quarter 2018 results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Patrick de La Chevardière, Chief Financial Officer. Please go ahead.
Hello, Patrick de La Chevardière here. We reported a strong set of second quarter results. On a quarter-over-quarter basis, adjusted net income increased by 23% to $3.6 billion, or $1.31 per share. Debt-Adjusted Cash Flow, DACF, was $6.8 billion, an increase of $1.1 billion compared to the first quarter. Net cash flow was very strong at $3.9 billion. Thanks to major project ramp-ups and recent acquisitions, we are well-positioned to capture the higher Brent price with strong production growth and an organic pre-dividend breakeven of less than $25 per barrel. Going straight to the segments. E&P is in great shape with adjusted net operating income of $2.7 billion in the second quarter, an increase of 23% compared to the first quarter. By comparison, Brent increased by 11% to $74 per barrel. E&P cash flow increased by 20% to $5.1 billion.
Production was 2.72 million barrel of equivalent per day in the second quarter. A slight increase from the first quarter with the full quarter of Maersk more than compensating for higher maintenance in the second quarter, mainly in the North Sea. It is indeed quite unusual to increase production from the first to the second quarter. Second quarter production increased by 9% compared to the same quarter last year. We now anticipate that 2018 production growth should be above 7%. We are continuing to deliver industry-leading production growth. Looking at this in more detail, Maersk is fully on board now, and we have Kashagan, Fort Hills and Yamal LNG continuing to ramp up. The start-up of Ichthys, Kaombo, Tempa Rossa and Egina will fuel growth in the second half, and these are good cash accretive new barrels.
Next year, growth will be driven by ramp-ups of these projects and the next wave of major start-up including Lara, Culzean and Johan Sverdrup. The momentum is strong, and it is welcome with high price. During the second quarter, we sanctioned Zinia II in Angola. After re-engineering the project and taking advantage of the lower cost environment, we succeeded in cutting the investment amount by more than half. In addition to Zinia II, we have recently restarted infill drilling programs on major fields in our core areas, and we took a FID on the Arcadia gas field at GLNG and a new phase of drilling for Al Shaheen. The gas renewable power segment generated about $200 million of adjusted net operating income in the second quarter, reflecting better results from gas trading and new energy.
Earlier this month, we closed the Engie LNG acquisition, and this position Total as the second largest player in the fast-growing LNG business. In LNG, we announced in May that we are taking a direct 10% stake in Arctic-2 in Russia, further expanding the LNG portfolio. In July, we closed the acquisition of 73% of Direct Energie. We have Total representative on the board, and the offer period to acquire the remaining shares has been launched. We are committed to growing along the gas and electricity chain, and this acquisition is a big step toward achieving critical mass in our two largest markets for electricity distribution, France and Belgium. Turning to the downstream. Refining & Chemicals contributed EUR 821 million of adjusted net operating income in the second quarter, an increase of 14% compared to the previous quarter.
The European refining margin indicator recovered from a seasonally weak first quarter and averaged EUR 35 per ton in the second quarter. Petchem price increase remained strong, but rising naphtha feedstock costs affected margins in Europe. We completed some maintenance programs in the second quarter, the most important being Antwerp and Normandy Petchem. We can expect better margin capture going forward. R&C generated EUR 1 billion of cash flow in the second quarter, bringing year-to-date contribution to EUR 1.9 billion. For the future growth in R&C, we are concentrating the investment on petrochemicals and targeting opportunities to take advantage of low-cost feeds. We have two ongoing expansion projects in the U.S. and Korea. We also launched two studies recently, a project in Saudi Arabia with Saudi Aramco to strengthen the integrated setup platform and capture synergies. Another project in Algeria with Sonatrach.
In France, we are converting La Mède to a biorefinery, and we'll be producing renewable biodiesel later this year. For marketing and services, the main message is that we are continuing to grow this high-return business, demonstrated best by an 11% increase in refined product sales outside Europe in the second quarter. Adjusted net operating income for marketing and service was EUR 478 million, an increase of 30% compared to the first quarter. The combined downstream segment, Refining & Chemicals, plus Marketing and Services, generated cash flow of EUR 1.7 billion in the second quarter, in line with our guidance for the full year. For the first half 2018, downstream generated cash flow of EUR 3 billion and a royalty of close to 28%. Moving to the group numbers, we generate EUR 6.8 billion of Debt-Adjusted Cash Flow in the second quarter.
For the first half, the group generated a robust Debt-Adjusted Cash Flow of EUR 12.5 billion. Oil prices are above EUR 70 per barrel, we are relentless in our demand for discipline on investment and OpEx, including the rapid capture of synergies from new assets. For the group, we have increased our cost reduction target for 2018 from EUR 4 billion to EUR 4.2 billion. Net capital investment, which includes organic investment, plus acquisition and divestments, was EUR 2.5 billion in the second quarter. For the first half, net capital investment was EUR 6.7 billion, including EUR 1.3 billion of net acquisitions. Note that net investment in the first quarter will include about EUR 3 billion for Engie LNG and Direct Energie. We confirm the full year 2018 guidance at EUR 16 billion-EUR 17 billion. Again, we are delivering on the commitment we have made in February.
With this strong growth in cash flows and discipline on spend, net cash flow was $3.9 billion for the quarter and $5.1 billion for the first half. Profitability is also continuing to improve. Return on equity increased to 10.9% for the 12 months ended June 30, 2018, and the ROE of the group is now back above 10% for the first time since the oil price crash. We are committed to maintain a strong balance sheet, and at the end of the second quarter, our net debt to capital ratio was 16.5%. This is a small increase from the first quarter. Due to the timing of the AGM, we made two dividend payments in the second quarter. We made three dividend payments in the first half, and the cash out impacted our net debt.
We bought back 19 million shares in the second quarter, bringing the total to 28 million shares for the first half. The 28 million shares include 18 million shares to eliminate dilution from the scrip. We bought back an additional 10 million shares for about $600 million as part of the $5 billion buyback announced in February. In addition to increasing the interim dividend by 3.2%, we are delivering on our commitment to share the oil price upside with our shareholders through the buyback. These results demonstrate that we are taking advantage of the favorable environment. Production growth is providing strong momentum for cash flow going forward. Our countercyclical strategy, acquiring Engie LNG and Petrobras assets, clearly rewarded us in the environment. We are confident that we can continue to successfully implement our strategy and deliver on our commitments to shareholders.
We look forward to providing you with more detail in September at our Investor Day presentation at the New York Stock Exchange. Now we can start the Q&A.
Thank you. If you would like to ask a question, please press the star or asterisk key followed by the digit one. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. Again, please press star one to ask a question. We will take our first question from Oswald Clint from Bernstein. Please go ahead.
Patrick, hi. Good afternoon. Thank you. I wanted to ask about the Engie LNG deal, which has closed this month. Obviously, we should expect some earnings contribution 3Q, 4Q, but is there optimization or kind of, I guess, optimization is the word. Is the optimization Total can do with this portfolio through changing some of the contracts and the destinations to enhance the profitability of the larger LNG portfolio with Total? Is that something that's possible, and if so, is it possible in the short term, or it'll take a couple of years to actually go through those contracts? The second question, please, was on your CapEx, the $16 billion-$17 billion for the year being reiterated. You did make a comment there around increasing infill drilling within your core basin. That's been included within your CapEx guidance.
Does that mean something is moving out of your CapEx guidance for this year, or the cost of that infill drilling is just particularly low? Thank you.
Thank you, Oswald. While you're answering your question, I'd like to repeat that we at Total are able to offer to shareholders an interesting growth while maintaining discipline. We increased our OpEx saving target to $4.2 billion. We deliver an organic pre-dividend breakeven below $25 per barrel. Our profitability is more than double digits with ROE at 11%. Your first question about Engie LNG optimization. It's a business which you can play well when you have a large portfolio. The Engie deal was closed mid of July the 13th. We are building on a group competitive advantage with strong technological and commercial expertise. It is in line with our strategy to expand along the gas value chain. We are doubling our LNG portfolio to consolidate our position as world number two. The point is not to be number two.
The point is to have a large portfolio. Managing this portfolio of 40 million tonnes a year in 2020 will represent 10% of the market. We can make many, many arbitrage. Total is positioning by this transaction itself to capture strong market growth, 10% in 2017. I remind you that was a big growth. The Engie LNG acquisition is financially extremely attractive, with a growing cash flow from operation impact over time. At $60 per barrel for 2019, we expect $100 million-$200 million a year with strong upside. We have an NPV for our synergies above $100 million, maybe $150 million. That's about Engie. The main thinking you should have on Engie is the portfolio effect. Your second question was about CapEx. Yes, the infill drilling are included in our $16 billion-$17 billion guidance.
We expect our CapEx to pick up second half of this year as we sanction new project like Johan Sverdrup, Tyra, or some short cycle in North Sea, in Qatar. In addition, traditionally, downstream spends more in the second part of the year. On the other hand, we are exiting a period of heavy investment as project start up, the new project we are launching are less capital intensive. As I said starting my answer to you, we remain disciplined and keep our guidance for capital investment at EUR 16 billion-EUR 17 billion this year and EUR 15 billion-EUR 17 billion for 2019, 2020. I remind you, this is a mix between organic CapEx and net acquisition. Thank you, Oswald.
Thank you.
We will now take our next question from Jon Rigby from UBS. Please go ahead.
Hi, Patrick. A couple questions. One actually picking up on where you just left off is with the closing of a couple of big deals in 3Q and your comments around the success of acting countercyclically, can we expect the pace of disposals, I guess, out of E&P to pick up over the next 6-12 months as you begin to sort of play the other side of that deal? Does the production guidance that you provide for this year include or exclude any effects of planned disposals? Then there's just a second question is, I guess oil prices are exceeding the levels that you expected in your planning or your budgeting. You're obviously buying back stock, but you're also generating free cash flow. You have an existing buyback target or indication.
At the margin, if you're exceeding expectations in free cash flow generation, where are you likely to put that excess cash? Is it likely to supplement the buyback, or is it to reduce your net debt? Thank you.
Okay, Jon. Thank you for your question. As you said, we are counter-cyclical. It's time for us to sell. There is no emergency. We face no difficulty. We just need to get the highest price for the asset we have put in place. You may wait maybe 6, 12 months to see the result of this new trend on us to start and try to monetize assets, as we did for Martin Linge, for instance, last quarter. The next question was, what to do with our excess cash.
If you remember our slide with the allocation of cash flow from operation, we wanted to reduce our debt, maintain our gearing below 20%, then increase share buyback. Increasing meaning increasing the speed at which we make it. This is what we are doing, basically, now. With the EUR 3 billion acquisition, you notice Engie LNG, and Direct Energie. We have a EUR 3 billion cash out next quarter. We need to repatriate cash flow from ops in our balance sheet to maintain our gearing, we will, I think, slightly increase the pace at which, sorry, we will buy back shares. Thank you, Jon.
Thank you.
We will now take our next question from Christyan Malek from J.P. Morgan. Please go ahead.
Hi. Good afternoon. Thanks for taking my questions. There's just two, if I may, Patrick. First of all, just sort of follow on, key factors aside from oil price in terms of phasing of buyback and sort of scope to increase it beyond the target of EUR 5 billion. Assuming you do accelerate the pace of it, where does the excess cash go? Is it going to lowering the gearing, or versus sort of actually raising that target beyond EUR 5 billion? If it's the former, would that imply or suggest that you're actually looking to do future M&A over the medium term? The second question in terms of sort of cash breakevens. You've had a fantastic show for the quarter in terms of managing lower to sort of the low 50s.
In terms of thinking about the medium-term CapEx guidance, you talked about 50 to 17. Is that something we should assume is sort of as a base case in terms of thinking about the equilibrium around cash breakevens over the medium term, or should we still be thinking about the lower end of the range?
Christyan, thank you for your question. The first question about cash allocation. We do maintain, I haven't increased the overall EUR 5 billion target for share buyback. I precisely said that I maintain this target, and we may speed up the process of bringing back shares, what we will start, I think, this third quarter. Thereafter, I remind you that maintaining the gearing below 20% is important for us. We will allocate most of the cash this quarter, the excess cash, to maintaining the gearing and increasing maybe slightly the pace at which we buy back shares. The cash flow and the breakeven. I will comment the organic cash breakeven, which is as planned as in February 2018. We generate EUR 6.4 billion cash flow this quarter before working capital, and the working capital for Total this quarter was basically stable. Our organic CapEx were EUR 2.8 billion.
We generate $3.6 of organic free cash flow at oil price in average at $74 per barrel. Using our sensitivity of $2.8 billion of cash flow for $10, the pre-dividend organic breakeven was exactly $23 per barrel. Using a full cash dividend, our breakeven post-dividend was below $50 per barrel, sorry, down year-on-year and quarter-on-quarter, as we carry on improving the overall performance of the business. It is not only because the oil price has increased that we change our strategy here. We do not change our strategy. We remain firmly focused on the efficiency program, including the cost-cutting program and the CapEx maintenance. Thank you.
Thank you.
We will now take our next question from Martijn Rats from Morgan Stanley. Please go ahead.
Hi. Hello. Hey, I had a few practical questions. I wanted to ask you about Kaombo, first of all. The Angolan loading program is showing a pretty decent sort of rebound in September, and I was wondering if this is basically driven by Kaombo coming on around that time. The other thing I wanted to ask you about is Yamal LNG. It's a project that has been mothballed already for quite some time, but there's no particular sort of reason to ask you about it now. I just wanted to ask, is there any prospect that this could come back? A lot of companies are talking about doing LNG FIDs again, and this could come back relatively quickly if the security situation allowed it, and that would change, of course, somewhat of the supply-demand balance. Finally, yeah, one question about working capital.
A flat working capital in a quarter where the oil price changed so much, how did you do it?
Okay. Thank you, Martijn. Kaombo North started. It's a matter of days. When you read the both allocation and Angola rebonding, I think your intuition is right. Yamal LNG is cocooned at the moment. If we were to face a stable environment in Yamal, we could restart this, resume again those operations, but that's not the case today, and I'm not expecting Yamal starting again soon. Working cap. You remember, 2 years ago, we had difficulty in managing our working cap, and it's difficult to manage a working cap, actually. We have put in place a group of people, and we review the working cap, not at any management committee meeting, but every quarter.
We review the working cap every quarter with all the management of the branches, Patrick Pouyanné, and myself, and we try and understand why the working cap was deteriorating or getting better, depending on the quarter. We give some guidance to the people so that they reduce their inventory, so that they speed up their payment. Very basic decision, which improves the working cap. I have to say that by year-end this year, assuming a stable oil price environment as it is today, we would like to recover between $1 billion and $2 billion of working cap, more than what we had spent this year. Beginning of this year to today, we spent basically $3.5 billion, and we would like to recover $1 billion-$2 billion of this working cap.
Wonderful. Thank you.
We will now take our next question from Irene Himona from Societe Generale. Please go ahead.
Good afternoon, Patrick. My first question concerns divisional tax rates. If I'm right, both E&P and R&C had reduced tax rates in the quarter sequentially. I wonder if you can discuss the drivers and importantly give us some guidance for full-year expected sort of tax rates. My second question on gas and renewables, you had a $424 million special charge in the quarter. I wanted to find out what you impaired. Finally, OpEx, you're increasing the target. Can you talk a little bit about the sources of the cost reduction? What new things are you doing, or is it the same old things that you're able to extract more efficiencies from? Thank you.
Thank you, Irene. Tax rate first. It is true that we are monitoring our tax rate very carefully, and that sequentially, the tax rate by mainly E&P as a volume of taxes was slightly down. This is basically due to one element of one concession, which has been extended so that we could have the value of our past losses being a tax asset. Without extension, there were no possibility to value those tax losses, and with the extension, we have the possibility to use those tax losses. We activate a tax gain there. That's about $100 million. The assets we impaired are two plants of SunPower, and we impaired for about $400 million, a little bit less than $400 million, if I well remember. That's mainly the impairment. This is the only impairment we had this quarter.
The last question was about how do we do to increase our OpEx cutting target. You know, Irene, I already told you we were fat. There is still some fat. We are monitoring every month the progress we made in our cost-cutting program, reviewing line by line. This is by managing that and incentivizing the people doing those work that we manage to increase our savings. Thank you, Irene.
Thank you.
We will now take our next question from Theepan Jothilingam from Exane BNP Paribas. Please go ahead.
Yeah. Hi, good afternoon, Patrick. I've got a couple of questions, actually. Firstly, I guess the Maersk Oil deal from last year looks increasingly attractive. I was just wondering whether you could give us any sort of updates in terms of the contribution to the quarter, and in particular, sort of what synergies you've been able to extract out of that deal. Secondly, I think Yamal volumes have gone extremely well. I was wondering how much possibilities there are to debottleneck further there. Thank you.
Okay. Let's start with Yamal. A good news is that Train 2 first drop of LNG happened, I think yesterday or two days ago, I can't remember exactly, but very recently. Train 2 is starting right at the moment. The Maersk contribution, you know that, we revised up our synergies with Maersk, and we will do more than $500 million. The deal was closed beginning of March. Obviously, the counter cyclical timing was excellent. The cash flow for next quarter with an excellent cash margin of about $30 per BOE at $6 per barrel. That is the margin provided by Maersk barrels. On top of that, we expect the Johan Sverdrup and Culzean to start up in 2019. The integration is progressing well. There were some costs provided for this integration in this quarter books of about $100 million.
This is why we are extremely confident and very happy of this acquisition. The same, I have to say that A.P. Moller should be very happy with the Total share price going up also on their side. It's basically a win-win deal that we have made. Thank you, Theepan.
We will now take our next question from Thomas Adolff from Credit Suisse. Please go ahead.
Hey, Patrick. Thomas from Credit Suisse. Two questions from me. Firstly, going back to the
Okay, it appears the participant may have stepped away. We will now take the next question.
Oh, sorry. I meant Johan Sverdrup. I am here.
We will now take our next question from Christopher Copeland from Bank of America. Please go ahead.
Hello, thank you very much. I just would like to focus on production, Patrick, and whether you could give us a little more color around what made you upgrade guidance now, which projects have come through faster, what have you de-risked ahead of expectations, and perhaps talk us through also your production expectations beyond this year. As we all know, you have got this 2022 CAGR outlook that was originally, I believe, established with South Pars in mind. Whether what you are seeing right now will easily already compensate for the Iranian volumes that you originally expected, or whether you have got other external options in mind from what has happened since over the last few months. Thank you.
Thank you. Clearly, we are doing well on production. The same with cash flow. The growth this year is very impressive, and it will be the same basically next year. I do not know exactly the figure, but the production growth will be strong for some time from now. For the first six months, our production is up by 9%, if I well remember. We believe that we can keep this rate with coming startups such as, and both startups are imminent, Kaombo Ichthys, Tempa Rossa will start up. It is a matter of day, maybe week, but not so much. You will see both startups being very imminent. That we will continue and grow the production this year and 7%, because, sorry, the production growth was 7%. 7% is a very high figure already. Do not ask us to make more than that.
We want to create good cash flows to sanction accretive project, we are doing so. The new wave of sanction will be Johan Sverdrup , Ikike, Mero 2, the new name of Libra, plus some short cycle infill in the North Sea in Qatar that we had previously kept on hold. That's basically what I can say. The loss of the volumes from Iran was late in the period, this doesn't change the guidance, that's it basically.
Thank you.
Keep in mind that the Yamal ramp-up is fast.
Thanks, Patrick.
We will now take our next question from Thomas Adolff from Credit Suisse. Please go ahead.
Hello, can you hear me now? I'll try again. Two questions for me. Going back to working capital. One of your competitors earlier on said that trading is profitable and it requires working capital. It is tough to manage working capital. I wondered how important trading is to the bottom line for Total since you've done a very good managing the working capital, not just this quarter, but in general. The second question is on LNG. Not too long ago, you were fairly small. Now you're quite big following the completion of Engie, and you have a very young portfolio and a deep hopper to pick from.
I wondered in terms of longer-term ambition, maybe to 2030, since you also have a positive view on the LNG market, how should we think about the size of Total in the mid 2020s, late 2020s from 40 million today? Can you be 60? Could you be 70? What is the internal discussion around that? Thank you.
Thank you. Well, I don't know who you refer by when you said that a competitor of ours was having difficulty with his working cap because of his trading. We are managing trading for both result and financial exposure. We do manage the working capital of the trading itself also. It's part of the whole company working capital exercise. We are able to control our working cap in trading at a quite low level. The trading is providing good result. You know that we do not provide figures on it, our trading is providing good result to the bottom line. It's less volatile than what you can see from our competitors, I do recognize that. All in all, it's a very good contribution to the bottom line from trading with a control of their working capital. LNG mid 2020, that's a big question.
I think this will be one of the topics we will cope with in our September presentation. Just remind a few assets we have in our portfolio, Engie LNG portfolio, notably Cameron LNG, the Arctic 2 LNG project. We have the PNG in Papua New Guinea. We have the seventh train of Nigeria LNG. We have Tellurian. We have a lot of low-cost projects that we could develop and which can provide value and results because we are not only managing the company for value but also for results.
Thank you, sir.
Thank you.
We will now take our next question from Bertrand Hodee from Kepler Cheuvreux. Please go ahead.
Yes, thank you for taking my question. Hello, Patrick. Two questions, if I may. The first one in Angola. We've been waiting for some time for Zinia to be sanctioned. There's been a lot of restructuring at Sonangol, some fiscal terms being agreed. Is there more project to be sanctioned in terms of tieback, especially on Golden Block 17? What kind of timing can we expect for those tieback? The second question related to Egina. I think this is one of the few projects coming on stream this year that we did not talk about during this conference call. Can you give us an update on when do you expect Egina to come on stream? Thank you.
Thank you, Bertrand. Many things in Angola. I have to say that Angola is a well-run country at the moment. We are very happy to work in this country and to share profit with the state and us. As you said, we have been able to cut the cost of Zinia II by more than half. We sanctioned it finally. There are other projects in the pipeline. I don't know exactly when we will be able to sanction them, but then you have CLOV 2, Dalia 3. In Nigeria, you have Akpo, Preowei. In this Gulf of Guinea region, there are a pipeline of five projects, I would say, that could be launched in the forthcoming years. On Egina, we own 24%. We are the operator. The first oil is expected by December this year.
The overall project is above 90%. The revised project cost is 9% below the initial budget due to CapEx efficiencies and excellent drilling performance. The FPSO arrived in Nigeria in January. The drilling campaign is progressing ahead of schedule. Thank you, Bertrand.
Thank you, Patrick.
We will now take our next question from Lydia Rainforth from Barclays. Please go ahead.
Thanks. Hello, Patrick. I just have one question, actually, and that was around the cost savings number, the idea that you'll be ahead of the target this year. Can you just walk through where that progress is coming from and sort of where within that process you think you are? Thank you.
Yeah. We have several initiatives that are going down our costs. You remember that we create a central management and operation branch, which name is Total Global Services. This initiative where we centralize cost, purchasing, accounting, and so on, is providing some results. Second, it is digital. It's difficult to quantify, but obviously, it's providing some results, including now. The good example is a smart home, for instance, that we are able to implement. Of course, we have our initial cost-cutting program that we implement week after week, month after month, and that is dragging down costs. I'd like to reemphasize also that the Total Global Service branch is now quite effective and efficient.
Thank you.
We will now take our next question from Jean-Luc Romain from CM-CIC Market Solutions. Please go ahead.
Good afternoon. Could you give us more color on the value you would assign to the acquisition of the two power plants you announced today? Would it compare to the value you assigned to the power plants of Direct Energie?
Yes. Basically, you can buy on the market today, and I will not give you the figure, which is confidential, but basically, you buy today CCGT at less than half price of a new build CCGT. This purchasing of two power plants is to complement Direct Energie, so that we could produce roughly one-third of the electricity we sell from our gas power plants.
Thank you very much.
We will now take our next question from Rob West from Redburn. Please go ahead.
Hello. Two from me. The first one is on FX. There is a debate opening up about how much the strengthening dollar has weakened downstream results in global businesses. I was wondering if you could comment on that. How much was the dollar a headwind for you in your downstream business over the course of the quarter? The second question is on Yamal. Have you received any cash dividends back from Yamal LNG venture? If not, when do you expect to receive them? Thank you.
On Yamal, I have not received any dividend. I should be aware of that if we have received one, but we haven't. When we will receive it, you have to wait by 2020, I think, after the first repayment of the debt. That's something maybe by 2019 because we have an early production. The FX on downstream, I don't know exactly how much was the impact on downstream results, but I can give you another matrix. The FX, the stronger dollar this quarter has increased our net debt by $1.3 billion this quarter. I remind you, our sensitivity so that you can play with the numbers, and the sensitivities works perfectly. $0.10 per dollar is $100 million of net and much less net operating income and much less on cash.
That's very helpful. Thank you.
We'll now take our next question from Lucas Herrmann from Deutsche Bank. Please go ahead.
Hey, Patrick. Thanks very much for the time. Couple if I might. First one, just going back to LNG. Again, you may well want to refer me to September, but I just wondered how much more risk you'd be happy taking into portfolio given the length that exists within the LNG portfolio, i.e., much of it was there for trading. When I think about other projects that you might get involved in, the Arctic LNGs of this world, the extent to which you, Total, are willing to contract. Secondly, just going back to refining. You mentioned that the issues at Antwerp and Gonfreville are resolved. How might we expect those to help performance through the third quarter, assuming other things hold up as well? Thank you.
Okay. LNG first. It is true that now, having integrated in our portfolio the Engie transactions, we are a little bit long, and we are working to reduce this length, and we will manage the portfolio more actively, actually, than it was done before. There will be more reloading. Something which is helpful because the market is like this today, is that when you reroute LNG tanker from Europe to Asia, there is a gain between $3 and $4 per million BTU at the moment. This is very helpful to manage this situation. Antwerp, "Anvert," or Anvers in French, it should improve. The big maintenance is behind us.
But-
Now-
No sense of how much you've forgone?
Sorry?
Sorry, Patrick. No sense of how much you've forgone through the, or how much you ceded in terms of opportunity through the period the facilities were offline?
It will be very helpful to have Antwerp and Normandy working perfectly. On top of that, on the refinery side, we are well-positioned for the new regulation on heavy fuel oil for tankers. This project.
Patrick, thank you very much.
The project we have make EUR 150 million a year more.
Thank you.
We have no further questions on the telephone.
Okay. Thank you very much. Don't leave your office today. We look forward to seeing you in September in New York for the Investor Day. Book your seat, and there will be a very funny dinner at the end of the meetings. The second quarter and first half results show that we are gaining momentum and taking advantage of the stronger environment. The group generates $5.1 billion net cash flow so far this year. The production growth is very impressive. The organic pre-dividend breakeven below $25 per barrel is impressive also. We have increased the dividend. We are buying back shares as we committed to do it. That's it. Thank you for joining us, and enjoy your summer holidays.
That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.