Good afternoon, everybody. Welcome to our Q1 conference call. Let me start by saying that I hope that all of you and your families are safe in front of this pandemic, which is COVID-nineteen, and that you are coping well in these extraordinary times. I really think that the word extraordinary is the right word. It's a literary sense, I would say.
None of us never thought we could experience such macro environment, such an oil price crisis at the same time. So, we have a lot of ground to cover this afternoon for this call. So, it's why I joined Jean Pierre not to leave him alone and to cover the various crisis that we are facing. We are facing again this healthcare crisis and our priorities are the health of all our people and the continuity of our operations. And I would like to just to say to pay a tribute to all the efforts and commitment and responsiveness of all our teams around the world who are working together to ensure the continuity of our operations during the crisis.
Really, they are doing a great job. So, thank you to them, all of them. The second crisis, the oil price crisis, It's unprecedented, I would say. I had in my speech, I always said there is volatility and we experienced volatility. It's difficult.
I know that the oil industry would like to see a stable world. I think we are absolutely unable in this industry to stabilize anything. We'll come back on it and it has, of course, some consequence that it stretches the financial framework of our company. And we will come back on it with the update of the action plan. But I just would like to tell you that, of course, over the past 3, 5 years, we have strengthened our balance sheet, we have high graded our asset base, we have lowered the breakeven.
And so fundamentally, and I will come back on that, we consider that Total is very well positioned to weather this storm. I would even add that myself, I become a veteran of tough times. I took my position in 2014 just before the first downturn there again. So, we begin to add some good recipes to face the situation. And fundamentally, in what we believe, it's that priority should be given to self help.
This is, I think, the essence of all the plans we will present to you. But at the same time, as you know, we are also to prepare the medium and long term. But we have these immediate and short term challenges, which means, of course, the evolution of the energy landscape and the climate policy. So that's clear that we have worked and together today by the way, I think it's a good symbol, but at the same time, we speak about the immediate challenge and action plans and also a medium and long term. We have issued a renewed climate policy, which is a result of quite a lot of work with the Board of Directors and including the engagement with some investors of the Climate Action 100 Plus Coalition.
I will come back on it. And so I will address that issue as well in the second part. In order to avoid to mix all the Q and A, we propose to have 2 separate sessions. 1, after Jean Philippe Jean Pierre has introduced the Q1 results and myself the update of the action plan. We'll have a first session and then we'll go to the medium and long term, because I'm afraid if we mix both, all the questions will be more on the short term than the medium and long term.
But I think it's also important to have some time. So I propose to dedicate around 1.5 minutes for the first part and 45 minutes for the second part. So now I will leave the floor to before there was P2, now it's GP2, so I am P1 and GP2, so I need to give him a nickname as well. So GP2 will give you all the Q1 results.
Thank you, Patrick. So as you know, the Q1 environment was marked by a 30%
drop in
oil and gas prices, a 20% decrease in European refining margins and a collapse in product demand in line with the COVID 19 crisis. In this context, Total nonetheless reported resilient results. The debt adjusted cash flow was 4 point $5,000,000,000 down 31% year on year, and the adjusted net income was $1,800,000,000 a decrease of 35% year on year. Let's move to the production. So the upstream production was 3.1 1,000,000 barrels of oil equivalent per day during the Q1, an increase of 5% compared to a year ago and stable compared to the previous quarter.
So we continue to benefit from ramp ups, mainly for the major offshore fields in the North Sea, Kullian and Johan Larduk and Aegina in Algeria as well as our LNG giant fields like Yamal and Ichthys. So the contribution of these ramp ups were partially offset by the security situation in Libya, the redevelopment of the Tyra field in Denmark and natural decline of about 3% per year. Our Integrated Gas Renewable and Power segments, so IGRP, reported again strong first quarter results. Adjusted net operating income was 0.9 $1,000,000,000 an increase of more than 50% year on year. In addition to higher volumes, these strong results reflect the resilient pricing of LNG in our portfolio, notably the contract sales.
It reflects as well the value of global integration, including the increased use of European re gas capacities and the strong performance of LNG Trading. Renewable activities increased their contribution as well during this quarter. As you know, we are committed to pursuing high quality growth for these iGRP segments, which is key to the energy transition and to further diversifying our integrated model, notably into low carbon electricity. And I know that Patrick will come back on that later. The stability and sustainability of the IGRP contribution strengthens our performance particularly since the low carbon electricity business is outside of the oil price cycle.
In the Q1, we continued to expand IGRP along the entire integrated gas and low carbon electricity chain. LNG sales increased by 27% year on year, close to 10,000,000 tonne in the Q1, thanks to the ramp ups of Yamal and Itis as well as the start up of the first two Cameron LNG trains in the U. S. Growth installed renewable power generation capacity increased by almost 70%. Low carbon electricity generation increased by 10%.
We continue to grow our customer base rapidly, up 9% in the quarter, and we announced almost 6 gigawatts of new projects. Let's move to E and P segments. So this segment generated adjusted net operating income of $700,000,000 in the 1st quarter, down from $1,700,000,000 a year ago. So how can we explain this DKK1 billion decrease is due mainly to the price environment, of course, and the deterioration of the oil and gas prices that has a negative impact of about $1,200,000,000 And this effect was partially compensated by the increase in volume, mainly from the ramp up I mentioned already. Important, I think, to point out is that E and P maintained continuity of normal operations throughout the quarter.
We had no virus related stoppages and significant supply chain issues. We are making progress on the major projects under construction. And we announced, by the way, 2 discoveries in Suriname, plus 1 in the U. K. North Sea.
Refining and Chemicals generated $400,000,000 of adjusted net operating income, down 50 percent compared to the same quarter last year. R and C was impacted obviously by the 20% decrease in refining margins, reflecting weak product demand and by the reduction in refinery utilization to 69%. The Feznan Refinery in France, the sector of refinery in Saudi Arabia, were both shut down for planned maintenance in the Q1. And as you know, the distillation unit at Normandy remained shut down after incident occurred last December. Petrochemicals held up better than refining, benefiting from the lower feedstock costs.
Steam cracker utilization was above 80%. Marketing and services generated $300,000,000 of adjusted net operating income, a decrease of 12% compared to the Q1 2019. M and S Marketing and Services was also affected by low product demand, notably in China, during the quarter because of COVID-nineteen, but also in France in March. Sales were down 10% year on year, driven mainly by 11% decrease in Europe. For the group, the 1st quarter adjusted net income was $1,800,000,000 compared to $2,800,000,000 in the same quarter last year.
And as already explained, this reflects the impact of lower prices, lower refining margins and lower demand. The group debt adjusted cash flow was $4,500,000,000 compared to 6 $400,000,000 in the same quarter last year. This $2,000,000,000 decrease was driven mainly once again by the drop in oil and gas prices, more or less $1,500,000,000 effect and the decrease in downstream cash flow for the effect of $600,000,000 In addition, dividends from equity affiliates were lower year on year due to the environment and timing effects. Let's move to investments. So net investments during the Q1 were at $3,700,000,000 organic CapEx at $2,500,000,000 down 12% compared to the Q1 2019 and net acquisition were $1,200,000,000 in the Q1, so $1,600,000,000 of acquisition, mainly for Adelie Gas Limited in India and the 2nd tranche on Arctic LNG 2 in Russia and asset sale for $500,000,000 mainly the block CA1 in Brunei that we sell to Shell and interest in the Fosca Bayou Regard terminal in France.
Since the start of 2019, we sold $2,500,000,000 of assets, and we announced a further $700,000,000 which are still to be closed. But given the less favorable context of asset sales, particularly for upstream assets, we are recoupposing the asset sales program to infrastructure and real estate. The balance sheet remains strong, with 21% gearing at the end of the Q1. Gearing was negatively impacted by the working capital built in the Q1 of $2,700,000,000 This working capital built is mainly due to seasonal or temporary effects, and I will give you 3 elements that contributed to this working capital build during the Q1. So first, our gas and electricity B2C business generates more receivables from our customers in wintertime when consumption is higher.
The second element of this explanation is directly linked to the environment. The tax liability of our subsidiaries, particularly in the marketing and services segment, were reduced in Q1. And on top of that, we have our trading entities that we are building their stocks to benefit from the contango in the market to prepare the future. And we hope that, of course, that it will be translated in additional results in the future. Having said that, as the working capital is a critical element for our group's cash, we have put together an action plan focusing on working capital release, and we made the decision, by the way, to incentivize our manager on their performance regarding the working capital.
By year end, in a $30 per barrel environment, we anticipate liquidity at the end of the Q4 was $21,000,000,000 So it is $9,500,000,000 of net treasury. So I mean the cash minus the debt that has a maturity less than 12 months, plus $11,000,000,000 of undrawn credit lines. And in April, we enforced these liquidity by adding, sorry, dollars 10,000,000,000 of additional funds. So we issue more than $3,000,000,000 of long term bonds on the market at competitive terms, and we drew $6,000,000,000 out of a newly negotiated credit lines. So summarizing the first quarter results.
Our business segments were resilient in a weaker environment, and the strong balance sheet, the low cash flow breakeven puts us in a favorable position to cope with the challenges ahead. And I leave the floor to Patrick to describe the way forward.
Okay. Thank you, JP2. We are good, like the results, which were quite resilient in this difficult environment. But the Q1 results, to be clear, are maybe the best of the year. We don't know where we go, but I can anticipate that the Q2 results would be much lower because, in fact, in Q1, when we look to the impact of the COVID-nineteen, it was mainly for business in China in M and S during the 1st 2 months.
And I would say since 6th March for the rest of the group. So, it's more or less 1 month, I would say, which has been really impacted, plus some inventories effect by the end of the quarter. But I think Q2 will be more complex. And it's why, by the way, we made something today I will make something today, which is quite unusual, which is to give you more guidance. But how we can see the year, to be honest, it's not a very good easy exercise, because these extraordinary circumstances characterized by a lot of uncertainty.
And the way we can the economy can exit European economy, U. S. Economy will exit from this special period of confining. Will it be as quick as in China or not? A lot of question marks.
But I think it was good to give you more guidance and to correct a certain number of anticipation compared to what we told you in February. So first, I will go use a few slides. The first slide is, of course, to tell you that we are facing with all the teams of the group around the world this COVID-nineteen challenge and priority being, of course, the health of all our people and again the continuity of all our operations in a safe way. So a lot of people, a lot of our employees are working from home and it works. I would say the IT systems of the group are also resilient.
We can have more than 20,000 people working same time from distance. It's working well. We have also, of course, reorganized all the operations underground with more rotating teams in order to be sure that they don't cross each other. We have taken some measures to put in terms of protective equipment. Maths are mandatory in the Maths are mandatory in the company.
You cannot enter into any site of Total without having issue of a temperature, which is abnormal, and we take the temperature of everybody coming. So and of course, we dispatch the company, sanitize the shell. And we are reorganized. We are, by the way, today in France, we're organizing all the offices and on all the sites in order to be able to keep the social distance between the people, which is, I would say, what is required by the health authorities. So this is, of course, obliging us to find new ways to work, but it seems to work.
And thanks to the efforts of everybody. Operations, we have implemented some business continuity plan, which means that we have in our subsidiaries limited the staff to what is essential people, looking to if we can ensure again all the productions of the sites and the access maximizing the availability. We control, of course, strictly the access to the sites on all the offshore platform. There are some if we think there is a risk to PCR testing, we put the people in quarantine before they go offshore. So actions have been done in order to ensure that continuity.
Customers is important. Our retail network is open at 95%, which is quite high. Unfortunately, to be honest, when I would look to the statistics, the business is not at that level. In France, we have lost almost 70% of the business in marketing. In Germany, it's around 35%, 40%.
But our people are there, and we have reorganized that to keep the social distancing. We continue to supply gas and electricity. And we take care, of course, of our communities as much as we can. So we are providing some masks in some of our countries. When we acquire some of our masks, we give some of the masks we acquire to our communities.
We have put in place some special program, in particular in France, but in other countries as well, in order to provide free gasoline to some health care professionals. It's a strong move in France, 1,200,000 people, healthcare professionals, have received card containing €30 of gasoline and they appreciate a lot. So it's strong it's good to demonstrate, I would say, the solidarity, mature support in these difficult times. It's a value of the company and we have to demonstrate it with our communities around us. So that's the COVID-nineteen.
Again, everybody is on board and we are on the first line of this war. Then, of course, following slide, the oil market, this is a crisis we face. I will not make you a lot of lessons. You read everything. What I would just say is that, of course, you know that we are facing a clear overproduction.
We have really, in our industry, a difficulty to adapt our production capacities and our production level to the demand. We have even done the contrary during 1 month, growing your supply instead of lowering it. I think, well, thank God the various producing countries at Big Tom have seen the dramatic effect on the oil price. And they have decided to take actions by putting in place some quota and not only the OPEC plus country with almost €10,000,000 but other countries are joining the group, including, by the way, a country like Canada. We'll come back on the total case, but obviously, today, it makes little sense to produce oil when you have a negative margin on variable costs.
And so but we industry is facing the situation. Of course, I met a journalist this morning who was telling me compared to 2015, I told him it's much more an unprecedented situation because in 2015, we're facing inventories growing from 58 days to 70 days. Today, we have jumped to 90 days. And this is, of course, the most difficult part for all of us is that not only we could face a shortage of inventories, but more fundamentally that means that it will take time before to be able to decrease these inventories, which means and by the way, I was in the announcement by the OPEC plus countries on April 10, what was interesting was not only the quota of 10,000,000 barrels of oil per day immediately, but it was the fact that they have thought to maintain quotas until the end of 2021, 6,000,000 barrels of oil per day. And of course, this is the fact that we face really results in inventories.
We will put pressure on the price. Again, difficult to anticipate, but this is the new old feeling we have. This is why, again, we took very seriously the situation. And March 21, we presented to you and we communicated immediately a first action plan that we need to reinforce today. Next slide.
So on the next slide, that's the fundamentals, which I want to remind you because it's very important. Each company is entering into this crisis with different, I would say, fundamentals. Ours today are much better to weather the storm than the ones we were facing in 2014. Log gearing, excluding lease around 17% and more fundamentally, a cash breakeven, which is under $0.25 even $0.22 $0.23 per barrel and the action plan we will put in place will be even lower with breakeven. So these two fundamentals on which I was insisting as being really the core of the strategy of the company are giving us today competitive advantage and this time, of course, to use this advantage compared to other competitors.
I would also say that like you see this table, but our CapEx today, our organic CapEx are half of the ones which were there with also some lessons learned, which was to keep some flexibility, flexibility in our CapEx. And what we will propose you present you is if we can quickly decide to cut the organic CapEx is because again in our organic CapEx, part of that we are flexible and it's around €3,000,000,000 But we can activate quickly and we can activate them because we have the contracts designed to be able to activate so we can stop some rig contracts in order to stop to make infill wells in Angola or elsewhere in the world. So these were the lessons learned from 2014, 2015, which has been implemented in the company in a disciplined way that we can leverage today. But the crisis is there, and the chart on the left on the right on the side demonstrates that it's even it's quite a big gap in terms of cash. In March, when we made our first action plan, we evaluated the pure price impact.
We have taken an assumption, can be wrong, of course, but the average of the coming 9 months is $30 per barrel. So we took the Q1, which was around, I think, $50 plus a 4th 3 coming quarter at $30 So it's an average of $35 per barrel. In March, we only evaluated the price impact with our metrics, I would say the sensitivity. So it was around $9,000,000,000 taking into account a lower refining margin, gas price. So we gave that figure to make a plan.
What we have done since after this action plan, we have asked our teams to rebase their budget. So there was an intense work to be done everywhere in the company. I must thank all these teams for this hard work. But the idea was, of course, for them once to absorb the cost action plans on OpEx and CapEx to confirm our first plan and to put it in that figure so that it's shared and we can table a bit, but also to better evaluate the impact of the price on, obviously, the activity, on the production on one side, on the refining on the other side and the marketing and sales. So and this came back to us.
And today, with the assumption we took, we evaluate the cash gap not of €9,000,000,000 but around €12,000,000,000 It's why we need to reinforce our action plan today. So next slide. So in terms of production, you had a guidance in February that we could raise our production by 2% to 4%. The 2% between 2% and 4%, I remind you that it was linked to the closing of the Anadarko assets. Today, we are evaluating all these guidance on production.
We say 2,900,000 to 3,000,000 barrels of oil per day. It will depend, of course, of the way that the OPEC countries will implement with discipline their quota. Politically, as a policy of Total, my instruction in the group is we apply the quota everywhere it's required by the country. It's our interest, honestly. And of course, we have some countries where it will hit total like Abu Dhabi, Iraq, Nigeria, Angola, Kazakhstan, less not so many, in fact, when you look at the list.
So we have the quota of OpExclus. We have voluntary reducing our production in Canada together with operators on dividing more or less by 2, even more on one of the field. But I think that's part of the contribution. We had also an effect, which was, by the way, taken into account our Q1 production already, the Libya conflict, where we have 2 fields, Al Sharra and Waha, which are closed down, shutdown. Only the offshore production is producing.
And some impact on some gas local demand that we can see because of the COVID-nineteen as well. So we give that guidance of 2.95% to 3%. Honestly, if all the quotas are really well implemented, it should be next to 2.95 rather than 3. But it's difficult to understand all what will happen during the coming 9 months. 2nd slide in terms of impact of activity is a downstream.
So there again, clearly, we have an impact of the lower demand. That's true that all refineries had some, I would say, availability issues during the Q1, like Normandy, what was mentioned by Jean Pierre, was lost because of a fire at the end of last year. We had turnaround in some of our plants. But today, in fact, our refineries are running in Europe, which I would say around 60% more or less. And we have some of the refineries like Grand Prix, which was going out of the turnaround.
We decided not to restart it for the time being. I like Faison as well. And so when we look to of course, the demand will come back when people within the business, the economy will wake up again after this I don't know, we say confining, maybe it's people are today closed in the they cannot really work. So the demand will come back. We'll sit with space.
But what we anticipate is a utilization rate of our refinery rather around 70%, 72%, 75% compared to what we had done last year around 80 5%. So it's a decrease of, I would say, around 15% of utilization rates, which, of course, will impact the cash flow from refining. On the contrary, on petrochemicals, we have clearly better news. I would say it's more resilient business for 2 reasons. 1, in fact, the demand is not so impacted.
Demand for plastics, for food and for hygiene are quite strong today for obvious reasons. And also petrochemicals, we have some flexible crackers, and we benefit in that business from, I would say, a capacity to have we have a capacity to have a certain resilience and the results are fine and are good. So, that's a good news, which will compensate, even not fully because the size of businesses are the same, but that's a good element. On the marketing and services, clearly, we are suffering hardly today during the Q2, in particular in Europe. M and S is mainly around for retail network around Europe and Africa.
And in Europe, we observe, I would say, we think around the demand decreased by 50%. As our fixed cost on variable cash margins is around 50 That means that if you lose 50% of your revenues, you have no cash flow out of this business during the quarter. So that's why we have an impact more or less we evaluate around $600,000,000 So all in all, when we look at it, the guidance we gave you for the downstream cash flow for the year is around €5,000,000,000 to €6,000,000,000 I remind you, in February, it was €6,500,000,000 I think we gave you €6,000,000 to €7,000,000 sorry, €1,000,000,000 of difference. We'll see, maybe we are a little pessimistic with the €5,000,000,000 but it's difficult to anticipate and I think it's good to give you such a better vision of where we go for the next for the rest of the year. So then so that means that we have to put to upgrade, I would say, or to upgrade the response to the environment.
In TOTAL, we strongly believe it's a philosophy that we have to help ourselves. So we have to take actions by ourselves. Maybe you have noticed, but I was one of the first CEO in France to say that we'll not ask anything, any help from the state, no form. I think it's good to believe to have this asset, to keep our independence and to be able to because the company is strong enough, the fundamental is good. And we know that we can have some resilience internally.
So on the capital side, the reduction, we announced $3,000,000,000 in March. Today, we are increasing this capital savings by 1 additional EUR 1,000,000,000 Of course, we have activated there again on the organic CapEx and the which are more than EUR 3,000,000,000 I would say, all what was flexible CapEx. We have also stopped some few FEED projects, which were not maybe in the less priority today. I would also say that, and I will come back on it, but Occidental officially told us that we cannot acquire the Algerian assets. So that's, of course, Geely is part of the acquisition budget.
Of course, on the same time, maybe we are prudent. So Algeria was around €2,000,000,000 We released to the only one because we also know that, I would say, the divestment budget is much more complex to execute. It makes no sense to me. And so to try to sell an asset like Bonga in Nigeria, it was public where we tried to where we put on sale, we stopped the sale because we don't want to lose value on the upstream assets and an upstream asset of high quality like this one. So we are replacing it with other ideas, but it could take time to execute it.
So €1,000,000,000 additional is coming from, I would say, fundamentally the M and A the net investment budget the net M and A budget net acquisition budget. But at the same time, again, I repeat it, and it's linked to my second part, we maintain our low carbon electricity investments at EUR 1,500,000,000 to EUR 2,000,000,000 dollars On the OpEx savings, we announced $800,000,000 We difficult to increase it a lot, but together with the bottom up approach coming from the teams, we have set a new target to €1,000,000,000 And to be clear, I announced this morning that I have proposed to the Board to reduce my salary by 25%, and the Executive Committee has decided to follow these efforts with me with 10% until the end of the year. I think it's for us, it's a message of exemplary within the company. We are asking good big efforts to everybody. Again, we don't want to release due to no idea to decrease the workforce.
We have increased the recruitment, which means reduced a lot, to be honest. We will more or less recruit in 2020 the level of people that we recruited in 2015, 2016. So we are back to these tough years. But we have we prefer to we trust the people who are today in the company to execute all the saving programs, and we show some exemplary by applying this decision on ourselves. You can see on the slide that the refining and chemical will benefit from $1,000,000,000 of energy savings, which will be in fact good for their margin, which is not so high because of the demand.
But it will help the refining and chemical or refining business to face the situation. So we don't add this €1,000,000,000 as a clear saving because it's part for me of the refining margin, of the assumption of refining margin. And then we have shareholder return, because again, we have to help by ourselves, but we are also to ask to our shareholders some effort. So we are planning at $60 per barrel, like we announced in February, a cash shareholder return of around $9,500,000,000 $7,500,000,000 plus 2 more or less. You know that we have decided immediately to stop the buyback in March.
We have and I will come back on the shareholder return set of the Board at the end of my presentation list. So I will not describe it now, but the message is that we have proposed a limited one shot scrip option, and I will come back on it on the last quarter of the 2019 final dividend. But at the end, the result is that we will give back to our shareholders, return $7,000,000,000 instead of $9,500,000,000 $7,000,000,000 If you take Slide number 4, you will see that the cash flow from operation is around $15,000,000 So it makes around 45%. So it's not too bad. So that means that we praise a lot and we attach value to shareholder return despite these difficult circumstances.
I will come to the next slide. This one, I will not comment it long. It's the same slide we used in 2015, 2016. The 4 keywords which are the mottos of the company: HSE, delivery, costs and cash be excellent of what we control. Everybody, I think, around the company is motivated: H, because of health, COVID.
S, because safety, because of course, that's a fundamental. It's been more fundamental with when difficulties are there not to have any accident. And E, and I will come back and say of the other part, is CO2. And everybody is mobilized on this challenge as well. Delivery, because it's the only way to generate cash flow, so increasing the availability, the use of assets.
The costs, I've already explained. And the cash, no need to say that it's the art of the war, it's the growth of the company. And like because of the cash is the blood of the company, yes, we have decided to clearly reward the people and our top executives on their capacity to release this $1,000,000,000 of working capital because it's also part of what we must manage in the company. So to summarize these next slide, the 2020 action plan, 4, 5 key figures today. Cash preservation, dollars 7,500,000,000 cash savings plus a $1,000,000,000 of working capital release.
Guidance, provision guidance, 2.95% to 3% Downstream CFFO, 5% to 6% and liquidity, which are very important to what Jean Pierre explained to you, I think it's key. We have increased it. We have taken actions as well. We never know where the prefer to have some cash in our pockets in our treasury rather than outside. So, a net I think it's a net liquidity, which means it's a gross treasury plus unrolled credit facilities minus a short term debt under 12 months of $25,000,000,000 And we know you know that we attach some value to maintaining our grade A credit rating, which we are where we are today.
I would like to start off before to the floor to Q and A to make some comments, next slide, on what are the mindset and the discussion at the Board level on the shareholder return. I'm sure that it's clearly a debate that has been put on the public domain with one of our colleagues. And I read a lot of papers during the weekend, interesting papers. So I would say the way we look at it, we discussed it. 1st, of course, the first responsibility of the Board is to preserve the future of the company, and that's important.
But at the same time, the Board has strong trust in the fundamentals of the company. And I think if today, we have the investment case in TOTAL is offering 2 major differences compared to some of our competitors, which are these low breakeven, under 25% and the low gearing, under 20%. And that means that we can use our balance sheet to weather the storm and for the shareholder return. And really the discussion with the Board is that we are conveying what it's a good time to show the difference and to use our competitive advantage to demonstrate why the investment case in total is superior to those offered by competitors. But the second element of the debate was, yes, at the same time, unprecedented market condition, extraordinary circumstances.
So what is the level of cautiousness, but also no overreaction. And the filling of the boat, yes, we have a lack of visibility, but we should not make premature decision and overreact. Let's wait. We can resist. We are ready.
So we have some resiliency. Let's see better visibility. Maybe not Q2 by the way I think it's better by Q3 because Q3 we will see if the U. S. Economy, European economy, the speed recovery to more normal level.
We'll have also better ideas of the way that the OPEC plus countries are really implementing the discipline of implementation of quota. So, a bit of visibility as well on the old market. So, we think that it's we have again the balance sheet to resist. So, no overreaction on our side. As I also will say that in the timing issue discussion, it was clear to us that yes, we can be very quick in total to make some M and A deals.
But when it comes to shareholder, it's better to think twice and we value the long term relationship. It's a matter of trust. We build trust with time and we know we can destroy it quickly. So, I would say that's the point. So, on cautiousness, of course, there is a door of a certain cautiousness as well.
Stopping the buyback, I think, was obvious. You have observed that we have decided that to offer the skip option for only and it's a one shot of skip option, 2019 dividend final dividend to the AGM. You can see that so it's again $1,000,000,000 of cash savings. We have, by the way, bought more than $500,000,000 over the Q1. So there is a balance there, more or less.
Having said that, what important is that what the Board has decided as well, it was not in the resolution, which means that we have rejected the idea to offer the scrip dividend for the full year 2020 because we don't have any resolution. And in the French legal system, it's the AGM has to decide a scrap dividend. So on the AGM of May 29, only a clear dividend for the final quarter will be offered, but not for the rest of the year, again, because we have the fundamentals and we are ready and the Board is clear what we can use this balance sheet, leverage the balance sheet. I would also also say with the same idea that in fact when we look to the size of the dividend of Total around 7, 7.5 €7,000,000 €7,500,000 €8,000,000,000 When we make our test about $40 per barrel, there is no problem. We can finance our investments.
We can pay the dividends. And so we are comfortable. And again, financials help to weather the storm. At the same time, that's true, but then I have read some papers, interesting papers from some of you, but there is an opening debate in our industry. We all have, I would say, a progressive dividend policy during several years.
Today, there are some voices about should we switch to more viable dividend linked to payout policy like some mining companies. I think this is some dialogue we cannot that which we need to share with our shareholders. Again, it's important to have their input. And in the same way that we have engaged with our shareholders about the climate policy, I think it's even more important to engage with them on such a topic and to share it. So that's the mindset of the company, of the Board, and it's why so strong confidence is the fundamental of the company.
We prefer to wait and to have a better visibility of the macro environment on the oil markets and to engage and to have the inputs of investors because if we have to face a longer crisis, if the price remain at $30 per barrel or under for long, obviously, we'll have to take action, but have to be shared with our shareholders. So a bit of a little long on this one, but I think now we can enter the Q and A.
And your first question comes from the line of Miguel de la Vigna of Goldman Sachs. Please go ahead. Your line is open.
Thank you. Thank you very much and congratulations on the resilient results in such a difficult environment. I had two questions, if I may. The first one is about LNG. We are seeing a clear divergence between LNG prices and Henry Hub, which are leading to negative margins, at least this summer.
I was wondering if some of these movements perhaps have made you more wary in terms of increasing the exposure to U. S. LNG and have made other projects like the one you're developing in Mozambique actually more resilient and less risky from a basis perspective? And then the second question I wanted to ask you is, if possible, to break down organic versus inorganic in the $14,000,000,000 budget and to clarify on the Occidental Africa acquisition, if effectively the second part of the transaction with Algeria and Ghana have been canceled or just delayed at this point in time? Thank you.
Okay. Thank you, Michele, for your questions. Always very interesting and challenging. I would say the first one. On LNG first, you have noticed that our LNG activity has been quite resilient.
By the way, Q2 from this perspective will be should be quite resilient as well because in fact on our long term price, we have a sort of 6 months of delay between the oil price and the LNG formulas. So it's the second half of the year, which will be more impact on the lower oil price. It is clear that, yes, we face today people pick back a lot about the oil market, but the gas markets are suffering a lot. It was already because since last year. So we have an exposure to the and we have, that's clear.
We will, by the way, probably we are on the way to, I would say, cancel some of the LNG tankers during summertime in order to limit some losses. It's true that we have on our side, I would say, we have projects we are working still on one project, the ECA projects in Mexico because it's on the Pacific coast. And together with Sempra, we see a lot of value. Know you save more than $1 per 1,000,000 BTU on just the trip to Asia. So this one is not a big project.
So this one, I think and I think we are aligned with Sempra and Mitsui. We should move forward in coming months. Other projects, the answer is no. I mean, to be clear, we are not in a I mean, I'm not very we are not today's priority is not to invest more in merchant projects in the U. S.
So clearly, we have the expansion in Cameron. We'll see with Sempra where we go. And the Greenfield project like the option we have with Tellurian, I think, is no reason it would be strange to move forward on this one. And that's true as well, that takes a step. From this perspective, the acquisition of the Mozambique LNG project is quite was a different nature.
We always explain that it was a project which was developed by Anadarko, I would say, in the old way with long term contracts linked most of them to oil prices. So that's what the big interest for us on the Mozambique, not only the size of the resource, which gives space for many developments, but also the quality, I would say, of the portfolio of the buyers. And so that's one of things. So that's one of things. So that's true that we have I already said, I think, in February, we have a lot of LNG in our portfolio.
We have enough projects. It's not time to add on it, maybe except ECA. The status of Oxy, and maybe I will as I told you, no, nothing is canceled. And to be clear, there is an SPA, which is valid and the long stop date is 1 year after the Mozambique closing, which means end of September 2020. And you know everything is public because all that has been disclosed to the SEC, so you can't find all the contract.
But the Algerian sale, Oxy notified us that they cannot deliver towards the Algeria assets. They will because of the position of Algeria authorities, we want to keep we want, in fact, fundamentally to keep the operator as it is today. So Oxy will remain as an operator. And so they did not approve, in fact, the change of control of Anadarko to Oxy. They approved it, but just to under the condition not to sell it.
So that means, Algeria will not be done unless Oxy finds a way to come back to us according to the contract. And on the Ghana, it's things are moving on. And again, I will not elaborate more on it because it's we have a contract with Poppy. And so, will it's between the 2 companies, but we have to decide the way forward. So, organic versus M and A, I would say, in the 14, I'm not sure to have a figure, it's probably something like 10 to 11 and 3% to 4%, 3% to 4%.
No, yes, or 11% and 3% or 10.5% to 4%. I don't know exactly the figure, but just to give you some range.
Thank you. Thank
you. And your next question comes from the line of John Rigby of UBS. Please go ahead. Your line is
open. Thank you. Yes, just a follow-up on those two questions. Is it possible there's obviously a lot of moving parts in IGRP and results held up very well in 1Q. Assuming everything else is held flat, what would you estimate will be the effect on 3Q or 4Q results from the fall in oil prices in 1Q?
I guess there's a way of you being able to make that estimate just arithmetically. And then also just to follow-up on the comments you made about Ghana. Is that deal still alive even with you not being able to complete on Algeria? And particularly, I guess, with all the other things that are going on that were not conceived of in the original contract. It would seem to me is that what you're attempting to or what Oxy will be attempting to complete on is a very different transaction to the one that you thought you were getting into a little over a year ago?
Okay. On IGRP, I mean, the part of the reserve which is linked to the LNG plants, LNG assets, is around out of the 900,000,000 is around 400,000,000 percent more or less. So this part will be impacted, and you can imagine that the oil price is divided by 2, which will be impacted in a way which is which has to be evaluated for more or less proportionately. I don't have exactly the figures that is last will come back to you, but it's more or less the order of magnitude. So it's not so big, in fact, but there will be an impact mainly on the results of the LNG assets on the second half of the year.
On Ghana, again, I think I just answered to you. Again, a lot of things have changed, including the new environment. So, we are working with Oxy on it. And as I said before, I think all that is also linked to position of the Ghana authorities and also linked to the environment that you knew and you know very well, I think, that the main the attractiveness for Total of Ghana was not at the same level than the other assets because it's non operated assets. And so we have less appetite for this one than for we had for the other one.
Okay. That's clear. Thank you.
Thank you. And your next question comes from the line of Arne Mouna of Societe Generale. Please go ahead. Your line is open.
Thank you very much. Good afternoon. I had two questions, Patrick. Firstly, if oil were to average not 30% but around 25% for the rest of the year and given the lack of visibility And if you need this environment to save another €2,000,000,000 or €3,000,000,000 What is the process of introducing a further dividend script? Would you call an extraordinary meeting?
And why not get authorization now given the uncertainties, just in case it is needed? And then my second question, just in terms of short term guidance in the Q2, what can we anticipate for the group tax rate in Q2 in the current environment compared with the 30% you had in Q1, please? Thank you.
Okay. I will leave the second one to my CFO, Expert in Tax. And for the first one, now let's be clear, now I'm very clear. We know the negative impact of the script. We know that there is a dilution, that our international investors do not like it.
We know that we have used it from 2015, 2017. Maybe, by the way, we keep it too long. You take some lessons from the past. And by the way, today, when the price the share price is around €30.2 or €30 per share, the division effect is even larger. So I mean, it's not for us the right tool.
So to be clear, the decision is clear. We will not convene any special AGM to introduce a script. So it's why it has been very clear. And clearly, in fact, for us, it's not the right tool if we have to face the, I mean, the higher storm like to describe. But again, we think that the fundamentals of the company are good and strong enough, and we are comfortable with what we said.
I think we have other flexibilities like the one we discussed just before about M and A, which could come to help the company if we need to help more the company. So I think so that's clearly for me it has clearly been a negative decision from the Board about this idea because again, we the dilution is too hard and that's a negative effect. And by the way, you in fact, at the end, you borrow money at 8% or 9%. So, I mean, it's quite expensive. So, no, it's not the right way to reorganize the shareholder return.
And so On the tax rate, Shankar?
The tax rate question, Yirend. So at $30 or $35 per barrel, we could expect group tax rate around 15%, so 1.5 taken into account an E and P tax rate in the range 25% to 30%.
Just to complement, Irene, you know that in France, when we put a resolution, it's not an option for the Board. We are obliged to use So it's complex. So it's why we don't want to be tricked to be trapped with the script for 1 year because once it's voted in France, we cannot decide not to use it. It's not like some of our colleagues in UK have the authorization and option, but we don't have it like that.
I see. Thank you.
Thank you. And your next question comes from the line of Biraj Borkhat of RBC. Please go ahead. Your line is open.
Hi. Thanks for taking my questions.
I have
2 please. The first one is on some of the details you provided. So thanks for all the comments on the levers you're pulling. One of the big ones is obviously the balance sheet. So you'll be adding to debt over this period.
So I was wondering how you think about the upper limit on the balance sheet. I think within your compensation scorecard, there's a 30% ceiling on your net debt ratio. So should we consider that as a hard ceiling? And then second question is on production volumes. Regarding the shut ins that you referenced in the near term, can you comment on what this means for your production capacity into 2021 and how much you lose there?
Thank you.
Okay. Good. Clear. I think I mean, the Board put this no, it's not the right time to change the variable pay of the CEO, to be honest. So, this criteria we have put in place a few years ago when I took my job on the gearing, incentivizing the management to take to pay attention to that level of debt.
So 20% maximum, 30% 0. Again, I'm not so I think the objective was clearly under 20%. We do our best to be under 20%. And I think we are far from going to 30%. I mean, I have some we have some room to maneuver there.
I think in the simulation with what we said about the working capital release and despite by the year end, at $30 per barrel, we should be around 21%. I think this is what we have simulated. So maybe it's a little higher than that. So yes, 30% is more of an art filling, but my personal objective is to maintain it lower than that. But again, we don't take decision and the Board does not take decision, only linked to one of the criteria of the CEO.
When we came to use the balance sheet and in these exceptional circumstances, we are able to take decisions independently of the criteria. Production guidance, I think, yes, there will be some impacts. In fact, when you decide not to drill some short cycle wells, but we don't have the benefit last year. So it's probably around don't have a figure. I think I read something around 50,000 barrels per day.
But again, these are short cycle. So, if we want to reactivate them, we'll be able to do it as well. So, but that's clear that this could have an impact, let's say, around 50,000 barrels per day to give you an idea.
Okay. Thank you very much.
Thank you. And your next question comes from the line of Lydia Rainforth of Barclays. Please go ahead. Your line is open.
Thanks and good afternoon everyone. Just one quick question actually. In terms of the approach that you're taking around keeping new energies CapEx, and I know we'll talk about that a little bit later, but also the digital recruitment going. Can you just talk about how you're actually seeing that, whether that's changing in terms of the update that you've given this morning? Is there intention still to keep those 2 businesses largely unimpacted?
Thanks.
Again, yes, new energy CapEx, which means what I call low carbon electricity. And fundamentally, it's either renewable or marketing B2C or B2B business like the one we have invested in India. We have a budget, which was announced between 1.5 to 2. I can't give you probably it's been nearer than 2 than from 1.5 this year in 2020 because we have already done some deals. And certainly organic, it's also inorganic.
We are building a business. So we need to be serious about it. I think it's part of the future of the company. So, we'll keep that. And again, we should be around $2,000,000,000 because we have done already these investments in Adelie.
And Q1 has been very active. When you read the if you read the facts, the key facts of the press release, there is more key facts on this part than on the rest of the company, I think. 2 gigawatt in India, 2 gigawatt in Spain, 1 gigawatt in Qatar, 1 gigawatt in France. So yes, we think it's part of the strategy and this one is could be considered as flexible, but we don't consider it as flexible because we are building the broad energy company that Total wants to become. So it's and by the way, I would add another element which is important.
When you look to this type of business, I know that they have a reputation not to offer the same profitability. When I see 10% of return, which is what we are able to do today after in our low CapEx model when you know we invest in 100% of an asset, renewable asset, and then we resell 50% of it. And we leverage from this, I would say, farm down part of the profitability. This type of assets, 9%, 10% plus compared to an Fstream asset, which is volatile at $30 it's good to have this type of assets as well in the business. So fundamentally, I see these new low carbon energy, low carbon electricity assets are bringing to the company and to the group a sort of more stable balance of revenue.
It will take time before it will be at the size will influence fundamentally the global business model. But so that's one of the reasons why we intend to stick to these investments. So that means that if we make €2,000,000,000 let's pass away that are the year out of EUR 14,000,000,000, it makes something like 13%. So people think so we are slowly growing the investment, the share of investment in this business unit.
Okay. Thank you.
Thank you. And your next question comes from the line of Christian Malek of JPMorgan. Please go ahead. Your line is open.
Hi, thank you. And thank you, Patrick. And also if you and JP2 are staying healthy, especially with the stress of another gaming company through this crisis. So a couple of questions. First, regards to capital frame and the logic of sustaining dividend at these levels in the context of CFFO.
And the second question is on the impact of the CapEx cuts on the future ore production. So regarding the level of the dividend, now your dividend is essentially CFO is 1 of the highest. It appears that the European oil is just under 40%. Regardless of the impact from this current crisis, do you think this is a relatively high level and it limits your ability to spend more on energy transition and your oil growth? Does some of your peers have argued that cutting a dividend is a key enabler?
The second question sort of links into that, which is to understand how much oil production has been deferred as a result of the CapEx cut this year. And if you were to raise CapEx, so flipping it around if oil moves higher, would you allocate it into new energies or oil? Can you give us a sense of how you sort of reallocate that marginal growth in CapEx? I'm just trying to understand on whether the updated energy transition policy comes at the expense of lower market share and all over the medium term. Thank you.
I think by the way, today, again, we have to as I said in my presentation, we are very comfortable. We know that in an oil and gas company, we'll have some volatility and we have to access a certain period of time to use to leverage the balance sheet in order to maintain a certain level of return to the shareholders. At the same time, Herveen, as I said, is about at the $30 for longer or very long. There is a certain limit to what we can do. But at $40 per barrel, the cash flow generation, if in a stable activity, I would say, is around $19,000,000,000 per year.
Dollars 19,000,000,000 of dividend. I have $12,000,000,000 for investing. I think we are fine with that. We have that means that yes, we have to make some choices. And from this perspective, on the second question, I think with €1,500,000,000 to €2,000,000,000 as an average, we are fine to grow it steadily.
This morning, you notice probably in the I will come back on it in the climate statement, but we said that we'll reach 20% of our capital allocation by 2,030 or sooner, which means we have time to grow it. We think that there is also a certain level to build. Is it so I don't think that this and I understand perfectly the question, but we but this dividend at this level is impairing the execution of our strategy. The CapEx cuts impact on this year production are really minimum. I mean, when you have a CapEx program of NCOs, but you cut to the Q2 and Q3, the production it could produce is, think, it's a matter of 10,000.
By the way, this would have been done in countries like Angola, where we have some quota. So I think our decision was just maybe anticipating the OpEx was decision. So I think it's almost very limited impact, in fact, for this year. For next year, it has a better impact. Where should we allocate capital if we have more cash?
Again, I think, to be clear, we don't we have a road map of growing steadily this low carbon electricity business. It will take time. We need to learn. We have to identify the right opportunities. There is no hurry.
We are releasing a road map for climate until 2,050 with some steps, and I will come back on it in my next presentation. So I don't feel that today, we have the necessity to free some cash from the dividend to transfer it on increasing the CapEx of this business unit. But if we have more, I think priority will be to allocate the capital to where we have the higher return. And so if my short term wells in Angola are quite, by the way, they have a good return, 20% of something like that, providing the price come back to an acceptable level, we will reactivate this flexible CapEx. It's part of the business model we have defined to have a sort of flexibility on the CapEx we allocate also to the upstream part.
Thank you very much.
Thank you. And your next question comes from the line of Martin Ratz of Morgan
Stanley. It's Martin Ratz of Morgan Stanley. I had two questions as well. I wanted to ask about the Downstream guidance, this figure of cash flow of $5,000,000,000 to $6,000,000,000 for the year. Last year, I think both the various downstream division together generated 7.
And this year, we still have multi millions of barrels a day of demand destruction. I know like 2Q was particularly weak, but across the year, it seems like a very small drop for the dramatic events that have just unfold, which I was hoping you could sort of explain that to us. Why isn't the Downstream weaker given the level of demand destruction? In 2,009, we saw very, very weak downstream results across the industry, and that was based on this 1,000,000 barrels a day of demand destruction. I all of you, I generally sort of don't fully understand how that works.
So if you could explain that, that would be much appreciated. And secondly, I wanted to ask GB2 what his estimate is of the amount of headroom that exists within the current credit rating. That would also be very useful.
Okay. So on the Downstream, I think, yes, the Downstream is a of different cash flows. We have the refining, where clearly we'll have a lower cash flow, a lower utilization, which is directly impacted by the lower demand. The M and S business, what we observed in China is 1 month after the end of, I would say, the full closure of the country. We have reached levels of business which are around 80%, 85%, back to the normality.
So if we have bad back level coming back quickly in Europe, which is why I told you, then we think that we could, I would say, we are generating normally yearly around €2,500,000,000 of CFFO. We give you that we could lose $600,000,000 So maybe we are missing there by $100,000,000 $200,000,000 but not more. Petrochemicals could do good very well. I mean, so we are optimistic on it. And don't forget that in refining and all this business, the Downstream are also traders, the trading business.
The trading business loves times when you have a lot of volatility in contango. By the way, they have borrowed some money to the group. Part of the increase the working capital is linked to traders we are storing. So I'm more optimistic than GP2. I think that the working capital of today will be the big benefits of tomorrow before the year end.
So we have to deliver. So all in all, my view, Martin, is that to give you the full story, I was the one who pushed 5 to 6. My downstream people are a little more optimistic. They look more to the 6% to the 5%, but I'm a little like you. But I would be surprised to have less than the guidance that we propose you.
So regarding the credit rating, as Patrick mentioned to you, of course, having a good credit rating is very important for us and to maintain, a, credit rating is part of our priorities. What I noticed is that despite the revised price deck from both S and P and Moody's that was revised in March or in April, we maintain our rating. So that's true that our perspective changes from stable or positive to negative on both S and P and Moody's side. It was, by the way, the same for all our peers. So it's true that if the prices remains at $30 per barrel, I think as our peers, we lose 1 notch probably, but it's not what has been confirmed until now by the agencies.
And so late wait and see. At present time, S and P, my understanding, makes its calculation using the $30 per barrel price deck for 2020. That's true that for 2020, 2021, they use higher price deck. So once again, if we remain at $30 per barrel our long term period, probably
we will not
be in a position to maintain this rating, but we will definitely keep our A rating. So that's once again, it's one of our priorities.
Yes. The A rating has always been linked to the gearing and all this business. So, it's important for us. But we have some room there to manage that.
Great. Thank you.
Thank you. And your next question comes from the line of Oswald Clint of Bernstein. Please go ahead. Your line is open.
Thank you very much, everyone. Thank you. Yes, obviously, very tricky to call demand recoveries. Let's think about next year over the next 5 years. I just and some of your peers are finding it obviously very tricky and some of them have a bit more comfort around the path for demand recovery.
So I just wanted to know if you as a team have with your experts and with your people on the ground have formed some view of how demand might recover from here? I mean jet fuel traveling, people flying, people traveling by car and public transport, etcetera. That's my first question. And then secondly, obviously quite impressive to see another countercyclical acquisition here in terms of Uganda. It's characterized as low cost barrels.
I just wanted to maybe test that assertion. Is it truly low cost, including transportation and pipelines? Is it I mean, at least at the forward curve, I seem to be getting around 10% return. I just wonder what I might be doing wrong there or is there some type of expression of oil prices recovering potentially back up to the $50 or $60 level, please? Thank you.
So, recovery, I would love to be able to answer to your questions with part of the uncertainty. To be honest, I'm more optimistic about the cars than the jet. The cars that we observe in many can in China is of their cars because they are afraid to use public transportation than before. So I think once, again, people are free to move, and that's a question mark, I think they will come back to use their cars. And we expect, I would say, the retail business to come back to a certain normality.
The jets are more afraid. But for me, as long as we don't find a vaccine or I don't know which medicines, I'm afraid the countries will close their borders and that there will be limited it will be difficult to fly again around the world. I mean, because each country, each government will have a first priority to safeguard the health of their people. And so I'm more pessimistic about the jet fuel business than for the gasoline and diesel business, which is more, I would say, continental business than our world business. But in that, yes, I would love to have a precise answer to your question.
On the second one, yes, I mean, there is a big huge amount of barrel, 1,500,000,000 to 2,000,000,000 barrels. So it's onshore. It's not very difficult to produce. Yes, there is a pipeline. It's true as well.
We all know that. But we know that when we look to this type of projects, we have some thresholds. And if we have done this acquisition, which is quite a good compared to the previous deal, we have done we have divided almost by 2 the cost of acquisition. So it was and we have been quick to find a solution with TULO. If we have done it, it's because we expect at least 10% return, yes, even at a lower price.
Okay. Fair enough. Thank you.
I will take the last question, maybe we after the second session of Q and A, we could take the ones, but I would like to move to the time. Last question maybe?
Yes, of course, sir. And your last question comes from the line of Thomas Sadelph of Credit Suisse. Please go ahead. Your line is open.
Thank you. Just one clarification on the dividend. I guess the decision on the dividend today, as well as some of the commentary you made on the call suggests to me that your view on the macro for the medium and longer term has not changed. So basically, what you're saying today is, let's wait and see, COVID-nineteen may not have any structural implication on how oil is consumed. And I want to wait until maybe 3Q 2020, see how economies recover and what the outlook may be for 2021 before making a fundamental decision on the dividend.
Is that how I should think about the dividend and the dividend decision? And then secondly, just going back quickly on LNG. And LNG will integrate it. Gas contributed very strongly again, and it did so in the Q4 as well. I wanted to know a little bit more about U.
S. LNG, whether it contributed positively in the Q1 and how we should think about the rest of the year? Clearly, when you look at prices today, it's out of the money. Thank you.
Okay. I mean, Thomas, you did not listen everything what I said. I told you that we have strong fundamentals and that we have time, we can use and leverage the balance sheet to maintain the dividend. I think it was a more fundamental message that I delivered. I also told you that we think that and both think that it's premature to take decisions when we see nothing because you could which means that does not mean that we'll take, but we put a question mark on the dividend policy on the Q3.
I just told you that we think that we'll have a better visibility by Q3. And does it change some fundamentals? I mean, I'm reading like you a lot of papers. Again, it can change the visibility and the price could remain, as I said, because of our inventories at $30, $40 above. But as I told you also, dollars 40 is very different from $30 so it's a question of appraisal of how long it will take to recover the oil price.
On the medium and long term, no, I think again, what we said about oil, of course, linked to the demand, but when you don't invest or you invest the investment in E and P will again be lower than before. The shale oil, which was the way to ensure the production will be impacted and quite quickly. According to our model, when we if you have a decrease of shale oil production by 2,000,000 barrels of oil per day this year and people are more or less reducing their investment, it could become 4 next year. And so it could accelerate the miss in terms of production. Of course, all that is linked to the pace at which demand will come back, And that I don't have a crystal ball.
So we think that, again, these type of decisions, we have the capacity with our balance sheet and our low breakeven to be resilient and not to overreact. And that for me is the main message. And so there is no I didn't give you a meeting point in Q3 to tell you we'll take another decision on dividend. It's not what I told you. I told you that we can be resilient and the fact that by the way we decided to give up on any scrip option for the coming year is, I think, a clear signal of trust in our fundamentals.
On U. S. LNG, I have I don't know if we know the answer. We know we are short term rehab. Our purchases represent 25% of our sales around 10%.
I would say that for me, this part what I know that in IGRP, I can tell you that in Q1, the trading of LNG has been quite positive. And it's also linked to the capacity to have all these world network of sources of LNG in the U. S, in Australia, in the Middle East. So it's part of the systems that we have established. And what I observe is that quarter after quarter, they are improving their reserves.
So I think this is also part of the business of arbitration between the different sources of LNG, which is a business model they want to develop. So I mean, there are some pluses, there are some minuses, but what I observed and it's that again and even when we acquired the LNG gas capacity in Europe, it was considered as a burden. Today, they are full at 80%. And we make money out of all these type of assets. So I think the message around LNG and one of the strengths of what we have built is more to have a global system with productions and outlets and customers and the regas capacities, which allow them to optimize it.
Okay. Maybe I should move to the second part of the presentation, which is on climate. Again, if some of you want to ask questions on the first part, I will be able to take them. But I think it's good to jump a little more to the, I would say, middle, medium and longer term and to give you some flavor about what we have announced today. I think InterCon, sometimes we believe more in values of doing than on speaking.
We are not so good in advertising and speaking. And that's true that we have spent we have a strategy that we execute. When I observe what we have done since 2015, we are by far among the major companies in terms of reduction of our net carbon footprint, the best ones. We have reduced our net carbon intensity by 6%. None of our peers have done so well.
They are far from them. I mean, we are really in action. And at the same time, because we are pragmatic, we don't like to put objectives which are too much aspirational. We are people, maybe a group of engineers. We like to be able to see what is a way to achieve the objective or the ambition we put on the table.
It's why we had until now, 2 years ago and we are ahead of the pack, an objective to 2,030 of 15% of reduction and ambition of 20%, 25%, 40% by 2,040. It was also clear to us when in September last year, the new message from the scientists that the world should be neutral by 2,050, but we have to also to ask ourselves some questions. So we put some we have worked together with the Board of Directors. We have also, as it's important, decided because of the roadshows in February, we have met investors, more to be honest in Europe than in the U. S, which were willing to engage with us about this topic, what is your climate ambition.
So we have decided with the support of the Board to engage in that dialogue with some representatives or some investors, which are participating to the Climate Action 100 plus in a positive way. But of course, all that was the dialogue was said, I would say, by all what we have prepared at the company and with the board. And the idea is that, yes, we share fundamentally the ambition to become carbon neutral by 2,050 together with society. I will come back on all the words of the statement. And so because also we observe in all our tools with our shareholders, investors that more and more of the ESG movements are gaining credit.
So we don't want to suddenly to become a lager from, I would say, investors' point of view, while at the same time, in terms of investment and of actions, we are leading the pack. So there was a sort of disconnect. So it was we say, okay, we need to express this ambition. And in the thinking of the Board, I want also to say that we see clearly 2 different package rates, what we call the scope 1 and 2. Scope 1 and 2, you all know that now is all what is under our control.
These are the emissions of our own operations. And clearly, on this one, there is no doubt for us that we should go to carbon neutrality. We are responsible when we produce, when we refine, when we transport all these emissions, which represent 45,000,000 tons more or less today going to carbon neutrality, which means that on one side, we'll work on the technology to reduce our emissions, mobilizing our teams and the net carbon neutrality, which means hardware that we can use some, I would say, carbon things in order to get to the neutrality. So that, for us was a clear since I would say last 6 months was clear that this was the easy part of it. Then we had a debate about the scope 3, which is the global, I would say, ambition, where obviously, we as you know, we are not the only responsible of these emissions because we sell products, energy products to customers.
They are used by our customers. We don't sell a plane. We don't sell a car. We don't transform. We don't product cement.
At the end, we are not the experts in what should be designed the engine of a plane, Rolls Royce or Safran are better than us. We don't know if they should use petrol, oil or gas or hydrogen or I don't know which other energy means. But what is clear as well is that this is on the table. So that means that Total, which has an expertise in this all this energy business, should work and must be proactive in helping the world to, I would say, adapt its demand frame for energy. So we said to ourselves, okay, we need to be able to express this ambition on the SCOP 3.
It's not we are not alone. We'll not do it alone. Because if we express we say to ourselves we'll be carbon neutral on and scope free, but clearly I'm just telling you I will quit this whole business because there is no way to do it. And this is not the mission we have. We think that we have to deliver energy to the world.
And at the same time, when we observe we were thinking about it, we observe that there is one region of the world, which is Europe, which is, I would say, at the forefront in terms of societal willingness to go to carbon neutrality. Society in Europe is willing to do it. The governments in Europe are expressing it through a real movement and ambition, objectives. They want to put policies. They want to put incentives.
They want to put regulations even in some countries. And so for Total Europe, it's very important because it's 60% of our sales today and 60% of our top 3 emissions, around 280,000,000 tons of our emissions are in Europe. And so fundamentally, we say to ourselves, okay, on Europe, we by the way, we propose to our shareholders to become a European company by statute on the next General Assembly, We have to be proactive and there is no way for us if Europe to Europe, you can carbon neutral, that means there will not be many thermal vehicles in 2,050 in Europe. So we have to adapt ourselves and to be proactive. And so carbon neutrality in Europe, we can take this commitment on scottering.
So that's a big step towards European continent. And so that's the pieces that we put on the table. And then for the rest of the world and the global stock free ambition, we consider that today is premature. It's premature because Europe, yes, has expressed a clear willingness to be like that, but some of the parts of the world are not there. They maybe take more time.
We hope and let's be clear that Europe will be, I would say, the light of the world and more regions will join the same policies and regulation with same policies. And then Total will commit to do it on this region as well. But on the global world, we said the best way to express our ambition is through the net carbon intensity indicator. And what we propose today is to decrease it by 60%, and I will come back on it. So that's really a comprehensive framework with some future steps to go to carbon neutrality.
We really share the ambition to get to net 0 by 2,050, but in step of society. We'll not do that alone and we'll not do it against the society because, to be honest, I could get rid of my oil suddenly, but I will sell it and somebody else will produce the oil. So it will not help the climate the global climate if Total just decides to leave this business. So it's not at all what we think we should do. We have some expertise.
We think we can be one of the prominent player of this new energy world and this is what we want to do. So just to it's a little long introduction, but I think I set the scene the way that we had the mindset of the management. It took us some time, yes. But now we are clear of what we put on the table together with, again, investors. And this dialogue was very valuable to us.
Just next slide, I will be quicker. So you know, I just remind you, if we take strategy. And the strategy, I repeat, is to become a broad energy company, a multi energy company. But clear that we prove this what we expressed today, we say, yes, will take time, but we'll grow and I will clarify the timing of this strategy. And we do it because there is an evolution of the market, energy market.
You all know that, I will not repeat it. Natural gas, low carbon electricity will become predominant. All petroleum products will diminish in the carbon mix, and we'll need some carbon sinks. And we do it because we believe this low carbon strategy is giving a competitive advantage for long term shareholders value. But I would say the key message, so the ambition is sustained by the strategy.
If I go to next slide, so it's just what I just expressed during my introductions. It's a summary of what we are committing and what we expressed today of the ambition getting to net 0. So yes, we share the ambition to get to net 0 by 2,050 together with society for our global business. We take 3 major steps today: net 0 on our operations, COP 1 and 2 net 0 on all our activities, COP 1, 2, 3 in Europe by 2,000 and 50 or sooner. And globally, a net carbon intensity reduction by 60% by 2,050, 60% or more.
We have investment expressed it in a strange factor in absolute value, 27.5 gram of CO2 per megajoule, which by the way, if you compare to our peers, is the lowest absolute value which has been put on the table by 2,050. So next slide. We also in this paper, it's a comprehensive approach. It's not just about metrics and 2,050. It's also, of course, it will impact our capital allocation to be consistent with this ambition.
And in particular, the company today, we are using $40 per tonne of CO2 pricing in all the investments. And we also asked our teams to test all this CapEx with $100 per tonne from 2,030, which will raise the ambition and which will go with direct part of the capital allocation. And as I said mentioned before, we will reach 20% of CapEx in low carbon electricity by 2,050, 30 or sooner. We also made annual review of progress and we engaged with all the professional organization on this climate policy, total. Next slide.
So these are slides which are just illustrating the 3 steps that we are taking today. So I will not be very long. The COP 1 and 2, of course, this net carbon neutrality will be there will be still some emission because in 2,050, I will come back on it, we'll continue to produce gas, to produce oil. And so there have been some emissions. We will reduce it through technology because, by example, we'll electrify part of our process.
We are lowering or we are decreasing our missile emissions. I will come back on it. And we'll need also some carbon things. And we think that more or less it will be the emissions will be on the high side around 20,000,000 to 30,000,000 tons. And thinking that we can develop carbon sinks of 20, 30,000,000 tons at the horizon of 2,050 is perfectly achievable.
So this, I would say, target objective is clear and I think this will be the easiest one to reach. The next one on Europe. So you understand the logic. We are actively supporting the EU ambition. By the way, all Europe is not only EU, it's Europe which is extended.
Sorry for our British colleagues, but it's EU plus UK plus Norway because obviously, if we take a commitment on Europe, we have to include the North Sea otherwise it would have been something a little tricky. So we include the wool. We think by 2,050, production in North Sea should be very not going to be very strong, to be honest, most of the decline of this area. We think by 2,050, again, that the policies will be put in place. We observe already that some countries have taken legislations to eliminate any thermal vehicles.
So that means that and we have to take it seriously because, of course, it will influence our business. So we have time, but we'll have to adapt. 30 years is around. So this represents a decrease of 280,000,000 tonnes of CO2. So it's a very strong commitment.
And third one, I will not comment my net carbon intensity. It's just for reference. Honestly, our definition is very near from the one from our Dutch colleague, I would say. By the way, we are working together to align and I think it's a strong message right now from Ben. I'm repeating the message.
I think it would be very good if the industry could, I would say, use the same metrics on this to to we have very limited results and we are making the work together. And I would call that it would be good that we really do the same. So I will not comment it, but this one is more important. So but it's more important because it's not only we have raised the ambition in terms of decrease. We have so put an ambition of 2,050 of 60% or more.
We put some intermediate steps, the 15% of 2,030 is there. We have realized 6% in 5 years. We put an intermediate step in 2,040 of 35% in order to be consistent. And again, the absolute value of 27.5 grams of CO2 is today's lowest absolute target. But I would like to illustrate that more what does that mean in terms of business for TOTAL.
What is the number? Let's keep it. In fact, what is the mix of supply, what Total could provide by Horizon, just to give you a flavor of what the company could become. And this is why we took this it took us some time because we wanted to understand if when we put this type of ambition on the table, we can really achieve that. And it was the idea that it's a serious matter.
In 2015, Total on Scope 3, the sales of Total were 66% 2 third oil, petroleum products, 1 third of gas, 2015 and less than 1% of electricity, nothing. In 2019, the mix of the sales of Total, 55% of oil, 40% of gas and 5% of electrons. So in 5 years, we have already introduced this 5%. Half of them are from renewables, half of them from gas type of a plan. And thanks to this evolution, but it's an evolution, we have managed to decrease by 6%.
If we want to in 2030, the 15%, what does that mean? That means 45% of oil, 40% of gas, 15% of electrons. And this is achievable. We have done 5% without suddenly accelerating, to come back to Christian's question, to be obliged to rush to suddenly, we can go steadily along this pathway. And that means that we should do in the next 10 years at the same pace what we have done in the last 5 years as we have more experience, more teams, more ideas, we better understand.
I'm convinced we can do it. And by 2,050, if I try to describe you what does it mean, a company like Total which will decrease by 60% or more worldwide this carbon intensity, we should still sell 20% of oil. But out of the 20%, not the same oil, one quarter of that should be Biofuels. So that means it's a different product. It's, I would say, 15% of oil, 5% of Biofuels, but liquids represent 20%.
The gas, still 40%, but there again, the gas should be around 80% natural gas and 20% green gas, either hydrogen or biogas. So that means and this is achievable at that horizon. And then the last 40% should come from electrons. And to be neutral to reach it, we also take into account some carbon sinks because it's part of the business model. And this is compatible with around 50,000,000 to 100,000,000 more in certain, but technology has to be developed.
But let's say between 50,000,001 100,000,000 tonnes of carbon things. 50,000,000 tons, I think, is achievable. 100 would be more challenging. But that's the type I wanted to describe beyond what is written there in terms of describe what could be and then I see in terms of business model, what does that mean? That means that clearly Total will remain again, we continue to produce oil, we continue to produce gas, we'll produce more biofuels, we'll produce more green gas, and yes, we'll invest heavily in some electrons coming mainly, by the way, 40%, obviously, in 2,050.
50% should come mainly from renewables. So back to the evolution, but it takes time. And again, in 2,030, what I just said, we are still 85% hydrocarbon and 50% electron. And that's important from this perspective. So we can put we can offer this ambition today because it's linked to something which seems to be realistic and on which we can put allocate capital year after year without disturbing the capacity of Total to deliver value from this area of expertise in hydrocarbon, but also by preparing the future.
The next slide is just, again, I will not comment to show it in February. I told you that Scope 3 requires from us to act on products, which is exactly what I expressed with Biofuels and GreenGuard, to act on demand. Yes, we need to work with our customers. We cannot do it alone. We need to work and we have engaged with plane manufacturers more or less, by the way, more, I would say, the companies we are designing the engine of claims, which are more interesting to work with them to see if we could really help these use of energy to change.
But we can also take actions on the demand, on our emissions. And today, I want to confirm to you 2 news, which we are not in the press release, but we have decided to influence the demand, but we will not sell any more fuel oil to power generation portfolio. And on the gas, what we have in our portfolio. And on the gas, we know that gas, there is on a mission always a debate about methane. When we look to really our operations and in particular on the gas fields, because it's key to produce gas, we can observe that we can commit to lower our emission from methane emission from the gas fields less than 0.1%, which is really minimum.
And so we it's another target where we put in our road map and we'll come back on these 2 giving more flavors in the coming months on these 2 commitments. So, next last slide, I think, is a conclusion of my introduction, repeating our ambition. And again, keep in mind that it's clearly a link between the strategy of the company and the way we want to establish and to become this broad energy company, producing and selling petroleum products, gases and electrons and in order to be able to fit our mission, which is to deliver affordable and reliable energy to our customers around the world. So now I'm ready to take some questions either on the climate mainly, but also some have some regrets on the first part.
And your first question will come from the line of Bertrand Hodee of Kepler Cheuvreux. Please go ahead. Your line is open.
Yes. Hello, everyone. Thank you for taking my questions. 2, if I may. 1 on LNG.
You disclosed some very useful new indicators for those Q1, and it is your LNG average selling price. It is something that is quite difficult for us to model, given the some S curve on long term oil price in contract. Can you give us a flavor of what could be as you look for LNG, say, at the same price, what could be your average LNG selling price in Q4, let's say, with $30 per barrel in Q2? And then the second question is on LNG, but that relates now to the energy transition and your ambition of getting to 0, net 0, scope 1 and 2. LNG activities are quite, I would say, CO2 intensive, either meantime, CO2 venting and also liquefaction process, highly energy intensive.
How can you improve the carbon effectiveness of your existing LNG plant? And what is do you have a view of the LNG plant of the future?
The first question I already tried to answer before. I told you that in fact this indicator, by the way, yes, we thought it was important to view the size of the LNG business to give you more information because the gas price on a fleet is the average of many local business, LNG business. So you will have this indicator from now on every quarter. As I said before, there is a very little impact, I think, should stay around $6 more or less for the next quarter because there is a time lag within the formula more or less of 6 months. And then after, of course, we'll have to see the impact and let's say around $4 from the second half probably because the impact will be will come from the lower oil price, will come in the second half.
So 6% during the quarter and then 4%, average of the year should be around 5%. And the second question, LNG. Yes, that's a very important question, of course. By the way, when you I'm always amused about the debate about LNG is more CO2 invented and then see by oil. It's wrong.
LNG plant is like a refinery for oil. So when you compare both chain, you should compare oil and refinery to gas and LNG. That's true. But for the existing plants, to be honest, they are already built. It's not easy.
You can work on part of the emission on the in particular between the wells and the plants. The plants itself are designed, so it will not be improved. You can also improve and lower the emissions from the transportation part, from the energy tanker part. There is still some it's easy to improve the technology. It's an industry where we are losing some LNG during the trips and we can do better.
And there are really some improvements on the way these energy tankers are designed and that's part of what we work on it. The new plant should be electrified. This is the one we want to build in Oman. We have a small project in Oman of LNG plant for bunkering. And the beauty of this plant for me, the big interest of this plant is not only to produce an additional 1,000,000 tonne of LNG and to develop the bunker in the business, it's a full electric plant, designed like that and it's a way to test this technology.
And a full electric LNG plant is lowering the LNG emissions by law. And so I mean that type of and again, by the way, it's a very clear example for me. The best way in most of the processes of the oil and gas industry to eliminate CO2 emission is to go to electrify. The processes like what is done in the North Sea by one of our colleagues. I think it's the future of this industry and this is our engineers in the E and P are working on this type of technologies.
Next question?
Your next question comes from the line of Christopher Kuplent of Bank of America. Please go ahead.
Thank you. Good afternoon. Just a few more questions and perhaps clarifications, if I may. Patrick, your CapEx cuts that you've announced for 2020, how quickly do you think you will go back towards, let's say, the originally intended EUR 14,000,000,000 dollars organic CapEx number. How related is that trajectory to the macro environment?
In other words, what can you do in 2020 sorry, 2021, and particularly thinking about FIDs that I suppose will be coming up over that time frame, whether it's Uganda, whether it's Papua New Guinea, Suriname, Nigeria, if you could give us a little bit of flavor there? And the second question linked to your net carbon footprint outlook a little bit longer term, It wasn't so long ago you talked about a DPS CAGR commitment of more than 5% per year. I'm assuming that when you look beyond the next 1, 2, maybe even 3 years, that's still something that you will remember in a few years' time. If you could let us know where you stand on that dividend outlook. Thank you.
You. It's quite easy to answer your question. You make the math. If you want me to spend $14,000,000,000 I have $7,000,000,000 to $8,000,000,000 shareholder return. So, I need $21,000,000,000 $22,000,000,000 and I need something like $45 above $50 So I will come back to this level of investments when we'll have this type of outlook for the price.
As part of it. And again, keeping some flexibility in the organic CapEx. So I mean for 2021, honestly, I have no idea today. It's premature. We are I know what figure we had in our long term plan last year, but we will do again the business plan.
We'll do again the exercise with some we are very comfortable, like I said before, at $40 per barrel. And again, you will tell me today, for the discussion of the Board, what would be your guess for next year? I answered if I had to give to my teams an assumption for the budget, but thanks God, I don't have to deliver it today in March or in April, I will do that in July. I will probably give something like $40 So at this level, we know that what we can what type of capital allocation we can make. That's the first answer.
On the second question, what was it, the question? I don't I lose the second question, sorry.
It was regarding your longer term outlook regarding the DPS.
No, no, no, okay.
Let me
be clear. No, no. It was clear the dividend. Now the dividend was clearly linked to both. I mean, we are more in a stable environment.
It was above $50 per barrel. It was linked to the growth of the volume as well. Remember, we are speaking about the production growing from $3.1 to 3 point $2,000,000 $3.3 and stable during 2 years. So this outlook today, we have we are no more about $50 and we are no more of the same level of production because of quota. So, I have 2 sources of lack of growth, so a little bit lack of, I would say, cash growth.
So it's affected. It's not affected by net 0 at all, let's be clear. No, net 0 will not influence that, to answer to your question. So I'm still committed to it, but obviously, we stopped. And you have observed that we the Board has decided to stick to the stability of the interim dividend compared to the one last year ago because it makes no sense in this type of environment to grow by 5%, something that there is no more growth.
So it would have been very odd to take such a decision when others are just deciding to decrease it by far more. So I mean, it's still there. It's still in my mind. But for the time being, honestly, in these market conditions, maybe it's slower. Let's wait 20 22, 2023.
I'm optimistic one day or the other, so we all will come back to a certain normality. And then lack of investments could translate in a higher oil price.
Okay. Thank you, Patrick.
Can I just quickly double check on your first answer? What is a lower budget? Let's assume $40 as you said, into 2021. What does it mean for a number of those flagship projects? And how quickly you think you'll be able to FID them?
Again, at $40 per barrel, I have $19,000,000,000 of cash flows. I serve you 7, so I have 12 for CapEx. If I want to invest more, I would like to divest more.
Okay. I guess I may not have been clear, but maybe you can prioritize a little bit those projects that haven't been FID ed. I guess, we're meant yes? Okay.
Yes, yes. Sorry, I missed that part of the question. So top projects, honestly, typically, the projects we have sanctioned, we don't stop them. So Mozambique is moving on. And as far I think for me, among the top projects, we'll have obviously Uganda.
We are investing in Uganda. So the idea is fundamentally to move on in Uganda and as soon as we can. I think we made that investment to deliver it. And I would say also we have to look to projects like discoveries in Suriname, which seems to be quite promising. So it could become as well.
But the way to run the project will be obviously like always in total by the, I would say, the breakeven cost of each of them and will invest the money on the ones which are the most efficient. On the other side, as I answered before to Michele, I don't think we'll add a lot of LNG projects, except maybe ECA in the coming year in terms of sanction.
Okay. Thank you very much.
Thank you. And your next question comes from the line of Lucas Herman of Exane. Please go ahead. Your line is open.
Good afternoon. Thanks very much for the opportunity and I'm glad you're all well. Can I ask one on the pro form a presentation and then move on to climate? On the in your presentation earlier on, I just wondered to what extent what we've seen over the course of the last 3 months, particularly the behavior of suppliers, not least the commencement of a price war at a time when it really didn't seem hugely appropriate, there has influenced the way you think about the commodity and the up stream business going forward. And I guess that becomes increasingly relevant given everything around climate change shifting in portfolios.
But clearly, if the growth opportunity in hydrocarbon starts to moderate, you'd expect the competition for the business that is actually available to intensify. So sorry, long way of putting it. But first question, just how what's happened in recent month to month suppliers has influenced your thinking? And then moving to the portfolio going forward, just a couple of simple questions, if I might. When you talk about your sales to customers, I'm never quite sure whether that's products that you source or that you produce yourself or whether it's inclusive of products that are bought in, whether it be electrons or whether it be oil barrels itself.
And do you expect to grow energy supply to the market, I guess, own energy supply to the market over the period to 2,050? And the question is simple. It's purely that there is an awful lot of energy associated with an oil molecule. That needs an awful lot of electrons to substitute? Thanks, Patrick.
Okay. Lucas, it's always very good question to make obliges me to think. Thank you, Lucas. I would say the first one, it's clear that honestly, what I've observed in my first reaction is that this industry, the oil industry, obviously, has a real difficulty to manage itself and has a good capacity to create huge volatility. And frankly, when you observe at a time where the demand declines, people decide to increase the supply.
You are little you say to yourself, we have an issue. And I'm not in control. We are not in control of it. We are as a company. And so that means that it's clear that it obliged us to think.
And the conclusion I first raised, I said to my colleague is when we said that we sanctioned $50 it's clear that we sanctioned the $50 and stop coming sometimes to me with a $55 or $60 because that means that all this math that we do in economic models with $50 flat are just wrong. And you can be hit when you start a project with suddenly a $20 per barrel price and it's the value is not the same. So I think the first lesson for me is, yes, there is a strong volatility. And what I said before when I answered to one of your colleagues, from this perspective, it's clear that in the business model of groups, energy companies, to try to find some less volatile businesses, which are offering profitability acceptable profitability could make sense. And when you have access to some long term renewable PPAs.
It's maybe less 50s, less volatile, and it gives a balance within the business model of a company like TOTAL. So I think it's clear that it gives some momentum to develop this type of business. Today, we have this marketing and retail business, which gives this type of stable revenues. But if in the same time, along the next 20, 30 years, people do not want to use petroleum products to run their cars. We'll have to find some substitute in our portfolios to this type of more stable cash flow businesses.
So that's why I'm there, but it's true that it has re influenced, I would say, my the feeling that it's really a very volatile business and that you need to be very stringent on the way to approve the projects and more than ever. And it accelerates from this point of view the fact that economically, we could be we could face all business with lower demand, a decline of demand. So that means that let's be very selective on the project we sanctioned. On the sales of customers, now a little bit clear. When we think about Intertales, we strongly believe that you need to be along the chain.
So it's not only selling, but it's also producing. So but here, there could be some imbalance at a certain point of time, but the strategy within the company and it's clear, if you want to develop a pure B2C portfolio in electricity and you just go to the market to provide your supply, you will not make a lot of money, I can tell you. Maybe your traders would be happy, but you don't make a lot of money. So and again, I think it's the same idea fundamentally that we have in the oil business or the gas business. We want to have some customers, but we also won't be able to produce.
And in electrons, we produce it either from mainly from renewables, probably in the future, but also from gas fired power plants and we make money out of it. So especially in Europe, in Europe, a continent like Europe, which is willing to exit from coal, more or less from nuclear, At the end, if you don't have a base load from gas, I don't know where it comes from. It gives us flexibility to cope with intermittency. So the ambition is on both sides. Even in the same as Cop Free to come back as I'm and so why we are not so we don't like this Cop Free.
This Cop Free only reflects the products we sell and not and so we could also sell from 3rd party, but the strategy is more to integrate the value chain.
And energy growth? Will you be selling more energy?
Yes, we are selling more energy in our model. Yes. If I want to yes, it's a good question. And I gave you the percentage of the portfolio. But in fact, if you want to reduce by 60%, at the end, you sell more energy.
You sell more energy.
Thank you.
Thank you. And your next question
You have to wait until September to have more clarity on this sentence. Okay.
Your next
question comes from the line of Lydia Rainforth of Barclays. Please go ahead.
Thanks. And just 2 from me, actually. The first one is just in terms of the interim targets that you set of, let's say, 15% for 2,030, it does seem to be slower pace of improvement that you've had for that first part. So if I think about the 6% reduction in carbon intensity for 2015 to 2019, is that only another 9% over the next 10 years? And again, the ambition for your Scope 2 emissions doesn't seem to have the same pace of improvement coming through.
So is that just an effect of you did the easy stuff very early on and it now gets more difficult? I'm trying to work out whether that's a cautious assumption around where the carbon emissions reductions come through or whether it just gets more difficult. And then the second question was in terms of the net zero ambition for Europe, does this work without a material step up in carbon prices? I know you talked about $100 a tonne in terms of that $20 from 2,030 onwards. But do you actually think there's a realistic policy chance of getting that through in Europe to make those changes?
Thanks.
Good question. The first one is you are observing our figures. At the end, the fact that we are already at 6% will become a detrimental to us. In fact, no, we had some easy, so low hanging force. We decided in 2015, 2016 to exit coal.
So when you exit a business like coal, it gave me immediately 2% or 3%. But it was a decision which we decided also to eliminate some cash flow from operations because we are making more or less $50,000,000 or $80,000,000 per year. So that's the reason why. At the end, no, we don't slow the pace of CO2 reduction. It's more, again, the capacity of allocation of capital.
I don't think we are cautious. I mean, even when some people around the table have looked to the figures, they think we should really continue to work like we have done. If we can do better quicker, we can do it. We'll do it. But we are not alone in this business.
I think we are facing competition. And the bigger we'll become in this business, the more the competitors will also be aggressive. So there are quite a lot of people working on the same ideas around energy I mean, decarbonize energy renewable business. So we have to also to be pragmatic. So no, some step that is done.
We have already made some investments. We'll have to do more, obviously, to continue to develop, to grow the business. And so it's more or less, as I if you remember the figures I gave you, I told you that we should have it's increasing every year an additional one percent per year of electronics in the portfolio, in fact. So it's 5% after 5 year, 15% after 15 years and then you continue. So it's not a reduction, but it's not an acceleration as well.
It's to do it in a pragmatic and profitable way. On the second one, yes, you are very true, but you are very true. But I don't see I mean, let me be clear. If Europe is I think Europe is serious about climate. If you want to be carbon neutral in Europe by 2,050, there is no other way to step up the carbon pricing.
I mean, that's clear. We will develop, I mean, I didn't mention that, we are participating with Equinor and Shell in Norway to the 1st large scale CUS projects, an orphan life project. When you take out, there are some lot of subsidies from the Norwegian state, but more or less the dollar per ton as a production is around 100 and $80 per ton of CO2, which means that this type of project, of course, we can think that we will improve them in terms of efficiency in the future even if, to be honest, there is no the room for improvement. It's a well. It's a plant which is treating gas.
Maybe on the transportation system, we can do better. But that means that this type of CCUS project will require a price over $100 per tonne if they want to become commercial businesses and if we want really to be so Europe is serious about climate change, about carbon neutrality, that means carbon pricing. And though we have to take that into account as well when we think to future allocation of capital that this will become it could become a reality. Then all that will be will take time because if the society wants to be neutral, as you know, the citizens are always looking to their pockets, They don't want too much to pay for it. And so and you know the best business that we had in the last quarter for Total in Europe was a fuel oil, heating fuel oil, heating oil.
The French people have rushed to fill their tanks because it was a very low pricing. I'm not sure it's good for the climate, but this is a reality of the energy business. So this is where you have a debate of do you manage at the same time to have an affordable energy and a clean energy. But more energy with less carbon, but the stronger challenge of the industry.
Perfect. Thank you.
Are you ready for next question?
Yes.
Thank you. And it comes from the line of Martin Ratz of Morgan Stanley. Please go ahead.
Hey, hello. I've had 2, both related to the discussion on the climate and the movement to low carbon electricity. I was wondering if you could talk perhaps a bit what you think are transferable competitive advantages from your traditional oil and gas business into this new business? And as in electricity markets do not look like oil markets, one is more global, the other one is more local, like regulatory changes. But then again, Talbot and many, many businesses, I was wondering what your view on this issue is.
And the second question I wanted to ask when it comes to this transition. I'm just wondering if you regard your own cost of capital as a disadvantage building out a new energies business? There's quite a lot of money sort of chasing these renewables opportunities, and it seems very, very competitive And quite a lot of auctions for offshore wind projects, for example, seem to be simply won by people that have very low loss very low levels of cost of capital. And I was wondering whether you believe that with a coming from a traditional and a gas backdrop, cost of capital is a source of competitive disadvantage?
So, I think the advantage of one of the advantage, maybe what we have done in the last quarter is a good example, is that a world company like us, we are is able to deploy of this business in many different countries, finding the best opportunities. Look what we have done. We have been able to have access to 2 gigawatts in India, 1 gigawatt in Qatar, some in Europe. So I think the capacity that we have because we have a world footprint to work on many geographies and to identify the right opportunities because we have several links. By the way, in India, it's interesting because we developed this relationship.
We had a new group because of the natural gas LNG And then we moved to renewables. So I think that's something that many when you look to people who are more dedicated to this, I would say, electricity business, they are quite the leaders are more focused on Europe plus generally the Americas, South or North. So maybe they so I think there we have access to Qatar. Sorry, of course, was linked to our capacity to develop in Qatar. So I think that's an advantage.
Having said that when you speak about offshore wind, this is very obvious, but there are some technologies. And in TOTAL, for example, what we have decided is that the offshore wind team is embedded in terms of technology and projects within the E and P division. Otherwise, it's very good because the E and P guys were afraid to have less jobs. Today, they are very excited by developing all their knowledge about floating units for its offshore wind, floating offshore wind. So there is some links which can be done, the scalability of it also.
So I think there is okay, that's true. So offshore wind is giving more technology, so it's more obvious. On the solar field, obviously, there is more the size of the capacity that we have to finance large projects. We think the projects itself are less complex. But we can also within this industry, we made, for example, some new return deals in Spain.
What we bring in Spain is the capacity to mobilize financing because we have a lot of developers today. We have a lot of ideas, but not more. So we can come and bring their ideas to reality. So I think there are I mean, we have some advantages. Of course, we face some competition, but it's also I don't see why we could not manage that diversification.
On the cost of capital, again, that's true that today with the yield we are offering to our shareholders quite expensive, but I hope that the fundamental idea is that we will re rate the share of the South by being disciplined on our dividend, but also by developing this low carbon business. Today, that is a disadvantage, again, but true, but I'm asking my teams to be able to deliver to the group more than 10% of return, which obliged us like we described the business model when we develop 100% project to farm down 50% to companies who are ready to pay NPV5 like done again recently in these 2 or 3 countries. Honestly, it's not a real issue for us but to share this project at 50%. And to keep a certain discipline of profitability, I think, is also good for the global future of this business. Because today, it seems quite easy to obtain some long term PPAs with, I would say, stable revenues.
When you go to more merchant renewable projects, the volatility could be stronger. So the level of profitability will be really higher requested by the investors. So it's not a disadvantage. It's a matter of managing the business in another way.
Okay. Thank you.
Good questions.
Thank you. And your next question comes from the line of Anish Kapalbir of Policy Advisors.
I had a question on the impacts of COVID. Obviously, you're seeing some short term impacts, but I really wanted to know what you think some of the structural shifts will be on the supply side for oil and gas and how you see that influencing your longer term strategy. So things like decline rates, the change in production from the U. S, both gas and oil and any permanent supply disruption in kind of LNG markets. So how is your thinking on those affecting your longer term investment strategy?
And then the second question was on your net zero presentation. If you're talking about a $100 per tonne carbon price in terms of the testing price, can you talk about how you get to that kind of price? And with the assumption of 50,000,000 to 100,000,000 tons of carbon sinks, is that implying a kind of cost of that of $5,000,000,000 to $10,000,000,000 over the long term?
Okay. The first question, we can take a lot of time to answer to that. I think, okay, COVID first has an impact, a short term impact on the demand. Once we'll find the back sign of our tools, I think we'll manage to exit it. I think this will have clearly an influence on, I think, the development of the shale oil in the U.
S. I think my view is that already last year, since last 2 years, we've seen investors more prudent about investing in shale oil, requiring cash flows out of it. Obviously, on the top of it today, it appears to be that these it's maybe flexible, but it's not a low cost source of oil. So I think this could influence the global landscape of the oil supply in the world, more fundamentally, but just during the COVID period. People forget, but maybe not.
And I think it could impact the way that people will be ready to invest in this industry. It does not change a lot at all, my view. It's even gone more comfortable to the views of Total that we will not invest in this one. On the gas, on the gas in the U. S, it could have a different effect.
If you have a lower production of shale oil, which means that the gas associated to shale oil could diminish, then it could in turn at the same time the price of gas in the U. S. In the other way. So we have to look at it. And in I'm not sure to have implied to have fully understood your question, I'm not sure to have implied to have fully understood your question about 100 dollars per ton.
The idea fundamentally idea is to ask our colleagues when they present an investment case, in particular, in hydrocarbon, which will go beyond 2,030 to test to the best case is a $40,000,000 aper ton, but to check what it gives is the carbon prices reaching $100,000,000 aperton to see the influence. And it's a way to test them against, I would say, a carbon neutrality business. So that was the I'm not sure if I've captured correctly, Anish, your question.
Yes. It was more given that you'll need to invest in around 50,000,000 tons plus of carbon sinks, what's the expected cost that you're thinking that will be associated with that? Based on carbon could that be kind of $5,000,000,000 per annum in terms of
No, no, no, no, no, no,
no, no, no, no, no, no, no, no, no, no, no,
no, no, no, no, it's not that, no, because 50,000,000 tons of carbon sinks at the horizon, some are, I would say, a natural based solutions. And the natural based solutions, we begin to work on it, are more around less than $10 per tonne. And you have plenty of projects of nature based solutions. So if you consider that half of them are nature based, it's something like $250,000,000 The overall is around are coming from CCUS. That means that you will use 25,000,000 tonnes, let's say, 100 of the dollars per tonne because the technology should more or less be at this level.
It adds €2,500,000,000 so it's more around €2,500,000,000 to €3,000,000,000 in 2,050, yes. We have time.
Thank you. And your next question comes from the line of Irene Himona of Societe Generale. Please go ahead. Your line is open.
Thank you. Perdiga, I had one question on climate. As you said, you cannot control the emissions of industries like cement or ores and so on. Do you see any advantage in partnering with some of these energy intense customers, let's say, to help them address their emissions, the emissions produced when they use products that they buy from Total. It is something that one of your peers is explicit.
And the line appears to have disconnected, sir. There are no further questions.
Okay. I will close. So, Eran, I understand you asked a question. Sorry, we have been disconnected. I'm afraid it was a mistake, my mistake.
So Eran, your question about partnering with industrial clients, cement producers, yes, I think it's a fundamental idea. We have engaged in many we need to act on demand. So to act on demand, we need to work with others. And I have pushed my teams to really take some time, for example, with plane manufacturers or marine industry. And still, we are working with steel companies to see how they could think and change the way they produce energy and looking to over source energy rather than only oil.
So that's part of what we want to proactively work on and the commitment 100 plus is also part of the commitment, which is to bring some of our competencies and capabilities to help the change of V and A use of our customers. So thank you for this long call. I think it was the last questions. I know we have been quite long this afternoon. We've covered many topics.
Maybe in these extraordinary circumstances, we need to have extraordinary calls. I hope we have answered to most of your questions. And again, I think the message that we want to deliver to you is that, Total, I think even if these times are very turbulent, we need to stick to our strategy, the fundamentals of the strategy. And I think more than ever, the fundamentals of actions are clear for a commodity company like Total, looking to our delivery, looking to our costs, managing our cash and staying the course for the long term strategy. And I think it's a good signal, but today, not only we speak about the short term and also about the medium and long term strategy for this climate ambition.
So thank you again for your listening, for your support, and we hope to meet you soon, all of you. Thank you.