On Wednesday, Total SA (TTE.US) Chief Executive Patrick Pouyanné testified before the French National Assembly's Economic Affairs Committee. He stated the company's first-quarter oil trading profits approximately doubled year-over-year to around $1 billion, boosted by severe crude market volatility triggered by the war involving Iran.
He also disclosed that the company's joint-venture refinery in Saudi Arabia, damaged by a drone attack, is currently operating at only about 70% capacity. Full restoration is not expected until early 2027. He further warned that if Qatari liquefied natural gas (LNG) supplies cannot resume, the decline in European gas prices this winter will be far less pronounced than the drop in oil prices.
Pouyanné told the hearing that the company's trading division typically earns about $500 million per quarter, "and in the first quarter they made an extra $500 million," bringing the quarterly trading profit to roughly $1 billion. He emphasized that this level of performance "cannot be replicated every quarter."
He revealed that when the U.S. Navy assembled ships near the Strait of Hormuz in February, Total's traders increased their crude oil purchases. Following the outbreak of conflict, the company successfully shipped some Persian Gulf oil via the Fujairah hub outside the Strait, securing excess profits. To hedge positions, the trading team also made some loss-making bets.
Driven by the surge in war-fueled trading profits, Total's first-quarter net profit jumped nearly 30%. However, this performance sparked significant public discontent in France, where households and businesses were struggling with soaring energy prices caused by the conflict.
During Wednesday's hearing, several lawmakers questioned and even criticized these profits, expressing strong interest in an "excess profits tax." Pouyanné cautioned that any new tax must comply with international treaties to avoid double taxation. He argued that Total was the only company to voluntarily implement a price cap at French service stations, a measure that cost about €200 million (approximately $232 million), and that "any market share gains from the price cap were offset by financial losses from selling below market prices."
Pouyanné also offered a short-term profit outlook, stating that due to the ongoing crisis, Total's second-quarter profits could be higher than the first quarter's.
Beyond trading profits, Pouyanné highlighted the impact of damaged Middle Eastern refining capacity on Europe. He noted that even if a ceasefire is reached and the Strait of Hormuz reopens, it would not immediately resolve energy shortages. This is because major, modern refineries in the Middle East, which previously exported significant volumes of diesel and jet fuel to Europe, have been widely damaged.
"Take our SATORP refinery in Saudi Arabia as an example. It was hit by three drones and is currently operating at about 70% capacity. Full repair is likely not until after this year, meaning early 2027," Pouyanné said. This delay means European supplies of refined products will struggle to normalize for an extended period.
Regarding natural gas, Pouyanné acknowledged that increased U.S. LNG production is helpful but cannot replace Qatari supplies to meet Europe's needs next winter. He issued an urgent call, stressing the necessity of ensuring the resumption of Qatari LNG supplies. "Otherwise, the decline in gas prices as we enter winter will be far less significant than the drop in oil prices."
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