Total (TTE.US) CEO testified before Congress: Q1 oil trading profits doubled to $1 billion due to Iran war, Saudi refinery to be fully repaired early next year.

On Wednesday, TotalEnergies CEO Patrick Pouyann stated at a hearing before the French National Assembly's Economic Affairs Committee that the intense volatility in the oil market caused by the conflict in Iran has boosted the company's oil trading profit in the first quarter to nearly $1 billion, doubling from the previous year. At the same time, he revealed that their joint venture refinery in Saudi Arabia has only been able to maintain 70% of its production capacity due to a drone attack, and full repairs are not expected until early 2027. He also warned that if Qatar's liquefied natural gas supply cannot be restarted, the price of natural gas in Europe during the winter will not drop as significantly as the price of oil. Pouyann admitted during the hearing that their trading department typically makes a profit of around $5 billion per quarter, but in the first quarter they made an additional $5 billion, resulting in a record profit of around $10 billion. However, he emphasized that this performance "cannot be replicated every quarter". He disclosed that in February, when the US Navy was assembling ships near the Strait of Hormuz, TotalEnergies traders increased their purchases of crude oil. After the conflict erupted, the company successfully shipped some Gulf oil out through the Fujairah Hub Group, Inc. Class A, outside of the strait, generating additional revenue. To balance their positions, the trading team also made some losing bets. The significant increase in profit from war-driven trading boosted TotalEnergies' first quarter net profit by nearly 30%, but this performance sparked strong public discontent in France - families and businesses were struggling with soaring energy prices caused by the conflict. During Wednesday's hearing, several members of parliament questioned and criticized these profits, expressing strong interest in an "excess profit tax". Pouyann reminded that any new tax must comply with international treaties to avoid double taxation, and argued that TotalEnergies is the only company voluntarily implementing price limits at gas stations in France, a measure that has cost them around 2 billion euros (approximately $2.32 billion), with any market share gains due to the price cap being offset by financial losses from selling below market price. Pouyann also made predictions about the short-term profit outlook, stating that due to the ongoing crisis, TotalEnergies' second quarter profit could be higher than the first quarter. In addition to trading profits, Pouyann highlighted the impact of reduced refining capacity in the Middle East on Europe. He pointed out that even if a ceasefire is reached and the Strait of Hormuz reopens, the shortage of energy cannot be immediately resolved, as major modern refineries in the Middle East that used to export large amounts of diesel and aviation kerosene to Europe have been widely damaged. "Take our SATORP refinery in Saudi Arabia for example, it was targeted by three drone attacks, and currently only operates at around 70% capacity. It is likely that full repairs will not be completed until after this year, early 2027." This delay will make it difficult for Europe's supply of refined oil to return to normal for a significant period of time. Regarding natural gas, Pouyann acknowledged that the increase in US liquefied natural gas production has been somewhat helpful, but cannot replace the supply from Qatar to meet Europe's demand in the coming winter. He issued an urgent appeal, emphasizing the need to ensure the resumption of Qatar's LNG supply, "Otherwise, the drop in natural gas prices after entering the winter will not be as significant as the drop in oil prices."