Good morning. Good morning, everybody. I'm happy to be here with you and to welcome you today in this beautiful room. Yes, it's the first time that we come to make a presentation to London. We celebrate I had the chance to celebrate 20th anniversary of releasing in New York by ringing the bell early in the year.
I think if we came to New York, it's a recognition to the fact that our U. S. Investors are, in fact, the largest group around among our investors representing 32% to 33% of the capital of Total, followed by the French investor, 25 percent the UK, 13% European investors representing around 55% to 60% of the capital of the company. I'm not alone today. We are there for a long day and a full day of presentations.
I am, of course, with our CFO, Patrick de la Chevalier, who you know very well, but also with other leaders of the company, Executive Committee members and because we will make this morning a global presentation, Patrick and myself, followed by a Q and A session. And this afternoon, we'll have some focus on 6 topics, which we consider the core of strategy of the company. So it will be Deepwater by Arnaud Boyack, our President E&P, Arnaud is there. Laurent Vivier, our President Gas, will speak about LNG, which of course is a big activity for the company. And then we'll have on the downstream Bernard Pinnatell for petrochemical strategy and, Montmartre and Geir, of course, for the future of marketing and services.
Montmartre is the forefront. And then, to speak about the future, we'll have Marine Noel Semaillard, who is our Chief Technology Officer, for speaking about technology. And Ovid will contribute to the future strategy and Philippe Sokae will end with a focus on the climate trajectory of the company, which is a way to come back on the full strategy of the company. We have a lot of time. We have planned some Q and A this morning.
And after every 2 sessions this afternoon, you will have a chance to ask questions. We have also the lunch. And for those who can stay with us, we have also planned to have a dinner with you, which will give opportunities to have many exchanges and better explanations maybe, but are going deeper than the presentation themselves. So starting with the strategy, you will have no surprise today, just to be clear. We do not change the strategy of a company like TOTAL every quarter or every half semester.
I think it's well established. I would say the cornerstone of the strategy for me is the word deliver. And you will see that among along these presentations, the words consistently delivering. I will come back several times because I think we insisted for the last 3 years that we need to be excellent on what we control and it's a way for it's a conditioned precedent to be able to build the future of the company. And I think we can say that we have a track record in the company of reliable execution.
And it's very important because it is the basis on which we will build the future of the company. So that's the first important message. It will be deliver and continuing to deliver with thanks to this good track record. Then, of course, strategy as if I try to characterize it is another word which is importers integration, integration of the full value chain. We have demonstrated very again in the last 3 years that it's important in the whole value chain to be not only to be along the full value chain and that downstream is giving a strong contribution to the cash flows of the company.
Of course, it's moving with the price of oil, but it's not moving, in fact, as we will see, because we managed to maintain a good track record on the downstream. So integration is a key word. It's also the one on which we build the strategy for the gas value chain, as you will see it, in particular, the LNG, which will go even downstream to Elite Power and to go along the full value chain. The other element on which we build is, of course, the anticipated market trends. It's they are moving in the energy field, so it's not an easy exercise.
But when you think to the future of the company, we want, of course, to position the group on what will be the growing market, energy markets. And this, of course, is linked to the evolution of these trend markets, frankly, because of technology, because of environmental challenges. We'll come back on it. And to execute this strategy, of course, we believe, as written there, but we need to act by being able to manage our portfolio and taking benefit on the low cycle to manage the portfolio counter cyclically. We'll come back on this to demonstrate to you how we can create value for our shareholders and profitability by this portfolio management and of course also by, I would say, playing to our strengths to build the future of the company.
We'll describe you a group of the evolution strategy today, which is, of course, mainly an oil and gas company, and we are proud to produce oil and gas. And we will add as it's clear, probably after some acquisition we've done in the recent years, What we built what we how we want to build a low carbon electricity business, and we'll come back on it. So that's today the program that we will develop in front of you. On one side, how do we consistently deliver the objective we set to ourselves for the benefit of creating increasing shareholder value and then strategy of an oil and gas, a responsible oil and gas and electricity company. Safety, you've seen this movie.
I like the movie because it pays tribute to all the men and women of the company, which are the core of all what I said. And when we speak about consistency delivering, it's not only figures. This is a lot of work of all the men and women in the group among the 130 countries where we operate. Safety is not only, of course, a question of respect for all the human people who are human who are working in the company. It's more than that.
It's at the core of our consistently delivering, a way to consistently deliver what we want to deliver. It's a cornerstone of the operational efficiency. And we are, as you know, and it's clear in TOTAL, the fact that we have been able to improve our records in safety as a direct impact is directly linked to the better availability of the plants, to the better maintenance of the plants, all that is linked. The way we work on safety is an iterative approach, which is described on the right slide, the flight side of the slide, which is we learn to improve. We improve, we learn to improve, we learn from near misses, we, of course, learn from accidents in order to improve together and to establish a new baseline and to start again with a curative approach.
What we've done in the last 3 years is also to have a unified approach of HSE through the whole group. And it's today we have a single group, group wide HSE team at the top of the company and with the idea that we need to take the best to take best practices along among all these various activities that we have in the group. And this unified approach of the group is also something symbolic of the way we have, I would say, tried to simplify and to better take value of being 100,000 people around the world, many activities, but to extract, I would say, maximum value of being together. I will move then to 3 slides about markets. As I told you, it's very important when we speak about strategy to see if we can see the evolution of the markets.
I will not forecast any price of oil because it will be wrong. What is clear is that when we look to the oil market, we are facing today some supportive elements of the oil markets. Last year, when I made this presentation, I think we were around $52 per barrel, today at $80 Of course, the context is not the same. Probably easier for me to speak in front of you. But let's be clear, I don't believe we don't believe at all that there is anything is given to us in the industry.
The market will remain volatile on the long term. Having said that, that is clear that the demand is strong. It's still strong, speaking IEA is speaking about plus 1,400,000, 1,500,000 barrels of oil per day this year and anticipate for the next 5 years a higher demand higher growth of demand yearly growth of demand higher than 1,000,000 barrels of oil per day. Of course, the prices of oil could influence negatively this demand. We see in some emerging countries that subsidies have to be increased.
This could damage the demand if the price continue to grow. We see also we could anticipate also on the demand some impacts of, I would say, the trade wars, which could damage the global economic growth. Having said that, the demand for oil is continuing to grow at a quick pace, and this is an important element, which supports the price today. On the short term as well, we have some on the supply side, we have seen that OPEC and Russia are aligned again and they are taking back some leadership in the market quite efficiently. At the same time, the U.
S. Shareholder, which was supposed and people were thinking to flow into the market, is facing some bottlenecks on infrastructures. This will not last, but at least for 1 year. I think probably next year at the same time, we'll have some the infrastructures will be built. But until there, this production cannot flow as easily in the market that it was planned.
And since we met last year, of course, some political decisions have been taken by the U. S. As well towards Iran, which has a direct impact on the exports of Iran. And it seems that reduction of exports could be even more stringent than what was anticipated. And we have also in this world some countries like Libya and Venezuela where the production has some hiccups in Venezuela.
Unfortunately, it's a continuous decline in production that we can face. I would say on the supportive side for the oil price, you have on if I think too, it's also the level of investments. The last 3 years, obviously, most of the companies around the world have been obliged to be prudent. So there were not many sanctions of new oil projects. See that the companies are still prudent for what we announced for what we do in 2018, 2019.
This obviously has some impacts on the oil production capacity for the next 3, 4 years, which we support the price. Having said that, we've seen a very volatile market, again $42 in August 2017, more than $80 today for the brand. So it's almost simplification by 2 in 1 year. It's better to be in bad position, but we could face some downtime in the future. So for Total, that means that we continue to strongly believe that the best position into this type of commodity market is to look to our breakeven and to be disciplined and to select the projects on the more on a breakeven basis rather than on betting on high prices.
The gas market, of course, has changed quite a vision. The gas market in 1 year has also changed quite a lot, supported by a strong demand coming from China primarily and other Asian countries like Korea. 1 year ago, the market was anticipating some oversupply because of the wave of Australian projects coming into production. This year, in fact, all that was has changed, picture has changed because of the Chinese policy, which has been reaffirmed at the top of the country, with the objective of China to grow the share of the gas in its emerging mix from 6% to 15%. This could represent this would represent big amount of LNG to be imported in China.
Of course, the gas production in China could grow, but in Russian and you have some Central Asia and Russian gas pipeline as well, but we will need more LNG. And by the way, the LNG demand in the first half of twenty eighteen has increased by 50% compared in China compared to the first half of twenty seventeen. So this is a large growth. We anticipate at least 5% per year for the next 15 years. This explains, of course, why Total has positioned itself strongly into that market.
And when you look to the supply side, I would say there is room for new projects, even not only room. The market will need new projects by 2025 and more than 2,030. And so that, of course, is supportive of the strong strategy in the LNG business. So last slide that we introduced for the first time this year on the market is electricity demand. Why?
Because, of course, when you speak about natural gas and our strategy is quite driven by natural gas, at the end, this natural gas is used to in particular to provide electricity. The electricity demand in any scenarios, we are not expert of electricity, but we consider all VIA scenarios, will increase by at least 50% in 25 years, more than 2% per year. And more importantly for us is that when you look to the graph, what is impressive is that in all these scenarios, the origin of this electricity will be mainly low carbon electricity, either natural gas or renewables. And this will represent this will be will double. The share of natural gas and renewable will double, which represents a big increase and big growth.
And of course, for energy companies, oil and gas companies, we cannot we have no choice than to face that to integrate climate change into our long term strategy. And this electricity demand growth is representing an opportunity to further expand our integrated model into this evolving low carbon energy market. And we will come back on it, but figures of growth, this is clearly the highest growth in the energy market, which is offered by electricity. So then I will give the floor to Patrick, which will comment on the teams of Total managed to consistently deliver on the objective we set to themselves.
Good morning, everyone. This morning, I will start by reviewing our recent performance and try and highlight some of our key objectives. Our track record of consistent delivery since 2014 differentiate us from our peers. We set ambitious objectives and we achieved them. And as a result, we outperformed our peers in the market.
This track record of success is built on a foundation of disciplined management. In the company, there is accountability and we demand safety, cost, execution and delivery. So let's have a look to the numbers. Here are 4 of the main objectives we set. The bar shows the performances.
The black line shows the objective and the initial targets. In every case, we have consistently delivered. And to manage the company, we concentrate mainly on managing the cash flow. And this has been a necessity since 2014. Over the 3 year period, we increased production by 20%.
We improved margin by cutting OpEx from close to $10 per BOE to in 2014 to $5.4 per BOE in 2017. We managed organic CapEx down by more than $8,000,000,000 a year. And we announced asset sales of $13,000,000,000 And this performance demonstrates disciplined management through the organization. Total is now for delivering outstanding production growth. In 2017, we started up 5 major projects and increased production by 5% to 2,570,000 barrels per day.
Taking the benefit of the Well Time acquisition plus the next wave of start ups, we target best in class production growth of 6% to 7% per year on average from 2018 to 2020. This is possible because of new projects, which and I will talk about next slide, which represent more than 600,000 barrel per day, let's say, about 20% of the 2020 production. Of course, this was due to M and A over the 2015, 2018 period like new contract in Abu Dhabi, like the acquisition of Maersk Oil and the alliance with Petrobras. It will represent those acquisitions will represent close to 700 barrels per day of projected 2020 production. We anticipate and this is one something we repeat every year, we anticipate relatively low decline rate of about 3%.
This is due, as you know, to the high proportion of stable long plateau production that we enjoy in our portfolio, about 50% of it is long plateau. For the 5 year period 2017, 2022, we confirm a production CAGR of 5%. And this is consistent with the growth rate of 3% to 4% post 2020. Taking a closer look to the new projects. On this slide, you have in blue the projects that are started.
There are 7 of them. And you have in addition 12 more that are scheduled to start up by 2020. These new fields and this is important, these new fields are accretive to our average cash flow per barrel. On the right, we compare the new startup of the average cash flow per barrel of the IOCs based on a UGMAT data. These projects generate at $50 I mean, our total project generate at $50 Brent was the IOCs generate with a $60 per barrel Brent.
In our $60 per barrel Brent base case, these projects generate about $20 per BOE of cash flow. At Total, our strategy is to emphasize value over volume. We will benefit from this production growth, but it is equally important that we are improving the cash margin and In every commodity business, there is a constant battle against inflation, and we are relentless in our cost reduction program. Compared to the 2014 base, we cut our 2017 OpEx by $3,700,000,000 well above our initial target of $3,500,000,000 We increased our 2018 target from $4,000,000,000 to $4,200,000,000 And our 2020 target is to reduce operating cost by $5,000,000,000 across the group. I must emphasize the point that we are cutting cost while we are growing the company, which is not obvious.
Upstream represents more than half of the cost reduction. So here again, you can see how important it is to add low cost production to the portfolio. On the right, we show the target production cost per barrel, and you see that we are roughly stable at around $5.5 per BOE. To continue to achieve our cost reduction target, we are concentrating on improving efficiency across the group, in part by consolidating share services and implementing innovative digital solution to cut costs. And there will be a presentation by Marie Noel to show you both high-tech.
We have an ongoing effort also to simplify our processes and our organization. Total Global Services or TGS was created to make sustainable improvement efficiency by centralizing and consolidating share services to the group. In 2017, TGS generated saving of about $400,000,000 The target is to save $1,000,000,000 by 2020. Along these same lines, we launched a group wide program to simplify and streamline the organization. The idea behind the 1 total Be Simple program is to promote efficiency within the group.
1 total share person has been nominated in any country in comparison to 1 representative per branch. The cross segment support function has been consolidated under Total Global Services. The discipline on cost and efficiency carries through to our capital investment strategy. We confirm CapEx in the $15,000,000,000 $17,000,000,000 per year range for 20 eighteen-twenty 20 period, so nothing new. And for 2018, we now have the target range to $16,000,000,000 to $17,000,000,000 earlier this year.
What is new here is the reconfiguration of the business segments on the right. We have moved essentially the LNG related natural gas producing activities from E and P and include them in the new Integrated Gas, Renewable and Power segment or EGRP, and you see that on the right side. For 20 eighteentwenty twenty, capital investment split is about 55% to 60% for E and P, 25% for eGRP and 15% to 20% for the downstream, which include marketing and services and refining and chemical. Cost inflation has not been an issue for us to this point, and we believe that there is ample availability of services to meet the needs of the industry. We don't talk about it about the bottleneck that we can see on the U.
S. Onshore activity. Based on our current project slate and cost environment, we are confident that our CapEx target to 2020 are sufficient to cover the projects that we are presenting today. A word on exploration. In late 2014, if you remember, we reevaluated our exploration strategy and begin to bring some outside people.
We rely on exploration as part of our resource renewal strategy and exploration is starting to deliver. Balmor on the left is a giant 500,000,000,000 to 1,000,000,000 barrel oil discovery in the deepwater Gulf of Mexico. Sururu in Brazil is a giant deepwater oil discovery. A6 is offshore gas Myanmar that we will be able to develop through our Riadana field. And Glendronach is offshore gas that is close to Etrador Glenlivette.
So we should begin to monetize it quickly. These discoveries are strengthening our position in key areas. On top of that, we maintain an exploration budget of $1,200,000,000 to 1 point $3,000,000,000 a year. So we talk a lot about upstream, which is in a great shape, but you should also remind that Total Downstream is the best in class company among the major. Downstream has been remarkably consistent in delivering cash flow of around $7,000,000,000 per year through the cycle and despite the sale of $7,000,000,000 of assets in the past 3 years.
Optimizing refinery, refining and chemical is a constant and ongoing process. We are improving plant availability. We are reducing our European footprint. And in 2018, for example, we include upgrading Antwerp and De Bottleneck Satorp, our 2 largest platforms. Marketing and services is a different type of business.
So the strategy there is to expand in high potential areas. Marketing has grown their cash flow contribution by about $100,000,000 per year on average since 2014. And we expect it to be $2,200,000,000 by 2018. Our downstream provide a reliable stream of cash flow, dollars 7,000,000,000 per year, and generate best in class ROACE of more than 25%. I think this slide is quite key to understand what we have done in the company.
The most impressive accomplishment I can show you is the speed and the magnitude of our progress in driving down the breakeven. By 2014, we needed a Brent well above $100 per barrel to cover CapEx and dividend. By 2017, we cut that down to about $50 per barrel, which is about where we are this year. This has been possible by maintaining a strong discipline on spend, both on CapEx and OpEx, by growing high margin upstream production, a good example is the acquisition of Maersk, plus a continuous contribution from our robust downstream activities. In the current environment, we are generating obviously a very strong cash flow.
And with the lower breakeven and higher margin production along with the new start up from our acquisition and organic, our upstream sensitivity to oil price is increasing. From 2.8 $1,000,000,000 a year for $10 per barrel change in Brent in 2018 to $3,300,000,000 by 2019 for $10 change. This is a slide we design and we select very carefully the item we will show to you because we are the best everywhere on this one. And to close this section, this is a benchmark, and I particularly enjoy it. We are consistently delivering on an ambitious set of objectives.
Upstream continue to set the pace for production growth, and the production growth will drive the increasing cash flow with the fact that we are adding accretive barrels. Downstream continues to deliver best in class returns. Overall profitability is improving with a return on equity above 10%. And gearing at 16% at midyear is well within our target. So that end my presentation.
I will leave this slide so that you can check it carefully.
Yes. So I think Patrick has demonstrated to you how we full disciplined management in the company. It resulted in a significant reduction of a breakeven, which is fundamental again, because we don't control the prices, but we this is what we control. And this is something on which we worked hard and which will be at, again, at the core of the strong foundation for building the future of the company. And by doing that, we created, I think, a sustainable advantaged positions within our peer group.
And so now I will move on, I would say, developing more about how we can create value in the future. And there will be 2 parts in my in this presentation there. One will be how we can create additional value through the cycle and the other one will be how we can do that by playing to our strengths and growing on the and positioning the group on the growing markets. So first, to create value for the cycles, there are 2 ideas that we put that we on which two levers there. The first one, of course, is that when you have some cycles like the ones we experienced, you have some opportunities, M and A opportunities.
And you can capture them under the condition that you have a strong balance sheet and that you are in better shape with some competitors. I will come back on it because this is what we've done. The second lever is when you have cycles. Of course, when you have low cycles, you have lower costs. And this, of course, gives opportunities to sanction new projects to prepare a future base of assets in better conditions and better profitability for the futures.
So first about M and A. It's clear that we have been quite active. We have acquired around $15,000,000,000 of assets. We sold some assets as well. But when we made the prepared presentation, we realized that in fact in the last 3 years and a half, we have moved 25% of the portfolio.
We have been able to acquire 7,000,000,000 barrels of resources at less than $2.5 per barrel, so a very low cost of acquisitions. And the table on the right of the slide show you that these acquisitions, these M and A activities has, in fact, enhanced the global value of our upstream portfolio. 1st, the color on the gray color shows you what is the characteristics of these barrels which have been acquired in terms of profitability and costs compared to on the white column, what is the average of the E and P portfolio. So you see that the ROACE of these assets at $60 per barrel is above 10% compared to an average for E and P of 7% to 8%. The OpEx per barrel is at $4 per barrel compared to an average, which is already low of $5.5 So when we told you that the strategy was to develop low cost barrel, this is a proof.
The second, by the way, is even more impressive on the technical cost, which means OpEx plus DD and A, which are of an average of $12 $13 per barrel compared to E and P average of 2019. And last but not least, which is even more important, is the organic cash breakeven is under $30 per barrel compared to an average for the E and P portfolio of 35. So this has been of course, we have been opportunistic to be able to capture this barrel during these low cycles. And this, of course, give a base for the future, explains why today we have a competitive advantage in terms of cash breakeven, even our OpEx per barrel and even in terms of profitability. Coming back on what we've done in the North Sea, sometimes and the value we can create by this type of activity when you do that at the right time.
Maersk Oil acquisition is clearly accretive. We spent $7,500,000,000 last this year in March. And of course, the deal, the acquisitions, the barrel was not at $50 but it was at $75 per barrel, which helps. And as you can see on this chart, in the next 5 years, in fact, dollars 70 per barrel, we will get $10,000,000,000 out of this acquisition of 7 which costs us $7,500,000,000 In fact, for the next 2 years, 2, 3 years, we'll have as one of the operation will stop in Denmark, we'll be able $70 per barrel to pay out of the Maersk Oil acquisition is around 3 years only. So this has been opportunistic.
I remember I remind you as well that there are some synergies there that we planned initially $400,000,000 We increased it to $500,000,000 We are well on track. In Copenhagen, everything has been done very efficiently. In less than 4 months, a new organization is put in place, including on the staff side. In U. K.
As well, we have reshaped the full organization of the U. K. Subsidiary and the synergies are being delivered and there is yet more to come. This acquisition of Maersk Oil gave us also the opportunity to high grade the portfolio of North Sea portfolio by engaging, I would say, a portfolio management activity quite intensively. In fact, Maersk Oil has brought to us some, I would say, young assets, a new base of assets, Culhane in U.
K, Johan Sverdrup in Norway and the Cira redevelopment in Denmark, which have a technical cost around $20 per barrel. And compared to some existing assets, the average portfolio of total was $25 per barrel. But which gave us the opportunity to divest some of the high cost assets we had like in Norway, Martin Linge and Ginakrog. Some small discoveries recently, we divested as well to AK BP. And we have put on sale a package of U.
K. Assets, which represent 40,000 barrels per day of production, which will be marketed in the coming months in U. K. In order to rationalize the operation. In fact, there is another logic behind all that is as we are large to lower the breakeven, it's better to have a larger base of operation to amortize your fixed costs.
And this is what we have done in U. K, where we are rationalizing our base of operation. We announced this morning that we are acquiring a share of Chevron in Danish underground concession in Denmark. And so this is, of course, a good opportunity for us to increase our share on an operated asset from 31% to 40 3%. And I think it's one of the strategy, of course, obviously, is to have larger share of participating interest on the assets we operate, and this will help us to continue to drive down our breakeven.
So this is the type of value creation we can do from not only the acquisition itself by being doing it at the right time, but also by then managing the portfolio in order to again enhance its quality. The other part of the benefit of the cycles, like Patrick said, is that we are facing a favorable cost environment to sanction new projects. I know that it's different here in the U. S. That we see some inflation in U.
S. Onshore. But on the international arena, I would say it's not true, in particular for Total, where we have a lot of activity and projects to sanction deep waters. So deepwater rig utilization rates is still quite low. We have a spare capacity of almost 50%.
And when you look to Korean yards or Chinese yards, it's even lower than 50%. So I know that the service industry would love to see a more tense market, but it's not the case. In fact, we benefit from the fact that they have built large capacities have been built during the boom when the price of oil was above $100 per barrel. And this, of course, is still there. And the global you can see on the chart, the global decrease of capital costs between 2014 and today is around 30%, There are you can observe a small inflation somewhere, but it's very limited.
So this means that we need to benefit to take benefit from this cost deflation to sanction new projects. And in total, we have I would say, we have 2 axes for the strategy. The first one that we mentioned last year to you is that we have accumulated because we are very disciplined in the way we are allocating capital. We have accumulated in the company 1,000,000,000 barrels of short cycle resources. And so one of the instructions we have given when we look to the price of $70, dollars 75 per barrel our subsidiaries is that they can look again and sanction quickly some of these barrels.
And we plan to sanction around 400,000,000 barrels of resources by the end of 2019 at CapEx of lower than $7 per barrel. What are these barrels? There are many tiebacks in field wells, in particular in West Africa, where we have in Nigeria, in Gabon, in Angola, a number of these projects. This is a good opportunity for us. It represents quite a large field.
In fact, post 2020, this will be translated in additional 100,000 barrels per day of production at which we will deliver more than $30 per barrel of cash flow at $60 per barrel. The condition to be short cycled, of course, is to be able and this is the instruction we gave them to their teams to be able to relinquish your rigs in case of a reversal in the oil price. But as you can see in terms of value creation on the chart on the left side of the slide, this we will invest around $2,500,000,000 to mobilize these barrels. And this at $60 per barrel will create $4,000,000,000 in the next 3, 4 years between 2019 2022. So this is a type of activity which is clearly helping also to enhance the profitability and the added value of the company.
The second activity is large projects. We have on the chart a number of large projects. 25 projects are mentioned on this slide. And of course, it's time to sanction them. They will represent, if we are able to sanction all of them by 2020, is the objective, more than 700,000 barrels per day of new production.
We have already sanctioned 6 of them. They are the yellow ones, 2, 4, 6 of them. And so we still have a lot of work to be done by the teams of Arnaud. And when you look to the projects, there are the characteristics, I will come back into the next part, characteristics of course, quite a lot of deepwater in Africa, in Nigeria, but also in Brazil where we have built a strong position with Yara, Lapa and all the series of the Meru developments. In the Gulf of Mexico, Patrick spoke about the discovery of Baltimore, but we have also other projects, Anchor, North Platte.
So these are deepwater projects. There are also some LNG projects. We'll come back on it, Arctic 2, Cameron LNG Extension, Nigeria LNG, Papua LNG. And of course, other ones like the one in Uganda, the 2 projects, Kirenga and Kingfisher in Uganda, which should be sanctioned next beginning first half of twenty nineteen. So these are activities which would benefit from a favorable cost environment in order to build a base of assets and of production, which will deliver some value post 2020.
This was the cycle or can be the benefit of the cycle. And then to present you how we want to grow to benefit from the growing markets by playing to our core strengths and building a responsible energy company. I think the market trends, I commented the global markets at the beginning of the presentation. When we look to how do we translate that for Total and how do we integrate climate into our strategy by taking into account these anticipated market trends of an evolving low carbon energy world, We are looking to what is the most disruptive scenario of international energy agency for an oil and gas company like TOTAL. We don't say that it will happen.
But if it happens, we have to take it into account. The good news of these scenarios is that natural gas will market will continue to grow, and this explains why we are offensive, aggressive and expanding the company along the gas value chain, in particular in LNG. On the contrary, the oil market could stabilize, even decline. I don't know if it will happen because as we observe today, we still see a strong growth of demand for oil. But there are some trends and in that case, it's better and this is why we focus the oil projects of the company, not only upstream but also downstream on the low looking to their breakeven on low breakeven oil projects.
And the last part, of course, I mentioned it, is that there is a large growth in the electricity, low carbon electricity, either from renewables or from natural gas. And we want to develop a profitable and sizable business in this low carbon electricity. If we do all that, of course, we will be responsible. Responsible means that we'll be able to continue to grow the company. And I think it's important.
It's not at all there is no idea in TOTAL to shrink as a group. It's to continue to develop our oil and gas business and also to develop a position in this low carbon electricity business, but at the same time to be able to reduce the carbon intensity of our energy cells. And this is a way to look at it. So there is a possible way there, which we'll describe. We will introduce we are publishing today our 3rd annual climate report.
We introduced a new indicator, which now has is even firmer than before, the carbon intensity of energy sales with which is which will and we set a target to ourselves and we think it's possible and we are committed to that to be able to diminish this indicator, to diminish the carbon intensity of our sales by 15% between 2015 and 2030. And beyond 2,030, we could reach a reduction of 25% to 35% depending on new technologies, depending also on public policies. Just to illustrate the strategy where we could on a long term target in terms of possible sales mix for a company like TOTAL, This means that by 2,040, we could have in our sales natural gas could represent between 45%, 55%, oil, including biofuels, around 30% to 40% and low carbon electricity, 15% to 20%. This would represent a clear positive and responsible contribution to tackle the climate change. The world today is not at minus percent per year, it's more of plus 1%.
In fact, this is reality. Of course, there is a link, a direct link with our strategy, and it is, in fact, the result of how we anticipate the market trends. And we want to put into actions our strategy by improving our operations efficiency, the natural gas, low carbon electricity, biofuels and investing in carbon things. Philippe is okay. We'll come back in more detail this afternoon on this strategy climate roadmap that we intend to put in place, which again is directly linked to the strategy we develop.
In oil and gas, to build the future of the company, we built we play it to our strengths. We identify some key areas where we have some expertise. I mean, 4 core areas of competencies in deepwater, in LNG, in petrochemicals and retail in lubricants. And they are recognized worldwide. And we have also some geographical areas where we have some advantage position like in Africa, where we are a clear market leader.
In Middle East and North Africa, where we have developed very strong relationships with many NOCs, National Oil Companies, which help us to have access to some of the resources and develop the group. And also, last but not least, the North Sea, where we have built a strong position of operating position by being the number 2 and operating around 500,000 barrels per day. So this will be these competencies will be described more precisely by my colleagues this afternoon. I would just give you some hints of what is the strategy in each of these segments, the core competencies. So on deepwater, yes, we are leader of Africa, but we have established a new strong base in Brazil.
We have been the early mover, I would say, in Brazil. And when you compare what we spent to establish the position on Lapa, Yala and Libra compared to what is spent today to acquire some exploration position, I think we were right to be early mover. It will represent something like 150,000 barrels per day of production and probably more to come because have some ambition to build on this on the position we created with Petrobras. And the other part, of course, deepwater area where we could leverage our expertise is the Gulf of Mexico, it was mentioned. Arnaud will come back of it.
As you can see, we are producing today around 350,000 barrels per day, but this segment, this deepwater segment will provide some growth in the future by growing to 500,000 per day by 2025. We are again, it's important with cash flow from operation above $30 per barrel, dollars 60 per barrel. I know there is a debate about deepwater against shale. You can do very profitable business in deepwater providing you target some giant fields or that you are able to tie back your discoveries to existing infrastructure. And these are the two ways to leverage that we want to leverage in the future to create value for deepwater expertise.
After that, we have the LNG. Of course, 2018 is very important for us with the acquisition of ENGIE LNG, which promote Total as a clear number 2 into the market. We will manage 40,000,000 tonnes of portfolio of 40,000,000 tonnes per year of LNG. It's more or less 10% of the world market. We intend to keep in the future to maintain this position of 10% of the world market in the LNG business.
On it's a full it's an integrated value chain. Of course, we look to production and liquefaction. We will produce 20,000,000 tonne LNG per year. And you we will see that we have projects to continue to grow to 30,000,000 tonne per year of LNG. Ichthys and Yamal are ramping up.
Trading and shipping, I just mentioned, we are number 2 in the world. Regasification is important for the LNG acquisition. We are controlling we are clearly number 1 European player, which is important in this business because Europe is a clear liquid market. And to have access to have an easy access to this market is helping us to manage the global portfolio. And the integration is going downstream to gas and power marketing.
I will come back on it. So we are and Patrick, and we announced that in February, but after the acquisition of ENGIE, we're intending to report differently on the financial results of the group. Patrick just mentioned it. So we will create from 2019 and you will report we will report on what we call IGRP, Integrated Gas Renewables and Power. In fact, the idea behind it is that you will see and this will be the combination of the existing Gas, Renewable and Power branch results plus all the LNG upstream and midstream assets, which are today in E and P.
The logic behind it is these are, I would say, the core businesses in which we invest, part of them, either LNG or low carbon electricity. And we want to identify in our reporting this segment as being the one which will grow. And I think it was a request from many, many, many years we heard that from our investors to have a better visibility and transparency of what this active gas LNG can deliver. You will have this from beginning of 2019. So yes, we feed our project LNG expansion.
We have and I would say, I've seen that Philippe has used a nice expression in Barcelona last week about the golden triangle of where we can produce LNG. I don't know if it's a golden triangle or a golden square, in fact, because we have 70% of the LNG worldwide. We'll be concentrated in 4 key regions: the Middle East and Oceania, Australia, Pacific and then the U. S. And Russia.
And TOTAL, in fact, as we have built some positions, and we are very well positioned in all these key areas to build for the next wave of LNG projects. The next wave of projects for Total will also become recognized for part of it, quite a lot of it, a number of them as low cost and brownfield projects. What I mean brownfield projects is building, being able to develop some additional trains based on the existing infrastructure. It will be the case, of course, in the U. S.
With ENGIE LNG gave us a share of Cameron LNG, which will be put on stream next year. We intend with Sempra, and we are in full agreement with Sempra to expand quickly this Cameron LNG operations, our 2 trains, which could be mobilized. It's, of course, valorizing low cost U. S. Shale gas and monetizing the interesting infrastructures.
In the U. S, we are also shareholder of Telenion. We consider this opportunity for the future in light of the Cameron also expansions. In Russia, we'll come back later on that, but we have signed we are very happy of what is the Yamal momentum. And you've seen that we signed an agreement, which is not only the entry of Total in Arctic 2, and by the way, we are shareholder of Novatek at 19.4%.
I can announce today that last week, we reached the historic agreement was we will reach one day 19.4%. We reached that level last week. And this, by the way, is an interesting story. We spent $6,800,000,000 to acquire this position in Novatek. We received in the meantime around $800,000,000 $900,000,000 so $6,000,000,000 The value of this participation today is $9,300,000,000 So in terms of value creation, I know that people consider there is a risk on Russia, but Pop Total has been able to identify almost 10 years ago one of the players.
I know that people will have some doubts, but this player is growing quickly. And the last agreement we signed in June is not only a position in Arctic 2, it's a position of direct investors in all the projects to come. And Novatek is announcing an ambition to be able to produce 56,000,000 tonnes per year of LNG by 2,030. So this is for us very important. Of course, we have also going around the square, Golden Square, we have in Oceania the new Papua LNG project, which will be developed in synergies with PNG LNG and Alexandre Morbon.
And we have also a project in Nigeria, which is a brownfield development. It's 8,000,000 tonne per year project. It's not only 1 train. In fact, it's more or less 2 trains on which we work together with our partners. And last but not least, but this will be a tender.
Of course, Total is very interested. There is no mystery to participate to the future expansion in Qatar, where we have a strong legacy position. And it's obvious that in terms of competitiveness, LNG in Qatar with a very conventional offshore gas production, one of the most efficient combined to a long expertise and some synergies is delivering one of the best, if not the best, competitive LNG for the future. Petrochemicals, a word about it. Bernard will come back on it this afternoon as well more in detail, but we are executing the petrochemical strategy we described last year.
I would say there are 3 components, on 3 levels on which we build the strategy. The first one, and I will not describe the project, and I will do it this afternoon. But first one is to concentrate our projects, our investments on the large integrated platforms. We have 6 of them. And you will see that the 3 of them, the 3 large projects which we work today are based on consolidating and developing and synergizing these platforms.
The last one being set up inside Arabia, which, of course, beyond the refining refinery project, which is a success, will offer us the capacity to have a large petrochemical expansion. The second levers we mentioned to you is access to low cost feedstock. And this chart is interesting because it shows you that by 2025, 60% more than 60% of the petrochemicals production of Total will be based on ethane or LPGs, advantaged feedstock. And the last levers is last target we have is to lower our exposure to Europe. We were very European centric in our refining and petrochemical business, more than 60%.
By 2025, Europe will represent less than 50%, 45%. A word as we speak about refining and chemicals, because we know that we have many questions about what could be the impact of the new IMO regulation on total business and results. I think globally, in fact, the results of the analysis is that we are very well positioned to benefit from it and to enhance our revenues by a few $100,000,000 Why? Because in fact, these IMO regulation, which I remind you obliged in the maritime world to use low sulfur bunker fuel, will have some impacts on the market. On crude oil first, of course, this will enhance increase the value of low sulfur crude oil.
And Total in this portfolio, we have 60% of low sulfur crude oil compared to an average of the in the worldwide production of 40%. So we have an advantage there that this 900,000 barrels per day or low sulfur production will have an increased value after the IMO implementation. On the product side, I think it's obvious that this IMO regulation will have 2 effects. 1, it will decrease the value of high sulfur fuel oil because the market will be reduced. But at the same time, it should increase the distillate value because it will be the best way, one of the way to have the regulation.
On sulfur fuel oil, in fact, we have many actions have been taken. We were producing in 2017 7,000,000 tonne per year. So of course, we need to decrease this production. And this chart is showing you that through the undermodalization, the port arter, coker, but also because we can segregate better in our refineries the way we produce high sulfur, oil or low sulfur, we can reduce it to from 7,000,000 to 3,000,000 tonne per year and even we could have some flexibility to go down to 2,000,000 tonnes per year. So in fact, at the end of the day, we will have a very low fuel oil yield, less than 5%.
So the decrease of high sulfur fuel oil should not hit the results of refining and chemical branch. On the contrary, because we have a high distillate output, 50%, we should benefit from the increase of the distillate value. And the 3rd consequence of the IMO regulation will be that it should give some impulse to alternative fuel and in particular LNG for bunkering. And TOTAL has been one of the pioneer on this business. And I think that this afternoon, Momar will come back and Laurent will come back on this activity.
Moving to marketing, we said I said to you we have 4 areas of core competencies, one of them is retail and lubricants. You can see that we continue and I know there are questions about the future of M and S, but Momar will demonstrate to you that we have plenty of ideas to continue to develop the value of M and S. But what we do in particular is we move to growing markets. In fact, there is a split there of the way we create some the $2,200,000,000 of cash flow, which will be delivered in 2018 by M and S. In terms of what are the legacy business, we have lower growth, European retail, eating oil.
It's less true for lubricants because there you can have some growth in lubricant business. But we have in fact in the last years made some M and As to reshape a little of the portfolio by divesting some mature assets or low market share retail and to concentrate our investments more in growth areas like the Africa retail or large emerging countries. We have expanded Mexico, Egypt, Pakistan. We are looking to Brazil, to India for the future. And we want also, of course, to develop some nonfuel revenues, Momar will come back on that this afternoon, and some alternative fuels.
So the target, which is to deliver more than $2,500,000,000 per year by 2022, has more than a reasonable way to be delivered by Maria Menas. A word about the U. S. As we are here today in New York. U.
S. Finally is for us a land of growth because, of course, it's fitting well with our strategy of an abundant low cost gas resources. I would also say it's quite a lot of low carbon electricity with a nice development of renewables here. And in fact, the U. S.
Are a land for us of growth in LNG. I spoke about Cameron and future developments through petrochemicals around our Port Arthur platform and also in natural gas for transportation, and we have acquired this year some shares in a company called Clean Energy, which is a leader of natural gas for transportation. And it's very interesting to see how this business can be developed in this country. I should not forget, of course, the deepwater on which we've built the position because we want to leverage our deepwater expertise. At the end of the day, in fact, the U.
S. By 2022 will be the number one country in terms of capital employed in the portfolio of Total, more or less 8%, 9%, 10%, 9% of global capital employed group, with a generation of $1,500,000,000 per year of cash flow and $1,000,000,000 per year being invested. Last piece of the strategy, building a low carbon electricity business. I mentioned it already. I explained the reason why.
What does it mean? That means that and I know that in 2016, we present you a puzzle, which puzzled you. In fact, it was not the best way to express you as a strategy. Today, in fact, because we have been we have the opportunity to put this puzzle into right order with the last acquisition we've made of the Direct Energy in France, I think we can develop in front of you better explain what we want to do. In fact, what we want to do again is through an integrated approach to build a production, trading and marketing business, producing low carbon electricity.
There is, I said, a large growth of it. We've come to capture it. We have today in France and Belgium around 4,000,000 customers, residential and professionals. We have a target to increase that to 7,000,000 customers. So we have a large, nice base of customers, but we don't want only to market.
We want also to provide and to produce electricity and the target being to be able to produce at least onethree of the sales. Other from natural gas, it's logic, the continuous integrated value chain that we described. We acquired recently some CCGTs in France on the top of the one which were in the portfolio of direct energy or natural gas or renewables with some so today, we have various subsidiaries. The idea is to combine all that to clarify it. But again, when I say it will be sizable, just to give you a to convert what we intend to produce in 2020 by 2022, 2023 into barrels per day.
This would represent something like 200,000 barrels per day equivalent of petrol or oil and gas. So it will be a sizable business. And we have the chance. Why will it be profitable? It's because we have the chance to build this portfolio from a white paper.
On one side, we are acquiring assets, in particular, the CCGTs, which in an environment which is quite favorable and we paid a third to a fourth what would be the new CapEx for SCCGT. And on the marketing side, we built that from a pure digital model. And Direct Energy, in fact, is managing 3,000,000 customers with 300 staff only. So compared to what are the business model of our utilities, we can be efficient. So this is what we intend to develop.
And the cash flow we expect by 2020 should be around $1,000,000,000 out, like we said, out of these businesses. So to come to try to sum up all the strategy we described to you in more figures, we described on this slide what will be the on the new scheme of the new segments, what will be the image of the company and the risk of cash flow from the company. The E and P in this new configuration, that means without LNG assets, is will represent around 55% of the capital employed of the group. We will invest around $10,000,000,000 per year. ROACE at $60 per barrel above 10% because the LNG assets are quite heavy in capital employed.
So it's the fact that we eliminate them from this group or this segment is enhancing the profitability and will represent a production of 2,600,000 barrel per day growing at 3% per year. In fact, most of the growth of the production is linked also to LNG business. It's Ichthys, it's Yamal, it's all these activities. So we will find and again, the cash flow from operation from E and P are, I would say, interesting to see how they will grow, and they will grow quickly. Sorry, I take my paper because I don't want them to make any mistake.
We will go from $15,000,000,000 in this segment by 20 17 to something like $18,000,000,000 at $60 per barrel and around $20,500,000,000 $21,000,000,000 with the sensitivity, which was mentioned at $70 per barrel by 20.20. So it's a big increase of cash flow from operations from this segment. The second segment is the new IGRP segment, so combining LNG and Gas Renewables and Power. This will grow from around $2,000,000,000 of cash flow from operations to almost $4,000,000,000 So it will double in 3 years its contribution to cash flow for operations. This represents this segment will represent 30% of capital employed.
CapEx around $3,000,000,000 Profitability is lower, but this is a segment where we will invest heavily. So of course, this is linked. And again, it's the LNG more than the low carbon electricity businesses, which are putting a weight on the ROACE, but we can reach we have the ambition to reach at least 8% or even 9% should be possible. These segments will represent a production of gas production around 0,500,000 barrels of oil per day equivalent, growing at 8% per year and 40,000,000 tons of energy managed and again electricity production equivalent of 100 by 2020 to 200,000 barrels per day by 20 22, 2023. And the last part, of course, of the group, but not the least, I mean, it's which is very frugal in capital employed, 15%, but we invest $3,000,000,000 and ROACE above 20%, as Patrick told you this year, 25% is a downstream, refining and Chemicals and Businesses.
We announced last year that we want to increase by $1,500,000,000 of cash flows from 20 17 to 2022. We are on this road map. Of course, it depends on the way we the refining margin will could be volatile, but we are well on this road map, most of the petrochemical projects delivering additional cash flows post 2020. So in order to conclude and to come back to how we will deliver the shareholder returns and we put a framework on the table in February. Of course, 1st, and this is an important message that we I think we have, with Patrick, delivered today is that we will have an outstanding growth in the next 3 years from 2018, 2020, which give us a very clear we have a very clear visibility on the cash flows.
The cash flows were $22,000,000,000 last year at $54 per barrel. They will increase this year it will increase by $7,000,000,000 between at $60 per barrel by 2020. We said $6,000,000,000 by the way, last year, so it's an additional $1,000,000,000 that we had on it. Because of the M and A activity that we have done in the meantime. So it's plus $7,000,000,000 at $60 per barrel, and it's even, of course, more at $70,000,000 because we have an additional $3,000,000,000 So it's something like $10,000,000,000 at $70 per barrel.
And there is no figures of 2019, so I will give you one just to calibrate it. At $70 per barrel, we should be around $29,000,000,000 next year of $29,000,000,000 $29,500,000,000 $29,500,000,000 of cash flow of DACF next year by 2019, just to calibrate how we enhance the increase of cash flow of the group. We have a clear visibility because there again, a start ups production start ups are Kaombo are started ups and it is starting as well and pronounce it first ever, the currency is coming. Egina is on time to be delivered by end of the year. We have a strong cash generation from all this acquisition of Maerskol, Brazilian assets and Abu Dhabi as well.
And all that, by the way, will lead us to have a return on equity of around 12% or $60 per barrel. This year, we are above 10%, reaching probably 11%. So this, again, we will come forth. So we are able to grow while maintaining a good and enhancing profitability of the portfolio of the group. In terms of so what do we do with all this cash flow?
We put a framework on the we proposed a framework to investors in February, and we'll not change it today. It will be a surprise to you. But first, of course, we have capital investments, a priority of the group, and this is important for the Board. Patrick confirmed to you that for the next 3 years, dollars 15,000,000,000 $17,000,000,000 per year. We don't anticipate cost inflation during these next 3 years.
And I would say that the volume of CapEx, which is behind this figure, is the right level to continue to develop the Group and the ambition of the Group. Dividend, of course, is a second priority. We have announced a 10% increase over 3 years. With no scrip dilution, we buy back all the shares since February. Balance sheet, then the 3rd priority to deleverage the company, maintaining the gearing under 20%, and we support the director attached great importance of Grade A of the group.
And the share buyback is the last element of this cash flow allocation. Is a way to share additional revenues with our investors. In February, we said up to $5,000,000,000 because we were still at as the framework was at $60 We this time, I can confirm that the $5,000,000,000 will be bought back under 2018, 2020. This program is put into action. We deliver it, and we have increased the interim dividend by 3.2% in 2018.
So we are on the path of the 10%. The share buyback, we have we bought back on the first half of the year, I think, dollars 600,000,000 We intend to put around $800,000,000 $900,000,000 on the second half of the year because of shares. Clearly, the oil price is higher than $60 per barrel. So we realized $1,500,000,000 in 2018 on the top of the $2,000,000,000 of strip shares buybacks that we have executed that we are executing. And so this gave us some strong momentum.
And in fact, there again, in terms of total shareholder return on since, I will say, 2014 on the 4 year period for this cycle, we are at the top of our peers with a 20% total shareholder return since 2014 despite the downturn. So again, a clear visibility on our cash flows, a clear framework of shareholder return policy and an execution as we do it in all the segments of our activities in order to deliver best in class TSR. So as a conclusion to this strategy and look presentation, I think there are 3 messages today and I would say 3 key messages to our investors. First is, yes, Total has a good and strong track record of execution, and we deliver our objectives. And for the next 3 years, we are you will our investors will benefit of an outstanding production growth, of a CapEx discipline, which on which we are fully committed, and on the downstream, which is one of the best in class downstream, which is consistently delivering $7,000,000,000 per year or even a little more.
The second message is that so this give us very strong confidence and a very strong visibility on the cash flow growth to 2020. I mentioned $7,000,000,000 of additional cash flow between $60 per barrel, dollars 10,000,000,000 at $70,000,000 and at $80,000,000 it's even more than that. I don't want to give you bad ideas. But there are there a clear roadmap for shareholder returns on which we are committed. And the last message is that beyond 2020, we have in our hand a very attractive portfolio on short term opportunities.
I've seen that we are able to deliver $2,000,000,000 or $1,500,000,000 added value just because to mobilize $400,000,000 of short term opportunities. We have a nice portfolio of attractive portfolio of large projects to be sanctioned by 2020. We have established a very strong position in the LNG business, which is one of the booming business in our industry and at the right time. And we also think that we can build an attractive low carbon electricity business in the coming years. With that being said, I hope that, again, commitment is to consistently deliver added value for the benefit of our shareholders.
Thank you for your attention.
Okay. So we'll move to the Q and A now. We have a few Q and A sessions throughout the day, one this morning and 3 sessions this afternoon. So please be patient with me, but I know you'll have lots of questions to ask. I'll try my best to get through everyone.
Please give your name before you ask a question and try and keep it to one question. I know I'm pushing it when I say that, but try your best. Okay. We'll start with John Rigby.
Yes, morning. It's John Rigby from UBS. Was going to ask 2, but I'll give you one, for
good order.
The thing that seems missing in this is because it's a strategy event is the sort of back end of the cash flow because if my basic arithmetic is correct, you look like you'll be generating something like about $10,000,000,000 of excess cash flow at $80 a barrel and probably $7 or $8 maybe 7 at $70 a barrel, but you haven't updated on your on buyback. You've made, I think, adjustment subtle adjustment on your intention for debt. And while I think is I don't want to see you commit to a target, can you provide some strategic thinking around the disposition of excess capital at the higher point in the cycle, so we have some kind of idea about what your intention would be if oil prices stay at these current levels? That's it.
Okay. I think, first, maybe we are prudent, but you know the price of oil is today at $80,000,000 I don't know where will be 1 year. So we have we don't want to modify the framework you gave to our shareholders only a few months ago on which we are committed. And by the way, I know that when we announced in February, when I discussed with some shareholders that we announced 3 years in advance an increase of dividends, some people told us that we are quite bold to do that. So having said that, what we will do if we have more cash because if the price is established more durably at a high level like $80 I think we have for me, it's quite clear.
1st, continuing to deleverage the company is a priority because if you have a high price, you will see one day or the other the low cycle coming back. So I would say part of the cash will be allocated to low deleverage company, and we set a target under 20%. We are today at 15%, I think, or 16%. We're not going down. I'll remind you that some of our peers a few years ago were even at 0% of gearing.
So that's one of priority. The second part will be, of course, and this is why we introduced a share buyback concept in the February framework, is that, obviously, if we have more cash, we'll share part of it with our shareholders through some increasing share buybacks. I don't want to give you today any figures, but it's the second allocation of it's a logic of it. The logic of it is to use the share buybacks rather than the dividend because the dividend we want I remind you that we have a constant policy on never cutting it back, but to use a share buyback as a way to return value to the shareholders. And the third part that I can say is that, as I mentioned in my speech, in terms of capital investments, I consider that the volume that we're investing is fine and is enough to be able to help to allow us to grow the company because we have also to manage the portfolio and we have some ideas to sell some assets.
But of course, it's a price in your scenario, John, if the price remain at $80 per barrel, one day or the other, we'll see some inflation in the cost. So the volume should remain the same. The value could be could have some impacts. That would be the market. But I don't consider this will happen before 2020.
So let's but again, if we are really in a scenario of a high price during 3, 4 years, your question is the right question, but we'll have we could have we'll have to update, I would say, the global strategy. But again, you have the fundamentals lowering the gearing, share buyback increase. And in terms of CapEx, the volume should be the same facing maybe some inflation. I told you one day that I don't anticipate that I don't think that would going beyond $20,000,000,000 would be a very good idea for the fundamentals of the group. Okay.
A couple more questions
on this side, then
we can move to the other side. It's going to be Tipan Jofflingham, then Oswald Clint.
Thank you. It's Thipan Joplin from Exane BNP. I had a question actually on the comment you made around an attractive portfolio in hand, the 700,000 barrels per day. So could you talk a little bit about what the breakevens are? What the IRRs that are expected?
And in the same vein, is the message really beyond 2022 to grow at the same rate in terms of volumes going forward to, let's say, the middle of the decade?
Is that the strategic intention here that Total remains a growth stock? Again, Patrick mentioned to you that the 6%, 7% combined with the 5% at 70%, 22% imply 3%, 4% from post-twenty 20. I think being able to grow around above 23% should be feasible. It's the answer to this question is not so easy today because we don't have in our hand today all the portfolio we'll have in 2023 or 2025. So when we made some long term plan exercise in the group, we are developing all the assets we know, but we have we know that things will move, will not be asleep during 5 years.
So we can we will have access to new resources there and again in some places around the world. But I would say that it's possible that we can grow at this level. Again, we have demonstrated, I think, in the last 3, 4 years but and I strongly believe that it's better to be reasonable if the price are high, but to take benefit when the price are low of some opportunities like we've done in the last years. In terms of IRR, let's be clear, attractive, I don't know what's not written, but we have we continue to sanction the projects at $50 per barrel, and we target our IRR around 15%. And I think in February, you had the split by IRRs about the portfolio.
We didn't show it there, but this could be described to you. There is no change of strategy, no change of policy. I think the only way to change of policy. I think the only way to maintain a low breakeven, all that is consistent. If suddenly, you decide to change the way you sanction the project by using $60 per barrel, then of course, your low breakeven will go up.
So I don't we don't want we have enough resources in the portfolio to be able to be to have this type of objectives when we sanction projects.
Oswald Clint here from Bernstein. Could I ask about your LNG slides, your LNG outlook? It's constructive. It's supportive of a good market. You're investing heavily in this market.
You also mentioned a 60,000,000 tonne or 56,000,000 tonnes of Russian expansion coming from Novotek. That's quite a big number. And if we add it all together to the other regions, again, maybe 5 years down the line, we have another supply wave of LNG coming through. Is that something you think about and another risk on the supply side? Or like this particular cycle, demand comes through still growing potentially more stronger and there isn't this sudden period 5 years down the line when everyone's talking about weak LNG demand just as you're investing heavily in it once again?
Thank you. And perhaps just linked to that, maybe just expand on your strategic initiatives to penetrate China a little bit more with your LNG portfolio. From our advantage or vantage point, it feels very much Africa and perhaps South America, even countries like Cuba more recently. But I'm curious to know how Total can push deeper with LNG into China. Thank you.
Of course, as I said, I think the demand for LNG is mainly driven by Asia and by China, in particular, policy. There is but there is today, it's a strong statement by the Chinese government that they want to really increase the share of the gas in their energy mix from multiply it by 2 or more than 2 from 6% to 15%. So this gave a strong momentum to LNG demand. I think they are very serious about it because mainly of air quality and other issues, which are very important for them and for the global stability of their society. So this is one of the main driver, but we observe that also in Korea, which is shifting also more and more to LNG.
So with an assumption of 5% per year, if you take, by the way, the last 3, 4 years, it's even a low assumption, okay? We have been we moderated it in the future. But I think it's not being overoptimistic. When we say that, the question is where this LNG will come from. And that's true that Novatek target is very ambitious.
But in fact, it's just the idea that beyond Yamal, which represents 16,000,000 tons per year, you will have another project called Arctic 2 of 2020 and another one by 2025 and another one by 2,030 of 20,000,000 tons. So in fact, it's 3 projects. The resource base is incredible where you have it's not a question of size of resources. It's more a question of being able to execute the projects. But one of the real interest of this position in Yamal Peninsula is the fact that the Russians are investing in opening permanently the North Sea route, the North route to Japan and to China.
In fact, the Russian government has decided to invest in some nuclear icebreaker in order to have to open it to open this route permanently. If it is the case, that means that Yamal is 1 is the best is very is only 15 days, I think, from China and Japan. And even if we have to tranship the LNG in Kaptshavka, all that is super efficient. And by the way, this is in terms of potential of adding value to Yamal in the Yamal investments. Today, the ships are going around the world through trans shipments in Northwest Europe.
Once we will have managed to optimize off the logistics, this will enhance the value of Yamal on Arctic 2 and the future projects. So yes, it's we have Novatek and Total. We have opened there a real profitable province for LNG with a huge potential. And so then it's a question of managing the projects, which is not so easy in this type of environment. But I think really, I strongly believe that the Chinese policy is a strong supporter to the expansion of the LNG market for the 10, 15 years to come.
Okay. A couple of questions on this side, maybe Jason, then Irene.
Thank you. It's Jason Gammel with Jefferies. Obviously, on the acquisition side, there's a lot of transformative deals that you've done over the last 4 years and been highly successful in acquiring assets. Now that we've seen a big move in the oil price to the upside, are you starting to see the market developing into more of a seller's market? And I'm not expecting any change to the guidance of $2,000,000,000 net per year on A and D.
But would you expect that you're going to be more active on the divestiture side of the business if prices remain where they're at today? [SPEAKER JEAN FRANCOIS
VAN BOXMEER:]
That is a logic. I have to be consistent. I said that we have to be countercyclical. So it's true that Patrick told you that we managed to sell $10,000,000,000 of assets in the last 3 years, but it was not a lot of upstream assets because it was difficult to sell them. Today, it's no more the case.
Today, it's clearly more a seller asset. So we yes, that's true that we have identified during these periods in our portfolio some assets which were not very resilient to low price, and it's time to try to market them. So we've put some mature asset, not only mature assets, but it's not true, a bunch of portfolio of assets in U. K, North Sea that we have acquired from Maerskol, so to try to clean the portfolio to be more efficient. But we have other ideas in our mind of assets to business.
So you again, I'm not we are not driven by volumes, even if we have to show you that we are growing. We are more driven by value creation. And there are some barrels in the portfolio of TOTAL which represents a volume, but which are not really generating a lot of cash flows even at $70 per barrel. So these ones are for sale. So yes, you could see Total active on this side as well in the coming years if price remains at this level.
Okay. Then maybe Irene and Thomas had questions.
Irene Guzman, Societe Generale. Thank you for the presentation. By 2,040, you aspire for low cost sorry, low carbon electricity to be 15% to 20% of your sales. Why 20%? What proportion of assets or CapEx will that represent?
How quickly do you aspire to get there? Does it remain Eurocentric? What sort of returns compared to traditional oil and gas? Thank you. [SPEAKER
STEPHEN ROBERT BINNIE:]
Again, it's a scenario which is consistent with the idea that we'll reduce our carbon intensity by 25% by 2,040, just to give you some various scenarios which have been elaborated by the teams. Yes, the idea is mainly to develop that in Europe, let's be clear. It's a European strategy. We'll behind in fact, if we were behind it, and I cannot describe all the figures, but it's achievable by not so many of course, we've been required some of our acquisition of these segments if we want to do that, but we have time. It's between 20 we are in 2018.
We speak about 2,040. So we have time to do that. We want first to demonstrate and to comfort the profitability of what we just done in France and Belgium. We think really that we can organically, in these two markets, reach 15% of market share. Direct Energy is acquiring 500,000 new customers per year.
Total Spring was is just acquiring around 300,000. So the combination of both even being more efficient because we are able to synergize the back or the back office, etcetera, will give us a good momentum. This again, this activity, we are targeting on this one more than 10% of profitability of capital employed. And in this type of scenario where I don't know if it will happen, but if by 2,040 really demand for oil is stagnating, that means that the price of oil should not be very high. And I remind you that at $50, dollars $60 per barrel, portfolio of company like Total is going to be a return of 8%, 9%.
So it's a question of combining different assets. So how much do we invest? We plan to invest in this business around it was written, I think, around $1,500,000,000 per year, dollars 1,500,000,000 to $2,000,000,000 per year. And with this space of investments, we can reach the target that we mentioned to you, 15%, 20%. So but again, we know it's a diversification.
We have made a big step by acquiring Direct Energy because it gave us the size, so we can look more, I would say, clearly to the way to the level to the leverage to or we can leverage the profitability of this business, but we are confident in the figures we deliver to you.
Hi, Patrick. Thomas from Credit Suisse over here. Last quarter, I asked you a question, and you didn't want to answer it, and you said you'll answer it today, so I'm going to try it again. Integration and scale has its benefits, but also being small and nimble can have its advantages. Total is now a very big company and you're growing fast, but you're growing in a fairly concentrated manner in key hubs.
You're integrated, but not as integrated as you'd like to be. And in more recent year, you've added more OECD barrels. So in essence, the question is how would you define the sweet spot of risk and value? That was the question last quarter. And then quickly, a second question just on LNG, if I may.
You've highlighted 4 projects and possibly a 5th one, Tellurian. Now everyone wants to develop projects, LNG projects at the time. Now if we're all going at the same time, isn't that a recipe for disaster just like the last cycle? So what are we going to do differently this time? Thank you.
First, in terms of LNG projects, I think one of the I mean, if we look to what we propose to develop, there are mainly, except Arctic, to some projects which are, in fact, building expanding existing projects other than greenfield projects, which put us in a good position in terms of, I would say, cost of delivering the LNG compared to some of our competition. So I think it's the interest of the portfolio we have is that we can expand some of the LNG platforms which are we have in the portfolio in, I would say, in an efficient way. I still do not understand fully your first question because you start off big against small, and then you I'm not sure to have captured what you want to. For this presentation, but we have some focus areas, one of them being LNG, clearly. And we strongly believe that there, is a combination of our capacities in a free impact but also in trading and marketing under Laurent leadership is strong and that we can it's this market is being more and more commoditized.
Laurent will come back on that this afternoon, but we can build. So we have one big sweet spot in which we think that we have built years after year position. This is 1. We spoke to you about deepwater. It's another part.
So I think we identified through the presentation the key areas of competencies on which we want to invest for the future of growing the company. Maybe it was not clear enough, but we tried to give you some answer to your questions. What are the risks? The risks are of many nature, as you know, in particular, the market trends. We are in an evolving energy market with many trends.
It's not everything is not clear. We try to put ourselves on, I will say, the safe on one side, we're trying to put ourselves on the safe side, in particular on the oil business, but we continue to grow our oil activity. But we want to be safe in terms of positioning the portfolio. And on the same side, we can be bold by trying to prepare the future of the company to build the future of the company by positioning ourselves as well on this low carbon electricity business. So these are but these are the risks that you can take.
So it's a question of what is to come back on the Iran question, what is the right combination between the various businesses that you put in your portfolio. There is no magic number. It's more a question of opportunities and to permanently monitor the strategy according to the evolution of the markets.
Okay. Maybe come back over here now. Thank you all for your patience. Maybe you can go to Lydia, then Chris.
Thanks. Hi, Patrick. One question just around the delivery and the focus on what you've delivered in the last 3 years, which has been impressive. Is there anything that has disappointed you over that period? And also then looking forward, the idea of where do you see the most upside in terms of delivery?
Is it on the digitization? Is it on the LNG side? Just where you think the risks are to the upside on that side?
Patrick?
I'm not disappointed by nature. I'm quite an optimistic guy. I think that among our project, and everybody knows, there is one project which was not perfect, which is Ichthys. There is some disappointment there. On the other side, you have plenty of beautiful project developed in time and within or below budget, which balance dramatically in favor of total our view on the project.
In term of what is the most exciting things for the future, I think let me ask first a question raised by Adolf. What we made differently, which is part of your answer also. What we make differentially this time in this cycle? First, we deliberately act countercyclically. 2nd, while we were growing the company, we are working to simplify our process and we should not minimize the time of the management in our willingness to simplify our processes.
So one total means something in the company. So Marie Noel will explain you give you a few example of what new technology can bring to our organization and our future. I'm quite enthusiastic by that, even if we are in an EV industry. I mean, you will see some example of things that are astonishing, I would say. You want to add something, Patrick?
No. I think, again, yes, that's true that we had some hiccups in the project execution, to be honest. But in fact, even if they were delayed, it's better to start a project when the price is $75.50. And that's the reality. So in fact, we were nervous about having that late because we were looking to lack lack of cash flows and we were counting all our cash.
But in fact, it's better to start Kaombo at $75, $80 rather than $50 I can tell you, and it helps a lot. So even this part, which honestly was and it was disappointing because it was for me a very strong area of excellence. At the same time, Yamal LNG, it was the most impossible project which was launched into the industry, and this is the only one which is under budget and even which in advance compared to the timing, I think the 3rd train of the M LNG will even start before the end of this year probably compared to what we had in mind. So we have it's a mixed feeling. Then, of course, as you know, but there was some good news that we have announced, building up our capacity to under renew the exploration strategy is taking time, but I'm not disappointing.
I'm more patient on that, and I'm happy to see that we have good results which can deliver some value. So no, frankly, there is no disappointment. I mean, I'm even more and more surprised quarter after quarter by the capacity of the company to deliver. And so it gives us a strong confidence as the CEO of the company. And we spend a lot of time to on the short term issues, and now we are able to speak to you more on the long term, which is makes translate this confidence.
And confidence is shared by the Board of Directors. And I think this, of course, give, I would say, it's a virtuous circle, a good momentum inside the company as well. And one of the things which you don't realize, but today, in fact, this discipline, even sometimes we face a situation where people in the company are really this culture of discipline in terms of management is deeply rooted in the company. That's one of the success. And so that's the point.
But of course, at the same time, we have been bold in some part of the M and A activities. Again, we in LNG, we have made a big step forward buying this portfolio. And so we have a huge responsibility today to deliver value. And I think there is a lot of value there, but it's a strong move. We are bought also by entering into a big way, being the 1st oil and gas company to enter into this low carbon electricity business in a big way that I'm sure will be followed by others there.
It's the route. I think for me, it's for the Board of Directors, to be clear, and I should have answered that also to Irene, It's a way to give to describe what could be the future of an oil and gas company. We know that some investors, not a specialist one, but some investors, when I met some general investor, they put monies in April, Facebook, I don't know why, and all the digital technologies. They see oil and gas segment sector as something maybe of the past because when you open the newspapers, you see some articles about we need more we will not need oil in 2030, which is fully wrong. We all know that in the industry.
But I think this is also for me a way to there is a bright future for these companies because we will be able to use all our engineering capacities or management capacities or financial capacities to build a new energy model for energy company, and this is the ambition we have.
Okay. I think we'll go to Chris and then to Henry.
Thank you. It's Chris Gootland from Bank of America Merrill Lynch. In the very same vein, Patrick, you started your presentation today by saying you wouldn't expect an update of the strategy every year. Indeed, we don't and you've stuck to your 2020 timeframe. So essentially, I'm asking a question around capital allocation beyond 2020.
I suppose some of your peers have already chosen to give us a little more visibility of where they expect to be in the mid-20s. I wonder whether you when you look at your $10,000,000,000 annual CapEx budget for E and P relative to the $3,000,000,000 for Downstream and Integrated Gas, Renewables and Power. How you envisage that to change into, let's say, 2025 and beyond? And I suppose a little mini question attached to that is, if you're already spending now $1,000,000,000 to $2,000,000,000 on Renewables and Power, you've only got left $1,000,000,000 $2,000,000,000 to spend on Nigeria LNG, Arctic 2 and lots of other potential LNG projects. Should we assume that you continue to use project finance also on top of that $3,000,000,000 in this division to expand further?
Thank you. [SPEAKER JEAN
FRANCOIS VAN BOXMEER:] The answer is yes. Yes, we use project finance. It's we consider it's a good way to leverage our equity in these businesses. No problem with that. If you want my feeling, but again, to explain 10 years in advance would be done, if not so.
I think you could see probably CapEx allocation to this iGRP segment growing, should be logic with what I described, betting more on natural gas and so expanding this one. So the $3,000,000,000 could become $4,000,000,000 let's say, 2. I don't think it will go up to huge amount. We don't again, because part of it is being linked to the project financing that you just mentioned, so it's there is a link. We could probably, one day, to update you of if we could we look at it, by the way, in terms of how do we allocate capital expenditure in terms of proportional vision, which means what is the Royal Mail.
It's shifted a little. It's adding €1,000,000,000 of this segment, in fact, but not much more. So this is probably things we could do. I don't think refining chemicals, petrochemicals and marketing should change a lot, neither going down or going very high because we need €3,000,000,000 to maintain this activity. I mean, there is a lot of 2 industrial maintenance.
Again, it's more a question of being able to find the opportunities to invest, but this also is project financed generally. So it doesn't capture it, most of it. And then upstream, the €10,000,000,000 again, it's linked to what could be the oil price environment. But if we want to grow by 3%, you can demonstrate from a base of 3,200,000, 3,300,000 barrel of oil per day to find 10,000,000,000, 11,000,000,000 I think. So these are more or less the way it could be distorted.
I think if today we gave you last year some figures 2022, you have some figures in this presentation as well. And my colleagues will come back this afternoon on figures, which gave you some minutes. But it's because we wanted just to highlight to our investors that we will benefit in total people who are buying shares today for the next 3 years of real outstanding growth and which will be translating in additional cash flows and return to shareholders. I think it was also, I would say, the part 3 of this presentation today to highlight what will happen, what we will deliver. And based on the track record delivery, this was, I think, the main axis of the presentation.
It's Henry Tarr from Berenberg. Just a quick question on the short cycle developments that you highlight. How flexible are investments here? So with the current oil price, are you pulling forward some infill drilling in some of the projects, etcetera? Or are all of these ones that you would have pushed ahead with anyway in your 50 to 60 environment?
Arnaud will come back on this afternoon. But the idea of advanced traction given to the teams is to be flexible, it's a question of what type of drilling rig contracts you sign, in fact. So it's to be able to mobilize or to demobilize the rigs. And from this perspective, the fact that as we show you, the markets, the deepwater rigs market is favorable. You have today unused capacity around 30%, 40%, gives us, of course, some capacity to adapt this contractual framework.
So this is flexibility is required to be able to qualify this type of infills or tiebacks of short term cycles investments.
Maybe one more question at this side from Blake.
It's Blake Fernandez with Piper Jaffray Simmons. I realize we're late in the hour, so I'll just ask a quick question on the decline rate. I know you said it's down to about 3%, and part of that was underpinned by long cycle projects. But I presume some of that is also short cycle infill drilling, which is probably shorter term in nature. So can you give us a sense of what you think the medium term decline rate is and when we might start to see that?
Thanks.
Well, the 3% is
The 3% is very simple to explain. 50% of our production has no decline. So that's a zero decline. The other 50%, which are more shorter plateau, tip like in Nigeria, in Angola, in Congo, leaving aside the LNG project, of course, has a 6% decline rate, which is in line with what you can find on the in the industry between 6% 7% in general. So nothing special.
And the infill drilling, yes, they may have some higher decline rate, but this is part of the 6% I told you.
Yes. And the short cycle I mentioned to you that we are mobilizing, which will open 100,000 barrels per day. In fact, it's helping to lower the decline rate of the base of production, because by doing this work, and we will so the 3%, honestly, it's not 3% to 3% to 4%. It's 3% and for quite a lot of years, many years, in fact, you can consider it.
Okay. I think there's a question in the back on the left. Christian?
Thank you for taking my questions. This is Christian Malley from JPMorgan. First question, when you look at the ambitions to reduce your carbon footprint through lower low carbon electricity as well as gas etcetera into next year. Do you think your CapEx guidance has been appropriately recalibrated to stay within that €15,000,000,000 to €17,000,000,000 beyond 2020. I'm just trying to triangulate how you keep spending to grow your bread and butter business, assuming growth remains a priority as well as transition your sales mix towards low carbon while staying disciplined within with whom the CapEx?
Secondly, coming back to shareholder return, with your gearing now well below your target of stay under 20 percent and strong cash flow generation over the next few years, what is stopping you from committing to more aggressive shareholder return strategy that runs concurrently with lower debt? I mean, pivoting around debt reduction when you already have a healthier pipeline of projects to sanction suggests that you're prioritizing excess cash for acquisitions to keep growing as opposed to returning it?
Okay, Christian. Basically, the 15,000,000,000 dollars 17,000,000,000 CapEx if we are facing no inflation. What we are not facing any inflation today in our business, meaning deep offshore and LNG. This is valid post 2020. If there is inflation coming by 2021, 2022 because the oil price is at 100 then we will see.
As Patrick told you, we commit in volume the volume of works we want to do. Under our current pricing, it is $15,000,000,000 to $17,000,000,000 Another question of the gearing, on the gearing, we can be as low as single digit if we go in a high turn of the cycle. And I used to say that in 1 and 1, while entering in the past downturn when we had a 30% gearing that was not comfortable. So we deliberately want to lower our gearing when we are in the high range of the cycle. And single digit, why not?
Remember, the first half of twenty sixteen, there was very little capacity to move, and there was plenty of opportunities to market. We would have had a gearing of less than 10% beginning of 2016. I can tell you, we have been much more active, and we could have taken other opportunities. So I think, again, this is driven by this fundamental belief that cycles will come. Maybe we are entering a new high cycle, but will downside will come back.
And I would have loved to have entered into to have in 2016 5% or 10% gearing. We would have been more active in some areas that we have been we weren't enabled to do that by that time. We are focused on strengthening the balance sheet. And then we've done it in 2017 because we were done the work. So I think this is a lesson first.
Why not committing to higher buyback? I answered the question because let's again, we were at $42 per barrel 1 year ago. We are today at $75 or $80 And I don't know where we'll be in 1 year. I'm not so optimistic by end of net 2019 if the U. S.
Shale oil is coming back into the market. You could see this world is plenty of surprise. So first, second, but what I said and I answered clearly, we introduced this buyback in order to share with our shareholders part of the additional revenues. So we will do it. This was my answer to as a second priority to John.
To give you today a figure 6 months after we put a framework on the table, which would be for me not so I don't want to modify the figure every year. What I want to do, by the way, again, I know that some of my peers announced some buybacks. We announced one that we executed. Not all of them have executed it. So maybe it's less ambitious, maybe we are prudent, but we are delivering what we say.
And of course, again, I'm committed to do that. I consider that in a commodity business, compared to our 50 as soon as we announced to you that we manage the company at $50, $60 it's logic. But if we have $80 we have additional revenues, part of it should come back should go back to the shareholders, either for increase of dividends or buyback. To give you figures, it's premature today. But I will be happy to come back on this topic in the near future.
That means that the price remains at our high side.
Any more questions before lunch? There's one here from Lucas.
Patrick, sorry, it's staying with buyback, but it's asked in a different vein. As this industry moves to a different or as the oil and gas industry moves to a different stage in its cycle, volatility to rather than absolute? And that's really directed at dividend. So the question is when do you start thinking more per share rather than absolute?
Okay. Obviously, I can't be happy.
You're always happy.
We work much more than that. And you know that and we are working towards pleasing our shareholders so that we can attract new one and increase the share price. That's basically what we are doing.
Sorry, that's not what I meant, Patrique. What I meant was that the pull on cash flow from dividend is substantial. At what point do you think more about yourselves as a company that looks to grow per share rather than grow absolute in the context of
No, we basically gave a target of 50% payout towards the shareholders. That's basically what we have. So we have the dividend and on top of that, we can play with the share buyback to achieve it.
Thank you.
Maybe time for one last question before we break for lunch. Martin?
Yes. It's Martin Reins from Morgan Stanley. I was wondering if you can talk a bit about fiscal terms. Of course, you've done a lot about your own cost, but one of the main components of IRRs of deepwater energy projects is what the government allows you to make. Now that basically we've had this big oil price downturn and looks like we've sort of started an upturn, any movement in fiscal terms that you're seeing?
No, no. Nothing. Nothing. I mean, again, I think it's premature. I mean, I think the whole ecosystem is still prudent today.
And I think it's too early. But no, no, I don't see that. And in fact, no, there is honestly no discussion on which could be detrimental to us. I think we have been even able, in some few cases, to enhance the fiscal terms in order to launch some marginal fields like in Angola and which have been confirmed by the new President. So I think it's still you have many of these producing countries which are willing to see more activities in the which have suffered a lot, in fact, from the downturn.
And so they are still offering some possibilities to enhance the term. So I don't we didn't see any of that. No, to be clear, nothing,
Nothing.
Okay. Maybe if that's the end of the questions, maybe we could break for lunch now. If you'd like to join us for lunch, we just have to go up the stairs to the 7th floor and have a buffet lunch available there. I'm planning to be back in the room at 1:30 to start the focus sessions. So as Patrick said this morning, so the afternoon, we have a series of focus sessions on different parts of the business.
And the our plan is to run them 2 presentations at a time back to back, then followed by a Q and A for 1 hour for each of the three sessions. So the first one this afternoon is by Arnaud Brinac, who's the President of Exploration and Production on Deepwater, which is a profitable source of growth, and then followed by Laurent Vivier, who's the Senior Vice President of Gas, which is growing in the integrated LNG value chain. So I'll pass the floor over to Arnaud and Laurent.
Okay. Good afternoon. It's always a challenge to be the 1st speaker after lunch. However, I hope that my presentation and maybe even more my French accent will keep you awake. My presentation will focus on our deepwater operations and assets, which will contribute significantly to the profitable growth of Total E and P Business in the next few years.
Here, you see a picture of Cambon Norte, which is our latest FPSO in deep offshore Angola, which started at the end of July of this year with a capacity of 115,000 barrels per day, and this is actually our 10th operated FPSO in the world. So deepwater is one of the strengths of Total, and we are leveraging this expertise to add profitable and cash accretive resources to our portfolio. Our production will increase to more than 500,000 barrels of oil per day by 2020, with cash flow from operation over $30 per barrel at $60 per barrel. Deepwater is approximately 15% of the group production, but will contribute to more than 35% of the cash flow from operations in the coming years. And like for the rest of our production, we have very low OpEx, amongst the lowest in deepwater.
By 2020, we'll have 3 main zones of production: Africa, Brazil and the U. S. Government. Africa, this is where we developed our expertise, pioneering developments in Angola, and then we have developed successfully giant projects in Angola, in Nigeria and in Congo. This year, in addition to Kaombo Norte, we will start production on Aegina FPSO in Nigeria on the same block as our Agpa operated FPSO.
We have 2 axis of development: short cycle infill opportunities, usually tied back to existing infrastructures and larger sized projects like OO in Nigeria. In Africa, we will produce 400,000 barrels per day in the coming 5 years. 2nd, in Brazil, we are growing our portfolio with already producing assets like our operated LAPA FPSO, our Libra and Yara through early production facilities. It should be noted that we are the 1st IOC to operate a field in the prolific Brazilian presold polygon, and this is with LAPA. On Libra, the first FPSO renamed Meru 1 has already been sanctioned together with 2 FPSOs on the Yara Giant Block.
And we have a new wave of projects coming up for sanction. Our Brazilian production is expected to exceed 100,000 barrels per day by 2022 and continue to grow afterwards. Finally, in the U. S. GOM, we already have a solid cash generation from our assets of Taiti and Jack, and we are preparing the next wave of deepwater projects following our discoveries on Ballymore and North Platteau and our acquisition of Encore with a target to reach $100,000 per day.
In addition, you will see that we have a high potential exploration portfolio. The cash generation from deepwater start ups will be growing significantly in the next 3 years, and this is supported by 3 already started projects or in very advanced state of completion. You have Munor in Congo, Kaombo Norte in Angola and Aegina in Nigeria. Aegina FPSO is already on location and has been on court successfully and is now in commissioning preparing for start up before the end of the year. And Kaombo Sul is in the final phase of construction and should start up mid-twenty 19.
The cash flow from operation at $60 from those 3 projects will grow from $1,000,000,000 to $4,000,000,000 by 2020. And these FPSOs will represent $200,000 per day or 7% from our production, but equivalent to 20% of our cash flow from operation. And with this additional production, Total will consolidate its position of number 1 in Africa. Indeed, our deepwater expertise was developed in Africa, where we obtained several industry awards from the OTC for world first. I could mention the 1st hybrid riser tower on Jirasol, the integration of gas lift and heating systems in production risers on Dalia, AGPO was the first all electrical FPSO and on past floor, we installed deepwater sub sea gas liquid separation.
We now operate 10 FPSOs, more than 600 deepwater wells, and we deliver a very robust 95% operational efficiency, thanks to operational excellence and continuous improvement of maintenance and logistics. We have also reduced development costs. For example, the number of days required to drill and complete a deepwater well in West Africa has been reduced by 35% from 2015 to 2017, thanks to optimized standardized and standardized well design, removing some casings by lower non productive time, this is all of the preparation of the drilling campaign and the training of the crews and also by the use of digital with a remote monitoring 20 fourseven from our expert center in Po. As was mentioned this morning by Patrick, in Africa, we have many short cycle development opportunities, which actually went to the back burner when we put the brake on investment in 2015. And now with much more favorable rig market and optimized design to reduce cost, we're able to launch these small projects, which are mostly infill wells tied back to existing infrastructures and the associated commitment are short terms and flexible and incremental production is coming very quickly from within a few months to up to 2 years.
In Angola, we are progressing with assumption of approximately 100 1,000,000 barrels by the end of 2019, and these barrels provide high cash margin greater than $5 per barrel at $60 per barrel environment and are very profitable with internal rate of return greater than 15% at $50 per barrel. Thanks to High Fort, unit costs have been cut by half since 2014. In Nigeria, we have more than 100,000,000 barrels to sanction before the end of 2019 with high cash margins and strong profitability even at $50 per barrel. Like in Angola, we have simplified design and optimized the use of existing infrastructure. But we're also working on the next phase of larger projects, and here are three examples in Nigeria prolific deepwater domain, where our target is to take FID before 2020.
First, OO on OML138 with 1,000,000,000 barrels that we intend to tie back to Usan FPSO. As a result, the technical costs are very competitive for this development. Bonga Southwest on OML-one hundred and eighteen with more than 600,000,000 barrels developed from a standalone new FPSO with a capacity of 150,000 barrels per day. And finally, Pre OE, our discovery on OML-one hundred and thirty with more than 100,000,000 barrels that will be tied back to Aegina FPSO. As you can see, for most of these developments, we are trying to make maximum use of existing infrastructures to lower technical costs and to improve the profitability and lower the breakeven of these projects.
Now let's go to Brazil. Brazil is a growth area for Total, with many world class deepwater assets, which have been added to our portfolio at very competitive price as we were early movers. It started with our entry in Libra in 2013 and then the signing of a strategic alliance with Petrobras in 2016. This alliance gave us access to LAPA field as operator and to the giant Yara lock. Brazil presold deepwater domain benefit from a fantastic geology, providing low development costs.
Reserves per well are 5 to 8 times higher than in most other deepwater basins. Our resources are now adding to more than 1,000,000,000 barrels with about half of these barrels already sanctioned under production. And we have a pipeline of projects, as can be seen on the slide, with 4 FPSOs on Libra, Meru 1, 2, 3 and 4, each with a capacity of 150,000 barrels per day. And the first one has already been sanctioned. Libra Giant Field with more than 3,000,000,000 barrels of oil on the same structure with excellent reservoir properties and the same oil quality is providing a unique opportunity to design 1 FPSO and build several.
On Yarra Block, we will have 3 FPSOs, 2 of which are already under construction and the recent well on the Suru structure in the central part of the block has uncovered an oil column of 530 meter of net pay. This is the largest ever found in Brazil. So a very promising block indeed. Finally, we are working on the next phase of development on LAPA field to be sanctioned in 2019 next year. Altogether, we shall be producing more than 100,000 barrels per day by 2022 with CFFO greater than $30 per barrel.
Finally, the U. S. Gum, where we have recently grown our portfolio to get a new wave of development of deepwater developments. The current production from our equity interest in Taiti and Jackfields is already contributing $400,000,000 of CFFO per year at $60 per barrel over the period 2018 to 2022. And with our discoveries on Baltimore and North Platteau and a high potential exploration portfolio, we have about 100 leases in the U.
S. GOM with good prospect in the Northlet and the Wilcox plays, not to mention our entry in Mexico, where we have 7 licenses with which on which we operate there, we feel confident to reach a material production of more than 100,000 barrels per day. I now would like to zoom on 2 discoveries to illustrate our strategy in the U. S. Gum.
First, the most recent and promising discovery of Baltimore in the Eastern Ghum on the North Smith play with resource estimated between 500,000,000 barrels and up to 1,000,000,000 barrel and 2 appraisal wells will be drilled later this year to firm up this potential of this major discovery, potentially one of the largest in the U. S. Gulf of nearly 20 years. Furthermore, this discovery can be developed very quickly with an early production scheme through available capacity in the nearby blind phase infrastructure. This will provide both an opportunity to reduce the time to market, but also to derisk and optimize the full field development of Balimo.
We have also captured, as is illustrated on the slide, a number of blocks of exploration at the edge with many prospects that could be tied back to Balmor development. 2nd, North Platteau, and you see the map on the right side of the slide, operator discovery in the Central GOM, which is on the Wilcox play. And we have fully appraised this discovery by 7 penetration, which has confirmed its potential for standalone development with a 75,000 barrel per day submissive facility tied back to nearby export systems. We are in the progress now of optimizing the well and topside design with the objective to take FID in 2020. And also, like for Balmor, we have nearby several ready to drill prospect in the vicinity of North Platte.
To finish, I would like to look at our deepwater exploration potential in emerging areas. First, Guyana, where we've been able to capture several high potential blocks on trend with recent discoveries, including our latest entry in the Orinduik block just after Exxon's recent hammerhead discovery. 2nd, Mauritania and Senegal, where we have had we have now a significant acreage in the deep offshore exploration domain, and we've already shot 3 d seismic over most of these blocks, and we have several ready to drill prospects, which we will start to drill later this year and in the beginning of next year. And finally, South Africa and Namibia, we will drill at the end of the year the Brule Pada, very promising oil prospects in Block 11B, 12B with a submissable rig specially designed to operate in the demanding weather condition offshore South Africa. And we have also captured high potential acreage in the emerging Orange Basin in Namibia and where we will drill the Venus prospect in the second half of twenty nineteen.
Of course, I take the opportunity to mention what was mentioned in Patrick's presentation this morning about our discovery on Myanmar, which is also deepwater and which will be a nice, in fact, a unit filler of the Yandana facility. So altogether, we have a strong deepwater exploration portfolio with numerous drillable targets in emerging areas, targeting significant resources to be drilled in the next 2 to 3 years. As a conclusion, a few takeaways. Thanks to our deepwater expertise built over several years, we are able to optimize developments to reduce breakeven costs. As a result, deepwater is today for us a growing and very profitable part of the portfolio.
We have a strong position in Africa with several major projects significantly contributing to cash flow generation in the next 3 years, and we are at the same time leveraging existing infrastructure to develop short cycle projects. As an early mover, we have been able to capture at low cost a very sizable position in Brazil with a pipeline of projects on world class deepwater assets. All these developments have low technical costs. Finally, we are building a material position in the Gulf of Mexico, and we are capturing high potential acreage in the deepwater exploration domain to capitalize on our deepwater expertise with the objective to find large resources with low breakeven. Thank you.
Thank you, Arnaud. Good afternoon to you all. I would like to present to you today not only how we are growing on this integrated LNG chain, but more of how we are capturing value and trying to monetize the flexibility and the changes which have been occurring on this LNG market. As Patrick noted earlier, the LNG markets are continually defining expectations. A few of us would have predicted that China would become the 2nd largest importer last year.
The combination of competitive LNG pricing and the benefit of cost reduction across the chain from liquefaction to shipping and to regasification, coupled with favorable government policies to promote clean gas over alternatives, have led to a voracious LNG appetite, with the number of LNG importing countries now exceeding 40. China LNG consumption could reach close to 100,000,000 tonnes per annum in 2025, but it's no means limited to China. For instance, demand from emerging Southeast Asian importers, and the list is long, Indonesia, Malaysia, Philippines, Myanmar, Singapore, Thailand, Vietnam, could increase fourfold from now to 2025, reaching 50,000,000 tonne per annum. So the so called LNG glut, which some predicted, has not materialized. Asian spot forward prices remain very high today at an equivalent of around 15.6% of Brent for the coming winter and 12.5% Brent for the coming summer in 2019.
As we can see on the right hand side of the graph, the world will face LNG shortage by the mid-20s with our new liquefaction projects being launched. As you will see later in this presentation, Total is preparing to take FIDs on a series of very competitive projects on all the major production basins. But gas markets are not only evolving rapidly in scope, they're also changing maturity and moving towards being a commodity. The market is generally considered to be liquid when the churn rate, the ratio of traded commodity to throughput, exceeds 10. As we can see on the left hand side of the graph, the Atlantic basin has already reached a very high level of liquidity with lengthy tenors.
The churn rate for the U. S. Benchmark Henry Hub stands at 50, while the combined rate for the 2 key European markers, the national balancing points in the UK and the Dutch TTF, has reached 37. In Asia, there is still a long way to go before that can be deemed to be a liquid market with paper trades well below physical volumes, but it is nevertheless growing exponentially. It is expected that €30,000,000 will be traded on the JKM, the benchmark price for spot cargoes delivered into Japan and Korea, a tenfold increase over 2 years ago.
And TOTAL has played a major role in the growth of the JKM trading and adding liquidity, accounting for around 16% of the volumes traded this year. And we expect this liquidity to continue developing rapidly. Let us turn now to our portfolio. We have succeeded in building an integrated portfolio strategically positioned in all major basins. Our recent acquisition of ENGIE's LNG assets complemented our existing portfolio by adding participating interest in liquefaction in the U.
S. And in Egypt, long term LNG sales and purchase agreements and LNG tanker fleet as well as access to reclassification capacities in Europe, which supports our significant position in marketing. We are a major LNG producer with 20,000,000 tonnes per year by 2020 on all the major production hubs. We have a fleet of LNG carriers, which will grow to 2018 by 2020, providing us with significant shipping flexibility. We have strong relationships and a portfolio of long term clients in Asia and parts of Latin America.
We hold the largest reclassification capacity in Europe, which as a result of integration allows us to supply our growing portfolio of around 6,000,000 customers in Europe and the gas fired power plants that we just recently acquired outside of Europe. We are also pursuing integration by progressing projects in Asia, the Middle East, Africa, Latin America to develop floating reclassification terminals and gas fired power projects, thereby opening up new outlets. In short, we have all the ingredients and the global reach necessary to maximize value across the integrated chain. But as you can see also on the map, we have a pipeline of liquefaction projects very well positioned on the merit curve and strategically placed in each of the key production Russia, Pacific Basin, Middle Eastern Africa and the U. S.
A. Russia is steadily growing as a global LNG supplier with links to China, and Total's partnership with Novatek is unique among the majors. Yamal LNG has been a resounding success in the industry. It took 4 years from FID to deliver the 1st LNG cargo last December, ahead of schedule. The 2nd train delivered its 1st cargo 8 months later, once again ahead of schedule.
And we are on track to have the 3rd train delivered by its 1st cargo by early 2019 or maybe it's been, as Patrick hinted this morning, by the end of the year. Overall, this means that 16,500,000 tonne per year of capacity was delivered in just over 5 years within budget despite the remote Arctic location. During the course of development, 142 modules were delivered over 2 years, making it the world's biggest modular construction. And of course, the marketing of the Yamal volumes was also a great success with 85% of sales committed under long term contracts indexed on oil. Novatek is now developing a 4th range just below 1,000,000 tonne with a cost target below $500 per tonne, taking advantage of existing facilities and the Yamal reserves.
The Yamal success owes much to the strength of the partnership with Novatek. Our track record on Yamal significantly derisks the next giant projects in the vicinity Arctic 2, which fits perfectly with our strategy of developing LNG on giant low cost onshore resources. As part of the deal, we acquired 10% of Arctic LNG 2, which will produce 18.19.8, sorry, 1,000,000 tonnes per year of LNG with 3 trains, and that represents with direct and indirect interest a share of 21.5%. By capitalizing on our Yamal development experience, the target is to reduce construction cost by 30% compared to Yamal by having the LNG trains installed on shallow water gravity based platforms avoiding the necessity to construct on permafrost. There are also synergies in shipping the Yamal energy carriers and facilitating the access and using the Northern Sea Route all year long.
Moving to the Pacific Basin. We are pleased to have achieved the milestone of 1st gas on Ichthys in July, and we expect the lifting of the 1st condensate cargo by the end of this month. The first LNG cargo is expected in November. ICTI's project unlocks 3,000,000,000 BOEs of gas with high liquid content and involve the construction of 2 floating units, a long pipeline to shore and a liquefaction plant. The project is underpinned by solid long term LNG contracts all indexed to oil.
And together, Yamal and Ichthys will add around 250,000 BOE per day for Total. Moving to Papua LNG. Elsewhere in the Pacific Basin, we are progressing with a highly competitive project that benefits from onshore gas with liquid content, synergies with existing liquefaction facilities and proximity to Asian markets. The LNG plant will be supplied by gas associated with the El Cantilop field discovered by Total. The conceptual choice of the downstream is under discussion with our partners in order to maximize the integration with the existing plant, therefore, decreasing cost.
Nigeria Train 7 is another competitive project due to the sizable cost, low cost gas resources in Nigeria and the obvious synergies with the existing facilities. The project consists of depotslenecking the existing plant and the addition of a new train of 7,500,000 tonne per annum. The feed is ongoing and FID could take place in 2019. And then moving to Qatar. Given our long history and close partnership with this country, we're, of course, interested by the opportunities arising from Qatar's plan to grow its production to 100,000,000 tonnes per year from the existing level of 75,000,000 to 80,000,000 tonnes.
We have been in Qatar for a long time. We are a strong partner. And the existing facilities are world class, and synergies could be found to optimize the construction of 3 additional 8,000,000 tonne per annum strains. The U. S.
Is obviously well positioned to supply low cost LNG, and we have been actively expanding our exposure there. The Cameron project was a big part of the ENGIE LNG portfolio that we acquired, and we are quite excited by the opportunity to add 2 more low cost trains. We accessed a tolling agreement, enabling full integration in the gas to LNG value chain. The development of Trains 45 have already been authorized by the U. S.
Authorities, so both the FERC and the DOE, and developing these strengths are a priority for us. And we have strong partnership with Sempra and, of course, the Japanese partners. Therion, separately, in our acquisition last year of 23% of the shares in Therion allowed us to increase our exposure in the U. S. Therion is looking to developing project based on integrated model, sourcing low cost shared gas and delivering low cost LNG through modular trains concept.
To conclude, we have a very strong base to build upon. As of today, in fact, we are shareholder in 12 LNG liquefaction plants that currently generate 25% of global LNG output. Based on our project pipeline, by 2025, we expect to have stakes in 15 plants producing around onethree of global LNG volumes. Together with our liquefaction capacity that I have detailed, we have also purchased quantities from third parties, allowing our portfolio to reach the size of 40,000,000 tonnes per annum. At the same time, we consistently ensure that we maintain a solid physical base in our portfolio with 3rd party sales and regas capacity supported by our marketing base in Europe.
This means we have the comfort of knowing that we always have a physical outlet for our cargoes, while in practice, continuously optimizing the flows to capture the highest margins wherever they lie at any one time. This physical balance provides us with a 3rd base case, a building block from which we do maximize value. As you can see from the chart on the right, our exposure to price reviews is also well managed, with less than 10% of our sales contracts open to reviews before 2022, after which the market is expected to tighten. The limited exposure to price reviews was one of the strengths of the ENGIE portfolio. Starting from this building block, which offers us a solid base case, we need now to optimize and generate additional value.
And in order to do this, you need 3 elements. The first is portfolio flexibility. We have the contractual ability to place 65% of our volumes in which of our basin offers the highest netback at any one time, either because the contracts have flexible destinations or because we are able to reload them from Europe. Secondly, shipping. We will have a fleet of 18 vessels, which is an important competitive differentiator.
On this graph, you will see the decrease of cost for each cargo which has been started under long term contract by Total for typical trip from the U. S. Government to Asia. The steady development of this fleet allows us now to have some vessels with a travel cost of 60% lower than vessels which were chartered in 2006. Finally, by having access to reclassification, we are able to constantly arbitrage between supplying LNG to the European market, where we have a large marketing base, or diverting LNG volumes to market elsewhere that fetch a higher premium and purchasing pipeline gas as a replacement.
As you will see on the chart on the far right, we expect to reload 18 cargoes from Europe this year to take advantage of attractive Asian prices. And I would like to share now some practical examples of how we bring value to this portfolio. First on the left, let's look at the practical example of physical optimization. All this will look a bit like plain vanilla to some of you who are a bit familiar with oil trading or oil products trading, but this kind of optimization was absolutely unthinkable 5 or 10 years ago in the LNG market with all contractual constraints that were existing. The starting point is one of our U.
S. FOB cargoes coming from Sabine Pass. At first, the base case was a delivery to Europe. But then in the second stage, we seized an arbitrage opportunity with the aim of diverting the cargo for a spot sell into Japan, thereby adding margin with higher Asian prices. But we didn't stop there.
In the 3rd stage, we went for another arbitrage by answering a late call from spot selling to Mexico, thus rediverting the cargo that had just crossed the Panama Canal to capture a further premium above Vision prices. And meanwhile, we are able to secure a cargo from Malaysia on the spot market. This set of spot transaction generated around $2.5 per METU extra margin for 1 single cargo and also freed up some shipping capacity. Obviously, we will not be able to do this for each and every cargo, but this sort of optimization is nevertheless recurrent. It is the case because we are in a unique position given our portfolio size, flexibility, shipping fleet with reduced cost and, of course, global reach.
I must say that not everybody wouldn't be in a position to do this kind of things. You need to have the right building blocks, free gas, shipping, long term contracts, trading and hedging capabilities. On the right hand side, we see an example of paper optimization before the cargo loading. The chart shows the period from September to November last year, which was marked by high market volatility. As can be seen on the graph, initially, Europe offered the best netback for U.
S. Cargo, but the tide then shifted to Asia and before going back to Europe and then finally ending up in Asia. By arbitrating between Europe, the NBP and Asia before the cargo delivery and by hedging the exposure, we were able to capture an additional margin. Those optimizations, both physical and locking every trash between basins, are monitored for each single cargo at any time in our trading offices in Houston, Europe and in Singapore. So what is the result of all our efforts to not just grow our LNG business but also to integrate across the value chain?
We have become the world's 2nd largest LNG player among IOCs. Within the next 2 years, total, we'll be managing around 10% of the global LNG market. We are thus confident that integrated gas from wellhead to the customer will generate $3,000,000,000 of cash flow from operations within 2 years, And I have absolutely no doubt that we'll keep growing after that. Thank you very much for your attention. We'll start with the LNG.
I think you mentioned the duration of contracts. I think that's not the only change, which is, in fact, happening on LNG contracts. You have shorter durations, usually more flexibility in order to accommodate some demand from the buyer and more seasonality, for example. And I think that's one of the great strengths of being a portfolio player, having some volumes coming from different areas and having a larger portfolio that we are able to accommodate those kind of demands. The tenure of long term contracts, which used to be 20 years on a traditional basis, now I would say traditional demands are between 7 10 years.
And we are still able to secure for long term contracts, I. E. Usually linked to E and P projects, some 20 year contracts when the typically on the projects I was talking about with the traditional price review. But as you've seen, we have limited exposure on this.
Yes. On the subject of the deepwater cost, I think my presentation at one objective was to show that in our portfolio, we are very much looking on how to optimize the different part of the cost for deepwater development. I explained how we optimize well design, which was clearly in Drillex one of the important cost for deepwater developments. It's clear that beside the fact that we've been able I mean, if I just take the 3 countries that I mentioned, West Africa, this is more than 100 wells. And so we have been really able to optimize the design of each single well to reduce the number of casings.
We've worked a lot on the way in which we prepare campaign, which by the way something we inherited from our drilling factory in Indonesia for example. And we see that the preparation in the drilling campaign is something that makes a huge difference, which would work independently from the cost of steel or material. So that's for the drilling. It's clear also that we've seen certain basins and Brazil is really best example, fewer wells per development. If we look at the current early production that we have on Libra field, we have a piano, the Libra, the early production scheme FPSO, we are producing 50,000 barrels with just one well.
By comparison, in other Depoita basins, we need 4 to 5 wells to produce this amount. So this is clearly an area. When it comes to FPSOs, we've also optimized in the last 2, 3 years the design by looking at the complexity that was added by having several levels of process modules 1 above another. I used to say that when you have a piece of equipment onshore, you can look at the cost of the equipment with its environment to be multiplied by 2. If you go to conventional offshore because of the fact that you're concentrating risk on one platform, you multiply by 3 just as a rough figure.
On NFPSO, because you are on effectively a tank of oil, you have a multiplication by 10. So the superposition of layers of equipment on FPSO is actually a very significant cost driver to the design of FPSO. So we've done a lot of work on this in order to avoid different layers of equipment one above another. And one way it's as part of the alliance we have with Petrobras is by making the units more compact, so as to avoid the superposition of layers. We've done also a lot of work on FPSO design, so that the constructability is much easier.
And it's clear that, as I mentioned on Libra, when you're able to design 1 FPSO and to build several, you also have economies of scale. So what I'm saying is that overall, we have tried to work and this has been really an effort in the last 2, 3 years of all the different aspects of well subsea architecture and FPSO design so as to minimize the cost. Of course, there may be some inflation on some of the material, but the fundamental design change that we've made will mean that the cost reduction we are making these deep offshore developments much more cost effective. And we effectively see that we have low technical costs.
Okay. There's a couple of questions over this side. John, maybe Lucas.
Thanks. Two questions, very quite quick. The first just to follow-up on that answer on the offshore. Is the point that you're making that effectively through the projects that you're choosing and the way that you're choosing to go about them, you avoid this issue that I think people are finding somewhat difficult, a sort of paradox where the offshore oilfield service industry is saying activity rates are starting to pick up. We think that costs will start to rise and the operators are saying we can continue to operate actually at a higher rate of activity, but within the envelope of our current CapEx.
Is that the answer to that question that you can raise activity rates, but you're comfortable that through your efforts that the CapEx isn't going to rise? The second question on LNG. What level of portfolio activity in such a large portfolio enables you to have visibility on the longer term, I guess, is to launch sort of backwards to launch FIDs of projects without selling all of the LNG as you might have done 10, 20 years ago. What kind of level of pre sold LNG would you feel comfortable with as a proportion of your equity total to go ahead with a new project? Thanks.
So I'll start answering the first question. I mean, this was really shown this morning in the presentation where you see that today you have about half of the fleet utilization in terms of deepwatering, half of the rig are still stacked waiting for work. So it will take considerable amount of projects to be launched to actually get to a level where rigs will be fully utilized. I would like to highlight as well and this is part of the previous answer that looking at West Africa, we have reduced the time per well and this is drilling and completion by 35%. And so we believe that we can be more effective.
We need less rig if you prefer for the same development. So altogether, this is clearly going to help us to manage for quite some time the increase of capacity. With regard to the yards, again, this morning, you show about the fact that the yards, large EPC contractors are still very short of work. So there is still a lot of spare capacity around. I should mention that one of the present discovery of Yamal LNG project has been the fact that we obtained extremely high quality and I would say reliability from the Chinese yard.
So I would say today the competition is much higher from all of these contractors, whereas for FPSOs, we considered maybe 3, 4 years ago that there was no possibility to build any FPSO if it was not done in Korea. Now this is not the case. So I would say the market is much more open. So we believe that we can have some increase of activity without seeing any impact on inflation for now.
And for LNG products, so far, despite this increase in liquidity that we've seen, there hasn't been today an LNG project which has taken FID without 100% of the volume being committed to long term contracts. So it can be in 2 nature, either selling to third parties or asking some of the shareholders to take their responsibility as the offtaker and offering the security of the balance sheet for the LNG project itself at its own perimeter. So that is still the case today. There is no full liquidity in the Asian market allowing an LNG project to relaunch just per se and counting on the liquidity of the market. We need the physical balance and the safety of a buyer.
That's what we are doing as Total, sometimes playing our role, not only being in equity, but offering as well the strength of our portfolio trading so that we are a buyer in order to facilitate or accelerate an FID. But we are not there in terms of liquidity of market in order to be able to not need long term LNG contracts from LNG projects.
Okay. I think Lucas had a question in the center.
Thanks very much. Again, sorry, 2 of them, Mike, but both 3. Exploration, it feels as though you're increasing the profile of the spend again I. E. That you're starting to push more back to the frontier.
I just wonder whether you could confirm that view and give us an indication as to how the split between near field and frontier is starting to shift again at Total? And secondly, on LNG, Laurent, on the Angie portfolio, my understanding was that a number of the supply contracts to Angie in Algeria were nearing the end of their life. Can you make any comments as to the longevity of Algerian supply or what you may be doing at the present time or have indeed done to extend supply, if that observation is correct to start with? Thank you.
So I'll start to answer on the exploration portfolio. Actually, we've done exactly the opposite. We've actually rebalanced the portfolio so that we have fewer overall, I would say, high risk, high reward frontier prospects and rebalancing towards, on the one hand, emerging basins, where you have a proven hydrocarbon system that works and when you have evidence of structural closure or stratigraphic trappings that you can demonstrate or validate through a direct hydrocarbon indicator. So I would say 50% of our portfolio. We have considered that we need about 35% and we are about at this level if we look at the 3 year portfolio of mature exploration, which is near field exploration like Glendronach, where you are drilling on known basins where you know there is an iron carbon, you have discoveries and you are already drilling on objects that you've been able to identify in seismic.
And I would like to add that from this perspective, all of the progress that we are making in use of digital algorithm for doing fast tracking of seismic interpretation is unlocking a lot of value. So there's a mature actually exploration we believe is going to be more successful with these skills, leaving about 15% for what I would consider to be the high risk frontier exploration. So maybe I gave you the wrong impression with my side, but clearly, we are doing exactly the opposite And we are coming back from a strategy where maybe a few years ago, we are going maybe too much to high risk targets.
And about the ENG portfolio, in particular, the Algeria contract, yes, you're right in saying that this contract has got an ending date, which is early 20s. It is, of course, strategic importance to continue the discussion with Algeria, not only for political dimension, but as well because it underpins the use of some forced capacity, regas capacity in the South of France. So the discussions have started. I cannot say much. But of course, discussions have started for renewal or extension of this contract.
Laurent, can you just remind us what the volume was? What the volume is comes into Angie's portfolio from Algeria that is subject to extension? [SPEAKER DANIEL
MARTINEZ VALLE:] We will see what it will be. Thank you.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] Okay. I think Thomas has a question over on the left.
Thank you. Two quick questions on Brazil, please. You declared commerciality on Mero not too long ago, but you still have an exploration period on the southern and central panel of the lever field. So I wondered if you can give us an update on any activity in those panels, if not, the planned activity. The second one on Iara, if I remember correctly, Subaru has had appraisal wells drilled in the past, and it's proven very heterogeneous.
And some parts of the reservoir, especially central part, has actually not flowed very well in the past. So I can see here that you've drilled a well, and you talk about great net pay. But I wonder if you can give a bit more color on the reservoir characteristics and whether it's finally flowing because there's a big question mark, has been in the past. And maybe final question on LNG, but it might still be for Arnaud. Yamal, excellent project, Icklis, shocking, more or less in stone.
So I'll start with Liba question on Libra. So indeed, you're right, the development, I would say, 3000000000 to 4000000000 barrels of oil is a Northwest panel, where we see now 4 FPSOs. And it's really one of the most remarkable field that we've seen to date in terms of depopsha in the pre salt because of the quality of the reservoir and the productivity per well. I mentioned up to $50,000 per day per well, which is quite incredible and the possibility to build to design 1 FPSO and build several, which is a dream for a deepwater development. We have indeed done some exploration, continued exploration on the central panel and the southeast panel.
And we have identified some oil column, but also some gas. And so today, we are continuing with the appraisal of this field. Of course, we are concentrating on the development of the best part of the field, but we are still doing the appraisal of the discovered resources on the rest of Ibar block. And of course, we will try to see if there is an economical development associated with these discoveries. When it comes to Yara, you have essentially 3 fields as well indicated on one of the map presented this morning.
So we have the Berbikau structure, which is being developed together with the southwest part of Sururu, where we have sufficient resources to have 1 FPSO. We have 2 FPSOs that will be located on Atapu, which is the field that is the most on the eastern part of the block. And then we have this huge Suru structure, where one of the concern was actually the distribution of the reservoir. And it was a very pleasant surprise to see such a thick reservoir, completely unexpected. And since one of the main concern on Sohu Central was the density of resource, it's very good news.
Now, this is the beginning. We need to do the appraisal. We need to look at, of course, deliverability per well, but it is currently today an upside from what we had seen initially.
I don't know if I'm at
the best place, but maybe Arnaud will take over over for comparing Yamal and Ictis and the lesson learned.
It's 2 very different projects, but it's clear that the we are in the process of looking at all of the ingredients that made Yamal LNG such a successful project. I think that we had a very strong supervision throughout the project. We had very good contractors. We were, as I mentioned earlier on, forced to go to China for the yards because Korean yards at that time were absolutely full. And we find out that the performance overall was really much better than average.
It was much better than expected by margin. But on top of that, much better than what we had seen on much on a lot of other yards. Particularly, what was remarkable is the fact that out of the 148 modules that were delivered in Yamal, there were very few punch lists. So the amount of work to be done, to be redone during the final commercial phase on the modules were very little. We knew for a fact that one of the key success to the Yamal project was going to be the scheduling of all the modules arriving in due time during the weather window on location.
And again, all of these logistics worked very well. I think we must say that there was very good cooperation between all of the parties involved. It is clearly a project which had a much more complex in a way architecture because you had 2 very large offshore platforms in offshore. In fact, an FPSO plus CPF, a very large floating structure for the processing of the gas, initial processing of the gas, a 900 kilometer pipeline and then an LNG facility built onshore in Darwin. What was surprising is to see that actually the productivity of the workers on Darwin in what you could consider to be a much more favorable work environment was about half of the one we had on Yamal LNG in 600 kilometer north of the Arctic Circle.
So we had to see that the productivity of the workforce on Darwin was much lower than we had anticipated. We suffered clearly on Ichthys of the overcapacity or not overcapacity, the overload of the coring yards because the 2 main structures, the CPF and the FPS, were suffered from quality issues, which was largely due to the number of level of subcontracting of the Korean yards. So there was a lot of rework done offshore in an Australian offshore environment. So a lot of delays and other costs resulting from, I would say, average, not to say, poor execution of the work on the yards.
Okay. Maybe we could try and get 1 or 2 more questions before we break. Unless one question per person, please, so we get through as many as we can. So I think Chris? [SPEAKER
UNIDENTIFIED COMPANY REPRESENTATIVE:] The conclusion is that it's better to work in Russia than in Australia. I can tell you by far. I don't think TOTAL will expose itself to other projects in Australia.
Thank you. Can I ask on when your partner, Novatek, sold or farmed down its stakes in Arctic 2, it published at the time an NPV of $25,000,000,000 Is that a number you recognize? Is that in any way related to an entrance fee for the farm in from Total? I hope that's a quick answer. And therefore, I'm going to squeeze in one more tiny question on U.
S. Projects. How do they rank compared to others considering that there isn't necessarily an integration upstream? Thanks.
Okay. So on the first question, I will not answer the first question. The second one, which is related to you want maybe It's
about LNG again. Yes. Okay. I think definitely, when you consider the profitability of other projects on the full chain and from the wellhead on the platform down to the delivered price, we are trying to position ourselves on the right side of the merit curve. All the projects I have mentioned are extremely competitive.
We are targeting a delivered price for each of those projects below $5 per MBTU delivered into Asia, which we think allows them to be despite cycles to be competitive in
the long
run. U. S. Projects add something to this. Firstly, they are dependent on the Henry Hub price.
Even if we are now fully integrated, thanks to an equity participation in Cameron, We keep this optionality to leave the gas in Europe and lift and stop lifting LNG. So that is an option, which I think has got great value in terms of marketing and in terms of the contractual setup. We benefit from 3 destination. And I've tried to highlight in my presentation the value that it can bring to be fully in control of the flows, usually pure E and P fully integrated projects, do not offer this kind of flexibility because the priority is to uptake the product.
Maybe for the final question for the session. We have a number of people following the presentation online and there's a question being submitted by Biraj Bockitarya from RBC. So do you expect project financing for LNG projects to get more difficult as average LNG contract durations get shorter over time and as the market becomes more liquid?
Well, I can take it. Yes, Yes, it's clear that financing may be more difficult as a result of this.
I think once again, it's our role as portfolio player to be able to offer this kind of security. Just as nice recurrent scheme
that we
have in
our mind, in this So it is now a recurrent scheme that we have in our mind, which is to participate by the lifting of some quantity in a fast track FID and to secure the financing of the project.
Thanks very much, Arnaud and Laurent. I propose we leave it there and we have a short break, and then we'll come back for the 2nd session at 3 o'clock.
Thank you.
So we have the same format again as the previous session. So we'll start with Bernard Pinnatell, who's President of Refining and Chemicals, talk about expanding petrochemicals, then followed by Moe Mahenger, who will talk about marketing and services of the future. Then again, we have a joint Q and A.
Okay. Thank you, Mike. So good afternoon. You've seen this morning that petrochemicals is one of the core strengths of Total. This part of the portfolio maybe in downstream is sometime less known than the rest, but it's a strong contributor to the cash flow.
Last year in 2017, Petrochemical delivered $1,800,000,000 of cash flow from operations and a return on capital employed of 30%. So you understand why it makes sense to invest or to expand in petrochemicals. And what I intend to do in the next 20 minutes is to tell you how we are going to execute this growth strategy. So let's first look at the market from a demand standpoint. You have on this chart the polymer PE and PP, which represent 50% of the worldwide demand.
So you see that these 2 polymers, which also are the main polymers of Total, enjoy a very nice growth, over 3% a year. It's been the case in the last years. It's going to be the case in the years to come. And this good growth is explained by very simple good fundamentals. The first one, of course, are the demographics, new consumers, the emergence of the middle class, as you know, megatrends as well.
We all know that energy efficiency relies very much on substituting heavy materials by lightweight materials, notably in the transportation industry. So all of this drives the growth. If you do the math and you translate this 3% more than 3% a year of growth into tonnes, It represents it's equivalent to 5,000,000 tonnes a year. So the market needs is 5,000,000 tonnes a year of additional demand that we need to satisfy. And 5,000,000 tons a year basically represent 5 world class crackers.
A world class cracker starts at 1,000,000 tonne a year. So every year, the market needs 5 more crackers to cope with the demand. If you do the math again and you look at how many new crackers are coming, sanctioned or in projects in the world, it's close to 4. So 4 in the supply, 5 on the demand side, you see that pretty well balanced, which gives an overall good visibility on this market from a supply and demand standpoint. The last comment I would like to make is recycling, because I'm sure we have all in mind that recycling is an increasing trend, which could take share of a polymer production, of course.
I will come back on this one at the end of the presentation to show you what we do to address this trend. But beside recycling, you see on the chart that the virgin part of the demand, the virgin polymer part is still growing. It's still growing in 2025. It will still grow beyond. And that's why we feel that recycling is not a threat.
It's more an opportunity complementary to serve the market with virgin polymer. But I will come back on that at the end of the presentation. So overall, a good business to be in, in terms of growth. So what about the profitability? What are the main drivers which explain how to make money, let's say, in petrochemicals.
If you had only something to remember from this presentation that it is all about feedstocks. Feedstocks represent above 60% of the cash cost in petrochemicals. So if you enjoy a cost competitive base in terms of feedstock, you have a winning combination. You see on the left hand side that most of the petchem feedstocks are oil based, more than 60%, as you see. Therefore, the oil based crackers are the price setter for polymers.
So polymer price are all linked to oil price. On the other hand, when you look at the right hand side of the slide, you see that ethane, which is one of the main feedstock, is discounted to naphtha. You probably know, of course, why, because it's a byproduct from the Shell, from gas. It's very abundant. And of course, that commands this discount.
That's true also for LPGs, which come either from oil or from gas, where we have also a significant discount compared to naphtha. And last but not least, we should keep in mind also that ethane can be also used as fuel. And a cheap fuel gives an additional upside in terms of energy costs. And now when you bring the two sides of the slide together, you see that polymer price driven by oil price, but feedstock decoupled from oil price, brings a kind of winning combination, a little bit counterintuitive. The higher the oil price, the brand, the better off you are when you produce gas based polymers.
So how do we intend
to grab
this opportunity. You saw this slide this morning, so I'm not going to detail it too much. You see that we are currently conducting 3 large projects in the world, 1 in the U. S, 1 in Middle East, in Saudi Arabia and one in Korea. So I will give you more detail in a few minutes.
But all these projects basically rely on the 2 main levers of our strategy in petrochemicals. The first one, of course, is to leverage cheap feedstocks, and each of them does. And the second thing, of course, second lever is to leverage the synergies from our integrated platforms. And you see that these 3 projects all rely on integrated platforms. Once completed, as you see, we will have a very well balanced profile with more than 60% of our production derived from these cheap feedstocks, IFN and LPGs, and more than 55% of the production coming out of the U.
S. Out of Europe, sorry. So now let's have a look at the 3 projects. The U. S.
First. In the U. S, we have a very large and highly profitable base. You see on this chart that our petrochemical business in the U. S.
Delivers each year $1,000,000,000 of cash flow from operations with $2,500,000,000 of capital employed. It's very profitable. And why is that? It's because we enjoy high quality asset base. You see on the slide first that we have in Port Arthur, Texas, a very large refinery, 200,000 barrels a day, deeply converting, which has been modernized in 2010.
This refinery is fully integrated with a cracker in Partha, which we share with BASF. It's a 1,000,000 tonne a year cracker, which can crack not only naphtha, but now also IFN and LPGs. We have the U. S. Largest polypropylene site with 1,200,000 tonnes of capacity in La Porte, Texas.
We also have the largest U. S. Styrene Polystyrene Facility in Carville, Louisiana with more than 1,000,000 tonne of production capacity. And in Beaufort, Texas, we are in the process of doubling the site's capacity to build a world class site for polyethylene, and I will comment on this one on the next slide. Last but not least, I would like also to mention Hutchinson, which is a specialty chemical player, market leader in specialty materials, elastomers for automotive and aerospace.
So you understand why we are doing so well in the U. S. We are well positioned all along the value chain, starting from refinery up to crackers, polymers and specialty chemicals. So let's have a look at our very first large project. The joint venture we have just set up early this year with Borealis and Nova.
With, if I had to summarize in a nutshell, the ambition to build a world class leader going from low cost ethane to high end polyethylene. So this joint venture first is about investing in a heath and cracker, a 1,000,000 tonne heath and cracker in power fare. It's a $1,700,000,000 CapEx. It's extremely low. It's one of the cheapest one on the U.
S. Gulf Coast. If you do the math and you divide this $1,700,000,000 CapEx by the 1,000,000 tonne of ethylene which will be produced, it gives you a cost of $700 per $1700 per tonne of ethylene, which is the 2nd lowest cost out of the 10 to 12 crackers, which are now being built in the U. S. Gulf Coast.
And why is that? Just because we leverage the synergies we have with the refinery in Paratha. We also have in this joint venture a project, which has just been sanctioned. You saw this morning the press release. We have taken the investment decision, to invest in a new PE line, Borstar line in Beaufort, which will double the site capacity to more than 1,000,000 tonnes of polyethylene.
So you see it's fully integrated, 1,000,000 tonnes of cracker, 1,000,000 tonnes of polymers. And I'd like to say that this joint venture, to some extent, is the perfect combination when you see what each of the partner brings to the joint venture. Total clearly brings all the integration, upstream, the platforms, the synergies. Boral is going to bring the Borstar, which is the top technology in the field of polyethylene, and that's going to be a first in the U. S.
And Nova brings, of course, the polymer presence, the market presence in the U. S. And by combining these 3, let's say, partners, we have a kind of a perfect match, which will build one of the top players in the U. S. For Qualia Tellen.
The project is well on track, and it's due to start up in 2021. Let's move now to our 2nd large project, which is in Korea. As you know, in Korea, we have a joint venture with Anwa, which has been a success story now for many years. The joint venture in Daizen is one of our world class integrated platform. It's a top asset.
I would say it runs like a Swiss clock even though it's run by Korean. It's like it's perfect. You see that this platform is a pacesetter in energy efficiency. It's a top quartile in terms of availability. So it's exactly the kind of asset we like.
And you see also that in terms of financials, it translates into very significant cash generation, more than close to a little bit above, let's say, above $1,000,000,000 of cash flow from operations. So it's a very nice success story. And it's not a surprise that we want to further invest in Daizen. And that's why we have sanctioned low cost debottlenecking project to increase our cracking capacity by 30%. But what is interesting there is that we increased our capacity to crack propane, so cheap propane coming from the U.
S. And we have also sanctioned the investment to increase our PE capacity by more than 50%, so which to bring it to 1,100,000,000 tonne a year. And what you see very clearly that all these projects, which are to some extent brownfield projects, let's put it this way, are highly profitable with very attractive internal rate of return for total investment, which is going to be in the region of slightly below $800,000,000 of CapEx. 3rd project, which is the newest one, that's SATORP. As you know, SATORP is our joint venture with Saudi Aramco in Jubail.
It's been a good partnership, a strong partnership. We have there a refinery, which we started up in 2014. It's a 440,000 barrels a day refinery, which has been debottlenecked early this year. You see that it's, again, a very good success story, highly profitable. We generate around $1,000,000,000 of cash flow from operations as well.
So it's very cash generating. It's a top asset, top quartile in terms of availability, fully converting, so there is no fuel oil produced in this refinery. And this refinery also generates more than 50% of distillates, which position it, of course, very well for the 2020 IMO regulation to come. So clearly, SATORP is going to be a winner in this new environment post 2020. So you will not be surprised that we want to build on this success.
And the natural next step, of course, is to leverage this platform to build downstream a giant petrochemical platform complex. It's a $5,000,000,000 CapEx. You see that for $5,000,000,000 CapEx, we will invest in the 1,500,000 tonne cracker, which will crack more than 50% of ADDvantage feedstocks. We will have also some downstream units, one of them being, again, 2 lines to produce polyethylene. The FEED will be launched next month in October, and we target start up by the end of 2023.
And this project will deliver here again a very attractive return with an ARR above 15%. So I've talked a lot about polyethylene because it was, of course, polyethylene is the largest polymer in the world. And of course, we want to take benefit of a cheap ethane. But there is another feedstock which we like very much, which is propane, which is abundant and low cost in the U. S.
And propane is used to do polypropylene, among other things. And polypropylene also is a very attractive polymer. It's a polymer with high growth, which used notably in the car industry. So really driven by the lightweight material trend once again. And that's also Polymer, where we enjoy a very strong market position.
We are the number 3 in Europe. We are the number 3 in the U. S. As well. So you understand it makes a lot of sense, of course, to look at this opportunity.
And what we are currently very actively looking at are growth opportunities in the U. S. To expand our presence along all these value chain, the propylene value chain, once again to take advantage of low cost propane here in the U. S. I would like also to mention in Algeria a project which is under study.
Algeria is a country which has also plenty of propane. And we feel that there are some opportunities there as well to invest in what we call PP, PDH. So it's a unit to convert propane into polypropylene. It's a joint venture with Sunnatrax, so it's currently in the under study. And the idea being, of course, there to serve the domestic market and also to serve Europe out of Algeria.
Last slide on the polymer. I mentioned at the beginning of the presentation, you remember recycling has a growing trend within the polymer market. I could also have mentioned biopolymers. But at the end of the day, basically, this is all about participating to the circular economy. And I would like to give you two examples on how Total intends to play its part on the circular economy.
On the left hand side, on recycling, I would like to tell you a little bit more about the solution that we have developed. We call it the circular compound. Basically, it's about blending cheap recycled polymer, which have 4 properties with other specified or other engineers Virgin Polymer, which we call booster. And by blending them together, we end up with a polymer, which has basically the standard properties of a normal polymer. But by doing that, we managed to get the best of both worlds.
We get the cheap stuff of a recycled polymer. We get the high margin of boosters, which is a kind of win win combination. And we manage recycle in a proportion of 50% recycled polymer. So that's, I would say, a smart way to address the recycling demand from our customers. On bioplastics, I would like to mention our joint venture with Corbjorn, a Dutch company, which is active in lactic acid.
Here, we intend to develop the market presence in PLA, polylactic acid. Polylactic acid is a polymer derived from sugarcane. So it's not only a biopolymer, but it's also biodegradable, which brings many benefits, notably when it comes to use this polymer for single use plastics. And there is a huge debate about the ban around the single use plastic. Using biodegradable polymers is a way to address this challenge.
We are just in the startup phase of a new site in Thailand. It's 75,000 tonnes a year site, which will position us as the number 2 in the world. And just for the record, the car you have on the slide there on the picture, this blue car, the body is made 100% out of PLA. So it can be used also for electric vehicles. So as a conclusion, you see that much has progressed since last year, since the last Investor Day.
SATAROP now is in has been launched. The joint venture in the U. S. In Bayport is operational. The has been just sanctioned today.
You see also that HTC Anoa, Total Chemical in Korea is progressing on schedule with a new project on PE, which has been announced in the meantime. As I was mentioning at the beginning, petrochemicals are doing great today, dollars 1.8 1,000,000,000 of cash flow from operations, 30% return capital employed. That's the kind of ratio we like. The strategy is very clear. We leverage feedstock.
We leverage synergies through the integrated platform. By 2025, just to remind you, the profile of our business will be completely rebalanced. As you see, more than 60% feedstock, cheap feedstocks and more than 55% out of Europe. And our commitment is, of course, to generate by 2022, at constant petchem environment, and additional cash flow generation of 20%. Thank you.
Thank you, Bernard. On the marketing side, we'll be consistently delivering our 100,000,000 CFFO per year over the period going to 2022. I will I'll be talking about our growth activities. For the legacy activities, suffice it just to say 2 words. First, our retail in Europe, we are consistently outperforming the market in Western Europe, first thing.
2nd, on lubricants, we are the only major company gaining market share over the last years. Now on the growth activities, first, we will be building on our existing retail network by increasing our revenues from shop food and services, by continuing to leverage our position in Africa by expanding into digital solutions and second, by looking at alternative fuels, mainly in LNG, bunkering and transport road and on EV. Now I'm going to zoom on some of the key areas of growth, the key drivers. I'll talk about the non our nonfuel business in Europe. I'll talk about our innovative transport solutions, I'll talk about Africa and I'll talk about the alternative fuels.
1st, nonfuel revenues in Europe. In Europe, we have a strong diversified offer of nonfuel products. These nonfuel products will represent 40% of our CFFO by 2022, 40% in 2022. We'll benefit from our strong card business, more than 300 $1,000,000 per year of transactions. We will leverage our 2,400 shops.
In the network that we control, what we call company owned service stations, we have shops in 75% of those sites, just to give you an idea. On the car wash, sorry, we have quite developed an expertise in car wash, and I'll tell you more about that later. But we've become an expert in Car Wash. Patrick is laughing. I'll tell you why he's laughing.
Now car wash, I love the stuff of car wash because some people may think that I'm just selling water. We are not just selling water. We have a strong concept. We are recognized take France, for example. We are a leader in France.
We have closed 1,000 sites, car wash sites. The beauty with car wash is that when you think about EV and all those things, electric cars, electric or not, you always need to wash your cars. So I love this business because this is a business of the future. And we have we enjoy very good margin in this business because not only are we washing cars, but we are bringing wax and car owners love that thing, water treatment. They are very sensitive to environment.
And we've been so successful in that that we've started developing that now outside our own network of substations, especially in parkings or at customer sites. We intend to have 2,500 branded total wash come 2022 coming from slightly more than 2,000 by now. And we'll expand into 50 countries from 40 countries to 50 countries by 2022. The second interesting thing is our AS-twenty four transport concept. Now we have a network of close to 800 AS-twenty four stations.
AS-twenty four is a concept for transport, especially in Europe. There is one market that will continue to grow, whereas the normal market of main fuels will decline in Europe by 0.5%, 0.7% in the coming years. When it comes to fuel for transport, years going to 2,030. Now we intend to increase the number of sites from 800% to 12 50% in the coming years on the AS-twenty 4. Now when you sell to the AS-twenty 4 fleet, the customers, you're not only selling fuel to them, you are selling additional services.
If I'm a transporter, and I am going from west of Europe to east of Europe, I need to use my car not only to fuel, but to pay toll fees and that sort of a thing. And that's the thing we are able to provide with our AS24. Another example of what we are doing is our card business. We have close to 4,000,000 card active cards in Europe today, And the volumes in cards represent 50% of the volume we are selling in network in Europe. Now, there too, a card owner is someone who is going to buy in addition to fuel a number of services.
Basically, you will sell to a cardholder, whereas with diesel truck or cars, you are going to sell to them ADBlue, that solution that you use to handle gas exhaust in diesel cars. You're going to sell to them the usual shop, food and services in the service station. You're going to we can even and we are selling more and more that sort of a service collection of VAT, for example, when you have a car and you are traveling into Europe. So we made acquisition of some startups. The Way Connect, the company we acquired recently, is a company that will allow a fit manager to handle the productivity of the drivers from point A to point B to be able to compare the driving behaviors and optimize the way is the transport costs.
On that business, our CFFO will grow by 9% between 2018 2022, going to 100,000,000 dollars by 2022. Now Africa, In Africa, we are when you take all the retailers, all sectors, Total is by far the 1st retailer in Africa, which means we are the company with the company will take all sectors with the biggest number of sites in Africa. Now you have total you have the nonfuel retailers. The second one is ShopRite in South Africa, and you see how we rank there. Now we'll continue to grow by selling traditional fuel because the African market in traditional fuel is growing by 2.8% per year.
And therefore we've been consistently outperforming the market. But not only are we going to continue increasing our fuel sales in Africa, but we are going to increase our sales of nonfuel business. There's the upcoming middle class, growing middle class, to whom we are going to sell more and more services. Today, for example, we made investments in some companies, in some startups. And today, in 8 countries in West Africa, you call in a service total service station, you're able to pay your electricity bill or your water bill with a device at the service station.
Those are the or you pay for your TV subscription. Those are the services we are going to continue selling into Africa. That business of non fuel will grow by 8% in Africa between now 2022. Natural gas, Laurent talked about natural gas earlier on. We intend to and we've started some years ago to invest into natural gas for transportation.
We made acquisition of a in Europe, we made acquisition of a company called Pit Point 3 years ago. Pit Point is a leader in Netherlands on natural gas for transport. We intend to be the market leader by 2022 because they have the expertise and we have the network. So they are going to we are going to deploy natural gas for vehicles in 300 of our substations in Europe, therefore making us the European leader for NGV. In the U.
S, you read that we made we acquired 25% shareholding in clean energy, making us the biggest shareholder of that company. And in addition to that, we provide them with $100,000,000 financing facility to support conversion from GSL to HGV of trucks. And that business will continue to grow, and that leasing program is quite successful. On LNG bunkering, you all know the IMO rules that will come in force in 2020 where the sulfur content will be reduced to 0.5%. We are leveraging in that and
we
consider that one of the main alternative for HFO will be LNG. We signed a contract with Seamus AGM, which is one of the biggest shipping group in the world, they are going to we are going to supply 9 ships starting from 2020, and we intend to reach 10% market share on LNG bunkering by 2025. With hub in Europe, in the Amazon, hub in Singapore where we have signed a contract with Pavion. We have a partnership with Pavion Energy, whereby we'll be chartering a vessel for bunkering. And in addition to that, we are going to have supply arrangement in Singapore, and we have another hub in Oman for LNG.
In addition to that business of bunkering, we have signed contracts to with Brittany Ferries. It may seem enigmatic, but it's very important that all type of customers get into this business of LNG. Now on EV charging, we just want to if I was to summarize, I would say we are walking the talk. We want to be a key player in EV charging. Now coming from the car owners, we are able today to provide them with 60 more than 6,000 charging points in Europe.
If you are a cardholder of Total, if you are a customer of Total, I give you access to more than 60,000 charging points for your electric vehicles in Europe. In addition to that, if you are one of my customers industrial customers or if you are a hotel or if you are a municipality, with the recent acquisition we made, we are able to come in your premises and do installation of charging points because we are selling charging points actually. And we are able to do the maintenance of those charging point, and we are able to assist you in optimizing your system. In our own service station, we have a plan to have 1,000 charging points in our own service station by 2022. And we intend and looking at how, of course, the technology will evolve because I think that, yep, some technological breakthrough to happen in this domain.
We intend today to have one station with fast charging point every 100 miles in Western Europe. Every 100 miles should find a total station where you can do fast charging. The acquisition we made, the charging point operator we acquired is G2 Mobility. They commend today 25% of business to government in Europe in France, and they have 10% market share on the B2B. So we are going to build on that to be the market leader there too.
So present all along the entire value chain of electric charging. Now before joining Bernard to answer your question, let me just summarize. M and S is a significant source of cash flow for the group. We have a target of $100,000,000 per year. We are on track to generate the $2,500,000,000 come 2022.
Our more mature business will continue to grow, and at the same time, most of our cash flow will come from nonfuel in Europe, from alternative fuels and from our traditional position in Africa. With that, I'm joining Bernard for your questions.
Thanks very much, Omar and Bernard. And who wants to have the first question? I think Blake on the right hand side.
Hi, thanks. I had two questions, if you don't mind. First on Port Arthur, I realize you're highlighting the integration with the chemicals business, but I'm just curious with the Gulf of Mexico potentially ramping to 100,000 barrels a day, I didn't know if it was possible to have that integrated into the refinery or if that would just continue to be more of a merchant type refinery. Secondly, on petrochemicals, if you have return on capital employed around 30%, just curious if there's not some M and A opportunities to expand a little bit more rapidly instead of just continuing to grow organically?
I'm going to repeat first the second question was on M and A, Your second question. Okay. It's something, of course, we are looking at. After it's always a trade off between the opportunity which are in front of us just because you declare we are going to make M and A that you, of course, find the right target. Knowing that when we look at the opportunity, we have greenfield on our existing platforms by leveraging once again the feedstocks, the integration we have.
We have very good projects with very high returns. So that's we are currently doing. So we are considering both. But for the time being, of course, we are executing the large projects we presented to you. If we have, of course, M and A opportunities, notably in the U.
S, which once again is a very nice country to be in, as we understood, from a feedstock, from the energy, from the environment standpoint, of course, that's something we will be happy to look at. Sorry, there was a first question, which was which has disappeared on Gulf of Mexico. Could you just repeat the question? Because once again, I'm not trying
to Sorry, yes.
Yes, of course.
For a long time Port Arthur has been kind of an isolated asset, just a merchant refinery running third party volumes. I didn't know if as you begin to ramp production in the Gulf of Mexico, if there is an opportunity to run those volumes through Port Arthur and integrate that as well?
No. Today, we look at the our refinery system is completely optimized, I would say, if we are trading harm. And we look at the crude, which are, of course, the ones which are the best suited to the refinery. We, for example, treat a lot of crude coming from Canada, which very well suited to as a heavy crude to the conversion profile of a poor offer. And that's, I would say, it would be 1 among many others that we will be looking at.
Now there is no specific game to further integrate GOM with Parfel.
Next question from Christian at the back.
Just two questions on the petrochemical outlook, particularly in the Middle East. There's obviously been some new expansion plans, particularly out of the UAE around petrochemicals. And wondered what you thought about in terms of sort of the competitive nature of that region and to the extent to which everybody is now going into petrochemicals and building out capacity. How do you think of the balance of supply demand beyond around 2021, 2022? And the second question, maybe it's premature, but with the potential Saudi Aramco tie up with SABIC, how does that affect, if at all, the project economics that
you have with SABL? On
the your second question is along the SABIC and Saudi Aramco. I don't really see that as affecting our projects because basically what we do and what Aramco is very keen on doing is to expand on their platform, on their existing platform into more downstream petrochemicals. So what we do in Jubei is something which is really which makes really a lot sense at the boundary of Jubail with Total and Amramco together because we leverage synergies. SABIC is not downstream. It's another story.
So I don't see there any issue. Honestly, I don't see an issue. And your first question was on the expansion in Vemirates or Too much supply. In sir?
Too much supply in the region for the next 5 years.
I'm sure
I have a very hard time understanding, I'm sorry, but
As everyone is building capacity, how do you think margins are going to trend?
No, but no, the question is about are there the question is, are there too many projects in the Middle East? Because Saudi Arabia is building projects, UAE is building projects
and China
is building projects. [SPEAKER JEAN FRANCOIS XAVIER BOUVIGNIES:]
But we have a very strong base in Qatar, of course, where we have been, as you saw, for more than 80 years. And it's a country rich with gas and ethane, where we already have a very strong position. So certainly, it's something we could think about. [SPEAKER JEAN FRANCOIS VAN
BOXMEER:] Well, to be
clear, as Bernard presented, in petrochemicals, as soon as you can be an advantaged feedstock, you have a competitive advantage compared to the NAFTA crackers. And so it's a question and there's debate with some countries building crackers on like the one who want to build Saudi Arabia or if any Qatar or advantage feedstock in UAE will be competitive. To be honest, I'm more surprised when I see companies building crackers in China on NAFTA, because I don't see except the logistics advantage, I don't see where is the competitive advantage of it. So to answer your questions, I think you have room to build more, I would say, advantage piece for crackers in the Middle East. It's not a question of
Question for Martin near the front.
It's Martin Rance from Morgan Stanley. I wanted to ask you two questions sort of related to refining in IMO. So earlier on, there was a slide, which I don't think is in your deck, but earlier in the day, how you bring the fuel oil production from 7,000,000 tonnes a year to 2,000,000 tonnes by 2020. And I was wondering if you could sort of run us through that bridge in a little bit more detail. Of course.
That went very fast, but it's a very large change. The second question that I wanted to ask sort of relates to this. So in some of the upstream sort of slides, there was a slide that referred to Total being well positioned in the upstream for IMO because of a relatively high share of crude being produced being quite low in sulfur. But in the Downstream, you're also arguing that Total is well positioned for IMO given the sort of distillate yield argument. But I was wondering, is there a contradiction here where you would can you be both positioned well in upstream and in downstream at the same time?
It's trading because it's not necessarily the crudes we produce, which are the crudes we process at the end of the day. There is a so let me answer the 2 questions. Maybe the very first one on the going from 7 to 2. In 7,000,000 tonnes of HSFO is what we processed last year. As you know, end of last year, we started up in Andwerpen, the Optara project, which is a conversion project, which is aimed at reducing the part of bottom of a barrel, which is transforming to fuel oil to transform that into distillate.
So basically, we have changed the balance in Antwerp from less fuel oil, more distillate. And that's
eliminate out of the close
to 3,000,000 tonnes, if my memory is right. The second thing we do is we have some extra capacity in power, in the coker. So it's a 50,000 barrels a day coker. So we have today some extra spare capacity, which we could fulfill with more vacuum residues and therefore also reducing our length in terms of HSFO. And the third thing we are doing is we segregate our vacuum residue because today people do not segregate low sulfur and high sulfur because there is no spread difference when it comes to value this stream.
Tomorrow with IMO, people are going to be very willing to buy the low sulfur part of the vacuum residue, and they will put a premium on this. And that's justify, of course, to invest to segregate in the logistics, the part which is low and the part which is high. And we have done this investment. And by doing this investment, we are able here again to reduce the length in HSFO. And the 4th dimension, if you remember, going from 3 to 2 is just to play exactly what you explained with a crude slate, the flexibility between the high sulfur and the low sulfur part of the crude we process.
And by doing that, mechanically, even structurally, not mechanically, structurally, we come to 2,000,000 tonnes of HSFO, which is less than 5% of what we proceed worldwide.
There is no contradiction because in total between coal production and refining, you have trading. In fact, only 20% of our production is ongoing into refining business and only 80%. So it's very there is a lot of optimization being done by the trading, which is in charge to get the best value for the crude. So we will get the value for the loss of crude from the trading. And then the trading will look for isulfur crude, which will be less expensive for refining.
So it's the worst mechanism. Trading is in between. This is why there is no contradiction at all.
I think Irene had a question.
Thank you. Bernard, you mentioned Hutchinson in your presentation. You have sold out of all your other specialty chemicals in recent years, Bostik, Aptotek and so on. You kept Hutchinson. What prevents you from selling it?
And is there any sense of the financial contribution of that company to your €1,000,000,000 cash flow from operations? Yes, thank you.
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] So I'm going to maybe answer on Hutchinson from an approach standpoint, and then I will let Patrick maybe answer
on the No, you can answer the answer. The answer is like Arnaud, there is no answer.
It's a
permanent question. So Yes, go back. Permanent answer, no question.
I know, Irene, you keep asking the question at every session, I recognize.
Well, let me be clear. It's worth giving me the floor on that because this type of decisions, refining and chemical is not in trouble.
Exactly, that's right. [SPEAKER JEAN FRANCOIS
VAN BOXMEER:] The sales of Atrotec, the sales of Borsig was done by Patrick and myself. This type of we consider that as it's holding decisions, I would say, best allocation of cash capacity management of the allocation of capital. But you can have R. Vijay Kumar:] No, but not a change.
[SPEAKER R.
Vijay Kumar:] it's true that there is a nice contribution to the 1.8% CFFO. But it's a secret, so I'm not supposed to answer as well.
I don't quote any number. I'm just saying it's growing every year. It's really something which is running very well, increasing. It's high value added margins, well positioned down stream close to customers, nice business with aerospace growing, the car industry with this trend on lightweight materials really. So it's really a very successful business, and we are glad to have it.
Iren, you touched your question was right, because in fact, if today, H and S is still in the control, it's because it's sizable. It's a sizable contribution to these results. So it's just to enhance the value of Hutchinson for all the ones who want to buy it. So it's quite sizable. And growing.
And growing.
I think there's a couple of questions, this side from Lydia, then maybe John.
Thank you. Two questions, if I could. The first one on the biochemicals and the recycling side. What are the margins on a per ton basis for those you think compared to what the traditional basis would be? So just any indication of profitability?
And then the second one was on the Africa retail side. I appreciate that this 8% per year growth, but do you think that's a business that you could grow quicker if you allocated more capital to it? And how do you think about that being the right rate of growth?
On biochemicals and recycling, no, it depends very much, to be honest, on the oil price. It works. This business model works when the oil price is high. As soon as it goes down, the business model is less, let's say, challenging. What I showed you as an example is that there are smart ways to come around and this compound, what I tried to explain, is a way to still make money even by using recycled products, which by definition have poor properties.
So that's they are business model. That's why I was saying it's an opportunity it's a growth opportunity recycling. But we have to be smart to find business models, which work. Of course, in high brand environment, it's even better, but even in low ones. And that's true also for bioplastics.
The good thing with bioplastics is that it's also driven. It could be tomorrow driven by regulation. And if we come to the plastic ban I was mentioning, people will be able to switch to these biodegradable plastics, so which is an unleashing lever, which we can activate, but it's different from
Well, on Africa Business, can it grow faster? Today, the market is growing by 2.5%. We are growing by 3.5%. Now what can make the market grow faster? If you look at Africa today, the bulk of the investments that are going into the continent overall are investments in road and ports and that sort of a thing on infrastructure in general.
That will drive growth in transport in Africa, because the key to when you talk to all the specialists of development, they will tell you that one of the drivers for growth in Africa is to increase the transport of goods from point A to point B to allow farmers to put their products into markets, have more and more intra regional trade, and that comes with more transport, be it by road or by train or by boats. So that can be that can help probably increase the volumes of fuels being pushed into the market. In addition now to all what you can get out of, again, nonfuel business, today in our sales stations, the usual convenience store in many African countries now is the Total Station. That's a convenience store that is open 20 fourseven. That's where you go for a coke or for you go for so that business will continue to grow with digital because there are more and more being digital in Africa.
So I enjoyed your comment about not wanting to give the finances on asset that's not for sale just in case it compromises your negotiating position. Can I ask just on the expansion projects in petrochemicals? Am I right in saying that the CapEx numbers that you're quoting for those projects don't sit in your CapEx guidance numbers? It looks like they're too large to do that. So I'm guessing that they are funded off balance sheet.
Is that correct?
No, no. We are part of the CapEx. So the fund
you within the CapEx guidance you're giving us, there's a full funding of your share of the investments into the associate companies.
Porcelain:]
No, there will be some project finance as well. You mean?
[SPEAKER DOCTOR.
MICHAEL DE LA CHEVARDIERE:] Michael
Cheuvreux:] The reason I ask is that some of your peers give a gross and a net figure. So I'm just trying to understand the CapEx intensity that you're looking at into petchem business.
[SPEAKER JEAN FRANCOIS PRUNEAU:] That's the equity part. There will be some project finance, but what you see there is the equity part on the joint ventures.
In your CapEx?
In the guidance which we have given this morning, dollars 15,000,000 to $15,000,000,000 to $17,000,000 a year of CapEx. These projects are part of this CapEx, and that's the equity part we finance in the project.
So there
was a portion of Sanddree
B, it
was a subsidiary company. Exactly. Yes.
No, no, there is no it's all square.
And maybe Tom Nissen and Jason.
Thomas Sotto from Credit Suisse. Two quick questions. On your cracking capacity outside of the U. S, I think you've invested a decent amount in increasing feeds of flexibility. So I wondered what the ratio now is between naphtha and propane, seventythirty or eightytwenty or whatever it is?
You mean between naphtha and ethane?
Yes, propane or ethane or
We have today 40% of ethane LPG and
the capacity between base chemicals and the second derivatives is fairly balanced in your portfolio?
You mean base chemical and?
2nd derivatives, so polyethylene. Polypropylene.
No, it's going to be it's all integration. As we are integrated, there is no length. So it's all balanced, yes.
Okay. And quickly on LNG bunkering, LNG trucks, how big do you think the market will be by 2,030?
How big the market will be, we consider that the market for LNG bunkering, that's easier, because for the road, it has a lot to do with regulations and with incentives government or municipalities can put. But on LNG bunkering, the market is suppose we expect the market to be around 10,000,000 tons, out of which we expect to be doing 1,000,000 ton, 10% market share on LNG bunkering. Now on LNG for road, it's really a question of for example, today in Europe, you don't have that much of fleet for NGV trucks unlike in the U. S. So there's you need to build the market, probably need to have discussions with EU and the rest.
Jason, I think you had a question.
Yes, thanks. This is Jason Gabel with Jefferies. My question was also on LNG as a buckering fuel. And it seems to me that most of the discussions right now are whether to use marine gas oil or to convert to scrubbers. And I'm supposing that's because the vessel would have to be a new build vessel if it's not honoring an LNG carrier.
But it's hard to get people to build new vessels if there aren't supply hubs. So I'm just wondering how you're managing the build out of supply hubs and whether you're in these negotiations that you have that are being contracted with shipping companies are providing insurance of the supply actually being there?
I think today on that business, there are still odd options are on the table. You have on new builds, you have companies opting, lights of CEM and CEM opting for LNG. You still have companies saying that they will go for scrubbers. The issue with scrubbers, which is yet to be resolved, is the issue of how do you handle the okay, of course, it should be dual, open loop, closed loop, But the question is how do we handle the waste? And the second question is, today, we know what the regulations are for 2020.
What if after 2020, IMO come with CFRA regulations and then how will they manage that? So what we are hearing from the market is that, yes, some are opting for low sulfur gazelle, hoping that by then products will be available, some are going for LNG. We have customers today we are discussing with, who say that definitely they would opt for scrubbers on the new build or they will revamp the existing fleet with scrubbers, and we are discussing with some of them. All options are on the table. Today, we are not really seeing a straight line on the way forward.
I think they are weighing all options. Knowing that, I think the thing behind is that regulation may get stiffer.
Any more questions? Chris, then maybe Henry?
Question for you,
Volvat. Can you give us an idea of the cost of upgrading, so to speak, of your retail network? So for example, the 1,000 stations that you're planning to equip with charging stations, what part of your CapEx budget is that? Just wondering how that budget is broken down? Thank you.
[SPEAKER JOSE RAFAEL
FERNANDEZ:] I'm not sure I understand completely the question. The cost of EV charge no, the cost EV charging, now depends on the type of EV charging. If you want to install slow to normal charging point, you're talking in Europe of a cost between $50,000 $100,000 If you're talking of fast charging today, where we are in terms of technology, you're talking of between 3 $100,000 $500,000 To be honest, today, people do not really see the economics of fast charging, but that market will come. But that's where we are today. But I'm sure that there'll be some technological breakthrough too into that domain.
The other question was on the cost of retail network. No, that's okay.
It's Henry Tarratt, Berenberg. Just a quick question. So longer term, ethane obviously looks like an advantaged feedstock. Near term, ethane prices have spiked and margins have come a bit lower. What's driving this?
And how long do you think it's going to take for this to clear in terms of the supply that's come on recently?
I'm sorry, but I have a hard time. I don't know why you're saying. No, you're right. If end price has gone up, it's around, what, dollars 6,000,000 to 7 per 1,000,000 BETU currently coming from, let's say, below 3, which has been a real spike. The reason is very simple.
There is a bottleneck on the fractioning unit. Today, they are completely saturated. You know it, of course. And there is also some bottleneck on the midstream. We have all these crackers starting up.
So there is a huge demand and a constraint on the supply. What we see basically is when we do all the math is that it's going to be debottlenecked by mid of 2019. This is what we anticipate, which for us is, of course, a good thing because our cracker is going to start much later on, so there's no issue from that standpoint. So but mid-twenty 18 mid-twenty 19.
Maybe time for one last question. Lucas?
Sorry, 2 very briefly. The first one, Bertrand, should we care about LeMED and biodiesel upgrade? And I say should we care just in the context of numbers that we end up seeing? And the second question was, Patrick, you mentioned about a year ago that maybe this was a sensible time to, should we say, let refining capacity go. I guess the broader question is, are you very comfortable with your refining footprint now?
Or is this a sensible time to let refining capacity go?
So I'm going to answer on Lamed, of course. Yes, we have this project in Lamed to produce HVO, which is, let's say, the high grade to produce biodiesel. Why have we done it? Just because the market is growing. There are mandates in Europe.
There is a new regulation called RED2, which is now targeting an even higher percentage of incorporation by 2,030. So what we have done in that made a lot of sense from a lot of sense from that standpoint to meet this growing demand. So and your second question was refining capacity, is total at the right level? That was your question.
Is the footprint, are you happy with it? The observation a year ago when refining was, should we say, having more than a renaissance but very robust, was this maybe an appropriate time to let us to consider altering the portfolio, letting assets go? Are you happy with your footprint?
I would say we have reduced, remember, the capacity by more than 20% over the 5 years because it's a very cyclical industry, and we have reduced, let's say, refinery, which we have the weakest one. We don't want to increase, that's true, If we have opportunities to further reduce because we know that the market, once again, is going to be cyclical and there will be more to come, of course, we'll consider it.
Okay. Thanks very much. Maybe you take another short break.
Just last remark to avoid any misunderstanding. We are not seller of Hutchinson.
I think there were some more questions. I'm sure,
but Omar can answer your
questions during the break, and we should come back here at half past 4 for the final session. Okay. So while everyone's taking their seats, just let me introduce the final two presentations of the day. So we have Marie Noel Sameria, who's a Chief Technology Officer, who will talk about leveraging how we're leveraging new technologies And then Philippe Soquet, who's the President of Gas Renewables and Power and Strategy and Innovation, will present on integrating climate into strategy. And then as for the previous sessions, we'll finish with a Q and A.
Thanks, Mariano.
Okay. Thank you, Mike, and good afternoon, everyone. So I'm Marie Noelle Simere. I'm quite new at Total. I joined the group in November last year after different position in high-tech companies, start up and in public research in high technology.
And so when I arrived at Total, I was very impressed by the high level of technology and by the full commitment of people to deliver. And so my task is to enable new technologies and new skills to support the different businesses of the group and to prepare the future. And there is plenty of innovation here. So today, I will focus my talk on technology and more specifically on digital technologies, showing how they leverage value for the group and for the shareholders. So on your left, you can see the topics I will go through.
On the right, you see the overall and D budget accounting for $1,000,000,000 per year and the top focus always that it spurs: safety, operational efficiency, low carbon mix, new services and new products, open innovation and digital technology. Digital technology account for about $300,000,000 this year, and we expect to increase that by about 3% per year. Total is more and more recognized as a differentiated leader in technology. It's through R and D and digital innovation that Total maintains its leadership position. And you can see that's its major commitment by the group.
So I will start with industrial digital. It's to say digital for industrial application. So the 2 main pillars are robotics on the one hand and artificial intelligence. And so let us start with robotics. Robotics refer mainly to unmanned autonomous vehicles that perform inspection task and collect data.
We use robots to reduce cost of inspection, to improve safety, especially in a harsh environment, to increase the integrity of our installations and collect more data, more reliable data, which is key for the next step related to artificial intelligence. Here are some of our robots, all world first. We estimate their global impact to 20 percent cost reduction at the average. So let me introduce to you the first one, Argonauts, that some of you know already. This is our inspection robot that we have tested in North Sea last year and that we tested in a real production site at our Shetland's gas plant last week with success.
The autonomous underwater vehicle is also an inspection robot that we have used in the Gulf of Mexico along pipelines. Another underwater robot is the glider that we use in Angola for subsea surface exploration for several weeks, getting rid of any very expensive supervisory ship, replacing it by a simple web interface and satellite communication. And on the far right, you have our seismic drone. Picture in your mind a fleet of drones dropping 100 of 1000 of biodegradable seismic sensors that collect and transmit high quality, high density 3 d data, saving between 3 to 5 years for final investment data collection for final investment decision. We tested it in Papua New Guinea last year, avoiding sending people into jungle and providing more dense and better data collection.
More value for less money and more safety, more reliability. This is the message here. So we've seen the first pillar. Let's go to the 2nd pillar, artificial intelligence. So artificial intelligence refers mainly to the way we learn from big data.
We develop more and more artificial intelligence to automatize routine, repetitive tasks and increase productivity. Total is a big data company. It's a big industrial data company and has a huge computing capacity on premises, ranking 2 in the top 500 of industrial computers. And we will increase this capacity for critical algorithms. For artificial intelligence, Total is ahead of its peers.
We want to reinforce our leadership through the partnership with Google. We are the only oil and gas company that has a joint team of 30 experts based on the Google Cloud Campus in California. We are the 1st company to apply Google Cloud and artificial intelligence on a real data set in geoscience. What is at stake? Each year, we spent about $400,000,000 for seismic acquisition and interpretation, and we have not enough time to exploit all the data.
And about half of our time is spent on routine analysis. So the goal is to develop artificial intelligence as a cognitive assistant so that we can exploit more information and dedicate more human expertise to high value analysis. So once again, less time for more data and more time for high added value task. We extend artificial intelligence to downstream. What is at stake?
Increased competitiveness of our existing refineries through optimization, real time maintenance and performance monitoring. To accelerate digitalization, we decided to partner with Tata in July this year and to create a center of digital innovation in India. And we dedicate a joint team of 30 experts in Pune. Tata Consultancy Services is one of the largest IT consultancies in the world, with 400,000 folks over more than 40 countries known for their agile methodology and IT experience. So the goal is to implement the Refinery 4.0 pilots at our refinery at Dange in France.
And so we apply artificial intelligence to the entire Rafay new seat, including supply chain, using cloud technology and Internet of Things to create a digital twin and optimize performance and productivity. Total is the first to develop an advanced production management platform that brings all the pieces together in real time, maximizing availability and margin and increasing maintenance and energy efficiency. The message is real time data management through artificial intelligence leads to increased competitiveness and margin. So we saw robotics. We saw artificial intelligence.
And in between, there are smart rooms, a key element in the digital chain connecting robots and remote sensors to human expertise and artificial intelligence. We currently have 25 smart rooms across the group, some located near important assets like Angola, Nigeria, U. K, Argentina and others concentrated to around our technology center in port or in Houston. Total differs from its peers by specific smartphones. For example, for rotating equipment, where smart rooms anticipate major failures, sometimes 6 months in advance, reducing non production time.
For drilling operations, where smart groups reduce risk and increase production through real time monitoring or metering where smart rooms save time of FPSO with high quality data. We have saved tens of 1,000,000 of dollars, thanks to Smart Room integrated to our digital implementation chain. In short, this is digital cost reduction through better efficiency, safety and performance. Moving from industrial application to digital mobility and marketing, we will see that here again, digital creates more value for less money. Imagine total service stations that automatically recognize your vehicle as you are approaching the station.
Top of your battery and your fuel tank with a robot offer personalized services. It has already started with total wallet to mobile payments deployed in Belgium and now in Germany, and that will be extended to 1,000 stations in Europe by this year. And more services are to come, like our B2B fleet management strategy, our new services based on Internet of Things. Thanks to our customer data management platform, we will be able to propose more personalized services to more customers, more digital for more users and more services. This is the message here.
Blockchain is another area of digital technology. Most of you already be familiar with the blockchain, which simply said makes all transaction complete, secure and traceable and private. The main application for Total is the commodity trading business. We are part of a joint initiative with 9 major European players, and the initial cost savings could be significant. Using blockchain as a unique and reliable digital identifier as potential applications in many other areas.
So starting early to catch more value, that's what is at stake. Another example of how the world around us is going digital, smart electricity. Half of our electricity sales are digital. With just over 300 employees, we can manage about 3,000,000 customers. It takes less than 10 minutes to subscribe to the service online, no paper, And it costs less than $70 to get a new customer.
Nobody does it better. Digital technology enables this low cost business model. And we offer other digital services like at home for real time monitoring of your power meter through Wi Fi onoff, which is the ability to remotely switch on and off your equipment to manage your power consumption or Octopus, which is the B2B service to optimize energy consumption globally for various sites and plants. Digital services are fundamentally changing the way that businesses related with customers. By leveraging these new technologies, we can offer more for less.
New technology creates new opportunities To move quicker and learn larger, we promote high profile partnerships and commit $150,000,000 a year to universities. CCUS, which refers to carbon capture, usage and storage, is a good example of partnership ranging from upstream research with universities up to commercial test bench. Total is part of the Northern Lights project in Norway with Equinorin shale, which is the first project at the industrial scale, targeting a storage site designed to receiving CO2 from industrial sources coming from several countries. We also involve in a partnership supported by China and Europe to demonstrate a pilot unit for power and steam and steam production using chemical looping combustion, which isolates a pure stream of CO2 for storage. Finally, we have dedicated about $20,000,000 over 5 years to Stanford and the Lawrence Livermore National Lab for developing a unique simulator of CO2 storage at the gigaton scale.
We believe that CCUS is mandatory to achieve carbon neutrality in the second half of the century. And so we dedicate up to 10% of our R and D budget to that. So we are taking position now to be ready tomorrow when CO2 businesses comes. Investing in start ups is another way to be on the move, scooting technology and new businesses to accelerate innovation. On the right, you can see in green our historical investment in start ups and in other colors the new targets in mobility, digital, climate and energy management.
We invest $200,000,000 in that. We have a new focus on China, which has huge potential in mobility and new energies. And we have committed $75,000,000 there. As a conclusion, we are pushing the boundaries. And without overstating the issue, we are developing new technologies that will change the way Total provides a safe, clean and affordable energy.
Total has a strong internal commitment to maintain a leadership position on the front of technology and digital. The overall performance, the ability to relentlessly execute and deliver while cutting costs and increase efficiency are signs that effectively implementing digital technology is creating value for our shareholders. And that concludes my remark. Thank you. And now I will give the floor to Philippe Saucoup.
Thank you, Marie Nuel, and good afternoon to all. Good news for you is that this presentation is the very last of the day. I hope it will be the very best, but you will decide about that. My purpose will be, in fact, to try to explain to you what we mean when we said some 2 years ago that we were willing to integrate Climate into our strategy. And going a step further, you will see that we have tried also to answer one question, which was how can we measure the long term trajectory of our company in terms of carbon emission intensity.
So I will start by a slide that you've already seen with Patrick this morning. And I would say this is the most important slide because you have everything on that. You have on the left part the IEA 2 degree scenario with key prevailing trends. And you can discuss, of course, about the figures, but it's difficult to argue about the trends that are showed by any kind of virtuous scenario that will take or that would take into account climate change. What do we see?
And what do we conclude of that? Threats and opportunities. We see that coal is shaking. Good news, we decided to exit already more than 4 years ago now. We see that oil is slightly declining.
Might have a debate once again whether it will be right or wrong, but what is clear is that we must be careful about selecting our project because we could end up in a much more competitive oil environment than the one that we live in today. And therefore, we are adamant that our future project will be low breakeven, and we have illustrated that in the move that we have been doing over the last 2 years, including in the Middle East and in Abu Dhabi. What we see also is slight increase of natural gas. And again, natural gas is a core business for us. And so when we see growth, we shouldn't be ashamed of trying to continue expanding in the gas value chain.
And last, what we see also, and this is for us a big opportunity, is that a fantastic growth of the renewables. Renewables, of course, are diversification for us. It's diversification, I should say, for every company because it's fundamentally a new business. But what is clear is that there is growth opportunity. And as I will try to evidence to you, we think that we might be successful in this diversification.
First item to be, I would say, to lead the to walk the talk and to be exemplary to reduce our carbon footprint, of course, we must improve our operation. And this is the very first driver that we use. We optimize the energy that we are consuming in our industrial facilities. We have already reduced by 30% our greenhouse gas emissions since 2010. We have ascribed very clear objective, minus 1% per year from 2010 to 2020.
And today, we are aware of schedule on this objective. We have taken also very clear commitment in E and P routine flaring with 0 routine flaring by 2,030. And again, we are in advance compared to our commitment. And so we are constantly investing on reducing the energy consumption. Methane, methane is a new theme for I wouldn't say for Total.
In fact, it's a new theme for the gas industry, which has started to be criticized maybe by our coal friends who have been forgetting that the coal mine are also emitting methane. But it's clear that we want to be exemplary also on that front. Methane has a very huge power of greenhouse gas compared to CO2. So it's, of course, a requirement for us to be exemplary, and we intend to continue to monitor our emission and to reduce them at the level of the oil and gas climate initiative. There has been a collective agreement to reduce to 0.25% this methane leaks by 2025.
For TOTAL, we have selected a stricter target of below 0.2% on a sustainable basis, and we are already much below 0.3%. And last but not least, it's important also that we test, we evaluate all our new investment for most stricter environment in term of climate, in term of carbon price. And we test, we evaluate every of our investment with a carbon price, which depend on the area, but it's a minimum of $30 per ton and can increase by $40 per ton. 2nd development, which is, of course, of importance to us. And again, it has been already described.
It is the development in the gas value chain. There is growth clearly in this business. We are even higher growth in LNG. You've understood that it was a core business and historically we have always been one of the leader of this industry. I'm sure that Laurent has convinced you that we had unique capabilities to be very competitive on the long term in this business.
So it's clear for us, we want to go deeper and we want to go stronger. This is why we position ourselves as a buyer of the ENGIE LNG business, giving us this 10% market share that we intend, of course, to keep. We are ideally positioned, I don't know whether it's a golden triangle or golden square, But clearly, being Russia, being Middle East Qatar and being in U. S, complementing that this free position by brownfield project, meet in Papua, in Nigeria or Nigeria, you can be sure that we have a portfolio of new project that will be among the most competitive of the industry. We won't be the only one, of course, willing to develop, but we are ideally positioned.
We have started a strategy of opening new LNG markets. We see a lot of potential for growing electricity from gas in emerging countries, and we are willing to step up in order to facilitate and facilitate also our sale of LNG. LNG for transportation, I won't come back on that. Momar, I described what we are doing. And of course, gas marketing, we want to integrate the gas chain.
Gas marketing is not a diversification for us. We have been presenting this business since more than 20 years now. We have been leading the B2B UK business, which is one of the most competitive. And therefore, it's natural for us to continue on the chain. Moving now to low carbon electricity business.
Of course, here, it's a bit more exotic and for Total. And we have to acknowledge that it is a diversification. But as it was said this morning by Patrick, we see in this business and especially on the business on which we want to focus, the Renewables and the Gas, so the low carbon electricity business, we see fantastic growth opportunity. And on this electricity chain, it is a diversification, yes, but we have a tool to succeed. It start by marketing of electricity.
It's not widely known, but we have been marketing electricity. We have been trading electricity in Europe since more than 20 years, and we have been doing that on a profitable basis. More recently, that is true, that we decided to accelerate our position by acquisition. And what we decided was to acquire leading companies, new companies that were born with what Marie Norell called smart electricity, born in a world of competition, when in fact the incumbents that are still dominant in terms of market share, it's obviously the case in France, have a very large market share, but have difficulty with their legacy asset. So this is why we think that this diversification might be very successful.
We have also ascribed to ourselves a reasonable target. We are not foolish. We are not dreaming. We are focusing on Europe and B2C for the time being. We are even focusing on France and Belgium.
And when we say we ambition the 12%, 15% market share in 5 years, it is only the continuation of the growth of Total Spring and Direct Energy. We are acquiring more or less a bit less than 1,000,000 customers per year. Having said that, we have this customer base. And of course, we want to integrate upstream of the need of our customers. It's always the case in TOTAL.
In the commodity business, we don't want to be trapped in the one narrow part of the chain. So we want to integrate ourselves upstream. We want to generate the electricity part at least of electricity that we are selling to our customers. It is obviously the case for renewables. And one argument to sell electricity today is to sell green electricity.
And we are developing solar farms, solar assets. We have started also to diversify in wind through TotalEvan acquisition, through Direct Energy acquisition. It's natural also for us to complement this renewable position by CCGT, because CCGT are bringing the flexibility that are needed to complement the intermittent renewables. And we are today roughly at 3 gigawatt of capacity, and we intend to be at 10 gigawatt within 5 years, mainly through organic growth of Renewables, but also maybe through some acquisition. And last, batteries.
Batteries are there. We have started to develop a new range of product in SAFT, specialized in Energy Storage System. We have already some sales, but we want to grow this business further, and we are preparing the launch of a new range of product that will be even more competitive than the one that Saft is putting on the market. This market is small today, but it is growing very, very fast. It's double digit growth.
If we see the example of this country, our affiliate, SunPower, today is marketing more or less 30% of its solar system, including battery. Biofuel. So biofuel is also a very important component of our development. As I like to say, biofuel are hydrocarbon best friends. They are liquid products.
They can be blended easily in our product. They can be distributed in our retail network without any change. And on top of that, we are highly strongly supportive by many countries around the world. And on top of that, of course, they allow us to decrease the carbon content of our products. So not a mystery, but we are today the leading European biofuel distributor.
We have decided to convert our former oil refinery of Lamide in HVO unit that will be the 1st world class SVO unit in France. Biogas is very expensive today, but we can imagine that incorporating some percentage reasonable percentage of biogas in the natural gas network would make sense one day. We shouldn't exaggerate the ambition behind that, but there is room to make the natural gas even greener. And of course, there is room also for R and D to prepare the next generation advanced biofuels, and we are doing that with various R and D program. Carbon compensation, Marine Oil has started, in fact, to disclose part of what we are doing.
The critical point that you have to realize is that even if this carbon compensation can seem a very long term issue, and this is clearly a long term issue for the second half of this century where everybody is speaking at the political level of a neutral carbon world. But even for horizon before 2015, if we want to achieve a 2 degree scenario, there is clearly no solution that does not include for a part carbon capture and sequestration. And we think that the oil and gas companies are the ones that have the stronger interest to develop this business, to develop the technology. And this is what we are doing today, 10% of our R and D program. We've already made a pilot some years ago in light in the south of France.
We are investing, as Manuel showed you, in Northern Light, which is a very emblematic project in Norway. And through GCI, collectively, our industry is investing some $1,000,000,000 over 10 years. So we are moving slowly, but we are moving in this direction to be ready for the time this technology will make sense business wise. And we don't forget about the forest that can be also a cheap way of secreting carbon. Dollars 10 per tonne might be possible.
So we have started also to step up and to move through total foundation. But of course, it will be a very progressive move. Having said that, having described to you what are the main business trends that we want to develop based on this integration of the climate change consequences on the energy mix. We were willing to build an index that would allow us to measure the carbon intensity of our energy cell. So how did we do that?
First, on the left side, we consider all the sales that result from the business plan that have been developed by the different entities for oil, for gas, for electricity. And these are business that have been business plan that have been developed on the basis of what we are doing now. Of course, we have tried to extend the horizon all the way up to 2,040. So don't ask me in too much detail about the ROCE of Mama in 2,049. But it's clearly a path in which we strongly believe that we can develop ourselves.
And what we are measuring are all the emissions that are generated by the sale of these products on the life full life cycle basis, which means that we are not only considering in our index the emission that are released during the production process, but also the emission that are released by our customers because clearly 90% of the CO2 emission are released when the hydrocarbon are burned and when we are transformed in CO2. And so our indicator is at the numerator, we have all this emission, what we call in the jargon, scope 1 plus scope 2 plus scope 3. We deduct carbon compensation, carbon zinc that we are using. So it's not very significant to this horizon, but there is some quantities that are sequestrated clearly. And we divide by the amount of energy that we intend to sell to our customers.
And after what we show in this chart that Patrick showed you this morning is this trajectory of this index. And what you see is that with all the business plan that we are developing, we and it's not a surprise because we are taking into account, taking opportunity of the growth in the low carbon businesses. And the more we go into the future, the more, in fact, we reduce our carbon intensity. And we see that we are reducing by 1% per year this carbon intensity index, which lead to a minus 15% in 2,030. Beyond 2,030, as Patrick said, of course, it's difficult to know exactly what will be the incentive, what will be the regulation that will be promoted by the different government and that will lead us to consider that certain development are or not economical.
And of course, there is a part of this trajectory that cannot be detailed today. But we consider that we should be very comfortable between minus 25%, which is the extrapolation of the minus 1% that we observed today and for the coming 1st 15 years. But of course, depending on the different regulation that will be adopted, it could be as low as minus 35%. And our product mix at this horizon, as you see, will still be very heavily biased, very heavily focused on hydrocarbon. Let me be clear, low carbon electricity will be a significant part, but it will be only 15% to 20% of our business.
When gas should be more or less at 50%, 50% plus and oil, including the biofuel component that is blended with our products should be between 30% and 40%. So this is the way we intend to develop and prepare the future of the company, taking once again opportunities that are arising from the climate change environment, improving once again our operation efficiency, growing natural gas that would represent more or less 60% of our hydrocarbon production, developing the low carbon electricity, mainly in Europe for the time being at least and the foreseeable future increasing biofuels because once again it's a growing market and investing in carbon sinks as soon as there will be a business case that will justify to invest in this carbon sinks on an equal basis. So this is why what we were willing to convey to you, And I hope that you're convinced that this move is once again not a major change compared to our appetite to develop our historical business. But we think that, yes, there is room to diversification in the low carbon business, and this will ensure on the long term the future of the company. Thank you.
Thank you very much, Philippe and Marie Noel. So we're going to the final Q and A session of the day. First question from Martin Ratz on the left.
I had a question about that Exhibit 8 that you just had up, which is the one that shows the carbon intensity to the trajectory. And I wanted to ask you 2 questions about it. First of all, I'm still struggling with the scope 1, 2, 3 things. Does it relate to scope 12? Or does this all relate to all three scopes?
And secondly, I find it quite interesting that you decided to put an actual target of minus 15% to it, as in there are some of your competitors that talk more about sort of ambitions or aspirations, showing good intentions to reduce it, but not quite willing to put an actual target to it for fear of some legal risk. And I was wondering what your thoughts were about that.
On the first question, the answer is that our index cover everything, the scope 1, plus 2, plus 3. So once again, the emission that are released by the process of this energy and the emission that are released when our customers are burning the fuel. So second question is why putting
It's an Anglo Saxons, lawyers in the U. S.
Lawyers better.
I think at the end of the day, the question is of which 1 is for companies like us. It's more a serious matter. It's will you be under pressure or not from the financial communities and elsewhere. So the words are important, are not so important. At the end of the day, it's are we or not do we have or not to can we avoid not to be responsible on these matters?
We are convinced that we have to act. Everybody is maybe not convinced, but it's our conviction, and it's shared by the Board of Directors. So the wording, to be prudent, let's speak about ambition.
Okay. So question from Lydia and then from Chris.
Thank you. I have two questions. The first one on the digital side and the on the robotics side, you talked about a 20% reduction in the cost base. Is it the robotics part of the absolute impact? Or is that just an example of that coming through?
And if I can just check that those that 20% reduction isn't included in your cost savings target? And then the second one, just going back into the carbon side, and I know this is a bit of an unfair question, but if are you able to give what the sensitivity of cash flow would be to a 10 dollars per tonne move in the carbon price?
Start by digital.
Okay. So your question is about the part of robotics in the cost reduction. Okay. I discussed with some of you just to explain that robotics or artificial intelligence is part of the solution. Even smartphones, it's just a contribution to the full chain of digital and implementation.
So we gave the average number of 20%, 20%. In some projects, it's more. In other projects, it's less. But at the average, it's roughly 20%.
And your second question on the sensitivity of cash flow about the carbon price is that an obvious one? Because on one side, you could easily compute, but we are more or less emitting some 36,000,000 tonne of CO2. So if there is an increase of $10 per tonne, could say, well, it will cost you $500,000,000 per year. In fact, it's much more complex than that because if all our competitors are paying exactly the same price, of course, the customer will end up paying the bill. And this is why your the answer is not so straightforward.
Thank you. Philippe, if I may go back to your last slide that you presented and just have two questions to clarify. First, can you give us an idea what you assume in that 2,040 outlook? And I realize it's quite a long time away. But what do you assume in terms of Total's energy sales?
How much is it going to grow between now and then? Because surely, and that's the second question, the easiest way I'm just checking whether I get this right, the easiest way to meet your carbon ambitions would be to sign lots of offtake agreements with nuclear power plants around the world and sell it to as many customers as you can? Just checking whether I get the mechanics right. Thanks.
Okay. Well, what we've been doing is, in fact, we have based our reasoning in terms of market share. And for instance, in the oil product business, we know what our market share today. We have taken some hypothesis on the size of the market all the way until 2,040. And we have taken into consideration, but we think that we have the potential to increase slightly our market share on this market.
But the basis of the reasoning is in terms of market share. The same gas, LNG, we have 10% of market share. We have extrapolated the growth of LNG market, and we have said that we would have this 10% market share all the way down in the future, $240,000,000 In low carbon electricity, there is growth, but we have taken the same kind of hypothesis. 2023, we have told you we ambition to have 15% of B2C market in France plus Belgium. We have supposed that in 20 40, we would have 15% of European market beyond.
These are the kind of assumption that been taking and this is leading to the trajectory, but you saw. Of course, you could say that in easy way, yes, you buy nuclear electricity and you sell it and there is 0 emission. We have not taken this kind of trick into consideration, but it's true that as we said, we just intend to have, let's say, between 30% or 50% maximum of integration on power generation. So we know our own mix. But beyond, we have taken the hypothesis as it is a European business that we would be acquiring 50% of the market at the based on the mix of the whole of Europe, which is not like in France, where it is mainly nuclear.
But we took into account a mix, but it's a mix of gas, of renewable, of coal and of new nuclear.
So we were cautious on that as well. Yes. John, I think John has a question here as well.
Sorry to harp on to that last slide, but I just had one other question. Given that I think you include Scope 3, if I understand it correctly, does that mean that you had to put an assumption in for the efficiency at which your gasoline and diesel sales are used? So there's a implicitly in that there's an improvement in the efficiency of internal combustion engines in that. Yes. Yes.
And then second is, could you talk a little bit more about where you see the current cost of carbon sequestration, the challenges you're seeing around the technology, what you need to see in terms of sort of breakthrough capabilities and where you think realistically you can take that cost because then I can start to relate that to where the carbon market is as well right now?
[SPEAKER DOCTOR. JENS OKAYLA:] Rudolf
Staudigl:] Well, in terms of cost, do you want to give figure? Basically, what we have made in terms of studies is leading us to a cost more or less of $100 per ton of CO2 to up to 150 The real difficulty is more to find the adequate place where we can store for very difficult time the CO2. And this is the real challenge. And this is one reason for us to work with Norwegian because North Sea, of course, can offer potential for the whole of Europe to store CO2. So the question
is But all that is
linked to
the carbon pricing. If you are in a world where we would pay $40 per tonne for a company like photot like Total, it would represent several 1,000,000,000 of dollars. I can tell you that if all the industry would face such a situation, we would accelerate investments in this type of technologies. And so it's difficult to anticipate because of it. We need to work on it.
We need to be much more proactive. We need some subsidies in order to make this framework working. But it's a question of scale up. But I'm convinced that it's very difficult to extrapolate from few pilots. You have only 17 projects in the world today of the CUS, 17.
It's nothing. So if really we had to store the amounts of CO2, which was in the shaft, we see 3,000,000,000 tons or even 5,000,000,000 tons, Motivation will be there and the business will be developed and I'm convinced we could reach under $50 per ton or $40 per ton. But the whole history of technology and incentivization by the pricing is why we think pricing is necessary. It gives me the opportunity to complement the answer to Lydia. In the report that we have on the table, you will find an interesting data, which is we try to evaluate what was the impact of $40 per ton long term on the portfolio value of Total is 5%, 5% on the NPV, long term NPV $40 per ton.
So yes, it's 5%. It's not as dramatic as some people would like to say. So it's 5% on $40 per ton. It's written in the book. [SPEAKER GOMES DA SILVA:] And by the way, this remark, and let me you've seen that Philippe mentioned natural things like forest.
Obviously, today, when you look to the site, it's much more interesting to invest in natural sinks than in CCUS, less than $10 You can be even much more efficient. So we need to think to that, properly speaking. And I know that we share these views with another large European companies. But I think yesterday during our session of HCI, it was put on the table as one thing which could make sense globally for the world and even in terms of efficiency of the dollar we invest.
I think Thomas had a question.
Thomas Adolff from Credit Suisse. Just on digital technology, you gave a lot of examples, but you haven't actually quantified the potential savings or extra revenue you can generate from everything you've just mentioned. So I wondered whether it's because it's too early, hard to say, or it's just going to get completed away in the form of lower energy costs. And you also mentioned earlier on that you are ahead of your peers in some areas. But being ahead, is that good enough?
Or is it actually is what you do also differentiated? Because I had this conversation with a CFO for another super major, and he said to preserve the margin, you need to do something differentiated. The second question is, you've talked about less time for data, more time for higher value tasks. Does that also mean your organization can now be much smaller in terms of headcounts? Thank you.
Okay. So there are many questions in your question. First of all, about the issue to evaluate precisely the cost reduction or the value of implementing a digital strategy, digital technology. I will say that today, we'll we start to implement. I gave many example of robots and drones.
We are first to develop the hardware, then to demonstrate it's a pilot site, then to demonstrate in a real situation and then to extrapolate deployment in all our sites. So step by step, we are more and more confident in our calculation. So when I gave the average number of 20%, we start to calculate it project by project. So I'm sure that in the next years, we will be more and more specific, giving right numbers depending on the project. My second comment is that you're right.
It's not only a question of technology. It's also a question of organization or how you dedicate your workforce. So I gave this example of what we are doing with Google, in the partnership with Google. It's clear that we will automize all the routine repetitive tasks, and we are able to evaluate the free time that we will spend for more complex issue. Today, we know that we have not enough time to exploit all the information that we are buying.
So thanks to artificial intelligence, we will give we will have access to more data. And so it's not just a question of quantification, it's also a question of learning or how can I say that? We will learn more because we will have more data. So knowledge will be higher. And so in some cases, we don't know exactly what will be the advantage, but we are sure that there is an advantage because we will know more.
In some other cases, you are asking about, is it a good thing to be ahead or not? I will say that regarding digital, there is no risk to be ahead. There is just a risk to create more value. And so we need to be committed. We need to be engaged.
It's why we sent people working with Google. It's why we sent people working with data in Pune. It's why we have researchers working with Stanford. We need to be at the front to know more about what is occurring and to keep the skills growing inside Total to be able to catch the value and to make the translation in our business.
So it's
a quite longer Just
to add, what is the main challenge for us on the cost side is that we need to be able to eliminate more or less the inflation that we face every year. In the commodity business, this is where we are, in fact. And refiners, they know that part of our workforce is because salaries are inflating, but at the end of the day, there is no inflation to margins. So all these tools for us that we are trying to develop is new ways to find new efficiencies in order to maintain to reach this objective, which is to lower the cost per month base. This is what we are working.
So digital clearly is hurting. So that's the cost part of the industrial digital. On the marketing part, it's more a question of creating value like on these smart electricity story where you can add services. This has potentially like, I would say, also the car fleet management of mobile business potentially more we will play on the revenues more than on the cost. And this could be some breakthrough.
I think the companies, for example, would be the first to be able to make to robotize their service stations could have an edge compared to the others and could attract more customers. So these are more disruptive like what we try to do on the smart energy, smart electricity. So to quantify it, to be honest, I read all the papers of my competitors before to make that presentation. I've been amazed by the precision of minus 15%, etcetera. We could have put plenty of figures.
Maybe we are 2 engineers in total. So I think Manuel gave you an hint. But again, for me, it's more a question of one side to be able to contribute to maintain to eliminate the inflation on the other side is to create added value in added services. We're going to have time to come back to you on that. But to be honest, the fact that we are now embarked in the smart electricity business in a large way.
We invested $2,500,000,000 in this company. We are now speaking about real figures and real market shares and real results, and we'll be able to show you that in the coming months quarters. I think it's the best answer to all of that. Geraint, last but not least, I don't want we don't do that to eliminate workforce in exploration. Clearly, one of the main challenge we have is that we are too slow.
We acquired data and before to go from data acquisition in this industry between data acquisition and putting a well, you have 2 years or something like that. It's very long, in fact. And it's even worse when you take in the reservoir management. In this industry, we make 4 d seismic, which means several seismic around the time, along the life of the reservoir. But to integrate these data that we acquire into a reservoir model, it takes 1 year to 2 years, so it's too slow all that.
So where I see that we could improve a lot of the industry is to be able to have some algorithms which would help us to update our models and then to be smarter on the way we implement the world. So again, it's a global added value of efficiency there, more than cutting. It's not because we have 200 geologists less that will enhance the returns on the shoulders. It's not at all the target. We are not it's not massive, the robotization aspect that the finance industry could say, face.
It is not what we are targeting industry. It's not at all. We are not there.
Conscious time is moving on. Maybe we can have one last question from Jason.
Thanks. This is Jason Gilmore with Jefferies. Just a couple of questions on big data actually. As you are partnering with other companies, are you retaining sole ownership of your data, including the metadata? Or is there some sharing of that data with the partner?
And then second of all, as more of your data is in places like the cloud, what are you doing about cybersecurity to address the integrity of that data?
I will not detail all the condition of the partnership with Google. But I will say that the guidance of the company apply, it means that each partner keep their background. So regarding Total, the background is in our data. Regarding Google, the background is in the cloud solution. And I would say, it's a core algorithm of artificial intelligence.
And regarding the way we will learn from all data, we will learn for us. So this will be exploit by TOTAL.
[SPEAKER JEAN PIERRE ANDRE DE CHALENDAR:] So
the security is of your concern, to be clear, but these are at this stage are pilots, I mean, R and D businesses. If we have to do that at a larger scale in a routine way, this obviously will be taken into account. And I can tell you what we dedicated the session of the Board Director of Total on the cybersecurity risk. So we took that very seriously and including in order of protecting our business interests from globally speaking. And it's creating today in companies like us, we are obliged to think differently on the way we organize the whole IT and IS systems, in fact, in order to protect the company.
And it's more in particular to avoid any intrusion of any, I would say, attacks on the command system or refineries and etcetera is really high importance for us in terms of security. So all that is taken. But at this stage, it's a stage of R and D developments. We can isolate them and it's not yet at a routine level. But this concern of cybersecurity is well taken into account.
And I think you oblige all the large corporations like Total to think again the way we have structured our whole IT system. And when you speak about cloud and things like that, it's raised some issues. That's clear.
Okay. I think it's been a very full and busy day. Maybe just before Patrick says a few closing words, I mean, you're all invited to dinner tonight at Delmonico's restaurant, which is just down the road. Unfortunately, I think I believe it's still raining. So there are some umbrellas at reception, which you can take with you.
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] We are a company, so the dinner is very important. Otherwise, if you don't come to the dinner, you will miss the best part of the day. So come to the dinner. We have the opportunity to continue to discuss with us. I would like, first of all, to thank you.
We have I think it was the first time we came here to New York, but we had even a larger attendance than in London, to be honest. So it's nothing to see with the Brexit if we come to New York. But I think it's good for us that we alternate between London and New York probably will come back because, again, we have shoulders of both sides of the Atlantic. They are very important to us, and it's good to come as well here. I would like to thank also all the speakers today behind all that.
A lot of work has been done by them, but also by the team. And we have to you know that we have taken one of yours to join the team, Brendan Owen. I didn't welcome him this morning, but I would like to welcome Brendan. Brendan is working with Mike. The idea is to transfer the job of Mike to Brendan.
There is one condition, he needs to learn French because before today, all that is in English. But before, we speak in French together, which is maybe, by the way, one of the challenge as a company in order to become even more global. But thanks to our Maersk colleagues, everybody is writing in English now, which is a good step. So thank you to all of you. And again, I hope that you appreciate it.
And thank you for your questions. And I think it's good to have this long session because I remarked and I take some few questions of yours, which will feed the next presentation of the company. And during the questions, during the workshops, some of the thematic sessions, we are more precise, but it helps you probably to go into more details. Don't hesitate again during the dinner. We are there to try to do your best, except so he also creates about what is the value of Arctic 2, what is what do we do with Virgin.
So you have some questions, don't ask you. Do not ask us. It has no you will see one day. You will see. Don't worry.
Thank you. Thank you, too, for the attendance. And I hope we'll have a good dinner together. Thank you again.