Pouyanne blames policy makers for the energy crisis

Jun. 14, 2022 12:09 PM ETOIH, XLE, USO, SHEL, BP, FSLR, TTEBy: SA News Team37 Comments

INYT/Energy Intelligence Oil & Money Conference - Day 2

Anthony Harvey/Getty Images Entertainment

  • "Oil and gas companies that have listened to policymakers' calls for less investment in fossil fuels is one of the reasons for current globally tight energy supplies" TotalEnergies (TTE) CEO Patrick Pouyanne said Tuesday.
  • Total (TTE) has committed to investing ~$3.6b per year in renewables and power through 2025, more than 3x the current investment run-rate of low-carbon leaders like First Solar (FSLR); however, unlike BP (BP) and Shell (SHEL), Total (TTE) has also committed to growing oil production (USO) through 2025.
  • With the White House scouring the world for energy supplies, from Venezuela to Iran and Saudi Arabia, while companies in the UK and US face policy headwinds at every turn, the statement appears well founded.
  • However, Mr. Pouyanne's comment may mark a shift in the industry - after reducing investment in fossil fuels for nearly a decade in hopes of winning favor with policy makers and ESG investors, energy companies may finally be preparing to increase investment in oil and gas production.
  • In the US, shale producers (XLE) have almost uniformly shied away from accelerating production growth in 2022, as supply chain challenges have led costs higher and production lower in the near term.
  • However, sustained high prices, a meager supply response from OPEC and the prospect of a failed Iran deal could result in a strategy shift from industry later this year; one that would likely benefit service providers (OIH), create a headwind to upstream free cash flow generation, and eventually balance oil markets.

Recommended For You

Comments (37)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.