•TotalEnergies to spend 30% of capex on power business
Emmanuel Addeh in Abuja
Oil prices are likely to remain capped below $80 per barrel despite the escalating Israel-Iran conflict, Rystad Energy, an independent research and energy intelligence company, said yesterday, as Iran and Israel continue to trade strikes with the escalation now in its fifth day.
“Based on our earlier disruption simulations, we see oil prices capped below $80 per barrel,” Rystad Energy’s Global Head of Commodities Markets (Oil), MukeshSahdev, said in a market update, carried by Africa Oil+Gas Report and reported by oilprice.com.
The conflict appears likely to be contained and the United States could potentially play a central role, according to Sahdev. The worst fear in the market is a potential closure of the Strait of Hormuz, the world’s most critical crude flow lane where more than 20 million barrels of crude pass every day, equal to a fifth of global daily oil consumption.
While disruption to Strait of Hormuz flows could be devastating and would send oil prices spiking and add further tensions, it is an unlikely scenario for many observers and analysts, including those at Rystad Energy.
“A blockade remains the key risk that could push markets into uncharted territory,” Rystad Energy’s Vice President, Commodities Markets (Oil), Janiv Shah, said.
However, “Given its interest in keeping prices closer to $50, the US could play a stabilising role,” Shah added. “We maintain our view that this is likely to remain a short-lived conflict, as further escalation risks spiraling beyond the control of key stakeholders,” Shah said.
Despite Israel and Iran hitting each other’s energy sites over the weekend, the targets are not material to global oil production or crude flows.
Following the oil price jump on Friday after the start of the Israeli strikes on Iran, oil was muted in early trading on Monday, with both benchmarks falling by around 1 per cent and trading in the low $70s per barrel as key oil flows from the Middle East remain unaffected.
Meanwhile, TotalEnergies plans to spend about 30 per cent of its capital expenditure (capex) on boosting its integrated power business, the Chief Executive of the French supermajor, Patrick Pouyanne, said at an energy conference on Monday.
The company looks to increase the share of the power business in its portfolio to 20 per cent by the end of the decade, the executive said at the ongoing Energy Asia conference in Kuala Lumpur, Malaysia.
When Shell, BP, and Equinor backtracked on their pivot to renewables and reduced investments in low-carbon energy solutions, TotalEnergies didn’t have to. It has been the outlier in Europe’s Big Oil group, as it has continued growing its LNG business as the world’s second-largest LNG trader after Shell, oilprice.com said.
TotalEnergies has been also boosting lower-cost oil and gas production, alongside increasing renewable energy capacity and power generation through acquisitions and joint ventures globally.
The company supports the global push to triple renewable energy capacity by 2030 and the global target is at the heart of TotalEnergies’ road map to investments and strategy by the end of the decade.
The French group invested a total of $17.8 billion in 2024, including $4.8 billion in low-carbon energy – mainly in power. This year, TotalEnergies plans capex at between $17 billion and $17.5 billion, including $4.5 billion for low carbon energies, mostly Integrated Power.
It has also maintained an annual capital expenditure target of $16-18 billion per year over the next 5 years, with the 30 per cent of the planned $16-18 billion annual capex going to the integrated power business.
By the end of 2024, TotalEnergies’ gross renewable electricity generation installed capacity had reached 26 gigawatts (GW), the company said. It aims to continue expanding the renewable power generation business, to reach 35 GW in 2025 and more than 100 TWh of net electricity production by 2030.
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