Patrick Pouyanne: Good. No, it’s not small. It’s a good deal. We don’t see — even if we don’t make a lot of noise, even I prefer to pick some good assets, which fits with the strategy, with growth potential. We don’t really think it’s small because, in fact, it’s giving us with Sapura the lead — an operating position in Malaysia. We see that as many advantages. In fact, we have a strong bond of Petronas. Malaysia is a very — in fact, it’s still a prolific basin, several gas basins, prolific ones. It’s an opportunity to have a material position, 50,000 barrels per day, I think. So it’s material. We can dedicate people. We see there beyond these licenses more to be done. So I cannot — there is a potential to expand in the gas business.
This is a business which related and which is priced as a netback from LNG. So you have different formulas. So it’s part of also the rest of this business. You have some upside, and you can correlate it. And it’s also a way get to strengthen the links with Petronas, Malaysia is an interesting location as well for other activities like in particular, CO2 storage for Asian buyers. So it’s — there are some — a lot of Japanese companies are looking to that. So we see — and again, I think for a company of our size, Elo is now in Asia, a South of Asia strategy. I think more fit in Asia is important for our future. This is where the demand will come. And Malaysia is an interesting country. We have also some LNG business. So this was a good opportunity.
Again, a material one because what I don’t want is to move from a small asset. So this one was — so we were to have materiality by making all this transaction together. On the buyback, okay, I just want — in fact, you know the answer by asking the question, Martijn, I think. When we stated in the press release of the — in February, just reading it, with EUR 2 billion of share buyback in the first quarter of ’21, which will remain the base level for quarterly buybacks in the current environment. I think the current environment in February were more or less $79, $80 per barrel. We continue on this basis, but it’s quite clear we have been clear about the cash allocation framework we follow. Further dividend. The CapEx where we are, and we don’t intend to extend them.
And we said that we use share buyback to — if we have more cash flows to share it with shareholders. So again, it was premature this quarter because we have only seen $90 for 1 month, so I will not conclude, but the $90 will remain for the year. I know that when I was making some roadshows in London, people were speaking to me about $100. But in the meantime, it was at $95. It went down to $88 or $89, So it’s volatile. To be clear, it’s clear that in our minds that if we have more cash than the base case, then we’ll look to share it full share buybacks with some shareholders. But we don’t have a mathematical formula to give you, so you have to guess. And again, it’s a monitoring. We’ll see what will be the second quarter. And I expect some decision probably middle of the year or September by the Board, when we’ll have a better visibility of what could be the execution of the year.
We have a good balance sheet. So we can — we will not wait the end of the year to announce to you what we’ll do. But again, let’s look to what is the reality of the market. Because at the same time, oil price is better, gas price was a little lower than anticipated at the beginning of the year even if it’s going up in the last weeks to more $90 in Europe, and the spread with the U.S. because NLP is going down at 1.5 is also a good — important indicator for us between TTF and Repsol. That’s a good signal. So again, we will follow what we say to our investors and shareholders. I remind you as well that we said that we want to distribute more than the payout for more 40%. This quarter it’s at 46%, I think. So we are on the way to — not to disappoint you, but as it’s like the strategy, we are consistent and we go step by step.
And when we are in a position to take decision, we’ll take them.
Operator: The next question is from Lucas Herrmann with BNP Paribas.
Lucas Herrmann: Interesting comments throughout, Patrick. Amazing, isn’t it? We all focus on oil now and have moved on a little bit. But I just wanted to, on the subject of FIDs, I wondered if you could talk a little bit about the offshore wind business and just how things have progressed for you over the last 6 to 12 months around costs, and what your thoughts are now on the timing of decisions Germany, U.K., possibly North Asia where you have opportunity. So just to give us some idea of, okay, I know what I’m doing on Namibia or Suriname, but what am I thinking around the allocation of capital to wind and time line?
Patrick Pouyanne: Okay. I will be transparent. There is no way. It’s clear that we had the experience recently in New York where — and in fact, it’s an issue. When you are in some markets, which are more regulated or I would say, more depending on some fiscal incentives. Suddenly, everybody wants to take the incentive for himself. But if the supplier is increasing the price of his turbine, because you want to capture the ITC, then we don’t have it and then we cannot make the project. So it’s a chicken and egg story. But we are not condemned to develop projects if they are too costly. I’m very — I’m CapEx driven, and you know me for a long now. We have just recently said that on P&G, we are able to delay because the CapEx was there and going to new contractors.
And on offshore wind, obviously, will be the same position. Because it’s clear that this energy is more expensive than onshore wind or solar. And in our Integrated Power strategy, it has to find its place in a merchant way. So we have to be able to make money, merchant pricing as well. So if it’s too costly and that is going out of what could be expected as a merchant pricing for electricity, then why should we do it? So we are working on it. It’s — there is no rush. We will not be led by, I don’t know, which planning by 2030 target. The 2030 target for TotalEnergies can be filled with plenty of onshore possibilities. We’ll have some offshore projects because we have some in the portfolio, which are good, on which we will give the priority.
We have created many options. And what we were discussing between us with Stefan was, okay, if we need to run all these opportunities and to do the best ones and not necessarily all of them. So again, you have some heating there. But either we can have some cold weather on all this value chain. Otherwise, we will wait and see. We are at the position. But we work. We work on that. Last comment, I would say, for me, offshore wind is an energy for, again — and you have to look carefully to what will be the electricity market prices. It’s an energy where for markets, where the energy — electricity price will remain high. It’s not — so you cannot deploy it everywhere. But Germany is a good fit. U.K. is potentially a good fit as well. And New York will see again, as we can obtain or not the right conditions to develop it.
So we are monitoring it. But in our capacity of Integrated Power, it should represent something like 10% by 2030. So it’s not a core of the growth. And so if the 10% are only 7 or 8, I don’t care. No, basically priority is profitability — a profitable growth. And so we will go and review this project one by one and if costs are rocketing, it’s better to wait and see and to allocate our capital to another project.
Operator: The next question is from Biraj Borkhataria with Bank of Canada.
Biraj Borkhataria: The first one is on LNG. There’s been on and off news flow around potential EU sanctions on Russian LNG. Now I’m just wondering what this would mean for your — the offtake at Yamal? In particular, would you be able to divert the cargoes and sell them elsewhere? Or would you have to declare force majeure? And then the second question is on hydrogen. So late last year, you announced a call for tender for across your refineries. And I don’t think we’ve seen anything since I was wondering if you could provide any insight on the response from the industry and what you’re seeing there?
Patrick Pouyanne: Okay. I know you like Russia, Biraj, very much. To be clear, there is no, for total, if you — I will tell you, if EU sanctions Yamal LNG, the price of LNG will go up quickly. And globally, our portfolio will benefit of it. So I’m not at all — it’s a positive if there were sanctions, not a negative because the cash from Yamal is quite limited contrary to what you might all think. First, we don’t receive dividends from Yamal LNG in — since ’23. Second, the LNG business, because I remind you that because of the risk of sanction, we decided not to hedge the volumes of Yamal. That means that this year, we have sold Yamal in Europe at TTF price, and we buy it at a Brent basis. That means that it’s not a very profitable operation given this year contract.
So honestly, it’s not a point. So yes, if there are sanctions on Yamal by Europe or by EU, we will have to exercise force majeure for sure on some of the contracts. There’s 2 contracts, 1 in for Europe, which we can exercise. There is 1 for Asia on which we’ll have to look more carefully to the close. So this is where we are. And — but my view to share with you, Biraj, I don’t think because the European leaders understand that there are gas security of supply to they rely on the LNG. And they don’t want again to see a crisis in Europe until ’27. And what I understand is that they might have some ideas, but from ’27, not before. So we’ll see. Again, for TotalEnergies, it’s neutral. It’s even a plus if there were some sanctions. So maybe people should think I’m a little provocative.
But in fact, that’s a reality. When I look to these projects, and it’s not billions of dollars in cash flows. It’s more a few hundreds of million dollars, which we can absorb easily, which have already been largely absorbed since 2022 in the company by other projects. On the second one, no, I would like you to follow more carefully. We gave you some indications in February on hydrogen. We told you that we received a lot of offers, more than 50 different offers to our tender. We have been offered 5 million tonnes, and we are targeting 500,000 tonnes per year. So then all the maturity of all these projects are not the same. We are working on them. I’m quite optimistic, to be clear, that we’ll get what we are targeting. It’s important for us because these 500,000 tonnes will allow us to decrease CO2 emissions by 5 million tonnes, 5 million tonnes of emissions, we have this year 38 million tonnes.
So it’s quite sensible on the road map. And again, within the European ETS framework and the famous Red Sea, we can do it, I would say, in terms of neutrality compared to paying the taxes or eliminating emissions and getting some green hydrogen. So really, it’s quite attractive. We are, in fact, becoming an anchor customer for some players, in particular, in Antwerp or Rotterdam. And even Rhina in Germany, quite a long, strong interest. So — and we could benefit from being a first mover there. Because again, they are as people, our projects are willing to develop the projects, thanks to such a 15-year contract that we could offer. So we’ll come back to you when we have clarity. There are different tenders, a lot of discussions. But I think before this year-end, we’ll be able to come back to you with news, but I prefer the teams to work than giving more indications.
But that’s — we are — I’m convinced that we’ll have the — we’ll be able to execute the road map as planned.
Operator: The next question is from Michele Vigna with Goldman Sachs.
Michele Vigna: Congratulations on the strong capital discipline and the ongoing upgrading of the portfolio. I think you mentioned P&G, that’s definitely a great example where cost inflation has led you to rethink or at least delay the project. I was wondering which other projects in your portfolio you think should be delayed or perhaps reengineered a bit following some of the recent cost inflation. Mozambique is certainly 1 where it feels like some of the bids have come back a little bit on the high side. And my second question is — goes back to the idea that you floated off a U.S. primary listing. Clearly, the big aim there is to be included in one of the major indices, like the S&P 500 which has so much passive and semi-passive following. I was wondering if you’ve had any discussions there and if you think it’s actually something doable to be included in that index while being remaining headquartered in Europe.
Patrick Pouyanne: Actually you know the answer to the second question. And you know that you cannot to be S&P 500. They are not initiated in the U.S., that’s all. So we don’t intend, that’s why we speak about primary listing. But again, when I see — when we discuss with U.S. shareholders, being for them having access directly to your shares in New York would be a plus compared to going through this ADR or to the Paris market to buy shares. I think that’s what we think about it. We see clearly more appetite on the North American site for energy companies, oil and gas companies was in Europe. So it’s — we are studying what could be, again, to facilitate their appetite by offering them easier access to share that’s the idea. But the index might be abused, but it’s not in the agenda to be clear, because we don’t speak about the initiation, we speak about primary listing.
That’s earned. On the first one, no, honestly, on Mozambique, we don’t face at all. I know one of my colleague wants to float that idea, but it’s not true. I mentioned that few months ago that we were discussing with contractors on Mozambique because they raised their costs. We had good discussion with them. So the good news that I can confirm today is that in fact, we are back to — we are on the good contracts with all of them. We realigned all the contractors because their interest is that we can execute the contract — project. The interest is not to force us to re-tender or redesign, or I don’t know which [indiscernible]. So we have a good concept, strong concept, resilient one. So we work with all of them. And today, we have contracts which have been initial to restart the project.
