But now we have the Red Sea logistical risks just on top of this. So, could I just get your outlook around business expectations in IG this year, especially with rerouting transportation OpEx or does your portfolio size help mitigate against this? Can you pass on some of these costs? Just how should investors think about this particular issue?
Wael Sawan : Do you want to take the first one? I can take the second one.
Sinead Gorman : Yes. No, indeed. And thanks Oswald. Yes, you’re right. We did actually remove the numbers very much conscious of doing so. Largely, you’re right, we’re exceeding where we expect it to be at this point. There’s a lot of noise in there. As you can imagine, it’s the typical normalization that one needs to do for working capital, et cetera. But yes, true delivery in there is mostly from a range of things. It’s, of course, the CapEx reductions that have come through, it’s some OpEx coming through and of course, share count reduction. But let’s not forget some of the growth that’s actually coming through as well. You saw us bring new volumes on this year as well, the Timmy of this world, of course, pierce redevelopment coming.
And you can see that future build as well with the FIDs of Perdido too Victory coming through. Just a range of them are coming Sparta as well. So, indeed, do I have confidence in terms of delivery? Yes. The moment. I’m looking forward to driving it even further in terms of the things that we can control in terms of taking out OpEx, et cetera, as we continue to deliver what we promised.
Wael Sawan: I think on your second, or your first question, sorry, your second question there, Oswald. Just where the LNG markets are in particular in the context of the Red Sea. By and large, we are not seeing massive amounts of disruption yet to LNG flows because of the reality that, in particular with a portfolio like ours that’s blessed with supply points on either side, of the Red Sea as well as on demand points, we are able to optimize and do swaps across the portfolio, which, of course, has always been our strength, we can truly, through our training and optimization organization, create value from discontinuities. Maybe I won’t project into the rest of the year. I think suffice it to say that Q4 was a very, very strong quarter for us on trading and optimization in the LNG space, particularly because of the opening up of the ARBs across east west, as well as the fact that, as you know, we typically have length this season in the northern hemisphere season.
Now those ARBs have, compressed since the start of the year. The absolute prices of gas are, lower at the moment. And so, the question will be how much more volatility we will see whether triggered by geopolitical considerations, higher than predicted demand in China. All of that will be an important determinant of where the LNG and the IG business particularly performs. But I think it’s always fair to say we have good production at the moment, we’re pleased with where prelude is at after the turnaround. We’re pleased with the progress we’re making in Trinidad and Tobago, pleased with the progress we’re making in Nigeria. And so, the fundamentals around the focus on performance, discipline, and simplification are coming through. And now we’ll need to see where the market goes to allow us to create the value we would hope create from that market.
Operator: Our next caller is Alastair Syme from Citi.
Alastair Syme: Sinead, the spend in the res steps up quite considerably in ’24. I mean, certainly in line with what you said at the June CMD. I know you got some strict returns criteria in this business. So, the question is really as you scale up the spend, how you’re finding the headroom versus those hurdle rates. And it certainly doesn’t feel to me as if it’s getting less competitors, but maybe you’ve got a different perspective. And then secondly, look, I won’t I won’t disappoint you, Wael. Congratulations on turning the corner on reserves the last two years. Look at, I know Qatar has been a big part of that, perhaps as much as half. And while the financial terms there look pretty good, it is also to some extent, an unusual almost one-off situation. So, my question to you is, how do you think about the underlying picture, and how would you think about the gap analysis sort of over the next five years, presuming you don’t get another opportunity like Qatar?
Wael Sawan: Do you want to take the first one?
Sinead Gorman: Sure. In terms of res, I think it’s a great question, Alastair. We’ve all seen many, many discussions in a variety of media and otherwise around the returns that are available in this space. I think what I would say is we’re being very disciplined around it. So, what you’re seeing is between 2023 and 2022, you will have seen effectively that our CapEx did go down in terms of res spend, but it was varied. So, remember, it differs depending on which region you’re talking about specifically, so we can’t make it a binary, conversation. So, what we’re seeing is we walk away from things where we just don’t see the necessary returns. So, the last German wind auction that we discussed previously, we just couldn’t get there at the end of the day.
Whereas in Australia, really seeing some decent returns coming through, and that’s really where we have an integrated value chain. So, we’re being able to see the side of things where we have the demand in our own assets. We also have the customer book, but also, we have battery power as well. Between all of the different elements with the renewables, we are able see an end-to-end just significant return coming through. But this is about remaining disciplined and we will be very, very focused on that, so very much ensuring that can we hit the hurdle rates? Do we believe, we bring something different? What’s our confidence level in doing so?
Wael Sawan: Thanks, Sinead. To your question around resources, I think to the discussions you and I have also had in the past. I mean, in my mind, resources are ultimately a proxy for cash flow and that’s where our focus is. The quality of the resources rather than does it sit under the 1P or 2P. We still have a very attractive funnel of resources as indicated by 20 plus years of commercial resource. By the way, that is even to post an SPDC sale in Nigeria as well. We will continue to have north of 20 years of commercial resource. What’s critical is it’s high quality barrels. You are talking predominantly deepwater barrels, predominantly energy barrels. What it gives me particular confidence in the coming years, as you are talking about some very attractive high margin projects coming in.
