Total cashes in on 1Q oil price rise

Total reported strong first-quarter financial results today, with its profit rebounding above pre-Covid levels on the back of this year's oil price recovery and a "positive contribution" from its renewables and electricity assets.

The company made $3.3bn of profit in January-March, compared with $34mn a year earlier and $3.1bn in the pre-pandemic first quarter of 2019. Adjusted profit — which strips out inventory valuation effects and one-off items — came in at $3bn, up by 69pc from the first quarter of last year, and 9pc higher than in the corresponding period of 2019 when refining margins were much higher.

The year-on-year increase was driven by much-improved upstream results and "a new record high" contribution from the firm's Integrated Gas, Renewables & Power division, which more than offset a tight squeeze on downstream profitability caused by weak refining margins and low demand for oil products, notably jet fuel.

Total said its Exploration & Production business "fully captured the higher oil price" in the first quarter, almost trebling its adjusted operating profit compared with a year earlier despite a drop in production, while the Integrated Gas, Renewables & Power segment managed to increase its adjusted profit in the face of lower LNG prices, thanks to "a good performance of trading" and a growing contribution from the company's renewables and electricity portfolio. "Over the past year, gross installed renewable power generation capacity grew from 3GW to 7.8GW, renewable power production more than doubled, net power production increased by more than 60pc and the group now has more than 5mn customers in France," chief executive Patrick Pouyanne said.

Total's oil and gas production was 2.86mn b/d of oil equivalent (boe/d) in January-March, a 7pc fall from a year earlier, with the impact of Opec+ quotas, asset sales and unplanned maintenance shutdowns in Norway more than outweighing the resumption of production in Libya. The firm expects its full-year output to be stable compared with 2020, unchanged from previous guidance.

Downstream downturn

Total's downstream business faced another challenging quarter, with refining margins in Europe depressed by a combination of rising crude prices and weak demand for oil products, "particularly for distillates, due to reduced aviation activity", the firm said. "Given the high level of distillate inventories, European refining margins remain fragile," it said.

Lockdowns and continued restrictions on air travel drove the company's first-quarter oil product sales, excluding trading and bulk refining sales, down by 13pc on the year to 1.44mn b/d, while Total's refinery runs averaged just 1.15mn b/d, over a fifth lower than during January-March last year. The sharp drop in throughput was underpinned by "the voluntary economic shutdown of the Donges refinery given the low margins, the shutdown of the Grandpuits refinery before its conversion to a zero-oil platform and the sale of the Lindsey refinery in the UK", the firm said, adding that the temporary shutdown of the 240,000 b/d Port Arthur refinery in Texas during winter storm Uri also contributed.

By Konstantin Rozhnov