Total SA Investor Day
Sep 24, 2019 PM UTC
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FP.PA - Total SA
Total SA Investor Day
Sep 24, 2019 / 02:30PM GMT
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Corporate Participants
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* Arnaud Breuillac
TOTAL S.A. - President of Exploration & Production
* Bernard Pinatel
TOTAL S.A. - President of Refining & Chemicals
* Helle Kristoffersen
TOTAL S.A. - President of Strategy & Innovation
* Jean-Pierre Sbraire
TOTAL S.A. - CFO
* Ladislas Paszkiewicz
TOTAL S.A. - SVP of IR
* Laurent Vivier
TOTAL S.A. - SVP of Gas
* Momar Nguer
TOTAL S.A. - President of Marketing & Services
* Patrick Pouyanné
TOTAL S.A. - Chairman, CEO & President
* Philippe Sauquet
TOTAL S.A. - President of Gas, Renewables & Power
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Conference Call Participants
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* Daniel Jon Boyd
BMO Capital Markets Equity Research - Oilfield Services Analyst
* Henry Michael Tarr
Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst
* Irene Himona
Societe Generale Cross Asset Research - Equity Analyst
* James Matthew Evans
Exane BNP Paribas, Research Division - Analyst of Oil and Gas
* Jason Gammel
Jefferies LLC, Research Division - Equity Analyst
* Jason Daniel Gabelman
Cowen and Company, LLC, Research Division - VP
* Kim Anne-Laure Fustier
HSBC, Research Division - Analyst of Oil and Gas
* Lydia Rose Emma Rainforth
Barclays Bank PLC, Research Division - Director & Equity Analyst
* Oswald C. Clint
Sanford C. Bernstein & Co., LLC., Research Division - Senior Research Analyst
* Sam Jeffrey Margolin
Wolfe Research, LLC - MD of Equity Research & Senior Analyst
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Presentation
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [1]
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Hello, everybody, and a warm welcome here in New York at the New York Stock Exchange. For those who do not know me, I'm Ladislas Paszkiewicz. I'm in charge of Investor Relations for Total. So we are going to have a full day today with 3 different presentations I'm not going to go through. I just want to mention to you that there is an app, application, that I encourage you strongly to load on your mobiles where all the presentations will be there. There are valuable information that you can have access to, and you'll have the full program for the day.
There will be 3 session. They will be followed by Q&A, so of course, all questions -- the questions from the floor will be taken care of. And without further ado, I think I have to hand the microphone to the person from the New York Stock Exchange for just a safety announcement.
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Unidentified Participant, [2]
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Good morning, everybody. My name is [Frank Peraro]. Welcome to the New York Stock Exchange. I am one of the fire safety directors here in the building. Just going to give you a couple important points, information regarding fire safety and fire emergencies.
If there is a fire emergency, if you look around, there's white devices, notification devices around the room. You'll see them flashing. There's also speaker capabilities from those devices. We will make announcements from downstairs in the lobby just in case if there is a fire emergency during the time that you guys are here.
There are 3 egress points on the floor, 3 stairways. Elevator cars are not an option in a fire emergency. They get recalled to the lobby automatically, tied into the fire alarm system. We have a fire alarm system in place for the building and a fire safety evacuation plan approved by the New York City Fire Department.
The 3 means of egress to the south end of the floor are the C stairway. Behind me, I have the B stairway and the A stairway. The A stairway will terminate at Wall Street, the B stairway in Broad Street and the C stairway in Broad Street. There will be fire wardens assigned to the floor in case there's a fire emergency to direct you and to assist you to get you to the proper egress points in case of a fire emergency.
Any questions? Thank you very much. Enjoy your stay here today.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [3]
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Thank you very much. As regard to Total, as safety, of course, is a core value of the group, I propose that we view a safety moment before we start the presentations.
(presentation)
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [4]
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All right. Well, now with no further ado, let me hand over to Patrick Pouyanné.
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [5]
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Good morning, everybody. Welcome to this annual Strategy Day for Total. We are back in New York City, like it was the first last year. We are very pleased and impressed by the attendance, and so we have decided to transform the [tri]. So Rugby World Cup in Japan, France will play against the U.S. in coming days. No doubt about the results for once.
And maybe it's a new tradition in Total to be in New York, but I think it's also recognition, as I said last year, that 33% of our shareholders are in the U.S. This event, this Strategy Day is happening at a time in the city where there is quite an activity, quite a busy week with the UN General Assembly and, in particular, the UN Climate Summit, which took place yesterday, gave us the opportunity to meet many stakeholders and to explain how the oil and gas companies are adapting ourselves to this new energy market and to the climate challenge.
It's also happening this day, our event today, at a time where the world is in the middle of quite a number of uncertainties and the recent attack on the oil facilities in Saudi Arabia were obviously quite a big shock in our industry. It's a shock from a geopolitical point of view because this Middle East region is [took off] a lot of energy supply in the world. But it's also a shock for the oil markets because obviously, it increased somewhat the risk premium in the oil price, and it might also force the market to reconsider what are the acceptable levels of inventories and spare capacities in the world.
Like last year, we come into force in New York with most of the executive committee members and, of course, 2 new executive committee members, which are Helle Kristoffersen and Jean-Pierre Sbraire. You will see them, both of them, because they will be -- together will make the first presentation, the strategy presentation together, previous year. Helle, as the Head of Strategy and Innovation, will present the macro environment of the markets. And Jean-Pierre, as our new CFO, will cover the financial performance of the company.
And then in the afternoon, we have the opportunity to listen to the other executive committee members which are there. We will have 2 focus session, 1 on the 2 key businesses for us. And you will understand through the strategy presentation why we selected these 2 domains, which is the LNG, with Arnaud Breuillac, our President, E&P; and Philippe Sauquet, our President, Gas, Renewables & Power; together with Laurent Vivier, President, Gas, will explain you all the -- what we developed as a portfolio in LNG. And we'll see that it's -- LNG will be a strong contributor to the future growth of the cash flows of the companies. And then we'll have a session about Downstream with Bernard Pinatel, our President, Refining & Chemicals; and Momar Nguer, President, Marketing & Services, will present you how they will also develop their businesses. And more than that, of course, you will have opportunities to interact with all the management, the management of the company, during the seated lunch and seated dinner if you can stay with us.
Coming back to the presentation of today, I would say that last year, we emphasized on the fact that Total was -- has strong capacity to deliver consistently on our objectives. And we also explained you what were the strategy for the future: on one side, building on our strengths in oil and gas integrated activities; and on the other side, willing to develop a low-carbon energy business mainly on electricity.
Since last year, of course, we have implemented that strategy and with some important events. We will come back on it. This year presentation, I think we'll focus on 2. I would say there are 2 main messages this year. First is that we are in a situation where we can go beyond the 2020 guidelines and 2022 guidelines. We can go -- we have developed enough our portfolio, sanctioned some projects to capture some resource, which, I would say, give quite a lot of clarity of the road map of Total until 2025. So we will describe this road map along the presentation and give you the key indicators of the way we intend to develop our activity, our strategies and to invest and to generate cash flows and return to shareholders until -- or along these coming 5, 6 years. So this is the first objective.
The second objective is that, through this presentation, we want also to demonstrate how we built a sustainable and profitable company and growth. We recognize that there is, in the markets, quite a lot of questions about the sustainability, long-term sustainability of the oil and gas industry because of all this climate challenge and this new market -- new energy trends. So we believe that the strategy we developed is a good answer to the sustainability of the cash flows of the companies and also of course, to the return to shareholders. So you will hear, and I will go to the first slide, these words, sustainable, probably many times today. We try to emphasize on what -- in the way of our business model is sustainable and, of course, profitable.
We have, of course, our answer, and sustainability means for us can be in different aspects. The first one, of course, and it's important, is that we have to cope with volatile and changing energy markets. Helle will come back on it. And I think it's important that in this moving environment we can adapt ourselves, and this is what we are trying to describe today. The second part when we speak about sustainability and resilience is that, yes, these markets are volatile.
We have put in place, since 2015, a clear reaction to this volatility, focusing, I would say, on 2 pillars of the financial performance. One is to lower the breakeven. We managed to get it under $30 per barrel. And the second one is to have a strong balance sheet in order to be able to sort of face this volatility. And Jean-Pierre will come back on the levels that we intend to -- we've done in the past but we intend to maintain in the future in order to continue to focus on these 2 pillars of the financial performance of the company.
And then we have a -- sustainability means also to continue to focus. If we want to have sustainable returns for medium and long term, this is primarily in our oil and gas traditional businesses to build -- to play to our strengths and also to continue to have integrated approach that we have developed for the value -- whole value chain. It's also meaning that we want to take benefit from the growing energy markets. It's mainly natural gas and LNG in particular. It's also electricity. And we will come back on the strategy that we want to develop in these 2 fields.
All that being, of course -- the aim of all that is to continue to increase sustainability of shareholder return. And I think you have seen an announcement this morning that we are doing it in a strong way by -- with the Board support -- strong support of the Board of Directors, which is to accelerate the dividend growth in the coming years in order to share with all the shareholders the additional cash flows that we can generate. But we'll come back on that in the presentation.
So that's for setting the scene. It will not be complete, as always, without a word on safety. Safety, as you know, is a core value for the company. It's a matter of cornerstone of operational efficiency, but it's also I would say, a matter of sustainability. A company cannot be sustainable if we have neither these assets nor these people, if we don't have a very high level of safety.
Of course, we have been able to and we continue to improve our statistics at the workplace. And you can see we are in the middle of the pack among the majors, and we target 0.8 as an injury rate for -- total recordable injury rate for group staff and our contractor staff. By the way, statistics is more or less the same between both categories of employees, which means that it's also part of the social responsibility to be sure that everybody is treated in the same way.
Having said that, there's always a but in safety because it's always fragile, all the efforts we do. And we had to suffer 3 tragedies, 3 fatalities in 2019. It's really a lot and which led us to react strongly internally. We're mobilizing everybody around a campaign and not only campaign but working groups, people who think into that 0 fatal accident become -- it's not acceptable to have a better performing company like Total is suffering fatalities. And this, of course, is a permanent, I would say, journey that we go into the company. So there is improvement, but it still have to be increased. And it's part, I would say, of our commitment in terms of social responsibility.
I will add a second slide this year, and I think it will come back in all our presentation, which is obviously safety is of value, but the other commitment we have to do is to the planet and to the environmental challenges, in particular, CO2. So CO2 is clearly something on which we want to emphasize. We have taken a symbolic decision in the company, which is that each site, in the same way that we display at the entrance of the site or offices the statistics for safety statistics, now we will -- you will see in all our sites in display the CO2 emissions. We want everybody to be aware of it. It's the first step to the awareness of our staff, of management and also in order to take some actions.
In February, we take a commitment on the emissions on which we are directly responsible. We have the operated emissions on the oil and gas parameters. We are emitting -- we were emitting 46 million tons. We have put a target of less than 40 million tons. It's an absolute target, and at the same time, of course, as you will see today, the company will continue to grow, and so it is a challenge.
For last year, 2018, we're at 42 million, so people could say the gap is not very big between 42 million and 40 million. In fact, it's bigger than it seems because in the meantime, we have new facilities. For example, Bernard will speak to you about petrochemical cracker in Port Arthur, which represents 1.5 million tons of emission. So we need to continue, in fact, on this strict parameter to lower the base. And in fact, the ambition is to go down to -- the 46 million is supposed to become 36 million if we want to leave up space for the new facilities that we will put into production in the meantime.
So it's a real effort, a commitment, which will come through different actions. Reduction of -- gas flaring reduction is obvious. We have done already a lot, 80% reduction of routine flame. We can do more. Methane reduction, we are -- as you will see, we strongly believe that the future -- or the energy of the future will be a mix of natural gas, renewables, energy storage and other carbon neutrality tools like CCUS and others. But if we want the natural gas to be -- to play this -- to have this share of energy mix, methane emissions is a challenge that we need to tackle. We are already on the good way. On our operations, we have less than 0.2%, 0.25%, so which is very low. We'll continue to drive down and we need to target almost 0, like in safety, on methane emissions. There are possibilities, there are technologies to do better, and we'll put that in place.
Energy efficiency is also of course, something in which we continue to improve. All our sites have to work. And by the way, one way to do it is that we put in place a CO2 fighter squad in the company, which has the objective to go around all the places, all the sites of the company, and, in fact, to leverage all our competencies in energy efficiency and renewables and in energy storage in order to be the best pupils among all our customers, I would say, in the company and to have some business case to show to our customers tomorrow that we can be more efficient.
And the last area of improvement for future projects is process electrification. In all our businesses, we can use electricity as a way to, of course, lower our future emissions. So safety, CO2, it was my introduction, I would say, on the E of the ESG challenges that we face. We'll come back, of course, on the social part in the presentation. Having said that and setting the scene, I will leave the floor to Helle, which will come to discuss and to present you our vision of the markets. And then Jean-Pierre will follow on the financial performance. Thank you.
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Helle Kristoffersen, TOTAL S.A. - President of Strategy & Innovation [6]
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Good morning, everyone. Happy to be here with you this morning. So a few charts on the macro environment, and the title here really says it all. Our markets are volatile, and they're changing. In fact, energy markets are in transition.
Here is a recap of the world energy outlook that we presented to you in February, with the 2 scenarios for the evolution of the primary energy demand in the world between now and 2040, 2 scenarios benchmarked against the IEA 2°C Scenario. What does it say? Oil still has a sizable share of overall energy demand in 2040, around 25% in the 2°C Scenario of the IEA, even if oil may no longer grow when we reach 2040.
Gas will continue to grow over the period in all scenarios because gas is abundant, affordable. It has multiple uses: power generation, heating, burning, feedstock, mobility. And natural gas is an essential complement to intermittent renewables. Power consumption will grow more than 50% in all scenarios and much more in certain scenarios. And at least 60% of incremental power demand is expected to come from renewables, be that solar, wind, hydro, biomass, geothermal and so on. So that's really the long-term picture, and let's now move on to the short term.
First, oil. Oil markets are fundamentally volatile, and it works both ways. We saw the price of Brent drop by 25% between end April and early August and then of course, came the attacks on the Saudi installations 10 days ago, with Brent jumping 15% in 1 day and geopolitics and oil security being back on the center stage. The chart here talks about market fundamentals, which is supply and demand, putting geopolitics on the side just for a second. Where do we stand? Short term, there are several questions around supply and demand balances with more questions on demand than on supply. And as you can see on the graph here, OECD inventories of oil began to grow in the summer of '18, which is generally perceived as a sign of market deterioration.
Let's look at demand and then on supply. The 10-year trend for oil demand continues to be very good, you can also see on the graph in orange. Demand has grown from 88 to 99 barrels per day roughly over the last 10 years. But what about short term then? Short term, oil demand is, of course, sensitive to prices but also to overall economic growth. Right now, people question the health of the global economy due to weaker GDP outlook in certain countries and due, of course, also to the impact of the ongoing trade tensions.
The net result is that lower demand growth is expected for 2019 and 2020 compared to recent years, with the latest outlook from the IEA showing 1.1 million barrel per day increase this year. On the supply side, the prevailing feeling onto the latest events in Saudi was that supply was sufficient to cover weakening demand. And therefore, there was very low -risk premiums, as Patrick said, factor into prices, which was honestly a little strange. Since the OPEC+ discipline is working well, several countries like Iran, Venezuela and Libya are experiencing long-lasting production disruptions or production cuts. The growth of U.S. shale is expected to slow down, and the industry is globally under-investing in new oil capacity.
But that was before, of course. Now geopolitics and spare capacity tightness are back as a top concern on the supply side of oil. Adding all this up, there is, for sure, a lot of uncertainty out there, and price volatility will, of course, continue to be very high. When it comes to Total, you know the conclusion we draw from volatility. We focus on assets and projects that have low breakevens.
Moving on to gas. Worldwide gas supply is abundant and has been boosted in particular by the output of the U.S., which has translated into growing U.S. LNG exports. And these exports have, in turn, increased the liquidity of worldwide gas markets, facilitating global gas trade. On the demand side, worldwide gas demand has been excellent over the last 3 years, and you can see that on the graph, almost 4% CAGR since 2015. Demand has been stimulated by lower prices and the switch from coal to gas supported by CO2 or air quality policies, notably in Europe, China and India.
Let's just remember that China year-to-date demand at the end of July for gas was up by 12%. That being said, gas is a seasonal market, and the winter has been mild pretty much everywhere. So when you combine ample supply and low seasonal demand, gas prices have indeed come under severe pressure in the first half of 2019, even if, more recently, spot prices have been impacted by the Saudi events and the forward curves show, of course, seasonal uptick in prices as we move into the next winter season.
The good news is that the lower gas prices will continue to stimulate demand. Our strategy in gas is to prioritize integration along the whole value chain to capture margins, and you will hear more about that in just a while.
Coming on to LNG. What's the picture? It says so in the title. There is strong momentum. LNG markets have grown by 9%, almost double digit in the last 3 years, which is, of course, simply huge. On the other hand, there is a clear softness in prices right now because of the numerous project start-ups or ramp-ups, especially out of the U.S., Russia and Australia. In addition, storage levels are high in Europe, so there is a feeling that markets are oversupplied right now.
But prices won't stay long forever -- stay low, sorry, forever. As shown on the graph to the left, markets will be tightening from 2021-plus and onwards. This chart shows you the lines, which is expected demand evolution, and the bars is available supply or expected supply to become available. So market tightness will be true even if the current LNG demand growth were to slow down from the 9% to, say, 5% or 6%. And of course, there'll be a much bigger shortage in supply if the current 3-year trend in LNG demand continues.
The pace of demand growth will largely depend on Asia, which you can see from the graph to the right, Asia leads LNG demand growth. Given this outlook for LNG between now and 2024-'25, there is clearly room and even need for competitive new projects, meaning projects below breakevens. As you know, the fundamentals of our portfolio are very strong, and in addition, we benefit from integration all along the LNG value chain.
A few words now on low-carbon power markets, which are another strategic area and focus for us. Let's start with Europe. The liberalization of power markets in Europe over the last 10 to 15 years has created a window of opportunity for newcomers like ourselves to take positions against incumbents. At the same time, the European power mix shown here based on Total's Momentum scenario is changing rapidly, as you can see, with a collapse in coal and a shift towards low carbon, meaning natural gas and renewables.
Gas is growing, in the scenario shown here, a little less than 3% per year, and solar and wind are growing more than 3x faster. This trend is triggered by various EU policies supporting the substitution of coal by gas and power generation via emission trading schemes, for instance, and also supporting renewables through multiple incentive schemes, contracts for difference and so on. When it comes to us, we are pursuing a strategy to become an integrated low-carbon power player in Europe with activities ranging from power generation all the way to the end consumer, excluding regulated markets but including trading activities, of course, which are very important in the power section.
Outside of Europe, our low-carbon strategy revolves around profitable growth in renewable power generation, so call it power upstream only. As we've discussed before, the worldwide power market is increasing very fast, especially in non-OECD countries, due to economic growth, rising living standards, electrification of other sources of energy and so on. This is certainly true in China, India and a whole range of other countries.
In whatever mid- or long-term scenario that you look at, renewables are capturing the lion's share of incremental worldwide power demand. And what we're showing here is, again, Total's Momentum and Rupture scenarios between 2018, 2030 and 2040. And you can see how the growth of natural gas in dark orange and renewables in lighter orange, how the growth is increasing both in absolute terms and in relative terms in the worldwide power mix. We'll hear more about how we're investing to create value in this market opportunity a little later.
And finally, our last chart, on petrochemicals, another key area for us illustrated here through the PE market. The market fundamentals for PE are very strong in terms of demand, with more than 3% growth per year expected between now and 2025, which effectively means no deceleration in demand versus historical trends. Demand in petrochemicals is sustained by population and GDP growth; rising living standards, for instance, in Asia; and also very importantly, by a structured shift towards lighter materials.
That being said, the PE market will be impacted in the coming years by a host of new capacity additions, which are expected to create excess capacity, assuming that all these new units run at high operating rates, which, of course, is not entirely granted everywhere. But we do expect new capacity to come online in Asia. And of course, here in the U.S., there is the ongoing start-up of the first wave of Gulf Coast projects.
As far as Total is concerned, we focus on securing access to low-cost feedstock and on integration, physical feedstock integration and also monomer-polymer capacity integration. You'll hear more about that from Bernard in a while.
And with that, I'm done with the macro framing, and I hand over to Jean-Pierre. Thank you.
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Jean-Pierre Sbraire, TOTAL S.A. - CFO [7]
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Thank you, Helle. Good morning, everyone. This section of the presentation focuses on our performance to date in terms of reducing the cash breakeven and strengthening the balance sheet, which we regard as the 2 essential elements to coping with the volatility of our markets and preserving the group long-term sustainability. At Total, discipline is the key. First, we control cash breakeven to minimize the impact of recurring items and downturns. And second, we maintain a robust balance sheet to provide the group with a solid foundation and financial flexibility, allowing us to weather cyclical lows and possibly to act countercyclically on opportunities that might arise. We are committed to maintaining these high standards in order to consistently deliver on long projects and objectives.
Let's start with the breakeven, which is to achieve a synthesis of the strategy to be resilient in volatile markets. As you see, we have made remarkable progress. In 2014, the pre-dividend organic cash breakeven was around $100 per barrel. Since 2017, we need less than $30 per barrel to cover our organic CapEx. We achieved that through a combination of, first, constant discipline on spend on both OpEx and CapEx; and second, by maximizing cash flow generation by enhancing the operational efficiencies of all our assets and by upgrading the portfolio through countercyclical M&A. And as you know, we have the best-in-class Downstream that generated large and sustainable cash, which is, by the way, partly noncyclical. I will come back on that later.
Our fundamental objective is to maintain the pre-dividend organic cash breakeven below $30 per barrel. At this level, we are more resilient to downturns in the environment. And of course, the low breakeven and the high-graded portfolio also increase our upside in a rising price environment.
We have clearly imposed a discipline to our CapEx, which has been trending down since 2015, while at the same time, we have delivered a very strong production growth. To summarize, we did more with less. Obviously, the discipline on CapEx goes hand-in-hand with strict economic criteria to sanction projects using a $50 per barrel oil price scenario. Of course, since 2018, we have started to sanction again some projects in order to capture the benefit of industry-wide cost deflation. As a consequence, our organic CapEx are increasing, but we tend to control them at around $14 billion to $15 billion per year for years to come.
Sustainability is also a matter of operational excellence. Total has been the fastest-growing major in part due to strong execution on major projects. 2018-2019 start-ups include FPSO in West African countries and in Brazil, representing around 600,000 barrels per day of capacity, plus 6 LNG trains, so in Russia, in the U.S., in Australia, representing around 30 million tons a year of capacity.
We are always exposed to cycles of volatility, so we have to be good at what we control like costs. You see here the significant progress we made over the cost-reduction front since 2014. We have developed a strong cost-cutting culture at Total, and we are keeping constant pressure on OpEx. Compared to our 2014 base, we target cost saving of $4.7 billion this year and more than $5 billion next year. This is a company-wide effort. All the business segment contributes to this effort, even if the majority of cost saving comes from the Upstream.
It is important to point out that at the same time, we have been growing the company. We have achieved this by creating opportunities to leverage synergies. You have the example of the Maersk Oil assets. We have been able to deliver quicker and greater synergies. We anticipate now a delivery of $300 million per year of synergies coming from Maersk Oil assets, saving coming from, first, the merger of the 2 subsidiaries in the U.K., which includes a 30% staff reduction. The reduction incorporates overhead in Denmark and leveraging on our purchasing power.
We improved, at the same time, efficiency across the group. We simplified our processes, our organization. With Total Global Services that was created 3 years ago, we have made sustainable improvements in efficiency by centralizing shared services for the group. We are on track to deliver ambitious cost savings, thanks to TGS, of $450 million last year to $1 billion by 2020. Centralized purchasing is one of the most important aspects of TGS. It has consolidated and streamlined 30% of our procurements last year from 15% in 2015, and the target is 40% by next year.
The cost-reduction story is an important part of maintaining the low breakeven and preserving our financial strength, so we will continue with it beyond 2020. We'll maintain the pressure on costs going forward, and we have a new target for 2023 of $1 billion of additional savings. That means that our target is to reduce operating costs by more than $6 billion by 2023 compared to the bases. Again, this will be a company-wide effort.
For the Upstream, as a result of this cost-cutting program and also the high grade of the portfolio I mentioned before, we will be able to reduce the production costs per barrel by half between 2014 and today. In 2014, our OpEx was about $10 per barrel. It will be below $5.5 per barrel next year with a target of $5 per barrel. And I think it's a good transition to the next slide. Part of this next generation of cost reduction will come from digitalization.
So digitalization is one of the levers we will use more and more in coming years to improve performance and create value. We have successfully started the digitalization -- the digital transformation in all segments at Total. But now we have the ambition to scale it up and to accelerate. Few example of program that we have already implemented. We have a partner with -- a partnership with Google for artificial intelligence on geoscience. We are working with Tata on Refinery 4.0 digital twin technology. To accelerate this digital transformation, we have made middle of this year the decision to create a digital factory at Total with about 300 dedicated engineers, and this digital factory will be in place mid-2020.
We are confident that through digital, we can capture significant savings on both OpEx and CapEx and step operational performance up to a new level of excellence. Digital will help us to increase the availability of our Upstream and Downstream assets and ultimately will contribute to increased production and, as a consequence, revenues.
For our customer-facing businesses such as GRP, Marketing & Services, digitalization can be used to expand the services to our customers and provide new services. We estimate that by 2025, value creation from digitalization will be $1.5 billion a year, and the split will be $1 billion per year coming from Upstream and $0.5 billion a year from Midstream and Downstream. This includes increasing revenues, improving availabilities and reducing costs.
We believe in the integrated model approach to achieve long-term success and sustainability in a volatile environment. And the Downstream plays an important role in answering stability across the highs and lows of market cycles. Our Downstream provides a sustainable cash flow from a diversified portfolio, more or less 50% of the cash flow coming from noncyclical businesses.
Cash flow has been consistently strong over the 2015-2018 period despite, by the way, $8 billion of asset sales.
Our Refining & Chemicals has been restructured and upgraded. And as a consequence of that, the breakeven for our European refineries is now below $20 per ton. Marketing & Services is largely noncyclical with a unique position in Africa. We were successful in actively managing the portfolio and developing Marketing & Services in growing markets. In addition, we are increasing the nonfuel sales, which further diversifies the revenue stream and strengthens sustainability. Finally, refining is ready for IMO 2020. Our refineries have been upgraded, and now we have reduced the high-sulfur fuel oil outputs from 7 million ton a year in 2017 to 2 million to 3 million ton now.
Turning now to the balance sheet and the importance of financial strength to sustainability. We maintain a robust balance sheet to provide the group with a solid foundation and financial flexibilities, allowing us to weather lows and possible -- and possibly act countercyclically on opportunities that might arise. Since 2016, we have the objective to maintain the gearing below 20%. It gave us the flexibility to be agile and [sight,] for example, the Maersk and Anadarko opportunities.
In 2019, you observed the increase in our gearing linked to the implementation of the famous IFRS 16 accounting rules. That means the capitalization of the leases in our balance sheets. As all our peers do not report the leases in their account in the same way, you'll see on the right side of the slide the benchmark excluding leases. The bottom line is clear: Total continues to rank as one of the strongest majors in terms of gearing.
We are committed to maintaining a strong balance sheet. We target gearing below 20%, although, and we have said that before, there may be brief periods when gearing is above that level. As the new CFO, I am convinced that financial strength is the foundation of long-term sustainability, particularly in our industry, which is marked by strong cycles. Our objective is to build and safeguard future flexibility. I know there will be times where successful companies have to rely on the strong balance sheet.
Finally, the benchmark. It's very clear. It shows the discipline on spend and operational excellence have positioned Total at the forefront of the major oil peer group. As a result of consistent execution and delivery, we have increased production far faster than our peers. But more important for the long term, this production growth, coupled with the underlying improvement in our portfolio, has driven the increase in cash flow.
To the right, you can see that during first half 2019, we outpaced our peers in cash flow generation. Our assets are performing at the best-in-class level. This is true for our Downstream, but it's also true at the level of group. We have a group-wide share above 10%.
That concludes my presentation and I leave the floor to Patrick. Thank you.
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [8]
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Good. So now we come into the 2 sections where I will describe the strategy we've put in place for the future to build a sustainable, profitable company and then the outlook 2025.
First section is about oil and gas, our businesses in E&P and Refining & Chemicals and Marketing & Services, obviously our traditional businesses, but to be clear, they are still given the majority of the cash flows and they are the core of the company. And then as we said, for last 2, 3 years, our strategy is to build on our strength. It is clear it is the strength around offshore, Deepwater, the LNGs, petrochemicals, retail and lubricants. We have developed strong competence, expertise in these fields, and we consider that this is a place where we are comfortable to invest. It's also a matter of geographies in Africa, in the Middle East, in North Africa, in North Sea where we have built also strong positions.
So if we will strongly believe that this is the right strategy in our oil and gas businesses because this is where, again, we can leverage our competence in order to deliver value. So rather than filling the gaps, we prefer to continue to build on this strategy, and this is the reason why we have demonstrated that we have been able to be agile in seizing opportunities because again, and there is a strong support of the Board of Directors, of this strategy somewhere is less risky than trying to develop in new areas.
So the way this strategy has allowed us to build a very large portfolio of new profitable projects. On this chart, on this map, you have around 30 projects, the different projects. And since 2018, if you remember, '15, '16, we were spending time to, I would say, work on the foundations, which have been described by Jean-Pierre in his presentation, breakeven, lower breakevens, financial strength. And '17 we begin to be more active because we say we want to benefit from the low cycles. We need to put in place this counter-cycle strategy. So we have been active by Maersk Oil, by the Engie LNG. And beginning '18, we say now it's time to sanction again new projects because we have space in our capital expenditures after the large projects which will be delivered.
And so this is the main activity, the main target for Arnaud Breuillac and his team in E&P to sanction the projects. 12 projects have been sanctioned since beginning of '18. There is still some work to be done. We target 6 others for the next 6 months and more -- and 12 more in 2020 and maybe some of them could go until beginning 2021. You have here the list of the projects. I will not comment all of them. A lot of Deepwater projects logically in line with the strategy in Africa, in Brazil, in Gulf of Mexico and also several LNG projects, on which we will come back during the presentation. Together, all these projects represent 800,000 -- more than 800,000 body of new production, which will fuel the growth post-2023, and you will see the impacts on our production profile.
On the top of these large projects, I would say, we have some what we call some short-cycle projects on which we also have been active because it's a way to increase the short-term cash flows. The payout is very less than 2 years. [The] IRR is above 20%. You have the examples here of Angola. These are brownfield projects, mainly infill wells, which can be developed and produced with existing infrastructures. They are short-cycle because they have flexible CapEx. We can interrupt the drilling in case of, I will say, a drop of the oil price. But it's also giving, of course, additional cash flows, which are welcome in the present time.
This -- all this activity of developing resources, of course, is taking place at a time where we are leveraging a favorable supply chain. It's clear that the market is still favorable, and we consider we already have the opportunity to comment that it will remain like that for quite a long time. You'll see that we've seen a decrease in the cost of 30% in deep offshore or conventional offshore compared to 2014. It's clear -- it happened in what we call international E&P business where we are mainly focused. It's not the same situation in U.S. onshore where you have quite, I will say, a large activity.
But on international E&P, in fact, the reality is that there is still such significant spare capacity, according to our statistics, around 40%. There is less competition, less activity in fact because a lot of U.S. E&P independents, which were working internationally before 2010, have refocused on businesses in the U.S. And you have also spare capacity because we have new contractors and Chinese contractors are offering clearly a competitive alternative like we've seen on Yamal in LNG and offshore projects.
So we took the assumptions and the figures that we presented to you in our, in particular, CapEx program but this type of environment will be maintained for the coming years. And in fact, if we are able to sanction the projects now, like we've done since 2018 and for the year to come, we will be able to lock in our CapEx these favorable oil and gas costs, I will say, in our portfolio.
In order to be sustainable, an oil and gas company need, of course, to renew our resource base and we have 2 engines to do that: exploration on one side, access to discovered resource on the other side through M&A. I begin by exploration and maybe it's -- this is new, we saw that today, but it's just to pay tribute to the reserves of the teams. We are under the leadership of Kevin McLachlan in 2015. We have launched a new exploration strategy. We have been able to have access to high-quality acreage around the world, and we have some interesting reserves, some more interesting reserves. Reserves which -- sizable reserves which will allow us to fill -- to feed our future growth in post-2023 as well.
So in North Sea, with Glengorm this year, which is around 250 million barrels next to Culzean, Elgin-Franklin in this part of the North Sea. We have made a new province discovery in South Africa with Brulpadda discovery, which will be appraised next -- not appraised, which will be followed by 2 new exploration wells next year in order to just -- to appraise, which is the size of the resource which can be in this province. We have also discovered -- made discoveries with Chevron in the Gulf of Mexico, Ballymore, which will probably tie back to existing infrastructure in order to shorten the time to market.
And last but not least, recently, and I'm happy that in Guyana, we have made our first 2 wells. You know it's a very prolific province but some of our peers announced to have discovered more than 5 billion barrels. We have been active in order to take some participations in all the licenses around these discoveries and the first 2 wells on the Orinduik license are positive in Jethro and in Joe. Joe is, by the way, a play opener in a new structural layer in Pliocene level. It will be followed by another well before year-end and the Kanuku license. And next year, we should also drill in the Kenya license operated by Exxon, and I hope that they will continue with the successful story in Guyana with us. So this is a promising start in this basin, which again, explorers are there but also the business developers, which have been able to capture this acreage have to be, I will say, complemented.
The other engine to fuel our resource base is M&A. But it's clear that we have been quite active but not only to acquire, also to divest. This is -- so this chart is interesting. We have on the period of '15-2020, including with the assumption that we'll close another core assets or some of them next year, some of them this year. We will have acquired around $30 billion of assets. But with the same period, we'll have divest $20 billion of assets.
There's $10 billion of more acquisition than divestments but by the way, divided by 6 years is more or less $1.5 billion to $2 billion net acquisitions. And most of the net acquisitions, let me be clear, are in the new energies where clearly we are not divesting. We are building a portfolio. We have acquired around $6 billion. So if you keep that in mind, the activity has been quite strong. It gave us access to 11 billion barrels of resource at less than $2.5 per barrel.
The fact that we have today this large portfolio and Arnaud is happy because he has 22 years of reserves but he gave us room to continue to make a portfolio management, which means to divest assets on which, which are either too small so in terms of human resource allocation, it's not optimal or which have some high costs. So we will continue to make this agility on both sides. So we have announced that we want to divest $25 billion in 2019-2020. It's already underway, $2 billion will be done before year-end.
And this activity, I think, is very important in a large corporation like Total where we have [$150 million] to $1 billion per asset. As I said, it's very important to permanently review our portfolio. The world is changing. Our markets are changing. We need to adapt ourselves. We need to be flexible in order to avoid to become a dinosaur. And so 40% of the portfolio eventually must move, 40% of Downstream. Cash flows are continuing to increase, which is a proof that we are a [high-grading] this portfolio. And at the same time, we are investing in new energies.
So of course, I had the opportunity to comment during the call of the second quarter, end of July, why we have moved on these opportunity of acquiring the African assets of Anadarko. Clearly, it's a very clear strategic fit, which was, by the way, the reason -- fundamental reason why we were able to go -- to move quickly with the Board of Director on this opportunity. It's LNG. It's Africa. It's Deepwater so exactly fitting with our chart I showed you before about the fundamental strategy to build on our strength.
Mozambique Area 1 is a one-of-a-kind asset. It's a giant high-quality resource. It's a project which is derisked, it's sanctioned. Contracts are in place. It's also derisked, by the way, from a marketing point of view. I know people have production questions about LNG exposure, but this project is 90% sold on -- under long-term contracts, which are largely oil indexed so which is an advantage. The acquisition price, I argue, and -- but it was quite commensurate in price, $150 million per percentage compared to $200 million to $250 million on the same license in the past and for the project which is derisked and marketed already.
There is a high-quality resource. So more to come beyond the first 2 trains. Of course, the project team will focus on the execution of the project now. But there will be also another team which will work to be able to go beyond, to prepare the future as we have very large resource, more than 60 Tcf as the first 2 trains mobilizing around 18 Tcf. So this project will contribute to future cash flows, $1 billion per year by 2025 and beyond.
In the portfolio, we have also other assets, which are high-quality, large resource base like in Algeria, the Berkine basin. Ghana is a growing Deepwater asset. As you know, the combination of all the assets makes that beyond the acquisition costs. In fact, we will receive cash -- positive cash flow coming from Algeria and Ghana will more than cover the injection of CapEx in the Mozambique projects.
It's also again a source of additional profits. I'm sure that Laurent Vivier this afternoon will explain new -- but he's quite happy to have a position in East Africa to serve some Indian or Southeast Asian customers. So we will be able to optimize this portfolio with this position in Mozambique. And also oil traders, which are -- we have quite a big oil trading in Africa. We are #1 in trading oil in Africa, the fact that we'd have access to oil in Ghana adds value for them.
Where are we, by the way, because I will answer questions so we have, of course, executed the SPAs. It will be a staged closing. So we are on the verge to close Mozambique. I will fly to Mozambique end of the week, and we should be able to close if not this week, beginning of next week. So Mozambique will be the first to come, which is important because the project has started. So we'll be onboard with the project team immediately. And then because there are different approval delays with different regulations in different countries, Algeria will come and then Ghana, probably the 2 or the last 2 could be closed by probably end '19, more probably beginning of 2020.
So in our strategy of oil and gas, of course, we are integration. The Downstream is important. The Refining & Chemicals, Bernard will come back. So I will not give you many details, but I think there are 3 pillars which are concerned in this strategy: first one is to invest priority to large integrated platforms. We have 5 around the world where it captures 70% of the capital employed by 2025. We grew -- the second act is growing in petrochemicals, but petrochemicals on low-cost feedstock, which means in fact natural gas or I mean ethane, propane, butane. So it's a natural gas to material strategy. We leverage the global growth of emerging market. It's also to be clear, a strategy where we want to integrate the monomer capacities, ethylene, propylene and the polymer capacities. Integration is key in petrochemicals. If you are alone in monomers, you could face hard times like some of our peers today in the U.S. So integration is a permanent word in oil and gas value chain.
And the third pillar for Refining & Chemicals is to invest in the new low-carbon economy: biofuels, bioplastics, recycling polymers with the objective to recycle 30% of our polymers by 2030. All of that is very important and is a way for Refining & Chemicals to find some relief for future growth in the future in this low-carbon economy and is part of the global sustainable strategy of the company, and definitely, Refining & Chemicals as our part of the sustainable future of the company if we can continue to develop these 3 pillars.
I have made something wrong. The more important information of this slide is that it's not just for investing, it's also for growing cash flows. And so Refining & Chemicals, you will see, will contribute to the growth of the cash flows between today and 2025 and $1.5 billion will come mainly from the 4 large projects that Bernard and his teams are developing. I will not detail the projects. Bernard will come back on it. As you can see, we are -- all or each of them have a return on -- an ROI above 15%. Each of them are on low-cost feedstock. Each of them are integrating monomer and polymer capacities, but I will let Bernard give you the details this afternoon on these projects.
The other segment, of course, of Downstream is Marketing & Services business. Momar will also give you some details. But there, we have also I will say, a strategy which is clear with 3 pillars in order to deliver noncyclical cash flows. We like this business. The first part is to continue to expand our retail activity in large fast-growing markets, which means China, India, Brazil, Mexico, to say not the lowest, the smallest one. I should not forget Saudi Arabia or Angola. So we target to expand our number of stations by more than 4,000. But Momar will give you the details.
Another pillar of it is to develop the nonfuel revenues. It's important in a market like Europe where we have like 4,000 retail stations. I have sometimes questions about the future. I can tell you that we are developing there, but already 40% in fact of the cash flow from this European network are coming from nonfuel revenues. And shops are very important and it's important -- so this is -- we continue to develop it and to leverage this by raised competence in another continent like Africa. We have the largest retail network, in fact, in Africa not only for fuel but globally speaking compared to other businesses and we can leverage it by developing additional revenues.
And the third pillar, like for Bernard, is to also grow in the low-carbon economy, on low-carbon fuels. Clearly, we see trends where petroleum products maybe will be substituted in the future even if it's -- the pace of it will be decided by the society. But there are new businesses like EV charging and we have today around 20,000 EV charging points. We want to develop this business not only in our retail networks but beyond. We are also developing alternative fuels like natural gas for trucks, LNG for bunkering and hydrogen in the future could be another fuel. So Momar will come back on all of that. Remember, the headline of the slide but then again, we invest and will grow our future cash flows, an increase of around $500 million, $600 million on the period, $100 million per year from '19 to '25. I will leave to Momar the task to comment on this slide or the development of the networks. Thank you.
So this concludes the strategy for our, I would say, traditional oil and gas business. And now let's go to the other part, which is to invest in growing energy markets for the sustainable long term and it's mainly, of course, about LNG and electricity.
I will not comment the right -- the left part of this chart. Helle has done it already, but I will just insist on the consequence that we took for strategy of Total. Taking climate change for us means that there will be an evolution of energy markets, so we have to take that into account in our strategy.
Oil projects, it was clearly developed, but we will lower -- we'd focus on low breakeven in order to avoid, in case of lowering demand situation, where we could be facing lower prices. But we want also -- but on the other side, there is a growth on the natural gas. So the idea is not only to be a gas producer, LNG producer but to again to develop the full value chain of natural gas. I will come back on it and also to take benefit from this low -- the electricity -- growth of electricity demand to develop a profitable and sizable low-carbon electricity. And last but not least, to also invest in future businesses, new businesses which will arise in a low-carbon economy world, where the carbon value. You will see businesses like CCUS, our natural-based solution, which will have a real profitability.
So let's embark into this presentation or strategy and first, which we call integrated Gas, Renewables & Powers, which is a segment on which we report financially. There are 3, I would say, pillars of the strategy. I could have added a fourth one but let's main -- let's speak about the one which we invest the most.
Of course, first, global LNG. With the portfolio of Total will expand up to 50 million ton per year of sales by 2025. I will come back this afternoon, Philippe and Laurent will also detail it together with Arnaud. Second, in electricity in Europe, we have built a position in Europe. We want to be a producer of electricity, and we have either from natural gas or from renewables and a distributor to the end customers. We're not a utility. I will explain to you why, but we want to be on both part of the chain, including also the trading of electricity. I will comment on it.
And then the last part is renewables worldwide. As Helle told you, there is a clear growth of demand for electricity. Renewables are the core of it, and we have the capacity to invest in selectively in projects in order to be a renewable electricity producer in -- to worldwide scale.
Globally speaking, on the period 2019-2025, the cash flow from all of these businesses will grow by $3.5 billion so it's a big part of the increase of the cash flows that we will show you, mainly of course, coming from LNG but the electricity part will also contribute. And the other figure that -- which is the headline of the strategy that we will invest $1.5 billion to $2 billion in low-carbon electricity, which represents 10%, more or less, of our CapEx.
So LNG position, as you see, it's on one side, yes, we are growing our LNG sales by up to 50 million tons. Last year, it was around 20 million tons, with 20 million tons contains 5 million tons, more or less, of spot. We didn't put spot sales on 2020-2025. Obviously, Laurent will explain what he will do but it's difficult to plan. It depends on the market, but it's part of the activity, obviously.
So we are today, with these figures, will be the second-largest player among the majors in this LNG business. But as you can see, in fact, the portfolio that Laurent is in charge of to optimize is 40 million tons in 2025 because 10 million tons are sold through the equity JVs of the Upstream.
Most important from my point of view is that you see that it's quite -- it's a multiplication by 2.5 of the cash flow by between last year and 2025 going up from 2 million tons -- $2 billion to around $5.5 billion by 2025. And in an environment which is around European gas, 5.5 and we have 2.5, so not very -- we're not too optimistic. We know that you have many questions. So we have been cautious in the way we appreciate the future of cash flows of LNG business. But it's clear that it's a very contributive part of the delivery of cash flows we'll do in future years.
I would like to make some zooms on 3 areas. First, Russia. I know that when we launched the Russia venture in 2011 by acquiring the stake in Novatek, there are some doubts. We are spending money. What will be the cash out? Today, of course, it takes time. Honestly, the thing is a little through, but 9 years after, we can show this slide where we will begin to deliver cash out of our Russian investments.
Of course, Yamal LNG has been a success. Most -- some of you have the opportunity to visit the plant. We repeated it. 1 year -- it was in the budget. It has been delivered 1 year in advance of the planning and it works. The capacity today is above -- the production is above the nameplate capacity, so beyond expectations. We have embarked on a new project on Arctic 2 with a different, by the way, concept. Arnaud will explain you that why it's more efficient. But the results from Total Group is that we have invested $6 billion in Novatek as a shareholder. The value of all that is around $12 billion today.
And on the cash out, we have -- we'll grow our cash flow from Russia to around $1 billion. It is the average on the period 2019-2025, so in fact, by end of the period, it's higher than that. Coming, of course, mainly from Yamal, for $500 million, but also from the increased Novatek dividends, which is active. And as a shareholder, we encourage Novatek to increase the dividend but no difficulty to do it. It's backed -- of course, this company has a growth profile which is very attractive. And so it will represent around $1 billion of cash flows, these Russian ventures, for the coming years. And I think it's sizable. And I would say is of course, a reward to the risk that we took by investing in the country.
The second position we have built, maybe it's just to -- I don't want to make any geopolitics here but just to show the other side of the Atlantic is here in the U.S. where we have proof in the last 2, 3 years, we have been quite active. Of course, with Cameron coming from the LNG portfolio but Cameron, this acquisition allowed us to develop an alliance with Sempra in North America and in particular, we -- and this is not only to extend Cameron together but also to build new LNG facilities on the Pacific coast, in Baja California, a project called EnergÃa Costa Azul.
We have been also dynamic by seizing the opportunity to receive $800 million from Toshiba against 2 million tons of U.S. LNG, which in their large portfolio that Laurent Vivier will manage is a big share but it's manageable by the Total teams and with $800 million obviously when you divide by 2 million ton per year over 20 years, I think, it lowers the cost of LNG, makes this energy very competitive. At the end, by 2021, we will have 10 million ton per year of U.S. LNG and we'll be the largest exporter from U.S. LNG by this time. And it contributes, of course, to the increase of the cash flows.
The last comment -- the last region I want to comment is Europe. And sometimes, people ask us, "What does it mean to develop an integrated strategy on natural gas?" I think it's clearly there. It's just a demonstration that in Europe, as Helle told you and Philippe will insist, you have a domestic production -- gas domestic production is decreasing, so you have room for more LNG.
And we have a pool strategy, it's a demand pool strategy. By developing in Europe, some portfolio of customers, either from marketing we'll have around 3 million gas customers in Europe, representing 8 million tons of LNG. All through our gas-fired power plants, which are feeding our electricity business, which will consume around 2 million tons of LNG, only 3 gigawatts. So 3 gigawatts, we'll have them beginning of next year. This represents 10 million ton of energy.
We have pure gas capacities. We have acquired them from Engie. And so half of the gas capacities, which were not fully used by Engie, in fact, will be used by our internal value chain, I would say, by our own consumers and consuming capacities. And of course, we have the LNG portfolio. So out of the 50 million tons, 10 million tons of energy, which today are not long-term committed, Laurent will be able to direct them to Europe to feed this value chain. So it's clearly the idea behind the integrating and going down to customers is -- in order to be able to take the maximum value of LNG in our portfolio.
Moving to electricity. So again, what do we want to do in electricity in Europe? Helle told you, in Europe, there's a liberalization -- it's a liberalized market, which means that you don't need to own, to control infrastructures, so you don't need to be a utility to invest in that business. That is the main message today.
So clearly, we do not intend at all to invest in any infrastructures, which have really a very low profitability because we have free access, equal access. In each European countries, we -- the market is organized to these new players having this equal access. And so there, we are building a business around the 3 activities, which are generation, so production, however, from natural gas or renewables. I should also speak about energy storage where we develop a business with Saft, a battery company.
Also customers and customers, so we'll -- today, we have around 3 million to 3.5 million, 3.5 million to 4 million electricity customers in France and Belgium. We target to have 8 million by 2025 and to continue to grow this business. We have also I mentioned, the strategy to develop some charge points for EVs in the future, so that customers -- in the mid -- I would say, intermediary, you have a trading business. And this is already -- we have already a big activity in electricity trading, which is linked to our gas business. And with more decentralized point of production, clearly, there will be a new business but aggregating all these resource, this electricity productions and customers and to optimize all that and this will be additional sources of revenues.
That's for Europe. Outside of Europe, clearly, we don't have the same approach. We want just to be a renewables generation producer -- power generation producer -- renewable producer then -- and so it requires some investments. But we want, of course, to be able to give you to our shareholders the same level of returns that we can have in our other businesses.
I know -- we have made a chart to answer too many questions we have. It's clear that when you invest the typical project renewable project, IRR is around 6%, 7%. And then you will have different sources of revenues. You will develop it, and clearly, we have the capacity and the balance sheet to take the risk of development. You can, of course, put in place, some leverage on these -- of these projects because there is quite an appetite. You can also farm down part of these projects when they do it.
You have many financial investors today who are looking to order in order to have access to this type of nonregulated assets, which -- and are ready to pay NPV 4, NPV 5. So -- and then in the end, we can operate and maintain them. When we add all these different flows of revenues for the equity that we'll inject this, the target is to obtain 15%. We've done that in countries like Japan. We are on the way to do it in France with a portfolio that we have acquired last year from Direct Energie.
And in fact, the business model is to be able to have a pipeline of projects which will have to be -- a pipeline of projects to divest 50% of them regularly in order to have a permanent sort of cash flows coming from the divestment and to leverage your equity. So it's a capital-light model at the end. So you can see, of course, investments and 100% of around $4 billion per year. If you make the math, you will find around $600 million to $800 million per year of capital invested in this business by Total. And so this is the way we want to build -- develop these renewable portfolio worldwide.
Last pieces of this presentation on the new energies, the low-carbon economy is that there are over areas of our businesses which are today a very early stage, but on which we believe we should invest as well. These are what we call natural base solution, what we call CCUS. This represent more or less, each of them $100 million per year investments. However, R&D and pilot projects on CCUS, we have pilot projects in Norway, in U.K., and we are studying others, our natural-based solutions.
It's building positions for the future but in a world where people want to -- a lot of people want to give value to carbon. This will become profitable businesses in the future. So don't see that as compensation. We don't try to compensate at all. We want to reduce our emission. We see that as investing in business which are linked to the evolution of the energy markets and to anticipate on the carbon pricing. I should -- we could have add on this slide, by the way, all that we do in storage, energy storage and batteries is also for us a way to develop the business, a profitable business on these new energy trends. And Saft is working out to develop business. It's a profitable business already which will contribute more in the future.
So all this strategy can be synthesized and I've seen one indicator, which is what we -- this carbon intensity of the energy products sold to our customers. It's a sort of scot-free indicator, which we introduced last year. We are not alone to manage it as the difference of scope 1 and 2, where we are clearly responsible of our operations, this one, we can achieve it in the society of our customers are changing their behaviors. And we are not car manufacturers.
So it's the car manufacturing industry which will change the pattern of the type of the fuels which will be used by our customers. But having said that, until 2030, we have a strategy and it's, of course, to sum of all what we did, I developed this morning, which should help us -- which will allow us to reach an ambition to lower the carbon intensity of this energy product we sold to our -- we sell to our customer by 10% to 15%.
You can see that between '15 and '18, we have already made 5%, but we'll continue to work in the various direction I gave you. Beyond 2030, it's more difficult to plan. I know that to do that is a new train to announce that everybody could be neutral in 2050. To be honest, I'm, maybe I'm too pragmatic but I would like Total to deliver until 2030 and to be judged on the capacity to deliver rather than just explaining that we can do something else when we will not -- none of us will be there tomorrow, in 25 years.
Coming back to the last part of the presentation, which is to summarize all that we said and to -- as I told you in introduction, we have a much better visibility on the road map until 2025. And I want to also few slides to summarize it and that will be, I think, the key slide of the presentation at the end.
First, the production. The production, of course, will follow our investments. We will continue to experience quite high growth, more than 5% per year between 2018-2021. So the year to come, 2019 is around 8% but 2020-2021, we still have an interesting growth because projects are still ramping up because we made some few M&As. For example, the Anadarko M&A, even if we'll sell some E&P assets, so it is why it's balanced. So this is the first phase.
Then of course, there is no miracle. '22-'23, we will see a form of plateau. It's a counterpart of the fact that in 2015, '16, '17, we didn't sanction new projects. So in this industry, you have 5x -- 5-year time lag, we'll stabilize it. But from '23, we will experience another period of growth with all the projects I mentioned to you, which are being sanctioned, which are above 3% and mainly of course, driven by energy projects.
We can see this growth as well because we have quite a low decline in our production base. 50% in terms of production of Total will be from long plateau with no decline, either LNG projects or these large concessions that we have in Abu Dhabi, in the Middle East, for example. So of course, it's an advantage. It's an advantage for future production profile.
What investment do we need to make this program? We need -- and the guidance we give you today is $16 billion, $18 billion, which includes around $1 billion to $2 billion of net acquisition like before. So that means the organic is around $15 billion, $16 billion. The previous guidance was $15 billion, $16 billion, so it's -- honestly, the discipline is still -- is absolutely maintained. We confirm that we will be at -- as I said, at the end of the -- as I said during the call, end of July, that if on '19, '20 considering the Anadarko acquisition will be at the high range of this guidance, around $18 billion, as an average, on both years.
It will depend about, of course, of the capacity to close the various deals that we have either on the acquisition side or on the divesting side. So that's why we give you an average on both years. So $16 billion, $18 billion, the discipline is maintained. And we spend with this money, these capital [introduced] expenditures, on exploration, expeditions, of 55% of it. iGRP will cover around 25% of this CapEx, 15% in LNG projects and 10% in low-carbon electricity or $1.5 billion to $2 billion. So 10%, 15%, 55%. And Downstream, we maintain around $3 billion of investments, which means 20 -- more or less 20% of the global CapEx.
These production profiles, these CapEx spends, result in strong cash flow growth. And during the presentation, I identified the main source of driving this growth of cash flows. The LNG, we mentioned the LNG. We mentioned also the Downstream, $2 billion, $3.5 billion from iGRP, which means -- and it will be more or less regular along -- just regular from 2019 to 2025. We give you the chart for $60 per barrel and the assumption -- we have the assumption on the gas price that we used, $5.5 billion for Europe and $2.5 billion for U.S. And so this is quite an impressive growth for cash flow. You have also the sensitivity on the next 2 years, around $3.2 billion for 2019, 2020, on this chart.
Just to illustrate the strategy, this chart, it will give you also the split of the capital employed and the cash flow by 2025. And you can see that clearly, we invest more in coming years in the growing markets, LNG and electricity, as we said. And this will represent a split around 50% for E&P, 30% for iGRP, 20% for Downstream and capital employed. And the cash flow by 2025 should be around 55%, 20%, 25%. So iGRP, of course, is a growing segment. Cash flow will begin to be delivered by 2025 and will be cash positive, of course, largely because of LNG, and the other segments are taking place. So this is, I would say, a chart, which has [strengthened] the way we move toward a sustainable long-term businesses step-by-step.
So what do we do with the cash flow, which is, of course, an important chart. This chart, we presented to you in February '18. There is no change of the priorities of cash flow allocation. The Board of Directors again reviewed all these projections for 2025 and confirmed that the priority must be given to capital investments because we are able to generate opportunities with high returns, we speak about 15%. So -- and we have a target and we are on line with the target of 12% on return on equity. So we want to continue to be able to seize opportunities. Having said that, we have confirmed a framework of $16 billion, $18 billion CapEx, which means organic CapEx plus acquisition minus the divestments.
Second priority is the dividend. And clearly, having discussed with many of our shareholders, they appreciated dividend growth. So we had the previous guidance on 10% over 3 years. You've seen the announcement, I will comment it after. So there is a new guidance to accelerate the dividend growth considering the higher cash flow generation of the company.
The third priority, as explained by Jean-Pierre, is to maintain a strong balance sheet and gearing under 20%. Under 20% is clearly a third pillar of cash flow allocation. And then share buybacks. As we announced it in February '18, we consider share buybacks as a way to split, to share the additional revenue that the company can generate above $60 dollar per barrel, let's say. We have -- are committed and we are -- of course, we will execute the $5 billion program on '18 -- from 2018, 2020. The first 2 year, we will have buyback around $3 billion. And so we'll have $2 billion to buy back next year. And beyond that, we will continue with the same policy to use share buybacks to share extra cash above $60 per barrel.
So when we -- the Board of Director has a full discussion about this perspective of cash flow growth, I would like first to remind you that when we speak about increasing sustainably as a dividend, in Total, it's a long history. We have good fare as a track record. Of course, it's in euro per share. The history of the dividend since 1982, it has never been -- it has never decreased. And if we look even from the last 20 years, this -- average growth was around 6% in euro. In dollar terms, it was a little higher. It's clear that there was a strong period of appraisal of the dividend between 2000 and 2008. And then after, it was lower.
But the Board reconsidered all this policy and is comforted clearly by the capacity as a company to deliver strong cash flows like we've done in '18, in '19. And so I've decided to -- has given itself to further guidance of a dividend growth of 5%, 6% per year. And we will want to talk and with an immediate effect next decision is to increase the next interim dividend for the third quarter of 2019 by 6%. So that's EUR 0.68 per share instead of EUR 0.64 per share. If we continue on the same level for the fourth quarter, which is a high probability, I think, that means that the dividend on the year 2019, because we already made 2 interim dividends, should be increased by 4.7%. But then the guidance will be -- will continue to be followed by the Board.
I know that for our fellow shareholders, there is also a growing concern about ESG. And I mean we have a lot of questions, we need some more truth. I would like -- again, I mentioned, of course, our commitment to the EV environment. I would like also on this chair to remind you, but I think you all know that we are -- our commitment to ESG is quite recognized by a lot of rating agencies and the CDP on climate change and the water security, we have a grade of A minus, which is the best grade for an oil and gas major, which has been attributed by over classifications which are more -- which are important for some of you and on which we are recognized.
I would also insist that, in fact, on the societal part, the social part of it, the societal part of ESG, the S, it's part of the DNA of the company. When we speak about investing more and more in Africa, for example, it is because we have a special way to work there with our teams and have a good relationship with all the stakeholders, locals [speak] up to us. We create jobs in these countries like in Nigeria. Now the Egina projects, which has been delivered, by the way, with a budget -- 10% under the initial budget, which is a good result for the teams. 77% of the hours have been spent in Nigeria on these very large projects. So we developed a specific know-how. We are supporting entrepreneurs in Africa through different ways. We are also investing in education. And so this gave us, I would say, a specific know-how, which means that we consider that we -- yes, we have a sustainable ESG commitment in this company.
This is the end of this presentation which was longer than the previous years, 3 voices, maybe more details, but it's also once a year, the right time to give you a review of the strategy. Clearly, we offer to our shareholders a business model based on sustainability and profitability. We give priority to invest in the growing markets: natural gas, LNG and low-carbon electricity. We maintain on both -- on one side, we want to maintain a strength -- a strong discipline on organic breakeven and balance sheet because this is the way to cope with the volatility of energy markets.
Discipline is also for our investment program, $16 billion per year over 2019 to 2023, extending the cost-saving program on OpEx and targeting $5 per barrel, only giving that we have a strong visibility on the cash flow growth, $1 billion per year additional each year between '19 and 2025, which gives us room, of course, to improve and increase sustainably as is on this growth on shareholder return, as I just explained to you.
This is the end of our presentation. I thank you for the attention, and we'll be ready with -- together with Helle and with Jean-Pierre to answer to your questions. Thank you.
[Ladislas]?
==============================
Questions and Answers
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [1]
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All right. So time has come for the Q&A session. I will ask you to raise your hand and introduce yourself when you have questions. And there are some microphone that are going to be distributed. Okay. So we have a question here.
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Jason Gammel, Jefferies LLC, Research Division - Equity Analyst [2]
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It's Jason Gammel with Jefferies. I appreciate the comments you that you made at the end, Patrick, about growing shareholder returns. Back at the second quarter conference call, you did mention the target of around 40% of cash from operations potentially being used for shareholder returns. And I just wanted to inquire whether that was still a target that you consider reasonable, and should we then think of buybacks as making up the gap between the dividend and reaching that 40% target?
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [3]
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Yes. If you make the math, you will see that you are not far from the 40%. By the way, if we have -- 6% growth of dividends, it represents more or less $500 million. So out of $1 billion, it's more than 40%. So it's a [train affair]. So all that is calibrated. But the Board of Directors expressed this guidance as with dividend growth, which is, I think, more tangible for everybody, linked to the year unless there was evaluation of the company rather than just a percentage of cash flow allocation.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [4]
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All right. Here, please?
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Sam Jeffrey Margolin, Wolfe Research, LLC - MD of Equity Research & Senior Analyst [5]
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This is Sam Margolin from Wolfe Research. On the CapEx for the next 2 years, as you mentioned, there's an offset between disposals and acquisitions, which includes Anadarko. Anadarko is a little bit higher than the disposal target. So just wondering if you could flesh out the underlying organic side of that CapEx. It might be going down a little bit to make up that offset or if it's just within the range because you hit the top of the range.
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [6]
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No. No, it's clear. We gave you -- I told you that of these 2 years, the CapEx level will be at an average of $18 billion. So it's at the high end of the range, $16 billion, $18 billion, which means that you take the $3 billion, you divide by 2, $1.5 billion, that means that we -- the organic around is $15 billion, $15 billion, $16 billion. So $15 billion, around $15 billion. So there is no impact. It's just the range that we gave you as the CapEx is taking into account. So it's different. But again, we didn't try to match the $8 billion or $9 billion of acquisition by the $5 billion of sales.
We introduced the $5 billion of sales because, as I said, we have a very large portfolio. It's part of the dynamic internally. We didn't make the deals of Anadarko to grow. We made it for the value, not for volume growth. So it gave us the opportunity to continue to high-grade the portfolio by divesting part of the 3 portfolio. You will see some sales we've done in the North Sea. We have other to come that at the end, it's taking into account into -- so there is no lower organic CapEx. The organic CapEx, which were, I think, around $14 billion. We'll continue to grow $14 billion to $15 billion. And you are adding these additional -- which means, by the way, but don't expect a large acquisition by Total during the next 2 years.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [7]
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All right. A question from Oswald.
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Oswald C. Clint, Sanford C. Bernstein & Co., LLC., Research Division - Senior Research Analyst [8]
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Oswald Clint at Bernstein. Two questions. So first, I just wanted to talk about coping with volatile markets. I know it's a 6-year plan you're giving, but I just wanted to focus in on 2020, please, if I could, because you spoke about spare capacity rising in chemicals. I think on your exhibit in 2020, 2021, you talked about LNG markets not tightening until 2021. So 2020 could still be soft. There is a lot of oil supply still coming next year from your [own] projects in Norway and Brazil. So I just want to get an understanding, the dividend steps up, you have a commitment to it, but if 2020 happened to be a particularly weak macro environment, what steps would you take here to protect that commitment? Would -- you spoke about Angola tiebacks being cut back, but what else? Do you -- can you cut back elsewhere? And -- or do you just rest on in terms of the balance sheet to pay the buyback, the $2 billion buyback plus the dividends?
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [9]
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Of course, we will not -- if we do that commitment today, not to explain you in 6 months that we renounce to it. I mean otherwise, it's -- so clearly, we do it because we have the room and the space in the balance sheet and the cash flow to do both. And -- so we intend to execute it as a buyback. I'll remind you that the buyback is linked also to oil price since the beginning and to do the dividend growth. The dividend growth is a priority and will be done. Having said that, yes, you're right. We can have the visibility of the soft market, unless we have other events like the one which happened last year.
Last week in Saudi Arabia, we set only a stance -- we saw potential in the market. So okay. It's clear. But the fundamentals of the cash flow generation are strong enough to give us confidence that we can execute it. So 2020, again, I think -- and it was clearly as a consideration by the Board of Directors if -- because as we -- as I said, what we announced is sustainable. We don't do it just for coming back on it next year.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [10]
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A question from Irene.
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Irene Himona, Societe Generale Cross Asset Research - Equity Analyst [11]
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Irene Himona, Societe Generale. I had two questions, please. Obviously, gas and LNG is a core part of the strategy of both growing and increasing sustainability. On Slide 49, you gave us your sensitivity to the oil price, making certain assumptions on the gas pricing. I wonder if you can give us an insight of your gas price sensitivity in terms of either earnings or cash flow.
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [12]
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There is a special slide that -- which is an annex because we knew we'll have the question because we had the question, of course. Could you put the slide on the screen because we tried to -- it was not -- it's in the annex. So you will have it, for all of you. We did not comment it during the presentation because of the dynamic of the presentation, but you have the answer. Maybe Jean-Pierre will comment it.
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Jean-Pierre Sbraire, TOTAL S.A. - CFO [13]
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Yes. So continuing our production, so 50% oil, 50% gas. For -- on the gas portion, more or less 50% is oil-indexed, 25% linked to NBP. And so you'll see the sensitivity for one [drop] on the NBP, you should increase, representing $300 million of additional cash. And the balance, 5% linked to Iara. So very small portion. And the remaining 20% sold on local market as the case in Asia, in South America. So not very sensitive to gas price -- international gas prices. So all in all, our production is about 75% oil-indexed if you, of course, consider the oil production as well.
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Irene Himona, Societe Generale Cross Asset Research - Equity Analyst [14]
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And my second question and more general one. I mean 10 days ago, we had the Saudi attack on very large infrastructure. And I wonder how you, the leadership of Total, begin to think and analyze that event in terms of risks to you because, clearly, you're a company with a very, very large infrastructure around the world. Does it change how you look at risks?
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [15]
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The first point is that I gave instruction to be sure that we could have emergency plans for people in the Middle East because I'm a little afraid about reactions in that region even if there is a lot of political leaders trying to calm down. But honestly, it's an -- it's a huge event. We've never seen such an attack on -- even during -- in '79, which was the worst year in the history of the Middle East [when Juhayman went on war]. We just never seen such destructions of oil facilities. So it's a fact.
I think this will be taken into account, as I said in my introduction, by the markets. The -- there was the idea that a perfect security of supply is not true. It's not a reality. Having said that, I mean my answer to you will be that, as always, we -- the best -- one of the inconvenient but advantage of the portfolio of Total is that we have many countries in which we produce. So sometimes it's a disadvantage in terms of our location or human resources and we have the temptation to try to refocus our people in the main countries.
But on the other part, the fact that we have a large portfolio of products -- of countries from this perspective is a bit to our advantage. We suffered already in Total when we lost -- we lost Yemen. So we didn't lose it because it's still movable and preserved. But we had to face the situation where suddenly a large portfolio -- and it was -- in few minutes coming back, my cash flows will grow by another $1 billion.
So we did not anticipate Yemen coming back in these figures. So we suffered it. So I think the answer to your question is don't focus too much on one country and don't -- be careful not to overexpose the company to one specific location, which, of course, the limit of that is that the large fields in this world are located where they are. I cannot move them. And so I have to face the situation. But it's clear that it's -- this is the main question that -- the answer that I could have to you -- to your questions.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [16]
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All right. Another question on the left.
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James Matthew Evans, Exane BNP Paribas, Research Division - Analyst of Oil and Gas [17]
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It's James Evans from Exane BNP Paribas. A couple of questions. Firstly, sorry to go back to the shareholder returns, but one thing I want to ask about is about this evaluation of going higher on the dividends versus more buybacks. I mean obviously, over the last year, the conversation has sort of increased in volume around transition pressure. There's probably more talk about decapitalization or not increasing the overall dividend burden too much in dollar terms. And I think, Patrick, when we sat together in June in Paris, the sort of the audience developed a greater focus on buybacks than before. So what -- is that conversation evolving at broad level? Or do you sort of see maybe the change in the next few years coming with a greater focus towards buybacks versus dividends as maybe we get towards the middle of the decade?
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [18]
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Listen, I think we have spent a lot of time on this question. We also discussed with some large shareholders of Total. And each time, I've asked the question, that they observed and loved the dividend. So at the end, I know that some markets in part of the U.S., our trend, today, it's quite fashionable to increase buybacks. I hope so that some of my peers are doing that. The Board clearly does not want to over-constrain the company. And we're in a -- honestly, we are in a period of time where we are to invest for adapting the company to these new markets. And we prefer to keep that flexibility for the future. Having said that -- and again, we consider share buyback as a tool to share additional revenue.
So if price is going up again, $70, we'll have much more revenues. We will use the share buybacks. They will not be -- disappear, but I think the discussion was clearly -- spent some time about what is the best tool. And at the end, we think that today, the appetite from our investors is even larger for having direct cash. There are lines of cash flow coming into our portfolio rather than just -- the buyback is an indirect cash. It's an indirect return. We buy back, but then we have to eliminate. The share buyback -- the dividend is a direct access for the cash for investors. So I mean it's quite simple. And in a world where the money is not for the value, cash has a value, which is important. So this is the way that the Board has discussed it.
And the second consideration obviously that is it a sustainable dividend? Because obviously when we do that, we increase it. We increase by $500 million per year, but we are planning at least half of it, the 3%. And the answer was clearly when we look carefully to all these figures that we show you about the cash flow growth generation, but yes, it is sustainable, that we are very confident on the -- and the fact that, again, all the moves we have done, and including the last one in Anadarko, has given us a strong visibility of this production profile based almost [no notion order]. Projects are identified as a matter -- as -- for all teams to be able to deliver them, which, of course, is a challenge. And as always, if we commit to something, that means we have some margins to maneuver; otherwise, we will not commit.
I think we have this reputation. Know we consistently deliver on our objective. And if we do that today, it's because we will deliver on these objectives and we can sustain the scope of the dividend. And I think again, it's also a reflection of the Board of Directors of the valuation of the company, I would say. And we think there is -- by the way, like most of the people will follow Total, the average price -- objective price today is around $58 -- EUR 58 per share. We are at EUR 49. So there is room for improving. And I think I'm strongly believe that the value of -- the future value of the company is counted by your strong cash flow -- of the dividend cash flows, of which we are appreciated.
So this is -- all this combination and -- is a result of the work and discussion with our shareholders to decide what is our priority. And again, we could have stayed today, telling you we have announced a program, February '18, we will execute it. It was when we saw all these cash flow goals coming back and being confirmed, we think it was the right time to accelerate this dividend growth in September '19 and not to wait another 1.5 years.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [19]
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Okay. Thank you. We have a question on the very left. Thank you.
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Unidentified Analyst, [20]
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It's (inaudible) from Redburn. I just had a question on your commitment to reduce your Scope 1 and 2 emissions to less than 40 million tons in 2025. How do you view spending in this area? Is this simply a cost to the business? Or do these initiatives around energy efficiency and process electrification also contribute to your operating cost reductions that you've outlined in the presentation today?
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [21]
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Of course, it's not a pure cost. I mean that is the logic. You work -- I mean I have a strong belief that you progress on nongovernmental matters, it's -- you may sink economically. And energy efficiency, when you are in refineries, it's just lowering your burden -- your cost, in fact. And so people are motivated. What we will tell -- what we are telling them is that the return on it, you can take into account the cost of capital, you can take into account the cost of energy in order to invest more efficiently in that one. So yes, it's clear. It's -- it has a return. It's not just a burden to be clear. Otherwise, we will not -- but I think having said that, it's also a responsibility of our society, that's why we are calling for carbon value.
We're advocating for that because it will be much easier for all of us. We are using internally $30 per ton and $40 per ton [high] price. And at $30 per ton, I can tell you, we have projects. And yesterday, I had a discussion with my colleague of a big company about our LNG projects in the Far East. And I told him we will implement CO2 injection because it's less than $20 per ton. So we will do it in these projects. And I have his support by the way, even if the teams could discuss. But I think it's important that some -- that we take actions on these ones, and this is in our hand.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [22]
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Okay. A question from the lady on the right.
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Lydia Rose Emma Rainforth, Barclays Bank PLC, Research Division - Director & Equity Analyst [23]
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It's Lydia Rainforth from Barclays. Two questions and one clarification, if I could. And Patrick, thank you for the visibility that you provided. Can I just check, on the dividend increase, that 5% to 6%, is that all the way up to 2025? Or is that just to the 2020 period?
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [24]
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No, no, no. It's clearly for coming years. It's written. So for coming years, it means the Board had given the guidance for coming years. So it's not a short-term one, no. And the translation on immediate effect is to show you that we walk the talk. I mean that the Board told me we'd be doing it immediately. No, no. It's clearly for coming years, not a 1-year guidance.
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Lydia Rose Emma Rainforth, Barclays Bank PLC, Research Division - Director & Equity Analyst [25]
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Okay. And then just the -- actually, two questions. Firstly, on the cash flow growth that you've outlined, if I run that math through, it looks like it's about 4% per year growth in cash flow, which is very similar to the level of production growth coming through. Given everything you outlined around the digitization program, the global services cost savings, I would have thought that there'd be more cash flow growth coming through. Is that fair? Or is it just in terms of there's other cash flow linkage somewhere else? And the second question was around the gas side. And clearly, you were the OGCIs of yesterday. There is more and more pushback about gas being a low-carbon fuel. Is that something that you think that the industry is doing enough to address in terms of the methane emissions and that you will actually get the policy support to deliver the growth in gas production or gas demand? So...
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [26]
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You can -- I was trying to check the figures. You said the cash flow growth is 4%, but the production growth from '19 to '25 is not 4%. We have a plateau during 2 years. We are 5%, 3 years; 3% at the end. So it makes more 3% -- 2% to 3%. So in fact, the math are okay. The cash flows are growing quicker in the production growth, but you will have time to look at it. But I think you're right. It's quite consistent. Let's be clear. The cash flow growth that we announced, you've seen that we have taken cautious assumption on the gas price. We have not -- we are -- the gas price assumptions are quite cautious as well because of the availment.
And yes. Methane. Methane obviously I think it's a clear point. There are 2 points there. One is what we can do at the level of the major companies. And yesterday, we had a presentation with my colleagues of the Oil and Gas Climate Initiative. And clearly, this group of leaders are committed, and we will reach 0.25%, which is very low, in fact. The question is more how do we involve the food industry in that moves.
And remember that the methane emission is not only a matter of all our operations. It's also a matter of the food chain. And how can we mix two worlds downstream because the emissions could come also from infrastructure, from distribution network in cities. So we need on this part to work as well. It's not -- it's a full approach that we should have, not just have in one on which clearly we can move, but it's not -- we have already made progress, we'll continue to make progress, but it's only a small part of the food chain. So yes, it is clearly a priority, I think, for the gas industry.
Again, this is where we're identified. And we are also investing quite a lot to better measure it to be sure that we are not overstating these methane emissions globally, but it's something to which the gas industry has to answer. But honestly, at the end, look at continents like Europe, we are facing the out core. We are facing earth nuclear. We want electricity, I think, in Europe. So the system -- honestly, I'm convinced that there is no way to make an energy system working without having a reliable source of supply, which is natural gas. Well, yes, there'll be more renewables, but we need energy storage, which, today, we don't know how you can -- to face the seasonality of the demand for electricity. You don't do it just with batteries. It doesn't work.
You need to have other ways. And because they're natural gas, we have to invest in this carbon, I would say, neutrality business. But a continent like Europe, its future will be from natural gas and renewables. It cannot be a new renewable. It doesn't work. To face the singularity of the demand and energy storage technologies, they have a lot to be developed. And we know that quite well. We've all staffed companies in which we develop. So we -- there is the something which has to be -- which, of course, we have to advocate for it. We have to demonstrate it. And methane is a challenge, but I'm convinced we can tackle it.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [27]
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Okay. We have a question here.
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Henry Michael Tarr, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [28]
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It's Henry Tarr from Berenberg. Just to come back on the cash flow, I think that's $1 billion a year. The bulk of it is coming from sort of the integrated gas in the $3.5 billion and another $2 billion from Downstream, Refining & Chemicals and M&As. Does that imply for fairly limited growth in the Upstream cash flow portion despite the production growth that you're...
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [29]
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In the E&P, I mean Upstream is covering LNG Upstream, so be careful then. Where we segment it, what we call by iGRP, the LNG part of the growth of -- production of the LNG from Upstream is going from 350,000 to 800,000 . So there is a big growth there, which, by the way, is part of the stabilization of low decline. So this part is reallocated to, what we call, iGRP. And it's clear that it has the most impact besides that. But true, that we have a profile, which is, in fact, quite stable in terms of cash flows. But again, this -- if you eliminate LNG, this production is declining not by 3%, but by 5%, 6% because the LNG is contributing, too. So I think that stabilizing means, in fact, somewhere growing by 5% of cash flows and the underlying assets.
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Henry Michael Tarr, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [30]
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That's great. And then just secondly on LNG. As you say, the bulk of your contracts now are oil price linked. As you go forward and sanction the new projects, do you see that oil price linkage holding through the next decade?
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Helle Kristoffersen, TOTAL S.A. - President of Strategy & Innovation [31]
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I think you will have more on this, this afternoon through the focus session on LNG. And so I invite you to ask again this afternoon if you didn't get the answer from Philippe and Laurent, but I think you will.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [32]
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All right. We have a question here.
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Daniel Jon Boyd, BMO Capital Markets Equity Research - Oilfield Services Analyst [33]
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Dan Boyd, BMO Capital Markets. Just a question on your sustaining CapEx. So I think, clearly, the dividend increase shows confidence in your portfolio. You have a low decline rate, as you highlighted. So how should we think about, just given how volatile the commodity market is, the sustaining CapEx that you need for your current dividend?
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [34]
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So sustaining CapEx for the -- I would say, the E&P part is around $3 billion per year. $3 billion. Of course, you have sustaining CapEx in Refining & Chemicals, which are around $500 million or 1 -- $500 million; and Marketing & Services sustaining CapEx is very limited. So I'm not sure we speak about the same thing. The sustaining CapEx, which means, what we call, to maintain just the existing base.
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Daniel Jon Boyd, BMO Capital Markets Equity Research - Oilfield Services Analyst [35]
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Yes. I'm thinking of it from, say, you commented on about $15 billion of organic CapEx. And so if you were not going to grow the dividend and we were on a downside volatility environment, I'm just thinking about how much you could flex CapEx and still maintain your cash flow?
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [36]
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Yes. It's another question to flex CapEx -- is different because part of the CapEx is committed to projects. So it's a different approach, this one. I will come back to you with the [highs and size]. I want to give you one for you. I will come back to you before the end of the day, this afternoon, I will answer to you.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [37]
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Yes. Behind?
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Jason Daniel Gabelman, Cowen and Company, LLC, Research Division - VP [38]
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Jason Gabelman from Cowen. It seems like moving away from -- and correct me if I'm wrong, $1.5 billion repurchases at $60 oil, you're kind of -- it sounds like moving away from that guidance aligned with the macro view that you laid out. There's -- you're seeing signs of underinvestment in the oil market. So I'm wondering what exactly what data points are you seeing that suggest there's underinvestment going on in the market because it seems like a lot of the investor community is worried about the opposite right now, but some of your peers are suggesting a similar evolution in the market where a few years down the road, you could see some undersupply.
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [39]
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Yes. I'm not sure if we have captured the question.
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Helle Kristoffersen, TOTAL S.A. - President of Strategy & Innovation [40]
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The question is (inaudible).
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [41]
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Yes. I think the fact that the industry has under-invested is quite clear. By the way, what we see on Total's side on a micro level when you see this plateau of production, it reflects the fact that in '15, '16, '17, we were not sanctioning projects. And I think the rest of the world has done like us. So of course, you had the U.S. shale oil impact, which has contributed today. But I'm convinced by what we observed on our profile, which was limited, by the way, for Total because we have been active on some M&A activities which have, I would say, filled some holes of these profiles.
You will observe it at the industry level by '22, '23, '24 the same impact. And because, by the way, if you continue to see the growth profile, those shale oil, which are beginning to slow down a little, you will see these impacts. There is no miracle in this industry. The fact that this industry did not sanction new projects in '15, '16, '17, it was generally the case not only for us. For most of the colleagues, we -- you will find that impact 5 years after. It's an industry where you have an impact, which is delayed, but it will appear. So I'm convinced that this will come.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [42]
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Yes. If you can hand him the microphone?
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Unidentified Analyst, [43]
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[Chris Anthrow] from Citigroup on behalf of Alastair Syme. I had a question I wanted to ask specifically on the Upstream, your Brazilian portfolio. You had spoken and said earlier about new big acquisitions. I just wanted to get a sense of your strategy for exposure in Brazil and especially in the context of -- in this fourth quarter of 2019, we're going to see several licensing options coming up. So any color there as to how you think about your exposure and then how it fits into the portfolio?
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [44]
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I would say, first, we have been the early mover on Brazil. We made the deal, a large deal with Petrobras in 2016, acquiring a position in the lara field, being -- becoming operator in Lapa. And by the way, we've done it in good financial conditions because we were the early mover, the first one. Since we have been quiet on the exploration rounds and, frankly, because spending a huge amount of bonus for exploration, this is out of -- I don't -- I'm not sure to share with you that some peers have followed. I know some of them have spent a lot of money. They discovered a lot of CO2, U.S. CO2 risk in exploring in basins we are now. And so between spending money, big amount of money on bonus, on exploration and having access to already-discovered resource where you have the datas, I prefer to spend my money on the second one rather than the first one.
Exploration, you create value which compensates the risk that you take because it's a risk. When it's exploration, you know or you don't know what you will find. And the cost of Brazilian basin, I can tell you between Lula, between Jupiter, between Libra, you have different fluid, and you observe very different. So I'm not sure that we are -- all geologists have a theory and they try to say to us, this don't go well with CO2, other part. To be honest with you, I have one disappointment around the last 2 years to have captured one license. The rest, we have no regret.
So coming to the [Tullow], because it's your question, this is a matter of question of economic conditions. And we have -- in Total, I have -- we have the chance. We been active on opportunities. We have a large resource base, so we are not obliged to do a deal to participate if we don't consider that the economic conditions are satisfactory. And so we are observing and we are calculating, working on different opportunities.
We already mentioned that as we are a partner of [Yamal], there is one of the offered field, which is called Atapu, which is in the vicinity of lara. Obviously, all teams are working on it. Otherwise, we will not do the job. Then at the end of the day, we'll see exactly what else the condition. And I know that it is complex to understand because it's a very smart mechanism. I don't know of many economists and engineers have worked on that because we have to pay a bonus, which was announced Tuesday, but then you have to renegotiate with Petrobras, by the way, to equalize that. And so this negotiation is going on, and maybe it will depend on the results of this negotiation. But clearly, I would say, if the basis of price assumptions behind it are $70 plus, this will be a problem for companies.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [45]
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Okay. Oswald, I think that's the last question that I see in the room.
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Oswald C. Clint, Sanford C. Bernstein & Co., LLC., Research Division - Senior Research Analyst [46]
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Okay. Sorry, I always liked to ask two, so I left my last one till the end. Just on your digital factory, that's a new data today, the $1.5 billion, out to 2025. I think as you described it, you spoke about availability improvements. So I wanted to get a sense of what is availability currently in Upstream, Downstream? What are you trying to get that to? I guess you also said returning capital employed is so high because your assets are already performing quite well. So what's the uplift here that you're expecting to deliver the $1.5 billion, please?
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [47]
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I think I would give the floor to Arnaud and Bernard because this digital factory came from them. They came to us and from [Yamal]. It came from the people. We have been -- maybe we have been a little slower, like always, in Total during the last -- but in fact, there were many proof of concepts around the company which have been developed. And we came to -- they came to us in last spring telling us, okay, no, we need to scale up and to accelerate. And by the way, I think that we would propose you to make a -- in February a field trip in Aberdeen because we have a lot of things to show you in Aberdeen about what is happening underground. [Karine] has started, and it's the first digital field that I really see in the company. It's -- I was there 2 or 3 weeks ago, and I've been impressed. So I think it's good to see that. Teams are working on [ready] cases, business case where they can show you the concrete answer, but I will leave the floor to Arnaud and to Bernard because they are behind all these digital factors, and they are the motivators. So please?
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Arnaud Breuillac, TOTAL S.A. - President of Exploration & Production [48]
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So just quickly on this very fascinating subject where we believe there is a huge field for improvement, in fact, in our industry, and we want of course to capture that. On the E&P side, and Patrick was speaking about [Karine] and how that was a smart[room] we can really lever all of the information that is available real time between the onshore and the offshore and much more efficient mobilizing teams and so and so. And there will be indeed some benefits on (inaudible).
We've already got some successful actually, small digital programs on cyclical wells in order that we close the well a bit earlier so that we can restart them faster. And it translates into getting more of our existing assets, which has been a trend in the last year. As you know, we've increased our reliability overall at E&P for about 89%, where we were in 2014, to 93% now. So we want to, of course, maintain that performance and potentially grow higher. But there are also some very positive aspects coming on costs and indeed also on capital and CapEx structures, going to the OpEx is going to be also on CapEx. So just to scratch the surface is a very important subject.
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [49]
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Thank you, Arnaud. So for refining, can you call just a few figures maybe I could share with you. This is utilization rate of IC in 2014, it was 81%; 2016, 87%; and 2018, 92%. That's in the fact book. So it shows that we have a very significant trend that we've improved our utilization rate in IC through operational excellence, through also some asset management. But now to go to the next step, we need to, of course, jump into the digital world. And this is where the idea came first last year to launch this Refinery 4.0. You know, in India, we've started together where we have around 30 people working on the known cases -- use cases to improve not only the availability, but we want now to go one step further with Arnaud together as well through this digital factory.
The idea being to work on very practical cases around assets' availability to be able to detect per head any kind of root signal, which would help us prevent some shutdown typically. And we have took up E&P, for example, investing in this [mark through] in Normandy where you can live- or real-time monitor assets in [digress] from Europe, for example. So these are all these kind of projects we are now working on. And as Patrick said, the target is really for Downstream, not just for refining chemical, but for all of the Downstream to generate $500 million of savings by the -- by 2025. So we are well on track, as you see.
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [50]
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Right. Saving, it's additional value as well. It's not only a -- it's a sum of them. But again, I think it's sizable. When the teams told us we are able to generate at least $1 billion, we have pushed them a little more, of course. Because when people come to you $1 billion, you ask for more; otherwise, you don't do your job. So we decided clearly that it's also by the way, for me, we have been very stringent in the way we manage our human resources.
We did not many layoff plan, but we did not recruit during 2 or 3 years. So we are back to the level where we were. And so now, it's time to invest in human resources in the field where we feel important for the future. And making this effort to attract young talents in our industry, in the company for the digital technology, I think, has also the attractive values. People are asking us, how do you continue to attract people to come to oil and gas companies? If we offer them the capacity and they discover this industry for these new technologies, and I strongly believe it's also for [mama] in marketing. You can generate more of the news like in electricity, this -- the direct energy.
All the business we do with B2C is a lot of digital tools. When we spoke -- when I spoke about aggregation platforms, it's just a word. But behind the aggregation platform, we have today a team of 20 people or 20 digital guys who are working to -- in order to optimize all the flows coming from various projects and customers. So it's a way to attract young talents to our companies. And when we'll embark them in oil companies, I'm sure they will be convinced that they can participate to developing the energy of the future.
So it's also that. So we said, okay, [if you're coming into the hole], it's worth to invest. And let's make it sizable, 300 new talents coming in the company. It's also a way, by the way, to adapt the way we manage and to new ways to guide these young people, they want to have maybe less vertical management rules and more horizontal ones. So let's engage in this structure. So attractiveness as a company also is important today in this world.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [51]
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All right. As I don't see any other hands raised, I think that closes this first part of the presentation this morning. And so there is a lunch which is going to be served, and we'll resume at 2:30 this afternoon.
(Break)
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Presentation
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [1]
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We start with the presentation on LNG with Philippe, with Arnaud and with Laurent. So leave the floor to Philippe Sauquet.
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Philippe Sauquet, TOTAL S.A. - President of Gas, Renewables & Power [2]
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So good afternoon to all. So we'll be 3 to try to explain to you what are the attractiveness of the LNG market for Total and how we are going to generate value in this challenging business.
So I start by the LNG market, and the first, of course, feature of the market is growth. And what is important is that the growth is not, I would say, LNG growth. The growth is coming from gas. And what we have seen over the last years was a very robust growth of gas demand, 4% per year between 2015 and '18. And as you see on this chart, we continue to anticipate growing gas demand, minimum of 2% per year up to 2030.
Drivers are clearly known to you. There is coal to gas switch including in power gen bid for economical reason such as in the U.S. for regulatory environment, for environmental reason such as in China or for [both worlds] such as in Europe. And the fact that the gas is growing is giving much more depth to the growth of LNG, LNG being the most dynamic part of the market. We have seen as we are commenting here this morning, 9% of growth between 2015 and 2018. And this growth for us will continue to be very high growth as markets will continue to benefit from large and cheap reserves and discovered sometimes very far from the Middle East, Russia, Australia, Africa or U.S.
And another very important message of this slide is that Asia is clearly a very key market in driving the growth. It's true for gas. 50% of incremental gas between 2018 and 2030 will come from Asia, and 70% of the incremental LNG demand will come from Asia. So high growth. Asia is one key, and this is, of course, driving the attractiveness of the market.
Other way, of course, of concern to all of you and of course to us is the drop in gas prices. And as you see on this slide, the gas prices have dropped. And first of all, the LNG prices, spot, have dropped after the warm winter of 2018, '19 and the start-up of newly production facilities, Australia, Russia and U.S. The nice thing and what is giving to us in the future is that gas and energy demand are related to these low prices.
And as you see, the forward market are anticipating a price recovery in Europe and Asia as of 2020. So we are currently around $4 for the European spot price, around $6 for JKM spot price in Asia. And for the coming year in the foreign market, giving more than $6 per million BTU, which is not, I would say, the highest level that we have known historically. But we know that this is a cyclical market. What we believe is that the bottom of the cycle is now.
And on the chart, which is on the right side that Helle showed this morning, what we see for the 2020 and '24 horizon is that beyond the new start of liquefaction that are today under construction, the liquefaction capacity is not enough to avoid some market tightening beyond 2021. Even in a demand scenario, that would be less dynamic than what we have seen recently, and you see that we have indicated in term of gas demand a bracket between, let's say, 5% and 9%, 9% being, once again, what we have had during the last 3 years.
New trend also in the LNG market that are also of interest, and I showed you the forward curve on the spot LNG price in Asia. Two, 3 years ago, you could've questioned the economic relevance of the spot market. But since then, we have seen it growing, and the spot and short term, roughly 1/3 of physical market, price of the spot indices, JKM for Asia or spot gas Europe for Europe, and this is making the LNG market more attractive.
Of course, (inaudible) we like, we love and we are still a large portion of the sale that are done for long-term contract that are all indexed. But what is clear as well is that the market and the buyers need some flexibility, and the global suppliers such as Total can benefit from the spot market to optimize and balance their flow safely through paper hedging on forward markets that are more and more liquid. So you should consider that this is positive for the development of the market.
What is also one key feature of the market is Asia, as I said, and we see strong growth in many countries around Southeast Asia, which will be contributing to the growth. But clearly, we have identified 2 key markets for the future, which are, of course, the 2 giants, China and India. Both are confronted to the growth of their energy needs for very large population. You know that. They are also confronted to the same need to decrease their high dependency on coal today for air quality, maybe tomorrow for climate.
Both have defined ambitious 2030 targets for increasing -- nearly doubling the -- to [15%] the share of gas in their energy mix. Both are investing in infrastructures. You have known that since many years in China, but it is starting also in India. And both are taking measures to stimulate market growth through either competition and liberalization including, once again, in India with the city gas distribution. So clearly, both of these markets could be a real game-changer much beyond our own forecast, and we could speed up the LNG growth much beyond in 2030.
Europe. Europe is also an important market, not maybe in term of quantity as far as the gas demand is concerned. You see that on this chart, even if the gas demand has grown in Europe by 11% since 3 years, Europe for us is not a gas market where we anticipate real further growth. We would like to be wrong, but this is how we see the market, but we don't either anticipate a decline.
Gas has clearly, for us, a role to play to complete intermittent renewables but will represent more or less 40% of the power mix in 2030, and I mean only intermittent renewable, solar plus wind, 40% of the power mix in 2030. And at this time, nuclear and coal will have started to be phased out in many countries or several countries in Europe, including Germany and Belgium. And -- but what will drive growth for LNG is domestic gas production, which is to decline.
We are foreseeing decline of 60 million tons between 2015 and 2030. You have seen that now the decision is definitive about Groningen. Groningen will have to stop in 2022. We don't see any pipe import growing. So there is a clear room for LNG to fill the gap, which will mean in 2030, LNG market in Europe of 100 million tons. And this is not neutral at all in global LNG market attractiveness for global LNG players such as Total. We have a regas capacity to import LNG. Actually, when demand in Asia is seasonally low, we can reroute, of course, LNG to Europe. And when the demand is high in Asia, we can reroute our LNG to Asia. So Europe being a kind of a swing market for all the global players such as Total.
Now more difficult exercise anticipating the future because, of course, when the prices are low such as today and we see an oversupply, you can legitimately ask questions about how long the oversupply will last. By experience, like in any community, there is a cycle, and the nice thing about gas and LNG is that the growth is taking care about the cycle. If you have a -- to be too helpful to Bernard, but when you have an overcapacity in refining, you have it forever. When you have overcapacity for a growing market such as petrochemical or such as LNG, there is one moment where the growth will have eaten the overcapacity. And this is why we are remaining optimistic about the supply/demand balance for LNG.
You see on this chart, we have included 2 scenarios of demand, low 5%, high 7% after the low 5%, high 9% of the first half of 2020 to 2024. This, of course, will be impacted by the prices, will securely higher demand when the prices are low and the opposite when the prices are high. And when you compare these demand needs with the forecast of the liquefaction capacity, which are in fact the bar, you see that we have a kind of basis of 460 million tons that are the asset that are either we're already operating or that are in the construction that we'll be operating starting 2024 onward.
But you see that there is -- very clearly beyond 2024, there is a need for new projects. There is a need for new FIDs to be taken in 2020 in order to be supplying the additional demand starting 2024 and beyond. At the same time, we have to acknowledge that there is not enough room for all the projects that are under study, especially in a low demand scenario. And in the current environment with these low prices, we should know very soon if promoters and bankers that are willing to launch high-cost project without long-term contract are really ready to spend the money. On our side, strategy is always the same like for any kind of commodity. We want to focus on developing low breakeven projects because we are the most robust that we'll be profitable even in the low phases of the cycle.
On this chart, which is not made by Total, it is a publication by Wood Mackenzie of the competitiveness of different LNG projects that are either under construction or that are just being contemplated for FIDs. And when you see those different projects, you can rank them into different categories. On the left side, you see under $5 per million BTU in the current environment delivered in Asia, brownfield of existing giant plants, Nigeria, again, of course, the most competitive. After, between, let's say, $5 to $6 delivered, you see the greenfield giants project, world-class, Russia, Mozambique, another example. And in the same range, you have also the brownfield U.S. project.
If you go a bit further, $7 to $8 delivered, you have the U.S. greenfield. And more than $8, you have the greenfield of the North American Pacific Coast. And as you see, you see in the red the project that are the one that Total today is contemplating to develop. And you see that all of this project or nearly all of this project are really in this -- I would say, the safe part of this curve, and this is why we remain optimistic about the profitability of our future business. And I will leave the floor now to Arnaud so that he can entertain you a bit in more detail about those nice projects that we are today developing. Arnaud, I leave you the floor.
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Arnaud Breuillac, TOTAL S.A. - President of Exploration & Production [3]
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Thank you, Philippe. So the objective of my presentation is to focus on Total's key LNG project in the portfolio. And actually, this slide is an artist's view of Afungi, which is the future onshore location of the Mozambique LNG facilities in the northeast of the country, which is about 30 to 40 kilometers of -- west of the field offshore, and I'll come back onto that.
So LNG production will take a growing share in the group's production from 14% in 2018 to more than 22% by 2025, obviously speaking, from 400,000 barrel per day to 800,000 barrel per day equivalent. And the next wave of projects are coming from key supply basins, I mean USA, Russia, Africa, Middle East and Asia. These new projects will contribute, as illustrated on the right part of the chart and we've already seen this, this morning, to the visibility of good cash flows growth. And integrated gas CFFO will be growing 2.5x from $2.1 billion to more than $5 billion by 2025.
We are set to grow our production with highly competitive projects in all of the key producing basins. Today, we are shareholders in 27 trains in 12 LNG plants, which represent 25% of the global production of LNG. And by 2025, we will have 30 million tons of equity production in 38 trains in 15 LNG plants that will represent 1/3 of the LNG global production.
Now let's focus on the different projects, starting with the expansion of Nigeria LNG, which is a good example of the quality of the projects we have in our portfolio. This is a low-cost opportunity with a brand-new 4.2 million-ton train, this will be the Train 7, and an additional liquefaction unit to debottleneck the existing train, adding 3 million ton per year of capacity. So altogether, this project will add more than 7 million tons of very competitive LNG to the existing 22 million-ton LNG plant. FID is expected by the end of 2019, with first production by the end of 2023. The low cost, approximately $700 per ton, is secured with a letter of intent already issued to the main EPC contractor.
Total's contribution to the additional gas supply to the plant will come from the nearby Ima field, which is located in shallow waters, about 20 kilometers southeast of the LNG facilities, with 1.4 TCF of gas in an excellent reservoir with very good characteristics. This field, in fact, will be developed with only 4 wells using a cost-effective well-to-shore concept. The cost of LNG delivered to Asia will be less than $3.50 per MBtu, and this project will generate around $200 million per year at $60 per barrel from 2024.
Let's go now to another large project, which is Arctic LNG 2. Building on the strength of our partnership with Novatek and capitalizing on Yamal LNG experience, we are targeting development costs 30% below that of Yamal on this project. One of the main feature is the gravity-based structural design. There will be one structure for each of the 36.6 million ton per year train, and this solution will enable us to have more work done on the yard and less work done in the harsh Arctic environment. Moreover, instead of still building the plant as we've done on Yamal LNG with 15,000 piles, in fact, the gravity-based structure will be sunk on the border of the other estuary.
And in Arctic condition where you have a river, in fact, you have [soil], you are not on the permafrost, and so we are benefiting from this el patio feature. The project FID was taken on September 5, and first production is expected by the end of 2023. Leveraging on low Upstream cost, this 19.8 million tons per year project is expected to develop more than 7 billion barrel of oil equivalent of reserves and is honking very well in the merit curve of our LNG projects with costs delivered in Asia below $3.5 per MBtu.
There will be also synergies for shipping with Yamal LNG [Kayov] as we will be able to pool the fleet and reduce the number of new Arctic class 7 ships to build. Finally, new trans-shipment terminals located in Murmansk and Kamchatka will ensure optimum use of the fleet and proximity with the growing markets in Asia and Europe. We expect CFFO to be around $350 million per year at $60 per barrel from 2024.
Of course, the U.S. is well positioned to supply low-cost LNG, and we have been actively expanding our positions with strong partnership with Sempra. First, with our entry into the 13.5 million tons per year of Cameron LNG train 1, 2, 3, which was part of our acquisition of Engie LNG business. Train 1 started early June, and we have lifted our first LNG cargo by the end of June of this year, and train 2 and 3 are due to start up next year.
Second, we have signed an agreement with Sempra to enter into ECA LNG, the competitive brownfield project on the Pacific coast in Baja, California with a 3.5 million-ton train to be sanctioned at the turn of 2019. This project will be fed with low-cost gas supply from the Permian, and this is ideally located to supply the Asian markets. Total has an offtake agreement for 1 million tons per year. And all together, the equity production from those 2 projects, Cameron LNG and ECA LNG, will amount to 3.5 million tons by 2025. Both these projects have the potential to be expanded further at very competitive costs.
Now let me move to Mozambique LNG. So with the acquisition of Anadarko African assets, we have been able to access to 26.5% operating interest in Mozambique Area 1. This giant gas resource is estimated at more than 60 TCF of gas with a gas composition that is very well adapted to liquefaction. And so considering the very -- the excellent reservoir characteristics, we expect high productivity per well with more than 30,000 barrel of oil equivalent per day from each well and the cost-effective 40 kilometers subsea tied back to shore development scheme.
So Mozambique LNG, 12.9 million-ton project, was sanctioned last June. And we developed 18 TCF with 2 LNG trains of 6.4 million tons each, and the start-up planned in 2024. The liquefaction costs are competitive at less than $850 per ton, and synergies are expected by sharing onshore facilities with Area 4, Rovuma LNG project.
As was mentioned this morning, 80 -- 90% of the volumes of Mozambique LNG 2 and -- 1 and 2 have been sold under oil indexed, long-term contract and delivered costs are less than -- are also about $3 per MBtu to Asia, and we expect on this project more than $1 billion of CFFO at $60 per barrel by 2025. Considering the massive gas resource yet to be developed, studies for trains 3 and 4 have already started, and most synergies are expected with area for future development phases.
Now let's move -- continue with our tour into the Pacific basin, where we are moving ahead with Papua LNG project, which benefits again from a low-cost onshore [container] gas resource with high productivity per well, again around 30,000 barrel equivalent per day, and low LNG brownfield cost coming from synergies with the existing PNG LNG facilities operated by Exxon. The 2 new 2.7 million tons per year trains for Papua LNG will be built within the existing LNG plant of PNG LNG at Caution Bay near Port Moresby. And these 2 trains will be built together with a third train dedicated to Pânyang gas development. So these, combined with low shipping costs, you have less than $0.5 per MBtu shipping cost to Asia, means that the delivery cost of the LNG to Asia will be there again less than $3.5 per MBtu, and CFFO from this project are expected to be around $300 million per year from 2025. The FEED studies are about to be launched, and FID is planned in 2021.
I would like to add that the market environment is very favorable to launch new LNG projects. First, I would like to underline that most of the projects that are presented today have already been decided, and therefore, the EPC contracts have already been awarded, and we have secured the costs. But even for the project like Papua LNG, we see that after the sharp decrease of costs in 2014 and on the stability, of course, since 2016 for Deepwater and offshore development cost, we have a situation with spare capacity about 40% on yards and rig for example.
And this is due to the fact that a lot of the independent E&P companies have been focusing on unconventional in the U.S. And also we've seen new competition coming on the market, for example, from Chinese yards, which have proven to be very performing in recent projects like Yamal LNG with 300,000 tons of modules built over 7 yards. What is shown on this chart is that for an LNG project, about 75% of the costs are non-LNG specific, and therefore, the impact of potentially renewed activity in LNG projects will not impact significantly the cost increase.
In closing my presentation, I would like to illustrate Total's commitment to reducing its CHG (sic) [GHG] emission by developing less CHG (sic) GHG intensive technical solutions. For LNG, the main contributors, as illustrated on the left side of the chart, for CHG (sic) GHG emission are the liquefaction process and the shipping. On the liquefaction process, we are working on improving process and operational efficiency with an objective to reduce CHG (sic) GHG emissions by 10% through several design optimization such as airing lead cooling or better recovery of energy losses. We are also aiming at reducing CHG (sic) GHG emission by 15% by using higher efficiency turbines, and we can go up to 50% reduction in emission by using all-electrical approach from the grid with potentially renewable energy sources.
On shipping, the size of our portfolio allows us to optimize the LNG transportation, and this will be detailed by Laurent in the next presentation, which at the end, of course, is reducing our overall CHG (sic) GHG emission. Also we've taken major steps to improve visualizations (sic) [insulation], for example, with the membrane technology and fuel consumption of LNG carriers with new propulsion 2-stroke engines combined with optimum usage of the boil of gas. In summary, we expect 15% reduction of the CHG (sic) GHG emission associated with shipping by 2025 compared to 2007.
This concludes my presentation on our portfolio of high-quality LNG projects, which will represent 30 million tons of equity production of LNG by 2025, and now I will hand over to Laurent, who will get you through our LNG portfolio. Thank you.
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Laurent Vivier, TOTAL S.A. - SVP of Gas [4]
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Good afternoon. So following Arnaud's presentation, I will move a bit downstream on this LNG value chain and just to describe how building a more global, a bigger LNG portfolio, more integrated, will allow us to capture the market development that Philippe has been describing. The LNG department has been busy in the past years since the acquisition of the Engie LNG portfolio. So Toshiba, just to name a few FIDs on Mozambique and Arctic 2, plus some Downstream elements that I will highlight. It gives a picture of a global and integrated portfolio.
Firstly, we are global because we are now positioned in all major hubs starting from the historical ones like the Middle East or West Africa to the ones which are currently developing, we have Australia, Russia and the U.S., of course, and the future hubs, which will develop, which will complement our position, which is East Africa. So we are able to -- through these global presence to arbitrage between the different basins. I think it is exemplified by the Mozambique project, which is exactly at equal distance between Asian destinations and European destinations, allowing us for coexisting and for the trains to come as well to make a nice arbitrage between those 2 markets. So this global footprint also makes us more resilient, and for example, we are able to overcome local force majeure or geopolitical risks as they exist today. And we are, through diversity of supply, we are able to offer clients safety of supply through the size of our portfolio.
So the portfolio is global, increasingly so and we are as well an integrated player. We have the 30 million tons of equity production, which is able to come in 2025, as described by Arnaud. We have as well a shipping fleet of 20 vessels. We have 5 vessels under construction and very low charter party rate, which I think have reached the bottom, and we're able to capture this opportunity with ordering those vessels. And they are as well best in class in terms of technology, allowing us, as Arnaud was talking about, GHG emissions as well to have the lowest cost possible. We have decreased in the past 10 years, standard [written trip] from the Gulf of Mexico to Asia from roughly $2.5 per MBtu to $1.6 per MBtu.
We are integrated as well with our 20 million tons per annum regasification capacity, which is secured for Europe, which is guaranteeing access to an important market, as Philippe was describing, and securing access to this market for our future E&P projects. And we are developing our Downstream presence through new long-term contracts, I would describe them afterwards, and as well demand creation through investment in import infrastructure.
So I've shown to you before, the growth of the portfolio through the development mostly of our Upstream projects will allow us to reach a size of 50 million tons in 2025. When you compound this growth for the period '20 to '25, it's roughly 8% per annum growth, which is in line with the market growth, allowing us to maintain our market share in the LNG market. But the market -- this portfolio will change in terms of structure. It will change, as shown to you right here. We have an increasing share of this portfolio which will come from our own liquefaction facilities, from quantities that we are purchasing from liquefaction quantities where we are a shareholder. This share will increase at the expense of purchases from third parties. So third parties will decrease not only in relative terms but as well as in absolute terms. They were bringing a lot of the flexibility in our portfolio at the beginning. Now the sheer size of it will make it less necessary.
And as well, we have constant share at the bottom, which is a development of equity JV sales to third parties, i.e., liquefaction plants which are selling directly to third parties without going through our trading portfolio. This is a result of historical contracts, which have been negotiated in the past. It's as well the arrival, for example, of Mozambique, as we were saying, the entirety of the production, 90% of it has been sold already to third parties.
Talking about now the flexibility in our portfolio. So this growing portfolio is designed to offer safe physical balance between supply and demand together with flexibility. On the right of the slide, you have a bar which is showing for the year 2020 the structure of the supply that we have in our trading portfolio. You have fixed European quantities, which are delivered to us in Europe, which are feeding our regasification capacity.
We have fixation volumes which are delivered and supplying part of our existing long-term contracts in the area, but you have 60% of the supply portfolio which remains flexible. Therefore, we start from a physically balanced portfolio, where in 2020 each single cargo which is reaching the portfolio has got a physical home, which is secured either through regas or long-term contracts. And we are able, afterwards, to add additional margin through this flexibility, through this optionality by optimizing the destination of the cargoes according to the price signals of the different markets.
It follows exactly what we've been describing to you last year, where in fact, the increased commoditization of the market is offering a lot of opportunities to portfolio players like this with the visibility and more credibility to a JKM market, for example, in Asia. We are able, with the flexibility that we have in our portfolio, to monetize the optionality of LNG cargoes. And this flexibility, as shown on the left, is not only preserved but increased despite the increase in size of our portfolio with flexible supply reaching around 80% in the coming 5 years. This flexibility, it has to be noted, is not only coming from volumes which are coming free of destination on an FOB basis, for example, in the U.S., but they are coming from increasingly flexible terms that we are able to get from our own projects and our own E&P production.
Talking about price references and price balance. We have preserved an oil upside on the volumes going through the LNG portfolio. So you see on the left, on the supply side, we have equity production, which is reaching our portfolio, of course, where group level are not exposed to prices, just to cost of production. And we have additional quantities which are being secured on the 3 main references which are used in the LNG market, which are oil-based price references, mostly Brent; European gas hub prices, which are increasingly TTF replacing NBP; and Henry Hub.
Looking at the balance between the sales which have been contracted and the purchases, we see that we have reduced by half our exposure to Henry Hub by resetting roughly 50% of the quantities we are buying on Henry Hub on the similar Henry Hub formula. We are balanced, and we are neutral in terms of European gas hubs. And the 80%, which is remaining in our sales structure, are equally spread between oil-related price formula, which is maintaining a low position against our supply and volumes, which will be optimized according to spot market, which are prevailing at the moment, optimizing the destination, able to go into regas contracts or the most -- or the best prevailing market conditions.
This portfolio of long-term contracts is resilient in the current price environment. What you see on the right, we have only a limited share of quantities which are exposed to price reviews, and those price reviews will only take place in 2022 and beyond in a market, as shown by Philippe, which will be with a more favorable supply and demand balance.
Our portfolio increase will be fed in the future, as shown by Arnaud, by the future projects, which will increase the share of volumes coming from our own liquefaction plants. We have used as well external growth, and the most notable step has been the purchase of the Engie LNG portfolio. We closed the operation 1 year ago. It's time to show you 2 different synergies which have been -- we have been able to achieve.
Firstly, on the left, on the shipping side, we have modelized, as per our existing portfolio, the shipping requirements of the Total portfolio on its own in terms of number of days of shipping which are required to transport the quantities. We have modelized an Engie portfolio on its own, and we have compared it to a joint portfolio. What you see is that we are able to save roughly 27% of the number of days which are required to transport quantities, which at the current size of the portfolio is an equivalent of roughly 5 vessels. And those gains of $0.20 per MBtu that we've shown are coming from lower shipping requirement, possibility to capture additional arbitrage between different basins and as well a better fit between the vessels which you use for each transportation playing on the diversity of vessels which is now within our fleet.
On the right, I have been mentioning this morning when we were talking about regasification, the integration along the chain allows a better usage of the regas capacity in Europe. What you have in the blue area is a range for 2017 and '18 of the usage of regasification capacity in northwest Europe. It was below 25%. The market shift, which has redirected cargoes to the European market plus our trading expertise, has allowed us since the beginning of the year to utilize this regas capacity at more than 65%, which is 10% more than the industry average.
Growing our portfolio on the supply means also growing the portfolio on the sales side. And we are continuing our policy and our strategy to do it through 3 different ways. Firstly, regasification capacity, as was shown to you before, as well in the more classical way, doing long-term sell contract. We've done so this year with 2 new counterparties, which are joining the LNG world, Guanghui in China and Taipower in Taiwan and very favorable terms. It must be said that it is through the size of our portfolio with the flexibility that it can bring, the seasonality of delivery, that we were able to match some very specific requirements from those buyers. We have as well secured a contract with CMA CGM for the delivery of LNG for bunkering, which is an investment, which is a development, very important for us in the creation of this new market, a new outlet for LNG for the future.
The third way that we are using beyond regasification long-term contract is demand creation through investment in Downstream infrastructure. We have been selected and awarded by the Republic of Benin the development of import facilities through an FSRU in order to replace fuel oil by natural gas in existing and future CCGTs in the country. We are continuing our partnership with AES in the Caribbean Islands, mostly in the Dominican Republic through the development step by step and replacement of, once again, fuel oil by natural gas for power generation creating a potential of 1 million tons per year of outlet for LNG. And we have as well, partnered with Adani through the development of import infrastructure in the Dhamra terminal in order to create an import terminal in the east coast of India and working with them in the development of demand downstream of this terminal.
As a conclusion, we are strengthening our #2 position on the global LNG market and growing our portfolio up to 50 million tons in 2025. We are increasing the purchase from our own projects of the group where we are a shareholder, securing the next waves of project in key supply basins whether USA, Russia, Qatar, Oceania or Mozambique. We are confident that the large portfolio gives opportunities for economies of scale and optimizations. And all this contributes to the visibility of the group, cash flow growth with integrated gas growing from $2.1 billion to $5.4 billion from the year 2020 to '25.
Thank you very much.
==============================
Questions and Answers
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [1]
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All right. So the time has come for the Q&A session. Please.
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Jason Gammel, Jefferies LLC, Research Division - Equity Analyst [2]
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This is Jason Gammel with Jefferies. You've had quite a big increase now in the volumes you'll -- the LNG volumes you'll be shipping from the U.S. Gulf Coast, and I was trying to get an idea of the margin that you're able to generate on that. So are we talking about -- you're buying Henry Hub. You're paying reservation fee. You're paying for shipping regas. What type of price would you need, let's say, in Europe to be able to achieve positive margins?
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Laurent Vivier, TOTAL S.A. - SVP of Gas [3]
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With -- I think those contracts are mostly public, so I think it's quite easy. One thing which is not public and which cannot be achieved by everything is the level optimization that you can do through those volumes and the monetization that you can have of the flexibility and the optionality which is embedded in those contracts. As you know, those contracts are free of destination, where we take delivery at the loading port with 3 destination worldwide. You have today some liquefaction fees. Patrick was talking about the Toshiba contract which -- with a lump sum payment which decreases quite substantially the cost of the liquefaction, the tolling cost. So above Henry Hub you are roughly at, I would say, $6 delivered into Europe.
What we add through optimization with our trading portfolio, the vessels that we've been able to develop, our trading expertise as well that I have described, we are roughly able to do close to $1 per MMBtu of extra margins through optimization and capturing the extrinsic value of those contracts.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [4]
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Yes? A question over there.
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James Matthew Evans, Exane BNP Paribas, Research Division - Analyst of Oil and Gas [5]
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It's James Evans at Exane BNP Paribas. A couple of questions. Firstly, I guess, Arnaud, you talked about some fantastic low-cost LNG projects, but they were a lot lower than what was on the Wood Mackenzie's numbers. So could you just help us, I guess, correct the difference a little bit?
The second question is about all of these future projects you've got on. We've got PNG, Nigeria. You've not even mentioned Qatar, Mexico, Tellurian, Cameron. What's the contracting strategy here? Do the lowest cost projects go without long-term contracts? Or should we just be thinking about portfolio-type approach now that's more progressive?
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Arnaud Breuillac, TOTAL S.A. - President of Exploration & Production [6]
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Just to answer the first question. It's not the same because you may have seen that on the WoodMac chart, the benchmark is done on the price of LNG that you need in Asia towards 10% rate of return whereas we're speaking about the delivered cost, in fact. So it's a cost of production to Asia. So it's not the same metrics. On top of that, this is our own numbers that we are showing to you versus Wood Mackenzie numbers, so there may be some differences as well.
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Philippe Sauquet, TOTAL S.A. - President of Gas, Renewables & Power [7]
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On the contract strategy, in fact, it's, I would say, a case-by-case basis. You have project, as it shows a point on the PNG, where we see a very high interest of buyers that are, I would say, our traditional long-term buyers in Asia that are expressing their interest. But it's clear that if they agree to give us a level of price, which is, I would say, attractive to us, we will go for it. If not, we can clearly keep part of this volume on the portfolio. So we do that on a case-by-case basis.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [8]
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Yes?
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Sam Jeffrey Margolin, Wolfe Research, LLC - MD of Equity Research & Senior Analyst [9]
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It's Sam Margolin from Wolfe Research. So thanks for that distinction about the delivered costs versus the cost curve of projects. But I think when you talk to investors, at least with respect to the recent bias of the current LNG market, the prevailing view is that you have this wave of supply at very low cost half cycle marginal pricing. And that -- in our experience, the cost curve isn't something that helps you out in a commodity business. And so the question is, if we're stuck in this oversupply environment in LNG for longer than expected, it was mentioned that there's a whole list of potential projects that you have that aren't captured in the slide deck here, what is the flexibility of the LNG initiative broadly? How much is driven by your view of the returns versus being compelled to manage your carbon footprint? Or are any other factors at work here?
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Philippe Sauquet, TOTAL S.A. - President of Gas, Renewables & Power [10]
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Well, frankly, speaking, we are developing LNG project to lower our carbon footprint. Yes. It has an impact today because the -- our content of our LNG is less than the overall mix of product that we are selling, but this is not clearly a driver for us. We really do that on pure economical ground. And once again, we -- of course, we see low prices today. This will be a clear deterrent for some projects today, but I cannot contemplate to make profit on the basis of the prices that we see as of today. And for us, all the project that we are considering are meeting the threshold of the project -- of the pricing that we're talking about. You'll see this morning in the $60 environment, we use $5.5 per MBtu, the gas price in Europe. The forward curve today is already at 6.26, 6.4. But for the project in the U.S., this is not enough to make money.
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Sam Jeffrey Margolin, Wolfe Research, LLC - MD of Equity Research & Senior Analyst [11]
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Okay. And just a quick follow-up on the pricing chart that you have, the open position. That's not set on an index to any underlying commodity. Can you just walk us through the mechanics of how you optimize it? Is it different spot price conditions in different regions that you're watching? Or is it something else that has a predictive element to it? Or are you moving things around between contracts?
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Laurent Vivier, TOTAL S.A. - SVP of Gas [12]
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What you have on this graph on the right in terms of the sales is what is already contracted and fixed. So there is a part which is going into Europe and the whole point of the flexibility of the portfolio is to be able to remove those cargoes away from Europe to better destinations. So that's exactly what it's saying, and you've it described quite well. It's about capturing at the time the best LNG price available on the market. So it can be Europe. But if we can generate some additional margin, it would be Latin America. It will be some projects that we have in Africa. It can be Asia. And that's -- those are the quantities which are free of destination, not contracted yet until long-term contract.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [13]
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Yes, Oswald?
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Oswald C. Clint, Sanford C. Bernstein & Co., LLC., Research Division - Senior Research Analyst [14]
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Philippe actually had -- you told us before, I think, that because of your scale, your size, you make about $1 per MMBtu because of this optimization. That's generally a good rule of -- is that still the right number? Is this 0.2 here on shipping that we hear about today, the 0.25 and the lower shipping, are those additional to that old number you gave us? And are you actually doing a little bit better than that number?
And secondly, I just wanted to ask about the -- this derivative market in the JKM, the Platts market. Are you now using that to express a view of -- you think winter is going to be soft? You can lock that in and get rid of your cargoes over time and not having to dump them within a soft market?
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Philippe Sauquet, TOTAL S.A. - President of Gas, Renewables & Power [15]
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Well, as rule of thumb, I figure you can keep the $1 per MMBtu as an average of what we are doing on our flexible volume. For the -- our type which is much more, when you have a -- the sharp increase of the spread between Europe and Asia for the -- in winter. Clearly, we are making much more than the $1 per MMBtu. In summer, it is less, but $1 per MMBtu yes, is a good average.
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Laurent Vivier, TOTAL S.A. - SVP of Gas [16]
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And also the savings, the kind of one-off which we're showing you in terms of fleet, dimension of the fleet, so it's not linked to the optimization of the cargoes. Reclassification yes, it is. In terms of optimization through physical trades of assets. And you are seeing in terms of JKM, we have an increasing visibility now on JKM, which has -- allows us to have visibility, I would say on the coming 2 years. It hasn't expanded extremely quickly. We were, maybe 1 or 2 years ago, where we would have talked to you about maybe a 6 months visibility.
The volumes have increased. We are participating in this. We are trying, in fact, to create as well a paper market for shipping. We've done the first paper shipping trade in LNG in the month of June, just trying to boost this market as well. The whole point for it is that as we have flexible portfolio and we are able to monetize optionality within this portfolio, the more tools we have in order to hedge at some point the situation and build up from this situation, the better it is. So we are using, yes, JKM in order, at some time according to market view, just to see what's going to happen in the months to come.
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Philippe Sauquet, TOTAL S.A. - President of Gas, Renewables & Power [17]
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And one example is when there was the attack on Saudi. Of course the oil price, we achieved the best price as well. And we have our U.S. cargoes positioned mainly on Europe. In one day, the European gas price went up by 10%. In JKM, the price in Asia went up by 28%. So it's a kind of movement, but you can really look when you are a paper market, such as JKM. One example.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [18]
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Okay, a question here. Lydia?
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Lydia Rose Emma Rainforth, Barclays Bank PLC, Research Division - Director & Equity Analyst [19]
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Two questions, if I could. Just, the first one, linking back to Oswald's question around the idea of optimization and shipping days. The idea that you pulled that down by 27% is quite impressive. Is there more that you can do as, based from an absolute standpoint, but as you get bigger, it's around functions of scales that, actually just being bigger, allows those optimization opportunities to be more often, perhaps maybe that $1 per MMBtu goes up over time with the scale, in the terms of the optimization side? And then the second one was on the GHG emissions and projects. Just the 60 kilograms per [SECE] per barrel of oil equivalent. What -- so the 15% reduction in the shipping savings, but does that absolute number go down to 50, or is there an absolute number on that?
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Laurent Vivier, TOTAL S.A. - SVP of Gas [20]
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I can start with shipping optimization. Clearly, there is a one-off, as I was saying about putting together 2 portfolios, which have, when they are separated, add extra requirements in terms of shipping. I would say it is a one-off, and I do feel that the numbers you've seen is pretty optimized and I think we've done our job right. The next step is definitely with the industry. It is the development of the spot market in the industry which will help to gain the next level in terms of synergy, which is absolutely necessary for the LNG industry, because we know that when you look at the fleet worldwide of LNG vessel, it's typically suboptimal, with a lot of vessels crossing each other. And it is by the development of said spot market and the right price signals on the gas market being given in the Atlantic basin and in Asia, that the cargoes will be able to be rerouted and optimized at the global and industry level.
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Arnaud Breuillac, TOTAL S.A. - President of Exploration & Production [21]
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Just try to answer your question on GHG emission. So the number that you saw in the chart, the 60-kilogram of CO2 per BOE is so -- taken as Scope 1 and 2 for typical LNG production and just to have the split of what are the main contributor on average. And then we are trying with this example to identify some points and we are working on each part below to try where we can save, considering indeed that we are on journey on the shipping and you see the way we are going. And likewise on the liquefaction process, what can we do?
If we take an example of Papua LNG. Papua LNG has negative CO2, about 20% in the gas composition, so there, there will be, meet outside of the liquefaction. But for this specific project, we will have of course a higher potential CO2 emission if we are not to inject the gas but, of course, for this one, we can justify to spend the exterminate, to do the injection of CO2 within the field.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [22]
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Irene?
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Irene Himona, Societe Generale Cross Asset Research - Equity Analyst [23]
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Irene Himona, Societe Generale. Arnaud, on Slide 10, you show us that LNG gas production grows from 14% to 22% of the group total by 2025. If we think about gas in total, not just LNG, but natural gas which is currently around half your production, what does it grow to by 2025, please?
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Arnaud Breuillac, TOTAL S.A. - President of Exploration & Production [24]
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I don't have the exact number, but I think it did grows -- we are clearly above 50%. So we will find -- well, I think it's probably around 55% or something like that. So we have a -- our balance of gas that we [store] is definitely moving towards gas. Of course, LNG is a main driving force in here, but would have to find the exact number to give you the split in 2025.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [25]
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Yes?
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Henry Michael Tarr, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [26]
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It's Henry Tarr from Berenberg. Two questions. One, on LNG costs. So you said, at the moment, costs remain extremely low to sanction some of these projects. We have seen a record number of LNG projects actually this year just in terms of capacity, and there's a limited number of contractors who are capable of doing this type of work. I mean how confident are you that when you come to do Nigeria or PNG, the costs are going to remain sort of stable, given the sort of background growth we've seen for some of these companies in the past 12 months?
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Arnaud Breuillac, TOTAL S.A. - President of Exploration & Production [27]
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As I told you, in fact for the Nigeria LNG Train 7, which is a financial train and an expansion, we've already locked in the contract, and we're at $700 per ton, which is quite competitive. And likewise for our Arctic LNG 2, which has already been awarded at Mozambique LNG, so those very large project are already locked in with the company leaders. What we are trying to restate on this slide is the fact that moving forward for the next projects, say Papua LNG, we still consider that a vast majority of the costs are going to be in a very favorable market because there is still enough capacity available. When it comes to contract [clauses] towards a specific LNG competency, okay, we may be exposed to a little inflation, but it will only be on 25% of the cost, the total cost of the project, but try to magnify the impact.
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Henry Michael Tarr, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [28]
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And then just on LNG bunkering, what do you see is the opportunity there? And how should we think about that as a great opportunity over the next 5 years?
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Arnaud Breuillac, TOTAL S.A. - President of Exploration & Production [29]
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I'm sure that Laurent will have more information to give you on that because he's the one driving it, Laurent Vivier. But clearly, we have seen there's some start of interest in LNG for bunkering and that this might be a very significant game-changer for LNG, The rule of bunkering fuel today is an equivalent of more than 200 million tons of LNG. So if the CVN part of the fleet switched to LNG, this will be a nice addition to LNG market. But Laurent will come back on that.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [30]
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Yes? One question over here?
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Jason Daniel Gabelman, Cowen and Company, LLC, Research Division - VP [31]
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Jason Gabelman from Cowen. You showed the resource from the Mozambique asset and it looks like there's a lot of capacity for growth beyond trains 3 and 4, so what's the optimal size or the maximum size for that asset? And then secondly, just on your demand growth outlook for LNG at 5% a year, I noticed on Slide 5 it looks like European gas pipe imports stay flat. So I'm wondering if that low end contemplates Nord Stream 2 coming online and other things, like potential for Japan to increase nuclear capacity -- or to restart some of the nuclear plants, I should say. Or is that 5% kind of a firmer lower end of growth?
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Arnaud Breuillac, TOTAL S.A. - President of Exploration & Production [32]
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So on the first question regarding Mozambique, it's clear that with 60 Tcf, there is the potential to have, 6 trains, maybe more but at least 6 trains. We are working on transfer info. The master plan, we're showing this artistic view of the actual real location, can accommodate in fact all the trains connecting the Area 1 to Area 4, and they saw margin expansion. So the master plan, if you prefer [to call it], is designed to connect [Mozambique to Qatar].
There is a huge area which will actually be ring fenced, as it would be a straighter division. There will be some accommodation facilitates. It's a very large area, which is about 30 kilometers by 30 kilometers by 15 kilometers. So it's a huge area that provides all of the necessary space for a number of trains, and when it comes to the resource, you can do the math by yourself, but you see 18 Tcf is the true [assistance] for [a 1 million-ton] train, and then you can see -- and 60 Tcf is the estimate today.
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Philippe Sauquet, TOTAL S.A. - President of Gas, Renewables & Power [33]
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As regard as the demand for Europe. No, we don't see the real room for pipe import growing and, therefore, we feel pretty much confident with the figure that we gave you for the LNG for growing up to 100 million tons. And as for Japan, yes, we have of course, a scenario which includes nuclear restarts. Nuclear restart are -- is up to date, has been long way for the Japanese government to restart some of the fleet, and we always say that all of it, the big power plants, be restarted, of course, but a significant part, yes. So question for gas is more the uncertainty about coal competition, because we have seen which might be surprising at the time when we are speaking, to see Japan opening new coal-fired power plant at the time when we are speaking about carbon neutrality.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [34]
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Yes, question from Kim.
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Kim Anne-Laure Fustier, HSBC, Research Division - Analyst of Oil and Gas [35]
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It's Kim Fustier, HSBC. Just a couple of questions for me. Firstly, a significant portion of your LNG sales is still oil-linked. Could you perhaps talk about the trends you're seeing on the oil slopes embedded in those long-term contracts? We're hearing slopes for recent contracts have been in the low double digits and that's quite a long way down from the mid-teens, which we used to see in the past. Any color on that would be great. And then secondly, Laurent, you highlighted the high utilization rate of Total's European regas terminals versus the industry average. Why is that a good thing, given that Europe is currently the sink for global LNG and that's where LNG realizations are currently the lowest?
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Laurent Vivier, TOTAL S.A. - SVP of Gas [36]
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Firstly, markets in Asia are still mostly in -- oil-related, with most of the value still insisting on oil-related contracts. We are, as you were saying, not at the mid-teens as was the case before. The market can be estimated in an open manner at roughly 11.5% today. What you have on average, what you are able to do and that's what we are trying to do, is escape from tenders sent to the overall industry, asking for plain vanilla deals, which are perfectly flat deliveries without any optionality, where we can offer something from our portfolio, which is coming from seasonality, flexibility and used [early on] you are able to beat those market, those prevailing market conditions, and trying to sell a bit better. That's what we are trying to do in Asia, in the contracts we've done and that we are discussing. You are talking about the high utilization rates in Europe.
Firstly, we are pretty happy when they are utilized, and when they are utilized by increased rate, you could argue that of course, Europe is a sink. It was -- it is true that when cargoes are coming to Europe, it is at the time not the best market. And so be it. What is important for us, that what we wanted to show that we are able to create extra flows by spot trades or buying from third parties, because you saw that sometimes we are having 100% utilization rate, so parties who wanted to go to European market could not have access, we were able to monetize our existing capacity, and bringing some additional value.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [37]
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Okay. I don't see any other questions in the room. So I think we're going to stop here. We are perfectly on schedule. And so we'll resume at 4 and a quarter, 4:15. Thank you.
(Break)
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [38]
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To your seats. We're going to resume. Yes. So we're finishing the day with this Downstream presentation with Bernard and Momar. And so Bernard first.
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [39]
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Thank you, Ladislas. Good afternoon. As Patrick mentioned this morning, petrochemicals is one of the core areas of Total and what I intend to do in the next 20 minutes, 20 to 25 minutes, is to show you how petrochemicals will contribute by 2025 to Total's sustainability targets in terms of cash flow generation, of course, but also in terms of CO2 emissions.
So let's first move to our strategy. A quick reminder, Patrick touched on this already this morning and let's see how petrochemicals fits into this strategy. As you know, strategy is about [needing] differentiation, and to be different you need to make choices, which is what we have done in Refining & Chemicals. We have made very clear choices.
The very first one is integration, obviously. We want to play the integration between refining and chemicals, that's really the backbone of the branch. It means that we focus most of our capital allocation and developments on our large integrated platforms in the world. We have 6 of them. It means that by 2025, these platforms will represent more than 70% of the capital we employ. And of course, we keep working on the operational excellence and then we'll come back on this one. So first choice, integration.
The second choice we have made, clearly is to grow in petrochemicals, not in refining. Why have we chosen petrochemicals? It's very simple. It's a growing market and it's a market where we want to leverage 2 key differentiating factors. The first one, of course, is petchems from gas, so from low feedstocks, ethane, propane, butane. And of course, the second lever we want to activate is we want to be balanced in terms of capacity between monomers and polymers, and I will come back on this one in a few minutes.
The third choice we have made is of course to grow and invest in low-carbon solutions. And again, by leveraging 2 key differentiating factors, biofuels, biopolymers, of course. And second lever, the secular economy, which we see as a group opportunity and which is key, of course, in the years to come to grow our petrochemical business. I will come back on this one in the course of the presentation as well. So you see the strategy is clear. It's more a matter of execution, obviously. You will see in the next few slides that we are progressing well in terms of execution and of course, all of this will translate into an additional cash flow generation of $1.5 billion by 2025.
So let's now move into petchem and see why is it worth investing in this market. So let's first look at the petchem market from a demand standpoint. What you see on the left-hand side, that's a growing market, it grows by 3% a year. It has been the case in the past few years. We see it, of course, also in the years to come and why is that? It's very obvious, it's because it's driven of course by the demographics, the growing world population, the emergence of the middle class, of course, and also all these megatrends around the lightweight materials being more efficient -- energy efficient in the transportation industry to reduce the CO2 emissions. So all of that drives the growth in plastics and polymers.
And of course, we see and here I will come back on this during the presentation, we see also a business opportunity, notably in the field of recycling, which is a growing trend in petrochemicals. So 3% a year, a good business to be in, in terms of growth, I would say, thanks to the strong fundamentals. Of course, if we look at the market today, what do we see? We see, of course, short-term imbalance. We see a short-term imbalance because new capacity are coming onstream in the U.S. Gulf coast, in Asia, in the U.S. Gulf Coast, all based on naphtha -- on ethane.
In Asia, based on naphtha. All these investments in the U.S. Gulf Coast have started up in 2017. We have a first wave 2017-2020. So I would say the bulk of it is now almost beyond us. But all of this weighed on the supply. And at the same time, on the demand side, we see the slowdown, notably linked to the trade war between China and the U.S. which doesn't look so short term, this market is suffering from some kind of imbalance. But I would say it's not so much a matter of concern for us because most of our projects are going to start post 2020. You will see in the next few slides that our large major projects are starting up post 2020, which means that in terms of timing, it's pretty favorable, it's post-first wave. And they will all rely on strong fundamentals, and I will detail these fundamentals once again: Low-cost feedstock, competitive CapEx by leveraging our platforms, and balancing our capacities between monomers and polymers.
So a good market to be in, in terms of growth, but is it profitable or how can you be profitable in petrochemicals? And we need to understand the main drivers of the petrochemical market, and if I have to summarize in 1 sentence, I would say it's about feedstock. It's clearly about feedstock. You see on the left-hand side that the main polymer feedstock are largely on the linked, notably naphtha. And that will remain. If you look at all the new capacities notably in China, which are about to started, they are all naphtha-based and some in Middle East as well. So this correlation to oil will stay for the polymer feedstock.
And now if you look at the right-hand side and you look at the feedstock price, what do you see? You see a strong discount of ethane compared to naphtha. It's true so far in LPG, by the way. And just keep also in mind that naphtha ethane is also used as a fuel, which gives also some additional upside in terms of energy cost. So to make it simple, when you put the 2 parts of the slide together, what do you see? You see that the oil-based cracker is the price setter for polymers. So in other words, polymers price are correlated to oil price, but at the same time you see that the gas-based feedstock completely discounted compared to oil. So in other words, the ethane-based cracker have a structural advantage compared to naphtha-based cracker. In other words, the higher the oil price, the better half the ethane cracker has compared to naphtha-based cracker. So it explains why we are focusing all our development on these low-cost feedstocks derived from natural gas, ethane and LPGs.
So when we look at competitiveness, we of course, think about feedstock, but we have also to think about the assets, of course. And that I would like to show you on this slide is how we work, what we do to improve our asset base, notably in Europe. It started up in 2013. You'll see on this map that we have done a lot since 2013 and we keep doing a lot. In terms of cracker today, we have crackers which are flexible and may -- and cracker which may crack up to 60% of low-cost feedstocks, which really gives them a strong competitiveness.
You see also that in terms of portfolio, we keep working around our polymer sites. We have recently announced the shutdown of a polymer -- polystyrene site in Spain in 2019. We are consolidating these volumes in [Staly], which will be the largest polystyrene site in Europe, very competitive site. And we also announced also the shutdown of the polypropylene line, the commodity polypropylene line in Feluy. So we keep working on our asset base in Europe. And of course, we keep also working on our operational excellence. We mentioned this morning all the plans around the cost saving. We mentioned this morning all the plans around the digital acceleration plan. All of this will of course further contribute to improving our cost base in petrochemicals.
So you see that we have done a lot in terms of feedstock, asset competitiveness, but we want also to improve our cash flows by investing, and investing of course in high-returns projects. You have on this chart these projects, I will detail them in the coming slides. But keep in mind that the oil, of course, rely or stick to our 3 basics. We leverage our platforms, we play the low-cost feedstock and we try and we manage to be balanced between the monomer and the polymer capacities.
So let's start with the U.S. So you see in the U.S. that we have, of course, a very nice base. Very profitable, $1 billion of cash flows from operations last year. So very profitable base. Why is that? It's because we have, of course, very good assets, world-class assets. You see on the left-hand side, a world-class platform in Port Arthur, the refinery integrated with a cracker, which we own 40%. In La Porte, we have the largest polypropylene site in the U.S. We have a very significant market share, we are #3, 10% market share. In Carville, the largest polystyrene plant in the U.S. as well, we have very strong market share, 50%. And in Bayport, Texas, we will have by 2021, very nice site, fully integrated with a new ethane cracker, 1 million tons of ethylene, 1 million tons of polyethylene. So again, a very significant asset.
So nice assets as you see, but there is more than that. And I think something key to keep in mind, is that these assets are all integrated in terms of monomer and polymers. All the olefins or all the molecules, ethylene and propylene, we produce in Port Arthur, are sold to internal use into the group. All the polyethylene -- all the ethylene that will be transformed in polyethylene in Bayport in 2021 will be produced in-house.
In Carville, we are fully integrated. All the styrene we produce is transformed to polystyrene and the same with ethylene, used for polystyrene. And that's true for 50% of what we produce in Laporte. And so you understand by having this full integration, monomer, polymer, we reduce or we are immune against the market cyclicality, and we are not exposed to, like some of our peers, to some length of molecules you may have and which are today sold at very low prices.
The first project we are looking at is our project in Bayport, you know about it, it's a joint venture in partnership with Borealis and Nova, 50-50, where we are investing in 1 million-ton ethane cracker. It's a very competitive cracker, it's the second cheapest cracker in the U.S. Gulf Coast. When you do the math, the ethylene cost comes at $17 per ton, which is extremely competitive. And we reached this very low level because we are, of course, benefiting from the integration with the refinery, with existing cracker in BTP and that helps us reduce our CapEx level. This project is well on track. It's already 70% completed, and we have a start-up date in 2021. So post first wave.
We also invest in new polyethylene line, 1 million tons of polyethylene by 2021. Again, fully integrated with the cracker and the start-up we target is by 2021 as well, post first wave. So you see, it's a very nice combination. Total brings in this joint venture the integration Upstream and the synergies with platform. Our partner, Borealis, will bring the technology of Borstar. And with Nova, we partner with Nova and we will be the #4 in the U.S. thanks to their strong market presence. So it's a very good project, and once again, we are well on track to start it up in 2021.
Second large project is Korea. So in Korea, we have in Daesan a very nice platform, a joint venture with Hanwha, 50-50. It's been a tremendous success story. You see it on the screen. Again, $1 billion of cash flows from operations in 2018 and even before. So it's one of the kind of assets we like a lot, best in class, high energy -- a setter for energy efficiency. So it's really the kind of assets where you want to invest more and this is exactly what we are doing. Since [Q3], we have put close to $1.3 billion of CapEx in Daesan, to increase the cracking capacity by 40%.
And we have doing -- and we have done it by increasing the cracking capacity on propane, on propane coming from the U.S., here again to benefit from the low-cost feedstocks. And to stick on sort of one of our principles, which is to balance monomer and polymers, downstream from the cracker, we have also increased our polyethylene and polypropylene lines' capacity by 50% to 60%. So that we have today, a well-balanced system and extremely competitive in terms of feedstock. And of course, in terms of CapEx because we leverage the existing platform.
We are so happy with the [JV], that we of course are evaluating new opportunities, notably around a new gas cracker, which will again benefit from the platform synergies.
Third large project, Saudi Arabia. You know this joint venture with Saudi Aramco. Here again, it's been a tremendous success story. It's a magic number, $1 billion of cash flow from operations on average since 2015. We started up in 2014, 400,000 barrels a day of capacity, it has been debottlenecked by 10% in 2018. We are now targeting 408,000 barrels by 2024, so you see it's extremely profitable to do all this debottlenecking project. And this refinery is one of the best in the world. It's a top-quartile refinery, excellent availability, 0 fuel oil, which positions this refinery very well for the post IMO 2020 environment. A large part of the yield will end at community slate, which is also an upside in the post IMO 2020 environment. So honestly, a very nice asset and I said that we want to further integrate Downstream with the petrochemical concept.
Just for the record, SATORP stands for, as you probably know, stands for Saudi Aramco Total Refining Petrochemical, the R from refining and the P from petrochemical. You see that the R has been a success, it's there, and now, of course, we're executing the second phase of this project, which is to build the Downstream complex around petrochemicals. This project is a giant project, $5.5 billion of CapEx, 1.5 million-ton cracker, mixed-feed cracker, it's going to be one of the largest one in the world, with 1.15 million tons a year, more than 50% of the feedstock will be based on the low-cost feedstocks, which fully comply with our strategy. We have downstream from the cracker, 1 million tons of PE as well.
Again, to be balanced, monomer, polymers. It's currently on the feed phase. We aimed by 2021 to have sanctioned the FID. So it's a very -- it's a good project, well on track. And started by 2024. You see the return, which is, of course, a very decent return, more than 15% of internal rate of return. And more than figures, the best maybe proof that this project is attractive is that we are able to attract partners downstream from the project and you see that, for example, Ineos has joined the project, has committed to spend $2 billion Downstream on specialty chemicals and that's serving the composite and the current fibers industry. We have also a current partner, Daelim, so we are having more and more third party coming and joining the project because they see the benefit of all this integrated platform.
Now let's have a look at the -- at recycling. When we say and when we explain our strategy in polymers, we're often questioned about recycling because most people tend to think that recycling is a threat, and is it wise to put so much money in petrochemicals when you see this trend, and this trend, which could take share from the growth. We don't share this vision, obviously. And why is that? If you look at the left-hand side, you will understand straight away, you see that the market grows, as we said, you see that the recycling part in this market grows as well, but you see that the virgin part is also growing.
So basically, we have 2 segments, the virgin polymers and the recycling polymers, which both enjoy steady growth. And you know we like segments which are growing, and we see this more as a business opportunity than as a threat, and we want to catch this growth in the recycling. And to catch this growth, of course, we are taking a certain number of actions that -- which I will detail. But first, we have set ourself an ambition, which is to have by 2030, 30% of our polymer recycled. And how will we achieve this target? We will achieve this target by investing, of course, organically in the field of mechanical or chemical recycling, through acquisitions as we have done recently with Synova. By working also with all the stakeholders along the value chain because we are talking about the secular economies, which means we have to involve the waste collectors and you have to involve the brand owners, of course, and that's why we have been a founding member of the Alliance to End Plastic Waste, which is an alliance of 30 large multinationals taking initiatives all along value chain to accelerate, let's say, the secular economy.
And last but not least, which may sound a little bit counterintuitive, but we support the ban of single-use plastic because we think that in our industry, the management of end-of-life, the fact that you find all this plastic into the ocean is not acceptable, and that could impair the way we will grow our business.
Last but not least, of course, bioplastic, which is very nice, it's a niche, but it's a growing niche, double-digit growth. It's a niche where we have a #2 position, notably in the bio-sourced polymer made out of sugarcane. We have a new plant in Thailand, which is in the ramp-up phase, 75,000 tons a year of production. So nice business and it's a business which also will help address this single-use plastic ban because when you are for biodegradable polymer, you may bring a solution to this channel. So as you see, since we met last year in New York, a lot has progressed. We, of course, our major project doing well, progressing well.
We are also tackling, very actively the secular economy issues, it was not so much on the agenda, if you remember, this is something where we really want to be extremely proactive, and we are once again giving ourself this ambition of 30% of recycled plastic by 2030. You see on the left-hand side our cash flow generation. It's solid and it's going to grow by $1.5 billion by 2025, as we said. How will we achieve this? By -- we will achieve this by once again sticking to our basics, which is the integration, leveraging in petchem, the low feedstock ethane and propane, butane and of course, playing the integration between monomers and polymers.
At the same time, you see that we will keep very strong capital discipline, $1.5 billion of CapEx in average year-on-year. So it's going to be, I would say, our guideline and we'll stick to this. And by spending this $1.5 billion a year, we'll be able to generate this cash flow improvement. We also want to bring a contribution to the group's CO2 reduction. You see it on the right-hand side. It's critical because refining chemical represent 50% of the CO2 emission of the group. We said this morning $42 million in 2018. You see that we are 50% of it.
So it's clear that the refining chemical is a key contribution to bring to this target. We have been able to do it over the last few years. You see it on the chart. We have reduced very significantly our CO2 emissions over the last 3 years and we will keep reducing it even if we keep growing. Patrick mentioned this morning this new cracker, 1.5 million tons of CO2, which will be coming with a new cracker, but in spite of that, we will be able to reduce -- to further reduce our CO2 emissions by 2025. Thank you. Momar?
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Momar Nguer, TOTAL S.A. - President of Marketing & Services [40]
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Now for Marketing & Services, the strategy consisting, first capturing growth in dynamic geographies, developing business, nonfuel retail activities, and building a strong offer on low carbon fuels. With that, we will deliver the $100 million CFFO additional per year until 2025.
First, we are going to grow aggressively in large emerging markets, namely China, India, Mexico, Brazil and Saudi Arabia. Second, we will be building on existing retail network, nonfuel sales, shop, food and services. This nonfuel part will represent 40% of our retail CFFO by 2025 in Europe. In Africa where market is still growing, we are going to increase our market share to reach 18%. We are going to leverage on our presence there. Second point. Third point, we'll grow our low-carbon business. For EVs, we are going to -- we attack -- today, we have 15,000 charging points we're operating. We ambition to have 150,000 charging points we'll be operating come 2025. We are going to develop our business of natural gas for transport, not only bunker fuels like Laurent and Philippe has said earlier, but on natural gas for vehicles too on the roads, both in Europe or/and in the U.S.
So today, I will zoom on just some points. First, what we are going to do in those large emerging markets? Second, what are we going to do in Europe, nonfuel revenues, how are you going to increase the nonfuel revenues? Third, how are we going to leverage our position in Africa? And fourth, the multienergy offer we are going to have for the market.
Now in large, this slide has been presented by Patrick earlier and I'm going just to comment what we are going to do here, on these 5 big markets. The 5 big markets represent, if you assemble them, they represent 25% of the fuel sales worldwide, these 5 markets. And these markets are markets that, where the consumption per capita, per car is increasing. We ambition to have 4,000 service stations, between 4,000 and 5,000 service stations in these 5 countries, in addition to our 14, existing thousand service stations. We are going to do that through mainly franchise models, which are very light in terms of CapEx.
In Mexico, for example, we partner with Gasored, that they have -- this is a group of dealers, they have 250 service stations. They've created JV reserves where we are going to bring our expertise, our brand and they are bringing their assets. In Brazil, we acquired a company called Zema with more than 200 service stations and counting. And additional stations, we are going to have will be franchise service station, there to -- that will be quite light in terms of CapEx.
In Saudi Arabia, it's a different story. There we've partnered with Saudi Aramco, we've acquired a network of service stations. Half of the service station will be branded Aramco, and the other half will be branded Total, and we will be the one bringing the expertise. So that's what we are going to do, basically increasing the number of service stations with a very light CapEx model. Because financing is not an issue today, on the price, on the cost of capital today.
In Europe, where the market in terms of the volumes is quite flat, we are going to leverage our position in Western Europe. There's 1 domain where the market is not flat or decreasing, that is the domain of transport of goods in Europe. That market is increasing by between 0.5% and 0.9% a year. And we are quite strong in that segment because we have truck stops in our service station, our main service stations, but in addition to the Total branded service stations, we have a subsidiary, an affiliate called AS24, which is dedicated to that sort of business that is growing.
So we are present in that segment of transport of goods trucks in Europe, and that market will be increasing. The second thing we are going to do in Europe is to develop our business in shop, food and services. There's 1 scene quite particular in -- when you think about shops in Europe, we are the leader in France. And one thing in France that makes France quite different from other countries is that because the retailers, pretty early, in the early '80s became our competitors on fuel, we had to develop our own expertise in shops. Therefore, we are capturing more value in the shop business than in other countries. So that business will continue to grow for us.
Shop, the food stuff, and then in addition to our card offer now, we are moving to mobility services, which means that when you buy a fuel card, you are not only buying a fuel card, but there are a lot of services associated. For example, it allows you to pay your -- the toll fees on the highways in Europe. And that is generating quite some revenues. We have 3 million cardholders today, and we are doing 300 million transactions per year. Half of the volumes we are selling in our retail in Europe are sold to fleet owners, actually, to cardholders. And those are buying in addition to fuel, other services.
In Africa, we are there, a big retailer. In Africa, we are -- if you take all sorts of retail business in Africa, Total is the one with the largest number of shops in Africa under one single brand. There's no -- we have no competitor in whichever domain in terms of number of sites in Africa. We have 2,600 shops there, 300 restaurants, and our stations in Africa, really, if you visit a Total station in Africa, it's a really one-stop shop. I mean that's the place where you not only go for fuel, but that is the place that is open 24/7, that's the place where, for example, you can buy an insurance.
If you have your car, you call in Total service station and you can buy insurance or you can subscribe for, if you want, a TV subscription, you can get there and get it. So we are selling a lot of services. Again, places that are open 24/7, that most of the time are elite, that are quite secure. That's -- and we are leveraging on that. And of course, we are participating in the leapfrogging of technology in Africa, all those, since you hear about Africa. We've launched, for example, we have a company where we are one of the investors, a start-up. They have a touch point, they have today close to 10,000 merchants that are using their services in our service stations.
Now just 1 slide on what we are doing in Brazil, one on these emerging markets. We ambition to have 1,000 service stations by 2025. We made the acquisition of a company called Zema. One thing that is interesting about Brazil, of course, is the percentage of bio you have in the fuels in Brazil. Even on diesel, you have 10% bio in diesel, you have in excess of 30% bio in gasoline. So today, we have 280 stations. We ambition to reach 1,000 service stations either by acquisition or because you have, in Brazil, you have 40% of the service station that are what they call white pumps, means that they are nonbranded. And those, of course, with quality of your service, you can attract them and transform them into Total service stations. So there, we see a lot of potential with again, very low CapEx.
On the electro mobility, that is a question I've had over lunch, what are you doing on electro mobility? We target to have 10% market share in this business in Western Europe come 2025. The main markets being France, Germany, Belgium, Netherlands. And to be a leader in B2B and B2Government business there. To do that, we've already taken major steps. One year ago, we made the acquisition of a company called G2Mobility. G2Mobility is the leader in France in B2Government business and to B2B business.
This summer, in June, we installed the first high-powered charging in service stations in France and in the Netherlands. And this summer again, we won a contract in the -- Netherlands is at the forefront in terms of electro mobility in Europe, and we won the contract to install charging points in the greater Amsterdam this summer. And we are going to install 10,000 charging points and we are going to operate in -- for the greater Amsterdam region. So we have already taken major steps there. Our aim is to operate, is to multiply by 10 the number of charging points we are operating today, from 15,000 to 150,000.
And in addition to that, in our own service stations, we aim to have charging -- high-powered charging points each 150 kilometers in Western Europe in the E5, which means that come 2025, we are going to have more than 1,000 high-powered charging points in our network in Europe.
So give access to our customers to the maximum of -- in terms of charging points, operate the maximum number of charging points and have those customers call in, in our service stations because we will be able to deliver them -- deliver to them these high-speed charging.
Natural gas. We are the leader in Europe in natural gas. We made the acquisition of a company called PitPoint in 2017. That is a Dutch company. One of the 3 NGV players in Europe. Today, we have more than 150 stations and are operated by Total selling natural gas for vehicles. We ambition to have 500 of them come 2025, and our goal in Europe is to have 15% minimum market share. That is pretty close to our market share on main fuels in Europe.
In the U.S., we have 20% shareholding in the leader of -- in the natural gas in the U.S. Clean Energy, we acquired participation in 2018. The volumes are growing. The intention is to reach more than 1 million tons in 2025.
On hydrogen, we are looking at that because we see it as probably the -- for the -- I told you earlier that we acquired a major player in transport of goods. Hydrogen will play a major role in the future. We are part of a JV in Europe called H2Mobility. That JV has 75 service stations today. Out of the 75 service stations combined, there are 20 service stations that are under the Total brand.
On LNG, today starting maybe answer the question, the rest. Today, the market of LNG is 0.4 million, 0.5 million tons today. We are seeing -- now with IMO, our view of the market is that in 2020, you're going to see probably that market doubling, getting to 0.9 million to 1 million tons. The first movers in that -- and we are seeing that with one of our clients who've signed with us, one of the early movers, CMA CGM, the first movers will be the container. Those ones will -- the ships carrying containers will be the first mover because of the volumes they are consuming are quite high. That market you consider it's a market of between 80 million tons to 100 million tons.
So thinking that, that market when you move to IMO 2020, you're going to have 10% of that market that will be LNG is quite reasonable considering that CMA CGM only will account for 0.6 million tons because they're the early movers. Therefore at the very beginning we are going to have a big market share of that business because we will be servicing the company that is the first mover.
Our ambition there is to reach between 10% and 15% market share in 2025. We see the market, and that is what is coming from when we compare our figures to Wood Mackenzie figures and to DNV GL figures. That's what is coming talking of a market of roughly 10 million tons in 2025, out of which we ambition to do 1 million to 1.5 million. Laurent said earlier we've already secured 0.6 million tons in CMA CGM in addition to the business we are having with Brittany Ferries and the cruise. So with that, we think that we'll be able to reach the 10% market share.
So in conclusion, MS is a significant and sustainable source of cash flow for the group. We will continue to deliver the $100 million of additional CFFO per year, and we are on track to generate the more than $3 billion of CFFO in 2025. We are going to continue on our legacy business. And on the growth areas, we are going to leverage on large emerging markets, nonfuel business in Europe, position in Africa an alternative energy.
With that, we are confident that we'll deliver this. Thank you.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [41]
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All right. So we have a last round of Q&As for Bernard and Momar. Jason.
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Jason Gammel, Jefferies LLC, Research Division - Equity Analyst [42]
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This is Jason Gammel with Jefferies. I may diverge a little bit from the primary topics and ask about refining. And you talked a little bit about IMO. But specifically how are you positioning for a post-IMO environment? I know you already have very low fuel yield. You've got very high mineral distillate. You'll be -- you're trying to position for a low sulfur fuel oil market. And are you already starting to move compliant fuels out into storage right now for 100 days from now?
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [43]
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So there are actually 2 dimensions in your question. You have worries about the refinery system, are we ready? And after, the supply chain and distribution side, are we prepared for a supply-compliant future? I will leave the floor to Momar on the second dimension. Maybe on the reminder on the IMO where we stand in terms of -- because we have to tell them, in terms of what we have done.
Just as a reminder, you saw on the left-hand side where we were in 2017. 7 million tons of high-sulfur fuel oil, and we are by 2020 between 2 million and 3 million tons. And the way we have achieved this, once again, has been threefold.
First, in -- Antwerp, our refinery in Belgium, with large investment we've made to convert fuel oil into a distillate. We've been able to reduce its length by around 1.5 million tons. So it has been completed by the end of 2017, early 2018. In Perth, where we have 50,000 barrels would be [copper,] as you know. So there, we have some spare capacities. So we have, of course, taken advantage of this spare capacity to optimize our global [UR] system. And once again, it's 0.5 million tons of fuel oil which has been able be turned into [each book].
And the last point, which is the largest part, by the way, 2 million tons. We have been able to do something pretty smart and with very low CapEx is to just invest in storage capacity to be able to segregate the vacuum residue -- the low-sulfur vacuum residue from the high-sulfur vacuum residue. Before, there was no value at differentiating, at segregating because there was no price differential. Now today, the market value, of course, the low-sulfur as compared to high-sulfur distillate.
And by doing this segregation, once again, with very low CapEx, we have been able to give some value at this stream and once again reduced by 2 million tons a year, [our length]. And you see by -- at the end of the day, we have the yield now which is well below 5%, which basically says that we don't have a very significant exposure to the fuel -- high-sulfur fuel oil.
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Momar Nguer, TOTAL S.A. - President of Marketing & Services [44]
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So on the supply, now like I said, the market today is 0.5 million tons. What we're seeing today is a lot of interest from shipowners about LNG yet to take decisions. And if you are -- we -- of course, we are going to leverage for us on our position on the supply side what Laurent is doing.
We are going to have barges. We've already ordered barges. We have 1 barge in [Singapore where we had 0]. We have -- we are going to have 2 barges in Europe, and we are working on China and in the Middle East.
We consider that the new vessels that will be coming will be again for the container vessels. The bulk of them will be LNG. We consider that in 2025 only, that's when you will see -- because it take longer time to convert, that's where you're going to see the shift in terms of the bulk of vessels and the bulk of ships that they will come only in 2025.
So for now, the first movers will be, of course, the cruise vessels. Those are already there. The ferries and then the container vessels. That's -- and we see the market moving, too. And this from of consensus the market going to 10 million tons in 2025. And then from there, increasing significantly to 2030.
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Jason Gammel, Jefferies LLC, Research Division - Equity Analyst [45]
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And are you actually marketing a low-sulfur fuel compliant bunker fuel or will you just be manufacturing mineral distillates and moving that profit as they flow?
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Momar Nguer, TOTAL S.A. - President of Marketing & Services [46]
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Can you take it again?
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Jason Gammel, Jefferies LLC, Research Division - Equity Analyst [47]
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Are you marketing a compliant low-sulfur fuel oil bunker fuel currently?
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Momar Nguer, TOTAL S.A. - President of Marketing & Services [48]
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Yes, definitely we are. We'll be offering to our customers all because Bernard is capable of supplying me with those, and our trading is -- so we're offering a variety of products to our customers, either LNG or low-sulfur diesel. Yes.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [49]
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All right, we have a question from Lydia here.
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Lydia Rose Emma Rainforth, Barclays Bank PLC, Research Division - Director & Equity Analyst [50]
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I have two questions again. On the petrochemical side, I mean you talked -- if we think about 60% of the business being low-cost feedstock by 2025. I'm still not entirely sure what happened to the other 40% in terms of how do you deal with the part that isn't low cost.
And then the second one was on the marketing side. If I look at that $100 million uplift in cash flow and the idea that you are to open more than 4,000 stations, that implies it's about $25,000 in cash flow per station. I was just wondering how that compares to -- or how the cash flow from the new stations compares to the existing cash flow per station.
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [51]
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So on the first question, yes, the 60% of feedstocks we will process by 2025 will be low-cost. So mainly gas-based, ethane, propane and butane. And the 40% is going to be mainly naphtha because today, in Europe, we have naphtha-based crackers with some Downstream derivatives which are linked to naphtha. So it's going to be a, I would say, nice balance, and we will have completely flexible set-up in Europe from that same point.
Today, it's exactly the contrary around. Today, we have 60% naphtha, 40% low feedstock. And by 2024, it's going to be exactly the other way around.
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Momar Nguer, TOTAL S.A. - President of Marketing & Services [52]
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On that $100 million -- just for fuel, we are going to generate 50% to 55% of the $100 million will be coming from retail business, not only fuel sales but the nonfuel sales, too. So 55% will come from retail. 30% will come from lubricants.
I did mention our lubricant business because that's part of legacy business, but that is a business where we are going to -- especially the volumes in lubricants are quite flat even some areas going down, but the unit margins are growing. So there, we are going to generate 30%. And the rest, the 15% are what we call specialty products which means sales of bitumen and other products. That's how it's going.
But the 55%, you have the impact of the new sites, but you have the impact of nonfuel sales, too.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [53]
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Question from Irene.
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Irene Himona, Societe Generale Cross Asset Research - Equity Analyst [54]
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I had three questions, actually. First one around petrochemicals. I think you referred to the current downcycle as short term or you expect it to be short term. Some of your peers are talking about previous cycles last year, a very long time. So my question is obviously we have 6 years to go to 2025, but if or when you risk your target CFFO of $5 billion for perhaps a longer duration downcycle, what sort of numbers -- what range do you come up with?
And then I had two questions, if I may, on the marketing side. So first of all, a few years ago, you had mentioned in a similar event that in Africa the banking systems were undeveloped, and there are no ATMs. And you aspired to sort of use your service stations to provide that. Is that included in your plan for nonfuel? Is that still happening?
And the second question on the nonfuel growth strategy. Obviously, your peers are doing exactly the same thing. Clearly, selling food or insurance is not necessarily your area of expertise. So I wonder when you think about the risks or the threats surrounding that strategy, what are they?
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [55]
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So maybe I'm going to answer the first question. Of course, we have run the numbers, Irene, as you may guess. What do we see? Just to give you some more order of magnitude. If you take the U.S. Gulf Coast, for example, the 2017 to 2025, so this period of time we're looking at. Today, you have 13 million tons of new capacity coming in the 8 years to come, '17 to '25. 13 million tons, 14 million tons of actual capacity. That's basically 4 years of growth if you see the market grows by 3% a year. So it's 3 million tons to 4 million tons a year. So basically, that's 3, 4 million -- 3, 4 years of growth which is invested, and it's completely absorbed.
So from that standpoint, this additional capacity over 8 years' period of time. I would say much, much [consolidation], small rates [plain] . As I explained, a matter of phasing. You have this structure, of course, a peak, and then that will rebalance. That's why we invest.
And then after, you have the naphtha world, which is mainly the additional capacity coming on the eastern part of the world. That's mainly Asia, China. That's all naphtha. And first, it's not all aimed at producing polypropylene because, of course, there are other derivatives. And here, again, these are not the most competitive crackers in the world. And in years to come, if what you say were to be true, the cycle lasting longer, these crackers will be, I suppose, I think the ones being the most impacted, suffering the most.
But regardless, this is simple math. The answer is very simple. We stick once again for 3 basics, which give us very strong base to weather any cycle. The first thing is that we bet on the low feedstocks. And you have seen that they are completely disconnected to naphtha. And there's a notion in effect today, and that will stay for the years to come. So this advantage will stay.
The second thing, of course, is we have -- thanks to our brownfield investments, low cost -- low CapEx because we leverage our platforms, which gives us also very competitive CapEx. And the first thing, of course, as I explained, is to balance monomers and polymers.
And if you stick to these 3 rules, the cycle will last one more year. It doesn't matter so much because we'll be in a very strong position, and that's our vision.
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [56]
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The assumptions that we are taking on petrochemicals are very conservative behind the figures.
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [57]
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Not telling.
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [58]
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Just two. We are not at the level of today. We are very conservative because we experience so low cycles in years, but we have still that in mind. So a few years are quite solid from this perspective.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [59]
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Yes? We have one question here.
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Momar Nguer, TOTAL S.A. - President of Marketing & Services [60]
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In terms of the -- thank you. Now on the -- yes, 3 years ago we mentioned that. And actually, that is happening today. We have invested in 2 start-up companies to accompany the process. One is we've invested -- and the system they're using includes touch point. They have today 6,000 machines that are active in that platform. They have 143 digital services, be it to buy insurance, to make -- buy and payment, to make payments of bills -- electricity bill. That is working today already, and we hold 31% of that company.
There's another company we've invested in that is called [Whistle]. And just to tell you what they are doing. Today, I've just been -- I was in Africa some weeks ago, and I've won a contract in one of the countries in West Africa and they're in charge of paying the scholarships. The government goes through the system to pay the scholarships to students because the money has been transferred by form so that the student can have access to that because some of the students are in rural areas where they do not have access to normal banking system.
So that is already working, and we are part of the system. And that's part of the nonfuel revenues in Africa.
Now on the nonfuel business in Europe, yes, all our competitors are doing that. But of course, I think we've developed through time expertise on that. Second, we have outlets because to sell those services you need outlets, and we have 6,000 outlets in Western Europe. The AS24 and the Total service stations.
For example, if you take car wash, we're developing tremendously that business of car wash not only in our service stations, but we are partnering now with [parking] owners to bring that service in the park. And so every time we are looking at ways to improve that business. And of course, going digital, for example, at the moment, and that's part of the things we are going to bring in the digital factory. How are you going to manage yield management in terms of carwash? That may be minor, but it's very important to make sure that you -- if you bring your car at 5:00 somewhere, you don't take the queue because you've already secured a slot prior to calling the service station.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [61]
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All right. Now we have a question here.
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Jason Daniel Gabelman, Cowen and Company, LLC, Research Division - VP [62]
------------------------------
Yes. Jason Gabelman from Cowen. Since Patrick mentioned it, I guess I'll ask. What is the underlying chain margin assumptions that you're using for this kind of $1.5 billion of cash flow growth through 2025? Is this year, which has not been so strong for chems, a good year to benchmark against?
And then just a follow-up on the IMO 2020 slide. There's a portion of crude flexibility that you pointed out between -- you have the ability to switch between high-sulfur and low-sulfur crude. What's kind of the level of that throughout your portfolio? And where do prices need to go for that to be economic for you, to do in terms of the low-sulfur, high-sulfur spreads?
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [63]
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So the first question is going to be pretty -- first to answer shortly. I'm going to give you the petchem margin and our line assumptions. So that will be fun of a time.
On the flexibility between high sulfur and low sulfur, maybe we could -- or we could maybe put back the slide what we -- I showed. Because you saw that we left 1 million tons to play. Yes, the low-sulfur, high-sulfur crude flexibility. It really depends actually on the spread between low-sulfur fuel oil and gasoline. When you have low-sulfur straight runs, typically, you may decide to develop the stream either to do gasoline or to do -- or to have [CC] or to do a low-sulfur fuel oil. It really depends on the spread. So it really depends on the market conditions.
In a given month, you may think it's more economical to develop the strength of our [BCC], in other words, to do the fuel oil. And we want to keep this flexibility also with high-sulfur. So that's why we -- it's clearly something we pilot but that's, I would say, the job to of a refiner to pilot the refinery and to try in the linear product to optimize the margins depending on the best practice.
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Jason Daniel Gabelman, Cowen and Company, LLC, Research Division - VP [64]
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Just in terms of volumes in the order of magnitude, is there any indication of -- I mean is it hundreds of thousands, tens of thousands?
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [65]
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No, no, no. I'm not answering this question. So we're talking about 1 million tons. So just keep in mind it's not very material.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [66]
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Any other questions? Yes, please.
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Henry Michael Tarr, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [67]
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Henry Tarr from Berenberg. Two questions. Just to come back on the franchise retail stations versus the equity, I guess. What's the economics of franchise versus your own retail in terms of CapEx, the value per station and the returns profile of the 2? That will be helpful. And then you're entering Brazil on the retail side as well. Have you any interest in going Upstream to biofuels in the country?
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Momar Nguer, TOTAL S.A. - President of Marketing & Services [68]
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Right. The franchise model works like this. Today, you invest 25% of what you would invest in the company-owned service stations. The stream of revenues are as follows. A brand because you are bringing your brand. Margin on the supply of products because we insist to be the one supplying fuels. Because you have an issue of the value of your brand and you don't want to dilapidate the value of your brand by selling unregulated fuel. So it's very important that you're involved in the supply of fuels. So there you have margins.
And of course, you bring in your expertise. My card system is a proprietary system. So if a franchise want to use it, of course, there's a fee to be paid.
So in terms of profitability compared to the CapEx, it's similar to company-owned service stations business basically because you have different streams of revenues.
The biofuels in Brazil, no, we do not intend to buy 100%. I mean if the question is, are we going to buy biofuel? No. That's not our intention. What we intend to do is when looking at opportunities of growth, we'll give -- we'll be more inclined to buy -- to make acquisition of companies where the percentage of buyers are the highest because in Brazil, you have difference in the -- depending on the states.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [69]
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The question was on this one, is do you invest -- do you want to invest in biofuels production? It was for you, Bernard.
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [70]
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Ah, in production in Brazil. It was mentioned in Brazil so...
Biofuel production, okay.
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [71]
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The answer is no.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [72]
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All right. One question here.
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James Matthew Evans, Exane BNP Paribas, Research Division - Analyst of Oil and Gas [73]
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James at Exane BNP Paribas. Just one for you, Bernard. Obviously, I know that the presentation is about growth, but I want to ask about refining and particularly as against the middle of the next decade and we think about the challenges for the European refining system. Have you got any plans around either divestments or repurposing of some of those refinery assets for other means that maybe you've not talked about today that we should be thinking about?
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [74]
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So first, we have developed already. If you remember since 2010, I think we reduced our capacity by more than 20%, which is by far more than the average of the industry in Europe. So I would say a lot has been done to reposition our system. There is still a large investment to do in Donges. This is a refinery where we still have some upgrading to do and to put this refinery, I would say, at the target of $20 per barrel recommended point.
After, we think that yes, there will be more capacity coming. That's true. We see it. And we just need to stick to what has been our success so far which is to focus on what we control, which means we will keep improving our availability as we have done in the past and working on the energy efficiency. That's all what I can tell you, unless Patrick wants to answer.
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [75]
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The question, it was about how do you phase out your oil refining business or it would be less? What is your phase-out plan of refining business?
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [76]
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In Europe?
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [77]
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In Europe.
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [78]
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Okay.
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [79]
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So the answer is transforming it in biorefinery.
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [80]
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In biorefinery, yes.
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Patrick Pouyanné, TOTAL S.A. - Chairman, CEO & President [81]
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Like we've done in...
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [82]
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(inaudible)
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [83]
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Okay. Any other questions? Yes, Lydia again.
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Lydia Rose Emma Rainforth, Barclays Bank PLC, Research Division - Director & Equity Analyst [84]
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Just one last one for me. Can we just talk about the digitalization, perhaps some point from both of you, in terms of what you'll see in that $500 million and just give some examples around that?
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Momar Nguer, TOTAL S.A. - President of Marketing & Services [85]
------------------------------
Okay, since we're already starting to do -- for example, I'm just going to give you one example. We developed a system -- when you are a loaner of fleet of trucks in Europe, your pain point is where my trailers are, right? Because the issue is that you have your trucks and you have number of trailers across Europe. So the question is at any given time you want to know where your trailer is.
We've developed a system we are selling to truck owners, fleet owners, that allow them to locate -- with a device that is costing EUR 6 per device, they're able to see where the trailer is and to optimize the usage of the trailers. That's one thing.
I mentioned earlier the issue of yield management for carwash. That's a pain point. For me one of the -- the main point for me for development of the carwash business is that you call in service stations and you see the queue, you have to take the queue for 20 minutes. So what we -- we will be working -- and we've started working on a system whereby it's 5:00, I book for 6:15 at station -- at street A at 6:15. And I pay in advance, of course, because I don't want no-shows. So at 6:15, you are there, and you do proper yield management. If it's -- those at 6:00, you can have a discount. But if you come on a Saturday at 11, you'll pay the high price.
So that's the sort of thing we are developing now, and it's quite -- we are quite enthusiastic about that. We are doing that on sales of heating fuels. That's already in place today in France. If you want to order heating fuel from Total, you go into our system. Depending on if you want to be delivered within 24 hours or within a shorter range, in 2 hours' time, you pay a different price. It's already in place.
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Bernard Pinatel, TOTAL S.A. - President of Refining & Chemicals [86]
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So if I take refining, a large part, this has to do, of course, with margin optimization. The typical process today, you get some crude, you put that into our inner program, you run it, you process your crude. At the end of the day, you end up with a mass balance and some yield. And you see the gap between what you are supposed to get and what you've got. That's simple. And you keep adapting your model for the next month. And you run it again and again and again.
With digital, even after -- definitely [internal], but mainly digital, you will be able to do it in real-time, which mean you can really optimize your units as they process the crude and you don't need to run it when it's too late afterwards. And the more you run it, the more you learn and the more you will be able to adapt it real-time. That's typically the kind of process we're working on, which yield, of course, a very significant amount of money because it has to do with margin, as an example.
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Ladislas Paszkiewicz, TOTAL S.A. - SVP of IR [87]
------------------------------
Okay. I do not see any other arms being raised, so that's going to close this session.
I want to thank you all for your attention during today and tell you that you're invited for dinner. That's going to take place at Bobby Vans, just 2 minutes' walking distance from here on 25 Broad Street. Thank you.
Actually, it's 5:45, so 10 minutes from now, and that's -- we'll be happy to greet you there.
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