WPC 2026 - Workshop 2 - The New Energy Order: Risks and Opportunities

Good Good afternoon everyone. Why are you all in the same uh side? It could be good to have some one here. Just >> sun to see the sky. >> To see the sky. All right. Okay. >> You are inspired by the sky. That's cool. >> Great. >> No, we need to be optimistic economy. >> All right. Okay. Thank you so much. Um it's my my great honor and privilege to to to moderate uh uh this discussion on energy. Um before I said a few words to introduce a topic, I would like to leave the floor to all the speakers just for you to know who is going to to speak. Uh Olivia, you introduce yourself and then I start. >> Okay. Olivia P. Uh I've been involved in energy and technology for many years since the first oil shock. Uh I've been working uh some time at the IIA and uh at the end of my career I chaired the uh French institute of petroleum and now I am advisor of the center of uh energy at >> Thank you. Thank you. Nicola please. >> Good evening ladies and gentlemen. I'm Nicolas Sky. Um I'm just a lawyer but I've been working in the private sector for 28 years in the in the fields of financial law and I have been dealing with the digital economy particularly for the energy sector living in Dubai and the Middle East. Energy has been the bread and butter of our economy and I'm here to discuss issues about connecting digital economy to energy markets. Thank you very much. Thank you. So this afternoon we have two Nicola, one Greek, one French. So the >> I'm the and the Nicholas without an age. Um and so nice to meet you everyone to see everyone. Uh so Nicolapio I'm um I've been 25 years in the energy industry 18 years with NG then I quit in 18 to create Tilt Capital um a P firm dedicated to energy transition and we invest inmemes Europeanmemes um mostly as a growth capital investor um across the whole the whole value chain and I have a an experience across the whole energy value chain including oil and gas. Thank you, Nikola. Dario. >> So, good afternoon everybody. I'm um I I lead the energy division uh in the UN Secretariat based in Geneva uh and hosted by the United Nations Economic Commission for Europe. And uh before that, I've been doing that for three and a half years. And we do cover the whole energy value chain for our member states. uh we work with about 1,500 experts around the world on current energy issues and before that a career a mixed career between private sector and uh and public sector in finance and energy. Thank you. Very glad to be here. >> Yeah, thank you Dario Oliv. >> Thank you. Good afternoon everyone. I'm very pleased to be here with you. Um I've been working with Total Energy for now 27 or eight years. I'm a former student of the French Institute of Victoria and in almost all the branches of the company and since January now this year I'm running the strategy and market division for the company. >> Thank you. >> Thank you Valeri. Good afternoon. I am heading the energy and climate center at the French institute for international affairs and before that I worked for the international energy agency in Paris covering Russia and subs Africa. Thank you. >> Thank you Mar. >> Good afternoon everybody. I am president of the international group of LG importers. uh and before that I have been in charge of gas supply with gas to France and then in charge of LNG sale of shener energy >> and I am Vali Dru executive director of the global gas center based in Geneva in Switzerland >> yeah I'm Christopho I've been working for more than 25 years in the nuclear energy sector and I'm right now the deputy director general of the French geological survey ERGM and I'm also the vice president of the energy poll of the French Academy of Technology. >> Thank you. So we have 2 hour and 15 minutes. Let's put it this way. Um each of you will make a presentation or said what you want to say on the subject that was dedicated to you. Uh just to five minutes for me to introduce the topic. Um the ongoing conflict involving Iran has brought into sharp focus for structural vulnerabilities and the global energy system. While the energy transition is progressing, recent events demonstrate that the world remains deeply dependent on a limited numbers of critical supply roots and producing regions. At the center of the current crisis lies a straight of horm through which roughly 20% of global oil and significant volumes of liqufied natural gas normally transit. Disruptions to this corridor have had immediate and farreaching consequences. The partial or near total closure of this route has led to what the international energy agency had described as one of the largest supply disruptions in the history of global energy markets. This has resulted in a sharp price volatility with oil prices surging and at times approaching prices levels while gas markets already tight have come under additional strain. Beyond price effects, the conflict has exposed the fragility of physical infrastructure. Attacks on production facilities and export terminals as well as disruption on to shipping have led to the suspension of significant portions of global oil and gas supply. In some cases, production cuts have not been a matter of market choice but a physical constraint. So we are facing a systemic shock and not just a resal crisis. So today we are going to tackle a number of issues uh from the energy security uh what does it imply in terms of uh uh prices. Uh we are going to tackle the issue of tokenization in the energy assets of investment. Uh so now I just I'm going to leave the floor to Olivier for a broader picture of what's going on and then if you agree after his presentation uh we will react and then move on to the second one. >> Thank you. Uh you have said all what I wanted to present. So uh please uh first slide. Uh no. Yeah. Uh four years after the Russian invasion of Ukraine, the Iranian crisis is another another wakeup call. Geopolitics is a key dimension of the energy sector. Geopolitic have always been a key dimension of the oil sector. And uh I used to quote Andre Jiro, former French minister of industry during the first oil shock who used to say oil is a diplomatic and military has a diplomatic and military content fiscal value and marginally calorific power. This is due to the unequal distribution of oil and gas reserves. And as you can see on this map, uh the size of each country is related to the importance of its oil reserves. It does not matter if the oil reserves are 15% higher or low or lower. This slide illustrates clearly the ge geological anomaly of the Middle East and you can see that Europe represents only 1% of all reserves. The same applies for natural gas and um twothird of gas reserves are located between the 15th and the 17th meridian specifically Russia, Iran and Qatar. However, these slides do not include nonconventional resources and I will come back on this issue at the end of my presentation. So the ge geographical distance between producing and consuming countries is uh creating major constraints for the oil and gas logistic. This is specifically the case for the transit through strong straits. Around 20% of the oil is transiting through the straight of 16% through Maracastra. We don't discuss a lot about Maracas trade but you should not ignore in the Red Sea. Swiss Canal and Bab Elm Mandeb are also important shock point and they are also have been also somehow impacted indirectly uh to from the uh crisis in Iran about 20 to 25% of energy trade is also transiting through our mus uh it's important to note that the bulk of oil and has is supplying Asian countries and only around 10% Europe. Um on uh the top of that we should not ignore that 10 to 20% of the supply of aluminium ammonia uh fertilizer and alium for example uh is impacted by the blockage of also a key dimension uh for the uh middle east countries uh who are heavily dependent on the exit through Omus. This is clear the case of Saudi Arabia, Iraq, Kuwait, UAE, Iran, Canar. And you can see the uh the the the amount of export of these countries transiting through HUS and uh there are only few opportunities to bypass Omuz. This is the case of the Saudi Arabia. This is the case of Saudi Arabia through the Red Sea, the Emirates through Oman Sea and marginally Iraq through the Mediterranean Sea. And yesterday uh Patrick Pu gave some figures on the potential but uh on and on the uh the uh surplus of export capacity through this point represent perhaps 5 the a quarter of what is transiting through uh unfortunately there is no alternative at all for kat gas uh And uh also we should not ignore that the Middle East countries are heavily dependent on the supply through for their economy for example for their food. During the Iraq Iran war in the uh in 1986, there were attacks from both sides of cargos in the Arabian Gulf. But the impact on the energy sector at that time was reduced due to the over over supply after the oil counter shock in 1986. Clearly there has been the apply price hike triggered by for oil and gas triggered by the blockage of Omus and the brand price rapidly increased over 100 dollars per barrel regaining the level reach after the invasion of Ukraine. The impact on the gasol and jet fuel was involved more for important because a significant part of the uh the the consumption of uh gas oil and jet fuel uh is crossing through. So when the price of oil was increasing by 60% the price of gas oil and jet fuel increased by 80% and 120%. Um so uh the result of all that is the price hike at the pump in every country with uh some counter measure different counter measure which has been taken by the different countries. So I will end by uh a focus on the the winners. Uh the the first winners is United States because they are benefiting from the price hike due to the increasing leadership in the oil and energy market and also thanks to the flexibility and reactivity of the shale oil and gas producers and thanks to the price increase. US production should increase in the next few months. This would increase further the leadership of United States on this market. However, the price hike at the pump is a bad news at the eve of the midterm election and the cost of the war is huge around $1 billion per day. Another winner with a question mark, Russia. Uh the first benefit is economic and despite the embargo was the efficiency of the embargo is questionable. Russian export remained stable stable for the last two years but Russia has been obliged to offer low lower price by 35 to 40% compar compared to January 2024. uh after the Iranian crisis, Russian export or re revenues has doubled from February to March and thanks to the present price hike, Russian export revenues are now higher than in 2022. But will it be enough to limit the immense budget deficit of the country? But uh the benefit for Russia is also political. Trump agreed to lift oil embargo for some buyers of Russian oil. As a result, the overall embargo has been weakened further. This situation give the opportunity to some countries to jeopardize the end of Russian hydrocarbon imports. Also, the European consensus in favor of Ukraine is weakened. Obviously Putin will take the opportunity to appear as the savior of the countries of the global south which is deeply impacted by the crisis. Some politicians and NOS's are considering that an exit for from fossil fuel will avoid political risk but it's somehow falling from Karib to Sila from the Middle East to China and uh we discovered only recently the geopolitical dimension of the energy transition. In fact, the world economy is relying on China for the bulk of technology and equipments needed for the transition. U as you can see on this slide uh red is dominating everywhere. uh China is dominating the value chain on batteries, solar PV, wind strategic material and China also does not hesitate to use this strategic weapon. So in a nutshell, the J to politics is an unescapable uh inescapable u challenge for the energy sector for the next years to come as it was for the last 40 years or 50 years. It is urgent to integrate this dimension in the energy policies to be put in place. Thank you. >> Thank you. Thank you so much for your presentation. Uh do we have any reaction, comments, whatever because you are here to participate as well. So I open the floor for any reaction. Uh please sir, I don't know. Could you introduce yourself please? Thank you. >> I can and I will. My name is Fared Yasin. Um I'm now retired but I used to be Iraq's ambassador to France. And just a few days ago, I met with the prime minister's adviser on energy who actually raised the point that Olivier made by the fact that we're uh stuck with the hormone strait and there is an clear intent by the Iraqi government to build pipelines to go beyond that to go back to an older situation. If you recall, the first pipelines built in the region brought Iraqi oil to the Mediterranean to Palestine and also to Syria. So there's an intent to do that and I was really relieved to hear Patrick Mnt mentioned it yesterday. >> Yeah, it's but unfortunately the capacity of Isl from Kiku Keruk to Seyan is quite low only 300 uh thousand bars per day. But it's it will come and it will be it's it's absolutely strategic for Iraq. >> Thank you. I I see you. Yeah. >> Yeah. >> Is it working? Yes. So my name is Mark Mo commodities and with Netexis. Um I think the number that you mentioned although they are very well shared by everybody on the on the brand price that you are slightly misleading they are effectively what you see and Friday night the close was I think at 104.8 eight or let's say 105 on the brand. The reality is this is the forward price, the future price as well. But the dated brand is about at $150 and obviously so that's what you consume in effect and everything is based on dated brand not on necessarily on brand and um as a marker but then also the gas oil and the jet is more than 200. So the impact of what we see is largely stronger that what we can expect because I heard a lot by saying oh that's not really that bad because we are around $100 and we've seen in fact in 2022 110 or slightly higher but it's a lot more than that. So that was my comment. uh I've been obliged to choose one set of figures uh but I frankly I don't know when I read the press I don't know what is the price today there are so many figures uh less than 100 more than 150 and anyway to anyway it is changing every hour depending on the tweets of Trump >> thank Thank you. Before there were just before Yes, please. >> Giddon Bramberg from Echop Middle East. Um the the last slide about um China's domination of energy uh transition is is is not something unknown. It's not something new. So why are you um just maybe some explanation why are you justifying that uh as difficulty to move forward on uh uh the uh transition given that China's domination is well known? No, in fact, I just want to remind that uh the energy transition has also a key uh a key uh geopolitic a key geopolitic a key geopolitic dimension. That's only the message I wanted to deliver. I would say uh the energy transition is green. That's that's fine. But the energy transition is also red. And also what is important is to remind us that uh since 2011 uh China started to use these weapons against Japan. And I think we are in Europe quite naive because we just discovered a few years ago that there are geopolitic problems with the energy transition technologies. Thank you, Mr. Sha. Uh >> yes, I just wanted to come back on the price of oil because if something is new this time, it's a huge premium you we you have between futures market prices which are more or less financial prices uh which are more set up by financial markets than anything else. And the real price of the physical stuff uh uh the date brand uh is around well it fluctuated it went as high as 145 now it's around 130 uh but for example 40s blend is uh 40 crude went up to 150 uh at at one time in March uh Dubai Well, which is a a particular benchmark right now went up 170 and what was said about uh diesel and jet fuel jet fuel in Singapore went up to $290 per barrel. So uh the the the real news there is that when we look at futures markets it's just a part of truth and the real markets are completely different and as probably as high as what we had you remember the uh the world record on uh crude prices was on the 10th of July 2008 at 147 uh officially We haven't reached that but in fact sometime we were above. >> Thank you for this uh precision uh Dario and then we move to uh total energy. You say I wanted to come back on the question about why did they show the slide about u China's dominance in in some of the minerals of the energy transition because actually and it's very relevant in what's going on in the Gulf because there are three commodities that usually flow through the straight of oras which are critical for the processing and refining of those minerals. One is sulfur 30% of the world production of sulfur goes through the straight of hormon. Second one is NAFTA which a byproduct of the oil production as well as sulfur and the third one is helium. Well, those three three commodities are used are heavily used in methological processes to produce the minerals that you see in for the energy transition and a lot of the refining and processing capacity as you have seen is in China or Southeast Asia and therefore it's we don't see that crisis coming up now but it's down the line is the next crisis are we deplete the stocks of existing equipment because there's a rush right now from from countries to react to the lack of gas and and then and therefore you know create you know electricity through solar panels etc. But that that equipment one that is finished then you have the the the downside one of the outcome of that is the impact on the availability of these minerals critical for this new technology and that's that's a second step if you want in in a side of the crisis should this crisis continue for months to come that will clearly come come on stage as well. >> Absolutely. Yeah. Now we would like to hear the perspective of total energy. >> With great pleasure. >> Thank you very much. >> Thank you. >> Thank you. So maybe I will uh I will start with the obvious um by saying that energy is essential to development and to economic growth. you see on the on the slide the evolution of the oil demand with population the uh evolution of the electricity market. We are going to speak about electricity with with GDP. Um well good news is that since 2015 and the Paris agreement you see we start to see a disconnect between emissions and energy demand. But at the end of the day uh we have to uh to to agree and to acknowledge that with the growth of the population we will be 10 billions people in 2050 uh with the living standards which are going to to increase by the demand for for energy will will continue to increase. That's that's a fact. And today you have 4.6 billion people still lacking access to energy which is not uh which is not acceptable. So we have to deal with that and we have to to see how we um we u we manage this this uh this situation and when it comes to to energy you you know that I'm saying the obvious at the beginning we are navigating the the famous energy trma because we we need to deliver an energy which is reliable and reliability today comes at the top of the agenda affordable because affordability and price is very important. Um as you mentioned energy is everywhere and uh in the economy and so the price of energy is important uh and you'll see the consequences of a high price of energy in the coming months with inflations and sustainable because we all have the I would say sustainability goals that we want to achieve and we we don't have to oppose sustainability with the other one because sustainability is part also of the solution. you will see that at the end of the day renewable energy is part of of the solution. It's local and sustainability is not opposed to affordability and reliability. So this is a dilemma we have to navigate in this in this dilemma and so the question was how do we uh do navigate that within within total energy. So before um before starting with um with um with describing our strategy, I would just uh draw three lessons from the current crisis. First first lesson is that by the tensions in the Middle East, they remind us how fragile is the I would say energy supply chain and um and that this supply chain is um I would say subject to geo geopolitical geopolitical sol shocks that can disrupt the market. We have seen that with the Russian crisis. We see that now with the crisis in the in the Middle East. And the first lesson which is important is that we need more capacities because uh this is when you have capacity that you can absorb shocks and for the time being we don't have enough capacity. Uh you see that we have disrupt we are disrupting 20% of the oil flows we are disrupting 20% of the LNG cap capacities. So uh we need to we need to to to uh to realize that without sufficient capacities and we need to invest I will come back to that without sufficient capacities we cannot absorb the shock and I have two example which are very interesting the first one is a gas gas price in the US it does not increase for standing why because there are plenty of gas in in the US so if you have capacities the price will not increase example in France electricity price. The nuclear production is working very well. Do you see the price of electricity increasing in France right now although the gasing price is increasing? No. So I I I think the first the first uh the first thing we we need to acknowledge is that energy is so important that we need to continue to invest in capacities. Second lesson is it has been said already by by Olivier. We need infrastructure because we need to move this energy. Uh and so we need infrastructure, we need vessel but we need also pipelines, we need networks, we need a number of infrastructure in order to make sure that we can move this this energy from where it is produced to where it is consumed. And this is something which has not been taken very well into consideration up to now and reality uh is now reminding us how important it is. The third lesson that I would um that I would draw from that crisis is that the price shock will and this is what we were saying will propagate beyond the energy sector to to the whole industry. uh it will be refined product, it will be petrochemicals, it will be fertilizers, it will be food at the end of the day and as a result of all that inflation will will come back in in the coming uh in in the coming months. Um so this is not just an energy market issue. This is an economy in it globality issue. So um as a company how do we navigate that? Um I would say that we have a consistent strategy which is more energy because as I mentioned we need more energy and less emission because we all want to achieve our sustainability goals. When it come to our strategy, I think the strategy is resilient for a simple reason is we are global, diversified and integrated. And I think that the three words are are very important because if you want to um to be to be resilient, if you you want to uh to continue to serve your your customer, you need to uh to to to be to be global diversified uh in order to um to make sure that you you're able to uh to continue to serve them. A good example is that we have not declared force measure on our LG contracts because we are sourcing LG from our own assets and from 11 I would say sources in worldwide. And so we continue to deliver our customers and this is part of our mission to be uh to be uh to be um to be able to to to serve them and it comes back to the to the trma. Um we have in terms of strategy a few criteria which are very simple in order to uh to ensure that we are diversified. we do not allocate more than 10% of our I would say capital employed in in a single country. So meaning that there is a limit above which we we we do not invest more in the country and this is very important because um you when the Russian crisis occurred we were able to move from Russia to the US very quickly. So at the end of the day agility and flexibility are also very important and this is because you you don't put everything in the same place that you are able to do that. Second thing which is very important is integration. I was mentioning integration is meaning that we are starting from production uh until distribution and this is very important because uh to be present all along the value chain because when one part of the chain is I would say not performing well you can compensate with with the rest of the chain it's true for oil and gas which is our I would say model in oil and gas and it's true also in electricity I will touch upon that in in a minute where we also want to be integrated from production until until distribution. All that has to uh to um to go with cost discipline and financial strength because if you want to to navigate I would say the cycle of a very um energy is cyclical. We we all know that. And so you you you have to be able to navigate through the cycles. And so if you want to maintain flexibility, you have you have to to maintain a strong balance sheet. And this is part of the criteria when we when we um you will see that when we sanction a project we sanction it under strict criteria in terms of environment so that we are sure that we can develop that and that it will be profitable even in very degraded environment. And last not least flexibility and optionality because the world is unpredictable. And so the question is not to predict what will be the future. the the question is more how do we adapt to a future that that we cannot predict and so that's that's globally what drives our our strategy. So when it comes to the strategy uh we say we are total energies. We have changed our our name a few years ago to say that we we wanted to distribute all kind of energies. Uh it's not fashionable is just because it's absolutely essential to accompany our customers and to accompany the transition and to be able to be to be diversified. So we have two main pillars. The first one is oil and gas and the second one is integrated power in in upstream. oil and gas as I mentioned uh we need to continue to invest um you if you look at all scenarios uh you take for instance the steps scenario of the international energy agency today we we are at 104 million barrels per day in 2050 we will be more than 80 million barrels per day meaning that there will be probably a decrease but a small decrease by 1% per year while If you do nothing, fields, oil fields, they are decoding by 7% per year. So you need to invest in order just to maintain the the current capacity knowing that at the same time energy demand will continue to grow as I mentioned at the beginning. So it's essential that we continue to invest in oil and gas for for this reason. uh it does not mean that we we we uh we um it's not part of of our own sustainability roadmap I would say because also in this oil and gas sector we are um improving the quality of our portfolio by um I would say um making sure that each new project which is developed improve the quality of the portfolios that we have in terms of emissions in terms of scope one and two and and methan for sure and the second pillar of our strategy is integrated power because we all recognize that electricity will be um the energy of of tomorrow and it's growing more than that the rest of the energy as you have seen on the first slide. So we are uh we are investing a lot in this in this integrated power branch and um we have an objective of producing between 100 and 120 terowatt per year in 2030 coming from zero a few years ago. So that's a huge uh I would say a huge investment that we are making uh making making here and once again this um this model is also to be integrated from production production with renewables and and gas gas assets until until distribution. And you see a little bit how it it is reflected in in what we sell and what we produce. And you see that in 20 in 2030 basically we will we will be in terms of production 40% oil 40% gas and 20% electricity coming from zero in in 2050. And as a result the carbon intensity of what we are selling is decreasing a lot as you can see on the right part of the slide. meaning that you can increase the quantity of energy that you are delivering while uh I would say meeting your sustainability criteria because you are decreasing the carbon intensity. Um I I was um mentioning our criteria in terms of um of investment for oil and gas. I I think that's very important to be able to develop this asset in very degraded environment. And so you you see that the reason why for instance we are trying we are managing to keep our I would say our cost opex on oil and gas project below below $5 per bar which is the lowest of the I would say the profession which which is in a sense um the influence to be to be competitive in any situation. Second thing which is very important is to have reserves because if we want to continue to develop we need to have reserves and so the duration of the reserves are a key parameter in this strategy. And last part I touch upon it already is diversification and you see in terms of diversification how our portfolio is diversified if we compare it to to others. So diversification is a key is also a key element. When it comes to LNG it's a little bit the same story. diversification again and flexibility which are very very important. So you see on the top right what middle east was representing in our portfolio but you see also the number of dots they do represent where we source uh LNG and the flexibility of of this portfolio. We we are a portfolio manager I would say meaning that at the end of the day we are able to redirect flows where a customer need need energy and the idea also is that LG in our strategy is very important because this is a link between the oil and gas business and the power business because when it comes to power we we put renewables but renewables alone they cannot I would say meet 24/7 demand in terms of electricity so we need flex flexibility. We all know that and above 30 40% of renewables in in in a in a grid system, you need to have a lot of flexibilities and flexibility comes with CCG assets. They they run on on gas. And so this LNG is the key link between the the two pillars of our of our strategy. And so when it comes to electricity and just to to give you an example, I was saying at the beginning that one key element was also to be able to be integrated from production to distribution to to deploy this model. We cannot do it everywhere because you have a number of countries where the price of electricity is regulated. So we focus on the countries where the price is deregulated. Namely some parts of the US curiously number of parts in the US have a regulated price. So we we focus on air cut PGM and queso mainly Europe is the regulated and this is where we can deploy our model and Brazil they do represent 70% of of the countries where we where we operate and just for you to know how does that translate into investment you see a little bit this this you say pie chart which represent in green what we are spending in terms of renewable energies and power more largely and and the rest in the orange you see the large part of the orange is what we call maintenance oil maintenance oil is exactly what I was saying at the beginning we need to invest just to maintain the production and the rest is new development so that's very important to have that to have that in mind how does that translate at the end of the day but we we are able to continue to increase our energy production to satisfy the customer needs while meeting more sustainable sustainable goals because you see the life cycle carbon intensity which is decreasing since since 2015. >> Thank you. >> Thank you very much. Thank you. As we have representative from Africa and from different countries from Africa in the room, I would like to to hear you just a few words about your strategy in in in Africa. So we are present in Africa for more than 100 100 years. It's I would say with Middle East one of the I would say location where we are we have the longest history and so we were present at the beginning mainly in West Africa uh with with um I would say Nigeria, Congo all these countries where we where we were producing now we have because we want to diversify as well and we continue to have project in in this in in this region. But we also have started to to have new projects in East Africa in Mozambi for for for LNG for instance and in also in in in the south part of Africa with Namiga which is also becoming a new I would say a new playground for us with Venus and Mopan discoveries which are which are very promising. Thank you. What is very interesting is at the last uh WPC conference uh the wording was investing in oil and gas. I'm I'm talking about total energy and and renewables. You didn't mention renewables. Now we are talking about integrated power. That's that's interesting in terms of evolution of the world. No, I think the model uh for we are refining the model but the model is still the same. What we what we want at the end of the day is to deliver power to our customers and our customers they want power at day and at night not just when renewables are producing. So that the reason why we have a model in which at the end of the day we have to to combine renewable assets, gas assets, batteries in order to make sure that we can deliver reliable power to our customers knowing that in our portfolio two3 is renewable and one third is Get for instance. >> No, no, it's fine. It's much more near the the pragmatic approach this world. No, but integration is very it's very important and this is what is and reliability in terms of supply and I would say reliable sustainable power is what people demand at the end of the day. >> Yeah, sure. Thank you Nicola. >> Yeah, thanks. There there's I think there's one element that is probably under analyzed in in what you just mentioned when you said that you didn't call any forceure. >> Come closer to your microphone. >> Okay. um when you said that there were no force major declared for you know for your clients and you continued serving your clients. I think what this crisis is also saying is big boys are back and and I think this is again a reward on concentration and and I would say the the power of the big energy players and I think this is pretty pretty substantial. Um when you were 20 years back think the renewables the renewable sector was paving the way for decentralization not only just of production decentralization of power in the in in the energy sector and I think here what you are saying is the people who will get out stronger from this crisis are the people who as you mentioned are integrated are diversified etc. Who can do that? People with balance sheet. And I think here we but I think this is this is also pretty it has some virtues especially for you for total and the likes. But this is potentially very detrimental to the emergence and the continuing emergence of other models coming frommemes etc. And I think this crisis we are yet to understand the impact it will have onmemes. I come from I come from NG so smaller than than total but still bigger than the companies in which I invest but I think today when I look at the companies in which I invest who are doing like the 20 50 million euro type of revenues these guys are hurting and whatever you can find as ways to you know to find new supply contracts they don't have access to that they are completely price takers they are completely um I would say um locked in by energy strategies that are way above their pay grade. And I think we should realize that what is currently happening it's a recon convergence of power into the uh when I say power power play into the energy sector. And I think we I don't I certainly don't have the final view of how this is going to end this is going to end but I do think this is a shift that is more fundamental ongoing than we than we can think of right now. Thank you. Any reaction? Yes. >> Yeah. Yeah. I think what you're saying is important, but I think there's misconception because you you you big companies would set the price of the market which is not not at all the case. We are producing roughly 2.5 million barrels of oil per day, alum oil, al gas. Meaning that in terms of oil, we do represent a little bit more than 1% of the market. So at the end of the day we are navigating a market. We do not set the price of the market. >> I absolutely agree. I was not target I would not saying total is doing this. I was saying the dynamic within the energy market is that the bigger players are going to have a bigger influence. So I'm not saying you are making the price but I'm just saying that from a perspective where 20 years back we were on a on a trend where there was this decentralization including into the number of players. You see now that the smaller players are hurting meaning there's going to be a concentration and so you're going to have more market power from from the bigger players and I'm not targeting tot I'm just saying as a global force you will have more power in the hands of the bigger players and I think this is something that will be an issue from an innovation perspective but also from the survival of new models coming out ofmemes >> sir you want to say something >> well I I would just say that um I your statement is very very important and I think it further justifies why we need to continue to support a decentralized approach because we see what's happened with the straits of Hamuz the concentration through one particular uh choke point chokes the whole world's global economy and if we the more we diversify and we more the more we go towards the energy transition economy the more uh actors we have, the less dependence we have and therefore it further I think justifies why um uh certainly uh you know global leaders like Europe um uh remain justified in uh promoting uh the transition economy. >> Thank you. Any other comment? Yeah, please. Um even though this is a very very important discussion um I I would like to bring it to to some personal questions towards a global giant. Um typically an energy crisis as the one we are expecting shall bring higher prices. Typically this is the fat cows point in time for uh global giants. And I was wondering about uh recent development and capital allocation in general. Uh the first question would be we have seen for example you were addressing sustainability and we've seen a lot of carbon emission reductions based on deserization but I would expect global giants to be investing in uh finding other ways of reducing emissions. My second question has to do also with investment and me coming from that part of the world. I would like to see how you think or how you find the economies of scale determining financial feasibility of the LNG findings for example in the eastern Mediterranean Leventine basin if you have analyzed those and how to tell is going if you have a strategic plan about such goals. Thank you. on your first question. I think >> please when you take the floor uh raise your voice because I'm I'm sure that at the end of the table they cannot hear you very well. So please raise your voice. Thank you. >> No no uh coming back to your first question. Uh it was how do you find new ways to to reduce the emission? It was it was your first question. Okay. Uh I think if we want to um to make sure that the transition is um is um is continuing at the right pace we need to have a CO2 price which is high enough because at the end of the day without CO2 price you cannot derive the the transition. So we we we believe that the CO2 price is something which is uh supporting the transition and we support a high high price and that's the reason why we are also investing in in in power because we know that this transition has to occur. Electricity and power will be the energy of tomorrow. If we want to move to this model it will it will take time. We know that but to accompany that we we need to have a CO2 price which is which is attractive for new models. And for instance, you you were mentioning new new models. You can capture and store carbon. This this model for the time being needs to have a CO2 price which is supportive which is not the case. And so we need to find a way to incentivize at the end of the day through carbon price through other incentive a way to to accelerate new new models as you mentioned. >> Thank you for this. I was rather referring to research and development on technical breakthroughs except mere or better dieselization in order to improve the quality of fuels that cause less emissions. But thank you for the insight on carbon credits. That's very interesting as well. >> Thank you. I I take the two question or comments from here and then we move to LNG. >> Please sir. >> Yes. to Nicolola Pure as a matter of clarity uh you underline the fact that the situation would be different formemes versus the global players uh would you pinpoint more particularlymemes in the oil and gas market where they're not that many they're not that heavy in the business ormemes on eur renewables and then the remark that has made been made for example concerning the situation in France where the electricity market has not been that much affected by the change in situation would not necessarily confirm your remark. >> No, I I think so. It wasn't in the oil and gas sector. I think the oil and gas sector uh is is well known and and in fact you can come back to that. No, I was more referring to actuallymemes and the whole energy value chain outside of the oil and gas sector and all the themes that are working actually that are being in competition with the Chinese. The problem with with what is currently happening is when you're when you're a big client, when you're a early kid, when you're a you know, etc. You have the you have the right access to the right people with the trading capabilities, you have everything. When you're just taking the crumbs, I can I can assure you that this is what we are living dayto-day onmemes that we are supporting. And so the problem is there's mechan mechanically there's a a differential in in in competitive competitiveness that is create that is being created formemes compared to the the larger the larger players that don't need to innovate. They just need to wait formemes to be in a situation where they can buy them up. And the more you have that that kind of trend the more this is going going to hinder innovation. And I think this is also we need to recognize that this is happening not only in oil and gas. The the point with China is is exactly this one. When you were in when you were in the in this sector 15 years ago, it was spread out. Today look at Goldwing, Mingyang, Envision, the three top wind turbine manufacturers in the world. They're all Chinese. They've surpassed Simmons, Kamesa, Investas, and everyone. Look at the power that these guys have. And and it's not it's not a power that is that is going to go down. They're accumulating power every single time. If we do not do something about this, and this is why I was also reacting to this. If we don't do something about this concentration of power, we will lose the ability to act to to activate innovation. >> It's not specifically connected to the present change in the market. No, but I think the present Yes, I do think it is because the present change exposes vulnerabilities. When you don't have when you don't have such a shock, people can navigate around it today. What are the options? I mean the the the there is a paralysis in many ofmemes and and and midcaps today because the the magnitude of the shock that they see forward I totally agree with the the crisis is before us. The price is not right now. The prices is in fact before us because when it's going to hit aluminum prices, when it's going to be helium, and it's already being hit hitting, etc., we are going to see the prices materializing. The the big guys are going to be able to arbitrage. It's going to be more costly. They're going to lose a few margin points of profitability. The small guys are going to go under. >> Thank you, Nicola. Dear Lady, yeah. U my name is P. I'm the former French ambassador in Russia. Uh I want I want to echo your your point regarding the the shift of power. Um the I'm not I'm not not I'm not at all a specialist in energy market but I think the you always had tensions between two logics the logics of companies uh about business innovation uh shareholders and so on. And then you have the the logic of governance um about sovereignty um uh setting up the national framework of activity or European framework for instance with climate change um and also uh providing incentives and the political preoccupation such as elections the price of oil and so on. you always had tensions uh between these two uh these two logic and it seems to me now that uh uh power politics are on the top and sometimes on in conflicting ways. I have one examples I I I have in mind regarding of course Russia uh this strategy of the Russian government to offer a a lot of contracts some of them being really uh very abstract uh to the to the US government uh in order I believe it's a trap in order to uh to make them forget about the war in Ukraine and to normalize the bilateral relation and so uh And so it differs of course uh from country to country. Uh in Russia it can be easy to weaponize the strategy of some companies even if gasp prom is also subject to to financial market or it used to be. Uh it's might be more difficult in in our democratic market economy countries. But my question is the is the following. I would like to to know I'm sorry I know it's a very broad question to know where how how you you you see the evolution of these two tensions. In other words, uh do you do we believe that uh governments will be on the top? power politics will dominate. And so it means that companies will have to to obey sometimes or to diverge or uh the market logic will be uh will be will be stronger and the logic of uh of of business uh because I think this is a really structural problem much much before uh the crisis we we experience but I think the the t there's some sort of climax uh in in what we we see Now >> thank you dear ambassador. Please uh thank you. I'm Sylv former ambassador as well but for environment and so you will not be surprised with my question. Um in the slides that you showed us, it was interesting indeed to see the kind of investment that Total is doing and the fact that there is a good part that is uh going towards uh the m the maintenance as you would say of the production capacity that you explained very well. Uh what uh my question is more on the other side which is the integrated power and the level of investment that you're making. you are basically saying that the future is the electricity which uh I would agree with definitely and therefore I would have imagined that uh investment could have been much higher and in fact in the investment that you're making it seems to be around 20 25%. So the question is very simple. Why is that that in total is not investing much more in the integrated power if you indeed believe that this is going to be the future? Thanks. >> Thank you for your question. Um first I think we are starting from from from zero. Few few few days few few years ago we we were not producer of of electricity. So now you have recognized that we have roughly 35 gawatt of of capacity and that we are going to deliver so we this year we are going to deliver almost 50 terow water and in 2030 100 ter. I I fine I I understand that you you you would like us to do more but I think in terms of pace of development uh this is something which is which is very uh very rapid. Second thing is that when it comes to oil and gas um honestly we are financing ourselves. Okay. Somehow when it comes to renewables this is a market where we can um I would say do and structure project with third parties and this is part of our business model. So we are we found learning. So when we are we start we develop a project when it comes on stream we sell part of the project to to financial investor so that we can recycle the the cash but it means that and we leverage this project meaning that when you see uh what we are investing this is only the part which correspond to our I would say um to our final take of the project meaning that on the ground the projects that we are deploying are much more than what you see on the on the screen because they are leveraged because part of of them are bought by by a third party. So because this figure is a net figure so this is what we are deploying uh plus what we are acquiring less what we are divesting because we are not divesting we are selling part of of them to to third parties to recycle the cash. So at the end of the day this is a net and on the ground it's much more than that. Thank you. I just leave the floor to Nicola for the question for sar. Yeah, please. >> I think you're hitting on a very very key and tough uh topic actually. Um um and I think the the the focal point here are externalities. I think the the issue that we we have is that we have lived over the past whatever decades. I I wouldn't even dare to to to um try to pinpoint that but externalities were either ignored CO2 etc or they were just dumped on governments and so investors private sector could just continue creating you know continue creating value while either ignoring or passing on externalities to to others and I think the the this is this is going to be the the fracture line that is going to continue to happen. either government say this is the end and we are going to see a prevalence of the government logic over the financial logic or we won't have that I would say that capability and we're going to see the financial logic continuing and for this I'm going to take one example which goes back to the Chinese dominance why have we why have we um put ourselves globally not only Europe global into the hands of China because in the '90s you had a very clear economic authority who was saying you should maximize your value by maximizing shareholder value and that means the lower cost supply and for the maximum margin so Europe 44% of of chips production in 1990 9% today why was that it was a deliberate deliberate decision to externalize the cost of chipm because it was cheaper in Taiwan and in other places and we were saying you know the the world is global and everything and so we're going to rip the benefits out of that and all of a sudden we discover that there's an externality called security of supply and that security of supply has been completely dismissed in the financial models that we have been using for the last 30 or 40 years and and so either and I'm not saying I want governments to regulate I'm just saying if we do not take that into consideration, we're just going to go from crisis to crisis. >> Thank now we move to Jean to have a perspective of the LG market please. >> Okay. Good afternoon. I will tell you about LJ with of course a snapshot on our muz and I will try to keep thing as simple as possible. So the who has >> the click >> thank you very much. So uh again main figures gas today is 23% of the global energy mix in the world and LG represent roughly 50% of the international trade of gas. So LG becomes really important in the map of energy. Today you have three main suppliers. US 25%, Qatar 18%, Australia roughly 18%. You see on this map that US is going mainly to Europe about 50% and 30% to Asia. Qatar up to 75% is going to Asia. China 20%, India 15%, South Korea 10% and rest of Asia 30%. And Australia is going mainly to Asia. On tier two you have three supplier, Russia, Malaysia and Nigeria. Uh the main things we have to keep in mind to understand what could be the outcome of the crisis in in our moose is that from today until 2030 there will be a huge increase in the liquefaction capacity. On the right side of uh the slide you can see that we will go from 515 million t in 2025 to 717 million ton in 2030. So in 5 years the liquefaction capacity will increase by 40%. which is huge which had never been seen before and last year or even at the beginning of this year. Uh the big topic at the conference is that what are we going to do with this bulk of energy going into the market. So you see always on the right side of the slide that the main increase comes from the US almost 100 million ton then Qatar 50 million ton and then the rest of the world. On the left side and the slide you see that the construction the the the facil the extension of liquifaction capacity which is under construction is mainly seen of course from today in 2026 2027 2028. So the just one word on reg capacity which is a little bit outside the topic but on the right side of the slide you can see that the reg capacity is about twice the liquefaction capacity which explain to you which explain that the LNG market is very flexible. And when there is a crisis, you can see huge amount of LNG coming from one part of the world to the other part of the world. We have seen that in 2022 with the crisis in Ukraine when Europe has pulled the LG which was primarily uh this time to Asia. We had seen that in 2011 at the Fukushima crisis when on the other way around Japan has pulled all the available LNG uh which was primarily supposed to go to Europe. So the energy market is very flexible and is able to adapt to measure shocks. On the next slide now we we come to Qatar to Abu Dhabi and to issue. So it has been said in the press for for 6 weeks kata and emirates account for about 20% of uh the world LNG uh production Europe only uh the the share of kata and and emirate for the supply of Europe is only 7%. So everybody has said that the the crisis in our mus is mainly a problem for Asia rather than for Europe. It's partially true and it's partially wrong. And I will come back to you later to that and explain to you why uh the uh the share of uh Asia coming from Qatar and Abu Dhabi is 26%. So it's very significant for China is 30% India 59%. So it's huge for India the crisis is a major major crisis Taiwan 34 South Korea 15 and Japan 6%. The next slide is about the price and then we will elaborate on that and explain why the crisis in Armus is not only for but also for the rest of the world. You can see on the uh in the orange color the envir price and on the top of the slide the price TTF which is the marker of of of of price in Europe and the GKM in Asia. when the shock came, you can see the peak uh in in March for AIA and also in Europe and you can see that the correlation is almost perfect and why is it the case? You have different uh reasons for that. The first reason is that part of the long-term contract in Europe are escalated on the TTF price on the spot price and when they are not escalated on CTF they are escalated on oil and there was also a shock on the oil price. So the long-term the pricing of the long-term contract embedded the crisis on the on the spot market. The second uh uh reason why the markets are linked with each other is today we have roughly between 20 and 30% of the world market which is on shortterm on spot basis. So when you have a shock on the supply, everybody is running to find spot energy. So even if the kata production was primarily uh this time to go to Asia, the correlation with Europe is abused. And the third thing which is interesting to me is to look at enri is the spot price in the US market. And you can see that there was a small peak rather small and very very quickly the Henry up came back to the price which is between three and five three $4 per million BD and it's very interesting it was not obvious because today you have roughly 20% of the US production which is exported through LG And it was not obvious that uh a higher demand for energy would not have for uh an effect an increase on the domestic price in the US. And in in 20 I remember in 2010 and 2015 then when the US started to develop liquefaction capacity, there was the debate on whether it would be a good thing for the US market to have export because people were afraid that the export of LNG would have for an effect to increase the domestic price in the US. So today the domestic uh production in the US is really resilient uh against the shock on the world energy market and it's the first time we can verify this uh with the experimentation. Then I come to the to the bulk of the subject the effect of the blockage and also the missiles on the Raslafan liquefaction facility. So on the left side you can see that in 2025 we had roughly 425 million ton of uh LG production. The supply increase uh which was uh uh foreseen for 2026 was roughly uh 50 million ton coming mainly from the US. So the precrisis base case it's the first block it's about 400 a little bit less than 480 million ton then we lost 12.5 million ton of capacity in Qatar with the missile coming from Iran and then we suppose that till the end of the year we will not be able to export any drop of energy through the armus strength. So it's a catastrophic scenario and so we arrive at a number of little bit more 400 million ton which gives what we have called the 2026 supply low then and then this is the assumption or wish whatever you want kata and emirate rest almost straight restart in July and then you go for from 410 to 430 million ton you can add a little bit of debuckton making increase of capacity in US, Australia, Angola Mozambi and then you have a scenario if the straight of our moves is free for navigation the 1st of July to almost 430 million ton which is above the capacity for 2025. In other words, and to make it simple, if the situation is solved before the 1st of July in our moods, we will be in 2026 in terms of energy production above the 2025 production. So, it's not a big deal and the situation is manageable. Of course, if the situation in our moose last more than after the 1st of July, we are in trouble. So I am rather okay nobody knows what is going to happen in but if there is a reasonable deal within the next let's say four to six weeks the situation for LG I'm talking about LNG not about oil the situation is perfectly manageable and I would add this for the small story on the right side. The two trains which have been hit by missile are train which are partially owned by Exon Mobile and I didn't read that in the press. In other words, the trains which are 100% owned by Qatar Energy have not been hit by the missiles. There are other other trains which are partially owned by or econo Philips or by total or by share which have not been. So I'm not saying that all the train which are partially owned by foreigners have been hit but the two trains which have been hit are up to 30% owned by Exon Mobile. Then I will not go into the detail and uh but just to keep in mind how uh countries in Asia have adapt their uh energy consumption to the situation. And to make it simple uh they have mainly uh put into operation the coal power plant. So there is a rather significant possibility to shift from gas to coal in India, in Bangladesh, in Taiwan, in Japan, in South Korea, in Philippine and maybe I'm not sure, maybe in Germany and maybe in other European countries, maybe in Poland, maybe in France there is one cold power plant. So through this possibility of shift between uh gas and coal this is an additional flexibility to cope with a crisis situation. Thank you. >> Thank you Jean for this very complete picture of the LNG. Any comment? Thank you and fascinating presentation. I think uh uh Jean what you showed about the US is really really important because um we saw around winter right that Henry head prices increased and it really created tensions in the US economy actually because it contaminates the electricity price also in the US which is something we have experienced in Europe >> but it was due to a cold weather wave. It had nothing to do with international situation. It was limited to the domestic market. >> Yes, indeed, indeed, indeed, indeed. But nonetheless, you know, it started raising eyebrows here and there. And um and then the Henry head price indeed went down again and now it's very resilient and uh amidst the uh the highest demand for US LNG probably ever seen. Right? So that is indeed remarkable to note. Now my my remark or my question will be once we've seen that I mean is that sustainable over the coming years because we know that uh gas demand for power generation will increase in the US that gas demand for direct uh uh energy supply for data centers and AI will increase. Um and I think that is that is a fundamental issue to to watch, right? Uh and it uh might uh be uh the case that additional oil rigs that are put as gas rigs and things like these help to lift up additional gas production and but will that be enough? That's I think the a very important question. Thank you. >> Yes, it's a very very important question. I would say that the the proof will be in the pudding. We will see uh uh there is a consensus I don't know if it's true uh to say that the the reserve in the US are almost illitimate shell gas reserves. So it's all about the price and uh the uh market the production market in the US for shell gas is very uh fast responding to prices. It takes about 6 months to drill another well and increase production. So then all the question is about the price. At what price the producer in the US will increase the shell production is it at $4 per I mean BTU at five I don't know maybe at six but there is a price where the production will be able to cope with the increase of the demand whether it's limited probably not but frankly speaking I don't know the the I don't know the limit But there is shell gas in the US. A huge amount of shell gas in Jur. So it's all about the price and it's all about the uh environmental constraints with the administration, the Trump administration. It's not a big constraints. I'm not making any judgment on whether it's good or not but it's a reality for the short term. >> Thank you Mr. Shalma. And then we move to the presentation of Dario. You're >> uh just to know uh what is the size of the imports of LNG in Europe coming from Russia and uh we supposed not to import anymore L Russian LNG after uh January the 1st 27. uh where will will we import that LNG from the states? Will there be enough uh what's your view on that European problem? So on Russia there are three project >> three project in operation seline which goes mainly to Japan. uh then you have uh YAML LNG I think I have in mind 20 million t of capacity about 50% to Asia and 50% to Europe so it's 10 million t and I think LG which is starting I speak under the control of the which is which has been involved in the in the projects could Europe import more LNG from Russia IA I'm not sure this should be taken on the share of Asia. So it at the end of the day it will be a comp competition on price. So your question then where could LNG for Europe coming from and then we forget your M isue in normal terms with the new project uh in the US 100 million t there is plenty of additional energy which is available. So my my answer would be shortterm within the next three four years US and then you could have big projects such as Mozambi for instance which is developed by Total or other project we could we could come stream >> thank you Jean Dario please >> thank you for your question just remember there's pipelines coming from Russia as well anyway that's another it's another subject we can discuss about that later but what I've been asked to talk about the electrification trend so um so let me put in perspective first of all the electricity as part of the overall energy energy demand it stands between 20 to 25% of your energy demand and this is up for about from about 15% 20 years ago or 18% u uh 10 years ago and uh the growth in the electricity uh demand has been growing substantially. Last year was between four to 5% growth in electricity demand double the rate of growth in energy in overall energy demand. And why is that? For two reasons and this is what is called the electrification trend. Two reasons. The one first one is the absolute growth in demand which is um uh generated by data centers and and cooling uh increasing cooling the deployment of cooling equipment across the world. Uh and then the second uh driver has been fuel switching i.e E uh the development of electrical vehicles uh that uh in exchange of thermal uh in internal thermal combustion engines, industrial processes particularly at low temperatures or middle to low temperatures and heating, home heating, buildings heating, those are the f most of the the dynamics around fuel switching that are driving the electrification trend. And uh this electrification trend has has been as well underpinned by two uh two major dynamics. The first one is obviously is the sustainability is to the the drive towards sustainability of our energy systems. uh as long as electricity is produced more cleaner than the ultimate fuel that is used for where you use you actually get a net benefit in uh in using electricity instead of your of the fuel. It is a much more efficient. Remember that you know typically when we use fossil fuels we use about 30% of the energy calorific intake if if we call it input if we call call it like that electricity is almost if you take out the transmission losses is about 90 90 between 92% in our in our countries. Um and so the electrific electrification trend is behind the the the the imperative of lower emissions uh of lowering emissions and by switching uh as I said um fuels uh fossil fuels mostly through electricity produced by lowcarbon uh technologies. Of course this is not true if they are produced by fossil fuels obviously. And the second trend has been the remarkable lower lowering of prices of renewable energy technologies with produce electricity. Solar panels from you know they lost about they lost they they actually they went down by 80% on a megawatt uh hour basis since uh in 20 years. Wind has been between 65 and 75. the and the massive upscale in industrial production of these technologies mostly due to China. I mean China today is by far is 95% of the world supply of solar panels and solar inverters and and and parts of the of the solar plants and as well is a very large producer of wind uh technologies between around 80% as as Nicola said just before it comes from China and so this the conjunction of sharply lower prices on a mega megawatt hour basis uh on the single equipment. Uh so the prices are on the equipment value and the availability of this equipment the massive availability of this equipment is driving of course the electrification trend and the lowering prices on uh uh on that basis. So if you take if you take on a single on a on an LCE basis on a levelized cost of energy basis single assets today renewable energy uh assets are cheaper than any other sort of energy on a single asset basis because I've come to uh the the implications of of that and what has driven that is uh is has driven partially as particularly in Asia I would say where electricity today accounts for about 27 to 32% of total energy uh demand. North America is around 23%, we in Europe 22, emerging markets is below below 20%. Um and uh but what has been the what we have seen now the impact of this uh uh of this super increase extraordinary increase in in power generation electricity generation that has not been accompanied by the same amount of investment in transmission and distribution. So you had a non-coordinated development of power generation particularly electricity generation and demand but not coordinated with the connections that take the supply to the demand and that has as well as coupled with the growing share of renewable energy uh into the grid has created and has been creating a number of issues. First and foremost, we all remember the blackouts or the outages in Spain, in Iberian Peninsula, but in North America even before that over the last few years, central central Europe very very recently and that has uh and so you have two different sets of impacts. You have one impact at local level and one impact I would say more diffused level. So the diffuse level is the generation is been generated by the growth in renewable energy that has not been accompanied by the upgrading of the grid. The grid has been established over 150 years in a linear and centralized energy system where you have large power generation plants distributing injecting vast amounts of power through the transmission and then ultimately through the distribution network to the user. one way. Now the increase of renewable energy and the increase of the electrification uses you have a lot more many points of electricity use now and you have in use and production of electricity has is making hybrid is rendering these centralized systems more hybrid and this is not what the our grid systems have been built for to support that type of birectional transit of electrons. And so this is what causes has been causing a lot of the issues that you have seen uh there. And uh and why is that is because our grids the quality if I may express like that of the electricity that transits across our grids has to be has to respect a number of parameters in terms of voltage and intensity etc which are very strictly strictly regular. We don't regulate it but they are strictly planned for in the grid. If something goes above those levels then the grid is not able to cope with it and shuts down either or either goes into overheat or or actually because we don't want that to happen is actually uh is actually shuts down and that's the reason why we have we have outages. Renewable energies are not able if you don't uh adopt certain specific technologies to provide some of the ancillary services which are critical for the grid stability which have been instead being provided for the last 150 years by the large rotating machines in fossil fuel plants, nuclear plants or hydropower plants which is a a an element that many policy makers and not the utilities but many policy makers and particularly regulatory authorities have underestimated over the last few years and that's where we find out uh ourselves today. uh and and from here the recent acknowledgment of the need to vastly in increase investments into the grid uh through technologies. Not only investment in terms of capacity but in terms in in terms of replicating these ancillary services that are done by uh by rotating machines into into another into another fine in a way that that the electricity is actually is actually of the quality that it can be that it can be u uh distributed by by our grids. Um so what are the limits to the electrification trend? Because there are some very clear limits to the electrification trend. And in certain uh certain industrial users typically uh heating uh or heat where heat is above 300° C is hardly is very difficult with today's technologies to be electrified. uh and that we still have to rely on on very powerful sources of of energy such as gas or or or oil for that for that matter. The second one is obviously is the availability of the equipment. I mean this r this rise in the electrification trend has uh put a strain on the availability of equipment. There are few companies for example, very few companies that produce the high voltage uh DC cables that are actually able to connect for example offshore wind towards or between between you know uh different different regional electricity markets between them and that is a major uh it's a major roadblock. It's a major bottleneck in terms of the electrification because the the bigger the size of the grid and the network is the more you can accommodate renewable energy. But at the same time, the more it can accommodate fluctuations in that quality of the electricity. And so by doing that, you want to connect grids, you want to be national, which are typically nationally on a on a regional basis and more international basis going forward. But to do that you need a certain specific type of equipment which is able to try to to transport electricity without too many losses across vast distances. Because remember one of the problems with electricity is as well on top of that is the fact that it's very difficult to store and particularly very difficult to store over long period of time. Today our battery technologies can supply up to 4 hours of electricity not longer than that. When you need if you are looking at uh uh you know using as as as my colleague here taking advantage of of of sun during a certain period when you know in or or wind etc and you want to accumulate that that that electricity in a battery form let alone some of the other energy storageages available. they have their own issues as well. We don't have technologies battery technologies able to go above the 4 hours and that is a major roadblock towards the complete or the the continued electrification of of certain of certain users. Other type of energy storage are like pump hydro for example but you need specific autoraphic considerations for that uh or molten salts or some other technologies but these are you know versus the needs of energy storage that we would we we have we need to is marginal I would say you can have a local solutions but mostly it's a it's um it's it's a there is a problem and therefore the the difficulty of storing electricity and the difficulty of being able to transport over very long distances. China is is has been able to do that but in in in the western world we have very few manufacturers equipment manufacturers that are able to produce the amount of cables necessary to to do that. That is an issue that is is was one of the blocking uh um issues around it's one of the blocking uh factors around an an increase of of electricity. The second one is is the is the the obviously the long-term storage. The third one is I said is the impact that certain users of electricity have on locally. So I talked about the diffuse you know the impact of diffuse the diffuse impact of electrification. One other aspect is the impact on locally and this is particularly in data centers and particularly what we they call the mega scalers. So these are these are uh uh super huge consumers of electricity uh comparable to some of the largest steel makers or the largest fertilizer makers or dissalination plants even bigger than that. uh in in terms of what um what the um the the the the technology companies are looking at into into into producing. And we saw that the establishment of these mega scalers and these very large data centers create huge issues at local level raises prices of course locally and therefore you have a a social backlash around that. But as well it creates a lot of disturbance in the local systems which then gets because local systems are connected to a a a larger system it gets then in translated into the larger network and so what's happening in that case is the the technical technology company companies are vertically integrating themselves becoming energy producers uniquely for the data centers. But this again this creates an issue. you have a huge powerful island uh energy island in a much in a very complex and outdated network and this creates uh um tensions between the two which is another block towards the to towards the the penetration of of the electrification. So overall I would say over the long term over the medium to long term the electrification of of our energy uses as much as possible with cleaner electricity of course will continue is is is uh is going forward. However, some of these blocks and the and the availability of which we mentioned before of critical minos which are necessary for the uh for the equipment that we have today and and the mining. These are very important roadblocks and but and and very important slowing factors in terms of the electrification. And you see one of the already the the the impacts of this dissonance between supply and demand is the fact that we have enormous capacity of renewable energy capacity not connected to the grid because of these issues. They've been built. They've been you know they're there but they cannot feed they cannot be used. You have huge curtailment as well of the existing infra renewable energy infrastructure which is connected that one because the the system is not able to cope with when you have the sun and the wind at the maximum uh midday for example the system is not is not able to cope with that and therefore what you need you go to cortma and cortma has becoming a very important very serious issue particularly in Europe in certain countries up to 20% of that capacity is wasted uh because of curtailment issues. And so you see the the electrification trend which on paper and we all want to happen because if it's done with cleaner electricity is is a much better solution that we than the current situation creates a number of issues and a number of problems that we need to cl that that needs to be that needs to be tackled and not only the size but as well as the speed of electrification as I mentioned before it certainly drives as well is it has to be taken into consideration how feasible and how quickly can we continue the electrification be beyond certain thresholds which in certain countries which have already been achieved particularly right I'm thinking about Spain for example on some on some countries like that we already pro possibly at the maximum uh potential of electrification of energy demand with the current technologies unless we change we find some of these uh some of these uh we eliminate some of these uh bottlenecks in particularly as I say long-term storage the availability of critical raw minerals investments into in into the ancillary services provided in the ancillary service in a digital way and and more general in more capacity for transmission and distribution and I'll be happy to answer any question thank you >> Mercio thank you so much very interesting yes >> two quick questions first the decrease in demand in electricity France do you account that the main factor is the fact that we're very much nuclear generated so that the sort of evolution you were describing does not apply in our country or there is there are other countries where uh we can see that sort of decrease in demand. Second question how do you take into account the possibilities of technological evolution in data centers? I mean uh a large part of the strategy today is based on the idea that data centers will require enormous quantities of electricity uh in the uh years to come. Uh maybe the efficiency uh the way they're conceived and built may change drastically uh not taking into account the possibility of DNA storage of information. >> Yeah, thank you both excellent questions. Uh so the decrease in demand in France I would say it's um is the con it's we need to look into the numbers more specifically but I would tend to say that is the consequence of the of the disindustrialization of the French economy and the export of certain industry particularly the energy intensive industries outside uh outside of uh uh of this is the general trend in Europe and so you can see uh although that that that trend is changed ing. I mean the overall trend is changing. The overall demand for electricity is is growing. Uh and as you know some of the uh more recent uh um u policies that the French government is enacting is towards raising that uh that uh the that the use of uh the use of electricity for example in heating which and and taking advantage of the large u the larger nuclear uh power footprint that that France has which is as we just heard is insulating it from what's what's going you know in the hormonal street um my view is that you know it's it's across many countries that electrification that electricity demand is growing in the United States for example has been flat for 20 30 years and now it's growing at at single digit but it's growing very very very dramatically in certain areas of the United States particularly driving by by the establishment of these large data centers is actually growing double digits which is creating the issues that we say Ireland is another example where a lot of data centers are being established there is already 20% of the electricity demand in Ireland is only for the data center and I come so to your second question you're absolutely right that's a question that we were discussing with Nicolas at lunchtime in fact my question was if uh typically if you see any technology starts with any any you know take trains you take you know the the steam engine you take uh computers, you take anything, it always starts with a very high energy intensity, a very high energy use uh at the at the beginning and then over time as the technology becomes more efficient uh and costs are driving uh driven down of the equipment and the energy cost becomes percentually more important and therefore you have innovations towards lowering that energy demand and I would I would expect that to happen as in in in the data centers and particularly then you have to distinguish between data centers and IA uh data centers dedicated to IA because they have different consumption patterns and different impacts on the on the electricity uh on the electricity demand. However, I would expect uh if if history is of any help that that demand will probably will probably be contained. However, that needs as well to be compensated with what is the need in terms of computing power that you expect because even if you achieve energy savings, but that computing power needs are growing exponentially, then your overall energy demand will continue growing. >> But what's the likelihood of a some sort of a bubble today on that? I think even uh yeah it's I mean you seen what the technology companies are doing they are differently they're choosing they're integrating themselves and and and acquiring becoming energy companies uh and acquire and they have they made different technology choices. Some of them are, you know, they they re they reopen 3M island. Some of them are are betting on small uh modular reactors. Most of them are building gas plants uh not because they think it's the quickest but in reality no with availability of turbines which is uh about up to 5 years uh waiting time some of the others are investing heavily in renewable energy. Uh and so what they see in what I is what I interpreted from their uh from their ads is that they see that energy need right now short-term crucial and it's crucial for them. It's crucial and they the and the availability 100% of that energy is crucial for where they want to do. the fact that they we might find ourselves with stranded assets. A I don't think it's a financial issue for these companies and B maybe there is a secondhand market for other users and you know I mentioned cooling and heating and so probably the overall the economics the economic calculus that they do is sharply in favor of having their own energy. I think the value for meta or for Google or for uh I don't know anthropic of 1 second of a blackout versus the value of 1 second of blackout for me it's the order of a millionth of magnitude >> please uh you first you then and then yeah >> so so just quickly I mean, thank you for the good presentation. Um, can you may just expand on the on the transmission gap um and maybe some suggestions particularly for Europe. Uh, you know, you know, how is uh how can you overcome that and bring the investments needed? So, so, so the investment in transmission in so what you see you need at the same time you need crossber transmission and you need domestic transmission. Okay, Germany for example you have a lot of renewable energy production in the north versus the high electricity users in the south. they haven't built the transmission lines across Germany because of the nimi not in my backyard uh um phenomena and so that is that is that is so very very clear uh then you need crossber transmission lines between countries and this is something that you know is being built and there is a whole program from the European has been there for many years in terms of you know the the 10 the the the the famous network electricity network uh in in creating a regional market. In other markets is different. So you have if we exit from Europe you have markets which are moving faster. Southeast Asia in particularly is moving faster in terms of creating regional markets. You see creation of regional markets. So you have the European market in terms of uh electricity. The second in Southeast Asia. Northeast Asia is more complicated because of the of the geopolitics of it. China has been massively investing in long distance transmission because a lot of their capacity is in the east uh you know whether it's wind or solar and then obviously the the sorry the west and the and the consumption is in the east and to transport that they build massively h massively actually taking out some of the companies who are producing but there there are very few companies who are able to produce for example the cables the undersea cables so that is a huge bottleneck if you don't. So in terms of investment you would need to think and this is where Europe has an a technology uh edge if you want on undersea cables for example that is something which should be considered a critical industry and there where the commission or or or institutions such as European investment bank should massively invest on because that is without those initially those regional markets and and finally as the the the Chinese government um the Chinese government has established a company which is an outfit of uh is an outshoot of the old uh ministry of the grid which is called Geeko. It is a global electricity interconnection development corporation whose design whose mission is to connect the world. So every country and every continent and create a super grid around the whole world. And so they go and they sell Chinese technologies in Africa, they say in Southeast Asia, in Asia, etc. And then the in the Latin American the idea to connect all of them and create a global electricity market. Now first we need to start with the regional markets and European Union is one of the most advanced, Southeast Asia is is another one. There are some of the others are growing but that that is but the the necessity to create such a a connection like highways basically electricity highways is is massive and there the issue is availability of critical minerals you know copper for example how much copper do you need to create such a such a network massive amounts incredible amounts of copper and you can use aluminium but it's not as good as copper in in electricity transmission So then you have other issues and then you know copper today is you know when you extract one ton of copper 0.5% one ton of rock sorry 0.5% is copper so where is this copper going to come we are only recycling 40% of it but so there are limitations to that but it's an it's a sector that needs massively massive investments. Thank you Dario. Please sir, >> um you you mentioned of course free mile islands uh as as you know uh the data center needs to connect very quickly to the grid because of the potential obsolescence of their chips. So one of their solution and again you alluded to would be to have of the meta uh connections. So obviously uh nuclear power plant I mean power plant gas and combination which so that's one question and my second question linked to that would be or is uh don't you think that to address one of the problem of renewable which is not only what you describe stability of uh the grid but also negative price that you get is really in the building of portfol portfolio of renewable batteries and gas. Toby, >> thank you. Is if you could shorten. >> Yes. Very very very quickly. Absolutely. Diversification is the right uh is the a mix of different technologies is the right particularly if you think as well at the impact of climate change which we don't know how that will impact our energy sources. So absolutely diversification is the name of the game and and should be and and you are absolutely right and when it comes to that's what they're doing. They want to take themselves out of the grid and to ensure that they have 100% electricity but this obviously is you know creates another set of issues. >> Was it fast enough? >> Yes. >> Short question. you didn't refer to cyber security and I think that it's an increasing concern due to the dissemination of uh many many equipments uh everywhere. Uh I recommend you the book Blackout from Ellburg which is based on a cyber attack on one company in Germany and one company in Italy and he describe the de how deep is the impact for the daytoday life. Okay. Um, I think also it's not uh uh in in uh Spain apparently it was not a cyber attack but in Poland on the 29th of December it was a cyber attack clearly and uh I would like to focus on the issue on inverters. There are inverters in every equipment of renewable energy of transmission and uh 70% of the market of inverters is controlled by China and around half of it by Huawei and uh uh the US discovered a malware in an equipment of Huawei recently. What do you consider of this challenge of cyber security? >> Quickly, I don't know. Thank you Olivia for raising that point. You are absolutely right is is as a crucial point particularly because with the prolif proliferation of entry points into the grid that creates huge issues because the the weakest the the cyber security level of your network is as strong as your weakest link and the link as you mentioned are many of them you know millions of them and so that is absolutely you're absolutely right and uh I had to try try to concur it's very passive it's very huge issue, but you're absolutely right. The cyber security issue is a big issue and will be a a super huge we actually know very little what's going on because most of the cyber attacks are not reported by companies or by governments. they actually are we are under reportported and >> just very quickly on your on your question it's again about externalities because the the problem is that the Huawei inverters are way cheaper than anything you can get in in Europe and so we're saying okay we're going to continue promoting those inverters the reality is indeed that we are taking a risk that will cost us much more than the price differential that that we are currently saving Yeah, thank you Kristoff. Now you have the floor. >> Thank Thank you very much. Uh is it working? >> Okay. So I'm try going to make a take to take a step aside from the current energy crisis and uh which has been discussed right now and focus on the question of uh the supply of critical raw materials and more generary metals uh which are quite necessary for the uh energy transition. So first uh let me remind you that uh uh you have here on this picture the current uh greenhouse gases emissions laid to the production of electricity by the different uh power proceeds. So you see as you know very well that coal and natural gas are highly concentrated in carbon dioxide emissions and represents roughly 55% of the current electricity worldwide and therefore the energy transition aimed to develop PV and uh windmills and nuclear electricity in order to decrease the greenhouse gases emissions. But if you compare on the same slides the metals intensity of each of these production mean you see that you have more or less reverse picture I mean that uh uh the less carbon dioxide emissions uh the higher uh the metals intensity the only exception being the nuclear energy and therefore you understand very well that we have a very critical issue to deal with which is to know how we are going to supply all these critical raw materials uh in order to ensure the energy transition. So just to give a few figures. So I just take four metals but the list is much longer. Uh what you see on this figure is the last prediction from the uh international energy agency. So you see the anticipated need uh by 2040 by comparison to 2023 for copper, lithium, nickel and the rare earths and you see that you have a very significant increase ranging from from from 150% for copper up to roughly 900% for lithium and the green part of the bars directly represent what is going to be used for the energy transition. So that you see that for element for some of the elements like lithium most of the use is going to be the energy transitions and therefore you you understand very well that if we do not succeed to supply and provide these metals we do will not succeed to ensure the energy transition in due time. So let just going to take one example and it has been already discussed uh few minutes ago which is copper. It's very interesting metals because it's more or less used in any electric usage. So what you see on this figure here is anticipated need for copper for the current decade up to 2030 once again taken from the international energy agency reports and you see uh the red and orange curves on the left figure which correspond to the anticipated need. So very significant um regular increase up to 25 million stone per year. And you have by comparison on the same slide the anticipated production by the current mines in operation or in project. And you see that you have a clear uh uh discrepancy which appear at the end of this decade. And uh we can wonder whether it is linked to the lack of reserve or is it due to difficulty to produce in due time. And when you look on the right figure, you see the comparison between the production uh which is to be read on the right uh axis uh and the known reserve which is to be read on the left axis and you see that the reserve are rather huge in the range of 800 million tons whereas we are consuming 20 million tons per year. So the fact that we anticipate disruption in the copper market is not related to the fact that we lack reserve. It's directly related to the fact that it's more and more difficult to get to market this material because the horse is less concentrated. It's deeper. There is strong social oppositions uh complex regulations and so on. And uh last but not least uh it's a huge investment when you want to develop and open new mines and difficult to take the decision of such an investment considering first the high volatility of the prices. uh you have here the evolution of the copper prices in the last 50 years uh which le which laid to reduction of investment in exploration and due also to the fact uh uh that time needed to develop a mine is very large in average at the world scale it's 17 years. So you have to take a decision to put billions on the table uh for a production that's going to occur let's say 20 in 20 years from now without any clear indication about what's going to be the need what's going to be the price and you can understand that uh many investor prefer to go elsewhere uh so in this situation France and Europe lost uh a very significant part of our mineral soy uh we are representing right know 6% of of the overall global mining output. So very far away from the range of Europe in terms of population, surface industry, GD GDP or whatever else you want. And only 3% of the world investment in exploration of our subsurface. Uh you have here a very clear picture of all the known projects in 2021 as far as I remember and I made a very specific focus on Western Europe. I think the picture is very clear on the fact that uh we are very completely out of the game I would say and I should correct the figure. We have one project in France right now the president of the was there two days ago. Uh so it leads to a situation which is very well known. Uh you have here the the origin of the materials we are consuming in Europe. So you see that uh it's coming from many different countries on different continents. uh but you have a very strong pay player in the room which is China for sure and you see the long list on the right of all the materials we are providing in China uh with for some of them 100% of our supplies which is coming from China. So this situation laid for sure for a very is a very significant uh uh risk uh concern concerning our economy industry and sovereignty. So the the place of China in these value chains is very interesting to to take a few second on uh it's not only related to the supply of Europe but it's a global place on the overall uh uh value chains worldwide you see the place of China for many minerals on the left and what is quite interesting is to see where it comes from. So on the on the figure on the right you see the main contributors for the reserve in different minerals. So lithium, nickel, cobalt, graphite, copper and rarovs. The m the the place of this country of the different countries for the extraction step and the place of the different countries of processing states and for sure China is in red. So what you can see is Chinese subsurface has some reserves in rar and graphite but not so more not so much and for some of the metals for which they are big players they have nothing in their subsurface or at least nothing known right now and nothing uh operated but if you compare to the processing step you have a huge difference which clearly describes the fact that it's the current situation is the result of a long investment of China in developing the refining activity, refining industry in their countries and therefore taking the monopoly in many of the value chains worldwide right now which has a strong consequences. It means that China need to feed the ref their refining plants uh their industry and uh so it's one of the role of the belt and road initiative which is the Chinese diplomacy or diplomatic uh strategy and you have here the place of the metals in the belt and road initiative which is in blue uh surprisingly so you see that investment in metals mining and so on is uh more than 80% of the overall investment of the belt and road initiatives And it's mainly the case in uh Africa but also South America and so on. And last but not least uh in the last recent years uh China also weaponized refined CRM supplies. uh we see that very clearly since the covid crisis and you have here the different decisions which has been taken by the uh chi by China in the last year regarding the supplies for gallium germanmanium graphite antimony minor metals many of them the rariffs and this decision is really to take uh to increase the pressure on the value chains to ensure high cost first when it's possible uh also to disorganize the forign supply chains which which is uh important and uh also to capture intelligence data which is of something more and more important and just as an example right now in order to get a license for getting importing some rare elements you need to get all the to give all the informations regarding how you're going to use the rare so it's a very clear way of getting in intelligence data so uh in this uh overall picture uh and since the end of covid there is an increasing reaction of the OECD countries in order to secure their supplies, protect the industry and it goes through investments, long-term contracts, partnerships, but also for some of the countries conflicts and we have to take that into considerations for sure. So at the EU scale uh I remind you the ambitious CRM act which is which enter into force in May 2024 and I'm just going to give the to remind you the very ambitious objective which are within this EU act. So it aims by 2030 to be uh able to extract 10% of our needs in the uh coming from the European subsurface to process in Europe process in Europe 40% of our consumption to recycle 25% or to use in our material 25% coming from the recycle and to not to more than 65% from a single country just by comparing to what I presented the last slide before you see that the step the pathway way is going to be long. We will not reach this figure by 2030 for sure. Uh but it's a very ambitious state. At the same time, we have also no it's not working anymore. Uh mobilization at the French level starting with the variance report in 2022 with a new public policies. I'm just going to give a few insights. Um first we we realize that we need a strong investment in order to have more uh uh understanding and knowledge about the global value chains and therefore a new intelligence observatory has been launched gathering the expertise from E3 CA if pen BRGM and KNAM and in order to provide to the French industry and French government some knowledge about in-depth uh understanding of his value chains which is not so Uh second uh to develop the circular economy with some investments and uh new industrial projects which has been launched and you have here a picture of the uh starting of the construction of the rare recycling plants which is under construction in lac in south France but there is also a mining project we mentioned that already. uh third to develop some uh innovative responsible mining industry in France and in Europe. And uh in this uh in respect with this objective uh there is a new mining project in Isasier in South France in Alia right now but also a new exploration program in France. And last but not least because everything will not be available in Europe for sure. There is also a strong investment for CRM diplomacy in order to secure some long-term takeoff. And I will conclude on that by mentioning that uh regarding the new international strategic partnerships which are under development. Uh the aim is really to support the development of responsible mining activities uh worldwide uh focusing on dedicated uh countries uh with whom we are aiming to get some strategic partnership. So it's really a new uh um objective for the French and European diplomacy right now. And you have just here on the two maps the list of countries uh uh with which European uh union has already contracted strategic partnerships. The list for France is more or less the same. So as a conclusion as you understand and as you already know low carbon technologies and economies will increase very significantly our need for critical raw materials. uh so it means that we are shifting from dependence to fossai fuel to a new dependency to uh critical raw material supplies and countries which are able to provide the materials. Uh I will mention that we are in fact back to the roots of the international trade and affairs when we are backed centuries ago. It was already the main drivers for developing such partnership. uh despite the available resources we anticipate that uh uh from the expert viewpoints right now the industry will probably lack to fail the to meet the need in due time. So I mean by 2030 2045 and so on. Uh the time which is available in order to provide the materials is not uh high enough in order to be able to develop the new minds which are needed. So it means that the tensions on the critical materials will be durable. It's not only a short-term issue and we need to think about how we can adapt and diversify our transition trajectories. And last but not least, the dominant position of China and our dependence to the importations creates a very important systemic risk to our economy, to our industry and to our sovereignty and we need to take that into account and I thank you very much for your attention. >> Thank you. Very interesting presentation. uh in order to yeah I will uh pass you the floor then we have uh Nicola take on Nicola and then we will wrap up. We started late so we have two hour uh 30 minutes so we have time so please >> so thank you very much for your presentation it was very interesting um your concern regarding the first slide which gives the impression that gas and coal are emitting the same thing when it comes to produce electricity so I would like to correct that when you burn gas you emit only 50% what what you emit with with coal at the end of the day so out of the 30 if you want figures out of the 39 gaton of CO2 that are emitting by the energy system. You have 14 coming from the electric system, two3 coming from coal. If you were to switch from coal to to gas, you will save five to six gigatons. So just your first slide was >> Yeah, I will check the number but I agree that gas is much favorable than coal for sure. >> Okay, thank you. And second thing which is very interesting is that you point out that at the end of the day China as a monopolium the processing of of metals which is the key element for them to to have this dominance. Um this is not um the process is known. The only thing is that for environmental reason we have decided to let this processes go to to China. Is there any uh will or political will to uh to I would say repatriate this kind of activity which would somehow give more independence at the end of the day. >> Yes. Uh I will take one example which is a well-known one which is the rarif. So just maybe let me remind you that processing up to 80s was mainly in Lar Roelle in France. uh roughly 60 or 23 of the global market was provided by this plant which was operated by a French company. We decided at that time to let everything go to China for the reasons which has already been explained earlier. Uh so economic reason uh social reason and so on. So everything right now is in China and we are trying to repartate whatever we can. uh by chance we still have the competence because uh separating the war of which is not so easy is exactly the same uh issue as separating the nuclear materials. So we do that every day in the French m and so there is right now a project for restarting the Lar Roelle plant for the lighter rar and there is a new plant in under construction in lac for the AV roughs and there is also a project for creating next step in the value chain which is the metalization of the rarif and the constru or the manufacturing of the permanent magnet. So we can anticipate that in uh let's say by 2030 we will may we should be able to manufacture some magnet in Europe and in France but it's not the end of the story because at the end you need after that you need to convince the French end user like automobile for instance that they should be ready to buy French magnet which is a bit more expensive than the Chinese one and this is part of the problem right now. Thank you. Now, Nicola, you have the floor. >> Thank you. >> Thank you very much all for a wonderfully insight analysis and particularly Dario for explaining the electrification situation, John for describing the risk analysis, and of course, last but not least, Kristoff for explaining to us. Yep. uh for explaining to us the critical minerals aspect of energy transition which all of you make my life a lot easier and I can skip a few slides in the in the sense of economy of time. Um I'm going to be taking this discussion into the financial aspect of um energy and trying to touch upon what I would consider a systemic limitation to the system as it currently exists. Um the situation is that we have all understood that we are in a crisis according to all factors that we have uh very carefully listened. We know that we are in the outer space and these are of course not just our moon screens. Um the the the issue with our current systems are practically that we lack the systemic ability to verify in real time how energy and necessary resources are produced, transformed and allocated. Uh being able to do that in real time would >> uh raise my votes. Oh, okay. Sorry. >> Yeah. Sorry. >> Is that better? >> Yeah. integrity. So um what uh what we're trying to uh explain here is that the current systems have grown accustomed or actually we have grown accustomed to view crisis under a familiar lens. We view a situation that we identify as a crisis and at the same time we're practically treating the systems that we rely upon as largely intact. um literally in need of calibration. This assumption definitely deserves to be challenged and as we all see there's no better place to start than the energy systems as we have seen um actually I can I can skip that because this was the analysis on the crisis that we were actually discussing and um we come to the conclusion that the markets currently cannot actually and accurately price what they cannot verify which is the product of the very specific circumstances that we have been discussing so far and the old architecture of the system practically relies on scarce information and costly verification. there's a a phase difference between actual information and reality whereby the prices are practically including uncertainty in the prices that and I'm very happy of course that uh the pricing issue has has been so prevalent here. Um the effect of tokenization I would say would not only be in relation to pricing but also in allocation as well as coordination. Um, in order for us to understand tokenization better, uh, I I fear that in light of the analysis we all listened to yesterday, um, we would need to do a little shift in our minds because it was predominantly concentrating in cryptocurrencies. Now, nothing could be farther away from the truth than that. And um, it was hidden in a small phrase from Professor Landanda with me research, right, that everything can be tokenized. So cryptocurrencies we will be discussing down down the road but I would very much like you to understand that in light of everything being tokenizable measurable in a verifiable and auditable system in a programmable infrastructure changes our perception of tokenization profoundly. Um the the umformational foundation of the way our systems work and prices are determined or allocation or coordination are affected would be significantly uh facilitated if we had access to real time information on commodities production transformation. information and uh logistics and and all the uh links in that chain. Tokenization enables markets to rely as we said on live and auditable data not on delayed disclosures. um in in terms of allocation, it allows us to um have clearly defined rights and claims and which are becoming traceable and enforceable within the system itself through the implementation of smart contracts which are configurable to the particular circumstances. And with regards to coordination, tokenization also allows us to have um all the market participants from producer to transporter to logistics to financiers to regulators to be able to coordinatingly react on the grounds of the same perception of reality. Of course, um there has been a lot of academic discussion on uh the tokenization and digitalization issue with many opinions having been um issued. Oh, I am sorry. This is the slide I was supposed to be talking now. Um there there seems to be some growing convergence regarding um uh tokenization as a system of record. There are quite uh some organizations that have been broadly supportive. Some have been suggesting caution with regards to particular aspects of the organization and some have been outright uh negative. So in order to summarize the IMF uh the uh the um uh world economic forum even the OAC have generally converged with some criticism that a new system of record that uh the potential for shared systems of record and increased transparency and broader accessibility are definitely feasible through tokenization. The OECD has approximately the same um the same attitude uh practically uh calling uh tokenization a possibly transformative feature of financial markets while they are of course uh insisting on the le need for legal certainty and enforcability. And outside the financial discourse we also have the European Parliament. We just discussed the CRMA uh in depth and we all understand that um traceability and verifiability are becoming indispensable. Um now to go to the antilogue which is of course very important and extremely meritorious. There are concerns about legal enforcability and uh the the contents of smart contracts. Um, on the other hand, the BIS critique mainly has to do with cryptocurrencies and all the systemic effects that this might have with regards to what they were discussing yesterday about public money and private money. if you remember that discussion um pressure on uh the banking system and so on and so forth they have been quite critical about uh cryptocurrencies and there's of course also academic work like especially Kazawa and Archer who think that tokenization might force exclusion and addressing some of uh Nicolola former uh points of criticism. However, um what I think we should need to draw as a conclusion from this dialogue is not that programmable systems and tokenization or digitalization are inherently bad. What they are trying to do is practically reflect its maturation process. So you see if we take the negative side and we see the institutional design that is necessary in order to alleviate all those concerns you shall see that they are definitely feasible and uh technically already implemented to a great extent. So governance capacity is answered by institutional grade governance. The smart contract fragility is of course answered by the legal code embedded in the smart contract and of course on blockchain uh uh regarding inclusion of smaller actors. it can be answered by progressive verification with enhanced credibility um surveillance through transparency which seems like a conspiracy theory but at the end of the day we are implementing zero knowledge proofs which I can explain in more detail I'm afraid I won't have the time to um what we call selective transparency without universal disclosure meaning that the tenants in the system would have the possibility to know if a fact is correct or not without actually access to the accurate information which would only be reserved to regulators auditing the processes and of course fragmentation content and risks are definitely uh answered by bounded and riskaware architectures. Now um I would like to up I had provided to be able to uh discuss more about cryptocurrencies. Um the cryptocurrencies um are not one single thing. I think that in light of the framework of our discussion we should need to be seeing them as three distinct uh dynamics. The first one would be that they are the earliest and large scale instances of digital systems meaning directly interacting with energy markets converting electricity to digital output. And this uh is largely um uh well interesting if not problematic because um some of the of significant risks have arisen there especially consumption being driven by price signals rather than actual necessity thus enhancing volatility. On the other hand, we see um local grid uh stress and a competition between industrial and societal uh energy needs. Um the second function of the cryptocurrency in this aspect would be um as an alternative settlement rail which of course shows on the one hand the necessity to have currency flexibility or diminishing um diminishing uh dependency on specific currencies. uh but in that aspect cryptocurrencies as payment methods have also introduced fragmentation reduced regulatory viability and of course increases some opacity. Um but in my humble opinion the the the most important aspect that we can keep right now from the cryptocurrency as a phenomenon would be that they are an early yet imperfect form of programmable and electronic system. So I think they could function as a proof of concept and demonstrating the possibility of distributed verification and blockchain realtime coordination at the same time and embedding of rules within execution itself. All that comes down to potential and risk at the same time. Um so cryptocurrencies we we can definitely say they are not inherently bad and we need to keep the lesson that they serve as uh a proof of concept. However, in order for them to properly function, they would need embedded oversight as their uh operational infrastructure. The challenge becomes therefore not on how how to design systems where oversight and economic activity are not external to each other but structurally aligned. And this is where embedded uh oversight becomes critical because it is practically the integration of regulatory logic into the very execution of the contract. Compliance will not need to be demonstrated after the fact uh through the reporting and deal representation because it becomes a condition of participation into this game itself. Uh transactions occur only in so far as the verification, validation or attestation of the information of the eligible participants has been verified and supervision does not longer depend on reconstruction. something that could also be of great interest to energy companies as it would significantly diminish insurance claims where forensic reconstruction is typically called the place where claims go to die. Um I will then keep it short. As we said, the effects on pricing, allocation and coordination are uh very important and embedded oversight, sorry, embedded oversight is um as said the regulatory uh integration um tokenization allows us to capture information within the transformation transform uh transfer, transport, logistics, and any transformation, for example, of critical minerals from the mine all the way to the condensate and from the condensate to the refinery and from the refinery into specific alloys that might be needed in order to um be utilized in the electrification industry. and being able to have that all captured inherited in various levels of tokens that are being issued um would give a significant advantage to the energy industry in the economy in general. U I I tried to keep it as short as possible. I hope it was clear. That's good. >> Yeah. >> The choice of future is of course whether we choose to remain with the current status or we do the transition towards verifiable systems. Thank you very much. >> Any question on the tokenization? Yes. >> Yes. Sorry. Very quick question. Thank you very much. So, so very concretely. So, Traffic Gura apparently got ripped off in Mongolia, right? for for some metal supplies that were supposed to be this and that quality and quantity and turned out to be something completely different. So So would that be the solution and and for that and and how much would that cost basically um so what's the kind of uh advantage in terms of cost? >> Thank you for the question. It's almost exactly what to organiza well one of the main significant points that tokenization is aimed to to protect against the quality the quantity and everything concerning any material be that fossil fuel be that critical mineral or or metal be that even energy or even um the transition of energy through a system is absolutely documented in an immutable way. Meaning that on blockchain we can never interfere. We can never go back and change something. If we are particularly prudent about embedding the contractual terms in the smart contract. It's an if this then that thing. And of course this does not only reflect the actual representation of physical commodities through their transformation with a utility token several stages. These inherit information from every pre of every previous stage whereby the entirety of that information is inherited by what would be a digital warehouse receipt that comes out the end of this procedure. The enforcability of a a predetermined contract with a predetermined offtaker is the simplest thing and in your to answer your question that would definitely be the case. But these receipt tokens or safety tokens as we would call them they can function dually. They can be rehypothecated. They can be commercialized. They can be even introduced to second uh uh second tier markets in order to function as derivatives of source futures or forwards and they are all programmable and customizable. about the cost. It's all a matter of scale whereby uh everything's of course competitive and within reason concerning the actual value of the commodity and the uh protection it gets through the capture of all these data. But then again data also becomes a part of the commodity. We have been doing this for quite some time in the United States particularly for deforest regulated materials which are for the department of defense very heavily regulated and the price premium that somebody might pay on neodymium ferrron borum magnets for example which one of the clients of the company that I represent that does that was more than 30%. Thank you very much. I want to leave the floor to Nicola now. >> I'll go quickly um because I want to hear what you have to say. Um so three points. One, I think Olivia you mentioned it. I think it is key to understand that energy will not get away from the energy dilemma. And I think we can we can spin it any way we want. There will always be an issue of security of supply, sustainability and affordability and and I think there was a fallacy going on in the I would say in the renewable space. Uh I'm I'm a big proponent of that that renewable big proponent of renewables that renewables were killing the energy dilemma. Not at all. And I think this this we need to recognize and and stop looking at things theoretically and look into the reality of industrial chains and and industrial uh I would say industrial constraints. Um I think there are some countries that are leapfrogging some elements. I think we we mentioned how can we you know how can we store energy? How can look at what is happening in Pakistan. Pakistan over the last two years deployed 32 gawatt of solar plus uh an amount of of storage which I frankly don't remember because it has been going so quickly under the BRRI uh the BRI financing that actually they scrapped two massive 1.2 2 gawatt um uh coal plants to replace them with coal plus with solar plus storage. Same thing in in Sri Lanka. Sri Lanka is very much exposed to to oil to um fossil fuel imports and they are scaling rooftop PV. They're scaling because they they understand that this is just how they will be able to to stay afloat in the future. And so I think there is this key question in my view that has been tackled by all players on the energy triumph. The second thing I wanted to to mention is the oil and gas paradox. I'm taking risk here because I'm speaking under the control of of Olivia and and and all of the others. Look at the rig count in the US. It's it's really telling the rig count in the US. So it's the number of rigs that are actively drilling in the US. at the height of the of I would say the the oil and gas conundrum in in early 2010 it was nearly 2 1,900 something. Then 2015 prices dropped. Boom. It dropped to roughly 1,100 and progressively decreased to 800. Today last Baker Hughes account was 544, the lowest it has ever been. Question, why is that? Normally it's supposed to be elastic to to oil prices. One of the one of the reasons I think but again I am one of the reasons is the perspective that that is being given on oil and gas is not the one that that was 10 years ago and and I think one of the very core elements is actually electrification. If China had not electrified or was not in the electrifi electrifying trend that it is on on transportation 11 million vehicles last year out of 34 million that have been that have been sold. The one of the analysis was that it's a point 0.5 million barrels per day impact on reduction of oil oil consumption. That may seem little but it's still 0.5% of global uh of global demand. And so I think this this we need to to understand that there is this lack of I don't think we're going back to the world of 20 years ago. No, I don't think oil and gas will be the dominant uh the dominant feature. You've mentioned it. you said electricity was going to be but I think we need to understand that this will have impacts on prices and volatility because we will have supply shocks at some point um because if we're not drilling and I don't think we should be drilling that much but if we're not drilling at some point there will be constraints and so we're going to see the the effects on prices another element just maybe on the the issue of gas on the back end 67% of back in of the gas coming out of the backend basin is actually associated gas on the on the Perian I think it's 40 it's roughly 50% 47% or something and that's up 10% from last year and so I think this is also one of the issues for the for the US is yes they they have some elasticity on on LG uh on on gas production but the problem is they're they're drilling so much oil and there's so much associated gas that if for example Europe decided to actually actively implement an electrification plan, there would be a massive problem for the US to actually export the gas or use that gas and they would be facing with a gas glut. And I think this is also something that the EU needs to recognize. We are the exit market for that gas glut and and today I don't think it is it is only a matter of security of supply for Europe. It's also a matter of what will US do with this with this uh this gas supply and my um my third element is actually on on finance. I think there was a financial fallacy that that has been going on too long for too long in the energy sector and that was driven by people like I was I was going to say people like me uh but at least financeers. It was the idea that we had entered into a world where we had derisked energy. it was becoming a it was becoming some sort of a um infrastructurized uh business and that the big in uh infrastructure fund could replace the strategic players. That is BS and we are seeing it today. Why? Because in the end energy is about geoeconomics. Fully agree it's about market and ability to move physical you know molecules or electrons etc. And there's always either a physical risk, a market risk or whatever. And so I think that this is we're also stepping away from this view that uh uh renewables and everything was just a a financial product um backed by by by government support and that you could put very very high leverage. That's over. We're going to have to place energy. We're going to have to optimize energy. And this is going back where people who actually know the energy business are going to be the ones in charge. And I'll end on my conclusion just on one element. I think Dar to to your point on electrification. We we need to I think we need to be aware of what is happening in China. The energy transition is not about replacing oil and gas with renewables. The energy transition is actually a a continuum from electrification of production and and decentralization and and both decentralization and if cost efficiency of electricity production electrification through autom automatization and a different pattern of consumption one element and I'll finish with that the IEA um showed its provision it its perspectives on electricity consumption in China between 2024 and 2027 2024 9,000 terowatt hours just for recollection Europe is consuming 2.5 so 2500 terowatt hours per year so China is already more than three times largely more than three times uh Europe's consumption between 24 and 27 the IIA A considers that it will add 2,000 terowatt hours of electric electricity consumption. So 80% of Europe's electricity consumption. Now when you look at the breakdown AI 200 terowatt hours, 10%. It's significant, but it's I mean it's not what is moving the needle. Transportation 400 terowatt hours. Okay, start to be 20%. Industry 800 terowatt hours. And this is where we I think we are missing the point. If we don't electrify, we will lose the we will lose the competitiveness b battle. We are always talking about competitiveness in Europe. If we if we miss that view on industry and this is why I think we should be very careful about saying, oh, we need to get security for our gas for through LG. Of course, it is part of the of the solution. I absolutely agree. But the driving factor should be electrification. If we fail to electrify in Europe, we will be we will become a a just a a passive market where we still we still manage to consume because we still are a bit rich and then we're going to get poorer and poorer. >> Yeah, please. >> Thank you very much, Nicholas. Um I find you are a little pessimistic regarding the gas when you speak about the gas glut history has learned teachers that in two or three years you can absorb the surplus of gas. It was the case when Qatar started the production for instance um what I acknowledge is that probably the countries which have um I would say coal plants today for power production will not dismantle them. they will keep them as a security as a backup. But when the price of LNG will will go down because at some point it will go down with all the projects that are on stream. I think it's it will be a pure economical I would say competition to to to choose which uh how you produce how you produce electricity. So I think LG has a place to uh to uh to to find and I think that the price will be and will help uh to find to find outlets for the power production. For sure I agree with you probably the one having been called locally and coal plants will not dismantle them. They will use them at backup if crisis like this should uh should occur again. Um and a good example is China for instance. China is not dismantling the gold plants. they they reduce the rate of use and they use them as flexibility because they are putting a lot of renewables and so now flexibility does not come from from CCGs for them but it comes from from coal plants so I think we we could find some the same scheme in other countries and I agree with you when you speak about electrifying the the industry it's it's key but at the same time we need to make sure that we keep the competitiveness of this industry so me when when I was speaking about the high CO2 price to to drive the the transition. It goes with the protection of of the industry locally and this is where policies have to be put in place in order to make sure that at the same time we drive we drive the transition but we keep the competitiveness of the industries locally otherwise will be. >> Thank you. Yes please. >> Yes I think my question is very much in the logic of what has just been said. uh electrification is good for our fight against climate change depending on the way electricity is produced. But uh I mean uh why would our industry if it's not electricity produced why would it be by principle less competitive that it's than an industry electricitydriven probably uh through the CO2 taxing system and maybe that's implied in your remark but otherwise I don't really understand your point. It's a it's a good point and and I should have expanded but it's it was a matter of time. Uh actually we're releasing a paper on that. CO2 is is in my view marginal. The real issue is what do you do with electricity when you're in this in this in the industry you actually use different industrial tools robots and all automated system. And we need to understand that when you are using thermal energy, you're using mechanical energy. You're using an energy that has a lot of it seems very it seems like a detail but it's not. When you're in in this industry, you have you have lands, you have you know you have um buffers etc which are losses and loss of efficiency. When you use electricity you use actuators, you use power electronics etc. and you're actually much more efficient than a thermal mechanicalbased um industrial system. This is exactly what the Chinese are doing. If you use electricity, you can use robots. I'm g going to give you one example. The last death solar project uh desk solar uh plant, so a a PV plant of 3 gawatt, 17 people, it's it's a dark plant. There is no electricity, no heating. Everything is done by robots and you have a control room with 17 people staying there. You have, I think, eight or nine people who are actually the the controllers there and a team of people who are there to repair the robots, not to operate whatever. They're there to repair the robots. And so electrification is not a question of CO2. It's a question of how productive are you on your industrial chain. And we are completely missing the point. If we think that we can compete with a nation that structurally is having an increase in in its electricity consumption and it's that is fueling this increase in electricity consumption with decreasing cost because the the cost of renewable is is going down massively. And so when I say this is a matter of competition, it's a matter of structural competition in the way we organize the industrial chain and we operate the industrial chain. >> Thank you, Nikon. >> Yeah, just in two seconds. Thank you so much. I think what I >> Nicole, >> yes. I think what I take away uh in two seconds is um yes we have a currently a supply shock uh for oil and gas uh which obviously will not be possibly that severe uh but which will drag on and have cascading effects on manufacturing and economies etc. But I think what this discussion has also highlighted is the extent of the manufacturing on the the extent of the pressure that is there on the manufacturing of a number of power electronics of raw materials etc which are actually a real bottleneck in order to accelerate electrification grid expansion etc. So, so I think there is a this is a very difficult moment to be in. And when I look at all these pieces of the value chains for grids, uh, power electronics, you you always find oligopolis. On the gas turbine side, three or four companies make 70% of the market. On the transformer side, it's the same. On the inverters, I think it's even worse. If we look at the critical raw materials um depending on where you look etc but bless it's the same uh and uh and by the way talking about concentration of reserves on copper they are all concentrated in five countries and when you go to cable it's the same situation so um I think what we what we will have to deal with is these oligopies will be the top winners they will basically be rent seeking and and that's not what we need. We need actors that deploy much faster, much bigger manufacturing. And how do we bring them from being rent seeking to basically maximizing output? This is I think a fundamental issue to address. And to give you one example, the three top DAX performing companies last year were first Ryan Metal, second Zemen's energy and third SAP. But Zemen's energy, this is I think what is most telling. Uh their best strategy is not to double manufacturing in order to respond to that. It's just to continue as they do because and next year and this year they'll be number one alone probably uh and uh and and I think that's that's a huge problem. And the and the second point I just wanted to mention perhaps here because we haven't really directly talked about that. I mean the number of oil rigs in the US uh that is going down but at the same time they they produce at record level. What it shows is how innovative this industry has been. Wow. And uh and now we have a change that after 10 years the solar plus stationary battery component with the innovation and the cost decreases and the scale I mean now we have a you know cost falling down and this can be deployed massively. Now my biggest concern for the world going on is really the electrofuels. I mean all these lowcarbon molecules that we will need. I do not see yet that we will be able to be on a trajectory like that. I mean the costs are still too high. Right? And when you say we need a high carbon price to do that, I'm afraid nobody can afford that. So the problem is how are we going to get this innovation done? Right. And and then my question to you, but but in general is I mean are we focusing enough on innovation and R&D and and the scale up? Probably not. But I think this is definitely where we where we need to go. And the Chinese might be doing it and we see it on fusion. We see it on nuclear. It's very impressive. We've seen it on the the transformation and the refinery of raw materials. maybe now on on hydrogen uh but uh but clearly on carbon capture and storage bring down these costs and on the electrofuels the electromules that we will need uh here we shouldn't miss that boat I think because this is going to be essential but well I'll stop here thank you so much >> no but fuel that's that's a good question but I think it's way too early because it's way too expensive for the time being if you look at the example of the sustainable aviation fuel for But it's uh when you produce it through co-processing it's twice the price of jet. When you have a I would say runfield refinery which is refurbish to do that it's three times. When you go to alult to jet it's five times the price of jet and when you go to isaf it's 10 to 12 times. So why should we start spending that much money in technologies which are so expensive while at the same time we we we are not developing the capacities for the for the for the SF for instance and we are not developing the capacity for the SF because the mandates are not clear because because people are not willing to pay for that fuel. So, so I think we did a policy, we did a policy which somehow encourage the uh and support the investment when you do an investment like we did for grumpy for instance which is converted to to produce stuff but you you take a bet on on on decades and at the same time when the the mandates are let's say 1% or 2% for for ages you you it's not a profitable in investment at the end of the day. So it's it's profitable for nobody and so I think the policy is not meeting the objectives at the end of the day and what's needed is to support the industry to develop the capacities so that we can deliver and use this uh this u this >> any other comment final comment or question to who you want. No, I >> just a small information. I just read that the meeting in Pakistan between US and Iran has been cancelled. So, we get closer to the 1st of July. >> All right. Thank you, Jean. >> Thank you so much. It was a fascinating discussion. Thank you very much. We could spend hours and hours to discuss energy issues. Just for you to know that there will be a cocktail at the teras at 7 7 and then the gala dinner. Thank you very much. Enjoy your evening.