PARIS: French energy giant TotalEnergies yesterday rebounded from the COVID crisis with a huge 2021 profit as oil and gas prices soared — a performance that raised political hackles in an election year in France.
The company reported net profit of $16 billion (14 billion euros) — the highest in at least 15 years — following a historic $7.2-billion loss in 2020, when oil prices crashed. Oil and gas firms slumped into the red in 2020 as the COVID-19 pandemic slashed energy demand and prices.
But the market rebounded last year as the global economy and demand recovered. "We entered the year 2021 cautiously, we didn’t know we were headed at the start of the year and we saw the environment completely turn around,” chief executive Patrick Pouyanne said at a news conference. "We took full advantage of this favourable environment, particularly in the second half of the year,” he said, noting that the company’s liquefied natural gas business did particularly well.
TotalEnergies’ adjusted net profit, which excludes certain one-time expenses, increased more than fourfold to $18.1 billion — even as its oil production fell two percent last year. With a presidential election looming in April, French left-wing politicians criticised the soaring profits at TotalEnergies even before the annual earnings statement was released. Green presidential election candidate Yannick Jadot railed against profits made "on the back of French men and women” while "gas and petrol bills rise for the benefit of shareholders”.
"We should just take it from them,” said left-wing leader Jean-Luc Melenchon. Stellar results at oil majors BP and Shell prompted calls for a windfall tax on the British energy giants. Pouyanne said TotalEnergies already makes sizeable contributions to governments. "If more were taken, it would be at the expense of investments, workers or shareholders,” he said.
Renewables investment
As lockdowns spread in 2020, oil prices dropped off a cliff, even briefly turning negative. But they soared back above $70 per barrel in 2021 and reached multi-year highs this year, exceeding $90. Natural gas prices, meanwhile, increase fivefold on strong winter demand and geopolitical tensions between key supplier Russia and Western nations over Ukraine. Oil prices could "remain at high levels” this year, TotalEnergies said.
After gas prices reached all-time highs in the final months of 2021, they have remained "very high” in Europe and Asia this year due to the geopolitical uncertainties, the company said. With prices rising, TotalEnergies announced Wednesday a discount at the pump in rural areas in France along with a 100-euro voucher for people struggling to pay their gas bill.
"It’s not small,” Pouyanne said following criticism over the amount of the offer. Once known as Total, the company changed its name last year to show that it was not just an oil and gas business anymore as it is diversifying into renewable energies. The company said yesterday it would spend $3.5 billion on in renewables and electricity — a quarter of its investments. — AFP