Total Suffers First Quarterly Loss Since 2015

 

 

 

Total suffered its first net loss in five years in the second quarter due to the plunge in crude prices triggered by the coronavirus pandemic, the French oil company said Thursday.

The $8.4 billion loss included $8.1 in writedowns in asset values due to the drop in oil prices, in particular for its oil sands investments in Canada where production costs are high.

But its adjusted net income — a measure that excludes changes in the value of its stocks of oil and exceptional items — remained positive. At $130 million, it was down 96 percent from the same period last year, however.

“During the second quarter, the Group faced exceptional circumstances: the COVID-19 health crisis with its impact on the global economy and the oil market crisis,” said the company’s chief executive Patrick Pouyanne in a statement.

The lockdowns imposed in many countries to slow the spread of the coronavirus triggered a massive drop in demand for oil, causing prices to plunge.

While crude prices have recovered somewhat as economic activity resumes, oil companies are reporting massive losses as lower prices make it difficult to operate profitably and accounting rules force them to take huge charges to the value of their assets.

Total’s output slid four percent to 2.85 million barrels per day of oil equivalent.

For 2020, it now forecasts an average daily output between 2.9 and 2.95 million barrels per day, a slight reduction from earlier guidance.

The company’s board of directors decided to maintain an interim quarterly dividend of $0.66 per share, reaffirmed its sustainability at $40 per barrel oil and said that the breakeven point on its energy assets is below $25 per barrel.

The main international oil contract, Brent, was trading at $43.47 on Thursday.

Given the volatile situation Total said it aims to cut operating costs by $1 billion and keep investments below $14 billion this year. However it reaffirmed ambitions to diversify, including by investing in a giant offshore wind project off Britain and acquiring more residential gas and electricity customers in Spain.

Total’s share price edged 0.2 percent higher in early trading in Paris, while the CAC 40 index shed 0.5 percent.

 

 

 

-AFP

Fire Guts Total Refinery In France

FILES) This file photo taken on June 10, 2018shows the French oil giant Total’s refinery in Gonfreville-l’Orcher, northwestern France.  CHARLY TRIBALLEAU / AFP

 

A fire erupted at a Total oil refinery in northwestern France on Saturday, but was brought under control and there were no injuries, local authorities said.

The blaze started at about 4am in a pump at the plant at Gonfreville-l’Orcher, near the port city of Le Havre, the local prefecture of the Seine-Maritime region said.

It said the blaze has been brought under control and is dying out though some small fires remained.

Tests for air pollution near the plant were negative but the prefecture advised residents to stay indoors.

Total said in a statement that no one was injured and that all those at the site, which employs around 1,500 people, have been accounted for.

AFP

Total To Invest In Forest Preservation Project

 

The head of French energy giant Total announced Saturday that the company would invest a hundred million dollars annually on a new forest preservation and reforestation project.

“We want to set up a business unit to invest in projects that will preserve forests,” chief executive Patrick Pouyanne told a meeting to discuss economic issues in Aix-en-Provence, in the south of France.

The company would spend $100 million a year on the project, he said.

“The most effective way today to eliminate carbon, for less than $10 a tonne, is reforestation,” he added.

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“This is not philanthropy,” he added. “It’s about investing in the medium- and long-term. A project for the forests, it has to last a long time to be positive for the planet.”

Pouyanne was speaking just days after Total said it had begun producing biofuel at a refinery in southern France, a project that has sparked an outcry from environmentalists and farmers over its plans to import palm oil.

The site at La Mede near Marseille is a former oil refinery which has been converted and is now one of the largest biorefineries in Europe.

A study released on Thursday said that a massive campaign of reforestation could help battle climate change.

The study, carried out by ETH Zurich and published in Science, said a large-scale operation could capture two-thirds of man-made carbon emissions and reduce overall levels in the atmosphere to their lowest in almost a century.

It found that the Earth can support 2.2 billion acres (900 million hectares) of trees that would sequester 205 billion tonnes of carbon.

Some environmental campaigners have reacted cautiously to the research.

“Yes, of course, we need to plant as many trees as possible,” wrote teenaged activist Greta Thunberg on Twitter Friday.

“Yes, of course, we need to keep the existing trees standing and rewild and restore nature.

“But there’s absolutely no way around stopping our emissions of greenhouse gases and leaving the fossil fuels in the ground.”

AFP

NNPC, IOC Sign Cash-Call Exit Agreement

NNPC, IOC, Cash-Call AgreementThe Nigerian National Petroleum Corporation (NNPC) and International Oil Companies (IOC) have signed an agreement to exit the Joint Venture Cash-Call Arrangement.

This brings to an end, the NNPC’s counterpart funding for 60% equity shareholding it owns in various oil and gas fields in international and indigenous oil firms.

The agreement was signed on Thursday in Abuja between the national oil company and Shell Petroleum, Nigeria Agip Oil, Total, Chevron and Exxon Mobil.

It is coming barely 24 hours after President Muhammadu Buhari announced that the Federal Government would cut provisions for the Joint Venture Cash-Calls, starting from January 2017.

The Minister of State for Petroleum, Dr. Ibe Kachikwu, noted that a governance process would be set up with immediate effect, to manage a new funding mechanism that would provide for cost recovery.

The NNPC Group Managing Director, Maikanti Baru, on his part, explained that the exit has set the stage for a review of the cash-call agreement.

He added that it has also created an opportunity for the adoption of a more sustainable funding arrangement with international oil companies’ joint venture operations.

Cash-calls is a counterpart funding the NNPC pays annually for the 60% equity shareholding it owns in various oil and gas fields operated by IOC and indigenous oil firms.

In 2016, underfunding for cash-calls amounted to $2.5 billion, bringing the national oil firm’s total cash-call arrears over the years to $8.5 billion.

Buhari To Hold Talks With Hollande And Key French Ministers

Buahri_officePresident Muhammadu Buhari will leave Abuja, Nigeria’s capital city, for Paris on September 14 to begin a three-day official visit to France at the invitation of President Francois Hollande.

According to a statement from the Nigerian President’s office, President Buhari will be accompanied on the visit by the National Security Adviser, Major-General Babagana Monguno (Rtd.), the Permanent Secretaries in the Federal Ministries of Defence, Finance, Agriculture, Foreign Affairs, Industry, Trade and Investment as well as the Chief Executives of the Nigerian Investment Promotion Commission and the Nigerian Export Promotion Council.

As the composition of his entourage indicates, President Buhari’s talks in Paris with President Hollande and other senior French Government officials will focus on the further strengthening and consolidation of ongoing bilateral cooperation between Nigeria and France in the areas of defence, security, trade and investments.

Apart from his scheduled meeting with President Hollande at the Elysee Palace on Monday evening, the President and his team will also confer with the French Minister of Defence, Mr Jean-Yves Le Drian, the French Minister of Finance and Public Accounts, Mr Michel Sapin, the French Minister of Economy and Industry, Mr Emmanuel Macron and the French Minister of Foreign Affairs and International Development, Mr Laurent Fabius.

President Buhari will visit the Headquarters of MEDEF, France’s largest federation of investors and employers, where he would participate in a France/Nigeria Investment Forum with leading Nigerian and French entrepreneurs.

The President will also confer with the Chief Executive Officers of leading French multinational companies such as Total and Lafarge on their current and future investments in Nigeria.

His other scheduled engagements in Paris include a meeting with African Ambassadors to France and an interactive session with members of the Nigerian community.

The President will conclude his visit to France on Wednesday, September 16 and return to Abuja the same day.

NLNG Eyes $1.5 Bln Debut Ship Yard In Nigeria

Ship_YardThe Nigeria Liquefied Natural Gas Company (NLNG) is sponsoring the construction of the first major ship yard in Nigeria at the cost of $1.5 billion, in its attempt to turn the country into a hub for maritime operations on the continent.

Nigeria does not have a drydock for maintaining and repairing large crude vessels, a major drawback for carriers sailing to the country, NLNG spokesman Tony Okonedo told Reuters.

Only South Africa had such a facility on the continent, Okonedo said, meaning that ships travelled a long distance for repairs. Nigeria has two facilities that can only accommodate small vessels, he said.

Okonedo said Samsung Heavy Industries and Hyundai Heavy Industries have both agreed a $30 million commitment towards the construction of the facility, which would be located in Badagry, near Nigeria’s commercial capital of Lagos.

“It could potentially be used to transport the 2.5 million barrel a day crude business in Nigeria,” Okonedo said on the sidelines of a media briefing.

Okonedo said the NLNG organised a roadshow earlier this year to market the dry dock project to investors, which included multinational oil companies in Nigeria, with large exploration and upstream activities.

He said NLNG, which is owned by Nigeria’s state-oil company NNPC, Royal Dutch Shell, French oil company Total and Italy’s Eni was in discussions with a strategic investor for the project.

It appointed France’s BNP Paribas and Guaranty Trust Bank to help raise around $1.6 billion two years ago to build six new LNG carrier ships, expanding its fleet to 30.

The construction of the dry dock, with a size that can accommodate 185 football fields, will take up to 48 months to complete and would commence once all the funding was in place, he said.

The company, which was set up over two decades ago, has a capacity to produce 22 million metric tonnes of liquefied gas a year. It obtains its gas supply from upstream oil companies and liquefies it for export.

It has long-term supply contracts with buyers in Italy, Spain, Turkey, Portugal and France and also sells on the spot market.

Revenues for the first half shed 25 percent, in line with the fall in crude prices, NLNG said.

Shell Sells Some Oil fields In Nigeria

Shell_SaleRoyal Dutch Shell has sold some of four oil fields up for grabs in Nigeria, it said on Wednesday, as the oil and gas company pushes ahead with global asset sales to cut costs, Reuters News Agency is reporting.

Shell last year put up for sale its 30 percent shares in four oil blocks in the Niger Delta — Oil Mining Licence (OML) 18, 24, 25, 29 — as well as a key pipeline, the Nembe Creek Trunk Line.

“We have signed sales & purchase agreements for some of the Oil Mining Leases, but not all that we are seeking to divest,” a Shell spokesman said.

No details were available on the value of the deals signed, nor when the full process will be completed.

France’s Total and Italy’s Eni are also set to raise revenue from the sale of their 10 percent and 5 percent shares in the assets. The Nigerian National Petroleum Corporation (NNPC) owns the remaining 55 percent.

The Financial Times on Wednesday reported that Shell is close to selling the assets for about $5 billion to domestic buyers.

In March, Reuters reported that Nigerian firms Taleveras and Aiteo made the highest bid of $2.85 billion for the biggest of the four oil fields, OML 29.

Shell, along with many other oil majors, is undergoing a broad process of asset sales across the world in an effort to cut costs and boost profits.

Other companies, including Total, Eni, Chevron and ConocoPhillips have sought to pull out of the oil-rich West African country which has been plagued by oil theft.

Reps. To Investigate Sale Of OML 30 Minning Licence

The House of Representatives has resolved to carry out a comprehensive investigation on the sale of oil mining licence, OML 30 to an alleged questionable oil exploring company.

This resolution was reached after Representative Yusuf Tajudeen presented a motion on the security implications bordering the said oil deal.

He said this development will have adverse effect on Nigeria’s revenue, economy, infrastructural and technical development.

The House Committee on Petroleum Resources, Upstream has been mandated to investigate the matter and report to the House within 3 weeks.

UK based explorer Heritage Oil had announced earlier in the year that Nigerian outfit Shoreline Power has agreed to acquire a 14.5 per cent equity slice of the duo’s OML 30 venture.

Heritage Oil and Nigeria’s Shoreline Power acquired OML 30 from Shell, Total and Eni last year in an $850million deal.

The deal came with an option for Shoreline Power to acquire an extra 30 per cent of Heritage Oil’s stake in the joint venture at OML 30.

The prolific block produced 35,704 barrels of oil in November, 15,665 of which was net to Heritage Oil under the prior 55:45 ownership and which yielded the UK explorer an estimated $52million.

Shell denies owing Nigeria $947 million

Oil giant, Royal Dutch Shell has reacted to claims that its SNEPCO division owes Nigeria $947 million from gas produced at its offshore Bonga oil field.

Shell's office in Port-Harcourt
People walk past Dutch oil giant Shell's sign board in Nigeria

The company in statement claimed that the allegation is incorrect, adding that it cannot comment further as it does not know the basis of the calculations that yielded the $947 million number.

On the claim that Nigeria may have lost out on $29 billion due to lower than usual prices for gas sales to NLNG, who’s shareholders include shell, Total, ENI and state oil firm NNPC, Shell noted that NLNG is a separate entity and the NLNG feed gas price was negotiated at arm’s length and is several times higher than the current price of domestic gas.

Total sells $2.5 billion Nigerian oil field to China’s Sinopec

Total is selling a 20 percent stake in a Nigerian offshore oil field to China’s Sinopec in a $2.5 billion deal which will help the French oil group fund its ambitious exploration plans.

Total said on Monday it had signed a deal to sell the stake in the OML 138 block, which currently produces 130,000 barrels per day of oil equivalent and contains the Usan field, which started production in February.

The French group said in September it planned to sell assets worth between $15 billion and $20 billion in the period up to 2014 as part of a bolder approach to managing its business, which has seen it buy and sell assets more frequently.

Total, which is also selling its French gas network business, is ramping up spending on exploration to take advantage of the historically high price of oil, which averaged $113.6 a barrel in the first half of 2012.

Total’s chief executive, Christophe de Margerie, said earlier this month the group did not intend to disengage from Nigeria altogether.

“It doesn’t mean we are scared and intend to start some kind of walking out of Nigeria … Total is happy to develop its projects in Nigeria,” he told reporters at an energy conference in Abu Dhabi.

Chinese companies have been among the most aggressive in targeting assets around the globe to help feed oil and raw material demand in the world’s second-biggest economy.

Sinopec, Asia’s largest refiner, has also snapped up energy assets in Britain and the United States recently to boost foreign earnings, as a slowdown in China hit profits.

Other shareholders in the OML 138 oil block, located 100 kilometres off the coast of Nigeria, are Exxon and Chevron, with 30 percent each, as well as Nexen , which owns 20 percent.

Total’s shares were up 2.5 percent by 1500 GMT, outperforming a 2.1 percent rise in the European oil and gas sector

Shell declares force majeure on Nigeria gas supply

Royal Dutch Shell’s Nigerian joint venture Shell Petroleum Development Company of Nigeria (SPDC) on Friday declared force majeure on its gas supply after an attempt to steal crude oil from a pipeline led to a fire, the company said in statement.

SPDC supplies natural gas to Nigeria Liquefied Natural Gas (NLNG) for exports overseas as well as to domestic power plants.

The stakeholders in Nigeria LNG are state-run energy firm NNPC with 49 percent, Shell (25.6 percent), Total (15 percent), and Eni (10.4 percent).

SPDC, a 100 percent-owned subsidiary of Shell, operates a joint venture in which the Nigerian National Petroleum Corporation (NNPC) holds 55 percent, Shell 30 percent, Elf Petroleum Nigeria Ltd (EPNL) 10 percent, and Italy’s Agip 5 percent.

Total plugs gas leak in Niger Delta, no further well needed

French oil major Total has plugged a gas leak in southern Nigeria’s Niger Delta region and no longer needs to drill an additional relief well to curb its flow, a spokesman said on Friday.

The leak occurred in March on a block that also contains crude oil in Rivers state, one of the three main states that make up the Niger Delta, a vast wetlands region in the southeast where Africa’s biggest energy industry is based.

Block OML 58 also produced around 76,000 barrels per day of oil in 2004 and this increased in 2008, the company says. No oil was spilling from the leak.

“This operation has done the job. As a result the relief well is no longer necessary. The gas leak has been plugged,” spokesman Fred Ohwahwa said by telephone.

The cement seal for the well was in the process of being finalised, but the leak had stopped, he said.

Nigeria remains a small player in the gas business.

Its oil producing region has one of the world’s worst records on oil and gas spills and pollution. Accidents and pipeline ruptures are commonplace.

Shell said it had started repair work on the Nembe Creek Trunkline, a major pipeline whose closure this month caused the company to declare force majeure on 60,000 barrels per day of Bonny Light earlier this month.

“The team will tackle eight other illegal bunkering points as it continues to re-assert the integrity of the facility,” a statement late on Wednesday said.

“When you add the cost of repairs to the facility downtime and loss of revenue, it becomes clear how crude theft has denied Nigeria of badly needed revenue,” Tony Attah, Vice President, Health, Safety and Environment, Shell Sub-Saharan Africa, added.

The company blamed oil thieves on the pipeline, which weaves through the delta’s creeks largely unpoliced and has been a frequent target for thieves. The company says its Nigeria joint venture is losing 43,000 bpd of crude a day to oil theft.