The French energy major expects a multi-billion dollar windfall from higher prices even as a regional conflict shuts down 15% of its production.
TotalEnergies expects a significant financial boost from surging oil and gas prices driven by the Middle East war, projecting a $2 billion to $2.5 billion increase to first-quarter working capital despite a major hit to production.
“If this blockade lasts more than three months, we will start to face some fairly serious supply issues,” Chief Executive Officer Patrick Pouyanne said at a Semafor event in Washington, D.C.
The company’s output from facilities in Qatar, Iraq, and the offshore United Arab Emirates, representing around 15% of its total, is being shut down. However, first-quarter production is forecast to remain stable at 2.545 million barrels of oil equivalent a day, supported by new field startups in Libya and Brazil.
The disruption underscores the volatile landscape for energy majors, who are grappling with operational risks while benefiting from higher commodity prices. Brent crude, the international benchmark, surged to its highest level since 2022 as the conflict escalated, directly impacting producers' bottom lines.
The update follows a similar announcement from British energy giant Shell, which also cut its first-quarter gas production outlook due to disruptions at its Pearl facility in Qatar. Like TotalEnergies, Shell noted it expects a boost to its bottom line from its oil trading division capitalizing on the price volatility. The stability of global energy supply now hinges on the duration of the conflict. Pouyanne suggested that if negotiations resume and the Strait of Hormuz is reopened, the situation could “come back to normality” within three months, but the risk of prolonged disruption and sustained high prices remains a key concern for the global economy.
This article is for informational purposes only and does not constitute investment advice.
