London — French oil group Total has no plans to shrink its oil production volumes in the coming years but hopes to maintain its current output levels while prioritizing lower-cost, shorter-cycle upstream projects, its chief executive officer Patrick Pouyanne said Oct. 26.
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"We don't want to decline oil on the production side, we'll continue," Pouyanne told an industry event on Oct 26. "It's a bit difficult to grow when you are selective but maintaining our oil production is part of a strategy...When we have opportunities to grow we'll do it...we are proud to be an oil producer."
Like many of its European rivals, Total has signaled a major boost in spending on renewables energy in the coming years as part of its strategy to shift to cleaner, lower-carbon fuels.
The company, which has said it expects global oil demand to peak in the 2030s, last month announced plans to grow its overall energy production by a third in the next decade, with half the growth coming from LNG and half from electricity, mainly renewables. With a shift in focus to cleaner, low-carbon energy, however, it said it expects its oil product sales will be reduced by almost 30% in the same timeframe.
Last year, Total's oil and gas output averaged 3.01 million boe/d, of which 1.67 million b/d, or 55%, was oil.
By 2030, the company expects its total energy sales mix will be: 50% gases, 30% oil products, 5% biofuels and 15% electrons. That compares with 55% oil products, 40% gas and 5% electrons in 2019.
BP in September became the first global oil major to abandon a long-held strategy of growing oil and gas portfolio, announcing plans to shrink upstream production by at least 1 million b/d of oil equivalent, or 40%, by 2030 as part of an ambitious transformation from an integrated hydrocarbons producer to a global energy major.
Looking for 'giant' finds
Although Total has no plans to follow suit, Pouyanne said Total is being more selective in its upstream investments, avoiding projects with multi-year exploration and development cycles such as deepwater offshore given the uncertainties over the future demand for oil and long-term oil prices.
"In order to be safe, we want to be sure that the oil that we invest [in] today -- when it faces lower demand -- continues to be competitive at a lower price," Pouyanne told the India Energy Forum.
Total has said its new upstream projects must have a breakeven of less than $25/b, and are able to produce a return of more than 15% at a $50/b long-term oil price.
Asked whether growing concerns over the climate and long-term oil demand threaten to create more stranded resources globally, Pouyanne said: "I think it will become an issue for countries that want to offer some exploration licenses...because we have to think, [for example] very deepwater, offshore exploration could take time to develop."
In Suriname, where Total and Apache recently made a third "substantial" offshore oil and condensate find, Pouyanne suggested that Total may not even consider developing the discovery unless it is a "giant" in terms of recoverable resources.
"If it's giant it works, if it's only interesting discoveries maybe they will have to stay where there are...So it might be an issue."
In Canada's oil sands industry, Pouyanne said he sees the potential that climate change and oil demand fears "may leave a lot of resources in the ground."
"There are a huge amount of resources which probably will not be all valorized in the long term in this type of environment," he added.