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During lunch with Total Engelgie boss Patrick Puyanne in 2019, Driller worried about the future and asked what his role would look like ten years from now. To the CEO, it was “obvious,” but they’re still drilling for oil.
In 2021, we responded to the pressure to embrace environmental transitions, and in 2021 it became even more renewable inhabitants. However, Pouyanné has made the key decision to use profits from its legacy business to fund environmentally friendly products and raise oil and gas production.
Four years later, that gambling appears to be rewarding. Rivals BP and Shell have retreated from their promise to reduce their fossil fuel business, but the French company’s plans to build a future around oil, gas and its partially green power flock remains the same.
“I think we can get the same level of profitability (from electricity) as oil and gas,” Olivier Jr., the company’s renewable energy director, told the Financial Times.
“If we can do that, there’s no reason for shareholders not to follow us. Others couldn’t necessarily demonstrate that, so others were messed up.”
At an energy conference in London in February, Pouyanné emphasized that oil and gas are key to electricity ambitions. “I’m not a magician, so I don’t give up oil and gas. I’m the only way I can fund all my electricity investments because I take cash from oil and gas,” he said.
Totalenergies suffered a set break with some of its green initiatives, but Pouyanné’s approach helped to avoid U-turns forced on major European rivals BP and Shell.
Seagreen Wind Farm, joint venture off the East Coast of Scotland, © Jeremy Sutton-Hibbert/ft
In March, activist Elliot Investment Management acquired a stake in nearly 5% of BP and was forced to abandon its ambitious climate targets. In 2020, BP promised to reduce its oil and gas output by 40% by the end of the decade, before cutting its target two years ago and then discarding it completely.
In Shell, CEO Wael Sawan said in January that he must begin generating returns as the renewable energy business wrote down US wind farms for nearly $1 billion. We also abolished our commitment to 2023 to 2% decrease in 2030.
In contrast, Totalenergies consistently sought to increase oil and gas production by 3% per year, but invested $4 billion a year in the integrated electricity sector.
“The (all attraction) is very practical and the world has actually come to be that,” said Eileen Himona, an oil and gas analyst at Bernstein.
The group’s integrated power division is far from completely green and relies heavily on gas. This was the source of 37% of the company’s power generation in 2024.
TotalEnergies says gas-fired power generation is needed to balance the intermittent renewable energy sources, representing about a quarter of the 100 terawatt hours of the 2030 division.
This sector is currently the largest in this sector. This year, it produced 35 gigawatts of renewable electricity, rising to 100 GW in 2030.
With further indications of its commitment, Totalenergies completed the 1.6 billion euro acquisition of Germany’s Wind and Solar Developer VSB Group this month, and also announced deals on hydroelectric power and renewable energy in Uganda and Canada.
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The key to the company’s strategy is to ensure that the integrated electricity sector is as profitable as oil and gas.
The group expects positive cash flow in 2028. It generates around $4 billion with the aim of providing 12% of employed capital, a metric widely used to assess the profitability of the industry.
This is similar to the returns generated from oil and gas when Brent crude oil is at a barrel price of nearly $60. The integrated electricity sector achieved a return on capital, which is employed at around 10%, he said. TotalEnergies said in its trading update on Tuesday it expects to report adjusted revenue of $500 million from the first quarter’s $450 million.
Despite its success, the integrated power sector has not circumvented the issue. Planned offshore wind projects in New York and New Jersey have been on hold for at least four years after the Trump administration stopped allowing new projects.
The 640 megawatt Yunlin project, which was launched in March, also faced difficulties. Jouny did not disclose the scope of the cost overrun, but Totalenergies, as lead developer, was forced to ask the bank for additional funding.
However, TotalEnergies’ strategy is not a bet on renewable electricity, but generally there is a demand for electricity. The International Energy Agency predicts that demand for oil and natural gas will peak by 2030, but electricity demand is expected to continue to grow at least 4% per year.
“This is a strategy driven by demand (and) (and) it is very clear that electricity is one energy growing in the 21st century,” Pouyanné said at a conference in London.
