gas, Renewable and Power segment that we will give you the data as quarter after quarter. It's a new reporting format. It increased its contribution largely on the strength of better result for integrated LNG and natural gas.
But we can also say that GRP Gas, Renewable and Power without the LNG delivered a result 56% higher in 2018 compared to 2017. In contrast, of course, the environment for Downstream was weaker. Nevertheless, we are well positioned. And the combined Downstream generated $5,000,000,000 of adjusted net income with ROACE above 25%. And basically, total downstream is the best in class.
Let's have a look sorry, I did not comment the right side of the slide. On the right, you have the average capital employed where total is close to 12% and once again is the best in class. This reflects in part our efforts to reduce our non producing assets and capital employed by half from 2014. We are around 24% today. Let's move to the cash.
Cash flow is an important metric for us. Our new high margin Upstream project are making a strong contribution. We generate $24,700,000,000 of cash flow from ops coming from upstream of course, an increase of 54% and downstream up to $6,500,000,000 Working capital reverse in the Q4 and basically is neutral over the year. Our portfolio is quite resilient to the long term. You saw that the past year and is increasingly able to capture the upside.
The cash outlay we are back in line with the guidance. CapEx was $15,600,000,000 1st year buyback was $1,500,000,000 Dividend with the 3.2% increase was at 7 point $7,000,000,000 And of course, we are investing in the future. On an organic pre dividend basis, we have reduced the breakeven to less than $30,000,000,000 sorry, dollars 30 per barrel. Let's move to exploration. From the left to the right, we start with some positive news this year from exploration.
The budget is stable at $1,200,000,000 And in 2019, with the same amount, we will do, thanks to cost structure, we will do more well in 2019 than in 2018. On the left, following the Glendronach discovery, Last year, we announced the Glengorm discovery in January, which appears to be the largest gas discovery discovery made in the U. K. Over the past 10 years. I remember that Glengorm, we acquired it from Maersk, which is adding value, of course, to this acquisition.
Next, we opened a new world class play offshore South Africa with the Bool Padagas condensate and light oil discovery with a potential resources of about 1,000,000,000 barrels. On the right, thanks to our partnership with Novatek, where we own close to 20%, 19.6% exactly, 0.4%, sorry percent. Novatek made one of the largest discovery of the industry in 2018 on the Yamal Peninsula. This underlines the importance of Russia as an LNG supplier. While exploration was playing a great role, we highlight the significant success achieved through M and A.
2018 was extremely active in term of M and A, and we grew and high grade the 2P reserve base. The Maersk Oil acquisition, which we did with shares, was by far the largest for us last year, dollars 7,500,000,000 It contributed strongly to the 2018 1P reserve replacement that we will show you. In terms of M and A for E and P, we sold $3,200,000,000 of asset with a breakeven at around $40 per barrel. And we acquired by $4,500,000,000 in cash of asset of higher quality low breakeven below $30 per barrel assets. We basically reallocate capital employed from asset with a breakeven above 40 percent to asset with a breakeven below 30 percent.
This is including Merskoye. We moved at the right time and at the right price. The net effect was to contribute to the 1,400,000,000 barrel increase in 2P reserve, which represents for us 20 years of production. Our portfolio management has played a role of in concentrating our 2P reserve within 8 countries, including 4 OECD countries, which are Australia, Canada, Norway and the U. S.
Then have a look to the downstream. Downstream, I remind you, it's a best in class downstream among the major with ROACE of above 25%. We show a cash flow contribution of $6,500,000,000 in line with our guidance of about $7,000,000,000 despite the volatilities, weaker environment. And I'd like also to remind you that since 2015, we already sold $8,000,000,000 of assets in the Downstream. So achieving $6,500,000,000 in a weaker environment after having sold $8,000,000,000 of assets is quite an achievement.
You can see the well balanced split on the right between Refining, Chemical and Marketing and Services of the cash flow. We are managing this balance of diversity and resilience from future by investing in advanced feedstock petrochemicals in core area for the refining and chemical and fast growing new market for marketing and services. We believe that we have the best in class downstream, and I'd like to point out that in 2018, the profitability of refining and chemical was 31%, and marketing and services was at 25%. I do consider that the balance sheet the strong balance sheet is an important part of supporting our strategy. We have a very strong balance sheet with despite of all the acquisition we have made, gearing far below 20% at 15.5%.
It's I remind you also, it's an element of the executive compensation scheme. I am happy to report that this gearing is completely under control. On the right, you see and you know that there will be a new IFRS 16 to be put in place by 2019. Side effect of this IFRS 2016, the gearing will increase by around 3%, capital employed by $5,000,000,000 to $6,000,000,000 and the cash flow by about $1,000,000,000 So this is a summary of all the objectives we set and what we have delivered. 2018 was highlighted by very successful portfolio management in a very volatile environment.
2 points I'd like to have to show you specifically. We outperformed on cost reduction. We were a little short on OpEx at $5.7 per BOE instead of $5.5 which was the target. This is due to the integration of Maersk, but we will have this 5.5% target for 2019. Downstream cash flow still strong in term of free cash flow generation and profitability was good also due to good operational performance.
The strongest performance obviously was the production growth at 8%, And now the stage is to set for 2019 to be an even more interesting year. And of course, we started our share buyback program by paying $1,500,000,000 So once again, the slide we show you every year where TOTAL is obviously the best. We specifically, dedicatedly choose the criteria, production, downstream ROACE, group ROACE, which is the best in class, gearing, of course. And that's a great achievement to be made and made by Total for the past 3 years. Every year we show you this slide.
Compared to our peers, I'd like to say that the story has been largely derisked. The execution risk for production growth is minimal at that point. I remind you that our objective is to create value and that the increase of volume is a secondary effect. So the 9% production growth we post for 2018 is a secondary effect of our main target to create value. And of course, we are on track to the shareholder return program.
As you know, I am retiring this coming summer. This will be my last presentation. I became CFO in 20 'eight, so it was a long time ago, 11 years, I think I'm done at that time. So it's time to pass the floor to Patrick and tentatively to Jean Pierre Blair in the future.
Patrick is not gone. He's still there. I still actually say yes. But it will be there with us for the next AGM and Q2 results. But yes, it's true because there was news in the newspapers March, December, I know it's during summertime.
And Jean Pierre, that you begin to know, I think, which is probably in the room, is there, will yes, will be the next CFO of Total. It's clear. It's approved by the Board and it will be made public very soon. But let's work and we'll have other opportunity to say to Patrick Hall, but we appreciate all of us and I know also our shareholders. Avi has been fortunate to have him during the financial crisis when he took his job and then the collapse of the oil price with myself.
And so we'll have opportunity to celebrate that, even if we'll be sad to see him leaving the company. But so I'm coming back to so for 2 parts. The first part will be to tell you what is exactly the I already described it in my introduction, but the program for the next year and then to give you to update about the strategy post 2020. So the keywords, like we said just before, is discipline and cash flow growth. I would say it's growth, production growth and profitability again, but this is cash flow.
Of course, production growth so it will feed our return higher return to shareholders. The so it will feed our return higher return to shareholders. The cash flow, yes, it's outstanding. And like Patrick said, it's derisked. So we are, in fact, comfortable to say to tell you that we'll be do more than a growth of 9%, because most of the key projects are started by end of the year.
AGINA at December 30. The teams were nice with us. Kaombo North and will be followed by Kaombo South by middle of the year. The FPSO of Carambo South is already anchored on the site, so we are on time. And of course, the 2 large project, N and D project, Yamal, which has managed to start us the last train, the 3rd train, 1 year in advance compared to our plans.
So of course and this is done in a very smooth way. It's a remarkable achievement by Novatek teams together with our engineers, which were there in Yamal. And Ichthys was a little long, but now it's down at higher cost, but it started. So for us, it represents more or less 100,000 barrels per day, Ichthys, over 26% and the ramp up is moved today. So that means that most of this growth is in our hand.
We have some few startups of giant projects coming in front of us. Karambossoff, I mentioned. Kislain from the Maersk Oil portfolio in the North Sea. Johan Zwerrup, our operator, is better informed than myself, but I'm confident they will deliver this project by, as they said, by their timetable. And Yalla-one is in Brazil, on which we expect also as a start up next year.
One of the characteristics is that we'll have a strong growth of LNG production, more than 40% increase in LNG, which is the reason why we decided to change our reporting to give more clarity on the LNG figures. And so you will see the production being reported to you through E and P tomorrow and from IGRP, E and P being most fundamentally all the oil production plus the domestic gas, IGRP being all the integrated gas LNG. But it will give you more information about this growing business as it is one of the key areas of growth and investment for us in the future. I think it's good that you have a better more data about this segment. On other characteristics and which is underlying the production growth of more than 9% is that, as we told you, we have some short cycle projects and we begin to sanction some of them.
It will contribute to 60,000 barrels per day, which is a way in fact to manage our decline rates, in fact, which will be quite low around 3%. So this is an outstanding production growth. We confirmed the 5% 17% 22%, but I will come back on this later in the presentation. It's combined with keeping the capital investment discipline. I had some questions from you in September.
Do you change your discipline? We told you no. And by the way, we're right because then we see the price going down. So we keep the guideline of $15,000,000 $17,000,000 In fact, for 2019, we are around $15,000,000,000 $16,000,000,000 including 1 to 2 net acquisition for 2019. Last year, we told you it was an average of net acquisitions, I mean acquisition sales around 2 as an average.
We've done 3 this year, so we target a little lower this year of $1,000,000,000 to $2,000,000,000 giving priority to more organic CapEx. You can see that the split and this is one of the interest I think of the new reporting we put in place that you have a more balanced vision of the CapEx figures. In fact, we invest more or less 20%, dollars 3,000,000,000 in the Downstream. It's quite stable. We invest $4,000,000,000 in IGRP, integrated gas and new Woven Power.
It's 2 to 3 from LNG and 1 to 2 from low carbon electricity, more or less, depends on the year. And E and P, traditional E and P represents around 55% of the investments. So we are in line with the guidance. We maintain the discipline and this will allow us to prepare the future growth of the company, as I will show you. We keep in place all our cost savings program, but again, despite some discussions when the price was higher, we are right to do that.
In fact, we even delivered more than what we showed you last year. We were target was above $4,000,000,000 We have delivered 4 point $2,000,000,000 We are confident for 2019 that the target will be $4,700,000,000 which means that our program was targeting globally $5,000,000,000 of savings between 2020 2014 will probably at the end land above the $5,000,000,000 And upstream and downstream are both contributing to these efficiency gains and it's of essence, in fact, because in our industry, again, the margin or refining margins or the marketing margins or upstream price, we do not does not follow the inflation. And so as we have some costs, in particular, our salary base, which take inflation, we need to permanently look for more efficiency. And it's possible from also by the way, all these digital technologies can help us will help us in the future to manage these savings. You can see that we are best in class in OpEx per barrel.
It's we are around $5.5 per barrel. It's true that mask oil in the North Sea was a little more expensive, but it's minimum, in fact, when you look at the impact. And we have an internal target because of the savings, but also because of the synergies on Maersk Oil in which we are online, in line to deliver the $300,000,000 cost synergies, which will help us to go down this $5,500,000 Again, we have a competitive advantage that we want to maintain. It's also a choice, as Patrick told you, in our M and A activity of selecting the assets which are fitting with the strategy and fundamentally, which is to permanently look carefully to breakeven of the company price of the company. So we have, thanks to this growth and thanks to discipline, a very clear visibility on the cash flow growth.
I just update the figure we gave you in September for 2019. You can see on this chart that we'll have more debt adjusted cash flow at $60 per barrel in 2019, but what we so $26,000,000,000 we delivered in 2018 at $71 per barrel, in fact, more or less a little less than $2,000,000,000 above the figures of this year. In fact, there is an increase of $6,000,000,000 of cash flows between 2017 20.19 at $60 dollars and 2020 will be $8,000,000,000 So this is why we are confident and we put in place a more active and often dynamic shareholder return policy. This cash flows is coming again. It's visible from projects which started already Kaombo, Ichthys, Egina represent in 2019 $3,000,000,000 of additional cash flows at $60 likely acquisition, which have been completed now represent $2,500,000,000 It will increase to $3,000,000,000 next year with some start ups, which have been mentioned.
And we have a sensitivity to the oil price, which is increasing. If we realize a liquid price, an increase of $10 we have $3,200,000,000 extra cash flows. So this came to this slide that we introduced to you last year for the first time with the Board discussions and approval, which is for priorities of cash flow allocation. There is no change. We executed.
We gave you that picture for the next 3 years. So we are in this plan. Capital investments, again, we are in the range. It's a priority of the company. Then the dividend increase, second priority.
So we announced that for 2019, we intend to we will increase the quarterly interim dividends and then to buy another 3.1%, 3.2 percent, dollars 0.08 of euro per year, which will make 6.5% globally from 2017 to 2019, and we will reach 10% as planned by 2020. Gearing is of essence by strong balance sheet, a 3rd priority. Patrick explained to you that gearing is under 20% under strong control, and I hope Jean Pierre will keep the same policy. And of course, the Board is adamant to maintain our Grade A penetrating. And as Patrick said, by the way, it's one of the key parameters of the executives' viable pay.
And then the share buyback, which has been introduced last year as a way to return more to shareholders if the price is higher. We told you beginning February that we were planning to buy back $1,000,000,000 at $60 The price was obviously higher. It was $71,000,000 So we increased the buyback to $1,500,000,000 And by the way, you've seen in the chart of cash flow allocation that Patrick showed you that we generated $26,000,000,000 $1,000,000,000 for payments of interest payments, so $25,000,000,000 and the $25,000,000,000 were perfectly split to $16,000,000,000 for capital intensity and $15,600,000,000 for capital investments and all the rest returned to shareholders. So this was executed exactly like planned. We increased it.
And this year, in 2019, at $60 we'll buy back the same amount that we've done in 2018 at $0.71 for 1.5 dollars If the price is different, we will have the same flexibility for returning more to shareholders through share buybacks. At this stage, there is no reason to change the $5,000,000,000 program. We'll see what the price will be in 2019. But again, the last 3 months have demonstrated to us that we need to be humble about this type of forecast. But we are exactly executing this shareholder return plan as explained last year.
So having said that, there is a strong visibility again and confidence of the Board of Directors and myself as Chairman and CEO and of course all the executive team about what will happen in the company for the next 2 years. We also our duty today is to prepare the future growth. And of course, this future growth, again, you know that slide. I will present it again this afternoon, but it doesn't change. It's fundamentally a strategy of the group is in line to potential anticipated market trends.
We don't know if the world will be able to make a 2 degree scenario. There are some doubts around the world. But whatever will happen, there are some market trends in terms of new technologies, which we need to take into account. And that means that we need to focus on oil, which is again low breakeven oil because we could face some situation where the oil demand will be slower or even decline. On the contrary, there is a strong space for seeing a growth for the gas, natural gas.
That's why we invest more and more in all the chain of the gas value chain. And the overall characteristics of the demand of energy is that electricity demand should almost double in the next 20 years, coming either from natural gas or from renewable. So it's why we invest in this low carbon electricity business. We also play to our strengths when we speak about oil and gas, and we have some areas of expertise. We want to stay integrated company business model, so we are, of course, producing.
In particular, we have a strong footprint in deepwater, and I will come back on it, but also LNG for natural gas and then petrochemical, which is the integration downstream and retail and lubricants. And we have some key geographic areas where we have put most of our efforts, where we are very confident and our teams have the right skills to develop projects in a profitable way, which is Africa. We are a market leader. Middle East and North Africa for the last 3, 4 years have demonstrated as we are a partner of choice and the North Sea, which we have reinforced with the Maersk Oil acquisition. We have been very active in the last 3, 4 years.
We acquired $24,000,000,000 of assets. We sold $16,000,000,000 or $17,000,000,000 of assets. In cash, by the way, it was we bought $16,000,000,000 $17,000,000 We sold $16,000,000,000 But on the top of it, we had the shares and debt acquisition of Maersk Oil, which allow us to make quite a lot of move rotation in our portfolio. And among in the production, the E and P production, the 3,000,000 barrel of oil per day production in 2019, more than 20% of this production has been acquired during the last 3 years, but some have been sold as well. So we acquired 7,000,000,000 barrels of resource of less than $2,500,000 per barrel as an average.
They will generate more than $4,000,000,000 of cash flows, which is what I show you on the slide and with a ROACE of $60 around 10%. A word about the ENGIE LNG deal, which was also a landmark deal on this activity of M and A activity in 20 18 because it's allowed us to become by far the 2nd publicly traded company in the LNG world with a portfolio of 20 1,000,000 ton per year. This will generate $300,000,000 $400,000,000 per year and while share of 20 percent, the payout is around 3 to 4 years. And we begin to see the positive effect on our portfolio, LNG portfolio, trading management since middle of the year in 2018. But all that, of course, all this activity has given us and Patrick showed you this big improvement of the portfolio of 2P reserves and so 1P renewable rate of 157% is very high.
Now we are main of activity for us and the main focus we have in 2019 will be to clearly sanction all these projects to transform these reserves in production in order to feed the growth. We have on your slide and I will go through, you have more than 700,000 barrels per day of potential production to be launched by 2020. Just by sanctioning all that, we have already in our portfolio a growth between 2020 2025 of more than 2%. Do not misinterpret, but it's a minimum growth that we'll do, but I don't think we'll stop begin to slip. And so we'll have opportunity to select more new projects if they are value accretive, I would say.
So we have already embedded more than 2% growth, which is more than the hydrocarbon markets. When you look to and these projects, as you can see, have a weighted average. I told you what we manage the company at $50 per barrel sanction the project, about 15%. Not all of them are about 15%, because I would lie to you if I would tell you that LNG projects are above 15%. LNG projects are quite capital intensive, but we they are the cash generation is also very strong and stable, so we sanctioned them on other parameters.
But globally speaking, we are having this global project will be we have a profitability above 15 percent, which will enhance, of course, the return on capital employed in the future. When you look to the map, you can see that we have sanctioned in 20 18 around 7 projects, 3 in the North Sea, 2 in Africa and some in Unchain Phase 2 in Argentina. In front of us, what are the characteristics for the year to come? We have a lot of projects in Brazil, so it will be a deepwater Brazilian year. The Mero 2, which should be sanctioned by middle of the year, it's a Phase 2 of Libra.
We have 3,000,000,000 to 4,000,000,000 barrels of reserves in Libra to be developed with at least 4 FPSOs. We have Yalla 3, which is a new phase of development of this license in which we have entered this year through the strategic deal with Petrobras and L'Apres Frei, which is a new phase of development of the presold field that Total operates now in Brazil. First, we are the 1st presold operator, and we will build on it to extend this life of the field. This is Brazil deepwater. We have also characteristic of we have some projects in the deepwater in the Gulf of Mexico, North Plateau that we operate since we made the acquisition at nice value of the cobalt assets, but also the projects where we are partner with Chevron.
We made a strong alliance on exploring together with Chevron, which is a successful operator. In the Gulf of Mexico, we have discovered Ballymore. We should be able to we are launching we should be able to connect in the 1st phase Ballymore to existing infrastructure. Enco as well, but it's another discovery on which we have launched the engineering studies and going sanction that in 2020. So they are good projects.
And the other characteristics, let's say, is LNG on this map where and I will come back on the LNG projects. We have 5 projects in the LNG business that we want also to sanction. So this will be the priority for all of us, for all teams to put in action and to transform all these results into production. On the top of it, it's not only these, I would say, medium and long term projects, it's we have also some we focus also on some short cycle developments, which are very flexible. We have sanctioned in we plan we have and we plan to sanction around $400,000,000 of reserves.
We identified more than $1,000,000,000 These are highly profitable projects, more than 20% or $50 per barrel because there are margin also in existing infrastructures and CapEx under $7 per barrel. We have some few examples there on this chart. And it helps, of course, to manage the decline rate, which is again 3%, probably one of the best in class. Integration is important. And by the way, this is a way to illustrate it.
In this company, in total, we produce 1,600,000 barrel of oil per day. We will be fine at 1,900,000 and we market 1,800,000. When we speak about integration, it's not physical integration, it's economic integration. We are a little over definer, but you can see that economically, we are well balanced and we intend to maintain this balance along the value chain, old value chain. One field that Patrick mentioned of areas of interest is to grow in petrochemicals and in particular, I would say, in advantaged feedstock petrochemicals.
You don't see Total investing in any new naphtha cracker because there is no competitive advantage, but you see us moving and being quite aggressive. And 2018 has been an excellent year, by the way, for the Refining and Chemical Business Unit led by Piper Bernard because not only they delivered $4,300,000,000 I think, yes, dollars 4,300,000,000 of cash flows and Roachio 31%, but also we have been able to launch new projects. So new cracker in the U. S, it has been sanctioned together with Borealis and Nova. It's not a new cracker, it's also a big increase of PE capacity.
Our success story in Korea with Anwar, each year we make we built on new capacities, P and PP, based there on propane extension. Every propane will be imported from the U. S. And then we have 2 new projects in the Middle East, North Africa region where we can have access to advantaged feedstock, one being in Saudi Arabia, the strong big large, very large expansion of Sato. We speak about the $5,000,000,000 projects investments.
It's a mixed fuel tracker with some ethane and some advantage of our advantaged liquids in which we benefit from the policy of Saudi Arabia together with Saudi Aramco. And then in Algeria, where we have launched this engineering studies together with Sonatrach of a new propane dehydrogenation unit to build on polypropylene business, She will be new for Algeria, part of it being for the domestic market, but the other part being exported with the knowledge of team of Total. I would not mention petrochemical without saying a word about this alliance, which has been just announced recently with 30 other companies on the end of plastic waste. I think it's very important when we speak about being responsible and having a sustainable development petrochemical by the whole industry and not only the production producing industry, but also our customers together with us think seriously about the way to manage all this plastic waste. It's a matter of recycling, but it's a decision we cannot take alone because we need, for example, what the plastics, A, to be recycled is a color.
So we need to convince Procter and Gamble to stop selling to the women of the world pink shampoo bottles because we cannot recycle them. That's very strong, but it's a question of it's just an example of and I think this alliance will be strong, a strong commitment. Clearly, in the world today, it could be, I think, when we speak about petrochemicals and we speak about growth of around 3%, 4%, One of stakeholders could be this issue of plastic waste. So it's a strong commitment within the company and for the refining and chemical division to develop more projects in recycling, also bioplastics as we've done recently in Thailand. Aware of that marketing and services, 2018 has also been a great year for them because they delivered $2,200,000,000 of cash flow from operation, growing another $100,000,000 like they promised to us.
So net result is stable, but the cash flow is a little higher. But also because they implemented under the leadership of Momar the strategy we seek to enter into some large growing markets in retail. And we are there making some, in particular, Mexico, Brazil and India. So in Mexico, now we have, I think, 200 stations. We've alliance with local partner.
We increased our growth to 400. In Brazil, we make an acquisition. It's an interesting market. It's a biofuel dominated market. We have made 300 stations.
We intend to grow in Brazil. It's not only an upstream business, but it's a large market, but it's also for us a downstream market that we want to benefit of. India, we have identified an Indian private partner, Adane Group, which has been very active and successful in India. And in order to set a JV, which will in fact encompass some LNG free gas terminals, but also a retail network of more than 1,000 stations over the next 10 years in India. And last but not least, we were everywhere in marketing and services in Africa, except the country, which is one of most important one for us in Angola.
It's a sign by the way, it's a sign of the opening policy of the new President of Angola, the fact that we have been able to set this JV downstream and fifty stations will be shared with Sun Angola and will more to come. It's a positive signal for the investors, I think, for investments in Angola. So M and S is steadily growing. Its target is around 2.5%, 2.6% FFO by 2022. It's less cyclical, if we're not cyclical, which is, of course, good for the company.
Then I come to the last part, which is not the oil and gas, it's more even if we speak about LNG, this new gas Renewables and Power business, which is a combination again of LNG and gas value chain, I would say integrated gas value chain and low carbon electricity. So it's true that it's important for me that we can disclose you this type of more precise data because it's an area where we will continue to invest. So growth investment will be around $4,000,000,000 per year for the next 2 years. But it's also an area where the growth with cash flow are growing quite quickly. And you can see that between 20192018, if you take the high side, which is $70 the white line is at $60 you can see that there is an increase of more than 60%, which is, of course, led mainly by the increase of the LNG production, but also by the growing volume of LNG trading we can do since we acquired the LNG portfolio.
So we will reach by 2020 a sort of balanced situation where we should be able in these new segments, so growth segments around more than $4,000,000,000 of cash flows and investing more or less $4,000,000,000 This is our plan for the future. LNG focus, more precise data, but integrated LNG. Again, we grow from $2,000,000,000 $3,000,000,000 in 2020. It's a 60% growth. It's a strong contribution from the 2018 startups, Yamal, Victis, Cameron will come on stream by middle of the year for the first train.
That's what we have in our portfolio. And you can see that we have also, I was mentioning, 5 projects to be sanctioned, which are all which are quite, let's say, a large task to be done. 2 of them in the U. S, together with Sempra, we managed to enter into discussion. And that's one of the good consequence of the deal with ENGIE is that it's not only joining Sempra and Cameron on Train 123, but it's entering with this large utility company in the U.
S. Through more projects and in particular this Energia Costa Azul project, which would give us a position in the Pacific Coast. It's and we would avoid a lot of logistic costs by not flowing from the Gulf Coast through Panama channel, but directly from the Pacific Coast to China, Japan or Korea to Asia. We save a little less than $1 per 1,000,000 bidu, so it's quite interesting. But we have also the expansion there, of course, of Cameron LNG Train 4 and 5, which could have mentioned Tellurian, which is taking shape.
We are 20% shareholder of Tellurian. And I know that our colleagues are progressing on this project. And then we have Arctic 2 together with Novatek, which is moving forward, the field and the sanction is planned by the second half of the year. And then we have Papua LNG, which together with Exxon and Oil Search, which is a key target to be able to finalize the agreements, and we announced the FEED as well there in November. We have a technical scheme which is today agreed, which is efficient, in particular because we will expand, in fact, the existing plant and not create a new LNG plant.
And then Nigeria LNG Extension is probably one of the best projects because they're against the brownfield projects and it's a question of decision in Nigeria, which might be complex, but our all partners are to be in line to move on this project for 7,500,000 tonne per year. About low carbon electricity business, so 2018 has been a year where we really shape it in a sizable way We have a better visibility in what we want to do. It's a segment where we will invest $1,000,000,000 $1,500,000,000 to $2,000,000,000 per year. It will depend on Fundamentally, we have on one side production capacities because we want to be integrated. 3 gigawatts of gas to electricity are in fact in our hand because we have signed a deal with KKR.
We have a new deal coming in with Uniper EPH by the end of the year. And the rest of the portfolio, so it's 30% natural gas, 70% renewable production capacity worldwide. We have many we have several subsidiaries working on that in order to make a profitable business. I will come back on that. Then we have some supply training activities and the marketing, the distribution.
We have now 4,000,000 customers in France and Belgium in 2018. We want to grow this base in France and Belgium to 7,000,000 customers with full direct energy, which is a very active company. We managed to get this year a number of new customers and to reach our objectives. A word about renewables because there are many, many questions in my road shows about how do you make money with renewables. And let's be clear.
So it's the business model we apply in the company in TOTAL. It is clear that when you bid to make a large solar farm or an offshore wind farm or an onshore wind farm, generally, it's a utility business. The project is around 5% to 6%, 7%. That's true, it's a basis. Then, of course, there is, in particular, in this environment, a way to leverage all this project because when you have 15, 20 years PPA, you can leverage these projects and so you can enhance the profitability for this leverage.
And you can also, if you are ready to take on your balance sheet the CapEx until completion of the projects, you can then farm down in a very efficient way to financial investors. We've done that on many projects and we managed to reach this 15% more than 15% rate of return. That means at the end of the day that you keep 50% more or less of the projects. So if I want to reach my 7 gigawatt capacity, I need to, in fact, develop 15 to get 7. But this way to leverage financial interest rate and then to farm down to other investors, we see some interest to get 7% instead of is a way to, at the end, get an acceptable equity return, which is matching the rest of our portfolio because, of course, for a company, we intend and we have some objective of return on equity of 12% $60 This activity should not be, of course, a burden.
So this is a way we want to develop this renewable business. I hope it clarifies to you how we will manage the portfolio that we have in our hand. All this strategy is contributing to and we want to be a positive player to tackle the climate challenge. We show you this figure. We'll come back this afternoon on this climate section because I know that there is a lot of interest on many investors.
We show you this slide last September. Our ambition is to diminish gradually the carbon intensity of all the products, energy products we sold to our customers. This is, I would say, a scope free approach for all of you who understand, who knows that. We want to we have the ambition to reduce it by 15% between 20 1530 to grow by 2,040, 25, 35, it's difficult to anticipate because there are new technologies. It depends also on the government policies.
We'll come back on that. But fundamentally, the road map is a matter of, of course, being accountable about our own emissions. And this afternoon, I will give you we will set a target to our own emissions in order to decrease them and to be committed to that. But also natural gas is part of the future mix and is a positive add on to the energy mix. It's a good complement to renewables.
Low carbon electricity business, biofuels, which are also contributing positively to this road map of lowering the carbon intensity of our products and last but not least, to invest in carbon sink businesses, either natural carbon sinks or CCUS. I will come back also on it. And being responsible is also a question of and we have also quite a lot of this question during the roadshow, how do you share the added value of TOTAL? So this is the image of the company, and I think there are many debates today around the world. A company like TOTAL, we take an average of 2010, 2018.
We generated $15,000,000,000 more or less, a little less, but as an average of added value. Half of it has been reinvested in the company. We are highly capital intensive business. So our priority is clearly to reinvest in the company, to continue to be able to deliver more energy to our customers, affordable and clean energy. The second, then the other half is more or less split into 3 thirds, so onesix for each of them.
In fact, the salaries of employees are a little higher than that, dollars 12,000,000,000 were given back to our employees, but the employees are fundamental. Obviously, without them, there would be no profits and no dividends. So we are not a business which is highly intensive in terms of number of people, but they got onesix of that. The states on this period have taken another 6 of it. So we are a business where we delivered around $10,000,000,000 per year as an average of tax issuance.
It was lower the last 3 years, but it's increased again this year. And then the dividends, which is the last share, onesix of it, around $8,000,000,000 to $8,000,000,000 per year as an average. So this is the image of the way we share the company's added value and cash flows through our various stakeholders for the benefit of all our 15,000,000 customers that we serve daily around the world. So finally, as a conclusion to this presentation, I think you are not probably surprised by the message. It's also good to be consistent.
It's a message we deliver to investors. We don't try to surprise you. You begin to know that we know our strategy well, so it's question of execution and deliver. The next years will be clearly a benefit of an outstanding growth. We maintain our discipline because it's fundamental to look through the breakeven permanently.
But we are also doing at the same time growth and profits and profitability. This is we're able to combine both because the discipline, of course, helping us with this ROACE of 12%, which we managed to reach this year. We have strong cash flows, which underpins our shareholder return. So maintaining the policy on increasing dividend, ending the scrip option and developing the buyback program. And of course, the activity will be also to shape the company for the future beyond 2020 with an attractive portfolio we have in our hand.
Thank you for your attention. And so I propose that Patrick, Arnaud, Momar, Bernard and Hamita will join me on the stage.
Okay. So while the Executive Committee join Patrick on stage, we've got about an hour of questioning time before we pause for lunch at 12 If I can remind you, we're going to have a lot of questions. If we could have one primary question and then a follow-up. Everyone's available for answering. I'm going to start at the left hand corner.
If I start with Oswald and then followed by Michele and then Thomas.
Thank you very much, Brendan. Yes, thank you very much for the presentation. Patrick, you just mentioned you don't like to surprise investors and you haven't today. But I guess the one number that's missing through this presentation is the CapEx after 2020. You've shown significant growth projects.
All of them fit in your LNG deepwater portfolio. The returns are attractive, but there's no line of sight on that 2021 CapEx, which could be a surprise. So hopefully, you could just talk about where you're thinking the at least the upstream CapEx might end up as look into the next decade please? And then just secondly quickly, on the LNG portfolio perhaps it's one for Philippe. The $2,000,000,000 cash flow going to $3,000,000,000 by 2020, the 40% increase in production volumes coming through this year.
It looks like it's just the volume driving that cash flow up. So therefore, are you're not assuming any arbitrage contribution as you scale up this portfolio. Perhaps you could talk about is that additional upside we should start to think about as the portfolio gets bigger just in terms of modeling? Thank you.
Okay. The CapEx, the more I give you, the more you want, of course. So this will be for September this year, more precise. But you know we have better clarity on the production. Again, but let me be clear, this 2%, the math is still the same.
And you will maybe end to 2017 and not to 2016, but not far from that. So it's still the range more or less. We will invest, I would say, downstream the $3,000,000,000 is stable fundamentally. Dollars 4,000,000,000 for iGRP, I think, is the right figure. And with that, we can deliver the projects there.
You have some leverage on these projects or expand. And then we have to grow if you want to grow by at least 2%. We will be a company at what we have, 3,300,000 barrel of oil per day, so it makes it takes decline 5. We need to make 5% per year, 150,000 barrel per day. We take a metrics more or less of 50,000 barrel per day per dollar per barrel per day.
You take you find $6,000,000,000 $7,000,000,000 plus some maintenance costs, renewable at the end renewal of reserves, you reach more or less $17,000,000,000 So it's maybe not $15,000,000 It's more $17,000,000 But it's not very far different from that. And there is something fundamental to that. It's because I mentioned it during this presentation, dollars 1 of CapEx this year is not the $1 that we spent in the last 5 years. With $1 of CapEx, I make 30% more volume or 40% more volume because the costs are down. And one of the key target, why do I say we want to focus now to sanction the project?
Because we in the international oil and gas business, where we are mainly very, it's not the case in the U. S. Shale, but the costs are quite low. We made the tenders recently for Uganda and for other projects. We have been always surprised by what we obtained because there is strong competition there.
And so if we can sanction this project today, we'll capture this 30%, 40% lower cost. And so when we spend $1 we make the $15,000,000,000 I would say in E and P, if we spend $12,000,000,000 it's the equivalent of $16,000,000,000 $17,000,000,000 of yesterday. So when we give you a range of $15,000,000 $17,000,000 it's $21,000,000 to $22,000,000 compared to be yesterday. So that's a fundamental driver why I'm confident that we'll stay around these type of figures. But again, I take your point.
And again, but to be clear, it's not we told you we have at least 2%, we can do more, we'll see. But I take your point, we'll have better clarity. But again, this is for me, the timing is of essence. We need to sanction now to capture this low cost. That's the key priority for Arnaud and his teams.
And I can tell you, we are all working hard to launch these Uganda projects, and we'll take time on this PNG project because it's the right time to do it. And then we'll keep the discipline. Philippe, about additional upside portfolio?
[SPEAKER PIERRE ANDRE DE CHALENDAR:] Yes. On LNG, our portfolio, as you noted, is nearly doubling between 2018 2020. The equity part, so traditional, let's say, liquefaction project are increasing from $11,000,000,000 close to $20,000,000,000 and our portfolio is nearly doubling, so the pure LNG trading portfolio from $10,000,000,000 to $20,000,000 What is clear is that in the figure that you see the increase from $2,000,000,000 to 3 $1,000,000,000 is coming in cash, is coming from the E and P liquefaction project. And we have, for the time being, been rather cautious in terms of additional LNG optimization. There is some that have been included.
But yes, we try to be cautious on that. You know that the optimization arose from market conditions. The second half of twenty eighteen was very profitable in terms of optimization. From at the time when we speak, market is favoring all LNG main LNG deliveries coming to Europe in a great way. Next time there is additional demand in Asia or additional cold front in Asia, you will see additional opportunity to optimize.
So some optimization, but yes, we can hope that it will be much more.
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] For example, look, maybe you've seen that in papers. There was a tender in Taiwan for delivering more LNG. And the 2 companies who make win are Shell and Total. But why? Because we are much more we are able today with the portfolio to offer flexible contracts to our customers.
And we can optimize the sources of productions and the destination. So for me, it's just a point that this market is commoditizing and the larger player have added value will be able to gain more contracts. So that's an example of what just happened very recently. Other question? [SPEAKER JEAN FRANCOIS
VAN BOXMEER:] Michel Della Vigna
from Goldman Sachs. Patrick, two questions, if I may. The first one is on CapEx. If I look at your budget, it looks like organically you will spend about $2,000,000,000 more in 2019 than in 2018. And I was wondering if you could give us some of the moving parts there, in particular, how much more you will spend on high profitability short cycle developments?
And then the second question is on the LNG market. You project a very bullish view long term. But I was wondering over the next 1 to 2 years as the U. S. Export projects are ramping up very fast after a few years of delays and the Chinese demand growth in gas continues, but slows down from the exceptional level in 2017 2018.
If you fear that actually for 1 to 2 years we could face an oversupply LNG market before tightening again in the early 2020s?
[SPEAKER JEAN PIERRE ANDRE DE CHALENDAR:] So the first CapEx, it's true your calculations are very good. It's going from 12.5 to 14, that's clear. I would say, in fact, the effort is not only in particular in LNG, because in the figure in LNG figures, IGRP will benefit for another $1,000,000,000 this year. So it's part of this increase. So you show it on the map, you see 2 to 3 in terms of organic CapEx.
The E and P, but Arnaud can comment on it. That's true that we have sanctioned some, I would say, short cycle projects. Do you have any indications to give to Michele on it? [SPEAKER JOSE
RAFAEL FERNANDEZ:] Yes. I mean, just to put things in perspective, when we put the brake on investment 2, 3 years ago, we the first CapEx project we could put on the back burner were the short cycle infill drilling. So we have all of them on stock. And as you know now, drilling rigs are half the price they were 3, 4 years ago. And we have optimized the development of all of these.
So we have, as was shown in the presentation, actually a stock of very good infill projects that we can sanction. And now it's really the time countercyclically to sanction them. So we see them in East Africa in West Africa with Agro. We have more Belundo. We see them, of course, in the North Sea.
We are doing some modeling in Central Gabon, in the Northern North Sea assets. We see them in the U. S. Bonds. So we have plenty of opportunities to do very efficient tiebacks that clearly now we are taking sanction.
And as you saw, we are going to be sanctioning between 2018 2019 about 400,000,000 barrels of oil that will be oil equivalent that will be sanctioned during the period.
About LNG, I mean, I'm optimistic about this market. I think I see the we are moving our thinking about LNG to 1 year and a half ago, it was oversupplied, then booming. I think the Chinese policy is very strong. It's fundamental to them. It's not only a question of price, it's a question of air quality, of social unrest in China.
So that's true that we benefited from huge increase, 40% during the last 3 years, so maybe not 40%. But they are at 55,000,000 tons. I think Japanese are at 80. I would not be surprised to see them even importing more than the Japan by end of next year. I think it's really 2020.
I think it's really a strong policy. And even I'm surprised, to be honest, it seems that there is no real impact of the higher prices that we observe this year on this policy. So this country, I think it's really embedded into very strong governmental policy. Of course, the U. S.
Will ramp up, but these are the only projects which should ramp up, by the way, during the next 2, 3 years. In fact, the rest of the world, Australia is down, Russia is down, Qatar is nowhere. So yes, that's true, there will be some ramp ups from the U. S. But I think it's also there is also a market today which is more gas, which is Europe, by the way.
And Europe is production in Europe declines. So you have potential for gas. Philippe, you are optimistic or not?
[SPEAKER PIERRE ANDRE DE CHALENDAR:] I remain very optimistic. I will As you've seen, we are forecasting and planning our assumption on the 5% increase between 2015 and 2030. And as you know, the 3 last years, we have been way above this 10% but we saw again in 2018. So yes, I remain optimistic cautiously optimistic but very optimistic on the VLNG growth.
Thomas Adolff from Credit Suisse. I've got two questions as well. Firstly, Patrick, you've been the CEO of Total for now just over 4 years and you started at a very interesting time in the industry. If we go back to the start of the period and think about the ideas you've had for the company, have they all gone according to plan and what are the key lessons learned from the past 4 years? Secondly, also going back to LNG, if we say LNG demand growth doubles by 2,035 from 20 17 levels, that's roughly 16000000, 17000000 tons per annum of demand growth.
Over the past 3 months, we've seen around 30,000,000 tons of project FID and you plan to sanction about 30,000,000 tons in 2019. The math doesn't quite add up. So the question I have is, do you intend to take FID without project funding and signing long term contract? And does the service industry has the capacity to do so many projects at the same time? Thank you.
[SPEAKER JEAN FRANCOIS PRUNEAU:]
So good questions. The first one, no, nothing not everything was planned, to be honest, by the way, because we as we said, the environment changed very dramatically. So we had to focus together with P2 and all the executive committee on changing the momentum in the company from pure growth story to a more value and cost and discipline, sorry. To be honest, one of the strong lesson is that this company is able to react in a very strong way. Maybe people discuss, but once it's done, they execute in an absolutely superb way.
And the fact that we are able to continue to deliver these cost savings programs, in mind, the first discussion has been even better than what I was expecting. So I'm very confident in the capacity of execution of this company and the group everywhere in all businesses. I think it's a trademark today of capacity to execute in terms of and it's a essence for me because again we are an industrial company, not a financial holding. So we need to be able to execute. That's the first characteristic.
The second one, I would say, is that, yes, we had in mind I had in mind that this could be the nice time to make M and As if you are able to countercyclical. I learned that when I was in this company, that it's better to move when you have to be countercyclical. I in. I remind that one of my colleagues, by the way, on there, we'll repeat the name, said that during an executive committee beginning of 2015. I keep that in mind.
The question there is to be able to be opportunistic. That's more, but you don't plan that. It's a question of looking around. And from this perspective, we have been able, and again, one of the lesson which was mentioned by Patrick, the strong balance sheet is absolutely fundamental, because we could have been more active beginning of 2016 when the price went down to $30 if we had the balance sheet. We didn't have that bad time, so we waited.
And I know the 1st 2 years we decided, okay, priority is to have a stronger balance sheet, and then we used it in 2017 for Maersk Oil and other deals. That's the second lesson there. But the reality is that there again, we have been able to do it and to manage this balance sheet, including by the way, you've seen this year, we have some mix ups on working capital. Finally, at the end of the day, everything came back into under the leadership of the executive committee members and Patrick. So these are the two lessons.
And so it gave me confidence that we can we have a strong basis to move forward and to be offensive. And I would like to tell you that I would have seen the company being today at having increased its production by 40%, but all that would have been done, but it has been done. The part which has been which was not clear to be fully honest was this low carbon electricity and renewables. We were only in 1 solar plant. I didn't have a business.
We are, I think, clarified today what we want to do there and what we don't want to do. And so I'm much more comfortable and I think we are more comfortable with the strategy we want to develop in that diversification area, which we were what I was for right away because 4 years ago it was not clear to me. But in the same time, I think this idea that to be a progressive player in this climate change, I think is more and more clear to us that the future of our oil and gas companies needs to be oil and gas and contributing to be active if we want to offer to our investors a longer future. That's what I think the investors are waiting from us. 2nd question was about LNG, no?
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] Yes. Too many projects being sanctioned. Some are right, some are wrong. But I agree with your point. I see that.
But there was a lack of sanction during 5 years. Now today you have another wave. It's clear that there is risks, to be honest. I would be it's a question that I'm asking to Philippe. Please tackle these projects.
I hope that some of them will not take off because it's a question of, again, being able to be disciplined in terms of how do you what type of project do you sanction in terms of breakeven for them, each of them. I think that we have and the question is, do we have long term contracts for them? Yes, for some of them, I would say. And we want to maintain this discipline to have we are ready because we have changed our position with the portfolio we have and we are being as well a portfolio company. Who are ready to take part of the risk ourselves on our portfolio, but not all of it.
So and it depends, of course, of the risk of the cost of the project. But I think a project like PNG probably will be launched if it's sold And we have enough buyers to sell. It's very attractive to many Asian buyers. There is a discussion today about Arctic 2 with Novatek about what is the amount of LNG we want to sell, but you will see partners coming into the project from Asia because they want also the LNG, and that's part of the beauty. And then you have the question about the U.
S. Projects. Honestly, on Energia, Costa Azul, we want to keep the volume for us.
We have
very good volumes. Hope we prefer to market them ourselves. On Cameron LNG, we'll have to see if we want also to find some buyers. So it's a mix. But I think as the market is changing, it's moving to a more commodity project from a pure long term contract.
And ourselves, we consider that we have the people and the capacity to take value out of managing a larger portfolio like another peer that I mentioned already. I think it's a question of balancing the risk, but we are ready to probably take we are ready to take more risk than before, not on all the full projects. This could change, by the way, I think when you look around the world, the various projects which are being developed, Probably it will be a question mark for some of them at the pace of development.
Okay. Before we move to the right hand side of the room, we'll pick up Irene and then followed by John.
Irene Himona, Societe Generale. One question on effectively costs and CapEx. Your CapEx discipline has been very strong and commendable. But some of your peers are saying that the industry has a lot of very material potential ahead for costs to continue to step down. In fact, one of them refers to the field of the future as having 30% lower capital costs and 50% lower operating costs, if all the available technologies today were to be utilized, such as automation, digitalization.
Do you share that view, Patrick? And if that is the case, where is Total? What are the obstacles standing in the way to implement that today and to step down further?
You should ask to the guy who said that, because for the time being, the people who have the lower OpEx per barrel is Total. So maybe we are not a genius, but at least we deliver. Now I think, of course, honestly, I think we should not exaggerate that. Of course, these technologies are more have some potential and we are looking to that. I said to my colleagues, I want LNG CapEx per ton to go back to 500.
Dollars We're still not there. We are at $600,000,000 $700,000,000 even in the U. S. Remember that we deliver Yemen LNG for $300,000,000 per ton and not for $500,000,000 or $700,000,000 So the question is, of course, and it's back to your question, by the way, probably because in the LNG business, you have quite a lot of projects. So you are at the end, it's a question of how service companies who are able to deliver your projects, to build the projects.
We answered, I don't know where the magic comes from the 30%. Maybe we are more cautious there again. We think that we can reach to 15%, 20%. But again, it's I think that why don't we implement today? It's a question of being able to scale them up.
We have plenty of proof of concept like we've seen with robotics there in the company. And one of for example, we delivered an AI system in the UK, you can about optimizing the maintenance costs and the way we manage all the mature wells on the mature wells. And it's proven it works. The question that I asked when I discovered that, it's beautiful, okay, nice. I said, okay, why don't we do that everywhere?
And then it's a question of having the talent in the company. And one of the difficult ways is to attract in the oil and gas industry all these guys which are in digital world. If you are a new digital engineer, I think you prefer to work for Google or for Samsung maybe than for Total. We have one chance in France. We have a strong basis of engineers who are doing that still.
So we intend one of the decisions we have taken very recently, beginning of the year, we decided that with Arnaud and Bernard, we will establish a real digital division aside your exploitation and project teams. Because as well as long as we don't have a strong team, 30, 50 people who are able to move forward to scale up, This will remain only nice examples, but not at a large scale. So I think the question for us is to scale up. To do that, we need to attract the people and to establish strong teams and not to leave to the traditional Metis, the fact that you need to work on it. So they do things, but not quick enough to answer.
So it will not be today, maybe it will be tomorrow, but I will ask my colleagues what is his recipe to lower by 30%. But at least being disciplined and again, it's not a question by the way, on digital, one figure, we increased our budget on digital. I think we are spending it was $400,000,000 is it? Yes. $400,000,000 on digital technologies and developments in the company.
So it begins to be quite sizable in fact in the company.
Thank you.
Thanks. It's John Rigby from UBS. Your CapEx the way you describe CapEx sort of acknowledges that there is portfolio churn going on the whole time with the net number that you talk about.
Can I just
look at 2 areas? The first is on the disposal side.
It felt
to me over the last maybe 3 or 4 years you've got less enthusiastic about Canada. And I just wonder with the effect that it had on the upstream in the Q4 and the fact that you didn't get the benefits in the Downstream that a number of your peers did through light heavy spreads in North America, whether that encourages you further to think that ultimately you need to exit that region. The second is, it seems to me that there are two examples of you addressing a strategic gap in your portfolio over the last couple of years that have been addressed differently. So the Gulf of Mexico, where you had an obvious shortfall for a long period of time, you seem to have been able to address within the scope of the organic process. But LNG, you decided to step out of that organic and went inorganic.
So I just wondered whether the other obvious gap
in your portfolio, which is
shale, you think you can
do within requires
a
somewhat more daring move? Requires a somewhat more daring move? And if I could treat that as the first question, just one very quick one, is on Papua LNG, is it my impression that it slipped back a little bit? It seemed to me that it was probably the best brownfield project globally at one stage and it seems to have slipped out of 2019. You're shaking your head.
No, no, it doesn't slip back. It's just a matter of again, we made it's a little far away from Europe and from the U. S, I think, so to go there. And you have in Papua New Guinea, you face a country with not so many people being able to design. So we need to be involved at a high level.
But we made a strong move forward in November when we signed the head of terms because we saw fundamental points about the future framework and we are drafting all the agreements. Next target is by April. I think I plan to be there again. So I think we have 2018 was a very important year on this project because we have aligned the views technical views of Total and Exxon on the same project. We know what we want to do.
And I can tell you between Darren and myself, we perfectly agree. We know that we want to expand the plant with 3 additional trains, 2 trains for the gas coming from all our reserves, one train for the gas coming from their reserves. Discussions are the government wants to have 2 discussions, 1 in total leader, 1 Bexar leader. We'll do it like that, but we are aligned fundamentally. And when we went there, we together with some of the colleagues of Exxon, we were agreeing.
So since that's done between us, no, it's a joint discussion with the government and we settled most fundamental issues last time. So no, we need to draft. But in some countries, there's some difficulties when you need to drive complex papers because we speak about 1,000,000,000 of dollars and you have fiscal issues and it takes a little time sometime to align the people. So but we have a it's one of the projects on that. I don't think we have been slow.
I think we spent some time, I will tell you, I said to Darren, between ourselves, between both companies. We could have saved 6 months between us, but it's down. And now let's move on fundamentally. And all the share cost issue between Exxon and Tata has been settled, so that's good. We are behind that.
So maybe we could have been a little earlier quicker between the two majors, but it's done. So I'm positive. Then coming back on your points. You are not surprised by my we make the same answer on the second question, which is very easy. Where do you find I can be organic in shale oil?
You see some people of Total in the field. So there is nothing organic. And I will not begin to buy some land, pieces by pieces in the middle of Permian would be so obviously, and this is, again, I observe what happens, but you know my answer. It is clear that you have there some sizable resource and potential production. The question for us is the cost of access.
And the cost of access, meaning not only cost of access, capacity to develop, having access to a machine, human resource machine. So if we move, it can be only done in quite a sizable way. Otherwise, it makes no sense for me to make an acquisition of $5,000,000,000 to have 30,000 barrels per day in the Permian just to fill the gaps and to tell you I'm there what is the added value for Total. So it's either sizable or no. Having said that, the question mark for the CERMA and CEO of the company and with us, all of us is, is this the best way to allocate the capital expenditure of TOTAL?
Is it that? Or should we do we have other opportunities? We keep let's be clear, I would not tell you we don't like it. It's not a question to like or not tonight. Question of best allocation of capital.
We keep a permanent eye. What I've observed, by the way, is that the value of the asset begins to diminish. I don't know if it's for long. So maybe we have to be patient to wait for the next cycle. But again, for me, it's not a question of filling a gap.
It's a question of doing it in a proper way and comparing that option to other options. And in the U. S, where we are investing quite heavily, and Patrick mentioned to you that the U. S. Are becoming one of our top 8 countries in terms of reserves, are more comfortable to invest in LNG like we are doing in several projects because where we know what we want to do, it's fitting well with strategy when there.
But again, I'm not in the same situation where some of our peers will inherit from some lands, which is very prolific, so that's the point. So let's organically, no, I don't think is our best way to do that. Then the Canada, I don't know what you want us to sell Canada. But I mean, it's a permanent question. Of course, we have an issue with Canada.
We have 100,000 barrel per day, I think, in Canada. We invested quite a lot of money. The integration, by the way, is not so right. We have a capacity to treat 50,000 barrels per day in Port Arthur, if we want to do that, and we have the logistics to go down to 4 Arthur. So we have half of integration, in fact.
So it's not true that we are not fully integrated. We do it, we don't do it. It depends on the market issues. But that's true that the oil price in Canada was quite low. By the way, if there is issues in Venezuela, maybe it will give again a good better valorization to Canada to feed all these refineries in the Gulf Coast if we stop exporting from Venezuela to the U.
S. Gulf Coast. We are not in a hurry and there is no way for me to accept I'm not desperate to sell Canada. We have invested. So if there is a good value proposition, we will study it.
But for the time being, it's not the case. So we are in a waiting mode.
Okay. The next question, we're going to start on the right hand side here with Jason Gammel And then Shannon, if we can then follow with Chris, please. Chris, go
ahead. Okay. Thanks Brendan. It's Jason Gammel with Jefferies. I had 2 on the Upstream, please.
First, you've got a pretty deep inventory of deepwater projects sitting in the queue. I was hoping you could address how the cost structure has improved in the deepwater over the last couple of years, where we're at on breakevens and the scope for further cost reduction through standardization, etcetera. And the second question I had was on the exploration program. Clearly, been an area that has added quite a bit of value this year. Can you talk about the level of investment you'll be making in exploration in 2019 and where your activity will be directed, please?
Okay. Arnaud will answer to you on the deepwater projects. On exploration, we are at $1,200,000,000 We missed that. We think it's a good level of effort. There is no scale effect, but I'm very honest, to be honest, this is one of the good news of the year that we had last year discovered Glendon Act, now Glengorm, now South Africa.
So maybe we're enjoying positive cycles. Again, it's not a question of spending more and more money. In fact, it's more a question of having the right ideas. I think we have been able to we have some areas of interest in our portfolio. I think about the Guyana licenses that we will begin to drill around the discoveries of Exxon and Essence in Oakena this year.
And we have other projects that maybe Arnaud is more able to meet. We plan to drill 20, 25 wells this year. So again, the fact that this discovery in South Africa is interesting. It's a new province. And we have, by the way, quite a large acreage, which was acquired.
So we will look at it. We will have some opportunities. We have also the Gulf of Mexico portfolio, which has been rebuilt, is of interest. We have together with Chevron, I think we have quite 2 new wells being this year. So Gulf of Mexico, Guyana will begin.
We have also taken some acreage on West Africa, in Senegal and Mauritania. We're quite large. And we intend to begin also to drill there. So we have prospective areas, but I would say what changed is not the pure giant quite low probability that we try to target during a certain period. It's more around identified prolific areas like Senegal, Mauritania, like Guyana to try to put more money there.
We'll see it's exploration, so I'm always prudent on that. But I see all that as a positive sign. And if on the top of what we have been able to do and being demonstrated, we have been very active and demonstrating our capacities in having access to and develop but discovered resource. We are able on the top of it to also have a positive exploration engine, then it will of course make our future even more brilliant. Arnaud, about deepwater improvement in Brazil, Gulf of Mexico?
[SPEAKER JEAN FRANCOIS VAN BOXMEER:]
Yes.
Most of you will remember that at the last meeting we had in September, there was actually a focus on deepwater, and we were able to explain to you that in our portfolio, in fact, we've been able in the last few years to work on either design, the standardization, as you mentioned. We happen to have also in our portfolio a lot of subsea tieback opportunities to existing deepwater infrastructure. So what we see in deepwater is a repeat in a way of the story we had successfully in the North Sea or in the U. S. Where we can tie back to existing infrastructure discoveries.
We see that in Nigeria with the Preowee that will be tied back to Regina. We have also this very significant discoveries that will be developed as deepwater development subsea tieback very efficient, very profitable. And clearly, we have also worked we are working on optimizing deepwater developments. Brazil, which is as was mentioned in the presentation, the coming next wave of large FPSO development. Libra is the field is called Meru now, but it is a case in study because this is 3000000000 to 4000000000 barrels of the same oil from the same reservoir with excellent characteristics, and I remind you, up to 50,000 barrel of oil per well.
So this we see again economies of scale. And so we can see that we have been able to make Deepwater extremely competitive in terms of return on investment.
[SPEAKER JEAN FRANCOIS XAVIER BOUVIGNIES:] Yes.
I think Brazil
is around $35 per barrel of breakeven, more or less. I mean, we learned a lot, by the way, from Petrobras in order to be able to be efficient, cost efficiency. I mean, I can tell you these teams are quite good in the way also to replicate FPSOs. And what for me, one of the lessons coming back to your question is that all teams in charge of deepwater have really been able to put themselves into question. If we want to make these projects now, we need to simplify the well structure and we've seen Agena from this point of view.
We managed to save $1,500,000,000 on the drilling program by simplifying all the wells. And I think our duty now as management is to keep them being stable, being simple. We have a program because the company will be simple, but we need to be sure that they stay simple. And the same on FPSO, when we look, for example, the way they imagine to develop this in the Gulf of Mexico, the North Platte discovery, the way our teams are thinking to that, it's a very simple platform to try to it's not a giant nice to have platform. It's much more simple.
They know that if we want to develop this 350,000,000 barrel of oil, we need to be able to simplify and to make it efficient. And that's a thing a mindset as well. So that's a good lesson. Other question maybe?
Okay. The next question is going to be Chris Coupland and then followed by Lydia.
Thank you. Chris Coupland from Bank of America Merrill Lynch. I think I only want to ask you one question, but you're probably going to tell me there is 3 questions in there. And it's about your 2,030 and 2,040 carbon footprint targets. It sounds quite far away, but even just a 15% cut from here to 2,030 doesn't leave you a lot of time.
And I wonder whether you could fill the void a little bit. Your presentation today is focused on next year 2020. You're spending around $2,000,000,000 on your low carbon electricity efforts. Is that something that makes you confident that level that you achieve already a 15% cut in your carbon footprint out to 2,000 and 30? Or is there a message that within the next 10 years actually your well, I suppose ambition to keep at the very least replacing your black oil production at some stage will go because you gave us earlier a calculation that Upstream $8,000,000,000 to $10,000,000,000 of CapEx.
You've got downstream commitments in refining and chemicals that in the end doesn't leave you a lot more room to actually step up your low carbon budget. So I know it's a convoluted way of asking you how you feel about the next decade and perhaps a slight shift in priorities in terms of capital allocation. [SPEAKER PIERRE YVES LESAICHERRE:]
No. I will I mean, we come back this afternoon on that. But if we came you can imagine, but the way we manage the company, if we came out in September with such schematic, it's because behind that there was a lot of work of does it fit with a growing oil and gas company, but being also able to manage this carbon footprint. So, there is no message, I said that in September, but we intend to stop growing in oil and gas. That's not at all the case.
But by being and it's a lot of work behind it, it's a combination and we will of on our own operations, finding new scheme of development, for example, one of the peer is in advance from this point of view, electrification of the process, developing the fields in another way. So you can slash down easily 5,000,000, 10,000,000 tons of CO2, and we will announce the target this afternoon, about if you are focusing on your own operations. So there are ways to do it internally, stop flaring, but electrification of process. So it makes, by the way, the technology. And that we need to be active now to stop to integrate this technology and not waiting by 2, by 2025 to begin.
That's one point. The second point is natural gas is helping us to reach the target because if we in natural gas and one key target will be to be more efficient in the LNG technologies in terms of efficiency energy efficiency. Look at the electricity is part of it, but with $2,000,000,000 per year during 10 years, it's fine. I can do a lot with $20,000,000,000 if you make the math. And that's true, but there is an ambition, which is to grow in this area, but I don't think we'll do much more with that.
It's okay. We can do that. Then we have biofuels, which are something which could be efficient. That's why we move in Brazil. There are ways to improve our mix of products.
And the last thing, but not last but not least is what we mentioned about natural carbon sinks. With less than $10 per tonne, you can do a lot in developing some businesses in the rainforests, degraded lands, and that's an area on which we will invest. We intend to invest $100,000,000 per year, and with that, we can generate also some offset of our footprint. So it's a mix of a combination. So we have what I can do, no, there is no message that we intend to stop our growth in oil and gas.
We are maybe we'll produce probably more gas than oil, but it's linked to the market. But it's a combination of gas, oil and low carbon electricity. To describe you, one of your colleagues asked me, you didn't give me the CapEx for 2021, so I will not describe you the CapEx between 2021 and 2030. I will make some efforts to center, but to give more clarity on the next what is beyond 2020. That's clear.
But then honestly, the 15% is an ambition. We have decided yesterday at the Board of Directors that we'll have an objective on the scope 1 and 2 to reduce our CO2 footprint and that's the payable pay of the CEO and the top executive will be linked to the Scope 1 and 2 adoption. Scope 3 in a different matters because there are some but this is something on which we believe and 15% are achievable without shifting the strategy. But keeping in parallel the 5 routes and I will come back on it this afternoon. [SPEAKER DANIEL MARTINEZ VALLE:] Lydia, what was the
Thank you. It's Lydia Rainforth from Barclays here. Two questions please. On the capital allocation side, clearly over the last couple of years production has been better than expected, costs have been better, cash flow has been better. But as an observation, it does appear that those incremental improvements are going into higher CapEx in the portfolio development side.
Can you just ask what is the right balance between those and looking at whether you would increase the share repurchase scheme and at what point that might trigger? And then secondly, probably another one for Patrick. Can you just comment on the Venezuela sanctions and the impact there?
[SPEAKER PIERRE ANDRE DE CHALENDAR:] Sure. I think we'll speak
we'll answer you
on the first question because I spoke a lot. Venezuela just Venezuela for us is 50,000 barrel per day, dollars 200,000,000 of cash in 2018. So you have the magnitude of the problem, which is not huge. Dollars 60 is $1.50 But we will obviously observe the sanction very strictly. We are trying to understand what it means legally.
Probably we have to manage Venezuela not from the U. S. But from Europe. But for the time being, the priority has been clearly the safety of all our people and everybody has been evacuated since last Monday. So, let's that's the first priority.
So, in terms of impact of Total, it's not very big. I write papers, so I prefer to give you the figures to care because of my read to papers that we were very hit, no, we will not be very hit. So we have to manage it and remain the portfolio. Patrick, the first question? [SPEAKER JEAN PIERRE ANDRE DE CHALENDAR:]
Yes, okay.
Let's answer on buyback first. The idea we had at the Executive Committee level 1.5 years ago was to return more cash to the shareholder in order to rerate the share price of Total in comparison to the other. That was the objective. Then how much will we return? So we design the $5,000,000,000 buyback program in a sense that at $60 we can make it 1st.
2nd, that the cash payout of the company dividend plus share buyback was consistent with what we can see on the market from the other. But I remind you that the main objective for us is CapEx. So we designed our capability to share buyback $5,000,000,000 because we have in our portfolio enough to develop $16,000,000,000 $15,000,000,000 of CapEx. So one, then there are 2 linked. And obviously, at $60,000,000 the math works.
We can invest $15,000,000,000 $16,000,000,000 a year, then having our share buyback program plus the increase of the dividend. So it's all an equilibrium. It worked at 60. Of course, if we are at 80, we could review our targets. But that's another story.
Something I learned within the past 11 years is all of our forecasts are wrong. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] So,
by the way, this is why we will not review the target despite all your push, because Board of Director is comfortable with that level. And again, it's not the end of the world in 2020. There is a follow-up and the cash flow will continue to be there after that. So obviously, like you said, it was 1, 1.5, 2.5. That means that this policy and I think we have fundamental idea, we use a buyback in order to share with you the additional upside of the price.
And we keep steady the dividend because we never none of us can do it's a strong commitment. When we increase the dividend, that's a permanent commitment. We don't there is no willingness at all to cut the dividend, but we didn't do it during 30 years. So I will not begin to do that. And so it's a combination.
But again, the table I show you, like Patrick said, priority is investments in the company. So if we have the feeling that we can do, we have a better opportunity to because it's a low cycle, there is something to be done to answer to some question of John, we'll do it and we will explain. It's a matter of discussion, if we can demonstrate to our investors that it's better value creation. But again, I think also one of the objectives of the Board is when we analyzed on the Patrick guidance why this share is maybe undervalued, one of the objectives. We observe that the return in terms of cash, the cash out to shareholder was lower than most of our peers.
So we have an objective to increase the cash out to our shareholders, to come back into the pack, I would say, of our colleagues. So you have done the math. So that's what is driving our increase of dividend and our buyback. We will have a cash out to be not to have to be undervalued because of that.
Okay. The next question is coming from the central middle here, Christian Malek, before coming back over for Al Syme.
Christian Malek from JPMorgan. Two questions, please. First of all, I just want to come back on your production growth outlook of a minimum of 2% beyond 2022, a minimum. How do you think about balancing that against your cash return target? And is there a case being considered ahead of your September CMD that you move away from a pro volume strategy to one of those pro cash return.
I mean that balance seems to me or put another way, if the world's got too many barrels, why do you need to grow above 5% volumes in the long run? And the second question is your gearing is the best one of the best of the super majors now at 15%. The only reason I can see it wanting to go lower is if you were going to do a large deal in or M and A. Can you talk about why you need to do a deal when you've got such fantastic pipeline of projects? And put another way, does that mean that you're prioritizing something away from oil and gas?
Because you've got all these projects, you don't need to do a deal. You can continue sanctioning them, and therefore, it's more likely you do something in power or something else. So just talk about that prioritization and the do you need to take advantage of opportunities, please?
[SPEAKER PIERRE YVES LESAICHERRE:] I think that you're right. We never said that we want to make a deal, a big deal. We just told you that the priority was to sanction all the projects to deliver what we have in our hands. So it was my strong message 2019. So, when I answered to a question from John, but don't misinterpret what I told you.
Again, there is no and just to know, but I mean, the strong balance sheet, again, it's first reason is to face the volatility. Is fundamental. Again, we managed to face this period with Patrick because we had to put a scrap dividend in place. We had to sell $10,000,000,000 of assets and these assets which have been sold are sold. I don't have this weapon in my hand if the low cycle come back again.
So the lesson for me, fundamentally, is to have a strong balance sheet is the best way to face the volatility of the oil price in a, I would say, more quiet way, because then I don't need to sell, I have that, I can use like some of my 2 U. S. Peers have done that when I observe it and they are back again to our level. I think it's a lesson. So keeping a low quite a low gearing, even if the price is at 60, 70, it's the best policy because then we are comfortable to face a low cycle.
Maybe we can use it, the balance sheet, but by the benefit, we don't have to make a strip dividend again. We don't have to we are obliged to take action. So that I agree with you. So that's a fundamental reason. So don't misinterpret it.
We are not we don't read this, not because Patrick will go, but suddenly we'll change the discipline policy and that we have in mind to make a big deal. We have not in mind to make a big deal. All the bankers are coming to our office. But first, the fact that we have been active thinks that we will continue to be active, but we have been active on things where we thinking we are able to deliver value to our shareholders. And I'm convinced that Maersk Oil was a good move.
But there is no Maersk Oil every day under Maersk Oil. So it's not a main target. The first point was about the 2%.
Yes, moving from volume to value.
But I mean, no surprise. I think I told you about 4 years ago. By the way, let me be clear. I didn't tell you that our target is 2. Don't present again, I was very precise in my wording.
I told you that with all what we have there, the 700,000 barrels per day to be sanctioned, we have at least a growth of 2%. And I added that we will not slip during 5 years. So it's just the fact that we have already embedded a growth of 2% if we develop all these projects and we intend to develop it. So it's not a target of 2%, but it's more than 2%. Keeping in mind that we want to continue this capacity on one side to grow, on the other side to be profitable.
So it's a question of choice of projects. Is the projects that we if we can add new projects to this portfolio, which are 15% or the $50 why not? I would be happy to put them on board. But it's not 2%. By the way, again, making at least 2% is more than the hydrocarbon market, but probably a room for more.
But no, the 5% we gave you was an average of 17% to 22%, which is still there. But if 2018 2019 we make 17%, we have the room for 2020, 2021, 2022 for 8%. So if you divide by 3, you will find 3% to 2%. So we are that means by the years to come, we are landing, but again, we don't have the same in CapEx intensity as well. And it's true that from 2015 to 2018, we were able to spend all the money to achieve all these projects, but we did sanction a lot of projects, obviously.
So we have a momentum that we cannot deploy. Okay, is it clear or? Thank you.
Alastair Symes.
Hi, it's Alastair Syme with Citi. I wanted to ask about the 2P resource base of $20,000,000,000 Really two questions. One is how much of that is do you think economic is $60 Is it all of it economic or is there some sort of element of price assumptions built into it? And secondly related, is $20,000,000,000 the right number? How do you think what the right size of the resource base should be for this company?
[SPEAKER JEAN FRANCOIS PRUNEAU:] 20,000,000,000 is 20 years. It's quite I mean, it's a permanent shut off system. You need to replenish, which we have been successful. To be clear, 2P means that everybody is developable and not at $60 or $50 The definition for us in the company, if we put it in our proved and probable reserves, that means that everything which is there will be is developable at $50 per barrel. This is the way we manage it.
So you have 20,000,000,000 barrels in front of you which are developable. It's a question of scale. Some of them are being already developed. What are the key countries there? And the 8, you have Russia, you have Abu Dhabi, you have Qatar.
So we have some long term results which are being developed and we cannot accelerate that development in some of the countries. Some others, it's up to us to accelerate that. So 20,000,000,000 dollars are fully economically developable. Otherwise, we'll not mention that we'll not put them there. If it's not, we put them in another category, which is called reserves.
So we have 2 key reserves and then we have resource, which some of them are not yet developed. For example, the discovery in South Africa at this stage is resource because we didn't work yet on the development scheme. Maybe we shift to 2P reserves. That was the first point. And what was the second There is no bible in the oil industry.
We have 20 years. I think it's fine. An horizon of 20 years of B2P reserve is not too bad. I'm not Saudi Arabia. But I could give you another figure.
I could give you I have a 40 years of resource base, which is true. But again, 40 years of resource in this resource, there is a lot of things maybe will never be developed. So, I prefer to give you sense of. So, metrics of 20 years, not too bad many as an average. We were a little aware.
Of course, when we grow, we have to think to that permanently. We had that metric in the company since I joined the company 20 years ago with some targets around 12 years of proven and 20 years of 2P. I don't know where it comes from. I should ask here it in my predecessors. By the way, the majors are more or less in this range.
Okay.
And in
terms of last question, Toby, Martin Ransdown the frontier before we pause for lunch.
Hi, hello. It's Martin Rask of Morgan Stanley. Two questions. Just to check on Slide 19, at the bottom it says $8,000,000,000 of incremental cash flow between 2017 2020. Is the math as simple as saying you expect to generate more than $30,000,000,000 in operating cash flow in 2020 at $60
Which side is it, 2019? [SPEAKER PIERRE ANDRE
DE CHALENDAR:] Slide 19 at the bottom.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] The math are very easy. We expect 22 plus 8, it makes $31,000,000,000
[SPEAKER PIERRE ANDRE DE CHALENDAR:] Yes.
It's very easy. [SPEAKER PIERRE ANDRE DE
CHALENDAR:] Frankly, it's a punchy number.
I know you have the figures, so I hope you can fill it in your spreadsheet.
Yes.
Sit down. Okay.
All right.
And you have everything for you. I hope you.
Yes. Think they're a little forecasted out there. But that's No, but why did we give you? Because it's
we are very 90 9 percent sure of that. We have already think it's clear. Clear visibility is why we gave you the figure.
Okay, good.
And the second question I wanted to ask you briefly, Slide 25, which shows your project map. You used to have Uganda there. And I know there's been some delays, but it's now not even on there anymore in terms of sanctioning before the end of 2020. I was wondering if you have an update on your
question. [SPEAKER JEAN FRANCOIS PRUNEAU:] I can tell you, we have decided that it will be the task of the year for the CEO of Total together with Arnaud. So, I went to Entebbe, Arnaud. I met President Museveni in Davos. So, I'm committed.
No, there was a lot it's a difficult project because it's landlocked. So we have to this pipeline going through Tanzania to align the interest, it's a new country to hold. There is no regulations. We need to create everything, but I'm optimistic. I think we had some good meetings.
We have settled many things about the refinery, about the pipeline tariff, about the transaction with Tullow, which has been delayed. A lot of we have a Lake Albert, but there are many crocodiles in the lake, so we need to domestic the crocodiles in order to move forward. So, I don't know if I will fight with the crocodile. I think it's I consider that we have it's too long, all that. So now it's a priority.
And so we have the project engineering is done. We have even some tenders. We have made the tenders. The price in terms of cost is very acceptable. So, we need to fine tune.
And as I said to President Museveni, I think I will come back again to your countries several times, but we'll manage that. We need to solve it. It's again like PNG, it's a problem when you have new country to all to align many people who are we think that the discussion with major public traded company is unbalanced. So they are not very comfortable because they see us managing different concepts and they think that fundamentally they are prudent. But I told him, okay, no, we are in the same boat.
It's a project we can deliver to you around $1,000,000,000 per year, more than to me, in fact, but if we move so I think so again, it's establishing good relationship and it's a priority. So I hope we'll be able I mean, an objective to deliver you good news next year. I'm committed and Momar is helping, Arnaud is helping. We are all on the boat. Now we want to solve this issue.
Otherwise, Momar will not retire. So, we stay, which is a good idea, by the way, to stay with it. Okay.
[SPEAKER PIERRE
YVES LESAICHERRE:] That
was the last question, Patrick. It was the last question.
Okay. So thank you for this attention. We'll have the lunch with you. I mean, I hope we'll have a continuing discussion. And again, this afternoon, we will have another topic.
So presentation this afternoon will be done first by Helle and Ladislas, our 2 strategy and energy for natural gas and power and Ladislas strategy at the group level. And then we'll come back to the climate. Sorry, my dear, I will not deliver you all the strategy on the next year by year on the climate, but you will have a better insight of what we want to do. Thank you.
Okay. Thank you very much. And remind you that this is going to be webcast. This next section will run hard stop to 3 So I'd like to welcome the first two presenters. We've got Lattice Laspasevic and Ella Kristofferson, and they'll be presenting on the Total Energy outlook.
If they can take the stage, please.
All right.
Good afternoon.
And thank you for giving me the opportunity to share with you a study work that we've done with Helle's team on analyzing what an outlook for energy demand could be by 2014. We've run a bottom up model. And of course, before I start entering to the details, I'd like to remind you or to tell you the way we have looked at this energy outlook, how we've built it with relying on 2 set of fundamentals aspects for demand. 1 fundamental driver being, of course, economic growth. And first of all, GDP growth that we have taken as 3.3% per year, slightly higher than historic GDP growth.
The second impact for energy demand, which is key, of course, is evolution of population with rising population expected to increase by about 1% per year on average between 2015 and 2,040. The consequence of these two factors, by the way, being that the GDP per capita is supposed to increase is expected to increase quite significantly in the 25 years to come. And that's very important because that raises the middle class demand very significantly. When GDP per capita increases fast, that moves that increases middle class having access to energy and middle class, in particular, in non OECD country, has the characteristic of the willing more mobility, more energy. So that's the key driver, of course, for energy demand growth.
On the other hand, there are opposite aspects with energy savings, which are very significant. That's going to take place in the years to come, and I will get back to that in more detail. This is driven by regulation and policies, and of course, also by technological improvement. So at the end when we combine both drivers together who go in opposite ways, You have multiple scenarios possible, and we have decided to present today 2 main scenarios, 1 which is called momentum, which is quite an aggressive scenario. It assumes, for instance, that by 2,040, 50% of the cars will run electric, which is quite significant as we move, of course, compared to today.
But this aggressive view is mixed with the fact that we have assumed in this momentum scenario that policies and regulation are as have been announced already and there is no breakthrough in technologies, meaning state of the art technologies are being maintained in this scenario, even though that would lead to a decrease of energy intensity by about 2.2 percent per year, which means that overall energy demand over the period to 15 to 2,040 would increase by about 1% per year on average. This scenario does not comply with the 2 degree scenario from IEA. And as a consequence, we have imagined a rupture scenario that would be consistent complying with these 2 degree scenario, but which requires technological breakthroughs, major shift in public policies in order to get there. And this will be detailed this will be presented in more detail afterwards. So what we propose to do is to go for oil, for gas and for electricity to describe to present to you under this momentum scenario what are the findings or thoughts that we could share with you.
Starting with oil. You see here on the left hand side of the slide that the vast majority of oil is being used for transportation and for petrochemicals. 2 third of oil is being used for these two segments. For transportation, you have passenger transportation, about half of it, and commercial transportation, the other half of it. The rest, residential and commercial, industry, power generation, does not, as far as oil is concerned, represents a large share of oil demand.
And you can see on the right hand side of the slide how we expect growth actually to be shared between these different sectors. It's interesting to note that transportation is the main driver for growth in oil demand as well as petrochemicals. But the other sectors, and I will not come back to them really, for instance, residential and commercial or power generation, demand for it is going to decrease over time actually on those sectors, which already does not represent actually a large share of oil demand. If we go now more in detail sector by sector, for light duty vehicle, you see here that growth, growth of cars actually is expected to the number of cars is supposed to raise from 1,100,000,000 to more than 2,000,000,000 especially because as GDP per capita increases, demand for mobility, in particular for non OECD countries, increases quite significantly. But what it is worth noting is that about 60% of this growth, and that's the dark blue bar that you see on the left hand side of the slide, the efficiency gains do reduce actually by this impact of growing needs by about 60%.
That means that cars that today on average consume 2014 to about 6 liters per 100 kilometers, which means that new cars, by the way, being sold in 20.40 will run with even much less than 6 liters per 100 kilometers. So we have taken an assumption of 30% decrease in efficiency well, 30% efficiency gain due mainly to environmental regulations. 2nd aspect, which is key, is penetration of electric vehicles. You see here that, as I mentioned, that 50% of the sales or 32% of the fleet is supposed to be on electric vehicles by 2,040, which compares actually quite aggressively with other assumptions taken by different analysis. But it would move at the end of the day by about 8,000,000 barrels per day consumption of oil by 2,040, as you can see.
The last element is the switch, which is linked to biofuels. And here, the assumption is that, on average, current biofuel integration incorporation in gasoline and diesel is about 3%. It would move up worldwide to about 8%. But the impact, as you can see, would remain quite limited, and so we would have still some increase for light duty vehicles. Heavy duty vehicle now is an interesting one as growth is more or less linked to GDP.
It's commercial activity and it's expected to grow at that level. Efficiency gains are a little bit lower than what they would be for light duty vehicle, in particular because regulations in some parts of the world are not as stringent as for LDVs. And here, we have taken as an assumption that the switch to electric vehicles, in particular for buses, would be quite significant. We have assumed that more than 50% of buses would run electric by 2,040. This, by the way, is a modification compared to what we had presented 18 months ago, where we had not seen that level of switch for heavy duty vehicles for on electricity.
And on the other hand, the natural gas switch, whether it is for compressed natural gas or LNG, is due to be much more important for HDV compared to light duty vehicles. For the rest of transportation business, I'll be quite quick. You have the MyTime activity, which is supposed to grow. But here, the main point is that there will be some significant switch to natural gas and probably IMO regulations will even enhance the switch to natural gas as low sulfur fuel oil will be more expensive. And for Aviation, at that stage, I have to recognize it's difficult to imagine that, that would be significant substitution.
And so as a consequence, as demand is going to grow both for cargo and for people, yes, there should be some increase in jet fuel demand for aviation in the years to come. Coming now to petrochemicals. I said that's the second driver, and you see here that growth actually will be significant because rising global prosperity does have some strong impact on plastics demand. But the key aspect of that slide is probably the recycling aspect. You see here that we have taken as an assumption that 25% of the feedstock would be displaced by expanding plastic recycling from about 10% or even less than 10% today.
So that means that there will be some demand growth for from petrochemicals. These demand growth, by the way, will mostly be focused on ethane and LPG more than on naphtha, even though today, of course, it runs very much out of naphtha. But as time goes on, petrochemicals will be produced more and more out of ethane or LPGs. So when we wrap it up and take it all together, at the end of the day, what we observe is that increased oil demand will be to a certain extent offset by efficiency gains that will reduce, I will say, the impact of growth by about 40%, 45%. It will be reduced as well by a switch to natural gas, more than 10,000,000 barrels per day of oil will be displaced by gas in our analysis by 2,040, as well as displacement by electricity through EV penetration.
But at the end of the day, we do see still a net increase that could be around 10,000,000 barrels per day compared to current oil demand. Of course, all of these figures are not certain. That's the least I could say. And that's the reason why, because uncertainty is, of course, everywhere by 2,040, by the way, that we've decided to run some sensitivities in order for you to have a sense of what it would impact in terms of oil demand in case, for instance, economic growth would not be 3.3%, GDP growth would not be 3.3%, but 2.8% or 3.8%, which is a very large, very significant difference. In this case, it would move the transportation need for oil by about 7,000,000, plus or minus 7,000,000 barrels per day.
What would happen in case efficiency of new vehicle would be 1 third better than what we have expected. It would move again demand by about 6,000,000 barrels per day. And finally, let's assume that it's not 50% of the sales of electric vehicles by 2,040, but 70%, which means almost addressing everything that is that can be addressed given that there will always be some IC vehicles staying in the market. The impact would be an additional 3,000,000 barrels per day of energy of oil being moved out of the market. So finally, what I would like to share also with you is the geographical split of this oil demand.
And you see that in 2015, developed countries represented more than 50% of oil demand, and this is due to be reduced by about 10%, which is a strong shift by 2,040 to the benefit, of course, of Asian countries, of India. And I point out in particular the role of Africa. Africa, even though it is only 4% of oil demand today, It should represent actually about 8% doubling, that's the large increase due to the increase in the population of oil demand by 2,040. So that ends this oil demand part, and I switch to L. A.
For gas and electricity.
Thank you, Ladislas. So after oil, moving on to Gas and Power. This is the first time we are talking about these markets in some detail, so I hope you'll find it useful. And in any case, as you know, they are important markets for our strategy. Here you see a picture of 1 of the recently acquired CCGTs by Total in Europe and of course, this power plant they run on gas.
The first chart shows here a breakdown of the worldwide natural gas demand in 2015 by sector and then the growth path between 2015 and 2014. There are 3 sectors driving gas demand, as you can see to the left. It's power generation and heat generation, 41% market share industry, 24% and residential and commercial 21%. In terms of growth, our momentum scenario shows 1.8 kilograms between 20152040, which is almost double up the growth in overall energy demand, almost. The market goes from 3,400 BCM per year in 2015 to 5,400 BCM in 20 14.
The use of gas, as you can see to the right, is on the rise in all sectors, but Power and Industry represent in our modeling work 2 thirds of the pickup in demand. There are no major changes in the market shares between now and 20 40 except for what Ladislas mentioned, which is that transport will grow in its use of gas and that will happen at the expense of residential and commercial. Zooming in now on power generation. Once again, it's the number one, sector in terms of demand for natural gas. And you can see that we estimate the CAGR between now and 2,040 at 1.8, so exactly the same as the overall gas demand, and this is why the market share doesn't change obviously.
The increased use of natural gas for power is linked to GDP growth and then linked to the electrification of energy use, which is another core theme, and I'll come back to that just in a while when we talk about power. Then the net fuel switch. If you look at the graph here, you may be surprised to see that it's relatively low, the little orange bar, net fuel switch. The reason for that is the following. We do expect a lot of pushing out of coal by natural gas in a number of countries such as Europe, the U.
S. Or China. Conservatively, perhaps, in our growth So conservatively, perhaps, in our growth here shown here, the net fuel switching impact is only 7% of future growth in demand. Efficiency gains in natural gas power plants, CCGTs and increased yield are also leading to gas savings in terms of feedstock, which is the last piece in blue and that of course reduces demand a little bit. Moving on to Industry.
Industry is an area where we expect growth will slightly outpace overall demand for natural gas. And the reason for that is simple. It's because industry uses gas both as an energy source and then as a feedstock for certain industries such as fertilizers or methanol plants for instance. The growth again is driven by economic activity. And then we also model a net fuel switching impact in the sense that we believe there will be fuel switching in many industries, for instance, those using boilers.
And that could be the case, say, in Latin America or in China. So we'll expect these industries to switch to more use of natural gas, driven both by regulation and then by the availability and cheap affordability of gas and that switch will occur at the expense of coal and oil. Energy efficiency, on the other hand, is holding back. Demand together with a structural shift towards lighter industries, so less heavy industries in the overall GDP mix moving forward. I'm not coming back on the gas demand for transport.
Let me start with that. Let's just keep in mind that in our growth scenario, the share of transport in natural gas demand will move from roughly 1% today to 5% in 20.40. So the last zoom I have per sector is on residential and commercial. In this sector, gas demand should be slightly below average, only 1% growth per annum between now and 2014. Demand again is driven by economic growth on one side and then on the other hand by better household living standards in terms of heating and cooking.
Over time, there will be a switch away from coal, oil and biomass in favor of gas, and we've modeled 2 thirds of that switch to occur in China. But then of course other parts of the world as well, Africa for instance or Latin America. However, the switching effect in the residential and commercial sector is entirely wiped off by higher efficiency, especially in the services sector and also in fact by a negative switch away from gas to more power. The chart here shows you how this natural gas demand translate into LNG demand and we discussed this a little bit this morning already. The unit here is BCM, not tonnes.
The first message is that the LNG growth should be around 5% between now and 2,040. So for the decade also going from 2,030 presented this morning until 2,040. Very strong growth, very good market opportunity, as Patrick explained, and it's true that I think we all tend to underestimate the potential of LNG. Let's keep in mind in any case that the LNG markets are undergoing very rapid transformation right now, and they are for sure no longer a niche. That is in fact the second message, which you can see to the right of the chart.
LNG will overtake pipeline in terms of worldwide gas trade share. The share of LNG will move from 10% in 2015 to close to 20% in 20.40. LNG will therefore become a much larger, much broader, much deeper market creating opportunities for portfolio players like Total. To the left, as you know, you will note that the LNG demand growth is coming a lot from Asia, let's say, non China and non Korea, Japan and Taiwan. But effectively, demand is growing across the board.
And then on other just if you wonder within other we have roughly half of that other size in 2,040 is linked to the bunkering switching that LADISLAST hinted to. And that's a big opportunity, and we don't think we've been particularly aggressive in modeling the bunker opportunity for LNG. Here is a chart on sensitivity that Ladislas also had, which is actually, I think, the more fun part of the modeling work. The assumed GDP growth has, of course, a big impact on gas demand, obviously. And so here we show what an impact of more or less 0.5% GDP growth worldwide would mean in terms of more or less demand for natural gas.
It is roughly a 7% impact. The 407% of 2,040 demand. Energy efficiency is obviously also a driver of more or less demand for gas. I'll let you look at the numbers. And then there would be a significant boost in gas demand from the level Ladislas presented if there was even more widespread use of gas in transport.
So increasing the baseline from Ladislas's slide by 10% more market share for gas in long distance trucks and in bunkers would mean 250 Bcm more gas demand in 20 40. Our model also already assumes pretty, let's say proactive pushing out of coal in power. But then again, if we switch 10% of the remaining coal use of power in 2,040, if we switch that to gas, that would drive 200 more BCM of demand. And of course, it would be much better for worldwide CO2 emissions, which is also something we all care about. On the negative side, gas may face even higher competition from renewables.
In our model, we assume that gas takes roughly 20 6% of all new power installations in the world. If that were to drop by 5%, so going to 21%, that would mean 200 BCM less of gas demand in 2014. So there are many different ways of modeling sensitivities and these are just a few of those we're looking at. Finally, I have a last section on power. And so once again, as for oil and for gas, the first chart on power demand in 20 15 and the expected growth in our momentum scenario until 2014.
I think you know that power markets are the fastest growing energy markets. Power demand in our model will grow by 2.2 percent per annum between now and 2,040, which is more than twice as fast as overall energy demand. You know it, it's called the electrification of year, the market moved from roughly 24,000 terawatt hours to 42,000 terawatt hours, almost that number, in 20.40. Residential, commercial and industry make up most of today's power demand, as you can see to the left, almost 80%. And these two sectors will also make up 3 quarters of the estimated growth between now and 20 40.
That being said, as you can see to the right, all sectors are growing, they are demand for power. Transport growth shown here is in line with the baseline Lattice last presented in terms of EV penetration. And transport makes up for 12%, 13% of the growth in demand. A few words on the residential and commercial sector that represents 45% of the increased power demand. Growth is triggered again by the increase in GDP, more people and then also higher living standards, higher GDP per capita, as Gladys has said, meaning more electrical appliances in households, more AC and so on.
And of course, also more services in the overall GDP, including data centers that use a lot of power. The residential and commercial power sector is also stimulated by the electrification of energy use. And this would be the case in Africa, for instance, where we expect to switch away from traditional biomass and LPG use in favor of more power. All of this is partially offset by energy efficiency gains and technical improvements in appliances, including basic things such as that of building insulation and the use of LEDs for lighting. Moving on to Industry Power demand, that will be roughly 30% of anticipated growth.
The main message here is that industry power demand will be spurred by the electrification of a whole range of industrial processes, more automation, more robotics and so on. So if you just look at growth, the demand in the industry for power should almost double in the coming 25 years. However, that growth is offset by energy efficiency linked to the adoption of new industrial structure moving away from Electro Intensive Industries. In terms of power supply, we have just one chart here showing you the origin of generated power. So to the left is the picture of 2015, the and to the right is the growth between 2015 and 2014.
I think you all know this, but we certainly believe that the worldwide power mix will evolve away from oil and coal to more low carbon power, meaning natural gas and renewables. And of course, these are markets that Total is targeting. In our model to the right, wind and solar alone, so not all renewables, but only wind and solar, will make up for 50% of incremental power generated and gas around 25%, 26%. The result of that is that the carbon intensity of power, meaning the number of kilograms of CO2 emissions per produced megawatt hour is going to decrease by roughly 1 third. And then the chart on sensitivity, again, power demand is hugely sensitive to GDP assumptions.
And it happens that in our modeling more or less 0.5 percent GDP means more or less 3,000 terawatt hours in 2,000 and 40, which is 7% more or less demand. Remember, it's because residential, commercial and industry are making up the bulk of power demand. So it is very sensitive to overall economic activity. The next 2, sensitivities are straightforward linked to energy So I'll jump to the last block, which is more amusing, which is to assume that China's per capita power demand would catch up with 1 third of the level of power demand observed in OECD countries or conversely that India per capita power demand would catch up with 1 third of the gap to China's power demand per capita. In both cases that would add 1,000 more terawatt hours of demand in 2014.
So a beginning of convergence in the per capita use of power worldwide. The last chart is on the regional weight in power demand. And unsurprisingly, these weights will shift massively between now and 2,040. Non OECD Asia will overtake in terms of power demand, the sum of North America, of Europe and of OECD Asia. And the shares would be around 48%, which is actually the same share as the share of non OECD Asia in the worldwide population in 2040.
Africa, on the other hand, as you can see on the chart here, would only represent 5% of the worldwide power demand, whereas its population would be close to 20% of the worldwide population. Zohra is definitely a case for being more aggressive on power demand than what we've modeled so far. Coming now on to the last section and perhaps the most interesting piece of our modeling work, bringing everything together and looking at primary energy demand and then CO2 emissions. Here you see the world primary energy demand in our momentum scenario. So the total primary energy demand grows by 1% per annum between now and between now and 20 40.
And that would be going in terms of 1,000,000 of barrels equivalent from 2.70 to 3.50. You can see on the bar chart that the share of gas and renewables is rising strongly. The precise numbers is from 36% to 46%. So a big push on low carbon energy, which again, our markets we're looking at. Coal drops from 28% to 22%, oil from 32% to 27%.
But then if you look at the right in this scenario, the total emission level measured in terms of gigatons of CO2 per annum is not curbed and remains high. In fact, you will note that the level of CO2 we show here in our momentum scenario is close to the one of the IEA new policy scenario. And therefore, since it's close in terms of emissions to the NPE, it's far away from the sustainable development scenario. So then we have been looking at what we called an optimized momentum scenario. And we built that by cumulating all the nice or desirable sensitivities that we have been discussed, Lattice, Les and I, from the momentum scenario.
So what have we done? We have cumulated the following sensitivities: more energy efficiency per annum, 0.1% more 33% more efficiency in new combustion engine cars sold in the market 10% higher EV penetration 10% higher gas penetration in transport for long haul trucks and buses and bunkering, sorry, 10% extra coal switch, so pushing out coal from gas and then also 5% more pushing out of gas in favor of renewables. And when we do that and add up all these sensitivities, total primary energy demand grows no longer at 1%, but at 0 0.8% essentially because of the higher energy efficiency assumption. But then you can see to the right that the level of emission is going down, but it's still not close to the 2 degree scenario. In fact, we only make up approximately 16% of the way to the 2 degree scenario emission level in 20.40, which therefore clearly says that we need a completely different set of assumptions if we want to have a primary energy demand that would be compatible with the emission level of the sustainable development scenario in 20 40.
So this is the basis for our rupture scenario. The main drivers are shown here, but the main drivers are high level technological breakthroughs, a very strong shift in public policies. And I would add also a big change in the energy consumption patterns of all of us, including us who are in the room here today. So this scenario is built on 4 major drivers. Number 1, huge energy intensity improvements of more than 3% per annum, which would lead to an energy demand that would be almost flat between 20152040.
That result could also be achieved via reduced economic growth. 2nd driver, much, much faster electrification in industry, in transport and in buildings. And that could happen, for instance, via breakthrough in mass storage of power, which would also need to have the right price points. As a consequence of much faster electrification, power demand would double in this scenario between now and 2014. And that would also mean that the share of EVs in the light vehicle fleet would be jump above 60% from the level we discussed earlier.
In terms of power generation, the 3rd driver would be a very strong acceleration of the transformation that is already ongoing towards lower carbon power. And there would be a massive shift to renewables, pushing out more than 2 thirds of the coal that we had in the momentum scenario. And then finally, we would need a significant amount of carbon sequestration with at minimum 2.5 gigatons of CO2 stored in one way or another in 20 40. So with all these assumptions, here is then what the rupture scenario would look like. Primary energy demand on the chart here in the rupture scenario would be only growing by 0.1%, so almost flat with 2015.
The use of coal is collapsing. You can see that the black bar is very small. The share of oil is down to 21% and the share of natural gas and renewables in this rupture scenario goes all the way up to 62%. There's a little bit of nuclear left, of course. And then more interestingly, the CO2 emission level that you can see to the right does reach the 2 degree scenario level in terms of emissions in 20 40.
So this is all I wanted to share with you on our modeling work. We are there to answer questions later. But first, I'll hand over to Patrick, who is going to talk about TOTAL and how we integrate climate into our strategy, which is a very good follow on. Thank you.
So these studies is maybe not no, no, please leave the previous slide. The message is and again, we've done that and quite a lot of time, and I think some of the peers are more with the same conclusion is that fundamentally, with all what we know today, and investment momentum is quite aggressive in many assumptions. The reality of the world and by the way, we should not forget what the state have proposed at the Paris Agreement. They all agreed to set a target of 1.5 degree, but the contribution of other national contributions were not fitting at all with the 1.5 degrees, but more with 3 degrees. So the momentum scenario, which is already quite aggressive, is not there just to justify that it's only in gas and hydrocarbon.
It's more that if really the world wants some bit 2 degrees, there is a huge shift which have to be done. And in particular, just to comment on one assumption, just to have in mind all of you that on a long term basis, the world is making 1% per year of energy intensity improvement. So to reach 3%, if you want to keep the same economic growth, it's just something which is a revolution in the world. So in fact, it is that the 2 d scenario is also a world where the economic growth is reduced. Otherwise, we don't reach it.
Having said that, it's not the reason why we should not act as Total. So I will come to the strategy of Total, which is again I already presented. In fact, this presentation has been done to you by Philippe in New York. But I think it's good that first the CEO will do it itself and because it's a result of a lot of works being done with the Board of Directors. And second, because we have also some question marks and we wanted to have today an open discussion.
And we have also introduced, as you will see, a new element of the Scope 1 and 2 target. So by the way, this is a solar plant developed by SunPower. So the strategy again and when do we what do we take what do we do in total. I could put now the momentum and I will do it by the way next time the momentum for a pure scenario as we straight mark by Total and not using IAEH sustainable development scenario, which was not very different from rupture. But again, what we have decided and that is because we have some fundamental market trends is to embed in our strategy these trends.
Of course, we don't say that will happen. We say that it might happen, even if again the demonstration is that it's not in our hand today, but we can think that there are trends and I don't know if it's 2,040, 2,050, 50, but we need to be responsible and to observe it. So what I said, I didn't say clearly is that a 2 degree world would be a world with lower demand of oil. Again, momentum scenario does not give us that, but it's not by the way, there is no more growth. So the second conclusion is that natural gas is a right combination with renewables to ensure, I would say, the stability of the energy system, the permanency of the energy system.
And then in all this scenario, you have the growth in renewables, mainly driven by the growth in electricity demand. So in this slide, just repeat the presentation this morning, we saw the 3 axis of the strategy of the group, all low breakeven all in order to be ready to face a market where there is plenty of oil and less demand. So the answer will be, I'm not there's a chance to run Saudi Aramco, but I need to be sure that my the oil projects will arrive by 2,040 will be at a low range of the cost curve, otherwise we could face troubles in such scenarios. Natural gas, there is room for him developing. We speak about transportation.
We speak about power. We speak about many domains where natural gas can be and as some virtue, in particular, if we want to be substituting coal by natural gas is obviously something which, by the way, takes place in some part of this world like the U. S. And last but not least, electricity, but sure that the 21st century will be a century of electricity. It offers a bit larger growth, higher growth than the other fuels, 2% of growth even in the momentum scenario.
So that's real factor is there. Our economy is more and more electrified and we need to look at this business. So then to speak about roadmap, I will go through the roadmap of Total through biased sales of what we can do in order to tackle the climate change at all level and to be responsible. Of course, the first thing to be done in a company like Total is to further improve the efficiency of our operations. This is in our hands.
This is our first responsibility, which means that and by the way, it fits also with some economic objectives. And when you are running Refining and Chemical Business, you learn very quickly that if you can save some energy to be burned in your plants, it's one of the best way to enhance the profitability of your operations. So we have a target internally on which we collectively look carefully, which is to enhance our energy efficiency of 1% per year. It's not so easy. And by the way, it's also helped by the fact that the plants are more available.
We have been able in the last 10 years to achieve this target. From 2010 to 2018 sorry, or 9 years, we have done just above 10%. So we are a little advanced compared to this target. Of course, it goes with some investments. We have allocated for since 2017 a $300,000,000 of capital investments in energy efficiency to our downstream facilities.
It goes as well if we want to promote it with some assumptions of what will be the CO2 price and what are the hurdles in terms of profitability, what we expect from this type of investments, all very pragmatic issues that our teams are asking us, okay, you asked us to spend, but what are your early or what do you expect as returns on these energy efficiency? So we put a price of $30 per tonne at $50 I think we have another assumption of $40 per tonne is the price of oil is higher. It's a little complex. We have many engineers in the company. So we put that and of course we use when there is a market in some areas of the world, we use the assumption of the market.
Another way to look at it, of course, in particular in upstream is all the flaring natural gas flaring. On one side, we say natural gas has a potential great future in the energy mix. On the other side, in our companies, we flare gas, so we waste gas. So there is something contracting to relieve them. I think we have been quite serious about it and we set some targets.
I take my papers. I don't want to make a mistake. But we say to our teams, okay, first, there is a global worldwide commitment that routine flaring is to be stopped by 2,030. So we don't launch any projects with routine flaring. And it has been decided some years ago.
It has been strictly team sometimes, but we have been very strict, no new projects with routine flaring. On the existing routine flaring, I think we set another target, which was first of the overall flaring. We were in 2010 flaring around 15 cubic meter 15,000,000 cubic meter per day and we are down. We set a target to be down by 60%, which we'll have done. We will be we are in 2018 at 6,000,000 cubic meter per day.
So it has been done. And on the wood in flaring, we said to the team we want to be at 80 percent less than we were in 2010 to 2020. And 2010, we are at 7.5% and today we are at 1.1%. So in fact, the objective of 80% is already achieved. It's no more so routine strength.
The difference between routine and the global strength is a safety strength, because on installations you have some unstable phases of operations and there is no way or the way than sometimes to accept that flaring in order to avoid any accidents on our platforms. So but fundamentally, we are, we have been very serious about it. The actions have been either to find ways to valorize the natural gas, which is the best way, or in fact also sometimes to get out of some assets, to be honest, which were to hold or to mature in order to build the growth on more environmental friendly assets. But the commitment of 2,030 will be achieved maybe before if we can do it. We are still with 1,000,000 cubic meter per day of routine flaring, not much, but we should we will be we will tackle this issue.
Another way of being more efficient, I was mentioning that this morning during Q and A, is of course to switch our processes to more being more electrified. In fact, to use more electricity driven platforms and to be serious about it. It's really a route which we need to embark and to in which we need to think seriously in terms of engineering of our platforms, of our developments. It has a cost for sure. So it's why we need to have some assumptions on CO2 and CO2 prices and the better the price will be at certain level, better it will be, but this is a serious way to do it.
We have sometimes some debates with also sometimes when we have a project where we emit some CO2. Do we invest immediately in reinjecting the CO2, capturing and re injection the CO2? This $30 per tonne is a nice threshold to decide and sometimes it works with threshold in order to implement it immediately. So the second axis of the strategy is natural gas. I showed this slide this morning.
And on this one, I will not repeat what we said, but obviously, it's also for us one of the action we have to be proactive is to develop new natural gas markets. And in particular, how can we pioneer and develop the LNG for bunkering for my team businesses and we have signed a contract with CMS CGM last year in order to equip and to provide LNG to all their new generation of containerships between Europe and Asia. And it worked. We demonstrated them that even if the ships are more expensive upfront, they will save some money. We have to develop some infrastructure.
We have taken some decisions to implement some barges in order to provide these LNG, once in around North of Europe, once in Singapore. We are speaking we are discussing today to implement also a bunkering system in Oman in order to be to provide the Middle East. So this is a proactive action to promote this natural gas and clearly this is a very clear way to clean this shipping industry in terms of energy. There are some IMO rules, but if we can go directly to LNG, it will be super efficient. Of course, when we speak about natural gas, one of the key issues and which is an objection to the growth of natural gas is the methane emissions and we have to be to take it into account.
We cannot speak about promoting natural gas if we are not very serious about methane emissions. I remind you that the methane has a greenhouse gas in power, which is much higher than CO2, and so we need to tackle it. So there is several debates. So we have spent quite a lot of time to be able to measure it, in particular, in all our operations there again. And so our upstream level is quite low.
It's about under 0.3%. We committed with our colleagues of the Oil and Gas Climate initiatives to be up 0.2 percent by 2025. I think Total should be able to reach that level earlier considering in particular our flaring or no flaring policy. We are making big steps. And I remind you that it's very important that when we say all the natural gas producers that we are cleaner, I would say, than the coal, it's true providing that the machinations are managed under 1.5% to 2%.
It's under the control of Ladislas, am I right? Yes. And so but it's along the full value chain. Of course, it's all value chain. It's not only in the upstream, it's also in the network, in the distribution and the customers.
We are not in this business. We are in some of them. But it's true that we need also in the oil and gas industry, even if we are not directly responsible of this downstream of the value chain to bring the natural gas to citizens in some cities, to steward, I think, to be steward of all this methane fight in order to have the cleanest possible chain and to be able to promote natural gas in a comfortable position, which I think we can do that. And so it's clear that the mobilization of the whole industry is necessary for that. Then we have the electricity again, and Hela explained to you all the good potential growth.
And entering, total carbon electricity is, of course, part of the road map. I told you that there is a strong they told you that there is a strong increase of demand. You can see that according to various scenarios, it could go up by 60% to 100%, to double the sale interruption scenario. And of course, most of the additional power will come from renewables and some from natural gas. Again, Helok shows you the various sensitivities.
And so that's why we positioned the company on this segment. And in particular, we said that we have an objective in 5 years of 10 gigawatts, 3 from gigawatts from gas, 5 power plants, 7 gigawatts from renewables. And this target will be, of course, increased year after year. It's also why we consider ourselves that in terms of renewables, of course, we have begun our journey with solar. We recently, Full Direct Energy, acquired some onshore wind position.
But we also look to other renewables. We are I want to be this is an evolution in the company, but the more we look of this business, the offshore wind and hydro are also offering sizable plants, I would say. It's important that and there are big improvements in terms of efficiency in offshore wind as well. So we are looking some ways to enter into that business and we will reach some partners or ourselves and there is there are ways to it's clearly a technology which is offering some interesting improvements in terms of capacity to deliver the affordable power. We have also this battery business, storage of electricity, one of the huge parts which is missing in fact today because everybody considers that we are because we are able to do batteries for EVs, we are able to store electricity.
It's not true at a large scale. It's quite expensive. The fact that we acquired Saft gave us we are clear insiders into that business and we observe all the progress. We are taking steps in order to grow the Saas business, in order to really develop these energy storage systems and to combine them renewables. When you combine, of course, some solar, for example, solar and batteries today, the cost is higher.
So we need also to drive the cars down. But in fact, fundamentally, when people say renewable are competitive with natural gas, it's not true if you take into account the intermittency. And so batteries as a way to make it competitive. There are some improvements there and I think it's one of the segments in which we think we could have also a position. And last but not least, of course, is distributing low carbon electricity to customers and we establish that business and we intend to grow it in the future.
So biofuels. Biofuels have mixed reputation in the banks. We have the 1st generation biofuel, the 2nd generation biofuels. But what is clear is that around the world, we have policies and government policies, which in many countries, in fact, are favoring biofuels. We observe a growth of 5% per year in the last 8 years, so it's a growing market.
It's true in Europe. It's also true in Asia and some in Southeast Asia. It's true in South American countries and true in the U. S. According to the various scenarios, we have the range of future growth, which is around 4% to 6%.
One of the issues being, of course, to have sustainable biofuels, I would say, which means the debate about the 1 gs against the 2 gs. Publicly, the 2 gs for the time being is not very as technologies and the volumes are quite minimal. You have, I would say, some evolution of the 1 gs biofuel, in particular what we want to do in our plants in France about used cooking oil or sorry, I'm missing the word in English, fat, animal fat, I think, that we want to use in complement of vegetable oil. So there are ways to make these sustainable biofuels. It's also necessary for us to scrutinize the way we supply these vegetable oil to our plants and we have taken some commitments on that in order to be sure that the whole chain is, I would say, climate friendly.
Entering into a Brazil market through our M and S business where we have an average, I was looking at the figures during lunch, around 30% in fact of the fuels which are sold in the network which we recently buy are in fact biofuels. So it's 30%. And but we need to grow it. It's also a way to contribute positively to these reaching objectives. There is another topic which is a little limited today, but gaining momentum is biogas.
And on this one, we have, I would say, few productions at an experimental level. It's not very big, but we have one in France, we have one in the Netherlands, and we have when we took some shares of clean energy in the U. S, we are also inherited this part of this position. So I think this will be I will not be surprised to see in future years some mandate policy to promote biogas into natural gas. It's one way, I would say, to also promote natural gas by combining it with some biogas and so we're lowering the CO2 content of the natural gas.
And last but not least, in the road map, it's about carbon sinks. Carbon sink businesses, I think it's important and it's fundamental. In any scenario, you still have hydrocarbon. And you know when you it's not only for producing hydrocarbon, when you have a cement plant or a steel plant, considering the level of heat they need to make the products, we don't see or we could avoid we could have ways to provide them with heating without hydrocarbon. So it's also so these technologies need to be developed.
It's a question it's a vital question. In all the scenarios, you have to take care of, let's say, 2,500,000,000 ton in 2,040, IEA, say, 5,000,000,000 ton in 2,050, but there is there a necessity to be serious about it. And when we move, we look at it. So on one side, we are embarking participating to projects like the Northern Lights project in Norway together with Quinn O'Hare, but also the Clean Energy gas project in UK, which is being developed also with, I think, Shell MVP, if I remember well. So we want to take a share, to take to grow our experience and to invest.
We invest more or less $100,000,000 per year globally in R and D and technology development program in CCUS. But there is also the natural things, natural carbon things, which means investing in preservation of forest, humid areas, degraded lands. This is not an oil and gas business, to be clear. And so we are recruiting. We have decided to be serious about it, to consider that there is something which, by the way, in terms of economic is much more efficient because you can clearly sequestrate some carbon from less than $10 per tonne, but it has to be done by professionals, I mean, which are environmental people, not us clearly.
And so we are recruiting a team. We have decided that we could we will be able to we will provide them around $100,000,000,000 of our investment budget. If we do that during 10 years, we could reach the equivalent of sequestration, at least let's say, it's your figure between 3,000,000 to 5,000,000 tons per year of CO2. It has to be done virtually. It's not given because this business is just it has to be done very seriously.
There are many consequences with communities and so you have to select the projects properly. But we think that it's a way to contribute in an efficient way in the climate change challenge. So when I come then to what does it give or I gave you all the elements of the roadmaps, when we speak about our emissions, I would say we have all emissions. Our emissions are the ones which are coming from our operations. Our accountability is what we call scope 1 and 2, which in fact, to be clear there, are mainly on the yellow and the orange part of oil and gas production and transformation.
And then, of course, our products are sold and then they are used by our customers. So there are emissions of so used by our customers. This is what we call scope 3. We have decided to take these two elements and to with the Board of Directors, we had again a discussion yesterday, by the way, about it and to see what we could do in terms of not only saying we are responsible, but acting. So first, on Scope 1 and 2 and our operations.
We have decided that we'll set to ourselves an absolute target of Scope 1 and 2 emissions from our operated facilities or operations under our control for all our traditional oil and gas business, E and P plus refining and chemicals plus marketing and services. And all of these activities were emitting around 46,000,000 tons of greenhouse gas in 2015, which is a year of supply segment, so we took out that as a reference. And we want that to be down by under 40,000,000 tonnes per year. So it's an absolute figure. Let me be clear, there is no message of shrinking behind it.
We tested that figure even to reassure Christian that we can grow. If I understand you don't want me to grow too quickly, but we can grow. And so it's a strong commitment, but we decided that we had a debate that it was the best way to show the commitment with an absolute figure, but we can reach it. We have already made some progress. I think we'll be soon at the 42%, 43%, but we will be down under 40% by 2025.
And the Board of Director has decided that an element of viable pay of the CEO and then of the top executives, because I translate all the targets which are given me to the Board to my top executives, will be linked to the progress on this target on scope 1 and 2 operated emissions from our traditional segments. The way to do it, I will not repeat, our flaring reduction, methane control, energy efficiency, process electrification, all what I just explained to you before. The second ambition, which is more strategic global strategy, is to be able to, as I said, to so we put in place this indicator, which is with weighted average of the life cycle emissions of energy product source. If you want the explanation, MADISFAST will give you everything. I can tell you it has been very it's well controlled.
There is no double counting. All that has been scrutinized. It's perfectly auditable. I know that we speak about we put an index in base 100 in 2015, but you have the figure of these emissions in 70 grams of CO2 by kilo BTU. And we intend to diminish it.
If we put in place, if we execute a strategy, which is that growing our natural gas business to, I would say, in 2,040, having 45%, fifty 5 percent of the global portfolio of the company being in natural gas. Having in oil 2030, including biofuels, bio30% to 40%, and we grow the low carbon electricity businesses to 15%, 20% of the global portfolio of the company, we can reach these ambitions in 2030 and 2,040. It's difficult to give precise figures. It takes time, but we are already embarked on this journey and this ambition will be by the way, it's fitting very well with what I show you about the market trends on which we face and we want to on which we want to develop the group and the company in future years. Last but not least, the last slide, we are not alone.
And on this climate change, I think it's important that the major companies are also taking some leaderships and not only alone, but also with collective actions. So we have in total clearly a clear policy because we are. But we should engage and being transparent, I think, and should engage in the initiatives which make sense in order to fit with our strategy. So yes, we are reporting since 2016 a very year now of all our figures and how we execute this strategy. And I think we already issued 3 reports, so it will be an annual report.
Secondly, we have decided to support the TCFD recommendation by Michael Bloomberg. And we have even participated positively in the working group to make recommendations or to implement it with some of our peers. And I think in our reporting, you can find the disclosure according to TCFD. We need to improve it every year, but since last year, since 2018, we are doing it. We are also in the U.
S. Joined the Climate Leadership Council, which is advocating for a carbon dividend plan. We have seen that in France, there are many debates about carbon CO2 taxation. The U. S.
Are these U. S. Leaders are promoting an interesting way to try to implement and to put, I would say, the citizens on the right side. Lalislas could answer for you some questions if you are interested, but we are a funding member and we participate actively to promote this idea. Together with our colleagues, we have the oil and gas climate initiative and we are also very active and not only in setting some rules.
We have in the Global Compact being around 1 of the 30 lead company on the Global Compact. And last but not least, I mentioned this morning that we joined founding member of the Alliance to End Pasiguies. So I think it's a global move in the company. Okay, it's going very through transparency. So we are open to dialogue.
We are open to provide the figures. But also we have, of course, to reach our mission. And our mission is to deliver energy to more people, to deliver an affordable, reliable and clean energy. And it makes no sense if we don't reach 3 objectives. It's not only a clean one, which will be expensive.
It doesn't work. Again, the events in France have demonstrated it, even in the developed countries. So we need to be able in a company like Total to combine the 3 objectives and in order to be a progressive player in this field and this is our ambition. So after this presentation, I will be happy to answer and to some questions, but my worry, it will be Ladislas and Helo, which will mainly, I hope, answer and on all this presentation. Thank you.
Okay. Well, the first question I'd like to say we'll give to Martin wraps down the frontier, and we'll follow that with Chris Copeland.
Thanks for this presentation. I thought it was very interesting. I wanted to ask you 2 things.
Brendan, yes. One question. Brendan, please come. Can you give me my file, which is over? I need the notes, you know.
Okay. Please go. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] All right.
Good. I've got 2 questions, if I may, about various parts of the presentation. The first one relates to the oil demand work that Lasse Lasse presented. And in my experience when people talk about the peak oil demand and things that erode oil demand, they end up talking about things erode gasoline demand rather than just oil demand. And if I look at your outlook, this idea is also sort of embedded in here.
And if I can just sort of pick out a couple of numbers, if I focus on the right hand chart of Exhibit 4 and pick out the things that are middle distillate. Aviation, I think you have it at plus 4,000,000 barrels a day, that's all middle distillate. Marine, plus 1,000,000 that's middle distillate and then Road, buses and trucks are 3,000,000 barrels a day, all middle distillate. In total, there's 8,000,000 barrels a day of middle distillate demand in this. Now, at the moment, it takes about 2 barrels of crude oil to make a barrel of middle distillate in the global refining system.
So to make these 8,000,000 barrels of middle distillate, we will end up refining 16,000,000 barrels of crude. But then the gasoline yield on that is easily a third. So if we refine 16,000,000 barrels a day of crude, we end up making 5,000,000 barrels a day of gasoline. There is not 5,000,000 barrels a day of incremental gasoline demand in this outlook. You put cars at only plus 1.
So in this outlook, it looks like there is an inherent imbalance in the amount of middle distillates that we're going to need versus the amount of gasoline that we're going to need. Now there are 2 solutions for this, of course. Either we very heavily invest in hydrocrackers, shutdown FCCs. The global refining system very heavily switches away from gasoline towards distillate. But in an industry that isn't growing all that much and frankly where the margins are rather skimpy, I doubt there would be appetite for such large investment.
The second alternative is, of course, that we have different demand patterns and that perhaps what we current we consider to be Middle East demand turn out to be gasoline demand. You could perhaps talk about, I don't know, gasoline trucks. May sound a little far fetched, but perhaps we need to go there. My first question is, how do you think this imbalance between the various parts of the barrel will be resolved within your outlook? That's my first question.
The second question that I have, which I recognize is completely different, but perhaps more a question for Patrick. If the outlook is 10,000,000 barrels a day of demand growth over the next 25 years, that's 400,000 barrels a day a year. But at the moment, if you look at the industry, both operators and service contractors, we have the ability to develop about 3 times that every year. We could easily grow well demand or oil supply at 1,200,000 barrels a day. So in terms of our development capability, we could well have a lot of oversupply.
But then again, if you look at the resource base that we have currently, plenty of resource, we can also develop resource at a much faster rate than 400 1,000 barrels a day. So it looks like both resource and capability to develop resource are both could well be an oversupply. And if you then think about who is going to capture the economic rent, you could either foresee a scenario where resource holding countries chase the ability of operators like yourself for your capability to get their oil out of the ground. Alternatively, you could envision a scenario where operators are actually chasing the countries that own this stuff so they can apply their trade. In that tension, where do you think the economic rent will fall in the future if we end up in this scenario?
Those are my 2 questions.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] I'll leave you the first one. I think I'll wait for you. And I'm sure the model is fine, but you have to explain to a little bit of that.
No, I have to say that the way we've run the model is really on primary oil demand. And at that stage, it's not been taken into account the refinery aspect of it. It's really moving for the big picture and saying how much oil do really I need in order assuming that you'll get there depending on the different slates that you will use afterwards, but it's really on the oil aspect. So probably we'll have to refine with no joke, we'll have to refine the analysis in that regard.
[SPEAKER JEAN PIERRE ANDRE DE CHALENDAR:] Okay. So the second question, by the way, you are right, but this is what Total is doing. We are chasing the producing countries where we find low cost oil. And it's why we have been quite aggressive to take all the position in the Middle East. It's why I prefer to have long term oil in Abu Dhabi than in other countries, than in Canada, for example.
That's clear, but your scenario is right. And by the way, if you follow your scenario, we don't have to worry too much about the cost of the industry. Come back to this morning in terms of capital efficiency of the industry. But it's true that I'm honestly, my strong belief is that all that is, to be honest, it's very this world of 2 degree, we don't see it at all for the time being. And by the IA scenario, when you look at it, there is like that.
And then there is a huge drop. You don't know what is happening somewhere. So I think this is where we need to keep both aspects in our hands. We need not to be radical. But you are right, at the end, the power will shift to the producing countries with the lowest cost of oil.
That's clear? But it's why we need to keep the position today rather than before, because it's better to negotiate today with them than tomorrow. I agree. So, we take that conclusion. When I speak low breakeven orders, we need to we need to look at and to change it, and we need to take the positions today and not to wait.
So, if we extend $3,500,000,000 to acquire the position in the concession in Abu Dhabi, it's perfectly because of that. And then we have the position for 40 years. Of course, obviously, these countries, they know that they have the rents in their hand and so the share of rent is different, but you protect your portfolio for the future. Question is that for us, we don't have so many opportunities to take very long term oil, in fact. We don't have so many cans with the falling back.
For the time being, Saudi Arabia, we did not manage to convince to give us access even if I'm going to Riyadh regularly.
Okay. Okay. So, next question is going to be Chris Copeland and then followed by Oswald Clint down the front.
Thank you. Just wanted to, Lanislas, you're starting your analysis from 2015 at 92,500,000 barrels per day. So you add 10,000,000 barrels per day and we're not far away from that today. It looks like we're going to be there in 2 years' time at current rates. So I wonder whether and I appreciate this we're dealing with the realm of uncertainties, but I wonder whether you can share with us how you expect the progression into the late 2020s, for example.
Do you see an early plateau? Or do you see a continued strong increase? And then at what stage and at what height do you see a peak before we go back to your 20.40 number? Thank you. [SPEAKER JEAN FRANCOIS
PRUNEAU:] All
right. First, I want to make clear that the $92,500,000,000 excludes biofuels and refinery gains. So we need to have consistent figures actually when we compare to make sure that the definitions are about the same. Regarding the progression, we do see actually an increase, which is flattening at the end of the period, but we hardly really see a strong peak rather than a plateau with growth actually being reduced as time goes on.
[SPEAKER JOSE RAFAEL FERNANDEZ:] No, but your question is good. So reality is that at the pace of growth today, we are exiting out of any of this scenario. And so something should happen somewhere, I don't know when, which will reverse the course. And this is the main difficulty, so that's true. And scientists are right to try to say there is an urgency to act.
But the world today, in fact, the reality is that we grow oil demand by 1.3, 1.5 because the price is low, because emerging countries are willing to develop their economy, whatever the consequence are. It's difficult. So that's true. But today, you have a trend which is not in line with any of the scenario. We cannot hide it.
What could be the reverse? What will be the element of reversing? In MSC, I see 2 categories of countries. We have OECD countries where you can find that the policies will be strong enough like in Europe. But there will be political willingness, we can reverse it, but frankly, to see that in most of the emerging economies, which aren't driving the growth for oil.
We not make a mistake. There is no growth for oil demand in OECD. It's not true. And the question then for OECD is do we shift quickly enough to compensate to growth of the emerging economies? This is the debate today and that's a question mark for the developed economies.
But it's true that there is some way of a contradiction. And again, if you observe quick, as you have done it, I'm sure the IEA scenario, you see suddenly a sort of break of curve, there is no real explanation. And it's always difficult to know when. So this question, which is a good nice quiz in all the conferences, for me, just a question it's a quiz that's very difficult to answer.
Can maybe just add one thing, which is that this scenario we're showing is already aggressive on EV penetration. And of course, today EV penetration is very low. So just remember that it's one of the assumptions that there will be high EV penetration coming up.
Thank you. Yes, just two questions really focusing on the oil demand side and an upside risk and a downside risk. Patrick talked about being an insider with Saft and understanding batteries and story to run renewables. But you're also you also have a lot of history with methanol and coal to olefins. So you have a 2,000,000 barrel per day reduction in oil demand because of coal and methanol to olefins.
I know you did this in the last decade. Total has quite some history with coal to chemicals. So is this using that knowledge? Do you think coal to chemicals works or and it's going to progress?
And when I became CEO, my first decision was to exit all this mess.
Well, that's right.
Because I went to China during the world. The people in the car told me you need to advocate for coal to chemical by the way, I was in coal to be in chemical before I thought I'd be okay. Let's be clear, all that is nice. It's just emitting 5,000,000 tonne of CO2 per year to make 1,000,000 tonne of polymers. That was the ratio.
So honestly, this was not responsible. So we and by the way, the economics were tough. So honestly, coal to chemicals, it's a root. You have to absolutely combine it with CCUS, does not exist. I mean, when you speak about China, to reinject CO2, you cannot find the place.
So we stopped it. So yes, we had a journey, but we decided that it was making sense. It was an economic driver, which was low feedstock coal in China, so it's low feedstock, advantage feedstock, but there was just a drawback. And if you put in the math $30 per ton, you just don't do it. That was the reality.
So, methanol to olefin, which we had developed the technology in Fer Louis. It was interesting when the price of oil was at $100 per barrel, when the price of gas in the U. S. Was at $8 per 1,000,000 BTU. But in the meantime, something happens, which was just a shift of the gas in the U.
S. To $3 ethane is at $3 or $4 And so unfortunately, this technology is more expensive MTO than simple cracker. When you make a cracker on ethane, it's more reliable. You don't obtain exactly the same products at the end. I know that some chemical, chemical, big large companies are trying to invest, but they are going slowly.
It's just a problem of what is the most competitive technologies. So we have it. I don't say that never will do it, but to take the decision today to invest in MCO, and we studied that very seriously in as an alternative to port off a crane cracker. At the end of the day, the crane cracker was more interesting.
And sorry, the other question was, you mentioned that electric buses, you've now gone to 50% electric buses and that's a change from this time last year. So something happened. You incorporated it. I remember BP last year saying plastic straws was a reduction in their chemical demand assumption. So each year there's another thing that happens where you're changing the numbers.
My question is just how much government policy meetings and interaction you're having? And how much does that increase so that you're on top of future political and policy changes?
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] Let's be clear, policies are extremely important in the evolution of what's going to happen. So we have to take that into account. So that's definitely significant. Now for heavy duty vehicles, we had in the first hand about 18 months ago assumed that almost it was no switch to EV for this segment of the market. And we realized that actually, because we learn and we look outside what's going on that probably you have, of course, buses, you have urban delivery trucks that are going to move faster than what we had anticipated probably.
Hello, think today you assist to attend to something very new for Total. 5 years ago, we were only making the size on the supply side. And we decided in 2015, no, we need to look at demand. And I told to my colleagues, I want to hear about demand in this company, because all what is happening around us, the demand is just fundamental. We can stack all the supply from all the countries 1 by 1, and we were doing that exercise every year about 2 years with E and P.
And we said, no, I want to see the demand and better understand. So we opened our mindset. We also had I will tell you on these electric cars, electricity, I invited to the Board of Director, CEO of Car Manufacturing, and we had a session with our Executive Committee. And it all is frankly, I'm convinced that all the cities, the big cities of the OECD world will be plenty of electric you forget about also. So it obliged us to think about it and to listen, to discuss with people, to open our mind.
I think it's a very important exercise for companies not because we are producers, but we are our production and our choice of decision strategy must be also driven by better understanding the demand. This is moving very quickly. All the buses will be electric, I think, in Paris in 3 years, 4 years, all Chinese, by the way, because they are most efficient. But it's moving very quickly. And I'm so you need to we change our minds, in particular, even on trucks.
Electric trucks, could take part of it, in particular, light trucks. We can see some evolution of these technologies going quickly. So, I think, yes, it's a world which is changing very, very quickly. By the way, for the car manufacturing companies, it's even more adequate for us, I think. But we have to understand and to be in the contact with them and to be through what we are trying to listen and not only in Europe or in our continent, but also to listen to what is happening in the other parts of the world because the vision is not exactly the same.
So there is an evolution, that's true. I think I'm about you mentioned about petrochemicals, that's true that 2 years ago, 3 years ago, all the oil and gas company, we want to do petrochemical, there is a huge growth petrochemicals, but true also that I'm convinced that part of this growth will be taken by recycling. Part of it will not be virgin oil or virgin gas. So we have to introduce that in the models. It's more complex because there you are obliged to take plenty of assumption because in fact it's technology which today is a very early stage.
But I think it's very important that we understand better the demand if we want to establish a strategy.
All right, Alastair Syme with Citi. Two questions, one for Hallo. If you look at your models on learning rates in solar and storage, do you think the combination becomes competitive with baseload generation gas and coal by 2,040? Is that economically viable? [SPEAKER STEPHEN ROBERT
BINNIE:] It depends on each country, in fact. I will tell you, in Australia, and Leuvai will take the floor, but what I observed, it depends frankly of the price of electricity in each country, which are very different. Leuvre, you want to elaborate?
No, I mean it's a good point. First, that electricity markets are entirely local, and there are all kinds of specificities to local markets. So it's hard to give an overall answer. Number 2, the rupture scenario we showed is a kind of top down assumption embedded in there, which is the answer is yes. I mean, mass cheap mass storage of power certainly changes the game.
And so that's what we have taken as an assumption in the rupture scenario. In the momentum scenario, we're improving, but we are not making this discontinuity in terms of availability, affordability and safety. But you know that within SAFT, we are working both on ESS based on today's technology and then Saft is investing also in next gen technology called solid state, which
We have an underground experience. We have convinced Momar that we need to solarize our retail stations around the world. So we enter into a huge program, 5,000 retail stations will be just solarized and governed. And we just recently and I think maybe it's something we could share with you, it could be interest, it's maybe microeconomic, but it gives the right idea. We just went through this feedback from the teams going through all the countries and looking to the profitability of this decision, which was a sort of consistent decision, but okay, let's do it.
By the way, it was a way to support SunPower panels. So, Momar contributed to our investment in SunPower. But I can tell you in combination of solar and some batteries in Africa, in most of the countries today it's profitable. Although you are above 20% rate of return. So it works even if expensive.
Okay, when you come to France, which benefits from the best or one of the lowest power electricity price, it doesn't work at all. In fact, we are very monetizing Filipe and SunPower. But so that's interesting. So it depends really of what is the cost today of providing electricity. And for example, in Australia, I understand that the situation is quite expensive to provide electricity.
So the combination, it works without a lot of subsidies.
And the same applies to these non connected areas like islands where Saft has already today deployed storage in connection with either wind or solar farms. And it works because the power prices are very expensive and so they can pay, so to speak, for that kind of generation. So again, it's a sum of individual and local conditions.
My follow-up, Patrick, it was just this morning you mentioned when you talked about the project sanctions that not all the LNG projects meet a 15% hurdle rate. What how do you think about in a rupture scenario what that could do to gas pricing and whether that would further impact on those returns? [SPEAKER JEAN FRANCOIS
PRUNEAU:] Rupture scenario and gas. We still have a stable demand in the rupture scenario by 2,040, yes?
It's a little lower than in the momentum, but there is still room for that.
Which is a little different because when we see what is the share of LNG in the natural gas market. LNG today is only 15% of the world gas market.
10% and we'll go to a little less
than 20%.
It's less than 20%.
The growth of LNG and accepting without having a question of domestic gas. The gas market is split into different words, in fact. So, I'm not afraid of that. By the way, we are prudent. We take an assumption.
The $50 per barrel is equivalent to us to something like in Europe $5.5 I think and in Asia $7 or something like that. So, we are our gas assumptions are quite prudent in fact when we sanction projects. This is, by the way, for me, one of the consequence of all these studies, Let's be prudent about the assumptions we take.
Our next question is here is Carlotta from Church of England.
Good afternoon. Carlotta, Church Commission for England. I have two questions. Linking with the presentation this morning about some of the future sanctionable projects and a lot of them appear as joint ventures and partnerships and then linking with the presentation this afternoon. One of the issues of great concern to the Church of England investing bodies and other investors is the capture of ESG risks and opportunities associated with especially with the non operated joint ventures.
So my question is how do the non operated joint ventures feature in the scenarios and projections that you have presented this afternoon? And the second question is more for Hele, I believe, on the outlook on LNG in Southeast Asia. What level of additional infrastructure investments may be needed in some of those countries, especially India, to displace faster the coal fired power plants with gas? And do you see the political willingness in those countries to create the necessary triggers for that development? [SPEAKER JOSE RAFAEL
FERNANDEZ:] The non operated ventures, the first decision to take when we decide to partner with a company is do we accept that operator and what does it follow our standards or not? What's fundamental for me? And we trust the operator. Then the second step is when we are in an operation operated by another company, we try to our duty to influence them as much as we can so that the development will be fit with our standards. And generally, I would say Total is partnering with quite big partners.
It's rare that we go with small companies and it's because also we are speaking about large projects. And large projects requires investment funds, quite large capital expenditures. And so when you partner with smaller companies, you have issues about financing the projects and then if we can delay. So I would say, for us, my answer to you will be that and it's also part of why we participate to all these collective actions. And I consider that it's in all interest, it's my interest.
If I dedicate some time with my OGCI colleagues also, but my interest is to embark most of the industry in the same position that we have. So I think and it's working. You can be amazed to participate you wouldn't be amazed to participate in these meetings where collectively we become smarter together and we engage. So I think the answer to you will be that it's not it's of course what we do each project, but it's also to be proactive so that in our industry we share the same stand alone. For example, methane, the fact that 13 companies or 14 companies have signed that commitment, for me it's a strong progress because if we are alone on our side, we're not able to solve the global problem.
So that's the way I would answer to you.
[SPEAKER JOSE RAFAEL FERNANDEZ:] Sorry, the question was about whether the non operated joint ventures were included in the projections and targets, etcetera, that you are disclosing.
[SPEAKER JEAN FRANCOIS VAN BOXMEER:]
They are in the ambition on scope 3. On scope 1 and 2, no, because it's operated. So the parameter is clear. They are in the ambition of scope 3 as soon as we take care of our share of the products. So we are eventually we take our share of the products and we are selling them all set.
All the sales which are earning by TOTAL are included in the scope of the ambition that we set on the scope 3 parameter. This is a specific answer.
LNG in Southeast Asia, First, you mentioned an important point, which is absolutely behind the modeling work we've done in the momentum scenario, which is to consider that there are gas countries today in Southeast Asia whose, let's say, reserves may begin to decrease severely over the next 25 years. But because they have existing gas infrastructure in place, we make the assumption that they are good candidates to import LNG because again, the marginal it's a marginal cost for them in terms of getting the LNG because the main infrastructure is there for historical reasons. So that's certainly a good driver for LNG demand in new countries that will be producing gas today. And effectively, it's not only in Southeast Asia that this may happen. It's true in some North African countries in Latin America.
On India specifically, it's a tough question. India is certainly in our model one of the markets where there is remaining coal because they have domestic coal, because we cannot just wipe out energy security aspects, which are very important for governments. And then I would say short term, of course, India is building LNG import terminals. And as Patrick said this morning, and as we know, India has been buying more and more LNG recently. But we do not assume in the model that coal will be entirely gone in India.
And so we showed you some sensitivity on pushing out 10% residual coal and India would be a country where that might happen. We've not done the modeling of the investment needed in India. And if I then go back to short term, remember the JV we've announced with the Adani Group. There is also an LNG aspect to that story, of course. Thank you.
Michele?
When I look through your rupture scenario, clearly, there are major technological breakthroughs that need to happen to achieve it. What do you think would be some of the more interesting or likely breakthroughs that we could see in the coming years? And the second question on your reduction in scope 1 and 2 emission to below 40,000,000 tons per annum by 2025. Clearly, improved efficiency in the existing operations and more efficient new operations is one way to get there. Another way to get there also would be to exit or dispose of more cargo intensive existing operations like more mature fields, oil sands, some of the leak infrastructure in West Africa, how much does that become a part of achieving this target?
[SPEAKER JOSE RAFAEL FERNANDEZ:] The target will be achieved. [SPEAKER PIERRE ANDRE DE CHALENDAR:] You identify there are many ways. What you mentioned is clear. And it's also linked to the 0 Offering. It's also linked to the global strategy of the company.
But again, I don't want to lose any value on any of my assets. So the targets will be achieved. And if we put that on the table, it's because we are totally committed and we see the ways to achieve it. And that's part of what we could have to do. If we do it, it's not because of the target.
It's because we consider economically it makes sense, so don't reverse it. So target for me, I've spent my when I began my career, it was in environmental matters and I spent 5 years of my job, my life. Fundamentally, we make progress in ecology if it makes sense economically. I see no players taking decisions purely, but it's good. So if it makes sense, we'll have the results.
But we have a clear roadmap on it. I will not say more. I hate to announce sales of assets, okay?
Okay. Our next question is just back here, and that will also be Lydia.
Thank you. Natasha, Dimitrijevic, Hermes. You just said that we make progress in ecology when it makes sense economically. So maybe you could give us some sense of the CCUS economics going forward and the 10% that you're putting in R and D, what you intend to get from that? That's the first question.
Second question is that you really pointed out that natural gas makes sense if we can manage methane. You are working with your peers on that. Yet there's no disclosure. There's just objectives. So we don't know what's measured, what's modeled modularized.
So when can we expect some type of disclosure on that? And thirdly
You should read
sorry?
Read our report. Yes, I do. And we have disclosed the emission level that we reached last year.
We would need to see a little bit more. If
you don't trust us, it doesn't work. But we are open. So we know when we write a figure in a report, an official report to the company, there is a backup behind it. But we are open to explain you how it measure rate.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] Thank you. You've done presentation to us that were highly convincing, but then you never published on the back of that. And so it would be really helpful. Okay. Thank you.
So the next report with the next report, we explain everything about methane measurements.
Thanks. And then my last question is about the you mentioned the stability of the supply and the challenges around growth in 2 degree scenarios. I was wondering if in your momentum scenarios, you took into account on the supply and the demand the impact of global warming because for instance Africa will be hit first and with the dire consequence on probably geopolitics, but also access to water onshore, maybe more extreme weather condition for offshore operations. And so have you started to modelize the impact of momentum scenario on your business? [SPEAKER JEAN
FRANCOIS VAN BOXMEER:] No, we didn't do it, but I think the world should do it because today, in fact, we are more in the momentum than any rupture scenario. And I think there is something which should be done by policymakers, which is to begin to really evaluate the consequence of a 3 degree world and what should we do for adaptation. But we didn't do it for clear. We are not there to we are not equipped enough to be to do that in total. We don't know everything.
We can participate to studies, which are promoting and we participate to think tanks and we finance some issues, studies, but we didn't do it. But again, I will tell you, I hope we will be in the momentum scenario. We are not there today. The CCUS, it's a very interesting question. Again, whatever we think, we need to develop this technology.
And I have a strong this is why, by the way, we also need to have a carbon price. And because this is chicken and egg and what is the level of price, which is driven development of technologies. Of course, for the time being, we need some subsidies to be able to develop it, but by the way, we subsidize also the renewable So I don't see why we could not subsidize these type of technologies. And we are more in the range of $60 $80 per ton. There is ways to progress.
By the way, I think that on the long term, there is not only CCS, there is a U, which is use of CO2. Of course, it's a molecule which is very difficult to change, to use and to but we have engaged with Stanford, for example, in many research on what could be done with the CO2 because maybe the transformation of the use of materials has more future than just storages, which are, I think, limitations somewhere in the world. Even if look, if 2 countries like Norway and the UK are promoting projects today in which we participate, it's because you can think and we are speaking about as we are becoming strong in Denmark, not only because of Euler, but because we love Denmark, we can think of the future of the North Sea, once all these fields will be depleted, why not using these reservoirs to reinject some CO2 in all these fields? There is potential industry, potential active business. It's not underground because I think that storing the storage of CO2 under the ground of people here in the city will be super difficult.
But in areas where, in fact, it was all the reservoirs, it could be done. Of course, we have to ensure that the closure will be firm, etcetera, etcetera. But so it's why we are seriously embarking on it because, again, if we don't have this technology, there is no way to reach in any way the targets that we would like the mining client to reach. So today, so with wine, we have decided to invest R and D and my CTO would be happy to meet you, I think, and you could exchange with her and the Head of the Program of R and D, and we are engaging around the world in many programs. But also in projects in order to develop business models, because at the end, we need to have a pragmatic business model.
This is where the Norwegian and the U. K. Projects have an interest. And so that's commitment. We put some CapEx in it.
Next question is Lydia and then followed by Irene.
Thank you. It's Lydia Rainforth from Barclays here. Two questions if I could. The first one is on carbon pricing and I understand what price you put into it. But what happens if you don't have carbon pricing?
Is there a risk in terms of gas demand sensitivities that you go that the world ends up going down a route that is coal plus renewables and gas gets left out as it is more expensive without the carbon pricing? And then the second question is just to come back to the total strategy and the growth discussions that we were having this morning and that idea of more than 2% growth out to 2025. It looks from this side that that's more aligned with the momentum strategy than the other strategy. I was wondering if you can comment around whether that's the correct interpretation. [SPEAKER
JEAN FRANCOIS VAN BOXMEER:] Carbon pricing, what is it you got there? [SPEAKER JEAN FRANCOIS VAN BOXMEER:]
Well, on carbon pricing, Lydia, I think the it's not just a question of carbon pricing. If you take the case of China, as we discussed many times, it's a question of air quality and so on. So going for renewables on one side and coal on the other side, we think is in any case not sustainable long term. Of course, carbon pricing helps that in the short term. But in our view, you know that we believe gas has intrinsic qualities as a complement to renewables for the intermittence and then is flexible, easy to pilot kind of energy.
And I think the case of China is a good example to illustrate that it goes far beyond carbon pricing.
Yes. But in full, carbon pricing exists, in many jurisdictions today in many countries and even in Europe. But at €20 per ton, you shift the UK has shifted from coal to gas. You don't need a very high tax. So what happens if there is nothing?
There is by the way, that's but again, a world of coal and renewables, I'm not sure it is the best way to it doesn't reach at all any target of CO2. But it's true, but honestly, in one who presented and you put a finger, Lydia, on something, which is for me one of the main challenge, which is will we be able really to replace coal per gas? And why? Because coal is super cheap. But the 2 larger consumers of energy in the world were China and India have plenty of coal, but even India has only coal natural resource.
And in any country, what I observed is that country security of supplies is becoming is beginning by using our own resource. So that's a huge challenge. And it's why seeing the penetration of energy and natural gas in India is a huge challenge because we have to compete with coal domestic core, which is employing millions of workers. And when I met Prime Minister Modi, of course, this debate is super difficult. When they run a country like that, we want to have an economic growth and emerging, putting people out of poverty.
So that's for me something which is and that's back to our duty. And our duty is to lower the costs of bringing natural gas as much as we can. We are back to our industrial manufacturing duty. It's why I'm a strong advocacy of having large portfolio, being able to optimize all the logistics of LNG tankers and all that between and when I see companies like Glencore, Vitol, etcetera, coming to that market, that's a good news, because the more we will be players there, the more we will be able probably to optimize our logistics by even exchanging tankers. We don't do that today, but why don't we?
I know we're not able to do that today. So there is something fundamental, which is to drive the cars down. Otherwise, all that we said, I'm afraid, will be not a 3, but a 4. So even more dramatic than the momentum. But momentum is not given at all.
It's supposed a huge effort, in particular this one. So that was my question, my answer.
Okay. Our next question is Irene.
[SPEAKER JEAN FRANCOIS PRUNEAU:] To perform the scenario analysis obviously
And sorry, there was a second question by Lydia. I was forgetting. No, no, I knew. Is it consistent to go by 2 and momentum is perfectly consistent? Again, it's a question of choice of all that I'm selecting in my portfolio.
It is consistent providing by my growth is again, I would say, immune against something which will change in the market. So it's why I'm insisting on low breakeven oil. Well, you should not be happy with us if we begin to tell you that I will reinvest in oil sands. That I think you should ask your shareholders my shareholders should ask to change the CEO, because that would be absolutely inconsistent. So I will not do it.
I want to keep my job. Sorry, I interrupt you. Sorry, Irene, sorry, but I didn't want to.
So to perform your scenario analysis, obviously, by definition, you have to see no great technological breakthrough. Now I appreciate it's impossible to answer a hypothetical question, but if we were to assume that sometime, I don't know, tomorrow, next month, a real black swan event happens somewhere in some university. There is a big technological breakthrough, and of course, that we come to recognize it as such because I don't think Nokia in 2007 saw the iPhone for what it was. But if that were to happen, I mean from a risk and strategy perspective, does TOTAL just continue to do what it's doing, reduce costs, improve resilience? Or is there, Patrick, some red button somewhere that you pressed to change something quite quickly?
[SPEAKER JEAN FRANCOIS PRUNEAU:] I will call Patrick Le Chevardier to quote well, but no, I think one of the answer to you for me is by the way the fact that we try to diversify the company in being not only in oil and gas, but also in the electricity business is a way to tackle this type of risks. If we are more diversified, we can maybe follow some technological trends in a better way, if I follow your advice. Otherwise, in the energy business, frankly, we didn't see a huge I mean, yes, there are some technological breakthrough. And one of them, by the way, was all the shale technology, which was we observe it, and it changed the full dynamic of the supply in our industry in 10 years. So, it's possible.
[SPEAKER PIERRE YVES LESAICHERRE:] Then that means that you need to to try to open your eyes to be aware and to try to understand and to react. But I don't have a magic red button. No, I don't have a that means that a company like Total, we must listen to what is happening around us. And for example, your question on electric bus was very interesting. You know why we didn't have any electric bus last time, because our colleagues wanted to sell oil.
So, we don't want to look to electric bus, that's all. So, it's part of the journey we have to be sure at the top of the company like Total, but we are aware of what is happening not only in our industry, but in our own. So, we spent 3 days in Las Vegas and Boston at the MIT last beginning of the year to open our minds and to listen to what is happening, not in oil and gas, I can tell you, in other fields, in order to say, maybe there, and for example, it's clear that the 5 gs technologies and all of these, which we make Internet of Things a reality, which we're connecting machines, is a clear field on which we must invest quickly. And that was not too clear to us, but we said out after 3 days, okay, now we need to really have a clear program and a way forward and not just waiting for that. So that's the type of so that's something that we so it's out of our industry, which is a difficulty.
So but it's part of what the leaders of the company must incentivize the people in the group to do it and listen and open their eyes.
Okay. I think there were 2 last hands. Time for just last two questions. Henry and then also over here.
Hi. It's Henry Tarr from Berenberg. I guess looking at these ambitions and targets, how much do you currently have within the portfolio already when I think about Saft and SunPower, etcetera, to reach these portfolios looking to 2,030 and beyond? And how much do you think you might yet still need to bring into the company?
We have 1 third. We need to bring 2 thirds. We have 10 years or 12 years out. It's feasible. It's feasible.
Okay. And this will be last question before Patrick closes.
Hi. Alex Choson from D and C. My first question would be, you said your momentum and rupture scenarios were based on the IA, NPS and SDS. Could you explain if there were differences on certain aspects why there were those diligence? And the second question would be on your Renewable and Power business, €1,500,000,000 to €2,000,000,000 is a lot to allocate.
Can you explain a little bit I'm guessing it's not only a matter of reaching a certain level of IRR. So can you explain a little bit the broader approach and strategy approach you are making investment in this business?
[SPEAKER CARLOS GOMES DA SILVA:]
I can talk about the scenario modeling. So I think there is a mistake. The scenarios are not based on the IEA new policies of sustainable development scenarios. It's in house modeling, bottom up, country by country, sector by sector. What we show at the when we wrap up is the CO2 emission level that would be associated with the 2 scenarios and there we benchmark with the IA scenarios.
But this is internal modeling work that we've done with all our teams. And so we just use the IA as a reference. We always use it. We've done that for many years. And in terms of CO2 emissions, we benchmark.
And then you can compare the data you now have in your booklets. You can compare the energy mix, the primary energy mix that comes out of our scenarios. You can compare them with all the other scenarios that are available in the market,
I would say. But could you give the main takeaways and the main difference that you've identified?
That's going to be a little long because it's really completely different modeling work. So I think it's hard to do that online.
But as an example, the IEA doesn't foresee more than 2,000,000,000 cars by 2,040 by far. And penetration of electric vehicles that we have taken into account is way more aggressive than the scenarios of IEA in the NPS scenario, for instance.
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] So I suggest we could use a dialogue if you're interested because the people were we didn't run the models ourselves, to be sure. We are doing a lot of things in the company, but that's that. If you are interested, it would be good to have the dialogue. And by the way, it's a model. It's the first time we decided to make it public, so we'll be improvement on it, and we are taking all the questions also.
For me, a way to improve and to come back to you and to revise because all that is moving quickly. The second point, how do we spend the money? We spend the money by looking to investments. But this year, in fact, in Gas and Renewables and Power, the downstream part, we spent in fact 3,000,000,000 dollars acquisition of Direct Energy plus some CGT. So we were above the 2.
And you have to understand my guidance as an average of the next 5 years more than year by year. It's because as we need to do some things inorganically and we want to acquire position at a sizable size, we need to take some quite big bets, in fact. And so that's part of the answer to you. How do we evaluate it? But we evaluate it when we made M and A in this field, we do it with the same rules in terms of returns as what we do with our oil and gas business.
I guess my question was more about the strategic approach because obviously Renewable and Power it's a lot of different like it's retail, it's power generation. So like the strategy
The strategy is again, I described it, sorry about this morning, but it's to be integrated along the chain. So to be producer, low carbon electricity producer, either from natural gas or from renewables, mostly from renewables, And to be also a marketer, distributor, supplying natural gas and power to low carbon electricity power to end customers. So that's and also in the middle to trade and supply all these low carbon electricity. So today the strategy is to be along the value chain, if it is your point. So you will see us moving from production elements onto also some downstream businesses, like we do in oil and in natural gas, in fact.
Okay. Well, in the interest of time, we'll be closing it there. Did you want any final closing comments, Patrick? Or
No. I think thank you for your attendance today. Okay, this session this afternoon was more futuristic and it's more in our way to work September, but we didn't want to wait September. We've done it today. And I think it was also important to us to reaffirm what we want to do on climate.
There are many debates with investors, with some of the stakeholders, which are good debates because it's part of course we learn and we try to be progressive and proactive. So thank you for the attendance. I've seen that there are as many questions this afternoon as this morning. And I noticed this morning, but finally, some questions were not too difficult to answer because everything is clear in Total. So clearer in Total than the future of the energy markets for sure.
But thank you for your attendance, and I think we'll have the opportunity to come back to you before summertime with Patrick. Thank you to all of you and see you soon.