TotalEnergies SE Ordinary Shares

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 Pouyanné, Alexis Tofferson, and Jean-Pierre Zbraire. And this presentation will be followed by a Q&A session. Then will come two presentations on how we progress our climate roadmap. Arnaud Broillac will drive you through how Total reduces carbon emissions from operations. And then Adrien Henry, Vice President of Natural Based Solutions, will explain how such solutions will contribute to net zero emissions. And these sessions will also be followed by a Q&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.

The new security rules, as we have seen and as we have mentioned on the COVID special table, are really one, respect social distancing, disinfect all the elements that you have, the boxes, the phone, the microphone, film, of course, the microphone and the TPE.

And that, really, I think about you. The site remained open during the confinement, but fuel sales fell by 76%, almost as much as traffic in the Ile-de-France. However, the surveillance remains in place and a large plan for disinfection of equipment has been put in place.

For customers who use fuel, we have set up a disinfection planning. It is that every hour we must disinfect the TPI, that is to say the parking tax screens by card and the guns. Obviously, there are gloves available at the cash register for customers and the paper which is next to the pump.

The health safety rules have also been reinforced inside the buildings.

We started by closing the access to the shop and closing the customers by the pass-by. This is to guarantee the safety of the employees and customers at the same time. We put for the employees at the disposal of hydroalcoholic gels, means of disinfection of their equipment at each take, each end of the job, and ice cubes, masks and gloves. For the client, we have set up a health course who direct them to the health points and the coffee points.

We can contract them, we can take a shower, we can go to the toilet, have a coffee, make the cut as we need.

It's 4.30 a.m., we can make a little cut and all. Thanks to the post office, we still have a little bit of comfort, as before, by buying cakes, sandwiches, drinks.

We can still buy things by going through the store. We're not without anything.

I find that this service is adapted to the circumstances. Since May 11, and the deconfinement everywhere in France, the shop is again accessible, but offers an arched route with markings on the floor, in boxes, as well as hydroalcoholic gel to all customers.

I say that it is a very good thing that people are protected. We are protected, the staff is protected. It was absolutely indispensable when it comes to the continuity of service.

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 Eleu 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. The global estimates of more than 100 million cases and more than 2 million lives lost thus far. In response to the virus, widespread lockdowns disrupted the global economy and the world was killed. 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 pivoting 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, innovating 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 most of digitalization, 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, But now it is becoming a global effort, with other major markets moving in the same direction, including the US, 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 zero emissions by 2050 or sooner, together with society. We see how science and technology have been able to identify the COVID-19 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 transition 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 four priorities, HSE, operational excellence, cost reduction, cash regeneration. While transforming, we will maintain strict financial discipline to keep our break-even low and our balance sheet strong. Diversifying the company will strengthen the resilience that allowed 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 through the cycle. This dividend highlights an issue that has become more pressing during this pivotal time period, the future of the major oil and gas companies. In my mind, there is no doubt that Total offers a compelling investment proposal, and the dividend is central to that thesis. However, questions about the long-term futures of oil and gas companies have become a weight on their valuations. As an optimist, I believe the transformation in which we engage will resolve those questions, as we redefine ourselves with ambitions that satisfy the long-term needs of an evolving global society. As Elie will explain to you, the right thing 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 energy 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 are entering into a decade of transformation because the transition will need time. Today, during this presentation, we will put on the table four new elements which are comforting this strategy of transformation and that we will comment on. We upgrade our climate roadmap by setting new objectives on Scope 1 and 2 by 2030. 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 capital linked. And last but not least, we propose to anchor this new strategy in our identity, to change our name into Total Energies in one single word. This new name, Total Energies, embodies the course we have resolutely 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 emissions by 2050 or sooner, together with 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 energy in red, more energy, less emissions. It's exactly our purpose, it's exactly the challenge we face and that we will solve within Total Energies. 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 this sustainability agenda that 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 obviously began by safety. Safety is a cost value, you know it. It's a journey and you can see on this chart that this journey is progressing within the right direction when you compare The total recordable engineering rate for Total and the peers 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 our sites around the world. It's a positive outcome, even if it's tarnished by the fact that Still, we had last year one fatality. One is too much, like always. One fatality 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, in 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 six countries, and at the same time maintaining the continuity of operations, as in fact we lost not so much of millions of man-hours' worth. So again, safety is the first tone of the journey of sustainability within Total, and will maintain and will 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 the name Total Energies. It's a matter of focusing on producing and delivering different energy products, gases, renewables, electricity, 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 energy business, but also to develop renewable gas. It's to accelerate investments in low-carbon electricity, primarily from renewables, and to integrate the electricity chain from production to storage, 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 capacity 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 of production, because our ambition is clearly 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 one-third in the next decade from the equivalent of 3 million barrel 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 two pillars. The one, which again, was distinguished in the energy market in 2020, despite the crisis, 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 laid by the demand evolutions, which means that the pattern of our sales, which was 55% all, 40% gas 5% electrons last year in 2019, will become in 2030 less 30% of all products. This is a big shift. 5% of renewable fuels, 50% of natural gas, and 15% of electrons. People could think it's not accelerating enough. This requires a huge transformation during the year 2020-2030. And thanks to this evolution of ourselves, and of our production, we will reduce emissions while growing. In September, we took a strong commitment, which is that the scope-free emissions of our customers by 2030 will be lower at the worldwide basis than what we were in 2015, and that in Europe, they will decrease by 30%. 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 integrate the COVID impact, the decrease between 2020 and 2015 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 envisioned by 2030, because it means that we'll have to adapt again all of activities and growing in some direction, decreasing in particular in all businesses. Today, we are upgrading, I would say, our climate roadmap by giving you another commitment, another objective on the top one and two. the emissions coming from our operated and rolling gas facilities by 2030, the net emissions should decrease by 40% versus 2015. Until now, we had this objective of less than 40 million tonnes in absolute value of 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 million tonnes by 2015. In the meantime, we grow between 15 and 25, so we have 10 million tonnes or more to integrate from our acquisitions and startups. So there is a lot of effort there on the historic base of emissions. As you can see, if this effort is going on, and Arnaud Broillac will come back on it, and will explain to you how we intend to reach less than 40 million tons by 2025, and going beyond, going beyond in net emissions, that means that from 2030, we will integrate in the Scope 1 and 2 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 Henry will explain you how. So it's another additional target aligning for the next decade, 30% or less of scope-free European emissions for European users and 40% scope 1 and 2 from operating oil and gas facilities. All that will lead us to the carbon neutrality by 2050. If I summarize, by the way, where we are on the global roadmap that we announced in May 2020, when we announced that we were sharing the ambition to get to net zero by 2050, together with the Society for Global Business, we put three major steps to get total to net zero. The first one was COP 1 and 2. Again, the results today in 2020 is minus 15%. In the official documents, you will see minus 22, but in fact, if we correct the COVID impact, it's minus 15. On COP 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 COP 1 and 2 and 3 of the carbon intensity reduction, we will have achieved 8%, which is, again, the best performance in terms of shifting the portfolio among all our peers. But sustainability is not only a matter of climate for Total, and for Total Energies 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 probably noticed that we are the only one who did not announce any layoffs despite the crisis. And maintaining all the workforce competencies, even if we were strong on managing our costs, and Jean-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% of women in all our management bodies by 2020. The board, together with the board, we enhance this objective to 30% of women in all management bodies by 2025 within the town. It's also a matter in the governance, of course, to put sustainability and to take consideration of all environmental and social challenges 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 between this sustainability objective and the way we incentivize all the executives of the company, including the CEO. As ESG factors, we represent 25% 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 are for the first time published of SASB 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 ESG commitment and performance And I am proud to say that for all of them which are there, Total is the best core within the oil and gas sector, even if there is still a journey to be done so that we are the best core among all the corporations of 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 this sustainability and our climate ambition, not only in, I would say, carbon emissions, but also in a global approach and into a financing policy. At the board level, we have decided that from now on, all the new bond issues will be climate related. 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, the scope 1 and 2, operated emissions, 25, 2030, the scope 3, 2030, 2040, 2050. So even with long maturities, we can link them. And I think we are the first company in the world to propose that KPI 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 the Tile, somewhere you will go together with our transformation, and if we don't reach our target, we will be punished by a higher cost of debt, and you will be rewarded. So it's worth continuing to finance these investments of the Tile. I'm there. That was the first part about sustainability. And I think this introduction, I want to leave the floor to Ella 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% and 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, Total Energies. 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 of 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 underinvestment in the oil industry as a whole. Given 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. But a 10 million barrel per day gap in supply between now and 2025, that's a massive shortfall of supply to cover in just a very few number of years. 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 two 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 deconfection 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 of announcements and net zero forecasts 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, Elisabeth. Total has been following the 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 break even at around $25 per barrel. So, to some extent, we were prepared when the crisis began. As COVID virus spread 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, which allowed us to continue investing in profitable projects, support the dividend, and maintaining a strong balance sheet. We were disciplined, we were flexible, and we have not overextended. In 2020, we generated $15.7 billion 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&A. 2020 CAPEX was $13 billion versus the initial guidance around $18 billion. 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. 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 $7.2 billion includes the cash-saving decision to propose the final 2019 dividend shares, as well as the $550 million of buyback in the first quarter. Gearing excluding leases increased to 21.7% at the end of 2020. But on the right-hand side of the slide, we show that Total has the strongest financial position among the majors with the lowest gearing. That means that we were able, despite the crisis, to preserve our balance sheet strength. We reacted quickly to the crisis. Immediate action plan was taken first in March when the oil price crisis started. And it was reinforced in May when the COVID-19 demand crisis came. The objective was very clear. It was to cut outlays by about $5 billion. The cost culture is part of the group DNA. So the foundation to deliver on the action plan was already there. The action plan was implemented effectively and rapidly 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 billion, ultimately came in at a saving of $5 billion. The reduction in CAPEX by more than 25% demonstrated the group's strong discipline on investment, 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 Adarko deal. Despite the need to conserve cash, we maintain investments of $2 billion for renewable electricity as it is the foundation of our future profitable growth. On the OPEC side, We began the year with a plan to cut costs by $0.3 billion, and we increased that objective in May to $1 billion. We over-delivered with a $1.1 billion of cost reduction by year-end. I will come back with more details on the next slide. Over the past several years, we have high-graded and actively managed the portfolio to reduce the organic breakeven, which was $26 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 billion of costs across the group compared to 2019, while the initial budget set was $0.3 billion. 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 $0.5 billion through the generalization of efficient cost-cutting initiatives across affiliates and further optimization that our cost culture will continue to foster through, for example, best practice sharing. Overall, 70% of OPEX saving in 2020 are sustainable. So they came from logistics, in particular, means optimization. They came from supply chain and procurement with centralized and global procurement, delivering more competitive purchasing across the group with leveraging use of digital. They came from structural change with staff redeployments, reorganization, new practice, and more digital usage to reduce our business travel and meeting costs. They came also from operations and maintenance, who are increasingly able to monitor operations from plant platform remotely with lower costs and increased effectiveness. We are already in the next phase of efficiency improvement and cost reduction, and our digital factories is starting to deliver. Because of the strong culture of 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 enough since 2014 to $5.1 per barrel in 2020, best in class, once again, among the majors, and we are targeting a further reduction to five drop 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 billion for CAPEX. The action plan led to a $5 billion CAPEX saving versus this original budget. with the capex at $13 billion in 2020. On the right, we show you where the $5 billion of 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 $1.5 billion of short-cycle E&P spending, essentially choosing to sell some projects for better times. We see the 2021 environment as uncertain, 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 billion. Continuing to invest in profitable projects to implement the growth transformation with 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 should the oil and gas environment strengthen. There is more differentiation among the majors that we have seen for many years and dividend policies have become constructed as well. The group fundamentals are strong, high-quality, low-break-even assets that we put together over the last five years with more than 30% rotation of the portfolio, cash break-even around 25% per barrel, strong balance sheets. 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 free interim dividends for the first three quarters 2020 has been maintained at €0.66 per share, and a distribution of the final dividends equal to the previous three quarters will 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. We believe our shareholders trust us as a major oil company to weather crises 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 a demonstration that our shareholder supports our strategy in terms of dividend policy. Finally, a recurrent site to benchmark the 2020 year performance against our peers. The 2020 environment was one of the most challenging years the industry has ever faced, but thanks to our resilience, we posted a $4.1 billion of adjusted net income, and a $15.7 billion of cash flow from operation in 2020. Once again, in absolute terms, 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 billion, mostly taken in mid-year, in June, and concentrated mainly on our Canadian oil stance 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 contexts, this return on equity was best in class. Total has performed well compared to its peers for many years, and as the peer group continues to become more differentiated 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.

So thank you, Jean-Pierre and Eleu, for this presentation of our results and our resilience. I think we have the foundation and now I would like to... Again, I repeat the pillars of the foundation, which is this motto, HSC, delivery, cost and cash, that are well, very well, and again, our teams have demonstrated in 2020 that when we ask them to act, they deliver, which is, of course, a great comfort to engage on the transformation journey in which we have decided to go. But we will always keep in mind that we need to deliver and that it's because we are good and even excellent on our short-term results, but we have the right to have this bold 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 information 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 an annex to the presentation, many details and geographies of all our assets. Not everything, because we need to keep some 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 is to raise the company from low multipole 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 multipole, but if we get 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 gross installed capacity, which is 7 gigawatts by end of 2020, which will go to 10 gigawatts by 2021. This represents, by the way, and we speak about growth capacity because this represents a growth capex of $5 billion in 2021. I will come back on it, but you know that we finance by equity only 30% of it, so $1.5 billion. And you will make the math with me after that. The most important is that all the projects that we sanction have an objective of more than 10% of equity RR. The other part of this slide is very important. In September, we told you that we were targeting 35 gigawatts by 2025. By that time, the renewable energy teams were not so little unhappy because they had only 25 gigawatts in their hands, but we were trusting them. And in fact, the last six 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, a pivoting year in terms of renewables, because we have demonstrated to ourselves that we were able to really capture early-stage opportunities at a low entry cost. There is no way to acquire existing assets because of the multiples I just mentioned. But then another way to grow, which is, of course, organically from all teams, but also to capture and to find agreements with some other development teams, which are early stage, which means they have the lands, they have 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 of shore wind and Qatar. Since the end of the year, beginning of the year, we have accelerated another 10 gigawatts in 2021. We will not do that every month, be sure. So we have maybe already reached the objective of the year. No, we'll continue to work, but with four new steps. A big new step in the U.S., solar in the U.S., at the utility-scale projects with two deals for 4 gigawatts. So that's important because it was one of the utility-scale markets for renewables, out of which we are not there. Now we have these projects that we need to deliver. One gigawatt, by the way, will be used in order to green the electricity of all our downstream plants, refineries, and all petrochemical plants. We have also done a bold move by acquiring 20% of Adani Green Energy. You know that in January, for $2 billion, you know that we have established two, three years ago a partnership with the Adani Group in gas, LNG, city gas. We have made, at the beginning of 2020, a first step in a GV with them in solar of three gigawatts capacity, but we share some assets which are now into production. But we have also decided that ADENIC Green Energy themselves accelerated a lot in 2020. They have now a portfolio of almost 20 gigawatts of contracted capacity. They even increased it, I think, last week by acquiring rights to another 4 gigawatts. They have great ambitions. It's a great partner. We embarked there. India is a very large market, several hundreds 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 the number one solar developer in the world. And I think we are entering the same story that we've done in Russia 10 years ago with Novatec and the LNG development of Yamaha. So it's an investment. You know as well that we paid $2 billion, but the shares today have a value of $4. So I think 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, with Sea Green 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 team financed them I've done well. We issue an hybrid bond to finance the renewable. Some people are asking me, but can you be competitive with renewables if you finance this renewable with a capital which is remunerated at 7%? We have demonstrated with this hybrid bond that we can finance a renewable for a coupon of 1.9%, which is a very highly competitive cost of capital. So the renewable business as a total has different fit. But I would say, reaffirm today, that the priority, of course, is to develop utility-scale portfolios. You hear different names, Total Solar International, Total Quadrant, Total Irlen, Adadi 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 a solar developer in Europe, the U.S. and the Middle East. We're working also with Adelie Green in India, which owns, at the end of 2020, 3.3 gigawatts. Total quadrant is also 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, which has 1.9 gigawatts of gross capacity. And we have the option to acquire it 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 GVs, mainly because of the magnitude of these projects We have several GVs, 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 Distributed Generation, dealing mainly with corporate, I mean, making corporate PPA, small ones, in order to put in place or to offer to corporations some solar, I would say, renewable capacities on their roof or small plants in order to go with them in their own climate neutrality journey. We have a GV with Envision in China. And of course we own 52% on SunPower. SunPower who has been reconcentrated in 2020, mainly on the residential digital business. And it seems that the stock market appreciates a lot this, I would say, refocusing of SunPower on this market. So that's the different vehicles we have. When we look to the portfolio more in detail, and you have plenty of information 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. 99% of these operations are covered by BPA. So almost all of it, 99.8% in fact. And we have BPA duration of 18 years and an average BPA price on these operational assets of more than $110 per megawatt. In construction, it's 5 gigawatts, free of net capacity, 90% covered by PPA. The remaining part is a share, 30% share of the Sea Green project that we have in UK offshore that we intend to go for CFD on next round. 20 years of PPA duration there again. An average price for this Assets in construction are $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 state PPA or corporate PPAs because we begin to work on this part. And the average PPA price for these new assets coming in stream in the next three, four years is $45 per megawatt. Beyond it, we have already some projects, in particular the offshore wind projects. projects that we mentioned in Korea, in UK, like the one we were awarded this week of the round four, 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 35 gigawatts of all 120 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 to take a point there because people are 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 will come quickly, some like offshore wind are a little later. But we try to understand if we have 10 gigawatts of projects, which will start, how much of it will be the payback of this 10 gigawatts, having a mix of solar, offshore wind, solar in Spain, solar in India, so geographies. As you know, we invest 30% in equity. That means that we put 30% 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 billion dollars of gross capex, in fact, equity will be 1.5 and non-recourse debt will be, let's say, 3.5. And the 1.5 are going into our investments. The 3.5 are on the assets themselves. Then we will clearly develop by ourselves the projects. This is why this growth capacity is important, because this is the effort by Total Support during the development phase. And when the project is developed at the production startup, at COD, like I said, 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 a 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, the risking part 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. Beauty of it is that you accelerate cash flows, we increase returns. We gave you the figures of the five farm downs we have executed in our France and Japanese portfolio in the last three years until the month of January. We sold 550 megawatts for $1.51 billion of EVs. which is these 550 megawatts. If you take the cost of, let's say, $500 million, you see that the multiplicator effect is five times two. So, obviously, this is important. It's accelerating cash flows. It's increasing returns. And you can see on the chart that after five 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 life model that we are developing. So it's a question of de-risking the portfolio, getting the most by bearing again the investment until the production started. And then the PPA will continue for 15 to 20 years, like I said before. 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 flows for the long term for shareholders in this renewable business. And this is a way to reach this 10% of return target on equities. 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 reserves and cash flows. The net production was last year at 14 terawatt-hour, which increased by 40% to 20 terawatt-hour from renewables, as well from gas-fired power plants, as we have acquired some in Spain. But the future to 2030 is clearly that the renewables will have the lion's share of our electricity production, as we explained to you last September. We introduced today another metric, a new metric, about this electricity business. You complained that you cannot understand where exactly is the result, so you will report. We will report, in fact, regularly, quarterly, on this metric, which is what we call a proportional EBITDA, of this electricity business, which includes, in fact, the proportional share of equity affiliates that we have, as we have this divestment policy. It's important because this is a cash flow which will help, which will, in fact, finance the cost of the debts 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 million to something like $800 million. Most of the growth coming with renewable business. And we are still, we are only at 10 gigawatts of installed capacity, 7 gigawatts a day, 10 gigawatts at the end of the year, 20 terawatt hour. I remind you that the target for total is to reach more than 100 terawatt hour by 2030. So it's five 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 business at scale. Just a last word before I move to LNG, sales. We have now 8 million customers in France, in Spain and Belgium. We delivered last year 50 terawatt hour of electricity to our customers. And I think we have also some few B2B customers in the UK. The intent being to concentrate our efforts on these countries for the coming years. So, the second pillar of the strategy is LNG. LNG, there, you know that it's a strong foot of our cash regeneration. By the way, 2020 demonstrated as well a resilience. We've seen, of course, a brand change. lost something like 30%, the NREAB lost itself 16%, the Asian price were at the bottom. And despite that, the cash flow generation from LNG, 3.2 billion, 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 million tons of cell last year, and we expect 10% more for 2021. So we benefited, of course, from the startup of Cameroon 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 two flagship projects, In Russia, Arctic 2, which is 45% progress on Train 1 by end of 2020. And Mozambique LNG, which is 21% 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 will 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 improved. and we have a clear plan securing an area of at least 25 kilometers around the project itself in order to be able to resume the work, which is our intent. We are contractors, but my highest priority is the security, not only of my staff, but fundamentally of the staff of all our partners on the ground in Mozambique. In 2020, we have also maintained our commitment to LNG by sanctioning, like Ella said, The two only projects we have sanctioned worldwide, one is 27 in Nigeria, and the other one, and we are happy to participate to that, is the Costa Azul project that SEMPRA is leading on the Pacific coast of Mexico. It's a very well-located project. closer to Asian market than the Gulf Coast. Obviously, you avoid the bottleneck of the Panama Channel. And it's a low-cost project because it's fundamentally the reversal of a regas plant, where we benefit from all the infrastructures, JTEs have already been invested, and it will be sourced from low-cost permanent gas. So that's interesting. You can notice that on this slide, systematically, we put to you, we put the indication of the carbon intensity. And it's linked to the climate ambition that we delivered in May. You know, we said that we want the allocation of capital should be consistent. You don't have in mind, probably, but let's say that the historic LNG plants have a carbon intensity generally around 40 kilo per CO2 per barrel or more, 40 to 50. So you can see that the last plants on which we invest, like Mozambique, on which the total teams have done some amendments to the plants which we inherited from Azarco, 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 40 watt per year, so it's 12%. It can 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 Franroche Blougaz 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 US 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 see clearly not only in the US but also in Europe, we think that gas mobility will become more biogas mobility because everybody is engaged on both sides in the Atlantic towards the carbon neutrality. So Clean Energy wants to integrate the upstream, and we propose them to put in place a GV between total, we have more financial capacities, and 50-50 with Clean Energy in order to develop a renewable gas production in the U.S. together with bio-CNG, bio-LNG distribution capacities. And the last part of our renewable gas roadmap is hydrogen. There again, a first project, pragmatic one. It's not big. It's a 14 megawatt electrolyzer, but it's an integrated project with a solar farm, 100 megawatts. And more importantly, this project, we have to deliver firm green hydrogen to Lamed by a refinery. So how do we store the hydrogen? How do we deliver the firm? It's a project which is worth around 200 million euros on which, of course, we'll need to support from 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 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, by the way, just to illustrate it, we delivered to you a figure which you don't see normally, which is the oil E&P cash flow. I want to pay tribute to all our colleagues who are continuing to maintain operations on oil fields around the world. 7.6 billion is half of the group's CFFO. If you are adding to that, The downstream CFFO, which represents almost $5 billion, 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 renewables and power, clearly we take part of this cash flow. But without this cash flow, there is no way to make the transition into which we are engaged. So it's why we have a strategy where we want to continue to maintain no more growing oil business, but to maintain all these activities and to be good at it, even excellent. The excellent is illustrated on the right side. Again, when we took the upstream adjusted net operating income, upstream means for us ENP and LNG because it's the 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 4 billion and is larger, much larger, I can say, and 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 of the peer group i'm very proud that we are able to deliver and again like 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 break-even because there is no other way to deliver value in this business. And the last five years have been, if there's one lesson, it's the volatility of oil price. So it's fundamental that when we make choices for the future, low technical cost, low break even, 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 the quota policy, let's be clear. Without any quota, it would have been, of course, a nightmare. We've seen the discipline of OPEC and OPEC+, I would say, not only OPEC countries, OPEC+, and, of course, of Saudi Arabia in particular, 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 OECD inventories, 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 quotas are being relaxed smoothly and Libya came back to a more normal production level. And you know that we have invested in some fields in Libya, like Wuhan. So it will compensate the decline. There is no surprise there. We know that we knew that 2021 and 2022, we don't have many projects coming on stream. will come from 2023, and I confirm today, because we didn't impair any 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 3.3, 3.4 million variables 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. In fact, at the end of the period, so I confirmed 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. I have 18 years of reserves, which means that all these assets have more or less a 20-year visibility and not five years or zero years. So it's quite a long, both type of assets have a clear visibility. We have 60% of reserve are gas, consistent with the strategy, I would say. A word about the renewal of reserve this year. You have there on the slide the 127% of renewable reserve replacement rates on the three-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 debunk 300 million barrels, more or less, of oil sands, 48 this year. of the proved reserves, which means that the yearly reserve replacement rate will be lower than 100%, about 70%. But again, this is more regulatory de-booking because these proved reserves of 40 will come back as proved reserves when the 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 proof than probable? Reserves, which are important. It's a figure we look at because it makes sense of a global portfolio. Last year was at 19, so we reduced from 19 to 18. Why? Because there, that's true, but we have debunked voluntarily In line with our climate ambitions, the oil sands go beyond 2050, as we announced in July. The implements were done fundamentally, $6 or $7 billion were done out of the 10 on these assets, which were the only stranded assets that when we made the review at the board level, we identified within our portfolio. And so this has one year, we lost one year, but again, it's to be fully consistent in our accountings with... the climate ambition to carbon neutrality by 2050. So the projects, we take FIDs. I told you the consistency with the climate ambition for us is driven by two fundamental elements that we look at the board level. Low technical costs, low break-even, 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 to be lower than the average of the portfolio. The average of the portfolio is 20 kilograms per CO2 per barrel, which is quite low compared to the average of the industry. It's even a little lower than that. The average of the industry is higher, more than 25 kilograms. So we have a good portfolio. But these two projects, you can see, will be at 15 in Brazil and 13 in Uganda. So from this perspective, in terms of carbon emissions, They are not deteriorating, they are even contributing to lower 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 Meru 1, 2, 3, this famous Libra field in which we entered. So it's a profitable project, profitable projects. On 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 all the files and taking into consideration these elements to approve the project, the commitment of the project. And we have taken one decision in line with policy of transparency, we will publish very soon. all the third party audits which have taken place around these projects which have been ordered by us but done by third parties on biodiversity and on the resettlement of the indigenous 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 parts of the investment because we took 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 a clear, to publish the report, explain the action plans which are being implemented in order to put in action the various recommendations. 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 commitments that we want the company to respect. So this project, I know that we have questions. I think Arno is coming soon to award the EPC contract. So it's this quarter, end of the quarter, let's say, to put all paper play, because then we need to go to the approvals by the partner of the authorities. But everybody is working hard to finalize this project. Just last negotiation, of course, with some contractors to put a little pressure. A word about exploration, because it's true that... in line as well with our climate ambition. We have restricted our exploration budget to $800 million. 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 development projects. And when we look to offshore, deep offshore, in particular giant fields. We are We are, I don't know if we are lucky, our teams are good, I would say it in that way. Our exploration team, you know, last year we entered into a Suriname license, and since we entered, we made the four major discoveries in the Block 58 together with Apache. We became operator of this block since January. We will concentrate a lot of effort in Earth budget, exploration appraisal budget, to this basin of Suriname and Guyana. We are together, we are just currently drilling a well together with Exxon on the Kenya land license in Kriana. Nine wells, the objective including some important appraisal wells The objective being for us to be able to define, before year end 2021, a first oil development in order to produce oil by 2025 on the block 58. So, a lot of activities in that part of the world, growing people from Total discovering this part, these regions. and a lot of commitment, but obviously we have potentially in our hands a new jewel in terms of oil for the group. Then moving to oil, the downstream. We know we had the tradition since 2015 that the downstream was delivering more than $6 billion 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, the refining margin, as you can see, had an impact of almost $1.2 billion on the cash flow, which is very consistent with all the metrics. You've seen that... Instead of $30 per ton, and I think last year we were even a little more, we went down to $11 per ton, which I've never seen that. We'll show you a graph just after. Refining margins are compressed. They are compressed because, of course, lack of demand. 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, sometimes negative. And in particular as well, as there is no more jet fuel, all the jet fuel products are being poured within the distillates, which crush the distillate margin as well. So the 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 other business in the downstream, petrochemicals have done well, very resilient. Trading, as of therefore, we mentioned in Q2, Another performance of $500 million, which has been maintained for the year, maybe not being repeatable every year. Marketing and services as a selling contribution. And so for 2021, I would say with a comeback of better demand, we could expect more than $5 billion. Maybe we are prudent, but, you know, it's also very important to plan prudently with these uncertainties. So just a word about refining business. You can see on the left of low have been the margins. It's called the red line. You compare it of what we experienced in the last four years, 16, 19. So you can see that it has been a disaster since April, fairly linked to the COVID. Of course, our teams have put, I mean, like the title says, dynamic adaptation on the short term with a COVID action plan, reducing their cash spends, $500 million, reducing rents, which is not very good for reserves because, of course, you have to fix costs to cover, but there was no choice. And even we have done a voluntary shutdown of Donge at the end of 2020, 200,000 bulls 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 oil products. We have also acted in 2020, a lot of work to begin to adapt our European footprint to the structural demand decline. We are selling the linseal refinery and the closing of the sale 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 a zero-code platform, which means renewable fuels and bioplastics. in particular to answer renewable fuels for the aviation, I would say, carbon, lowering carbon footprint of the aviation as a liquid. And 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. So all in all, you can see that the retail business has done very well. Almost same cash flow from delivering van last year. 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 we appreciate it doesn't have the same volatility, obviously, as the rest of the portfolio. Thank you. 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 being prudent, speaking about $40, $50. At 2025, we put also $60 because Heller explained to you why we believe strongly. But with less investment in all these oil businesses, at the end, at a certain point, I'm convinced that we will have suddenly, because the demand is not diminishing except the COVID impact, so quickly that we will face a supply crunch. We could push the price high. It's a matter of when the market will begin to anticipate, by the way, 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 billion of cash flows coming from all the segments, coming from E&P, $1 billion, in particular projects like Brazil, Uganda, I mentioned, coming from the downstream because... It will come back, you know, it will not remain at these levels, and M&S as well as a growth plan, and coming as well from energy and from renewables as we gave the figures. The sensitivity for this year, $10 per barrel, gives us $3.2 billion per barrel. And cash flow allocation, no surprise as well. These slides, you know it. 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 prudently at 12 billion. If we could have one flexibility, but the flexibility might be 1 billion, not more, to be in line with the 13, 16 billion we mentioned to you in September as a guideline. It's renewables and power will represent more than 20%. And I would say consider it's a new normal for future capital investments. The dividend clearly, the board has demonstrated its strong commitment to support the dividend through the cycle. So I would say in this environment, we maintain the 66%. your sense of Euro per quarter, and you can expect that it should be the same for the coming year, through the cycle, and also when the price is going up, not overreacting both ways. And so the balance, because the priority for us is flexibility on capital investment and balance sheet, we have managed to limit the increase of the gearing to 21.7%, which is But it's about the 20% we have as a target, even we'd like to have 15%. So if we have cash flows, extra cash flows, priority will be to allocate that to deliver the company again. Because again, the big lesson for the last five years is huge volatility. Sure, bye-bye. 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 total energies. Of course, this is, for me, it's probably 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 a company. It was done, I think, a very long time ago when CFP became total. Then it was done because of the merger of in 2000, just interim way, you know, total final, total final, total final, total. So we have decided that because we really think at the board level, but we want to incur these transformation in our identity. And I think it's a very strong message. It's not that 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. And we want to do it because we strongly believe that it's the best way to re-establish the long-term valuation of the portfolio, including the 18 years I mentioned of reserves of oil and gas. We want to say to the market, 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 four key messages, which is, I think, at the core of these total energies that we will build together. Thank you.

Thank you, ladies and gentlemen. We'll now begin the question and answer session. As a reminder, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Please kindly mute any audio sources while asking a question. If you wish to cancel your request, please press the pound as a hash key. Once again, it's star 1 if you wish to ask a question. We have the first questions coming from the line of Oswald Clint from Bernstein. Please ask your question.

Oh, 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 $0.1 billion of cash flow in 2019 and how that might get up to $1.5 billion, I think, by 2025. So 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 investors? kind of 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, you know, 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 by companies like EDP, who spin out another little part of their business at 17%, and suddenly they're both 20 billion euro market caps. So the sum of the parts has clearly worked in some of these names. So I just wanted to get your thoughts on that, please.

Yeah.

okay um first question um i mean uh i'm not sure it's easy to do 1.5 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 uh by the way i gave me the opportunity to to mention because I should have done it or I could have done it at the end, but Philippe Sauquet will retire in one month. I see in front of me, he's not around the table, but he will be next time, Stéphane Michel. No, it's nothing to see. He will retire just because he has the age, Philippe. But Philippe has led the capacity to, I would say, develop all this portfolio. Now Stéphane will have to execute it. He delivers 1.5 billion. 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 $250 million if I was looking to give you an update. It was not in the presentation in terms of cash flow direct to total. So the $100 million became $250 million. So again, the 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 100 billion euros, and EDP. 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 to spin up the energies, you know, and to come back again Total. Otherwise, I would 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 companies are more valorized on their potential of growth rather than the cash flow they deliver, probably people will ask us more. But I think the fundamental idea is that we want to give the same clarity and a lot of what these companies are giving you in order to make this valorization. It could take time, 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, you know, the last – what I observed last round of UK offshore wind for me gives me comfort. When you see who were awarded during last week these 1.5 gigawatt contracts, we said 8 gigawatts, these are big players. So I strongly believe because of the capital intensity of all this electricity and renewable business, but there has always been a time, which is good, to have people. We were quicker than others. We invented it. and which are the reward. And then now the time to scale up all these business. And to scale up, you need a lot of capital. And then the big players will 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 Bokataria from RBC. Please ask your question.

Hi. Thanks for taking my questions. A couple, please. Looking at 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 or 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 10 times over 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 auctions, to be honest. Last year we win in Qatar and this year in the UK. And it's not us, but Adani Green has won auctions in India, but it was not the town. 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% RR 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 to deliver what we want. In fact, what we've done are more, I would say, direct negotiations. You know, and all what we mentioned, Anwar GV in the US, it's a direct discussion with them because we have a partnership with the Sanchez portfolio, which 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 having people on the ground, identifying some potential partnerships, bringing our value proposal, which means financial capacities, commercial capacity, attractiveness. When you offer some PPAs, corporate PPAs, you can convince people. The Adani deal is not an auction. Honestly, if we paid $2 billion to get the 20%, it's because we have developed a fundamental, strong partnership with any group. 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, but I will not say that to Stéphane Michel, who will take the job because he will believe he has to rest. It's up to him to go on the same momentum. So doing deals, again, auctions is not the best way because it's very complicated, like in a stream, by the way, like in Olingas. 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, a credible partner. including, by the way, attracting contractors. You know, Chinese contractors knocking to our door because they want and they give us better costs 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 capex in this field, we are among 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 at least two or three opportunities that we have decided not to follow because they were too expensive before we went on the ones we have selected. 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 it was a long journey to make a lot of efforts of everybody, SunPower, shareholders, total, in order to make this 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 occurred. Sunpower is clearly benefiting for a better, 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... These new ways, like the games of 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 Sun Tower 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-up. De La Vie from Goldman Sachs. Please answer 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're just exiting a deep recession. You're prioritizing financial de-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 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 industry, transport, heating, power, especially in a lot of emerging markets. But there is a rising demand. 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, two 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 metric. It depends, of course, on the level of the code 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 others 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 I read your papers. I know Goldman is quite positive, and I'm happy that you are. And vaccines are being spread, but not all over the world. We 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 when it will be the time, I will answer more precisely to the question. But obviously, my view is that supporting the dividend through cycles is fundamental 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 that we have to return more to shareholders who have to be – of course, rewarded for their patience. Decarbonization gas as a key role. Yes, that's true. It's interesting what you said, but you know there is hydrogen, and you speak about blue hydrogen. It's clear that when you think to hydrogen at the big scale, there are two ways to do it. Either you do very big solar farms in the middle of Saudi Arabia or Qatar or Morocco or very big, and you have a very low cost 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 that 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 colorblind, I would say. 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 can find these large CO2. I think that Novatec 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 hydrogen in the future is probably like this one. Remember the story in LNG 30, 40 years ago, We were a pioneer within Total by developing energy in Qatar, in Indonesia. But we find to do that some Japanese customers. We have customers ready to pay a certain level in order to develop this energy 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 the 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 a journey, but I see that for me, and your question is a good question in terms of addressing what could become a relay of our position where we are today a strong position developing energy because we have large gas resources 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.

We have the next question coming from the line of Lydia Rainford from Barclays. Please answer the question.

Thanks, and good afternoon too, if I could. Patrick, first of all, what happens to the CapEx budget at higher prices in terms of the oil price? Obviously, it gives you a little bit more flexibility, but does extra spend go into the renewable space, or does it go into the upstream to capture some of that potential uplift in prices? And then secondly, just in terms of the cost of decarbonisation and the work that you're doing in terms of bringing forward some of the emissions reduction of 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, how we can lower our emissions. And you will see that we find a lot of tons with a very low cost, in fact, which were not just a question of concentration. So you will have to be patient on the second one, and Arnaud will answer in half an hour for his presentation. On the first one, let me clear. I think that... Again, the 12 billion is a good level. We could really go to 13, maybe. And there are two ideas. One, of course, we have some flexibility. We have some flexible short cycle capex, which have been stopped last year, in 2020, in the NP, which are mainly infill wells, on which we take a little time, so we cannot reactivate that immediately because we need to remobilize our rigs and things like that. But it might be done. And so that's an idea because these providing a short cycle means payback for two years. So if we have a vision that the price could remain at a good level, then it's an opportunity. 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 there. And when you see that Saudi Arabia has decided by itself to cut $1 billion, it means that I think they see some fragility in the market. So don't become too short-sighted, too short-term. And too short-termism should not dominate our decision. Then, when you evolve, it's possible, but you need to have opportunities to do that. And again, we have... It's a matter of maturing opportunities and... It's not because I decide to spend $1 billion, but I will spend $1 billion. It doesn't work like that. Opportunities need to be profitable to reach the target, so there is a maturity of the portfolio. So, again, consider that in 2021, it might be $12 billion, it might be $13 billion, but we'll see. Let's stay on the $12 billion, which is, again, my priority is first to come back to strengthen the balance sheet.

We have the next questions 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 upon your potential participation, our 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 biomethane, and you're involved in all three different technologies. As it relates to heavy-duty transport, which technology are you the most excited about? Thank you.

answering of the excitation on technology for transport maybe uh and the syrian movie question is you know in 20 by 2025 i think it's quite minimum it's something like potentially 20 30 000 miles per day so it's not important uganda is more important it's 100 000 miles per day it's why we because we have a large stake in the projects and for by the way it's a It's why we are working hard to launch Uganda, and we are very near this FID now. And before I let the time to Ella to think, and maybe, by the way, Alexei, you can compliment if you want, Ella. LNG, Qatar, Ice Qatar, yeah. I don't know. You know better than me what are the entries, because I don't know. I'm waiting to see the terms. I think that Qatar is moving forward. They have announced that they have awarded the EPC, which, by the way, is good, because part of the first approach they've done one 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 sadal kaby that ms recently that he intends to bring partners I think fundamentally what Qatar will ask is some off-take. Because now in LNG, what happened, we also know that... And so we'll see what level of commitment and off-take different players will take. So for me, at the end, it's a matter of risk and reward. I mean, we know what they are expecting, and then we'll see the rewards, if there is a good balance. will 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 Sadiq Khabib thinks exactly like me it's a question of risk and rewards and There are plenty of good advantages in Qatar, which in particular are the cost of production and the cost of energy 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?

Yes, Thomas, I think the answer is we're excited about everything, and then we have to keep thinking. 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 two 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, you know, we will all be seeing electrical trucks going forward, not immediately. So it's also a question of maturity and timeline. And then, of course, you can combine a little bit of everything by doing e-fuels. So I would say at this stage, as you pointed out, we are involved in the three 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 EVUT, I think the volume of biogas might not be sufficient. 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. They might decide for themselves. So we are there fundamentally to be able to provide energy products. at the 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 Ella is right. At this point, we have to be ready and to understand for which of these fuels 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 policymakers.

Okay.

Our next questions come from the line of Irene Imona from the city general. Please ask your question.

Thank you. Good afternoon. I actually have three questions, if I may. Firstly, a results question. In the fourth quarter, the EMP tax rate was very low, I presume due to pricing. With Brent back to a more normal $50, $55 this year, What can we expect the upstream tax might be this year? Secondly, Patrick, you target 30% of all the management bodies, a total to be women by 2025. What was that proportion in 2020, please? And my third question was that you raised today the portion of capital expenditure on renewables to over 10% you show how by 2030 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 2030 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 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 at 20%, in fact, today in all the management committees. I ask all my colleagues to have at least two women out of ten, as we say, and we intend to go from two to three, I mean, fundamentally. And I think it's an important move. I remind you that five years ago there was no women at the executive committee. Today I'm happy and lucky to be here. surrounded by . 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 are 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 points 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, We have today around 33% of women. So the idea is fundamentally, and we continue to increase it, but we think we should go to 45 because it's a matter of recruitment. We have a lot of technical positions where we find less women. So the idea is by 2025 to have, in fact, at the management bodies, 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 say. Maybe then we'll go from 30 to 35, but then it's a matter of two figures. It's one person, 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.

Yes, ENP tax rate. Yes, for the fourth quarter. the ENP 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 a Brent around 40 dollars per barrel, you have a tax rate at 29%. So it's fully in line with the guidance we gave, 30% at 40 dollars per barrel. And if you remind the 2019 figures, so in an environment around 60 dollars per barrel, you have an ENP tax rate around 40%.

And so you can think 35 or 50. Exactly. 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 perfect. But at the end of the day, when I look to the average on the year, we are always the same type of guideline. So it works. So you have a precise answer for your model. 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 questions to all my 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 is asking. So to tell you the truth, yes, I think by 10 term, and I hope it will be cash neutral by 2030, because again, that's true that the more we invest, the more... The gap increased, but we said $1.5 billion by 2025. By that time, let's say, we'll spend something like $3 billion or, I don't know, figures. So by 2030, 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, you know the cash neutrality of the investments of Novatec will be reached this year, 10, 11, 12 years after? Because we have to invest in energy, it's always long cycles. It's true as well, when I remember having made a lot of works on Angola, before we obtained the cash neutrality in Angola, which is today one, or we say of the cash flow of the company, it took more than 10 years. It took 15, 20 years before we really obtained. So energy requests a lot of investment because you continue to be willing to grow. So growing means investment. 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 discussion I had with Gerard Tamadani about the future of HER. because obviously I was ready to take 20%, but I want my money back, like the UK Prime Minister said one day to Europe, you know. 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 JP Morgan. Please go ahead.

Thank you, and thank you for a very comprehensive presentation. Two questions, if I may. First, I really appreciate the detail on the path to scaling up returns in the low-carbon business. 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, but you clearly seem to be leading the way here, Patrick. Given there seems to be this dislocation valuation relative to pure plays in the low-carbon business and 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, whether it's financials, carbon intensity in the portfolio, not just a holistic target? So probably more than two questions there. Apologies.

So the first question I think I 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 change our name to TotalEnergies, not to suddenly IPO the energies. I mean, I want to keep the energies within the company. I think it's a strong move by the board. which means that we think that it's a question of patience, as I just said, that the larger the stake will be in our portfolios, the better it will be understood and it will be valorized. So that's clear that we are willing to invent a new category of energy company. 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 four in the UK, maybe they 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. We'll see. Again, I think the signal we send you today by changing the name of the company to Total Energies 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 renewable and electricity is full part of the business model. And so I don't intend to change the business model every morning because I wake up and I'm afraid about the valuation of the company. Low 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 intend to give you that every quarter for what I said. If we need to give more, I'm not sure. There was a debate. I've seen that one competitor is giving even the PPA by contract. I'm not sure I'm willing to say 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. Our interest, it will 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 give you 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 gigawatts 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 to welcome your suggestion in the coming weeks.

Thank you.

Our next question is from the line of Jason Kenny 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 Total 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 2050. 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 2030, 2035 from renewables? That's my first question, really. And the second maybe to Hella. Could you envisage a macro scenario where we have 80 million barrels a day of demand for oil only in 2025, so no more than 80 million barrels a day of demand? And what kind of oil price do you think that would entail if we were to see that demand? Obviously, there's two sides to the equation here. And then one more, if I may, and it's on a 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 electrolysis.

So the first answer is 15-20% by 2030-2035, I would say, fundamentally. 15-20%, I think it's already at this horizon. The second question I will ask Elle. I'm sure she has that scenario. If she has that scenario, I think she will be fired, in fact, tomorrow morning. So I'm just looking at Elle.

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 will be tons of other issues. If oil demand drops to that level, I think we'll have, you know, the world will be undergoing, you know, be on the wake of disappearing. So 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 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 one, but two, three pandemics on the road, that we think that we are all locked down, that there is nothing, nobody is moving anymore, you know, which I hope not for all of us, but I mean, you know, we've seen something incredible in 2020 or 2020, but I hope it will not happen. But by the way, let me be clear, the oil price is not only given by demand and supply, you know, I don't know if you noticed today, today, honestly, at $55, the demand is not yet very well, very high, the inventories are high, because we have some players in the market which have been quite efficient, which discipline, I would say, in terms of which who are clearly willing, and there is probably a debate, is it 45, is it 50, is it 60, but who are targeting to get $50, I would say. And it's back to what is a competition between all in Russia, all in Saudi Arabia, and all in the shallow in the U.S., But so my vision is that today you have, because these economies of these countries are not able to transition in five years. So they absolutely need a certain level of oil price. And they would prefer to diminish their production by letting the oil price crashing to I don't know which level. I mean, for me, you have there, and again, the oil demand, I know that everybody is very, today, thinking to, the word transition means something. It means that the world today, let's be clear, our world is working because we have oil. And we should not forget it, I mean. 80% of the world economy is carbonized. And we will not shift it just because we are winning 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 discipline, not because of supply and demand.

I was probably thinking more about efficiency gains and substitution effects where other fuels switch in to take out some of the oil demand, the oil pricing.

We talked 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, you know, 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 five years. even by being super, super aggressive. I didn't catch your last question, please. Can you?

Yeah, I mean, it was basically cutting out the middleman of the electrolyzer and just going straight from photoelectrocatalysis on solar panels directly produced in hydrogen.

That's still very early stage, I think.

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.

Yeah, well, it's perfectly right, you know, to produce the hydrogen. There are two 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. Or you always have 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 two molecules is a real challenge. So I don't think that we will see photocatalysis. High temperature electrolysis is much more promising to me. Sorry to be boring.

No, no, but you know, I think Jason is willing to see if he wants to invest in which company. So high-temperature technology. As the hydrogen companies are just becoming crazy in terms of valuation, you know, everybody is looking for the next golden mine. You know, where is the next golden mine? So, clear. Next question.

The next questions come from from Scotiabank. Please ask your question.

On carbon sequestration, you haven't mentioned anything on that. That seems to be a big difference 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 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 billion for this For this year, $13 billion to $16 billion for the next several years. Is there an organic cap X estimate that you can share? Out of that net investment, what the organic cap X 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, 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 ENP president, to speak about carbon sequestration because I have the feeling that he's best positioned to speak about it rather than Philip in charge of renewables. I don't know why, but carbon sequestration is obviously for me something in particular I've been public. You know, Total has invested in Northern Lights, but I consider that having some positions in the North Sea with depleted cells, it might be a future for us. Is it a business? That's more a question. 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 this CO2 if we want to develop blue hydrogen? But Arnaud will come back on it and he will give you a flow. I don't have the feeling, to be honest, it will be a major business. It's absolutely a necessity that we manage that. But again, and it will, of course, be highly dependent on CO2 pricing to make that technology to become a business. But Arnaud will develop it in his presentation just after. The organic capex, I don't know if I have the right to disclose it. I think it depends. No, I don't disclose it. No, it's not. It's a matter, it's a flexibility we keep around these, but the organic, I can just tell you that the organic capex in 2020 was $10 billion. So that you can, you will see it in our accounts, so I can reveal something it is in the accounts. But again, and then the way we speak, when we look to net investments, but of course, one difficulty we faced in 2020 When the oil price is low, the capacity to divest from assets is not so strong or you have to lose some value. We are not ready to lose value. And so there is acquisition, but there is 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 2020 around 10 billion is a good figure. Thank you. It's back to my answer also to show cycle capex, which is a way to have some flexible organic capex, I would say.

The next question comes from the line of Martin Rapps. Please answer your question.

Yeah. Hi. Good afternoon. I've got two, if I may. First of all, the ESU bonds, so the bonds linked to climate KPIs, 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 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, yeah, not something that gets an awful lot of attention these days, but I was wondering what your outlook is for your European refining portfolio and what 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 a refinery that is closed. Donge has been just temporarily shut down to face the low margins. But we never announced that we are closing Dange. No way. So maybe I was not clear. The one we announced that we are really closing in terms of the refinery is Grand Puy, like Lamed. These ones will never come back as refining capacity, as all-product capacity. When we did, too, that, I would say, conjectural decision to... shutdown launch, it was clearly announced as a temporary shutdown because to wait for better margins. And I think Total has done a lot in its portfolio in terms of restructuring since the last 10 years. So other players around Europe should also take their responsibilities. Jean-Pierre will tell you everything about these ESG bonds.

Yes, the idea 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 the greenium bond. I don't know exactly, perhaps five bips, but the main driver is to align our financing policy with our climate ambitions, and it's a matter of sustainability, a matter of acceptability, rather than a way of reducing the cost of our bond issuance.

But the bond issuance by total 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 second quarter, we issue $9 billion of new bonds with very long maturity, and we are able to capture 40 years of maturity at less than 3%. So on average, I would say around 2%.

Yeah, 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, you know, 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... When they buy some bonds, they have to be neutral bonds, neutral buyer, you know, and to buy 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. 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 our future, there is a real problem. It could create a problem. So linking... of all our bonds tomorrow to become ESG bonds, like you said, I like your idea, ESG bonds, we call them, not sustainability bonds, by the way. ESG bonds, it's clearer. To 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 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 their 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 one default for me. It's an absolute default. rule, you know, you are green or you are not green. In fact, there is something wrong there, because this economy is in transition. So we should find a way to reward the 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 But smaller players who are not delivering cash flows and who have limited access to capital. So I think this is for me something very important. And I hope that these ESG bonds policy will be well received and even can be, if we make some pupilles, would be good. 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 bonds. So it's good. Okay.

Wonderful. Thank you.

We have the next questions coming from the line of Alistair Sands from City. 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 it's 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 to 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 funders, I can tell you the price we obtain are always better. So it's clear that it's linked also to be very low interest rate, but the attractiveness for you have many, many financial institutions, you know that perfectly, who themselves want to decarbonize their own portfolio. Everybody is the same transition. And so you have more demand for this type of assets than for supply. So it's clear. So it might change in the future. But, you know, with the maturity, I mean, all that is a question of market maturity. And we'll see. But honestly, I think for the next five years, I'm comfortable that 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, that is last. Maybe we should move to the next, 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&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 Adrien Henry, as I mentioned earlier on. So I switch directly to Arnaud Broillac.

Good afternoon, good morning, or 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 noted our capacity to relentlessly reduce costs over the last five years, and you will see through this presentation how we have engaged in a similar journey to reduce emissions from our operations. We are committed to reduce by 40% the scope one and two emissions from our operated oil and gas facilities between 2015 and 2030, with an ambition to get to net zero by 2050. Our main levers are to reduce, avoid, capture, and offset. Reduce our emissions by optimizing the energy used to produce or refine oil and gas. This can be achieved by electrification of the process and by increasing the energy efficiency. Avoid by ensuring zero flaring or venting and keeping methane emissions near to zero 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 one and two emissions is positive. Finally, in parallel to optimizing the energy used and minimizing the energy lost, we are developing carbon sinks, notably with nature-based solutions, and my colleague Adrien 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 to reduce COP1 and COP2 emissions. The first phase allowed us to identify more than 500 projects in upstream and downstream operated assets. out of which more than 400 projects have been qualified with the potential to reduce scope 1 and 2 emissions by 7 million of tons of CO2 equivalent per year. To answer Lydia's questions, most of these projects would cost less than $40 per ton of CO2 reduced, and since January 2020, the economic value of all new investments are computed with a CO2 price of $40 per ton of CO2 with a sensitivity at $100 per ton of CO2 from 2030. 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 2.5 million tons of CO2 per year by 2025. To illustrate these actions, here are a few examples as shown on this slide. We will reduce venting in Gabon by reducing coal vents to the flare. Routing 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 2030 on all of our operated assets. In Angola... Revised operating philosophy on our FPSOs will contribute to significant savings on fuel gas consumptions. For example, by 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 Kelin or on Tura fields in the North Sea with connection to wind power turbine and solarization of onshore sites like Temparosa 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 kilograms 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 kilograms of CO2 per barrel of all 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, will be generated by a dedicated solar farm installed near the project site. On Merus Free FPSO in deep offshore Brazil, the emission intensity will be approximately 15 kilograms of CO2 per barrel at plateau level thanks to the extraction of CO2 from the fuel gas and re-injection into the reservoir. On this project, vapor recovery compressors are used and also waste heat recovery units. With this modification, in two years, MERU3 FPSO intensity will be reduced by 25% compared to MERU1 FPSO design. On our Lake Albert project in Uganda and Tanzania, the emission intensity is estimated at 13 kg of CO2 per barrel, well below the average intensity of our oil and gas operated assets, at around 20 kg as mentioned. And for example, we've decided to add an LPG extraction unit on the Tilenga 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 ECO project, the pipeline project to export the oil from Tilenga, 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 let's look at the downstream emissions. Altogether, by 2025, 4.5 million tons of CO2 of scope 1 and 2 emissions will be avoided each year thanks to 280 projects. 2.3 million tons of CO2 per year will come from avoiding emissions through electrification of the processes by producing green hydrogen in Lamed biorefinery from a 100 megawatt operated solar farm or by supplying our European refineries with green electricity. This is our Go Green project and I will come back to this. 1.4 million tons 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 generation, and we have a major project in our Leuna refinery in Germany, and by using digital solutions as in ENP to optimize energy consumption. And last, 0.8 million ton 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 million tonnes will be avoided by supplying our downstream operations with green electricity produced from our solar farms in Spain. The production will be amounting to 10 TWh by 2025, and our power trading entity will 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 with an estimated power consumption of 6 TWh in 2025. Of course, excess power will be sold to third parties. In summary, we have identified 400 projects in upstream and downstream operations that will avoid 7 million tonnes of CO2 equivalent per year by 2025. Now let's focus on methane emissions. 2020 global methane emissions from the oil and gas sector are estimated by the IEA at around 72 million tonnes. Most of these emissions are coming from the upstream sector, around 75%, and the remaining 25% from the gas distribution activities. The upstream emissions sources are associated with unburnt gas at the fair tips, coal vents associated to production, process venting, and unburnt 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 64,000 ton, which is equivalent to 1.6 million ton of CO2 as methane has a warming factor that is at least 25 times greater than CO2. Measurements of group methane emissions are a combination of continuous measurements by flow meters 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 illustrates 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 of our methane emissions from our operated oil and gas asset is less than 0.2% of our production of commercial gas. The methane intensity of our gas asset alone is less than 0.1% 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 are to design facilities with closed flare systems, to replace gas instruments with air or inert gas, and to systematically exclude continuous cold venting. On all of our prepped assets, we're increasing the frequency of leak detections and repair, and we're also reducing the number of gassed pneumatic devices. Here are some examples of venting reduction on three projects. First, on Tura Redevelopment Project in Denmark, a new project, so all coal vents have been removed, leading to a methane reduction of 1.2 kilotons per year. which is equivalent to 30,000 tons of CO2 per year. On only a platform in Gabon, the rerouting of coal vent between two platforms and the installation of an electrical compressor will contribute to a reduction of 7.4 thousand tons per year of methane, which is equivalent to 180,000 tons of CO2. And last, on Elgin platform in the UK, the rerouting of the street gas used by the glycol unit will be rerouted to the LP flare and has reduced the methane emission by 3.8 thousand tons per year, which is equivalent to 90 thousand tons of CO2. Finally, we are participating in R&D programs to improve methane detections and quantifications. Since 2018, we have a dedicated testing platform near Pau 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 on some of our onshore and offshore operated sites. Satellite data acquisition is booming, and we are partnering with new companies like KEROS or GHG-SAT, which have specialized in satellite detection of greenhouse gas emissions. And we are also developing fixed camera and micro sensors 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 third part of my presentation will focus on our project in carbon capture and storage, and I hope it will answer Paul's questions earlier on. Carbon capture and storage projects are essential for the industry to meet the climate challenge. All 2°C scenarios 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 million tonnes of CO2 sequestration by 2030 and more than 5,000 million tonnes by 2050. Just for comparison, the global CCS capacity Last year, in 2020, was 40 million tons, and identified projects by 2030 are adding up to 170 million tons. So today there is a need for acceleration of development of CCS projects that currently require tax incentives and carbon pricing to fly. However, the number of projects planned to be launched in the next 10 years will drive costs down through economies of scale and technology improvements. Europe, with its net zero ambition by 2050, has clear targets to develop CCS and several countries 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 favourable environment with a concentration of large industrial complex connected to infrastructure, pipeline and harbours 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 million tonnes 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 and will combine the three following pillars. First, project management, HSE, operational excellence and cost optimization expertise. This is our primary responsibility. Second, 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 to 5 million tons of CO2 storage capacity per year by 2030 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 Sea. 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 $220 per tonne by 2030, but also with an 80% state subsidy on the $800 million capex for Phase 1. This phase 1 will include the transportation, injection and storage of up to 1.5 million tonnes 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 million tonnes of CO2 per year to fulfil the need of European emitters and should have a unit cost around $70 per tonne of CO2 thanks to economies of scale, mainly on transport. In the Netherlands, the climate accord has set the pace for decarbonized economy with a target price of $150 per ton of CO2 by 2030. With attractive subsidies for CCS and EU funding, Total is planning to produce clean hydrogen from its SMR unit, capturing 0.8 million tons of CO2 per year by 2025 and shipping it to North Sea storage sites. This is on our Zealand refinery. Catechs are estimated at $300 million, and therefore the unit cost for capture and conditioning should be around $70 per ton of CO2. A similar project is under study at our Antwerp refinery and would 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 million tonnes 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, platforms and wells. The development concept will be modular and based on customer needs. This project is targeting around $50 per ton of CO2 for transportation and storage for 2 to 4 million tons of CO2 per year. To conclude this part on CCS, Total is investing $50 million per year in R&D to lower CCS costs. As illustrated on the previous slide, we are accelerating R&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 actions and projects to reuse 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 are working with government and partners to find cost-effective solutions to develop CCS projects. 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 Henry, who will present our nature-based solution to sink carbon in natures as this will be required to get to zero net emissions by 2050.

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 2030 as a first milestone, and these activities shall contribute to get to the net zero emissions balance from 2030 onwards, as said by Arnaud earlier. And this is the final and necessary piece of effort and achievements coming after reductions as detailed before. To this end, in 2020, we assembled a team, we defined and built a model for our operations around a few pillars I will detail, and we started originating, designing, and achieving some operations. Of course, there are multiple ways to sink 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 operation that sequester carbon through living nature are 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 decide to focus on some of the ways that nature offers to sequester carbon and mostly photosynthesis and soil carbon absorption. And this by difference to other possible ways like dissolutions in the oceans or more complex mineralization ways 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 2030 and toward 2050. So both conservation and creation of new carbon sequestration ways are necessary. The second good 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 types of operations create different co-benefits 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, and 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 a 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 ground, we will have all these types of operations in our portfolio. 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 a voluntary carbon market and that the design, verification and certification pathways are critical to ensure the final environmental integrity of the 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 or 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 underground 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 imageries and all the new technologies coming will offer a good scientific base to follow the actual performance and the measure of performance from the conservation. Finally, and certainly not least, the third pillar of our model for developing our nature-based activities is the 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 use of land is the second cause for emissions to the atmosphere. 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 the 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 agriforestry 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 portion of the investment we will deploy will 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 three 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 second 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 candidate 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 million 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 two very significant operations that can lead to the potential of sequestering over 25 million tons of CO2 equivalent over 20 years. plus another set of three to four operations we could develop in a second phase that could go for another 25 million 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 cooperation. We are committing for financing operations over decades in such cases. What is also very important in these two operations is the fact that they add afforestation and reforestation through agroforestry scheme to the conservation part of the activity. So again, we are not opposing creation of new carbon sinks 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 sequester carbon 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. 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 operation, so the planting operations in the given country, and also together with the state, 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 two 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 first 20 years of the operations and generate the corresponding amounts of verified emission reductions. So that in the second phase after year 20, 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 the 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 sequestration and corresponding emission reduction. And second phase, selective thinning so that we recreate the possibility for the emergence of a natural forest in the 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 agroforestry development for the production of food crops and possibly cash crops for the local people starting in the first year of the operations and not waiting for 20 years that the value of the timber value chains come. 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 three pillars in mind is to invest in, scale up, and manage or contribute to manage integrated and communities-inclusive nature-based value chains that capture carbon in this order. I mean, 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, the purpose of all this in line with the pillars I defined is that as from 2030, the group will have and will be ready with internal capacity for carbon sequestration and corresponding generation of verified emission reductions and also starting with as soon as 2030 with 100 million tons CO2 equivalent carbon credits being the fruit of all these developments from today until 2030. To achieve such a big ambition, the group has decided for significant means on average $100 million per year over this period And of course, with this portfolio approach I described, we will target a balanced average price under $20 per ton of CO2. And as of today, as a result of the first months of work, we have over 40 million tons of CO2 equivalent already approved for, as I described in pictures, multi-year projects. With this, we will target 5 to 10 million tons CO2 equivalent sequestration capacity by 2030, a reserve of 100 million tons CO2 equivalent carbon credits to be used from 2030 onwards, while maintaining at least 10 years of reserves. Thank you.

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 Adrien, is that at least we learn each time he's speaking. It's an executive committee, so we continue to learn. I hope you learn, but I think it's important because, of course, it's part of the climate journey that we have, climate roadmap, if we want to get to carbon neutrality. So, we think we will open the second round of questions for half an hour, I think, as was planned, so that we can shut close at 5.30. I think it's quite already 3.30, 3 hours and 30 minutes, quite a good time of listening and answering. So, please, if you have any questions, of course, on the second part or on the first part, but we interrupt at 4.30.

Thank you. We have first questions coming from the line of Hanish Kapadia from Policy Advisors. Please ask your question.

Hi. Thanks very much for the presentation. I just had a question going back to the upstream. Just looking at the U.S. Gulf of Mexico, I had a couple of questions around that. With the federal permitting ban potentially coming in, could you talk about how that could potentially affect your Gulf of Mexico 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 or your thoughts on the Ballymore discovery, given the disappointment that Shell's had with Appomattox. Thank you.

Okay. Gulf of Mexico, you know, we are fundamentally – we have two portfolios. Either we are linked to Chevron as an operator, and I trust Chevron as being very well positioned to be an operator in the Gulf of Mexico. We had Ballymore. We had others. The one last year we sanctioned. Anchor and we are also with them on other assets, Tahiti and Jack, so we have a good partnership. But this year it is true that we have on our side one project which is Fundament North Platte as an operated project together with Equinox. I think it's part of the projects on which we were a little suspended, to be honest, in 2020, North Plateau, because we had some arbitration to be done in the CAPEX, and it's a project 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 discoveries, 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 break-even. The beauty of the U.S. is normally that the attractive fiscal terms are lowering the break-even. 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, I don't have all the details of the permitting, but I don't think it has a direct impact on our development because we are well in control, I think, of the license on which we want to develop our projects, North Platte, in particular, or Ballymore. So I don't see, as it could have on other properties, 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 we are reviewing that independently, I would say, of the decisions of the federal government. So beyond Balimo and beyond North Plateau, 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 local 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 these very large developments which are offering low costs. So it's more for me a potential mismatch between the type of targets in the Gulf of Mexico and our global old strategy for the future. Having said that, these two projects, we are working on them, and if they can reach our thresholds, we will approve them, so I don't see any impact again specifically on the new federal policy on these two projects.

Thank you.

The next question comes from the line of Alexandro Pozzi from Mediobianca. 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 five 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 that. how you see supply and demand evolving over the next few years. Of course, we're coming from a big spike in gas prices, but maybe some of those factors behind that are maybe normalizing this year. So anything you can say about a short video time outlook for LNG. And my second one is on offshore wind in the U.K., It looks like you left some of your competitors quite upset because they haven't won any acreage in the UK, also because of the option fee. But that keeps me wondering whether maybe the renewable economics in OECD countries are getting very competitive and compressed, maybe below your 10% equity threshold. And the final one on Mozambique, I was wondering whether you have a timeline on when onshore work can restart there.

Thank you.

No, the situation is not the same between LNG and ore, it's clear. We know that what has been good with the year 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 year that there were 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. You know, in this energy market, there was a sort of, particularly in the U.S. projects, we are developing by transferring a lot of risk from the off-takers, you know, and I think with the crash, not only it's to the old price, but the crash on the GKM, the low market we've seen, the sports markets, I think people realize that taking off-take risks without being integrated in the project could be quite unbalanced. So my view is that what happened this year between, again, spot market crash in Asia plus the less investments in our industry leading to less FIDs is probably good because we will probably have a more normalised energy 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 for energy, strong demand for energy. 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, 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 feared to have another supply. I think we have a more balanced vision of the 2025 horizon than it was one year ago. Offshore wind, I mean, again, I think the option fee is part of the equation. Then it will be a matter of how will be the CFD because 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 rise There is no project, so people, I think that's clear, but what we observed is that, as I said before, this market is a clear signal that you have today players with 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, 83,000 pounds per megawatt per year, which is half, almost half of what some other competitors paid. We are within the range of what is acceptable to us and we keep the capacity to get our returns as we are targeting. No, it's a matter, of course, time is of essence. Time is of essence, which means that the quicker we'll be able to go to the sanction of the project, I think 2025, one of my peers mentioned that figure, but today 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 better the returns will be. But again, one of the big elements today still missing is the specificity of the UK options. is that they separate in the UK the seabed rights on one right and then the CFD auction, you know. And so it's when we have the CFD that we really know what is the reality of profitability. But we have been, I can tell you, very reasonable on our side of our CFD expectations in the way we did. Mozambique, timeline, onshore work. I mean, to be clear, we all agree when we met with the government, but the sooner is the better that we want to mobilize to immobilize so if on the ground again the armed forces and the police are able to to re-control the area that we agree together I think end of Q1 should be able to restart the work that's the objective that we said to ourselves jointly with the government so because of course we But what is very important to us is we want to be sure that when we remobilize people, we can really engage in a sustainable work there. We don't want to re-engage 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 and so on. Again, this is going beyond the situation in that region. It's not only a matter of the area around the project. It's a more global security issue for the Mozambican government. And so we'll see what we can control, recontrol the situation.

Okay, that was very clear. Thank you.

The next questions come from the line of Peter Lowe from Redburn. Please ask a question.

Hi, thanks. I just had a question on the ambition to green all the power used in your European operations. Have you structured that as a corporate PP? solar business, and can you give any colour 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, moving away from government-stuck PPAs towards more commercial ones as companies seek to decarbonise?

So, yes, it's organized clearly as a clear contract. You know, the way we work within Total, even if there are three subsidiaries involved, you have Total Solar Spain, which signs a PPA with Total Trading Power, I would say, which is based on... 15-year PPA with a price, which is within the market. It was a negotiation, which will allow, on one side, Total Solar Spain to develop the projects, having secured the 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 contract, because in between somebody is supposed to make some money, you know. And the beauty is that when we compared 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 refining and chemicals to buy some power 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 and this is the second question that this model could be offered tomorrow to other corporations in fact we really wanted to structure it within the market so with market rules so that what we have done within Total and it's done in the Europe it will be done tomorrow in the US In the same way in Texas, where we have with the acquisition. So it could be done exactly the same way for corporations. The entity which takes more risk there in the middle is the total trading power. But the beauty, of course, is that it's one element within the last portfolio. And you know, this is why in all this 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, other 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., the U.S. today is a merchant market except for corporate PPAs. I suspect that in Europe, you know, there will be a point where states will no more come with PPAs, but will say, let's say, corporate PPAs are coming. It depends, of course, on the technologies. It's not true for offshore wind, even if probably the 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 development. It's a project that we are looking, linking in the Netherlands an offshore wind farm to an hydrogen development that might be also a way. So I think there is an evolution. But, you know, 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 a merchant market, you know. Like we've seen, for example, LNG is a perfect parallel. At the beginning, we developed the LNG industry with long-term contracts with Asian customers, 15 years long-term contracts, and then it moved to more sport development markets. 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 the commercial market.

Thank you.

The next questions come from the line of Christopher Coupland from Bank of America. Please ask your question.

Hello. 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 one of the few dividends intact, and yet, Your dividend yield is 7.5%. The oil price is knocking on 60. So 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 TOTA 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. In fact, the fact that they are able to deliver some cash flows. You have a question about their future and the 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, it's to show, to demonstrate to the market to install Total Energy in the long term So I don't think it's a question of either an inequity affiliates or that is technicalities. It's not the case. 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 a business model. But again, I'm proud to be black and green. I'm proud to be able... Because if I don't have the black part, which 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... But fundamentally, fundamentally... Well, I'm convinced as well that keeping the dividend intact is at the core of the investment thesis. And, of course, from this perspective, we are. I see that today the challenge is there. It's a question of sustainability of the model. But not in terms of cash flow. It's more about climate, CO2 impact, et cetera.

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 DSCF guidance out to 2025 at $60 a barrel, it looks to be a bit lower, sort of, you know, 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 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. And in that scenario, where would we expect incremental capital to go? Would that primarily accelerate the low-carbon ambition? Thanks.

The first one, I think the increase of $6 billion was more or less what we said in September, so maybe you are. It's a question of millimeter on the slide, but having said that, I'm not sure, but of course, 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 6 billion was what I had in mind.

No, Jean-Pierre?

We gave a guidance by sectors between LNG, between downstream and ENP on the site. So you have all the details.

And so you see that it's more or less in line with what... Okay, so maybe... I don't know if it's a matter of 3% or 4%, but I think the fundamental... We did not rerun all the figures, to be honest. Okay. The second one, as I told you, I mean, let's 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 will be either, I mean, 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 opportunities that people are working. But, you know, I'll 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., these are stage payments which we pay, in fact, according to the progress of the projects. And so that's not changing a lot, but not requiring a lot of capital expenditures. And the rest of the projects, you know, we cannot accelerate the portfolio because we decide it's a matter of putting all that together. Do we have more M&A in mind, renewables? No, honestly, I think that what we've done this year with Vidani was a big chunk, 2 billion, and we don't work on things today. Today we don't have something else in mind. So I will tell you that if we have, again, I answered several times the question, consider that the $12 billion is a good guideline, but maybe we could have one billion more, but it will depend. But then if we have more cash flows, we will allocate that to deliver it to the company.

Okay, perfect. Thank you.

We have the next question coming from the line of Ryan.

How many questions do you have? Yeah, but I think we'll stop at 545. So I take the questions quickly. So let's go, Ryan. Let's go. The four questions, but no more after that. Okay, Ryan.

Great. Thank you. Maybe a couple of quick ones. One on the PPA, on the renewables business. Your disclosure shows kind of a steady decline in the PPA price from 110 megawatt-hours. or dollars per megawatt hour to 55 to 45 on the project center development at 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 PPA, do you expect that to eventually reach the 90% plus as in the other buckets?

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. The business model of Total is fundamentally to link. 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 UK, there will be some CFD auction grants 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 risk. 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, you know. I think we inherited from the portfolio we had, which is already operated, we inherited from, in particular, Total Quadrant, when we were called 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 decreased with the cost, in fact. The PPA price decreased with the cost decreased. so i mean we are very transparent and i see that i think yes but there is a limit to that you know 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 uh in the detail will be also the geographies you'll be able to reconcile but my view is that having i'm not surprised and i can think that uh it will continue to decline to a certain point, because at a certain point there will be no more profitability. And it's also linked to the technologies, because there I gave you a figure, and I think it was a question from Christian, because he was right, Christian, to say that the average for a wind project and not for a wind project and a solar project should not be the same. So we'll find ways to disclose these type of technologies. But The global trend is that I think the PPA prices are following, in fact, the decline of the technological cost, which is very logical. My view is that in the solar industry, we are not far from, I would say, reaching the asymptotic part. The wind onshore as well. Where we are not yet is when we combine solar and batteries. Storage is not yet, I would say, we still can decrease the cost of storage. And offshore wind, clearly we are not yet, I would say, at the optimum cost of all that. There are still some improvements. Even when we speak about floating offshore, it's even more right. No, I'm not surprised. I think it's part of, I would, and I think the other companies working on this business. So does it have implication IRR? Again, it's a matter of we decrease the PPA price if we can decrease the cost. And the IRR is a mix of, at the end, 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 Harmon from Exxon. Please ask your question.

Thanks very much, and thanks for the opportunity. And Patrick, thanks for the many hours of comments. Two, if I might. The first one is, I guess there's an English saying, which is, you know, there are two ways to skin a cat. And in terms of, you know, 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 sense at any point for refining and chemicals to be a separate business? Or is the tie between electrons, et cetera, 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 a profit center in its own right or is it just an offset center? Thanks, Patrick. Thanks.

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 – no, we consider that as clearly linked to our capacity to go to carbon neutrality. And so we develop all these 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 owe this carbon credit. So the second question is very clear, and that's where we are. The first one, 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 belongs to value chain for each of them. 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. And same for the gas, same for electricity. So, and you know, you speak about chemicals, but what we have in total is not a lot of chemicals. We have petrochemicals, which are, in fact, we don't have chemical business. In fact, we have 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... Cracker plus one. In fact, we do not develop any. And the few businesses that we have which are downstream because we spin off a lot or we sold a lot in the last years. Remember, we sold both sticks to Arkema. We divested Atotech. 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 were more resilient than the others. So it's a question for me of integration of the oil value chain, and we keep that in the model, and don't need to divest RNC to make more. In renewables, no, it's not true.

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 emissions, the 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.

Understood. But the question is for Bernard. Arnaud was the voice, the speaking voice for ENP and RNC, as you've seen. So Bernard has to work hard to lower its emission quickly. That's the point. But at this stage, I don't think it's... I see that globally as a group. And yes, it's true that refining chemicals are part of the scope of one and two emissions. But today, when you look to our global emissions, it's only part of the issue. But we are not there. We are not there.

Thank you. Thank you.

We have the next questions coming from the line up. Jason Gabelman from Cowan. Please ask a question.

Yeah, thanks for taking my question. I have two quickly. First, on the downstream growth, which I think is stable with what it was previously guided to at $2 billion cash flow growth from 2019 to 2025. But it seems like now there's some component in there for higher margins. 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? Thanks. Okay.

First one, the $2 billion, no, there is no margin growth with $2 billion. It was explained before. It's $1 billion coming 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 Alexi and Bernard. Bernard, you can elaborate on the component of the $1 billion. And Alexi, same, he has some growth in some retail market, can elaborate on the $1 billion. When it was $1 billion from the refining, $1 billion from marketing, and maybe you could So it's not linked to an assumption of two billion as an absolute.

Bernard? Yes, there are two 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 year with the PE line, our joint venture with Borealis, Borestar. And we have also, let's say by 2025, the startup of our larger petrochemical projects in Middle East. And the second dimension is on the renewable diesel as we will grow our... We will generate more cash flows. We released last year that one ton of renewable diesel generated $350. So you multiply that by the million tons we will do and you come up to the $1 billion additional cash flow.

So petrochemicals and renewable fuels. And Alexis, your billion dollar extra that you will bring to the group?

Not one million, but our five-year plan was to add $100 million per year of cash flow. It comes from the existing business, our stronghold, which is Europe and Africa, where we can manage our growth of cash flow, especially from non-fuel revenues in Europe and developing our 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 from growth and it's $300 million coming from the recovery of the COVID that we lost this year as we rebased it, considering that the demand will come back. So that's $800 million. So you have the thing. No, but accelerating farm down, unfortunately, we don't receive the same amount of money if you farm down with a sensitive, you know. So, I mean, it's a matter of maturity of the project because financial institutions, these guys, they love projects with no risk, you know. So if you have more risk because you accelerate, because you farm down your interest earlier in the development process, they 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 of entry for total because we have the balance sheet to support the development rather than divesting that to people that I prefer to de-risk. 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 pierce the risk. And if we farm down, we want the people to pay with no risk. So if they accept the execution risk, the project execution, maybe we can look at it. But generally, our experience is that this type of, you obtain the 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, you know, they love pipelines. It's an infrastructure at the end. So if you want to address an 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 has the honor of the last question? The best one. No.

We have a last question coming from the line of Paul Chang 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 The gas and low-carbon business in the fourth quarter, at least comparing to what we see, seems like the earning is low. Just curious, is there any one-off items that have negative impact, such as in trading or in derivative, that we should be aware? Thank you.

First question, no, it's clear. I mean, you have a natural decline of portfolio, let's say, 3%. So 3% of 3 million barrels per day or 2.9, let's say, 19,000 barrels per day. And so we think that then it's difficult. But, you know, it's not that we think that between the quota, Libya will offer something like 30,000 or 40,000, 40,000, 50,000 barrels per day. Then we make an assumption about 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 curtailment, no, I think we stopped curtailment. Curtailments were mainly in Canada, and I think we don't have any more assumptions of curtailment in this figure. So the big question mark again is at which rate quotas might be relaxed, and it's difficult to anticipate. I don't think we are so. The reality is that it's not new, is that we don't have startups in 21. We have experienced a lot of startups in previous years, but we don't have new projects coming on stream in 21, 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. Ah, the contribution of GRP, I will give that as a final question to our CFO. Or no, I will give it to Philippe, as Philippe is the last answer to this type of exercise. So Philippe, it's a good question for you, it's a tricky one, but you will explain this as it will be your last answer to this group of people.

Yes, I must confess that the 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 get some options 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. 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 good news. I think, in fact, Philippe is very nice to Stéphane, which will lead the president, so we should become... giving it of the good results for the first quarter 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 ENP, 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.