TotalEnergies SE ($TTE)

Ladies and gentlemen, welcome to TotalEnergies' First Quarter 2026 Results Conference Call. I now hand over to Patrick Pouyanne, Chairman and CEO; and Jean-Pierre Sbraire, CFO, who will lead you through this call. Sir, please go ahead.

Good afternoon or good morning, everyone. I'm pleased to be with you again today. So before Jean-Pierre will go through the details of this first quarter financials, I would like first to make some few opening remarks, in particular, on the conflict in the Middle East and its consequences. As you know, this region, Middle East holds, of course, a very special place for TotalEnergies. It's deeply rooted in our DNA, in our history, in our identity because it is where the company was born in 1924 in Iraq. And more importantly, this is a region where we have established along the years, a prime position, which differentiates ourselves. Since the very first day of the conflict on February 28, our priority has been first the security of our teams and their families. And we have decided just 2 days after to organize the evacuation of employee families and as well as some nonessential employees out of the UAE, Qatar, Iraq, Saudi Arabia, German and Lebanon. Thanks to the strong mobilization in all our affiliates in the regions, but also around the globe and also at the quarters, more than 1,300 people have returned safely from the countries concerned by the conflict. And I want to thank all the teams who participated to that strong effort. Safety of our staff will remain our utmost priority, but I want also to reiterate here our full solidarity and support for the population of these countries, which suffers a consequence of the conflict. And we -- I want to reaffirm TotalEnerg's commitment to all our local partners, contractors and customers. From this point of view, I want to underline that we kept a presence in all the countries aside our partners. For example, in Abu Dhabi, all our secondaries working for the ADNOC JVs, are maintained underground. It's the same situation in Qatar. We have also, by the way, sent some experts to assist Qatar Energy in evaluating the damage and repair necessary to the 2 trains which were damaged during the conflict. We have maintained a team in Iraq in Basra of 20 TotalEnergies staff, which are supervising the progress of the [ DGH ] projects on the ground with around 5,000 workers there. And also in Saudi Arabia, we have, of course, maintained on most of our secondies in order to supervise the ARL projects, which mobilized today 22,000 workers. So my message on this first is to thank all our teams, which are, again, working hard in the region facing the situation. I went myself last week to visit them. And I can tell you that I feel I had a strong feeling of a high mobilization of everybody facing these adverse events. And also, I met, of course, our partners and authorities to reaffirm our commitment to the region. Of course, we will have to draw some lessons from what happened, in particular, to envisage some alternative evacuation routes for the production of oil in the region, but that will come after the conflict. This conflict immediately has some impact on TotalEnergies operations. And we have been, by the way, very transparent, I would say, since day 1 to disclose all the impact on our activities. So at this stage, production is shut down in Qatar, Iraq and UAE offshore, which represents approximately 15% of the total oil and gas production of the company, more precisely, 360,000 barrels per day because we continue to produce onshore UAE production -- oil production, 210,000 barrels per day TotalEnergies sales, which is evacuated for terminal out of the strait of Om. And we also continue to produce the Dolphin gas between Qatar and UAE because it's, I would say, a domestic production. While this is a significant portion of our production upstream, the Middle Eastern assets contributes less to our cash flow per barrel than the rest of our portfolio due to higher taxation in the regions and this 15% of volumes, a little less 360,000 barrels per day impact account -- only account for roughly 10% of our upstream cash flow at $60 per barrel. The company's cash accretive growth expected for 2026 is largely outside the Middle East, and you've seen that through the results of the first quarter, meaning that the higher oil price observed since the start of the crisis more than offset, of course, the loss of production in the Middle East and equivalent of $8 per barrel increase in the Brent, is enough to offset the expected 2026 CSO [indiscernible] from the shut-in production. And we are, of course, today of more of $100 per barrel, I think, even $115 per barrel this morning, which represents which in terms of our sensitivities to price represents substantial additional cash flows. The impact on the LNG production shutdowns in Qatar or in Abu Dhabi on our energy trading activities are, in fact, very limited as our exposure to our marketing portfolio is limited to 1.5 million tonnes for the remainder of 2026. I remind you that most of the LNG produced by our JVs in Qatar are, in fact, marketed by Qatar Energy itself and not by TotalEnergies. Finally, on our refining activities in the region, the set of site which is owned jointly by Aramco and TotalEnergies was impacted by [indiscernible] that occurred during the night of April 7 through April 8, causing damage to 3 units. No casualties were reported. As a safety precaution, the units were immediately shut down. A partial restart occurred on April 14, allowing to resume production at 50% capacity, 230,000 barrels per day. And the repair work on the first one of the unit, BDU units are well underway, and we expect to restart and to increase the production to more than 300,000 barrels per day from beginning of early days of May, May. So that's the situation for our assets. But discount, of course, has consequences beyond the only perimeter of TotalEnergies and now will impact the course of 2026 very significantly in terms of markets. Also the damage to upstream assets has been limited so far. The closure of the state of almost constitute a major disruption to the world energy system as it affects around 20% of worldwide oil crude oil, refined products and of course, LNG exports. And there is very limited spare capacity of production outside the Gulf in reality. So the immediate consequence of the surge in oil prices, which are now around $100, $115 per barrel, which have been extremely volatile with major swings in the past weeks. Some days have been the highest days. I think we experienced 8 of the 10 highest volatile days in the last 25 years during the month of March and April. So given the time required to restart facilities, but also and more importantly, to reach the market because the oil tanker, which will be loaded in Abu Dhabi or in Saudi Arabia will take 25 days of shipping to reach its customers in Asia, Korea, Japan. And so there is a time lag. Even if the war to end quickly, prices are expected to remain at high levels. And in all the scenarios, I can read and I agree with the scenarios I'm reading either from the IMF or from some banks, at least $80 per barrel is expected for 2026. In fact, the reality is that the 2026 surplus scenario that was anticipated by the market and by ourselves, by the way, at the beginning of the year is now over. It's behind us with global hydrocarbon inventories being materially drawn to balance the market. already at a pace of 10 million to 13 million barrels of oil per day. We have already consumed, I would say, 500 million barrels out of the inventories. And with the phenomenon I described to restart and to the market, it's probably more 1 billion barrels, which will at least be consumed from the inventories. And we would exit even if the conflict, and I hope so, will end in the month of May, we would exit the conflict with clearly some very low inventories. So this conflict also has some impact on the LNG markets and prices. We have seen that the European gas price have established today at around $15 per million BTU. But again, we are facing now by this summertime, the peak season for LNG because it's only the warm summer season in Asia, which will grow and which will call for more LNG demand. But also it will be a season where Europe will have to replenish its storage. And as you know, at the end of the winter season, we were at the lowest point of the last 5 years in terms of European gas storage around 25%. And we anticipate as well, and I was in Qatar that Qatar LNG, we wait for a real stabilization of the straight of ours before to restart the liquefaction plant. We cannot turn off this plant easily. So it will also impact -- I would say, the time it will take to reach the market. So that's on LNG. And I would not be surprised to see some support from higher prices by summer season considering this time lag that Qatar LNG could go back to the market and Qatar LNG almost 20% of the world market. So in this context, the strategy of TotalEnergies demonstrates once again the ability of the company to capture price upside, thanks to major strategic strengths on the company. And also, I must say, I complement the team because of the strong operational performance, which, of course, is of essence in such markets during the first quarter. First, of course, we are integrated along the value chains of oil, gas, LNG, electricity and allows us to capture margins and prices all along the value chains and provide us with a unique combination of activities in oil, gas, electricity, being a low-cost producer, transforming them into added value products, which can then be traded on the market and sold to our B2B, B2C customers. Secondly, we are a growing company and a strong organic growth. And then we are demonstrating quarter after quarter our ability to strongly grow our production with -- as you've seen a 4% year-on-year organic production growth for the oil and gas business and also, of course, our electricity business. 4% for oil and gas was above our annual guidance of 3% and which, of course, helps to offset, if not completely during the first -- it was completed during the first quarter will be partially during the second quarter, the impact of Middle East conflict. But more importantly, it allows us to capture the upside of the high prices because the incremental production, new production that we put on stream is more attractive and generates more cash flows per barrel than the average of the portfolio. Third, we are diversified. And I think this is, again, a strong lesson of this crisis, strong diversification, our rich and diversified portfolio allow us to compensate again the impact of the crisis in the Middle East for our geographically diversified portfolio of oil and LNG outside of the region. notably allow us to activate the flexibility of our LNG portfolio to ensure the security of supply of all our customers. And the diversity of the LNG portfolio, we are producing in 11 different countries allow us to serve our customers in Asia, rerouting some noncontracted volumes that we have in our portfolio to them and not to declare any force majeure in our contracts. I can ensure you because I visited some customers in Asia, but they appreciate very much the value of the contract commitment at TotalEnergies. We have also, I would say, and it's another example of the optionality of our diversified portfolio. I would say that more than ever, the decision to restart the Mozambique LNG construction in January is -- could be fully appreciated because it's a way a diversification, which will be good for our portfolio by 2029. It was an article recently in the journal that the Mozambique will be the [indiscernible] of Africa, and we are proud to be -- to build these projects in Mozambique, and it will help us to diversify. And I would say as well as we are working hard, these events are giving a good momentum to sanction Papua LNG before year-end. So in this context, of course, and compared to the beginning of the year where we were all cautious, there are no reason not to fulfill all our commitments for strong returns to shareholders. And I think the Board has taken decisions yesterday that I'm happy to report to you and considering, of course, the strength of the balance sheet, but also the environment and taking into account the ability to demonstrate our growth. priority was again given to what I call the [indiscernible] dividend by continuing to -- it's our strong track record of dividend growth, and we have decided to increase the first interim dividend by 5.9%, above probably market expectation to EUR 0.9 per share compared to last year interim dividend, which was EUR 0.85. So we confirm once again the leadership of TotalEnergies, not only in terms of dividend resiliency, but also more important, dividend growth among the oil and gas majors. Secondly, in view, and we are, I would say, very pragmatic and consistent once again, in view of the current projections of the evolution of the prices, not only the second quarter, but as I said, along the year 2026, the Board of Directors gave us the authorization to continue, of course, the share buyback program up to the high end of the range that we gave last February, which was $750 million to $1.5 billion per quarter. So we'll target the high end of this range up to $1.5 billion per quarter. The Board also reiterate the objective to achieve a cash payout ratio above 40% for the full year 2026, and we will monitor buybacks accordingly along the year. Keep as well in mind that in terms of capital allocation, Board attached great importance to deleverage the balance sheet, and we would be happy to see gearing in the low 10 by the end of '26 if the barrel price or the crude oil price was remaining above $100 per barrel. On that note, and I will now turn now the call to Jean-Pierre, who will go through the details of the first quarter financials.

Thank you, Patrick. So I will start by commenting on the price environment in the first quarter versus the first quarter '25. Brent averaged $81 per barrel during the first quarter versus nearly $64 per barrel in the first quarter, up more than 25% and average liquid price was up by $12.4 per barrel due to the time lag effect in particular in the [indiscernible] [indiscernible] averaged $13.7 per MMBtu versus $10.3 per MMBTu during the first -- during the fourth quarter of '25. And our average LNG price stayed at $8.5 per MMBtu, oil price increase impacting LNG prices with 1 or 2 months of lag time according to LNG pricing formulas. Finally, the European refining margins remained at $11.4 per barrel on average over the quarter with exceptional margin in March and poor margins in January and February. In this price environment, the company reported very strong financial results with first quarter '26 cash flow of $8.6 billion, increasing by 20% compared to the first quarter and adjusted net income increasing by more than 14 -- 40% to $5.4 billion. These results, as already highlighted by Patrick, were possible because of the strong operational performance of all businesses, which demonstrated the company's ability to fully capture the environment upside. Upstream delivered a 4% upstream underlying attractive production growth, offsetting the production loss due to the crisis in the Middle East stream a very good operational performance of our refinery utilization rate on average over the quarter above 90% that allow us to capture high refining margins in March. And trading was also able to take benefits from the high market volatility in March and delivered a high performance on crude petroleum products, but also LNG. TotalEnergies has delivered a strong profitability this quarter with return on equity at 14.4% and ROCE at 12.7%. Now moving to the business segments and starting with Hydrocarbons. On a year-on-year basis, excluding the impact of the Middle East conflict, first quarter oil and gas production exceeded expectation and increased by more than 4% above the guidance provided of 3% for '26. As communicated by the company from the very beginning, the production was impacted by COVID in the Middle East with an impact of around 100,000 barrels per day on average for the quarter, which corresponds on average to around 25 days of disruption during the month of March. E&P, exploration and production. So turning to quarterly results and starting with E&P division. The segment generated an adjusted net operating income of $2.6 million this quarter, up by more than 40% quarter-to-quarter, fully capturing the increase in average liquid price of $12.4 per barrel over the quarter and demonstrating the attractiveness of the new projects. This quarter, [indiscernible] Southwest in Brazil, in Libya started up and we each once ramped up, bring an additional production capacity of 25,000 barrels oil per day. Similarly, cash flow reached for E&P $4.6 billion, up 26% quarter-to-quarter. On the cost side, once again, we maintained our leadership with an average OpEx per barrel of oil equivalent below $5 in the first quarter '26. On integrated LNG on the production side, LNG production, it has grown by 12% quarter-to-quarter, mainly supported by growth in Australia with [indiscernible] back to full capacity during the quarter, the United States and Malaysia. First quarter LNG sales reached 12.4 million tonnes, supported by strong spot activity, giving us a strong start compared to our yearly guidance of more than $44 million. [indiscernible] growth and strong trading activity capturing market volatility, the adjusted net operating income of integrated LNG went [indiscernible] category quarter-on-quarter to $1.3 billion and cash flow to $1.8 billion. Given the evolution of the oil and gas prices in recent months and the lag effect on pricing formulas I already mentioned, the company anticipates an average LNG selling price of around $10 per MMBtu for the second quarter of '26. As we execute our consistent strategy in LNG, the main milestone of the quarter was the full restart of construction activity at our Mozambique LNG projects with more than 6,000 people already on site as we speak. This project was more than [indiscernible] specification with the LNG supply [indiscernible] crisis of goods, [indiscernible] Turning to integrating power now. So net production -- net power production increased year-on-year up to 11.7 terawatt hour with a 20% growth of power generation from renewables offsetting the lower utilization of gas [indiscernible] capacities [ in the context of lower winter demand in Europe and in the United States. TotalEnergre has increased renewable capacity by nearly 8 gigawatts, 12 [indiscernible] to reach [indiscernible] of 42 gigawatt installed capacity at the end of the year. Cash flow from operation was $0.6 billion as [indiscernible] comes down [indiscernible] of '26 in the fourth quarter of '25. This quarter again, we provide more granularity in integrated Power financial performance with a split in cash flow between production assets on one side, renewables and gas-fired plants and sales activity on the other side, B2B, B2C and trading. The former contributed 35% of the cash flow and the latter for 65%, in line with the first quarter of '25 due to the seasonal nature of the marketing business with more consumption, obviously, during the winter the closing of deals that we announced this morning, TotalEnergies reaches now at 50% interest in a portfolio of [indiscernible] power generation assets in Europe and integrated power should then benefit in '26 from 10 terawatt hour of net production -- net power production in line with the 15 terawatt [indiscernible] given for the full year and more than $500 million contribution to available cash flow in relation with EPHE. Moving to downstream. And during the first quarter, Refining & Chemicals was able to capture the exceptional margins in March, thanks again to the high availability of the refineries, which recovered their full operational performance, was particularly the case in dollar in the U.S. and [indiscernible]. Utilization reached 92% in the absence of planned turnarounds and trading activities were also very strong for prudent products taking benefits of the market volatility. Overall for ARC, adjusted net operating income was up nearly $600 million quarter-to-quarter up to 1.6 billion and cash flow reached $1.7 billion. In Marketing Services, results remain consistently strong and reflects the seasonality of the business with higher margin activities offsetting lower volumes linked to the disposal of some assets in Brazil and in Africa. Moving to corporate company level and starting with working cap. So working cap increased by $5.1 billion during the first quarter, out of which $2.5 billion is related to [indiscernible] business seasonalities and $2.6 billion that reflects the impact of higher hydrocarbon prices at the end of the quarter, notably on inventories. While the context remains quite volatile, we deploy our investment program with discipline with net investments that amounted to $4.5 billion in the first quarter with a neutral balance between acquisitions and disposal in line with our quarterly budget. And we, therefore, reiterate full year '26 net investment guidance of $15 billion. As a result, the gearing lands at 15.5% at the end of the quarter with cash flow growth driven by higher energy prices, partially offsetting in particular, the impact of high prices on the working capital. Looking forward now, we expect to maintain strong momentum with hydrocarbon production, excluding Middle East impact in the second quarter expected to grow around 4% compared to the second quarter of '25, in line with first growth registered during the first quarter. As we speak, as mentioned by Patrick, production shutdown in the Middle East still represent around 15% of the company's total production, and we anticipate refining utilization in the range of 80% to 85% in the second quarter, which accounts for a 2 month scheduled maintenance at [indiscernible] and the impact of the capacity reduction of the [indiscernible] commented by Patrick. As I mentioned, the company confirmed it expects its yearly net investment to be at $15 million for the full year, in line with annual guidance. Therefore, this investment should trend downwards in the second quarter. Meanwhile, the company is evaluating options to accelerate short-cycle investment to capture current hydrocarbon price environment. To conclude, the set of growing earnings clearly demonstrate in our view, the strength of our integrated model in oil, gas and power, which enable us to see price updates upside in the first quarter and put us in a strong position for the second quarter and the rest of the year. With that, I think with Patrick, we are now available to answer your questions. So you can open up the line for questions, please.

[Operator Instructions] the first question is from Michele Della Vigna, Goldman Sachs.

Congratulations on the strong results. I wanted to ask 2 questions on LNG. The first one is about whether with all of this crisis, you're starting to see a resurgence of demand for oil-linked long-term contracts and if that can unlock more LNG projects for you like, for instance, PNG. But longer term, I was also wondering if this crisis may actually be a bit more concerning and reduce some of the dependence on hydrocarbons from Asia, for instance, turn some of those countries more towards coal, solar and energy storage as an alternative. And if that could actually make perhaps what already looks like probably an oversupplied LNG market from 2028 last well into the next decade.

Okay. I will take the second one first, [indiscernible]. It's quite clear for our customers in Asia, the crisis in '22, another one in '26. reliability, I would say, from an affordability point of view of the LNG will be questioned. And that's why, by the way, we think we will -- we have to promote to them the idea of long-term contracts, not only related to spot price, that's very clear. That's what the Europeans because the whole are not benefiting from. I think it should influence -- put them more on this type of long-term contract. You are right. But the way the whole planet not only in Asia. I think the government will look again to like we were in the '70s domestic production first, I would say, domestic energy first, whatever it is coming from coal when you have coal coming from biofuels. By the way, Malaysia, Indonesia are beginning to raise their biodiesel content very logically. But coming to renewables, of course, as well. And from this position of company, TotalEnergies could benefit from it because we are also investing in electricity, I would say. So that will be -- and I would say electrification will be also a global answer because it will be -- you can produce electricity from various needs and not only from hydrocarbon. So that will be the other big trend, I think we will see because security of supply because, again, affordability of energy is of essence. So it's not a very good news, I agree for the LNG markets. As you said, probably the result of this crisis as well is that we pushed back some of the, I would say, the famous wave. I think because there will be some delays in some projects because we are -- by the way, we don't know today how long the war will last, we have no idea. But I see -- I was -- I always said that '26 will remain a good price. I think '27 will be optimistic then what you said, the oversupply LNG market will come from 2028. But I would say, by the way, that it's not bad for customers to have an oversupplied market. One of the observations I've done when I observe what happened today with the crisis, and it's quite remarkable. I know only 2 markets today where there will be no impact on the crisis on the energy price. One was the U.S. domestic gas price still remain at even lower at $3 instead of $4 before of $3.5. Why? Because there was -- there is an oversupply. There is overcapacity, the Permian gas now it's connected through pipelines. And the other market they observed is French electricity market, no impact at all because also overcapacities of nuclear and renewables, by the way, both. So we produce too much. And so that means that it is a way to secure the affordability. So from this perspective, because of what you said and the fear which could be generated to our customer -- energy customers, the fact that we will enter at a certain point when probably more summer '28 than before or winter '28 to, I would say, a lower cycle will be good to convince them to come to us. It's -- I make a link with your first question. Honestly, today, I think we were happy and lucky to have signed a lot of oil link contracts because in this context, we are very sort of bullish price of oil. We have always quite be bullish, but I think this context, the crisis will also impact, I would say, this oil market because there will be now something which was completely even, which, in fact, was only putting in the cartography, which was closing of the state of almost became a real possibility to materialize this spread is materialized. And you have in the Gulf, more than 20% of -- 25% to 20% of the oil resource, oil and gas resource. So clearly, I think this will have an impact on the way that the markets I would say, take this threat into even if we go to a stabilized situation for straight of will have an impact on the market -- on the Middle East market, I would say. So today, I think we are happy to see that. We see appetite from Asian buyers for Papua LNG, not only because of the contract, because of the geographical position, I would say. Of course, Papua LNG is perfectly located, not far from them outside. So any diversity is good. And -- but on our side as well, we think that we are -- by the way because of this geography, we'll see if we sign long-term contract for Papua LNG or if we keep some LNG for our own portfolio because we like this LNG as well for our own portfolio. So we'll be -- but again, no problem from this perspective to to sign. And we might be, I would say, in this context, a little tougher in the negotiation. What I've observed in the last week, some Asian buyers come back to [indiscernible] because they just observe what happens and the stable, I would say, an affordable gas marker is the [indiscernible]. I think so there will be quite a lot of new popularity for the [indiscernible] if some LNG offtakers want to sell their LNG there. But definitely, this crisis has an impact on all the global LNG market. Having said that, you've seen our results during the first quarter. While you have a strong diversified portfolio, you can do good results when you have volatility. And I think we demonstrated that with our teams during the first quarter. I think we will continue for the next quarter as well.

The next question is from Biraj Borkhataria, RBC.

Thank you for the comprehensive overview of your operations. The first one was just on the comment in the release around accelerating short-cycle investments. Could you just unpack that a little bit more? What opportunities are you looking at? And secondly, kind of what are you looking to see macro-wise or otherwise to put that capital to work? And then secondly, just a follow-up on Papua New Guinea. Could you just talk about the steps from here to FID? Are the fiscal terms all now agreed and tendered and so on? Just any uncertainties there ahead of FID.

Okay. First question. I mean you would have been surprised that we did not mention that I'm sure I would have a question. So it's quite natural from the CEO of the company that I've asked to my E&P teams, okay, is there anything to accelerate on the short cycle to benefit from a higher price deck because again on '26, I'm quite -- I mean, be confident it's difficult in this world. But to see at least $80 per barrel, I don't think it's -- I would put quite a lot of my money on it for the rest of the year. So by the way, there are -- it's just -- it's an exercise which is moving on. I know there are a few countries like Angola, for example, where they have some ideas. So if we need to dedicate a few hundred million dollars to that, I would do it. It will be -- maybe I will tell you at the end of the day, but it's not $15 billion, $15 billion to $15.5 billion, but it will -- you will accept it if it is profitable on the short term. I think honestly, I'm not sure it's so big because, in fact, when we built the budget, we did not arbitrate a lot of short-term cycles. In fact, we had a list of what we could cancel in case the price of oil was going down to $50 per barrel. So we prepared in case of, I would say, adverse market. But we have asked the questions. And I know that because I visited some countries that they have some few ideas. So I'm quite -- I can be flexible on keeping the discipline. But again, if we can generate some good free cash flow in the short term, everybody will appreciate it. So it's not probably as big as I just mentioned, it's probably some hundred million to hundred million dollars that we are -- we could mobilize subject to capacity to have the rigs, et cetera. So we are working on it with some countries. On PNG LNG, I think it's big projects, good many partners. Many -- we have in parallel some, I would say, at least 4 workflows. So the CapEx side, I would say, and the EPC are progressing very well. We have made some recommendations to our partners. We are waiting for the approval from one of them. So I hope we will get it soon so that we can move forward with these tenders. In parallel to that, we have, I would say, the financing of the project because there is a project financing. Both are it, by the way, because as you know, selection of the nationality of some contractors have an impact of the involvement of export credit agencies. So we need to do -- it's not -- there is a little sequence there. So we need to have decided the contractors so that we can definitely confirm to the different credit export agencies. So that's also -- I think there is some appetite clearly from Asian credit export agencies, but also we discussed with the U.S. ones about it. And so we are moving on the financing of it as well. So it's a second workflow. The third workflow, as you said, is a discussion with the government. They are progress, I would say. I could almost say finalized, but I didn't see the ink on the paper. But between the government and ourselves, there is a good understanding on the agreement. So I can say that. Of course, it will have to be again approved by the partners. So we are in the, I would say, now in the process to final to close the loop, I would say, between partners, governments on this and terms the idea there is somewhere to protect the projects the CapEx will be around $14.5 billion. So it's quite -- it's not too cheap. It's much better than the $18 billion, but it's still cheap. So the idea is to protect the projects when the price of oil are low and to give back some when the prices are high above $90, I would say. So there is a sort of trade-off, which is good for the -- which would be good. And the fourth one is the marketing on the marketing. So on the marketing, there is some progress, quite a lot of progress. But again, on our side, the more we look to Papua LNG, the more we have appetite for the LNG located in that region and diversifying our portfolio. So it's possible that we could market because we market not only LNG, but the one of [indiscernible] as well, we could market maybe 1 million tonnes in the long term and keep the other 1.5 to 2 for our own portfolio. So we are looking to different options. So all that is progressing. I would say the target is to sanction the project for sure before the end of the validity of the offers, which is, I think, around November. So because in this market, I don't want to have to -- we don't want to reopen and to negotiate to extend offers. We could face some inflation there. So -- but I think we are aligned, I think, with the partners on moving to the FID second half of the year. the government for sure. There is a last point to clarify if I want to be exhaustive. We need to be sure of the way that the financing, there is a back in, and we need to know exactly what is the back to be exercised. So all this work through, we try to -- we are working on them in parallel to the FID.

The next question is from Lydia Rainforth from Barclays.

Two questions, please. Could you just touch on the early closing of the EPH transaction and what options that now gives you? And then secondly, could I come back to the cash return side? I just want to be clear about what sort of the message is around where we see cash returns going through here because obviously, you're at the top end of the guidance that you've given, but that was at $60 to $70. And I'm just trying to work out whether you're prepared to -- whether you would go beyond that or whether the priority then is the debt side coming down. I just want to be clear on the messaging around cash returns for the rest of the year.

So first point, EPH first, I mean we have been -- the teams have been very efficient. By the way, the antitrust also have been super efficient because even in Europe, we course to get the approval on these transactions, which allow us to close early -- end of April instead of end of June. So that means that we are now entering into this new company, TTEP at the time, which, by the way, is not too bad because as gas price are higher in Europe and the electricity price in a country like Italy, we have a big exposure now to Italy. Italy is facing some increase of electricity price. And so this gas will have a little higher margin. In fact, some EUR 2 per megawatt are beyond, I would say, the normal average margin. So it's positive. the second good news, recently, the EH team managed to get very attractive new capacity contracts for some plants in Ireland around 200,000 -- GBP 200 [indiscernible] per kilowatt hour. So we come with time where it's good news. So first, I'm happy to join to make it earlier. And it gave us, of course, options, as you know. Now we will have access to 50% of the electrons of all the [indiscernible] fleet. And so this will allow our teams to increase our trading business, but also to go to customers to sell them power with combining gas and electrons coming from the gas-fired power plant, flexible electrons with the renewable electrons. So that's exactly the pace. So we are -- we will move forward. We gave you some indications, I think, in the press release that the impact because it's from 1st of May. So I think we evaluate the impact on the production around 10 terawatt hour, and we told you that the cash flow should be at least 2/3 of an annual cash flow, which means at least $500 million of impact, maybe a little more. We see less enter in the venture. So I would say, give a push to the integrated power business, and you should see next quarter and third and fourth quarter, I would say, in the results and the cash step compared to where we are today. Cash return. I mean, be clear we are going -- step by step. We gave you -- yes, you're perfectly right on the buyback. We gave you at the beginning of the year, $750 million to $1.5 billion between $60 and $70. So we told you immediately on the second quarter, we'll monitor that quarter-after-quarter, to be clear. We grew to high end of the range to $1.5 billion for this quarter. And then I have added in my comments that we are guided by another objective, which is 40% of payout. So if you make the math, you will see that if we are at $90 per barrel, for example, as an average, as an example, need to go beyond 1.5 for the second and third quarter. But I think the idea is to monitor it progressively because again, there is -- I don't know if we will be at 80, 90, 100. But we reiterate this commitment and the Board reiterates the commitment in the press release to give you the guidance at least more than 40%. I have added to you that because more than 40% could be 40%, 45%. I just added to you another guidance to tell you that if we were in a scenario of $90 or $100 per barrel, there is some cash priority will be also to deleverage the company. And if we are able to combine low [indiscernible] of gearing and higher buybacks, we will do it. So I hope I'm clear. I cannot -- I will not give you a precise scale what happens at 75, 80, 85, 90, 95 is mathematical formula. I'm not a perfect engineer. So I prefer you to guess now.

Next question is from Martijn Rats of Morgan Stanley.

I've got two, if I may. I wanted to ask you about the 2 to 3 months sort of restart time that you mentioned in the release. And I was hoping you could elaborate a bit on what really happens in that period? What are the steps that are on the critical path that make this longer or shorter? Is it tankers back into the Persian Gulf? Is it well intervention? Are there critical components in some of the LNG facilities. I mean can you please make that sort of operational logistical sort of what really drives that? And secondly, I wanted to ask you about Mozambique, where we are now with the total budget for the project and the start the time line? I remember $15 billion, but I also heard a $20 billion. Can you just give an update on where we are now?

On the second question, $20 billion has been consistent for the last 2 years. $15 billion, it was a long time ago. We have told you that there was some interim cost because of force majeure. We have updated. We have been obliged to renegotiate some of the EPC, I would say, contracts because 4 years after, of course, there is inflation. So I repeated $20 billion in all my speech for the last 2 years. So I repeat $20 billion today, and this is the budget on which we are and which we put the financing, by the way, on the basis of $20 billion. So the rest is rumors, but this is the point. So this one is the time line. We have started in January. So we have 6,000 or more people on the ground today. So they are -- I mean I've been there with the President of Mozambique, and they are already -- construction has begun on the train on the first train and jetty. So time line is that the objective and the timing is to produce first LNG by 2029, the first train. So that's where we -- we are sticking to that time line. And the mobilization is on its way to reach this target today. And on these projects, we have, in fact, we spent some money not only to save good equipment, et cetera during 4 years, but also to progress all the engineering and the procurement. So all that has been done is very advanced compared to, I would say, traditional projects. We have a progress at the end of March of the project. If I see the global progress of the project at the end of March is 42%, in fact. So it's not -- we are not starting from cash. We have progressed on these projects. And so it's a matter to be able to construct. By the way, since January, the security situation in [indiscernible] quiet, I would say, and is well under control, thanks to the support of both Mozambican forces, but also forces which are committed to remain in the area on the first time. So I mean, probably there is -- I was reading the press release at the same time because, in fact, to restart facilities, it does not take 2 to 3 months. The 2 to 3 months is covering first today, there is no -- it's covering the whole cycle that I described in my introduction speech. It's also the fact between the way you will restart oil production, you will bring tankers. You need to -- because the tankers, which are today in the Gulf are all full. So you have, I think, something like several hundred of tankers that you need to exit. You need to bring some empty tanker back. Then you need to ship a new oil to, I would say, some destination in Asia, like I said, it's 20-25-day shipping. It's longer if you need to go to Europe. So it's more -- it's a matter of the delay, is not only -- because restarting the wells, it's not very complex. In the Middle East, production is generally quite easy production. So we don't expect difficulties from restarting the wells. It's more restarting the world system to stabilize it to come back to the through where before the war, you had [indiscernible] every day 50 oil tankers moving in, moving out the Gulf, et cetera, and charging and loading oil or loading products. So that's this cycle where we estimate 2 to 3 months to have -- so it's not exactly what the world is restarting production facility is restarting or coming back to, I would say, a normal mode, which would have been -- should have been more correct in our statement. What I said on the LNG side, I spent some time in Qatar, is on Qatar side, it's clearly, of course, we cannot afford to -- I mean, start on again [indiscernible] plants and start off again if the prices come back. So I think it's very wisely wants to observe, I would say, some certain stability in the situation before to be able to restart. So that might take a little more time, knowing that LNG tankers, the fleet is not as strong. I mean, as big as oil tankers. So we need to move the LNG tankers. And then we don't use the Red Sea. We don't use the Red Sea, for example, with LNG tankers. So the tour to the voyage to come from Middle East from Qatar to Europe is longer around Africa. So this is again an estimation more of the time that it will take to come back to, I would say, a normal situation just to come back.

The next question is from Doug Leggate of Wolfe Research.

I wonder if I could also squeeze in Patrick and Jean-Pierre. Maybe first maybe for Jean-Pierre for whichever wants to answer this. You're getting an opportunity with these windfall oil prices, obviously, to address your capital structure perhaps. Obviously, working capital bumped up your net debt, but you also, I guess, added another hybrid bond pending the redemption later this year. I'm just wondering, where would you like to see the capital structure? And in this environment, why hold any hybrid bonds given those were something of an emergency issue during COVID? That's my first question. My follow-up is just very quickly, Patrick, I wonder if this environment as it relates to refining margin specifically, has changed your view on Port Arthur as a core asset?

[indiscernible] So we do not increase -- the intent is not to increase the hybrid bond portfolio. We are opportunistic at TotalEnergies. The hybrid market was very good in January and February. By the way, it was before the crisis, so before the $100 per barrel price. So we decided to do liability management. So just to anticipate, in fact, the bond that will mature end of this year by replacing it at good condition. So it was $1.5 billion. So that's all. So it's not -- our intention is not to increase this portfolio. So just benefiting from good markets at the beginning of the year to, in fact, to anticipate the reduction of the bond.

And what about the capital structure generally, Jean-Pierre? I mean, why not take the opportunity to lower the net debt?

I said that. I think I told you that I just told you that the objective, if I want to reach a gearing of low 10s, that means lowering the net debt fundamentally. So that's the way to look to reach low 10. So I told you that one of the objectives -- primary objective and that will be if we are at $90, $100 per barrel environment, the Board and I convey to you the message of the Board in the arbitration, we have on one side, the 40% of payout to shareholders that will stick on. But if some of you ask me to go to 50%, I might answer to you, no, 40% -- more than 40% is our commitment. And the other the extra cash we prefer to deleverage and to lower the net debt going down to gearing of 10%, and maybe lower in fact. So for me, that's part of the -- that's clearly the trend that we -- I would say, the direction we want to give you today. So we share your view. On Port Arthur, you have a buyer for Port Arthur, you have an idea in the No. I mean, honestly, Port Arthur is a very good asset. It's, by the way, today, making good results. I can tell you. It's a very positive asset in this environment. It has a value for trading teams because it's the only asset. Trading is not only -- not in our company. We, in fact, optimizing, I would say, our assets and molecules and there are flows around of assets. The optimize molecules around of assets. So it's the anchor point for [indiscernible] and we have a strong trading arm in the U.S. and Port Arthur is, I would say, an anchor point is a tool for them. So it's on one side for the refiners, profitable assets where we have also, I remind you, integrated a lot of petrochemical assets with BTP and crackers. So it's an integrated platform. And today, we benefit from good margins. For example, today, we have engaged and we are on the verge to sign some trading contract with Venezuela with [indiscernible]. And part of the destination of PDVSR heavy crude oil will be Port Arthur and our traders are developing a trading scheme around flows from Venezuela to the U.S. Gulf Coast. So I think that's the idea on Port Arthur. So yes, it's a good asset delivering and contributing to the strong downstream results that we have experienced.

The next question is from Lucas Herrmann, BNP Paribas Exane.

Patrick, I wondered if I could ask you about the UAE news overnight and the decision to exit OPEC, what your personal thoughts are, how it leaves you thinking perhaps about the future and the robustness or otherwise of oil prices, just general comments. And secondly, if I can be greedy, any observations on Namibia over the last 3 months or how your sentiment towards that opportunity may or may not have changed as you continue to look at the data?

UAE decision, not difficult for a sovereign decision by the state, which we are involved. We knew for some -- not today, but for some years that the UAE are not specifically happy with the quota, which was allocated to them. I think it's quite public by the OPEC because UAE has made and we are contributed to contributing to it. We are one of the most exposed company to the UAE onshore and offshore. We are -- they have involved they have a program to raise the capacity from close to 4 million and then to 5 million variable per day where we have -- by the way, there was a test in January. an official test for the OPEC, by the way, when we reached during a week 5 million barrel of oil per day. So by the way, it's contributed before the war to the good production which was, I mean, delivered by TotalEnergies in the first quarter. So this is that decision. On our side, as the CEO of an oil and gas company, we always supported the OPEC role in the market, but I've seen that OPEC or OPEC+, I think that Russia will continue with OPEC Saudi Arabia in OPEC+. And I think the UAE has also said that they will coordinate with the OPEC on the market. So I think clearly, the statement -- when you read the statement of the UAE, they are investing for growth, and they want to benefit for the growth, I would say, that's the way I'm reading the statement. future for oil prices, honestly, Lucas, what happens today, you can see that the oil prices are not only relying on supply and demand and a pure logic. So I think it's -- we have -- after 11 years of CEO, I have seen more period of, I would say, external events to the market than really the market itself. So we'll see what will -- the way that the different countries and the role that each country will want to play in that context. On Namibia, I would say good news for me in Namibia. We have engaged in January with the authorities, the level. I went myself Chairwoman of together -- for sure, I would say, this combination of [indiscernible] has been very welcomed locally, very welcome because it will help everything. First, the sanction of Venus then on Venus, we have an agenda with the government, which is to make our best on both sides to sanction the project by, I would say, end of July because we have again some offers by end of July, tenders. So why is it positive? Because they see our company as being the operator of choice, and we can discuss with them not only on one project, but they see not only our commitment to one, but to at least 2 projects, if not more, with [indiscernible] behind [indiscernible] behind Venus. So the plan is clear, we want to sanction Venus this year. There is a discussion with the government to [indiscernible] this is a very old oil and gas rule, in fact, from the beginning of the 2000, which has never been really used in Namibia. In fact, we are the first, in fact, to be -- I would say, to develop a very large project and ultra-deepwater projects. And that's the point on which I think the authorities understand that the ultra-deepwater projects require some, I would say, some amendments to the standard terms. So this is on what we work today with them. And again, there is a good dynamic because we are both sides in a win-win situation. And both we see the perspective of the second project. So on the second project, propane, our plan and again, it will be approved soon. The plan is to, in fact, to make an appraisal program with 3 wells. We want to drill the first one. But it's an appraisal program and be clear, not to check if there is a development. There is a development. The question for us, do we have 800 million barrels to develop or do have 1.2. It's a question of [indiscernible]. And we need to appraise not to miss some resources by rushing to a first development, which will be not optimal for getting -- if there is more than 1 billion barrels, we might adapt geographically when you look to the map. It's linked to the last well, which was drilled by [indiscernible], by the way, which opened some doors. But we want also to drill some seismic, [indiscernible] seismic to be sure that there is some resource resources, the rock on [indiscernible] is better. I would say the permeability is much better. So we are more on a standard development, which will not require some [indiscernible] discussions, I would say. We could do that with the terms it's more plastic. So this one, I would say, the idea and the plan, which is approved with [indiscernible] is to drill '26, '27, finish the appraisal and then to move to sanction by '28. So one sanction in mid-'26, one in '28 and maybe more because on these licenses, there are also still to explore. So there is -- for me, Namibia will become for us a new anchor country, I would say. And by the way, it's a good I know that I will have some questions about the Middle East, but it's a good diversification, again. So to have options and to develop the options is a big lesson of what is happening. And we'll -- on Namibia, we are on a good momentum. I hope I will be able to report to you by end of July that we have really materialized the first project.

Is that still the completion date, Patrick, for the transaction?

The transaction should be completed at the same time or a little before, in fact, a little before. It's more on the transaction, it's more paperwork to be honest, because the partners have lifted their preemption rights. So we are more on the paperwork with the Namibia government in order to move forward and that's it.

The next question is from Alastair Syme, Citi.

Can I get you to talk to the profitability of chemicals in the current environment? I mean oil and gas looks pretty clear, but I'm not sure how to think exactly about your chemicals business. And then my other question, and this might be a very, very short answer. But what is your trading business doing with tankers in the straight moves? I mean, do you have any traffic moving? Or do you see any arrangements where traffic can move?

[indiscernible] for the second one. We had 10 tankers before the last weekend stuck in the Gulf? No, we have 9 because one of the tanker has moved out of during the weekend. when Friday evening, I think both parties announced that there will be reopened. We gave instruction immediately to traders try to get out. There were 2 tankers which were in the queue. The first one exactly. The second one, unfortunately, was just after the Indian tankers, which was attacked. So in fact, all that was governed by the way, by the insurance companies because, because in fact, we get on the Friday evening, the insurance -- we are insured to go through the straight on the Friday evening. And when there was an attack in the Sunday afternoon on the Indian tankers, then the insurance company told us there is no more insurance. So we went back to the Gulf. So this is the situation. Honestly, we are following on this one. Of course, if we can exit the best, but we are following the news and we depend completely on the discussions between the different parties to the conflict, that's the situation for us. So this is where we are. We have done -- we try to do. We have done a small business within the Gulf. We managed to offload one of the -- because we had some refined product tanker, which was sold. So we managed to offload it in one country and then to load it with some other crude oil. So we try to do what we can inside the Gulf, trading inside the Gulf with the tankers, which is limited -- on Chemicals, obviously, in fact, there are 2 different impacts. First one, that naphtha is more expensive because it's rare. So and so because it's scarce. So we've seen that the cracker margin went down in March. But the good news is that at the same time, there is a scarcity globally of naphtha on Asia. And as you have a scarcity of Asia, you have some people in Asia with crackers looking for [indiscernible]. Then the price of the polymers have increased. And in April, for the first time for long, I've seen a positive results coming from my polymer business. So I would say, by the way, I've observed in April, but on all our business, including biofuels everywhere, in fact, the beginning of the scarcity implied by the crisis is pushing all our products in the green, I would say we are benefiting from that. And that's the beauty of the integration we have. But I see that on the end product. So there are on the chemicals, some downside on the cracker, but the polymers are much better. So let's -- and in particular, and in the U.S. as well, by the way, because when you are -- and that's the advantage to be on the petrochemicals, not only on naphtha, but part of our chemicals in the U.S. and is on gas. And then when you have polymer price going up and you or ethane in the U.S. is stable, the margin is much better. So I see some, I would say, some good signals on the chemical business, which are completely the consequence of this crisis. So net-net positive earnings in chemicals.

The next question is from Mark Wilson, Jefferies.

I think one area we haven't covered yet is refining. You're probably only company that breaks out your refining very clearly in the annual report. Intel has grown to just under 1.5 million barrels a day. And jet fuel, aviation fuel is about 10% of that, just over. Could you give us the dynamics between the different main products? Do you have the ability or desire to move the amount, for instance, of aviation fuel that is produced versus diesel and others? And do you see cost headwinds as well as margin as we move through the year and into 2Q has been mentioned by other companies?

Clearly, I mean, clear all our refineries today have been -- there was an instruction with the limit of a refinery, unfortunately, you distillate and you distillate, you have a slate of products, but the ways to optimize. So all of them in Europe, the instruction is max jet first and then max diesel and then the result in gasoline. So we try to maximize the 2 cracks. And in particular, these days, which are the better jet fuel even is better than the paper jet fuel is really high. So maximizing jet and then maximizing diesel in particular because in France, we are a big consumer of diesel and diesel crack was quite high. And then gasoline, we know that we have enough European refineries are producing a lot of gasoline. So there is less incentive to do it. So that we do at the max. It's not -- we don't go from 10% to 20%. It's a matter of adding 2% to 3%, but of course, is good for the global refining margin. So that is clear. And we do it -- we have done it immediately and systematically in order to be able -- because these are the critical, I would say, products, jet fuel and diesel, which we are more relying on imports for the European continent. So of course, the margin is better. So it's very logic we've done that. I'm not sure to have understood the question of the cost headwinds, what it is related to [indiscernible]

Well, there's obviously been a lot of talk about the availability of feedstock and competition for crudes and certain grades of crude. So is that any impact?

Yes. Okay. In fact, today, yes, I understand. Some feedstock are, I would say, are scarce and so they are more expensive. But again, yes, it's an impact. We see some by the way there is -- the refining margin were exceptionally high in March, around $25 per barrel. So I would say the -- I think Jean-Pierre told you that, but it was very poor in January, February and the 11.4% margin was a result of very nonlinear, I would say, margin. But in April, there was some volatility in the margins linked partly to more volatile linked partially to the feedstock, which are coming in the refinery. So that's true. That's true. But again, on this one, clearly, I will tell you, there is a very strong connection between refining in the company and trading. And all that is optimized between both of them. And in fact, they are completely -- they are -- by the way, the suppliers of refinery are exactly on the same to the traders. And we interface between both of them in order to have to optimize the slate which will go to refineries and what we should sell among all of crude oil that the traders have access to on the market. And we make it as an optimization for the company. So it may be not optimal for the trading itself, but if it's optimized, if it's an optimum on the refining and trading as a combination, then we will take the feedstock to the refinery. So this is one of the advantage, I would say, to have this strong integration and to think, in particular, in this type of period. I know some people were thinking that we might have a lack of crude, we will never have a lack of crude. And so we optimize the type of feedstock we need to our refineries according to the access to many flows that our trading can generate.

The next question is from Kim Fustier, HSBC. Firstly, on Qatar, how are you managing the force majeure situation in Qatar as it relates to your LNG portfolio and your commitments to customers? Just noting that one of your IOC peers is also partner in Qatar LNG had to declare force majeure. And related to that, what is your view on the time line of the Qatar LNG expansion project? I also wanted to ask about Satorp. What's the repair time line for the damaged units? And again, linked to that, what is the potential impact on the time line of the Amiral project?

Okay. I mean, again, it's -- I repeat why people do not believe us. Qatar LNG has declared force majeure to its customers. That means that in Qatar, we have some JVs with Qatar LNG and the marketing of this JV is done by Qatar Energy. So our JV which are reported in the upstream part, which are, I would say, like the rest, but are not producing today. So there is no production, no revenue and very logically and very professionally, I would say, Qatar Energy has immediately declared measure to its customers. That's one point. From this perspective, TotalEnergies is a customer for Qatar Energy only for our own offtake. The difference between our competitor and ourselves is that because we are very exposed and we know that to Qatar, we have some limited contracts with Qatar as for our own offtake for our own portfolio. And so the amount is around 1.5 million tons per year. So we had this 1.5 million tonnes per year. We received the fourth measure from Qatar because we are a customer for them. But then we decided that we will not transfer it because, by the way, we don't -- in the way we work with our LNG portfolio, when we sign a contract with a Korean or Japanese buyer, we don't sign, we don't tell them it is coming from Qatar because we are a portfolio company. So we took on our. And by the way, we told them we are a portfolio company. We produce in 11 countries. So we secure the supply. So we decided, yes, we received the force majeure, but we will take it for us, and we will not -- we could have done it probably, but we decided that it was in terms of commercial, in terms of what we advocate every day for their customers, the best position because probably 1.5 million ton is absorbable in the portfolio of 40 million ton we will deliver. We will not transfer the force majeure to any of our customers. That's what we've done. I know that our competitor is more exposed because if I read correctly in the press, it's more 6 million or 7 million tonnes than 1 million ton, 1.2 million or 1.2 million. So probably with 7 million tonnes, it was for them more logic. To be honest, my energy traders were ready to exercise the force majeure, but the management said be careful what we do. And so we've done it like that. So no problem. Time line on scatter expansion, I think I can -- I think the themselves, they have said that today, the impact is evaluated to 2 months or something like that on the -- I would say, on the expansion on NFE per strain because NFE on the ground, Technip and the teams are continuing to to work, in fact, onshore. The offshore works have been stopped. So I think it was planned for Q3 2026. So probably today, we are more on Q4 of 2026. And again, there is a difference in all this wording between when you put the gas in and when you offtake the first LNG. So if you want my bet in my plants, I would say first LNG offloaded from NFE is probably right on the beginning end '26, beginning '27, if I'm taking a bet on that. But that's where we are. And again, this is completely linked to the -- how long will this war will last because as long as we don't cannot restart works offshore, of course, it might impact the time line. So there are 3 units. One I told you the first unit will be repaired very quickly, the VG. So that means that SOP is able to produce some VGO from -- in 10 days. We could produce full, in fact, full capacity VGOs, but then you need to find somebody who buys VGO. And as we cannot expose VGO because the is closed, we will be limited to something like 300,000, 330,000 barrels per day during the -- and then we need to recover the 2 other units, the 2 other units are the conversion units, which allow us to transform the VGO, I would say, diesel global products. This one, honestly, today, it's -- we don't know. We have sent some experts, and we are working together with Aramco. There have been some damage to these units. So it's a matter of at least 6 months, maybe more. We don't know. We are working on it. And when we will have -- as we have been very transparent since the beginning of the conflict, when we'll have better news on it, but I would say not news, we will report to you. At this stage, the teams of Aramco and TotalEnergies are working to evaluate really the dam and more to evaluate the repair that we need to do. TotalEnergies, we have an insurance on this type of war events, which we will -- we might activate if the damage are higher than $150 million. So this is own limit, I would say, threshold for sales. Impact of Air, Air, there are 22,000 people working in Air today on the ground. That's why we have also again Aramco. I went in Real. We discussed a lot about Air. We have the full support of the authorities for [indiscernible]. So [indiscernible], again, is progressing. And the progress of [indiscernible] is today at 70% this project. The start-up is planned by end of '27, I would say, beginning '28. But again, it's -- of course, the context might -- what I just tell you today is the conflict was worsening, which I don't could change. So this is just an update today with validity, but this is the situation for [indiscernible]

The next question is from Matt Lofting at JPMorgan.

Congratulations on the performance of the integrated model in what's clearly been exceptional times. I wanted to ask you, you guys engage extensively with host governments globally. It's early days, but are you seeing any change in the tone of conversations as a result of recent events towards greater urgency, let's say, from some countries to develop domestic production and better secure energy supply? And then second, sort of more specific to the financials, price and timing lags are an inherent part of several parts of TotalEnergies business. I wondered if you could just talk a bit about how that impacted Q1, given the sort of surge in commodity prices more kicked in, in March and how that then sort of plays out as we look forward to the coming quarters?

Okay. On the second question, the obvious case is the LNG because most of the contracts on LNG are based on have a time lag of 1 even 2 months. So obviously, we don't see -- by the way, we end the average price of the quarter was $8.5 per million BTU, exactly what we planned in February in the trading statement. And on the guidance that we gave in February. So that means that there was no impact on the March oil prices or gas prices. So we expect to see the impact of the March high price clearly will be in the second quarter. That's why we gave you a guidance, by the way, of $10 per MMBtu, which again is reflecting price of March an assumption for other months of $80 per barrel and the TTF around $40, $50 per MMBtu. So again, if it was -- if the crude oil was higher and remain higher, that could impact positively the $10 per MMBtu. So this is the obvious case. On the crude oil, we have some few things. We have one country where by the way -- which where we have a formula, which is with 1 or 2 months delay is the UAE, which creates, by the way, some difficulties and we are trying to solve them because when you have a 2 months delay, that means that we could face a day that it will reopen and the price could go down, you could have to pay with 2 months delay, but not a good situation. We are discussing on that. But honestly, these are the main 2. There are also some impacts on polymers and things like that in plastic world, generally, it's also -- we have also some delays in all the formula. So for example, answering, I should have commented that in March, we suffered the naphtha that we bought on market. But the polymers and all the pricing do not reflect immediately the increase of the NAFTA. So that was negative from the NAFTA, and this will be recouped in the second quarter. But beyond 1 to 2 months, we don't have many time lines longer than that, might be exceptional situation with 6 months, but it's very fair in fact, in the portfolio, okay? -- government, I think I answered in my first answer to -- that was more the same question. Yes, I said to Michele, look, it's quite clear that today, you begin to see for sure. Again, the governments are looking to what could we develop our domestic production? Could we -- that's obvious, securing energy supply I said [indiscernible] I say more [indiscernible] for countries who have coal, will the coal. That's sure [indiscernible] is more coal renewables as well. So that's positive for renewables. I think in many countries, including in Europe. Nuclear will be, again, I would not be surprised to see there was already a good momentum, but to see a country like India again, China is already there, but with nuclear products. So like some European countries. So we have been new France after 73, we are French and Japan, we will see new country coming to us. So that's obvious to me, which is, as I said to, for sure, a challenge for the gas because it's a [indiscernible] electricity. So gas to [indiscernible] is not only used for electricity, also used for heating, by the way. But it will be for sure a challenge. The other governments where I see a change of tone, I told you that I visited, of course, our friends in the Middle East. It's clear that on the agenda today, you have the question of can we get around the straight of almost. So we are discussing again on projects to build some pipeline to double the pipeline to [indiscernible] double pipeline through Saudi Arabia. Iraq, obviously, is in a situation where we need to revive some old pipelines, which are stuck today, the pipeline [indiscernible]. You have the pipeline through Turkey. So it's for me, these countries for sure, today, the question of their own security of supply security of delivering and of evacuating and commercializing will become high on the agenda of all these countries. So yes, and again, because it's not only an isolated one, we have '22, now we have '26. So you have this question of security of supply and affordability, which is linked to that. And again, for me, it [indiscernible] how do we remunerate more capacities. We need to invest more in all these energy capacities will be high on the agenda and in many countries around the world.

The next question is from Jason Gabelman, TD Cowen. Gabelman line got disconnected. So the next question is from Christopher Kuplent, Bank of America.

Just two more questions remaining. When we think back to February and you gave us your outlook for cash flow during the year, you were referencing a EUR 60 Brent range, refining margins at 5, et cetera. We're now in a different world. You've talked yourself about 80 as a good starting point for the year. What can you tell us how should we adapt your sensitivities that you've published, which I believe were meant for a 60 to 70 world rather than for an 80 to 100 world. So where would you like to make some adjustments or give us some warnings other than the volumes, of course, that you're not able to sell right now in terms of the validity of these sensitivities? And then maybe as a quick second question, considering you haven't been active in the farm-down market, maybe I can ask you my favorite question, Patrick. What do you think is the current state of M&A? I know it's not one market. power is very different from oil, from gas. But where would you rather be right now a buyer or seller?

For first question, Chris, I invite you to read Page 13 of the press release, I think, and you have the stable the sensitivity. And fundamentally, they are between 60 and 80, you can extend 60-70 to 60-80. So I have no doubt about it. The only point is that as we have lost as we can -- if we remain in a situation of today, which without the Middle East production, then of course, we must correct it. That's why we gave you a sensitivity of 10% on the Middle East production. But I've made the math if we were just for you, just to give you, if we were in an environment around $80 per barrel, $15 per refining margin without the Middle East will be around $32 billion of cash flow, $2 billion. But again, if the situation remains the same and if my scenario is not good, the because if it remains the same, we will not be at $80 during the whole year. So if we lose really the production of the Middle East during the next 9 months, I think you can correct $80 to $100 or $110. So again, you can take around $3 billion for $2.8 billion officially, but $3 billion for -- and it's a little more, you're right, because, in fact, when we go high at $100, the Middle East impact the production. The loss of the 15% is no more 10%, it will go down to 6%, 7%, which means that the higher we go, the more the sensitivity will rely on the barrels outside of the Middle East. So your question is good, but we need to make the math correctly at $100. We will do it, and I think Renault and his team will give you the -- we might publish it if you want because this information is important. We might publish it on our Internet site. So there is less impact from the production of the Middle East at $100 that we have on the -- at $60, that's true as well. So that's what I can comment. So all that is, to be honest, any high scenario is a good news for integrated companies like TotaEnergies. No, it's okay. I mean it's not so complex. [indiscernible] is not able to make the math, but the budget guy is able. So don't worry. You just need to correct it. what I said he should be able to do it. Just a joke. Okay. M&A M&A on [indiscernible], honestly, today is difficult because where is the right price deck for the oil assets in the next 3 years. And there was a sort of consensus until the crisis, I think oil was more or less assets are more or less exchange around $70 per barrel, I would say, in the market. It was more or less the market and some few could debate, but it's more or less the average assumption. today. And of course, to put $70 for the next -- for '26, '27, '28, I would agree if my teams are proposing me to sell at $70. I would say -- and it's very difficult because there is no certainty at all about where we'll establish the market. So you could say it's $80, it's $75, you could say also maybe it's $100. So I think M&A on oil today is not an easy game to play. And I'm sure neither from the -- of course, the buyer would love to buy $70, but I think the seller will be a little more difficult to convince. So that's where I see that. On the gas, different. We are looking on our side to U.S. gas business on the other side, the U.S. gas market has been stable. So I think that means that -- by the way, when you look to the assets on this side, we didn't move a lot valuation. So that's more easier for on this side. Power, they are all crazy in the U.S. with gas-fired power plants. So it's not a good market to buy gas-fired power plant. They are more reasonable in Europe because we don't -- we are not in Europe with gas in Europe. So it's good to continue to buy M&A to make M&A on gas plants in Europe. And we are looking to some opportunities to complement the portfolio an obvious country for us to look at is Germany in Europe from a power point of view. So that is the situation. And then if I continue M&A on renewables, by the way, have a good news for all of you didn't ask me the question, but we got the money from the U.S. government on our account yesterday. So we have the famous $28 million. By the way, the share for TotalEnergies out of the $928 million because we had some one of the concession is $550 million. So we'll have this cash in coming -- is already. It already came. So on renewables, the market is influenced by higher interest rates. So it's not -- but it's -- the multiples in that field are quite high compared to oil and gas. But I see a sort of impact on raising interest rate on the valuation of these assets.

The next question is from [indiscernible]

Just one quick question left for me. Coming back to the trading, great performance in the first quarter in both oil and gas. I was wondering if you have any comments on the second quarter. Should we be expecting a strong performance given we've seen already 1 month with significant volatility and maybe a full quarter of significant volatility in both markets?

I cannot answer that question. We just know that we have no idea. Trading is not a matter of running a plant and taking the production multiplying by price -- an assumption on the price minus the cost. It doesn't work like that. So I can only comment that there is a very volatile market. The traders generally are quite happy when they see volatile market. up to a point it's too volatile, there are some danger and the volatility is not related to supply and demand, but to the tweets of some authorities in the world, it's even more dangerous because you could go -- you could face suddenly a reverse situation. So we are not betting on price. There is no -- the trading of TotalEnergies is an asset-backed trading and it's fundamentally not -- we are not betting on the oil price. We don't make -- we are not exposed to flat price in the trading. So -- no, it's impossible. I wish I will reiterate a strong performance. What we've done is some -- when we say in press release that there is an exceptional performance, a strong performance to qualify it compared to the normal run rate. The normal run rate of trading is quite good, by the way. Again, we'll -- I have no information. Their book, by the way, there was a lot of comments in newspaper on one specific position, which was taken by all crude oil traders. But when they take a position on one side, they had some other position on the other side. They are -- so it's not one sided. Yes, they made a position which was long in the girth at the beginning of the war, that's true, but there are other positions which were not as positive. And by the way, our product team, our product trading team it was quite good. To benefit from the fact that in Asia, there was a scarcity of products and so to be able to supply Asia with products. So we have a strong performance there. So it's different, I would say, different markets, different flows. We'll see, and we'll see. By the way, when I -- just to confirm to you, I don't know when I mentioned a figure to Chris, I think I said $32 billion of cash flows. I have normalized the trading to a normal run rate delivery and not an exceptional one. So if there was repeating quarter after quarter same performance, then my $32 is a little short of the reality, okay? So I cannot answer to you more than that, Henry. And a book of trading is plenty of trades and we'll see the results at the end. But what I can confirm is that the trading division of TotalEnergies is quite successful. And I never see them underperforming the market, either they are, I would say, on the average or they make strong performance.

The next question is from Fergus Neve, Rothschild & Co Redburn.

Just one from me. I just hope you might be able to provide us with a bit of an update on some of the key projects which are due to come online this year. And perhaps if you could comment on Ratawi Phase 1, which I imagine is affected by the current situation in the Middle East. And then maybe also Telenga due to come online later this year. That would be really helpful.

Ratawi, we have -- I said that we have 5,000 people working on the ground, but there is no way to expose the crude oil. So it was -- we were planning to start up in Q2. I would say, logically, what I can answer to you today, it's not Q2 more Q3 than Q2. The question will be not only to build the plant and the plant is almost done. In fact, it was a question of 1.5 months on [indiscernible]. But it's more a question to be able to produce the oil and to export it, which is today, I would say, the limit to start up Ratawi. So as quick as we can, obviously, and no problem, the wells are drilled, easy to produce. So restarting Ratawi, it's a matter of a few days, and we have teams on the ground, so it's easy. By the way, we have started up just before the conflict, we started up the solar plant in Ratawi. The first project which came on stream was a solar plant and the 300-megawatt phase. And the authorities were quite happy because facing a lack of gas for making electricity, we are supplying some solar electrons to the Bara area now since end of February. [indiscernible] is moving on. I mean, we told you that the start-up of production for Telanga will be end of Q4 -- end of Q4, I would say. We were explicit in February, I think. So there is no change on this part. What is progressing well is [indiscernible]. We think that Iaco might be completed September, October. And by the way, as Kingfisher, the other projects in Uganda, where we are partner is also will be probably ready by summertime. It's possible that we'll begin to flow the oil from Kingfisher first. It's a long pipeline to fill. But the operations and crude oil production from Uganda might start up I would say September end of Q3 and then [indiscernible] Q4.

The next question is from Jean-Luc Romain, CIC.

It relates actually to the offshore U.S. where you just announced you had the cash back. Do you consider offshore wind U.S. as a dead zone for the foreseeable future? Or do you still see it as a future development zone in case an administration would become more receptive to this kind of development?

No. I was clear. I commented that in the U.S. newspaper, I think. I could use the word that Darren's noninvestable. It's not investable because the cycle of an offshore wind project is much longer than the duration of the U.S. administration. And it's offshore wind requires a long cycle of permitting, developing, negotiating. So if every 4 years, you are stuck because you have a change, it's not possible. And -- but more fundamentally [Audio Gap] And you know the story that we -- I mean, when we studied all these projects in front of New York to Jersey and frankly, it was very difficult. The offshore part was quite in line with what we expected, even if there was some cost increase from the, I would say, the turbine point of view. But what was very expensive was the subsea cable and landing a cable subsea cable to serve New York very urban city, New York, New Jersey was much more expensive than planned. So at the end of the day, we would be able to deliver electricity of around $150 per megawatt hour. It's much more expensive than what you can do in the U.S. So in terms of allocation of capital and considering the various ways to produce electricity in the U.S. with plenty of gas, solar, onshore solar, onshore wind, it's better for us to develop our position in the U.S. but with the most efficient allocation of our own capital and for consumers as well. So that -- so no, the answer is definitely, it's not a matter to at TotalEnergies, we consider that it's not a good market for developing offshore wind. And in fact, what I also say, I think developing offshore wind requires some specific market. It's a question of cost to produce electricity. And it's linked as well. So U.K., Germany, France might be -- are some interesting countries because they have less capacity to develop onshore renewables because limited space, in fact. So there is a market there. So we will concentrate on these projects. And the other lesson we draw is that on offshore wind is that it needs to be big to be profitable. So we are cleaning our portfolio. We had a small project in Denmark. We are just exiting it because it does not fly. Markets and honestly, Brazil, Philippines, India, forget all that. It has no plenty in Brazil. You can't produce plenty on onshore wind in North with , which costs much less than offshore wind. So offshore wind is more expensive. It should be dedicated to markets which could afford it and which need it. And that's the conclusion which we draw for ourselves. So we'll concentrate on some projects which are large, by the way, which are -- on which we believe that the fundamentals are good. And so that's the reality. So you will not see newspapers and press release that Total is back in U.S. offshore wind. at least as long as I am CEO and Chairman of the company.

The next question is from Anish Kapadia, Palissy.

I wanted to ask about battery storage and especially in the context of seeing Europe having its earliest curtailments of renewables this year, the record level that's expected this year and the extreme negative pricing. So I just wanted to get what's your view on the battery storage growth in Europe? How you see the Iran conflict accelerating this? And then what's the role of Total [indiscernible] within this context?

Fundamentally, it's not linked to the conflict. When you develop renewables, you should put batteries. So good news for the -- on the last 2 years. In fact, the cost of batteries are dramatically lower. They have been divided almost by 2 battery cells. Thanks again, by the way, to Chinese suppliers, but it's a reality. So you have a strong decrease of batteries. And I think it's absolutely necessary in the -- not only to avoid curtailment, but also it's a matter of grid management when you develop a renewable farm, you should have some battery. I'm against the CfD scheme in Europe because in the CfD scheme, the developer -- solar or wind developer have obligation to build the battery, is securing a price from the state, and he can -- so sometimes the states are smarter, we don't pay you if it's negative. But in fact, it's just a strange scheme, in fact, the CfD. The scheme, which is working in the U.S. where you have some fiscal support on your CapEx, ITC or PTC is much better because, in fact, if you are facing the market, you develop your solar plant. And for sure, you always build the battery storage with the solar plant you are and your profitability will be low. So I think it's obvious that -- and the more we see, by the way, as you said, investments and development of new solar farm -- like in Spain, for example, but even in Germany, we begin to see the limit and the curtailment is higher and higher because there are new batteries. So yes, I think it's time to really incentivize and in battery storage. So on our side, we are investing in batteries. We have -- in particular in Germany, it's a good market because there is a lot of renewables. We have a company which we acquired 2 years ago, and we have just developing -- we are developing 2 to 3 gigawatts of batteries. We just farmed down part of some of them at 50% to end with a good profitability. So rely, yes, we think there is a real market, in particular in Europe. And it's not only because we run conflict, it should be accelerated. If Europeans are serious I would say, developing the penetration of renewables in Europe. It's absolutely fundamental to do it together with batteries to stabilize the grid and to be able to absorb most of this renewable production. And [indiscernible] to come back, SAF is good, strong. It's developing very well on the energy storage system business. I think we are -- they are #4, 5 in the world, and they are making quite a lot taking quite a lot of markets. So it was one of the reasons why we acquired SA was a little long market to, I would say, to take off, but now it's really a full speed on it. And there are also some technology improvements which allow to think that the cost could also when we were discussing with the CEO, he thinks that the battery storage could -- has already diminished by 50%, but another 30% decrease is possible on the cost, thanks to higher density of energy storage, et cetera.

The next question is from Bertrand Hodee, Kepler.

It's a follow-up on Mark question on refining. One of your competitor explained yesterday that because of various factors like major dislocation on crude differential, product yields or freight cost, it's realized refining margin in April was about $5 less than its headline margin indicator. So do you see that? And can you also tell us what is the average of total refining margin indicator so far in [indiscernible]

I didn't see such a dislocation to be honest. I know that the year-end, I was looking what is -- normally, we have an indicator internally, but my team does not have Okay. So there was -- in fact, the realized refining margin in the first quarter was around 10.5%, while the indicator we gave you was around 11.4%. So there was a little lower, but not far. So we suffered less from -- that's true, but honestly today, one of the issue, to be honest, and including today in April, we have some -- yes, and it's true. I will tell you, I'll give you another figure just because I want to be solidarity with my colleague. In April, the ERM was -- the indicator was around 25 and the MCV of the refining, the realized margin on variable cost was around $21.5. So you had not $5, but $3.5 difference. Why? Because honestly, the paper market today, these indicators are difficult to follow are difficult. But that it's going that way, the other month, it could be the other way. So we are trying to -- each of us are trying to trace an indicator to give a sense of what is happening on the market. But there is a dislocation and it's perfectly true today between the products and -- by the way, it was an extraordinary situation, by the way, March where you've seen high oil price and high refining margins. Normally, you have -- it's rebalancing. It's countercyclical. It was not the case. So again, at the end, what I know is that I've never seen in my life such high margins on the paper. So it's good. so that we can -- even if there is a little difference between the paper indicator and the realization, it's still delivering very good and strong results that the situation. And again, I know we have a debate internally because the daily, our teams are calculating the famous refining indicator based on the market. And we have some big ds because on the other side, when we see that we can sell jet fuel at more than $200 per barrel, we are not sure that all that is completely consistent. So it's today, you have -- in fact, as you have a dislocation between the physical market and the paper market, which is quite astonishing at certain point, it should converge. The type of indicators are not so I mean they are not so reflecting the reality of what is happening on the day-to-day marketing of the products.

[Operator Instructions] There are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Okay. So thank you for your assistance. Thank you for your comments. I think it was a quarter where once again, we demonstrated the strength of our model. I think we will not disappoint you in terms of return to shareholders. The share of TotalEnergies since we have been listed in the New York Stock Exchange on December 8, I'm looking to that as a starting point of the Renaissance of the company has overperformed all our peers by quite a margin. So I hope that this set of results will help to maintain it. And again, if we can attract more shareholders to this to TotalEnergies and to globally the sector, it's good. So thank you for your attendance. And I think we'll have opportunity to meet in coming months. And our shareholders for sure, will meet on the 8th Annual General Meeting on May 29, I think, in Paris. So thank you again.

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.