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Off balance sheet commitments and lease contracts
12 Months Ended
Dec. 31, 2020
Off balance sheet commitments and lease contracts  
Off balance sheet commitments and lease contracts

NOTE 13 Off balance sheet commitments and lease contracts

13.1 Off balance sheet commitments and contractual obligations

Maturity and installment plants

As of December 31, 2020

Less than 1

Between 1

More than 5

(M$)

    

Total

    

year

    

and 5 years

    

years

Non-current debt obligations net of hedging instruments (Note 15)

48,705

22,745

25,960

Current portion of non-current debt obligations net of hedging instruments (Note 15)

 

4,674

 

4,674

 

 

Lease obligations (Note 13.2)

 

8,943

 

1,207

 

3,178

 

4,558

Asset retirement obligations (Note 12)

 

15,368

 

463

 

1,840

 

13,065

Contractual obligations recorded in the balance sheet

 

77,690

 

6,344

 

27,763

 

43,583

Lease obligations for low value assets, short term contracts or not yet commenced (Note 13.2)

 

1,745

 

704

 

626

 

415

Purchase obligations

 

143,177

 

11,719

 

39,126

 

92,332

Contractual obligations not recorded in the balance sheet

 

144,922

 

12,423

 

39,752

 

92,747

TOTAL OF CONTRACTUAL OBLIGATIONS

 

222,612

 

18,767

 

67,515

 

136,330

Guarantees given to customs authorities

 

2,312

 

2,189

 

60

 

63

Guarantees given on borrowings

 

14,164

 

746

 

3,660

 

9,758

Indemnities related to sales of businesses

 

333

 

179

 

 

154

Guarantees of current liabilities

 

147

 

68

 

56

 

23

Guarantees to customers / suppliers

 

19,182

 

2,603

 

1,853

 

14,726

Letters of credit

 

2,432

 

2,297

 

135

 

Other operating commitments

 

23,879

 

3,224

 

3,002

 

17,653

TOTAL OF OTHER COMMITMENTS GIVEN

 

62,449

 

11,306

 

8,766

 

42,377

Mortgages and liens received

 

77

 

28

 

24

 

25

Sales obligations

 

80,521

 

7,001

 

29,362

 

44,158

Other commitments received

 

20,401

 

15,270

 

1,474

 

3,657

TOTAL OF COMMITMENTS RECEIVED

 

100,999

 

22,299

 

30,860

 

47,840

Of which commitments given relating to joint ventures

 

34,920

 

644

 

7,288

 

26,988

Of which commitments given relating to associates

 

51,795

 

999

 

8,664

 

42,132

Maturity and installment plants

As of December 31, 2019

Less than 1

Between 1

More than 5

(M$)

    

Total

    

year

    

and 5 years

    

years

Non-current debt obligations net of hedging instruments (Note 15)

40,931

19,888

21,043

Current portion of non-current debt obligations net of hedging instruments (Note 15)

 

5,331

 

5,331

 

 

Lease obligations (Note 13.2)

 

7,465

 

1,202

 

2,883

 

3,380

Asset retirement obligations (Note 12)

 

14,492

 

617

 

3,153

 

10,722

Contractual obligations recorded in the balance sheet

 

68,219

 

7,150

 

25,924

 

35,145

Lease obligations for low value assets, short term contracts or not yet commenced (Note 13.2)

 

2,077

 

536

 

879

 

662

Purchase obligations

 

147,516

 

10,763

 

38,189

 

98,564

Contractual obligations not recorded in the balance sheet

 

149,593

 

11,299

 

39,068

 

99,226

TOTAL OF CONTRACTUAL OBLIGATIONS

 

217,812

 

18,449

 

64,992

 

134,371

Guarantees given to customs authorities

 

2,012

 

1,876

 

17

 

119

Guarantees given on borrowings

 

14,510

 

306

 

7,372

 

6,832

Guarantees related to sales of businesses

 

331

 

163

 

16

 

152

Guarantees of current liabilities

 

172

 

79

 

60

 

33

Guarantees to customers / suppliers

 

12,318

 

1,435

 

2,169

 

8,714

Letters of credit

 

2,786

 

2,768

 

18

 

Other operating commitments

 

22,055

 

3,240

 

1,202

 

17,613

TOTAL OF OTHER COMMITMENTS GIVEN

 

54,184

 

9,867

 

10,854

 

33,463

Assets received as collateral (security interests)

 

85

 

23

 

37

 

25

Sales obligations

 

93,441

 

7,135

 

31,330

 

54,976

Other commitments received

 

22,358

 

16,845

 

1,705

 

3,808

TOTAL OF COMMITMENTS RECEIVED

 

115,884

 

24,003

 

33,072

 

58,809

Of which commitments given relating to joint ventures

 

39,055

 

461

 

11,822

 

26,772

Of which commitments given relating to associates

31,465

 

913

 

8,381

 

22,171

Maturity and installments

As of December 31, 2018

Less than 1

Between 1

More than 5

(M$)

    

Total

    

year

    

and 5 years

    

years

Non-current debt obligations net of hedging instruments (Note 15)

 

37,784

19,072

18,712

Current portion of non-current debt obligations net of hedging instruments (Note 15)

 

5,027

 

5,027

 

 

Finance lease obligations (Note 13.2)

 

1,878

 

213

 

468

 

1,197

Asset retirement obligations (Note 12)

 

14,286

 

844

 

3,388

 

10,054

Contractual obligations recorded in the balance sheet

 

58,975

 

6,084

 

22,928

 

29,963

Operating lease obligations (Note 13.2)

 

9,130

 

1,644

 

3,691

 

3,795

Purchase obligations

 

121,119

 

9,708

 

30,652

 

80,759

Contractual obligations not recorded in the balance sheet

 

130,249

 

11,352

 

34,343

 

84,554

TOTAL OF CONTRACTUAL OBLIGATIONS

 

189,224

 

17,436

 

57,271

 

114,517

Guarantees given to customs authorities

 

2,043

 

1,904

 

12

 

127

Guarantees given on borrowings

 

18,680

 

169

 

68

 

18,443

Indemnities related to sales of businesses

 

334

 

165

 

10

 

159

Guarantees of current liabilities

 

222

 

83

 

74

 

65

Guarantees to customers / suppliers

 

8,463

 

1,222

 

847

 

6,394

Letters of credit

 

3,515

 

3,164

 

160

 

191

Other operating commitments

 

29,416

 

2,085

 

1,046

 

26,285

TOTAL OF OTHER COMMITMENTS GIVEN

 

62,673

 

8,792

 

2,217

 

51,664

Mortgages and liens received

 

84

 

23

 

33

 

28

Sales obligations

 

91,695

 

7,989

 

27,709

 

55,997

Other commitments received

 

21,565

 

15,527

 

1,328

 

4,710

TOTAL OF COMMITMENTS RECEIVED

 

113,344

 

23,539

 

29,070

 

60,735

Of which commitments given relating to joint ventures

 

42,768

 

162

 

4,425

 

38,181

Of which commitments given relating to associates

39,437

 

773

 

8,378

 

30,286

A.    Contractual obligations

Debt obligations

“Non-current debt obligations” are included in the items “Non-current financial debt” and “Non-current financial assets” of the Consolidated Balance Sheet. It includes the non-current portion of swaps hedging bonds, and excludes non-current lease obligations of $7,736 million.

The current portion of non-current debt is included in the items “Current borrowings”, “Current financial assets” and “Other current financial liabilities” of the Consolidated Balance Sheet. It includes the current portion of swaps hedging bonds, and excludes the current portion of lease obligations of $1,207 million.

The information regarding contractual obligations linked to indebtedness is presented in Note 15 to the Consolidated Financial Statements.

Lease contracts

The information regarding leases is presented in Note 13.2 to the Consolidated Financial Statements.

Asset retirement obligations

This item represents the discounted present value of Exploration & Production and Integrated Gas, Renewables & Power asset retirement obligations, primarily asset removal costs at the completion date. The information regarding contractual obligations linked to asset retirement obligations is presented in Note 12 to the Consolidated Financial Statements.

Purchase obligations

Purchase obligations are obligations under contractual agreements to purchase goods or services, including capital projects. These obligations are enforceable and legally binding on the company and specify all significant terms, including the amount and the timing of the payments.

These obligations mainly include: unconditional hydrocarbon purchase contracts (except where an active, highly-liquid market exists and when the hydrocarbons are expected to be re-sold shortly after purchase) in the Integrated Gas, Renewables & Power segment, reservation of transport capacities in pipelines, unconditional exploration works and development works in the Exploration & Production segment, and contracts for capital investment projects in the Refining & Chemicals segment.

B.    Other commitments given

Guarantees given to customs authorities

These consist of guarantees given by the Group to customs authorities in order to guarantee the payments of taxes and excise duties on the importation of oil and gas products, mostly in France.

Guarantees given on borrowings

The Group guarantees bank debt and lease obligations of certain non-consolidated subsidiaries and equity affiliates. Maturity dates vary, and guarantees will terminate on payment and/or cancellation of the obligation. A payment would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee, and no assets are held as collateral for these guarantees. As of December 31, 2020, the maturities of these guarantees are up to 2053.

As of December 31, 2020, the guarantees provided by TOTAL SE in connection with the financing of the Ichthys LNG project amount to $4,912 million. As of December 31, 2019, the guarantees amounted to $4,937 million.

As of December 31, 2020, the guarantees provided by TOTAL SE in connection with the financing of the Yamal LNG project for an amount of $3,250 million by TOTAL SE. As of December 31, 2019, the guarantees amounted to $3,688 million.

As of December 31, 2020, TOTAL SE has confirmed guarantees for TOTAL Refining SAUDI ARABIA SAS shareholders' advances for an amount of $1,164 million. As of December 31, 2019, the guarantees amounted to $1,184 million.

As of December 31, 2020, the guarantee given in 2008 by TOTAL SE in connection with the financing of the Yemen LNG project amounts to $509 million as in 2019.

As of December 31, 2020, guarantees provided by TOTAL SE in connection with the financing of the Bayport Polymers LLC project, amount to $1,820 million as in 2019.

Indemnities related to sales of businesses

In the ordinary course of business, the Group executes contracts involving standard indemnities for the oil industry and indemnities specific to transactions such as sales of businesses. These indemnities might include claims against any of the following: environmental, tax and shareholder matters, intellectual property rights, governmental regulations and employment-related matters, and commercial contractual relationships. Performance under these indemnities would generally be triggered by a breach of terms of the contract or by a third party claim. The Group regularly evaluates the probability of having to incur costs associated with these indemnities.

Other guarantees given

Non-consolidated subsidiaries

The Group also guarantees the current liabilities of certain non-consolidated subsidiaries. Performance under these guarantees would be triggered by a financial default of the entity.

Operating agreements

As part of normal ongoing business operations and consistent with generally accepted industry practices, the Group enters into numerous agreements with other parties. These commitments are often entered into for commercial purposes, for regulatory purposes or for other operating agreements.

C.    Commitments received

Sales obligations

These amounts represent binding obligations to sell goods, including in particular hydrocarbon sales contracts (except where an active, highly-liquid market exists and when the volumes are expected to be re-sold shortly after purchase).

13.2 Lease contracts

Accounting principles

A lease contract is a contract that grants lessee the right to use an identified asset for a specified period of time in exchange for consideration. At lease inception, an asset corresponding to right of use and a debt are recognized in the lessee’s balance sheet. Carrying value of right of use corresponds to present value of future lease payments plus any direct costs incurred for concluding the contract. Lease debt is recorded as a liability in the balance sheet under financial debts. Rights of use are depreciated over the useful lives applied by the Group.

Leases that are of short duration or that relate to low value assets are not recorded in the balance sheet, in accordance with the exemptions in the standard. They are presented as off-balance sheet commitments.

ØFirst-time application of IFRS 16 "Leases"

As part of the first application of IFRS 16 "Leases" as of January 1, 2019, the Group:

-applied the simplified retrospective transition method, accounting for the cumulative effect of the initial application of the standard at the date of first application, without restating the comparative periods;
-used the following simplification measures provided by the standard in the transitional provisions:
oexclusion of contracts that the Group had not previously identified as containing a lease under IAS 17 and IFRIC 4,
oexclusion of leases whose term ends within 12 months of the date of first application;
-recognized each lease component as a separate lease, separately from non-lease components of the lease (services);
-applied the two exemptions of the standard on short-term leases and leases of low-value assets.

The impact of the application of this standard as at January 1, 2019 is $5,698 million on fixed assets, $(5,505) million on net debt and $(193) million on other assets and liabilities. The weighted average incremental borrowing rate of 4.5% at transition date was determined on the basis of the initial duration of the contracts.

In 2019, the impact on fixed assets was broken down as follows:

(in M$)

    

Right of use of buildings

2,278

Right of use of machinery, plant and equipment (including transportation equipment)

 

2,632

Other right of use

 

788

TOTAL

 

5,698


The Group mainly leases real estate, retail stations, ships, and other equipment (see Note 7 to the Consolidated Financial Statements).

A-Reconciliation between the operating lease commitments disclosed under IAS17 at December 31, 2018 and the additional lease liabilities (IFRS 16) recognized on the balance sheet at January 1, 2019

Reconciliation between the operating lease commitments disclosed under IAS 17 at December 31, 2018 and the additional lease liabilities (IFRS 16) recognized on the balance sheet at January 1, 2019

The reconciliation is as follows:

    

January 1,

M$

2019

Operating lease commitments at December 31, 2018

 

9,130

Commitments relating to IFRS 16 exemptions:

 

(417)

- Low value assets

 

(90)

- Short-term leases

 

(327)

Leases not yet commenced at January 1, 2019

 

(608)

Commitments relating to service component of lease contracts

 

(760)

Commitments relating to leases of non identified assets or substitute assets

 

(628)

Variable lease payments

 

(6)

Other impacts

 

204

Impact of discounting

 

(1,360)

ADDITIONAL LEASE LIABILITY ON CONTRACTS PREVIOUSLY ACCOUNTED FOR AS OPERATING LEASES

 

5,555

Finance lease liability at December 31, 2018

 

1,878

TOTAL LEASE LIABILITY AT JANUARY 1, 2019

 

7,433

Other information required on lease debts, notably their maturity, is presented in Note 15 to the consolidated financial statements.

B-The future minimum lease payments on leases to which the Group is committed

The future minimum lease payments on leases to which the Group is committed are as follows:

For the year ended December 31, 2020

    

    

Leases recorded in

(M$)

Exempted contracts

balance sheet

2021

 

704

 

1,659

2022

 

252

 

1,366

2023

 

159

 

1,117

2024

 

118

 

1,022

2025

 

97

 

964

2026 and beyond

 

415

 

6,325

Total minimum payments

 

1,745

 

12,453

Less financial expenses

 

  

 

(3,510)

Nominal value of contracts

 

  

 

8,943

Less current portion of lease contracts

 

  

 

(1,207)

NON-CURRENT LEASE LIABILITIES

 

  

 

7,736

For the year ended December 31, 2019

    

    

Leases recorded in

(M$)

Exempted contracts

balance sheet

2020

 

536

 

1,586

2021

 

360

 

1,228

2022

 

212

 

1,019

2023

 

162

 

835

2024

 

145

 

766

2025 and beyond

 

662

 

4,757

Total minimum payments

 

2,077

 

10,191

Less financial expenses

 

  

 

(2,726)

Nominal value of contracts

 

  

 

7,465

Less current portion of lease contracts

 

  

 

(1,202)

NON-CURRENT LEASE LIABILITIES

 

  

 

6,263

For the year ended December 31, 2018

    

(M$)

Operating leases

    

Finance leases

2019

 

1,644

 

263

2020

 

1,282

 

183

2021

 

967

 

182

2022

 

772

 

179

2023

 

669

 

179

2024 and beyond

 

3,796

 

1,826

Total minimum payments

 

9,130

 

2,812

Less financial expenses

 

  

 

(934)

Nominal value of contracts

 

  

 

1,878

Less current portion of finance lease contracts

 

  

 

(213)

NON-CURRENT FINANCE LEASE LIABILITIES

 

  

 

1,665

For the year ended December 31, 2020, rental expense recorded in the income statement and incurred under short term leases or low value assets leases and under variable lease payments is $600million and $162 million, respectively.

For the year ended December 31, 2019, rental expense recorded in the income statement and incurred under short term leases or low value assets leases and under variable lease payments is $366 million and $132 million, respectively.

Rental expense recorded in the income statement and incurred under operating leases for the year ended December 31, 2018 is $1,304 million.