France’s TotalEnergies said on Wednesday that the company’s integrated LNG business logged a jump in its adjusted net operating income to $11.2 billion in 2022 due to a high demand in Europe.
The firm said its fourth-quarter adjusted net income rose 11 percent to about $7.56 billion, boosted by higher LNG sales, while its full-year 2022 earnings doubled to $36.2 billion when compared to the year before.
Net income for the fourth quarter dropped 44 percent on year, while full-year net income rose 28 percent to $20.5 billion and includes nearly $15 billion in provisions related to Russia, TotalEnergies said.
TotalEnergies also took a $4.1 billion hit in its fourth-quarter results for the write-down of its stake in Russian LNG producer Novatek.
“While down from the previous quarter highs due to uncertainties about the demand outlook, fourth quarter oil and gas prices as well as refining margins remained strong in supply-constrained markets,” chief executive Patrick Pouyanne said.
“Benefiting from this favorable environment as well as the increase in its hydrocarbon production and LNG sales, thanks to its unique position in Europe, TotalEnergies reported cash flow of $9.1 billion and adjusted net income of $7.6 billion,” he said.
According to Pouyanne, including the $4.1 billion impairment related to the deconsolidation of Novatek at year-end 2022, IFRS net income was $3.3 billion.
LNG sales and earnings rise on high European demand
Last month, TotalEnergies said it expected higher cash flow from its LNG business in the fourth quarter of 2022.
According to the firm, adjusted net operating income for integrated LNG was $11.2 billion in 2022, double the $5.6 billion contribution in 2021.
TotalEnergies said its integrated LNG portfolio, in particular its regasification capacity in Europe, was well-positioned to capture the benefit of the favorable pricing environment.
Cash flow from integrated LNG rose almost 80 percent to $9.8 billion last year due to the same reason, it said.
TotalEnergies said the average LNG price reached $14.83/MMBtu in the October-December period, logging a rise when compared to the same period in 2021 but down compared to the previous three-month period.
The price dropped about $6.68/MMBtu compared with the previous quarter while it rose 1.71/MMBtu compared to 2021.
In 2022, the average LNG price was at $15.90/MMBtu, a rise of 81 percent year on year.
Moreover, LNG sales increased by 10 percent to 12.7 million tonnes in the the fourth quarter when compared to the same period in the year before.
LNG sales also rose from 10.4 million tonnes in the the third quarter.
TotalEnergies said that LNG sales rose due to strong LNG demand in Europe.
During the full-year of 2022, TotalEnergies sold 48.1 million tonnes of LNG, up by 15 percent when compared to the year before.
LNG production also rose by 10 percent to 4.4 million tonnes in the fourth quarter from the previous quarter, benefitting from a full quarter of production from the Inpex-led Ichthys LNG project in Australia, the firm said.
However, LNG production dropped by 2 percent from the same quarter in the year before due to the end of the Qatargas 1 operating license and supply issues at Nigeria LNG, TotalEnergies said.
Looking ahead, TotalEnergies said “the tensions on European gas prices seen in 2022 are expected to continue in 2023, as the limited growth in global LNG production is supposed to meet both higher European LNG demand to replace Russian gas received in 2022 and higher Chinese LNG demand.”
In 2023, TotalEnergies is strengthening its position in Europe with two FSRU-based terminals, including the recently launched Deutsche ReGas facility in Germany’s Lubmin port and the Le Havre FSRU in France.