Rising Oil Prices: Total to Deploy Cash to Renewables

Emmanuel Addeh

French oil major, TotalEnergies, plans to use part of its cash bonanza generated from surging hydrocarbon prices to speed up investment in Liquefied Natural Gas (LNG) projects and renewables.

But despite the phenomenal growth by oil firms and countries producing the commodity, almost all the economic induces in Nigeria are tottering as the country has continued to embark on a borrowing spree.

“This might be an opportunity to accelerate the transition,” TotalEnergies Chief Executive Officer Patrick Pouyanne said after the company reported its first-quarter profits rose threefold as oil and gas prices surged. If we move, it will be primarily in either the LNG fields, and/or in electricity and renewables, ”he said.

European nations are trying to find alternative supplies to Russian oil and gas and accelerate the shift toward renewables as President Vladimir Putin’s invasion of Ukraine exacerbates the continent’s energy crisis. 

“I’m not a very big fan of very large-scale acquisitions,” because integration is important, Pouyanne said. He added that the company’s multibillion purchases of A.P. Moller-Maersk A/S’s oil and gas unit, as well as some of Anadarko Petroleum Corp.’s Mozambique assets in recent years “were well done.”

The company is also using some of its first-quarter cash flow to reduce debt, increase shareholders returns, and make additional investments to support short-term gas production in the North Sea. TotalEnergies will spend near $15 billion this year — up from $13.3 billion in 2021 — a quarter of which will be invested in renewable energy and power projects.

The $15-billion spend for this year will be capped, Pouyanne said, meaning that any large acquisition would be offset by divestments, a Bloomberg report indicated.

Meanwhile, Saudi Arabia has continued to benefit from a price surge in the past year, first due to demand recovering from the coronavirus pandemic and then to Russia’s invasion of Ukraine

Saudi Arabia’s economy grew at the fastest pace in more than a decade in the first quarter-riding on booming oil prices and rising production.