The French energy giant is following its peers BP Plc and Royal Dutch Shell Plc, which had previously warned that they could write off nearly $ 40 billion between them in the second quarter. The scale of the deficiencies shows how the global health crisis, combined with the drive to slow climate change, is shaking the foundations of the industry.
Most of the major European oil companies had valued their assets using long-term crude prices of between US $ 60 and US $ 80 per barrel. This is close to where the international benchmark Brent was trading before the outbreak of the pandemic, but it is now seen as unrealistic in the post-Covid economy. Total expects Brent to average US $ 35 this year.
“Beyond 2030, given technological developments, particularly in the transport sector, Total predicts that demand for oil will have peaked and that Brent prices should tend towards the long-term price of $ 50 ( US) barrel, ”the company said in a statement on Wednesday.
America’s largest oil producers are under increasing pressure to disclose their long-term forecasts. Exxon Mobil Corp. and Chevron Corp. do not publish such estimates, which means that shareholders are less able to examine how their investment plans correspond to market realities.
Total and Shell release their results Thursday, and Exxon and Chevron follow on Friday. All are expected to post big losses for the second quarter.