Good morning or good afternoon to you all, and thank you for joining us today. Our program today will start with a presentation of 2020 results and outlook by Patrick Pouillanae, Helle Christofferson and Jean Pierre Zreuil. And this presentation will be followed by a Q and A session. Then we'll come 2 presentations on how we progress our climate road map. Arnaud Broyac will drive you through How TOTAL reduces carbon emissions from operations and then Adrien Henri, Vice President, Nature Based Solutions, We'll explain how such solutions will contribute to net zero emissions.
And this session will also be followed by for Q and A session. So before we start, I'd like to share with you a safety moment. As you know, Safety is a core value for TOTAL and we start all our meetings with a safety moment.
Good morning, good afternoon or good evening for those who are in Asia, And welcome to this session of our 2020 results and outlook. I'm happy to welcome you today together with My colleagues of the Executive Committee, Jean Pierre and Helle and Arnaud will take the floor during the presentation, but Alexis, Bernard, Namita and Philippe are also there for answering your questions. I'm sure you will have for them as well. So all of us will remember 2020 as a landmark year that brought unexpected challenges and led to significant changes. We'll look back and think of our lives in terms of before COVID and after COVID.
The pandemic has taken a terrible toll on people With global estimates of more than 100,000,000,000 cases and more than 2,000,000 lives lost thus far. In response to the virus, wide Fred lockdowns disrupted the global economy and the world's scale, raking businesses and livelihoods to an unimaginable extent. We look back at 2020 and remember it as a punishing year for the industry. While dealing with the COVID related health and safety concerns As well as maintaining continuity of operations, Brent fell below $20 per barrel and it became a real test of faith. So 2020 was a year full of short term challenges that we had to tackle and once again Total demonstrated its resilience.
But 2020 is also a pivotal year in terms of global consciousness Of the planet's fragilities. We have built over the past 20, 30 years a global interconnected world, Interconnected for the best, elevating billions of people out of poverty, but also interconnected for the worst, Pandemic, climate change, biodiversity. In many ways, we recognize the world has changed dramatically. There is no going back from here. There is only the way forward.
So move to digitization, for example, has accelerated and is changing the way we do business, Making somewhere everything more efficient. Europe is leading the way on the green deal And but now this is becoming a global effort with other major markets moving in same direction including the U. S, China, Japan, Korea, India. And that's also why we need to think long term. That's why in the midst of the 2020 global crisis, Total launched a bold new strategy to transform itself into a broad energy company with the view to get to net 0 emissions We see our science and technology I've been able to identify the COVID-nineteen virus, develop new vaccines and launch a campaign to provide global immunity all within a single year.
We share the same optimism in science and technology to face and solve the climate challenge. For Total and indeed for the world energy industry, the energy transitions means a dual challenge, Satisfying growing global demand with more energy on one side, while safeguarding the environment with less emissions, Less carbon on the other side. We see it as an exciting challenge and it comes at a time where we need to become A stronger company playing a positive role in an evolving society. At the same time, we remain fully committed to the 4 priorities: HSE, operational excellence, cost reduction, cash flow generation. While transforming, we'll maintain strict financial discipline To keep our breakeven low and our balance sheet strong, diversifying the company will strengthen the resilience But allude us to weather the storm in 2020.
Jean Pierre will comment on our resilient 2020 performance, The strongest among our peers, but demonstrated the company is on the right track and that all of us at Total are aligned And ready for the transformation. Thanks to this resilience and because we value the trust of our shareholders to come along with us in this transformation, We maintained our policy to support the dividend for the cycle. This dividend highlights an issue that has become more pressing during this Private all time period, the future of the major oil and gas companies. In my mind, there is no doubt Vatotal offers a compelling investment proposal and the dividend is central to Vatazes. However, questions about the long term futures of Oil and Gas Companies has become a weight on the valuations.
As an optimist, I believe the transformation in which we engage will resolve those questions as we redefined ourselves with ambitions that The long term needs of an evolving global society. As Helene will explain to you, the writing is on the wall. Clean low carbon energy is in the future. In 2020, global energy demand fell by 5% because of the global Economic crisis. Oil demand fell by 9%, but demand for LNG and Renewable Power actually grew.
And in the context of achieving our climate ambitions while creating value, our strategy for profitable growth is focused on these two pillars, LNG and Renewable Generation. As I explained in September, we're entering into a decade of transformation Because the transition will need time. Today, during this presentation, we'll put on the table 4 new elements, Which are comforting this strategy of transformation and that we will comment. We upgrade our climate road map By setting new objectives on scope 1 and 2 by 2,030, we will increase disclosure on our growing renewable business As to fulfill all your expectations, we integrate our climate ambition into our financing policy. All our bond emissions will be now Climate Capiel Linked.
And last but not least, we propose to anchor this new strategy In our identity, to change our name into TotalEnergies in one single word. This new name, TotalEnergies, embodies a course we have recently charted for ourselves. The one of a broad energy company committed to providing energies that are ever more affordable, reliable and clean. This name is consistent with our social values and ambition to achieve net zero emission by 2,050 or sooner To give us a society and more globally, to become a stronger company playing a positive role in an evolving society And putting sustainability at the core of our purpose. And I love this image, Total Energies in red, more energy, less emissions.
It's exactly our purpose. It's exactly the challenge we face And that we will solve within TotalEnergies. And so I would like in this first part of the presentation, Which is not traditional for the results and outlook in February, to come back on the sustainability agenda What we have put together within TOTAL, just to remind you the strategy we presented to you in September Because all that is consistent and just adding comforting this strategy by some few elements. The sustainability journey of LUKOIL Begins by safety. Safety is a curve value, you know it.
It's a journey and you can see on this Chart, but this journey is progressing within TOTAL in the right direction when you compare the total recordable in January rate for TOTAL and the Piers, since 2015 into 2020, going down from 1.1 to 0.74. It's a lot of effort of all the teams and our partners, the contractors in all of sites around the world. It's a positive, I would say, outcome, even if it's tarnished by the fact that Still, we had last year one facility. 1 is too much like always, one facility in a drilling operation in the Gulf of Mexico. 2020 was also, of course, an extraordinary year from Health, Safety and Environment from the Health point of view as we had to protect All our employees and partners and we have demonstrated within total our capacity to face this type of crisis, Mobilizing all the teams delivering masks, millions of masks of gloves, mobilizing some plants to produce hydroalcoholic gel In 6 countries and at the same time maintaining the continuity of operations as in fact we lost not so much [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Of million and man hours worked.
So again, safety is the first stone of the journey of sustainability within TOTAL And we'll maintain and we'll even enhance in future years in the next decade all these efforts safety is a value. But the journey is also a strategic one to transform Total into a broad energy company, which now has a name TotalEnergies. It's a matter of focusing of producing and delivering different energy products, Gases, Renewables, Electricities, Liquids and also to invest in Carbon Sinks. This slide is a strategic roadmap, Which I presented to you in September, which is to grow in gases in our LNG business, but also to develop some renewable gas. It's to accelerate investments in low carbon electricity, primarily from renewables and to integrate the electricity chain from production to Trading and Supply.
In Liquis, it's clearly to focus on low cost oil, but also to develop a renewable fuel business And at the same time to adapt our downstream capacities to the demand, in particular in Europe, and again, because it's mandatory for carbon neutrality To develop and invest in carbon sinks. More energy means growing our production because our ambition is currently to continue to grow. The world needs more energy and we will take our share of this growing energy demand, Which means that fundamentally, as we said in September, growing by 1 third in the next decade from the equivalent of 3,000,000 barrels of oil Equivalent per day to 4 or I should say more from something like 17 petajoules per day to 23 petajoules per day. That will be done with 2 pillars. The one which again was distinguished in the energy market in 2020 despite the LNG on one side and Renewable Electricity on the other side.
At the same time, we will adapt The sales to the demand. Our strategy is fundamentally led by the demand evolutions, which means that the pattern of our sales, Which was 55% oil, 40% gas, 5% electrons last year in 2019 We'll become in 2,030 less 30% of oil products. This is a big shift, 5% of renewable fuels, 50% of natural gas 15% of electronics. People could think it's not accelerating enough. This requires a huge transformation During the year 2020, 2,030.
And thanks to this evolution of our sales, we will end of our production, we will reduce emissions while growing. In September, we took a strong commitment, which is that the scope 3 mission of our customers by 2,030 will be lower On a worldwide basis than what we were in 2015. And that in Europe, we will decrease by 30%. We have the we can today report to you the results of 2020, which of course is lower than 2015 because We are helped, if I may use the word helped by the COVID impact, less activity, less sales. But even if we What if I mean, if we integrate the COVID impact, the decrease between 20202015 of the scope free emission of our customers in Europe is 12%.
And so there is still a lot of work to be done to reach the 30% that we ambition by 2,030 because it means that we'll have to adapt again All of activities and growing in some direction, decreasing in particular in our oil businesses. Today, we are upgrading, I would say, our climate roadmap by giving you another commitment, another objective on the scope 12. The emissions coming from our operated oil and gas facilities by 2,030, the net emissions should decrease by 40% versus 2015. Until now, we had this objective of less than 40,000,000 tons in absolute value on scope 1 and 2 by 2025, which is already a challenge because it's not only a question of diminishing the historic perimeter of 46 1,000,000 tons by 2015. In the meantime, we grow between 2015 and 25,000,000 tons.
So we have 10,000,000 tons or more to integrate from our acquisition and start ups. So there is a lot of effort to say on the historic base of emissions. As you can see, this effort is going on And Arnaud Royac will come back on it and will explain you how we intend to reach less than 40,000,000 tons by 2025. And going beyond, Going beyond in net emissions, that means that from 2,030, we will integrate in the scope 12, the, I would say negative emissions coming from the carbon sinks that we will develop from in particular our Nature Based Solution Business Unit and Adrien Haire will explain you how. So it's another additional target Aligning for the next decade, 30% or less of scope 3 European emissions for our European users and 40% scope 1 and 2 From operated oil and gas facilities.
All that will lead us to the carbon neutrality by 2,050. If I summarize, by the way, where we are on the global road map that we announced In May 2020, when we announced that we were sharing the ambition to get to net 0 by 2,050 together with Societe Society For Global Business, We put 3 major steps to get Total to net 0. So first one of Scope 1 and 2. Again, the results Today in 2020 is minus 15%. In the official documents where you will see minus 22%, but in fact, if we correct the COVID impact, it's minus 15%.
On scope 1 and 2 and 3 in Europe, I just mentioned it, it's minus 12%, even if you read minus 25%, but in fact COVID helped us too much there And demand will come back. And on scope 1 and 2 and 3 of the carbon intensity reduction, we will have achieved 8%, Which is again the best performance instead of shifting the portfolio among our peers. But sustainability is not only a matter of climate for Total and this is and for Total Energy is tomorrow. We want sustainability to be at the heart of all of Total's transformation journey. So it's a matter when we speak about environment, also biodiversity.
We took this year some new commitments. On the S of ESG, of course, is to find a way to deliver a just Transition, in particular as a responsible employer. And you've probably noticed that we are the only one who did not announce any layoff Despite the crisis and maintaining all the workforce competencies even if we were Strong on managing our costs, and Saint Pierre will come back on it. It's also in the journey of transformation, putting the right place to the diversity. We strongly believe that diversity is enhancing our collective intelligence.
And so we have decided that we reach our target to get to have 20 Percent of women in all our management bodies by 2020. The Board together with the Board, we enhanced this objective to 30% of women in all management bodies by 2025 within TOTAL. It's also a matter in the governance, of course, To put sustainability and to take consideration of all environmental and social synergies when we took decisions for new Projects and capital allocations as the Board recently did it when he approved the Uganda project. It's also a matter to be Consistent with between this sustainability objective and the way we incentivize all the executives of the company, including the CEO, As ESG factors, we represent 25 percent of variable parts and of LTI criteria and of our remuneration. For this journey in sustainability, we have one principle, which is transparency.
Transparency to explain what we do And to report on it, so I know it's a lot of work for our teams and that there is more and more requests coming from shareholders about understanding How we perform in SG, I see that very important to deliver to you all the elements to evaluate properly our efforts. And so that's why in 2020, we have for the first time published our SaaSBI reporting and we will add in 2021 The World Economic Forum KPI ESG Linked Reporting and also the WDI Reporting. As you can see on the left right side, there are many agencies evaluating our ESG commitment and performance. And I am proud to say that for all of them which are there, Total is as a best goal within the oil and gas sector. Even if there are still Journey to be done so that we are the best goal among all the corporations in the world, which is the real ambition that we should have as an energy and a multi energy company.
Last but not least, the consistency is also to integrate the sustainability And our climate ambition, not only in, I would say, carbon emissions, but also in a global approach and into a financing policy. We at the Board level, we have decided that from now on, all the new bond issues will be climate KPI linked, which means that Jean Pierre and his teams will propose you to issue bonds, which will be systematically linked one way or the other to a climate KPI. We have the KPIs, Measurable KPIs, Scope 1 and 2 operated emissions, 25, 2030. Scope 3, 2,030, 2,030. So, Iwan, with long maturities, we can link them.
And I think it's we are the 1st company in the world to propose that To embed, I would say, our transition within our financing policy. And I know that there are a lot of debates around taxonomy, but that is our answer. If you will buy bonds of Total, somewhere you will go together with our transformation. And if we don't reach Our target will be punished by higher cost of debts, and you will be rewarded. So it's worth continuing to finance with investments of TOTAL.
I'm there, that was the first part about sustainability and I think this introduction, I want to leave the floor to Helle and to Jean Pierre to come back on earth on the market and our results and our resilience Before to speak again about the outlook.
Thank you, Patrick. And so now just a few words on the macroeconomic environment. As you're all aware, 2020 was a year of a global economic recession, except in China, Due to the shock of the pandemic, 2020 was a year of rollercoaster energy demand due to repeated periods Of more or less severe lockdowns. And 2020 was a year of extreme volatility in commodity prices Due to supply and demand imbalances. Against that backdrop, the chart here shows you The contrasted evolution of various energy markets, as Patrick just mentioned earlier.
Global energy demand was down by 5%, more or less in line with GDP. Oil markets, on the other hand, were down 9% Because mobility is a key contributor to oil demand. What's striking on the chart is that LNG demand And wind and solar power generation did remarkably well, growing, respectively, 3% 13%. This confirms the role of these two markets in the ongoing transformation of our energy systems And as key growth pillars for Total. Then I also think that this market picture underscores the benefit Of being a broad based energy company, TotalEnergies.
Regarding oil markets. Asian demand, in the end, proved very resilient last year. But the key question right now is, of course, how fast global demand will rebound and to what levels. The jury is out on that. We need the vaccines, obviously, and we need the implementation of the massive economic recovery packages That have been decided around the world.
What's clear on the other hand is that there is a risk Supply crunch in the midterm, and that's the message of this chart. We've seen in 2020 how OPEC managed To bring back market discipline, we've seen the cracks in the U. S. Shale model, and we've seen A continued underinvestments in the oil industry as a whole. Given that the natural declines in existing oil fields that are shown here, The message is simple.
We need new oil projects. And that's true even if you take a very cautious view on short Term demand recovery and on future demand levels. What's shown here is a cautious outlook out to 2025, About a 10,000,000 barrel per day gap in supply between now 2025, that's a massive shortfall On LNG, once again, demand was very dynamic in 2020 considering the economic downturn. Worldwide LNG demand was up by some 3%, while global gas demand was down by around 2%. This big disconnect is due to the fact that the LNG market is much smaller than the global gas market, but also to the fact that it's much more flexible, More reactive and actually tailored to the needs of the customers.
And with the lower prices that characterized the first Quarters of 2020, the first three quarters, demand elasticity proved remarkably high. Imports were up by 11%, 12% in China and by 15%, 16% in India. Those are the latest numbers. On the supply side, there were only 2 FIDs, and Total was part of those actually, as other less competitive Projects were either canceled altogether or pushed out. There were several outages in existing liquefaction trains, Which contributed to the tensions in the LNG supply chain, especially in the second half of the year.
And with the cold winter in Asia, Prices soared to record levels at the very end of 2020. Going forward, we continue to see strong support for LNG. It's been a high growth market every year since 2015. And as Patrick said, this trend is now being amplified by a number And net zero climate goals by key customers such as, for instance, China, Japan and Korea. And with that, I now hand the floor over to Jean Pierre.
Thank you, Euler. Total has been following a strategy to Strengthen the group since the collapse of oil prices in 2015. We started the year 2020 with a gearing below 20%, With a cash breakeven at around $25 per barrel, so to some extent, we were prepared when the crisis began. As COVID virus spreads and markets began to collapse, we reacted quickly. We adapted by implementing an immediate action plan and you will see we delivered.
The group demonstrated in 2020 its resilience during storm, [SPEAKER PIERRE ANDRE DE CHALENDAR:] Which allow us to continue investing in profitable projects, support the dividend and maintaining a strong balance sheet.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] We were
disciplined, we were flexible and we have not overextended. In 2020, we generated $15,700,000,000 of cash flow from operations. Relative to the plan we announced in 2019, The most significant change for 2020 was flexing the level of investments, including M and A. 2020 CapEx was $13,000,000,000 versus initial guidance around $18,000,000,000 I will come back later on this saving. But at the same time, we maintain our commitment To grow Renewable Energies, to support the transformation strategy of the group.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] We did not overreact to the crisis, and instead, we chose to support the dividend through the cycle, as Patrick mentioned already. Return to shareholders of $7,200,000,000 includes the cash saving decision To propose the final 2019 dividend in shares as well as the 5 A $50,000,000 of buyback in the Q1. Gearing, excluding leases, increased to 21.7 percent at the end of 2020. But on the right hand side of the slide, we show that Total has the strongest [SPEAKER PIERRE ANDRE DE CHALENDAR:] Financial position amongst the majors with the lowest gearing. That means [SPEAKER PIERRE ANDRE DE CHALENDAR:] That we were able, despite the crisis, to preserve our balance sheet strength.
[SPEAKER MARCO TRONCHETTI
PROVERA:] We reacted quickly to the crisis. Immediate action plan was taken 1st, in March, when the oil price crisis started. And it was reinforced in May when the COVID-nineteen demand crisis came. The objective was very clear. It was to cut outlays by about $5,000,000,000 The cost culture is part of the group DNA.
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] So the foundation to deliver on the action plan was already there. The action plan was implemented effectively and rapidly [SPEAKER PIERRE ANDRE DE CHALENDAR:] While maintaining continuity of operation throughout the crisis. And we delivered more than we promised as the year went on. The reduction of CapEx targeted at least at $5,000,000,000 ultimately came in at a saving of $5,000,000,000 The reduction in CapEx by more than 25% demonstrated the group's strong discipline on investments As well as its ability to flex the level on spend, particularly short cycle projects, But also, it reflects the decision we made not to pursue some acquisition, for example, the Ghanaian and Algerian parts of the Oxy and Adarco deal. Despite the need to conserve cash, we maintain investments of $2,000,000,000 For renewable electricity, as it is the foundation of our future profitable growth.
On the OpEx side, we began the year with a plan to cut costs by $300,000,000 And we increased that objective in May to $1,000,000,000 We over delivered with a $1,100,000,000 of cost [SPEAKER IGNACIO CUENCA ARAMBARRI:] I will come back with more details on the next slide. Over the past several years, We have high graded and actively managed portfolio to reduce the organic breakeven, which was 20 $6 per barrel for 2020. This low breakeven, high quality portfolio of assets is the cornerstone of our resilience. Managing cost is a continuous group wide effort That is built into our culture. In 2020, we cut more than $1,000,000,000 of cost across the group [SPEAKER
PIERRE ANDRE DE CHALENDAR:] Compared
to 2019, while the initial budget set was $300,000,000 The crisis has forced us to adopt new ways of working, most of which are sustainable And contribute to accelerate digitalization in many areas, new operating philosophy in many of our sites. In 2021, our target is to cut an additional $500,000,000 through the generalization of Efficient cost cutting initiative across affiliates and further optimization that our cost culture will continue to foster [SPEAKER PIERRE ANDRE DE CHALENDAR:] Through, for example, best practice sharing. Overall, 70% of OpEx savings in 2020 are sustainable. So they came from logistics, in particular means optimization. They came from supply chain and procurement We centralized and global procurement delivering more competitive purchasing across the group with leveraging use of digital.
They came from structural change with staff through deployments, reorganization, new practice and more digital usage to reduce our business travel And meeting costs. They came also from operations and maintenance. We are increasingly able to monitor operations From plant platform, remotely, we've lowered our costs and increased effectiveness. We are already in the next phase of efficiency improvement and cost reduction. And our digital factory is starting to deliver.
Because of the strong culture in terms of cost cutting, Total is already the low cost producer Among our peers in terms of OpEx per barrel. This is a competitive advantage that we are always working on to improve. We have cut our OpEx roughly in half since 2014 to $5.1 per barrel in 2020, [SPEAKER
PIERRE ANDRE DE CHALENDAR:] Best in class,
once again, among the majors. And we are targeting a further reduction to $5 per barrel in 2021. Digitalization and the new best practices we are adopting will allow us to continue to capture sustainable cost reductions. In 2020, our original budget Was at $18,000,000,000 for CapEx. The action plan led to a $5,000,000,000 CapEx saving versus this original budget, With the CapEx at $13,000,000,000 in 2020.
On the right, you show we show you where the $5,000,000,000 2020 CapEx saving came from, so it will give you an idea of how we can flex spending. Most of the cuts were made in Upstream, including net acquisition. In particular, we exercise our flexibility to delay around $1,500,000,000 of short cycle E and P spending, Essentially choosing to sell some projects for better times. We see the 2021 environment as ascertained, so we prefer to approach it prudently and with flexibility. The 2021 CapEx plan was developed using $40 per barrel brands, maintaining what we control, Maintaining discipline on CapEx with a budget of $12,000,000,000 continuing to invest in profitable projects To implement the group transformation, we have a strong signal of commitment with more than 20% of CapEx devoted to renewables And electricity.
That means in 2020 that we preserve the flexibility to mobilize short cycle CapEx There is more differentiation among the majors that we have seen for many years and dividend policies have become contrasted as well. The group fundamentals are strong, high quality, low breakeven assets that we put together over the last 5 years with more than 30% rotation of the portfolio. Cash breakeven around $25 per barrel, strong balance sheet. 2020 was a tough year, but the Board, confident in the group's fundamentals, confirmed its policy Of supporting the dividends through economic cycles. The 3 interim dividends for the 1st 3 quarters of 2020 Has been maintained at €0.66 per share and a distribution of a final dividend equal to the previous 3 quarters We'll be proposed to the next Annual General Meeting of Shareholders in May.
We respect the relationship we have developed with our shareholders over the years. Paying the dividend is central to our disciplined cash flow allocation to create shareholder value. [SPEAKER PIERRE ANDRE DE CHALENDAR:] We believe our shareholder trust us as major oil company to weather crisis and cycles of volatility. You can see on the right hand side of the slide our performance in terms of total shareholder returns in comparison with our peers. And this is for us the demonstration that our shareholder supports our strategy in terms of dividend policy.
Finally, a recurrent slide to benchmark the 2020 year performance against our peers. The 2020 environment was one of the most challenging years the industry has ever faced. [SPEAKER PIERRE ANDRE DE CHALENDAR:] But thanks to our resilience, we posted a $4,100,000,000 of adjusted net income and a 15 [SPEAKER PIERRE ANDRE DE CHALENDAR:] $700,000,000 of cash flow from operation in 2020. Once again, in absolute term, we are among the best performers Of the group, despite the fact that we are competing against some much larger peers relative to the size of the production. Consistent with our climate ambitions, we recorded impairments of around $10,000,000,000 Mostly taken in midyear in June and concentrated mainly on our Canadian oil sands investments, Which are high cost assets and have reserves extending beyond 30 years.
Despite the magnitude of the number, it is the lowest level of impairment among our peers. It demonstrates the high quality of our assets and reflects a history of using prudent price assumptions. On return on equity, although too low in such contests, this return on equity was best in class. Total has performed well compared with peers for many years. And as the peer group continues to become more differentiated [SPEAKER JEAN FRANCOIS VAN BOXMEER:] In Strategy and Assets, I believe, as Patrick said, we are on the right track.
We are well positioned for this positive momentum to continue. And I will leave the floor to Patrick.
[SPEAKER JEAN PIERRE AND HELLE FOR THIS presentation of our This presentation of our results and our resilience. I think as you said, we have the foundation and now I would like to Again, I repeat the pillars of the foundations, which is his motto, HSE, delivery, cost and cash, that are well very well. And again, our teams have In 2020, that when we ask them some to act, they deliver, Which is, of course, a great comfort to engage on the transformation journey in which we have decided to go. And but we will always keep in mind that we need to deliver [SPEAKER MARCO TRONCHETTI PROVERA:] And that it's because we are good and even excellent on our short term results that we have the right to have this broad strategy of transformation And investing part of the cash flows we get from Oil and Gas Business into these new energies. So I know that you are all expecting more informations about Renewables, so you will not be disappointed.
I hope so. We have taken today what we will do and I will do. And you will have more to come, by the way, because you will have in the and then next to the presentation many details in geographies of all our assets, Not everything because we need to keep some few information for us, but a lot of them. The idea being that we want to help all of you to better evaluate The portfolio that we are putting together in our Renewable business, as you know, all the fundamental idea to create a broad energy company It's to raise the company from low multiple from oil and gas and to get part of what the market is giving to these green new energies. I don't dream to have a 25 multiple, but if we get there from 6 or 5, 5 to 6 or 5 to 7 to 10, we'll be more than happy.
So this idea today is to have deep dives in these assets. So first, about immediate delivery. As you can see, we have a growth in total capacity, which is of 7 gigawatt by end of 2020, which will grow to 10 gigawatt by 2021. This represent, by the way, and we speak about growth capacity because this represent a growth CapEx of $5,000,000,000 in 2021. I will come back on it, but you know that we financed by equity only 30 percent of it, so EUR 1,500,000,000.
And you will make the math with me after that. The most important is that all the projects that we sanctioned have an objective of more than 10% of equity IRR. The other part of the slide is very important. In September, we told you that we were targeting 35 gigawatts by 2025. By that time, so you will all teams who are not so a little unhappy because they had only 25 gigawatts in their hands, [SPEAKER MARCO TRONCHETTI PROVERA:] But we are trusting them.
And in fact, the last 6 months, we worked continue to work. And now we have these 35 gigawatts In our portfolio, and I will describe that to you. First, why did we get them? Because we really and from this Perspective 2020 was really for me a very important and accelerating year or even pivoting year in terms of renewable because we I've demonstrated to ourselves that we were able to really capture early stage opportunities to low entry costs. There is no way to acquire existing assets because of the multiples I just mentioned.
But then another way to grow, which Of course, organically from our teams, but also to capture and to find agreements with some other development teams, [SPEAKER MARCO TRONCHETTI PROVERA:] Which are early stage, which means they are the lands, they are the connections, but they don't have necessarily the financial capacity. They don't have necessarily all the commercial agreements, And we can work with them to accelerate their developments and to put all these projects, I would say, to reality. So in 2020, we worked and we put together 10 gigawatts of new projects, mainly in Spain, in India, a first step In UK offshore wind and Qatar, since the end of the year, beginning of the year, we have accelerated another 10 gigawatt in 2021. [SPEAKER PIERRE ANDRE DE CHALENDAR:] I will not do that every month to be sure. So we have maybe already reached the objective of the year.
No, we'll continue to work. But with 4 new steps, A big new step in the U. S, solar in the U. S. At the Utility Scale project with 2 deals for 4 gigawatts.
So that's [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Important because it's a very it was one of the market of a utility market, scale market for renewables out of which we are not there. Now we have these projects that we need to deliver. 1 gigawatt, by the way, will be used in order to green the electricity of all our downstream plants, Refineries and all other petrochemical plants. We have also done a bold move by acquiring 20% Of Adani Green Energy, you know that in January for $2,000,000,000 you know that we have established 2, 3 years ago A partnership with the Adani Group in gas, LNG, City Gas. We have made beginning of 2020 a first heavy duty with them in solar, Our free year awards capacity, but we share some assets, which are now into production.
But we have also decided that Adelnik Green Energy themselves Accelerated a lot in 2020. They have now a portfolio of more almost 20 gigawatt of Contracted capacity, we even increased it, I think, last this week by acquiring rights to another 4 gigawatts. We have great ambitions. It's a great partner. We embarked there.
India is a very large market, several 100 of Gigawatts of solar and wind capacities are promoted by the governments for their own climate journey. And so we are very proud to embark with number 1 solar developer in the world. And I think we are entering into the [SPEAKER MARCO TRONCHETTI PROVERA:] Same story that we've done in Russia 10 years ago with Novatek and the LNG development of Yamal. So it's an investment. You know as well that we €2,000,000,000 but shares today have a value of €4,000,000 So I think we might we will be able to deliver good profitability out of these investments.
And last but not least, UK, where we took UK offshore wind. We made the first step in 2020 with SSE, [SPEAKER JEAN FRANCOIS VAN
BOXMEER:] We've Seagreen project and
last week together with our partner Macquarie, we obtained the seabed rights of our 1.5 gigawatt projects on the Eastern side of UK. We have been active, so we had to finance all these acquisitions. And Jean Pierre and his [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And Jean Pierre and his team finance team have done well. We issued a hybrid bond to finance the renewable. Some people are asking me, but why can you be If you finance this renewable with a capital which is remunerated at 7%.
We have demonstrated with this hybrid bond that we can [SPEAKER PIERRE ANDRE DE CHALENDAR:] Finance or Renewable Forever coupon of 1.9%, which is a very highly competitive cost of capital. [SPEAKER PIERRE ANDRE DE CHALENDAR:] So the Renewable business of TOTAL has different fit, but I would say reaffirm today that the priority, of course, is to develop Utility Scale Portfolio. You hear different names, Total Solar International, Total Quadrant, Total Irene, Nadalie Green, now Offshore Wind, Total Offshore Wind. In fact, all that at the end of the day, you have a photo there of what are the competence of each of these companies, the subsidiaries. I would say Total Solar International, it's our solar developer in Europe, the U.
S. And the Middle East. We're working also with Adeliguin in India, Which owns at the end of 2020, 3.3 gigawatts. Total Quadrant is your subsidiary in France, solar and onshore wind, 1 gigawatt end of 2020. Total Iran is a company we put together with some founders of Iran.
We have 30% of this company, We have 1.9 gigawatts of growth capacity, and we have the option to acquire 100% in 2023 or to go to IPO. Adelie Green, I just mentioned it, is the acquisition of the 20% as a shareholder. And offshore wind, we develop it ourselves in JVs [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Mainly because of the magnitude of these projects, we have the several JVs either with SSE, with Macquarie or with local developers on floating offshore In the UK and in France. And then we have another part of the business, which is dedicated to the distributed generation. There is a subsidiary called Total Distributor Generation, dealing mainly with corporate I mean, making corporate PPAs more ones In order to put in place or to offer to corporations some solar, I would say renewable capacities on the roof for small plants in order to go with them in their own Clibet neutrality journey.
We have a JV with Envision in China and of course we own 52% on SunPower. SunPower was been re concentrated in 2020 [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Mainly on the residential DG business. And it seems that the stock market appreciates a lot with, [SPEAKER PIERRE ANDRE DE CHALENDAR:] I will say refocusing of SunPower on this market. So that's the different vehicles we have. When we look to the portfolio more in [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And you have plenty of informations on this slide.
We can look at them by Maturity of assets, you can see that we have 7 gigawatts in operation, gross capacity. The net is 3.1. I will come back on this notion just after. We 99% of these operations are covered by BPA, so most all of it, 99.8%, in fact. And we have PPA duration of 18 years and an average PPA price on these operation as operational assets of more than $110 per megawatt.
In construction, it's 5 gigawatts free of net capacity, 90% covered by PPAs. The remaining part It's a share, 30% share of the Seagreen project that we have in U. K. Offshore that we intend to go for CFD on next round. 20 year of PPA duration there again, an average price for these assets in construction of $55 per megawatt.
And in development, we have 23 gigawatts, so the one on which we are working, 21 net because we Kept most of our assets within the development phase, as you know, and 40% are already covered by PPA, which means only almost 9 or 10 gigawatts, average duration 20 years, there is a mix between 60% of takers are PPA of corporate PPAs because we begin to work on this part. And the average PPA price for these new [SPEAKER PIERRE ANDRE DE CHALENDAR:] Assets coming in stream in the next 3, 4 years is $45 per megawatt. Beyond it, we have already some projects, in particular, the offshore wind Projects that we mentioned in Korea, in UK, like the one we were awarded this week of around 4, Which are not yet covered by PPA, but I should say it's a question of maturing all these assets. So the important point is that already 60% of all the portfolio we mentioned, the [SPEAKER JEAN FRANCOIS VAN BOXMEER:] We mentioned the 35 gigawatts or more than 20 gigawatts are already covered by PPA, which allow this portfolio to deliver predictable long term cash flow. If I'm going to this delivering of cash flows and profitable growth and the business model, I just want [SPEAKER MARCO TRONCHETTI PROVERA:] To take a point there because people tell us asking us how do you manage to make your 10% return.
We have done an exercise taking and Modeling, in fact, the 10 gigawatts of projects which were acquired in 2020. And so by modeling them, that means that Normalizing as if all the COD of these projects were on the same date, which is not exactly true because some of them Welcome quickly, some like offshore wind a little later, but we try to understand if we have 10 gigawatts of projects, Which will start how much of what is will be the payback of this 10 gigawatts, I think a mix of solar, offshore wind, Solar in Spain, solar in India, so geographies. As you know, we invest 30% in equity. So that means that [SPEAKER PIERRE ANDRE DE CHALENDAR:] We'll put 30 percent and we have 70% of non recourse debt, non recourse being very important. It's not on the balance sheet, obviously.
So when we said that this year we'll finance the equivalent of this $5,000,000,000 Of growth CapEx, in fact, equity will be EUR 1,500,000,000 and non recourse debt will be, let's say, EUR 3,500,000,000 And the EUR 1,500,000,000 are going into our investments, EUR 3,500,000,000 are on the assets themselves. Then we will [SPEAKER PIERRE ANDRE DE CHALENDAR:] Clearly developed by ourselves the projects. This growth capacity is important because this is the effort that Total Support during the development phase. [SPEAKER PIERRE ANDRE DE CHALENDAR:] And when the project is developed, the production startup with COD, like Vei said, we have our policy is to farm down 50% of it. There are two reasons to farm down it.
The first one is a matter of risk management, the risk of the portfolio. Renewables is a local business. We take the local risk of production, but also the local risk of delivery of sales. And PPAs for 20 years are nice contracts, but you have also our risk of counterpart. Even with states, We observe it in Spain in the future.
We see that France has sometimes some strange ideas as well. And so for us, it's a matter of, I would say, derisking of the portfolio by selling 50% of the assets. And that's an important point of view for me as Chairman and CEO of the company. The other Beauty of it is that you accelerate cash flows with increased returns. We gave you the figures of the 5 farm downs we have executed In our France and Japanese portfolio in the last 3 years until the month of January, we sold 5 50 megawatts For $1,510,000,000 of EV, which is this 5 50 megawatts, if you take a cost [SPEAKER PIERRE ANDRE DE CHALENDAR:] So let's say $500,000,000 you see that the multiplicator effect is times 2.
So obviously, this is Important, it's accelerating cash flows, it's increasing returns. And you can see on the chart that after 5 years of production, The remaining 50% we kept, we have more or less the payback of the equity investments. So this is a global Cash flow model, which we call the capital light model that we are developing. So it's a question of derisking the portfolio, getting the most by bearing Again, the investment until the production start ups and then the PPA will continue for 15 to 20 years like I said before. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And beyond it, production will continue again, will continue because this type of assets have a long life.
So this is a way that we are creating Cash flow for the long term for shareholders in this renewable business and this is a way to reach this 10% of return target on equity. Finally, on this Power business, the growth is globally on the electricity production because at the end what we had is the net Production, so I remember the growth we finance the net we get it as a production and we'll feed our future results and cash flows. So net production was last year at 14 terawatt hour, which increased by 40% to 20 terawatt hour main From renewables as well from gas fired power plants as we have acquired some in Spain, but the future to 2,030 [SPEAKER JEAN FRANCOIS VAN BOXMEER:] It's clearly that the renewables will have the lion's shares of our electricity production as we explained you in last September. We introduced today another metric, a new metric about this electricity business. You complained that you cannot understand where exactly the results, so [SPEAKER JEAN FRANCOIS VAN BOXMEER:] You will report we will report in fact regularly, quarterly on this metric, which is what we call a proportional EBITDA Obviously, electricity business, which includes, in fact, the proportional share of equity affiliates that we have as we have this divestment policy.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] It's important because this is a cash use which will help which will, in fact, finance the cost of the debt and also the return to dividends to Total. You can see that it's growing and it will grow in 2021 from, let's say, around $500,000,000 to something like $800,000,000 The most of the growth coming went to renewable business. And we are still we are only at 10 gigawatt of installed capacity, 7 gigawatts today, 10 gigawatts at the end of the year, 20 terawatt hour. I remind you that the target for Total is to reach more than 1 So it's 5 times more. So when we speak about generation of cash flow, that's a reality.
This is exactly why we want to embark In this renewable product business at scale. Just a last word before I move to LNG. Sales, we have now 8,000,000 customers in France, in Spain and Belgium. We delivered last year 50 terawatt hour [SPEAKER PIERRE ANDRE DE CHALENDAR:] Electricity to our customers. And I think first and we have also some few B2B customers in UK.
We intend being to concentrate our efforts on these countries for the coming years. So the second pillar The strategy is LNG. LNG there, you know that it's a strong foot of our cash flow generation. By the way, 2020 demonstrated as well resilience. We've seen, of course, the brand lost something like 30%.
The Henry Hub lost It's at 16%. The Asian price were at the bottom. And despite that, the cash flow generation from LNG, EUR 3,200,000,000 [SPEAKER PIERRE ANDRE DE CHALENDAR:] It was quite almost the same than last year. Why? In particular, because we continue to grow.
We create value from scale and arbitrage, 10% growth, 38,000,000 tons of sales last year and we expect 10% more For 2021. So we benefited, of course, from the start up of Cameron, in particular, which will deliver at full scale In 2021, and so that's why we have this growth. But as you know, we have this story is not over Because and we did not stop it despite the crisis. We have the 2 flagship projects in Russia, Arctic 2, [SPEAKER PIERRE ANDRE DE CHALENDAR:] Which is 45% progress on Train 1 by end of 2020. And Mozambique LNG, which is our 2021 progress on end 2020.
We face clearly some security issues. As you know, it's public and we are working with the Mozambique government. It does not have at this stage Impact on the planning of the projects which we'll deliver by 2024 because we are still mainly in the engineering phase, the logistical phase And the offshore works have been maintained, but obviously the situation on the ground will need to be controlled And we have a clear plan securing an area of at least 25 kilometer around the project itself in order to be able to resume the work, Which is our intent, whether we are contractors, but my highest priority is the security not only of my staff, but fundamentally of the staff of our partners on the ground in Mozambique. In 2020, we have also maintained our commitment to LNG by sanctioning, like Helle said, So 2 only projects we were sanctioned worldwide. 1 is 27 in Nigeria and the other one, and we are happy to participate to that, It's a Costa Azul project that Sempra is leading on the Pacific coast of Mexico.
It's a very well located project Closer to Asia market than the Gulf Coast, obviously, you avoid the bottleneck of the Panama channel. And it's [SPEAKER JEAN FRANCOIS VAN BOXMEER:] It's a low cost project because it's fundamentally the reversal of regas plant
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] Well,
we benefit from all the infrastructures JTs already have already been invested and it will be sourced [SPEAKER PIERRE ANDRE DE CHALENDAR:] From low cost Permian gas. So that's interesting. You can notice that on this slide, systematically, we put to you we put the indication of a carbon intensity. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And it's linked to the climate ambition that we delivered in May. We said that we want that the allocation of capital should be [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Consistent, you don't have in mind probably, but let's say that the historic LNG plants The carbon intensity generally around 40 kilo per CO2 per barrel or more, 40 to 50.
So you can see that the last plants we are [SPEAKER JEAN FRANCOIS VAN BOXMEER:] On which we invest like Mozambique, on which the Total teams have done some amendments to the plans which we inherited For Malteco, we are 25, so we are making effort to minimize in all our projects these carbon emissions systematically. I speak about gas, a word about renewable gas. Maybe in September, it was a little aspirational what I said when I mentioned figure. No, We can speak about it more because we have some assets. We have made some interesting moves.
We acquired a company in France, which has a production of 500 gigawatt per hour per year of renewable gas. The market in France is 4 terawatt hour per year, so it's 12%. It can double it has projects to double its capacity in the coming years. So it's for me a platform of continuing to grow not only in France, but in Europe and we are happy to welcome for us brokers in the group. We have done also another move in the United States together with Clean Energy.
We acquired 25% of Clean Energy In 2017 or 2018, Clean Energy is a company which is dedicated to promote gas mobility in the U. S. With a very large network Of gas retail station, I would say natural gas station, they have decided that because the move in mobility we Clearly, not only in U. S, but also Europe, we think that gas mobility will become more biogas mobility for Because everybody is engaged on both sides in the Atlantic in the towards the carbon neutrality. So Clean Energy wants to integrate the Up And we propose them to put in place a JV between Total.
We have more financial capacities and fifty-fifty with clean energy In order to develop renewable gas production in the U. S. Together with bio CNG, bio LNG distribution capacities. And the last part of our renewable gas road map is hydrogen, where again, a first project, pragmatic one. It's not big.
It's 40 Megawatt electrolyzer, but it's an integrated project with a solar farm, 1 of the megawatt. And more importantly, This project will have to deliver green firm green hydrogen to Lamed Biorefinery. So how do we store the hydrogen or we deliver the firm? It's a project which is worth around €200,000,000 on which, of course, we'll need to support from governments in order to move forward. But there is A lot of enthusiasm in Europe from European governments to develop this hydrogen economy.
It's a first step And we'll have we'll come back later coming years about the ambition in Hydrogen. I should not forget oil, of course, because oil is at the core of all our businesses, and nobody should forget it. And today, we by the way, just to illustrate it, we delivered to you a figure which you don't see normally, which is the oil E and P cash flow. I want to pay tribute to all our colleagues who are continuing to maintain operations on all fields around the world. EUR 7,600,000,000 is half of the group CFFO.
If you are adding to that the downstream CFFO, which represents almost EUR 5,000,000,000 Clearly, today, it's true that most of the cash flows of Total come from oil. And when we invest more than 20% Of our new investments in the Board and Power, clearly, we take part of this cash flow, but without this cash flow, there is no way to make the transition in which we are engaged. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] So it's why we have a strategy where we want to continue to maintain no more growing oil business, but to maintain all this activity And to be good at it, even excellent, the excellent is illustrated. The excellence is illustrated on the right side. Again, when we took the Upstream adjusted net operating income, Upstream means for us E and P and LNG because it's a way that We can compare to our peers.
You can see that the results of the company this year was fundamentally delivered By this upstream at EUR 4,000,000,000 and is larger much larger, I can say, [SPEAKER PIERRE ANDRE DE CHALENDAR:] On our peers, despite the fact that among these peers, we have the smallest production, which we should remember. And frankly, if I'm proud of what we do, When I see that the global cash flow delivery by Total is the size of some of the largest peer group, I'm very proud that we are able to deliver. And again, like [SPEAKER JEAN PIERRE ANDRE DE CHALENDAR:] I know that Jean Pierre insisted a lot on it. It's back to the fundamental quality of the portfolio and which has been driven by choices which are Low breakeven because there is no way to make to wavering to deliver value in this business. And the last 5 years have been if there's one lesson is the volatility of oil price.
So it's fundamental, but when we make choices for the future, Low technical cost, low breakeven is at the heart of what we select. And this is exactly what we will do. I will show you in the new projects. A word about our production, to tell you that, yes, this year we lost 100,000 barrels per day more or less Because of the quota policy, but as the CEO of Total, I'm supporting the CEO of quota policy. Let's be clear.
Without any quota, it would have been, of course, [SPEAKER
JEAN FRANCOIS VAN BOXMEER:] A nightmare.
We've seen the and the discipline of OPEC and OPEC plus I would say not only OPEC countries, OPEC plus and of course, of Saudi Arabia in particular, [SPEAKER PIERRE ANDRE DE CHALENDAR:] I think it's praised by everybody in the industry. So yes, we lost production, but the positive impact on the oil price even today at 55%, above 60%, I understand this morning. I mean despite the fact that the market remains fragile, inventories are still high more than 70 days on the So obviously, A, B, C, D inventory is much higher than the 60 days that we had last year. So that's a nice policy. So we lost barrels, but at the end we gained some cash flows.
For 2021, we have a stable production because we think that The quota are being relaxed mostly and Libya has come back to a more normal production level. And you know that we have invested in some fields in Libya like Waha. So it will compensate the decline. There is no surprise there. We know that we knew that 2021 and [SPEAKER JEAN PIERRE ANDRE DE CHALENDAR:] 2022, we don't have many projects coming on stream.
The growth will come from 2023, and I confirm today because we didn't impair any [SPEAKER JEAN PIERRE ANDRE DE CHALENDAR:] In the flexibility that Jean Pierre explained to you, we did not impair any of the big projects which were Planned in September during the year 2020, so 3,300,000, 3,400,000 barrel of oil per day is back To this 2% per year as an average that we mentioned from 2019 to 2025, we told you in September it's not on a linear basis. It's in fact at the end of the period, so I confirm that to you. A word about our reserves. We have 12 years of proved reserves At the end of 2020, 18 years of proved and probable reserves. So by the way, I have 20 years of average of PPA duration, 18 years of reserves, which means that all these assets have more or less a 20 year visibility and not 5 years or 0 year.
I mean, So it's quite a long both type of assets have a clear visibility. We have 60% of reserve our gas, Consistent with the strategy, I would say. A word about the renewal of reserve this year. You have there on the slides the 127% of renewable Reserve replacement rates on the 3 year average, which makes a lot of sense. This year, we have to follow the SEC rules and the SEC rules, We use a price of $41 I think something like that as an average, which means that exactly like we've done in 2016, We are obliged to de book 300,000,000 barrels more or less of oil sands for this year.
This Of the proved reserves, which means that the yearly reserve replacement rates will be lower than 100%, about 70%. But again, this is more regulatory de booking because this proved reserves of Fortis will come back in the as proved reserves When is the price average price of the next year is higher than $45 per barrel? So it's just, I would say, a regulatory move like we've done in 2016. What is more fundamental of proved and probable reserve, which is important, is a figure we look because it makes sense Global portfolio last year was at 2019, so we reduced from 2019 to 2018. Why?
Because there, that's true, but we have de booked voluntary In line with our climate ambitions, the oil sands go beyond 2,050 as we announced in July. The impairments was done fundamentally 6 $7,000,000,000 we are down out of the 10 on these assets, which were the only stranded assets. But when we made the review at the board level, We identified within our portfolio. And so this has 1 year we lost 1 year, but again, it's to be fully consistent in Accounting with the climate ambition to carbon neutrality by 2,050. So the projects, we take FIDs.
I told you the consistency with the climate ambition for us It's driven by 2 fundamental elements that we look at the Board level: low technical costs, low breakeven, less than $20 per barrel. This is the case for Brazil. This is the case for the Uganda project. And of course, minimize carbon intensity. We want all the projects [SPEAKER JEAN FRANCOIS VAN BOXMEER:] To be lower than the average of the portfolio.
The average of the portfolio is 20 kilogram per CO2 per barrel, which is quite low compared to [SPEAKER JEAN FRANCOIS VAN BOXMEER:] The average of the industry is higher, more than 25 kilograms. So we have a good portfolio. But these two projects you can see [SPEAKER
JEAN FRANCOIS VAN BOXMEER:] We'll be at
15 in Brazil and 13 in New Guyana. So from this perspective, in terms of carbon emissions, they are not iterative, they've been Contributing to lower our global carbon intensity because it's back to this parameter of carbon intensity. We have also, of course, Uganda, Brazil, I would say, it's a continuation of the success story of the Mero 1, 2, 3, this famous Libra field On which we entered, so there is it's a profitable project. On the Uganda, which is Onshore, we have other challenges, in particular, to manage the social and environmental impacts, biodiversity and relocation of people. We have spent a lot of time.
The board reviewed the order file and taking into consideration these elements to approve [SPEAKER CARLOS GOMES DA SILVA:] The project, the commitment of TOTAL to the project. And we have taken one decision in line with Policy of transparency, we will publish very soon all the 3rd party audits which have taken place around these projects, which have been ordered by us but done by [SPEAKER MARCO TRONCHETTI PROVERA:] On biodiversity and on the resettlement of the indigenous pollution population, there is a lot of debate in social media about it. The best answer we can give is to be very transparent and to demonstrate we have been by the way, all these reports are important part [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Of the proof of the investment because we took also some lessons, we put some action plans, we have to improve, we are not perfect. And we will, by the way, as well, together with the report, make clear today to publish the reports, [SPEAKER MARCO TRONCHETTI PROVERA:] I explained the action plans which are being implemented in order to put in action the various recommendation. And again, It's part of the sustainability commitment that I mentioned at the beginning, and we must demonstrate that we are able to develop an onshore project together with respecting all the sustainability commitment that we want the company to respect.
So this project, I know we have questions. I think Arnaud is coming soon to award the EPC contract. It's this quarter, end of the quarter, let's say, to put all paper plates because then we need to go to the approvals by the partner of the authorities. But [SPEAKER PIERRE ANDRE DE CHALENDAR:] Everybody is working hard to finalize this project. Just last negotiation, of course, with some contractors [SPEAKER PIERRE ANDRE DE CHALENDAR:] To put a little pressure.
A word about exploration because it's true that in line as well with our climate ambition, [SPEAKER PIERRE ANDRE DE CHALENDAR:] We have restricted our exploration budget to $800,000,000 It's lower than before. And because fundamentally, we have And very consistent, decided to focus and to focus our exploration spendings on what we call the low cost [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Development projects and when we look to offshore, deep offshore, in particular, Giant Fields. We are, I don't know if we are lucky or our teams are good, [SPEAKER MARCO TRONCHETTI PROVERA:] I will say it in that way. Our exploration team, you know last year we entered into a Suriname license, and since we entered, We made 4 major discoveries in the Block 58 together with Apache. We became operator of this block since January.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] We will concentrate a lot of efforts in our budget exploration appraisal budget to this basin of Suriname and Guyana. [SPEAKER PIERRE ANDRE DE CHALENDAR:] We are together we are just currently drilling a well together with Exxon on the Kenya license in Kriana, 9 wells, the objective including some important appraisal wells, the objective being for us to be able to define Before year end 2021, 1st development, oil development in order to produce oil by 2025 on the Block 58. So [SPEAKER PIERRE ANDRE DE CHALENDAR:] A lot of activities in that part of the world, growing people from Total discovering this part of these regions [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And a lot of commitment, but obviously, we have potentially in our hands a new jewel in terms of All for the group. Then moving to all the downstream. We know we were we had the tradition since 2015, but the downstream was delivering more than 6,000,000,000 Dollars per year, this year, it's not the case.
It's not the case and fundamentally because of the crisis, because in particular of the collapse of the demand. So refining margin, as you can see, had an impact of almost $1,200,000,000 on the cash flow, which is very consistent with all the metrics. You've seen that Instead of $30 per tonne, and I think last year, we were even a little more, we ran down to $11 per tonne, which I've never seen that. We show you a graph just after. The refining merger are compressed.
They are compressed because, of course, lack of demand. [SPEAKER PIERRE
ANDRE DE CHALENDAR:] I would
say the crude is supported by OPEC policy, so good price of crude, no demand. So at the end of the day, the margins is very minimum, [SPEAKER PIERRE ANDRE DE CHALENDAR:] Sometimes negative. And in particular as well, as there is no more jet fuel, all the jet fuel products Are being pulled within the distillates, which crushed the distillates margin as well. So situation is not very good. I think it can only improve with A better economic return and before better demand.
There is no OPEC of refining, so of course, we also suffered from This aspect. The obvious business in the Downstream, petrochemicals have done well, very resilient. Trading as of a therefore, we mentioned in Q2 another performance of $500,000,000 which has been maintained for the year, Maybe not being repeatable every year, Marketing and Services has a solid contribution. And so for 2021, I would say with A comeback of more better demand. We could expect more than €5,000,000,000 maybe we are prudent, but it's also very important [SPEAKER PIERRE ANDRE DE CHALENDAR:] To plan prudently with these uncertainties.
So just a word about Refining Business. You can see on the left Of low have been the margin. It's the red line. You compare it of what we experienced in the last 4 years 2016, 2019. So you can see that it has been a disaster since April, clearly linked to the COVID.
Of course, our teams have put [SPEAKER PIERRE ANDRE DE CHALENDAR:] I've been like the title say, dynamic adaptation on the short term with a COVID action plan, reducing their cash spends, dollars 500,000,000 reducing runs, [SPEAKER PIERRE ANDRE DE CHALENDAR:] It's not very good for results because, of course, you have the fixed cost to cover us, but there was no choice. And even We have done the voluntary shutdown of Donsje end of 2020, 200,000 barrels per day of refining capacity out of the European market. We intend to restart this refinery As soon as we can, but when we will be able to make money by running it and delivering all products. We have also acted in 2020 a lot of work to begin to adapt our European footprint to the structural demand decline. We [SPEAKER PIERRE AND THE CLOSING OF THE SELL SHOULD HAPPEN BY THIS QUARTER BY END OF THIS MONTH.
I think green lights are there, if Bernard does not contradict me, I hope. And then we have also engaged The conversion of the Grand Prix in the OCCO platform, which means Renewable Fuels and Bioplastics, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] In particular to answer Renewable Fuels for the Aviation, I would say carbon lowering carbon footprint of the Aviation as a liquid. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Marketing and Services, last business, but not the least. I would say good performance. You have some indications of the way The evolution of the sales of the marketing and services during the year, you can see the incredible drop of the jet sales, Which went down by almost 70%, which have affected our B2B sales because it's part of the cash flow which is missing this year.
The rest of the business has been affected, I would say, an average of less than 10%, 15% of lower Sales, but at the same time, as the refining margins were low, the marketing business was benefiting from better margins. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] So all in all, you can see that the Retail business has done very well, almost same cash flow from delivering than last year. [SPEAKER PIERRE ANDRE DE CHALENDAR:] It's also supported by the fact that in our retail business, we have also some non fuel sales, which are more stable. So a resilient foot, and [SPEAKER JOSE MARIA ALVAREZ PALLETE:] We appreciate the it doesn't have the same volatility obviously, but the rest of the portfolio. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] So if I just want to conclude to give you some outlook, I want to confirm today what we said to you in September, I would say fundamentally.
Maybe I think being prudent speaking about $40, $50 at 20.25 we also $60 because Helmut explained to you why we believe strongly that we have less investments in all these oil business at the end of certain point,
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] I'm
convinced that we will have suddenly because the demand is not diminishing except the COVID impact so quickly [SPEAKER PIERRE ANDRE DE CHALENDAR:] But we might we will face a supply crunch. We could push the price high. It's a matter when the market will begin to anticipate, by the way, [SPEAKER PIERRE
ANDRE DE CHALENDAR:] This supply crunch and it's a
strong belief. But at $50 per barrel, if we normalize all that, you can see that we'll have an additional $6,000,000,000 of cash flows coming from all the segments, coming from E and P EUR 1,000,000,000 in particular projects like Brazil, Uganda, I mentioned [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Coming from the downstream because it will come back. We'll not remain at these levels and M and S as well As a growth plan and coming as well from LNG and from renewables as we gave the figures. The sensitivity for this year, [SPEAKER PIERRE ANDRE DE CHALENDAR:] $10 per barrel gives us $3,200,000,000 per barrel. And cash flow allocation, no surprise as well.
This slide, you know it. [SPEAKER PIERRE ANDRE DE CHALENDAR:] We just modified, I would say, the allocation of capital investment this year for 2021. Jean Pierre explained to you that we have decided to plan it [SPEAKER PIERRE ANDRE DE CHALENDAR:] Prudently, at EUR 12,000,000,000 if we could have one flexibility, but it because the flexibility might be EUR 1,000,000,000 not more, It will be in line with the EUR 13,000,000,000 EUR 16,000,000,000 we mentioned to you in September as a guideline. Renewables and Power will represent [SPEAKER JEAN FRANCOIS VAN BOXMEER:] More than 20%, and I would say consider it's a new normal for future capital investments. The dividend clearly, the board has demonstrated It's strong commitment to support the dividend for the cycle.
So I would say in this environment, we maintain the EUR 0.66 Your sense of euro per quarter and you can expect that it should be the same for the coming year For the cycle, I mean also when the price is going up, not overreacting both ways. And so the balance because the priority for us is [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Flexibility on capital investment and balance sheet. We have managed to limit increase of the gearing to 21.7%, which is but it's above the 20% we have as a target, even we'd like to have 15%. [SPEAKER PIERRE ANDRE DE CHALENDAR:] So if we have cash flows, extra cash flows, priority will be to allocate that to deliver the company again because again the big lessons for the last 5 years [SPEAKER PIERRE
ANDRE DE CHALENDAR:] It's a huge volatility.
Share buyback, we will discuss it when we'll have higher price and some flexibility, which is not the case again at that time. So to conclude this presentation, and I began by TotalEnergies. Of course, this is for me [SPEAKER MARCO TRONCHETTI PROVERA:] It's probably it's an important decision. It's not every day that you change the name of a company, that you propose to your shareholder to change the name of the company. It was done, I think, very long time ago when CFP became Total.
Then it was done because of the merger in 2000, just Interim way, total, total, total, Fina, total, Fina, total. So we have decided that because we really think at the board level that [SPEAKER MARCO TRONCHETTI PROVERA:] We want to anchor this transformation in our identity. And I think it's a very strong message. It's not [SPEAKER PIERRE ANDRE DE CHALENDAR:] But we are more than serious. We want to establish Total Energies in a new category, no more an oil and gas company, but a broad energy company, an energy company.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] And we want to do it because we strongly believe that it's the best way to reestablish the long term valuation of the portfolio, including the 18 years I mentioned of Reserves of oil and gas, as you know. We want to say to the markets there is a long future for companies. So today's evaluation does not recognize this long future, but by growing energy from renewable and LNG by upgrading our climate roadmap, by embedding our climate ambition into the financial policy, By supporting the dividend for the cycles, these are the 4 key message, which is, I think, at the core of This total energies that we will build together. Thank you.
Thank you, ladies and gentlemen. We'll now begin the question and answer session. The line of Osoir Clint from Bernstein. Please ask your question.
Hi. Thank you very much for all the additional details today. I had two questions perhaps on the IGRP division. I mean the cash flow, you mentioned it in the results, they had a positive offset From renewables against the weaker LNG prices, which was good to see. You've given us your new proportional EBITDA metric today as well, which is great.
It's likely small, but I wanted to boil it back down to the cash flow. Last year in September, you told us $100,000,000 of cash flow in 2019 And how that might get up to $1,500,000,000 I think by 2025. So I mean the question is given everything you're saying here and the Business development you've done in January, is it fair to say that that's a de risked number at this stage or an easily achievable cash flow number for Electricity by 2025, please? Thank you. And then sorry, the second one.
I mean, you've made, Patrick, some very interesting comments here around The valuation of renewable companies and how you'd like to tap into that. The disclosures, I guess, of your new EBITDA will help and that will certainly help. But I guess the question is what happens if it doesn't happen quickly enough? And I'm just asking you, have you considered or will you consider, would you consider other examples of showing that to the market? I just can't help be struck Companies like EDP, who spin out another little part of their business at 17% and suddenly it's they're both €20,000,000,000 market cap.
So The sum of the parts have clearly worked in some of these names. So I just wanted to get your thoughts on that, please.
Yes. Okay. First question, [SPEAKER PIERRE ANDRE DE CHALENDAR:] I mean, I'm not sure it's easy to do EUR 1,500,000,000 to be I will not change the figure because now we have the portfolio we need to execute. And so we are entering into a new phase of development of our Renewables and Power business. I don't know if it's the reason why I decided to change the President of this division.
By the way, it gave me the opportunity to mention because I should have done it or I could it at the end, but Philippe's okay. We'll retire in 1 month. I see in front of me, he's not on the around the table, but he will be next time, Stephane Michel. No, it's nothing to say. He will retire just because he has the age, Philippe.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] But Philippe has been the had led the capacity to, I would say, develop all this portfolio. Now Stephane will have to execute to deliver the EUR 1,500,000,000. Maybe Philippe has done the easy part, it's not true. But no, we'll not change this figure. I think in 2020, I think we are at 2 €50,000,000 if I was looking to so to give you an update.
It was not in the presentation in terms of cash flow direct to total. So the €100,000,000 became €250,000,000 So again, portfolio is there, and we'll come back to you on these matters in September. I think it's better not to no way to change. No, honestly, on the second part, you cannot compare Total, which has a market cap of EUR 100,000,000,000 Yoro and Edith. I think it's a mistake from my view.
And let's be clear, if we transform TOTAL in TOTAL Energies, it's not suddenly [SPEAKER PIERRE ANDRE DE CHALENDAR:] To spin off the energies and to come back again total. Otherwise, I will be a strange man or a strange Chairman and CEO. So I think we want to be we know that we need to be patient. We know that we need to deliver. Even if today all these renewable company are more valorized The potential of growth rather than the cash flow they deliver, probably people will ask us more.
But I think and the fundamental idea is that we want to give the same Clarity and a lot of that they these companies are giving you in order to make this valorization. It could take time to But the business model of TOTAL, yes, 15% is only a share of 100%. It's true. But I think, again, there are cycles in the markets, And I'm optimistic. So don't expect from us any move like the one you suggest.
We are really committed to develop this business within Total Energies as a strong foot of Total Energies. It will take the time, but the last what I observed last round of U. K. Offshore wind for me gives me comfort. When you see WU has won the WU were awarded during last week these 1.5 gigawatt contracts, when you say 8 gigawatts, So I strongly believe because of the capital intensity of all this electricity and renewable business, But there has been a time, which is good, to have people we were quicker than others, we invented it and which Have a good one.
And then now the time to scale up all this business. And to scale up, you need a lot of capital. And then the big players [SPEAKER JEAN FRANCOIS VAN BOXMEER:] We'll have a big share, including in terms of returns and profits. And this is exactly the strategy we want to develop within Total Energies.
Thank you. Thank you.
We have the next question coming from the line of Biraj Borkhataria from RBC. Please ask your question.
Hi, thanks for taking my questions. A couple, please. Looking at kind of the announcements over the last few months, it looks like Almost every week you won an auction on the renewable side of the deal. Could you just talk about what proportion of the renewable bids So all the deals you tried to secure in 2020, you won. It looks like you've just been more successful than many of your peers Over the last 12 months.
And the second question is on SunPower. You've owned that stake for a few years now and obviously the value of that investment has gone up Yes, 10 times in the last year. Can you just talk about the strategic rationale for holding that asset now, given your growing renewables portfolio Elsewhere in different geographies. Thank you.
In fact, we did not win a lot of auction, to be honest. Last year, we win in Qatar and this year, in the UK. And it's not us, but Adelnik Green I've won auctions in India, but it was not total. Why? Because we lost.
We lost in Abu Dhabi. We lost in Saudi Arabia. So In fact, I think we lost more than we win. Why? Because auctions, as always, are not the best way to create value.
And you know when you have a target of 10% IRR post farm down on equity to be competitive on auctions, it's tough. You've seen that the last tender in UK pricing were quite high, but we consider we have the capacity together with Macquarie to deliver what we want. In fact, what we've done are more, I would say, direct negotiation there. And all what we mentioned, ANNOI, JV in the U. S, it's a direct With them because we have a partnership.
So Sunshares portfolio, it was a direct approach by all teams and not A tender organized by a banker like we've done in Spain last week. So it's more adding people on the ground to identifying some Potential partnerships, bringing our value proposal, which means financial capacities, commercial capacity, attractiveness. When you offer So on PPAs, corporate PPAs, you can convince people. Via Adani, a deal is not an auction, honestly. If we paid €2,000,000,000 to get the 20%.
It's because we have developed a fundamental strong partnership with Adeligroup. So I think it's making business, and that's the way you create value. So and by the way, Biraj, don't expect us to make an announcement every week. I've been to be honest, I didn't plan Beginning, end of the year, but we'll announce once as many deals as we've done. So I think now after but I will not say that to Stephane Michel will take the job because we will believe he has to rest.
It's up to him to go on the same momentum. No. So Doing deals, again, auctions is not the best way because it's very competitive, like in Upstream, by the way, like in Oil and Gas. We all know that. If you want to create value, you have to be smart.
And I think what I observed positively, and if we have this momentum, is because Total became serious. It's considered as a very serious partner around the world. The ambition we have announced, and it all started, by the way, by winning the auction in Qatar last January. We became immediately with this 800 Megawatt Credible partner, including, by the way, attracting contractors, Chinese contractors knocking to our door because they want and giving they give us better Of course, in order to be competitive. So it's a virtuous circle.
And now with the ambition we have announced, again, when you compare the amount of capital intensity we have, the capital We have capital CapEx in this field. We are amongst the largest players. So I think it attracts and people come to us with proposing projects, and we can select. The U. S.
Journey has not been an easy one. I think we have I cannot we have at least there are 2 or 3 opportunities that we have Excited to not to follow because they were too expensive before we went on the ones we have selected. So and that's one advantage. This is a very large market, A very growing market. So there is enough room not to rush and to compete to lower the price to get the business you can, Which is not exactly true on Offshore Wind, but that's the capacity to leverage our global footprint.
SunPower, honestly, I think we it was a long journey to make and we have a lot of efforts of everybody, SunPower, shareholders, Total, In order to make the spin off of the manufacturing business, which has been a success, we created Maxeon, which has, by the way, its own We still own 30% of this manufacturing business, which has an acceptable, by the way, Journey on the stock market since the spin off appeared. SunPower is clearly benefiting for a better a more understandable Business model, which is mainly concentrated, as I said, on residential DG. Value has gone up, but you know, Very high. That's true. Probably part of this new wave, like the Game Soft story in the U.
S. But at this stage, we are majority shareholder, and what we want is to consolidate SunPower. And then As I mentioned to you, it's the priority of Total is to develop our utility scale business. So DG is part of the portfolio, but it's much too early to speak about any future. And by the way, it's a listed company, so I will not make any comment On SunPower, but I think globally speaking, of course, we are in a much better position today than we were during several years.
And Saint Power is in a much better position. And I would like to pay tribute to Tom Werner and his team who have done A very good job during the last years.
Thank you.
We have the next question coming from the line of Michel Delaive from Goldman Sachs. Please ask your question.
Patrick, it's Michele. Congratulations on the very strong and consistent delivery through this year. Two questions, if I may. The first one is about cash return to shareholders. So we are just exiting a deep recession.
You're prioritizing financial gearing, which makes perfect sense. But as we look to the longer term, given the health of your business, What do you think is the right long term cash return to shareholders? I believe in In the past, you mentioned 40% as a level you could aim for, for the long term. I believe on your cash generation, The current dividend gives you about a 30% return. And how would you put in that context the importance of buybacks?
And then my second question really is about decarbonization. Gas has without doubt a key role to play in the transition in the next 20 years To decarbonize the industry, transport, heating, power, especially in a lot of emerging markets. But there is a rising Weariness about potential stranded assets in the long term. I'm wondering what is the ability today of actually building this gas infrastructure in a way that It can be easily retrofitted with clean hydrogen in the longer term effectively avoiding any kind of stranded assets and accelerating The hydrogen transition in the long term. Thank you.
As always, 2 interesting questions with Michele. The first one, by the way, this year, I'm afraid that the cash out is more 47% 48% than 30% with the dividend. So we have been above the 40%. I think this idea of 40% was, I think, for me, is not a bad metrics to It depends, of course, of the level of the crude of price that we get. My conviction is that As we want to support the dividend for the cycle, if we have more cash, buyback is obviously a better way to keep flexibility rather than Increasing dividends, but it's always the same debate.
You have some shareholders prefer dividends, some of us prefer buyback. Honestly, Michele, if I have that difficult question to answer, I will be happy. For the time being, I'm more prudent than you because For me, we are not yet exiting the full depression. I know that I know I read your papers. I know Goldman is quite positive, and I'm happy that you are.
But And vaccines are being spread, but not all over the world, so it could take time. So maybe we are too prudent within TOTAL, but I would say that You can keep in mind what we told you, and then we'll when it will be the time, I will answer more precisely to the [SPEAKER PIERRE ANDRE DE CHALENDAR:] But obviously, my view is that supporting the dividend full cycle is fundamental [SPEAKER MARCO TRONCHETTI PROVERA:] To keep trust. And so we need to manage prudently as well the increase of dividend, but we'll see. And then if we have more cash, It's normal, but we have to return more to shareholders who have to be, of course, rewarded for their patience. Decarbonization gas is a key role.
Yes, that's true. It's interesting what you said, but there is hydrogen and you It's clear that when we think to hydrogen at a big scale, there are 2 ways to do it. Either you do very big solar farms In the middle of Saudi Arabia or Orquita or Morocco or very big, and you have a very low cost Of electricity, because obviously, green hydrogen fundamental is not only to lower the cost of electrolyzer, it's fundamentally to be able to produce a very low cost of electricity. So large scale, scale will be of essence in that story. So it's one way to do it.
The other way is to find large gas fields Like the one you have in Qatar, in Yamal, maybe in the U. S, by the way. And then to but you need also to find a very large Carbon storage, if you want to be able to produce blue hydrogen and decarbonated hydrogen, which is the thing that we have to combine both. I'm not sure that we have But in all the locations, but it's obvious that when I'm thinking to the future of hydrogen for Total, I'm thinking both green or blue, I'm color blind, I would And we have some very the best location for Blue Hydrogen are the ones Where you can produce gas at a very low cost and where you have you can find these large CO2, I think that Novatek is looking to that, obviously. I'm sure that Qatar, Big large producing countries should look to that.
And then it could make the transition, as I said. By the way, The way we should develop Hydrojet in the future is probably I like this one. Remember the story in LNG 30, 40 years ago. We were a pioneer within TOTAL by developing LNG in Qatar, Indonesia. But we're fine to do that some Japanese customers.
We have customers ready to pay a certain level in order to develop this LNG technology, which was nowhere. And we've done it, and it was a success in a large way. I think hydrogen is there today. It's a matter now of finding So scale projects with scale, but also finding the customers ready to make this emerging. So governments can do things like in Europe, But also, it will be a mix.
So we are at the beginning of the journey, but I see that For me, and your question is a good question in terms of hydroging, could become a relay of our position where we are today, a composition developing LNG because we have large gas reserves at a low cost like in Russia. It might be the future for Total on the blue one, Providing we identify the carbon storage and the other fit being green with renewables.
Thank you.
You have the next question coming from the line of Lydia Reinfeld From Barclays, please ask your question.
Thanks and good afternoon. 2 if
I could. Patrick, first of all, what happens The CapEx budget at higher prices in terms of the oil price obviously gives you a little bit more flexibility. But does extra spend go into the renewable space? Or just to go into the upstream to capture some of that potential uplift in prices? And then secondly, just in terms of the cost of decarbonization And the work that you're doing in terms of bringing forward some of the emissions reduction on it.
Are you finding that the cost of reducing emissions is coming down as you do more work on it? Thanks.
The second question, I think I will leave it to Arnaud during his presentation because he will show you the whole exercise we have done internally, We can lower our emissions, and you will see that we find a lot of tons with a very low cost, in fact, which we are not just a question of concentration. So You will have to be patient on the second one, and Arnaud will answer in half for now for his presentation. On the first one, let me be clear. I think that, Again, the EUR 12,000,000,000 is a good I mean, it's a good level. We could really go to EUR 13,000,000,000 maybe.
And there are 2 ideas. 1, of course, we have some flexibility. We have some flexible short cycle CapEx, which have been stopped Last this year, in 2020, in E and P, which are mainly infill wells, on which it will take a little time, so we cannot reactivate that immediately because we remobilize, I would say, rigs and things like that, but it might be done. And so that's an idea because this providing short cycle means It's payback for 2 years. So if we have a vision that the good price could remain at a good level, then it's an opportunity.
And that's But at this stage, I'm not yet there. It's not because I've seen yesterday evening $60 but I consider $60 is very bad. And when you see that Saudi Arabia has decided by itself to cut 1,000,000,000 more, it means that I think they see some fragility in the market. So Don't become too short side too short term. In too short term, assumption that dominate our decision.
Then when you evolve, it's possible, but you need to have opportunities To do that, and again, we have I mean, there's it's a matter of maturing opportunities. And It's not because I decide to spend €1,000,000,000 but I will spend €1,000,000,000 It doesn't work like that. Opportunities needs to be profitable towards the target, so there is a maturity The portfolio and we'll so again, consider that in 2021, might be 12,000,000 might be [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Protein, but we'll see. Let's stay on the $12,000,000,000 which is my again, my priority is first to come back to strengthen the balance sheet.
The next question is coming from the line of Thomas Adol from Credit Suisse. Please ask your question.
Good afternoon. Thanks for taking my question. I guess my first question is on LNG and perhaps can share your latest thoughts on Qatar, your potential participation of fiscal terms, they're more acceptable and entry costs more digestible. And then secondly, just in terms of the pre FID production contribution in 2025, can you remind me Whether a large part of it is going to be driven by Suriname and Uganda, a simple yes or no is fine. And then thirdly, I do apologize, Just a quick one on how to decarbonize heavy duty transport.
Obviously, you can use hydrogen, you can use renewable diesel, You can use Bayer, Lissen, and you're involved in all 3 different technologies. As it relates to heavy duty Transport, which technology are you the most excited about? Thank you.
I will let Helle Answering of the expectation on technology for transport, maybe and Surinha, the question is in 2020 by 2020 I think it's quite minimum. It's something like potentially 200,000, 30,000 barrel per day. So it's not important. Uganda is more important. It's 100,000 barrel per day.
So why we because we have a large stake in the project. And by the way, it's a very that's why we are working hard on to launch Uganda, and We are very near this FID now. And now before I let this time to Helle to think, But and maybe, by the way, Alexis, you can complement if you want, Helene. LNG Qatar. Hi, it's Qatar.
Yes. I don't know. You know better than me what are the entry costs. I don't know. I'm waiting for to see the terms.
I think Qatar is moving forward. They have announced the I mean, that they have awarded the EPC, so which, by the way, is good because part of the First approach we've done 1 year and a half ago, there was a big uncertainty on CapEx. Of course, it was difficult to manipulate Some fiscal terms and entry costs without having the CapEx, so I think that will be clarified. I understand from So Adelekebi that I met recently, but he intends to bring partners. I think fundamentally, what Qatar will ask is to Some offtake, because now in LNG, with this what happened, we also know that and so we'll see what level of commitment and offtake Different players will take.
So for me, at the end, it's a matter of reward of risk and reward. I mean, we know What we are expecting and then we'll see the rewards. If there is a good balance, we'll move forward. And obviously, we have A strong history in Qatar. But again, it's not a matter of emotion.
It's a matter of, at the end of the day, of and I think, by the way, Yes. Saad Al Kabi thinks exactly like me. It's a question of risk and rewards. And there are good plenty of good advantage in Qatar, which, in particular, the cost of production and the cost [SPEAKER PIERRE ANDRE DE CHALENDAR:] Now the cost of production and the cost of LNG efficiency. And then we are waiting.
I think it will come soon, And then we'll take some decisions about our commitment on Qatar. Hello, Alexis?
Thomas, I think the answer is we're excited about everything, and then we have To keep, I would say, an eye on both the cost and the benefits. Renewable gas, biodiesel, great technologies. No big deal in terms of engines. But then I'm not sure that there is enough opportunity worldwide to switch the whole heavy duty transport to those 2 Decarbonizing Technologies. So then you have to consider hydrogen, which is less mature, but over time, probably has a higher Potential source of supply.
You didn't mention it, but we will also be seeing electrical Trickle trucks going forward, not immediately. So it's also a question of maturity and time line. And then, of course, you can combine a little bit of everything by doing eFuels. So I would say at this stage, As you pointed out, we are involved in the 3 major technologies for the next 10 years, and then we'll see what happens after that.
Alexis, you want to add something? No. No, I think that honestly, So biogas story for EBIT, I think as the volume of biogas might not be sufficient, but that's the point. But Let's see. I mean, let's see what because there is a lot of policies behind it, and let's see as well what the Truck manufacturers will decide.
We might decide for ourselves. So we are there fundamentally to be able to provide energy products At lowest possible cost and to adapt ourselves. If we can help them in their choice, it will be good, but We'll see that. So I think Helmut is right. At this point, we have to be ready and to understand in which For which of these fuel the one we can produce in the best efficient way and where we can produce them in the best efficient way.
And this is what we can bring To our customers and to the policy makers. Okay.
The next Questions come from the line of Arin Iwona from Citigroup. Please ask your question.
Thank you. Good afternoon. I actually have Three questions, if I may. Firstly, a results question. In the Q4, the E and P tax rate was Very low, I presume due to pricing.
With Brent back to a more normal $50, dollars 55 this year, what Can we expect the Upstream tax might be this year? Secondly, Patrick, you target 30% of all The management bodies at Total to be women by 2025. What was that proportion in 2020, please? And my third question, Uzi, you raised today the portion of capital expenditure on renewables to over trend and You show how by 2,030 oil product sales will be done quite materially. And Today oil is a huge part of cash flows even in the very low price environment of last year.
Is it totally premature to ask Whether by 2,030, we might expect the renewables business to turn perhaps cash neutral or Even cash positive, it doesn't seem to matter today for the valuation of renewable utilities. They have no free cash flow, but [SPEAKER
JEAN FRANCOIS VAN BOXMEER:] Obviously, it does matter to
your investors. Thank you.
Okay. Jean Pierre will take the second one. I will answer the first one. We have more or less a 20%, in fact, today in all the management committees. I ask all my colleagues to have at least 2 women out 10, let me say.
And we intend to go from 2 to 3, I mean, fundamentally. And I think it's an important move. Remind you that 5 years ago, there was no women at the Executive Committee. Today, I'm happy and lucky to be Surrounded by Helle and Namita. Surrounding is the right word.
And so I wait for somebody else coming. And I think it's important, again, for me because diversity brings some collective intelligence. We have better groups when we are In particular, in this time where we have some decisions which are not so easy to take, to listen to various point of view. And that's something on which we are really embarked. You have to know, but fundamentally, among what we call, I would say, The managers in total, I mean, the
No managers.
Managers. We have today around 33% of women. So the idea is fundamentally and we continue to increase it, but it's different we think we should go to 45% because it's a matter of recruitment. We have a lot of technical Good positions where we find less women. But so the idea is by 2025 to have, in fact, At the management body, the same proportion of women that we have among all the managers of the company.
That's the idea. So to come to a certain level of normality, I would Maybe then we'll go from 30% to 35%, but then it's a matter of few figures. It's 1%. But that's the idea. And I want to do that At different levels, it's very supported by the board.
And so that's a strong policy, which is also contributing to the ESG commitment of the company. So Jean Pierre, tax rate? [SPEAKER JEAN PIERRE ANDRE
DE CHALENDAR:] Yes, E and P tax rate. Yes, for the Q4, the E and P tax rate was At 20%, so benefiting from some particular tax elements. When you look at the full year, so on average Over 2020, with the Brent around $40 per barrel, you have a tax rate at 29%. So it's fully in line with the [SPEAKER PIERRE ANDRE DE CHALENDAR:] We gave 30% at $40 per barrel. And if you remind the 2019 figures, so in an environment around $60 per barrel, You have an E and P tax rate around 40%.
And so you can think 35% or 50% if it works. So that's more or less the guideline. Again, you could have some quarterly effects because of tax deferred. And with the COVID, all the systems are not But at the end of the day, when I look to the average on the year, it's we are always the same type of guidelines. It works.
In
line with the guidelines.
So it's by the link. So you have a precise answer for your model, Irene. And then it's because maybe you will not have a precise answer on the last one Because I observe that you want to have more clarity, I would love that you ask the same questions To all my energy colleagues, I'm sure that you are asking the same question to all our big energy New competitors in the Renewable fields because for the time being, I'm not sure it's really a question that the market are asking. So to tell you the truth, yes, I think by 'twenty I mean, I hope it will be cash neutral by 2,030 because Again, that's true that the more we invest, the more the GAAP increase. But we said EUR 1,500,000,000 by 2025.
By that time, let's say, we spend Something like EUR 3,000,000,000 or I don't know, a figure. So by 2,030, yes, you can take this assumption, but the cash neutrality should be an objective for the company. And I'm not let me be clear for me, it's nothing surprising then. When I am entering into Russia in 2011, The cash neutrality of the investments of Novatek will be reached this year, 10, 11, 12 years after because we have to invest in energy. Always long cycles.
It shows as well when I remember having made a lot of works on Angola, before we obtained the cash neutrality in Angola, which Today, 1, I would say, of the cash flow of the company, it took more than 10 years because 15, 20 years before we really obtained. So In Energy, we request a lot of investment because you continue to are willing to grow. So growing means investments. And there is a point where you can get the fruits out of that, and that's part of the model that you need to put in place. I can tell you, by the way, that's an interesting I think the discussion I had with Gautam Adani about the future of AGGR because, obviously, I was ready to take 20%, but I want some My money back, like a UK Prime Minister said one day to Europe.
So I use the same way to work. No, but okay. No, let's say It's a good horizon, a good objective that you just put us, and I adopt it.
Thank you very much.
Thank you. Your next question is from Christian Malek from JPMorgan. Please go ahead.
Thank you and thank you for a very comprehensive presentation. Two questions if I may. First, so really appreciate the detail on the path This is getting up returns in the low carbon business. And as it further matures, would you, the Board, consider an IPO as part of unlocking A lower cost of capital and what would the key triggers be? The second question is about disclosure and it's not fair because I could ask this of your peers, You clearly seem to be leading the way here, Patrick.
Given there seems to be dislocation valuation relative to pure plays In the low carbon business and in the renewables business, can we expect greater disclosure to demonstrate progress towards this 10% equity IR target? And Would you consider disclosing carbon intensity levels by asset or region, given it seems investors want greater transparency for everything, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Madera, it's financials, carbon intensity in the portfolio, not just a holistic target. So probably more than 2 questions there, apologies.
So the first question, I think, answered to one of your colleagues, I think, Again, no, I mean, it's not on the table today at all. As I said just before, we changed our name to TotalEnergies, not just suddenly IPOEnergies. I mean, want to keep the energies within the company. I think it's a strong move by the board, which means that for really, We think that it's a question of patience, as you just said, that the more the larger the Take will be in our portfolio, the better it will be understood, and it will be valorant. So that's clear that we are willing to invent A new category of energy company.
And I don't see why today there is a debate about the legitimacy of oil and gas to produce electricity, probably we're afraid some electricity companies, by the way, by coming into the picture after what happened in round 4 in U. K, maybe we are right to be afraid. But I mean, it's a matter for me of delivery. So it's not there, not on the short term. And We'll see.
Again, I think the signal we send you today by changing the name of the company to TotalEnergies is a very strong signal that Really, we embark in this strategy of transformation, and that Renewable is fully part of this business model. And so Renewables and Electricity is full part of this business model. And so I don't intend to change the business Not all, every morning, but because I wake up and I'm afraid about the valuation of the company. Look, Carbon Disclosure. Okay, we will give you a lot of disclosure today.
If you don't have enough, you will tell me. So we'll give you capacity by geography, by technology. We'll give you So and by the way, we intend to give you that every quarter, so what I said. If we need to give more, I'm not sure there was a debate. I've seen that one competitor It's giving even the PPA by contract.
I'm not sure I'm willing to say to my competing to my competitors, All my figures, I never gave that for Oil and Gas. I never disclosed all the fiscal terms of the Oil and Gas contracts. So I'm a little sensitive, but let's see. My our interest, it'd be clear, Christian, where we are aligned Is that and so we will give you by region, we will give you by technology the figures. You will see that wind represents around 20%, 25%, we will use the net capacity.
So I think with what we will deliver to you today, you have a lot To work on, and I will be happy to listen to what you want because, again, our willingness by disclosing more is clearly that Everybody could better valorize and give the right valuation on this portfolio. And 35 gigawatts, 20 gigawatt of PPA, Just these figures and the price we gave you, if you compare with some renewable company, I think you can find some good valuation. So I take the point, and I will be happy to welcome your suggestion in the coming weeks.
Thank you.
Our next question is from the line of Jason Kenney from Santander. Please go ahead.
Hi there. So truly impressive level of disclosure from Total. It's a critical culture shift, I think, And I really do hope it appears in the share price given the obvious value in the business lines. I'm really enjoying the solar coaster that Hotel is on as well. Material portfolio additions over recent months.
And I know that in Comments you've mentioned that renewables could be 40% of sales or revenues by 2,050.
And I
know it's not going to be a linear process, but do you think You could give us a percentage of revenue by 2,030,235 from renewables. That's my first question really. The second maybe to Helle. Could you envisage a macro scenario Where we have 80,000,000 barrels a day of demand for oil only in 2025, So no more than 80,000,000 barrels a day of demand. And what kind of oil price do you think that would And tail, if we would see that demand, obviously, there's 2 sides to the equation here.
And then one more if I may, and it's on the Technology question really because of the amount of solar that you do have and the shift to hydrogen over time, I'm wondering if there's an investment in photoelectrocatalysis that you could maybe combine with those solar panels and just create hydrogen directly without using electrolyzers?
So the first answer is 15%, 20% by 2,030,035, I would say, fundamentally. 15%, 20%, I think it's already at this horizon. The second question, I will ask Helle. I'm sure she has that scenario. If she has that scenario, I think she will be fine, in fact, tomorrow morning.
So I'm just letting hello
Jason, hi. I'm not allowed, of course, to say that this is a credible scenario, but honestly, I don't think it's a credible scenario. I think there'll be tons of other issues. If oil demand drops to that level, I think we'll have the world will be Undergoing be on the wake of disappearing. So now I think that's science fiction, honestly.
We told you back in September that we see oil demand beginning to peak at the end of this decade. We I have no reason to believe that it will be declining rapidly from here on until 2025. I don't think that exists.
And by the way, I mean, just to comment on it, the only scenario you can think is that it's not 1, but 2, 3 pandemics on the road that we think that we are all locked down, but there is nothing nobody is moving You know, which I hope not for all of us, but I mean, we've seen something incredible in 2020 or 2020. So But I hope it will not happen. But by the way, let me clear, the oil price is not only given by demand and supply. I don't know if you noticed today. Today, honestly, at $55 the demand is not yet very well, not very high.
The inventories are high Because we have some players in the market which have been quite efficient, which disciplined, I would say, in terms of which We are clearly willing, and there is probably a debate, is it $45, is it $50, is it $60, but we are targeting to get $50 I would say. And it's back to what is a competition between oil in Russia, oil in Saudi Arabia and oil in the shale oil in the U. S. But So my vision is that today, you have because these economies of these countries Not able to transition in 5 years, so we absolutely need a certain level of oil price. And they would prefer to Diminish production by letting the oil price crashing to I don't know which level.
So I mean, for me, you have there and again, The oil demand, I know that we everybody is very Today, thinking to the word transition means something. It means that the world today, let's be clear, the world our world It's working because we have oil, and we should not forget it. I mean 80% of the world economy is carbonized, I mean, and we will not shift it Just because we are willing it somewhere, and so it will take time. So my view is that the oil price at this level, I would answer to you, it's $45 or $50 per barrel. Because of the supplier Because of the supplier discipline, not because of supply and demand.
I was probably thinking more about efficiency gains and substitution effects where Other fuels switching to take out some of the oil demand, the oil supply side.
We About that back in September, Jason, and we absolutely look at that, of course, but it's impossible to do as quickly as 2025.
Fair enough. Okay.
Although I think we showed you some very aggressive assumptions in the total energy outlook, Very aggressive assumptions, but we can't reach that level that you just suggested in 5 years, even by being super, super aggressive. I didn't catch your last question, please. Can you
Yes. I mean, it was basically cutting out the middleman Electrolyzer and just going straight from photoelectrocatalysis on solar panels directly producing hydrogen.
That's still very early stage, I think.
You are the expert in solar panel, and I go, Jean. If we have an But Helu is the R and D in terms of innovation.
It's being looked upon, as far as I'm aware. Philippe, I'll leave you. But very early stage at this point in time.
Yes. Well, Helene, he's perfectly right. To produce hydrogen, There are 2 molecules that are embedded on Earth, methane on one side, and you have to separate hydrogen from carbon. It's easy, but it goes with CO2. We always to separate in water, hydrogen from oxygen.
And you need a lot of energy because it's a very stable molecule. And to get from solar directly the level of intense energy that you need to separate those 2 molecule It's a real challenge. So I don't think that we will see the photo catalyze. High temperature in electrolysis is much more promising to me. Sorry to be boring.
I think Jason is willing to see if he need to he wants to invest in which company. So high temperature technology, As the hydrogen company are just becoming crazy in terms of valuation, everybody is looking for the next
Absolutely, yes.
The Next golden mine, where is the next golden mine? So clear. Next question.
The next questions come from Alain Oberstern from Scotiabank. Please ask your question.
On carbon sequestration, you haven't mentioned anything on that. There seems to be a big differences in approach between the European and the U. S. Companies. If we're looking at The low carbon wind and solar power, the technology is quite established and well defined.
Carbon sequestration seems like it's early stage. So trying to understand that, is that a business that you think Sometime in the future, it will be a major business for you and could be as big of a focus and emphasize as your solar and wind power. If not, why not? That's the first question. The second question is that you have been talking about net investment 12,000,000,000 for this year, 13,000,000,000 to 16,000,000,000 for the next several years.
Is there a organic CapEx Estimate that you can share, what our net investment, what's the organic CapEx may look like? Thank you.
The first question, I didn't mention it because, in fact, you will have just to wait for Arnaud because when Arnaud will speak about Scope 1 and 2 and net emissions, obviously, we will not speak only about NBS, Natural Based Solution of Vallouignery, but Arnaud will cover the carbon sequestration. And honestly, I will tell you, I've just revealed something today to you is that I asked Arnaud, the E and P President, to speak about carbon sequestration by FICC because I have this I think that is best positioned to speak about it rather than Philippe in charge of renewables. I don't know why, but carbon sequestration is obviously for me something In particular, I've been public. Total has invested in Northern Lights, but I consider that having some positions in the North Sea with It might be a future for us. Is it a business?
That's more a question. Is it it's a necessity for sure To offset, I would say, or to store some carbon, and it's back to the hydrogen. Hydrogen, where do we store the CO2 if we want to develop Blue hydrogen, but Arnaud will come back on it, and he will give you our floor. I don't have the feeling, to be honest, it will be a major business. It's absolutely necessity that we manage that.
But again, it and it will, of course, be highly dependent on CO2 pricing to bring that technology to become a business. So but Arnaud will develop it in his presentation just after. The organic CapEx, I don't know if I have the right to I think it depends no, I don't disclose it. No, it's no, It's a matter it's a flexibility we keep around this but the organ I can just tell you that the organic CapEx In 2020, we're at $10,000,000,000 So that you can you will see it in our account. So if I can reveal something, it is in the account.
But again and then the way we speak when we look to net investments, but of course, one difficulty we faced in 20 20, let's be clear, is that when the oil price is low, the capacity to divest some assets is So not so strong. You have to lose some value. We are not ready to lose value. And so there is a When you see there is acquisition but with divestment. So for me, it's more that equation that I'm looking carefully, which is if I can sell more, I can buy more.
But organic CapEx, the range of 20.20, around EUR 10,000,000,000 is a good figure.
Thank you.
It's back to my answer also to short cycle CapEx, which is a way to have some flexible organic CapEx, I would say.
The next question comes from the line of Martin Ratz from Morgan Stanley. Please ask your question.
Yes. Hi, good afternoon. I've got 2, if I may. First of all, the ESG bonds, so the bonds linked to climate Yes. That seems a rather big deal.
And I was wondering if you could talk about it perhaps a little bit more. Specifically, I was interested in The sort of the magnitude of the sort of cost of capital advantage you think you could get Relative to more traditional bonds by using this approach. And then secondly, yes, not something that gets an Full of attention these days. But I was wondering what your outlook is for your European refining portfolio and what levels of restructuring we might expect there In coming years, I was a little surprised that you, for example, mentioned that you would still restart a refinery that is currently closed, for example. So if you could Talk about that a bit, that would be great.
The second question, no, I did not mention I will restart if the final is closed. Dans has been just temporary shut down to face the low margins, but we never announced that we are closing Dans. No way. So maybe I wasn't clear. The one we announced that we are really closing in terms of the refinery is Grand Prix, Like Lamed, these ones will never come back as refining capacity at all product capacity.
When we did took that, I would say, Conjectural decision to shut down launch, it was clearly announced as a temporary shutdown because to wait for better margins. And I think Total has done a lot in his portfolio in terms of restructuring ever since the last 10 years. So [SPEAKER JEAN PIERRE ANDRE DE CHALENDAR:] Other players around Europe should also take their responsibilities. Jean Pierre will tell you everything about these ESG bonds.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] Yes.
The idea is
to use climate KPI bonds in the future for our bonds insurance is not directly linked to a cost Advantage. I know that on the market at present time, there is what we call a greenium. I don't know exactly, perhaps 5 Bips, the main driver is to align our financing policy with our climate ambitions, and it's a matter of sustainability, a matter of acceptability, [SPEAKER PIERRE ANDRE DE CHALENDAR:] Rather than a way of reducing the costs of our bond insurance.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] But the bond issuance by the time today are at which level as an average? We issue bonds at which level?
At present time, we issue bonds less than 2% In 2020, during the Q2, we issued $3,000,000,000 sorry, dollars 9,000,000,000 of new bonds [SPEAKER PIERRE
ANDRE DE CHALENDAR:] With very
long maturity, and we are able to capture 40 years maturity as less than 3%. So on average, I would say around 2%.
Yes. And I think it's an important for me decision of the board, this one. As you said, it's quite a big deal, Martin. You're right. Because all that is back to, for me, all these debates, in particular, in Europe around taxonomy and the fact that There is even people pushing the ECB to decide that they should know today ECB as a monetary Body has to be neutral.
When they buy some bonds, they have to be neutral bonds, neutral buyer, and to buy all their share of all the bonds. There are people pushing the ECB to align their way they will purchase bonds on the taxonomy. And taxonomy is quite, I would say a stringent approach, maybe too stringent, by the way. But I think what we propose today is a way to say, okay, look, You have some corporations, some companies like TOTAL who are in transition. We need to finance the transition.
And so But at the same time, by the way, TOTAL is very useful because, again, the economy today is a carbon economy. So if we cannot Finance of future, there is a real problem. It could create a problem. So linking all our bonds tomorrow to become ESG bonds, like you I like your idea. ESG bonds, we call them the sustainability bonds, by the way.
ESG bonds, it's clearer. To KPI Climate KPI for me is making this link of transition in a strong way. If we could have an advantage, I hope it will be the case, At least what I don't want to see is to have a disadvantage of the financial policy. But again, we are obliged to take to preempt, And I think it's a strong message to all these monetary policy bodies that we have players like Total, Total Energies, who are ready To be very serious about the transition, and you must take that into account in the way you will allocate Your bond purchasing policy, I think and this is what I'm advocating at the European level. The taxonomy has wonderful for me.
It's an absolute rule. You are green or you are not green. In fact, there is something wrong there because this economy is in transition. So this we should find a way to reward So best in class ESG players. If we are among the best ESG players, we should find a way to find this access to this good financing Because again, the transition will not be only done by smaller players who are not delivering cash flows and who have a limited Access to capital.
So I think this is for me something very important, and I hope that this ESG bonds Policy will be well received and even can be if we make some pupils, would be good, and [SPEAKER PIERRE ANDRE DE CHALENDAR:] But at least for TOTAL. But I take the point, Martin. I will ask so there is a new KPI for Jean Pierre, which is to lower its cost of debt Thanks to my idea to make easy one, so it's good. Okay.
Wonderful. Thank you.
We have the next question coming from the line of Alastair Synes from Citi. Please ask your question.
Hi. Thank you. I just have one question really on that Slide 28, where you sort of talk about the renewables financing model. And I was just intrigued around the farm down strategy, whether you're seeing any signs that, that strategy is changing over the years. Is it getting More competitive, are you finding the terms more difficult?
I guess just reflect, I mean, the strategy works until There's a lack of buyers that are interested in taking on that risk or helping you de risk. Thank you.
Of course, you are right. But today, the market is huge. When we make some fund downs, I can tell you the price we obtain are always better. So it's clear that it's linked also to the very low interest rate, but the attractiveness for you have many, many financial institutions, you know that perfectly, Well, Vemses wants to decarbonize their own portfolio, where everybody is the same transition. And so you have more Demand for this type of assets, that's for supply.
So it's clear. So it might change in the future. But with the maturity, I mean, that is a question of market minority, and we'll see. But honestly, I think for the next 5 years, I'm comfortable that it [SPEAKER JEAN FRANCOIS VAN BOXMEER:] We'll be able to execute this approach, and that's something so there is a lot of appetite for that. Okay.
Maybe it's 4:30, Ladislas. Maybe we should move to the next question because I'm afraid we could go too long For our auditors, I think we have something like 30, 35 minutes of presentation coming on. So maybe we should introduce We should keep the questions for the last session, if you're right, and introduce Arnaud and Adrienne now.
All right, yes, and we after the presentation of Arnaud and Adrien, anyway, we'll have also a Q and A session, So you will have time to present to ask your questions. So now comes the second part of the day With the climate roadmap in action, and so there will be Arnaud and then
Good afternoon, good morning or [SPEAKER PIERRE ANDRE
DE CHALENDAR:] Good evening, wherever you are.
I think Patrick gave you a good reason why I'm making this presentation. Another one is that you will have Our capacity to relentlessly reduce costs over the last 5 years, and you will see through this presentation Now we have engaged in a similar journey to reduce emissions from our operations. We are committed to reduce by 40% the Scope 1 and 2 emissions from our operated oil and gas facilities
[SPEAKER PIERRE ANDRE DE CHALENDAR:] Between
2015,030, with an ambition to get to net 0 by 2,050, our main levers are to reduce, Avoid, capture and offset. Reduce our emissions by optimizing the energy used to produce Our refined oil and gas, this can be achieved by electrification of the process and by increasing the energy efficiency. Avoid by ensuring 0 flaring or venting and keeping methane emissions near to 0 [SPEAKER MARCO TRONCHETTI PROVERA:] And CAPTURE with CCS projects, and I will come back on that and also on methane emission later in my presentation. Of course, portfolio management will impact emissions, but we scrutinize all new projects to ensure that their marginal impact to our Scope 1 and [SPEAKER PIERRE ANDRE DE CHALENDAR:] Emissions is positive. Finally, in parallel to optimizing the energy used and minimizing the energy lost, we are developing carbon sinks, [SPEAKER PIERRE ANDRE DE CHALENDAR:] Notably, with Nature Based Solutions, and my colleague, Andrea Henry, will come back at the end of this presentation to cover these projects.
Altogether, we are developing a strong low carbon culture in the company, and this is illustrated by the next slide. In 2020, our CO2 filing squad has launched a company wide systematic review of all opportunities [SPEAKER PIERRE ANDRE DE CHALENDAR:] To reduce COP 1 and 2 emissions. The first phase allowed us to identify more than 500 projects in upstream and downstream [SPEAKER PIERRE ANDRE DE CHALENDAR:] Operated assets, out of which more than 400 projects have been qualified with a potential to reduce scope 1 and 2 emissions [SPEAKER PIERRE ANDRE DE CHALENDAR:] By 7,000,000 of ton of CO2 equivalent per year. To answer Lydia's questions, most of this project [SPEAKER PIERRE ANDRE DE CHALENDAR:] It would cost less than $40 per ton of CO2 reduced. And since January 2020, the economic value of all new investments Our computed with a CO2 price of $40 per ton of CO2 with a sensitivity at $100 per ton of CO2 from 2,030.
Let's zoom now on our upstream projects. We have identified 160 projects or initiatives That will contribute to reducing the scope 1 and 2 emissions of our upstream operations by 2,500,000 ton of CO2 per year By 2025. To illustrate these actions, here are a few examples as shown on this slide. We will reduce venting Gabon by reducing coal vents to the flare. Routine flaring will be reduced in Nigeria, OML 100, By rerouting gas to the export system and in Congo and Gabon by adding LP compressions.
Of course, Routing flaring will be stopped by 2,030 on all of our operated assets. In Angola, Revised operating philosophy on our FPSOs will contribute to significantly to significant savings on fuel gas Consumptions. For example, for further optimizing the base further optimizing the number of turbo generators running With minimum impact on power reliability and by upgrading the air filtration on turbine intakes, Several digital projects will contribute to reducing power requirement from compressions or pumping stations. Finally, We are studying electrification of offshore platforms on Killeen or on Tura fields in the North Sea with connection to wind power turbine and solarization of onshore sites like Temparossa in Italy. For each new upstream project, we are systematically reviewing cost effective solutions to minimize emissions.
On Mozambique LNG, to come back on the point made by Patrick earlier on, we've managed to reduce the emission intensity of the project Down to 25 kilogram of CO2 per barrel per barrel equivalent, of course, significantly below the average emissions Intensity of LNG projects that is shown on this slide at 38 kilogram of CO2 per barrel of oil equivalent. This is achieved by optimizing the power generation, by choosing low emissions gas turbines, by adding waste Heat recovery units on each of the turbine exhaust systems and by installing high efficiency boil off gas compressors. In addition, as part of the energy generation, we'll be generated by a dedicated solar farm installed near the project site. On Mero 3 FPSO in deep offshore Brazil, the emission intensity will be approximately 15 kilogram of CO2 per barrel at plateau level, thanks to the extraction of CO2 from the fuel gas and reinjection into the reservoir. On this project, vapor recovery compressors are used and also waste heat recovery units.
With this modification, In 2 years, Meru 3 FPSO intensity will be reduced by 25% compared to Meru 1 FPSO design. Last, on our Lake Albert project in Uganda and Tanzania, the emission intensity is estimated At 13 kilogram of CO2 per barrel, well below the average intensity of our oil and gas operated assets at around 20 kilogram, as mentioned. And for example, we've decided to add an LPG extraction unit on the Telanga upstream production facilities To optimize the fuel gas consumption, and we are also supplying the local market with those LPGs, substituting charcoal being used For Cooking. On the Ico project, the pipeline project to explore the oil from Thilanga, the pumping stations will be solarized In Tanzania. So all new Upstream projects are scrutinized during the conceptual and design phase to ensure that no opportunity is lost to reduce our emissions.
Now look let's look at the downstream emissions. Altogether, by 2025, 4,500,000 tonne of CO2 of Scope 1 and 2 emissions will be avoided each year, thanks to 280 projects. 2,300,000 tonne of CO2 per year will come from avoiding emissions through electrification of the processes By producing green hydrogen in Lameth Biorefinery from a 100 Megawatt operated solar farm or [SPEAKER PIERRE ANDRE DE CHALENDAR:] By supplying our European refineries with green electricity, this is our go green projects, and I will come back to this. 1,400,000 ton of CO2 per year will come from reducing emissions by improving energy efficiency in all of our refineries, By switching from fuel oil to natural gas for electricity or steam generations and we have a major project in our Leuna Refinery [SPEAKER PIERRE ANDRE DE CHALENDAR:] In Germany. And by using digital solution as an E and P to optimize energy consumption.
And last, 0.8 [SPEAKER PIERRE ANDRE DE CHALENDAR:] 1,000,000 tonne of CO2
per year will be captured
from the SMR unit in our Zealand refinery. And in addition, For beyond 2025, we have another CO2 capture project studied for our refinery in Antwerp. A few words on our Go Green project, which will be a significant contribution to the reduction of our emission in Europe As 2,000,000 tons will be avoided by supplying our downstream operations with green electricity produced from our solar firms in Spain, The production will be amounting to 10 terawatt hour by 2025. And our power trading entity We'll do the interfacing between the solar farms, the local power markets and the group entities. This green electricity will be used In our operated industrial sites, especially our refineries, but also our commercial sites and offices across Europe, [SPEAKER PIERRE ANDRE DE CHALENDAR:] With an estimated power consumption of 6 terawatters in 2025.
Of course, excess power will be sold to 3rd party. [SPEAKER PIERRE ANDRE DE CHALENDAR:] In summary, we have identified 400 projects in upstream and downstream operations that will avoid 7,000,000 tons of CO2 equivalent per year by 2025. Now let's focus on methane emissions. 2020 global methane emissions from the oil and gas sector Our estimated by the IEA at around 72,000,000 tonne. Most of these emissions are coming from the upstream sector, [SPEAKER PIERRE ANDRE DE CHALENDAR:] Around 75%, and the remaining 25% from the gas distribution activities.
The upstream emissions sources are associated with unburnt Gas at the fingertips: coal vents associated to production, process venting, and unburned fuel gas in the combustion engines or furnace. Finally, fugitive methane emissions can be found in flanges, fittings and passing valves. Methane emissions from total operations in 2020 are estimated to be 64 1,000 tonne, which is equivalent to 1,600,000 tonne of CO2, as methane has a warming factor that is at least 25 times [SPEAKER
PIERRE ANDRE DE CHALENDAR:]
Greater than CO2. Measurements of group methane emissions are a combination of continuous measurements by flowmeters on flare and cool vents And calculations with typical emissions factor per equipment, spot surveys are also used with gas detectors and infrared cameras. The pie chart on the left part of the slide illustrate that half of our methane emissions are associated with venting And 25% with flaring. Therefore, all actions launched to reduce venting and flaring, as illustrated before, will contribute To reducing significantly our methane emissions. The current intensity of our methane emissions from our operated oil and gas asset is less Then 0.2% of our production of commercial gas.
The methane intensity of our Gas asset alone is less than 0.1 percent of our production of commercial gas, which is already very low compared to the average of the industry As published by the Environmental Protection Agency, EPA or the IEA. Even though our methane emissions are already very low, this slide illustrates our relentless efforts to continue to reduce these emissions. From 2010 to 2025, we will have reduced our methane emissions by more than 50%. Our operational levers on new projects To design facilities with closed flare systems to replace gas instruments with air or inert gas and to systematically [SPEAKER MARCO TRONCHETTI PROVERA:] Exclude continuous cold venting. On all of our operated assets, we're increasing the frequency of leak detections and repair, And we are also reducing the number of gas pneumatic devices.
Here are some examples of venting reduction on 3 projects. First, on Tura redevelopment project in Denmark, A new project, so all coalvents have been removed, leading to a methane reduction of 1.2 kiloton per year, Which is equivalent to 30,000 ton of CO2 per year. In Gabon, the rerouting of colvent between 2 platforms and installation of an electronic electrical compressor, sorry, We'll contribute to reduction of 7,400 ton per year of methane, which is equivalent to 100 An 80,000 ton of CO2. And last, on Elgin platform in the U. K, the rerouting Of the strip gas used by the glycol unit will be rerouted to the LP flare [SPEAKER PIERRE ANDRE DE CHALENDAR:] And has reduced the methane emission by 3,800 tons per year, which is equivalent to 90,000 tons of CO2.
Finally, we are participating in R and D programs to improve methane detections and quantification. Since 2018, we have a dedicated testing platform, NIRPO, in France to test and qualify new technologies For greenhouse gas emissions, detection and measurements, we have developed a proprietary technology mounted to a drone to detect and measure CO2 and methane. And this tool has already been used in some of our onshore and offshore Operator Sites. Satellite data acquisition is booming, and we are partnering with new companies like Keros Or GAGSat, which have specialized in satellite detection of greenhouse gas emission, and we are Also developing fixed camera and microsensors for continuous local monitoring of greenhouse gas emissions. We believe that the combination of drone and satellite measurements, together with on-site cameras and sensors, will provide reliable data On CO2 and methane emissions.
In conclusion of this presentation on methane, I want to confirm Total's strong commitment To maintaining our emissions to the lowest level, to develop technologies to provide reliable monitoring of methane emissions And to be at the forefront of the industry reduction initiatives to get methane intensity below 0.2% on oil and gas assets. The 3rd part of my presentation will focus on our project in carbon capture and storage, and I hope it will answer Paul's questions [SPEAKER PIERRE ANDRE DE CHALENDAR:] Carbon capture and storage projects are essential for the industry to meet the climate challenge. All 2 degrees C scenario include an important contribution of CCS to sequestrate and keep CO2 concentration in the atmosphere Below 450 PPM. The latest IEA SDS scenario includes 850,000,000 tonne of CO2 sequestration by 2,030 and more than 5,000,000 tonne by 2,050. Just for comparison, the global CCS capacity last year, in 2020, was 40,000,000 tons and e notified projects [SPEAKER PIERRE ANDRE DE CHALENDAR:] By 2,030, adding up to 170,000,000 tonnes.
So today, there is a need for acceleration of development of CCS project [SPEAKER PIERRE ANDRE DE CHALENDAR:] That currently require tax incentives and carbon pricing to fly. However, the number of projects planned to be launched In the next 10 years, we'll drive costs down through economies of scale and technology improvements. Europe, with its net zero ambition by 2,050, has clear targets to develop CCS, and several countries I have set up fiscal incentives on CCS projects. Therefore, we should see strong growth in CCS and particularly in the North Sea That provides a favorable environment with a concentration of large industrial complex connected to infrastructure, pipeline and harbors and depleted fields. Since 1996, TOTAL has built transverse competencies on CCS By mobilizing expertise across the company on each segment of these projects.
This is illustrated on this slide where we have a track record Of being involved in pioneer projects and industry initiatives. Currently, TOTAL is involved in several CCS projects From across Northern Europe, at different maturity levels, which are totaling a potential of 15,000,000 tons of CO2 storage, The Northern Lights project in Norway being the most advanced with other projects in the UK and in the Netherlands, And we've also managed to engage the Danish government to look at CCS. CCS Business Framework is still in the making [SPEAKER MARCO TRONCHETTI PROVERA:] And we'll combine the 3 following pillars: 1st, project management HSE operational excellence and cost optimization expertise. This is our primary responsibility. 2nd, state support.
And third, CO2 value obtained through regulation. It could be CO2 tax, fuel directives or ETS. We intend to develop CO2 capture and storage projects to capture emissions from our operated sites And therefore reduce their Scope 1 and 2 footprint. We are targeting 3,000,000 to 5,000,000 tonne of CO2 storage capacity Per year by 2,030 for the group, let's have a more detailed look at our main projects. First, thanks to our historic presence in Norway, we are partners with Equinor and Shell on Northern Light, the most advanced CCS project in the North FID of Phase 1 was taken in May of last year, and this project has received a strong support from the Norwegian government, Both with the announcement of a target price for CO2 of $2.20 per tonne by 2,030, but also With an 80% state subsidy on the $800,000,000 CapEx for Phase 1.
This Phase 1 will include the transportation, injection and storage of up to 1,500,000 tonne of CO2 per year. The unit cost of this phase is approximately $150 per tonne of CO2. Phase 2 will consist of an extension to reach 5,000,000 tonne of CO2 per year to fulfill the need of European emitters And should have a unit cost around $70 per ton of CO2, thanks to economies of scale, mainly on transport. In the Netherlands, the climate accord has set the pace for decarbonized economy with The target price of $150 per tonne of CO2 by 2,030. With attractive subsidies for CCS and EU funding, Total is planning to produce clean hydrogen from its SMR unit, capturing 8,000,000 tonne of CO2 per year by 2025 and shipping it to North Sea storage site.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] This is on our
Zealand refinery. CapEx are estimated at $300,000,000 and therefore, the unit cost for capture and conditioning Should be around $70 per ton of CO2. A similar project is understudy at our Antwerp refinery [SPEAKER PIERRE ANDRE DE CHALENDAR:] And we'd be connected to a CO2 transportation infrastructure with a gathering pipeline and export terminal at the Port of Antwerp. Also in the Netherlands, the Aramis project aims at giving a new life to depleted gas fields. We have identified the potential to store more than 4,000,000 tonne of CO2 per year, and we intend to build an onshore terminal To receive CO2 by pipelines, barges and ships, and to connect this terminal to an offshore sequestration network, Reusing existing infrastructure, offshore pipelines, platform and wells.
The development concept will be modular and based on customer needs. This project is targeting around $50 per tonne of CO2 for transportation and storage for 2,000,000 to 4,000,000 tonne of CO2 per year. To conclude this part on CCS, Total is investing 50,000,000 Dollar per year in R and D to lower CCS costs. As illustrated on the previous slides, we are accelerating R and D results By implementing new ideas into industrial projects through partnerships. On CO2 capture, we are working on new materials and processes To improve the efficiency mechanism.
On transportation, for example, we are developing solutions to avoid hydrate formation in pipelines and wells During injection, on storage, we are working on reservoir modeling and monitoring to ensure safe containment of CO2 over time. This concludes my presentation on Total's actions and projects to reduce our carbon emissions By leveraging our expertise across the different branches of the group, we are relentlessly reducing our Scope 1 and 2 emissions And maintaining our methane emissions at a very low level. And we're working with government and partners [SPEAKER PIERRE ANDRE DE CHALENDAR:] To find cost effective solutions to develop CCS project. As a reminder, our target is to reduce our net emissions by 40% In 2030 compared to 2015. Now I will hand over to my colleague, Adrien Henri, We'll present our nature based solution to sink carbon in nature.
This will be required to get to 0 net emissions by 2,050.
Good afternoon, ladies and gentlemen. As introduced earlier, the purpose of the Nature Based Solutions activities is to build Carbon sequestration capacities and to provide for volumes of high standard carbon credits for the group. The plan is to build these capacities and volumes from now to 2,030 as a first milestone, And these activities shall contribute to get to the net zero emissions balance from 2,030 onwards, as said by [SPEAKER PIERRE ANDRE DE CHALENDAR:] An earlier. And this is a final and necessary piece of effort and achievements coming after reductions as detailed before. [SPEAKER PIERRE ANDRE DE CHALENDAR:] To this end, in 2020, we assembled a team.
We defined and built a model for our operations around Of course, there are multiple ways to think carbon in nature, but the very First pillar of our model is to focus on the quality of the underlying operations that will come, because ultimately, the quality of this The guarantee for the robustness in time, the sustainability of the sequestration And also, ultimately, the guarantee for the environmental integrity of the verified emission reductions that can come from these operations. As a consequence, we decided to focus on some of the ways that nature offers to sequester carbon and mostly photosynthesis And soil carbon absorption, and this is by difference to other possible ways like dissolutions in the oceans or more complex mineralization waste That we consider not fit for such operations today because of uncertainties and progress of operational ways to deploy. Another important point is that we will, as far as the underlying operations are concerned, consider both conservation activities and Creation of new carbon sinks. This is for many reasons, but mostly because we think they're both useful and necessary in terms of Volumes of carbon sequestration that will be required to reach a certain carbon concentration in the atmosphere in 2,030 and toward 2,050.
So both conservation and creation of new carbon sequestration ways are necessary. The second reason for considering both Is that the conversion way and the creation of carbon sink bring different co benefits in terms of Biodiversity in terms of water cycle management, in terms of local job creation, these different type of operations create different co benefits, [SPEAKER PIERRE ANDRE DE CHALENDAR:] And it's good to opt for a portfolio approach. Finally, we also obviously anticipate changing environments for this operation and these carbon sinks on the ground. There will be changes in the climate. There will be changes In the biology, there will be changes in the regulations applying to all these different types of operations.
So it seems the right way to go To consider again the portfolio approach and not to go only for either planting trees on bare land or just conserving forest, but to go for various types of operations and to bundle them in a portfolio approach. In fact, and on the grounds, we will have all these types of The second very important pillar for deploying our operations is, of course, the environment the Certification and verification environment that applies today and that will apply in time. And we set for ourselves the target and the standard that we will only go for the highest Standards for verification. It's now common knowledge that the vast majority of such operations happen in the voluntary carbon market And that the design verification and certification pathways are critical to ensure the final environmental integrity of Verified emission reductions that come from such operations. So we set for ourselves the rule that we will go only for the highest standards and, of course, Follow the external new rules and standards that could come in time and that will certainly come in time.
Again, to be specific, It means that we have a strong preference for operations that have realistic and reasonable baseline For the calculation of the sequestration of the carbon through nature and in terms of conservation operations, it goes as far as preferring Operations under nested approach are jurisdictional approach. It also means that we will have a preference for proven methodologies That have been proven through past operations all over the world, and this is true for a few methodologies in terms of removing carbon through plantation, and it's also true for Some methodologies and a lot of methodologies in terms of conservation. Finally, it also means that we will strictly follow the rule of On the ground measurements for the performance of the carbon sequestration, be it for, again, the creation of new plantation or new carbon sink Or be it for the conservation, the progress in terms of satellite inventories and all the new technologies coming will offer A good scientific base to follow the actual performance and the measured performance from the conservation. Finally, and certainly not least, the 3rd pillar of our model for developing our nature based activities [SPEAKER PIERRE ANDRE DE CHALENDAR:] It's a very strong belief that there is no long lasting carbon thing from nature without local inclusive value chain with people For the simple fact that we will not enter spaces to deploy these carbon sequestration activities where there is nobody or nobody has to leave from These same places, as a matter of fact, it's also common knowledge that deforestation and degradation, in a broad sense, the change of Fuse of land is the second cause for emissions to the atmosphere.
So it's also the result of past decades of developments of such activities that There should be local value chains deployed alongside the carbon sequestration we are expecting from nature. In a very practical way, it means that we will adopt an holistic approach and we will consider carbon sequestration. We will also consider biodiversity. We will also consider The water cycle and we will obviously consider the creation of local value chains, meaning local job producing value and Agree forestry production from nature, locally, creating jobs, creating also products that will be used locally and internationally. Practically, again, on the ground, it means that we will team up with partners who have a long experience of such operations, Learn with them and take the risk of operations with them.
It also means that a share a portion of the investment we will deploy We'll go for the creation and or scaling up of such non carbon activities that come along with the carbon sequestration we are targeting. And finally, it also means that we intend to monitor the progress and the results, the performance of our nature based activities, not only with The number of carbon credits coming from these operations, but also looking after and monitoring the co benefits that will come from these operations. Now based on this model, in the course of the past year, we have started originating, Designing and achieving some operations that I'd like to illustrate now with 3 examples. These three examples are of different Kind and illustrating the different types of operations in a portfolio spirit, as I was explaining before. The first operation I'm Picturing here is a partnership we closed with an Australian Developer in the 2nd part of 2020.
And this company is proven and seasoned in financing and deploying Money alongside farmers so that the transition from a non sustainable pasture management waste to sustainable pasture management waste, What is obviously called regenerative agriculture transition. So the model here is that Through and with our partner, we will offer the farmers to candidates and then to deploy new ways of Managing their pastures, and it means different grazing models. It means different amendments to the soils. And this leading to more carbon sequestration in the soil. It's very interesting to develop this activity in Australia for At least two reasons.
The first one is in Australia, the carbon market for such operations is advanced and there is a connection with the compliance market for nature based activities. So it offers a robust framework with proven experiences before. And the second good reason is that in Australia, these Soil carbon methodologies have been proven several times already, so it's a good move to start with the first phase on this operation. You could consider that maybe 1,000,000 tons CO2 equivalent over 25 years is a small move. However, It's a good example of how we see operations.
It's a first move and what we're bringing to the table to the partners and to the farmers is Long term horizon in terms of financing so that they have the time for their transition and they can focus on the operations rather than Caring for the financing of this transition. And 10,000 hectares is the goal for this first phase and it's already a significant surface of land. Now another example In Peru and it's a flagship example of what we can deploy and do in the conservation part of our activity, At the end of 2020, we settled an agreement with a long experienced Peruvian NGO for the design and the development of 2 very significant operations that can sequester and that would that can lead, sorry, to the potential of sequestering Over 25,000,000 tons of CO2 equivalent over 20 years, plus another set of 3 to 4 operations we could develop in a second phase That could go for another 25,000,000 tons of CO2 equivalent and corresponding volumes of carbon credits. Here again, Our approach is to partner with seasoned and best operators, while bringing to them what they've been lacking for decades, that is Long term development and operational horizon and support and long term and patient financing.
We are committing for Financing operations over decays in such cases. What is also very important in these two operations It's the fact that they add afforestation and reforestation through a growth forestry scheme to The conservation part of the activity. So again, we are not opposing creation of new carbon sinks or and conservation of existing forest. We are not opposing the development of nature based activities and important carbon sinks and local use of the same surfaces and same land by local population. We are aiming for the models that combine and gather all these different aspects so that we create the local value chains that will both and create improved livelihoods for population so that we erase the very causes for deforestation and degradation that are the most Important causes for emission to the atmosphere from the land use change.
Finally, a third example. This is an operation that we are currently building now and that will happen in Central Africa. This operation has been originated, designed and developed by the Total Nature Based team. So it's a development in house, Together with a long proven partner for the operations, so the planting operations in a given country and also together with the state, [SPEAKER PIERRE ANDRE DE CHALENDAR:] Because when you are going for planting up to 40,000 hectares of new planted forest, of course, you have to have such A strong partner and you have to discuss this development with the state. Here, the idea and the model is to Create a planted forest on lands that start with a very low carbon content and that suffer from fires several times a year.
There will be 2 phases in this operation. The first phase is to Create this planted forest, and doing this, create a forest atmosphere locally where there was only Very few plants growing. And doing so, we will sequester carbon in the 1st 20 years of the operations [SPEAKER PIERRE ANDRE DE CHALENDAR:] And generate the corresponding amounts of verified emission reductions. So that in the second phase after year 2020, We can start selective thinning of that wood and get only the annual growth of the planted forest. But doing this, we will unbalance the age and type of trees that are planted in this forest and we will create the condition To transition from a planted forest to possibly, after 30, 40, 50 years, the regeneration of a local forest in the very long term.
And while doing so, we will also create local value chains for timber products that will serve The local big cities undergoing growing population and demographic development will serve these cities with both Construction Wood and Energy Wood. So first phase, creation of a planted forest, a forest atmosphere, generation of carbon and corresponding emission reduction and second phase, selective seeding so that we recreate the possibility for the emergence of natural forest in a very long term while producing locally construction wood and energy wood for growing populations. Last but not least, on this operation, we include the 2,000 hectares at Grow Forestry Development for the production of food crops and possibly cash crops This was my last example for picturing the type of operations we intend to have in our Nature Based Solutions Portfolio of Operations. And so as a conclusion and in a nutshell, I'd like to stress that our purpose With these 3 pillars in mind is to invest in, scale up and manage or contribute to manage [SPEAKER PIERRE ANDRE DE CHALENDAR:] Integrated and communities inclusive nature based value chains that capture carbon in this order. I mean, [SPEAKER PIERRE ANDRE DE
CHALENDAR:] All this is
working together. This is our strong belief and this is the model we define for our nature based operations. And of course, [SPEAKER PIERRE ANDRE DE CHALENDAR:] The purpose of all this, in line with the pillars I defined, is that as from 2,030, the group will have and will be ready with [SPEAKER PIERRE ANDRE DE CHALENDAR:] Internal capacity for carbon sequestration and corresponding generation of verified emission reductions and also Starting with as soon as 2,030, with 100,000,000 tons CO2 equivalent carbon credits being the fruit of all this development From today until 2,030. To achieve such a big ambition, the group has decided for significant means, On average, dollars 100,000,000 per year over this period. [SPEAKER PIERRE ANDRE DE CHALENDAR:] And of course, with this portfolio approach I described, we will target a balanced average price under $20 per ton of CO2.
[SPEAKER PIERRE ANDRE DE CHALENDAR:] And as of today, as a result of the 1st months of work, we have over 40,000,000 tons of CO2 equivalent already approved for, as I described and pictured, multiyear projects. Again, with this, we will target 5,000,000 to 10,000,000 tons CO2 equivalent sequestration capacity by 2,030, a reserve of 100,000,000 tons CO2 equivalent carbon credits [SPEAKER PIERRE ANDRE DE CHALENDAR:] To be used from 2,030 onwards, while maintaining at least 10 years of reserves. Thank you. [SPEAKER JEAN FRANCOIS VAN BOXMEER:]
Thank you, Adrien, and thank you, Arnaud. I think, Adrien, maybe you can stay there if there are any questions. We are a little far from our traditional domain, which is good with Adrienne, is that at least we learn each time he's speaking. It's an executive [SPEAKER
CARLOS GOMES DA SILVA:] So we
continue to learn. I hope you learn, but I think it's a real it's important because, of course, it's part of the climate journey that we have [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Permit Rudmap, if we want to get to carbon neutrality. So we think we will open a second round of questions For all of our now, I think as was planned so that we can shut close at 5:30. I think it's quite already 3:30:30 minutes, quite a good time of listening and answering. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] So please, if you have any questions, of course, on the second part or on the first part, but we interrupted 4:30.
Thank you. We have our first question coming from the line of Hanish Kapadia from Palisir Advisors. Please ask your question.
Hi. Thanks very much for the presentation. I just had a question going back to the upstream. When just looking at the U. S.
Gulf of Mexico, had a couple of questions around that. With the Federal permitting bans potentially coming in. Could you talk about how that could potentially affect your Gulf of Mexico Co operations and further developments. And then if you could also say something about the potential FIDs in the Gulf of Mexico. I think you have a few projects that are close to FID.
And in particular, if there's been any effects On your thoughts on the Balmor discovery, given the disappointment that Shell had with Appomattox. Thank you.
Okay. Gulf of Mexico, we are fundamentally we Mentally, we have 2 portfolio has been is either we are linked to Chevron as an operator, And I trust Chevron has been very well positioned to be an operator in the Gulf of Mexico. We had Balmoral, we had others, The one last year we sanctioned. Anchor. Anchor.
And we are also with them on other assets. Taytii and Jack. So we have a good partnership. But This year, it is true that we have on our side one project, which is North Platte as an operated project together with Equinor. I think it was it's part of the projects on which we did not what we were a little suspended, to be honest, in 2020, North Platteux, Because we had some arbitration to be done in the CapEx, and it's Projects which we have to work on in order to lower the cost.
The difficulty in the Gulf of Mexico is the size of the reserves, the size of discovery Contrary to Brazil or to maybe Suriname, we have pools of oils which are not so big. And so we need to work hard in order to reach our targets in terms of technical cost breakevens. Beauty of the U. S. Is normally that the fiscal terms is lowering So attractive fiscal terms are lowering the breakeven in terms and there is, of course, an upside as soon as the price of oil is going up.
So we need to review. So I would say my answer to first, let's I don't have all the details of the permitting, but I don't think it has a Direct impact on our developments because we are well in control, I think, of the license on which we want to develop our projects, North Platou, in particular, or [SPEAKER CARLOS GOMES DA SILVA:] Lalor, so I don't see as it could have on other properties, this one is well these ones are well controlled. So it's more for me a question about how does the Gulf of Mexico fit in our exploration strategy and our global Low cost oil strategy, I would say. And to be we are reviewing that independently, I would say, Of the decisions of the federal government. So beyond Balimo and beyond North Platteau, in which we will restart the work, I'm not so convinced that we will have an aggressive exploration strategy of the Gulf of Mexico.
But again, It's not linked to the recent decision of the federal administration. It's more I said during my presentation that we want to refocus our exploration on these Large low cost developments. And obviously, when we have made a large review of what we've done in the last 20 years, I cannot say that it is delivered really this very large development, which are offering low cost. So it's more for me a potential mismatch between the type of targets in the Gulf of Mexico and our global oil strategy for the future. Having said that, these 2 projects, we are working on them.
And if they can reach our threshold, [SPEAKER CARLOS GOMES DA SILVA:] We'll approve them. So I don't see any impact again on you specifically on the federal new federal policy on these two projects.
Thank you.
The next question comes from the line of Alexandre Pozzi from Mediobanca. Please ask your question.
Hi, thank you for taking my questions. The first One is on macro. You have a nice slide showing how tight the oil market could be within the next 5 years. But when we look at the LNG, I'm not sure if the market is so tight. So I was wondering if you can spend a few words on How you see supply and demand evolving over the next few years.
Of course, we're coming from a big spike in the gas prices, But maybe some of those factors behind that are maybe normalizing this year. So anything you can say about Short period time outlook for LNG. And my second one is on offshore wind in the UK. It looks like you left some of your competitors quite upset because they haven't won any acreage in the U. K, also because of the option fee.
But that keeps me wondering whether maybe the renewable economics in OECD countries are getting a very competitive And compressed maybe below your 10% equity threshold. And then the final one on Mozambique. I was wondering whether If whether you have a time line on when onshore work, can we start there? Thank you.
No, situation is not the same between LNG and Oil, it's clear. We know, but what has been good with the year 20 2020 is that there was a pause on many of the potential FIDs Around the world, in the U. S, but also the other projects in Mozambique. So we could have feared last [SPEAKER JEAN FRANCOIS VAN BOXMEER:] I see there are too many projects rushing to FID in 2020. 2020 has put a pause.
And I think has also put back to reality A number of projects. In this LNG market, there was a sort of I mean, particularly the U. S. Projects, we have developed By transferring a lot of risk on the offtakers. And I think with the crash, not only it's literally continuing to be oil price, but the crash on So GKM, there's a low market we've seen.
So spot markets, I think people realize, but Taking offtake risks without being integrated in the project, quite unbalanced. So my view is What happened this year between again the spot marking crash into Asia plus via I mean, less investments in our industry leading to less FIDs It's probably good because we will probably have a more normalized LNG market in terms of new projects coming on stream or being sanctioned. So that's why probably there was an overeating market. It's putting some cool, and that's better for all of us. Having said that, again, the good news is that you still have a strong demand growth, I mean, for LNG, strong demand for LNG.
The fact that this year, you are still at plus 3% despite the global economic crash is quite impressive because it's led fundamentally By the shift in Korea, in China, in India, no, from coal to gas. So there is a good demand And I would say some cold water being put on all the people rushing for more projects. So globally speaking, my vision is that By 2025, where we could have fear to have an oversupply, I think we have a more balanced vision Of the 2025 horizon, but it could have been what it was 1 year ago. Offshore wind, I mean, again, I think the option fee is part of the equation. Then it will be a matter of I will be the CFD because [SPEAKER CARLOS GOMES DA SILVA:] It's only part of the equation, the option fee to get the seabed.
But what I'm sure is that we don't have the seabed rights. There is no project. So, Piccol, I think that's clear. But what we observe is that, as I said before, this market is a clear signal that You have today players with a larger balance sheet able to manage these risks. But again, I can tell you that With the option fee we paid, which is, I think, GBP 83,000 per megawatt per year, Which is half almost half of what some of our competitors paid.
We are within the range of what is acceptable to us, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And we keep the capacity to get our returns, that's what we are targeting. No, it's a matter of course, time is of essence. Time is of essence, which means that As quicker, we'll be able to go to the sanction of the project. I think 2025, one of more Pierre mentioned that figure. But to date, it's a good target.
It's an ambitious one, but it's a good one. The quicker we go to the target of FID and then the quicker we get the production, The returns will be. But again, one of the big element today is still missing. It was the specificity of this UK auction It's that they separate in the UK, the Seabed rights and one rights and then the CFD auction. And so it's when we'll have The CFD, but we really know what is the reality of profitability.
But we have been, I can tell you, very reasonable on our side Also of our CFD expectations in the way we bid. Mozambique timeline, onshore work, I mean, to be clear, We all agree when we met with governments that the sooner is the better, that we want to mobilize to remobilize. So If on the ground, again, the armed forces and the police are able to recontrol The area that we agreed together, I think end of Q1 should be able to restart the work. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] That's the objective that we set to ourselves jointly with the government. So because, of course, we know that we did but what is very important to us is We want to be sure that when we will re mobilize people, we can really engage in a sustainable work there.
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] And we don't want to reengage and then to stop again. That would be very detrimental for the trust of all the Partners in this project. So let's first work in SOVAN. Again, this is going beyond the situation in that region. It's not only a matter of The area around the project is a more global security issue for the Mozambican government.
And so we'll see what we can control, we control the situation.
Okay. That was very clear. Thank you.
The next questions come from the line of Peter Lowe from Redburn. Please ask your question.
Hi, thanks. I just had a question on the ambition to green all power used in your European operations. Have you structured that as a corporate PPA with your Spanish solar business? And can you give any color on how that contract works? Then perhaps as a follow on, are you seeing demand for similar PPAs from third party companies who want to reduce their own emissions?
And is that an area Total will seek to grow in going forward, kind of moving away from kind of government Stock PPAs towards kind of more commercial ones as companies seek to decarbonize? Thanks.
So yes, it's organized clearly as a clear contract. The way we work within TOTAL, even if it's there are 3 subsidiaries involved. You have Total Solar Spain, which signs a PPA with total Total trading power, I would say, which is based on a 15 year PPA with a Price, which is within the market was a negotiation, which will allow on one side Total Solar Spain to develop the projects, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Having secured a PPA, which is part of the Renewable business. And then you have another contract between Total Trading Power And Total Refining and Chemical division, which is again selling some power. Of course, they don't have exactly the same Pricing, because in between, somebody is supposed to make some money.
And the beauty is that when we compare today, in fact, Total Refining and Chemicals is buying some power from, I would say, on the market with some More or less medium and long term contracts. And so at the end of the day, the question was that it makes sense for Total Renewing Total Refining and Chemicals to buy some power from Innovus. Why the trading is interfacing? Because obviously, Once the solar plants are in Spain and the other plants are not in Spain, so you need to manage all that. So and we structure it in a way, This is a second question, but this model could be offered tomorrow to other corporations.
In fact, we really wanted to structure it within the market, so with market So that what we have done within TOTAL and it's done in the Europe, it will be done tomorrow in the U. S, in the same way in Texas, we have Well, we have with the acquisition. So it could be done exactly with the same way for corporations. The entity which takes more risk there in the middle is Total trading power. But the beauty, of course, is that it's one element within the large portfolio.
And this is why in all these Business, we need to have trading businesses trading entities because at the end, they aggregate some sources coming from Spain and some sources coming from other places And some more customers, so they can make their own optimization of the business. And this is what we can offer To other corporations, we can offer not only our capacity of producing renewable power Somewhere. But also the capacity to aggregate, to deliver to them. And so we have engaged with some corporations, Our corporations, which are looking for that. Versus states, I'm not sure to have captured what is versus states.
But again, my vision is that like we've seen in the U. S, so U. S. Today is a merchant market except for corporate PPAs. I suspect that in Europe, there will be a point where states will no more come with PPAs, but we'll say, Let's say corporate PPAs are coming.
It depends, of course, as the technologies. It's not true for offshore wind, even if Probably, Netherlands have begun to make some PPAs, some corporate PPAs are not willing to Subsidize any more offshore wind, even if they might subsidize them for hydrogen developments. It's a project that we are looking Linking in the Netherlands an offshore wind farm to a hydrogen development that might be also a way. So I think there is an evolution. But let me be clear, for me, with Renewable Business at the infant stage, we need some subsidies from states.
Then you see a market growing with corporations. And one day, in 15 years, all that will be Merchant market, like we've seen, for example, LNG is a perfect parallel. At beginning, we developed the LNG industry We've long term contracts with Asian customers, 15 years long term contracts, and then it moved to more Smart Development Market. So I think you will see and all that is linked, of course, to the evolution of the technology, lowering the cost of the technology and the capacity To be profitable in a merchant market.
Thank you.
The next questions come from the line of Christopher Kuplent from Bank of America. Please ask your question.
Thank you very much. And I'll keep it to just one question, Patrick. I mean, look, 2020 has been a very challenging year. When you look back, You obviously highlighted to us, you've come out with 1 of the few dividends intact and yet your dividend yield is 7 point The oil price is knocking on 60%. So what do you what is your answer?
What else do you have to do to show to the equity market That your cost of equity is not 7.5%. I wonder what possible explanations you would have. Is it perhaps linked to the fact that a lot of your growth, whether it's Adani, whether it's SunPower, is Sort of a little hidden in listed subsidiaries or do you have other more important explanations?
The only explanations I have is that the yield of total is lower than some of our peers and that it takes time, okay? You clearly, you have today I was clear in my introduction. You have the fact that the equity market is no more in love with Oil and Gas Companies, The fact that they are able to deliver some cash flows. You have a question about their future, I mean, sustainability of the model. I think Total is working hard to show that there is a sustainable model.
And again, if we are willing to establish this strategy, is to show to [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Demonstrate to the market, we install total energies in the long term. So I'm not feeling it's a question of hidden in Equity Affiliates or that is technicalities, it's not the case. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] It's more fundamental. And I think that the fact that today we want to disclose I think we need to convince the market that You can be somewhere black and green. That's clarity.
We are part of the business model. But again, I'm not I'm proud to be black and green. I'm proud to be able because if I don't have the black part, is delivering cash flows. I cannot grow the green part. So it's part of what we do.
So it could take time. But again, I think and but fundamentally, fundamentally, Where I'm convinced as well is that keeping the dividend intact is at the core of the investment thesis. And of course, from this perspective, not we are I see that it's today the challenge is very, it's a question of sustainability of the model. So let's but not in terms of cash flows. It's more about climate, CO2 impact, etcetera.
Okay. Thank you very much.
The next questions come from the line of Dan Boyd from Mizuho Securities. Please ask your question.
Hi, thanks. I have two questions. The first one is, when I look at your DSEF guidance out 2025 at $60 a barrel. It looks to be a bit lower sort of 5%, 6% lower than what you presented in September. You commented on most of your major projects being on track.
So I'm just wondering if there are some conservatism based in that new update Or if you can kind of go through what the moving parts were that would be helpful. My second question is related to divestments and where that incremental capital We would likely go you correctly pointed out that the asset market hasn't been that great and you've held off on Upstream divestments. But as we go forward, if commodity prices hold, presumably you would go back to the market to sell assets. In that scenario, where would we expect the incremental capital to go? Would that primarily accelerate the low carbon ambition?
Thanks.
On the first one, I think the increase of EUR 6,000,000,000 was more or less what we said in September. So maybe you are It's your question. There's a millimeter on the slide, but having said that, there might I'm not sure, but of course, the No, I think for me, it was more or less the same guidance. So I'm the team will check and we'll come back to you. But I think the increase of [SPEAKER JEAN PIERRE ANDRE DE CHALENDAR:] 6,000,000,000 was what we had in mind.
No, Jean Pierre?
[SPEAKER JEAN
PIERRE ANDRE DE
CHALENDAR:] We
gave the guidance by sectors between LNG, between downstream and E and P on the slides. You have all the details. And so we see that it's more or less in line with what
Okay. So maybe not only if it's a matter of But I think for the fundamental, we did not rerun all the figures, to be honest. The second one, as I told you, I mean, let me be clear. For the time being, Proceeds for asset sales, we need to look at them. But what I told you is that I think I answered the question.
In fact, it It will be either both are possible to look to some short cycle flexible CapEx on the upstream, which have A quick delivery payback. That's possible. The other part is accelerate renewables. Again, it's a matter of having the opportunity. So You that people are working.
But to be clear, what we have done recently does not mobilize a lot of CapEx. I mean, acquisition cost is quite low because what we've done in Spain, what we've done again in the U. S, There are stage payments, which we pay, in fact, according to the progress of the projects. And so that's not changing a lot. That's not So requiring a lot of capital expenditures.
And the rest of the projects, we cannot accelerate the portfolio because we decide. It's a matter of putting all that together. Do we have more M and A in mind in renewables? No, honestly, I think that what we've done this year with Vaidani was a big chunk, EUR 2,000,000,000 And we don't work on things today. Today, we don't have something else in mind.
So I would tell you that if we have But again, I answered several times the question. Consider that the EUR 12,000,000,000 is a good guideline, but maybe we could have EUR 1,000,000,000 more, but it will depend. But then if we have more cash flows, we will allocate that to deliver to company.
Okay. Perfect. Thank you.
We have the next questions coming from the line of Ryan Turd from
How many questions do you have? Yes. But I think we'll stop at 5:45. So I take the questions quickly. And so let's go, Ryan.
Let's go. Four questions, but no more after that. Okay, Ryan.
Great. Thank you. Maybe a couple of quick ones on 1 on the PPA, on the renewables business. Your disclosure shows kind of a steady decline in the PPA price from 100 10 megawatt hour dollars per megawatt hour to $55 to $45 on the projects under development in 2025. Can you talk a little bit about what's driving That where you see the price going in the future and what does it mean for project returns going forward.
And then In that bucket of projects to 2025 where 40% of the takeaway is currently covered by PPAs, do you expect that to eventually reach the 90% plus [SPEAKER JEAN
FRANCOIS VAN BOXMEER:] As in the other buckets? [SPEAKER JEAN FRANCOIS
VAN BOXMEER:] Yes, of course. The idea is that we launch projects If we have PPA, we don't like too much to launch projects based on merchant markets, to be honest. It's not the fundamental it's a business model of Total is fundamentally to link.
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] So we need to work to continue to find the PPAs, but
I know that there are different ways. Either some projects will be, Like I said, for example, in the UK, there will be some CFD auction brands, which will allow us to have access to some State PPAs or we'll have to develop more corporate PPAs. So the second question is quite clear for me. And At a certain point, maybe in the future, we'll see if we accept a certain level of merchant risks. But I would say It's not the business model, and it's not what we are developing with the Renewable team.
On the first one, no, it's logic. I think we inherited from the portfolio we had from which is already operated. We inherited from, in particular, Total Quadrant when we acquired Direct Energies, Some very old PPAs with high prices, so that's logic. And you see, we have seen in that industry The PPA cost decrease with the cost, in fact, the PPA price decrease, the cost decrease. So I mean, we are very transparent and I see that [SPEAKER JEAN FRANCOIS VAN BOXMEER:] I think, yes, there is a limit to that at a certain point because you need to make money.
It depends as well as the region where you deploy your projects. So You will have to I think part of the disclosure that we will find in the deep dive will be also the geographies. You'll be able to reconcile. But My view is that, I think, I'm not surprised, and I can think that it will continue to decline to a certain point because at certain point, there will be no more profitability. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And it's also linked to the technology because there I gave you figure and I think it was a question from Christian, [SPEAKER FRANCOIS XAVIER BOUVIGNIES:] Because he would like it was right, Christian, to say that the average for wind project and not for wind project and solar projects Should not be the same.
So we'll find ways to disclose these type of technologies. But so global trend is that I think the PPA prices are following, in The decline of the technological costs, which is very logical. My view is that in the solar industry, we are not far from, We're seeing the asymptotic part. So wind don't show as well. Where we are not yet is when we combine solar and batteries.
Storage is not yet, I would say, at we still can decrease the cost of storage. And offshoring, still, clearly, we are not yet, I would say that at the optimum cost of all that, there is still some improvement. Even we speak about floating offshore, It's even more right. So no, I'm not surprised. I think it's but it's part of I would And I think the other companies working on this business.
So does it has implication IRR? Again, it's a matter of we decrease the PPA price if we can decrease the cost. So, and the IRR is a mix of at the end, the returns is a mix of cost and revenue. So there is a link for me between both.
Perfect. Thank you.
Yes, you have another question?
Okay. We have another question coming from the line of Lucas Harman from Exane. Please ask your question.
Thanks very much and thanks for the 2, if I might. The first one is, I guess, as an English saying, which is there are 2 ways to skin a cat. And in terms of shifting your business, clearly, one way is to accelerate capital going into green, but the other is possibly to think about Doing something different with Black and I don't mean just limiting the rate of investment, but perhaps spinning out. Could you see a point where or would it make Any point for Refining and Chemicals to be a separate business? Or is the tie between electrons, etcetera, and some of the options Within Refining and Chemicals, too tight.
And second question, if I might. Just on the Natural Carbon Solutions business, I'm getting slightly confused as to whether this is just an offset business for you or whether actually it's a business that you think you can also Drive value from through selling offsets to industry, again, maybe associated with electrons, maybe associated with what they're doing. So is it profit center in its own right or is it just an offset center? It's
very clear.
Thanks, Patrick.
The Second question is very clear. It's strictly for us. We clearly consider that we have to be it's a question for me even We consider that as clearly linked to our capacity to go to carbon neutrality. And so we develop all this business Fundamentally, to be able to offset our emissions because we'll need them as soon as as long as we want to be Carbon neutral, we know that we need to own this carbon credit. So the second question is very clear, and that's where we are.
The first one, no, honestly, I mean, The business model we want to develop is clearly a multi energy company. So we have an oil business linked to Which integration along the value chain for each of them. So we are developing oil integrated upstream, downstream, Adapting, of course, the footprint of our business to the demand. So if there is less demand, we need to adapt our own capacities. But I mean [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And same for the gas, same for electricity.
So and you speak about chemicals, but what we have in total within total is not a lot Chemicals, we have petrochemicals, which are in fact we don't have chemical business. In fact, we have a petrochemicals, which means that we have A cracker, which is like a refining and we make just the polymers, polyethylene or polypropylene, which is just the TRACARE plus 1, in fact, we do not develop any and the few businesses that we have which are downstream because we spin off a lot We sold a lot in the last years. Remember, we sold Bostik to Arkema. We divested Atotec. So all these, what we were calling Specialty Chemicals, have been divested.
So for me, there is no way I mean, I don't envisage because I see again, look this year, petrochemicals, we are more resilient than the others. So it's a question for me of [SPEAKER MARCO TRONCHETTI PROVERA:] Integration of the oil value chain, and we keep that in the model and don't need to divest R and C to make more In renewables, no, it's not true. I mean
But that's not really the question, Patrick. The question is much more about the way the market thinks about Capital employed and the value that it's willing to put on your equity and the faster you shift towards low emission, More rapidly, you're likely to see an appreciation in your price. And that's the rationale behind the question rather than the questions Which have simply been spin out renewables attract a multiple that way.
Okay, understood. Understood. So but the question is for Bernard. Arnaud was a voice The speaking voice for E&P and R and C, as you've seen. So Bernard has to work hard to lower its emission quickly.
That's a point.
But at
this stage, I don't think it's I see that globally as a group. And [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Yes, it's true that Refining and Chemicals are part of the SCORM 1 and 2 emissions. But today, when you look to [SPEAKER MARCO TRONCHETTI PROVERA:] Our global emissions, it's only part of the issue, but we are not there. We are not there.
Thank you. And thank you.
We have the next question coming from the line of Jason Kappelman from Cowen. Please ask your question.
Thanks for taking my question. I had 2 quickly. First, on the downstream growth, which I think is stable with What it was previously guided to at $2,000,000,000 cash flow growth from 2019 to 2025, but it seems like Now there's some component in there for higher margin. So I'm just wondering if you could split out that Downstream growth From 2020 to 2025 between refining margin improvement, marketing growth and chemicals growth. And then my second question just on back to the farm downs of the Power business.
I mean you mentioned The market is currently valuing these assets pretty attractively. Is there a situation where you could accelerate The farm downs and maybe bring some of that cash forward given, you've already hit your gross portfolio target in terms of What's in the backlog then?
Okay. First one, the EUR 2,000,000,000 no, there is no margin growth within EUR 2,000,000,000. It was explained before, it's EUR 1,000,000,000 coming from fundamentally from the various chemical projects, which we have, the cracker in the U. S, the cracker I mean, I'm Speaking about the control of Alexis and Bernard. Bernard, you can elaborate on the component of the EUR 1,000,000,000.
And Alexis, same. Yes, some growth in some retail markets. Can elaborate on the EUR 1,000,000,000. It was EUR 1,000,000,000 from the refining, EUR 1,000,000,000 from marketing, and maybe you could explain. It's not linked to an assumption on EUR 2,000,000,000 as an absolute, I mean, yes.
Bernard, Rexi?
Yes. There are 2 components. There is on the petrochemical side, of course, all the big projects that you mentioned, Patrick, starting now in the U. S. Gulf Coast with a new cracker and next We have the PE line, our joint venture with Borealis, Borstar.
And we have also by the let's say, by 2025, a start up of Our larger petrochemical projects in Middle East. And the second dimension is on the renewable diesel. As we will grow our Production, you know we will generate more cash flows. We released last year that 1 tonne of Renewable diesel generated $3.50 so you multiply that by the 1,000,000 tons we will do, and you come up to the $1,000,000,000 actual cash flow.
So Petrochemicals and Renewable Fuels. And Alexis, your $1,000,000,000 extra that you will bring to
the group, Not €1,000,000,000 but the our plan, the 5 year plan was to add $100,000,000 per year of cash flow. It comes from the existing business, which are our stronghold, which is Europe and Africa, where we can manage Our growth of cash flow, especially from nonfuel revenues in Europe and developing our strong market share in Africa. And we have launched some new developments in new markets, Brazil, Saudi Arabia, Mexico, and we will also get some growth from there.
Okay. So it's $500,000,000 from growth, and it's $300,000,000 coming from the recovery of COVID that we lost this year as we rebase it, considering that the demand will come back. So that's $800,000,000 So you have the thing. No, but accelerating farm down, unfortunately, you don't give we don't receive the same amount of money if you farm down at With a certainty, so I mean, there is it's a matter of maturity of the project because financial institution of these guys, They love projects with no risk. So if you have more risk because you accelerate, because you found down your interest Earlier in the development process, we will give you the same way that today we acquired this pipeline with a low cost of entry.
I want to keep this low cost certainty for Total because we have the balance sheet to support the development rather than putting them in rather than divesting that To people, but I prefer to derisk. So for me, the only point that we could ask ourselves is once we have All the elements in our hand, including the PPAs, is there a possibility at the development stage To farm down quicker than waiting the COD, that's something on which we but clearly, our strategy is to get Access to pipeline with a low cost of entry to mature the pipeline, and then we are ready to pay as a risk. And if we'd farm down, We want the people to pay with no risk. So if they accept the execution risk, the project execution, maybe we look and look at it. But generally, Our experience is that this type of you obtained a better valuation if you wait for I mean, having put your asset into production, and then it's Just a matter of it's like a pipeline.
They love pipeline. It's an infrastructure at the end. So if you want to address the infrastructure fund, It's better not to ask them to be a part of the risk of construction of infrastructure. That's simply the logic. The last question.
Who was the owner of the last question? It's the best one.
We have a last question coming from the line of Paul Cheng from Scotiabank. Please ask your question.
Thank you. Two quick ones. First, in your production guidance for this year that's flat To 2020, that seems a bit low, given last year that we have the government curtailment. So what's the underlying assumption in the government curtailment in this year? Is it similar to last year or that you actually have a higher number?
The second one is on the gas and low carbon business. In the Q4, At least comparing to what we see, it seems like the earning is low. Just curious is that any one off item That have negatively impact such as in trading or in derivative that we should be aware? Thank
you. First question, now it's clear. I mean, you have a natural decline in portfolio, let's say, at 3%. So 3% of 3,000,000 barrel of oil per day or 2.9 Let's say, 19,000 barrel per day. And so we think that when it's difficult, but it's not we are we Between the quota, Libya will offer something like 30,000 or 40,000, 40,000, 50,000 barrel per day.
Then we make an assumption about at which rate At which rate quota could be relaxed and it's difficult to guess. So again, I'm not sure we are very prudent. Honestly, I think we are reasonable. So curtailments, no, I think we stopped curtailments were mainly in Canada. And I think we don't have any more assumptions for curtailments in this figure.
So the Question mark again is at which rate quotas might be relaxed and is difficult to anticipate. So I don't think we are so. So reality is that it's not new, is that we don't have start ups in 2020 We have experienced a lot of start ups in previous years, but we don't have new projects coming on stream 2021, except I may say The Libya coming back on stream is a sort of restart up for us as we didn't experience much production in 2020. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] The contribution of GRP, I will give that as a final question to our CFO [SPEAKER JEAN FRANCOIS VAN BOXMEER:] To honor, I will give it to Philippe as Philippe is the last answer to this type of exercise. So Philippe for your It's a good question for you.
It's a tricky one, but you will explain this as you it will be your last answer to this group of people.
Yes. I'm most concerned that yes, performance of trading Gas and Power in Q4 was Disappointing as it was the case for most of our competitors. I could add that we kept some option for For the month of Jan, which was much more interesting than a boring month of December.
I think, in fact, our traders did not anticipate the boom of the gas price. They were not we are not we should hire a meteorologist, I think, In the team, I think they didn't see all this boom coming up, but they've seen it in January. So it's good news. I think, in fact, Philippe is very nice to Stephane, which will lead the President. So he should become President for Gas, Renewables and Power, giving him of the good results for the Q1 2021.
So that's, I think, the answer. So on this note, I would like To tell you or to all of you, thank you. Thank you for your attendance to this results and outlook session. I think you had the opportunity to dig into all what we are building within TOTAL, in particular, in the new businesses, but also the Important ones in E&P, Refining and Chemicals, Marketing and Services. And again, I wish you the best for this year, Including, of course, a good health.
And hope to see you soon physically. Next session for us will be end of September. In the meantime, all of you will be vaccinated probably, and we might meet again. So thank you for your attendance, and See you soon. Bye.