Depreciation follows similar steps by many large oil and gas companies, including Royal Dutch Shell (RDSa.L) et BP (BP.L) in recent weeks in the wake of the collapse in fuel consumption due to the coronavirus outbreak.
Total, which releases second-quarter results on Thursday, sharply lowered its near-term price outlook, leading to a $ 1.5 billion depreciation of its Canadian assets and an $ 800 million depreciation of liquefied natural gas facilities (LNG) from Australia.
Canada’s tar sands require complex and energy-intensive extraction processes that cause high carbon pollution. BP’s $ 17.5 depreciation last month also included prospects in Canada.
Paris-based Total, which recently announced plans to significantly reduce its greenhouse gas emissions, reduced the value of its Fort Hills and Surmont Canadian oil sands projects by $ 5.5 billion after cutting its long-term price.
The move will reduce Total’s oil and gas reserves from 19 years to 18.5 years of current production levels, he said in a statement.
Total will also stop investing in capacity expansion projects in Canada’s oil sands, he said. He decided to withdraw from the Canadian Association of Petroleum Producers (CAPP), saying the association was not aligned with Total’s positions.
The write-downs will total $ 8.1 billion in the second quarter of 2020 and will increase Total’s debt ratio, or leverage, by 1.3%.
Total said it revised its oil price assumptions for the next few years given the fall in prices in 2020, setting the price of Brent at $ 35 per barrel in 2020, $ 40 in 2021, $ 50 in 2022 and $ 60. in 2023.
Its projected average Brent price between 2020 and 2050 thus stands at $ 56.8 per barrel, roughly in line with BP.
He said, however, that the decline in investments in the oil sector since 2015 would result in insufficient global production capacities by 2025 and a rebound in prices.
“Beyond 2030, given technological developments, particularly in the transport sector, Total anticipates that demand for oil will have peaked and that Brent prices should tend towards the long-term price of $ 50 per barrel. ”Total said.
Reporting by Bate Felix and Ron Bousso; Edited by David Goodman, Kirsten Donovan, Andrew Cawthorne
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