TotalEnergies SE Ordinary Shares

Ladies and gentlemen, thank you for standing by and welcome to Total Energy's 2021 results and 2022 Outlook conference call. At this time, all participants are in a listen-only mode. After the speech, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. I must advise you that this conference is being recorded today, the 10th of February, 2022. I would now like to hand the conference over to Mr. Patrick Pouillonnet, Total Energy's chairman and chief executive officer. Please go ahead, sir.

Good afternoon or good morning, wherever you are, and welcome to our TETAL Energies 2021 results and 2022 outlook presentation. But we are more conceived today as, I would say, a call on our Q4 and yearly 2021 results and our objective 2022 than as a full presentation. And you will understand why at the end of the presentation, because we'll give you a new date for a new meeting soon. We have condensed the format for today. Jean-Pierre, our CFO, will cover the 2021 results. And I will present the outlook focusing on 2022. which means executing the strategy that we presented you end of September, which does not change, obviously, even if we benefit from better environments today. But as you know, safety is a core value for Total Energies, and we start all our meetings with a safety moment. So let's do it.

The Landivisio project is fully involved in the transformation strategy of our company towards an energy mix where electricity will play an increasingly important role to reach 15% by 2030.

The Landivisio power plant is a combined gas cycle. On the site itself, the work started in June 2019 and is expected to be completed in the summer of 2022, so for about 3 years. The site extends over 20 hectares and the installation over 7 hectares and in peak we have dismantled 800 people. The main challenges during the construction phase are safety first, because on a site of this size, we have a lot of risky activities, such as traffic, civil engineering, high-speed work, which are ensured by companies with different habits and security cultures, in a restricted area. And so the whole objective is to coordinate all these activities, to accompany the subcontractors and to encourage them to respect the total energy rules.

In this regard, we have set up a safety improvement program on site. The ambition of the Landi V-safe program is to improve safety on the site of the plant, while emphasizing the respect of the company's rules of law. The regular presence of Total Energy and Siemens teams on the ground on the occasion of many Joint Safety Tours was decisive in the success of the initiative.

So this safety moment is a good introduction to our renewables and power business with this new CCGT which has just been built and which is being started in France, in Brittany. So welcome again. I would say that the year 2020 and 2021 was quite an extraordinary time. And we experienced, I would say, some Russian mountains. No humor from my side there. But really, we went from, I would say, the historic bottom in terms of results last year, facing hard times, to record results in cash flows in 2022. So we entered into 2021, I would say quite prudently, with no visibility. It was my message one year ago. The pandemic was not yet over. In fact, indeed, COVID continued to have a major impact on our lives and day-to-day ways of working. Well, I felt today that maybe the worst is behind us and we enter into 2022. In fact, 2021 was also, I would say, marked by an impressive economic recovery worldwide and a clear rebound of energy demand, a rebound which linked to tighter supplies because of the crisis. resulted in, I would say, exceptional high prices. But we have benefited during the second half of 21, and in particular, the fourth quarter. These high prices, especially gas prices, but also power prices, Demonstrated, by the way, the interconnections of all the energy markets in these times of energy transition. There are two lessons for me of 2021 which are supportive of the strategy we put in place. The first one is that we have clearly seen that gas is transition fuel as a key role. The demand for gas, because it's a source of electricity, has been huge, and the competition between Asia and Europe to get this energy led to quite high prices, very high prices, exceptional ones. And the second lesson that we can drive is that really, again, this energy transition is leading to more complexity, more volatility in energy markets, and from this perspective, we are more and more i would say convinced that the multi-energy model that we're developing within total energies is the right way to leverage this complexity and this interconnection between energy markets but year 2021 will also remain i would say for us Of course, an historic year not only because of our results and cash flow that Jean-Pierre will present to you, but also because this is a year where we moved from total to total energies. And it means a lot to us. It means, in fact, that the whole company, together with its shareholders, who voted at 92% in favor, are engaged in a strategic transformation to build a sustainable multi-energy company, which will address the challenges of more energy, less emissions, more sustainability. and fully capturing the complexity and volatility across all energy markets and to position total energies as a leader of the energy transition. On this slide, you have there, I would say, the demonstration that our new multi-energy model is now in motion. And the 2021 key achievements illustrate that, I would say, illustrate this strategy. Of course, oil has provided, as was reported, is providing a record source of cash flow which is to fund the transition this is the cash engine and our new strategy is to focus on low cost low emission is also in progress with examples of deep water in progress in brazil or uganda projects on the gas we also as we know we have built in the last 10 years i would say a A global LNG business from upstream to downstream with a global reach to grow the business, create value, increase cash flow generation. And clearly in 2021, we had the benefit of this strategy leveraging our number two worldwide ranked position. On both segments as well, we have entered oil and gas in a way to adapt our portfolio to, I would say, biofuels on one side, biogas on the other side. In renewable and electricity, we have reached, by the way, each year will be a recorded bid, otherwise it will be a problem as we are growing, but $1.4 billion. In advance to our plan, which was a little less than a billion, 10 gigawatts of renewable capacity, 6 million electricity customers, and now this segment represents 25% of our capex, in line with the allocation of the capital investment strategy. So these are key achievements, I would say, but I would also mention the fact we are continuing, of course, to get to our net zero ambition by diminishing our emissions. We will come back on it, including methane. And we have also, in line with this strategy, decided to exit some projects like Venezuela because aviol is not low cost and low emission. I would say a symbol of this strategy was, of course, the multi-energy projects we managed to put in place, the new multi-energy hybrid projects like the one we have done in Iraq. where we will valorize gas resource and solar resource, financing all that with oil productions. So I would say for 2022, I will come back on this part in the presentation. The key word for all of us will be to deliver. So delivery, because obviously in such a favorable environment, getting the most out of our assets is our key priority. This slide is, I will maybe come back on it in the conclusion. It's a summary of, I would say, the compelling investment case we put together to our investors for TotalEnergies, building a sustainable multi-energy company while at the same time increasing shareholder returns, transforming and increasing shareholder returns. In this introduction, I just want to highlight maybe The fact that the board of directors yesterday has taken two important decisions to continue to get an attractive and sustainable return to shareholders, which is on one side to increase the interim dividend quarterly dividends by 5% for the year 2022 exercise. Of course, this has been decided because it's supported by sustainable underlying cash flow growth. And we'll come back on it. And the second decision, as we announced in 21, is to share the present oil and gas price upside by a new tranche of buyback. We bought back $1.5 billion on the second half of 21. We increased for the first half of 22 to $2 billion buyback. and the Board intends to monitor the level of the tranche of buyback semester after semester. I will not be longer on this slide because I prefer to present it to you in the conclusion and I prefer in fact to hand over to Jean-Pierre who will talk about our 2021 results.

Thank you, Patrick. I think this slide is a perfect introduction for my presentation. Last year, in 2021, we delivered the highest cash flow in the history of the company. Net results and profitability were also record-setting in 2021. To deliver these record results, we rely on strong execution, leveraging our high-quality, low-cost portfolio. So let's move to safety. You know, safety is a core value for total energy and a cornerstone of our strong execution and operational excellence. It is important to point out that the majors have progressed to an impressive safety standard of less than one recordable injury per million man hours. Far below, that's what you can see on the slides here, far below the TRIR, the total recordable injury rate shown by the main utilities. As far as total energy is concerned, we are still at the level of the best company in our industry. But, unfortunately, we had a fatality in 2021 in our operation. An electrician lost his life in Kazakhstan in 2021. This is a grim reminder that we need to implement constant improvement in safety standards. Note that we integrate, as you know, renewables into our portfolio. This means that we are bringing in businesses that have, on average, a higher TRIR than our existing portfolio. Of course, we implement our safety culture in our renewable units, raising the standards to our own and making it safer. But it will take some time and may have an impact during the integration phase. But you can see that the progress that has been done on that field are impressive as well. And so we are confident that we can implement our culture as well in that business. Now, the environment. You know that perfectly well. 2021 turned out to be a year with record high commodity prices. You see here the price curves, oil, gas, electricity. I think all the curves are impressive and spectacular. All markets began to rally early in the year 2021. And the gas and power markets followed, moving sharply higher in the summer. all supported by increasing energy demand linked to the overall economic rebound after the 2020 recession in relation with COVID-19. Very, very important to note that gas and power curves moving in sync also illustrates the increased complexity and interconnection of energy markets as already highlighted by Patrick. For oil, the current micro is likely to persist because demand is expected to grow as we continue to emerge from the pandemic and there is no significant influx of new supply on the horizon. OPEC has been very disciplined in its releases of quotas, but does not appear to have a lot of spare capacity. Years of underinvestments, I would say since 2015, should lead to tension in supply and should support prices. A data point that is pretty telling. The current upstream capex level of $350 billion is aligned with the assumption of the IEA net zero scenario, while actual demand is way higher. So no wonder prices are going up. 2021 has clearly established gas as a transition fuel. It is the most flexible fuel to ensure power reliability and the obvious alternative to coal. In many parts of the world, gas demand was supported by electricity demands and low outputs for either intermittent renewable or hydro or both, for instance, China, Latin America, and Europe. Supply were tight, and we saw Europe competing with Asia for LNG cargoes. As you know, several major LNG projects have been delayed, many of those due to COVID-19. So the LNG oversupply that was anticipated in 2019 is gone at least until 2025. Europe is transitioning to renewable power generation, but it will take time. For now, higher gas and coal prices and cost of carbon for marginal gas coal or gas plants have driven up power prices, as you can see on the slide as well. First, a focus on our Q4 performance. The highest quarter in terms of CFFO, cash flow generated from our operation, and net result in the history of the company. Here you see a comparison between the cash flow generated by our operation Q4 2021 versus Q4 2020. Cash flow rose sharply, more than doubling, from $4.5 billion to $9.4 billion in Q4 2021. This performance, I think, demonstrated clearly our ability to use our multi-energy model to fully capture in Q4 2021 the very favorable market environment. Oil continuing to rise above $80 per barrel. Gas in Asia and in Europe hitting all-time heights above $30 per million BTU. And at the same time, European power above 100 euro per megawatt hour. In absolute terms, our leverage to oil prices was the main driver, nearly doubling oil-linked cash flow, I mean the cash flow generated by E&P and downstream, this cash flow being more than $7 billion. But in terms of relative increases, integrated LNG grew by 2.5 times, with a safe FO above $2 billion. This historic level built on the globally integrated energy portfolio, leveraging rising oil and gas prices and outperformance in the gas and energy trading business. And renewable and electricity grew their positive contribution by 1.5 times, thanks to our growing power trading team, reflecting last quarter's exceptionally strong electricity markets, particularly in Europe. Let's move now on the full year picture, the full year 2021. 2021, it was the highest cash flow delivery in the history of the company, as I already mentioned in my introduction, thanks mainly to the LNG contribution. Full year 2021, cash flow hits a record high of close to $30 billion, almost doubling compared to 2020 figure. Upstream was clearly the cash machine. With a CFFO close to $19 billion and CAPEX at $6.5 billion, this segment generated an impressive $12 billion of net cash flow. Integrated LNG moved to a record level as well and contributed close to $6 billion of CFFO, demonstrating that the volume's growth and expansion along the value chain has indeed moved this business to a structurally higher level. DamoStream was resilient, more than covering its capex, to add $3 billion of net cash flow to the company. And renewable and electricity, while still in early days, made a positive contribution of close to $1 billion. In this context, no surprise, we doubled our EBITDA in 2021 compared to 2020 at $42 billion. As you know, controlling the breakeven is at the heart of our sustainability. We have leveled our pre-dividend organic breakeven below $25 per barrel. At this level, we are clearly more resilient to potential downturns in the environment, and the low breakeven also increased outside in a rising price environment. That's exactly what we were able to demonstrate last year. Net results and profitability. They were at record-setting in 2021, but it was not an historical high. The company reported adjusted net income of $18.1 billion, representing a return on equity of nearly 17% and a return on capital employed, Roche, of nearly 14% for 2021. This, I think, demonstrates clearly the high quality of our portfolio and operations. All the segments contributed to that performance. E&P benefited for sure from higher oil and gas prices with an adjusted net operating income above $10 billion. LNG business reported historic results with an adjusted net operating income close to $6 billion. These built on the globally integrated energy portfolio, leveraging rising oil and gas prices and outperformance in the gas and energy trading business. But please note that we consider that around $1 billion was linked to the exceptionally volatile markets captured by our trading in 2021. As you can see, renewable electricity, while still in early days, made also a positive contribution in terms of adjusted net operating income last year. Downstream was hit particularly hard by the pandemic, but marketing has recovered back to its pre-COVID level, leading to adjusted net operating income of $3.5 billion. In 2021, we recorded $2 billion of net income adjustments. That means that the IFRS net income was $16 billion, so the $18 billion minus this $2 billion of net income adjustments. This amount of adjustments is mainly due to the $1.4 billion loss on the sale of total energy stake in Petrocedeno. PDVSA in Venezuela, and we recorded this $1.5 billion loss in our statement end of June. And this adjustment takes into account as well a $300 million impairment linked to our withdrawal from Myanmar. For the computation of the impairment, of potential impairments, we have taken into account the net zero scenarios computed by the IEA for our price trajectory assumptions. So the oil price trajectory converged from $50 per barrel in 2040 towards $25 per barrel in 2050. That means the price retained in 2050 by IEA in its net zero scenario. And we had exactly the same rational for gas scenario. The revision of this long-term price assumption, both on oil and gas, leads to limited additional impairments, around $300 million, reflecting the resilience of our portfolio. Turning now to CAPEX. As you know, we are investing with discipline selectively across all our activities in support of our strategy to build the multi-energy company. In response to 2020 COVID crisis, we came up on top of collapsing oil prices. We cut capex by 25% from 17% in 2019 to 13% in 2020. we have established a target range for net investments of $30 to $15 billion per year to 2025. And as you can see, our 2021 capex came in at just over $13 billion, at $13.3 billion, to be precise. It is true that we planned our capex quite prudently for 2021, as at that time we had no visibility for the remaining part of the year. So slightly more than half of our capex was dedicated to maintaining the base, mainly upstream and downstream oil, and the other half went to the strategic growth, renewable and electricity on one side, energy and gas on the other side. In fact, renewable and electricity represented more than $3 billion, or 25% of our 2021 capex. The remaining parts, close to 25%, at $3.1 billion, was dedicated to LNG and gas, but also, as you can see on the slide, to biomass, mainly related to biofuel and renewable diesel at an early stage of development. Among the majors, Total Energy has been and continues to be the low-cost producer in terms of cash OPEX per barrel and the low-emission hydrocarbon producer. We believe that these benchmarks are important to demonstrate the competitive advantages we have developed and maintained within our company. We have cut our OPEX in half since 2040, to nearly five euro per barrel equivalents. And the upstream scope one and two, emission intensity 100% on operated assets, has been reduced to 17 kilogram CO2 per barrel oil equivalents. I can tell you that we have top-down buy-in on these metrics across the organization. Our teams understand the importance of operating as cleanly and as efficiently as possible. The need for tight controls on OPEX is something that we all recognize. And CO2 emission is taken with the same level of importance, both in terms of sustainability and as a barometer of efficiency. Downstream cash flow was $5.5 billion in 2021, a 17% increase from the previous year, but still below pre-COVID level. The impact of lockdowns linked to the pandemic were particularly hard on our refining businesses. and refining suffered due to the drop in demand for roads and aviation fuel, and we adjusted rents in our refineries accordingly. In Europe, the refining margins remain weak in 2021, having been heating up by high energy costs. Petrochemicals, on the other hand, remain a bright spot, benefiting from the very dynamic polymer markets, which are linked to health and safety products. Marketing and services dipped in 2020, but cash flow from operation recovered to pre-COVID levels, with an increase of 15% on average between 2020 and 2021, meaning that 2021 SafeFO is even slightly above 2019 level. At the same time, marketing and services sales GLOBALLY DECLINED BY ALMOST 20%. THAT MEANS THAT WE WERE ABLE TO SUCCESSFULLY IMPLEMENT OUR SCOPE-FREE SELECTIVITY STRATEGY ON LOW MARGIN VOLUMES, ARBITRAGING OUR PORTFOLIO. DOWNSTREAM CAPEX WAS $2.2 BILLION IN 2021. THAT MEANS THAT WITH THE CFO OF $5.5 BILLION, THIS SIDE OF OUR BUSINESS CONTRIBUTED $3.3 BILLION OF NET CASH FLOW TO THE COMPANY. It was a resilient source of free cash flow in 2021, clearly. One of the most exciting aspects of the total energy story has been the successful developments of our integrated LNG business to the level of best-in-class across the industry. the main driver has been the growth in sales, up by more than 20% compared to pre-COVID 2019 level. That provides us with a strong base we can use to leverage favorable market conditions. And it was the case, obviously, in 2021. As you can see here, cash flow increased to $5.6 billion in 2021, a massive 70% jump from the previous year by capturing the strong rebounds in both oil and gas prices. To understand the $2.3 billion increase in cash flow, let's have a look at the upstream-downstream splits. The upstream, essentially the liquidation part of the business, provides the scale and global reach that sets total energy apart as a major player in all of the main markets. Cash flow from the upstream part of the business increased by $1.7 billion. linked to the higher average LNG price, which is in turn driven mainly by oil prices, with a three to six month lifetime effect. Our average LNG price for 2021 increased by $4 per million BTU to $8.8 per million BTU on average over 2021. In Q4, I remind you that our average LNG price reached more than $13 per million BTU. Downstream, effectively everything beyond the tailgate of the LIC-OE Faction Plan is the integrated tool we use to leverage and arbitrage volatility across the global markets. Cash flow from the downstream parts of the business increased by $0.6 billion. So $1.7 billion coming from upstream, $0.6 billion coming from downstream. Here, we are relying on contractual flexibility to set destinations. Our worldwide footprint, including our position as the largest exporters of U.S. LNG. Ample rigas capacity in Europe and a fleet of 20 chartered LNG carriers. We have developed strong position along the entire LNG value chain and we have a growing trading operation that, as already mentioned, that takes full advantage of this. Our integrated LNG businesses is the main driver for our underlying cash flow growth, as Patrick highlighted in his introduction, and a key lever to capture the benefits of high oil and gas prices. Now, renewable and electricity business. Compared to LNG, our renewable and electricity business is at an early stage of development, for sure. But as you know, we are scaling up. In 2021, we expanded our global footprint to more than 70 countries, and we added more than 10 gigawatts of gross installed renewable power generation capacity. Our portfolio has grown to 43 GW of gross capacity, including this 10 GW of installed capacity, 7 GW under construction, and 26 GW in development. Like LNG, we are building a renewable and electricity business that is integrated along the entire value chain. And as illustrated on the slide, we're interested in storage, in trading, EVs, mobility, and retail distribution. I will not comment in details the map showing the main 2021 achievements, but you can see that we are very active and successful on each segment of the value chain, and particularly in offshore winds. I will just mention, of course, the acquisition of the 20% stake in Adani Green in India in January 2021, so the largest solar developer in the world, for a $2 billion investment. And now, given Adani Green's share price increase, this investment is valued at around $8 billion. In 2021, renewable electricity outperformed our expectations. Net electricity production increased to 21 terawatt hour, a 50% jump from the previous year, and slightly ahead, as you can see, of our forecast. In addition to strong growth from renewables, we benefited from increasing CCGT power generation linked to the addition of four CCGT plants, two in France and two in Spain, in late 2020. And of course, we benefited as well of exceptional volatility captured by our electricity trading. Our proportional share of EBITDA for rain and electricity in 2021 was $1.4 billion, about 2.5 times the level of the previous year, and far above our expectations, reflecting once again the leverage we are building into that business to profit from favorable market conditions. So how has this record cash flow generation been allocated in 2021? First, once again, we invested $13.3 billion. That means that 45% of the $29.1 billion of cash flow generated from operation went back into the business. We reduced debts and lowered the gearing to 15% as year-end 2021. The gearing I have in mind at the end of 2020 was 22%. We insist that a strong balance sheet is the first line of defense for any entity exposed to commodity prices. That is very important. That is a very clear priority whenever we find ourselves on the high side of the commodity cycle. AND WE ALLOCATED ONE-THIRD, 33% OF OUR CASH FLOW TO SHAREHOLDER RETURNS, SECOND ONLY TO CAPEX IN TERMS OF MAGNITUDE, WITH MOST OF THAT IN THE FORM OF DIVIDENDS, $8.2 BILLION, PLUS $1.5 BILLION IN BUYBACKS IN Q4 2021. SHAREHOLDER RETURN IS A TOPIC THAT PATRICK WILL COVER IN DETAIL, SO I WILL STOP HERE AND HEAD THE STAGE BACK TO PATRICK. THANK YOU.

Thank you, Jean-Pierre, for these 21 results, which clearly position us quite well. And we enter, in fact, 2022 in a very different mind than last year. Last year, no visibility, quite prudent. This doesn't mean that we will lose our discipline on the investment part, but clearly we think that 2022 is much more largely due to risks in terms of market environment. Our outlook for 2022 is clearly for another probably strong year in terms of results. And a year where the priority for all the teams is again to focus on delivery. delivering our production, utilization rate of our refineries, delivering our expansion renewables, delivering on our marketing margins. All that is a key to increase the value and the shareholder returns. So we have, as you know, a break even down to less than $25 per barrel, like Jean-Pierre told you. We plan our budget at $60 per barrel, which is quite conservative, but clearly the outlook is positive for the company and for shareholders. Of course, there are some risks in the commodity markets which are inherent, I would say, to supply and demand, but on the supply side, We do not see, honestly, material risk for oversupply. We are not in a situation, like Jean-Pierre explained to you, where overinvestment is leading to oversupply. Not yet. Even if we obviously will all observe the behavior of independent US shale oil producers, and at which pace shale oil production will grow in 2022, because this is a main factor of uncertainty, in my view, on the whole side. The other side, of course, is on the demand. On the demand, we are clearly continuing to get out of the pandemic, I would say. Still some markets like the aviation fuel is not yet at its pre-pandemic level, so there is still room for increasing demand for oil products. So again, this is favorable to, I would say, the outlook for 2022. But we should not as well forget that the 2021 results demonstrated that we have a clear ability to leverage a favorable environment, and that the year 2020 demonstrated the resilient performance when we have to reverse the harsh environment. So going forward, I really think that we are focusing now on transforming TotalEnergies into a sustainable multi-energy company that can best navigate the transition toward a net-zero world. So getting to a net zero ambition by 2050 together with society, just to give you the results of 2021, Jean-Pierre spoke to you about safety. I'm taking the CO2 emissions, which is the other I would say almost core value of the company, reducing these emissions. 2021 is another year of decrease. You have the other figures which have been calculated by excluding a specific COVID impact. So on scope one and two, 37 million tons, a reduction from 20% compared to 2015. I remind you that we have a target of minus 40% by 2030. So we are well off. on the journey to that. So that's the first point. I would remind you as well that in this figure is including all the emissions of the CCGT, which were not in the perimeter of 2015. So it's four million tons which represents. So that means that in fact the efforts done by all the teams in exploration, production and refining and chemicals mainly have already been quite impressive, moving down from 45 to less than 35. Then another metric important when we speak about our emissions and our operated activities is methane, as I said. We didn't wait for Glasgow. to focus on methane, even if the world seems to have discovered the impact of methane. We took that very seriously for many years. And from 2015 to 2021, it's a reduction of almost 50%. We are a little less, 49,000 tons for the year 21 of methane. We will set some new targets, and I can already tell you that we revised the target we set in September. It will be reported end of March in our sustainability and climate report to a reduction of 80% for the next decade and 50% by 2025, which means that we are really working hard to go next to zero for methane emissions as soon as possible. And it's important because, of course, Our involvement in the natural gas business is strong, so it's a matter of consistency. Then on the scope three, as you can see, and we can see that we are driving down our scope three emissions in Europe in order to adapt, I would say, our sales to the demand on oil products. uh by anticipating we have established a strategy that would say to arbitrate the low margin sales uh and it's already uh our contribution to the green deal is uh clear minus 23 on scope one two and three in europe but globally speaking uh we said we said that the next during the decade 2020-2030. Our mission is to maintain a scope 3 worldwide under the scope 3 of 2015, despite the fact that we are growing almost by 30% the company in terms of energy delivery to our customers. That means that if the 400 million tons figure seems to be the same as the 410, it's very different. In fact, because there is more emissions coming from gas and less from oil products. Last figure which I think needs to be recorded is carbon intensity of all cells, which is down by 11% compared to 15%. Objectives minus 20% by 2030, so yet again, we are well on the way to get the objective. So I think it's also a strong set of results, and it's more and more important not only to look to financial results, but also to extra financial results like these ones. So coming back to 22, yes, we have announced in September a capital investment strategy of $13-15 billion. For the year 22, we will be on the high range, let's say $14-15 billion. Keeping the same, I would say, split that we announced, which is a fundamental, I would say, to our transformation, the way we allocate our capital. So 50% on what I call the oil maintenance, that means that we have no ambition to grow in oil. We want to maintain the oil production upstream and aligning the refining around 1.3 million barrels per day. This requires capital because, as you know, we have a natural decline around 3%. So to maintain, we need to invest. We need also to invest to maintain the reliability and safety of our downstream plants, refineries and petrochemical plants. So these 50% are necessary to maintain, to stabilize. And the rest, 50%, is to grow, to grow under two pillars. One pillar is renewable and electricity, which has taken 25% of our global capex. So we'll go for more, for free, to $3.5 billion in 2022. And the other pillar is energy and gas, I would say, and new molecules like in gas, you could understand also biogas and hydrogen, even if it's yet limited in 2022. So going to end of this field, let's begin by oil. In oil, the program, obviously, again, is to focus on delivery and on organic value creation. So we have an increase, and it's part of the reason why the CapEx budget increased in 22 compared to 21. We have reactivated the short cycle capex that we have in countries like Angola or Nigeria. $1 billion of short cycle capex are now mobilized, more rigs coming on stream, keeping in mind there is a limitation, which is a COVID impact on the operation. So it's not exactly the level where we were before the pandemic, but it's growing and it will bring a contribution of around 50,000 boil per day. main asset being there, the block 17 in Angola. I would also remind that we have some startups in 2022, in particular Meruan, Brazil, the first of the four Merus, is coming on stream by middle of the year, Ikike in Nigeria, and some new fields in the Novatec portfolio. We have also, in terms of organic value creation, continuing to explore. In particular, we have some very high-impact wells. We have one free, in fact, being drilled today, one in Brazil, Mauro Prospect. Our explorers have good hope, high hopes, I would say. Suriname continues to drill to, I would say, appraise the world potential of the block in view to identify a whole development by end of 2022. And Namibia is another high-impact world which is being drilled. That's for the organic part. But you know, to upgrade our portfolio, and which we also use, I would say M&A, with two clear axes, divesting mature high emission assets non-core that we have done this year in gabon in angola block 14. so that's one part and we sold for two billion dollar of assets and i would say it's not because price of oil is high that we must stop this strategy we must on the country implement it in 22 so there is more to come of these mature marginal fields because probably we get more value from investors in 22 than before and on the other side we are acquiring we continue to have an acquisition of interest in low cost low emission assets and i would say that i consider we have been very successful in the TOR auctions end of December by getting access to two giant depot fields, Sipia and Atapu surplus, PSCs, with quite good returns. So we are very happy to be partner of these two giant fields. And we know also that we are leveraging, when we looked for low-cost oil, we are looking, of course, to, we have a very strong foothold in the Middle East and Iraq, Libya, we already explained. By the way, on this slide, you can see that we accelerate our growth in deep-water Brazil. We are planning to reach 150,000 barrels per day by 2025. Now it's by 2023, with the additions we have done. And really, that will be some cash engine for all businesses in the coming years. Last comment on this one. We continue, and we are able, and by the way, it's a demonstration that the strategy can work, including on the oil and gas business. We have been able, even focusing and divesting some high-cost, high-emissions projects, but investing in low-cost, low-emission projects. To have a reserve with a replacement rate in 21 of 123%, the average is 116%. So this strategy can work to focus on, again, some low-cost, low-emissions oil and gas fields. So for 2022, one figure for the upstream division and Nicolas' teams is 2.9 million barrels of oil per day, or equivalent, plus 2%. There are some plus, short cycle, some new productions. There are some minus. When we withdraw from Myanmar, obviously, we lose some productions. We'll be gassed there. But this is a clear focus of all the teams I know in E&P, and thank you for that. The downstream is the same message, in fact. It's on two pillars. There is a delivery on one side for refining. It's coming back to, I would say, a decent utilization rate, 80%. As Jean-Pierre said, the year 21 was rough. For margins, we are low. Energy prices are high, still high. In particular, natural gas is impacting quite a lot the refining. But also, we had, honestly, some operational issues in some plants. So teams are mobilized there, which is good, because that means that we have extra cash which might be delivered. The other part of the delivery is a cracker in the US. We are expecting it to be also transparent. It suffered from the COVID, I would say, impact in terms of capacity to deliver it. So it's late. It's late. And it was difficult to manage all the COVID impacts, I would say, on the building of this cracker. But now the teams are all mobilized in the U.S. to start up the cracker by, I would say, middle of the year. which will allow, by the way, to start the cracker almost together with the polymer lines. So in terms of integration, it will be economically, it's not too bad. I would say the other part for refining and chemicals is to engage into the transformation on biofuels on one side and also on circular economy with more polymers being produced from bio and recycled polymers. 100,000 tons is a target for 2022. And on marketing and servicing, they implement the strategy we have defined, which is also a form of transformation. Of course, getting most of the assets, which is the growing non-fuel revenues. This is a source of additional cash, so they have a target of 35%. But also, at the same time, continuing to be selective on all product sales by arbitraging the low margin sales. Compared to 2015, the objective is to decrease this type of sales by 20%. And new energies, very again, continuing to develop in EV charging. In particular, I would say we put more and more focus on our own retail network. Because we think that the customers may have the same trend than before going to a retail station, but there we need to invest in high-power charging because these are the expectations and will be the focus of investments. So all in all, we are expecting another good year, but you know... We have not been disappointed by the downstreams for many years. $5.5 billion in 2021, more than $6 billion in 2022. The extra should come, of course, from refining, which was low. Maybe the petrochemicals, the polymer, will not be able to deliver the exceptional year of 21. That's the market. But I think this is, again, important for the whole company and to fund the transformation. Then LNG. And LNG, I think Jean-Pierre spoke about it. Of course, this is the engine of the growth, and in particular of the underlying cash flow growth, which is feeding the increase of the dividend. As you can see, we have clearly a volume increase by 6 million tons, mainly driven by long-term contracts. And these are these long-term contracts which will deliver, I would say, the sustainable underlying cash flow. Of course, at the same time, there is a strong leverage to high and volatile price. High, it's for a free volatile. This is what our downstream people like to make arbitration, I would say. It seems to be strange that we like volatility, but in fact, we have some big teams who love that. So on the upstream part, we have two informations there. 80% of our, I would say, of our production, energy production is linked to oil. So of course, we have a leverage to oil, which is quite strong. But we have also a leverage to, I would say, spot markets and BP indicators. Before, we were giving you $1 million by $1 per million BTU. With the volatility, we said, no, we will give it for $10 by a million BTU, because we plan on 10 as a price on NBP, but maybe it will be 20, like it is more than 20 since the beginning of the year. So it's $800 million extra cash for $10 per million BTU, only on the upstream part of the LNG. And in fact, another information which is important to us, is that, and Jean-Pierre told you, we have a time lag of three to six months in our LNG formula. So we embark, in fact, in 22 with a very strong visibility for the first semester of more than $12 per million BTU, which is a higher average than the one we had in the second half of 21. So that's important. And again, on the other side, our downstream LNG teams, they have the capacity to arbitrage and to, again, get benefit from volatility with two key indicators which illustrate their capacity. The first one, they have a global portfolio flexibility of 65%. So they can change the destination of 65% of the sales portfolio they have in their hand. And second, remember that we are number one U.S. exporter, which of course is very important in terms of flexibility because there is one gas price that does not move too much, even if it goes last year from $3 to $5 per million BTO, is the U.S. gas price. So the capacity to arbitrate between China, Asia, and Europe of course, is a strong engine for cash flow. So this, of course, LNG, again, like 21, even 22 more than 21, will be a year where we should get the fruits of all what we invested, and we continue to invest in this business. Renewables and power, I would say this is an important year, 22, because we'll go from growing from 3 gigawatts per year to 6 gigawatts per year. In 2019, it was 4, we went from 4 to 7 in 2020, from 7 to 10 in 2021, so it was plus 3, plus 3. Now we enter into a new phase of growth. which is plus 6, which is more than 16, and the plus 6, in fact, with 4 times 6, we reach the 35 gigawatts, before to have a new phase beyond 25, which is plus 9, plus 10 gigawatts, to reach the 100. So the capacity, all that is not a dream from the CEO. All that are projects where people are working on the ground in many countries to deliver it. One spectacular project which will come on stream will be Alcázar in Qatar, the 800 megawatts. And I think that you will be happy if we invite you not only to go to Qatar to visit the solar plant, but maybe to look to the World Cup in November 2022. It's very serious, by the way, the invitation to our investors. But definitely, I think it will be good to understand what it means to build a 10 kilometer by 10 kilometer solar plants in the middle of the desert. not playing football on the solar panels, but just to deliver power to Qatar. And of course, I can tell you, we are all mobilized so that they will have this green power to feed this stadium during the World Cup. The other part of the 22, I would say, new startups are in offshore wind. In fact, the field of Yunlin in Taiwan began, started its production, the first generator in 21, but very limited. The real startup is in 2022. And there is in Scotland the first also turbines, which will generate power together with SAC on the Sea Green projects. So the program is delivering this growth. In terms of results and production, which is also important because we are looking carefully to that, this is obviously the target is to have a profitable growth. And production will increase by, let's say, 25%. mainly from renewables, by the way, not from CCGT this time. And EBITDA, in terms of what we call proportional share of EBITDA, you could be surprised that you don't see the translation of the 25% in the EBITDA. It's more than 1.5. It's not because we are prudent. It's because, as Jean-Pierre told you, in the $1.4 billion of 2021, clearly there is an exceptional result from our traders and Q4 benefiting from the exceptional level of European power. I hope they will replicate it, but you know, it's never granted, so we are prudent of planning these type of results. But again, it's begun to be material, 1.5 billion of EBITDA. Of course, we have a global EBITDA of $40 billion, but in my view, it's becoming to be a material contribution to the company. So if I summarize that for 2022, our generation of cash, of course, and this is a little complex scheme, because we try to show you that, yes, we embark on $1 billion underlying energy and power, by the way, because part of it is also justified by power, billion dollar, which will justify the increase of dividend. But after you read it, you can read that we have, yes, delivered the debt adjusted cash flow in 21 of around $31 billion. If we translate all that at the same environment level, which is $60 Brent, $25 per ton for refining margin, and $10 per million BTU for NBP, it would have been around $26. In 2022, the same environment will give $27, so an additional billion dollars. But if I'm coming back in a more plausible environment, because don't conclude that I'm very pessimistic about our price. I'm not pessimistic. Just to make the demonstration, I would have preferred the gray under and the blue on the top, but that's the way it has been designed. If we come back in a more plausible environment, which is $70 per barrel, maybe I'm a little shy, and $20 per million BTU, maybe I'm a little high, we would get something like $34 billion. Why? Because you have the matrix of 33, exactly, 33, 34. You have the matrix for $10 Brent. We have an extra $3.2 billion. And for $10 per billion BTU of NBP, you have an extra $3 billion. The $3 billion represents the LNG part. I gave you $800 plus the domestic, the gas, European gas, Norwegian gas, UK gas, which is delivering the other $2.2 billion. So this is a matrix. Of course, you will tell me, but you are not there. You are today at 80. We'll see by the end of the year where we'll be. But we have room not only in the conclusion of these slides, not only to increase the interim dividends, which is sustained by this $1 billion. And I will tell you, the math are quite simple. What the board said, OK, we will give back to the shareholders 40% of the $1 billion through the dividend. And that represents an increase of 5%. So it's why you have the 5% announced this morning. And we have also room to share with you part of the surplus extra. And the next first tranche for 2022 will be $2 billion. So I'm coming to this slide that you know very well. It does not change compared to previous slides in terms of, I would say, priorities, capex, $14, $15 billion. The dividend supported by underlying long-term cash flow growth, plus 5%. Just to explain to you why. The balance sheet credit A rating, Standard & Poor's is even A with positive trend, I think. And gearing under 20%, we are at 15%, so we'll continue to consolidate it. And share buyback, sharing surplus. It's from oil and gas prices. Before, we were giving guidance on oil prices. This is a gas pricing. Gas prices are also giving us, I would say, short-term higher revenues, so $2 billion for the first half. It means that it will be executed during the first half. and that the Board will consider to reevaluate it according to the actual results for the second part of the year. So if I just want to make a benchmark of our results and our shareholder returns, I would say that if we look to this chart, you can see that in terms of return on equity with 17%, I think we have waited quite a long to see this type of figures, about 15%. We are number one among the majors. By the way, we have also put there ESG risk rating, the one by Sustain Analytics. Don't make a mistake. The lower you are, the better you are in the way they make the notation. So there again, we are well ranked. But for shareholders, we have returned 33% in 21 of the CFFO. which is comparable. There is one competitor which is giving a little more, but I think this benchmark is a good benchmark for us. And in terms of TSR, on the last three year TSR, with 12%, we are the number two, far above our two European competitors. So if I may summarize the investment case and why we qualify it of compelling investment case, I would say that you have one pillar obviously is a low cost, low emission portfolio, which allow us to capture high energy upside from cap high energy prices. You've seen the figures. $10 per barrel, more than $3 billion, $10 per million, $3 billion. And we have demonstrated in 2021 that we are able to capture it, and that's important in particular with all projects, all portfolios, but also the energy portfolio. The second pillar of our investment case is that we consider that the multi-energy sector Integrated model that we are building, all gas and electricity is the one which will get, I would say, the best value for shareholders out of the transition. The transition is a matter of molecules. hydrogen, biogas, CO2, which are clearly at the core of competencies of an oil and gas company, but also of electrons, which is growing power. The use of power is growing, which means that power being a secondary energy, it's a matter of increasing interconnection in the market and complexity somewhere. In particular, more intermittency coming from renewables create more volatility in the market. And this is what is underpinning our multi-energy and integrated strategy. And I would add that, you know, in our companies, the DNA of a large rolling gas company like TotalEnergies, the management complexity is somewhere at the core of it. It's part of the DNA. And so we are well positioned with our know-how, our balance sheet, our worldwide footprint to manage that. Then, of course, we translate that into what is new in the electricity value chain. There again, the more we look to this business, the more we think that we need to develop the integrated approach that we had in oil and gas to be integrated along the world value chain, production, storage, trading, supply. We need also to be ready to leverage our strong balance sheets, which gives us the capacity to to capture value from volatility in electricity markets. So you will see the mix of total energies in the future will not be only about PPAs, but also accepting to take the risk of commodity price, because again, we have the capacity to do it. And thanks to our strong . That can be also a differentiator from some competitors in that field. knowing that we continue and I confirm to you that all the projects in which we invest, we are selective and we reach, we are targeting more than a double digit return on equity. All that will help, will contribute to continue to increase the attractive and sustainable shareholder return to shareholders. And I've already insisted to that. But I will also end my presentation with what we call that about extra financial ESG reporting and progress. We attach great importance. We know that for investors, it's more and more important. And this is why, and that's my final slide, the board of directors has decided, in line, I would say, with what we proposed last year in the resolution to the AGM, to the 2021 AGM, We ended the resolution stating that the Board will report on the progress of Total Energy's ambition with respect to sustainable development and energy transition towards carbon neutrality annually. The way we will do it is that, yes, we will issue a report on March 24th, Sustainability and Climate Progress Report 2022. We'll have the opportunity the same day to make a presentation on the investors and ask sustainability and climate are intrinsically linked to strategy. Obviously, we review the strategy. This is why we have not done it today again. And the other decision which has been taken is that on May 26, the next AGM, 2022 AGM, we will submit this progress report to an advisory vote in order to continue, I would say, to align the company and its shareholders of the trajectory of transformation that we have entered into. so thank you for your attention and now with jean-pierre and my colleagues which are in the room not behind the desk but in the room ready to answer to you to your questions thank you for your attention

Ladies and gentlemen, we will 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 hash key. Once again, please press star 1 if you wish to ask a question. We've got the first question from the line of Irene Jimona from Societe Generale. Please go ahead.

Thank you very much. Good afternoon. Congratulations on what were very strong results. I had two questions, please, on distribution policy. Firstly, on the buyback, if you could please clarify the timing or the phasing of the 2 billion buyback you announced for the first half of the year, and then In terms of visibility in the future buyback, should we anticipate you announcing the amounts twice a year? My second question on the 5% dividend increase, you had previously indicated last year that dividend increases would depend on a structural increase in cash flows, and today you attribute the dividend increase to a structural increase in cash flow from LNG and electricity. Can we read into that that you anticipate LNG and power markets to continue to remain tight throughout 2022? Thank you.

So, thank you, Irene, for your kind words. I would say, first, the timing. I just mentioned it in my speech. Clearly, it will be executed during the first half of 2022 because the board of directors want also to look what is the share price. We will not buy if the shares continue to grow. There is a certain point. So it's why we also want to have a program on the first half. So Jean-Pierre and his teams will execute the $2 billion in the coming months. with the rules, of course, during the windows on which we can intervene on the markets. So that's the first. Second, I mean, let's, the board wants to monitor that according to, we'll see, you know, we could expect maybe more cash flows coming, more surplus cash flows. So it will be at least twice a year. It may be, it could be, I would say, it depends on the board. It could be even modified after the first quarter result. But let's see, the technical answer is at least twice a year. So don't consider that the 2 billion is only for the year. There is no hidden agenda. It's just for first half. And then we'll see. But you know, in the past, each time we have announced a long buyback program, we were interrupted by some events on the market. So let's be prudent. Let's execute. But you can consider that if the environment remains as it is, it will be at least the 2 billion for the second part, if not more. On the dividend, I would say, again, what means for me structural CFFO or underlying long-term CFFO, it means that it comes from some volume increase, from something which is sustainable. It does not come from the actual prices. The impact of the prices, we know that it's volatile, is reported in what we call the surplus cash flow. And we increase the dividend by 5% because we consider that we are in a growth trajectory. I remind you that in September, like we previously reminded you, that we are in a trajectory where the cash flow should grow by $5 billion at the same environment. And so it's the first tranche of this $5 billion for the next five years. If you remind us, as you follow us very carefully, I think in 2018 or 2019, we had already that in mind. Of course, then the events with the crisis have disrupted everything. And we have already announced that if we have an extra billion, we would allocate more or less 5% increase on the dividend. So we are coming back. on the trajectory on which we were before, but it's not linked to, we believe that the price will remain. It's linked to, in the, I would say, conservative environment, we consider that, I would say, these, the six million tons extra volume LNG are there for long, and even, the reality is that they will continue to increase because we have a growth trajectory, So this is a basis of the increase of the dividend. It's something which can be sustained independently of, I would say, very high oil prices, but in a conservative environment.

Thank you very much.

Having said that, to answer to your question, I think that the energy target will remain tight for a few years. If you remind as well, Irene, I knew that in 2018, 2019, people were speaking about oversupply, but they were forgetting it's by 2024, 2025. In fact, we already announced by 2022, 2023, and I would say even 2024 with the COVID impact, we don't see much change. trains coming on stream you know it's easy to anticipate and we continue to see by the way high demand the only point on the demand where we have to be prudent for lng is that if the price remain at 20 i'm a little afraid of the negative impact it will have on some emerging markets like Bangladesh, Vietnam, India, even India. So that's why I'm prudent on the energy side in terms of anticipation, because, again, gas is competing for coal, and if gas remains too high, coal will come back, despite the climate change. Or coal will not exit, more exactly. Thank you.

Thank you. Next question comes from the line of Michelle de la Viña from Goldman Sachs. Please go ahead.

Patrick and Jean-Pierre, it's Michele. Congratulations from my side as well on the results. Two questions, if I may. One on shareholder returns and one on renewables. On shareholder returns, if I look at the dividend, the $2 billion buyback, it's effectively a 40% distribution of your cash flow under your conservative assumptions of $60 oil, $10 MMBTU. I was wondering, for modeling purposes, If the macro proves to be more generous, which looks likely at this point in time, should we assume that we can continue to have a 40% payout on the incremental cash flow there, which more or less is what you have delivered through the cycle over the last few years? My second question is on renewable power. It's... It's something I find very difficult to model at the moment because there are so many different forces at play. There's higher power prices on one side with also a repricing of intermittency, but on the other side, much higher costs across the value chain. And there is a beginning of the rate rise cycle with higher cost of capital as well for project financing. And each of those pulls the equity returns in different directions. I was just wondering, when you look at your opportunities in renewable power, especially in offshore wind. How do you compare the return on equity and the opportunities there versus where you were seeing them one year ago? Thank you.

Okay. The 40%, again, I just explained that it's, yes, you are right. The way we calculate the dividends is the increase of the dividends is plus $1 billion, $400 million. It represents 5% of the $8 billion we distribute. So that's right. So it's a guidance where we think it's a good guidance. Having said that, sometimes, like in 2021, we were targeting that. Then the price increased quicker than we were able to make the buyback, so we reached 33. So it's a 35, 40% is the range which is in the mindset of our board of directors. So if you want to model, you can use it. On the renewable part, I think, yes, things are moving. And again, it's a matter of, and this is, for me, something which, where we have an evolution in the company. When we enter into that field, we see, oh, maybe it's a secure business, you know, you have these PPAs. But the more we look at it, the more we think that we have more value to create if we accept to, I would say, and it's like LNG, I would say. LNG, historically, we are willing long-term contracts to invest. And then we decided around 2005, let's buy the LNG forces and let's become a player in the markets, arbitration, et cetera. And we've seen the positive results in 21, 15 years after we engaged in the strategy. I think we are looking to more and more renewables and power assets has also a capacity to maybe it's 50 which will be i would say secure but the other part we have because of a balance sheet the capacity providing we have also storage capacities providing we have also trading teams strong teams to leverage the volatility and we are i would say the more i'm looking to this market the more I'm thinking that the electricity price could go higher and higher. So I think it's better to keep... So when we analyze an investment like the one you mentioned, offshore wind, it's not only one of the key parameters will be the anticipation that you have on the power pricing in 2030, by the way, 2035. And so my view is that, yes, let's keep part of it on PPAs where you secure, I would say, a base return. But we have to accept as well the profitability. We just recruited the chief economist outside of our oil and gas markets in the electricity markets in order to help us to better modelize that. So for me, and I think this is justifying uh with you why a company like us is entering into the business not to secure revenues but to be to be able to leverage the integration again and the volatility thank you thank you next question comes from the line of lydia rainford from barclays please go ahead

Thank you and good afternoon and hopefully the March 24th presentation we will manage to see each other in person. Two questions if I could. The first one was on the integration side and the total being multi-energy. Can you actually talk us through the economics of something like the Iraq project and is that sort of saying the best example of where multi-energy really works for total? And then secondly, on the renewable side, You talked about the business now being in over 70 countries. I was wondering, at what point do you think that how much you need to focus that business and is more geography actually better or is there specific areas you kind of think that you need to focus on? And then just very, very lastly, and just to pick up on the cash returns, you mentioned the share price earlier. Is the buyback level dependent actually now on the share price? Thanks.

The last question. Yes, there is a level where, obviously, it could become too expensive. So I don't want to cap the share price hike, let's be clear. But there might be an arbitration between having the debt going down, keeping the money, and then, you know, because we know the markets will be volatile, you know. The best buybacks for our investors and for the company, the best investment in buybacks is to buy the shares when the share is low, when the share is very high. So the board will obviously monitor that. There is no... I mean, don't ask me the mathematical solution. There is no magic there. It's just a question of monitoring it because I have already met a lot of investors which criticize us somewhere sometimes when we buy when it's high, you know. So why not keeping the money and then using it when the share is low? You know, we would have more. Last year was not possible. It was a year when the share was at $30. But I know some investors who bought some shares at this level who were not able to do it as a company. So that's the point there. Just a remark. On the economic benefits on the integration, there are several. One of them, in particular, in the case of Iraq, and we are using that in other oil countries, is that, you know, when you have developers willing to develop large projects in these emerging countries, they are all asking to, when you are a small developer, they want some sovereign guarantees. When you are an oil and gas company and you receive revenues from a state, larger revenues, let me be clear, the revenues from oil compared even to what we want to do in Iraq, the magnitude of the power revenues is not the same. You can find a way to, I would say, guarantee your electricity revenues by the oil revenues. So there is a link there, which is a good leverage in terms of economic benefits and possibility to make the projects. And so, I mean, and same, you know, at the end of the day, the gas resources which were leveraged are also part of, I would say, an extensive contract, service contract. I would not call that – I don't know what is the name of the contract in Iraq. I don't remember. But it's part of – you can use, like we've done in other countries, like it was done, for example, in Qatar by share with the GTL. You can use revenues of one to leverage investment in the other. So that's the beauty of it. You know, if I'm able to invest in different projects, then it's a question of managing the different parameters of the contract. Yeah. The advantage to be in more countries for renewable is that there are less competitors. I will tell you the advantage is that first we are there. We know the country. We have a presence. We have some people working already in marketing and services, in EMP. So we have a knowledge of the authorities. They respect us. We have an image. So it's good because we have a trust, I would say. You're built on the trust. The second part is that most of the developers, of course the smaller ones, you have some small companies, but the larger, I would say, utilities are focused, I would say, on some countries, the large countries which offer PPAs, which is not the case, of course, of all these emerging countries. The idea is, of course, it's complex in some of the smaller countries, but the profitability... It can be higher. So this is what we are looking for, to have direct negotiation, to be able to leverage, I would say, what we can bring to the country in order to have a better profitability. And I think this is an advantage of a company like TotalEnergies. We are present in many countries. As long as we have this relationship, we can leverage it. We call them renewable explorers. They will not replace our real explorers, but they will bring some good profits in the future.

Thank you. Next question comes from the line of Bertrand Rodet from Kepler Chevrolet. Please go ahead.

Hello. Thank you for taking my question. Congratulations again for the result and also for having the vision to grow your LNG portfolio back in 2018-19, especially with the acquisition of US LNG portfolio from Engie and Toshiba. at a time where those LNG contracts would have probably provided some losses. So I guess that was a counter-cyclical and wise strategy, in my view. But now I want to understand more your sensitivity to spot LNG prices, and I fully get that given the structure of your portfolio, you may have surely hedges in place. For 2022, if I understood well during the presentation, you stated that a $10 per MBTU move equals to around $3 billion of additional cash flow, $2.2 billion for upstream and $0.8 billion for LNG. And back in September, I reminded that you also highlighted that a $10 per MBTU move in both NBP and spot LNG were adding $6 billion. to your cash flow by 2025. Should I be right to understand the discrepancy of $3 billion between the two sensitivities because of the hedges you have? That is my first question. And the second question is, should I also be right to assume that if you were to raise your medium-term assumption for both NBP and GKM, so Spot LNG in Asia, by $5 per MDTU, We could also add $3 billion of scriptural cash flow to your 2025 plan.

Well, technical questions. So first, yes, you are right on Toshiba, just to tell you that today we are cash positive after 21 without using the $800 million we receive. It's a profitable business. So we have received $800 million, and we are already making more money. So just thank you for reminding that to everybody. I would say then... Your point. There is a point here. We mentioned in September that when the difference between the GKM and Unreal is increasing by $1 per million BTU, Then we have extra cash of, if I remember, $600 million. By the way, there is a lag effect there, because yes, it's linked to edges, all that. And so in fact, when you make the edges, the year where you make the edges, because it's a mark to market story, you are edging the year after. So you have the results in the year, and you have the cash flow in the year after, if I remember correctly. So you have a discrepancy between the results and the cash. so in 2022 we'll get the results of the edges which were implemented in 2021 but remember that the way we age is quarter after quarter so we didn't knew in first quarter 21 but the last quarter we should have wait for the longer end of the year no we were not magicians we would have done it we would have wait but we don't do work it like we edge quarter after quarter So, in fact, what we embarked in the AGs, which will be delivered in 2022, I would say is only half a year compared to what you could imagine today, just to explain you that. And what we will do this year, of course, we have today a spread between GKM and Unreal, which must be around $15 or $20 per million BTU. This is the decisions that we will engage, the AGs we will do in first quarter, for example. You will have some results, but the cash will be in 2023, which is good. That's good visibility. So that is where it's not exactly to plan. So in a permanent regime, your assumption for 2025 is right. So $5 million BTU extra spread will give us, in a permanent regime, $3 billion extra cash flow in 2025. It's more difficult to do from one year to another year because it depends. Of course, it's a permanent regime, but it means the $5 should be the same during the spread, should be the same along all the years, along all the quarters, as we, again, each quarter after quarter. I think I've been clear to you. It took me a little time to understand, so I'm trying to translate all that. And if not, you call Jean-Pierre and Stéphane, and they will explain you. But fundamentally, yes... The answer is in 2022, we will receive more cash than in 2021 from these edges because in 2021, we see the one down in 2020, in 2022, in 2021. But 2022 is not a full year, I would say, compared to what could be done in 2023. So there is something additional to come to us in terms of cash flow.

Thank you. Next question comes from the line of Christian Malik from JP Morgan. Please go ahead.

Hi, gentlemen. Thank you for the opportunity to ask questions. And honestly, congratulations on this very strong result and seeing the dividend increase as well. Two questions from me. First, just on the project in the Gulf of Mexico that you announced, the North Platte Deep Water project. It's certainly extraordinary in the context of having completed the feed. You've got the semi-subproduction facilities out to tender, and Valeris has got a four-to-two-month drilling contract. So with that in mind, it's not in its infancy. So could you just walk us through the industrial or financial logic as to why you've done that, potentially sort of within the context of U.S. energy policy around Gulf of Mexico and Is there a sort of should we draw conclusions around your appetite to invest within GOM within that context? Just trying to understand even from a policy standpoint how you see the U.S. from some investment standpoint. And the second question, it relates to the very welcome sort of sustainability and climate progress report. Within the framework of how you deliver these metrics and the data around carbon intensity, should we or can we hope for more disclosure at the asset level in terms of carbon intensity, asset or region, so we can better understand the relationship between profitability returns and the carbon intensity of some of the highest carbon-intensive projects in the world? Thank you.

Thank you, Christian, for these two questions. No, there is no U.S. policy involved, no consideration of the U.S. policy regarding gum and oil in this decision. It's a pure, intrinsic decision linked to the project and linked also to our capital allocation. We look at it. It's honestly at the limit, at the high limit of the range we gave ourselves. I remind you that we said to investors, We'll invest in oil portfolio, in oil greenfield projects, $20 per barrel, $30 of technical costs, capex plus opex, or $30 of break-even. And North Platte, because of its size, in fact, we knew it. It's not a giant field. It's really on the high side of these metrics. So that's one point. And second point, we prefer to invest in Sepia and Atapu in Brazil than in North Platte. So, yes, we have done our job because we were the operator, and we want our partner to be able, if they wish to do so, to hand over in a smooth way. But all in all, at the end, we consider that we had better opportunities in our portfolio to allocate our capital. So there is no politics behind it, just decision at a level. And again, in the framework of investment, inside our investment framework that I just reminded. I'm not sure we'll report all the assets one by one. We don't report the production one by one. We do it regionally, so I'm considering that. I will take your point. There is no problem for me to look at it. By the way, we begin, I think, if I remember correctly, we have a spread of reporting between the different continents, like we've done for reserves. At the end of the day, for me, I consider that fundamentally, I don't know what the SEC will issue, but we should report on these emissions like on the financials in the same type of framework. So we are working on it. And by the way, we are also working not only on scope one and two operated emissions, but only on the equity emissions. I think this year we'll be able to do it for scope one. We don't have all the data for scope two for more or assets, but, you know, it's progress report. So we progress. And I think so we'll disclose more in our sustainability and climate report than what we have done until now in a way which is more readable for you so that you can better maybe analyze the data. So that's our intent. The idea for both by submitting by the way to an advisory vote this report is that to consider that the financial use the general assembly of shareholders approves the financial reporting that will approve the extra financial reporting and we think this is a global trend We've seen after COP26 the ISSB and all these organizations willing to normalize, I would say, the extra financial, and we are willing to contribute to that. Christian, just a word. I read your paper this morning. You are pessimistic about our capacity to make buybacks on the year 2022. If we announce $2 billion for first half, I'm not sure we'll decrease on the second half until our share will range the roof. unless the share will raise the roof. Thank you.

Thanks, Patrick, and look forward to the World Cup with you in Qatar. Very excited.

Thank you. And with more buybacks, I know.

Thank you. Next question comes from the line of Baraj Bukataria from RBC. Please go ahead.

Hi, thanks for taking my question. First of all, just a clarification on trading. You mentioned a $1 billion, I think it referred to integrated gas benefit in 2021, but I recall last quarter you called out a $500 million benefit. I guess implying that the trading contribution for gas, integrated gas, was the same in Q4, would have expected it to be better. So could you just run through those numbers again? And also, if you could quantify the electricity side trading gain there, that would be helpful. And then the second question is on Libya. I believe there's some kind of one-off or catch-up tax payment due in 2022. Is there any details you can provide on that? Thank you. Thank you.

Okay, I was wondering, I mean, catch-up tax payment, ah, no. Trading in, no, the one, what I think, just, have you seen the results from IGRP for Q4 are quite exceptional, I think $6 billion, if I remember. Yes. We just sent a warning that we consider there is somewhere in this $6 billion, it's reported as a recurrent result, $1 billion, which has been clearly given by the, I would say, exceptional trading. I remind you that in Q2 2020, all trading, we made the same warning. So just to tell you, because the base for me is more five for a quarter than six. I love it. So you can consider, take it like that. And it's gas and power team, because IGRP includes everything. I will not give more detail on that.

And that's the beauty of the integration, the fact that at the same time can deliver high performance in terms of gas trading, but also in electricity trading as well.

Yes. Libya, yes, in Libya, there is in our, I would say, working capital, we had an amount of around $1 billion, a positive end of 2021. I will be very transparent to you. end of December 2021, there is a billion dollar which is in our balance sheet, which has been transferred in Libya to the Libya government. Why it was in our balance sheet like it was with all the partners is that there was a debate uh to which institution we should direct the billion dollar and obviously we were all very careful together with our colleagues partners on the waha field not to direct that to the wrong institution we wanted that to be sure that it was a central bank of libya and the right account not to be accused of mismanagement. So it took a little time to clarify the paperwork, and we received the instruction, a clear and valid instruction in January. So the billion dollar, which is, you know, working capital, has disappeared now. End of March, it will not be somewhere there. But there are other good elements by end of March, margin calls and things like that, which will compensate, you know, working capital. So yes, it's true. But it's not a major point. We did not use it to make buyback, so it's okay.

Understood. Thank you.

Thank you. Next question comes from the line of Lucas Herman from Exxon. Please go ahead.

Patrick Pierre. Thanks very much for your time. Patrick, it's nice to see you looking very well. Two of my minds as well. I wanted to start with Russia. You've been hugely successful. and the value of the assets has obviously increased considerably, but so too is obviously the value of the cash flows. I just wondered if you could give us an indication of, you know, what's the dividend that you now receive or expect to receive from Novatek? What's the benefit, if you can provide it, that you derive from, you know, the volumes that you take from Yamal? And I think Yamal LNG, and I think most importantly, what cash flows or equity cash flows does the company actually receive now from the Yamal LNG plant, or to what extent are they still directed at paying down debt? And the second, if I might, probably for you, Jean-Pierre, is just when I look at the associate line in IGP and R, how much of that now is coming from liquefaction and how much of the associate line ballpark percentage is coming from the power business or the integrated renewable business? Thanks very much.

Perhaps on equity affiliate contributions, I do not have a specific figure from LNG, but globally at the level of the group, 21% of our result is coming from equity affiliate contributions. The question was LNG versus renewables, you know? At present time, of course, the main part is coming from energy, for sure. I mentioned that renewable and electricity, we start seeing a contribution in 2021. around $600 or $700 million, of course, it will grow in the future. So at present time, out of the 20%, 21% result coming from equity affiliates, most of the contribution came from LNG for obvious reasons. ICTIS, YAMA, and these types of businesses, of course.

So I will just give you the global cash flow from Russia because, of course, with the crisis, we look at the figure to know what was the risk. It's around $1.5 billion in 2021, which, honestly, at the size compared to a 30... Billion, $30 billion is not, yes, it's sizable, but it's for 5%. So, you know, in the past, I think I remember Yemen LNG, when it stopped, was around $1 billion per year as well. So we experience this type of situation, but I hope not, because I think for Europe it's very important. By the way, I can tell you the consequence of any energy sanctions on Russia I think globally the company is winning because the impact on the oil prices and gas prices will be huge. So, yes, I would say our operations in Russia, our assets in Russia might be growing. given us some edX and to manage it. But having said that, we have been put, by the way, I said $1.5 billion. It's a big mistake. It's 1.3 billion euros, you know, because I must not speak in dollars about Russia. It's just to give you the magnitude. So it has increased a lot, the dividend. I think the Novotek dividend represents more or less $500 million per year, more or less. I mean, it has increased, but it's the idea. Okay. Thank you, Lucas. Thank you very much.

Thank you. Next question comes from the line of Christopher Cookland from Bank of America. Please go ahead.

Hello there. Good afternoon. Thanks for taking my questions. I think I might have one for each of you. Patrick, maybe you can give us a wider update on the current security situations as you see it on the ground. You mentioned Yemen just now. I'd be interested in Mozambique and the prospect for bringing back staff. And perhaps for you, Jean-Pierre, when we talk about, and many questions have been asked already, I appreciate that on buybacks and shareholder distributions. What should we use as most appropriate metric that you would consider is an appropriate allocation of capital during these relatively high oil and gas price times to shareholders versus to your balance sheet? Thank you.

I give time to Jean-Pierre. Difficult question. Mozambique, I visited Mozambique very – 10 days ago. I met with President Nussi, and some of my people went into Cabo Delgado, not me at this stage. You know, there have been – let me clear up. It's a war. You have some terrorists. So it's no more a matter of total to be – total energies to be involved in solving that situation. And we will come back. We could envisage to come back and to restart the project only once there will be peace. I mean, a peaceful situation, which means not only having been able to secure the security, to, I would say, take back the control of the security, but also to have populations, a civil population, back in the villages and with a normal life. That will be the signal. There is no way for... I will not... We will not build a plant in a country where we'll be surrounded by soldiers. You know, it does not work like that. Having said that, there have been some clear improvements on the ground since the involvement and the Mozambique arrangement with the SADC, I would say, troops, I mean, yeah, consortium of troops. different countries, including Rwanda. They managed to get back the security in some key areas around Palma, where we are. Our project is around Mosimbada Playa. For those who know Mozambique, I've become an expert. But they do not control today the full Cabo Delgado. And for me, as long as it's not controlled, security. Why it's important? Because the population will come back only when security will be under control. And all that is linked for us. But, I mean, I have no idea when we can start the project back, but my view is that the conditions under which we could restart the project might be fulfilled. Maybe it will take a year. I don't know. We'll see. We observe. And we are what is good. We have the same vision. with the authorities of Mozambique of what needs to be achieved. There is no pressure for us to exit out of force majeure. And we have established, I would say, we have frozen everything for contractors. We know that when we say, yes, we can come back, it will take six months really to... to start up again. But again, my priority, it's a matter of sustainability, all that, and human rights. And so we'll not relaunch the project as long as I see photos from refugee camps around the site. But again, it's not negative. It's still, for me, a project and we are monitoring the situation because we think that the authorities of Mozambique are taking the right decisions in terms of security. So let's observe. The contribution of TotalEnergies today and its partners is mainly to contribute to the social life, I would say. We have engaged with NGOs to see if we could Because all the stability in this part of Mozambique will also come from giving some few jobs, some few prosperity share, without waiting the gas to be produced. But we need clearly to help the local populations to see some... I would say some shared prosperity from the project before. That might just be agriculture and buying food from these farmers for feeding our teams on the project, but we need to act on the ground. It's a condition of the security for me. So that could take time as well. But the gas is there, the project is there, the energy demand is there. So now it's a question of patience in order to be able to execute the project.

Thank you, Patrick. And just a quick one. That probably means you've not budgeted a huge amount in your CAPEX guidance for 2022, as far as Mozambique is concerned.

No, you don't have. And by the way, you don't have for another reason. As you know, we have a project financing in place. We stopped just a day before. It was frozen. It was frozen the day after we declared the fourth measure. We gave the money back. We stopped the letters. We didn't want to get the financing. So we know that the project financing is in place. And it's easy for us, if we reactivate the project, to activate the project financing. So in terms of impact in the capex, we had more capex than expected in 21, in fact. It's why we went a little above the 13, by the way, on the upstream part. But no in 22. Thank you.

And on gearing, so honestly, I do not have any magic figure. So we think, once again, that balance sheet is, having a strong balance sheet is key to face a potential downturn in our environment. It's not obviously the case, do not what we anticipate at present time. You know all the different elements, the way we will allocate the cash flows. So you know the guidance we gave for discipline, and you know that we are disciplined regarding capex spans. You know the dividends, so $8 billion more or less full cash dividends, so plus 5%, as Patrick mentioned to you. The $2 billion for the first semester, so of course the balance will go to decrease the gearing. And just to give you perhaps one figure, for an additional $1 billion of cash flow, the gearing will be down by 0.6%, more or less. So that means that if we are successful, if the environment continues to be very supportive, of course, the gearing could go below the current level.

But again, I have no problem to have... If gearing is going down, it's good for us. We'll have... we'll have a reserve of cash to be counter-cycled when we'll have to be counter-cycled. But again, the answer is more for me. It's not one against the other. is shareholder distribution. I think I told you we were at 33%. I guided you towards the 40%, so you can see the range of it. And if there's more to come at this stage, we consider it will be to deliver the company. another maybe you know we i'm sure mistake we should not do is believing that we are entering into a long high cycle you know each time we have said that the year after it's a catastrophe so i'm i'm very prudent on this part because it's obvious you know if price remain high you will have more investors and more all coming and it takes two three years but then you have the the impact In the meantime, the best is to strengthen the company and to be ready then to use the balance sheet because opportunities will come in the different energies. And it might be a way, by the way, if opportunities come, to accelerate the transition.

Understood. I think the 40% is a great answer. Thank you.

Thank you. Next question comes from the line of Alistair Syme from Citi. Please go ahead.

Thank you. Patrick, you talk about unit development costs in the upstream, and I mean both across oil and gas. If I remember rightly, you used to talk about a figure of about 50,000 barrels per day on unit development costs. And I just want to, if you could update that figure for the current costs and environment and portfolio. And what I'm getting at here is that the upstream CapEx that you're guiding to in 2022 is well below where it was in 2019. So I'm just trying to understand how much of that is change in emphasis versus lower costs versus any assumptions on disposals that you're making in 2022. And then the second question, which is a point of clarification on your reserve replacement ratio, because 121% was sitting on the slide labeled oil, so I wasn't sure whether that was just for the oil part of the business or that was across the entire upstream. Thank you.

Listen, the second answer is easy. It's in the slide all, but it's all in gas. It's a global one. We didn't know where to put it. We put it there yesterday evening because we got the figure quite late. So there was not a perfect position. We could have done it elsewhere. So it's all in gas. It's a reverse replacement rate, global one, 121% on one year and 116% on three year. So the second answer is easy. The first one, Yes, it's true that we report in net investments and that clearly there are some sales on the E&P side embedded in the budget. So the organic part of the capex for E&P is higher than the $7 billion you could or 6, 7. I think it's $8 billion more or less. But you probably have an assumption of around $2 billion of sales more or less. It's more or less the metrics, but I think if I remember well what we have. Honestly, the $50,000 per barrel per day of flowing barrel is a matrix where Today we don't see an inflation in the projects at this stage, a little inflation. We've seen some inflation on steel, I would say, in the Uganda project. I think the delay in the last year costed us a little, some extra, but we are managing that, having some flexible contracts. So at this stage, the $50,000 per barrel, flowing barrel,

because we are targeting some low-cost barrel i would say is is can you can still consider it thank you very much thank you next question comes from the line of paul cheng from scotia bank please go ahead thank you good morning or good afternoon gentlemen um patrick you mentioned about certain name uh that you may be able to identify the oil development by the end of the year. So what exactly we have to do in order for us to reach that stage, how far we are from reaching that kind of decision? And the second point is that on – second question, on the LNG sales mix that the page in your presentation, it looks like about 40%, 45% of the sales is in spot. So we assume that wallet is totally linked to the spot LNG price or that they are still, to a large part, linked to the long-term oil prices. Thank you.

So Suriname is just drilling. We need to appraise. We have several discoveries. We have a plan. I think we have one, two, three wells to drill in order to confirm. I mean, with the three next three wells on the southern uh paul where we have made different discoveries uh i think with the three wells we will comfort us the capacity to again you know the point is that we are targeting enough oil pool to avoid uh to to have to to find a solution for commercialization of the gas which might be tricky and delay everything So there are three wells for me coming, and we intend to drill them, all of them, by 22. So I think that's why I was answering end of 22. I hope we'll have, I think the plan on, I would say, the south front pole, because then we explore on the north as well of the block, but where we have made discoveries mainly on the south front part of the block, for me, after these three wells, we have a clarity of what can be done, and the size of it, and engaging towards development. So that's the point where I am today. If I had to explain you the whole details, it could take two hours because there are plenty of cases, assumptions, et cetera. So we need to do it. Second, and we find hydrocarbons each time we drill. Don't worry. But the question is of much oil, of much gas, and et cetera. So on the other part, yes, you are right. It's a 60% long-term and 40% spot. Spot is pure spot. I mean, spot is two things, in fact, in the spot volume. You have... 10 million tons, let's say, as a round figure, which is 20%, 20% is real deals, which are spot deals, which means we have the vessels, we have the energy tankers, and we buy spot, and we sell spot, and we make a small money on the difference between buying arbitration. That's the pure spot. And then in our portfolio of the marketing team, there are some contracts which are linked to sport indicators. I would say either GKM or NBP. And these ones are not all linked. Our links are more in the long-term part. I'm speaking under the eyes of Stéphane. If I made a mistake, you raise your... It's okay? It's okay. So the answer is right.

Patrick, on the second component, you're saying that it's linked to the sport. How big is that volume?

Sorry?

You mentioned earlier that that's a portion of the volume that is based on your marketing team and that those is linked to the sport LNG price market. How big is those volumes?

Qu'est-ce qu'il dit? Again, you have 44 million tons, if I remember. You deduct 10. So you have 34 million tons. And you know the proportion of long term. So long term is 60% of 34. So it makes 26. So 36 minus 26 makes 10 million tons. So it's 10, 10, more or less, and 26. All that is in the slide. You take your finger, you count, and it's there. Good. Thank you, Paul.

That was the last question. I would like now to hand back over to the speakers for final remarks.

Thank you. So thank you for your attention. Yes, it's true that the results are, I think, in line with more than in line because we beat the consensus by 10%. So stronger is delivery, but yet more to come. It's easier, honestly, to monitor the company this year than last year where we had no visibility, even if... Of course, we must continue to be very focused, and I know all the teams are very focused on the delivery of all these production volumes in marketing, petroleum products and refining petrochemicals. And I want to invite you to join us on March 24th. I don't know if it will be virtual or in presencial, you know. With this pandemic, we'll let you know that's what we intend to do. If it can be in present, we'll do it. It will be probably more presentation than today because we intend to present you the sustainability climate report, but also to come back on the strategy and having the visibility of where we go. in order to prepare the General Assembly of Shoulders. So thank you for your attention and we wish you the best for the next month and see you on March 24th.