TotalEnergies SE (TTE) 2026 Q2 法說會逐字稿

Ladies and gentlemen, welcome to TotalEnergies second-quarter and first-half 2026 results conference call.

I now hand over to Patrick Pouyanné, Chairman and CEO; and Jean-Pierre Sbraire, CFO, who will lead you through this call. Sir, please go ahead.

Hello, everybody. Good afternoon, or good morning for those who are in the US.

And before Jean-Pierre will go through the details of the second-quarter financial, I would like first to make some few opening comments, starting obviously with the current conflict in the Middle East, which has picked up again in the last few days and which is clearly impacting our markets and our operations and our perspectives. Also, we are aware of all the things in mid-June, but the resolution could be envisaged for the signature of the MoU and ceasefire between the US and Iran.

The situation has remained, to say the least, extremely volatile, with the Strait of Hormuz being an intermittent battleground, where the risk premium to navigate in these waters is increasingly high. Some are even beginning to consider that this could become a new normal, with the strait opening on and off depending on level of tensions between the parties.

This unstable and chaotic environment has been prevailing for the second quarter, but I would say the last 15 days in June, where we have seen some quite interesting reactions of the market, with crude oil going down very quickly, but products going to the roof at the same time. We don't know how long this conflict will continue. We have no specific information, so I don't know if anybody knows, by the way. But of course, for us, safety of our teams will remain our utmost priority.

As Jean-Pierre will show you in a moment, we can say we have managed this quarter to deliver once again strong results and cash flows from both our strategic pillars, thanks to the strong performance of the teams who managed to capture very favorable market conditions for many of the energies we are producing and selling. The oil prices rose about $100 per barrel, even if differentials have widened, while refining petrochemicals, biofuel margins, but also distributions margins were increased, with some even reaching historic levels. And gas, LNG, electricity were also at strong levels.

Once again, TotalEnergies is demonstrating its capacity to capture these margins and high prices, leveraging the integrated and diversified business model along the value chains of oil, gas, and electricity. First, all Upstream and Downstream businesses have been performing very strongly at the same time, which is not so frequent, in fact, since quite often one benefits from a supportive environment at the expense of the other. But currently, both are capturing high prices and margins, given the tensions on global demand for products. As we speak, Integrated margins this morning are around $130 per barrel, Brent or crude oil around $95, and margins at 35%.

E&P delivered a strong quarter in terms of productions, thanks to a solid 4% organic growth, higher than our forecast, coming from a rich and diversified portfolio of projects, which was planned, in particular from Brazil, US, and Libya. But also, and I must say it was very good, from a strong operational performance, limiting the unexpected stoppage of the production. So it was a very good performance from an operational point of view.

And all that allowed us to partly compensate the production losses in the Middle East. E&P has been delivering, once again, this quarter, a strong cash flow from operation, despite as well, and there was a difference in the Middle East between the production reported and the capacity to lift these productions, which impacted, because the lifting in the Gulf, of course, was very limited by access to the Strait of Hormuz.

Looking forward on the Middle East situation, beginning of July, end of June, the production was going up quite quickly, and we had limitations, only 5% of our global production. But this weekend, after the conflict came back, we were more back to 8%, 10% of limitations. So difficult, which I think we say 5% to 10% in our perspective. It will obviously depend on the way that the conflict will develop.

And again, it's not only production for us, also lifting, offloading the crude oil, which might be affected. And when we look to what happened in the second quarter, the real offloading was, in fact, affected, as per our guidance, at 15% of our production. So we'll see what will happen for the next -- for this quarter.

Refining & Chemicals performed in an exceptional way, I must say, leveraging market conditions, managing well the tensions on supply of refined products to maximize capturing margins. So refiners have adjusted the way they use their plants in the second quarter to prioritize, in particular, production of diesel and jet fuel, which were offering higher margins, and also, by doing that, contributing to security of supply of France and Europe.

This performance was achieved although some of our facilities have been impacted by events outside of our control, like the SATORP refinery in Saudi Arabia which was hit in mid-April, if I remember well, by some drones and which has been used at around -- which is back today at 70% of capacity and full capacity by end of the third quarter is expecting. But also Port Arthur in the US suffered, unfortunately, in June from a lightning strike during a tropical storm and now is progressively coming back to normal production levels.

Our crude oil and petroleum products trading activities have been very successful for the second quarter in a row with a strong performance and made another $500 million overperformance on the top of our usual structural performance of $500 million. And last, but not least, on the Downstream, Marketing & Services reported the best-ever quarter, driven by positive impact of the seasonality in Europe, but also higher unit margins, in particular on products like lubricants.

After a strong performance in this quarter and the first quarter, our gas trading activities results in the second quarter were not good, to be clear, and impacted by flat to declining European market conditions, whereas our traders were positioned to see the more supportive European gas environment in line with supply-demand fundamental expectations. Our traders took a long position on gas, thinking being bullish on the market, which seems to be reasonable because many indications were pointing to gas prices increasing because of lower supply out of the Middle East and from Qatar, because European inventories were low, at less than 15%, below the five-year average.

But these factors did not materialize during the second quarter, even, in fact, prices have declined through the quarter, leading to weaker or poorer results from the trading business. The story is, however, not over. As you have probably seen now, gas prices in Europe are valid, and as we are, traders are rightly stubborn since early July. Their gas trading results are following, and we'll be back to some overperformance again.

On our second pillar, electricity, there was multiple good news during this quarter. Integrated Power delivered one of its best quarters ever in terms of -- with a strong cash flow, in fact the second best in 2024, even in the absence of farm-downs during this quarter. But it was supported by the closing of the transaction with EPH. In April, one to two months earlier than expected, and the cash flow coming from EPH was as per the expectations.

So this strong delivery is on almost all fronts. But gas trading, for once, we have generated at the company level next to $10 billion this quarter, which has been allocated in a very consistent matter, as announced to you -- as I've announced to you last April during the call for the first quarter.

First, of course, we are deleveraging down to a growing ratio of 13%, which show an improvement of 2.4 percentage points quarter to quarter, benefiting from a $3.3 billion reduction in net debt and also a $1.2 billion of working cap release. And second, of course, we have confirmed the increase of our interim quarterly dividend by 5.9% to EUR0.9 per share, which places TotalEnergies once again in the leading pack of the growing dividend companies.

Along this quarter, our cash generation has also allowed us to sustain our production growth targets with disciplined capital investments of $3.4 billion, comforting our annual guidance of $15 billion, and also to increase, as announced, our buybacks to $1.5 billion in the second quarter. And the Board has authorized us to maintain this buyback with another $1.5 billion for the third quarter.

With all this good news, I now hand it over to Jean-Pierre, who has an easy work to go through the details of second-quarter financial results.

Thank you, Patrick. So I will start by commenting on the price environment in the second quarter of '26 versus the first quarter.

We captured high commodity prices, although gradually graduating, decreasing over the quarter. Brent averaged $104 per barrel during the second quarter versus $81 per barrel in the first quarter, meaning plus $23 per barrel, more than 25%. While average liquid price was up by $18 per barrel due to widened differential and a lifting schedule weighted towards the end of the quarter in a crude market, which softened in June in the context of the ceasefire in the Middle East.

TTEF averaged $15.6 per million BTU versus $13.7, and our average LNG price increased by 20% at $10.2 per million BTU. Oil prices started to impact LNG prices with one to two months of lag effects according to LNG pricing formulas. Finally, the European refining margins increased by $13.5 per barrel, on average, over the quarter.

In this price environment, the company reported very strong financial results, increasingly by almost 15% compared to the first quarter, with second quarter '26 cash flow of $9.8 billion and adjusted net income increasing to $6 billion. These results were possible because of the strong operational performance of all businesses, demonstrating the company's ability to fully capture the environment upsides.

Upstream delivered an underlying accretive production growth of over 4% year on year, which is above the annual 3% guidance and partially offsetting the production loss in the Middle East.

Downstream, a very good operational performance, as explained by Patrick, from our refineries, which has been deliberately geared towards maximizing distillate production, diesel, jet fuel, to capture higher refining margins. And Integrated Power cash flow generation increased by 25% over the quarter, supported by contribution of EPH assets in line with expectations since the closing of the transition at the end of April.

TotalEnergies generated these very strong results, the highest since the end of '22, despite two challenges. Although production from the Middle East was higher than originally expected, a significant portion of this production could not be lifted during the quarter and is recognized in E&P results based on the crude price from end June, meaning less than $70 per barrel.

Our gas trading underperformed after an overperformance in the first quarter because of the decline in gas price for the quarter, as explained by Patrick. TotalEnergies has delivered strong profitability this quarter, with return on equity at 15.9% and ROACE close to 14%.

Now moving to the business segments, starting with hydrocarbons. On production on a year-on-year basis, excluding the impact of the Middle East conflict, second-quarter hydrocarbons production increased by more than 4% above the guidance provided of 3% for '26, benefiting from the ramp-up of the project started since the beginning of '25 and from an operational improved facility availability.

The impact of the conflict in the Middle East is around 210,000 barrels of oil equivalent per day over the quarter, below the guidance communicated last quarter of 360,000, due to the company's production ramp-up in offshore United Arab Emirates and the restart of production in the other countries in the region during June, although physical lifting turned out to be in line with the guidance, with an impact of 350,000 barrels of oil equivalent per day. Looking forward, we expect to maintain a strong momentum with oil and gas production in the first quarter, excluding the Middle East impact, expected to grow around 3% compared to the first quarter of '25, in line with the annual growth guidance.

Turning on the quarterly results and starting with E&P results. And the segment generated an adjusted net operating income of $3.2 billion this quarter, up by 25% quarter to quarter, capturing the increase in average liquid price of $17.9 per barrel over the quarter and demonstrating the accretive new projects contributing this quarter to the yearly production growth.

Similarly, cash flow reached $5.8 billion, up 27% quarter to quarter. On the cost side, very important as well. Once again, we maintain our leadership with an average OpEx barrel equivalent below $5 in the second quarter.

On Integrated LNG, the LNG production, decreased by 10% quarter to quarter, mainly due to shutting production in Qatar related to the Middle East conflict. But in contrast to the outperformance in the first quarter, this quarter, the second quarter, was impacted by the underperformance of gas trading activities in an overall flat or even bearish European market, reflecting the significantly decreased adjusted net operating income and the cash flow of the segment quarter to quarter of $0.8 billion. Given the evolution of oil and gas prices in recent months and the lag effects on pricing formula, the company anticipates an average LNG selling price of above $11.5 per million BTU for the third quarter '26.

As we execute our consistent strategy in LNG, the main milestone of the quarter was the start-up of Energía Costa Azul plant on the Pacific coast of Mexico, strengthening the diversification of the LNG portfolio of the company towards the Asian market. TotalEnergies loaded the first cargo at EC LNG and shipped it to the Asian market, where the company pursued a strategy of signing long-term oil index LNG contracts with new clients in China or in Japan.

Turning now to Integrated Power. The net power generation increased to 14.8 terawatt-hours, up 28% year on year, driven by an increase of nearly 15% in generation from renewable sources, reflecting growth in installed capacity, and a 2-terawatt-hour increase in production from flexible gas-fired capacity, resulting notably from the completion of the transaction with EPH end of April. TotalEnergies is on track to reach its annual objective in Integrated Power, in particular, to generate more than 60 terawatt-hours over the year.

Cash flow from operation was above $700 million, supported by the contribution again of EPH assets, in line with expectations since the closing of the transaction. And this quarter again, we provide more granularity in the Integrated Power financial performance with a split in cash flow between what we call production assets, meaning renewables and gas-fired power plants, and sale activity, B2B, B2C, and renew. The former contributed 60% of the cash flow and the latter contributed 40%.

TTEP, the new venture with EPH, will continue providing its growing contribution to the company's results throughout the year in line with expectations. As TTEP has started contributing in the second quarter, we said in the first quarter that Integrated Power should benefit in 2026 from 10 terawatt-hours net power production, in line with the 15-terawatt-hour guidance given for a full year, and more than $500 million contribution to available cash flow.

Moving to Downstream. During the second quarter, Refining & Chemicals was able to fully capture an increase in refining and petrochemical margins, notably adapting the refinery run to produce more distillates. Overall, for Refining & Chemicals, adjusted net operating income was up by $200 million quarter to quarter to $1.8 billion, and cash flow reached $2 billion.

Marketing & Services delivered outstanding results, the best in at least 10 years, driven by the positive impact of the seasonality in Europe and the higher unit margin, as noted by Patrick, notably on lubricants.

Adjusted net operating income was up 21% year on year at $500 million, and cash flow closed to $850 million, up 19% year on year.

Moving to the company level and starting with working cap. The working capital decreased by $1.2 billion during the second quarter, largely driven by the reversal of the first-quarter buildup with the lower hydrocarbon prices at the end of the second quarter compared to the end of the first quarter.

The company has kept the course for capital expenditure, with net investments amounting to $3.4 billion in the second quarter, with a contribution of net disposal to $1.2 billion. This, as explained by Patrick, comforts our guidance for full-year '26 net investments level of $15 billion. As a result, the gearing has improved by more than 2 points to reach 13.1% at the end of the quarter, reflecting a reduction in net debt of $3.3 billion.

To conclude, once again this quarter, the integrated model of TotalEnergies demonstrated its ability to capture higher prices and higher margins, with a growing cash flow to support the deleveraging of the company, our shareholder distribution, with a clear priority to the dividends and the CapEx to deliver our growth.

I think now, we can open the line for questions.

(Operator Instructions) Martijn Rats, Morgan Stanley.

Hi. Hello. Two questions, if I may. I know there's an awful lot of tension, of course, on the Middle East, but I wanted to ask you a quick one about Namibia. It's still very important for Total. Where do you stand on sort of the FID of Venus versus the completion of the transaction with Galp on Mopane? I was hoping you could say a few words about that.

And then secondly, I wanted to ask you about the payout ratio for this year, because the guidance is more than 40%. I think we're sort of tracking below that so far. Of course, you see volatile macro environment; it's perhaps no surprise. But the sort of the payout guidance, over which period should we expect that to be realized? Would you still expect to have more than 40% payouts sort of over the year, or should that become a longer-term target?

Thank you, Martijn, for the first question. So I will be more precise.

On the Galp transaction related to Mopane versus Venus, we have received, end of last week, the official approval of the Ministry of Energy of Namibia. And so we are just, in fact, finalizing the last paper to close the deal potentially tonight or tomorrow. So we are just -- so your question came to the right time. So that's important, of course, because this is the fact that we are going to be on both developments as operator as a strong value for us in order to engage with the first FID.

On the FID of Venus, I would say there are intense discussions as well. We have a joint target between the government of Namibia and the consortium to sanction it by end of July. There are discussions progressing. We'll see if we can conclude in July or if we need to have a little more time. Technically, I think we have selected all contractors, so we are ready to take the FID subject to finalizing discussions with the government of Namibia. There have been some progress, but it's still some progress to be done.

So again, no, generally it's when the last minute we can conclude, but we'll see if we can do it. Otherwise, we'll wait. But reasonably optimistic that all the parties -- there is a joint interest clearly, and in particular, the Namibian authorities are fundamentally supportive to have a strong operator being able to capitalize on synergies between the projects.

I will remind you that now that Mopane has been approved and will be closed, the next step is to engage in the second half to appraise Mopane. We have three wells in '27, and the FID will be taken in '28, so all that as we engage in a strong momentum. And clearly for us, Namibia will begin and is becoming a very important help for future growth, not only to 2030, but beyond 2030.

Then on the other topics, yes, we are clear we are targeting 40% of payout. We have increased the buyback level and the dividend level between the first quarter and the second quarter. I don't know where we'll go. To be honest, you could say we have been -- there was a little cautiousness in the fact we have raised from $750 million to $1.5 billion. We maintained the $1.5 billion for the next quarter, because I can tell that we were quite impressed also when the MoU was signed in June by the quick drop of the crude oil price down to $70. So it's difficult honestly to anticipate what will be the cash flow for the second half of the year.

Of course, we will be globally above the guidance we gave -- I gave even to you end of April. I think I mentioned the cash flow guidance at $80, $7 -- $80 per barrel, $7 of refining margin of $32 billion, obviously will be higher than that. Where will it land between $35 billion through $40 billion? I mean, I don't know. It's difficult to guess. So we can make the math like you.

If we were at $35 billion, there is a miss -- there is a question of $1 billion, one a little more, around $1 billion to increase in the return to shareholders. $1 billion in the last quarter, we'll see, and there will be a debate at the Board at the different ways we could imagine to execute it.

But I think, again, my message to you is, first, it's a good topic because that means that we are generating more cash flows than compared to the guidance we gave you in February. So it's a matter of, we'd say, a rich company. It's a good topic. But the idea that we will target the 40% is really on the yearly basis.

I remind you, by the way, that we have quite an advance, and if you want to make it in a multi-year case, as you suggested in your question, I think the last year, we were at 55%, the previous year around 50% or 53%. So if I make it on many multi-year, which is not the case because we are simple guys, but we are quite in advance compared to 40%. So again, consider that 40% guidance is guiding the Board.

And again, the Board is also, as I was explaining to you last quarter, looking -- thanks to your support, with your support and your strong guidance last year or the same period of the year -- to the gearing ratio. And going down to 10% is quite also an objective for the company, and we might achieve it this year.

So that's the equation of the capital distribution for the Board. And I think we will manage that as we've done that regularly in perspective on different stakeholders.

Great. Thank you.

Michele Della Vigna, Goldman Sachs.

Thank you very much. I wanted to ask two questions. The first one is if you have an update on the two giant oil developments you're operating in Uganda and Suriname.

The second one is more of a macro question. I was wondering if you have a view on China demand. We've seen a drop of about 5 million barrels per day in imports since the beginning of the conflict. It's very difficult to unpick what is the stocking demand. Substitution demand distraction. I was just wondering if you had any view of how to think about it.

Okay. First question, on Uganda, we are in the last six months of development. We expect the crude oil production to start by before the end of the year. '27 will be the year where we reach the plateau.

We have two developments. We have Tilenga on one side and the other one, the offshore. Kingfisher, I think, is ready to start up by September. My information is now good. The pipeline is also ready by September. So we might start, in fact, in the next quarter, the production at a rate, which is, I think, Kingfisher was around 60,000 barrels per day. And then Tilenga will come ramping up on the first half of '27, so full plateau for me is by mid-'27. So this is where we are.

And by the way, it's an opportunity for me, and we will follow that carefully. Of course, Uganda is affected today by a disease, Ebola. But if it was not the case, we think that we might organize -- if it stopped, we might organize a field trip with some of you, the ones who are brave to go to Uganda, in one year in September 2027. So Uganda, for me, now is a matter of finalizing and turning the wells on.

On Suriname, things are moving very well. We confirmed that the production will start up by first half '28. That's where we are according to planning I have. It was our first quarter, maybe second quarter, but we are in first half '28, and the news of the construction, it has already progressed by 40%. We are at 40% advancement, but the FPSO in the yard is building correctly. So no, this is a more classical -- it's more complex to execute an onshore project than an offshore one. So we are, in Suriname, in a project which for TotalEnergies is a deepwater project, we know how to execute them.

Then, China is very interesting demand. Of course, we have all been surprised when we discovered the statistics of May and June where, in fact, you are right, the refinery runs went down from 15.5 million barrels of oil per day in February to 12.5 million in June.

So clearly, with the policy, which was firstly -- first, to remind you, that the Chinese authorities have decided very quickly to stop exporting products out of China. And they reduced the run rate of the refineries in China by 10%, down to 90% voluntary reduction of Chinese. So it was more affecting the export.

The domestic demand, it's difficult to say, but it's a domestic demand disruption, so I will not say that. It's also true probably that -- so what we're sure is that we've observed it. It seems that there is some turnaround on Chinese refinery in July, August, and summertime, so we don't expect, in fact, much increase of this demand from China.

It's true that when you look at that, you can consider that China has a -- the system in China has quite an impact on the oil market. And probably, you know we were commenting in April the fact that the Strait of Hormuz blockade was representing 10 million to 12 million barrels of oil per day of the market.

The Chinese by themselves with our policy absorbed 4 million barrels of oil per day. If you add on that, the US has released almost 2 million barrels per day of the SPR. They have solved -- the two countries have solved almost 60% of the problem for. That's probably why, by the way, the price of all went up to $120, but not so high.

So for the coming months, Michele, you can observe likely that we are back to the blockade today. No vessels, no tankers are crossing strait at all, so we are back to the situation. I know that the Chinese have announced that they will allow against some fuel refineries to export some fuel products. It was during the calm, the quiet period at Hormuz. Today, we can imagine that, again, it might not be the case again with these events.

So that's what I can comment. So for sure, less exports, domestic demand disruption, difficult to have data on this one.

Thank you.

Biraj Borkhataria, RBC.

Hi there. Thanks for taking my question. Just two on your LNG business. In June, there were reports around a Russian decree to authorize a sale of 10% of Arctic LNG 2, I think, related to the European sanctions.

So I don't believe you have commented, but are you aware and are you planning to exit there? And related to that, are you any clearer on the sort of legal language around EU sanctions and what it means for your mouth at this point? I know I asked these at full-year results, and it wasn't quite clear exactly what it would mean and there's been some conflicting reports. So any kind of that would be helpful. Thank you.

Thank you, Biraj, for your questions. I know that you have a specific interest for Russian matters, for good reasons, by the way.

So Arctic LNG 2, as you know, I remind you that we decided in 2022, it was very early in March. The accounts of March 31, 2022, shortly after the war, we recorded an impairment of $4.1 billion, which was in fact concerning notably Arctic LNG 2, the full write-off.

Secondly, that Arctic LNG 2 has been placed under sanctions by US authorities on November 2, 2023. And as a result, immediately, we suspended procedures in accordance with existing contracts. And in consequence, in fact, our rights, obligations under these contracts related to Arctic LNG 2 have been suspended since November '23.

In such a context, Novatek approached us indeed and initiated discussions for the transfer of over 10% in Arctic LNG 2 to one of their own subsidiaries, Nordline. And this has been publicly authorized, as you noticed, by a special decision of the Russian presidency in June.

In fact, given this context of Arctic LNG 2, we, on our side, consider that it's in the joint interest of TotalEnergies and Novatek to dispose of our Arctic LNG 2 shares, which again were fully impaired in '22. We have notified our partners and lenders, and we expect the transfer process initiated by Novatek to be completed in the near term. So the Arctic LNG 2 chapter will be over for TotalEnergies in such a context.

The second question I would love to be able to answer to you, but we are waiting to see what is the legal language precisely. So as you have -- there was some press news this morning that there was intense discussion about the new sanctions package at Brussels. And among these different topics, and we are not part of everything, even if we try to understand we are not in the room, there was a debate which came from the Greek authorities, which were claiming that the Greek LNG tankers should be allowed to transport some LNG from Russia if it was to be offloaded outside of the EU. So that was basically the case.

It says that there is a legal language, but again, which could in fact have an impact on the Yamal LNG, accordingly what was said, and which could in fact allow some transfer and purchase of Yamal LNG if we were using EU LNG tankers outside of the EU. Again, so a specific case, so it's a little complex story. But that might have an impact on the fact that we -- in fact, if it is the case, that means that TotalEnergies could not use the force majeure like it was until now. Because until now, there could be, in fact, with the regulations which were in place which were banning the LNG exports to EU.

But there was a question mark. I made that comment, I think, in April to all of you, or in February, I remember, but we are questioning if there was a different interpretation of the European sanctions that even an EU company could not purchase any of Russian LNG, either for EU or outside of EU. So it seems that the new language could, in fact, clarify it in a way that it could be done outside the EU if we use some EU LNG tankers in fact, which in fact would be that the interest of EU companies would say some be preserved independently if it's outside of EU.

So again, I'm just commenting some verbal information. We have been in contact with different, and I think the final resolution will be delivered probably tonight or tomorrow morning. We are drafting the last ones, and we'll see what will be the outcome. Of course, we need to analyze it because we have a policy where we don't want to take any risk with sanctions.

But my comment, if it is the case, again, I think the interest of EU companies will be preserved. Because honestly, to let Russian LNG being sold outside of the EU, not by EU companies but only by our competitors, was a little odd to all the EU companies involved. So let's see. That's what I can tell you, and we'll keep you aware, obviously, because it has some impact on our own business and we'll keep you aware of the situation.

Thank you very much.

Doug Leggate, Wolfe Research.

Thank you. Good afternoon, everybody. Patrick, I wonder if I could pick up on Martijn's prior question about cash returns and the 40% and so on. I think we would all agree probably this is a bit of a windfall environment and maybe formulaic returns of capital. One could be forgiven if there was some flexibility there.

My question is specifically around the hybrid bonds as opposed to the net debt target and whether you would consider these windfalls as an opportunity to perhaps address some of that longer-term financing as part of your capital structure. That's my first question. I've got a follow-up on Exploration, please.

I should give that to Jean-Pierre, but I know that I'm still -- to be honest, the hybrid bonds, for me, it's a debt. It's not a debt, but it's a quasi debt with a low interest rate compared to what we can to issue bonds. So I don't make a lot of difference between the different bonds that we have issued. So we -- it's around EUR11 billion of 3% coupons, so it's quite a cheap debt.

So is it a priority to unwind all that? My answer will be clear, it's no. And we have made some partial reimbursement, but it's not a priority. And again, we are more, this year, looking to the global cost of all different bonds rather than this specific one year.

Maybe Jean-Pierre will elaborate.

No. It's highly dependent on the market. So if you could consider it's cheap debt, there is no reason not to keep the hybrid in our portfolio. But of course, it's highly dependent on the conditions, as Patrick explained. So what is important for us is globally the cost of global debt, so senior bond plus hybrids.

That's very clear, guys. Thank you. My follow-up, Patrick, is very specific on Exploration. So you hired Nicola out of Eni, and you have Mopane and Venus in Namibia. Back in 2016, Total drilled the only deepwater well in Uruguay. And Eni, late last year, farmed into Uruguay. It seems that activity there is picking up a bit. So my question is, when you roll all that together, does Total have any ambitions to move into Uruguay?

Okay. I mean, Doug, you will need to ask a question to Nicola. To be honest, Nicola did not come to my office to tell me we need absolutely to come back to Uruguay. So to be clear, our own experience in Uruguay has been quite average, to be honest.

And in fact, it's a [whole] basin because this basin, which was the Pelotas Basin, if I remember well. In fact, we drilled in Uruguay. We also drilled in the other side in Brazil, which was not as well quite a success. So we made two drillings in this deepwater basin there, which was honestly not very encouraging. So I have noticed that there were some companies last year which went back. Nicola is quite excited by Namibia by coming back on Suriname with OBN. So he has some other ideas or other African countries.

But again, I discussed with him through your intermediary, Doug, if he wants to come back to Uruguay as the CEO, the policy is quite clear. We allocate $1 billion per year to Exploration and appraisal. This is my commitment to Nicola when we are in, and I told him it's up to you to decide where we'll put the money. You have to share with you your convictions. But if it's your ideas, we know we will follow that.

By the way, when I was looking to potentially, not (inaudible), but the Venus case, looking to the department, a Venus development might generate quite a nice cash flow paying many years of -- or like Suriname, the GranMorgu development will pay many years of exploration. So that we need to keep in mind, but it's in terms of cash generation, added value, Exploration for me is a nice engine. But again, I trust Nicola that he will bring to us ideas. I don't know if it's Uruguay or not, but until now, it's not Uruguay.

Great. Thanks so much, Patrick.

Christopher Kuplent, Bank of America.

Thank you very much. Just two quick questions from me, Patrick. The info that you've given us on the positioning of your gas traders is very helpful. Can you maybe comment on whether their bullishness has extended into power and your merchant and spark spread position there? And what you expect on that side now that you've got access to the EPH portfolio?

And the second question, as ever, I keep trying to get comments out of you on the state of the M&A markets. But maybe now, we have a specific example that you know more about than we do, which is the Danish deal, which I believe is entirely operated by yourself. What do you think about this environment? You've made use of inorganic before. Is this an environment to sell or to buy? Any comment, once again, would be appreciated. Thank you.

I commented the gas trading, but gas trading has been, again, whether lower performance than certain trading. So just to tell you that no other position is the winning one on electricity. Honestly, I don't have the visibility on that.

Your question, of course, we have -- as you know, the EPH deal is a deal where we are buying the assets, but we transform all assets in a tolling mode in order to have access to the electrons and in order to trade ourselves around this electricity. In fact, today, at this stage, all the assets have not been yet -- all the tolling agreements have not yet been signed. So we are working on it.

So I think the full potential of trading around the EPH deal is more for the fourth quarter than immediately, to be honest. But of course, we are expecting from that some additional value. In fact, we have some objective and we were discussing that, by the way, with our trading electricity team last week during our five-year business plan, so we have some objective and we expect them to deliver.

We are trading on two markets. There is a European market, the one with which we are also trading in the US, which is a little more complex market, to be honest, because our position there is probably today still limited. So we will need to find ways to increase the position in the US if we want to be profitable for adding electricity in the US. In Europe, we have quite a large portfolio today in different countries, so we have some (inaudible) expectations. The US is still work being in progress on this one.

M&A market, yeah, I mean, I didn't have the time to analyze the price which was paid by VÃ¥r to acquire the BlueNord Energy, so I didn't -- maybe I will receive -- probably I will receive a memo, but I was occupied by other matters these last days. It seems, for me, the market today is more a seller market than a buyer market. With the price of the crude oil price that we experience today to make a deal, unless you have a bigger (inaudible) or schemes in which you will try to capture part of the potential upside, it's not a stable market.

So before these crises, I think we'd imagine that this were done around to buy you around $70 per barrel. Today, to sell at $70 -- on my side, to be honest, I would not be a seller today on these assets, on the oil assets, because we would not like to lose some upsides. So selling is probably better today than buying. Yeah, it's fine to come back to your deal.

But again, I cannot comment the specific situation you mentioned. And maybe we have some preemption right. I don't know the situation of this deal. So we look at it, but as it is our assets and we operate with -- by the way, I'm not surprised because BlueNord was a fund and it was quite clear to me that -- I met, by the way, the owner of BlueNord when I was in Denmark a few months ago. And it was quite clear to me that we were willing to sell.

For us, as TotalEnergies, we have already quite a big share in these Danish underground assets. So it's quite mature assets, to be honest. So I think we are fine with what we have. But again, we'll look to this situation.

Great. Much appreciated. Thank you.

Mark Wilson, Jefferies.

Thank you. Regarding European projects, could I ask about the Cyprus project, Cronos Block 6, and what the expectations to move that one forward are, please?

And then secondly, on gas trading, yes, I agree with others, helpful comments. But you spoke to the European expectations for price moves there that didn't occur. Should we consider your gas trading business to be more of a regional-focused business rather than global? Obviously, oil material moves up and down, and probably that enabled that business. But should we think of your gas trading business as being a more European regional-focused one? Thank you.

No. I know we have a global gas trading. We are a big LNG player. I just mentioned that there are different markets in the US, in Asia, of course. I just tried to, in my comment, tell you where we make the miss.

And the miss was more on the European anticipation on the TTF, where I think we were around $15, $16; end of March, we were around $17. Of these, we're thinking it would go up to $19, $20 like it is going by the way today in July because we anticipated the impacts on the market both of the distraction from the Qatari production from the market and I would say as well the fact that the inventory in Europe has to be rebuilt.

And in fact, what happened is that the market probably considered that it was to anticipate to grow, to have a higher price because expecting maybe the Qatari disruption to stop, which happened in June but came back in July, and that we have other time to grow the inventories. It's also true that the weather in Europe was quite in fact good in the second quarter.

So it's just to try to give you the main major, the one on which they took a position which appeared which were in fact reversed, which we are not the right ones, but it does not mean at all that we are not a global one. I would say on the other markets, I didn't see any specific -- we didn't see any underperformance. We only see it on the European position. That's why I mentioned it, but don't take -- don't throw the conclusion.

Cronos, thank you for this question on Cronos. We are working on many FIDs, in fact, at the end of July. And the good news -- and I think I must pay tribute to Eni, the operator, because we are 50% -- we have a big share at 50% like the operator Eni. We worked jointly, by the way, in the last six months to go to the FID.

And the good news is that we have -- I think we are working hard to, again, like on Venus, finalize the FID by the end of July. It's a matter of -- again, there is a lot of -- Cronos, for everybody, is an interesting development where we produce gas in Cyprus and then we maximize existing infrastructures in terms of CapEx because it's a subsea development. It will go to those installations in Egypt together to make the gas treatment and then to Damietta LNG plant in in Egypt.

So as you can imagine, there was a number of intergovernmental agreements and agreements with third parties to use all these existing installations. But we are -- it's being done, honestly. And I think, as you discussed, we'll be able probably the end of next week to announce that.

And it's good. It's an interesting project, because at the end, for TotalEnergies, we have access to 1.4 million tons of LNG in Egypt, just in front of the European markets. So you can imagine that it's an interesting project from gas to LNG. And for Cyprus as well, it's the first gas development in Cyprus. And maybe your scheme will open the door, we open the way to other valuations. So it has been a long journey, but I think we are there and we'll be happy to invest capital in the Cronos project.

Matt Lofting, JPMorgan.

Thank you for taking the questions. Two, if I could, please.

I wanted to first ask you about full-year operating cash flows. I think, Patrick, you said earlier, understandably, that you'd expect to be probably above the $32 billion for the full year that you mentioned in April. Obviously, the macro scenario is uncertain. So if we were to stick to the sort of $80, $15 gas, and $7 refining that you used in April, where do you think full-year cash flows at that price tag would outturn on an underlying basis versus the $32 that you saw three months ago?

And then secondly, I wanted to ask you about Refining and security of supply of feedstock. Is the company able to access the appropriate feedstocks for the system as you look into the coming months? And is there a scenario where additional measures could be required from that perspective, particularly if conflict in the Middle East persists? Thank you.

Okay. On the first question, it's quite easy to answer the $32 billion because we know what has been the improvement in the second quarter would be raised to $34.5 billion. That's why I mentioned $35 billion, I think, in my answer to your colleague, the first question that I got. So $34.5 billion, $35 billion would be in such an environment. I will see if you can get it as a guidance.

Again, we'll see if we are at $80, since the beginning of the year, we were a little higher. We are more than average, I think, around $90.7 since the beginning. And the last 30 days, we're at $76. So that's quite a spread. So between $75 and $90, we'll see where we land. It's an interesting thing. So in this assumption, $34.5 billion.

And the current forward curve is a moving target. It follows (inaudible), so I don't have the figures. But I mentioned to you a range of $35 billion to $38 billion, 39 billion if we are remaining. I think if we were having a second half as the first half, you double it, you find $38 billion. But it's more -- it's a higher environment. It's not $80, it's $90. It's $90, it's a refining margin of $15. So it's $90, $15, and TTF at $15 as well, which was the average of the first half. If you replicate such an environment, you could imagine we should deliver around $38 billion instead of $35 billion. So you have a range where we could land. But I don't know, maybe it will be lower at the end, but that's what I can tell you today.

The second question, no, we have no problem of supplying feedstock to our Refining system, not at all. We are producing a lot of oil in Brazil, a lot of oil in Africa. And so in fact, our refinery -- by the way, independently of Hormuz, in fact, in terms of crude supply, the Atlantic Basin or European refineries which are on the Atlantic Basin are generally supplied by crude oil coming from the Atlantic Basin.

It's true that we'd like to have some sour crude coming from the Middle East to make more diesel because it's the best food to produce diesel. There is a limited -- but generally, this Hormuz -- the sour crude from the Middle East is more going to Asian refineries, in fact, than to European ones. So no, we have no concern on our side to fill to -- feed our Refining system.

The only concern I could have is more around SATORP in Saudi Arabia because, first, it has been hit. So I hope it will not be hit again and so we don't have the full capacity. Secondly, SATORP production is, of course, founded in the Gulf. It has been quite well used by the Saudi system during the second quarter for domestic use because they had four refineries which were hit. So from this perspective, we are running it for the domestic market, but we'll see what could happen if it's strong. So that's the situation, but no security or supply for this type of system.

Super. Thank you on both.

Lucas Herrmann, BNP Paribas.

Yeah. Thanks very much, Patrick. It's a little conceptual perhaps, but one of the things that I think most of us are struggling with medium term at the moment is the fragmentation or fracturing within OPEC. The UAE having departed, Iraq talking about an incremental quota or changing its quota.

If you think forward about your own position, the potential for Iranian barrels to come back, more UAE to be available, Iraqi flows perhaps be larger, where does discipline sit with what remains of the rest of OPEC? How does that impact the way you think about allocation of capital to projects? Does it change anything in terms of how you feel about the robustness of oil markets, particularly at the bottom of the cycle?

And secondly, if I might, and maybe this is just one that I should leave or we should leave for the Strategy Day, is simply to ask whether in light of the actions you've taken around Mopane, the addition of EPH, and the environment we're seeing in Refining in particular at the moment that may be sustained, whether that's changed and altered your target of $20 billion or so of free cash by 2030 in the $70 world. Thank you.

Okay. The first question, it's a good question for the investor presentation outlook in September, Lucas, where we speak more about strategy.

But the first one, honestly, in terms of capital discipline, because of all what you described very rightly, it's very good to stick off the discipline to test all our projects at $50 per barrel. Because the answer, yes, you can infer that today we are in a world of high prices, but we could go in a way where everybody would like to produce more, and maybe by the way Saudi Arabia like they have done in 2020 could do. Why not myself? I mean, if everybody wants to produce, we could do it again.

If you remember what happened in 2020 when Saudi Arabia decided to close the market, I think some few people around them were quick to come back to more discipline. So it's a matter of discipline. For us, honestly, I continue to believe and we are. But in the company, we are continuing to test the $50. We plan the business plan. The five-year business plan, we plan it at $60.

Yes, we test what happens at $80 or $70, like you mentioned. But keeping the discipline and knowing that we are in a cyclical industry, I think, is just fundamental. So all these events that you mentioned, I think, are just confirming to me that we need to keep a discipline. That's what I would answer to you.

And that means as well that you should not be surprised that when we speak in end of September about capital, net investment, capital investment, you will hear figures which will be, not more or less, in line with what we told you last year. We do not suddenly increase our CapEx because we have, on the short term, higher environment.

Does it change 2030? Not really, what you said, because first, the production of Mopane beyond 2030, Venus should start by end 2030, so I would say, so Venus, Mopane for me, it is 2030, 2035. We are working on it, so there is no impact. EPH somewhere was part of already along our plan, our five-year business plan we told you. But we have just anticipated with EPH some of the CapEx, we were willing to allocate to M&A in Integrated Power. So it has been done, but it was, in fact, modeled even if EPH was not the deal which was, in fact, modeled in our future cash flow by 2030.

And balance and refining, frankly, I will not take it as granted. So I'm still, maybe because I manage that business in three years, a little more cautious of it. Today, we have an incredible situation where both markets are positive in the same direction. That's true, but on the products market, you have no products coming out of the Strait of Hormuz. So the Russian situations with themselves, they stop exporting diesel and so you have Russian disruption.

So you have a lot of impacts which are pushing up the product price. I don't think it will -- because if Strait of Hormuz remains on and off, as I read that some authorities said, maybe it's a new normal. If it is the case, then we'll not be in the $50 per barrel environment. We'll be elsewhere, because to reinstall, there is no low cycle with an on and off Strait of Hormuz production. Of course, we will need to -- we are building and we are willing to -- we are discussing today to invest in some of the pipelines projects, which will allow to circumvent the Strait of Hormuz, which will take a few years.

So the balance of Refining, I don't take it for granted for planning by 2030. So we will come back to your question more precisely. But for me, in fact, what we have worked since we met last year in September '25, we have confirmed, in fact. And we will come back to tell you fundamentally all our targets, we can confirming even strongly.

And so yes, the increase of free cash generation that we announced, which was more than $10 billion, an increase of $10 billion more than $10 billion, will be confirmed. And I'm very -- so far, this is one of the first messages in September will be the confirmation of that. The second one will be to able to give you more color on beyond 2030, because in fact, we are working now beyond 2030.

So the company has two objectives to deliver all the 2030 additional free cash, and we will do it. I can't tell you because -- and we'll demonstrate why we are super confident, and you have some of the projects you mentioned. And then, we're working as well to continue the story because the story of TotalEnergies' growth does not stop in 2030.

Nash Cui, Barclays.

Hey. Good afternoon. Thanks for taking my questions. Two, please. The first one is on the Middle East. Patrick, we watched some of your recent interviews with French media. I think you talk a lot about the importance of building more export pipelines in the UAE as well as other countries. I wonder if you could elaborate your thinking around the Middle East situation and Total's longer-term strategy in the area, please.

And then the second question is on Power segment. You have built a successful Power business, and you achieved one of the best quarters, as you mentioned earlier. Strategically, I wonder what's your next ambition for this business? Thank you.

Okay. On the Middle East, it's quite obvious to me. We are very well positioned in Abu Dhabi, for example, and we just announced two very big projects, by the way. Maybe despite this war, we have been quite active in Abu Dhabi to reinforce the whole partnership and position of TotalEnergies together with ADNOC or XRG or Mazda. We have announced (inaudible) Mazda and all these renewable businesses in Asia.

We have announced Bab Gas Cap Concession, which was an old dream for many people in the company to have access to the Bab Gas Cap. So it's done with our partner. By the way, it's interesting to know that when, in 2015, we signed the Bab Concession onshore, some people were skeptical. 10 years after, we delivered additional value, and it's because we were in the place together with our partners that we managed to go along with ADNOC. And thank you, by the way, to the trust that the Emirati authorities have given into the existing consortium.

And we have also announced the Umm Shaif Gas Cap. We have FID yesterday. This week, in fact, we have FID together with ADNOC and we have a 20% share of the Umm Shaif Gas Cap, which is also, by the way, not only gas, it's also liquids. And all these gas caps, by the way, are gas projects, of course, but they are also quite good condensate projects. So it's liquid. But in liquids, you need to have outlets.

And so it's clear to me, and Abu Dhabi has been very active, ADNOC has been very active, very reacting, and we need to double the pipeline to Fujairah in order not only to accommodate future growth, but also to connect the offshore production. I think the ADNOC is offering to partners to look at the projects, and we definitely will -- we are looking to that very seriously. So that's one part.

The other part of interest for us is Iraq because we have some production in Iraq. Iraq, today, we have only one way to export almost, not one way, I'm exaggerating. But fundamentally, it's Basra, so it's in the Gulf. So being able to contribute and to see, there are some projects which are being announced and being studied from Iraq to Syria, and TotalEnergies is keen to join the projects, if possible, or to develop some.

So I think it's obvious to me that we cannot -- if we want tomorrow to come back to you and to say we want to continue to invest because it's cheap oil, which is true, and there is a lot of oil, we need to diversify our exit routes. Otherwise, we would not do a proper business case. So that's why we are unclear.

And I think, by the way, for the countries themselves, so I think it's -- and even I think if the conflicts were coming to an end quickly, we must absolutely keep that in mind and pursue the effort to have alternative routes from this oil.

Integrated Power, but the next ambition is to reach the 2030 target. It's not yet done. This year, we'll reach 60 terawatt-hour. We will reach 100 more than 100 terawatt-hour. I think the 100 terawatt-hour is probably the low assumption for production by 2030.

More importantly, we want to generate a net cash flow from this business. We said next year, it will be net cash flow positive. This year, it might be, but I would like to do it in a normal CapEx environment, and we want to join not only more than zero. But I would say in our famous free cash flow, more than $10 billion free cash flow target by 2030, there was $2 billion coming from Integrated Power.

So the target is to deliver this $2 billion, and then beyond 2030, there are different options. But of course, we might see -- continue to grow the business. The question is at which pace, in fact, and that will depend as well to opportunities. But I think on this topic, the Board is very keen to really see the capacity of the company to deliver what all the targets rather than planning big ambitions.

And then, it's not a matter of growth. It's a matter of value as well for the Board. And I think for all our investors in Europe have been supportive, not always, but today more supportive than before, by the way, to us to invest. I think we are right, because one of the lessons of the crisis, as you can observe in many countries, the new world is electrification. It's not green, by the way, it's electricity, electrification, domestic resource. So we are -- and it's also supported, of course, by all the data centers and AI growth.

And we are right to be and to continue to invest into this energy, which is a good complement to what we do, in particular on oil and gas, electricity and the gas to power connection is obvious. So that's the ambition to continue to develop it in some geographies.

Just to again to frame this completely, where we can develop the integrated model, where gas, renewables, customers, trading is possible, but in some few major European countries, the US, that will be the core of our investments. If you had Brazil and India, I think you have the description. So we are, in fact -- today, the next ambition is to be stronger in some markets where we can deliver the integration and the profitability.

Very helpful. Thanks, Patrick.

Kim Fustier, HSBC.

Hi. Good afternoon. Thanks for taking my questions. I wanted to go back to the Middle East. The production impact came in below your original guidance, thanks to the surprisingly fast ramp-ups in the UAE in June and maybe in Iraq as well. Now, with tensions rising again in the past couple of weeks, could that progress reverse? So in other words, if the situation doesn't change from here, how soon could we see production shut-ins once again across the UAE and Iraq?

And then just staying with Iraq for a bit, just on the GGIP project, I think the Ratawi Phase 1 was supposed to be starting up sometime this year. Could you give us an update on this project? And obviously, does the renewed regional escalation pose any risk to the timing of the oil ramp-up, but also the other parts of that project, including the associated gas and the seawater project? Thank you.

Okay, thank you. So I mentioned that I gave you some information in my opening comments to tell you that beginning of July, the projection was in July -- until July 8, in fact, until the blockade came back, the production was going up, and the impact on our production was even around 5% only.

But the global production from the Middle East, if you consider that our base was around 650,000 barrels per day, was by that time 550,000 barrels per day because there was an increase in many assets, in particular, of course, in the Abu Dhabi assets were almost back to normal production, which demonstrate, by the way, that I remember the questions that they had during the month before the MoU. It's quick to go back to the normal level. Yes, it's very quick.

The wells in the Middle East are very easy to reopen and to produce. So Abu Dhabi was back. I would say even Qatar was not fully back, in fact, on the LNG side because there was a sort of ramping up consciousness on this one. And Iraq, even Ratawi, was back to half of the production. So Iraqi part was a little more. So we were minimizing and we are ramping up quickly to come back to a normal level.

Since July 8, in fact, because of the situation, when I was looking to the situation beginning of this week, again, the impact is more around the 8% to 9% I mentioned during my opening speech, because, of course, we cannot maintain such production if we cannot offtake. It's not a matter of wells, it's a matter of offtake. And because, again, when you produce at maximum, your tanks are full and then your system -- it's all the logistics which are constraining the production.

So I would say that, of course -- and again, by the way, of course, the LNG plant of Qatargas 2 in Qatar, which was ramping up, has been shut down again. So you have some impacts. And today, as I told you, that's why to guess today, I would say a bit here the guidance I will give you. If we were like we were in the second quarter, we could imagine the production could be with an impact of 10%, but the offtake could be unfortunately higher. And back to our initial guidance, when we gave you 15%, it was, in fact, in terms of physical offtake, 15% during the second quarter; third quarter could be the same.

But again, the lesson is -- the good news is that if the Strait of Hormuz is open back again, then we'll be able to ramp up quickly. And then of course, it is a condition to bring tankers and to offtake the production. So all that is going together. That's what we face today. And we had some during the few weeks of opening. We managed to get all our tankers out. We managed to have some tankers in and out, by the way, in order to load. I think we managed to load three tankers during that period. But again, now we are back to nil because it's not possible. So let's observe.

The second question, Ratawi. Ratawi, I think there are different stories. There is the first phase that we are planning to start up we were expecting the first half. Of course, we are delaying because there has been some impact. By the way, Ratawi cannot produce fully today and it has been some impact because some equipment, et cetera, to growth. But so today, we are targeting end of first quarter, so September will be possible. Obviously, we don't have some events under control.

And then the other projects are progressing. All the projects have been launched, and all the contracts have been awarded. We have people on the ground for the seawater project, for the associated gas project for the second phase of Ratawi. By the way, we are working as well and we have good news in terms of productivity of the wells, which we think will be good that we have it on the first phase one day.

But all that is just being impacted in terms of execution because a lot of equipment -- in fact, one of the -- because (inaudible), as everybody spoke about crude oil transit and products refined for the transit, but there are also impacts on the equipment, either one way or the other way, and we have transported a lot of equipment via boats. But for the larger ones, it's not easy to do and so it's not possible.

So about the situation, we are dedicated to the project with some impacts. And today, it's difficult to give you in terms of -- of course, I could just tell you it's postponed by three months, which I just said. Maybe, we need to reassess a situation where we'll be back to a normal situation in the Gulf region.

Thank you.

Jason Gabelman, TD Cowen.

Hey. Good afternoon. Thanks for taking my questions. I want to ask the first one on the potential for windfall taxes. And given the recent backup in commodity prices, I'm wondering, Patrick, if your conversations with governments indicate any appetite to reinstitute windfall taxes?

Honestly, until now, in fact, most of the governments have taken some measures in between 2010 and 2015, which are still there in many of our countries. We had one limited impact now in Brazil, where they have instated an export tax for four months. And there are today rumors that they could extend it, which has been declared as not constitutional, but it seems to be a legal fight around this export tax in Brazil. The UK scheme has been increased recent years, so they cannot take more. Norwegian is okay.

And honestly, in most of our PSCs, the reality is that there are some mechanisms which you can observe when you look to the average tax rate of TotalEnergies between an environment at $60 or $50, where we are more or less an average of 40%, and an environment at $90 or $80, we are more around 45%, 50%. There are some mechanisms within the PSC. In fact, when the price is going up, so the governments are taking the bigger stake.

And in fact, it's no more, because in fact, the way we negotiate ourselves, we try to protect the low cycle by giving up a little more on the high cycle. That's the balance that we try to institute -- to propose to the government. So this mechanism exists, and so we didn't face this type of conversation, to be honest, since the beginning of the crisis. So we are not there, and that's what I can tell you. So except Brazil, I don't have today in my head any other situation where we have some discussion, but again, because of the mechanism exists already in many of our PSCs.

Great. Thanks for that. And my follow-up is, I wanted to go back to the Yamal project for a minute and just understand, because you have kind of the interest in the liquefaction facility, and then you're separately lifting volumes as well. And I'm trying to understand kind of what the cash flow split is between those two parts of the business, and also if you've been able to actually get cash distributions out of the Yamal facility itself over the past few years.

In fact, you are perfectly true. There are two different activities. One is a Russian activity, Russian in Russia, which is a Yamal liquefaction plant, where we are a shareholder for 20%. The cash flows -- some cash flows has been distributed. It's not an easy way to -- because then we respect sanctions, so the question is it distributed in Russia and when does it flow to Europe.

Because again, the sanctions in Europe have limited the number of capacity to transfer from Russia to Europe. Some cash has come back to TotalEnergies, not the full of that. So this part is not -- I can tell you, it's not -- in fact, in the way we plan, we don't consider that. We just are cautious. It's not coming on a regular basis. So in fact, from time to time, we have some openings, but that's not a regular basis. And so some cash is somewhere in Russia, we expect waiting for us.

Maybe the other part, which is the European lifting, yes, there's this one. It's out of Russia. It's a business where it's a UK and Swiss entity, or UK entity, I think, which is dealing with Russian contracts, on which the cash is out. This one, of course, we have direct access to the cash. The magnitude of this business is around an average of $400 million.

But again, it's going up and down according to depending on the difference because it's the contracts are linked to the brand, so it depends on the assumptions that you will take on the print brand. So let's say $300 million, $400 million per year, that's a potential site. It's a contract part of the portfolio. It's not a major situation for Total Energies.

Great. Thanks for the answers.

Henri Patricot, UBS.

Yes, hello. Thank you for the update. Just to take one question, coming back to capital allocation. Last quarter, you mentioned that we're evaluating options to accelerate short-cycle investments in Upstream. Why are you on these options? It sounded like earlier that you might take a big CapEx and change, so they're just not being considered anymore. Thank you.

No, we have, of course, the different (inaudible) that worked on it. There have been some proposals. We have approved some few, I think, $200 million, $300 million this year. So the guidance of $15 million, maybe it could be at the end $15.2 million, but I consider it's part of the global guidance. That's not a real impact.

And yet, this might have for next year, there is a little more because, of course, these type of actions are not only for immediate actions. So I would say you have probably $500 million of capital allocation acceleration, which would come next year.

But again, it does not feel it will not be the global guidance we gave you last year, which was, I think, around $15 billion to $17 billion per year of CapEx. Then, we said $14 billion, $16 billion will stay around in the $15 billion, $16 billion range. So yes, we have taken some actions, and that will impact a little more '27 than '26.

Thank you.

Bertrand Hodee, Kepler Cheuvreux.

Yes, thank you for taking my question. I wanted to come back and to try to quantify the underperformance of the LNG trading in Q2. Integrated LNG net income was down $500 million Q2, while at the same time, contribution from equity affiliate, which is my understanding mainly liquefaction, was up $300 million. That puts a Q-on-Q discrepancy at group level for Integrated LNG, excluding affiliate, at around $800 million. This is what we should understand as a swing in the trading performance?

You are very good, Bertrand. We can add nothing to you. We are very transparent. In fact, we mentioned to you that there was an overperformance last quarter of around $500 million, and your $800 million is right. So you have an underperformance reversed not only from $500 million to less than $300 million compared to a normal situation. So you merit a certain distinction.

And the second question, probably on your comment that those long position that did not work out in Q2 was now being in positive territory. Is that a hint that we could be headed for an overperformance of LNG trading in Q2 -- in Q3 by the same magnitude?

Exactly. But maybe we are only in July, so maybe it could be larger, I don't know. Okay, no, to be clear, yes, it could be the same magnitude, be clear. Because this market, when they are volatile, when you take $5 per million BTU in 20 or 30 days, 20 days, I can tell you, these type of positions are making them then.

The question will be not only where the results are not finished on July 22, but on September 30. So we'll come back, but it's possible, yes. But we might come back to you with the good news of the same magnitude.

I hope so. Thank you.

Thank you for your support.

Fergus Neve, Rothschild & Co Redburn.

Yeah. Hi there. Thank you very much for taking my questions. Just on the LNG growth pipeline, it was positive to see the ECA LNG project start up earlier this month. Could you provide a quick update of where the FID for Papua LNG stands today and also how the Mozambique project is progressing?

And then secondly, just on the Refining environment, I was wondering if you could comment at all on how your margin has looked so far in July. Thanks.

In July, it looks very well. I can tell you the average margin on the last 30 days were at $31 per barrel for July. So it looked very well. And I think July is probably around $35 per barrel right now. And it's reached a historic record for me, which were more than $40, $44, I've seen one day. So today, it's a little backtracking because again, the crude oil is going up.

In fact, I have one observation to make you since the last -- since the Strait of Hormuz was again blocked since July 9. When you make the sum of crude oil and refining margin, you are almost at $130 year to date. I mean, I don't know if there is a trick, but probably. So that's what I mentioned that in my opening comments. So second one.

The first one, on Papua LNG, we are working all together very closely with ExxonMobil, with Santos, with the government, of course. The government has just launched the last part of the procedures, the local hearings. The objective is to clearly to sanction all that before year-end; November, I think, is the target. But we are aligning the interests of all the partners in the interest of the projects, and we are studying how we can maximize synergies today between Papua, PNG LNG in order to deliver the most efficient project to the government, but again, in close cooperation with the government.

So I'm happy to see that the different stakeholders are all the same objectives today. And okay, we need to put together some fuel, it's not an easy one, but I'm optimistic we could reach this sanction and we are all working for that and we are very aligned on that.

On Mozambique LNG projects, okay, it has restarted, as you know, since January. And today, we are in fact increasing the mobilization of people in the ground. I think we are 7,000 or 8,000 people. So project is progressing, let's be clear. We are facing some few difficulties because some of the equipment were in fact being built in Dubai and different yards in the Middle East, so we had to face some tough times to exit all these equipment. I think it's done now.

But the progress, so we are progressing on the -- and in fact, today, when we compare to the progress here, we are almost 45% of completion. But yes, we have still a lot of things to build on there in our PNG and offshore. So that's on this way, with the target being '29 for the first frame, and we working on it.

Brilliant. Thank you very much.

Jean-Luc Romain, CIC CIB.

Thank you for taking my question. It relates to Refining and your plan to introduce more green hydrogen in your system. Where are you with this? And are there regulations in Europe which are not going fast enough for you to progress on that?

Yeah, the French one. No, but we are working on it. Where are we? In fact, we have done the -- we have nice offers. We could -- as you know, there is -- the good news of the quarter is that the German parliament has adopted its own regulation. So today, we are very clear on the German part and positively part. So Leuna will be able to maximize the use of green hydrogen. So that's the good news.

There was a bad news on the Netherlands part, which has been adopted, but not in the maximum part. So I think the Netherlands refinery will be able to take 30%, more or less, of what we are planning to offtake. But again, if there is no fiscal support, we cannot do that.

And then, we are working today with the last two kind of governments: which is the Belgian one, where the drafts are not so positive; and the French ones, where the drafts are positive, but the problem the French system is that you need to go to the parliament and to make fiscal reforms in the French parliament. It's not an easy task for the government, but we are working on it, and I think we'd like to have the definitive scheme and not an interim one, to be honest. Because of course, if we commit for long-term contracts of 10, 15 years, we need to have a scheme which will give us a certain level of comfort.

But we have some -- it's a very technical matter, to be honest. It's one of the most complex topics I know, because to explain to a political leader the RET3 and what it is to make green hydrogen in Europe, getting some support, this one is tough, to be honest. But we get some -- we have some momentum, so we are working on that. And not only ourselves, by the way, in France, of course, we are working and in hand with Air Liquide, which is also interested to get these regulations. So progressing.

But still, again, for us to commit our long-term contracts, we need to have all these regulations being enacted. It's the beauty of Europe. You think you've done the work because there is a directive in Brussels, and then you take four years to implement it in each country.

And then, by the way, where I'm afraid that I just discovered that there is a new directive which could again come back to the definition of green hydrogen, the RET4, based on consultation. So to be honest, when you hit that, you begin to be afraid because it's a problem that is coming from regulation, so it could be difficult.

Thank you very much.

Ben Salem, Oddo BHF.

Hi, Patrick, and thank you for taking my question. In the light of the recent escalation in the Middle East, has your view on geopolitical risk changed? Which region do you see as offering the most attractive risk-adjusted investment opportunities over the coming years? And how might this influence your future capital allocation priorities? I know it's maybe for the CMD, but I think it's important. Thank you.

Yeah. Thank you, Ahmed. But we continue to consider the Middle East as an investable region. There is no doubt about it. It's a question, of course, and then at the end of the day, it's a question of risk and reward. Maybe the reward will be to have a little higher.

But when I saw my US competitors rushing to Iraq during the last weekend, if I noticed the number of MoUs signed to develop hundreds of thousands of barrels, I don't know why these US companies certainly would like to see lower geopolitical risk and also which have more DNA in the region would consider it as a higher one. So we think it's a question of risk and reward. It's always policy. Again, it's back also to my comments about, I think, alternative routes to expose the oil to go to the market.

But having said that, it's clear as well that the policy and strategy of TotalEnergies has been to diversify the portfolio. And that reinforced my strong belief diversification is of essence in this business. We have done it well in Brazil, in Africa, in new countries in Africa. Of course, the US are also attractive to us, but we are building quite a big position in the US in terms of capital allocation for LNG and for Integrated Power. So we are fine.

And so I understand the question. But at the end, when you make oil and gas, you go where you find it. And if we discover oil and gas in Suriname and in Namibia, we are happy. And that's true that we don't find oil and gas in Europe to answer your questions. And by the way, we don't have the right to look for it. So that's where we are.

But for me, the answer to your question is fundamentally to maintain our strategy of diversification. And this is what we will present to you in September. I think the events that we have faced in the last four months are demonstrating that this is the right one. And we have been able, as I answered, to supply feedstock not to claim any force majeure for our LNG customers, contrary to some competitors, because we have a diversified source of supply of LNG and, from this perspective, building a position in Mozambique.

But look to the countries we are developing in the last three years, Suriname, Malaysia, and Namibia, so we are continuing to diversify our stakes because of that reality of our business. And not only in 2026, but we discovered that it has been the case for companies one or two years old. And I think it has been the case for long.

So that's what I would answer to your question.

Gentlemen, that was the last question. I'll turn the conference back to you for any closing remarks.

Yeah. Thank you for your attendance today and for your support. I remind all of you that we have a Capital Markets Day in New York City on September 28. I think it is a Monday, if I remember right. So Monday, September 28, be all ready to attend the TotalEnergies Capital Markets Day with more news to come because we continue to work during summertime.

So thank you for your attendance, and happy holidays to all of you.

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.