French oil major, Total has reported a strong first-quarter recovery in its upstream oil and gas business, with higher prices leading to almost triple the level of adjusted operating profit in the segment compared to a year ago, but also noted continued market volatility and “very poor” refining margins.
Total also reported record-high adjusted operating profit from its ‘integrated gas renewables & power’ division, which includes its LNG business.
The company’s LNG sales were stable compared with a year ago at 9.9 million mt, but the company said it had more than doubled its installed renewable power generation capacity in the last year from 3 GW to 7.8 GW, and the division as a whole generated 8% more in adjusted operating profit.
The French major forecast its oil and gas production would remain stable in 2021 compared with 2020 levels, even though first-quarter hydrocarbon production was down 7 per cent on the year at 2.86 million b/d of oil equivalent, within which liquids output fell 11 per to 1.51 million b/d.
The fall in upstream output was due to reductions under the OPEC+ agreement, which crimped volumes from Kazakhstan, Nigeria and the UAE, as well as unplanned Norwegian maintenance, Total said.
But the company also benefited from a recovery in Libya and growth from new projects, notably Culzean and Johan Sverdrup in the North Sea, North Russkoye in northern Russia, and Brazil’s Iara sub-salt field.
“The group maintains its expectation for stable hydrocarbon production in 2021 compared to 2020, benefiting from the resumption of production in Libya,” Total said.
CEO Patrick Pouyanne went on to say that the upstream division had “fully captured the higher oil price and provided a strong cash flow contribution of $3.8 billion,” noting the company’s decision to advance Uganda’s long-delayed Lake Albert oil project, with an agreement signed April 11 on the East Africa Crude Oil Pipeline project.
Pouyanne also highlighted that adjusted profit for the quarter was higher than the same quarter two years earlier, in 2019, reinforcing hopes for recovery. However, “the oil environment remains volatile and dependent on the global demand recovery, still affected by the COVID-19 pandemic,” the company added.
Underlining the precarious state of European refining, Total said European refining margins were 80% lower than a year earlier, at $5.3/mt, reflecting a 2 million b/d drop in European demand for refined products, to 13 million b/d.
Total reduced its refinery throughput by 38% globally and 81% in France, to 1.15 million b/d and 114,000 b/d respectively, as it works to reduce capacity or convert facilities to renewable fuel production. Poor refining results were, however, offset by strong petrochemical performance and “resilient” marketing and services, Total said.
Overall, Total reported a 69% year-on-year increase in adjusted net profit, to $3 billion for the quarter.
