TotalEnergies has agreed to reallocate nearly $1bn from offshore wind projects to oil and natural gas investments in the US.
The decision follows an agreement with the US Department of the Interior (DoI) allowing TotalEnergies to abandon its previous offshore wind leases and focus on more cost-effective natural gas projects.
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Under the terms of this agreement, the US will reimburse TotalEnergies for its lease payments on two offshore wind projects.
The Carolina Long Bay lease, executed in June 2022, involved a payment of $133m, while the New York Bight lease required a payment of $795m in May 2022.
In exchange for relinquishing these leases, TotalEnergies plans to invest an equivalent amount into US oil, natural gas and liquefied natural gas (LNG) production.
This year, the company will invest $928m in projects including the development of Trains 1 to 4 at the Rio Grande LNG facility in Texas and expansion of conventional oil and shale gas activities in the Gulf of Mexico.
TotalEnergies Board of Directors’ chairman and CEO Patrick Pouyanné said: “TotalEnergies is pleased to sign this settlement agreements with the DoI and to support the administration’s energy policy. Considering that the development of offshore wind projects is not in the country’s interest, we have decided to renounce offshore wind development in the US, in exchange for the reimbursement of the lease fees.
“Furthermore, these agreements, under which we will reinvest the refunded lease fees to finance the construction of the 29 million tonnes per annum (mtpa) Rio Grande LNG plant and the development of our oil and gas activities, allow us to support the development of US gas production and export.
“These investments will contribute to supplying Europe with much-needed LNG from the US and provide gas for US data centre development. We believe this is a more efficient use of capital in the US.”
Recently, TotalEnergies signed a letter of intent with Glenfarne, the developer of Alaska LNG, for a long-term purchase agreement for up to 2mtpa of LNG over 20 years, conditional on final investment approval.
