Total to make $8 billion write-down following COVID-19 oil crash

Total has announced it will take an US$8 billon impairment on the value of its assets, mainly in carbon-intensive oil sands projects, following the collapse in oil demand earlier this year during the COVID-19 crisis.

The French energy major slashed its oil and gas price outlook, leading to a $1.5 billion impairment of its Canadian assets and an $800 million impairment of Australian liquefied natural gas (LNG) facilities.

The company also wrote down a further $5.5 billion in the value of its Fort Hills and Surmont Canadian oil sand projects after cutting its oil price assumptions for the next years given the drop in prices in 2020.

Total announced it will stop investing in capacity expansion projects in Canadian oil sands, which require complex and energy-intensive extraction processes that cause heavy carbon pollution.

It has also decided to withdraw from the Canadian Association of Petroleum Producers (CAPP), saying the association is not aligned with Total’s positions. The company recently announced plans to sharply reduce its greenhouse gas emissions, in line with other oil majors.

The group today reported $3.6 billion of cash flow in its financial results for the first half of 2020, highlighting the ‘exceptionally weak second quarter environment’ due to the COVID-19 pandemic and the subsequent lockdown of the European economy.