About 15% of it TotalEnergies’ Production has stalled as the war with Iran nears the one-month mark, but rising oil prices have more than made up for lost barrels, Chairman and CEO Patrick Pouyanné told CNBC in an exclusive interview.
With Brent crude trading well above $100 a barrel, much of the attention has focused on oil prices, but Pouyanné said the crisis is having a much larger impact on product prices.
“The Brent market is fine, but the product market that impacts customers … is much higher than the Brent market,” he told CNBC at S&P Global’s CERAWeek energy conference in Houston. He added that the world had “never” seen refining margins on products such as Asian jet fuel at current levels. In addition to petroleum products, about 30% of the world’s fertilizer is transported through the Strait of Hormuz, threatening the spring planting season.
TotalEnergies is a major player in the global LNG market, including the largest exporter of U.S. LNG. The CEO said the company can continue to fulfill customer orders in Europe and Asia thanks to its diversified global portfolio.
Last week, QatarEnergy said its Ras Laffan plant had suffered “significant damage” from Iranian drone attacks, effectively shutting down 20% of global LNG supplies. The shutdown has driven up natural gas prices in Europe and Asia.
Pouyanné expects prices could rise significantly if the war drags on through the summer, as demand in Asia increases over the summer while Europe tries to replenish inventories. European natural gas was trading at about $18 per million British thermal units on Tuesday, but Pouyanné said prices could reach $40 per MMBtu over the summer if the conflict continues.
TotalEnergies is a major investor in US energy. On Monday, the company reached an agreement with the Trump administration to abandon its offshore wind projects in return for $1 billion. The company agreed to reinvest the money in U.S. oil and gas projects instead.
The federal government plays a critical role in approving offshore wind turbines, and the current government has been a vocal critic of the industry. Pouyanné said he didn’t want to fight with the government over its offshore wind leases, which he acquired under former President Joe Biden, so he approached the government with a deal. He added that offshore wind energy no longer makes sense in the U.S. given cheaper alternatives.
“In the unique situation of the United States, where there is a lot of land, a lot of gas, a lot of coal and a lot of land to build onshore solar, onshore wind and batteries, we don’t need offshore wind,” he said. “It’s a fringe technology that’s not affordable.”
“I prefer to invest my capital in more efficient technologies that provide customers with affordable electricity,” he said.
As part of its expanding US portfolio, TotalEnergies recently signed a 15-year contract with Google to supply data centers with renewable electricity. Pouyanné said other hyperscalers – including Amazon And Microsoft – now speak directly to TotalEnergies.
“These hyperscalers understood that an energy company – like TotalEnergies – because we also have capacity, not just to build, to invest, to own land and trade, we were a pretty good partner for them,” he said.
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