TotalEnergies SE Ordinary Shares

Hello everybody, good afternoon or good morning for those who are in the US. And before Jean-Pierre will go through the details of the second quarter financial, I would like first to make some few opening comments. Starting obviously with the current conflict in the Middle East which has picked up again in the last few days and which is clearly impacting our markets and our operations and our perspectives. Although we are all hoping in mid-June that a resolution could be envisaged for the signature of EMOU and ceasefire between the US and Iran, the situation has remained, to say the least, extremely volatile, with the Strait of Hormuz being an intermittent battleground where the risk premium to navigate in these waters is increasingly high. Some are even beginning to consider but this could become a new normal with a straight opening on and off depending on the level of tensions between the parties. This unstable and chaotic environment has been prevailing for the second quarter but I would say the last 15 days in June where we have seen some quite interesting reactions of the market with crude oil going down very quickly but products going to the roof at the same time. We don't know how long this conflict will continue. We have no specific information. I don't know if anybody knows, by the way. But of course, for us, safety of our teams will remain our most priority. As Jean-Pierre will show you in a moment, we can say we have managed this quarter to deliver once again strong results and cash flows from both our strategic pillars. Thanks to the strong performance of the teams who managed to capture very favorable market conditions for many of the energies we are producing and selling, the oil prices rose about $100 per barrel, even if differentials have widened, while refining petrochemicals, biofuel margins, but also distribution margins were increased, with some even reaching historic levels. and Gas, LNG, Electricity were also at strong levels. Once again, TotalEnergies has demonstrated its capacity to capture its margins and high prices, leveraging the integrated and diversified business model along the value chains of Oil, Gas and Electricity. First, all upstream and downstream businesses have been performing very strongly at the same time. which is not so frequent since quite often one benefits from a supportive environment at the expense of the other. But currently both are capturing high prices and margins given the tensions on global demand for products. As we speak, integrated margins this morning are around $130 per barrel, brands of crude oil around $95 and margins at $35. ENP delivered a strong quarter in terms of productions, thanks to a solid 4% organic growth, higher than our forecast, coming from our rich and diversified portfolio of projects, which was planned, in particular from Brazil, US and Libya, but also, and I must say it was very good, from a strong operational performance, limiting, I would say, the unexpected results All of this allows us to partly compensate the production losses in the Middle East. ENP has been delivering once again this quarter a strong cash flow from operations. Despite as well, I would say, and there was a disturbance in the Middle East between the production reported and the capacity to lift these productions, which impacted because the lifting in the Gulf, of course, was very limited by access to the Strait of Hormuz. Looking forward on the Middle East situation, beginning of July, end of June, I would say the production was going up quite quickly and we had limitations, I would say only 5% of our global production, but this weekend, after the conflict came back, we were more back to 8-10% of limitations. Thank you very much. affected as per our guidance at 15% of our production. So we'll see what will happen for the next quarter. Refining and chemicals performed in an exceptional way, I must say, leveraging market conditions, managing well the tensions on supply of refined products to maximize capturing margins. So refiners have adjusted the way they use their plants in the second quarter to prioritize In particular, production of diesel and jet fuel, which we are offering higher margins. And also, by doing that, contributing to security of supply of France and Europe. This performance was achieved, although some of our facilities have been impacted by events outside of our control, like... The SATOP refinery in Sao Olivia, which was hit in mid-April, if I remember well, by some drones, and which has been used at around, which is back today at 70% of capacity and full capacity by end of the third quarter, is expecting. But also Port Arthur in the U.S. suffered, unfortunately in June, from a lightning strike during a tropical storm, and now is progressively coming back to normal production levels. Our crude oil and petroleum product trading activities have been very successful for the second quarter in a row with a strong performance and made another $500 million, I would say overperformance, on the top of our usual structural performance of $500 million. And last but not least on the downstream, marketing and services have reported the best ever quarter, driven by the positive impact of the seasonality in Europe but also Unit margins in particular on products like lubricants. After a strong outperformance in the first quarter, our gas trading activities results in the second quarter were not good and impacted by flat to declining European market conditions, Whereas our traders were positioned to see the more supportive European gas environment in line with supply-demand fundamental expectations. Our traders took a long position on gas, thinking being bullish on the market, which seems to be reasonable because many indications were pointing to gas prices increasing, as because of lower supply out of the Middle East and from Qatar, because European inventories were low, at less than 15%, below the five-year average. But these factors did not materialize during the second quarter. Even, in fact, prices have declined through the quarter, leading to, I would say, weaker or poor results from the trading business. The story is, however, not over. As you have probably seen, now gas prices in Europe are valid. and as we are lit there, traders are rightly stubborn since early July. Their gas trading results are following and will be back to some overperformance again. On our second pillar, electricity, there was multiple good news during this quarter. Integrated Power delivered one of its best quarters ever in terms of strong cash flow. In fact, the second best in 2024. Even in the absence of farm downs during this quarter, but it was supported by the closing of the transaction with EPH in April, one month earlier or one to two months earlier than expected, and the cash flow coming from EPH was as per the expectations. So, very strong deliveries on almost all fronts, but I would say gas trading for once, We have generated at the company level next to $10 billion this quarter, which has been allocated in a very consistent manner, as I have announced to you last April during the call for the first quarter. First, of course, we have deleveraging down to a green ratio of 13%. We show an improvement of 2.4 percentage points quarter to quarter, benefiting from a 3.3 billion reduction in net debt and also a 1.2 billion dollar working cap release. And second, of course, we have confirmed the increase of our interim quarterly dividend by 5.9% to 0.9 euro per share, which places Total Energies once again in the leading pack of the growing dividend companies. Along this quarter, our cash generation has also allowed us to sustain our production growth targets with disciplined capital investment of $3.4 billion, comforting our annual guidance of $15 billion, and also to increase, as announced, our buyback to $1.5 billion during the second quarter. And the Board has authorized us to maintain this buyback with another $1.5 billion for the third quarter. With all this good news, I now hand it over to Jean-Pierre, who has an easy work to go through the details of the second quarter financial results.

Thank you, Patrick. So I will start by commenting on the price environment in the second quarter of 2016 versus the first quarter. We captured high commodity prices, although gradually decreasing over the quarter. Brent averaged $104 per barrel during the second quarter versus $81 per barrel in the first quarter, meaning plus $23 per barrel, more than 25%. While average liquid price was up by $18 per barrel due to widened differential and a lifting schedule way towards the end of the quarter in a crude market which softened in June in the context of the ceasefire in the Middle East. CTF average $15.6 per million BTU versus $13.7 and our average LNG price increased by 20% at $10.2 per million BTU. Oil prices started to impact LNG prices with one to two months of lag effects according to LNG pricing formulas. Finally, the European refining margins increased by $13.5 per barrel In this price environment, the company reported very strong financial results, increasingly by almost 15% compared to the first quarter, with second quarter 26 cash flow of $9.8 billion and adjusted net income increasing to $6 billion. These results were possible because of the strong operational performance of all businesses, demonstrating the company's ability to fully capture the environment upsides. Upstream delivered an underlying accretive production growth of over 4% year-on-year, which is above the annual 3% guidance and partially offsetting the production loss in the Middle East. Downstream, a very good operational performance as explained by Patrick from our refineries, which have been deliberately geared towards maximizing distillate production to capture higher refining margins. An integrated power cash flow generation increased by 25% over the quarter, supported by a contribution of EPH assets in line with expectations since the closing of the transition at the end of April. Total energy generated this very strong result, the highest since the end of 2022, Despite two challenges, although production from the Middle East was higher than originally expected, a significant portion of this production could not be lifted during the quarter and is recognized in E&P results based on the crude price from end June, meaning less than $70 per barrel. Our gas trading underperformed after an overperformance in the first quarter because of the declining gas price for the quarter, as explained by Patrick. TotalEnergies has delivered strong profitability this quarter, with return on equity at 15.9% and a ROH close to 14%. Now moving to the business segment, starting with hydrocarbons. On production on a year-on-year basis, excluding the impact of the Middle East conflict, second quarter hydrocarbons production increased by more than 4%, above the guidance provided of 3%, The impact of the conflict in the Middle East is around 210,000 barrels of oil equivalent per day over the quarter, below the guidance communicated last quarter of 360. Due to the company's production ramp-up in offshore United Arab Emirates, and the restart of production in the other countries in the region during June. Although, physical lifting turned out to be in line with the guidance with an impact of 350,000 barrels of oil equivalent per day. Looking forward, we expect to maintain a strong momentum with oil and gas production in the first quarter, excluding the Middle East impact, expected to grow around 3% compared to the first quarter of 2025, in line with the annual growth guidance. Turning on the quarterly results and starting with EMP results, and the segments generated an adjusted net operating income of $3.2 billion this quarter, up by 25% quarter to quarter, capturing the increase in average liquid price of $17.9 per barrel over the quarter, and demonstrating the accretive new project contributing this quarter to the yearly production group. Similarly, cash flow reached $5.8 billion, up 27% quarter to quarter. On the cost side, very important as well, once again, we maintain our leadership with an average OPEX per barrel equivalent below $5 in the second quarter. On integrated LNG. The LNG production decreased by 10% quarter to quarter, mainly due to shut-in production in Qatar related to the Middle East conflict. But in contrast to the outperformance in the first quarter, this quarter, the second quarter, was impacted by the underperformance of gas trading activities in an overall flat or even bearish European market. Reflecting the significantly decreased adjusted net operating income, and the cash flow of the segment, quarter to quarter, of $0.8 billion. Given the evolution of oil and gas prices in recent months and the lag effects on pricing formula, the company anticipates an average energy selling price of above $11.5 per annum ETU for the third quarter of 26.

As we execute our consistent strategy in energy,

The main milestones of the quarter were the startup of Energia Costa Azul Energy Plan on the Pacific coast of Mexico, strengthening the differentiation of the LNG portfolio of the company towards the Asian markets. Total Energy loaded the first cargo at ECLNG and shipped it to the Asian markets, where the company pursued a strategy of signing long-term oil index LNG contracts with new clients in China or in Japan. Turning now to Integrated Power, the net power generation increased to 14.8 TWh, up 28% year-on-year, driven by an increase of nearly 15% in generation from renewable sources, reflecting growth in installed capacity, and a 2 TWh increase in production from flexible gas-fired capacity, resulting notably from the completion of the transaction with EPH and the safe work. Total Energy is on track to reach its annual objective in integrated power, in particular to generate more than 60 TWh over the year. Cash flow from operation was above $700 million, supported by the contribution again of EPH assets, in line with expectations, since the closing of the foundation. And this quarter again, we provide more granularity in the integrated power financial performance, with a split in cash flow between Production Assets, meaning renewables and gas-fired power plants, and sale activity, B2B, B2C, and trading. The former contributed 60% of the cash flow, and the latter contributed 40%. TTIP, the new venture with EPH, will continue providing its growing contribution to the company's results throughout the year, in line with expectations. As TTP has started contributing in the second quarter, we said in the first quarter that integrated power should benefit in 2026 from 10 terawatt-hours of net power production in line with the 15 terawatt-hours guidance given for a full year and more than $500 million contribution to available cash flow. Moving to downstream, during the second quarter, Refining and chemicals was able to fully capture the increase in refining and petrochemical margins, notably adapting the refinery run to produce more distillates. Overall, for refining and chemicals, adjusted net operating income was up by $200 million quarter to quarter to $1.8 billion, and cash flow reached $2 billion. Marketing and services increased. delivered outstanding results, the best in at least 10 years, driven by the positive impact of the seasonality in Europe and the higher unit margin, as noted by Patrick, notably on lubricants. Adjusting net operating income was up 21% year-on-year at $500 million and cash flow close to 850, up 19% year-on-year. Moving to the company level and starting with working caps, Working capital decreased by $1.2 billion during the second quarter, largely driven by the reversal of the first quarter build-up, with lower hydrocarbon prices at the end of the second quarter compared to the end of the first quarter. The company has kept the course for capital expenditure, with net investment amounting to $3.4 billion in the second quarter, with a contribution of net disposal to $1.2 billion. As explained by Patrick, comfort our guidance for full year 26 net investments level of $15 billion. As a result, the gearing is improved by more than two points to reach 13.1% at the end of the quarter, reflecting a reduction in net debt of $3.3 billion. To conclude, once again this quarter, the integrated model of total energy demonstrated its ability to capture higher prices and higher margins with a growing cash flow to support the delivery of the company, our shareholder distribution with a clear priority to the dividends and the capex to deliver our growth. I think now we can open the line for questions.

Thank you, 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 and one on your telephone and wait for your name to be announced. Please kindly mute any audio sources by asking a question. If you wish to cancel your request, please press the star and zero key. Once again, please press star and one if you wish to ask a question. The first question is from Martin Ratz, Morgan Stanley.

Hi, hello. Two questions, if I may. I know there's an awful lot of attention, of course, on the Middle East, but I wanted to ask you a quick one about Namibia. It's still very important for Total. Where do you stand on the FID of Venus versus the completion of the transaction with Galp on Mopane? I was hoping you could say a few words about that. And then secondly, I wanted to ask you about the payout ratio for this year, because the guidance is more than 40%. I think we're sort of tracking below that so far. Of course, you see volatile macro environments. It's perhaps no surprise, but the sort of the payout guidance, over which period should we expect that to be realized? Would you still expect to have more than 40% payouts sort of over the year, or should that become a longer-term target?

Okay. Thank you, Martin, for the first question. So, There will be more precise. On the GALP transaction related to Mopain versus Venice, we have received at the end of last week the approval, official approval of the Ministry of Energy of Namibia. And so we are just in fact finalizing the last paper to close the deal potentially tonight or tomorrow. We are just, so your question came at the right time. So that's very important, of course, because this fact that we will be on both developments as operators has a strong value for us in order to engage with the first FID. On the FID of Venice, I would say there are intense discussions as well. You know, we have a joint target between the government of Namibia and the consortium to sanction it by end of July. There are discussions progressing. We'll see if we can conclude in July or if we need to have a little more time. Technically, I think we have selected all contractors. So we are ready to take the FID subject to finalizing discussions with the government of Namibia. There have been some progress, but there's still some progress to be done. So again, Generally, it's one of the last minutes we can conclude, but we'll see if we can do it. Otherwise, we'll wait. But I'm, I would say, reasonably optimistic that all the parties, there is a joint interest, clearly. In particular, the Namibian authorities are fundamentally supportive to have a strong operator being able to capitalize on synergies between the projects. I remind you that now that Mopane has been approved and will be closed, the next step is to engage in the second half to appraise Mopane. We have three worlds in 2027 and the FID will be taken in 2028. So all that as we engage in a strong momentum and clearly for us, Namibia will begin, is beginning, is becoming a very important hub for future growth, not only to 2030, beyond 2030 that we'll have. Then on the other topics, yes, we are clear, we are targeting 40% of payout. We have increased the buyback level and the dividend level between the first quarter and the second quarter. I don't know where we'll go. To be honest, you could say we have been, there was a little cautiousness in the fact we have raised from $750 million to $1.5 million. We maintain the 1.5 for the next quarter because I can tell that we were quite impressed also when the MOU was signed in June by the quick drop of the crude oil price down to $70. So it's difficult, honestly, to anticipate what will be the cash flow for the second half of the year. Of course, we will be globally above the guidance we gave, I gave even to you, End of April, I think I mentioned the cash flow guidance at $80, $7 up, $7 up, refining margin of $32 billion. Obviously, we'll be higher than that. Where will it land between $35, $40? I mean, I don't know. It's difficult to guess. So we can make the math like you. If we were at $35 billion, there is a miss. I mean, a miss, not a miss. There is a question of $1 billion, a little more, around $1 billion drop. to increase in the return to shareholders. One billion in the last quarter, as we'll see, and there will be a debate at the board at the different ways we could imagine to execute it. But I think, again, my message to you is, first, it's a good topic, because that means that we are generating more cash flows than compared to the guidance we gave you in February. So it's a matter of, I would say, rich companies. It's a good topic, but the idea that we will target the 40% is really on the yearly basis. I remind you, by the way, that we have quite an advance if you want to make it in a multi-year case, as you suggested in your question. I think the last year we were at 55%, the previous year around 50% or 53%. So if I make it on many multi-year cases, which is not the case because we are simple guides. We are quite in advance compared to 40. So again, consider that 40% guidance is guiding the board. And again, the board is also, as I was explaining to you last quarter, looking, thanks to your support, with your support and your strong guidance last year at the same period of the year, to the gearing ratio. Going down to 10% is quite also an objective for the company, and we might achieve it this year. So that's the equation of the capital distribution, I would say, for the board. And I think we will manage that as we've done that regularly, respecting all different, I would say, stakeholders. Great, thank you.

The next question is from Michele Della Vigna, Goldman Sachs.

Thank you very much. I wanted to ask two questions. The first one is if you have an update on the two giant oil developments operating in Uganda and Suriname. The second one is more of a macro question. I was wondering if you have a view on China demand. We've seen a drop of about 5 million barrels per day in imports since the beginning of the conflict. It's very difficult to unpick what is the stocking, demand substitution, demand destruction. I was just wondering if you had any view of how to think about it. Thank you.

Okay, first question on Uganda. Okay, we are, I would say, in the last six months of development. I would say we expect the crude oil production to start before the end of the year. I would say 27 will be the year where we reach the plateau. We have two developments. We have Tlenga on one side and the other one, the offshore. Kingfisher, I think, is ready to start up by September. My information is good. The pipeline is also ready by September. So we might start, in fact, in the next quarter, the production at a rate which is, I think, Kingfisher was around 60,000 barrels per day. And then Tlenga will come. Thank you very much. to go to Uganda in one year in September 2027. So Uganda, for me, now it's a matter of finalizing and turning the wheels on. On Turin, things are moving very well, I would say. We confirmed that the production will start up by first half of 2028. That's where we are, according to planning I have. It was our first quarter, maybe second quarter, but we are in first half of 2028, and we The news of the construction, it has already progressed by 40%. We are at 40% advancement, but the FPSO in the yard is building correctly. So, no, I would say, this is more classical, you know, it's more complex to execute an onshore project than an offshore one. So, we are in Suriname, we are in a project which, for Total Energy, is a deep water project. We know how to execute them. Then, China, it's a very interesting demand. Of course, we have all been surprised when we discovered the statistics of May and June, I would say, where in fact, you are right, the refinery rents went down from 15.5 million barrels of oil per day in February to 12.5 in June. So clearly, with the policy, which was firstly, first, I remind you that the Chinese authorities have decided very quickly to stop Exporting products out of China. And they reduced the run rate of the refineries in China by 10%, down to 90%. I would say a voluntary reduction of Chinese. So it was more affecting the export. The domestic demand is difficult to say that it's a domestic demand disruption. So I would not say that. It's also true, probably, that that's what we saw. What we're sure is that we've observed it. It seems that there is some, I would say, turnaround on Chinese refinery in July, August, in summertime. So we don't expect, in fact, much increase of this demand from China. It's true that when you look at that, you can consider that China has... The system in China had quite an impact on the old market, and probably you know we were commenting in April the fact that the Strait of Hormuz blockade was representing 10 to 12 million barrels per day of the market. The Chinese by themselves with their policy have, I would say, absorbed 4 million barrels per day. If you add on that that the US has released almost 2 million barrels per day of the SPR, they have sold the two countries, I would say, have sold... Almost 60% of the problem. That's probably why the price of oil went up to 120, but not so high. So for the coming months, Michele, you can observe, like me, that we are back to the blockade today. No vessels, no tankers are crossing straight at all, so we are back to the situation. I know that the Chinese have announced that they will allow again some few refineries to export some few products. It was during, I would say, the quiet period that almost today we can imagine that again it might not be the case again with these events. So that's what I can comment. So for sure, less exports, domestic demand, destruction, difficult to who have data on this one.

Thank you.

The next question is from Biraj Borkataria, RBC.

Hi there. Thanks for taking my question. Just two on your LNG business. In June, there were reports around a Russian decree to authorize a sale of 10% of Arctic LNG2, I think related to the European sanctions. So, I don't believe you have commented, but are you aware and are you planning to exit there? And related to that, are you any clearer on the sort of legal language around EU sanctions and what it means for Yamal at this point? I know I asked with full year results and it wasn't quite clear exactly what it would mean and there's been some conflicting reports. So any kind of there would be helpful. Thank you.

Thank you, Bernard, for your questions. I know that you have a specific interest for Russian matters. For good reasons, by the way. So, Arctic Energy 2. As you know, I remind you that we decided in 2022, it was very early in March, in the accounts of March 31st, 2022, shortly after the war, we recorded an impairment of $4.1 billion, which was in fact concerning notably Arctic Energy 2, full write-off. Secondly, that Article NG2 has been placed under sanctions by U.S. authorities on the 2nd of November 23, and as a result, immediately, we suspended procedures in accordance with existing contracts, and in consequence, in fact, all rights, obligations under these contracts related to Article NG2 have been suspended since November 23. In such a context, Novatic approached us, indeed, and initiated discussions for the transfer of over 10% in Arctic LNG2 to one of their own subsidiaries, Nordline. And this has been publicly authorized, as you noticed, by a special decision of the Russian presidency in June. In fact, given this context of Arctic LNG2, we on our side consider that it's in the joint interest of Total Energies and Novatec to dispose of our Arctic LNG2 shares, which again were fully impaired in 2022. We have notified our partners and lenders, and we expect the transfer process initiated by Novatec to be completed in the near term. So the Arctic LNG2 chapter will be over for total energies in such a context. The second question. I would love to be able to answer to you, but we are waiting to see what is the legal language precisely. So, as you have, there was some press news this morning, that there was intense discussion about the new sanctions package at Brussels. And among these different topics, and we are not part of everything, even if we try to understand, we are not in the room, there was a debate which came from, I would say, the Greek authorities, which were claiming that the Greek energy tankers should be allowed to transport some energy from Russia if it was to be offloaded outside of the EU. So that was basically the case. And it says that there is a legal language, but again, which could in fact have an impact on Yamal energy, according to what was said. and which could in fact allow, I would say, some transfer and purchase of Yamal energy if we were using EU energy tankers outside of EU again. So a specific case, so it's a little complex story, but that might have, yes, an impact on the fact that we, in fact, if it is a case, that means that Total Energies could not We used a force majeure to say, like it was until now, because until now there could be, in fact, with the regulations which were in place, which were banning the LNG exports to EU, but there was a question mark. I made that comment, I think, in April to all of you, or in February, I remember, that we are questioning, there was a different interpretation of the European sanctions, but... Even a EU company could not purchase any of Russian energy either for you or outside of the EU. So it seems that the new language could in fact clarify it in a way that it could be done outside of the EU if we use some EU energy tankers in fact. Which in fact would be that the interest of EU companies would say some be preserved independently and many others. So again, I'm just commenting some verbal information. We have been in contact with different and I think the final resolution will be delivered probably tonight or tomorrow morning. We are drafting the last ones and we'll see what will be the outcome. Of course, we need to analyze it because we have a policy where We don't want to take any risk with sanctions, but my comment is that if it is the case, again, I think the interests of EU companies will be preserved, because honestly, to let the Russian LNG being sold outside of the EU, not by EU companies, but only by your competitors, was a little odd to all the EU companies involved. So, let's see, that's what I can tell you, and we'll keep you aware, obviously, because it has... Thank you very much. The next question is from Doug Legate of Wolf Research.

Thank you. Good afternoon, everybody. Patrick, I wonder if I could pick up on Martin's prior question about cash returns and the 40% and so on. I think we would all agree probably this is a bit of a windfall environment. And maybe formulaic returns of capital, you know, one could be forgiven if there was some flexibility there. My question is specifically around the hybrid bonds issue. As opposed to the net debt target and whether you would consider these windfalls as an opportunity to perhaps address some of that longer-term financing as part of your capital structure. That's my first question. I've got a follow-up and exploration, please.

I should give that to Jean-Pierre, but I know that I'm still... To be honest, you know, the highway bonds, for me, it's a debt issue. It's a quasi-debt with a low interest rate compared to what we can issue bonds. So I don't make a lot of difference between the different bonds that we have issued. So I would say it's around 11 billion euros of 3% coupons. So it's quite a cheap debt. So is it a priority to... And with all that, my answer will be clear, it's no. And it's no, and we have made some partial reimbursement, but it's not a priority. And again, we are more looking at, this year, we are more looking to the global cost of different bonds rather than this specific one. Maybe Jean-Pierre wants to elaborate.

That depends on the market. So if Thank you very much.

Yeah, my follow-up, Patrick, is very specific on exploration. So you hired Nicola out of ENI, and you have Mopaine and Venus in Namibia. Back in 2016, Total drilled the only deepwater well in Uruguay, and ENI, late last year, farmed into Uruguay. It seems that activity there is picking up a bit. So my question is, when you roll all that together, does Total have any ambitions to Move into Uruguay.

Okay. I mean, Doug, you will need to ask a question to Nicolas. To be honest, Nicolas did not come to my office to tell me we need absolutely to come back to Uruguay. So to be clear, our own experience in Uruguay has been quite average, to be honest. And in fact, it's a whole basin because this basin, which was the Pelotas Basin, if I remember well, In fact, we drilled in the Uruguay. We also drilled in the other side in Brazil, which was not as well quite a success. So we made two drillings in this deepwater basin there, which was honestly not very encouraging. So I have noticed that there were some companies last year which went back. Nicolas is quite excited by Namibia, by coming back on Suriname with OBL. So he has some other ideas or other African countries. But again, I discussed with him through your interview, if he wants to come back through your wife. As the CEO, the policy is quite clear. We allocate $1 billion per year to exploration and appraisal. This is my commitment to Nicolas when we are in. And I told him it's up to you to decide where we'll put the money. You have to share with you your convictions. But if it's your ideas, we know we follow that. When I was looking at the Venice case, looking at the department, you know, a Venice development might generate quite a nice cash flow, paying many years of exploration. But we need to keep in mind that in terms of cash generation, added value exploration for me is a nice engine. But again, I trust Nicolas that he will We're bringing to us IDs. I don't know if it's Uruguay or not. But until now, it's not Uruguay.

Great. Thanks so much, Patrick.

The next question is from Christopher Copland, Bank of America.

Thank you very much. Just two quick questions from me, Patrick. The info that you've given us on the positioning of your gas trade is very helpful. Can you maybe comment on whether their bullishness has extended into power and your merchant and spark spread position there and what you expect on that side now that you've got access to the EPH portfolio? And the second question, as ever, I keep trying to get comments out of you on the state of the M&A markets, but maybe now we have a specific example that you know more about than we do, which is the Danish deal. which I believe is entirely operated by yourself. What do you think about this environment? You've made use of inorganic before. Is this an environment to sell or to buy? Any comment once again would be appreciated. Thank you.

I commented to gas trading, but gas trading has been again a rather complicated Lower performance is served on trading, so just to tell you that now the position is, I would say, the winning one. On electricity, honestly, I don't have the visibility on that. Your question, of course, we have, as you know, the EPH deal is a deal where we are buying the assets, but we transform all assets in a tolling mode in order to have access to the electrons and in order to trade ourselves around with electricity. In fact, today at this stage, all the assets have not been yet, all the tolling agreements have not yet been signed. So we are working on it. So I think the full potential of trading around the EPH deal is more for the fourth quarter than immediately, to be honest. But of course, we are expecting from that some additional value. In fact, we have some objectives, and we were discussing that, by the way, with the Our trading electricity team last week during our five-year business plan. So we have some objectives and we expect them to deliver. We are trading on two markets. There is the European market, the one in which we are also trading in the U.S., which is a little more complex market, to be honest, because our position there is probably today still limited. So we will need to find ways to increase the position in the U.S. if we want to be, I would say, profitable trading electricity in the U.S., In Europe, we have quite a large portfolio today in different countries, so we have some expectations. The U.S., I would say, is still a work being in progress, I would say, on this one.

M&A market, yeah, I mean, I didn't have the time to analyze the...

The price which was paid by Vore to acquire the Blue Nord Energy, so I didn't, maybe I will receive, probably I will receive a memo, but I was occupied by other matters these last few days. It seems for me the market today is more a seller market than a buyer market, you know, with the price, the crude oil price which we experienced today to make a deal. Unless you have a big earn-out or schemes in which you will try to capture part of the potential upside, it's not a stable market. So before this crisis, I think you could imagine that the deals were done around to buy you around $70 per barrel. Today, to sell at $70, on my side, to be honest, I would not be a seller today on these assets, on your assets, because we would not like to lose some Some websites. So selling is probably better today than buying. Yeah, it's fine to come back to your deal. But again, I cannot comment on the specific situation you mentioned. And maybe we have some preemption, right? I don't know. I don't know the situation of this deal. We'll look at it. But as it is our assets and we operate with... By the way, I'm not surprised because Bruno was a fund and... It was quite clear to me that I met, by the way, the owner of BlueNord when I was in Denmark a few months ago, and it was quite clear to me that we were willing to sell. For us, as TotalEnergies, we have already quite a big share, I would say, in these Danish underground assets. So it's quite mature assets, to be honest. So I think we are fine with what we have. But again, we'll look to this situation.

Chris, much appreciated. Thank you.

The next question is from Mark Wilson Jeffries.

Thank you. Regarding European projects, could I ask about the Cyprus project, Kronos Block 6, and what the expectations to move that one forward are, please? And then secondly, on gas trading, yes, I agree with others. Helpful comments, but you spoke to the European expectations for price moves there that didn't occur. Should we consider your gas trading business to be more of a regional focused business rather than global? Obviously, oil material moves up and down and probably that enables that business. But should we think of your gas trading business as being a more European regional focused one? Thank you.

No, we have a global gas rating. We are a big LNG, I would say, player. I just mentioned that there are different markets in the U.S., in Asia, of course. I just tried to, in my comment, to tell you where we make the miss, and the miss was more on the European anticipation, on the TTF, where I think we were around $15, $16. At the end of March, we were around $17. Our teams were thinking it would go up. So 19-20 dollars, like it is going by the way today and in July, because we are anticipating the impact on the market both of the destruction from the Qatari production from the market and the, I would say as well, the fact that the inventory in Europe has to be rebuilt. And in fact, what happened is that the market probably considered that it was Thank you very much. which were not the right ones, but it does not mean at all that we are not a global one. I would say on the other markets, I didn't see any specific, we didn't see any, I would say, underperformance, I would say. We only see it on the European position. That's why I mention it. But don't draw this to the conclusion. Chronos, thank you for this question on Chronos. We are working on many FIDs, in fact, at the end of July. And the good news, and I think I must pay tribute to ENI, the operator, because we are 50, we have a big share, 50% like the operator ENI. We worked jointly, by the way, in the last six months to go to the FID, and the good news is that we have, I think we are working hard to, again, like on Venus, to finalize the FID by the end of July. It's a matter of Again, there is a lot. Kronos for everybody is an interesting development where we produce gas in Cyprus and then we maximize existing infrastructures in terms of CAPEX because it's a subsea development. It will go to Zor installations in Egypt to make the gas treatment and then to Damietta LNG plant in Egypt. So you can imagine there was a number of intergovernmental agreements and agreements Agreements with third parties to use all these existing installations. But we are, it's being done, honestly. And I think, I think if the audio is cut, we'll be able probably next week, end of next week to announce that. So, and it's good. It's an interesting project because at the end for TotalEnergies, we have access to 1.4 million tons of energy in Egypt, just in front of the European market. So you can imagine that it's a, It's an interesting project from gas to LNG. And for Cyprus as well, it's the first gas development in Cyprus. And maybe your scheme will open the door, will open the way to other valorization. So it has been a long journey, but I think we are there and we'll be happy to invest capital in the Kronos project.

The next question is from Matt Lofting, JP Morgan.

Thank you for taking the questions. Two, if I could, please. I wanted to first ask you about full-year operating cash flows. I think, Patrick, you said earlier, understandably, that you'd expect to be probably above the $32 billion for the full year that you mentioned in April. Obviously, the macro scenario is uncertain. If we were to stick to the $80, 15 gas and 7 refining that you used in April, where do you think full-year cash flows at that price deck would outturn on an underlying basis versus the 32 that you saw three months ago? And then secondly, I wanted to ask you about refining and security of supply of feedstock. Is the company able to access feedstock? The appropriate feedstocks for the system as you look into the coming months and is there a scenario where additional measures could be required from that perspective particularly if conflict in the Middle East persists? Thank you.

Okay, on the first question, it's quite easy to answer. The 32, because we know what has been the improvement in the second quarter, would be raised to 34.5. That's why I mentioned $35 billion, I think, in my answer to your colleague, the first question that I got. So 34, 45, 35 billion would be in such an environment. I would say you can get it as a guidance. Again, we'll see if we are at $80.00. In the beginning of the year, we were a little higher. We are more of an average, I think, around $90.7. So since the beginning. And the last 30 days, we're at $76. So that's quite a spread, you know. So between $75 and $90, we'll see where we land. It's interesting. So in this assumption, $34.5. and the current forward curve is a moving target, you know, it follows the spot one, so I don't have the figure, but I mentioned to you a range of 35 to 38, 39 billion if we are remaining, I think, if we were having a second half as the first half, you double it, you find 38, you know, so, but it's more, it's a higher environment, it's not 80, it's $90. It's $90, it's a refining margin of 15, So it's $90, $15, and TTF at $15 as well, which was the average of the first half. If you replicate such an environment, you could imagine we should deliver around $38 billion instead of $35. So you have a range to where we could land, but I don't know, maybe it will be lower at the end. That's what I can tell you today. The second question, no, we have no problem of supplying feedstock to a refining system, not at all. You know, we are producing a lot of oil in Brazil, a lot of oil in Africa. And so, in fact, our refinery, by the way, independently of Hormuz, in fact, in terms of food supply, you know, the Atlantic Basin or European refineries which are on the Atlantic Basin are generally supplied by crude oil coming from the Atlantic Basin. It's true that we like to have some sour food coming from the Middle East to make more diesel because it's the best food to produce diesel. There is a limited, but generally, the sour crude from the Middle East is more going to Asian refineries, in fact, than to European ones. So, no, we have no concern on our side to fill our refining system. The only concern I could have is more around Satop in Saudi Arabia, because first, it has been hit, so I hope it will not be hit again, and so we'll... We don't have the full capacity. Secondly, Sator production is of course stranded in the Gulf. It has been quite well used by the Saudi system during the second quarter for domestic use because they had over refineries which were hit. So from this perspective, we are running it for the domestic market, but we'll see what could happen if it's strong. So that's the situation, but no security or supply for pit stockpile system.

Super. Thank you on both.

The next question is from Lucas Herrmann, BNP Paribas.

Yeah, thanks very much, Patrick. A little conceptual perhaps, but one of the things that I think many of us are struggling with medium term at the moment is the fragmentation or fracturing within OPEC, the UAE having departed, talking about an incremental quota or changing its quota. If you think forwards, The potential for Iranian barrels to come back, more UAE to be available, Iraqi flows perhaps be larger, where does discipline sit with what remains of the rest of OPEC? How does that impact the way you think about allocation of capital to projects? Does it change anything in terms of how you feel about the robustness of oil markets, particularly at the bottom of the cycle? And secondly, if I might, and maybe this is just one that I should leave or we should leave for the strategy day, is simply to ask whether in light of the actions you've taken on Mopay or around Mopay, the addition of EPH, and the environment we're seeing in refining in particular at the moment that may be sustained, whether that's changed and altered your target of 20 billion or so of free cash by 2030 in the $70 world.

Hi, everyone.

Thank you.

Hi, James.

Okay, the first question. It's a good question for the investor presentation outlook in September, Lucas. Yes. We speak more about strategy. But the first one, honestly, in terms of capital discipline, because of all what you described very rightly, it's very good to stick to that discipline to test all our projects at $50 per barrel. Because the answer, yes, you can infer that today we are in a world of high prices, but we could go in a way where everybody would like to produce more. and maybe Saudi Arabia like they've done in 2020 could do. Why not myself? I mean, if everybody wants to produce, we could do it again. If you remember what happened in 2020 when Saudi Arabia decided to close the market, I think a few people around them were quick to come back to more discipline. So it's a matter of discipline. For us, honestly, I continue to believe and we are. But in the company, you know, we... We are continuing to test the $50. We plan the five-year business plan. We plan it at $60. Yes, we test what happens at $80 or $70, like you mentioned. But keeping the discipline and knowing that we are in a cyclical industry, I think it's just fundamental. All these events that you mentioned, I think are just confirming to me that... We need to keep that discipline. That's what I would answer to you. And that means as well that you should not be surprised that when we speak in end of September about, I would say, capital net investments, capital investments, you will hear figures which are more or less in line, which will be, not more or less, which will be in line with what we told you last year. We do not suddenly increase our capex because... because we have, on the short term, a higher environment. Does it change 2030? Not really, what you said, because Mopane, first, the production of Mopane is beyond 2030. Venus should start by 2030, so I would say, so Venus, Mopane, for me, it is 2030, 2035. We are working on it, so there is no impact. EPHs. Some were already part of our five-year business plan. We told you that we had just anticipated with the EPH some of the capex we were willing to allocate to M&A in integrated power. So it has been done, but in fact it was modeled, even if EPH was not, I would say, the deal which was modeled in our future cash flow by 2030. and Bounce and Refining, frankly, I will not take it as granted. So I'm still, maybe because I managed that business during three years, I'm a little more cautious on it. Today we have an incredible situation where both markets are positive in the same direction. That's true that on the products market, you have no products coming out of the Strait of Hormuz. The Russian situations, I would say themselves, they stopped. and so you have erosion disruption. So you have a lot of impacts, I would say, which are pushing up the product price. I'm not sure, I don't think it will, because if straight of almost remains on and off, as I read that some authorities said, maybe it's a new normal, if it is the case, then we'll not be in a $50 per barrel environment, you know, we'll be elsewhere. Because to reinstall a There is no low cycle. We have an on and off Strait of Hormuz production. Of course, we are building and we are willing to, we are discussing today, to invest in some of the pipeline projects which will allow to circumvent the Strait of Hormuz, which will take a few years. So the balance on refining, I don't take it for granted for planning by 2030. So we will come back to this question more precisely, but for me, in fact, what we have worked since we met last year in September 25, we have confirmed, in fact, and it's more, and we will come back to tell you fundamentally, all our targets are, we can confirm even strongly. And so, yes, the increase of free cash generation that we announced, which was more than $10 billion, an increase of $10 billion more than $10 billion, will be confirmed and I'm very happy. One of the first matches in September will be the confirmation of that. The second one will be to be more polar on beyond 2030 because in fact we are working now beyond 2030. So the company has two objectives to deliver all the 2030 additional free cash and we will do it. I can tell you because and we demonstrate why we are super confident and you have some of the projects you mentioned. and then working as well to continue the story because the story of total energy growth does not stop in 2030.

The next question is from Nash Kui, Barclays.

Good afternoon. Thanks for taking my questions. Two, please. The first one is on the Middle East. Patrick, we watched some of your recent interviews with French media. I think you talk a lot about the importance of building more export pipelines in the UAE as well as other countries. I wonder if you could elaborate your thinking around the Middle East situation and the total longer-term strategy in the area, please. And then the second question is on power, power segment. You have built a successful power business and you achieved one of the best quarters as you mentioned earlier. Strategically, I wonder what's your next ambition for this business? Thank you.

Okay, on the Middle East, it's quite obvious to me, you know, we are We are very well positioned in Abu Dhabi, for example, and we just announced two very big projects, by the way. Maybe despite this war, we have been quite active in Abu Dhabi to reinforce the world partnership and position of Total Energies together with Adnok or XRG or Mazda. We have announced G-Wave, Mazda, and all these renewable businesses in Asia. We have announced the BAP gas cap concession, which was... All dream for many people in the company to have access to the BAB gas cap. So it's done. We've all partnered. By the way, it's interesting to know that when in 2015 we signed the BAB concession onshore, some people were skeptical. Ten years after, we delivered the additional value. And it's because we were in the place together with our partners that we managed to go along with that knock. And thank you, by the way, to the trust that the Emirati authorities have given into the existing consortium. And we have also announced the UMSHAVE gas back cap. We have FID, I would say, yesterday, this week, in fact. We have FID together with ANOC, and we have a 20% share, the UMSHAVE gas cap, which is also, by the way, not only gas, it's also liquid. All these gas caps, by the way, are gas projects, of course, but they are also quite good condensate projects. So it's liquid. Then in liquid, you need to have outlets, you know. And so it's clear to me, and Abu Dhabi has been very active, ADNOC has been very active, very reacting on we need to double the pipeline to Fujairah, in order not only to accommodate future growth, but also to connect the offshore production. I think the ADNOC is offering to partners to look at the projects, and we definitely will, we are looking to that very seriously. So that's one part. The other part of interest for us is Iraq, because we have some production in Iraq. Iraq today, we have only one way to export, almost not on one way, I'm exaggerating, but fundamentally it's Basra, so it's in the Gulf. So being able to contribute and to see, there are some projects which are being announced and being studied from Iraq to Syria, and Total Energy is keen to join the projects if possible, or to develop some. So I think it's obvious to me that we cannot, if we want tomorrow, to come back to you and to say we want to continue to invest because it's cheap oil, which is true, and there is a lot of oil. We need to diversify or exit good. Otherwise, we would not do a proper business case. So that's why I'm clear. And I think, by the way, for the countries themselves. And even I think if the conflicts were coming to an end quickly, we must absolutely keep that in mind and and Perth UV Effort to have alternative routes for this oil. Integrated power, but the next ambition is to reach the 2030 target. You know, it's not yet done. This year we will reach 60 terawatt hour. We will reach 100 more than 100 terawatt hour. I think the 100 terawatt hour is probably the low assumption for production by 2030. More importantly, we want to generate a net cash flow from this business. We said next year it will be net cash flow positive. This year it might be, but I would like to do it in a normal CapEx environment. And we want to join not only more than zero, but I would say in our famous free cash flow, more than $10 billion free cash flow target by 2030. There was $2 billion coming from integrated power. So the target is to deliver this $2 billion. And then... Beyond 2030, there are different options, but of course, you know, we might see continue to grow the business. The question is at which pace, in fact, and that will depend as well to opportunities. But I think on this topic, the board is very keen to really see the capacity of the company to deliver on our targets, rather than planning big ambitions. And then it's not a matter, I would say, of It's a matter of growth, it's a matter of value as well for the board. And actually for all our investors who have been supportive, not always, but today more supportive than before, by the way, to us who invest, I think we are right. Because one of the lessons of the crisis, as you can observe in many countries, the new world is electrification. It's not green, by the way, it's electricity, electrification, domestic resource. So we are, and it's also supported, of course, by all the... Data centers and AI growth. And we are trying to be and to continue to invest into this energy, which is a good complement to what we do in particular on oil and gas, electricity and the gas-to-power connection is obvious. So that's the ambition, to continue to develop it. In some geographies, just to, again, to frame completely, Where we can develop the integrated model, where gas, renewables, customers, trading is possible, that means some few major European countries, the US, that will be the core, I would say, of our investments. If you had Brazil and India, I think you have the description. So we are, in fact, today, the next ambition to be stronger in some markets where we can deliver the integration and the profitability. Very helpful. Thanks, Patrick.

The next question is from Kim Foussier, HSBC.

Hi, good afternoon. Thanks for taking my questions. I wanted to go back to the Middle East. The production impact came in below your original guidance, thanks to the surprisingly fast ramp-ups in the UAE in June, and maybe in Iraq as well. Now with tensions rising again in the past couple of weeks, could that progress reverse? So in other words, if the situation doesn't change from here, How soon could we see production shut-ins once again across the UAE and Iraq? And then just staying with Iraq for a bit, just on the GGIP project, I think that Watawi Phase 1 was supposed to be starting up sometime this year. Could you give us an update on this project? And obviously, does the renewed regional escalation pose any risks to the timing of the oil ramp-up, but also the other parts of that project, including the associated gas and the seawater project? Thank you.

Okay, thank you. So I mentioned that I gave you some information in my opening comments to tell you that I would say beginning of July, the production I would say was in July, until July 8 in fact, until the blockade came back, the production was going up and the impact on our Production was even around 5% on the global production from the Middle East. If you consider that our base was around 650,000 barrels per day, was by that time 550,000 barrels per day because there was an increase in many assets, in particular, of course, in the Abu Dhabi assets were almost back to normal production, which demonstrates, by the way, that the I remember the questions that I had during the month before the MOU. Is it quick to go back to the normal level? Yes, it's very quick. The wells in the Middle East are very easy to reopen and to produce. So Abu Dhabi was back. I would say even Qatar was not fully back, in fact, on the LNG side because there was a sort of ramping up, crushesness on this one. and Irak, Ivan Rataoui, was back to, I would say, half of the production. So the Iraqi part was a little more, I would say. So we are minimizing and we are cramping up quickly to come back to a normal level. Since July 8th, in fact, because of the situation, when I was looking to the situation beginning of this week, again, the impact is more around the 8% to 9% I mentioned during my opening speech because... Thank you very much. I would say that, of course, and again, by the way, of course, the LNG plant, Qatar Gas 2 in Qatar, which was ramping up, has been shut down again. So you have some impacts, and today, as I told you, that's why today, I would say, to be clear, the guidance I will give you, if we were like in the second quarter, we could imagine the production could be with an impact of 10%, but the offtake could be, unfortunately, higher. And back to our initial guidance, When we gave you 15%, it was, in fact, in terms of physical off-take, it was 15% during the second quarter. The first quarter could be the same. But again, the lesson is, the good news is that if the Strait of Hormuz is opened back again, then we'll be able to ramp up quickly. And then, of course, it is a condition to bring tankers and to off-take the production. So all that is going together. That's what we face today. We had some during the few weeks of opening. We managed to get all our tankers out. We managed to have some tankers in and out, by the way, in order to load. I think we managed to load three tankers during that period. But again, now we are back to nil because it's not possible. So let's observe. The second question, right away, I think there are different stories. The first phase that we are planning to implement To start up, we were expecting the first half. Of course, we are delaying because there has been some impact. As we can produce fully today and it has been some impact because some equipment, etc. But so today we are, I would say, targeting end of third quarter. So September will be possible. We don't have some events under control. and then the other projects are progressing. All the projects have been launched and all the contracts have been awarded. We have people on the ground for the seawater project, for the associated gas project, for the second phase of Fratawi. By the way, we are working as well and we have good news in terms of productivity of the wells which we think we could have in the first phase one day. But all that is just being impacted, I would say, in terms of execution because a lot of equipment is In fact, one of the... because, first of all, we've already spoke about crude oil transit and products refined for the transit, but there are also impacts on the equipment, either one way or the other way, and we have transported a lot of equipment by roads, but for the larger ones, it's not easy to do, and it's not possible. So that's the situation, so we are dedicating the project with some impacts, and Today, it's difficult to give you in terms of... Of course, I could just tell you it's postponed by three months, which I just said. Maybe we need to reassess the situation where we'll be back to a normal situation in the Gulf region.

Thank you.

The next question is from Henri Patricot, UBS. Mr. Patricot, we cannot hear you. Maybe the line is on mute. The next question is from Jason Gableman, T.D. Cowan.

Good afternoon. Thanks for taking my questions. I want to ask the first one on the potential for windfall taxes. And given the recent backup in commodity prices, I'm wondering, Patrick, if your conversations with governments indicate any appetite to reinstitute windfall taxes?

Honestly, until now, in fact, most of the governments have taken some measures between 2010 and 2015, which are still there in many of our countries. We had one impact, an impact in Brazil, where they have instated an export tax for four months, and there are today rumors that they could extend it, which has been declared as not constitutional, but it seems to be a There is a legal fight around this export tax in Brazil. The UK scheme, you know, has been increased in recent years, so they cannot take more. Norwegian is okay. And honestly, in most of our PSCs, the reality is that there are some mechanisms which you can observe when you look to the average tax rate of total energies between an environment at $60 or $50, where we are more or less an average of 40%, and an environment of $90 or $80, we are more around 45-50%. There are some mechanisms within the PSE. In fact, when the price is going up, the governments are taking a bigger stake. And in fact, it's normal because in fact, the way we negotiate ourselves, we try to protect the low cycle by giving up a little more on the high cycle. That's a balance that we try to institute. to propose to the government. So this mechanism exists. And so we didn't face this type of conversation, to be honest, since the beginning of the crisis. So we are not there. And that's what I can tell you. So except Brazil, I don't have today in my head any other situation where we have some discussion. But again, because of the mechanism exist already in many of our ESCs. Great.

Thanks for that. And my follow-up is I wanted to go back to the Yamal project for a minute and just understand because you have kind of the interest in the liquefaction facility and then you're separately lifting volumes as well. And I'm trying to understand kind of what the cash flow split is between those two parts of the business and also if you've been able to actually get cash distributions out of the Yamal facility itself over the past few years.

In fact, you are perfectly true. There are two different activities. One is a Russian activity, Russian in Russia, which is a Yamal liquefaction plant where we are a shareholder for 20%. The cash flows, some cash flows have been distributed. It's not an easy way to, because then we respect sanctions, so the question is distributed in Russian, when does it flow to Europe? Because again, the sanctions in Europe have limited the number of capacity to transfer from Russia to Europe. Some cash has come back to Total Energies. Jean-Pierre Sbraire The lifting, European lifting, yes, this one is out of Russia. It's a business where it's all UK and Swiss entity, or UK entity, I think, which is dealing with Russia, with Russian contracts, on which the cash is out. So this one, of course, we have directly access to the cash. The magnitude of this business is around, I would say, an average of $400 million. but again it's going up and down according to depending on the different because it's the contracts are linked to the brand so it depends on the assumptions that you will take on the on the credit brand for let's say 300 400 million dollars a year that's here that's a potential site it's not it's it's a it's a contract part of the portfolio it's not a major it's a it's not a major situation for the telemetry great thanks for the answers

The next question is from Harry Patricot, UBS.

Yes, thank you for the idea. Just to take one question, coming back to capital allocation, last quarter you mentioned that we're evaluating options to accelerate short cycle investments in upstream. Where are you on these options? It sounds like earlier that you might say it could be CapEx and Chen, so they're just not being considered anymore. Thank you.

No, no, we have, of course, different theories that worked on it. There have been some proposals. We have approved some few, I think, $100, $300 million this year. So the guidance of 15, maybe it's good at the end, 15.2, but I consider it's part of the global guidance. That's not a real impact. And yet, this might have, for next year, there is a little more, because, of course, these type of actions are not only for immediate actions, but more I would say you have probably $500 billion of capital allocation acceleration which will come next year. But again, it will not be the global guidance we gave you last year, which was, I think, around $15 to $17 billion per year of CapEx. Then we said $14, $16. We'll stay around in the $15, $16 billion, I would say, range. So, yes, we have taken some actions, but we'll impact a little more 2016. 27 and 26. Thank you.

The next question is from Bertrand Haudet, Kepler Chevreux.

Yes, thank you for taking my question. I wanted to come back and to try to quantify the underperformance of the LNG trading in Q2. Integrated LNG net income was down $500 million Q&Q, while at the same time, contribution from equity affiliate, which is, my understanding, mainly liquefaction, was up $300 million. That puts a Q&Q discrepancy at group level for integrated LNG, excluding affiliate, at around $800 million. This is what we should understand as a swing In the trading performance?

You are very good, Bertrand. We can add nothing to you. You know, we are very transparent. In fact, we mentioned to you that there was another performance last quarter of around $500 million, and your $800 million is right. So you have another performance reversed not only from $500 million, but to less than $300 million compared to a normal situation. So you merit a certain distinction.

And the second question, probably on your comment that those long positions that did not work out in Q2 was now being in positive territory. Is that a hint that we could be headed for a novel performance? LNG Trading in Q2 by the same magnitude? Exactly. But maybe we are only in July.

So maybe it could be larger. I don't know. Yes, it could be the same magnitude. Because these markets, when they are volatile, they are volatile. When you take $5 per million BTU in 20 or 30 days, I can tell you, these types of positions are making then the question will be not only what the results are not Finished on July 22nd, but on September 30th. So we'll come back, but it's possible, yes, but we might come back to you with the good news of the same magnitude. I hope so. Thank you. Thank you for your support.

The next question is from Fergus Neve, Rothschild, and Cole Redburn.

Yeah, hi there. Thank you very much for taking my questions. Just on the LNG growth pipeline, it was positive to see the ECA LNG project start up earlier this month. Could you provide a quick update of where the FID for Papua LNG stands today and also how the Mozambique project is progressing? And then secondly, just on the refining environment, I was wondering if you could comment at all on how your margin has looked so far in July. Thanks.

In July, it looks very well. I can tell you the average margin on the last 30 days was at $31 per barrel. So it looks very well, and I think July is probably around $35 per barrel right now. And it reached an historic record for me, which was more than $40, $44 I've seen in one day. So today it's a little backtracking because, again, the crude oil is going up. In fact, I have one observation to make you since the last... The Strait of Hormuz was again blocked since July 9. When you make the sum of crude oil and refining margin, you are almost at $130 a year, day after day. I mean, I don't know if that is a trick, but probably. So that's what I mentioned in my opening comments. So the second one. The first one, on Papua LNG, we are working all together very closely with ExxonMobil, with Santos, with the government, of course. The government has just launched the last part of the procedures, the local hearings. The objective is clearly to sanction all that before year-end. November, I think, is the target. But we are aligning the interests of all the partners in the interests of the projects, and we are studying how we can maximize synergies today between Papua, PNG, LNG, in order to deliver the most efficient project to the government. but again in close cooperation with the government so I'm happy to see that the different stakeholders are all the same objective today and okay we need to put together some few it's not an easy one but I'm optimistic we could reach this sanction and we are all working for that and we are very aligned on that. On Mozambique LNG project so okay it has restarted as you know since January and today we are In fact, increasing the mobilization of people in the ground. I think we are at 7,000 or 8,000 people. So our project is progressing, let's be clear. We are facing some few difficulties because some of the equipment were in fact being built in Dubai and different yards in the Middle East. So we had to face some tough times to exit all this equipment. I think it's done now. But the progress, so we are progressing on... and, in fact, today when we compare to the progress here, we are almost at 45% of completion, but we have still a lot of things to build on the, let's say, in FNG and offshore. So that's on its way, with the target being 29 for the first train, and we'll work on it.

Brilliant. Thank you very much.

The next question is from Jean-Luc Romain, CIC CIB.

Thank you for taking my question.

It relates to refining and you plan to introduce more green hydrogen in your system. Where are you with this and are there regulations in Europe which are not going fast enough for you to progress on that?

Yeah, the French one. No, but we are working on it. No, where are we? In fact, we have done the, no, we have nice offers. We could, as you know, there is a good news of the quarter is that the German parliament has adopted its own regulation. So today we are very clear on the German part and positively part. So Loina will be able to maximize the use of green hydrogen. So that's a good news. You know, there was a bad news on the Netherlands part, which has been adopted, but not in the maximum part. So I think the Zealand Refinery will be able to take 30%, more or less, of what we are planning to take, to have taken. But again, if there is no fiscal support, we cannot do that. And then we are working today with the last two governments, which is a Belgian one, where the drafts are not so positive. And the French ones, where the drafts are positive, but the problem, the French... The system is that you need to go to the parliament and to make fiscal reforms in the French parliament. It's not an easy task for the government, but we are working on it. And I think we'd like to have the definitive scheme and not an interim one, to be honest. Because, of course, if we commit for long-term contracts of 10, 15 years, we need to have a scheme which will give us a certain level of comfort. But we have some very technical matters, to be honest. It's one of the most complex topics I know. Because to explain to a political leader the Red Free and what it is to make green hydrogen in Europe getting some support, this one is tough, to be honest. But we have some momentum, so we are working on that. And not only ourselves, by the way, in France, of course, we are working hand-in-hand with Air Liquide, which is also interested to get these regulations done. So, progressing, but still, again, for us to commit our long-term contracts, we need to have all these regulations being enacted. You know, it's the beauty of Europe. You think you've done the work because there is a directive in Brussels, and then you take four years to implement it in each country. And then, by the way, I'm afraid that I just discovered that there is a new directive which could again come back to the definition of green hydrogen, the Red 4. Thank you very much. And the last question is from Ben Fallon at OBHF. Hi Patrick, and thank you for taking my question. In the light of the recent escalation in the Middle East, has your view on geopolitical risk changed?

Which region do you see as offering the most attractive risk-adjusted investment opportunities of the coming years? And how might this influence your future capital allocation priorities? I know it's maybe for the CMD, but I think it's important. Thank you.

Yeah, thank you, Ahmed. But you know, we continue to consider the Middle East as an investable region. There is no doubt about it. It's a question, of course, and then at the end of the day, it's a question of risk and reward. Maybe the reward will be to have a little higher. But when I saw my U.S. competitors rushing to Iraq during the last weekend, if I noticed the number of MOUs signed to develop hundreds of thousands of barrels, I don't know why these U.S. companies suddenly would like to see lower geopolitical risks and ourselves which have more I would say DNA in the region would consider it as a higher one. So we think it's a question of risk and reward. It's always policy. Again, it's back also to my comments about having alternative routes to export the oil to go to the market. Having said that, it's clear as well that the policy and strategy of TotalEnergies has been to diversify the portfolio, and that reinforced my strong belief diversification is of essence in this business. We have done it well in Brazil, in Africa, in new countries in Africa. Of course, the U.S. are also attractive to us, but we are building quite a big position in the U.S. in terms of capital allocation through LNG and through integrated power, so we are fine. And so I understand the question, but at the end, you know, when you make oil and gas, you go where you find it, right? If we discover oil and gas in Suriname and in Namibia, we are happy. And that's true that we don't find oil and gas in Europe to answer to your questions. And by the way, we don't have the right to look for it. So that's where we are. But for me, the answer to your question is fundamentally to maintain our strategy of diversification. And this is what we will present you in September. I think the events that we have faced In the last four months, I've demonstrated that this is the right one, and we are able, as I answered, to supply feedstock, not to claim any force majeure for LNG customers, contrary to some competitors, because we have a diversified source of supply of LNG, and from this perspective, building a position in Mozambique But you know, look to the countries we are developing in the last three years, Suriname, Malaysia, Namibia. So we are continuing to diversify our stakes because that's the reality of our business. And it's not only in 2026 that we discover that. You know, it has been the case for companies one or two years old, and I think it has been the case for long. So that's what I would answer to your question.

Gentlemen, that was the last question. I turn the conference back to you for any closing remarks.

Yeah, thank you for your attendance today and for your support. I remind all of you that we have Capital Market Day in New York City on the 28th of September. I think it is a Monday, if I remember right. So Monday, 28th of September. Be all ready to attend the Total Energies Capital Market Day. We have more news to come. because we continue to work during summertime. So thank you for your attendance. And happy holidays to all of you.