MOSCOW (MRC) -- France's TotalEnergies reported higher production and a sharp jump in earnings in the third quarter of 2021, predicting that surging oil and gas prices and rebounding demand will lift its performance into early 2022, reported S&P Global.
Given the outlook for higher OPEC+ production quotas and seasonal gas demand in the fourth quarter, TotalEnergies said Oct. 28 it expects fourth-quarter 2021 hydrocarbon production to be in the range of 2.85 million-2.9 million b/d of oil equivalent, up from Q3 levels.
After gas prices hit record levels in Europe and Asia during the quarter, TotalEnergies said, "barring an exceptionally mild winter, the low inventory level for gas and expected sustained demand are likely to keep gas prices in Europe and Asia at high levels until the second quarter 2022."
Global oil prices reached multiyear highs in the quarter at over $85/b, marking a steady recovery in oil demand to pre-crisis levels from the pandemic.
TotalEnergies said it anticipates that 2021 oil price increase will positively impact its average LNG selling price for the next six months, given the lag effect on price formulas. As a result, TotalEnergies said it expects LNG to be above $12/MMBtu in the fourth quarter 2021.
For the third quarter, the company's upstream division reported production of 2.81 million b/d of oil equivalent in the quarter, up 4% year on year, on higher OPEC+ quotas, rebounding gas demand and project start-ups and ramp-ups. These included North Russkoye in Russia as well as Iara in Brazil, and the resumption of production in Libya.
TotalEnergies reported adjusted net income of USD4.77 billion, up more than fivefold from the year-ago quarter and 38% higher compared to the second quarter of 2021.
"The global economic recovery, notably in Asia, drove all energy prices sharply higher in the third quarter due to the interconnection of energy systems. Gas prices in Asia and Europe, up more than 85% from the previous quarter, reached unprecedented levels, and oil prices gained 7%, continuing their steady year-long rise," CEO Patrick Pouyanne said in a statement.
TotalEnergies' integrated gas, and renewables & power segment generated record adjusted net income of USD1.6 billion and cash flow of USD1.7 billion, helped by "an outperformance" of its trading activities, which leveraged its integrated worldwide LNG portfolio.
Total LNG sales increased sharply compared to 2020, up 24% for the quarter and 7% for the first nine months. The average LNG selling price increased by 38% compared to the previous quarter, benefiting on a lagged basis from the increase in the oil and gas price indexes on long-term contracts.
Downstream, TotalEnergies - Europe's biggest refiner - saw its average refining margin double in the third quarter of 2021 as fuel demand continued to recover in the region, but said higher energy costs had dented earnings from the sector.
The company's "variable cost margin" for its European refineries averaged USD20.5/mt, or about US2.8/b, in the third quarter, compared with USD10.2/mt in the previous quarter, it had said in an Oct. 15 trading statement. The margin recovery, which remains below average 2019 levels, compares to minus USD2.7/mt in the year-earlier period when coronavirus lockdowns flipped TotalEnergies' reference margin into negative territory for the first time in over a decade.
Adjusted net operating income for the refining and chemicals segment rose sharply year on year to USD602 million in the third quarter, compared to a loss of USD88 million in the third quarter of 2020.
Crude throughputs in the third quarter, however, were little changed at 1.22 million b/d.
As MRC informed before, with its name change from Total to TotalEnergies amid its transition from fossil fuels, the major oil company is investing more in renewables and energy storage while decreasing emissions from its natural gas business.
We remind that TotalEnergies has recently inaugurated the extension of Synova in Normandy, the French leader in recycled polypropylene production. TotalEnergies is therefore doubling its mechanical recycling production capacity for recycled polymers, to meet growing demand for sustainable polymers from customers, such as Automotive Manufacturer (Auto OEM) and the construction industry.
According to MRC's ScanPlast report, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.
TotalEnergies is a broad energy company that produces and markets energies on a global scale: oil and biofuels, natural gas and green gases, renewables, and electricity. The company rebranded itself from Total to TotalEnergies during Q2 2021. The French firm has announced allocating part of surplus revenues to share buybacks. Its 105,000 employees are committed to energy that is ever more affordable, clean, reliable and accessible to as many people as possible. Active in more than 130 countries, TotalEnergies puts sustainable development in all its dimensions at the heart of its projects and operations to contribute to the well-being of people.