By Alice Dore
Total SA expects a revenue shortfall of at least $12 billion due to the global pandemic and oil crisis, Chief Executive Patrick Pouyanne said on Friday at the company's annual general meeting.
The coronavirus crisis has significantly changed the French oil-and-gas major's trading environment, Mr. Pouyanne said.
A drop in global energy demand linked to the economic fallout from the crisis has now been compounded by a supply crisis, brought on by the decision by a number of producer nations to increase their output despite lowered demand, he said.
This situation led to a dramatic drop in the price of hydrocarbons in March: "A barrel at $30 or $35 instead of $60 as we had anticipated for 2020 represents a revenue loss of $9 billion" this year, the executive said.
The crisis will also have a significant effect on the company's operational prospects for 2020, with the drop in activity leading to a $3 billion shortfall, Mr. Pouyanne said.
Total now expects production to be at around 2.95 million barrels a day, a decrease of about 5% compared to the previous forecast for 2020, Mr. Pouyanne said. The average utilization rate of Total's refineries will be around 70% this year, or 15% less than in 2019, he added.
In early May, the French oil-and-gas company stepped up a previously-announced action plan aimed at fortifying the company against falling oil prices.
"We believe we have we'll have to cover at least $12 billion... with our action plan," Mr. Pouyanne said on Friday.
Mr. Pouyanne sees the second quarter of 2020 as the worst point of the crisis brought on by the virus, he said. He warned results for the period won't be good, but said he expects to have better visibility from September or October.
This story was translated in whole or in part from a French-language version initially published by L'Agefi-Dow Jones.
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