TotalEnergies to maintain price caps at rural stations amid prolonged high fuel costs

Patrick Pouyanné, the CEO of TotalEnergies, announced that the company intends to continue capping prices at its rural gas stations. He explained that global tensions and persistent issues with refinery capacity mean that fuel prices at the pump will likely take several months to decline.

Pouyanné shared his analysis during an annual conference hosted by the French Electricity Union. He noted that TotalEnergies recently moved three of its five oil tankers from the Persian Gulf, but cautioned against assuming the Strait of Hormuz is fully open. "The question is: can we bring them back to fill them?" he asked, describing the current situation as a "period of observation and testing."

“

The question is: is it possible to bring them back to fill them? It will take a few weeks, even months, before things return to normal.

He elaborated that while the agreement facilitating passage is well-drafted, it will require weeks, possibly months, for conditions to normalize. This cautious outlook stems not only from shipowners' potential hesitation to transit the Strait of Hormuz again but also from the necessity of rebuilding damaged infrastructure, particularly refineries and liquefied natural gas plants.

“

It will take time to rebuild them. We have six months of work to restore the refinery we own with Aramco, in Saudi Arabia.

"It will take time to rebuild them," Pouyanné warned, specifying that the refinery co-owned with Aramco in Saudi Arabia requires six months of work. The global community has become more aware of risks, leading to plans for new oil and gas transport capacities, such as pipelines, to bypass potential obstacles, though these will also take time to implement. Pouyanné pointed out that while crude oil prices have fallen, refining margins, which reflect costs due to damaged infrastructure in the Gulf and Russia, remain high. He cited that oil products are currently priced at $95 per barrel, with $15 of that attributed to refining margins, a significant increase from pre-Middle East conflict levels.

Pouyanné assured that there is no risk of oil or gas shortages. However, he expressed greater caution regarding price levels for both commodities, suggesting they could remain elevated for an extended period. The crisis has spurred countries to focus on domestic energy production, including biomass in Asia and a resurgence of coal. Pouyanné noted the increasing emphasis on domestic energy sources and coal.

“

The oil products are at 95 dollars a barrel: 80 dollars plus 15 dollars of refining margin. Still far from the 60 dollars before the war in the Middle East.