TotalEnergies sees 'exceptional' refining result in 2Q

TotalEnergies expects its refining and chemicals division to deliver "exceptional" results in the second quarter, driven by "very high" margins for middle distillates and gasoline.

The company said on 15 July that the variable cost margin achieved by its European refining business averaged $145.70/t in April-June, more than three times the level of the previous three months and around 14 times higher than the second quarter of 2021. It marks the highest refining margin by some distance since the company began reporting a variable cost indicator in 2018.

Refinery output across the industry struggled to keep up with demand in the second quarter, while gains in oil product prices and crack spreads outpaced rises in crude values. Other integrated oil and gas companies — including Shell, ExxonMobil and Spain's Repsol — have also flagged up a pending windfall from soaring refining margins in recent trading updates.

Upstream profits are set to be strong as well, given the rise in oil and gas prices compared with the second quarter last year. But for TotalEnergies, the higher price environment will be partially offset by a drop in production. The firm expects its upstream output, excluding LNG, to be around 100,000 b/d of oil equivalent lower than the first quarter on the back of disruptions in Nigeria and Libya, as well as a higher volume of planned maintenance.

The company said it expects to report a strong performance from its integrated gas, renewables and power segment "but without replicating the exceptional contribution of the first quarter of 2022".

By James Keates