By Akanimo Sampson
Total, a French major energy player, which produces and markets fuels, natural gas and low-carbon electricity is currently bracing to export its first Liquefied Natural Gas (LNG) cargo from Gydan peninsula, Russia by 2023, while the second and third train to start up by 2024 and 2026.
Total, Novatek and the other project shareholders have approved the Final Investment Decision (FID) for Arctic LNG 2, a major LNG development in Russia, with a production capacity of 19.8 million tons per year.
The news came as the Board of Directors of the French oil major, reviewed the outlook for the Group through 2025. Total is demonstrating its ability to maintain a sustainable pre-dividend breakeven below 30 $/b and a solid financial position with a gearing objective below 20%. The Group also reaffirms its strong discipline on investment and cost.
Delivering on its strategy for sustainable and profitable growth in oil and gas activities as well as investing in growing energy markets, notably LNG and low-carbon electricity, provide stronger visibility on the future of the Group.
Notably, this resulted in a projected increase in the Group’s cash flow of more than $5.00 billion by 2025 in a 60 $/b environment or an average increase of about $1.00 billion per year.
Consequently, the Board, meeting on September 23, decided to accelerate dividend growth in the coming years, with a guidance of increasing the dividend by 5 to 6% per year instead of the 3% per year as previously announced.
As a result, the proposed amount for the third interim dividend for 2019 will be 0.68€ per share, an increase of 6% compared to the third interim dividend for 2018. These decisions reflect the Board’s confidence in the Group’s ability to deliver profitable and sustainable growth in the coming years.
In the mean time, Total has a direct 10% interest in Arctic LNG 2 alongside Novatek (60%), CNOOC (10%), CNPC (10%) and a Mitsui-Jogmec consortium, Japan Arctic LNG (10%). Total also owns an 11.6% indirect participation in the project through its 19.4% stake in Novatek, thus an aggregated economic interest of 21.6% in the project.
Chairman and CEO, Patrick Pouyanné, says Arctic LNG 2 will leverage the success of the Yamal LNG project and will deliver competitive LNG to the markets in four years’ time. Arctic LNG 2 adds to our growing portfolio of competitive LNG developments based on giant low cost resources primarily intended for the fast growing Asian markets.
The project has very low upstream costs with the development of the giant resources from the Utrenneye onshore gas and condensate field. The installation of three concrete gravity-based structures in the Gulf of Ob on each of which will be located a 6.6 Mt/y liquefaction train will contribute to significant capex reduction (more than 30% per ton of LNG) compared to Yamal LNG. Also, the close proximity to Yamal LNG will allow Arctic LNG 2 to leverage synergies with existing infrastructure and logistics facilities.
Arctic LNG 2 production will be delivered to international markets by a fleet of ice-class LNG carriers that will be able to use the Northern Sea Route and the transshipment terminal in Kamchatka for cargoes destined for Asia and the trans-shipment terminal close to Murmansk for cargoes destined for Europe.
Total is the second-largest private global LNG player, with an overall portfolio of around 40 Mtpa by 2020 and a worldwide market share of 10%. With 22 Mt of LNG sold in 2018, the Group has solid and diversified positions across the LNG value chain. Through its stakes in liquefaction plants located in Qatar, Nigeria, Russia, Norway, Oman, Egypt, the United Arab Emirates, the United States, Australia or Angola, the Group sells LNG in all markets.
Total is active in more than 130 countries including Nigeria. Its ambition is to become the responsible energy major.
