TotalEnergies’ held its 2023 strategy day this week, the company appears to be building out a profitable low-carbon energy business, however, the update also reinforces our view that the company’s ambitions for growing gas will make it difficult to reduce total emissions.

Key observations

• TotalEnergies increased FY28 oil and gas production and is now expected to have the highest growth in oil and gas of European majors, at 19% (upper end) between FY22-28. Exceeding Eni which is growing oil and gas production 17% to FY26 and then plateauing.

• Distributions were increased for FY23 and FY24 while FY23 capex was downgraded to US$16-17bn from $US16-18bn. 

• While earnings for low carbon appear positive, TotalEnergies did not confirm its FY30 renewable capacity target of 100 GW, its biogas or hydrogen target. 

• TotalEnergies followed Shell in lowering FY23 capex in favour of higher distributions, if the pressure to increase or maintain high distributions continues, we see potential for capex downgrades to low carbon.