Despite worries from environmentalists, the French oil giant TotalEnergies has reiterated its commitment to extract Uganda’s oil.
The business has come under a lot of pressure to give up both the Tilenga development project in the Albertine and the East African Crude Oil pipeline project.
Patrick Pouyanne, CEO of TotalEnergies, however, stated that oil projects in Brazil, the Middle East, and Uganda will proceed, but in conformity with the company’s commitment to taking climate action.
About investments there, he said, “I frequently repeat that the last drop of oil will be produced there. Therefore putting the business in these nations is a method to safeguard the portfolio and ensure that it can continue to function on cash.
Pouyanne address on Tuesday coincided with the launch of the company’s Sustainability & Climate –2023 Progress Report.
The report details TotalEnergies’ transformation strategy’s advancements as well as an update on their climate ambition.
For the years 2022 to 25 TotalEnergies promised to invest $13–15 billion annually. It expects to divide those investments in half and use the other half to sustain the foundation of its operations.
Of the expansion investments, 50% will go toward developing new energy, primarily renewables and electricity, while the remaining 50% will go toward natural gas, primarily LNG.
According to a statement, of the five super-majors, TotalEnergies will be the most profitable major in 2022. With a Return on Average Capital Employed (RoACE) of more than 28%, TotalEnergies was able to provide its shareholders 37.2% of the $47 billion in cash flow it created.
“The oil’s resiliency by TotalEnergies, which we position with a low cost and low breakeven point of less than $20 per barrel. We have assessed our portfolio in light of potential demand based on the current value condition. Hence, it is undoubtedly safe, he said.
The commercial feasibility of oil production is typically impacted by the global price of oil. Some have questioned whether fresh initiatives like Tilenga will be financially successful and economically sustainable.
Throughout the past 20 years, the price of a barrel of oil has tended to fluctuate, with the lowest price being $10 and the highest being $140.
According to Patrick Pouyanne, TotalEnergies will prioritize investments in affordable and low-carbon assets both in Uganda and overseas.
Investment in renewable energy projects is the primary objective of the cash flow generated by the company’s assets in Brazil, Uganda, Angola, and the United Arab Emirates.
The Tilenga and EACOP projects, whose Final Investment Decision (FID) was made on February 1, 2022, are discussed in detail in a part of the Sustainability and Climate -2023 Progress Report. According to the report, as of the end of 2022, 94% of compensation agreements for Tilenga had been signed and 92% had been paid out.
According to the EACOP report, 85% of compensation payments had been made as of December 2022, 91% of compensation agreements had been completed, and 775 of the households had chosen to be relocated to newly built dwellings close to the pipeline project.
By the beginning of March 2023, 205 of the 775 houses had supposedly been delivered.
According to the corporation, the development phase of EACOP would generate close to 80,000 direct and indirect jobs and award local companies almost $2 billion in contracts. Indirect and direct employment totaling 42,000 are anticipated during the pipeline’s operational phase.