TotalEnergies' new moves in its ambitious Brazilian plans

French firm TotalEnergies announced in late October that it was forming a joint venture with the Brazilian company Casa dos Ventos, which is focused on renewable energy generation. 

The new company is created with a portfolio of 6.1GW, of which 700MW is in operation, 1GW under construction and 4.5GW at an advanced stage of development.

The JV will have the priority right to acquire other projects currently under development by Casa dos Ventos and will also seek investment opportunities in the areas of hydrogen and green ammonia.

With ambitious plans in the sector, TotalEnergies has already announced the goal of increasing its power generation capacity from the current 16GW to 100GW with renewable sources by 2030.

But the company will continue investing in the oil and gas sector, including in Brazil, where it has the goal of expanding its hydrocarbon production.

BNamericas talks to the French company's general director and country chair in Brazil, Charles Fernandes, about its projects in the country. 

BNamericas: What are the main reasons for forming the joint venture with Casa dos Ventos?

Fernandes: We don't consider ourselves an oil company – we’re a multi-energy company. We have the objective of achieving carbon neutrality by 2050, and we’ve established a series of goals to achieve this, including reducing up to 40% of scope 1 and 2 emissions by 2030.  

So, we’re investing heavily in renewable energy around the world, and we already have 12GW in renewable activities with very strong partnerships in the US, India and Europe. 

Our power capacity is expected to reach 100GW by 2030, and we’re already on track for 35GW by 2025. 

We invest US$14bn to US$18bn annually, and in 2022 we’re investing US$4bn in renewable energy.

The partnership with Casa dos Ventos fits into this context of the energy transition. Today, in Brazil, we operate in the renewable energy area through Total Eren, which already has 300MW in operation in solar and wind power and 1.2GW under development. 

This is a very promising market, with enormous potential. From our side, we bring expertise in PPA [power purchase agreements], trading and the solidity of our balance sheet to leverage and accelerate projects. 

[Editor's note: Total Eren's solar plants sell their energy through reserve energy contracts in the regulated environment, while the wind power plants have their energy sold in the free market.]

BNamericas: Is offshore wind generation in Brazil on TotalEnergies' radar?

Fernandes: The time horizon for this activity is not immediate. There are a number of ongoing discussions about the regulatory framework, but it will happen. We have to observe how the market will establish itself in this area, which isn’t yet developed under the partnership with Casa dos Ventos. 

We’re following this closely, also because there is an entire supply chain that needs to be structured, such as ports and energy transmission. The most important thing is to have a clear framework that gives investors confidence to make investments in the long term. 

BNamericas: What’s the status of the main projects underway in Brazil in the renewable energy area?

Fernandes: There are three PV solar plants in operation, in São Paulo and Bahia, and two smaller wind power plants in Rio Grande do Norte. Through Total Eren we have 1.2GW in wind and solar under development. 

BNamericas: Are you looking at other investments in clean energies, such as biofuels and green hydrogen?

Fernandes: We look at these opportunities insofar as they fit into our strategy and offer some kind of potential. They’re on the perimeter of what we’re studying as a possibility in Brazil as well. 

BNamericas: What’s the panorama for the main projects underway in Brazil in the oil and gas sector?

Fernandes: We currently have a very consolidated portfolio, concentrated in the Campos and Santos basins. They’re world-class assets with low costs and reduced levels of CO2 emissions, developed in partnership with Petrobras, such as Libra, Mero, Sépia and Iara. In addition, we’re the operators of Lapa [in the Santos pre-salt]. Our total production in Brazil is planned to reach about 200,000boe/d by 2026. 

[Editor's note: According to Brazil’s oil and gas regulator ANP, TotalEnergies' output in September  2022was approximately 150,000boe/d.]

BNamericas: What are the prospects for Lapa?

Fernandes: Lapa has reached maturity in its initial development. Today, we have projects to connect discoveries, such as Lapa SW [southwest], which will allow us to increase the production curve in the coming years. With this connection, we expect to be able to extend the life of the field from 2025, taking advantage of the available capacity of the existing FPSO. 

BNamericas: Together with Petrobras, Petronas and QatarEnergy, TotalEnergies recently announced a new discovery in the Sépia field. What are the expectations for the project in the Santos pre-salt?

Fernandes: When we acquired Sépia and Atapu, we knew the potential of these fields, and the discovery announced reinforces our confidence in the potential of these areas. We expect this to strengthen our partnership and increase production, which is growing steadily. 

BNamericas: Much is said about the declining geological success rate of the "new pre-salt" in comparison with what was seen in the first decade of this century, with Tupi, Sapinhoá and Búzios, for example. What’s your view on that?

Fernandes: Exploratory activity involves risks. Obviously there will be no infallible success rates. Our positions in the exploration blocks we’ve acquired reinforce our confidence in the potential of the pre-salt. We have to be patient with exploration, which is a medium and long-term exercise. 

BNamericas: What are the possible synergies between your E&P projects and the offshore wind ventures already submitted by the company to Ibama? Is it an option to supply energy to platforms from offshore wind plants?

Fernandes: When we talk about developing an offshore field, it’s inevitable to think about how to reduce the carbon footprint and offshore wind generation is one of the alternatives for this. The industry and society demand that we move in that direction. 

BNamericas: Is TotalEnergies studying the implementation of the "All electric" concept in its offshore production units?

Fernandes: This is one of the forces to reduce carbon footprint and is part of our research and development activities in Brazil and worldwide. 

BNamericas: What are the company's plans in the areas of natural gas production and marketing?

Fernandes: The first aspect is LNG. We have a supply contract to supply up to 3Mt/year of LNG to the regasification terminal under construction by Compass [Gás e Energia, of the Cosan group]. 

Another aspect is gas coming from offshore fields. Some companies already market offshore gas with gas distributors in Brazil. TotalEnergies still depends on connections to the network for the Iara and Sépia fields to be commercialized. But it will happen. We soon hope to be part of this group of companies that sell offshore gas 

BNamericas: Is TotalEnergies considering expanding its Brazilian local oil and gas portfolio, via mergers and acquisitions or ANP bidding rounds?

Fernandes: We’ve been very present in the ANP auctions every year and we’ll study opportunities in Brazil and the Americas. It’s still early to know our position. The open acreage program has become a milestone for companies in the sector, and we’re studying the possibilities. But we have a well-consolidated portfolio and the focus is to develop this portfolio, and increasing our production to 200,000boe/d is already a challenge. 

BNamericas: Does the company have plans in the midstream and downstream in the country?

Fernandes: We sold our interest in TBG [Transportadora Brasileira Gasoduto Bolívia-Brasil], because it wasn’t a strategic activity. The focus is on upstream, where we have great added value, and refining isn’t on our list of priorities. 

[Editor's note: TotalEnergies entered the fuel distribution market in Brazil with the acquisition of the distribution activities of Grupo Zema in December 2018. The company has a network of nearly 240 service stations and several storage facilities for petroleum products and ethanol. In the lubricants segment, it owns a plant in Pindamonhangaba in São Paulo state, with an annual production capacity of 50,000t of lubricants per year for the automotive, industrial, agricultural, and maritime sectors.]

BNamericas: What does the company expect in terms of the impacts of the change of government in 2023 and the main regulatory challenges?

Fernandes: We’ve been operating in Brazil for 40 years and are present in more than 100 countries. We invest in the long term, and changes in the democratic cycle are normal. We’ll continue to work with our partners and authorities. 

It’s important to continue improving the natural gas framework. The auctions of blocks and fields already work well. The most important thing is the stability of the system, the legal regime, and that improvements continue to be made. 

BNamericas: What’s your view of the opening of the electric energy market?

Fernandes: Every opening provides dynamism if it’s structured with a clear regulatory framework. The frameworks in Brazil have been perfected over the years, and our expectation is that dialogue with all parties will remain ongoing in order to continue with our investments. 

BNamericas: How much do you plan to invest in Brazil?

Fernandes: We’ll invest US$1bn in the country per year in the next five years.  

BNamericas: The lion’s share of that will be for oil and gas?

Fernandes: Today, yes, because we have a goal of increasing production that requires significant resources. But there will be more and more investments in renewables, strengthened by our partnership with Casa dos Ventos.