TotalEnergies SE Ordinary Shares

But at TotalEnergies, we consider that it's not a good market for developing offshore wind. And in fact, what I also say, I think developing offshore wind requires some specific market. It's a question of cost-merit curve to produce electricity. And it's linked as well. So UK, Germany, France might be some interesting countries. because they have less capacity to develop onshore renewables because limited space, in fact. So there is a market there. So we will concentrate on these projects. And the other lesson we drew is that on offshore wind is that it needs to be big to be profitable. So we are cleaning our portfolio. We had a small project in Denmark. We are just exiting it because it does not fly. markets, and honestly, Brazil, Philippines, India, forget all that. There's no interest. There are plenty in Brazil. You can produce plenty on onshore wind in Nordeste with gas as a venture, which costs much less than offshore wind. So offshore wind is more expensive, so it should be delegated to markets which could afford it and which need it. And that's the conclusion which we draw for ourselves. So we'll concentrate on that. Some projects, which are large, by the way, on which we believe that the fundamentals are good. And so that's the reality. So you will not see newspapers and press releases, but the time is back in the U.S. for sure. Thank you very much. At least as long as I am here and chairman of the company.

Thank you.

The next question is from Anish Kapadia, Palissy.

Thanks. Good afternoon. I wanted to ask about battery storage and especially in the context of seeing Europe having its earliest containment of renewables this year, the record level that's expected this year and the extreme negative pricing. I just wanted to get what's your view on battery storage growth in Europe, how you see the Iran conflict accelerating this, and then what's the role of Total and SAFT within this context?

I will say, fundamentally, it's not linked to the conflict of when you develop renewable, you should put batteries. So good news on the last two years, in fact, the cost of batteries has dramatically increased. They have been divided almost by two battery cells. Thanks again, by the way, to Chinese suppliers. But it's a reality. So you have a strong decrease of batteries. And I think it's absolutely necessary, not only to avoid containment, but also it's a matter of grid management. But when you develop a renewable farm, you should have some battery. I'm against the CFD scheme in Europe, because in the CFD scheme, the developer, solar or wind developer, has zero obligation to build the battery. He's securing a price from the state, and he can... So sometimes the states are smarter. They say, we don't pay you if it's negative. But in fact, it's just a strange scheme, in fact, the CFD. The scheme, which is working in the U.S., where you have some fiscal support on your CAPEX, ITC, or BTC, is much better because, in fact, if you are facing the market and you develop your solar plant, and for sure, you always build the battery storage with the solar plant. Otherwise, you are dead and your profitability will be low. So I think it's obvious that... And the more we see, as you said... investments and developments of new solar farms, like in Spain, for example, but even in Germany, we begin to see the limits, and the curtailment is higher and higher because there are no batteries. So, yes, I think it's time to really incentivize in battery storage. So on our side, we are investing in batteries. We have, in particular in Germany, where it's a good market because there's a lot of renewables, We have a company which we acquired two years ago, and we are developing two to three gigawatts of batteries. We just farmed down part of some of them at 50% to Allianz with a good profitability. So, yes, we think there is a real market, in particular in Europe. And not only because we run conflict, it should be accelerated. If Europeans are serious about, I would say, developing the penetration of renewables in Europe, It's absolutely fundamental to do it together with batteries to stabilize the grid and to be able to absorb the most of this renewable production. And SAFT, to come back, SAFT is good, is strong, is developing very well on the energy storage system business. I think they are number four or five in the world, and they are making quite a lot, taking quite a lot of markets. So it was one of the reasons why we acquired SAFT. It was a little long market to take off, but now it's really a full speed on it. And there are also some technology improvements which allow to think that the cost could also, when we were discussing with the SAFT CEO, he thinks that the battery storage has already diminished by 50%, but a 30% decrease is possible on the cost, thanks to higher density of energy storage, et cetera, et cetera.

Thank you. The next question is from . Yes. Yes, hello.

Sorry, my mic was off. It's a follow-up on Mark's question on refining. one of your competitors explained yesterday that because of various factors like major dislocation and crude differential product yields or freight costs, it's realized refining margin in April was about $5 less than its headline margin indicator. So do you see that? And Can you also tell us what is the average of total refining margin indicator so far?

Thank you. I didn't see such a dislocation, to be honest. I know that the ERM, I was looking at what is, normally we have an indicator internally, but my team does not have it. Okay, so there was, in fact, the realized refining margin in the first quarter was around 10.5%. while the indicator we gave you was around 11.4. So there was a little lower, but not $5. So we suffered less from... That's true, but honestly, today, one of the issues, to be honest, and including today in April, we have some... Yes, and it's true. I will give you another figure, just because I want to be in solidarity with my colleague. In April, the ERM was the indicator... was around $25, and the MCV of refining, the realized margin on variable cost was around $21.5. So you had not $5, but $3.5 difference. Why? Because honestly, these paper markets today, these indicators are difficult to follow. But that is going that way. The other months, it could be the other way. So we are trying to, each of us are trying to trace an indicator to give a sense of what is happening on the market. But there are dislocations, and it's perfectly true today between the products. By the way, it was an extraordinary situation. By the way, the March, where you've seen high oil price and high refining margins. Don't believe you have a... It's rebalancing, you know. It's counter-cyclical. But not the case. So, again, at the end, what I know is that I've never seen in my life such high margins on the paper, so it's good. and so that we can be even if there is a little difference between a paper indicator and the realization it's still delivering very good and strong results that's the situation and again i know we have a debate internally but because the daily uh our teams are calculating these famous refining indicators based on the market and we have some big doubts because on the other side when we saw that we see that we can sell that more than $200 per barrel, we are not sure that all that is completely consistent. In fact, as you have a dislocation between the physical market and the paper market, which is quite astonishing. At some point, it should converge. These type of indicators are not so reflecting the reality of what is happening on the day-to-day marketing of the products.

Thank you very much. Very helpful answer. Thank you. Thank you, Bertrand.

As a reminder, if you wish to register for a question, please press star and one on your telephone. There are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Okay, so thank you for your assistance, thank you for your comments. I think it was a quarter where once again we demonstrated the strength of our model. I think we will not disappoint you in terms of return to shareholders. The share of Total Energy since we have been listed in the New York Stock Exchange on December 8, I'm looking to that as a starting point of the renaissance of the company. has overperformed all our peers by quite a margin. So I hope that this set of results will help to maintain it. And again, if we can attract more shareholders to TotalEnergies and to globally the sector, it's good. So thank you for your attendance. And I think we'll have opportunity to meet in coming months. And our shareholders, for sure, We'll meet on the annual general meeting on May 29, I think, in Paris. So thank you again.

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.