| Financial instruments related to commodity contracts |
Note 16 Financial instruments related to commodity contracts 16.1 FINANCIAL INSTRUMENTS RELATED TO COMMODITY CONTRACTS | Accounting principles Financial instruments related to commodity contracts, including crude oil, petroleum products, gas, and power purchase/sales contracts within the trading activities, together with the commodity contract derivative instruments and freight rate swaps, are used to adjust TotalEnergies’ exposure to price fluctuations within global trading limits. According to the industry practice, these instruments are considered as held for trading. Changes in fair value are recorded in the income statement. The fair value of these instruments is recorded in “Other current assets” or “Other creditors and accrued liabilities” depending on whether they are assets or liabilities. Certain energy derivatives are also held as part of a cash flow hedge for future transactions. The valuation methodology is to mark-to-market all open positions for both physical and paper transactions. The valuations are determined on a daily basis using observable market data based on organized and over the counter (OTC) markets. In specific cases when market data is not directly available, the valuations are derived from observable data such as arbitrages, freight or spreads and market corroboration. For valuation of risks which are the result of a calculation, such as options for example, commonly known models are used to compute the fair value. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net balance | | | | | | | As of December 31, 2025 | | Gross value | | Amounts | | sheet value | | Other | | | | | (M$) | | before offsetting | | offset | | presented | | amounts not | | Net carrying | | Fair | Assets / (Liabilities) | | Assets | | Liabilities | | Assets(c) | | Liabilities(c) | | Assets | | Liabilities | | offset | | amount | | value(b) | Gas & Power activities | | | | | | | | | | | | | | | | | | | Swaps | | 304 | | (329) | | (108) | | 108 | | 196 | | (221) | | – | | (25) | | (25) | Forwards(a) | | 4,326 | | (2,692) | | (94) | | 94 | | 4,232 | | (2,598) | | – | | 1,634 | | 1,634 | Options | | 129 | | (8) | | – | | – | | 129 | | (8) | | – | | 121 | | 121 | Futures | | – | | – | | – | | – | | – | | – | | – | | – | | – | Other/Collateral | | – | | – | | – | | – | | – | | – | | 123 | | 123 | | 123 | Total Gas & Power | | 4,759 | | (3,029) | | (202) | | 202 | | 4,557 | | (2,827) | | 123 | | 1,853 | | 1,853 | Crude oil, petroleum products and freight rates activities | | | | | | | | | | | | | | | | | | | Petroleum products, crude oil and freight rate swaps | | 87 | | (53) | | (33) | | 33 | | 54 | | (20) | | – | | 34 | | 34 | Forwards(a) | | 1,061 | | (1,389) | | (1) | | 1 | | 1,060 | | (1,388) | | – | | (328) | | (328) | Options | | 55 | | (202) | | (42) | | 42 | | 13 | | (160) | | – | | (147) | | (147) | Futures | | – | | – | | – | | – | | – | | – | | – | | – | | – | Options on futures | | 60 | | (34) | | (34) | | 34 | | 26 | | – | | – | | 26 | | 26 | Other/Collateral | | – | | – | | – | | – | | – | | – | | – | | – | | – | Total crude oil, petroleum products and freight rates | | 1,263 | | (1,678) | | (110) | | 110 | | 1,153 | | (1,568) | | – | | (415) | | (415) | TOTAL | | 6,022 | | (4,707) | | (312) | | 312 | | 5,710 | | (4,395) | | 123 | | 1,438 | | 1,438 | Total of fair value non recognized in the balance sheet | | | | | | | | | | | | | | | | | | – |
(a) | Forwards: contracts resulting in physical delivery are accounted for as derivative commodity contracts and included in the amounts shown. |
(b) | When the fair value of derivatives listed on an organized exchange market (futures, options on futures and swaps) is offset with the margin call received or paid in the balance sheet, this fair value is set to zero. |
(c) | Amounts offset in accordance with IAS 32. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net balance | | | | | | | As of December 31, 2024 | | Gross value | | Amounts | | sheet value | | Other | | | | | (M$) | | before offsetting | | offset | | presented | | amounts not | | Net carrying | | Fair | Assets / (Liabilities) | | Assets | | Liabilities | | Assets(c) | | Liabilities(c) | | Assets | | Liabilities | | offset | | amount | | value(b) | Gas & Power activities | | | | | | | | | | | | | | | | | | | Swaps | | 117 | | (129) | | (7) | | 7 | | 110 | | (122) | | – | | (12) | | (12) | Forwards(a) | | 8,060 | | (6,595) | | (79) | | 79 | | 7,981 | | (6,516) | | – | | 1,465 | | 1,465 | Options | | 277 | | – | | – | | – | | 277 | | – | | – | | 277 | | 277 | Futures | | – | | – | | – | | – | | – | | – | | – | | – | | – | Other/Collateral | | – | | – | | – | | – | | – | | – | | 403 | | 403 | | 403 | Total Gas & Power | | 8,454 | | (6,724) | | (86) | | 86 | | 8,368 | | (6,638) | | 403 | | 2,133 | | 2,133 | Crude oil, petroleum products and freight rates activities | | | | | | | | | | | | | | | | | | | Petroleum products, crude oil and freight rate swaps | | 85 | | (46) | | (44) | | 44 | | 41 | | (2) | | – | | 39 | | 39 | Forwards(a) | | 656 | | (1,012) | | (14) | | 14 | | 642 | | (998) | | – | | (356) | | (356) | Options | | 70 | | (102) | | (60) | | 60 | | 10 | | (42) | | – | | (32) | | (32) | Futures | | – | | – | | — | | – | | – | | – | | – | | — | | – | Options on futures | | 66 | | (55) | | (55) | | 55 | | 11 | | – | | – | | 11 | | 11 | Other/Collateral | | – | | – | | – | | – | | – | | – | | – | | – | | – | Total crude oil, petroleum products and freight rates | | 877 | | (1,215) | | (173) | | 173 | | 704 | | (1,042) | | – | | (338) | | (338) | TOTAL | | 9,331 | | (7,939) | | (259) | | 259 | | 9,072 | | (7,680) | | 403 | | 1,795 | | 1,795 | Total of fair value non recognized in the balance sheet | | | | | | | | | | | | | | | | | | – |
(a) | Forwards: contracts resulting in physical delivery are accounted for as derivative commodity contracts and included in the amounts shown. |
(b) | When the fair value of derivatives listed on an organized exchange market (futures, options on futures and swaps) is offset with the margin call received or paid in the balance sheet, this fair value is set to zero. |
(c) | Amounts offset in accordance with IAS 32. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net balance | | | | | | | As of December 31, 2023 | | Gross value | | Amounts | | sheet value | | Other | | | | | (M$) | | before offsetting | | offset | | presented | | amounts not | | Net carrying | | Fair | Assets / (Liabilities) | | Assets | | Liabilities | | Assets(c) | | Liabilities(c) | | Assets | | Liabilities | | offset | | amount | | value(b) | Gas & Power activities | | | | | | | | | | | | | | | | | | | Swaps | | 116 | | (125) | | (27) | | 27 | | 89 | | (98) | | – | | (9) | | (9) | Forwards(a) | | 5,875 | | (6,369) | | (253) | | 253 | | 5,622 | | (6,116) | | – | | (494) | | (494) | Options | | 540 | | – | | – | | – | | 540 | | – | | – | | 540 | | 540 | Futures | | 2 | | – | | – | | – | | 2 | | – | | – | | 2 | | 2 | Other/Collateral | | – | | – | | – | | – | | – | | – | | 109 | | 109 | | 109 | Total Gas & Power | | 6,533 | | (6,494) | | (280) | | 280 | | 6,253 | | (6,214) | | 109 | | 148 | | 148 | Crude oil, petroleum products and freight rates activities | | | | | | | | | | | | | | | | | | | Petroleum products, crude oil and freight rate swaps | | 66 | | (50) | | (28) | | 28 | | 38 | | (22) | | – | | 16 | | 16 | Forwards(a) | | 655 | | (1,348) | | (13) | | 13 | | 642 | | (1,335) | | – | | (693) | | (693) | Options | | 23 | | (97) | | (23) | | 23 | | – | | (74) | | – | | (74) | | (74) | Futures | | 1 | | – | | — | | – | | 1 | | – | | – | | 1 | | 1 | Options on futures | | 287 | | (214) | | (209) | | 209 | | 78 | | (5) | | – | | 73 | | 73 | Other/Collateral | | – | | – | | – | | – | | – | | – | | – | | – | | – | Total crude oil, petroleum products and freight rates | | 1,032 | | (1,709) | | (273) | | 273 | | 759 | | (1,436) | | – | | (677) | | (677) | TOTAL | | 7,565 | | (8,203) | | (553) | | 553 | | 7,012 | | (7,650) | | 109 | | (529) | | (529) | Total of fair value non recognized in the balance sheet | | | | | | | | | | | | | | | | | | – |
(a) | Forwards: contracts resulting in physical delivery are accounted for as derivative commodity contracts and included in the amounts shown. |
(b) | When the fair value of derivatives listed on an organized exchange market (futures, options on futures and swaps) is offset with the margin call received or paid in the balance sheet, this fair value is set to zero. |
(c) | Amounts offset in accordance with IAS 32. |
Commitments on crude oil and refined products have, for the most part, a short-term maturity (less than one year). The changes in fair value of financial instruments related to commodity contracts are detailed as follows: | | | | | | | | | | | For the year ended December 31, | | Fair value | | Impact on | | Settled | | | | Fair value as of | (M$) | | as of January 1, | | income | | contracts | | Other | | December 31, | Gas & Power activities | | | | | | | | | | | 2025 | | 1,730 | | 1,024 | | (1,094) | | 70 | | 1,730 | 2024 | | 39 | | (345) | | 2,000 | | 36 | | 1,730 | 2023 | | 2,347 | | (5,792) | | 3,681 | | (197) | | 39 | Crude oil, petroleum products and freight rates activities | | | | | | | | | | | 2025 | | (338) | | 10,079 | | (10,124) | | (32) | | (415) | 2024 | | (677) | | 10,118 | | (9,779) | | – | | (338) | 2023 | | (901) | | 11,033 | | (10,812) | | 3 | | (677) |
The fair value hierarchy for financial instruments related to commodity contracts is as follows: | | | | | | | | | | | Quoted prices | | | | | | | | | in active markets for | | Prices based on | | Prices based on | | | As of December 31, 2025 | | identical | | observable data | | non observable | | | (M$) | | assets (level 1) | | (level 2) | | data (level 3) | | Total | Gas & Power activities | | (119) | | 1,409 | | 440 | | 1,730 | Crude oil, petroleum products and freight rates activities | | 24 | | (439) | | – | | (415) | TOTAL | | (95) | | 970 | | 440 | | 1,315 |
| | | | | | | | | | | Quoted prices | | | | | | | | | in active markets for | | Prices based on | | Prices based on | | | As of December 31, 2024 | | identical | | observable data | | non observable | | | (M$) | | assets (level 1) | | (level 2) | | data (level 3) | | Total | Gas & Power activities | | (78) | | (38) | | 1,846 | | 1,730 | Crude oil, petroleum products and freight rates activities | | 13 | | (351) | | – | | (338) | TOTAL | | (65) | | (389) | | 1,846 | | 1,392 |
| | | | | | | | | | | Quoted prices | | | | | | | | | in active markets for | | Prices based on | | Prices based on | | | As of December 31, 2023 | | identical | | observable data | | non observable | | | (M$) | | assets (level 1) | | (level 2) | | data (level 3) | | Total | Gas & Power activities | | 1,054 | | 1,677 | | (2,692) | | 39 | Crude oil, petroleum products and freight rates activities | | 73 | | (750) | | – | | (677) | TOTAL | | 1,127 | | 927 | | (2,692) | | (638) |
Financial instruments classified as level 3 are mainly composed of long-term liquefied natural gas purchase and sale contracts which relate to the trading activity. The management of positions is carried out on the basis of a net value of LNG purchase and sale commitments; the valuation of contracts is based on observable market data, such as commodity forward prices, but it also takes into account unobservable data on contract performance (assumptions on the variable terms of the contracts, on the availability of infrastructures, on the performance of counterparties…). The valuation of LNG contracts is sensitive to changes in oil and natural gas prices on North American, Asian and European markets, as well as to these assumptions on contract performance. TotalEnergies’ management horizon is 12 months in 2025 (as in 2024 and 2023), and includes the full annual delivery program of LNG cargoes for the following year. The analysis of the fair value of the LNG portfolio over the period beyond 12 months carried out by the Company, allows to verify that there is no material asset or liability to be recognized in its accounts for that period. This analysis, which takes into account the specific characteristics of LNG contracts and of the gas market, including its liquidity, incorporates valuation parameters that are unobservable over this period, in particular Company internal assumptions on the long-term evolution of hydrocarbon prices, the execution of contracts and the performance of counterparties, the renegotiation of price terms in contracts or the exercise of their contractual flexibilities. The description of each fair value level is presented in Note 15 to the Consolidated Financial Statements. Cash flow hedge The impact on the income statement and other comprehensive income of the hedging instruments related to commodity contracts and qualified as cash flow hedges is detailed as follows: | | | | | | | As of December 31 | | | | | | | (M$) | | 2025 | | 2024 | | 2023 | Profit (Loss) recorded in other comprehensive income of the period | | (730) | | 2,670 | | 2,770 | Recycled amount from other comprehensive income to the income statement of the period | | (807) | | (2,671) | | 117 |
These financial instruments are mainly European gas, power and CO2 emission rights derivatives. As of December 31, 2025, the ineffective portion of these financial instruments is $8 million (the ineffective portion of the financial instruments was $127 million in 2024 and $124 million in 2023). 16.2 Oil, Gas and Power markets related risks management Due to the nature of its business, TotalEnergies has significant oil and gas trading activities as part of its day-to-day operations in order to optimize revenues from its oil and gas production and to obtain favorable pricing to supply its refineries. In its international oil trading business, TotalEnergies usually follows a policy of not selling its future production. However, in connection with this trading business, TotalEnergies, like most other oil companies, uses energy derivative instruments to adjust its exposure to price fluctuations of crude oil, refined products, natural gas, and power. TotalEnergies also uses freight rate derivative contracts in its shipping business to adjust its exposure to freight-rate fluctuations. To hedge against this risk, TotalEnergies uses various instruments such as futures, forwards, swaps and options on organized markets or over-the-counter markets. The list of the different derivatives held by TotalEnergies in these markets is detailed in Note 16.1 to the Consolidated Financial Statements. As part of its gas and power trading activity, TotalEnergies also uses derivative instruments such as futures, forwards, swaps and options in both organized and over-the-counter markets. In general, the transactions are settled at maturity date through physical delivery. TotalEnergies measures its market risk exposure, i.e. potential loss in fair values, on its trading business using a “value-at-risk” technique. This technique is based on a historical model and makes an assessment of the market risk arising from possible future changes in market values over a one-day period. The calculation of the range of potential changes in fair values takes into account a snapshot of the end-of-day exposures and the set of historical price movements for the past two years for all instruments and maturities in the global trading business. Gas & Power division trading: “value-at-risk” with a 97.5% probability | | | | | | | | | As of December 31, | | | | | | | | | (M$) | | High | | Low | | Average | | Year end | 2025 | | 108 | | 11 | | 38 | | 36 | 2024 | | 139 | | 19 | | 54 | | 77 | 2023 | | 111 | | 16 | | 54 | | 54 |
The Trading & Shipping division measures its market risk exposure, i.e. potential loss in fair values, on its crude oil, refined products and freight rates trading activities using a “value-at-risk” technique. This technique is based on a historical model and makes an assessment of the market risk arising from possible future changes in market values over a 24-hour period. The calculation of the range of potential changes in fair values is based on the end-of-day exposures and historical price movements of the last 400 business days for all traded instruments and maturities. Options are systematically re-evaluated using appropriate models. The “value-at-risk” represents the most unfavorable movement in fair value obtained with a 97.5% confidence level. This means that TotalEnergies’ portfolio result is likely to exceed the value-at-risk loss measure once over 40 business days if the portfolio exposures were left unchanged. Trading & Shipping: “value-at-risk with” a 97.5% probability | | | | | | | | | As of December 31, | | | | | | | | | (M$) | | High | | Low | | Average | | Year end | 2025 | | 41 | | 11 | | 20 | | 13 | 2024 | | 53 | | 8 | | 24 | | 16 | 2023 | | 74 | | 17 | | 37 | | 28 |
TotalEnergies has implemented strict policies and procedures to manage and monitor these market risks. These are based on the separation of control and front-office functions and on an integrated information system that enables real-time monitoring of trading activities. Limits on trading positions are approved by TotalEnergies’ Executive Committee and are monitored daily. To increase flexibility and encourage liquidity, hedging operations are performed with numerous independent operators, including other oil companies, major energy producers or consumers and financial institutions. TotalEnergies has established counterparty limits and monitors outstanding amounts with each counterparty on an ongoing basis.
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