UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 20-F
(Mark One)
¨ | ||
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2011
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period fromto
OR
¨ | ||
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
Date of event requiring this shell company report
Commission filenumber: 1-10888
TOTAL S.A.
(Exact Name of Registrant as Specified in Its Charter)
Republic of France
(Jurisdiction of Incorporation or Organization)
2, place Jean Millier
La Défense 6
92400 Courbevoie
France
(Address of Principal Executive Offices)
Patrick de La Chevardière
Chief Financial Officer
TOTAL S.A.
2, place Jean Millier
La Défense 6
92400 Courbevoie
France
Tel: +33 (0)1 47 44 45 46
Fax: +33 (0)1 47 44 49 44
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class | Name of each exchange on which registered | |
Shares American Depositary Shares | New York Stock Exchange* New York Stock Exchange |
* | Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission. |
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
2,363,767,313 Shares, par value €2.50€2.50 each, as of December 31, 2010
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes xþ No o¨
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes o¨ No xþ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes xþ No o¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).**
Yes o¨ No o¨
** This requirement is not currently applicable to the registrant.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” inRule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | Accelerated filer ¨ | Non-accelerated filer |
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ¨ | ||||
International Financial Reporting Standards as issued by the International Accounting Standards Board | Other |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 o¨ Item 18 o¨
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes o¨ No xþ
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Item 1. | 1 | |||||||
Item 2. | 1 | |||||||
Item 3. | 1 | |||||||
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Item 4A. | 65 | |||||||
Item 5. | ||||||||
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Item 8. | ||||||||
Item 9. | ||||||||
Item 10. | ||||||||
Item 11. | ||||||||
Item 12. | ||||||||
Item 13. | ||||||||
Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds | |||||||
Item 15. | ||||||||
Item 16A. | ||||||||
Item 16B. | ||||||||
Item 16C. | ||||||||
Item 16D. | ||||||||
Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers | |||||||
Item 16F. | ||||||||
Item 16G. | ||||||||
Item 17. | ||||||||
Item 18. | ||||||||
Item 19. | ||||||||
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Financial information included in this Annual Report is presented according to International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and IFRS as adopted by the European Union (EU) as of December 31, 2010.
Statements Regarding Competitive Position
Unless otherwise indicated, statements made in “Item 4. Information on the Company” referring to TOTAL’s competitive position are based on the Company’s estimates, and in some cases rely on a range of sources, including investment analysts’ reports, independent market studies and TOTAL’s internal assessments of market share based on publicly available information about the financial results and performance of market participants.
Additional Information
This Annual Report onForm 20-F reports information primarily regarding TOTAL’s business, and operations and financial information relating to the fiscal year ended December 31, 2010.2011. For more recent updates regarding TOTAL, you may read and copyinspect any reports, statements or other information TOTAL files with the United States Securities and Exchange Commission (“SEC”). All of TOTAL’s SEC filings made after December 31, 2001, are available to the public at the SEC Web site athttp://www.sec.gov and from certain commercial document retrieval services. See also “Item 10. Additional Information — Documents on Display”.
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Unless the context indicates otherwise, the following terms have the meanings shown below:
“ | acreage” | The |
“ | ADRs” | American Depositary Receipts evidencing ADSs. |
“ | ADSs” | American Depositary Shares representing the shares of TOTAL S.A. |
“ | barrels” | Barrels of crude oil, natural gas liquids (NGL) or bitumen. |
“ | Company” | TOTAL S.A. |
“ | condensates” | Condensates are a mixture of hydrocarbons that exist in a gaseous phase at original reservoir temperature and pressure, but that, when produced, exist in a liquid phase at surface temperature and pressure. Condensates are sometimes referred to as C5+. |
“crude | oil” | Crude oil is a mixture of compounds (mainly pentanes and heavier hydrocarbons) that exists in a liquid phase at original reservoir temperature and pressure and remains liquid at atmospheric pressure and ambient temperature. “Crude oil” or “oil” are sometimes used as generic terms to designate crude oil plus natural gas liquids (NGL). |
“ | Depositary” | The Bank of New York Mellon. |
“Depositary | Agreement” | The depositary agreement pursuant to which ADSs are issued, a copy of which is attached as Exhibit 1 to the registration statement onForm F-6 (Reg.No. 333-172005) filed with the SEC on February 1, 2011. |
“ | Group” | TOTAL S.A. and its subsidiaries and affiliates. The terms TOTAL and Group are used interchangeably. |
“ | hydrocracker” | A refinery unit which uses a catalyst and extraordinarily high pressure, in the presence of surplus hydrogen, to shorten molecules. |
“ | liquids” | Liquids consist of crude oil, bitumen and natural gas liquids (NGL). |
“ | LNG” | Liquefied natural gas. |
“ | LPG” | Liquefied petroleum gas is a mixture of hydrocarbons, the principal components of which are propane and butane, in a gaseous state at atmospheric pressure, but which is liquefied under moderate pressure and ambient temperature |
“ | NGL” | Natural gas liquids consist of condensates and |
“oil and gas” | Generic term which includes all hydrocarbons (e.g., crude oil, natural gas liquids (NGL), bitumen and natural gas). |
“proved | Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations, prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The full definition of “proved reserves” that we are required to follow in presenting such information in our financial results and elsewhere in reports we file with the SEC is found inRule 4-10 ofRegulation S-X under the U.S. Securities Act of 1933, as amended (including |
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as amended by the SEC “Modernization of Oil and Gas Reporting” ReleaseNo. 33-8995 of December 31, 2008). |
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“proved developed | reserves” | Proved developed oil and gas reserves are proved reserves that can be expected to be recovered (i) through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and (ii) through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well. The full definition of “developed reserves” that we are required to follow in presenting such information in our financial results and elsewhere in reports we file with the SEC is found inRule 4-10 ofRegulation S-X under the U.S. Securities Act of 1933, as amended (including as amended by the SEC “Modernization of Oil and Gas Reporting” ReleaseNo. 33-8995 of December 31, 2008). |
“provedundeveloped | reserves” | Proved undeveloped oil and gas reserves are proved reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. The full definition of “undeveloped reserves” that we are required to follow in presenting such information in our financial results and elsewhere in reports we file with the SEC is found inRule 4-10 ofRegulation S-X under the U.S. Securities Act of 1933, as amended (including as amended by the SEC “Modernization of Oil and Gas Reporting” ReleaseNo. 33-8995 of December 31, 2008). |
“steam | cracker” | A petrochemical plant that turns naphtha and light hydrocarbons into ethylene, propylene, and other chemical raw materials. |
“ | TOTAL” | TOTAL S.A. and its subsidiaries and affiliates. We use such term interchangeably with the term Group. When we refer to the parent holding company alone, we use the term TOTAL S.A. or the Company. |
“ | trains” | Facilities for converting, liquefying, storing and off-loading natural gas. |
“ | ERMI” | ERMI is an indicator intended to represent the refining margin after variable costs for a theoretical complex refinery located around Rotterdam in Northern Europe that processes a mix of crude oil and other inputs commonly supplied to this region to produce and market the main refined products at prevailing prices in the region. |
“ | turnarounds” | Temporary shutdowns of facilities for maintenance, overhaul and upgrading. |
b | barrel | k | thousand | |||
cf | cubic feet | M | million | |||
boe | barrel of oil equivalent | B | billion | |||
t | metric ton | W | watt | |||
m3 | cubic meter | GWh | gigawatt-hour | |||
/d | per day | TWh | terawatt-hour | |||
/y | per year | Wp | watt peak | |||
Btu | British thermal unit |
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1 acre | = 0.405 hectares | |||||
1 b | = 42 U.S. gallons | |||||
1 boe | = 1 b of crude oil | = 5,447 cf of gas in 2011(a) | ||||
= 5,478 cf of gas in 2010 | ||||||
= 5,490 cf of gas in 2009 | ||||||
1 b/d of crude oil | = approximately 50 t/y of crude oil | |||||
1 Bm3/y | = approximately 0.1 Bcf/d | |||||
1 m3 | = 35.3147 cf | |||||
1 kilometer | = approximately 0.62 miles | |||||
1 ton | = 1 t | = 1,000 kilograms (approximately 2,205 pounds) | ||||
1 ton of oil | = 1 t of oil | = approximately 7.5 b of oil (assuming a specific gravity of 37° API) | ||||
1 | = approximately 48 | |||||
1 Mt/y LNG | = approximately 131 Mcf/d |
(a) | ||
Natural gas is converted to barrels of oil equivalent using a ratio of cubic feet of natural gas per one barrel. This ratio is based on the actual average equivalent energy content of TOTAL’s natural gas reserves during the applicable periods, and is subject to change. The tabular conversion rate is applicable to TOTAL’s natural gas reserves on a group-wide basis. |
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TOTAL has made certain forward-looking statements in this document and in the documents referred to in, or incorporated by reference into, this Annual Report. Such statements are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of the management of TOTAL and on the information currently available to such management. Forward-looking statements include information concerning forecasts, projections, anticipated synergies, and other information concerning possible or assumed future results of TOTAL, and may be preceded by, followed by, or otherwise include the words “believes”, “expects”, “anticipates”, “intends”, “plans”, “targets”, “estimates” or similar expressions.
Forward-looking statements are not assurances of results or values. They involve risks, uncertainties and assumptions. TOTAL’s future results and share value may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results and values are beyond TOTAL’s ability to control or predict. Except for its ongoing obligations to disclose material information as required by applicable securities laws, TOTAL does not have any intention or obligation to update forward-looking statements after the distribution of this document, even if new information, future events or other circumstances have made them incorrect or misleading.
You should understand that various factors, certain of which are discussed elsewhere in this document and in the documents referred to in, or incorporated by reference into, this document, could affect the future results of TOTAL and could cause results to differ materially from those expressed in such forward-looking statements, including:
material adverse changes in general economic conditions or in the markets served by TOTAL, including changes in the prices of oil, natural gas, refined products, petrochemical products and other chemicals;
changes in currency exchange rates and currency devaluations;
the success and the economic efficiency of oil and natural gas exploration, development and production programs, including, without limitation, those that are not controlled and/or operated by TOTAL;
uncertainties about estimates of changes in proven and potential reserves and the capabilities of production facilities;
uncertainties about the ability to control unit costs in exploration, production, refining and marketing (including refining margins) and chemicals;
changes in the current capital expenditure plans of TOTAL;
the ability of TOTAL to realize anticipated cost savings, synergies and operating efficiencies;
the financial resources of competitors;
changes in laws and regulations, including tax and environmental laws and industrial safety regulations;
the quality of future opportunities that may be presented to or pursued by TOTAL;
the ability to generate cash flow or obtain financing to fund growth and the cost of such financing and liquidity conditions in the capital markets generally;
the ability to obtain governmental or regulatory approvals;
the ability to respond to challenges in international markets, including political or economic conditions (including national and international armed conflict) and trade and regulatory matters (including actual or proposed sanctions on companies that conduct business in certain countries);
the ability to complete and integrate appropriate acquisitions, strategic alliances and joint ventures;
changes in the political environment that adversely affect exploration, production licenses and contractual rights or impose minimum drilling obligations, price controls, nationalization or expropriation, and regulation of refining and marketing, chemicals and power generating activities;
the possibility that other unpredictable events such as labor disputes or industrial accidents will adversely affect the business of TOTAL; and
the risk that TOTAL will inadequately hedge the price of crude oil or finished products.
For additional factors, you should read the information set forth under “Item 3. Risk Factors”, “Item 4. Information on the Company — Other Matters”, “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.
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Not applicable.
Not applicable.
The following table presents selected consolidated financial data for TOTAL on the basis of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and IFRS as adopted by the European Union for the years ended December 31, 2011, 2010, 2009, 2008 2007 and 2006.2007. The historical consolidated financial statements of TOTAL for these
periods, from which the financial data presented below for such periods are derived, have been audited by Ernst & Young Audit and KPMG S.A., independent registered public accounting firms, and the Company’s auditors. All such data should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included elsewhere herein.
1
(M€, except per share data) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||
INCOME STATEMENT DATA | ||||||||||||||||||||
Revenues from sales | 140,476 | 112,153 | 160,331 | 136,824 | 132,689 | |||||||||||||||
Net income, Group share | 10,571 | 8,447 | 10,590 | 13,181 | 11,768 | |||||||||||||||
Earnings per share | 4.73 | 3.79 | 4.74 | 5.84 | 5.13 | |||||||||||||||
Fully diluted earnings per share | 4.71 | 3.78 | 4.71 | 5.80 | 5.09 | |||||||||||||||
CASH FLOW STATEMENT DATA(a)(b) | ||||||||||||||||||||
Cash flow from operating activities | 18,493 | 12,360 | 18,669 | 17,686 | 16,061 | |||||||||||||||
Total expenditures | 16,273 | 13,349 | 13,640 | 11,722 | 11,852 | |||||||||||||||
BALANCE SHEET DATA(b) | ||||||||||||||||||||
Total assets | 143,718 | 127,753 | 118,310 | 113,541 | 105,223 | |||||||||||||||
Non-current financial debt | 20,783 | 19,437 | 16,191 | 14,876 | 14,174 | |||||||||||||||
Minority interests | 857 | 987 | 958 | 842 | 827 | |||||||||||||||
Shareholders’ equity — Group share | 60,414 | 52,552 | 48,992 | 44,858 | 40,321 | |||||||||||||||
Common shares | 5,874 | 5,871 | 5,930 | 5,989 | 6,064 | |||||||||||||||
DIVIDENDS | ||||||||||||||||||||
Dividend per share (euros) | €2.28 | (c) | €2.28 | €2.28 | €2.07 | €1.87 | ||||||||||||||
Dividend per share (dollars) | $3.02 | (c)(d) | $3.08 | $3.01 | $3.14 | $2.46 | ||||||||||||||
COMMON SHARES(e) | ||||||||||||||||||||
Average number outstanding of common shares €2.50 par value (shares undiluted) | 2,234,829,043 | 2,230,599,211 | 2,234,856,551 | 2,255,294,231 | 2,293,063,190 | |||||||||||||||
Average number outstanding of common shares €2.50 par value (shares diluted) | 2,244,494,576 | 2,237,292,199 | 2,246,658,542 | 2,274,384,984 | 2,312,304,652 |
(M€ , except share and per share data) | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||
INCOME STATEMENT DATA | ||||||||||||||||||||
Revenues from sales | 166,550 | 140,476 | 112,153 | 160,331 | 136,824 | |||||||||||||||
Net income, Group share | 12,276 | 10,571 | 8,447 | 10,590 | 13,181 | |||||||||||||||
Earnings per share | 5.46 | 4.73 | 3.79 | 4.74 | 5.84 | |||||||||||||||
Fully diluted earnings per share | 5.44 | 4.71 | 3.78 | 4.71 | 5.80 | |||||||||||||||
CASH FLOW STATEMENT DATA | ||||||||||||||||||||
Cash flow from operating activities | 19,536 | 18,493 | 12,360 | 18,669 | 17,686 | |||||||||||||||
Total expenditures | 24,541 | 16,273 | 13,349 | 13,640 | 11,722 | |||||||||||||||
BALANCE SHEET DATA | ||||||||||||||||||||
Total assets | 164,049 | 143,718 | 127,753 | 118,310 | 113,541 | |||||||||||||||
Non-current financial debt | 22,557 | 20,783 | 19,437 | 16,191 | 14,876 | |||||||||||||||
Non-controlling interests | 1,352 | 857 | 987 | 958 | 842 | |||||||||||||||
Shareholders’ equity — Group share | 68,037 | 60,414 | 52,552 | 48,992 | 44,858 | |||||||||||||||
Common shares | 5,909 | 5,874 | 5,871 | 5,930 | 5,989 | |||||||||||||||
DIVIDENDS | ||||||||||||||||||||
Dividend per share (euros) | €2.28 | (a) | €2.28 | €2.28 | €2.28 | €2.07 | ||||||||||||||
Dividend per share (dollars) | $3.10 | (a)(b) | $3.15 | $3.08 | $3.01 | $3.14 | ||||||||||||||
COMMON SHARES(c) | ||||||||||||||||||||
Average number outstanding of common shares€2.50 par value (shares undiluted) | 2,247,479,529 | 2,234,829,043 | 2,230,599,211 | 2,234,856,551 | 2,255,294,231 | |||||||||||||||
Average number outstanding of common shares€2.50 par value (shares diluted) | 2,256,951,403 | 2,244,494,576 | 2,237,292,199 | 2,246,658,542 | 2,274,384,984 |
(a) | ||
Subject to approval by the shareholders’ meeting on May |
Estimated dividend in dollars includes the first quarterly interim dividend of |
The number of common shares shown has been used to calculate per share amounts. |
2
For information regarding the effects of currency fluctuations on TOTAL’s results, see “Item 5. Operating and Financial Review and Prospects”.
Most currency amounts in this Annual Report onForm 20-F are expressed in euros (“euros” or “€“€”) or in U.S. dollars (“dollars” or “$”). For the convenience of the reader, this Annual Report onForm 20-F presents certain translations into dollars of certain euro amounts.
The following table sets out the average dollar/euro exchange rates expressed in dollars per €1.00€1.00 for the years indicated, based on an average of the daily European Central Bank (“ECB”) reference exchange rate.(1) Such rates are used by TOTAL in preparation of its Consolidated Statement of Income and Consolidated Statement of Cash Flow in its Consolidated Financial Statements. No representation is made that the euro could have been converted into dollars at the rates shown or at any other rates for such periods or at such dates.
DOLLAR/EURO EXCHANGE RATES
Year | Average Rate | |||
2007 | 1.3705 | |||
2008 | 1.4708 | |||
2009 | 1.3948 | |||
2010 | 1.3257 | |||
2011 | 1.3920 |
Year | Average Rate | |||
2006 | 1.2556 | |||
2007 | 1.3705 | |||
2008 | 1.4708 | |||
2009 | 1.3948 | |||
2010 | 1.3257 |
The table below shows the high and low dollar/euro exchange rates for the three months ended December 31, 2010,2011, and for the first three months of 2011,2012, based on the daily ECB reference exchange rates published during the relevant month expressed in dollars per €1.00.
DOLLAR/EURO EXCHANGE RATES
Period | High | Low | ||||||
October 2010 | 1.41 | 1.37 | ||||||
November 2010 | 1.42 | 1.30 | ||||||
December 2010 | 1.34 | 1.31 | ||||||
January 2011 | 1.37 | 1.29 | ||||||
February 2011 | 1.38 | 1.34 | ||||||
March 2011(a) | 1.42 | 1.38 |
Period | High | Low | ||||||
October 2011 | 1.4160 | 1.3181 | ||||||
November 2011 | 1.3809 | 1.3229 | ||||||
December 2011 | 1.3511 | 1.2889 | ||||||
January 2012 | 1.3176 | 1.2669 | ||||||
February 2012 | 1.3454 | 1.2982 | ||||||
March 2012(a) | 1.3312 | 1.3057 |
(a) | ||
Through March |
The ECB reference exchange rate on March 21, 2011,22, 2012, for the dollar against the euro was $1.42/$1.3167/€.
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(1) | For the period 2007 — 2011, the averages of the ECB reference exchange rates expressed in dollars per€1.00 on the last business day of each month during the relevant year are as follows: 2007 — 1.38; 2008 — 1.47; 2009 — 1.40; 2010 — 1.32; and 2011 — 1.40. |
The Group and its businesses are subject to various risks relating to changing competitive, economic, political, legal, social, industry, business and financial conditions. These conditions, along with TOTAL’s approaches to managing certain of these risks, are described below and discussed in greater detail elsewhere in this Annual Report, particularly under the headings “Item 4. Information on the Company — Other Matters”, “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.
A substantial or extended decline in oil or natural gas prices would have a material adverse effect on our results of operations.
Prices for oil and natural gas historically have fluctuated widely due to many factors over which we have no control. These factors include:
global and regional economic and political developments in resource-producing regions, particularly in the Middle East, Africa and South America;
global and regional supply and demand;
the ability of the Organization of Petroleum Exporting Countries (OPEC) and other producing nations to influence global production levels and prices;
prices of alternative fuels which affect our realized prices under our long-term gas sales contracts;
governmental regulations and actions;
global economic and financial market conditions;
war or other conflicts;
cost and availability of new technology;
changes in demographics, including population growth rates and consumer preferences; and
adverse weather conditions (such as hurricanes) that can disrupt supplies or interrupt operations of our facilities.
Substantial or extended declines in oil and natural gas prices would adversely affect our results of operations by reducing our profits. For the year 2011,2012, we estimate that a decrease of $1.00 per barrel in the average annual price of Brent crude would have the effect of reducing our annual adjusted net operating income from the Upstream segment by approximately €0.13€0.11 billion (calculated with a base case exchange rate of $1.30$1.40 per €1.00)€1.00). In addition to the adverse effect on revenues, margins and profitability
from any fall in oil and natural gas prices, a prolonged period of low prices or other indicators could lead to reviews for impairment of the Group’s oil and natural gas properties and could impact reserves. Such reviews would reflect management’s view of long-term oil and natural gas prices and could result in a charge for impairment that could have a significant effect on our results of operations in the period in which it occurs. Lower oil and natural gas prices over prolonged periods may also reduce the economic viability of projects planned or in development, causing us to cancel or postpone capital expansion projects, and may reduce liquidity, thereby potentially decreasing our ability to finance capital expenditures. If we are unable to follow through with capital expansion projects, our opportunities for future revenue and profitability growth would be reduced, which could materially impact our financial condition.
However, in a high oil and gas price environment, we can experience sharp increases in cost and fiscal take, and, under some production-sharing contracts, our entitlement to reserves could be reduced. Higher prices can also reduce demand for our products.
We face foreign exchange risks that could adversely affect our results of operations.
A significant portion of our revenues and the majority of our operating income are derived from the sale of crude oil and natural gas which we extract from underground reserves discovered and developed as part of our Upstream business. In order for this business to continue to be profitable, we need to replace depleted reserves with new proved reserves. Furthermore, we need to accomplish such replacement in a manner that allows subsequent production to be economically viable. However, our ability to discover or acquire and develop new reserves successfully is uncertain and can be negatively affected by a number of factors, including:
unexpected drilling conditions, including pressure or irregularities in geological formations;
the risk of dry holes or failure to find commercial quantities of hydrocarbons;
equipment failures, fires, blow-outs or accidents;
our inability to develop new technologies that permit access to previously inaccessible fields;
4
adverse weather conditions;
compliance with both anticipated and unanticipated governmental requirements;
shortages or delays in the availability or delivery of appropriate equipment;
industrial action;
competition from publicly held and state-run oil and gas companies for the acquisition of assets and licenses;
increased taxes and royalties, including retroactive claims; and
problems with legal title.
Any of these factors could lead to cost overruns and impair our ability to make discoveries and acquisitions or complete a development project, or to make production economical. If we fail to discover and develop new reserves cost-effectively on an ongoing basis, our results of operations, including profits, and our financial condition, would be materially and adversely affected.
Our crude oil and natural gas reserve data are only estimates, and subsequent downward adjustments are possible. If actual production from such reserves is lower than current estimates indicate, our results of operations and financial condition would be negatively impacted.
Our proved reserves figures are estimates reflecting applicable reporting regulations as they may evolve. Proved reserves are those reserves which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible — from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations — prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. Reserves are estimated by teams of qualified, experienced and trained earth scientists,geoscientists, petroleum engineers and project engineers, who rigorously review and analyze in detail all available geosciences and engineering data (e.g., seismic, electrical logs, cores, fluids, pressures, flow rates, facilities parameters). This process involves making subjective judgments, including with respect to the estimate of hydrocarbons initially in place, initial production rates and recovery efficiency, based on available geological, technical and economic data. Consequently, estimates of reserves are not exact measurements and are subject to revision. In addition, they may be negatively impacted by a variety of
factors which are beyond our control and which could cause such estimates to be adjusted downward in the future, or cause our actual production to be lower than our currently reported proved reserves indicate. The main such factors include:
a decline in the price of oil or gas, making reserves no longer economically viable to exploit and therefore not classifiable as proved;
an increase in the price of oil or gas, which may reduce the reserves that we are entitled to under production sharing and risked service contracts and other contractual terms;
changes in tax rules and other government regulations that make reserves no longer economically viable to exploit; and
the actual production performance of our reservoirs.
Our reserves estimates may therefore require substantial downward revisions to the extent our subjective judgments prove not to have been conservative enough based on the available geosciences and engineering data, or our assumptions regarding factors or variables that are beyond our control prove to be incorrect over time. Any downward adjustment would indicate lower future production amounts, which could adversely affect our results of operations, including profits as well as our financial condition.
We have significant production and reserves located in politically, economically and socially unstable areas, where the likelihood of material disruption of our operations is relatively high.
A significant portion of our oil and gas production occurs in unstable regions around the world, most significantly Africa, but also the Middle East, Asia-Pacific and South America. Approximately 32%28%, 22%24%, 10% and 8%, respectively, of our 20102011 combined liquids and gas production came from these four regions. In recent years, a number of the countries in these regions have experienced varying degrees of one or more of the following: economic instability, political volatility, civil war, violent conflict and social unrest. In Africa, certain of the countries in which we have production have recently suffered from some of these conditions. conditions, including Nigeria, where we had in 2011 our second highest hydrocarbon production, and Libya.
The Middle East in general has recently suffered increased political volatility in connection with violent conflict and social unrest. A number of countries in South America where we have production and other facilities, including Argentina, Bolivia and Venezuela, have suffered from political or economic instability and social unrest and related
problems. In Asia-Pacific, Indonesia has suffered some of these conditions. Any of these conditions alone or in combination could disrupt our operations in any of these regions, causing substantial declines in production. Furthermore, in addition to current production, we are also exploring for
5
We are exposed to risks regarding the safety and security of our operations. In addition, while our insurance coverage is in line with industry practice, we are not insured against all possible risks.
TOTAL engages in a broad scope of activities, which include drilling, oil and gas production, processing, transportation, refining and petrochemical activities, storage and distribution of petroleum products, and production of base chemical and specialty products, and involve a wide range of operational risks. Among these risks are those of explosion, fireexplosions, fires, accidents, equipment failures or leakage of toxic products as well as environmental risks related toor emissions andor discharges into the air, water or soil, and the management of waste.including related environmental risks. We also face risks, once production is discontinued, because our activities require environmental site remediation. In the transportation area, the type of risk depends not only on the hazardous nature of the products transported, but also on the transportation methods used (mainly pipelines, maritime, river-maritime, rail, road), the volumes involved, and the sensitivity of the regions through which the transport passes (quality of infrastructure, population density, environmental considerations).
Certain branches or activities face specific additional risks. In Exploration & Production, we face risks related to the physical characteristics of our oil or gas fields. These include the risks of eruptions of crude oil or of natural gas, discovery of hydrocarbon pockets with abnormal pressure, crumbling of well openings, leaks that can harm the environment and risks of fire or explosion. These events may cause injury or death, damage or destroy crude oil or natural gas wells as well as equipment and other property, lead to a disruption of activity or cause environmental damage. In addition, since exploration and production activities may take place on sites that are ecologically sensitive (tropical forest,(for example, in tropical forests or in a marine environment, etc.)environment), each site requires a
risk-based approach to avoid or minimize the impact on human health, flora and fauna, the ecosystem and biodiversity. In certain situations where TOTAL is not the operator, the Group may have reduced influence and control over third parties, which may limit its ability to manage and control these risks. TOTAL’s activities in the Chemicals segment and the Refining & Chemicals and Supply & Marketing divisionsegments also entail additional health, safety and environmental risks related to the overall life cycle of the products manufactured, as well as raw materials used in the manufacturing process, such as catalysts, additives and monomer feedstocks. These risks can arise from the intrinsic characteristics of the products involved (flammability, toxicity, or long-term environmental impacts such as greenhouse gas emissions), their use (including by customers), emissions and discharges resulting from their manufacturing process, and from recycling or disposing of materials and wastes at the end of their useful life.
Contractual terms may provide for indemnification obligations, either by TOTAL in favor of third-parties or by third-parties for TOTAL’s benefit.benefit, if, notably, an event occurs leading to personal injury, death, property damage or discharge of hazardous materials into the environment. With respect to joint ventures the assets of which are operated by TOTAL, contractual terms generally provide that TOTAL assumes liability for damages caused by its gross negligence or willful misconduct. With respect to joint ventures in which TOTAL has an interest but that assets of which are operated by others, contractual terms generally provide that the operator assumes liability for damages caused by its gross negligence or willful misconduct. All other liabilities of any type of joint venture are generally assumed by the partners in proportion to their respective ownership interests. With respect to third party providers of goods and services, the amount and nature of liabilities assumed by the third party depends on the context and may be limited by contract. With respect to the Group’s customers, TOTAL seeks to ensure that its products meet applicable specifications and that TOTAL abides by all applicable consumer protection laws.
While our insurance coverage foris in line with industry practice, we are not insured against all of our subsidiaries. In addition, we alsopossible risks.
We maintain insurance to protect us against the risk of damage to Group propertyand/or business disruption.disruption to our main refining and petrochemical sites. In addition, we also maintain worldwide third-party liability insurance
coverage for all of our subsidiaries. Our insurance and risk management policies are described under “Item 4. Other Matters — Insurance and risk management”. While we believe our insurance coverage is in line with industry practice and sufficient to cover normal risks in our operations, we are not insured against all possible risks. In the event of a major environmental disaster, for example, our liability may exceed the maximum coverage provided by our third-party liability insurance. The loss we could suffer in the event of such a disaster would depend on all the facts and circumstances and would be subject to a whole range of uncertainties, including legal uncertainty as to the scope of liability for consequential damages, which may include economic damage not directly connected to the disaster. The Group cannot guarantee that it will not suffer any uninsured loss and there can be no assurance,
6
We are subject to stringent environmental, health and safety laws in numerous jurisdictions around the world and may incur material costs to comply with these laws and regulations.
Our workforce and the public are exposed to risks inherent to our operations that potentially could lead to injuries, loss of life or environmental damage and could result in regulatory action, legal liability and damage to our reputation.
We incur, and expect to continue to incur, substantial capital and operating expenditures to comply with increasingly complex laws and regulations covering the protection of the natural environment and the promotion of worker health and safety, including:
costs to prevent, control, eliminate or reduce certain types of air and water emissions, including those costs incurred in connection with government action to address climate change;
remedial measures related to environmental contamination or accidents at various sites, including those owned by third parties;
compensation of persons claiming damages caused by our activities or accidents; and
costs in connection with the EUdecommissioning of drilling platforms and globally that rising greenhouse gas emissions and climate change may significantly affect the environment and society could adversely affect our businesses, including by the addition of stricter regulations that increase our operating costs, affect product sales and reduce profitability.other facilities.
If our established financial reserves prove inadequate, environmental costs could have a material effect on our results of operations and our financial position. Furthermore, in the countries where we operate or expect to operate in the near future, new laws and regulations, the
imposition of tougher license requirements, increasingly strict enforcement or new interpretations of existing laws and regulations or the discovery of previously unknown contamination may also cause us to incur material costs resulting from actions taken to comply with such laws and regulations, including:
modifying operations;
installing pollution control equipment;
implementing additional safety measures; and
performing site clean-ups.
As a further result of any new laws and regulations or other factors, we may also have to curtail, modify or cease certain operations or implement temporary shutdowns of facilities, which could diminish our productivity and materially and adversely impact our results of operations, including profits.
Regulatory measures designed to address climate change and response measures. Actsphysical effects attributed to climate change may adversely affect our businesses.
Growing public concerns in the EU and globally that rising greenhouse gas emissions and climate change may significantly affect the environment and society could adversely affect our businesses, including by the addition of terrorism againststricter regulations that increase our plantsoperating costs, affect product sales and offices, pipelines, transportation or computer systems could severely disrupt businessesreduce profitability. Furthermore, our business operates in varied locales where the potential physical impacts of climate change, including changes in weather patterns, are highly uncertain and operations and could cause harm to people.
Our operations throughout the developing world are subject to intervention by various governments, which could have an adverse effect on our results of operations.
We have significant exploration and production, and in some cases refining, marketing or chemicals operations, in developing countries whose governmental and regulatory framework is subject to unexpected change and where the enforcement of contractual rights is uncertain. In addition, our exploration and production activity in such countries is often done in conjunction with state-owned entities, for example as part of a joint venture, where the state has a significant degree of control. In recent years, in various regions globally, we have seen governments and state-owned enterprises exercising greater authority and imposing more stringent conditions on companies pursuing exploration and production activities in their respective countries, increasing the costs and uncertainties of our business operations, which is a trend we expect to
continue. Potential increasing intervention by governments in such countries can take a wide variety of forms, including:
the award or denial of exploration and production interests;
the imposition of specific drilling obligations; | |
7
price and/or production quota controls;
nationalization or expropriation of our assets;
unilateral cancellation or modification of our license or contract rights;
increases in taxes and royalties, including retroactive claims;
the establishment of production and export limits;
the renegotiation of contracts;
payment delays; and
currency exchange restrictions or currency devaluation.
Imposition of any of these factors by a host government in a developing country where we have substantial operations, including exploration, could cause us to incur material costs or cause our production to decrease, potentially having a material adverse effect on our results of operations, including profits.
We face foreign exchange risks that could adversely affect our results of operations.
Our business faces foreign exchange risks because a large percentage of our revenues and cash receipts are denominated in dollars, the international currency of petroleum sales, while a significant portion of our operating expenses and income taxes accrue in euros and other currencies. Movements between the dollar and euro or other currencies may adversely affect our business by negatively impacting our booked revenues and income, and may also result in significant translation adjustments that impact our shareholders’ equity.
Ethical misconduct or breaches of applicable laws by our employees could expose us to criminal and civil penalties and be damaging to our reputation and shareholder value.
Our Code of Conduct, which applies to all of our employees, defines our commitment to integrity, compliance with all applicable legal requirements, high ethical standards and the behaviors and actions we expect of our businesses and people wherever we operate. Ethical misconduct or non-compliance with applicable laws and regulations, including non-compliance with anti-bribery, anticorruption and other applicable laws, could expose TOTAL and our employees to criminal and civil penalties
and could be damaging to our reputation and shareholder value.
Disruption of our critical IT services or breaches of information security could adversely affect our operations.
Our businesses depend heavily on the reliability and security of our information technology (“IT”) systems. If the integrity of our IT systems were compromised due to, for example, technical failure or cyber attack, our business operations and assets could sustain serious damage, material intellectual property could be divulged and, in some cases, personal injury, environmental harm and regulatory violations could occur.
We have activities in certain countries which are subject to U.S. and EU sanctions and our activities in Iran and Syria could lead to sanctions under relevant U.S. and EU legislation.
The United States and the European Union (“EU”) have adopted legal restrictions with respect to certain activities in Cuba, Iran, Sudan and Syria, and the U.S. Department of State has identified these countries as state sponsors of terrorism. We currently have investments in Iran and, to a lesser extent, Syria Myanmar, Sudan and Cuba. U.S. legislation and regulations currently impose economic sanctions on these countries.
With respect to Iran, the United States adopted legislation in 1996 implementing sanctions againstnon-U.S. companies doing business in Iran and Libya (the Iran and Libya Sanctions Act, referred to as “ILSA”), which in 2006 was amended to concern only business in Iran (then renamed the Iran Sanctions Act, referred to as “ISA”).
Pursuant to this statute, the President of the United States is authorized to initiate an investigation into the activities ofnon-U.S. companies in Iran and the possible imposition of sanctions (from a list that includes denial of financing by the U.S. Export-Import Bank, limitations on the amount of loans or credits available from U.S. financial institutions and prohibition of U.S. federal procurements from sanctioned persons) against persons found, in particular, to have knowingly made investments of $20 million or more in any12-month period in the petroleum sector in Iran. In May 1998, the U.S. government waived the application of sanctions for TOTAL’s investment in the South Pars gas field. This waiver, which has not been modified since it was granted, does not address TOTAL’s other activities in Iran, although TOTAL has not been notified of any related sanctions.
In November 1996, the Council of the European Union adopted regulations which prohibit TOTAL from complying with any requirement or prohibition based on or resulting
directly or indirectly from certain enumerated legislation, including ILSA (now ISA). It also prohibits TOTAL from having its waiver for South Pars extended to other activities.
In each of the years since the passage of ILSA and until 2007, TOTAL made investments in Iran in excess of $20 million (excluding the investments made as part of the development of South Pars). Since 2008, TOTAL’s position has consisted essentially in being reimbursed for its past investments as part of buyback contracts signed between 1995 and 1999 with respect to permits on which the Group is no longer the operator. In 2010, TOTAL’s2011, TOTAL had no production in Iran represented less than 0.1% of the Group’s worldwide production.
ISA was amended in July 2010 by the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (“CISADA”), which expanded the scope of ISA and restricted the President’s ability to grant waivers. In addition to sanctionable investments in Iran’s petroleum sector, parties may now be sanctioned for any transaction exceeding $1 million or series of transactions exceeding $5 million in any12-month period for knowingly providing to Iran refined petroleum products, and for knowingly providing to Iran goods, services, technology, information or support that could directly and significantly either (i) facilitate the maintenance or expansion of Iran’s domestic production of refined petroleum products, or (ii) contribute to the enhancement of Iran’s ability to import refined petroleum products. The sanctions to be imposed against violating firmsparties generally prohibit transactions in foreign exchange by the sanctioned company,party, prohibit any transfers of credit or payments between, by, through or to any financial institution to the extent that such transfers or payments involve any interest of the sanctioned company,party, and require blocking of any property of the sanctioned companyparty that is subject to the jurisdiction of the United States. Investments in the petroleum sector commenced prior to the adoption of CISADA appear to remain subject to thepre-amended version of ISA. The new sanctions added by CISADA would be available with respect to new investments in the petroleum sector or any other sanctionable activity occurring on or after July 1, 2010. Prior to CISADA’s enactment, TOTAL discontinued now-prohibitedprohibited sales under ISA, as amended by CISADA, of refined products to Iran.
On September 30, 2010, the U.S. State Department announced that the U.S. government, pursuant to the “Special Rule” provision of ISA added by CISADA that allows it to avoid making a determination of sanctionability under ISA with respect to any party that provides certain assurances, would not make such a determination with respect to TOTAL. The U.S. State Department further
indicated at that time that, as long as TOTAL acts in accordance with its commitments, TOTAL will not be regarded as a company of concern for its past Iran-related activities.
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On January 23, 2012, the Council of the European Union prohibited the purchase, import and transport of Iranian oil
and petroleum and petrochemical products by European persons and by entities constituted under the laws of an EU Member State. Prior to that date, TOTAL had ceased these now-prohibited activities.
TOTAL continues to closely monitor legislative and other developments in France, the European UnionEU and the United States in order to determine whether its limited activities in Iran, Syria and other sanctioned or potentially sanctioned jurisdictions could subject it to the application of sanctions. However, theThe Group cannot assure that current or future regulations or developments regarding Iran will not have a negative impact on its business or reputation.
With respect to Syria, the United Nations Security Council resolutions described above,EU adopted measures in May 2011 with criminal and financial penalties that prohibit the supply of certain equipment to Syria, as well as broadcertain financial and comprehensive economicasset transactions with respect to a list of named individuals and entities. These measures apply to European persons and to entities constituted under the laws of an EU Member State. In September 2011, the EU adopted further measures, including, notably, a prohibition on the purchase, import or transportation from Syria of crude oil and petroleum products. Since early September 2011, the Group ceased to purchase hydrocarbons from Syria. On December 1, 2011, the EU extended sanctions which are administrated byagainst, among others, three state-owned Syrian oil firms, including General Petroleum Corporation, TOTAL’s co-contracting partner in PSA 1988 (Deir Es Zor licence) and the Tabiyeh contract. TOTAL has ceased its activities that contribute to oil and gas production in Syria.
The U.S. Treasury Department’s Office of Foreign Assets Control (referred to as “OFAC”). administers and enforces broad and comprehensive economic sanctions programs, as well as sanctions that are based on the United Nations Security Council resolutions referred to above and that target individuals engaged in terrorism or weapons proliferation in Iran, using the blocking of assets and trade restrictions. The activities that are restricted depend on the sanctions program and targeted country or parties, and
civil and/or criminal penalties, imposed on a per transaction basis, can be substantial. These OFAC sanctions generally apply to U.S. persons and activities taking place in the United States or that are otherwise subject to U.S. jurisdiction. Since August 16, 2010, transactions between Iranian entities andnon-U.S. financial institutions holding U.S. bank accounts in the United States have been subject to OFAC restrictions. Sanctions administered by OFAC target, among others, Cuba, Iran, Myanmar (Burma), Sudan and Syria. TOTAL does not believe that these sanctions are applicable to any of its activities in these countries.
On December 8, 2011, OFAC amended the Sudanese Sanctions Regulations with the publication of two general licenses that authorize all activities and transactions relating to the petroleum and petrochemical industries in the Republic of South Sudan and related financial transactions, and the transshipment of goods, technology and services through Sudan to or from the Republic of South Sudan and related financial transactions.
In addition, many U.S. states have adopted legislation requiring state pension funds to divest themselves of securities in any company with active business operations in Iran or Sudan.Sudan, and state contracts not to be awarded to such companies. State insurance regulators have adopted similar initiatives relating to investments by insurance companies in companies doing business with the Iranian oil and gas, nuclear, and defense sectors. TOTAL has no business operations in Sudan and, to date, has not made any significant investments or industrial investments there. The Genocide Intervention Network (formerly known as Sudan Divestment Task Force) report states that TOTAL should be regarded as “inactive” in Sudan by the U.S. states that have adopted such divestment legislation. CISADA and the Sudan Accountability and Divestment Act, which was adopted by the U.S. Congress on December 31, 2007, supportsupports these state legislative initiatives. If TOTAL’s operations in Iran or Sudan were determined to fall within the prohibited scope of these laws, and TOTAL were not to qualify for any available exemptions, certain U.S. institutions holding interests in TOTAL may be required to sell their interests. If significant, sales of securities resulting from such lawsand/or regulatory initiatives could have an adverse effect on the prices of TOTAL’s securities.
For more information on TOTAL’s presence in Cuba, Iran, Sudan and Syria, see “Item 4. Other Matters — Business Activities in Cuba, Iran, Sudan and Syria”.
TOTAL S.A., a Frenchsociété anonyme(limited (limited company) incorporated in France on March 28, 1924, together with its subsidiaries and affiliates, is the fifth largest publicly-traded integrated international oil and gas company in the world.world(1).
With operations in more than 130 countries, TOTAL has activities in every sector of the oil industry, includingindustry: in the Upstreamupstream (oil and gas exploration, development and production, LNG)liquefied natural gas) and Downstreamdownstream (refining, petrochemicals, specialty chemicals, marketing and the
(1) | Based on market capitalization (in dollars) as of December 31, 2011. |
trading and shipping of crude oil and petroleum products) segments.
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The Company’s corporate name is TOTAL S.A. Its registered office is 2, place Jean Millier, La Défense 6, 92400 Courbevoie, France. Its telephone number is +33 (0)1 47 44 45 46.
TOTAL S.A. is registered in France at the Nanterre Trade Register under the registration number 542 051 180. The length of the life of the Company is 99 years from March 22, 2000, unless it is dissolved or extended prior to such date.
TOTAL’s worldwide operations arein 2011 were conducted through three business segments: Upstream, Downstream, and Chemicals. The table below gives
information on the geographic breakdown of TOTAL’s activities and is taken from Note 5 to the Consolidated Financial Statements included elsewhere herein.
Rest of | North | |||||||||||||||||||||||
(M€) | France | Europe | America | Africa | Rest of world | Total | ||||||||||||||||||
2010 | ||||||||||||||||||||||||
Non-Group sales(a) | 36,820 | 72,636 | 12,432 | 12,561 | 24,820 | 159,269 | ||||||||||||||||||
Property, plant and equipment, intangible assets, net | 5,666 | 14,568 | 9,584 | 20,166 | 13,897 | 63,881 | ||||||||||||||||||
Capital expenditures | 1,062 | 2,629 | 3,626 | 4,855 | 4,101 | 16,273 | ||||||||||||||||||
2009 | ||||||||||||||||||||||||
Non-Group sales(a) | 32,437 | 60,140 | 9,515 | 9,808 | 19,427 | 131,327 | ||||||||||||||||||
Property, plant and equipment, intangible assets, net | 6,973 | 15,218 | 8,112 | 17,312 | 11,489 | 59,104 | ||||||||||||||||||
Capital expenditures | 1,189 | 2,502 | 1,739 | 4,651 | 3,268 | 13,349 | ||||||||||||||||||
2008 | ||||||||||||||||||||||||
Non-Group sales(a) | 43,616 | 82,761 | 14,002 | 12,482 | 27,115 | 179,976 | ||||||||||||||||||
Property, plant and equipment, intangible assets, net | 7,260 | 13,485 | 5,182 | 15,460 | 10,096 | 51,483 | ||||||||||||||||||
Capital expenditures | 1,997 | 2,962 | 1,255 | 4,500 | 2,926 | 13,640 | ||||||||||||||||||
(M€) | France | Rest of Europe | North America | Africa | Rest of world | Total | ||||||||||||||||||
2011 | ||||||||||||||||||||||||
Non-Group sales(a) | 42,626 | 81,453 | 15,917 | 15,077 | 29,620 | 184,693 | ||||||||||||||||||
Property, plant and equipment, intangible assets, net | 5,637 | 15,576 | 14,518 | 23,546 | 17,593 | 76,870 | ||||||||||||||||||
Capital expenditures | 1,530 | 3,802 | 5,245 | 5,264 | 8,700 | 24,541 | ||||||||||||||||||
2010 | ||||||||||||||||||||||||
Non-Group sales(a) | 36,820 | 72,636 | 12,432 | 12,561 | 24,820 | 159,269 | ||||||||||||||||||
Property, plant and equipment, intangible assets, net | 5,666 | 14,568 | 9,584 | 20,166 | 13,897 | 63,881 | ||||||||||||||||||
Capital expenditures | 1,062 | 2,629 | 3,626 | 4,855 | 4,101 | 16,273 | ||||||||||||||||||
2009 | ||||||||||||||||||||||||
Non-Group sales(a) | 32,437 | 60,140 | 9,515 | 9,808 | 19,427 | 131,327 | ||||||||||||||||||
Property, plant and equipment, intangible assets, net | 6,973 | 15,218 | 8,112 | 17,312 | 11,489 | 59,104 | ||||||||||||||||||
Capital expenditures | 1,189 | 2,502 | 1,739 | 4,651 | 3,268 | 13,349 |
(a) | ||
Non-Group sales from continuing operations. |
UPSTREAM
TOTAL’s Upstream segment includes the Exploration & Production and Gas & Power divisions. The Group has exploration and production activities in more than forty countries and produces oil or gas in approximately thirty countries. The Group’s Gas & Power division conducts
activities downstream from production related to natural gas, liquefied natural gas (LNG) and liquefied petroleum gas (LPG), as well as power generation and trading, and other activities.
Exploration & Production
Exploration and development
TOTAL’s Upstream segment aims at continuing to combine long-term growth and profitability at the level of the best in the industry.
TOTAL evaluates exploration opportunities based on a variety of geological, technical, political and economic factors (including taxes and license terms), and on projected oil and gas prices. Discoveries and extensions of existing fields accounted for approximately 46%76% of the 2,4452,037 Mboe added to the Upstream segment’s proved reserves during the three-year period ended December 31, 2010
2011 (before deducting production and sales of reserves in place and adding any acquisitions of reserves in place during this period). The remaining 54%24% comes from revisions of previous estimates. The level of revisions during this three year period was significantly impacted by the effect of successive increases of the reference oil price (from $36.55/b at the end of 2008 to $110.96/b in 2011 for Brent crude) which induced a substantial negative revision.
In 2011, the exploration investments of consolidated subsidiaries amounted to€1,629 million (including exploration bonuses included in the unproved property
acquisition costs). Exploration investments were made primarily in Norway, the United Kingdom, Angola, Brazil, Azerbaijan, Indonesia, Brunei, Kenya, French Guiana and Nigeria. In 2010, the exploration investments of consolidated subsidiaries amounted to €1,472€1,472 million (comprising(including exploration bonuses included in the unproved property acquisition costs). The main exploration investments were made in Angola, Norway, Brazil, the United Kingdom, the United States, Indonesia, Nigeria and Brunei. In 2009, the
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The Group’s consolidated Exploration & Production subsidiaries’ development investments amounted to €8€10 billion in 2011, primarily in Angola, Nigeria, Norway, Kazakhstan, the United Kingdom, Australia, Canada, Gabon, Indonesia, the Republic of the Congo, the United States and Thailand. The Group’s consolidated Exploration & Production subsidiaries’ development investments amounted to€8 billion in 2010, primarily in Angola, Nigeria, Kazakhstan, Norway, Indonesia, the Republic of the Congo, the United Kingdom, the United States, Canada, Thailand, Gabon and Australia. The Group’s consolidated Exploration & Production subsidiaries’In 2009, development investments amounted to nearly €8€8 billion, in 2009, primarilypredominantly in Angola, Nigeria, Norway, Kazakhstan, Indonesia, the Republic of the Congo, the United Kingdom, the United States, Gabon, Canada, Thailand, Russia and Qatar. In 2008, development investments amounted to €7 billion, predominantly in Angola, Nigeria, Norway, Kazakhstan, Indonesia, the Republic of the Congo, the United Kingdom, Gabon, Canada, the United States, and Qatar.
Reserves
The definitions used for proved, proved developed and proved undeveloped oil and gas reserves are in accordance with the United States Securities & Exchange Commission (SEC)(“SEC”) Rule 4-10 ofRegulation S-X as amended by the SEC Modernization of Oil and Gas Reporting release issued on December 31, 2008. Proved reserves are estimated using geological and engineering data to determine with reasonable certainty whether the crude oil or natural gas in known reservoirs is recoverable under existing regulatory, economic and operating conditions.
TOTAL’s oil and gas reserves are consolidated annually, taking into account, among other factors, levels of production, field reassessment,reassessments, additional reserves from discoveries and acquisitions, disposal of reserves and other economic factors. Unless otherwise indicated, any reference to TOTAL’s proved reserves, proved developed reserves, proved undeveloped reserves and production reflects the Group’s entire share of such reserves or such production. TOTAL’s worldwide proved reserves include the proved reserves of its consolidated subsidiaries as well as its
proportionate share of the proved reserves of equity affiliates and of two companies accounted for under the cost method.affiliates. For further information concerning changes in TOTAL’s proved reserves for the years ended December 31, 2011, 2010 2009 and 2008,2009, see “Supplemental Oil and Gas Information (Unaudited)”.
The reserves estimation process involves making subjective judgments. Consequently, estimates of reserves are not exact measurements and are subject to revision under well-established control procedures.
The reserves booking process requires, among other things:
internal peer reviews of technical evaluations to ensure that the SEC definitions and guidance are followed; and
that management makes significant funding commitments towards the development of the reserves prior to booking.
For further information regarding the preparation of reserves estimates, see “Supplemental Oil and Gas Information (Unaudited)”.
Proved reserves
In accordance with the amendedRule 4-10 ofRegulation S-X, proved reserves for the years ended on or after December 31, 2009, are calculated using a12-month average price determined as the unweighted arithmetic average of thefirst-day-of-the-month price for each month of the relevant year unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. The reference prices for 2011, 2010 and 2009 were, respectively, $110.96/b, $79.02/b and $59.91/b for Brent crude. The
As of December 31, 2011, TOTAL’s combined proved reserves forof oil and gas were 11,423 Mboe (53% of which were proved developed reserves). Liquids (crude oil, natural gas liquids and bitumen) represented approximately 51% of these reserves and natural gas the year ended December 31, 2008remaining 49%. These reserves were calculated using December 31 price ($36.55/b)located in Europe (mainly in Italy, Norway and the United Kingdom), in Africa (mainly in Angola, Gabon, Libya, Nigeria and the Republic of the Congo), in the Americas (mainly in Canada, the United States, Argentina and Venezuela), in the Middle East (mainly in Qatar, the United Arab Emirates and Yemen), and in Asia (mainly in Australia, Indonesia, Kazakhstan and Russia).
As of December 31, 2010, TOTAL’s combined proved reserves of oil and gas were 10,695 Mboe (53% of which were proved developed reserves). Liquids (crude oil, natural gas liquids and bitumen) represented approximately 56% of these reserves and natural gas the remaining 44%. These reserves were located in Europe (mainly in Norway
and the United Kingdom), in Africa (mainly in Angola, Gabon, Libya, Nigeria and the Republic of the Congo), in the Americas (mainly in Canada, the United States, Argentina and Venezuela), in the Middle East (mainly in Qatar, the United Arab Emirates and Yemen), and in Asia (mainly in Indonesia and Kazakhstan).
As of December 31, 2009, TOTAL’s combined proved reserves of oil and gas were 10,483 Mboe (56% of which were proved developed reserves). Liquids (crude oil, natural gas liquids and bitumen) represented approximately 54% of these reserves and natural gas the
11
Sensitivity to oil and gas prices
Changes in the price used as a reference for the proved reserves estimation result in non-proportionate inverse changes in proved reserves associated with production sharing and risked service contracts (which together represent approximately 30%26% of TOTAL’s reserves as of December 31, 2010)2011). Under such contracts, TOTAL is entitled to a portion of the production, the sale of which is meant to cover expenses incurred by the Group. As oil prices increase, fewer barrels are necessary to cover the same amount of expenses. Moreover, the number of barrels retrievable under these contracts may vary according to criteria such as cumulative production, the rate of return on investment or the income-cumulative expenses ratio. This decrease is partly offset by an extension of the duration over which fields can be produced economically. However, the increase in reserves due to extended field life resulting from higher prices is generally less than the decrease in reserves under production sharing or risked service contracts due to such higher prices. As a result, higher prices lead to a decrease in TOTAL’s reserves.
Furthermore, changes in the price used as a reference for the proved reserves estimation impact the volume of royalties in Canada and thus TOTAL’s share of proved reserves.
Production
For the full year 2010,2011, average daily oil and gas production was 2,3782,346 kboe/d compared to 2,2812,378 kboe/d in 2009.
Liquids accounted for approximately 56%52% and natural gas accounted for approximately 44%48% of TOTAL’s combined liquids and natural gas production in 2010.2011.
The table on the next page sets forth by geographic area TOTAL’s average daily production of liquids and natural gas for each of the last three years.
Consistent with industry practice, TOTAL often holds a percentage interest in its fields rather than a 100% interest, with the balance being held by joint venture partners (which may include other international oil companies, state-owned oil companies or government entities). TOTAL frequently acts as operator (the party responsible for technical production) on acreage in which it holds an interest. See the table “Presentation of production activities by geographic area”region” on the following pages for a description of TOTAL’s producing assets.
As in 20092010 and 2008,2009, substantially all of the liquids production from TOTAL’s Upstream segment in 20102011 was marketed by the Trading & Shipping division of TOTAL’s Downstream segment. See the table “— Business Overview — Trading & Shipping — SupplyTrading division’s supply and sales of crude oil”.
The majority of TOTAL’s natural gas production is sold under long-term contracts. However, its North American production, and to some extentpart of its production from the United Kingdom, Norway and Argentina, is sold on the spot market. The long-term contracts under which TOTAL sells its natural gas usually provide for a price related to, among other factors, average crude oil and other petroleum product prices, as well as, in some cases, a cost-of-living index. Though the price of natural gas tends to fluctuate in line with crude oil prices, a slight delay may occur before changes in crude oil prices are reflected in long-term natural gas prices. Due to the interaction between the contract price of natural gas and crude oil prices, contract prices are not usually affected by short-term market fluctuations in the spot price of natural gas.
Some of TOTAL’s long-term contracts, notably in Argentina, Indonesia, Nigeria, Norway, Qatar and Qatar,Russia, specify the delivery of quantities of natural gas that may or may not be fixed and determinable. Such delivery commitments vary substantially, both in duration and in scope, from contract to contract throughout the world. For example, in some cases, contracts require delivery of natural gas on an as-needed basis, and, in other cases, contracts call for the delivery of varied amounts of natural gas over different periods of time. Nevertheless, TOTAL estimates the fixed and determinable quantity of gas to be delivered over the period2011-2013 2012-2014 to be 3,6654,051 Bcf. The Group expects to satisfy most of these obligations through the production of its proved reserves of natural gas, with, if needed, additional sourcing from spot market purchases. See “Supplemental Oil and Gas Information (Unaudited)”.
12
2010 | 2009 | 2008 | ||||||||||||||||||||||||||||||||||||
Natural | Natural | Natural | ||||||||||||||||||||||||||||||||||||
Liquids | gas | Total | Liquids | gas | Total | Liquids | gas | Total | ||||||||||||||||||||||||||||||
kb/d | Mcf/d | kboe/d | kb/d | Mcf/d | kboe/d | kb/d | Mcf/d | kboe/d | ||||||||||||||||||||||||||||||
Africa | 616 | 712 | 756 | 632 | 599 | 749 | 654 | 659 | 783 | |||||||||||||||||||||||||||||
Algeria | 25 | 87 | 41 | 47 | 143 | 74 | 51 | 145 | 79 | |||||||||||||||||||||||||||||
Angola | 157 | 34 | 163 | 186 | 33 | 191 | 200 | 33 | 205 | |||||||||||||||||||||||||||||
Cameroon | 9 | 2 | 9 | 12 | 2 | 12 | 13 | 2 | 14 | |||||||||||||||||||||||||||||
The Congo, Republic of | 115 | 27 | 120 | 101 | 27 | 106 | 85 | 23 | 89 | |||||||||||||||||||||||||||||
Gabon | 63 | 20 | 67 | 67 | 20 | 71 | 73 | 20 | 76 | |||||||||||||||||||||||||||||
Libya | 55 | — | 55 | 60 | — | 60 | 74 | — | 74 | |||||||||||||||||||||||||||||
Nigeria | 192 | 542 | 301 | 159 | 374 | 235 | 158 | 436 | 246 | |||||||||||||||||||||||||||||
North America | 30 | 199 | 65 | 20 | 22 | 24 | 11 | 15 | 14 | |||||||||||||||||||||||||||||
Canada(a) | 10 | — | 10 | 8 | — | 8 | 8 | — | 8 | |||||||||||||||||||||||||||||
United States | 20 | 199 | 55 | 12 | 22 | 16 | 3 | 15 | 6 | |||||||||||||||||||||||||||||
South America | 76 | 569 | 179 | 80 | 564 | 182 | 119 | 579 | 224 | |||||||||||||||||||||||||||||
Argentina | 14 | 381 | 83 | 15 | 364 | 80 | 14 | 365 | 81 | |||||||||||||||||||||||||||||
Bolivia | 3 | 94 | 20 | 3 | 91 | 20 | 3 | 105 | 22 | |||||||||||||||||||||||||||||
Colombia | 11 | 34 | 18 | 13 | 45 | 23 | 14 | 45 | 23 | |||||||||||||||||||||||||||||
Trinidad & Tobago | 3 | 2 | 3 | 5 | 2 | 5 | 6 | 2 | 6 | |||||||||||||||||||||||||||||
Venezuela | 45 | 58 | 55 | 44 | 62 | 54 | 82 | 62 | 92 | |||||||||||||||||||||||||||||
Asia-Pacific | 28 | 1,237 | 248 | 33 | 1,228 | 251 | 29 | 1,236 | 246 | |||||||||||||||||||||||||||||
Australia | — | 6 | 1 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Brunei | 2 | 59 | 14 | 2 | 49 | 12 | 2 | 60 | 14 | |||||||||||||||||||||||||||||
Indonesia | 19 | 855 | 178 | 25 | 898 | 190 | 21 | 857 | 177 | |||||||||||||||||||||||||||||
Myanmar | — | 114 | 14 | — | 103 | 13 | — | 117 | 14 | |||||||||||||||||||||||||||||
Thailand | 7 | 203 | 41 | 6 | 178 | 36 | 6 | 202 | 41 | |||||||||||||||||||||||||||||
CIS | 13 | 56 | 23 | 14 | 52 | 24 | 12 | 75 | 26 | |||||||||||||||||||||||||||||
Azerbaijan | 3 | 54 | 13 | 3 | 50 | 12 | 4 | 73 | 18 | |||||||||||||||||||||||||||||
Russia | 10 | 2 | 10 | 11 | 2 | 12 | 8 | 2 | 8 | |||||||||||||||||||||||||||||
Europe | 269 | 1,690 | 580 | 295 | 1,734 | 613 | 302 | 1,704 | 616 | |||||||||||||||||||||||||||||
France | 5 | 85 | 21 | 5 | 100 | 24 | 6 | 103 | 25 | |||||||||||||||||||||||||||||
The Netherlands | 1 | 234 | 42 | 1 | 254 | 45 | 1 | 244 | 44 | |||||||||||||||||||||||||||||
Norway | 183 | 683 | 310 | 199 | 691 | 327 | 204 | 706 | 334 | |||||||||||||||||||||||||||||
United Kingdom | 80 | 688 | 207 | 90 | 689 | 217 | 91 | 651 | 213 | |||||||||||||||||||||||||||||
Middle East | 308 | 1,185 | 527 | 307 | 724 | 438 | 329 | 569 | 432 | |||||||||||||||||||||||||||||
United Arab Emirates | 207 | 76 | 222 | 201 | 72 | 214 | 228 | 74 | 243 | |||||||||||||||||||||||||||||
Iran | 2 | — | 2 | 8 | — | 8 | 9 | — | 9 | |||||||||||||||||||||||||||||
Oman | 23 | 55 | 34 | 22 | 56 | 34 | 23 | 59 | 34 | |||||||||||||||||||||||||||||
Qatar | 49 | 639 | 164 | 50 | 515 | 141 | 44 | 434 | 121 | |||||||||||||||||||||||||||||
Syria | 14 | 130 | 39 | 14 | 34 | 20 | 15 | 2 | 15 | |||||||||||||||||||||||||||||
Yemen | 13 | 285 | 66 | 12 | 47 | 21 | 10 | — | 10 | |||||||||||||||||||||||||||||
Total production | 1,340 | 5,648 | 2,378 | 1,381 | 4,923 | 2,281 | 1,456 | 4,837 | 2,341 | |||||||||||||||||||||||||||||
Including share of equity andnon-consolidated affiliates | 300 | 781 | 444 | 286 | 395 | 359 | 347 | 298 | 403 | |||||||||||||||||||||||||||||
Algeria | 19 | 4 | 20 | 20 | 3 | 21 | 19 | 4 | 20 | |||||||||||||||||||||||||||||
Colombia | 7 | — | 7 | 6 | — | 6 | 5 | — | 5 | |||||||||||||||||||||||||||||
Venezuela | 45 | 6 | 46 | 44 | 6 | 45 | 82 | 6 | 83 | |||||||||||||||||||||||||||||
United Arab Emirates | 199 | 66 | 212 | 191 | 62 | 202 | 218 | 64 | 231 | |||||||||||||||||||||||||||||
Oman | 22 | 55 | 32 | 22 | 56 | 34 | 23 | 59 | 34 | |||||||||||||||||||||||||||||
Qatar | 8 | 367 | 75 | 3 | 221 | 42 | — | 165 | 30 | |||||||||||||||||||||||||||||
Yemen | — | 283 | 52 | — | 47 | 9 | — | — | — | |||||||||||||||||||||||||||||
2011 | 2010 | 2009 | ||||||||||||||||||||||||||||||||||
Liquids kb/d | Natural gas Mcf/d | Total kboe/d | Liquids kb/d | Natural gas Mcf/d | Total kboe/d | Liquids kb/d | Natural gas Mcf/d | Total kboe/d | ||||||||||||||||||||||||||||
Africa | 517 | 715 | 659 | 616 | 712 | 756 | 632 | 599 | 749 | |||||||||||||||||||||||||||
Algeria | 16 | 94 | 33 | 25 | 87 | 41 | 47 | 143 | 74 | |||||||||||||||||||||||||||
Angola | 128 | 39 | 135 | 157 | 34 | 163 | 186 | 33 | 191 | |||||||||||||||||||||||||||
Cameroon | 2 | 1 | 3 | 9 | 2 | 9 | 12 | 2 | 12 | |||||||||||||||||||||||||||
Gabon | 55 | 17 | 58 | 63 | 20 | 67 | 67 | 20 | 71 | |||||||||||||||||||||||||||
Libya | 20 | — | 20 | 55 | — | 55 | 60 | — | 60 | |||||||||||||||||||||||||||
Nigeria | 179 | 534 | 287 | 192 | 542 | 301 | 159 | 374 | 235 | |||||||||||||||||||||||||||
The Congo, Republic of | 117 | 30 | 123 | 115 | 27 | 120 | 101 | 27 | 106 | |||||||||||||||||||||||||||
North America | 27 | 227 | 67 | 30 | 199 | 65 | 20 | 22 | 24 | |||||||||||||||||||||||||||
Canada(a) | 11 | — | 11 | 10 | — | 10 | 8 | — | 8 | |||||||||||||||||||||||||||
United States | 16 | 227 | 56 | 20 | 199 | 55 | 12 | 22 | 16 | |||||||||||||||||||||||||||
South America | 71 | 648 | 188 | 76 | 569 | 179 | 80 | 564 | 182 | |||||||||||||||||||||||||||
Argentina | 14 | 397 | 86 | 14 | 381 | 83 | 15 | 364 | 80 | |||||||||||||||||||||||||||
Bolivia | 3 | 118 | 25 | 3 | 94 | 20 | 3 | 91 | 20 | |||||||||||||||||||||||||||
Colombia | 5 | 27 | 11 | 11 | 34 | 18 | 13 | 45 | 23 | |||||||||||||||||||||||||||
Trinidad & Tobago | 4 | 47 | 12 | 3 | 2 | 3 | 5 | 2 | 5 | |||||||||||||||||||||||||||
Venezuela | 45 | 59 | 54 | 45 | 58 | 55 | 44 | 62 | 54 | |||||||||||||||||||||||||||
Asia-Pacific | 27 | 1,160 | 231 | 28 | 1,237 | 248 | 33 | 1,228 | 251 | |||||||||||||||||||||||||||
Australia | — | 25 | 4 | — | 6 | 1 | — | — | — | |||||||||||||||||||||||||||
Brunei | 2 | 56 | 13 | 2 | 59 | 14 | 2 | 49 | 12 | |||||||||||||||||||||||||||
Indonesia | 18 | 757 | 158 | 19 | 855 | 178 | 25 | 898 | 190 | |||||||||||||||||||||||||||
Myanmar | — | 119 | 15 | — | 114 | 14 | — | 103 | 13 | |||||||||||||||||||||||||||
Thailand | 7 | 203 | 41 | 7 | 203 | 41 | 6 | 178 | 36 | |||||||||||||||||||||||||||
CIS | 22 | 525 | 119 | 13 | 56 | 23 | 14 | 52 | 24 | |||||||||||||||||||||||||||
Azerbaijan | 4 | 57 | 14 | 3 | 54 | 13 | 3 | 50 | 12 | |||||||||||||||||||||||||||
Russia | 18 | 468 | 105 | 10 | 2 | 10 | 11 | 2 | 12 | |||||||||||||||||||||||||||
Europe | 245 | 1,453 | 512 | 269 | 1,690 | 580 | 295 | 1,734 | 613 | |||||||||||||||||||||||||||
France | 5 | 69 | 18 | 5 | 85 | 21 | 5 | 100 | 24 | |||||||||||||||||||||||||||
The Netherlands | 1 | 214 | 38 | 1 | 234 | 42 | 1 | 254 | 45 | |||||||||||||||||||||||||||
Norway | 172 | 619 | 287 | 183 | 683 | 310 | 199 | 691 | 327 | |||||||||||||||||||||||||||
United Kingdom | 67 | 551 | 169 | 80 | 688 | 207 | 90 | 689 | 217 | |||||||||||||||||||||||||||
Middle East | 317 | 1,370 | 570 | 308 | 1,185 | 527 | 307 | 724 | 438 | |||||||||||||||||||||||||||
United Arab Emirates | 226 | 72 | 240 | 207 | 76 | 222 | 201 | 72 | 214 | |||||||||||||||||||||||||||
Iran | — | — | — | 2 | — | 2 | 8 | — | 8 | |||||||||||||||||||||||||||
Oman | 24 | 62 | 36 | 23 | 55 | 34 | 22 | 56 | 34 | |||||||||||||||||||||||||||
Qatar | 44 | 616 | 155 | 49 | 639 | 164 | 50 | 515 | 141 | |||||||||||||||||||||||||||
Syria | 11 | 218 | 53 | 14 | 130 | 39 | 14 | 34 | 20 | |||||||||||||||||||||||||||
Yemen | 12 | 402 | 86 | 13 | 285 | 66 | 12 | 47 | 21 | |||||||||||||||||||||||||||
Total production | 1,226 | 6,098 | 2,346 | 1,340 | 5,648 | 2,378 | 1,381 | 4,923 | 2,281 | |||||||||||||||||||||||||||
Including share of equity affiliates | 316 | 1,383 | 571 | 300 | 781 | 444 | 286 | 395 | 359 | |||||||||||||||||||||||||||
Algeria | 10 | 3 | 10 | 19 | 4 | 20 | 20 | 3 | 21 | |||||||||||||||||||||||||||
Colombia | 4 | — | 4 | 7 | — | 7 | 6 | — | 6 | |||||||||||||||||||||||||||
Venezuela | 44 | 7 | 45 | 45 | 6 | 46 | 44 | 6 | 45 | |||||||||||||||||||||||||||
United Arab Emirates | 219 | 62 | 231 | 199 | 66 | 212 | 191 | 62 | 202 | |||||||||||||||||||||||||||
Oman | 22 | 62 | 34 | 22 | 55 | 32 | 22 | 56 | 34 | |||||||||||||||||||||||||||
Qatar | 8 | 382 | 78 | 8 | 367 | 75 | 3 | 221 | 42 | |||||||||||||||||||||||||||
Russia | 9 | 465 | 95 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Yemen | — | 402 | 74 | — | 283 | 52 | — | 47 | 9 |
(a) | ||
The Group’s production in Canada consists of bitumen only. All of the Group’s bitumen production is in Canada. |
13
The table below sets forth, by country, TOTAL’s producing assets, the year in which TOTAL’s activities started,commenced, the Group’s interest in each asset and whether TOTAL is operator of the asset.
TOTAL’s producing assets as of December 31, |
Year of entry into the country | Operated (Group share in %) | Non-operated (Group share in %) | ||||||
Africa | ||||||||
Algeria | 1952 | |||||||
Tin Fouye Tabankort (35.00%) | ||||||||
Angola | 1953 | Girassol, Jasmim, Rosa, Dalia, Pazflor (Block 17) (40.00%) | ||||||
Block 0 (10.00%) Kuito, BBLT, Tombua-Landana (Block 14) (20.00%) Oombo (Block 3/91) (50.00%) | ||||||||
The Congo, Republic of | 1928 | Kombi-Likalala-Libondo (65.00%) Moho Bilondo (53.50%) Nkossa (53.50%) Nsoko (53.50%) Sendji (55.25%) Tchendo (65.00%) Tchibeli-Litanzi-Loussima (65.00%) Tchibouela (65.00%) Yanga (55.25%) | ||||||
Loango (50.00%) | Zatchi (35.00%) | |||||||
Gabon | 1928 | |||||||
Anguille (100.00%) | ||||||||
Anguille | ||||||||
Anguille Sud-Est (100.00%) | ||||||||
Atora (40.00%) | ||||||||
Avocette (57.50%) | ||||||||
Ayol Marine (100.00%) | ||||||||
Baliste (50.00%) | ||||||||
Barbier (100.00%) | ||||||||
Baudroie Marine (50.00%) | ||||||||
Baudroie Nord Marine (50.00%) | ||||||||
Coucal (57.50%) | ||||||||
Girelle (100.00%) | ||||||||
Gonelle (100.00%) | ||||||||
Grand Anguille Marine (100.00%) | ||||||||
Grondin | ||||||||
(100.00%) Hylia Marine (75.00%) | ||||||||
Lopez Nord (100.00%) | ||||||||
Mandaros (100.00%) | ||||||||
M’Boumba (100.00%) | ||||||||
Mérou Sardine Sud (50.00%) | ||||||||
Pageau (100.00%) | ||||||||
Port Gentil Océan (100.00%) | ||||||||
Port Gentil Sud Marine (100.00%) | ||||||||
Tchengue (100.00%) | ||||||||
Torpille (100.00%) | ||||||||
Torpille Nord Est (100.00%) | ||||||||
Rabi Kounga (47.50%) | ||||||||
Libya | 1959 | Zones 15, 16 & 32 (ex C 137, 75.00%(b)) Zones 70 & 87 (ex C 17, 75.00%(b)) Zones 129 & 130 (ex NC 115, 30.00%(b)) Zones 130 & 131 (ex NC 186, 24.00%(b)) | ||||||
Nigeria | 1962 | OML 58 (40.00%) OML 99 Amenam-Kpono (30.40%) OML 100 (40.00%) OML 102 (40.00%) | OML 102-Ekanga (40.00%) | |||||
OML 130 (24.00%) | ||||||||
Shell Petroleum Development Company (SPDC 10.00%) OML 118-Bonga (12.50%) |
14
Year of entry into the country | Operated (Group share in %) | Non-operated (Group share in %) | |||||||
North America | |||||||||
Canada | 1999 | ||||||||
Surmont (50.00%) | |||||||||
United States | |||||||||
Several assets in the Barnett Shale area (25.00%)(c) Several assets in the Utica Shale area (25.00%)(c) Tahiti (17.00%) | |||||||||
South America | |||||||||
Argentina | 1978 | Aguada Pichana (27.27%) | |||||||
Aries (37.50%) | |||||||||
Cañadon Alfa Complex (37.50%) | |||||||||
Carina (37.50%) | |||||||||
Hidra (37.50%) | |||||||||
San Roque (24.71%) | |||||||||
Sierra Chata (2.51%) | |||||||||
Bolivia | 1995 | ||||||||
San Alberto (15.00%) San Antonio (15.00%) Itau (41.00%) | |||||||||
Colombia | 1973 | ||||||||
Cusiana (11.60%) | |||||||||
Trinidad & Tobago | 1996 | ||||||||
Angostura (30.00%) | |||||||||
Venezuela | |||||||||
PetroCedeño (30.323%) Yucal Placer (69.50%) | |||||||||
| |||||||||
Australia | 2005 | ||||||||
Brunei | 1986 | Maharaja Lela Jamalulalam (37.50%) | |||||||
Indonesia | 1968 | Bekapai (50.00%) Handil (50.00%) Peciko (50.00%) Sisi-Nubi (47.90%) Tambora (50.00%) Tunu (50.00%) | |||||||
Badak (1.05%) Nilam-gas and condensates (9.29%) Nilam-oil (10.58%) | |||||||||
Myanmar | 1992 | Yadana (31.24%) | |||||||
Thailand | 1990 | ||||||||
Commonwealth of Independent States | |||||||||
Azerbaijan | 1996 | ||||||||
Shah Deniz (10.00%) | |||||||||
Russia | 1991 | Kharyaga (40.00%) | |||||||
Several fields through the participation in Novatek (14.09%) | |||||||||
Europe | |||||||||
France | 1939 | Lacq (100.00%) Meillon (100.00%) Pécorade (100.00%) Vic-Bilh (73.00%) Lagrave (100.00%) Lanot (100.00%) Itteville (78.73%) La Croix-Blanche (100.00%) Vert-le-Grand (90.05%) Vert-le-Petit (100.00%) | |||||||
15
Dommartin-Lettrée (56.99%) |
Year of entry into the country | Operated (Group share in %) | Non-operated (Group share in %) | ||||
Norway | 1965 | Skirne (40.00%) | ||||
Åsgard (7.68%) Ekofisk (39.90%) Eldfisk (39.90%) Embla (39.90%) Gimle (4.90%) Glitne (21.80%) Gungne (10.00%) Heimdal (16.76%) Huldra (24.33%) Kristin (6.00%) Kvitebjørn (5.00%) Mikkel (7.65%) Morvin (6.00%) Oseberg (10.00%) Oseberg East (10.00%) Oseberg South (10.00%) Sleipner East (10.00%) Sleipner West (9.41%) Snøhvit (18.40%) Snorre (6.18%) Statfjord East (2.80%) Sygna (2.52%) Tor (48.20%) Tordis (5.60%) Troll I (3.69%) Troll II (3.69%) Tune (10.00%) Tyrihans (23.18%) Vale (24.24%) Vigdis (5.60%) Vilje (24.24%) Visund (7.70%) Yttergryta (24.50%) | ||||||
The Netherlands | 1964 | F6a gas (55.66%) F6a oil (65.68%) F15a Jurassic (38.20%) F15a/F15d Triassic (32.47%) F15d (32.47%) J3a (30.00%) K1a (40.10%) K1b/K2a (54.33%) K2c (54.33%) K3b (56.16%) K3d (56.16%) K4a (50.00%) K4b/K5a (36.31%) K5b (45.27%) K6/L7 (56.16%) L1a (60.00%) L1d (60.00%) L1e (55.66%) L1f (55.66%) L4a (55.66%) | ||||
E16a (16.92%) E17a/E17b (14.10%) J3b/J6 (25.00%) Q16a (6.49%) |
Year of entry into the country | Operated (Group share in %) | Non-operated (Group share in %) | ||||||
United Kingdom | 1962 | Alwyn North, Dunbar, Ellon, Grant Nuggets (100.00%) Elgin-Franklin (EFOG 46.17%)(d) Forvie Nord (100.00%) Glenelg (49.47%) Jura (100.00%) West Franklin (EFOG 46.17%)(d) | ||||||
Alba (12.65%) Armada (12.53%) Bruce (43.25%) Markham unitized fields (7.35%) ETAP (Mungo, Monan) (12.43%) Everest (0.87%) Keith (25.00%) Maria (28.96%) Otter (50.00%) Seymour (25.00%) | ||||||||
Middle East | ||||||||
U.A.E. | 1939 | Abu Dhabi-Abu Al Bu Khoosh (75.00%) | ||||||
Abu Dhabi offshore (13.33%)(e) Abu Dhabi onshore (9.50%)(f) GASCO (15.00%) ADGAS (5.00%) | ||||||||
Oman | 1937 | |||||||
Various fields onshore (Block 6) (4.00%)(g) Mukhaizna field (Block 53) (2.00%)(h) | ||||||||
Qatar | ||||||||
16
North | ||||||||
North | ||||||||
Syria | 1988 | Deir Ez Zor (Al Mazraa, Atalla North, Jafra, Marad, Qahar, Tabiyeh) (100.00%) | ||||||
Yemen | 1987 | Kharir/Atuf | ||||||
Various fields onshore (Block 5) (15.00%) | ||||||||
(a) | ||
The Group’s interest in the local entity is approximately 100% in all cases except for Total Gabon |
(b) | TOTAL’s stake in the foreign consortium. |
(c) |
TOTAL has a |
Through ADMA (equity affiliate), TOTAL has a 13.33% interest and participates in the operating company, Abu Dhabi Marine Operating Company. |
Through ADPC (equity affiliate), TOTAL has a 9.50% interest and participates in the operating company, Abu Dhabi Company for Onshore Oil Operation. |
TOTAL has a direct interest of 4.00% in Petroleum Development Oman LLC, operator of Block 6, in which TOTAL has an indirect interest of 4.00% via Pohol (equity affiliate). TOTAL also has a 5.54% interest in the Oman LNG facility (trains 1 and 2), and an indirect participation of 2.04% through OLNG in Qalhat LNG (train 3). |
TOTAL has a direct interest of 2.00% in Block 53. |
Operated by DEZPC, which is | ||
GPC. Following the extension of European Union sanctions against Syria on December 1, 2011, TOTAL has |
17
In 2010,2011, TOTAL’s production in Africa was 756
659 kboe/d, representing 32%28% of the Group’s overall production, compared to 756 kboe/d in 2010 and
749 kboe/d in 2009 and 783 kboe/d in 2008.
InAlgeria, TOTAL’s production amountedwas 33 kboe/d in 2011, compared to 41 kboe/d in 2010 compared toand 74 kboe/d in 2009 and 79 kboe/d in 2008. 2009.
This decline is mainlywas due on the one hand to the termination of the Hamra contract in October 2009.2009 and on the other hand to the divestment of TOTAL’s stake in CEPSA (48.83%), which was finalized in July 2011. The Group’s production camenow comes entirely from its direct interest in the TFT field (Tin Fouyé Tabenkort, 35%) and from its 48.83% interest in CEPSA(1), a partner of Sonatrach (the Algerian national oil and gas company) on the Ourhoud and Rhourde El Krouf fields.. TOTAL also holds a directhas 37.75% interestand 47% stakes in the Timimoun gas project alongside Sonatrach (51%) and CEPSA (11.25%) as well as a 47% interest in the Ahnet gas project alongside Sonatrach (51%) and Partex (2%).development projects respectively.
• | |
On the TFT field, plateau production was maintained at 185 kboe/d. A 3D seismic survey covering 1,380 km2on the |
• | Launched in 2010 |
• | |
Under the Ahnet project, the technical section of a development plan |
InAngola, the Group’s production was 135 kboe/d in 2011, compared to 163 kboe/d in 2010 compared toand 191 kboe/d in 2009 and 205 kboe/d in 2008.2009. Production comes mainly from Blocks 17, 0, 14 and 14.17. Highlights of the period 20082009 to 20102011 included several discoveries on Blocks 15/06 and 17/06, and progress on the major Pazflor and CLOV projects.
Deep-offshore Block 17 (40%, operator) is TOTAL’s principal asset in Angola. It is composed of four major zones: Girassol, Dalia, Pazflor and CLOV.
On the Girassol pole,hub, production from the Girassol, Jasmim and Rosa fields was more than 190220 kb/d in 2010.
On the Dalia pole,hub, production was more thannearly 240 kb/d in 2010.
Production on Pazflor, the third pole, Pazflor, comprisedhub consisting of the Perpetua, Zinia, Hortensia and Acacia fields, production is scheduled to beginstarted up in lateAugust 2011 and reached 170 kb/d at the end of 2011. This project provides for the installation of an FPSO with aThe production capacity of the FPSO is 220 kb/d.
The development of CLOV, the fourth pole, was launchedhub, started in 2010 with the award of the main contracts. This developmentand will result in the installation of a fourth FPSO with a production capacity of 160 kb/d.Start-up of production is expected in 2014.
On Block 14 (20%), production on the Tombua-Landana field started in August 2009 and adds to production from the Benguela-Belize-Lobito-Tomboco and Kuito fields.
On ultra-deep offshore Block 32 (30%, operator), appraisal is continuing and pre-development studies for a first production zone in the central/southeastern portion of the block are underway (Kaombo project).
On Block 15/06 (15%), a first development hub including the discoveries located on the northwest portion of the block has been identified. The development plan for the hub has been submitted to the authorities.
TOTAL also has operations on exploration Blocks 33 (55%, operator) and, 17/06 (30%, operator), 25 (35%, operator), 39 (15%) and 40 (50%, operator).
TOTAL is also developing in LNG through the Angola LNG project (13.6%) with the construction of, which includes a gas liquefaction plant near Soyo. The plant will be supplied in particular by the gas associated with production from Blocks 0, 14, 15, 17 and 18. Construction work is ongoing andstart-up is expected in 2012.
InCameroon, the Group’s production was 3 kboe/d in 2011, compared to 9 kboe/d in 2010 compared toand 12 kboe/d in 2009 and 14 kboe/d in 2008.
InCôte d’Ivoire, TOTAL signed in October 2010 an agreement to acquireis operator of the Cl-100 exploration license, with a 60% interest (operator) in theCI-100 exploration license. The transaction has been approved by the relevant authorities.stake. The 2,000 km2 license is located approximately 100 km southeast of Abidjan in water depths ranging from 1,500 to 3,100 meters.m. Exploration work will includestarted with a new3D seismic survey of over 1,000 km2 at the end of 2011, which completed the 3D coverage of the entire block. Initial exploratory drilling is planned for the end of 2012.
In February 2012, TOTAL acquired interests in three ultra-deepwater exploration licenses : CI-514 (54%, operator), CI-515 (45%) and CI-516 (45%). For the two last blocks TOTAL will become the operator upon the first commercial discovery. The work program includes a 3D seismic survey which will complete coverage of the block,whole acreage and a firstone well is expected to be drilled in 2012.
18
InGabon, the Group’s share of production was 58 kboe/d in 2011, compared to 67 kboe/d in 2010 compared toand 71 kboe/d in 2009, and 76 kboe/d in 2008, due to the natural decline of fields. The Group’s exploration and production activities in Gabon are mainly carried out
by Total Gabon(1)( is1), one of the Group’s oldest subsidiaries insub-Saharan Africa. Africa.
Under the Anguille field redevelopment project, the AGM N platform, from which twenty-one additional development wells are to be drilled, left the Fos-sur-Mer shipyard at the end of 2011 for Gabon. The drilling campaign is expected to start at the beginning of the second quarter of 2012.
• | |
On the deep-offshore Diaba license (Total Gabon 63.75%, operator), following the 2D seismic survey that was | |
Total Gabon farmed into the onshore Mutamba-Iroru (50%), DE7 (30%) and Nziembou (20%) exploration licenses in 2010. Following negative exploratory drilling on license DE7, Total Gabon relinquished the license in 2011. Studies are underway to shoot a seismic survey on the Nziembou license and drill an exploration well on the Mutamba license in 2012.
InKenya, TOTAL acquired in September 2011 a 40% stake in five offshore licenses in the Lamu Basin: L5, L7, L11a, L11b and L12. This transaction has been approved by the Kenyan authorities.
InLibya, the Group’s production was 20 kb/d in 2011, compared to 55 kb/d in 2010 compared toand 60 kb/d in 20092009. Events in the country forced the entire industry to stop production and 74 kb/d in 2008. Decliningfreeze development. Depending on the field, production was primarily due tosuspended from late February or early March 2011. The new EPSA IV contracts came into effect in 2010. At that time, the implementation of OPEC quotas and new contractual provisions for Blocks C 17 (75%)(2), C 137 (75%)(2), NC 115 (30%)(2) and NC 186 (24%)(2) oncontract zones in which TOTAL is a partner. The EPSA IV agreements (exploration and production sharing agreements) on Blockspartner were redefined: 15, 16 & 32 (formerly C 137, and75%(2)), 70 & 87 (formerly C 17, were ratified by the Libyan government75%(2)), 129 & 130 (formerly NC 115, 30%(2)) and 130 & 131 (formerly NC 186, 24%(2)).
In offshore zones 15, 16 and 32, production resumed in September 2011 and reached its former level within a few days. Exploration work is expected to restart in 2012.
In onshore zones 70 and 87, production resumed in January 2010 and now extend2012. It will gradually be ramped back up to 2032.plateau level.
In addition, the Group is reviewingexpects to continue the impacts on its operationsdevelopment of the Dahra and the measuresGarian fields.
In onshore zones 129, 130 and 131, production resumed in October 2011. A return to be taken for the projects mentioned below.plateau level
production is expected during 2012. The seismic campaign started before the |
• | |
In the onshore Murzuk Basin, following a successful appraisal well drilled on the discovery made on a portion of Block NC 191 (100% | |
InMadagascar, TOTAL acquired in 2008 a 60% intereststake in the Bemolanga permitlicense (operator), which containsto appraise the oil sand accumulations. A firstaccumulations it contains. The appraisal phase was launched todid not confirm the bitumen resources needed for afeasibility of the mining development. Drilling operations were carried out in two phases duringdevelopment of the dry season between July and November 2009 and between April and July 2010.
InMauritania, TOTAL has exploration operations on the Ta7 and Ta8 licenses (60%, operator), located in the Taoudenni Basin alongside Sonatrach (20%)Basin. In January 2012, TOTAL (90%, operator) acquired interests in two exploration licenses: Block C9 in ultra-deep offshore, and Qatar Petroleum International (20%).Block Ta29 onshore in the Taoudenni Basin.
On the Ta7 license, a 1,220 km 2D seismic survey was shot in 2011 and is being interpreted.
On the Ta8 license, drilling of the exploration well ended in 2010. Results from the well were disappointing.
On the C9 and Ta29 licenses, a seismic acquisition campaign is planned as the first phase of the exploration program.
InNigeria, the Group’s production amountedwas 287 kboe/d in 2011, compared to 301 kboe/d in 2010 compared toand 235 kboe/d in 2009 and 246 kboe/d in 2008. This increase is due in particular to improved security conditions in the Niger Delta.2009. TOTAL has been present in Nigeria since 1962. It operates seven production licenses (OML) out of the forty-four in which it holds an interest,has a stake, and two exploration licenses (OPL) out of the eight in which it holds an interest.has a stake. The Group is also active in LNG through Nigeria LNG and the Brass LNG project. With regard to recent changes in acreage:
In 2010,2011, TOTAL acquired a(operator) increased its stake from 45.9% interestto 48.3% in Block 1 inof the Joint Development Zone, governedadministered jointly by Nigeria and São Tomé and PríncipePrincipe.
The divestment of 10% of the Group’s stakes held through the joint venture operated by Shell Petroleum Development Company (SPDC) in Blocks OML 26 and was awarded operatorship in this block.42 has been finalized.
(1) | |
Total Gabon is a Gabonese company whose shares are listed on Euronext Paris. TOTAL holds |
(2) | TOTAL’s stake in the |
TOTAL owns 15% of the Nigeria LNG gas liquefaction plant, located on Bonny Island, with an overall LNG capacity of 22.7 Mt/y. In 2011, the plant’s operating rate continued to increase and reached 81%, compared to 72% in 2010 and 50% in 2009, mainly due to the increased reliability of gas deliveries from the other suppliers.
Preliminary work continued in 2011 prior to launching the Brass LNG gas liquefaction plant project (17%), which calls for the construction of two trains, each with a Gabonese company whose sharescapacity of 5 Mt/y. Calls for tenders for the construction of the plant and loading facilities are listed on Euronext Paris. underway.
TOTAL holds 58%,continues its efforts to strengthen its ability to supply gas to the Republic of Gabon holds 25%LNG projects in which it owns a stake and to meet the public float is 17%.
19
– | On the OML 136 license (40%), the positive results for the Agge 3 appraisal well confirmed the development potential of the license. Development studies are underway. | ||
– | As part of its joint venture with the Nigerian National Petroleum | ||
– | On the OML 112/117 licenses (40%), TOTAL continued development studies in |
On the OML 102 license (40%, operator), TOTAL confirmed the launch of the Ofon phase 2 project in 2011 with the signing of the main construction contracts, with production start-up scheduled for 2014. In 2011 the Group also discovered Etisong North, located 15 km from the Ofon field, which is currently producing. This is the second exploration well on the Etisong hub after the Etisong Main discovery made in 2008. The exploration campaign is expected to continue with two additional wells in 2012.
On the OML 130 license (24%, operator), the Akpo field, which started up in March 2009, reached plateau production of 225 kboe/d in 2010. Production was limited between March and September 2011 by a technical issue on the engine of the gas reinjection compressor (liquids production of 160 kb/d instead of 190 kb/d). On this license, the Group is actively working on the Egina field, for which a development
plan | |
On the OML 138 license (20%, operator), TOTAL finalized the development of the Usan offshore project (180 kb/d, production capacity) with the drilling of production wells, installation of sub-sea equipment and connection to the FPSO. Production started up in February 2012.
TOTAL also strengthened its deep offshore position with the ongoing development of the Bonga Northwest project on the OML 118 license (12.5%).
Due to the relative calm with regard to safety in the Niger Delta region resulted in a substantial increase in the2011, it has been possible to maintain oil production operated by the Shell Petroleum Development Company (SPDC)SPDC joint venture, in which TOTAL ownshas a 10%. stake, at close to 2010 levels. The Soku processing plant resumed operationsSPDC joint venture’s gas production was higher in 20092011 as a result of the contribution of the Gbaran-Ubie project, which started up in 2010.
InUganda, TOTAL finalized in February 2012 its farm-in for an interest of 33.33%, which covers the EA-1 and EA-2 licenses as well as the new Kanywataba license and the Gbaran-Ubie development project was completedKingfisher production license. All of these licenses are located in 2010 with the commissioningLake Albert region, where oil resources have already been discovered and a substantial potential remains to be explored.
TOTAL will be the operator of EA-1 and partner on the other licenses. TOTAL and its partners Tullow and CNOOC are embarking on an ambitious exploration and appraisal program from 2012 onwards. First priority will be given to the exploration of Kanywataba and EA-1 licenses west of the 1 Bcf/d production facility.
In theRepublic of the CongoMiddle East, the Group’s share of production was 120 kboe/d in 2010, compared to 106 kboe/d in 2009 and 89 kboe/d in 2008.
U.A.E. | 1939 | Abu Dhabi-Abu Al Bu Khoosh (75.00%) | ||||
Abu Dhabi offshore (13.33%)(e) Abu Dhabi onshore (9.50%)(f) GASCO (15.00%) ADGAS (5.00%) | ||||||
Oman | 1937 | |||||
Various fields onshore (Block 6) (4.00%)(g) Mukhaizna field (Block 53) (2.00%)(h) | ||||||
Qatar | 1936 | Al Khalij (100.00%) | ||||
North Field-Block NF Dolphin (24.50%) North Field-Block NFB (20.00%) North Field-Qatargas 2 Train 5 (16.70%) | ||||||
Syria | 1988 | Deir Ez Zor (Al Mazraa, Atalla North, Jafra, Marad, Qahar, Tabiyeh) (100.00%)(i) | ||||
Yemen | 1987 | Kharir/Atuf (Block 10) (28.57%) | ||||
Various fields onshore (Block 5) (15.00%) |
20
| TOTAL’s stake in the
Africa In 2011, TOTAL’s production in Africa was 659 kboe/d, representing 28% of the Group’s overall production, compared to 756 kboe/d in 2010 and 749 kboe/d in 2009. InAlgeria, TOTAL’s production was 33 kboe/d in 2011, compared to 41 kboe/d in 2010 and 74 kboe/d in 2009. This decline was due on the one hand to the termination of the Hamra contract in October 2009 and on the other hand to the divestment of TOTAL’s stake in CEPSA (48.83%), which was finalized in July 2011. The Group’s production now comes entirely from the TFT field (Tin Fouyé Tabenkort, 35%). TOTAL also has 37.75% and 47% stakes in the Timimoun and Ahnet gas development projects respectively.
InAngola, the Group’s production was 135 kboe/d in 2011, compared to 163 kboe/d in 2010 and 191 kboe/d in 2009. Production comes mainly from Blocks 0, 14 and 17. Highlights of the period 2009 to 2011 included several discoveries on Blocks 15/06 and 17/06, and progress on the major Pazflor and CLOV projects. Deep-offshore Block 17 (40%, operator) is TOTAL’s principal asset in Angola. It is composed of four major zones: Girassol, Dalia, Pazflor and CLOV. On the Girassol hub, production from the Girassol, Jasmim and Rosa fields was 220 kb/d in 2011. On the Dalia hub, production was nearly 240 kb/d in 2011. Production on Pazflor, the third hub consisting of the Perpetua, Zinia, Hortensia and Acacia fields, started up in August 2011 and reached 170 kb/d at the end of 2011. The production capacity of the FPSO is 220 kb/d. The development of CLOV, the fourth hub, started in 2010 and will result in the installation of a fourth FPSO with a capacity of 160 kb/d. Start-up of production is expected in 2014. On Block 14 (20%), production on the Tombua-Landana field started in August 2009 and adds to production from the Benguela-Belize-Lobito-Tomboco and Kuito fields. On ultra-deep offshore Block 32 (30%, operator), appraisal is continuing and pre-development studies for a first production zone in the central/southeastern portion of the block are underway (Kaombo project). On Block 15/06 (15%), a first development hub including the discoveries located on the northwest portion of the block has been identified. The development plan for the hub has been submitted to the authorities. TOTAL has operations on exploration Blocks 33 (55%, operator), 17/06 (30%, operator), 25 (35%, operator), 39 (15%) and 40 (50%, operator). TOTAL is also developing in LNG through the Angola LNG project (13.6%), which includes a gas liquefaction plant near Soyo. The plant will be supplied in particular by the gas associated with production from Blocks 0, 14, 15, 17 and 18. Construction work is ongoing and start-up is expected in 2012. InCameroon, the Group’s production was 3 kboe/d in 2011, compared to 9 kboe/d in 2010 and 12 kboe/d in 2009. In April 2011, TOTAL finalized the divestment of its stake in its upstream subsidiary Total E&P Cameroon, a Cameroonian company in which the Group had a 75.8% holding. Since that time, the Group no longer owns any exploration and production assets in the country. InCôte d’Ivoire, TOTAL is operator of the Cl-100 exploration license, with a 60% stake. The 2,000 km2 license is located approximately 100 km southeast of Abidjan in water depths ranging from 1,500 to 3,100 m. Exploration work started with a 3D seismic survey of over 1,000 km2 at the end of 2011, which completed the 3D coverage of the entire block. Initial exploratory drilling is planned for the end of 2012. In February 2012, TOTAL acquired interests in three ultra-deepwater exploration licenses : CI-514 (54%, operator), CI-515 (45%) and CI-516 (45%). For the two last blocks TOTAL will become the operator upon the first commercial discovery. The work program includes a 3D seismic survey of the whole acreage and one well to be drilled on each block during the initial three-year exploration period. InEgypt, TOTAL signed a concession agreement in February 2010 and became operator of Block 4 (East El Burullus Offshore) with a 90% stake. The license, located in the Nile Basin where a number of gas discoveries have been made, covers a 4-year initial exploration period and includes a commitment to carrying out 3D seismic work and drilling exploration wells. Following the 3,374 km2 3D seismic survey shot in 2011, drilling is under preparation. InGabon, the Group’s production was 58 kboe/d in 2011, compared to 67 kboe/d in 2010 and 71 kboe/d in 2009, due to the natural decline of fields. The Group’s exploration and production activities in Gabon are mainly carried out by Total Gabon(1), one of the Group’s oldest subsidiaries in sub-Saharan Africa. Under the Anguille field redevelopment project, the AGM N platform, from which twenty-one additional development wells are to be drilled, left the Fos-sur-Mer shipyard at the end of 2011 for Gabon. The drilling campaign is expected to start at the beginning of the second quarter of 2012.
Total Gabon farmed into the onshore Mutamba-Iroru (50%), DE7 (30%) and Nziembou (20%) exploration licenses in 2010. Following negative exploratory drilling on license DE7, Total Gabon relinquished the license in 2011. Studies are underway to shoot a seismic survey on the Nziembou license and drill an exploration well on the Mutamba license in 2012. InKenya, TOTAL acquired in September 2011 a 40% stake in five offshore licenses in the Lamu Basin: L5, L7, L11a, L11b and L12. This transaction has been approved by the Kenyan authorities. InLibya, the Group’s production was 20 kb/d in 2011, compared to 55 kb/d in 2010 and 60 kb/d in 2009. Events in the country forced the entire industry to stop production and freeze development. Depending on the field, production was suspended from late February or early March 2011. The new EPSA IV contracts came into effect in 2010. At that time, the contract zones in which TOTAL is a partner were redefined: 15, 16 & 32 (formerly C 137, 75%(2)), 70 & 87 (formerly C 17, 75%(2)), 129 & 130 (formerly NC 115, 30%(2)) and 130 & 131 (formerly NC 186, 24%(2)). In offshore zones 15, 16 and 32, production resumed in September 2011 and reached its former level within a few days. Exploration work is expected to restart in 2012. In onshore zones 70 and 87, production resumed in January 2012. It will gradually be ramped back up to plateau level. In addition, the Group expects to continue the development of the Dahra and Garian fields. In onshore zones 129, 130 and 131, production resumed in October 2011. A return to plateau level
InMadagascar, TOTAL acquired in 2008 a 60% stake in the Bemolanga license (operator), to appraise the oil sand accumulations it contains. The appraisal phase did not confirm the feasibility of the mining development of the resources. However, the contract was extended by one year until June 2012 to assess the conventional exploration potential of the license. InMauritania, TOTAL has exploration operations on the Ta7 and Ta8 licenses (60%, operator), located in the Taoudenni Basin. In January 2012, TOTAL (90%, operator) acquired interests in two exploration licenses: Block C9 in ultra-deep offshore, and Block Ta29 onshore in the Taoudenni Basin. On the Ta7 license, a 1,220 km 2D seismic survey was shot in 2011 and is being interpreted. On the Ta8 license, drilling of the exploration well ended in 2010. Results from the well were disappointing. On the C9 and Ta29 licenses, a seismic acquisition campaign is planned as the first phase of the exploration program. InNigeria, the Group’s production was 287 kboe/d in 2011, compared to 301 kboe/d in 2010 and 235 kboe/d in 2009. TOTAL has been present in Nigeria since 1962. It operates seven production licenses (OML) out of the forty-four in which it has a stake, and two exploration licenses (OPL) out of the eight in which it has a stake. The Group is also active in LNG through Nigeria LNG and the Brass LNG project. With regard to recent changes in acreage: In 2011, TOTAL (operator) increased its stake from 45.9% to 48.3% in Block 1 of the Joint Development Zone, administered jointly by Nigeria and São Tomé and Principe. The divestment of 10% of the Group’s stakes held through the joint venture operated by Shell Petroleum Development Company (SPDC) in Blocks OML 26 and 42 has been finalized.
TOTAL owns 15% of the Nigeria LNG gas liquefaction plant, located on Bonny Island, with an overall LNG capacity of 22.7 Mt/y. In 2011, the plant’s operating rate continued to increase and reached 81%, compared to 72% in 2010 and 50% in 2009, mainly due to the increased reliability of gas deliveries from the other suppliers. Preliminary work continued in 2011 prior to launching the Brass LNG gas liquefaction plant project (17%), which calls for the construction of two trains, each with a capacity of 5 Mt/y. Calls for tenders for the construction of the plant and loading facilities are underway. TOTAL continues its efforts to strengthen its ability to supply gas to the LNG projects in which it owns a stake and to meet the growing domestic demand for gas:
On the OML 102 license (40%, operator), TOTAL confirmed the launch of the Ofon phase 2 project in 2011 with the signing of the main construction contracts, with production start-up scheduled for 2014. In 2011 the Group also discovered Etisong North, located 15 km from the Ofon field, which is currently producing. This is the second exploration well on the Etisong hub after the Etisong Main discovery made in 2008. The exploration campaign is expected to continue with two additional wells in 2012. On the OML 130 license (24%, operator), the Akpo field, which started up in March 2009, reached plateau production of 225 kboe/d in 2010. Production was limited between March and September 2011 by a technical issue on the engine of the gas reinjection compressor (liquids production of 160 kb/d instead of 190 kb/d). On this license, the Group is actively working on the Egina field, for which a development
On the OML 138 license (20%, operator), TOTAL finalized the development of the Usan offshore project (180 kb/d, production capacity) with the drilling of production wells, installation of sub-sea equipment and connection to the FPSO. Production started up in February 2012.
TOTAL also strengthened its deep offshore position with the ongoing development of the Bonga Northwest project on the OML 118 license (12.5%).
Middle East | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.A.E. | 1939 | Abu Dhabi-Abu Al Bu Khoosh (75.00%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Abu Dhabi Abu Dhabi onshore (9.50%)(f) GASCO (15.00%) ADGAS (5.00%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Oman | 1937 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Various fields onshore (Block 6) (4.00%)(g) Mukhaizna field (Block 53) (2.00%)(h) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Qatar | 1936 | Al Khalij (100.00%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
North Field-Block NF Dolphin (24.50%) North Field-Block NFB (20.00%) North Field-Qatargas 2 Train 5 (16.70%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Syria | 1988 | Deir Ez Zor (Al Mazraa, Atalla North, Jafra, Marad, Qahar, Tabiyeh) (100.00%)(i) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Yemen | 1987 | Kharir/Atuf (Block 10) (28.57%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Various fields onshore (Block 5) (15.00%) |
(a) | The Group’s interest in the local entity is approximately 100% in all cases except for Total Gabon (58.28%) and certain entities in the United Kingdom, Abu |
(b) | TOTAL’s stake in the foreign consortium. |
(c) | TOTAL’s interest in the joint venture. |
(d) | TOTAL has a 46.17% indirect interest in Elgin Franklin through its interest in EFOG. |
(e) | Through ADMA (equity affiliate), TOTAL has a 13.33% interest and participates in the operating company, Abu Dhabi Marine Operating Company. |
(f) | Through ADPC (equity affiliate), TOTAL has a 9.50% interest and participates in the operating company, Abu Dhabi Company for Onshore Oil |
(g) | TOTAL has a direct interest of 4.00% in Petroleum Development Oman LLC, operator of Block 6, in which |
(h) | TOTAL has a direct interest of 2.00% in Block 53. |
(i) | Operated by DEZPC, which is 50% owned by TOTAL and 50% owned by GPC. Following the extension of European Union sanctions against Syria on December 1, 2011, TOTAL has ceased its activities that contribute to oil and gas production in Syria. For further information on U.S. and European restrictions relevant to TOTAL’s activities in Syria, see “Item 3. Key Information — Risk Factors”. |
Africa
In 2011, TOTAL’s production in Africa was
659 kboe/d, representing 28% of the Group’s overall production, compared to 756 kboe/d in 2010 and
749 kboe/d in 2009.
InAlgeria, TOTAL’s production was 33 kboe/d in 2011, compared to 41 kboe/d in 2010 and 74 kboe/d in 2009.
This decline was due on the one hand to the termination of the Hamra contract in October 2009 and on the other hand to the divestment of TOTAL’s stake in CEPSA (48.83%), which was finalized in July 2011. The Group’s production now comes entirely from the TFT field (Tin Fouyé Tabenkort, 35%). TOTAL also has 37.75% and 47% stakes in the Timimoun and Ahnet gas development projects respectively.
• | On the TFT field, plateau production was maintained at 185 kboe/d. A 3D seismic survey covering 1,380 km2on the East and West portions of the field was completed in October 2011. The data is currently being processed and interpreted. |
• | Launched in 2010 following approval of the development plan by the ALNAFT national agency, the basic engineering phase for the Timimoun project has been completed. Commercial gas production is scheduled to start up in 2016, with anticipated plateau production of 1.6 Bm3/y (160 Mcf/d). |
• | Under the Ahnet project, the technical section of a development plan was submitted to the authorities in July 2011. Discussions are underway with the project partners and the authorities with regard to bringing the gas to market, with anticipated plateau production of 4 Bm3/y (400 Mcf/d). |
InAngola, the Group’s production was 135 kboe/d in 2011, compared to 163 kboe/d in 2010 and 191 kboe/d in 2009. Production comes mainly from Blocks 0, 14 and 17. Highlights of the period 2009 to 2011 included several discoveries on Blocks 15/06 and 17/06, and progress on the major Pazflor and CLOV projects.
Deep-offshore Block 17 (40%, operator) is TOTAL’s principal asset in Angola. It is composed of four major zones: Girassol, Dalia, Pazflor and CLOV.
On the Girassol hub, production from the Girassol, Jasmim and Rosa fields was 220 kb/d in 2011.
On the Dalia hub, production was nearly 240 kb/d in 2011.
Production on Pazflor, the third hub consisting of the Perpetua, Zinia, Hortensia and Acacia fields, started up in August 2011 and reached 170 kb/d at the end of 2011. The production capacity of the FPSO is 220 kb/d.
The development of CLOV, the fourth hub, started in 2010 and will result in the installation of a fourth FPSO with a capacity of 160 kb/d. Start-up of production is expected in 2014.
On Block 14 (20%), production on the Tombua-Landana field started in August 2009 and adds to production from the Benguela-Belize-Lobito-Tomboco and Kuito fields.
On ultra-deep offshore Block 32 (30%, operator), appraisal is continuing and pre-development studies for a first production zone in the central/southeastern portion of the block are underway (Kaombo project).
On Block 15/06 (15%), a first development hub including the discoveries located on the northwest portion of the block has been identified. The development plan for the hub has been submitted to the authorities.
TOTAL has operations on exploration Blocks 33 (55%, operator), 17/06 (30%, operator), 25 (35%, operator), 39 (15%) and 40 (50%, operator).
TOTAL is also developing in LNG through the Angola LNG project (13.6%), which includes a gas liquefaction plant near Soyo. The plant will be supplied in particular by the gas associated with production from Blocks 0, 14, 15, 17 and 18. Construction work is ongoing and start-up is expected in 2012.
InCameroon, the Group’s production was 3 kboe/d in 2011, compared to 9 kboe/d in 2010 and 12 kboe/d in 2009. In April 2011, TOTAL finalized the divestment of its stake in its upstream subsidiary Total E&P Cameroon, a Cameroonian company in which the Group had a 75.8% holding. Since that time, the Group no longer owns any exploration and production assets in the country.
InCôte d’Ivoire, TOTAL is operator of the Cl-100 exploration license, with a 60% stake. The 2,000 km2 license is located approximately 100 km southeast of Abidjan in water depths ranging from 1,500 to 3,100 m. Exploration work started with a 3D seismic survey of over 1,000 km2 at the end of 2011, which completed the 3D coverage of the entire block. Initial exploratory drilling is planned for the end of 2012.
In February 2012, TOTAL acquired interests in three ultra-deepwater exploration licenses : CI-514 (54%, operator), CI-515 (45%) and CI-516 (45%). For the two last blocks TOTAL will become the operator upon the first commercial discovery. The work program includes a 3D seismic survey of the whole acreage and one well to be drilled on each block during the initial three-year exploration period.
InEgypt, TOTAL signed a concession agreement in February 2010 and became operator of Block 4 (East El Burullus Offshore) with a 90% stake. The license, located in the Nile Basin where a number of gas discoveries have been made, covers a 4-year initial exploration period and includes a commitment to carrying out 3D seismic work and drilling exploration wells. Following the 3,374 km2 3D seismic survey shot in 2011, drilling is under preparation.
InGabon, the Group’s production was 58 kboe/d in 2011, compared to 67 kboe/d in 2010 and 71 kboe/d in 2009, due to the natural decline of fields. The Group’s exploration and production activities in Gabon are mainly carried out
by Total Gabon(1), one of the Group’s oldest subsidiaries in sub-Saharan Africa.
Under the Anguille field redevelopment project, the AGM N platform, from which twenty-one additional development wells are to be drilled, left the Fos-sur-Mer shipyard at the end of 2011 for Gabon. The drilling campaign is expected to start at the beginning of the second quarter of 2012.
• | On the deep-offshore Diaba license (Total Gabon 63.75%, operator), following the 2D seismic survey that was performed in 2008 and 2009, a 6,000 km2 3D seismic was shot in 2010. This new seismic survey has been processed and the results are currently being interpreted. |
Total Gabon farmed into the onshore Mutamba-Iroru (50%), DE7 (30%) and Nziembou (20%) exploration licenses in 2010. Following negative exploratory drilling on license DE7, Total Gabon relinquished the license in 2011. Studies are underway to shoot a seismic survey on the Nziembou license and drill an exploration well on the Mutamba license in 2012.
InKenya, TOTAL acquired in September 2011 a 40% stake in five offshore licenses in the Lamu Basin: L5, L7, L11a, L11b and L12. This transaction has been approved by the Kenyan authorities.
InLibya, the Group’s production was 20 kb/d in 2011, compared to 55 kb/d in 2010 and 60 kb/d in 2009. Events in the country forced the entire industry to stop production and freeze development. Depending on the field, production was suspended from late February or early March 2011. The new EPSA IV contracts came into effect in 2010. At that time, the contract zones in which TOTAL is a partner were redefined: 15, 16 & 32 (formerly C 137, 75%(2)), 70 & 87 (formerly C 17, 75%(2)), 129 & 130 (formerly NC 115, 30%(2)) and 130 & 131 (formerly NC 186, 24%(2)).
In offshore zones 15, 16 and 32, production resumed in September 2011 and reached its former level within a few days. Exploration work is expected to restart in 2012.
In onshore zones 70 and 87, production resumed in January 2012. It will gradually be ramped back up to plateau level.
In addition, the Group expects to continue the development of the Dahra and Garian fields.
In onshore zones 129, 130 and 131, production resumed in October 2011. A return to plateau level
production is expected during 2012. The seismic campaign started before the events is expected to resume by the end of 2012. |
• | In the onshore Murzuk Basin, following a successful appraisal well drilled on the discovery made on a portion of Block NC 191 (100%(2), operator), a development plan was submitted to the authorities in 2009. After the interruption related to the events, discussions with the authorities have resumed. |
InMadagascar, TOTAL acquired in 2008 a 60% stake in the Bemolanga license (operator), to appraise the oil sand accumulations it contains. The appraisal phase did not confirm the feasibility of the mining development of the resources. However, the contract was extended by one year until June 2012 to assess the conventional exploration potential of the license.
InMauritania, TOTAL has exploration operations on the Ta7 and Ta8 licenses (60%, operator), located in the Taoudenni Basin. In January 2012, TOTAL (90%, operator) acquired interests in two exploration licenses: Block C9 in ultra-deep offshore, and Block Ta29 onshore in the Taoudenni Basin.
On the Ta7 license, a 1,220 km 2D seismic survey was shot in 2011 and is being interpreted.
On the Ta8 license, drilling of the exploration well ended in 2010. Results from the well were disappointing.
On the C9 and Ta29 licenses, a seismic acquisition campaign is planned as the first phase of the exploration program.
InNigeria, the Group’s production was 287 kboe/d in 2011, compared to 301 kboe/d in 2010 and 235 kboe/d in 2009. TOTAL has been present in Nigeria since 1962. It operates seven production licenses (OML) out of the forty-four in which it has a stake, and two exploration licenses (OPL) out of the eight in which it has a stake. The Group is also active in LNG through Nigeria LNG and the Brass LNG project. With regard to recent changes in acreage:
In 2011, TOTAL (operator) increased its stake from 45.9% to 48.3% in Block 1 of the Joint Development Zone, administered jointly by Nigeria and São Tomé and Principe.
The divestment of 10% of the Group’s stakes held through the joint venture operated by Shell Petroleum Development Company (SPDC) in Blocks OML 26 and 42 has been finalized.
(1) | Total Gabon is a Gabonese company whose shares are listed on Euronext Paris. TOTAL holds 58.28%, the Republic of Gabon holds 25% and the public float is 16.72%. |
(2) | TOTAL’s stake in |
TOTAL owns 15% of the Nigeria LNG gas liquefaction plant, located on Bonny Island, with an overall LNG capacity of 22.7 Mt/y. In 2011, the plant’s operating rate continued to increase and reached 81%, compared to 72% in 2010 and 50% in 2009, mainly due to the increased reliability of gas deliveries from the other suppliers.
Preliminary work continued in 2011 prior to launching the Brass LNG gas liquefaction plant project (17%), which calls for the construction of two trains, each with a capacity of 5 Mt/y. Calls for tenders for the construction of the plant and loading facilities are underway.
TOTAL continues its efforts to strengthen its ability to supply gas to the LNG projects in which it owns a stake and to meet the growing domestic demand for gas:
– | On the OML 136 license (40%), the positive results for the Agge 3 appraisal well confirmed the development potential of the license. Development studies are underway. |
– | As part of its joint venture with the Nigerian National Petroleum Company (NNPC), TOTAL is continuing with the project to increase the production capacity of the OML 58 license (40%, operator) from 370 Mcf/d to 550 Mcf/d of gas in 2012. A second phase of this project is expected to allow the development of other resources through these facilities. |
– | On the OML 112/117 licenses (40%), TOTAL continued development studies in 2011 for the Ima gas field. |
On the OML 102 license (40%, operator), TOTAL confirmed the launch of the Ofon phase 2 project in 2011 with the signing of the main construction contracts, with production start-up scheduled for 2014. In 2011 the Group also discovered Etisong North, located 15 km from the Ofon field, which is currently producing. This is the second exploration well on the Etisong hub after the Etisong Main discovery made in 2008. The exploration campaign is expected to continue with two additional wells in 2012.
On the OML 130 license (24%, operator), the Akpo field, which started up in March 2009, reached plateau production of 225 kboe/d in 2010. Production was limited between March and September 2011 by a technical issue on the engine of the gas reinjection compressor (liquids production of 160 kb/d instead of 190 kb/d). On this license, the Group is actively working on the Egina field, for which a development
plan has been approved by the Nigerian authorities. Calls for tender are underway and construction is expected to start in 2012. |
On the OML 138 license (20%, operator), TOTAL finalized the development of the Usan offshore project (180 kb/d, production capacity) with the drilling of production wells, installation of sub-sea equipment and connection to the FPSO. Production started up in February 2012.
TOTAL also strengthened its deep offshore position with the ongoing development of the Bonga Northwest project on the OML 118 license (12.5%).
Due to the relative calm with regard to safety in the Niger Delta region in 2011, it has been possible to maintain oil production operated by the SPDC joint venture, in which TOTAL has a 10% stake, at close to 2010 levels. The SPDC joint venture’s gas production was higher in 2011 as a result of the contribution of the Gbaran-Ubie project, which started up in 2010.
InUganda, TOTAL finalized in February 2012 its farm-in for an interest of 33.33%, which covers the EA-1 and EA-2 licenses as well as the new Kanywataba license and the Kingfisher production license. All of these licenses are located in the Lake Albert region, where oil resources have already been discovered and a substantial potential remains to be explored.
TOTAL will be the operator of EA-1 and partner on the other licenses. TOTAL and its partners Tullow and CNOOC are embarking on an ambitious exploration and appraisal program from 2012 onwards. First priority will be given to the exploration of Kanywataba and EA-1 licenses west of the Nile.
In theRepublic of the Congo, the Group’s production was 123 kboe/d in 2011, compared to 120 kboe/d in 2010 and 106 kboe/d in 2009.
On the Moho Bilondo field (53.5%, operator), which started up in April 2008, drilling of development wells continued until 2010. The field reached plateau production of 90 kboe/d in June 2010.
Two positive appraisal wells (Bilondo Marine 2 & 3) drilled at year-end 2010 in the southern portion of the field confirmed an additional growth potential as an extension of existing facilities. Studies are underway for the development of these additional reserves.
The development of the resources in the northern portion of the field, the potential of which was bolstered by appraisal and exploration wells drilled in 2008 and 2009, is also being examined (Moho North project).
Production on Libondo (65%, operator), which is part of the Kombi-Likalala-Libondo operating license, started up in March 2011. Plateau production has reached 12 kb/d. A substantial portion of the equipment was sourced locally in Pointe-Noire through the redevelopment of a construction site that had been idle for several years.
In theDemocratic Republic of the Congo, following the Presidential decree approving TOTAL’s entry as operator with a 60% interest in Block III of the Graben Albertine, the exploration permit was issued in January 2012 by the Minister of Hydrocarbons for a period of three years. This block is located in the Lake Albert region.
In theRepublic of South Sudan, which became an independent state on July 9, 2011, TOTAL holds an interest in Block B and is preparing with state authorities the resumption of exploration activities on this block.
North America
In 2011, TOTAL’s production in North America was 67 kboe/d, representing 3% of the Group’s overall production, compared to 65 kboe/d in 2010 and 24 kboe/d in 2009.
InCanada, TOTAL signed in December 2010 a strategic partnership with Suncor related to the Fort Hills and Joslyn mining projects and the Voyageur upgrader. The partnership was finalized in March 2011 and allows TOTAL to reorganize around two major hubs the different oil sands assets that it has acquired over the last few years: on the one hand, a Steam Assisted Gravity Drainage (SAGD) hub focused on Surmont’s (50%) ongoing development and, on the other hand, a mining and upgrading hub, which includes the TOTAL-operated Joslyn (38.25%) and Suncor-operated Fort Hills (39.2%) mining projects and the Suncor-operated Voyageur upgrader (49%) project. The Group also has a 50% stake in the Northern Lights mining project (operator) and 100% of a number of oil sands leases acquired through several auction sales. In 2011, the Group’s production was 11 kb/d, compared to 10 kb/d in 2010 and 8 kb/d in 2009.
On the Surmont lease, commercial production in SAGD mode of the first development phase, which started up in late 2007, is now producing around 25 kb/d of bitumen from thirty-five well pairs. The operator plans to drill additional wells in 2012 and to continue to convert the activation method on the existing wells from gas lift to electric submersible pump (ESP) in order to improve production.
In early 2010, the partners of the project decided to launch the construction of the second development
phase. The goal of production start-up from Surmont Phase 2 has been set for 2015 and overall production capacity from the field is expected to increase to 130 kb/d. In April 2011, the authorities issued a license permitting production (phases 1 and 2) of up to 136 kb/d.
The Joslyn lease is expected to be developed through mining, with a first development phase having an anticipated capacity of 100 kb/d.
The basic engineering for the Joslyn North Mine started in March 2010. To take into account changes to the project following the partnership with Suncor, the revision of the basic engineering is expected to be finalized in 2012. A decision to launch the project is planned for 2013.
Public hearings that are necessary for the project to be approved by the Canadian authorities were held in autumn 2010. The project was recommended as being in the public interest in January 2011, and approval from the Alberta authorities (Order in Council, OIC) was obtained in April 2011. The provincial authorizations from the Energy Resources Conservation Board (ERCB) and Alberta Environment were also obtained in May and September 2011, respectively. The project received federal approval (Federal OIC and approval from the Canadian Ministry of the Environment) at the end of 2011. As a result, preliminary site preparation work began in early 2012 and production is scheduled to start in 2018.
TOTAL closed in September 2010 the acquisition of UTS and its main asset: a 20% stake in the Fort Hills lease. In December 2010, as part of their partnership, TOTAL acquired from Suncor an additional 19.2% stake in the lease, thereby increasing its stake to 39.2%. Basic engineering and site preparation work are underway. Start-up of the Fort Hills mining project, which has already been approved by the relevant authorities for a first development phase with a capacity of 160 kb/d, is expected in 2016.
TOTAL had also acquired in late December 2010 a 49% stake in Suncor’s Voyageur upgrader project. This Voyageur upgrader project, which Suncor mothballed at year-end 2008, resumed in 2011 and is expected to start up concurrently with the Fort Hills project. As a consequence, the Group has abandoned its upgrader project in Edmonton.
In 2008, the Group closed the acquisition of Synenco, the two principal assets of which are a 60% stake in the Northern Lights project and 100% of the adjacent McClelland lease. In early 2009, the Group sold to
Sinopec, the other partner in the project, a 10% stake in the Northern Lights project and a 50% stake in the McClelland lease, reducing its equity stake in each of the assets to 50%. The Northern Lights project is expected to be developed through mining. |
In theUnited States, the Group’s production was 56 kboe/d in 2011, compared to 55 kboe/d in 2010 and 16 kboe/d in 2009.
In the Gulf of Mexico:
– | The deep-offshore Tahiti oil field (17%) started producing in 2009 and reached production of 135 kboe/d. Phase 2, which |
– | Development of the first phase of the deep-offshore Chinook project (33.33%) is ongoing. The production test is scheduled to start in mid-2012 after sub-sea work carried out following an incident on one of the risers. |
– | In 2009, TOTAL and Cobalt had signed an agreement related to the merger of their deep offshore acreage, with Cobalt operating the exploration phase. The TOTAL (40%) — Cobalt (60%, operator) alliance’s exploratory drilling campaign was launched in 2009 and the drilling of the first three wells produced disappointing results. This campaign was disrupted due to the U.S. government’s moratorium on offshore drilling operations from May to October 2010 and resumed at the beginning of 2012 with the start of drilling of the Ligurian 2 well. |
– | In April 2010, the Group disposed of its equity stakes in the Matterhorn and Virgo operated fields. |
Following the signature of an agreement in late 2009, a joint venture was set up with Chesapeake to produce shale gas in the Barnett Shale Basin, Texas. Under this joint venture, TOTAL owns 25% of Chesapeake’s portfolio in the area. In 2011, approximately 300 additional wells were drilled, enabling gas production reaching 1.4 Bcf/d in 100% at the end of 2011. Engineers from TOTAL are assigned to the teams led by Chesapeake.
At the end of 2011, TOTAL signed an agreement with Chesapeake and EnerVest to enter into a joint venture. Pursuant to the agreement, TOTAL acquired a 25% share in Chesapeake’s and EnerVest’s liquid-rich area
of the Utica shale play (Ohio). At the end of 2011, thirteen wells have been drilled across the acreage with very promising results seen from each well in terms of productivity and liquid content. |
In 2009, the Group closed the acquisition of a 50% stake in American Shale Oil LLC (AMSO) to develop shale oil technology. The pilot to develop this technology is underway in Colorado.
InMexico, TOTAL is conducting various studies with state-owned PEMEX under a general technical cooperation agreement renewed in July 2011 for a period of five years.
South America
In 2011, TOTAL’s production in South America was 188 kboe/d, representing 8% of the Group’s overall production, compared to 179 kboe/d in 2010 and 182 kboe/d in 2009.
InArgentina, where TOTAL has been present since 1978, the Group operates 30%(1) of the country’s gas production. The Group’s production was 86 kboe/d in 2011, compared to 83 kboe/d in 2010 and 80 kboe/d in 2009.
In Tierra del Fuego, the Group notably operates the Carina and Aries offshore fields (37.5%). The award of the contracts to build the offshore facilities for the development of the Vega Pleyade gas and condensates field is scheduled for 2012. The project is scheduled to start production in 2014 and should make it possible to maintain the production operated by the Group in Tierra del Fuego at around 615 Mcf/d.
In the Neuquén Basin, TOTAL started a drilling campaign in 2011 on its operated licenses in order to assess their shale gas potential. The campaign, which started on the Aguada Pichana (27.3%, operator) and San Roque (24.7%, operator) fields, will be extended subsequently to the Rincon la Ceniza and La Escalonada licenses acquired in 2010 (85%, operator) and to the four fields acquired in 2011: Aguada de Castro (42.5%, operator), Pampa de la Yeguas II (42.5%, operator), Cerro Las Minas (40%) and Cerro Partido (45%).
The connection of satellite discoveries on the edge of the main Aguada Pichana field, particularly in the Las Carceles canyons area, and the increase in compression capacity at San Roque, have extended plateau production of the mature fields in these two blocks.
InBolivia, the Group’s production, primarily gas, amounted to 25 kboe/d in 2011, compared to 20 kboe/d
(1) | Source: Argentinean Ministry of Federal Planning, Public Investment and Services — Energy Secretary. |
in 2010 and 2009. TOTAL has stakes in six licenses: three producing licenses — San Alberto and San Antonio (15%) and Block XX Tarija Oeste (41%), and three licenses in the exploration or appraisal phase — Aquio and Ipati (80%, operator) and Rio Hondo (50%).
Production started up in February 2011 on the gas and condensates Itaú field located on Block XX Tarija Oeste; it is routed to the existing facilities of the neighboring San Alberto field. A development plan for a second phase at Itaú was approved by the local authorities in June 2011. In early 2011, TOTAL decreased its stake in Block XX Tarija Oeste to 41% after divesting 34% and is no longer the operator.
In 2004, TOTAL discovered the Incahuasi gas field on the Ipati Block. Following the interpretation of the 3D seismic shot in 2008, an appraisal well was drilled on the adjacent Aquio Block and the extension of the discovery to the north was confirmed in 2011.
Due to the positive results from the well, TOTAL filed a declaration of commerciality for the Aquio and Ipati Blocks, which was approved by the local authorities in April 2011. Additional appraisal work is underway, notably with the drilling of a second well on the Ipati Block in 2012.
In 2010, TOTAL signed an agreement to dispose of 20% in the Aquio and Ipati licenses to Gazprom. Following approval of the agreement by the Bolivian authorities, TOTAL will have a 60% stake in the licenses.
InBrazil, TOTAL has equity stakes in three exploration blocks: Blocks BC-2 (41.2%) and BM-C-14 (50%) in the Campos Basin, and Block BM-S-54 (20%) in the Santos Basin.
The Xerelete field is mainly located on Block BC2, with an extension on Block BM-C-14. A unitization agreement was finalized by the partners on both blocks and submitted to the authorities for approval in April 2011.
In 2012, pending the authorities’ approval, TOTAL is expected to become operator of the unitized Xerelete field. After seismic reprocessing, a pre-salt prospect was found under the Xerelete discovery made in 2001 at a water depth of 2,400 m. TOTAL is planning to resume drilling activities on the block in 2012.
On Block BM-S-54, a first well was drilled in the pre-salt at the end of 2010 on the Gato do Mato structure, and a significant oil column was found. The appraisal plan approved by the authorities in October 2011 includes testing the Gato do Mato well and, if
that test is successful, drilling a second well on the structure in 2012. As the Gato do Mato structure extends beyond the boundaries of Block BM-S-54 into a free zone, a draft unitization agreement has been submitted to the authorities. |
At the end of 2011, a second structure (Epitonium) identified on Block BM-S-54 was drilled. The results of the well are under analysis.
InColombia, where TOTAL has had operations since 1973, the Group’s production was 11 kboe/d in 2011, compared to 18 kboe/d in 2010 and 23 kboe/d in 2009. The decline in production in 2011 was mainly due to the divestment of TOTAL’s stake in CEPSA, which was finalized in July 2011.
On the Cusiana field (11.6%), production from the project to extract 6 kb/d of LPG started at the end of 2011.
Following the discovery of Huron-1 in 2009 on the Niscota (50%) exploration license and a 3D seismic survey in 2010, the first appraisal well has been underway since mid-2011. A second appraisal well is expected in 2012.
In 2011, TOTAL sold 10% of its stake in the Ocensa oil pipeline, reducing its holding to 5.2%.
In February 2012, TOTAL signed an agreement to sell TEPMA BV. This wholly-owned affiliate of TOTAL holds the working interest in the Cusiana field as well as a participation in OAM and ODC pipelines in Colombia. This transaction is subject to approval by the relevant authorities.
InFrench Guiana, TOTAL owns a 25% stake in the Guyane Maritime license. The license, located about 150 km off the coast, covers an area of approximately 26,000 km2 in water depths ranging from 200 to 3,000 m.
Located around 170 km northeast off Cayenne, drilling of the GM-ES-1 well on the Zaedyus prospect took place in 2011. The well was drilled at water depths of over 2,000 m and reached a vertical depth of 5,908 m below sea level. It revealed two hydrocarbon columns in gravelly reservoirs.
This discovery follows on from the shooting of a 3D seismic survey covering 2,500 km2 on the eastern zone of the Guyane Maritime license.
An extensive drilling campaign and a further 3D seismic survey are planned on the license starting in 2012.
InTrinidad & Tobago, where TOTAL has had operations since 1996, the Group’s production was 12 kboe/d in 2011, compared to 3 kboe/d in 2010 and 5 kboe/d in 2009. TOTAL holds a 30% stake in the offshore Angostura
field located on Block 2C. Production started up in May 2011 on Phase 2, which corresponds to the gas reserves development phase. A drilling campaign on three wells started in mid-2011 in order to increase oil production. An exploration well was also drilled in 2011 and revealed additional gas resources.
In Venezuela, where TOTAL has had operations since 1980, the Group’s production was 54 kboe/d in 2011, compared to 55 kboe/d in 2010 and 54 kboe/d in 2009. TOTAL has equity stakes in PetroCedeño (30.323%), which produces and upgrades extra heavy oil in the Orinoco Belt, in Yucal Placer (69.5%), which produces gas dedicated to the domestic market, and in the offshore exploration Block 4, located in the Plataforma Deltana (49%).
The development phase of the southern portion of the PetroCedeño field was launched in the second half of 2011.
An additional development phase on the Yucal Placer field to increase production capacity from 100 Mcf/d to 300 Mcf/d is under discussion with the authorities.
Asia-Pacific
In 2011, TOTAL’s production in Asia-Pacific was 231 kboe/d, representing 10% of the Group’s overall production, compared to 248 kboe/d in 2010 and 251 kboe/d in 2009.
InAustralia, where TOTAL has held leasehold rights since 2005, the Group owns 24% of the Ichthys project, 27.5% of the GLNG project and nine offshore exploration licenses, including four that it operates, off the northwest coast in the Browse, Vulcan and Bonaparte Basins. In 2011, the Group produced 4 kboe/d due to its stake in GLNG, compared to 1 kboe/d in 2010.
The Ichthys LNG project is aimed at the development of the Ichthys gas and condensates field, located in the Browse Basin. This development includes a floating platform designed for gas production, treatment and export, an FPSO to stabilize and export condensates, an 889 km gas pipeline and an onshore liquefaction plant located in Darwin. The project was launched in early 2012 following completion of the engineering studies, calls for tender and subcontractor selection. The LNG has already been sold under long-term contracts mainly to Asian buyers.
Production capacity is expected to be 8.4 Mt/y of LNG and nearly 1.6 Mt/y of LPG as well as a production of 100 kb/d of condensates at peak. Production start-up is expected at year-end 2016.
In late 2010, TOTAL acquired a 20% stake in the GLNG project, followed by an additional 7.5% stake in
March 2011. This integrated gas production, transport and liquefaction project is based on the development of coal gas from the Fairview, Roma, Scotia and Arcadia fields. The final investment decision was made in January 2011 and start-up is expected in 2015. LNG production is expected to eventually reach 7.2 Mt/y. The preliminary project development and engineering work are continuing. The 420 km pipeline for transporting the gas has received environmental approval. Off the coast near Gladstone, on Curtis Island, site preparations have started with civil engineering, dredging and construction of the initial jetty and the residential compound. |
Following extensive seismic surveying in 2008 and interpretation of the data in 2009, a drilling campaign on two wells started in early 2011 on license WA-403 (60%, operator). As one well demonstrated the presence of hydrocarbons, additional appraisal work will take place on this block (3D seismic).
Three new exploration wells are planned for 2012/2013 on license WA-408 (100%, operator).
In Brunei, where TOTAL has been present since 1986, the Group operates the offshore Maharaja Lela Jamalulalam gas and condensates field located on Block B (37.5%). The Group’s production was 13 kboe/d in 2011, compared to 14 kboe/d in 2010 and 12 kboe/d in 2009. The gas is delivered to the Brunei LNG liquefaction plant.
On Block B, the drilling campaign that started in 2009 continued in 2010 and 2011. Production on the first well started in 2010. The next two wells, which were exploratory, revealed new reserves in the southern portion of the field, for which development studies are underway. A fourth well drilled in 2011 in the southern portion of the field was connected to the production facilities at the end of the year. A ten-year extension of the mining rights period was recently granted by the Brunei government.
On deep-offshore exploration Block CA1 (54%, operator), formerly Block J, exploration operations that had been suspended since May 2003 due to a border dispute between Brunei and Malaysia resumed in September 2010. A seismic survey started before the summer of 2011 and an initial campaign of three drillings started in October 2011.
InChina, the Group has had operations since 2006 on the South Sulige Block, located in the Ordos Basin in the Inner Mongolia province. Following appraisal work by TOTAL, China National Petroleum Corporation (CNPC) and TOTAL agreed in November 2010 to submit to the authorities for approval a development plan under which CNPC is the operator and provides the benefit of its experience in
developing Great Sulige. TOTAL has a 49% stake and provides support in its areas of expertise.
The authorities gave the operator permission to undertake preliminary development work in the spring of 2011. Drilling operations started and additional 3D seismic data was shot in 2011 in preparation for the upcoming drilling campaigns. Start-up of production is expected in 2012.
InIndonesia, where TOTAL has had operations since 1968, the Group’s production was 158 kboe/d in 2011, compared to 178 kboe/d in 2010 and 190 kboe/d in 2009.
TOTAL’s operations in Indonesia are primarily concentrated on the Mahakam permit (50%, operator), which covers in particular the Peciko and Tunu gas fields. TOTAL also has a stake in the Sisi-Nubi gas field (47.9%, operator). TOTAL delivers most of its natural gas production to the Bontang LNG plant operated by the Indonesian company PT Badak. The overall capacity of the eight liquefaction trains of the Bontang plant is 22 Mt/y.
In 2011, gas production operated by TOTAL amounted to 2,227 Mcf/d. The gas operated and delivered by TOTAL accounted for nearly 80% of Bontang LNG’s supply. In addition to gas production, operated condensates and oil production from the Handil and Bekapai fields amounted to 59 kb/d and 23 kb/d, respectively.
On the Mahakam permit:
– | In 2011, the scheduled drilling of additional wells in the main reservoir of the Tunu field continued with increasing density. The second phase of drilling development wells to discover shallow gas reservoirs has started. |
– | On the Peciko field, Phase 7 drilling, which started in 2009, is continuing. |
– | The development of South Mahakam, which includes the Stupa, West Stupa and East Mandu fields, is ongoing. Start-up of production is expected in early 2013. |
On the Sisi-Nubi field, which began production in 2007, drilling operations continue within the framework of a second phase of development. The gas from Sisi-Nubi is produced through Tunu’s processing facilities.
In October 2010, TOTAL closed the acquisition of a 15% stake in the Sebuku permit, where the gas field Ruby was discovered. Development of the field, with the aim of producing 100 Mcf/d of natural gas, started in February 2011. Production start-up is scheduled for the end of 2013.
On the Southeast Mahakam exploration block (50%, operator), the first exploration well (Trekulu 1) completed at the end of 2010 produced negative results.
In May 2010, the Group acquired a 24.5% stake in two exploration blocks — Arafura and Amborip VI — located in the Arafura Sea. Two wells were drilled on these blocks in late 2010/early 2011. The results were negative.
In September 2011, TOTAL signed an agreement to acquire a stake in three exploration blocks located in the southern Makassar Strait (Sageri, 50%, South Sageri, 35% and Sadang, 20%). A first well was drilled on the Sageri block at the end of 2011.
In September 2011, TOTAL also signed an agreement to acquire a stake in an exploration block located in the southern Makassar Strait (South Mandar, 33%). Under the agreement, the Group acquired additional 10% stakes in the South Sageri and Sadang blocks.
In May 2011, TOTAL acquired a 100% stake in the South West Bird’s Head exploration block. The block is located onshore and offshore in the Salawati Basin, in the province of West Papua.
The Group signed a production sharing agreement in March 2011, for a 50% stake in a coal bed methane (CBM) field on the Kutai Timur Block in East Kalimantan province.
In the autumn of 2010, the Group signed an agreement with the consortium Nusantara Regas (Pertamina-PGN) for the delivery of 11.75 Mt of LNG over the period 2012-2022 to a re-gasification terminal located near Jakarta. The first deliveries are expected in the second quarter of 2012.
InMalaysia, TOTAL signed a production sharing agreement in 2008 with state-owned Petronas for the offshore exploration Blocks PM303 and PM324. Following the seismic studies performed in 2009 and 2010, TOTAL withdrew from offshore exploration Block PM303 in early 2011. Exploration work continued on Block PM324 (50%, operator); initial drilling in high pressure/high temperature conditions started in October 2011 and continues in 2012.
TOTAL also signed in November 2010 a new production sharing agreement with Petronas for the deep offshore exploration Block SK 317 B (85%, operator) located off the state of Sarawak. 3D seismic surveys have been carried out on the zone. The results should be available shortly.
InMyanmar, the Group’s production was 15 kboe/d in 2011, compared to 14 kboe/d in 2010 and 13 kboe/d in 2009. TOTAL operates the Yadana field (31.2%), located on offshore Blocks M5 and M6, which produces gas that is delivered primarily to PTT (the Thai state-owned company) to be used in Thai power plants. The Yadana field also supplies the domestic market via a land pipeline and, since June 2010, via a sub-sea pipeline built and operated by Myanmar’s state-owned company MOGE.
InThailand, the Group’s production was 41 kboe/d in 2011 and 2010, compared to and 36 kboe/d in 2009. This comes from the Bongkot (33.33%) offshore gas and condensates field. PTT purchases all of the natural gas and condensates production.
On the northern portion of the Bongkot field, the 3H (three wellhead platforms) development phase came onstream in early 2011. New investments are being made to meet gas demand and maintain plateau production:
– | phase 3J (two well platforms) was launched in late 2010 with start-up scheduled for 2012; |
– | phase 3K (two well platforms) was approved in September 2011 with start-up scheduled for 2013; and |
– | the second low-pressure compressor installation phase to increase gas production was completed in the first quarter of 2012. |
The southern portion of the field (Greater Bongkot South) is also being developed in several phases. This development is designed to include a processing platform, a residential platform and thirteen production platforms. Construction of the facilities started in 2009 and accelerated in 2011 with the installation of the residential and gas processing platforms in August. Production is expected to start in the spring of 2012, with a capacity of 350 Mcf/d.
InVietnam, TOTAL holds a 35% stake in the production sharing agreement for the offshore 15-1/05 exploration block following an agreement signed in 2007 with PetroVietnam. Two oil discoveries were made on the southern portion of the block, one in November 2009 and the other in October 2010. The results from the additional wells drilled on these discoveries between November 2010 and October 2011 are being assessed.
In 2009, TOTAL and PetroVietnam signed a production sharing agreement for Blocks DBSCL-02 and DBSCL-03. The onshore blocks, located in the Mekong Delta region, are held by TOTAL (75%, operator) and PetroVietnam (25%). Based on the seismic information obtained in 2009 and 2010, the partners have decided not to continue the exploration work.
Commonwealth of Independent States (CIS)
In 2011, TOTAL’s production in the CIS was 119 kboe/d, representing 5% of the Group’s overall production, compared to 23 kboe/d in 2010 and 24 kboe/d in 2009.
InAzerbaijan, where TOTAL has had operations since 1996, production was 14 kboe/d in 2011, compared to
13 kboe/d in 2010 and 12 kboe/d in 2009. The Group’s production comes from the Shah Deniz field (10%). TOTAL also holds a 10% stake in South Caucasus Pipeline Company, owner of the South Caucasus Pipeline (SCP) gas pipeline that transports the gas produced in Shah Deniz to the Turkish and Georgian markets. TOTAL also holds a 5% stake in BTC Co., owner of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, which connects Baku and the Mediterranean Sea. In 2009, TOTAL and state-owned SOCAR signed an exploration, development and production sharing agreement for a license located on the Absheron block in the Caspian Sea. TOTAL (40%) is the operator during the exploration phase and a joint operating company will manage operations during the development phase. Drilling of an exploratory well started in early 2011. In September 2011, the well showed the existence of a substantial gas accumulation. The well will be tested in 2012.
Gas deliveries to Turkey and Georgia from the Shah Deniz field continued throughout 2011, at a lower pace for Turkey due to weaker demand than initially forecast. Conversely, SOCAR took greater quantities of gas than provided for by the agreement.
Development studies and business negotiations for the sale of additional gas needed to launch a second development phase in Shah Deniz continued in 2011. In October 2011, SOCAR and Botas, a Turkish state-owned company, signed an agreement on the sale of additional gas volumes and the transfer conditions for volumes intended for the European market. The agreement is expected to enable the start of FEED studies for this second phase in the first quarter of 2012, although some of the commercial provisions of the agreement have yet to be finalized.
InKazakhstan, TOTAL has owned since 1992 a stake in the North Caspian license, which covers the Kashagan field in particular.
The Kashagan project is expected to be developed in several phases. The development plan for the first phase (300 kb/d) was approved in February 2004 by the Kazakh authorities, allowing work to begin on the field. The consortium continues to target first production by year-end 2012.
In October 2008, the members of the North Caspian Sea Production Sharing Agreement (NCSPSA) consortium and the Kazakh authorities signed agreements to end the disagreement that began in August 2007. Their implementation led to a reduction of TOTAL’s share in NCSPSA from 18.52% to 16.81%. The operating structure was reconfigured and the North Caspian Operating Company (NCOC), a joint operating company, was entrusted with the operatorship in January 2009. NCOC supervises and coordinates NCSPSA’s operations.
InRussia, where TOTAL has had operations through its subsidiary since 1991, the Group’s production was 105 kboe/d in 2011, compared to 10 kboe/d in 2010 and 12 kboe/d in 2009. This comes from the Kharyaga field (40%, operator) and TOTAL’s stake in Novatek.
• | In 2007, TOTAL and Gazprom signed an agreement for the first phase of development on the giant Shtokman gas and condensates field, located in the Barents Sea. Under this agreement, Shtokman Development AG (TOTAL, 25%) was created in 2008 to design, build, finance and operate this first development phase, with estimated overall production capacity of 23.7 Bm3/y (0.4 Mboe/d). Engineering studies are underway for the portion of the project that will allow the transport of gas by pipeline through the Gazprom network (offshore development, gas pipeline and onshore gas and condensates processing facilities on the Teriberka site) and for the LNG part of the project, which will allow the export of 7.5 Mt/y of LNG from a new harbor located in Teriberka, representing approximately half of the |
In late 2009, TOTAL closed the acquisition from Novatek of a 49% stake in Terneftegas, which holds a development and production license on the onshore Termokarstovoye field. An appraisal well was drilled in 2010. The results of this well and of the pre-project studies allowed for the final investment decision to be made at year-end 2011.
On the Kharyaga field, work related to the development plan of phase 3 is ongoing. This development plan is intended to maintain plateau production at the 30 kboe/d (in 100%) level reached in late 2009. TOTAL sold 10% of the field to state-owned Zarubezhneft in January 2010, thereby decreasing its interest to 40%.
In the autumn of 2009, TOTAL signed an agreement setting forth the principles of a partnership with KazMunaiGas (KMG) for the development of the Khvalynskoye gas and condensates field, located offshore in the Caspian Sea on the border between Kazakhstan and Russia, under Russian jurisdiction. Gas production is expected to be transported to Russia. Pursuant to this agreement, TOTAL is planning to acquire 17% of KMG’s share.
In March 2011, TOTAL and the Russian listed company Novatek signed a strategic partnership agreement pursuant to which TOTAL acquired a 12.09% stake in Novatek in April 2011, with the intention of both parties for TOTAL to increase its
holding to 15% within 12 months and |
In October 2011, TOTAL and Novatek signed the final agreements for the joint development of the Yamal LNG project. With a 20% stake, TOTAL has become Novatek’s main international partner in the gas liquefaction project. Novatek, which will retain a 51% stake, intends to dispose of the remaining 29% to other partners. The Yamal LNG project covers the development of the South Tambey gas and condensates field, located on the Yamal Peninsula in the Arctic.
Europe
In 2011, TOTAL’s production in Europe was 512 kboe/d, representing 22% of the Group’s overall production, compared to 580 kboe/d in 2010 and 613 kboe/d in 2009.
InDenmark, TOTAL has owned since June 2010 an 80% stake in and the operatorship for licenses 1/10 (Nordjylland) and 2/10 (Nordsjaelland, formerly Frederoskilde). These onshore licenses, the shale gas potential of which has yet to be assessed, cover areas of 3,000 km2 and 2,300 km2, respectively. Following geoscience surveys on license 1/10 in 2011, the decision was made to drill a well during the second half of 2012. Geoscience surveys are ongoing on license 2/10.
InFrance, the Group’s production was 18 kboe/d in 2011, compared to 21 kboe/d in 2010 and 24 kboe/d in 2009. TOTAL’s major assets are the Lacq (100%) and Meillon (100%) gas fields, located in the southwest part of the country.
On the Lacq field, operated since 1957, a carbon capture and storage pilot was commissioned in January 2010, and carbon injection is expected to continue until 2013. In connection with this project, a boiler has been modified to operate in an oxy-fuel combustion environment and the carbon dioxide emitted is captured and re-injected in the depleted Rousse field. As part of TOTAL’s sustainable development policy, this project will allow the Group to assess one of the technological possibilities for reducing carbon dioxide emissions.
Agreements were signed in December 2011 for the sale of the Itteville, Vert-le-Grand, Vert-le-Petit, La Croix Blanche, Dommartin Lettrée and Vic-Bilh assets. Operatorship and production rights for these assets were transferred in January 2012.
The Montélimar exclusive exploration license, awarded to TOTAL in March 2010 (100%) to assess, in particular, the
shale gas potential of the area, was revoked by the government in October 2011. This revocation stemmed from the law of July 13, 2011, prohibiting the exploration and extraction of hydrocarbons by drilling followed by hydraulic fracturing. The Group had, however, submitted the required report to the government, in which it undertook not to use hydraulic fracturing in light of the current prohibition. An appeal has therefore been filed in December 2011 with the administrative court requesting that the judge cancel the revocation of the license.
InItaly, the Tempa Rossa field (75%, operator), discovered in 1989 and located on the unitized Gorgoglione concession (Basilicate region), is one of TOTAL’s principal assets in the country.
In 2011, Total Italia acquired an additional 25% in the Tempa Rossa field, bringing its stake to 75%, as well as shares in two exploration licenses.
Site preparation work started in early August 2008, but the proceedings initiated by the Prosecutor of the Potenza Court against Total Italia led to a freeze in the preparation work (for additional information, see “Item 8. Financial Information — Legal or arbitration proceedings — Italy”). New calls for tenders were launched related to certain contracts that had been cancelled. Drilling of the Gorgoglione 2 appraisal well that started in June 2010 reached its final depth, confirming the results of the other wells. It is expected to be tested in 2012. The extension plan for the Tarente refinery export system, needed for the development of the Tempa Rossa field, was submitted to the Italian authorities in May 2010 and approved at the end of 2011. Site preparation work began and start-up of production is expected in 2015 with a capacity of 55 kboe/d.
InNorway, where the Group has had operations since the mid-1960s, TOTAL has equity stakes in eighty production licenses on the Norwegian continental shelf, seventeen of which it operates. Norway is the largest single-country contributor to the Group’s production, with volumes of 287 kboe/d in 2011, compared to 310 kboe/d in 2010 and 327 kboe/d in 2009.
In the Norwegian North Sea, where numerous development projects have recently been launched, the Group’s production was 205 kboe/d in 2011. The most substantial contribution to production, for the most part non-operated, comes from the Greater Ekofisk Area (Ekofisk, Eldfisk, Embla, etc.).
– | Several projects are underway on the Greater Ekofisk Area, located in the south. The Group owns a 39.9% stake in the Ekofisk and Eldfisk |
fields. The Ekofisk South and Eldfisk 2 projects were launched in June 2011 following approval of the development and operation plans by the authorities. The project relating to the construction and installation of the new Ekofisk living quarters and utilities platform is now in its second year. |
– | On the Greater Hild Area, located in the north and in which the Group has a 51% stake (operator), the Hild development scheme was selected at the end of 2010. The development and operation plan has been submitted to the authorities in early 2012. Approval is expected in 2012, with production start-up scheduled for 2016. |
– | A number of successful exploration and appraisal activities were carried out in the North Sea in the 2009-2011 period. These activities have led to the launch of several development projects, which are already underway or for which approval by the authorities is expected in 2012: |
¡ | In the central section of the North Sea, on license PL102C (40%, operator), a fast-track development project has been launched for the Atla field (formerly known as David), which |
¡ | Gas production on the Beta West field (a satellite of Sleipner, 10%), located in the |
¡ | In the Visund area of the Nordic North Sea on license PL120 (7.7%), the Visund South fast-track development project for the Pan/Pandora discoveries is underway. Start-up of production is expected in 2012. |
¡ | The
Oseberg in the Nordic North Sea. Start-up of oil production is expected |
¡ | The fast-track development project for the Vigdis North East structure (PL089, 5.6%), |
¡ | A positive appraisal well was drilled in 2010 on the |
In the Norwegian Sea, the Haltenbanken area includes the Tyrihans (23.2%), Mikkel (7.7%) and Kristin (6%) fields as well as the Åsgard (7.7%) field and its satellites Yttergryta (24.5%) and Morvin (6%). Morvin started up in August 2010 as planned, with two producing wells. In 2011, the Group’s production in the Haltenbanken area was 63 kboe/d.
The partners decided to go ahead with the Åsgard sub-sea compression project, which will increase hydrocarbon recovery on the Åsgard and Mikkel fields, and the development and operation plan has been submitted to the authorities.
In 2011, TOTAL successfully drilled an exploration well on the Alve North structure on license PL127 (50%, operator) near the Norne field.
In the Barents Sea, LNG production on Snøhvit (18.4%) started in 2007. This project includes development of the Snøhvit, Albatross and Askeladd natural gas fields, as well as the construction of the associated liquefaction facilities. Due to design problems, the plant experienced reduced capacity during the start-up phase. A number of maintenance turnarounds were scheduled to address the issue and the plant is now operating at its design capacity (4.2 Mt/y). In 2011, the Group’s production was 19 kboe/d.
In 2011, TOTAL drilled a positive exploration well on the Norvarg structure in the Barents Sea on license PL535 (40%, operator), which was awarded during the twentieth licensing round.
The Group improved its asset portfolio in Norway by obtaining new licenses and divesting a number of non-strategic assets:
In 2011, TOTAL obtained four new exploration licenses during licensing round APA 2010 (Awards in Predefined Areas), including one as operator. The Group also acquired in 2011 a 40% stake and the role of operator of license PL554, north of Visund. Drilling of an exploration well is expected on the license in 2012. At the beginning of 2012, during licensing round APA 2011, TOTAL obtained eight new licences, including five as operator.
In 2010, the Group divested its stake in the Valhall/Hod fields.
In June 2011, TOTAL announced that it had signed an agreement for the planned sale of its entire stake in Gassled (6.4%) and the associated entities. The sale was effective at the end of 2011.
In theNetherlands, TOTAL has had natural gas exploration and production operations since 1964 and
currently owns twenty-four offshore production licenses, including twenty that it operates, and two offshore exploration licenses, E17c (16.92%) and K1c (30%). In 2011, the Group’s production was 38 kboe/d, compared to 42 kboe/d in 2010 and 45 kboe/d in 2009.
The K5CU development project (49%, operator) was launched in 2009 and production started up in early 2011. This development includes four wells supported by a platform that was installed in 2010 and connected to the K5A platform by a 15 km gas pipeline.
The K4Z development project (50%, operator) began in 2011. This development is comprised of two sub-sea wells connected to the existing production and transport facilities. Start-up of production is expected in early 2013.
In late 2010, TOTAL disposed of 18.19% of its equity stake in the NOGAT gas pipeline and decreased its stake to 5%.
InPoland, at the end of March 2011, TOTAL signed an agreement to acquire a 49% stake in the Chelm and Werbkowice exploration concessions in order to assess their shale gas potential. On the Chelm license, drilling has taken place, the well has been tested and the results from the well are being examined.
In theUnited Kingdom, where TOTAL has had operations since 1962, the Group’s production was 169 kboe/d in 2011, compared to 207 kboe/d in 2010 and 217 kboe/d in 2009. Around 90% of this production comes from operated fields located in two major zones: the Alwyn zone in the northern North Sea, and the Elgin/Franklin zone in the Central Graben.
On the Alwyn zone, start-up of satellite fields or new reservoir compartments allowed production to be maintained. The N52 well drilled on Alwyn (100%) in a new compartment of the Statfjord reservoir came onstream in February 2010 with initial production of 15 kboe/d (gas and condensates). The N53 well was also drilled on Alwyn on the same type of reservoir in 2011 and came onstream in September 2011 with initial production of 4 kboe/d (gas and condensates).
The development project for Islay (100%), a gas and condensates discovery made in 2008 located south of Alwyn, was approved in July 2010. Development is underway and production start-up is expected in the first half of 2012 with a production capacity of 15 kboe/d.
In 2010, TOTAL signed an agreement to divest its stake in the Otter field; its holding fell from 81% to 50% in 2011 and was completely disposed of in February 2012.
In the Central Graben, the development of the Elgin (46.2%, operator) and Franklin (46.2%, operator) fields, in production since 2001, contributed substantially to the Group’s presence in the United Kingdom. At the end of 2011, TOTAL acquired the remaining 22.5% of Elgin Franklin Oil & Gas (EFOG), a company through which it holds a stake in the Elgin and Franklin fields. On the Elgin field, a first infill well came onstream in October 2009 with production of 18 kboe/d. A second infill well started up in May 2010 with production of 12 kboe/d.
Following a gas leak on the Elgin field on March 25, 2012, the production on the Elgin, Franklin and West Franklin fields was stopped and the personnel of the site were evacuated. Investigations are ongoing to determine the causes and the remediation of the gas leak. The Group is actively monitoring the situation (situation as of March 26, 2012).
Additional development of West Franklin through a second phase (drilling of three additional wells and installation of a new platform connected to Elgin) was approved in November 2010. Start-up of production is expected at year-end 2013. The decision was made in 2011 to install a new well platform on the Elgin field. This new platform will be installed in parallel with the West Franklin project and will enable the drilling of new wells on the Elgin field as of 2014.
In addition to Alwyn and the Central Graben, a third area, West of Shetland, is undergoing development. TOTAL increased its equity stake to 80% in the Laggan and Tormore fields in early 2010.
The decision to develop the Laggan/Tormore fields was made in March 2010 and production is scheduled to start in 2014 with an expected capacity of 90 kboe/d. The joint development scheme selected by TOTAL and its partner includes sub-sea production facilities and off-gas treatment (gas and condensates) at a plant located near the Sullom Voe terminal in the Shetland Islands. The gas would then be exported to the Saint-Fergus terminal via a new pipeline connected to the Frigg gas pipeline (FUKA).
In 2010, the Group’s stake in the P967 license (operator), which includes the Tobermory gas discovery, increased to 50% from 43.75%. This license is located north of Laggan/Tormore.
In early 2011, a gas and condensate discovery was made on the Edradour license (75%, operator), near Laggan and Tormore. The development of Edradour using the infrastructures in place is being examined.
TOTAL has stakes in ten assets operated by third parties, the most important in terms of reserves being the Bruce (43.25%) and Alba (12.65%) fields. The Group disposed of its stake in the Nelson field (11.5%) in 2010.
Middle East
In 2011, TOTAL’s production in the Middle East was 570 kboe/d, representing 24% of the Group’s overall production, compared to 527 kboe/d in 2010 and 438 kboe/d in 2009.
In theUnited Arab Emirates, where TOTAL has had operations since 1939, the Group’s production was 240 kboe/d in 2011, compared to 222 kboe/d in 2010 and 214 kboe/d in 2009. The increase in production in 2011 was mainly due to higher production by Abu Dhabi Company for Onshore Oil Operations (ADCO) and Abu Dhabi Marine (ADMA).
In Abu Dhabi, TOTAL holds a 75% stake in the Abu Al Bu Khoosh field (operator), a 9.5% stake in ADCO, which operates the five major onshore fields in Abu Dhabi, and a 13.3% stake in ADMA, which operates two offshore fields. TOTAL also has a 15% stake in Abu Dhabi Gas Industries (GASCO), which produces LPG and condensates from the associated gas produced by ADCO, and a 5% stake in Abu Dhabi Gas Liquefaction Company (ADGAS), which produces LNG, LPG and condensates.
In early 2009, TOTAL signed agreements for a 20-year extension of its stake in the GASCO joint venture starting on October 1, 2008.
In early 2011, TOTAL and IPIC, a government-owned entity in Abu Dhabi, signed a Memorandum of Understanding with a view to developing projects of common interest in the upstream oil and gas sectors.
The Group has a 24.5% stake in Dolphin Energy Ltd. alongside Mubadala, a company owned by the government of the Abu Dhabi Emirate, to market gas produced primarily in Qatar to the United Arab Emirates.
The Group also owns 33.33% of Ruwais Fertilizer Industries (FERTIL), which produces urea. FERTIL 2, a new project, was launched in 2009 to build a new granulated urea unit with a capacity of 3,500 t/d (1.2 Mt/y). This project is expected to allow FERTIL to more than double production so as to reach nearly 2 Mt/y in January 2013.
InIraq, TOTAL bid in 2009 and 2010 on the three calls for tenders launched by the Iraqi Ministry of Oil. The PetroChina-led consortium that includes TOTAL (18.75%) was awarded the development and production contract for the Halfaya field during the second call for tenders held in December 2009. This field is located in the
province of Missan, north of Basra. The agreement became effective in March 2010 and the preliminary development plan was approved by the Iraqi authorities in September 2010. Development operations started with the shooting of the 3D seismic survey, drilling and the construction of surface facilities. A production level of 70 kb/d of oil is expected to be reached in 2012.
InIran, the Group’s production under buy back agreements was zero in 2011, having been 2 kb/d in 2010 and 8 kb/d in 2009. For additional information on TOTAL’s operations in Iran, see “— Other Matters — Business Activities in Cuba, Iran, Sudan and Syria”.
InOman, the Group’s production was 36 kboe/d in 2011, stable compared to 2010 and 2009. TOTAL produces oil mainly on Block 6 as well as on Block 53 and liquefied natural gas through its stakes in the Oman LNG (5.54%)/Qalhat LNG (2.04%(1)) liquefaction plant, which has a capacity of 10.5 Mt/y.
InQatar, where TOTAL has had operations since 1936, the Group has equity stakes in the Al Khalij field (100%), the NFB Block (20%) in the North field, the Qatargas 1 liquefaction plant (10%), Dolphin (24.5%) and train 5 of Qatargas 2 (16.7%). The Group’s production was 155 kboe/d in 2011, compared to 164 kboe/d in 2010 and 141 kboe/d in 2009.
The production contract for Dolphin, signed in 2001 with state-owned Qatar Petroleum, provides for the sale of 2 Bcf/d of gas from the North Field for a 25-year period. The gas is processed in the Dolphin plant in Ras Laffan and exported to the United Arab Emirates through a 360 km gas pipeline.
Production from train 5 of Qatargas 2, which started in September 2009, reached its full capacity (7.8 Mt/y) at year-end 2009. TOTAL has owned an equity stake in this train since 2006. In addition, TOTAL takes part of the LNG produced in compliance with the contracts signed in 2006, which provide for the purchase of 5.2 Mt/y of LNG from Qatargas 2 by the Group.
The Group also has a 10% stake in Laffan Refinery, a condensate splitter with a capacity of 146 kb/d that started up in September 2009. Finally, since May 2011 the Group has been a partner (25%) in the offshore BC exploration license.
InSyria, TOTAL is present on the Deir Ez Zor license (100%, operated by DEZPC, 50% of which is owned by TOTAL) and through the Tabiyeh contract that became effective in October 2009. The Group’s production from these two assets was 53 kboe/d in 2011, compared to 39 kboe/d in 2010 and 20 kboe/d in 2009. In early December 2011, TOTAL ceased its activities that contribute to oil and gas production in Syria.
For additional information on TOTAL’s operations in Syria, see “— Other Matters — Business Activities in Cuba, Iran, Sudan and Syria”.
InYemen, where TOTAL has had operations since 1987, the Group’s production was 86 kboe/d in 2011, compared to 66 kboe/d in 2010 and 21 kboe/d in 2009.
TOTAL has an equity stake in the Yemen LNG project (39.62%). As part of this project, the Balhaf liquefaction plant on the southern coast of Yemen is supplied with the gas produced on Block 18, located near Marib in the center of the country, through a 320 km gas pipeline. The two liquefaction trains were commissioned in October 2009 and April 2010, respectively. The plant has a nominal capacity of 6.7 Mt/y of LNG.
TOTAL also has stakes in the country’s two oil basins, as the operator of Block 10 (Masila Basin, East Shabwa license, 28.57%) and as a partner on Block 5 (Marib Basin, Jannah license, 15%).
TOTAL owns stakes in four onshore exploration licenses: 40% in Blocks 69 and 71, 50.1% in Block 70 (operated by TOTAL since July 2010), and 36% in Block 72 (operated by TOTAL since October 2011).
In March 2012, TOTAL acquired a 40% interest in the Block 3 exploration license, which it will operate. The acquisition is subject to the approval of Yemen’s Ministry of Oil and Mineral Resources.
(1) | TOTAL’s
OIL AND GAS ACREAGE
NUMBER OF PRODUCTIVE WELLS
NUMBER OF NET OIL AND GAS WELLS DRILLED ANNUALLY
DRILLING AND PRODUCTION ACTIVITIES IN PROGRESS
INTERESTS IN PIPELINES The table below sets forth TOTAL’s interests in oil and gas pipelines as of December 31, 2011.
|
(a) | |||
Interest of Total Gabon. The |
33
Gas & Power
The Gas & Power division is primarily focused on the optimization of the Group’s gas resources. The division is active in the transport, trading and marketing of natural gas, liquefied natural gas (LNG) and electricity, LNG re-gasification and natural gas storage. It is also engaged in shipping and trading of liquefied petroleum gas (LPG), power generation from gas-fired power plants or renewable energies, and coal production, trading and marketing.
The Gas & Power division is also developing new energies that emit fewer greenhouse gases to complement hydrocarbons so as to meet the increasing global demand for energy. For this purpose, the Group has two main focuses:
the upstream/downstream integration of the solar photovoltaic channel (achieved through the acquisition of a 60% stake in SunPower in 2011);
the thermochemical and biochemical conversion of feedstock into fuels or chemicals.
In these fields, TOTAL pursues and strengthens R&D in solar energy, conversion processing of biomass, gas and coal, energy storage, carbon capture and storage and gas technologies.
In parallel, the Group is closely monitoring nuclear power generation and its outlook.
Liquefied natural gas
A pioneer in the LNG industry, TOTAL today ranks second worldwide among international oil companies(1) and has sound and diversified positions both in the upstream and downstream portions of the LNG chain. LNG development is key to the Group’s strategy, with TOTAL strengthening positions in most major production zones and markets.
Through its stakes in liquefaction plants located in Indonesia, Qatar, the United Arab Emirates, Oman, Nigeria, Norway and, since 2009, Yemen, TOTAL markets LNG in all worldwide markets. In 2011, TOTAL sold 13.2 Mt of LNG, an increase of 7.3% compared to 2010 LNG sales (12.3 Mt) and of 48.3% compared to 2009 sales (8.9 Mt). The start-up of the Angola LNG plant in 2012, together with the Group’s liquefaction projects in Australia, Nigeria and Russia, are expected to allow for growth to continue in the coming years.
The Gas & Power division is responsible for LNG operations downstream from liquefaction plants.(2) It is in
charge of LNG marketing to third parties on behalf of the Exploration & Production division, building up the Group’s LNG portfolio for its trading, marketing and transport operations as well as re-gasification terminals.
InNigeria, TOTAL holds a 15% interest in the Nigeria LNG plant (NLNG). The Group signed an LNG purchase agreement, initially intended for deliveries to the United States and Europe, for an initial 0.23 Mt/y over a 23-year period starting in 2006, to which an additional 0.94 Mt/y was added when the sixth train came on stream in December 2007.
TOTAL also holds a 17% stake in the Brass LNG project, which calls for the construction of two liquefaction trains, each with a capacity of 5 Mt/y. In conjunction with this acquisition, TOTAL signed a preliminary agreement with Brass LNG Ltd setting forth the principal terms of an LNG purchase agreement for approximately one-sixth of the plant’s capacity over a 20-year period. This contract is subject to the final investment decision for the project by Brass LNG.
InNorway, as part of the Snøvhit project, in which the Group holds an 18.4% stake, TOTAL signed in 2004 a purchase agreement for 0.78 Mt/y of LNG over a 15-year period primarily intended for North America and Europe. Deliveries started in 2007.
InQatar, TOTAL signed purchase agreements in 2006 for 5.2 Mt/y of LNG from train 5 (TOTAL, 16.7%) of Qatargas 2 over a 25-year period. This LNG is expected to be marketed mainly in France, the United Kingdom and North America. LNG production from this train started in September 2009.
InYemen, TOTAL signed an agreement with Yemen LNG Ltd (TOTAL, 39.62%) in 2005 to purchase 2 Mt/y of LNG over a 20-year period, starting in 2009, which is initially intended for delivery in the United States and Europe. LNG production from Yemen LNG’s first and second trains started in October 2009 and April 2010, respectively.
Since 2009, part of the volume purchased by the Group pursuant to its long-term contracts related to the LNG projects mentioned above has been diverted to higher-value markets in Asia.
InAngola, TOTAL is involved in the construction of the Angola LNG liquefaction plant (TOTAL, 13.6%), which includes a 5.2 Mt/y train expected to start up in 2012. As
(2) | The Exploration & Production division is in charge of the
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part of this project, TOTAL signed in 2007 a re-gasified gas purchase agreement for 13.6% of the quantities produced over a 20-year period.
InAustralia, TOTAL holds a 24% stake in the Ichthys LNG project, which calls for the construction of two LNG trains, each with a capacity of 4.2 Mt/y. In conjunction with this acquisition, TOTAL signed an LNG purchase agreement for 0.9 Mt/y over a 15-year period. The final investment decision of the partners of the Ichthys LNG project was made in January 2012.
InChina, TOTAL signed in 2008 an LNG sale agreement with China National Offshore Oil Company (CNOOC). This agreement, starting in 2010 for a 15-year period, provides for the supply by TOTAL of up to 1 Mt/y of LNG to CNOOC. The gas supplied comes from the Group’s global LNG portfolio.
InSouth Korea, TOTAL signed an LNG sale agreement in 2011 with Kogas. Under this agreement, TOTAL will deliver up to 2 Mt/y of LNG to Kogas between 2014 and 2031. This gas will come from the Group’s global LNG portfolio.
With regard to LNG transport operations, since 2004 TOTAL has been the direct long-term charterer of the Arctic Lady, a 145,000 m3 LNG tanker that ships TOTAL’s share of production from the Snøvhit liquefaction plant in Norway. In November 2011, TOTAL signed a second long-term contract for the chartering of a 165,000 m3 LNG tanker, the Maersk Meridian, in order to strengthen its transport capacities with regards again to its lifting commitments in Norway.
The Group also holds a 30% stake in Gaztransport & Technigaz (GTT), which focuses mainly on the design and engineering of membrane cryogenic tanks for LNG tankers. At year-end 2011, out of a worldwide tonnage estimated at 386 LNG tankers(1), 258 active LNG tankers were equipped with membrane tanks built under GTT licenses.
Trading
In 2011, TOTAL continued to pursue its strategy of developing its operations downstream from natural gas and LNG production. The aim of this strategy is to optimize access for the Group’s current and future production to traditional markets (with long-term contracts) and to markets open to international competition (with short-term contracts and spot sales). In the context of deregulated markets, which allow customers to more freely access suppliers, in turn leading to new marketing arrangements
that are more flexible than traditional long-term contracts, TOTAL is developing trading, marketing and logistics businesses to offer its natural gas and LNG production directly to customers.
In parallel, the Group has operations in electricity trading and LPG as well as coal marketing.
Furthermore, in 2011 TOTAL began to market the petcoke production of the Port Arthur refinery (United States) on the international market.
The Gas & Power division’s trading teams are located in London, Houston, Geneva and Singapore and conduct most of their business through the Group’s wholly-owned subsidiaries Total Gas & Power and Total Gas & Power North America.
Gas and electricity
TOTAL has gas and electricity trading operations in Europe and North America with a view to selling the Group’s production and supplying its marketing subsidiaries.
InEurope, TOTAL marketed 1,500 Bcf (42.5 Bm3) of natural gas in 2011, compared to 1,278 Bcf (36.2 Bm3) in 2010 and 1,286 Bcf (36.5 Bm3) in 2009, including approximately 12% coming from the Group’s production. In addition, TOTAL marketed 24.2 TWh of electricity in 2011, compared to 27.1 TWh in 2010 and 35 TWh in 2009, which came mainly from external resources.
InNorth America, TOTAL marketed 1,694 Bcf (48 Bm3) of natural gas in 2011, compared to 1,798 Bcf (51 Bm3) in 2010 and 1,586 Bcf (45 Bm3) in 2009, supplied by its own production or external resources.
LNG
TOTAL has LNG trading operations through spot sales and fixed-term contracts as described in “— Liquefied natural gas” above. Since 2009, new purchase agreements (Qatargas 2, Yemen LNG) and new sale agreements (China, India, Thailand, South Korea and Japan) have substantially developed the Group’s LNG marketing operations, particularly in Asia’s most buoyant markets. This spot and fixed-term LNG portfolio allows TOTAL to supply gas to its main customers worldwide, while retaining a sufficient degree of flexibility to react to market opportunities.
In 2011, TOTAL purchased 99 contractual cargos and 10 spot cargos from Qatar, Yemen, Nigeria, Norway, Russia and Egypt, compared to 94 and 12, respectively, in 2010 and 23 and 12, respectively, in 2009.
(1) | Gaztransport & Technigaz data.
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LPG
In 2011, TOTAL traded and sold approximately 5.7 Mt of LPG (butane and propane) worldwide, compared to 4.5 Mt in 2010 and 4.4 Mt in 2009. Approximately 28% of these quantities came from fields or refineries operated by the Group. LPG trading involved the use of 7 time-charters, representing 188 voyages in 2011, and approximately 142 spot charters.
Coal
In 2011, TOTAL marketed 7.5 Mt of coal in the international market, compared to 7.3 Mt in 2010 and 2009. Approximately 70% of this coal comes from South Africa. More than three-quarters of the volume was sold in Asia, where coal is used primarily to generate electricity, with the remaining volume marketed in Europe.
Petcoke
In 2011, TOTAL began to market the petcoke produced by the coker at the Port Arthur refinery. Approximately 0.6 Mt of petcoke was sold on the international market in 2011 to cement plants and electricity producers, mainly in Mexico, Brazil, Turkey and China.
Marketing
To unlock value from the Group’s production, TOTAL has gradually developed gas, electricity and coal marketing operations with end users in the United Kingdom, France, Spain and Germany.
In theUnited Kingdom, TOTAL sells gas and power to the industrial and commercial segments through its subsidiary Total Gas & Power Ltd. In 2011, volumes of gas sold amounted to 162 Bcf (4.6 Bm3), compared to 173 Bcf (4.9 Bm3) in 2010 and 130 Bcf (3.7 Bm3) in 2009. Sales of electricity totaled approximately 4.1 TWh in 2011, stable compared to 2010 and 2009.
InFrance, TOTAL markets natural gas through its subsidiary Total Energie Gaz (TEGAZ), the overall sales of which were 208 Bcf (5.9 Bm3) in 2011, compared to 226 Bcf (6.4 Bm3) in 2010 and 208 Bcf (5.9 Bm3) in 2009. The Group also markets coal to its French customers through its subsidiary CDF Energie, with sales of approximately 1.2 Mt in 2011, compared to 1.3 Mt in 2010 and 1 Mt in 2009.
InSpain, TOTAL markets natural gas to the industrial and commercial segments through Cepsa Gas Comercializadora, in which it holds a 35% stake. In 2011, volumes of gas sold amounted to 85 Bcf (2.4 Bm3), like in 2010 and compared to 70 Bcf (2 Bm3) in 2009.
InGermany, Total Energie created a marketing subsidiary in 2010, Total Energy Gas GmbH, which began
commercial operations in 2011, making its first sales to industrial customers and service companies.
The Group also holds stakes in the marketing companies that are associated with the Altamira and Hazira LNG re-gasification terminals located in Mexico and India, respectively.
Gas facilities
TOTAL develops and operates its natural gas transport networks, gas storage facilities (both liquid and gaseous) and LNG re-gasification terminals downstream from its natural gas and LNG production.
Transport of natural gas
InFrance, the Group’s transport operations located in the southwest of the country are grouped under Total Infrastructures Gaz France (TIGF), a wholly-owned subsidiary of the Group. This subsidiary operates a regulated transport network of 5,000 km of gas pipelines. As part of the development of Franco-Spanish interconnections, TOTAL decided in 2011 to complete the Euskadour (France-Spain link) project with commissioning scheduled in 2015. This decision followed the decisions made in 2010 to invest in the Artère du Béarn and Girland gas pipeline projects (reinforcement of Artère de Guyenne), with commissioning scheduled in 2013.
Another highlight of 2011 was the implementation by TIGF of the Third Energy Package adopted by the European Union in July 2009, which entails splitting network operations from production and supply operations.
InSouth America, TOTAL owns interests in several natural gas transport companies in Argentina, Chile and Brazil. These assets represent a total integrated network of approximately 9,500 km of pipelines serving the Argentinean, Chilean and Brazilian markets from gas-producing basins in Bolivia and Argentina, where the Group has natural gas reserves. These natural gas transport companies are challenged by a difficult operational and financial environment in Argentina stemming from the absence of an increase in transport tariffs and the restrictions imposed on gas exports. The Group successfully negotiated in 2011 financial arrangements with some of its customers, which resulted in a significant improvement in earnings for GasAndes, a company in which TOTAL holds a 56.5% stake.
Storage of natural gas and LPG
InFrance, the Group’s storage operations located in the southwest are grouped under TIGF. This subsidiary operates two storage units under a negotiated legal regime with a usable capacity of 92 Bcf (2.6 Bm3).
Through its 35.5% stake in Géométhane, TOTAL owns natural gas storage in a salt cavern in Manosque with a capacity of 10.5 Bcf (0.3 Bm3). A proposed 7 Bcf (0.2 Bm3) increase in storage capacity was approved in February 2011, with commissioning scheduled in 2017-2018.
InIndia, TOTAL holds a 50% stake in South Asian LPG Limited (SALPG), a company that operates an underground import and storage LPG terminal located on the east coast of the country. This cavern, the first of its kind in India, has a storage capacity of 60 kt. In 2011, inbound vessels transported 850 kt of LPG, compared to 779 kt in 2010 and 606 kt in 2009.
LNG re-gasification
TOTAL has entered into agreements to obtain long-term access to LNG re-gasification capacity on the three continents that are the largest consumers of natural gas: North America (the United States and Mexico), Europe (France and the United Kingdom), and Asia (India). This diversified presence allows the Group to access new liquefaction projects by becoming a long-term buyer of a portion of the LNG produced at these plants, thereby strengthening its LNG supply portfolio.
InFrance, TOTAL holds a 27.6% stake in Société du Terminal Méthanier de Fos Cavaou (STMFC) and has, through its affiliate Total Gas & Power, a re-gasification capacity of 2.25 Bm3/y. The terminal received 59 vessels in 2011.
In 2011, TOTAL acquired a 9.99% stake in Dunkerque LNG (EDF 65%, operator) in order to develop a methane terminal project with a capacity of 13 Bm3/y. Trade agreements have also been signed which allow TOTAL to reserve up to 2 Bm3/y of re-gasification capacity over a 20-year period. Commissioning of the terminal is scheduled for the end of 2015.
In theUnited Kingdom, through its equity interest in the Qatargas 2 project, TOTAL holds an 8.35% stake in the South Hook LNG re-gasification terminal and an equivalent right of use to the terminal. Phase 2 of the terminal was commissioned in April 2010, which increased the terminal’s total capacity to 742 Bcf/y (21 Bm3/y). The terminal operates at nearly 80% of its capacity and in 2011 re-gasified nearly 100 cargoes from Qatar.
InCroatia, TOTAL is involved in the study of an LNG re-gasification terminal on Krk Island, on the northern Adriatic coast.
InMexico, TOTAL sold in 2011 its entire stake in the Altamira re-gasification terminal. However, TOTAL retained
its 25% reservation of the terminal’s capacity,i.e., 59 Bcf/y (1.7 Bm3/y) through its 25% stake in Gas del Litoral.
In theUnited States, TOTAL has reserved a re-gasification capacity of approximately 353 Bcf/y (10 Bm3/y) at the Sabine Pass terminal (Louisiana) for a 20-year period ending in 2029.
InIndia, TOTAL holds a 26% stake in the Hazira terminal, which has a natural gas re-gasification capacity of 177 Bcf/y (5 Bm3/y). The terminal, located on the west coast of India in the Gujarat state, is a merchant terminal with operations that cover both LNG re-gasification and gas marketing. After a year of sluggish activity in 2010, the terminal’s full capacities are under contract for 2011 and 2012. The Indian market’s strong growth prospects have led to a decision to increase the terminal’s capacity to 230 Bcf/y (6.5 Bm3/y) starting in 2013.
Electricity generation
In a context of increasing global demand for electricity, TOTAL has developed expertise in the power generation sector, especially through cogeneration and combined cycle power plant projects.
The Group is also involved in power generation projects from renewable sources and is closely monitoring nuclear power generation and its outlook.
Electricity from conventional energy sources
In addition, following the enactment of the Third Energy Package by the European Union in July 2009, which provides for splitting network operations from production and supply operations, TOTAL and TIGF are reviewing adaptations to be implemented before the regulation becomes effective in France starting in March 2012.
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InNigeria, TOTAL and its partner, the state-owned NNPC (NigerianNigerian National Petroleum Corporation)Corporation (NNPC), own interests in two gas-fired power plant projects that are part of the government’s objectives to develop power generation and increase the share of natural gas production for domestic use:
The Afam VI project, part of the Shell Petroleum Development Company (SPDC) joint venture in which TOTAL holds a 10% stake, concerns the development of a 630 MW combined-cycle power plant. Commercial operations started in December 2010.
The development of a new 417 MW combined-cycle power plant near the city of Obite (Niger Delta) in
connection with the OML 58 gas project, part of the joint venture between NNPC and TOTAL (40%, operator). A final investment decision is expected in the first half of |
InThailand, TOTAL owns 28% of EPEC (EasternEastern Power and Electric Company Ltd),Ltd, which operates the combined-cycle gas power plant ofin Bang Bo, with a capacity of 350 MW, in operation since 2003. The plant’s production is sold to EGAT (Electricitythe Electricity Generating Authority of Thailand) as part ofThailand under a long-term agreement.
Electricity from nuclear energy sources
InFrance, TOTAL partners with EDF and other players through its 8.33% interest in the second French EPR project in Penly, in the northwest of the country, for which studies are underway.
The Group continues to review other opportunities in the countries where it operates and favors partnerships with experienced, recognized nuclear operators, and is closely monitoring the impact that the serious situation in Japan may have on the development of certain nuclear projects worldwide.
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In concentrated solar power, TOTAL, (20%), in partnership with Spanish company Abengoa (20%),Solar, won the call for tenders for the construction and 20-year operation for twenty years of a 109 MW concentrated solar power plant in Abu Dhabi. As part of thisThe Shams project TOTAL(TOTAL, 20%) is partneringbeing carried out in partnership with MASDARMasdar through the Abu Dhabi Future Energy Company, (ADFEC), which ownsholds a 60% intereststake in the joint venture created for the project. Construction work started in July 2010 andstart-up is expected induring the summersecond semester of 2012. The plant’s production will be sold to Abu Dhabi Water and Electricity Company (ADWEC).
In wind power, TOTAL owns a 12 MW wind farm in Mardyck (near Dunkirk, France), which was commissioned in 2003.
With respect to marine energy, TOTAL holds a 16% interest26.6% share in Scotrenewables Marine Power, located in the Orkney Islands in Scotland.Start-up and tests of Tests are being conducted on a 250 kW prototype are expected in 2011.
Solar photovoltaicenergy
TOTAL is developing upstream operations through industrial production and downstream marketing activities.activities in the photovoltaic sector based on crystalline silicon technology. The Group is also pursuing R&D in this field through several partnerships.
In 2011, TOTAL took a major step toward implementing its solar photovoltaic strategy, where the Group has been active since 1983, by acquiring a majority stake in the U.S. company SunPower.
Production of solar-grade polysiliconSolar photovoltaic
SunPower
In June 2010,2011, following a friendly takeover bid, TOTAL announcedacquired 60% of SunPower, a U.S. company based in San Jose, California and listed on NASDAQ (NASDAQ: SPWR). TOTAL now appoints the majority of the members of SunPower’s board of directors. SunPower is an integrated player that it acquired a 25.4% interestdesigns, manufactures and supplies the highest-efficiency solar panels in theU.S. start-up AE Polysilicon Corporation (AEP) market. It is active throughout the solar chain, from cell production to the design and construction of turnkey large power plants.
Upstream, SunPower manufactures all of its cells in Asia (Philippines, Malaysia). In 2011, SunPower operated twelve cell manufacturing lines at its cell manufacturing plant in Melaka, Malaysia (SunPower, 50%), which has developed a new processcapacity of 600 MWp/y. SunPower’s overall cell production capacity at the beginning of 2012 was 1,300 MWp/y.
Downstream, SunPower is present in most major geographic markets (United States, Europe, Australia and Asia), with operations ranging from residential roof tiles to large solar power plants.
A specific R&D agreement between TOTAL and SunPower has also been signed.
As of January 2012, TOTAL owns 66% of SunPower following the Tenesol transaction described below.
Tenesol
Tenesol is a French company that designs, manufactures, markets, installs and operates continuously to produce cost-competitive solar-grade granular polysilicon. The technology developed by AEP is currently being industrialized. This production unit,solar photovoltaic systems. In October 2011, TOTAL became the commissioningsole shareholder of Tenesol after having finalized the acquisition of its EDF partner’s shares (excluding overseas activities). Tenesol owns solar panel manufacturing plants (South Africa, France), which started in 2010, is expected to eventually have a nominaltotal capacity equivalent to 1,800 t/y of solar-grade polysilicon.
TOTAL and SunPower reached an agreement whereby, in 2012, Tenesol’s operations, along with the solar panel plant in Moselle, northeastern France (see “— Other assets” below), became part of photovoltaic solar cellsSunPower.
Photovoltech
TOTAL holds a 50% interest in Photovoltech, a Belgian company specialized in manufacturing multicrystalline photovoltaic cells. In 2010,2011, Photovoltech increasedfinalized the overallramp-up of its third production line, raising the total production capacity of its Tirlemont (Tienen) plant in Tienen, Belgium to 155 MWc/y following the installation of a third production line. Photovoltech’s sales in 2010 were approximately €104 million in 2010, an increase of about 30% compared to 2009.MWp/y.
Other assets
In R&D,2011, TOTAL is continuing its partnership with the IMEC (Interuniversity MicroElectronics Center), based at the University of Leuven (Belgium), to sharply reduce the use of silicon while increasing the efficiency of cells in order to substantially lower costs of this technology.
In addition, Tenesol’s overseas activities remain 50-50 subsidiaries of construction workTOTAL and EDF through a new company named Sunzil.
Finally, the Group is expected in the first half of 2011 with a commissioning at year-end.
Solar photovoltaic market context in 2011
In 2011, the photovoltaic sector was forced to cope with a difficult environment marked by excess cell production capacity and modification or cancellation of subsidy programs. This transition period is expected to result in a consolidation of the sector followed by the emergence of a competitive industry. As a clean energy, solar power has a large potential and should eventually become an indispensible part of the energy mix.
New solar technologies
TOTAL has committed to developing innovative technologies to improve its portfolio of solar projects. The Group has major R&D programs through partnerships with major laboratories and international research institutes in France and abroad (includingabroad.
In the United States, Switzerland,upstream solar chain, TOTAL holds a 30% stake in AE Polysilicon Corporation (AEP), a U.S. company based near Philadelphia, Pennsylvania. AEP has developed a new continuous process to produce solar-grade granular polysilicon.
With respect to the production of crystalline silicon cells and panels, the Group is continuing its partnership with the Interuniversity MicroElectronics Center (IMEC) near the University of Leuven, Belgium, in an effort to increase the efficiency of solar cells.
Regarding thin-film technologies and Germany).silicon-based nano-materials, in 2009 the Group partnered with the Laboratoire de Physique des Interfaces et des Couches Minces de l’Ecole Polytechnique (LPICM) and the French National Center for Scientific Research (CNRS) to set up a joint research team in the Saclay area in France. TOTAL also entered into a research partnership with Toulouse-based Laboratoire d’analyse et d’architecture des
systèmes (LAAS) to develop associated electrical systems. The aim of these partnerships is to improve the efficiency of the photovoltaic chain in order to substantially lower costs in this sector.
In organic solar organic technologies, the Group acquired a stake inapproximately 25% of theU.S. start-up Konarka in 2008 and owns approximately 25%.2008. Since 2009, Konarka Technologies Inc has carried out research projects in cooperation with TOTAL to develop solar film on a large scale.
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ConversionBiotechnologies — conversion of biomass
TOTAL is exploring a number of avenues for developing biomass depending on the resource used, (type, location, harvesting, transportation, etc.)the nature of the target markets (e.g., the type of molecules and markets targeted (fuels,fuels, lubricants, petrochemicals, specialty chemicals, etc.)chemicals) and the conversion processes.
The Group focuses onhas chosen to target the two primary conversion processes: biological and thermochemical biomass conversion processes.
In June 2010, TOTAL entered into a strategic partnership with Amyris Inc., aU.S. start-up specializing in biotechnologies. The Group acquired an interesta stake in Amyris’ share capital (approximately 22% at year-end 2010)(21.28% as of February 24, 2012) and signed a collaboration framework agreement that includes research, development, production and marketing partnerships as well aswith the creation of an R&D team.
Amyris owns a cutting-edge industrial synthetic biological platform designed to create and optimize micro-organisms (yeasts, algae, bacteria) that can convert sugarsugars into fuels and chemicals. Amyris owns research laboratories and a pilot unit in California as well as a pilot plant and a demonstration facility in Brazil. Today,Industrial production of farnesene began in 2011 at three partner sites (in Brazil, the projectUnited States and Spain) representing a nominal annual capacity of 50,000 m³. A fourth production site is in the industrialization phaseas well under construction and production is expected tostart-upshall be completed in 2012.
In addition, the Group continues to develop a network of R&D collaborationspartnerships, including with the Joint BioEnergy Institute (JBEI) Novogy (United States), the University of Wageningen (Holland) and the Toulouse White Biotechnology consortium (TWB) (France) in the field of technologiestechnology segments that are complementary with Amyris’ platform: deconstruction of ligno-cellulose,lignocelluloses and new biosynthesis processes.
The Group is also assessing the potential of phototrophic processes and bio-engineering of microalgae. In December 2011, it entered into a partnership with Cellectis S.A. in exploratory research on molecules similar to petroleum products, from microalgae, for microalgaethe energy and other phototrophic organisms.
Carbochemistry
DME
TOTAL is involved in a program to develop new carbon capture and storage technologies to reduce the environmental footprint of the Group’s industrial projects based on fossil energy.
In partnership with the FrenchIFP Énergies Nouvelles(French (French Institute for Oil and New Energies Institute)Alternative Energies), TOTAL is involved in an R&D program related to chemical looping combustion, a new process to burn solid and gas feedstock that includes carbon capture at a very low energy cost. In 2010, this partnership resulted in the construction of a demonstration pilot at the Solaize site (France).in France. A large-scale pilot is expected to be commissioned in 2013.
The Group is also involved in the EU-co-funded Carbolab project that intends to validate the carbon storage technology in coal seams.seams and coalbed methane recovery.
DME
TOTAL is involved in the European “Bio-DME” project in Sweden, the goal of which is to validate a di-methyl ether
(DME) production chain through gasification of black liquor generated by a pulp mill. The pilot plant located in Pitea successfully came into production at the end of 2011. To date, three metric tons of bio-DME that meet the Group’s specifications for use as fuel have already been produced.
In addition, to support the commercial development of DME, TOTAL is involved with eight Japanese companies in a program intended to heighten consumers’ awareness of this new fuel in Japan. The 80 kt/y production plant (TOTAL, 10%), located in Niigata, started up in 2009.
Finally, via the International DME Association (IDA), TOTAL is participating in studies on the combustion of blends that include DME and in standardization efforts regarding the use of DME as fuel.
Coal production
For nearly thirty years, TOTAL has produced and exported coal from South Africa primarily to Europe and Asia.
With thestart-up of production on the TumeloDorstfontein East mine in 2009,2011, the subsidiary Total Coal South Africa (TCSA) owns and operates fourfive mines in South Africa. A fifth mine is under construction in Dorstfontein, withstart-up expected at year-end 2011, and development of a sixth mine is underway in Forzando withstart-up expected in 2013. The Group is also studying severalcontinues to study other projects aimed at developing its mining development projects.
The South African coal produced by TCSA or bought from third-party’sthird-parties’ mines is either marketed locally or exported through the port of Richard’s Bay, in which TOTAL hasholds a 5.7% interest.
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The 2011 Downstream segment comprisescomprised TOTAL’s Refining & Marketing and Trading & Shipping divisions.
In October 2011, the Group announced a proposed reorganization of its Downstream and Chemicals segments. The procedure for informing and consulting with employee representatives took place and the reorganization became effective on January 1, 2012.
This led to organizational changes, with the creation of:
A Refining & Chemicalssegment, a large industrial center that encompasses refining, petrochemicals,
fertilizers and specialty chemicals operations. This segment also includes oil trading and shipping activities. |
A Supply & Marketing segment, which is dedicated to worldwide supply and marketing activities in the oil products field.
The Downstream activities described below, including the data as of December 31, 2011, are presented based on the organization in effect up to December 31, 2011.
Refining & Marketing
TOTAL’s worldwide refining capacity was 2,3632,088 kb/d at year end 2010,2011, compared to 2,363 kb/d in 2010 and 2,594 kb/d in 2009 and 2,604 kb/d in 2008.2009. The Group’s worldwide refined products sales (including trading operations) in 20102011 were 3,639 kb/d, compared to 3,776 kb/d (including trading operations), compared toin 2010 and 3,616 kb/d in 2009 and 3,658 kb/d in 2008. 2009.
TOTAL is among the largest refiner/marketerrefiners/marketers in Western Europe(1), and the leading marketer in Africa(2). TOTAL’s
Directly or via its holdings, TOTAL has a worldwide marketingretail network consisted of 17,49014,819 service stations at year end 2011, compared to 17,490 in 2010 compared toand 16,299 in 2009 and 16,425 in 2008,2009. Through its retail network, TOTAL provides fuels to more than 50% of which are owned by the Group.3 million customers every day. In addition, TOTAL’s refineries allow the Group to produceTOTAL produces a broad range of specialty products, such as lubricants, liquefied petroleum gas (LPG), jet fuel, special fluids, bitumen, heavy fuel, marine fuel and petrochemical feedstock.
The Group continues to adapt its business and improve positions in a context of recoveringgrowing demand worldwide, mainly in non-OECD countries, by focusing on three areas:
adapting to mature markets in Europe, supportingEurope;
developing its positions in growth in Africa,markets (Africa, Asia and the Middle East,East); and
developing specialty products worldwide.
In July 2011, TOTAL closed the sale to IPIC of its 48.83% stake in CEPSA as part of the optimization of the Group’s Downstream portfolio in Europe, TotalErg (TOTAL 49%) was created in October 2010 in Italy by merger of Total Italia and ERG Petroli. TotalErg has become the third largest operator in the Italian market.(3) In addition, in the United Kingdom, TOTAL offered for sale in 2010 its marketing business and the Lindsey refinery.
In October 2011, TOTAL sold its network of service stations and its fuel and heating oil marketing business in the United Kingdom, the Channel Islands and the Isle of Man.
Refining
TOTAL holds interestshas equity stakes in twenty-fourtwenty refineries (including ten that it operates), located in Europe, the United States, the French West Indies, Africa and China. Highlights of 2010 included a slight recovery of the refining environment that led to improved refining margins in refineries worldwide, even though margins are still recording low levels.
In 2010,2011, TOTAL continued its program of selective investments in Refining, focusingwhich is focused on three areas: pursuing major ongoing projects (deep conversion at the Port Arthur refinery and construction of the Jubail refinery),
adapting the European refining system to structural market changes, and strengtheningincreasing safety and energy efficiency.
InWestern Europe, TOTAL’s refining capacity was 1,792 kb/d in 2011, compared to 2,049 kb/d in 2010 and 2,282 kb/d in 2009, accounting for 85% of the Group’s overall refining capacity. The decrease in 2011 was due to the sale of the Group’s stake in CEPSA. The Group operates nine refineries in Western Europe and owns stakes in the Schwedt refinery in Germany and two refineries in Italy through its interest in TotalErg.
InFrance, where it owns five refineries, the Group continues to adapt its refining capacities and shift the production emphasis to diesel, in a context of structural decline in petroleum products demand in Europe and an increase in gasoline surpluses.
Since autumn 2010, TOTAL has been implementing its project to repurpose the Flanders site. The shutdown of the refining business will lead to gradually dismantling the units. The Group has commenced repurposing the site through the creation of a technical support center, a refining training school, an oil depot and business offices.
In addition, the industrial plan started in 2009 to adapt the Group’s refining base in France is ongoing. This plan is intended to reconfigure the Normandy refinery and rescale certain corporate departments at the Paris headquarters. At the Normandy refinery, the project is intended to upgrade the refinery and shift the production
40
In Julysummer 2010, the Group closed the disposal ofdivested its minority interest (40%) in the Société de la Raffinerie de Dunkerque (SRD), a company that specializes in bitumen and base oil production.
In theUnited Kingdom, the hydrodesulphurization (HDS) unit at the Lindsey refinery was commissioned in February 2011. The unit makes it possible to process up to 70% of high-sulphur crudes, compared to 10% previously, and increase low-sulphur diesel production. In 2010, the Group announced that it
(1) | Based on publicly available information, refining capacities and quantities sold. |
(2) | PFC Energy, based on quantities sold. |
would offer for sale | ||
InGermany, an additional HDS unit designed to supply the German market with low-sulphur heating oil started up in autumn 2009 at the Leuna refinery.
InItaly, TotalErg (TOTAL, 49%) has operated the Rome refinery (100%) since October 2010 and holds a 25.9% stake in the Trecate refinery.
In theUnited States, TOTAL operates the Port Arthur refinery in Texas, with a capacity of 174 kb/d. In 2008, TOTAL launched an upgrading program that included the construction of a desulphurization unit commissioned in July 2010 and a vacuum distillation unit, a deep-conversion unit (or coker) and other associated units, which were successfully commissioned in April 2011. This project enables the refinery to process more heavy and high-sulphur crudes and to increase production of lighter products, in particular low-sulphur distillates.
InSaudi Arabia, TOTAL and Saudi Arabian Oil Company (Saudi Aramco) created a joint venture in 2008, Saudi Aramco Total Refining and Petrochemical Company (SATORP), to build a 400 kb/d refinery in Jubail held by Saudi Aramco (62.5%) and TOTAL (37.5%). TOTAL and Saudi Aramco each plan to retain a 37.5% interest with the remaining 25% expected to be listed on the Saudi stock exchange. The main contracts for the construction of the refinery were signed in mid-2009, concurrent with the start-up of work. Commissioning is expected in 2013.
The heavy conversion process of this refinery is designed for processing heavier crudes produced nearby and selling fuels and lighter products that meet strict specifications and are mainly intended for export. The refinery will also be integrated with petrochemical units.
InAfrica, the Group has minority stakes in five refineries in South Africa, Senegal, Côte d’Ivoire, Cameroon and Gabon.
In theFrench West Indies, the Group has a 50% stake in the company Société Anonyme de la Raffinerie des Antilles (SARA), which owns a refinery in Martinique.
InChina, TOTAL has a 22.4% intereststake in the WEPEC refinery, located in Dalian, in partnership with Sinochem and PetroChina.
Crude oil refining capacity
The table below sets forth TOTAL’s daily crude oil refining capacity(a):
As of December 31, (kb/d) | 2010 | 2009 | 2008 | |||||||||
Refineries operated by the Group | ||||||||||||
Normandy (France) | 199 | 338 | 339 | |||||||||
Provence (France) | 158 | 158 | 158 | |||||||||
Flanders (France) | — | 137 | 137 | |||||||||
Donges (France) | 230 | 230 | 230 | |||||||||
Feyzin (France) | 117 | 117 | 117 | |||||||||
Grandpuits (France) | 101 | 101 | 101 | |||||||||
Antwerp (Belgium) | 350 | 350 | 350 | |||||||||
Leuna (Germany) | 230 | 230 | 230 | |||||||||
Rome (Italy)(b) | — | 64 | 64 | |||||||||
Lindsey — Immingham (United Kingdom) | 221 | 221 | 221 | |||||||||
Vlissingen (Netherlands)(c) | 81 | 81 | 81 | |||||||||
Port Arthur, Texas (United States) | 174 | 174 | 174 | |||||||||
Sub-total | 1,861 | 2,201 | 2,202 | |||||||||
Other refineries in which the Group has an interest(d) | 502 | 393 | 402 | |||||||||
Total | 2,363 | 2,594 | 2,604 | |||||||||
As of December 31, (kb/d) | 2011 | 2010 | 2009 | |||||||||
Refineries operated by the Group | ||||||||||||
Normandy (France) | 199 | 199 | 338 | |||||||||
Provence (France) | 158 | 158 | 158 | |||||||||
Flanders (France) | — | — | 137 | |||||||||
Donges (France) | 230 | 230 | 230 | |||||||||
Feyzin (France) | 117 | 117 | 117 | |||||||||
Grandpuits (France) | 101 | 101 | 101 | |||||||||
Antwerp (Belgium) | 350 | 350 | 350 | |||||||||
Leuna (Germany) | 230 | 230 | 230 | |||||||||
Rome (Italy)(b) | — | — | 64 | |||||||||
Lindsey — Immingham (United Kingdom) | 221 | 221 | 221 | |||||||||
Vlissingen (Netherlands)(c) | 82 | 81 | 81 | |||||||||
Port Arthur, Texas (United States) | 174 | 174 | 174 | |||||||||
Subtotal | 1,862 | 1,861 | 2,201 | |||||||||
Other refineries in which the Group has equity stakes(d) | 226 | 502 | 393 | |||||||||
Total | 2,088 | 2,363 | 2,594 |
(a) | ||
For refineries not 100% owned by TOTAL, the |
(b) | TOTAL’s |
(c) | TOTAL’s |
(d) | TOTAL has |
41
The table below sets forth by product category TOTAL’s net share of refined quantities produced at the Group’s refineries(a):
(kb/d) | 2010 | 2009 | 2008 | |||||||||
Gasoline | 345 | 407 | 443 | |||||||||
Avgas and jet fuel(b) | 168 | 186 | 208 | |||||||||
Diesel and heating oils | 775 | 851 | 987 | |||||||||
Heavy fuels | 233 | 245 | 257 | |||||||||
Other products | 359 | 399 | 417 | |||||||||
Total | 1,880 | 2,088 | 2,312 | |||||||||
(kb/d) | 2011 | 2010 | 2009 | |||||||||
Gasoline | 350 | 345 | 407 | |||||||||
Aviation fuel(b) | 158 | 168 | 186 | |||||||||
Diesel and heating oils | 804 | 775 | 851 | |||||||||
Heavy fuels | 179 | 233 | 245 | |||||||||
Other products | 335 | 359 | 399 | |||||||||
Total | 1,826 | 1,880 | 2,088 |
(a) | ||
(b) | Avgas, jet fuel and kerosene. |
Utilization rate
The tables below set forth the utilization rate of the Group’s refineries.
2010 | 2009 | 2008 | ||||||||||
On crude and other feedstock(a)(b) | ||||||||||||
France | 64 | % | 77 | % | 89 | % | ||||||
Rest of Europe | 85 | % | 88 | % | 93 | % | ||||||
Americas | 83 | % | 77 | % | 88 | % | ||||||
Asia | 81 | % | 80 | % | 76 | % | ||||||
Africa | 76 | % | 77 | % | 79 | % | ||||||
Net share of CEPSA and TotalErg(c) | 94 | % | 93 | % | 106 | % | ||||||
Average | 77 | % | 83 | % | 91 | % | ||||||
2011 | 2010 | 2009 | ||||||||||
On crude and other feedstock(a)(b) | ||||||||||||
France | 91 | % | 64 | % | 77 | % | ||||||
Rest of Europe (excluding CEPSA and TotalERG) | 77 | % | 85 | % | 88 | % | ||||||
Americas | 81 | % | 83 | % | 77 | % | ||||||
Asia | 67 | % | 81 | % | 80 | % | ||||||
Africa | 80 | % | 76 | % | 77 | % | ||||||
CEPSA and TotalERG(c) | 83 | % | 94 | % | 93 | % | ||||||
Average | 83 | % | 77 | % | 83 | % | ||||||
(a) Including equity share of refineries in which the Group has a stake. (b) Crude + crackers’ feedstock/capacity and distillation at the beginning of the year. (c) For CEPSA in 2011: calculation of the utilization rate based on production and capacity prorated on the first seven months of the year.
|
| |||||||||||
2011 | 2010 | 2009 | ||||||||||
On crude(a)(b) | ||||||||||||
Average | 78 | % | 73 | % | 78 | % |
(a) | ||
Including equity share of refineries in which the Group | ||
2010 | 2009 | 2008 | ||||||||||
On crude(a)(b) | ||||||||||||
Average | 73 | % | 78 | % | 88 | % | ||||||
(b) | ||
Crude/capacity and distillation at the beginning of the year. |
Marketing
TOTAL is one of the leading marketers in Western EuropeEurope.(1)(1) The Group is also the largest marketer in Africa, with a market share of nearly 14%.(2)(.
TOTAL markets a wide range of specialty products which it producesproduced from its refineries and other facilities. TOTAL is among the leading companies in the specialty products market,(3), in particular for lubricants, LPG, jet fuel, special fluids, bitumen, heavy fuels and marine fuels, with products marketed in approximately 150 countries(4)(3).
Europe
In Europe, TOTAL has a network of 12,062more than 9,400 service stations in France, Belgium, the Netherlands, Luxembourg Germany and the United Kingdom,Germany, as well as Spain and Portugal through its interest in CEPSA (48.83%) and Italy through its interestshare in TotalErg (49%).
TOTAL also operates a network of more than 579615 AS24-branded service stations dedicated to commercial transporters.
TOTAL is among the leaders in Europe for fuel-payment cards, with approximately 3.5 million cards issued in twenty-eighttwenty-seven European countries.
InWestern Europe, TOTAL continued to optimize its Marketing business in 2011.
InFrance, the TOTAL-branded network benefits from a wide number of service stations and a diverse selection of products (such as theBonjourconvenience stores and car washes). Elf-branded service stations offer quality fuels at prices that are particularly competitive. Nearly 2,1002,000 TOTAL-branded service stations and 280270 Elf-branded service stations are operated in France. TOTAL also markets fuels at nearly 1,9001,800 Elan-branded retailservice stations, generally located in rural areas.
In October 2011, TOTAL launched Total access, a new service station concept combining low prices with TOTAL brand fuel and service quality. The Total access network will be made up of around 600 service stations in France, including the 270 Elf-branded service stations that will be rebranded as Total access. The project is expected to be fully implemented by 2014.
At the end of 2011, TOTAL finished implementing the project to adapt oil logistics operations announced in January 2010. The Pontet and Saint Julien oil depots were closed in October 2010. Operatorship of the Hauconcourt depot was transferred to a third party in October 2010. In July 2011, operatorship of the Le Mans oil depot was transferred to a third party and the Ouistreham oil depot was divested. In January 2010, TOTAL also divested half of its stake (reduced from 50% to 25%) in Dépôts Pétroliers de La Corse and transferred operatorship. Dyneff and TOTAL’s logistics assets in Port La Nouvelle were pooled in December 2011 under the umbrella of new company Entrepôt Pétrolier de Port La Nouvelle, which was created in July 2011.
In 2012, TOTAL is expected to complete the adaptation of oil logistics operations by implementing the project announced in September 2011. In the first half of 2012, the Brive and Chambéry depots are expected to be closed, and operatorship of the Lorient and Lyon depots is expected to be transferred to third parties. At the same time, TOTAL is expected to divest 24% of its current 50% stake in Entrepôt Pétrolier de Lyon. The Honfleur depot, which belongs to wholly-owned TOTAL subsidiary BTT, is expected to be closed in the second half of 2012.
(1) | Based on publicly available information, quantities sold. |
(2) | Market share for the markets where the Group operates, based on publicly available information, quantities sold. |
(3) | Including via national distributors. |
• | InItaly, as part of the optimization of the Group’s downstream portfolio in Europe, TotalErg (TOTAL, 49%) was created in | |
In theUnited Kingdom, TOTAL announced in June 2011 that it had signed an agreement to sell its network of service stations and its fuel and heating oil marketing business in the first half of 2011.In January 2010, TOTAL also closed the disposal of half of its share (50%) in Société des Dépôts Pétroliers de Corse.• In theUnited Kingdom, TOTAL announced in September 2010 its intention to offer for sale its marketing business, except for certain specialties (lubricants, etc.).(1) Based on publicly available information, quantities sold. Scope: France, Benelux, United Kingdom, Germany, Italy,the Channel Islands and through CEPSA, Spainthe Isle of Man. This sale was closed in October 2011. TOTAL continues to operate in specialty products in the United Kingdom, particularly lubricants and Portugal.(2) Market share for the markets where the Group operates, based on publicly available information, quantities sold.(3) Based on publicly available information, quantities sold.(4) Including via national distributors.(5) PFC Energy, Unione Petrolifera, based on quantities sold.aviation fuel.42
AS24, which is active in twenty-fivetwenty-six European countries, continued to expand its network, in 2010 byexceeding the milestone of 600 service stations and opening new marketing outlets in particular in two new countries, (SwedenUkraine (2011) and Serbia)Georgia (early 2012). The AS24 network is expected to continue to grow, and expand to other countriesmainly through expansion in Europe, the Caucasus and the Mediterranean Basin.
Africa & the Middle East
TOTAL is the leading marketer of petroleum products on the African continent, with a market share of nearly 14%.(1)(2) Following the acquisition of marketing and logistics assets in Kenya and Uganda in 2009, the Group runs more than 3,6003,500 service stations in more than forty countries and operates two major networks in South Africa, Nigeria, Kenya and Nigeria.Morocco. As part of the optimization of its portfolio, the Group divested its subsidiary in Benin in Decemberlate 2010.
TOTAL also has a large presence in the Mediterranean Basin, principallyTurkey and Lebanon, and is developing a network of large service stations in Turkey, Morocco and Tunisia.
In the Middle East, the Group is active mainly in the specialty products market and is pursuing its growth strategy in the region, notably through the production and marketing of lubricants.
Asia-Pacific
At year-end 2010,2011, TOTAL was present in nearly twenty countries in the Asia-Pacific region, primarily in the specialty products market. The Group is developing its position as a fuel marketer in the region, in particular in China. TOTAL operates service stations in Pakistan, the Philippines, Cambodia, Indonesia, and is a significant player in the Pacific Islands.
InChina, the Group operated nearly 130160 service stations in 2010at year-end 2011 through two TOTAL/Sinochem joint ventures.
InIndia, TOTAL is expected to open in early 2012 its first lubricants, bitumen, special fluids and additives technical support center outside Europe.
InVietnam, TOTAL continues to strengthen its position in the specialty products market. The Group becamehas become one of the leaders in the Vietnamese lubricants market due to the acquisitions of lubricants assets at year-end 2009.
Americas
InLatin Americaand theCaribbean, TOTAL is active in nearly twenty countries, primarily in the specialty products market. In the Caribbean, the Group holds a significant position in the fuel distribution business, which was strengthened by the acquisition in 2008 of marketing and logistics assets in Puerto Rico, Jamaica and the Virgin Islands.
InNorth America, TOTAL markets specialty products, mainly lubricants, and is continuing to grow with the acquisition at year-end 2009 of lubricant assets in the province of Quebec in Canada.
Sales of refined products
The table below sets forth TOTAL’s sales of refined products by region(a):
(kb/d) | 2010 | 2009 | 2008 | |||||||||
France | 725 | 808 | 822 | |||||||||
Europe, excluding France(a) | 1,204 | 1,245 | 1,301 | |||||||||
United States | 65 | 118 | 147 | |||||||||
Africa | 292 | 281 | 279 | |||||||||
Rest of world | 209 | 189 | 171 | |||||||||
Total excluding Trading | 2,495 | 2,641 | 2,720 | |||||||||
Trading | 1,281 | 975 | 938 | |||||||||
Total including trading | 3,776 | 3,616 | 3,658 | |||||||||
(kb/d) | 2011 | 2010 | 2009 | |||||||||
France | 740 | 725 | 808 | |||||||||
Europe, excluding France(a) | 1,108 | 1,204 | 1,245 | |||||||||
United States | 47 | 65 | 118 | |||||||||
Africa | 304 | 292 | 281 | |||||||||
Rest of the World | 225 | 209 | 189 | |||||||||
Total excluding Trading | 2,424 | 2,495 | 2,641 | |||||||||
Trading | 1,215 | 1,281 | 975 | |||||||||
Total including Trading | 3,639 | 3,776 | 3,616 |
(a) | ||
Including TOTAL’s share in CEPSA (up to end of July 2011) and, as from October 1, 2010, in TotalErg. |
(1) | PFC Energy, Unione Petrolifera, based on quantities sold. |
(2) | Market share in the countries where the Group operates, based on 2011 publicly available information, quantities sold. |
Service stations
The table below sets forth the number of service stations(a) of the Group:
As of December 31, | 2010 | 2009 | 2008 | |||||||||
France | 4,272 | (b) | 4,606 | (b) | 4,782 | |||||||
CEPSA and TotalErg(c) | 4,958 | 1,734 | 1,811 | |||||||||
Europe, excl. France, CEPSA and TotalErg | 2,832 | 4,485 | 4,541 | |||||||||
Africa | 3,570 | 3,647 | 3,500 | |||||||||
Rest of world | 1,858 | 1,827 | 1,791 | |||||||||
Total | 17,490 | 16,299 | 16,425 | |||||||||
As of December 31, | 2011 | 2010 | 2009 | |||||||||
France(a) | 4,046 | 4,272 | 4,606 | |||||||||
Europe, excluding France | 5,375 | 7,790 | 6,219 | |||||||||
of which TotalErg | 3,355 | 3,221 | — | |||||||||
of which CEPSA | — | 1,737 | 1,734 | |||||||||
Africa | 3,464 | 3,570 | 3,647 | |||||||||
Rest of the World | 1,934 | 1,858 | 1,827 | |||||||||
Total | 14,819 | 17,490 | 16,299 |
(a) | ||
Biofuels
TOTAL is active in the biodiesel and biogasoline sectors. In 2010,2011, TOTAL produced and blended 549494 kt of ethanol(2)(1) in gasoline at its European refineries(3) (compared to 560 kt in
43
TOTAL, in partnership with the leading companies in this area, is developing second generation biofuels derived from biomass. TOTAL is also working with leading worldwide public and private scientific partners on
biochemical and thermochemical biomass conversion.
The Group is alsothus participating in French, European and international bioenergy development programs.
BioTfueL, research project intendedwhich aims to develop a technology to transformconvert biomass into biodiesel.biodiesel; and
Futurol, aan R&D project for cellulosic bioethanol, which intends to develop and promote on an industrial scale a production process for bioethanol by fermentation of non-food ligno-cellulosiclignocellulosic biomass.
Hydrogen and electric mobility
TOTAL has been involved in research and testing programs for fuel cell andis continuing its hydrogen fuel technologies. The Group is a founding member of the European Industry Grouping for a Fuel Cell and Hydrogen Joint Technology Initiative created in 2007 to promote the development of research in the field.
The number of prototype electric vehicle fueling stations (fast charge) is increasing. TOTAL now has twelve charging stations in Berlin,Belgium. In France, two stations have been completed in partnership with the utility company Vattenfall.Paris area as part of the SAVE project, and six are being built in the Netherlands.
Trading & Shipping
The Trading & Shipping division:
sells and markets the Group’s crude oil production;
provides a supply of crude oil for the Group’s refineries;
imports and exports the appropriate petroleum products for the Group’s refineries to be able to adjust their production to the needs of local markets;
charters appropriate ships for these activities; and
undertakes trading on various derivatives markets.
The Trading & Shipping division’s main focus is serving the Group. In addition, the division’s expertise acquired also allows this divisionit to extend theits scope of its activities beyond its primary focus.
Trading & Shipping’s worldwide activities are conducted through various wholly-owned subsidiaries, including TOTSA Total Oil Trading S.A., Total International Ltd, Socap International Ltd, Atlantic Trading & Marketing Inc., Total Trading Asia Pte, Total Trading and Marketing Canada L.P., Total Trading Atlantique S.A. and Chartering & Shipping Services S.A.
(1) | Including ethanol from ETBE (Ethyl-Tertio-Buthyl-Ether) and biomethanol from MTBE (Methyl-Tertio-Butyl-Ether). |
(2) | CEPSA’s refineries and oil depots are not included in 2011, 2010 and 2009 figures. |
(3) | VOME: Vegetable-Oil-Methyl-Ester. Including HVO (Hydrotreated Vegetable Oil). |
(4) | Including Total Erg’s Rome and Trecate refineries in Italy. CEPSA’s refineries and oil depots are not included in 2011, 2010 and 2009 figures. |
(1) | Contango is a term used to describe an energy market in which the anticipated value of the spot price in the future is higher than the current spot price. The reverse situation is described as backwardation. |
Trading
TOTAL is one of the world’s largest traders of crude oil and refined products on the basis of volumes traded. The table below sets forth selected information with respect to the worldwide sales and sourcesources of supply of crude oil and sales of refined products for the Group’s Trading division for each of the last three years.
Trading of physical volumes of crude oil and Tarragona refineriesrefined products amounted to 4.4 Mb/d in Spain and TotalErg’s Rome and Trecate refineries in Italy.
44
For the year ended December 31, (kb/d) | 2010 | 2009 | 2008 | |||||||||
Worldwide liquids production | 1,340 | 1,381 | 1,456 | |||||||||
Purchased by the Trading division from the Group’s Exploration & Production division | 1,044 | 1,054 | 1,102 | |||||||||
Purchased by the Trading division from external suppliers | 2,084 | 2,351 | 2,495 | |||||||||
Total of Trading division’s supply(a) | 3,128 | 3,405 | 3,597 | |||||||||
Sales of Trading division to Group Refining & Marketing division | 1,575 | 1,752 | 1,994 | |||||||||
Sales of Trading division to external customers | 1,553 | 1,653 | 1,603 | |||||||||
Total of Trading division’s sales(a) | 3,128 | 3,405 | 3,597 | |||||||||
(kb/d) | 2011 | 2010 | 2009 | |||||||||
Group’s worldwide liquids production | 1,226 | 1,340 | 1,381 | |||||||||
Purchased by the Trading division from the Group’s Exploration & Production division | 960 | 1,044 | 1,054 | |||||||||
Purchased by the Trading division from external suppliers | 1,833 | 2,084 | 2,351 | |||||||||
Total of Trading division’s supply | 2,793 | 3,128 | 3,405 | |||||||||
Sales by Trading division to Group Refining & Marketing division | 1,524 | 1,575 | 1,752 | |||||||||
Sales by Trading division to external customers | 1,269 | 1,553 | 1,653 | |||||||||
Total of Trading division’s sales | 2,793 | 3,128 | 3,405 | |||||||||
Total sales of refined products | 1,632 | 1,641 | 1,323 |
(a) | ||
Including |
The Trading division operates extensively on physical and derivatives markets, both organized and over the counter. In connection with its trading activities, TOTAL, like most other oil companies, uses derivative energy instruments (futures, forwards, swaps, options) to adjust its exposure to fluctuations in the price of crude oil and refined products. These transactions are entered into with various counterparties.
For additional information concerning Trading & Shipping’s derivatives, see Notes 30 (Financial instruments related to
commodity contracts) and 31 (Market risks) to the Consolidated Financial Statements.
All of TOTAL’s trading activities are subject to strict internal controls and trading limits.
In 2011, the Trading division maintainedoil market tightened; as a level of activity similar to those recorded in 2009result, the oil price rise accelerated and 2008, with trading physical volumesthe structure of crude oil and refined products amountingprices flipped from contango to approximately 5 Mb/d.backwardation(1).
2010 | 2009 | 2008 | min 2010 | max 2010 | ||||||||||||||||||||||||||
Brent ICE — 1st Line(a) | ($ | /b | ) | 80.34 | 62.73 | 98.52 | 69.55 | (May 18 | ) | 94.75 | (Dec. 24 | ) | ||||||||||||||||||
Brent ICE — 12th Line(b) | ($ | /b | ) | 84.61 | 70.43 | 102.19 | 75.29 | (Jan. 29 | ) | 95.15 | (Dec. 24 | ) | ||||||||||||||||||
Contango time structure (12th-1st) | ($ | /b | ) | 4.27 | 7.70 | 3.59 | (0.55 | ) | (Nov. 29 | ) | 6.98 | (May 31 | ) | |||||||||||||||||
Gasoil ICE — 1st Line(c) | ($ | /t | ) | 673.88 | 522.20 | 920.65 | 567.25 | (Feb. 01 | ) | 784.50 | (Dec. 16 | ) | ||||||||||||||||||
VLCC Ras Tanura Chiba — BITR(c) | ($ | /t | ) | 13.41 | 10.43 | 24.09 | 8.24 | (Oct. 01 | ) | 23.66 | (Jan. 12 | ) |
2011 | 2010 | 2009 | min 2011 | max 2011 | ||||||||||||||||||||||||||||
Brent ICE — 1st Line(a) | ($/b | ) | 110.91 | 80.34 | 62.73 | 93.33 | (Jan. 07 | ) | 126.65 | (Apr. 08 | ) | |||||||||||||||||||||
Brent ICE — 12th Line(b) | ($/b | ) | 108.12 | 84.61 | 70.43 | 94.20 | (Jan. 07 | ) | 121.74 | (Apr. 29 | ) | |||||||||||||||||||||
Contango/Backwardation time structure (12th-1st) | ($/b | ) | -2.79 | 4.27 | 7.70 | -9.55 | (Oct. 14 | ) | 2.65 | (Feb. 07 | ) | |||||||||||||||||||||
Gasoil ICE — 1st Line(a) | ($/t | ) | 933.30 | 673.88 | 522.20 | 767.75 | (Jan. 01 | ) | 1,053.00 | (Apr. 08 | ) |
(b) | 12th Line: Average quotation on ICE Futures for twelfth nearby month delivery. |
The oil markets had ended 2010 significantly up, driven by the very strong upturn in demand for oil (+2.8 Mb/d). The outbreak of war in Libya in February 2011 quickly deprived the oil market of 1.6 Mb/d of crude supply. On the international markets, the shutdown of Libyan crude production was markedaggravated by recovering demand, due mainlyproduction losses in Nigeria (through attacks on oil infrastructure and diversion of the oil), Angola (with technical problems on several fields), Yemen (through attacks on oil infrastructure) and Syria (due to economic growth in emerging countries (China, India, Latin America, the Middle East)embargo). Meanwhile,The resulting crude oil deficit was offset mainly by Saudi Arabia, Kuwait and the United Arab Emirates, which all increased their production
considerably, thereby reducing the surplus available production capacity. Production in Libya gradually started up again from September 2011 and reached around 0.9 Mb/d at the end of 2011.
Overall in 2011, OPEC crude oil production was estimated to be slightly down compared to 2010 (-0.1 Mb/d), as was non-OPEC crude production (-0.2 Mb/d). The production of other liquids productionin 2011 (LPG, LNG, biofuels) outsiderose (+0.5 Mb/d).
With regard to demand, the significant price rise and generally weaker economic growth than in 2010 slowed
growth in oil demand, which fell from +2.8 Mb/d in 2010 to +0.5 Mb/d in 2011.
In this environment, crude oil prices, which started rising at the beginning of OPEC countries grew rapidlythe year, increased from an average of approximately $96/b (ICE Brent 1st Line) in January 2011 to $123/b in April 2011 while the market adjusted to the loss of Libyan supply. Prices fell slightly in the second half of 2011, particularly under the effect of the IEA’s emergency stock release (60 Mb offered, 35 Mb delivered) and the partial resumption of Libyan production. Crude oil prices remained high however, reaching an annual average in 2011 of $110.91/b.
As a result of the backwardation in the price structure on the crude oil market for almost the entire year, 2011 was also marked by a sharp fall in OECD oil industry inventories through October 2011 (year-on-year, crude -70 Mb and products -46 Mb), which diminished in the last 2 months of the year with the rise in Libyan crude production from OPEC countries increased only slightly despite(December 2011 year-on-year, crude -26 Mb and
products -36 Mb).
2011 also saw a softeningwidening of quotas that have been effective since year-end 2008. The increasethe price differential between WTI crude (confined to the central United States) and Brent crude (delivered in global oil storage, which has prevailed since early 2008, finally stopped in mid-2010 with a first major decrease mainlythe North Sea and accessible internationally). While Brent was experiencing upward pressure due to the strong increasebalance of crude oil on the international market, WTI was under downward pressure from a continuous rise in demandlocal production and exports from Canada, the combination of which exceeded local refining capacity requirements and potential exports outside the region. The price of WTI thus rose less quickly than Brent, increasing the gap to almost -$28/b in mid-October (at the height of the upward pressure on Brent).
The gap was more than halved at the end of the year, particularly with the announcement of the planned reversal of the Seaway pipeline, which should ease the pressure from the surplus of crude weighing down markets in the third quarter of 2010. Following this reversal, oil storage at year-end 2010 was at the year-end 2009 level.central United States.
Shipping
TOTAL’s Shipping division arranges the transportation of crude oil and refined products necessary to develop the Group’s activities. These needs are met through transactions on the spot market and the development of a balanced time charter policy. It has a rigorous safety policy that is due mainly to the strict selection of the vessels that the division charters. Like a certain number of other oil companies and shipowners, the Group uses freight rate derivative contracts in its shipping activity to adjust its exposure to freight-ratefreight rate fluctuations.
In 2010, the2011, TOTAL’s Shipping division chartered approximately 2,9003,000 voyages to transport approximately 119 Mt.110 Mt of crude oil and refined products. As of December 31, 2010, the Group2011, it employed a fleet of forty-sevenfifty vessels chartered under long-term or medium-term agreements (including fiveeight LPG carriers and no single-hulled vessels).carriers), of which none is single-hulled. The fleet has an average age of approximately fourfive years.
Freight rates average of three representative routes for crude transportation
2011 | 2010 | 2009 | min 2011 | max 2011 | ||||||||||||||||||||||||||||
VLCC Ras Tanura Chiba — BITR(a) | ($/t | ) | 11.99 | 13.41 | 10.43 | 9.32 | (Oct. 10 | ) | 18.54 | (Feb. 15 | ) | |||||||||||||||||||||
Suezmax Bonny Philadelphia-BITR | ($/t | ) | 13.86 | 14.50 | 12.75 | 10.23 | (Jan. 20 | ) | 19.85 | (Mar. 22 | ) | |||||||||||||||||||||
Aframax Sullom Voe Wilhemshaven-BITR | ($/t | ) | 6.51 | 6.39 | 5.20 | 5.04 | (Jan. 17 | ) | 9.46 | (Mar. 4 | ) |
(a) | VLCC: Very Large Crude Carrier. BITR: Baltic International Tanker Routes. |
2011 was a particularly eventful and difficult period for oil shipping activities.
During the first half of 2010 included:2011, events in Japan and North Africa had a strong impact on crude oil imports. Requirements in Japan fell suddenly and very markedly, but were quickly restored and returned to almost pre-crisis levels by the end of 2011. In the end, the impact on demand for shipping was relatively limited. In the Mediterranean, the shutdown of Libyan production resulted in the rebalancing of demand for long-haul VLCC shipments: imports, particularly to Europe, were offset by supply from further away, thus increasing the demand for transportation.
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second quarter that left the second half of 2010, the fundamentals of the freight market deteriorated sharply, leading toat a collapse of freight rates at the end of July. This trend was the result of the sustained growth of the active fleet duehistoric low. With regard to the significant decrease in floating storage andproduct tanker market, the continued growth ofsituation remains
poor worldwide, with transatlantic traffic to the fleet.United States particularly slow.
CHEMICALS
Chemicals
In October 2011, the Group announced a proposed reorganization of its Downstream and Chemicals segments. The procedure for informing and consulting with employee representatives took place and the reorganization became effective on January 1, 2012.
This led to organizational changes, with the creation of:
A Refining & Chemicalssegment, a large industrial center that encompasses refining, petrochemicals, fertilizers and specialty chemicals operations. This
segment also includes oil trading and shipping activities. |
A Supply & Marketing segment, which is dedicated to worldwide supply and marketing activities in the oil products field.
The Chemicals activities described below, including the data as of December 31, 2011, are presented based on the organization in effect up to December 31, 2011.
Base Chemicals
The Base Chemicals division includes TOTAL’s petrochemicals and fertilizers activities.
In 2010,2011, the Base Chemicals division’s sales were €10.7€12.7 billion, compared to €8.7€10.7 billion in 20092010 and €13.2€8.7 billion in 2008. The 2010 market environment for Base Chemicals was marked by recovering demand for petrochemical products and improved integrated margins. The2009.
start-up of the steam cracker in Ras Laffan and of the linear low-density polyethylene plant in Messaied. In 2010, the Fertilizers business was adversely affected by manufacturing incidents, whereas the European market was recovering.
BREAKDOWN OF TOTAL’S MAIN PRODUCTION CAPACITIES
2010 | 2009 | 2008 | ||||||||||||||||||||||
Asia and | ||||||||||||||||||||||||
North | Middle | |||||||||||||||||||||||
(in millions of tons) | Europe | America | East(a) | Worldwide | Worldwide | Worldwide | ||||||||||||||||||
Olefins(b) | 4,695 | 1,195 | 1,300 | 7,190 | 6,895 | 7,285 | ||||||||||||||||||
Aromatics | 2,500 | 940 | 755 | 4,195 | 4,195 | 4,360 | ||||||||||||||||||
Polyethylene | 1,180 | 460 | 500 | 2,140 | 2,040 | 2,035 | ||||||||||||||||||
Polypropylene | 1,335 | 1,150 | 295 | 2,780 | 2,780 | 2,750 | ||||||||||||||||||
Styrenics(c) | 1,050 | 1,260 | 640 | 2,950 | 3,090 | 3,220 | ||||||||||||||||||
(in thousands of tons) | 2011 | 2010 | 2009 | |||||||||||||||||||||
Europe | North America | Asia and Middle East(a) | Worldwide | Worldwide | Worldwide | |||||||||||||||||||
Olefins(b) | 4,695 | 1,195 | 1,460 | 7,350 | 7,190 | 6,895 | ||||||||||||||||||
Aromatics | 2,500 | 940 | 770 | 4,210 | 4,195 | 4,195 | ||||||||||||||||||
Polyethylene | 1,180 | 440 | 520 | 2,140 | 2,140 | 2,040 | ||||||||||||||||||
Polypropylene | 1,315 | 1,175 | 345 | 2,835 | 2,780 | 2,780 | ||||||||||||||||||
Styrenics(c) | 1,150 | 1,260 | 730 | 3,140 | 2,950 | 3,090 |
(a) | ||
Including minority interests in Qatar and 50% of Samsung-Total Petrochemicals capacities. |
(b) | Ethylene, propylene and butadiene. |
(c) | Styrene and polystyrene. |
The petrochemicalpetrochemicals business grouped under Total Petrochemicals, includes base petrochemicals (olefins and aromatics) and their polymer derivatives (polyethylene, polypropylene(polyolefins and styrenics).
InEurope, TOTAL’sthe main petrochemicalspetrochemical sites are located in Belgium, (Antwerp, Feluy)in Antwerp (steam crackers, polyethylene) and Feluy (polypropylene, polystyrene), and in France, (Carling,in Carling (steam cracker, polyethylene, polystyrene), Feyzin (steam cracker), Gonfreville (steam crackers, styrene, polyolefins, polystyrene) and Lavéra)ra (steam cracker, polypropylene).
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Texas, (Bayport,in Bayport (polyethylene), La Porte (polypropylene) and Port Arthur)Arthur (steam cracker, butadiene).
InAsia, TOTAL owns, in partnership with Samsung, a 50% interest in the Daesan integrated petrochemical site located in Daesan, South Korea.Korea (steam cracker, styrene, paraxylene, polyolefins). The Group is also active through its polystyrene plants located in Singapore and Foshan (China) plants.
InQatar, the Group holds interests in two steam crackers and several polyethylene lines.
Most of these sites are either adjacent to or connected by pipelines to Group refineries. As a result, most of TOTAL’s petrochemical operations are closely integrated within refining operations.
(1) | Based on publicly available information, consolidated sales. |
TOTAL continues to strengthen its leadership positions in the industry by focusing on the following three main strategic areas:
InEurope, TOTAL is improving the competitiveness of its long-established sites notably through cost management, better energy efficiency at its facilities and increased flexibility in the choice of feedstock.
In an increasingly competitive environment, the Group launched two reorganization plans mainly for the sites in Carling (eastern France) and Gonfreville (northwestern France):
– | The first plan, launched in 2006, called for the closure of |
– | The second plan, launched in 2009, is |
Following its sole customer’s termination of the supply contract for the secondary butyl alcohol produced at the Notre-Dame-de-Gravenchon facility in Normandy, this dedicated facility had to be closed in the second half of 2010.
At the end of 2011, TOTAL signed an agreement relating to the acquisition of 35% of ExxonMobil’s stake in Fina Antwerp Olefins, Europe’s second largest base petrochemicals (monomers) production plant. Following approval by the relevant authorities, the transaction was finalized in February 2012 and TOTAL became the sole shareholder in Fina Antwerp Olefins on March 1, 2012. The acquisition will open new
opportunities to strengthen the competitiveness of the assets and to pursue integration which is one of the foundations of Total’s strategy.
In theUnited States, TOTAL and BASF purchased in 2011 Shell’s stake in Sabina, one of the largest butadiene production plants in the world. TOTAL and BASF are now the only two shareholders in Sabina, with stakes of 40% and 60%, respectively. This new structure will allow for increased synergies with the TOTAL refinery and the jointly-owned steam cracker (TOTAL 40%, BASF 60%) located on the same site in Port Arthur, Texas.
TOTAL is continuing to expand in growth areas.
InAsia, the Samsung-Total Petrochemicals Co. Ltd joint venture (TOTAL, 50%) completed in 2008mid-2011 the first modernizationdebottlenecking phase of the units at the Daesan site in South Korea, its main production site inwith the region.aim of bringing them to full capacity. This major development increasedfirst phase included increasing the site’s initial production capacity by nearly one-third thanks to the extension of the steam cracking and styrene units, and thestart-up of a new polypropylene line and a new metathesis plant. A further debottlenecking of the steam cracker to 1 Mt/y and the polyolefin units to 1,150 kt/y.
The second phase is expected to take place in September 2012 and aromatic units wasinvolves increasing the capacity of the paraxylene unit to 700 kt/y.
In addition, to keep up with growth on the Asian markets, two major investments have been approved for planned start-up in 2010. The capacity extensions are scheduled to be effective in 2011 for the steam cracker and the polyolefin2014: a new 240 kt/y EVA(2) unit and in 2012 fora new aromatic unit with a capacity of 1.5 Mt/y of paraxylene and benzene, the aromatic unit.
In theMiddle East, construction of athe 700 kt/y paraxylene unit at the Jubail refinery in Saudi Arabia was approved in 2008 by TOTAL and Saudi Aramco.is under construction. This world-class unit is mainly intended to supply the Asian market. The main construction contracts were signedStart-up is scheduled for 2013.
TOTAL is developing sites in 2009 andcountries with favorable access to raw materials.
start-up is expected in 2013.
started up in 2009. The Group also holds a 22% interest in an ethane-based steam cracker in Ras Laffan designed for processing 1.3 Mt/y of ethylene. The steam cracker started up in March 2010. In
(1) | Facilities ranking among the first quartile for production capacities based on publicly available information. |
(2) | Ethylene Vinyl Acetate. |
addition, construction of a 300 kt/y low-density polyethylene line has started at Qapco, in which TOTAL holds a 20% interest, with commissioningstart-up scheduled infor the second quarter of 2012.
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Base petrochemicals
Base petrochemicals includeincludes olefins and aromatics (monomers) produced by the steam cracking of petroleum cuts, mainly naphtha and LPG, or of gas as well as propylene and aromatics manufactured in the Group’s refineries. The economic environment for these activities is strongly influenced by the balance between supply and demand and changes in feedstock prices, especially naphtha.
The market was buoyant in the first half of 2010 included2011, followed by a significant slowing in volumes and falling margins, mainly in Europe and the recovery of global demand for monomers and improved marginsUnited States, in all geographical areas.the second half. Over 2011 as a whole, TOTAL’s production volumes increased by 8% in 2010.
TOTAL is consolidatingexpanding its positions in Asia and the Middle East with thestart-up of the Ras Laffan steam cracker in 2010 in Qatar and continued investments to increase capacities in South Korea. In Europe and the United States, TOTAL is improving energy efficiency at its sites, strengthening synergies with refining and increasing the flexibility of the steam cracker feedstock.
PolyethylenePolyolefins
TOTAL’s strategy for polyolefins (polyethylene, polypropylene) is based on lowering the breakeven point of its plants in Europe and the United States and continuing to differentiate its range of products, while meeting new market requirements for sustainable development. The Group is also continuing to expand its activities in growth areas, mainly through its stakes in joint ventures in South Korea and Qatar.
Polyethylene: Polyethylene is a plastic produced byresulting from the polymerization of ethylene manufactured inproduced by the Group’s steam crackers. It is primarily intended for the packaging, automotive, food, cable and pipe markets. Margins are strongly influenced by the level of demand and the price of ethylene. In Europe, margins are impacted by competition from expanding production in the Middle East, which benefits from favorable access to ethane, the raw material used in ethylene production.
2011 was marked by the recovery of globala slowdown in growth in demand in every region, especiallyall geographical areas and by falling margins, more particularly in China.
The Group’s sales volumes increased 4.7%by 2% in 2010 compared to 2009 thanks to the2011.
start-up of the linear low-density plant in Qatar. High density polyethylene margins remained weak in Europe. In the United States, margins remained high mainly due to the competitive price of ethane-based ethylene.
As with polyethylene, 2011 saw a slowdown in growth in worldwide demand and falling margins in the global polypropylene market and all geographical areas, in particular North America and China. However, the European industry was affected by ongoing production difficulties throughoutsecond half of the year.
TOTAL’s sales volumes only slightly increaseddecreased by 2.5% compared to 2009 (+1%). Margins strongly increased in Europe in a tight market environment but they remained stable at a relatively weak level in the United States. To face increasing competition from new plants in the Middle East, TOTAL owns plants in Europe and the United States that place the Group among the industry’s leaders.
Styrenics
This business activity includes the production of styrene and polystyrene. Most of the styrene manufactured by the Group is used to produce polystyrene, a plastic principally used in food packaging, insulation, refrigeration, domestic appliances and electronic devices. Margins are strongly influenced by the level of polystyrene demand and the price of benzene, which is polystyrene’sstyrene’s principal raw material.
The worldwide styrenics market increased by approximately 2% in 2010 thanks to the resilience of the automotive, electronics and insulation markets. The global polystyrene market also increased in 2010,2011, driven by domestic demandAsia, while the markets in China.
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The Group continues to expand its styrenics business. In Feluy, Belgium, TOTAL is building a new-generation expandable polystyrene manufacturing plant. Start-up is scheduled for early 2013. The expandable polystyrene is intended for the insulation market, which is experiencing strong growth. In China, TOTAL doubled the capacity of the Foshan compact polystyrene plant to 200 kt/y in 2010 whereas polystyrene margins strongly increased due to the market stabilization and capacity reductions in mature areas.
Fertilizers
Through its French subsidiary GPN, TOTAL manufactures and markets nitrogen fertilizers made from natural gas. Margins are strongly influenced by the price of natural gas.
In 2010 and 2011, GPN’s production was affected by a number of manufacturing incidents that resulted in long shutdowns for maintenance of the Grandpuits and Rouen ammonia plants in France and a reduction ofreduced production at the downstream plants’ productionplants (nitric acid, urea and ammonium nitrate). These incidents adversely affected GPN’sthe results of GPN, which could not take advantage of favorable global market conditions.
GPN’s plans were strengthened through two major investments: the improved European market.
In France, three obsolete nitric acid units in Rouen and Mazingarbe were closed in 2009 and 2010.
GPN’s mines and quarries business continuedat the Mazingarbe site was divested in January 2011. Sales for the divested lines of business were€30 million in 2010.
In November 2011, the Group initiated the process of divesting its major restructuring plan initiated since 2006:
Specialty Chemicals
TOTAL’s Specialty Chemicals division includes rubberelastomer processing (Hutchinson), resins (Cray Valley, Sartomer and Cook Composites & Polymers), adhesives (Bostik) and electroplating chemistry (Atotech). The divisionIt serves consumerthe automotive, construction, electronics, aerospace and industrialconvenience goods markets, for which customer-oriented marketing, innovation and customer service as well as innovation are key drivers. TOTAL markets specialty products in more than fifty-fivesixty countries and intends to develop in the global market by combining internalorganic growth and targeted acquisitions. This development is focused on expandinghigh-growth markets and the marketing of innovative products with high added value that meet the Group’s sustainable development approach.
The ConsumersHutchinson consumer goods business (Mapa® and Spontex®) was divested in Aprilspring 2010. Sales for the divested lines of business were €530€530 million in 2009.
The Cray Valley coating resins and Sartomer photocure resins).resins businesses were divested in July 2011. Sales for thesethe divested lines of business were €860€860 million in 2010. Disposal is subject to prior consultation with employee representativesThe structural and approval byhydrocarbon resins business lines were kept and have been incorporated into the relevant authorities, and may be effective by the second quarter of 2011.
Specialty Chemicals wasenjoyed a favorable thanksclimate in the first three quarters of 2011 due to the economic recovery in matureresilience of the European and North American markets which had faced difficult conditions in late 2008 and early 2009, and ongoingcontinued growth in the emerging countries. The situation deteriorated in the fourth quarter. In this context and on alike-for-like basis (excluding Consumers products)Mapa Spontex and Resins), 20102011 sales were €6.8€5.3 billion, a 21%9% increase compared to 2009.
RubberElastomer processing
Hutchinson manufactures and markets products derived from rubberelastomer processing that are principally intended for the automotive, aerospace and defense industries.
Hutchinson, among the industry’s leaders worldwide(2), provides its customers with innovative solutions in the areas of fluid transfer, air and fluid (or water) seals, transmission, mobility and vibration, as well asanti-vibration, sound and thermal insulation.
Hutchinson has eighty production sites worldwide, including fifty-two in Europe, fifteen in North America, seven in South America, five in Asia and one in Africa.
Hutchinson’s sales were €2.7€2.99 billion in 2010,2011, up 19%10% compared to 2009 in an uneven environment depending on the lines of business.2010. Sales for the automotive business substantially increased thanks11% due to the recovery in
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To strengthen its position in the aerospace industry, in late 2008 Hutchinson acquired Strativer, in late 2008, a French company specialized in the expandinggrowing composite materials market.market, and, in early 2011, Hutchinson acquired Kaefer, a German company specialized in aircraft interior equipment (insulation, ventilation ducts, etc.). In the automotive sector, in April 2011 Hutchinson acquired Keum-Ah, a South Korean company specialized in fluid transfer systems.
(1) | Nitrogen oxide emissions are noxious to the environment and subject to regulation. |
(2) | Based on publicly available information, consolidated sales. |
Hutchinson continuedcontinues to develop in expanding markets, primarily Eastern Europe, South America and China, relying notably on the Brasov (Romania), Lodz (Poland), Sousse (Tunisia) and Suzhou (China) sites and on the SousseCasa Branca site (Tunisia)(Brazil) opened in 2009.
ResinsAdhesives
Adhesives
Bostik has forty-six production sites worldwide, including twenty-one in Europe, nine in North America, seven in Asia, six in Australia and New Zealand, two in Africa and one in South America.
In 2010,2011, sales were €1.4€1.43 billion, up 14%3% compared to 2009. This strong performance confirms Bostik’s strategy of strengthening2010.
Bostik continues to strengthen its technological position in the construction and industrial market, which has been less affected thansectors, pursue its program for innovation focused on sustainable development, keep up with its expansion in high-growth countries and improve its operational performance.
2011 saw the construction industry, and continuing its development in growing markets, especially in the Asia-Pacific region.
Finally, Bostik continued to rationalize its industrial base with the closure of the Ibos site in India in 2012.France, which came into effect at year-end 2011.
Electroplating
Atotech which encompasses TOTAL’s electroplating business, is the second largest company in thisthe electroplating sector based on worldwide sales(1). It is active in bothon the markets for electronics (printed circuits, semiconductors) and general metal finishing markets (automotive, sanitary goods,construction, furnishing).
Atotech has sixteen production sites worldwide, including seven in 2010, drivenAsia, six in particular by the growing automotiveEurope, two in North America and electronics markets. After decreasing 20% between 2008 and 2009, one in South America.
Atotech’s sales were €0.8€0.89 billion in 2010,2011, up 31%14% compared to 2009.
In Germany,order to strengthen its position on the electronics market, in 2011 Atotech started up a new production unit intended foraimed at the semiconductorsemiconductors market was inaugurated in 2010.
Atotech successfully pursued its strategy designed to differentiate its products through a comprehensive service provided to its customers in terms of equipment, processes, design and chemical products and through the development of green, innovative technologies to reduce the environmental footprint. This strategy relies on global coverage provided by its technical centers located near customers.
Atotech intends to continue to develop in Asia, which represents more than 50%almost 60% of its global sales.
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Various factors, including certain events or circumstances discussed below, have affected or may affect TOTAL’s business and results.
Exploration and production legal considerations
TOTAL’s exploration and production activitiesoperations are conducted in many differentvarious countries and are therefore subject to an extremelya broad range of regulations. These cover virtually all aspects of exploration and production activities, operations,
including matters such as leasehold rights, production rates, royalties, environmental protection, exports, taxes and foreign exchange rates. The terms of the concessions, licenses, permits and contracts governing the Group’s ownership of oil and gas interests vary from country to country. These concessions, licenses, permits and contracts are generally granted by or entered into with a government entity or a state-owned company and are sometimes entered into with private owners. These arrangements usually take the form of concessions or production sharing agreements.contracts.
(1) | Based on publicly available information, consolidated sales. |
The oil concession agreement remains the traditional model for agreements entered into with States: the oil company owns the assets and the facilities and is entitled to the entire production.
In exchange, the operating risks, costs and investments are the oil company’s responsibility and it agrees to remit to the relevant State, usually the owner of the subsoil resources, a production-based royalty, income tax, and possibly other taxes that may apply under local tax legislation.
The production sharing contract (PSC) involves a more complex legal framework than the concession agreement: it defines the terms and conditions of production sharing and sets the rules governing the cooperation between the company or consortium in possession of the license and the host State, which is generally represented by a state-owned company. The latter can thus be involved in operating decisions, cost accounting and production allocation.
The consortium agrees to undertake and finance all exploration, development and production activities at its own risk. In exchange, it is entitled to a portion of the production, known as “cost oil”, the sale of which should cover all of these expenses (investments and operating costs). The balance of production, known as “profit oil”, is then shared in varying proportions, between the company or consortium, on the one hand, and with the State or the state-owned company, on the other hand.
In some instances, concession agreements and PSCs coexist, sometimes in the same country. Even though there are other contractual structures still exist,models, TOTAL’s license portfolio is comprised mainly of concession agreements.
In all countries,every country, the authorities of the host State, often assisted by international accounting firms, perform joint venture and PSC cost audits and ensure the observance of contractual obligations.
In some countries, TOTAL has also signed contracts called “risked service contracts”, which are similar to production sharing contracts. However, the profit oil is replaced by risked monetary remuneration, agreed by contract, which depends notably on the field performance. Thus, the remuneration under the Iraqi contract is based on an amount calculated per barrel produced.
Oil and gas exploration and production activities are subject to authorization granted by public authorities (permits)(licenses), which can be different for each of these activities. These permits are granted for specific and limited periods of time and include an obligation to return a large portion, or the entire portion in case of failure, the entire portion, of the permit area covered by the license at the end of the exploration period.
TOTAL is required to paypays taxes on income generated from its oil and gas production and sales activities under its concessions, production sharing contracts and risked service contracts, as provided for by local regulations. In addition, depending on the country, TOTAL’s production and salesales activities may be subject to a rangenumber of other taxes, fees and withholdings, including special petroleum taxes and fees. The taxes imposed on oil and gas production and salesales activities may be substantially higher than those imposed on other industrial or commercial businesses.
The legal framework of TOTAL’s exploration and production activities, established through concessions, licenses, permits and contracts granted by or entered into with a government entity, a state-owned company or, sometimes, private owners, is subject to certain risks whichthat, in certain cases, can diminishreduce or challenge the protections offered by this legal framework.
Industrial and environmental considerations
TOTAL’s activitiesoperations involve certain industrial and environmental risks which are inherent in the productionhandling, processing and use of products that are flammable, explosive, polluting or toxic. Its
The broad scope of TOTAL’s activities, which include drilling, oil and gas production, on-site processing, transportation, refining and petrochemical activities, storage and distribution of petroleum products, and production of base and specialty chemicals, involve a wide range of operational risks. Among these risks are therefore subject to government regulations concerning environmental protectionthose of explosion, fire, leakage of toxic products, and industrial safety in most countries. More specifically, in Europe, TOTAL
51
Most of these activities also involve environmental risks related to emissions into the air, water or soil and the production of waste, and also require environmental site remediation and closure and decommissioning after production is discontinued.
The industrial events that can have the most significant impact are primarily a major industrial accident (fire, explosion, leakage of highly toxic products) or large-scale accidental pollution.
All the risks described correspond to events that could potentially cause injury or death, damage property and business activities, cause environmental damage or harm human health. TOTAL employees, contractors, residents
living near the facilities or customers can suffer injuries. Property damage can involve TOTAL’s operated sites in the United States are subject to the Occupational Safety and Health Administration (“OSHA”) Process Safety Management of Highly Hazardous Materials,facilities as well as the property of third parties. The seriousness of the consequences of these events varies according to the vulnerability of the people, ecosystems and business activities impacted, on the one hand, and the number of people in the impact area and the location of the ecosystems and business activities in relation to TOTAL’s facilities or to the trajectory of the products after the event, on the other OSHA regulations.
Moreover, oil and gas exploration and production activities are particularly exposed to risks related to the physical characteristics of an oil or gas field. These risks include eruptions of crude oil or natural gas, which notably could result from drilling into abnormally pressurized hydrocarbon pockets.
TOTAL conforms to the REACH regulation, which purpose is to protect health and safety of products and chemical substances producers and users notably by providing detailed information through safety data sheets (SDS/ESDS). Like most other industrial groups, TOTAL is concerned by reports of occupational illnesses, in particular those caused by asbestos exposure. Asbestos exposure has been subject to close monitoring at all of the Group’s business units. As of December 31, 2011, the Group estimates that the ultimate cost of all asbestos-related claims paid or pending is not likely to have a material impact on the Group’s financial situation.
TOTAL’s entities actively monitor regulatory developments to comply with local and international rules and standards for the evaluation and management of industrial and environmental risks. In case of operations being stopped, the Group’s environmental contingencies and asset retirement obligations are addressed in “Asset retirement obligation” and “Provisions for environmental contingencies” in Note 19 to the Consolidated Financial Statements. Future expenses related to asset retirement obligations are accounted for in accordance with the principles described in paragraph Q of Note 1 to the Consolidated Financial Statements.
Health, safety and environment regulations
TOTAL is subject to extensive and increasingly strict health, safety and environmental (“HSE”) regulations in the European Union (“EU”), the United States and worldwide.
The following is a non-exhaustive list of HSE regulations and directives that affect TOTAL’s operations and products in the European Union:EU:
The Industrial Emissions Directive (“IED”) entered into force on January 6, 2011, and must be transposed
into national legislation by EU Member States by January 7, 2013. This Directive |
By imposing the reduction of emissions from industrial installations, the IED will progressively result in stricter emission limits on some of TOTAL’s facilities by making compulsory certain rules described in BREFs (Reference documents on Best Available Techniques).
The Air Quality Framework Directive (2008/50/CE) and related directives on ambient air quality assessment and management, among other things, limit emissions of sulphur dioxide, nitrogen dioxide and oxides of nitrogen, particulate matter, lead, carbon monoxide, benzene and ozone.
Existing directives controlling and limiting exhaust emissions from cars and other motor vehicles are expected to continue to become more stringent over time. Since 2009, a maximum sulphur content of 10 ppm is mandatory throughout the EU.
The Sulphur Content Directive (1999/32/EC, as amended) limits sulphur in diesel fuel to 0.1% (since January 2008) and limits sulphur in heavy fuel oil to 1% (since January 2003), with certain exceptions for combustion plants provided that local air quality standards are met.
The 1996 Major Hazards Directive (Seveso II) requires emergency planning, public disclosure of emergency plans, assessment of hazards and effective emergency management systems. A revision process is currently pending to strengthen rules on the control of major accident hazards involving chemicals. The revision will align the legislation to changes in EU chemicals law and will clarify and update other provisions, including introducing stricter inspection standards and improving the level and quality of information available to the public in the event of an accident. The new directive is expected to apply from June 1, 2015.
In October 2011, the European Commission proposed a regulation on the safety of offshore oil and gas activities. The regulation introduces rules for the effective prevention of and response to a major accident that would be immediately applicable to new installations and with transitional periods for existing installations.
Numerous directives regulate the classification, labeling and packaging of chemical substances and
their preparation, as well as restrict and ban the use of certain chemical substances and products. |
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On the other hand, the EU Member States, the European Commission and the European Chemical Agency are in the process of implementing the Regulationregulation adopted in 2006 for the Registration, Evaluation and Authorization of Chemicals (REACH) that replaces or complements the existing rules in this area. REACH required the pre-registration of chemical substances manufactured and imported into the EU by December 1, 2008, to qualify for full registration under a phase in during the period2010-2018. The European Commission notified that the European Chemical Agency received more than 3 million notifications related to chemical substances classification at the end of phase 1, in December 2010. This regulation requires the registration and identification of chemical substances manufactured or imported in EU Member States, and can result in restrictions on the sales or uses of such substances. GHS and REACH imposes substantial costswill require us to evaluate the hazards of our chemicals and products and may result in future changes to warning labels and material safety data sheets.
The Framework Directive on TOTAL’s operationsWaste Disposal is intended to ensure that waste is recovered or disposed of without endangering human health and without using processes or methods that could unduly harm the environment. Numerous related directives regulate specific categories of waste. In November 2008, the Framework Directive on Waste Disposal was partially modified by the Directive on Waste 2008/98, which features more precise definitions and stronger provisions. Transposition of this Directive in France occurred with the Ordinance of December 17, 2010.
A number of Maritime Safety Directives were passed in the European Union.wake of the Erika and Prestige spills, and implemented in France by Ordinance n° 2011-635 dated June 9, 2011. Those regulations, found in the three Maritime Safety Packages, require that tankers have double hulls and that ship owners acquire improved insurance coverage, mandate improvements to traffic monitoring, accident investigations and in-port vessel inspection (Port State Control: objective of 100% inspection in the EU), and further regulate organizations that inspect and confirm conformity to applicable regulations (Classification Societies). The last package will enter into force in 2012.
Numerous directives impose water quality standards based on the various uses of inland and coastal waters, including ground water, by setting limits on the discharges of many dangerous substances and by imposing information gathering and reporting requirements.
Adopted and effective since 2000, a comprehensive Water Framework Directive is progressively replacing numerous existing directives with a comprehensive set of requirements, including additional regulations obligating member countries to classify all water courses according to their biological, chemical and ecological quality, and to completely ban the discharges of approximately thirty toxic substances by 2017.
The law n° 2011-835 was adopted in France in July 2011 to prohibit the exploration and operation of shale gas by hydro-fracking technique and to repeal the exclusive research permits for projects using this technique. Consequently, the exclusive research permits issued to TOTAL at Montelimar (in the south of France) were repealed by the French Government. An administrative procedure is currently pending against this repeal.
In March 2004, the EU adopted a Directive on Environmental Liability (2004/35/EC). The Directive seeks to implement a strict liability approach for damage to water resources, soils and protected species and habitats by authorized industrial activities.
Directives implementing the Aarhus Convention of June 25, 1998, concerning public information rights and certain public participation rights in a variety of activities affecting the environment were adopted in January and May 2003, respectively. French regulations on public inquiry and impact assessment were adopted in 2011 and will enter into force on June 2012. These regulations aim to reinforce public participation and information rights concerning projects that could affect the environment.
In November 2008, the EU adopted a directive on the protection of the environment through criminal law that obliges EU Member States to provide for criminal penalties in respect of serious infringements of EC law (Directive 2008/99/EC). This directive was transposed in France in January 2012.
With respect to the climate change issue, numerous initiatives in the EU are pending or currently being revised, including:
– | A 2003 Directive implementing the Kyoto Protocol within the |
scheme effective as of January 2005 for greenhouse gas (“GHG”) emissions quotas. On the basis of this directive, carbon dioxide emissions permits are then delivered. This trading scheme required Member States to prepare, under the supervision of the EU Commission, national allocation plans identifying a global amount of quotas to be shared and delivered for free by the governments to each industrial installation | ||
– | ||
The first period of the Kyoto Protocol is reaching an end in 2012. |
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– | The Climate Action and Renewable Energy Package imposes an EU objective referred to as “3 x 20”, which commits EU Member States by 2020 to reduce overall GHG emissions to at least 20% below 1990 levels, |
EU (i.e., power generation, industry, transport, buildings and construction, as well as agriculture) are charged with making the transition to a low-carbon economy over the coming decades and these issues | ||
– | The 2009 Directive on Carbon Capture and Storage (CCS) was transposed in France in 2010. This legal framework forms the basis for developing CCS projects that are expected to serve as one of the most valuable solutions for the reduction of carbon dioxide emissions. Such regulations will have technical and financial impacts, including on TOTAL’s projects. | ||
With respect to biodiversity issues, this subject is increasingly taken into consideration. Following the 2010 Nagoya summit, the UN’s 65th General Assembly decided to form the IPBES (Intergovernmental Science-Policy Platform on Biodiversity) to share knowledge and future policies on biodiversity and ecosystem services.
In the United States, where TOTAL’s operations are less extensive than in Europe, TOTAL is also subject to significant HSE regulations at both the state and federal levels. Of particular relevance to TOTAL’s lines of business are:
The Clean Air Act and its regulations, which require, among other measures: stricter phased-in fuel specifications and sulfur reductions; enhanced emissions controls and monitoring at major sources of volatile organic compounds, nitrogen oxides, and other designated hazardous and non-hazardous air pollutants; GHG regulation; stringent pollutant emission limits; construction and operating permits for major air emission sources at chemical plants, refineries, marine and distribution terminals and other facilities; and risk management plans for the handling and storage of hazardous substances.
The Clean Water Act, which regulates the discharge of wastewater and other pollutants from both onshore and offshore operations and, among other measures, requires industrial facilities to obtain permits for most wastewater and surface water discharges, install control equipment and treatment systems, implement operational controls, and preventative measures, including spill prevention and control plans and practices to control storm water runoff.
The Resource Conservation and Recovery Act, which regulates the generation, storage, handling, treatment, transportation and disposal of hazardous waste and imposes corrective action requirements on regulated facilities requiring investigation and remediation of potentially contaminated areas at these facilities.
• | |
The Comprehensive Environmental Response, Compensation, and Liability Act (also known as CERCLA or Superfund), under which waste generators, former and current site owners and operators, and certain other parties can be held jointly and severally liable for the entire cost of remediating active, abandoned or non-operating sites contaminated by releases of hazardous substances regardless of fault or the amount or share of hazardous substances sent by a party to a site. The U.S. Environmental Protection Agency (“EPA”) has authority under Superfund to order responsible parties to clean up contaminated sites and may seek recovery of the government’s response costs from responsible parties. States have similar legal authority to compel site investigations and cleanups and to recover costs from responsible parties. The U.S. government and states may also sue responsible parties under CERCLA for |
National and international maritime oil spill laws, regulations and conventions, including the Oil Pollution Act of 1990, impose significant oil spill prevention requirements, spill response planning and training obligations, ship design requirements (including phased in double hull requirements for tankers), operational restrictions, spill liability for tankers and barges transporting oil, offshore oil platform facilities and onshore terminals and establishes an oil liability spill fund paid for by taxes on imported and domestic oil.
In the wake of the Deepwater Horizon accident, the Bureau of Ocean Energy Management, Regulation and Enforcement was replaced by the Bureau of Ocean Energy Management, which is responsible for managing development of offshore resources, and the Bureau of Safety and Environmental Enforcement (“BSEE”), which is responsible for safety and environmental oversight of offshore oil and gas operations. The BSEE has implemented more stringent permitting requirements and oversight of offshore drilling. Among other changes, well design, casing and cementing standards have been upgraded and compliance must be certified by a professional engineer. In addition, plans must describe containment resources available in case of an underwater blowout
and | |
54Environmental Management Systems program.
Other significant U.S. environmental legislation includes the Toxic Substances Control Act, which regulates the development, testing, import, export and introduction of new chemical products into commerce, and the Emergency Planning and CommunityRight-to-Know Act, which requires emergency planning and spill notification as well as public disclosure of chemical usage and emissions.
TOTAL’s facilities in the United States are also subject to extensive workplace safety regulations promulgated by OSHA.the Occupational Safety and Health Administration (“OSHA”). Most notable among OSHA regulations is the Process Safety Management of Highly Hazardous Chemicals, (PSM), a comprehensive regulatory program that requires major industrial sources, including petroleum refineries and chemical manufacturing facilities, to undertake significant hazard assessments during the design of new industrial processes and during modifications to existing processes, as well as a comprehensive and continual monitoring and management process for these chemicals.
The EPA’s regulation of GHG emissions endanger public health and the environment. This endangerment finding allows the EPA to regulate these emissionsfrom industrial sources under the Clean Air Act. Based on its endangerment finding, the EPA issued final rules in 2010 that apply the federal Clean Air Act’s Prevention of Significant Deterioration and Title V operating permit programs to stationary sources of GHGs. GHG permitting requirements apply to certain stationary sources in two steps beginningformally commenced on January 2, 2011, with2011. The authority to regulate GHG emissions under the largest industrial facilities firstClean Air Act is the culmination of several EPA rulemakings promulgated in 2009 and 2010 as a result of the 2007 U.S. Supreme Court decision inMassachusetts v. EPAconfirming the authority of EPA to become subject to permitting.regulate GHG emissions under the Clean Air Act. Each of these rulemakings is under legal challenge. The EPA intends tomay issue future rulemakings, beyond 2011,regulations requiring additional industry sectors to report GHG emissions and has indicated its intention to phase in GHG permitting offor smaller industrial sources. Various state and regional requirements also govern GHG emissions and additional measures can be expected in the future. Depending upon the outcome of legal challenges and on the content of future GHG regulations, by the EPA, TOTAL subsidiaries in the United States may incur additional capital and operating costs to comply with control technologyand/or facility upgrade requirements for reducing GHG emissions.
TOTAL subsidiarieshas investments in the United States may incur additional capitalin unconventional gas plays that utilize hydraulic fracturing, or “fracking,” a process that involves pumping a mixture of water, sand and chemicals underground at high pressure to fracture rock formations and release natural gas and
liquids that are otherwise inaccessible. Currently, regulation of these practices occurs at the state level, although there are a number of federal legislative proposals that could alter the regulatory framework. In addition, various state initiatives could result in stricter regulation of fracking. Increased regulation could affect TOTAL’s operating costs, to comply with such legislation including the acquisition of emissions allowances to continue operating.
Proceedings instituted by governmental authorities are pending or known to be contemplated against certainU.S.-based subsidiaries of TOTAL under applicable environmental laws that could result in monetary sanctions in excess of $100,000. No individual proceeding is, nor are the proceedings as a whole, expected to have a material adverse effect on TOTAL’s consolidated financial position or profitability.
Risk evaluation
TOTAL policies regarding health, safety and the environment
TOTAL has developed a “Health Safety Environment Quality Charter” which sets out the basic principles applicable within the Group regarding the protection of people, property and the environment. This charter is rolled out at several levels within the Group by means of management systems.
Along these lines, TOTAL has developed efficient organizations as well as safety, environmental and quality management systems, which it makes every effort to have certified or assessed (standards such as the International Safety Rating System, ISO 14001 and ISO 9001). For example, in 2010, TOTAL received ISO 9001 certification for “development and management of the database of technical businesses” in exploration and production.
Assessment
As part of its policy, TOTAL systematically assesses risks and impacts in the areas of industrial safety (particularly technological risks), the environment and the protection of workers and local residents:
prior to approving new projects, investments, acquisitions and disposals;
periodically during operations (safety studies, environmental impact studies, health impact studies and risk prevention plan in France as part of the 2003 legislation on the prevention of major technological risks);
prior to introducing new substances to the market (toxicological and ecotoxicological studies and life cycle analyses); and
based on the regulatory requirements inof the countries where these activities are located as well as recognizedcarried out and generally accepted good engineering practices.
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In particular, TOTAL has developed common methodologies for analyzing technological risks which must gradually be applied to all activities carried out. Furthermore, life cycle analyses for related risks are performed on certain products to study all the stages of a product’s life cycle from its conception until the end of its useful life.
Risk managementManagement
TOTAL develops risk management measures based on risk and impact assessments. These measures involve thefacility and structure design, of equipment and structures to be built, the reinforcement of safety devices and the protection against the consequencesremedies of environmental events.
In addition to developing organizations and management systems as described above, TOTAL seeksstrives to minimize industrial and environmental risks that are inherent toin its operations and, to this end, has developed efficient organizations as well as quality, safety and environmental management systems. The Group is also targeting certification for or assessment of its management systems (including International Safety Rating System, ISO 14001, European Management and Audit Scheme) and conducts detailedby conducting thorough inspections and audits, trains appropriatetraining personnel heightensand raising awareness ofamong all the partiesthose involved, and implementsimplementing an active investment policy.
In addition, performance indicators (in the Group’s2002-2005areas of HSE) and2006-2009 plans, an action plan was defined by the Group for the2010-2013 period that focuses on two initiatives for improvement: reducing the frequency risk monitoring have been put in place, objectives have been set and severity of work-related accidents, and strengthening the management of technological risks. The results related to reducingon-the-job accidents are in line with goals, with a significant decrease in the rate of accidents (with or without time-loss) per million hours worked by nearly 80% between the end of 2001 and the end of 2010. In terms of technological risks, this plan’s initiatives include specific organization and behavioral plans as well as plans to minimize risks at the source and to increase safety for people and equipment.
Although the emphasis is on preventing risks, TOTAL takes regular steps to prepare for different activities of the Group. These plans are designed to improve environmental performance, particularly regarding the use of natural resources, air and water pollution, waste production and treatment, and pollution and site decontamination. They also include quantified objectives to reduce, most notably, greenhouse gas emissions, water pollution as well as sulphur dioxide emissions and to improve energy efficiency.
In particular, TOTAL has set two other internal Task Forces:
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At the Group level, TOTAL has set up the alert scheme PARAPOL (Plan to mobilizeMobilize Resources Against Pollution) to facilitate crisis management and assist withprovide assistance by mobilizing resources in case of pollution. PARAPOL is made available to TOTAL’s affiliates and its main aim is to facilitate access to both internal and external response resources in the event of a pollution of marine, coastal or inland waters, without geographical restriction. The PARAPOL Procedure describes the organization of the emergencyprocedure is made available to TOTAL affiliates and its main goal is to facilitate access to internal experts and physical response team’s efforts, which is led by a PARAPOL Coordinator who manages or monitors the incident in order to access additional resources, both in terms of equipment and response experts. PARAPOL allows the mobilization of Group experts previously cleared to provide specific assistance to emergency response teams.
Furthermore, TOTAL and its affiliates are currently registered withmembers of certain external oil spill cooperatives that are able to provide expertise, resources and equipment in all
geographic areas where TOTAL conducts its activities,has operations, including in particular:particular Oil Spill Response, CEDRE (Center of documentation, research and experimentation on accidental water pollution) and Clean Caribbean and Americas.
Following the blow-out on the Macondo well in the Gulf of Mexico in 2010 (concerning which the Group was not involved), TOTAL created three Task Forces in order to analyze risks and provide recommendations.
In Exploration & Production, Task Force No. 1 reviewed the safety aspects of deep offshore drilling operations (wells architecture, design of blow-out preventers, training of personnel based on lessons learned from the serious accidents that occurred recently in the industry). Its efforts have led to the implementation of even more stringent controls and audits on drilling operations.
Task Force No. 2, coordinated with the Global Industry Response Group (GIRG) created by the OGP (International Association of Oil and Gas Producers), is studying deep offshore oil capture and containment operations in case of a pollution event in deep waters. In the short term, capture devices will be available in several regions of the world where TOTAL has a strong presence in exploration-production (North Sea, Gulf of Guinea).
Task Force No. 3 related to plans to fight accidental spills in order to strengthen the Group’s ability to respond to a major accidental pollution, such as a blow out or a total loss of containment from an FPSO (Floating Production, Storage and Offloading facility). This initiative has led, in particular, to a sharp increase in the volume of dispersants available within the Group.
The Group believes that it is impossible to guarantee that the contingencies or liabilities related to the above mentioned health, safety and environmental concerns will not have a material impact on its business, assets and liabilities, consolidated financial situation, cash flow or income in the future.
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Oil and gas exploration and production require high levels of investment and are associated with particular risks and opportunities. These activities are subject to risks related specifically to the difficulties of exploring underground, to the characteristics of hydrocarbons and to the physical characteristics of an oil or gas field. Of risks related to oil and gas exploration, geologic risks are the most important. For example, exploratory wells may not result in the discovery of hydrocarbons, or may result in amounts that
would be insufficient to allow for economic development. Even if an economic analysis of estimated hydrocarbon reserves justifies the development of a discovery, the reserves can prove lower than the estimates during the production process, thus adversely affecting the economic development.
Almost all the exploration and production operations of TOTAL are accompanied by a high level of risk of loss of the invested capital due to the risks related to economic or political factors detailed hereafter. It is impossible to guarantee that new resources of crude oil or of natural gas will be discovered in sufficient amounts to replace the reserves currently being developed, produced and sold to enable TOTAL to recover the capital it has invested.
The development of oil and gas fields, the construction of facilities and the drilling of production or injection wells require advanced technology in order to extract and exploit fossil fuels with complex properties over several decades. The deployment of this technology in such a difficult environment makes cost projections uncertain. TOTAL’s operations can be limited, delayed or cancelledcanceled as a result of numerousa number of factors, such asincluding administrative delays, particularly in termsparticular as part of the host states’ approval processes for development projects, shortages, late delivery of equipment and weather conditions, including the risk of hurricanes in the Gulf of Mexico. Some of these risks may also affect TOTAL’s projects and facilities further down the oil and gas chain.
Economic or political factors
The oil sector is subject to domestic regulations and the intervention of governments, directly or through state-owned companies, in such areas as:
the award of exploration and production interests;
authorizations by governments or by a state-controlled partner, in particular for development projects, annual programs or the selection of contractors or suppliers;
the imposition of specific drilling obligations;
environmental protection controls;
control over the development, exploitation and abandonment of a field causing restrictions on production;
calculating the costs that may be recovered from the relevant authority and what expenditures are deductible from taxes;
cases of expropriation, nationalization or reconsideration of contractual rights.
The oil industry is also subject to the payment of royalties and taxes, which may be high compared withhigher than those imposed with respectapplicable to other commercial activitiesbusinesses and which may be subject to material modificationschanges by the governments of certain countries.
Substantial portions of TOTAL’s oil and gas reserves are located in certain countries that may be considered as politically and economically unstable. TheseSuch oil and gas reserves and the related operations are subject to certain additional risks, including:
the implementation of production and export quotas;
the compulsory renegotiation of contracts;
the expropriation or nationalization of assets;
risks related to changes of local governments or the resulting changes in business customs and practices;
payment delays;
currency exchange restrictions;
depreciation of assets due to the devaluation of local currencies or other measures taken by governments that might have a significant impact on the value of activities; and
losses and decreased activity due to armed conflicts, civil unrest, the actions of terrorist groups or sanctions that target activities or parties of certain countries.
TOTAL, like other major international oil companies, has a geographically diverse portfolio of reserves and operational sites, which allows it to conduct its business and financial affairs so as to reduce its exposure to such political and economic risks. However, there can be no assurance that such events will not adversely affect the Group.
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Provided in this section is certain information relating to TOTAL’s activities in these jurisdictions.
For more information on U.S. and other legalEU restrictions relevant to our activities in these jurisdictions, see “Item 3. Key Information — Risk Factors — We have activities in certain countries which are subject to U.S. and EU sanctions and our activities in Iran could lead to sanctions under relevant U.S. and EU legislation”Factors”.
Cuba
In 2010, TOTAL2011, TOTAL’s Refining & Marketing division had limited marketing activities for the sale of specialty products to non-state entities in Cuba and paid taxes on such activities. In addition, TOTAL’s Trading & Shipping division purchased hydrocarbons pursuant to spot contracts from a state-controlled entity for approximately €83€40 million.
Iran
TOTAL’s Exploration & Production division hashistorically had been active in Iran through buyback contracts. Under such contracts, the contractor is responsible for and finances development operations. Once development is completed, operations are handed over to the national oil company, which then operates the field. The contractor receives payments in cash or in kind to recover its expenditures as
well as a remuneration based on the field’s performance. Furthermore, upon the national oil company’s request, a technical services agreement may be implemented in conjunction with a buyback contract to provide qualified personnel and services until full repayment of all amounts due to the contractor.
TOTAL has entered into such buyback contracts between 1995 and 1999 with respect to the development of four fields: Sirri, South Pars 2 & 3, Balal and Dorood. For all of these contracts, development operations have been completed and TOTAL retains no operational responsibilities. A technical services agreement for the Dorood field expired in December 2010. As TOTAL is no longer involved in the operation of these fields, TOTAL has no information on the production from these fields. Some payments are yet to be reimbursed to TOTAL with respect to South Pars 2 & 3, Balal and Dorood. In 2010, TOTAL’sSince 2011, TOTAL has no production in Iran corresponding to such payments in kind, wascompared to 2 kboe/d.d in 2010 and 8 kboe/d in 2009. No royalties or fees are paid by the Group in connection with these buyback and service contracts. In 2010,2011, TOTAL made non-material payments to the Iranian administration with respect to certain taxes and social security.
With respect to TOTAL’s Refining & Marketing division’s 2011 activities in Iran, Beh Total, a company held 50/50 by Behran Oil and Total Outre-Mer, a subsidiary of the Group, producesproduced and marketsmarketed small quantities of lubricants (16,000(20,000 tons) for sale to domestic consumers in Iran. In 2010,2011, revenue generated from Beh Total’s activities was €34.9€43.5 million and cash flow was €5.9€4.6 million. Beh Total paid €800,000approximately€1 million in taxes. TOTAL does not own or operate any refineries or chemicals plants in Iran. In 2010,2011, Beh Total paid €5.6€5.6 million of dividends for fiscal year 20092010 (share of TOTAL: €2.8€2.3 million).
In 2010,2011, TOTAL’s Trading & Shipping division purchased in Iran pursuant to a mix of spot and term contracts approximately forty-fiveforty-nine million barrels of hydrocarbons from state-controlled entities for approximately €2.5€3.7 billion.
Sudan
Since the independence of the Republic of South Sudan on July 9, 2011, TOTAL is not present in Sudan. TOTAL holds an interest in Block B in Southernwhat was, prior to July 9, 2011, the southern region of Sudan.
TOTAL disbursed in Sudan through a 1980 Exploration and Production Sharing Agreement (EPSA). Operations were voluntarily suspended in 1985 because of escalating security concerns, but the company maintained its exploration rights. The Group’s initial interest was 32.5%. Despite the withdrawal of a partner, TOTAL does not intend to increase its interest above its initial level. Consequently, the Group has entered into negotiations with new partners to transfer the former partner’s interests for which the Group financially carries a share.
schools and water wells along with non-governmental organizations and other stakeholders involved in Southernsouthern Sudan.
For more information on TOTAL’s activities in the country. If TOTAL were to resume its activities in SouthernRepublic of South Sudan, it would make sure to do so in strict compliance with applicable national, European and international laws and regulations, as well as with the Group’s Codesee “Item 4. Business Overview — Republic of Conduct and Ethics
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The main terms of PSA 1988 are similar to those normally used in the oil and gas industry. The Group’s revenues derived from PSA 1988 are made up of a combination of “cost oil” and “profit oil”. “Cost oil” represents the reimbursement of operating and capital expenditures and is accounted for in accordance with normal industry practices. The Group’s share of “profit oil” depends on the total annual production level. TOTAL receives its revenues in cash payments made by SPC.GPC. TOTAL pays to the state-owned Syrian company SCOT a transportation fee equal to $2/b for the oil produced in the area, as well as non-material payments to the Syrian government related to PSA 1988 for such items as withholding taxes and Syrian social security.
The Tabiyeh contract, signed with GPC, may be considered as an addition to PSA 1988 as production, costs and revenues for the oil and part of the condensates coming from the Tabiyeh field are governed by the contractual terms of PSA 1988. This project is designed to enhance liquids and gas output from the Tabiyeh field through the drilling of “commingled” wells and through process modifications in Deir Ez Zor Gas Plant operated by the Syrian Gas Company. Until early December 2011, TOTAL is financingfinanced and implementingimplemented the Tabiyeh Gas Project and operatesoperated the Tabiyeh field.
In 2010,2011, technical production for PSA 1988 and the Tabiyeh contract taken together amounted to 7463 kboe/d, of which 3953 kboe/d were accounted for as the Group’s
share of production. The amount identified as technical production under the agreements, minus the amount accounted for as the Group’s share of production, does not constitute the total economic benefit accruing to Syria under the terms of the agreements since Syria retains a margin on a portion of the Group’s production and receives certain production taxes.
In 2010, throughaddition, TOTAL and GPC entered into a Cooperation Framework Agreement in 2009, which provides for the co-development of oil projects in Syria.
Since early December 2011, TOTAL has ceased its subsidiary Total Middle East basedactivities that contribute to oil and gas production in Dubai, TOTAL sold 6,000 tons of lubricants in Syria via a distributor.
In 2010,2011, TOTAL’s Trading & Shipping division purchased in Syria pursuant to a mix of spot and term contracts nearly teneleven million barrels of hydrocarbons from state-controlled entities for approximately €580€824 million.
Competition
TOTAL is subject to competition from other oil companies in the acquisition of assets and licenses for the exploration and production of oil and natural gas as well as for the sale of manufactured products based on crude and refined oil. TOTAL’s competitors are comprised of national oil companies and international oil companies.
In this regard, the major international oil companies in competition with TOTAL are ExxonMobil, Royal Dutch Shell, Chevron and BP. As of December 31, 2010,2011, TOTAL ranked fifth among these companies in terms of market capitalization.(1)
Insurance and risk management
Organization
TOTAL has its own insurance and reinsurance company, Omnium Insurance and Reinsurance Company (OIRC). OIRC is integrated intowith the Group’s insurance management and is used as a centralized global operations tool for covering the Group’s risks. It allows the Group to implement itsGroup’s worldwide insurance program to be implemented in compliance with the various regulatory environmentsspecific requirements of local regulations applicable in the countries where the Group operates.
Some countries may require the purchase of insurance from a local insurance company. If the local insurer accepts to cover the subsidiary of the Group in compliance with its worldwide insurance program, OIRC requests a retrocession of the covered risks from the local insurer. As
(1) | Source: Reuters. |
a result, OIRC negotiates reinsurance contracts with the subsidiaries’ local insurance companies, which transfer most of the risk to OIRC. When a local insurer covers the risks at a lower level than that defined by the Group, OIRC provides additional coverage so as to standardize coverage throughout the Group.
At the same time, OIRC negotiates a reinsurance program at the Group level with mutual insurance companies for the oil industry and commercial reinsurers. OIRC permits the Group to better manage price variations in the
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In 2010,2011, the net amount of risk retained by OIRC after reinsurance was a maximum of €50$75 million per third-party liability insurance claim and €50$75 million per property damageand/or business interruption insurance claim. Accordingly, in the event of any loss giving rise to an insurableaggregate insurance claim, the effect on OIRC would be limited to its maximum retention of €100$150 million per event.
Risk and insurance management policy
In this context, the Group risk and insurance management policy is to work with the relevant internal department of each subsidiary to:
define scenarios of major disaster risks (estimated maximum loss);
assess the potential financial impact on the Group should a catastrophic event occur;
help to implement measures to limit the probability that a catastrophic event occurs and the financial consequences if such event should occur; and
manage the level of risk from such events to be either covered internally by the Group or transferred to the insurance market.
Insurance policy
The Group has worldwide third-party liability and property insurance coverage for all its subsidiaries. These programs are contracted with first-class insurers (or reinsurers and mutual insurance companies of the oil industry through OIRC).
The amounts insured depend on the financial risks defined in the disaster scenarios and the coverage terms offered by the market (available capacities and price conditions).
More specifically for:
Third-party liability insurance: since the maximum financial risk cannot be evaluated by a systematic approach, the amounts insured are based on market conditions and industry practice, in particular, the oil industry. In 2011, the Group’s third-party liability
insurance for any liability (including potential accidental environmental liabilities) was capped at $850 million. | |
Property damage and business interruption: the amounts insured vary by sector and by site and are based on the estimated cost of and reconstruction under maximum loss scenarios and on insurance market conditions. The Group subscribed for business interruption coverage in 2011 for its main refining and petrochemical sites.
For example, with respect to the highest estimated risks of the Group (floating production, storage and offloading units (FPSO) in Angola andfor the Group’s highest risks (platforms in the North Sea and main European refineries)refineries and petrochemical plants in Europe), in 2011 the Group’s share of coverage in 2010insurance limit was approximately $1.65 billion for the Downstream segment and approximately $1.5 billion.
Deductibles for property damage and third-party liability fluctuate between €0.1€0.1 million and €10€10 million depending on the level of risk and liability, and are borne by the relevant subsidiary. For business interruption, coverage begins sixty days after the event giving rise to the interruption.
Other insurance contracts are bought by the Group in addition to property damage and third-party liability coverage, mainly for car fleets, credit insurance and employee benefits. These risks are entirely underwritten by outside insurance companies.
The above-described policy is given as an example of past practice over a certain period of time and cannot be considered as representative of future conditions. The Group’s insurance policy may be changed at any time depending on the market conditions, specific circumstances and on management’s assessment of the risks incurred and the adequacy of their coverage.
While TOTAL believes its insurance coverage is in line with industry practice and sufficient to cover normal risks in its operations, it is not insured against all possible risks. In the event of a major environmental disaster, for example, TOTAL’s liability may exceed the maximum coverage provided by its third-party liability insurance. The loss TOTAL could suffer in the event of such a disaster would depend on all the facts and circumstances and would be subject to a whole range of uncertainties, including legal uncertainty as to the scope of liability for consequential damages, which may include economic damage not directly connected to the disaster. The Group cannot guarantee that it will not suffer any uninsured loss and there can be no assurance,guarantee, particularly in the case of a major environmental disaster or industrial accident, that such loss would not have a material adverse effect on the Group.
Competition law
Competition laws apply to the Group’s companies in the vast majority of countries in which it does business. Violations of competition laws carry fines and expose the Group and its employees to criminal sanctions and civil suits. Furthermore, it is now common for persons or corporations allegedly injured by violations of competition laws to sue for damages.
The broad range of activities and countries in which the Group operates requires local analysis, by business segment, of the legal risks in terms of competition law. Some of the Group’s business segments have already been implementing competition law conformity plans for a long time. Moreover, a Group-wide policy designed to coordinate risk management measures and competition law conformity plans has been under development since the beginning of 2012.
Organizational Structure
TOTAL S.A. is the parent company of the TOTAL Group. As of December 31, 2010,2011, there were 687870 consolidated subsidiaries, of which 596783 were fully consolidated and 9187 were accounted for under the equity method. For a list of the principal subsidiaries of the Company, see Note 35 to the Consolidated Financial Statements.
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TOTAL has freehold and leasehold interests in numerous countries throughout the world, none of which is material to TOTAL. See “— Business Overview — Upstream” for a description of TOTAL’s reserves and sources of crude oil and natural gas.
None.
This section is the Company’s analysis of its financial performance and of significant trends that may affect its future performance. It should be read in conjunction with the Consolidated Financial Statements included elsewhere in this Annual Report. The Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB and IFRS as adopted by the European Union.
This section contains forward-looking statements which are subject to risks and uncertainties. For a list of important factors that could cause actual results to differ materially from those expressed in the forward-looking statements, see “Cautionary Statement Concerning Forward-Looking Statements” on page vi.
OVERVIEW
TOTAL’s results are affected by a variety of factors, including changes in crude oil and natural gas prices as well as refining and marketing margins, which are all generally expressed in dollars, and changes in exchange rates, particularly the value of the euro compared to the dollar. Higher crude oil and natural gas prices generally have a positive effect on the income of TOTAL, since its Upstream oil and gas business benefits from the resulting increase in revenues realized from production. Lower crude oil and natural gas prices generally have a corresponding negative effect. The effect of changes in crude oil prices on TOTAL’s Downstream activities depends upon the speed at which the prices of refined petroleum products adjust to reflect such changes. In the past several years, crude oil and natural gas prices have varied greatly. As TOTAL reports its results in euros, but conducts its operations mainly in dollars, the effect of an
increase in crude oil and natural gas prices is partly offset by the effect of the variation in exchange rates during periods of weakening of the dollar relative to the euro and strengthened during periods of strengthening of the dollar relative to the euro. TOTAL’s results are also significantly affected by the costs of its activities, in particular those related to exploration and production, and by the outcome of its strategic decisions with respect to cost reduction efforts. TOTAL’s results are also affected by general economic and political conditions and changes in governmental laws and regulations, as well as by the impact of decisions by OPEC on production levels. However, the Euro zone’s turbulences during the fiscal year 2011 did not affect the Group significantly. For more information, see “Item 3. Key Information — Risk Factors” and “Item 4. Information on the Company — Other Matters”.
The year 2011 witnessed a number of geopolitical events that put pressure on market supplies. Despite the market environment for the oil and gas industry was marked by the rebound in theeconomic slowdown, demand for oil gas and petroleum products drivencontinued to rise, fuelled by the global economic growth of emerging markets. Pressure on supply, plus rising demand, resulted in particulara sharp increase in emerging countries. Crude oilthe price of crude oil. The average price of Brent in 2011 was $111/b, compared with $80/b in 2010.
Gas spot prices increased in 2010continued to reach an average $80/b. Spot gas pricesrise in Europe and Asia also recovered. Followingin 2011, mainly due to increased demand on Asian markets. Spot prices for gas in the United States remained very low, due to the continued rise in production, driven by the development of non-conventional gases.
Despite the gradual adjustment of refining capacity, the overcapacity that has existed in the European refining market since 2009 recordcontinued into 2011, due to low levels, refiningdemand in Europe. Refining margins recovereddropped to an average of $17/t in 2011, compared with $27/t in Europe.2010(1). In the first half of 2011, the Chemicals segment enjoyed a globally favorable environment, which has deteriorated since then. In the second half of the year, the Base Chemicals and Specialty Chemicals divisions saw their margins shrink due to the drop in demand for polymers improved in all consuming areas and led to recovering petrochemical margins.
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The year 2011 saw numerous acquisitions and asset sales, reflecting the improved environmentGroup’s ambition to optimize its portfolio by creating value from certain mature assets and by developing its Upstream assets with high potential for growth.
TOTAL benefited from the soundrise in its operational cash flow and the€8 billion inflows from asset sales in 2011 to fund the increase in its investment program, while maintaining a dividend of€2.28 per share, which will be submitted for approval to the Shareholders’ meeting on May 11, 2012. The balance sheet remained strong, with a net-debt-to- equity ratio(2) of 23% at the end of 2011, compared with 22% at the end of 2010.
In terms of operations, 2011 saw the continued improvement of safety performance, with a 15% drop in the Group-wide TRIR(3) compared with 2010.
In the Upstream segment, three major discoveries in Azerbaijan, Bolivia and French Guiana were the first results of the Group,Group’s bolder exploration strategy. The year 2011 also witnessed the successful start-up of the Pazflor deep-offshore platform in particular with production growingAngolan waters, a project operated by TOTAL that illustrates the Group’s expertise in the development of major projects. Five new major projects, including the Ichthys LNG project in Australia (TOTAL, 24%), were also launched, in order to secure growth in the years to come.
Still in the Upstream segment, 2011 also saw the announcement of the acquisition of a 14.09% stake in the Russian company Novatek and an increase of the Group’s stakes in the Fort Hills project in Canada and in Tempa Rossa in Italy. At the end of 2011, the Group announced its entry into the Utica shale gas and condensates deposit in the United States. The Group continued to extend its oil and gas acreage by more than 4% comparedacquiring stakes in promising exploration areas, such as the pre-salt blocks in the Kwanza basin in Angola, and by acquiring stakes in deposits that have already been discovered, such as the Yamal LNG project in Russia.
At the same time, in 2011, TOTAL disposed of certain mature or non-strategic Upstream assets, including its exploration-production subsidiary in Cameroon and its stakes in pipelines in Colombia.
In the realm of new energies, TOTAL acquired in 2011 a 60% stake (now, 66%) in the U.S. company SunPower, to 2009.become one of the leaders in the solar industry. Although currently in the consolidation phase, this industry offers opportunities for strong growth.
In the Downstream and Chemicals segments, TOTAL deployed its strategy of increasing the competitive performance of its activities, scaling down its exposure to mature zones, mainly Europe, and bolstering its presence
(1) | Based on TOTAL’s “European Refining Margin Indicator” (ERMI). |
(2) | Net-debt-to-equity ratio = net debt (i.e., the sum of current borrowings, other current financial liabilities and non-current financial debt, net of current financial assets, hedging instruments on non-current financial debt and cash and cash equivalents) divided by the sum of shareholders’ equity and non-controlling interests after expected dividends payable. |
(3) | Total Recordable Injury Rate. |
in its cash flow from operations, TOTAL strengthened its balance sheet with a net debt to equity ratio of 22% at year-end 2010, down from 27% at year-end 2009 (forhigh-growth areas. Consequently, 2011 saw the computationstart-up of the net debt to equity ratio, see the Consolidated Financial Statements included elsewhere herein, Note 20) Financial debt and related financial instruments — C) Net-debt-to-equity ratio).
On the Marketing front, in each business segment. With a higher level of acquisitions and disposals,2011, the Group also showedcontinued its intentionoptimization drive by selling off its distribution activities in the United Kingdom and launching a program to optimize its portfolio of businesses.
A restructuring of the Downstream and Chemicals sectors was announced in October 2011. The deployment of this project led to organizational changes on January 1, 2012, with the creation of:
a Refining & Chemicals segment, a large number of countries,industrial base that encompasses refining, petrochemicals, fertilizers and specialty chemicals operations. This segment also includes oil trading and shipping activities.
a Supply & Marketing segment, which is dedicated to worldwide supply and marketing activities in the Group put an emphasis on corporate social responsibility (CSR) challenges and the development of local industries.oil products field.
The process initiated in 2004 to increase R&D budgets continued with expenditures in 2011 of €715€776 million, up 10%9% compared to 2009,2010, with the aim of, in particular, the continued improvement of the Group’s technological expertise in the development of oil and gas resources and the development of solar, biomass, carbon capture and storage technologies in order to contribute to changes in the global energy mix.
Finally, in 2011, TOTAL reasserted the Upstream segment,priority on safety and the environment as part of its operations throughout its business. For all of its projects conducted in a large number of countries, the Group continued its ambitious investment program that includes launching seven new projects, including Laggan/Tormore inputs an emphasis on corporate social responsibility (CSR) challenges and the North Sea and CLOV in Angola. Highlights of 2010 also included the announcementdevelopment of the acquisition of an interest in two major projects: the Fort Hills field andVoyageur upgrader in Canada and GLNG in Australia. The Group continued to add to its acreage with new exploration plays focused on pre-salt projects, unconventional gas and new frontier areas. Finally, in 2010, TOTAL divested its interests in the Valhall and Hod fields in Norway and Block 31 in Angola, and announced the sale of its Exploration & Production subsidiary in Cameroon.
Outlook
In 2011,2012, TOTAL intends to consolidate its drivers for growth and enhance the priority given to the safety, reliability and acceptability of its operations.
The 2012 net investment budget is $20 billion ($20 billion)(approximately€14.3 billion(1)). In addition, TOTAL intends to continue
to acquire targeted assetsactively manage its asset portfolio with, in particular, a program of non-strategic asset sales. The 2012 budget for organic investments (i.e., net investments excluding acquisitions and dispose of non strategic assets.
Capital expenditures will mostly be focused on the Upstream segment with an allocation of €12.3$20 billion ($16(approximately€14.3 billion)(1). 35%, or more than 80% of the investmentsGroup’s organic capital expenditure budget. About 30% of the investment in the Upstream segment shouldis expected to be dedicated to producing assets while 65% should70% is expected to be assigned to developdeveloping new projects. In the Downstream and Chemicals segments,organic capital expenditures willin the Refining & Chemicals and Supply & Marketing segments are expected to amount to nearly €3.1$3 billion ($4(approximately€2.1 billion)(1) and $1 billion (approximately€714 million), respectively, in 2011,2012. In line with the strategy to develop a number of major integrated platforms in particular dedicatedorder to stimulate growth and improve competitive performance, the main projects in the Refining & Chemicals segment in 2012 will be the upgrading of the Normandy refinery and petrochemical plant, andthe building of the Jubail refinery in Saudi Arabia. In addition, major turnaroundsArabia and the expansion of Group refineries should increase compared with the lower number recordedDaesan platform in 2010.
The Group also confirms its commitment with respect to R&D with a budget increasing to nearly €0.8about $1.2 billion ($1 billion)(1)(approximately€857 million) in 2011.
In the Upstream segment, TOTAL expectswill deploy its strategy intended tostart-up a speed up growth of its production, while improving the profitability of its portfolio of assets. The year 2012 should see the launch of numerous projects. In 2012, TOTAL plans to bring eight new wave of major projects startingon-stream, which will contribute to expected growth in mid-2011 with,output in particular,2012 and achieving thestart-up target rate of Pazfloraverage annual production growth of 2.5% between 2010 and 2015: Usan and OML 58 Upgrade in Nigeria, Islay in the UK North Sea, Angola LNG in Angola, scheduledBongkot South in the fourth quarter of the year.Thailand, Halfaya in Iraq, Sulige in China and Kashagan in Kazakhstan. The Group will also carry on the study of a number ofcontinue to evaluate numerous other projects, in particular in Western Africa, Russia Australia, Canada and China. CommencementCanada. The anticipated launch of construction overthese projects during the course of the next couple oftwo years subject to final investment decisions, will contribute to increasingshould improve visibility on middle-term growth.growth in output after 2015. With an exploration budget increasingthat stands at $2.5 billion (approximately€1.8 billion), up 20% compared to €1.6 billion ($2.1 billion)(1) for 2011, the Group will also implement a boldercontinue to pursue an ambitious and more diversified approach with the expectation of making greater discoveries in the years to come.strategy.
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(1) | All euro figures in this section converted at a rate of $1.40/€. |
In the Downstream sector, with a new organization that will allow it to take up the challenges specific to each activity of that sector, the Group should start to reap the first benefits of an integrated Refining & Chemicals segment and Chemicals segments,Supply & Marketing segment, each of which is closer to its markets. TOTAL will strive to improve its competitiveness by continuing to adaptadapting its assets portfolioactivities in Europe starting upand seeking to enhance its operational efficiency and synergies between its operations. The year 2012 will see continued development in high-growth zones, with the expected start-up of a new units atpolyethylene production unit in Qatar and the Port Arthur refinerycompletion
of the first step of the expansion of its Daesan platform in the United States and developing positions in growth markets.
In 2012, TOTAL can rely on its solid balance sheet at year-end 2010 and increased leewayon the start-up and ramp-up of new projects that should contribute to the growth of operating cash flow. Moreover, in an environment marked with crude oil prices over $80/b,2012, TOTAL will continue to develop its variousnew projects in 2011 through an ambitious investmentcapital expenditure program, while sticking tomaintaining a targeted net debt to equitytarget for the net-debt-to-equity ratio of between 25% and 30%20-30% and a dividend policy withbased on an average pay-out ratio of 50% based onof adjusted fully-diluted earnings per share(1). The Group also confirms its intention to divest the remainder of its stake in Sanofi-Aventis by 2012, which represented 5.5% of the outstanding share capital of Sanofi-Aventis as of December 31, 2010, for an estimated market value of €3.5 billion ($4.6 billion)(2).
CRITICAL ACCOUNTING POLICIES
A summary of the GroupGroup’s accounting policies is included in Note 1 to the Consolidated Financial Statements. Management believes that the application of these policies on a consistent basis enables the Group to report useful and reliable information about the Group’s financial condition and results of operations.
The Company has changed its method for reserve estimates due to the adoption of the Accounting Standards UpdateNo. 2010-03, Oil and Gas Reserve Estimation and Disclosures, effective for annual reporting periods ended on or after December 31, 2009.
The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of preparation of the financial statements and reported income and expenses for the period. Management reviews these estimates and assumptions on an ongoing basis, by reference to past experience and various other factors considered as reasonable which form the basis for assessing the book value of assets and liabilities. Actual results may differ significantly from these estimates, if different assumptions or circumstances apply.
Lastly, where the accounting treatment of a specific transaction is not addressed by any accounting standards or interpretation, management applies its judgment to define and apply accounting policies that will lead to relevant and reliable information, so that the financial statements:
give a true and fair view of the Group’s financial position, financial performance and cash flows;
reflect the substance of transactions;
are neutral;
are prepared on a prudent basis; and
are complete in all material aspects.
The following summary provides further information about the critical accounting policies that involve significant elements of management judgment, and which could have a significant impact on the results of the Group. It should be read in conjunction with Note 1 to the Consolidated Financial Statements.
The assessment of critical accounting policies below is not meant to be an all-inclusive discussion of the uncertainties in financial results that can occur from the application of the full range of the Company’s accounting policies. Materially different financial results could occur in the application of other accounting policies as well. Likewise, materially different results can occur upon the adoption of new accounting standards promulgated by the various rule-making bodies.
Successful efforts method of oil and gas accounting
The Group follows the successful efforts method of accounting for its oil and gas activities. The Group’s oil and gas reserves are estimated by the Group’s petroleum engineers in accordance with industry standards and SEC regulations. In December 2008, the SEC published a revised set of rules for the estimation of reserves. These revised rules were used for the year-end estimation of reserves beginning in 2009. Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations, prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic
(1) | For the adjusted fully-diluted earnings per share, see the Consolidated Financial Statements included elsewhere herein, Note 4) Business segment information — A) Information by business segment. |
methods are used for the estimation. These estimates do not include probable or possible reserves. Estimated oil
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Exploration leasehold acquisition costs are capitalized when acquired. During the exploration phase, management exercises judgment on the probability that prospects ultimately would partially or fully fail to find proved oil and gas reserves. Based on this judgmental approach, a leasehold impairment charge may be recorded. This position is assessed and adjusted throughout the contractual period of the leasehold based in particular on the results of exploratory activity and any impairment is adjusted prospectively.
When a discovery is made, exploratory drilling costs continue to be capitalized pending determination of whether potentially economic oil and gas reserves have been discovered by the drilling effort. The length of time necessary for this determination depends on the specific technical or economic difficulties in assessing the recoverability of the reserves. If a determination is made that the well did not encounter oil and gas in economically viable quantities, the well costs are expensed and are reported in exploration expense.
Exploratory drilling costs are temporarily capitalized pending determination of whether the well has found proved reserves if both of the following conditions are met:
the well has found a sufficient quantity of reserves to justify, if appropriate, its completion as a producing well, assuming that the required capital expenditure is made; and
satisfactory progress toward ultimate development of the reserves is being achieved, with the Company making sufficient progress assessing the reserves and the economic and operating viability of the project.
The Company evaluates the progress made on the basis of regular project reviews which take into account the following factors:
First, if additional exploratory drilling or other exploratory activities (such as seismic work or other significant studies) are either underway or firmly planned, the Company deems there is satisfactory progress. For these purposes, exploratory activities are considered firmly planned only if they are included in the Company’s three-year exploration plan/budget.
In cases where exploratory activity has been completed, the evaluation of satisfactory progress takes into account indicators such as the fact that
costs for development studies are incurred in the current period, or that governmental or other third-party authorizations are pending or that the availability of capacity on an existing transport or processing facility awaits confirmation. |
The successful efforts method requires, among other things, that the capitalized costs for proved oil and gas properties (which include the costs of drilling successful wells) be amortized on the basis of reserves that are produced in a period as a percentage of the total estimated proved reserves. The impact of changes in estimated proved reserves is dealt with prospectively by amortizing the remaining book value of the asset over the expected future production. If proved reserve estimates are revised downward, earnings could be affected by higher depreciation expense or an immediate write-down of the property’s book value. Conversely, if the oil and gas quantities were revised upwards, futureper-barrel depreciation and depletion expense would be lower.
Valuation of long-lived assets
In addition to oil and gas assets that could become impaired under the application of successful efforts accounting, other assets could become impaired and require write-down if circumstances warrant. Conditions that could cause an asset to become impaired includelower-than-forecasted lower-than-expected commodity sales prices, changes in the Group’s business plans or a significant adverse change in the local or national business climate. The amount of an impairment charge would be based on estimates of an asset’sthe higher of the value in use or the fair value minus cost to sell compared with its book value. The fair value usuallyin use is based on the present valuesvalue of expected future cash flowsflow using assumptions commensurate with the risks involved in the asset group. The expected future cash flowsflow used for impairment reviews areis based on judgmental assessments of future production volumes, prices and costs, considering information available at the date of review.
Asset retirement obligations and environmental remediation
When legal and contractual obligations require it, the Group, upon application of International Accounting Standard (IAS) 37 and IAS 16, records provisions for the future decommissioning of production facilities at the end of their economic lives. Management makes judgments and estimates in recording liabilities. Most of these removal obligations are many years in the future and the precise requirements that will have to be met when the removal event actually occurs are uncertain. Asset removal technologies and costs are constantly changing,
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The Group also makes judgments and estimates in recording costs and establishing provisions for environmentalclean-up and remediation costs, which are based on current information on costs and expected plans for remediation. For environmental provisions, actual costs can differ from estimates because of changes in laws and regulations, public expectations, discovery and analysis of site conditions and changes inclean-up technology.
Pensions and post-retirement benefits
Accounting for pensions and other post-retirement benefits involves judgments about uncertain events, including estimated retirement dates, salary levels at retirement, mortality rates, rates of return on plan assets, determination of discount rates for measuring plan obligations, healthcare cost-trend rates and rates of utilization of healthcare services by retirees. These assumptions are based on the environment in each country. The assumptions used are reviewed at the end of each year and may vary fromyear-to-year, based on the evolution of the situation, which will affect future results of operations. Any differences between these assumptions and the actual outcome will also impact future results of operations.
The significant assumptions used to account for pensions and other post-retirement benefits are determined as follows:
Discount and inflation rates primarily reflect the rates at which the benefits could be effectively settled, taking into account the duration of the obligation. Indications used in selecting the discount rate include rates of annuity contracts and rates of return on high-quality fixed-income investments (such as government bonds). The inflationhigh quality corporate bonds. Inflation rates reflect market conditions observed on acountry-by-country basis.
Salary increase assumptions (when relevant) are determined by each entity. They reflect an estimate of the actual future salary levels of the individual employees involved, including future changes attributed to general price levels (consistent with inflation rate assumptions), productivity, seniority, promotion and other factors.
Healthcare cost trend assumptions (when relevant) reflect an estimate of the actual future changes in the cost of the healthcare-related benefits provided to the plan participants and are based on past and current healthcare cost trends including healthcare inflation, changes in healthcare utilization, and changes in health status of the participants.
Demographic assumptions such as mortality, disability and turnover reflect the best estimate of these future events for the individual employees involved, based principally on available actuarial data.
Determination of expected rates of return on pension plan assets is made through compound averaging. For each plan, the distribution of investments among bonds, equities and cash and the expected rates of return on bonds,
equities and cash are taken into account. A weighted-average rate is then calculated.
The effect pensions had on results of operations, cash flow and liquidity is fully set out in Note 18 to the Consolidated Financial Statements. Net employee benefit expense in 20102011 amounted to €374€315 million and the Company’s contributions to pension plans were €269€347 million.
Differences between projected and actual costs and between the projected return and the actual return on plan assets routinely occur and are called actuarial gains and losses.
The Group applies the corridor method to amortize its actuarial losses and gains. This method amortizes the net cumulative actuarial gains and losses that exceed 10% of the greater of (i) the present value of the defined benefit obligation, and (ii) the fair value of plan assets, over the average expected remaining working lives of the employees participating in the plan.
The unrecognized actuarial losses of pension benefits as of December 31, 2010,2011, were €1,170€1,713 million compared to €1,045€1,170 million for 2009.2010. The increase in unrecognized actuarial losses is explained by actuarial losses due to a decrease in discount rates in 2010 partially offset by an increase2011 and due to a decrease in the value of plan assets. As explained above, pension accounting principles allow that such actuarial losses be deferred and amortized over future periods, in the Company’s case a period of fifteen years.
The Company has not completed its calculations for 2011, it is considering a decreased weighted-average expected rate of return on pension plan assets of 5.35% for the year (5.90%2012 compared to the 20092011 rate of 6.39%), due to a decrease in discount rates in 2010.5.90%. The Company does not believe, based on currently available information, that it will be significantly modifying its discount rate in 2012 or the near future.
The Company’s estimates indicate that a 1% increase or decrease in the expected rate of return on pension plan assets would have caused a €60€62 million decrease or increase, respectively, in the 20102011 net periodic pension
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Income tax computation
The computation of the Group’s income tax expense requires the interpretation of complex tax laws and regulations in many taxing jurisdictions around the world, the determination of expected outcomes from pending litigation, and the assessment of audit findings that are performed by numerous taxing authorities. Actual income tax expense may differ from management’s estimates.
RESULTS 2009-2011
As of and for the year ended December 31, (M€, except per share data) | 2011 | 2010 | 2009 | |||||||||
Non-Group sales | 184,693 | 159,269 | 131,327 | |||||||||
Net income (Group share) | 12,276 | 10,571 | 8,447 | |||||||||
Diluted earnings per share | 5.44 | 4.71 | 3.78 |
RESULTSGroup Results 2011 vs. 2010
The year 2011 witnessed a number of geopolitical events that put pressure on market supplies. Despite the economic slowdown, demand for oil products continued to rise, fueled by the growth of emerging markets. Pressure on supply, plus rising demand, resulted in a sharp increase in the price of crude oil.
2008-2010In the Upstream segment, the 2011 oil market environment was marked by a 40% increase in the average Brent price to $111.3/b from $79.5/b in 2010. In 2011, TOTAL’s average liquids price realization(1) increased by 38% to $105.0/b from $76.3/b in 2010, in line with the increase in the average Brent price of oil. TOTAL’s average natural gas price realization(1) increased by 27% to $6.53/MBtu in 2011 from $5.15/MBtu in 2010. The average euro-dollar exchange rate was 1.39 $/€ in 2011 compared to 1.33 $/€ in 2010.
In the Downstream segment, the Group’s European Refining Margin Indicator (ERMI) fell to $17.4/t in 2011 from $27.4/t in 2010. Despite the gradual reduction of refining capacity, the overcapacity that has existed in the European refining market since 2009 continued into 2011, due to low demand in Europe.
In the first half of 2011, the Chemicals segment enjoyed a globally favorable environment, which has since deteriorated. In the second half of the year, Petrochemicals and Specialty Chemicals saw their margins shrink due to the drop in demand caused by the economic slowdown.
Consolidated sales of TOTAL were€184.7 billion in 2011, an increase of 16% from€159.3 billion in 2010, as a result of an increase in non-Group sales in the Upstream, Downstream and Chemicals segments of 26%, 15% and 11%, respectively.
Net income (Group share) in 2011 increased by 16% to€12,276 million from€10,571 million in 2010, mainly due to the impact of the increase in hydrocarbon prices on the Upstream segment’s results. The after-tax inventory valuation effect (as defined below under “— Business
Segment Reporting”) had a positive impact on net income (Group share) of€834 million in 2011 and a positive impact of€748 million in 2010, in each case essentially due to the increase in oil prices. As from January 1, 2011, the Group accounts for changes in fair value of trading inventories and storage contracts (as defined below under “— Business Segment Reporting”). Changes in fair value of these items had a positive impact on net income (Group share) of€32 million in 2011. Special items had a negative impact on net income (Group share) of€14 million in 2011, comprised mainly of€1,014 million of impairments (essentially impairments on European refining and renewable energy assets) and€1,538 million of gains on asset sales. Special items had a negative impact on net income (Group share) of€384 million in 2010, comprised essentially of asset impairments that had a negative impact of€1,224 million (essentially impairments on European refining assets) and gains on asset sales that had a positive impact of€1,046 million. Effective July 1, 2010, the Group no longer accounts for its interest in Sanofi as an equity affiliate, but treats such interest as a financial asset available for sale in the line “Other investments” of the balance sheet. In 2010, the Group’s share of adjustment items related to Sanofi had a negative impact on net income (Group share) of€81 million.
In 2011, income taxes amounted to€14,073 million, an increase of 38% compared to€10,228 in 2010, primarily as a result of the increase in taxable income. The increase in the effective tax rate from 49% in 2010 to 53% in 2011 was mainly due to an increase in the portion of the Group’s income before tax attributable to entities with a local tax rate much higher than the French tax rate (36.10%). The portion of the Upstream income before tax represented 89% in 2011, unchanged from 2010.
The Group did not buy back shares in 2011. The number of fully-diluted shares at December 31, 2011, was 2,263.8 million compared to 2,249.3 million at December 31, 2010.
Fully-diluted earnings per share, based on 2,257 million weighted-average shares, was€5.44 in 2011 compared to€4.71 in 2010, an increase of 15%.
As of and for the year ended December 31, (M€, except per share data) | 2010 | 2009 | 2008 | |||||||||
Non-Group sales | 159,269 | 131,327 | 179,976 | |||||||||
Net income (Group share) | 10,571 | 8,447 | 10,590 | |||||||||
Diluted earnings per share | 4.71 | 3.78 | 4.71 |
(1) | Consolidated subsidiaries, excluding fixed margin and buyback contracts. |
Group Results 2010 vs. 2009
In 2010, the oil and gas market environment was characterized by increased demand for oil and natural gas products. Crude oil prices were relatively stable during 2010, with an average Brent oil price of $79.5/b, an increase of 29% compared to $61.7/b in 2009. In 2010, TOTAL’s average liquids price realization(1) increased 31% to $76.3/b from $58.1/b in 2009, in line with the increase in the average Brent price of oil. TOTAL’s average natural gas price realization(1) decreased to $5.15/MBtu in 2010 from $5.17/MBtu in 2009. The average euro-dollar exchange rate was 1.33 $/€ on average in 2010 compared to 1.39 $/€ in 2009.
Refining margins rebounded in 2010 from historically low levels in 2009. For the full year 2010, the Group’s European Refining Margin Indicator (ERMI)ERMI was 27.4 $/$27.4/t, an increase of 54% compared to $17.8/t in 2009.
For the full year 2010, the Chemicals segment benefited from a strong rebound in demand and margins in the Base chemicalsChemicals division’s market, as well as an increase in demand in the Specialties chemicalsChemicals division’s market.
Consolidated sales of TOTAL were €159.3€159.3 billion in 2010, an increase of 21% from €131.3€131.3 billion in 2009, as a result of an increase in non-Group sales in the Upstream, Downstream and Chemicals segments of 15%, 23% and 19%, respectively.
Reported net income (Group share) in 2010 increased by 25% to €10,571€10,571 million from €8,447€8,447 million in 2009, mainly due to the increase in hydrocarbon prices and production, as well as a rebound in the Chemicals segment. The after-tax impact of prices on inventory valuation accounted for in the Downstream and Chemicals segments had a positive impact on net income (Group share) of €748€748 million in 2010 and a positive impact of €1,533€1,533 million in 2009, in each case due to the increase in oil prices. For a discussion of the impact of prices on inventory valuation in the Downstream and Chemicals segments see ‘‘—“— Business Segment Reporting” below. Special items had a negative impact on net income (Group share) of €384€384 million in 2010, comprised essentially of asset impairments that had a negative impact of €1,224€1,224 million and gains on asset sales that had a positive impact of €1,046€1,046 million. Special items had a negative impact of €570€570 million in 2009. Effective July 1, 2010, the Group no longer accounts for its interest in Sanofi-AventisSanofi as an equity affiliate, but treats such interest as a financial asset available for sale in the line “Other investments” of the balance sheet. The Group’s share of adjustment items
related to Sanofi-AventisSanofi had a negative impact on net income (Group share) of €81€81 million in 2010 (six months) and a negative impact of €300€300 million in 2009 (full year).
In 2010, income taxes amounted to €10,228€10,228 million, an increase of 32% compared to €7,751€7,751 in 2009, primarily as a result of the increase in taxable income. The increase in the effective tax rate from 47% in 2009 to 49% in 2010 was mainly due to an increase in the portion of the Group income before tax attributable to entities with a local tax rate much higher than the French tax rate (34.43%). The portion of the Upstream income before tax represented 89% in 2010 compared with 82% in 2009, with a mechanicalcorresponding impact on the Group effective tax rate.
The Group did not buy back shares in 2010. The number of fully-diluted shares at December 31, 2010, was 2,249.3 million compared to 2,243.7 million at December 31, 2009.
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Business Segment Reporting
The financial information for each business segment is reported on the same basis as that used internally by the chief operating decision maker in assessing segment performance and the allocation of segment resources. Due to their particular nature or significance, certain transactions qualified as “special items” are excluded from the business segment figures. In general, special items relate to transactions that are significant, infrequent or unusual. However, in certain instances, certain transactions such as restructuring costs or asset disposals, which are not considered to be representative of the normal course of business, may be qualified as special items although they may have occurred in prior years or are likely to recur in following years.
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(1) | Consolidated subsidiaries, excluding fixed margin and buyback contracts. |
with those of its competitors and to help illustrate the operating performance of these segments excluding the impact of oil price changes on the replacement of inventories. In the replacement cost method, which is conceptually close toapproximates the LIFO(Last-In, (Last-In, First-Out) method, the variation of inventory values in the statement of income is, depending on the nature of the inventory, determined using either the month-end prices differential between one period and another or the average prices of the period. The inventory valuation effect is the difference between the results according tounder the FIFO and using the replacement cost method. Whenmethods.
As from January 1, 2011, the replacement cost is higher thaneffect of changes in fair value presented as an adjustment item reflects, for trading inventories and storage contracts, differences between internal measures of performance used by TOTAL’s management and the costaccounting for these transactions under IFRS. IFRS requires that trading inventories be recorded at their fair value using period-end spot prices. In order to best reflect the management of economic exposure through derivative transactions, internal indicators used to measure performance include valuations of trading inventories recorded at their fair value based on forward prices. Furthermore, TOTAL, in its trading activities, enters into storage contracts, the oldest inventory, usefuture effects of which are recorded at fair value in the replacement cost method lowers results. When the replacement cost is lower than the costGroup’s internal economic performance. IFRS, by requiring accounting for storage contracts on an accrual basis, precludes recognition of the oldest inventory, use of the replacement cost method, as opposed to FIFO, increases results. In the discussion of net income (Group share) we separately disclose the after-tax amount of the inventory valuationthis fair value effect.
Until June 30, 2010, the Group also adjusted for its equity share of adjustment items related to Sanofi-Aventis.Sanofi. As of July 1, 2010, Sanofi-AventisSanofi is no longer accounted for as an equity affiliate (but is instead treated as a financial asset available for sale in the line “Other investments” of the balance sheet).
The adjusted business segment results (adjusted operating income and adjusted net operating income) are defined as replacement cost results, adjusted for special items.items, excluding the effect of changes in fair value as from January 1, 2011. For further information on the adjustments affecting operating income on asegment-by-segment basis, and for a reconciliation of segment figures to figures reported in the Company’s audited consolidated financial statements, see Note 4 to the Consolidated Financial Statements.
The Group measures performance at the segment level on the basis of net operating income and adjusted net operating income. Net operating income comprises operating income of the relevant segment after deducting the amortization and the depreciation of intangible assets other than leasehold rights, translation adjustments and gains or losses on the sale of assets, as well as all other income and expenses related to capital employed (dividends from non-consolidated companies, income from equity affiliates and capitalized interest expenses), and after income taxes applicable to the above. The income and expenses not included in net operating income butthat are included in net income are interest expenses related to long-term liabilities net financial debt only,of interest earned on cash and cash equivalents, after applicable income taxes (net cost of net debt and minoritynon-controlling interests). Adjusted net operating income excludes the effect of the adjustments (special items and the inventory valuation effect and, until June 30, 2010, Sanofi-Aventis related items)effect) described above. For further discussion onof the calculation of net operating income and the calculation of return on average capital employed (ROACE)(1), see Note 2 to the Consolidated Financial Statements.
Upstream results
(M€) | 2010 | 2009 | 2008 | |||||||||
Non-Group sales | 18,527 | 16,072 | 24,256 | |||||||||
Operating income(a) | 17,450 | 12,858 | 23,468 | |||||||||
Equity in income (loss) of affiliates and other items | 1,533 | 846 | 1,541 | |||||||||
Tax on net operating income | (10,131 | ) | (7,486 | ) | (14,563 | ) | ||||||
Net operating income(a) | 8,852 | 6,218 | 10,446 | |||||||||
Adjustments affecting net operating income | (255 | ) | 164 | 278 | ||||||||
Adjusted net operating income(b) | 8,597 | 6,382 | 10,724 | |||||||||
Investments | 13,208 | 9,855 | 10,017 | |||||||||
Divestments | 2,067 | 398 | 1,130 | |||||||||
ROACE | 21% | 18% | 36% |
(M€) | 2011 | 2010 | 2009 | |||||||||
Non-Group sales | 23,298 | 18,527 | 16,072 | |||||||||
Operating income(a) | 22,444 | 17,450 | 12,858 | |||||||||
Equity in income (loss) of affiliates and other items | 1,596 | 1,533 | 846 | |||||||||
Tax on net operating income | (13,506 | ) | (10,131 | ) | (7,486 | ) | ||||||
Net operating income(a) | 10,534 | 8,852 | 6,218 | |||||||||
Adjustments affecting net operating income | (129 | ) | (255 | ) | 164 | |||||||
Adjusted net operating income(b) | 10,405 | 8,597 | 6,382 | |||||||||
Investments | 21,689 | 13,208 | 9,855 | |||||||||
Divestments | 2,656 | 2,067 | 398 | |||||||||
ROACE | 20% | 21% | 18% |
(a) | ||
For the definition of operating income and net operating income, see Note 2 to the Consolidated Financial Statements. |
(b) | Adjusted for special items. See Notes 2 and 4 to the Consolidated Financial Statements. |
(1) |
2011 vs. 2010
Upstream segment sales (excluding sales to other segments) increased by 26% to€23,298 million in 2011 from€18,527 million in 2010, reflecting essentially the impact of higher hydrocarbon prices.
Oil and gas production averaged 2,346 kboe/d in 2011, compared to 2,378 kboe/d in 2010. This 1.3% decrease was due essentially to the result of normal decline, net of production ramp-ups on new projects (-1.5%), security conditions, mainly in Libya (-1.5%) and the price effect(1) (-2%), partially offset by changes in the portfolio (+2.5%; integrating the net share of Novatek production and the impact of the sale of interests in CEPSA) and the end of OPEC reductions (+1%).
Proved reserves based on SEC rules were 11,423 Mboe at December 31, 2011 (Brent at $110.96/b), compared to 10,695 Mboe at December 31, 2010 (Brent at $79.02/b). Based on the 2011 average rate of production, reserve life is thirteen years.
See “Item 4. Information on the Company — Exploration & Production — Reserves” for a discussion of proved reserves and “Supplemental Oil and Gas Information (Unaudited)” contained elsewhere herein for additional information on proved reserves, including tables showing changes in proved reserves by region.
Upstream net operating income in 2011 amounted to€10,534 million (for 2010,€8,852 million) from operating income of€22,444 million (for 2010,€17,450 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of€13,506 million (for 2010,€10,131 million), partially offset by income from equity affiliates and other items of€1,596 million (for 2010,€1,533 million). The increase in net operating income in 2011 compared to 2010 was due primarily to the impact of higher hydrocarbon prices.
Adjusted net operating income for the Upstream segment was€10,405 million in 2011 compared to€8,597 million in 2010, an increase of 21%, essentially due to the impact of higher hydrocarbon prices partially offset by the impact of the mix effect, changes in foreign exchange rates and increased costs, exploration expenses and taxes. Technical costs for consolidated subsidiaries, in accordance with ASC 932(2) were $18.9/boe(3) in 2011, compared to $16.6/boe in 2010, mainly due to
depreciation, depletion and amortization (DD&A) charges related notably to the start-up of new projects and increased operating expenses per barrel.
Adjusted net operating income for the Upstream segment excludes special items. In 2011, the exclusion of special items had a negative impact of€129 million on adjusted net operating income dividedfor the Upstream segment and a negative impact of€255 million in 2010, in both cases comprised principally of capital gains on asset sales partially offset by averageasset impairments.
The Upstream segment’s total capital employed.
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Upstream segment sales (excluding sales to other segments) increased by 15% to €18,527€18,527 million in 2010 from €16,072€16,072 million in 2009, reflecting essentially the impact of higher hydrocarbon prices and production growth.
Oil and gas production averaged 2,378 kboe/d in 2010, compared to 2,281 kboe/d in 2009. This 4.3% increase was essentially the result of productionramp-ups on new projects, net of the normal decline, and a lower level of turnarounds (+3%), changes in the portfolio (+2%), lower OPEC reductions and an increase in gas demand (+1.5%) and improved security conditions in Nigeria (+1%), partially offset by the price effect(1) (-3%).
Proved reserves based on SEC rules were 10,695 Mboe at December 31, 2010 (Brent at $79.02/b), compared to 10,483 Mboe at December 31, 2009 (Brent at $59.91/b). At the 2010 average rate of production, the reserve life iswas more than twelve years.
See “Item 4. Information on the Company — Exploration & Production — Reserves” for a discussion of proved reserves and “Supplemental Oil and Gas Information (Unaudited)” contained elsewhere herein for additional information on proved reserves, including tables showing changes in proved reserves by region.
(1) | The “price effect” refers to the impact of hydrocarbon prices on entitlement volumes from production sharing and buyback contracts. For example, as the price of oil or gas increases above certain pre-determined levels, TOTAL’s share of production normally decreases. |
(2) | Accounting Standards Codification Topic 932, Extractive industries — Oil and Gas. |
(3) | Excluding IAS 36 (impairment of assets). |
Upstream net operating income in 2010 amounted to €8,852€8,852 million (for 2009, €6,218€6,218 million) from operating income of €17,450€17,450 million (for 2009, €12,858€12,858 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of €10,131€10,131 million (for 2009, €7,486€7,486 million), partially offset by income from equity affiliates and other items of €1,533€1,533 million (for 2009, €846€846 million).
Over the full year 2010, adjusted net operating income for the Upstream segment was €8,597€8,597 million compared to €6,382€6,382 million in 2009, an increase of 35%, essentially due to hydrocarbon prices (+€2.3 billion). Technical costs for consolidated subsidiaries, in accordance with ASC 932(2) were $16.6/boe in 2010, compared to $15.4 $15.4/boe in 2009, mainly due to depreciation, depletion and amortization (DD&A) charges related notably to thestart-up of new projects and increased operating expenses per barrel.
Adjusted net operating income for the Upstream segment excludes special items. In 2010, the exclusion of special items (comprised principally of capital gains on asset sales partially offset by asset impairments) had a negative impact of €255€255 million on adjusted net operating income for the Upstream segment compared to a positive impact of €164€164 million in 2009 (comprised principally of asset impairments and other elements).
The Upstream segment’s total capital expenditures increased by 34% to €13,208€13,208 million in 2010 from €9,855€9,855 million in 2009. The capital expenditures in 2010 mainly included projects in the following countries: Angola, the United States, Nigeria, Canada, Norway, Kazakhstan, Australia, the United Kingdom, Indonesia, the Republic of the Congo, Libya, Gabon and Thailand.
ROACE for the Upstream segment increased to 21% in 2010 from 18% in 2009. The increase was mainly due to the adjusted net operating income having increased, principally due to increased hydrocarbon prices and production.
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(M€) | 2010 | 2009 | 2008 | |||||||||
Non-Group sales | 123,245 | 100,518 | 135,524 | |||||||||
Operating income(a) | 982 | 2,237 | 826 | |||||||||
Equity in income (loss) of affiliates and other items | 141 | 169 | (158 | ) | ||||||||
Tax on net operating income | (201 | ) | (633 | ) | (143 | ) | ||||||
Net operating income(a) | 922 | 1,773 | 525 | |||||||||
Adjustments affecting net operating income | 246 | (820 | ) | 2,044 | ||||||||
Adjusted net operating income(b) | 1,168 | 953 | 2,569 | |||||||||
Investments | 2,343 | 2,771 | 2,418 | |||||||||
Divestments | 499 | 133 | 216 | |||||||||
ROACE | 8% | 7% | 20% |
(M€) | 2011 | 2010 | 2009 | |||||||||
Non-Group sales | 141,907 | 123,245 | 100,518 | |||||||||
Operating income(a) | 1,694 | 982 | 2,237 | |||||||||
Equity in income (loss) of affiliates and other items | 401 | 141 | 169 | |||||||||
Tax on net operating income | (409 | ) | (201 | ) | (633 | ) | ||||||
Net operating income(a) | 1,686 | 922 | 1,773 | |||||||||
Adjustments affecting net operating income | (603 | ) | 246 | (820 | ) | |||||||
Adjusted net operating income(b) | 1,083 | 1,168 | 953 | |||||||||
Investments | 1,870 | 2,343 | 2,771 | |||||||||
Divestments | 3,235 | 499 | 133 | |||||||||
ROACE | 7% | 8% | 7% |
(a) | ||
For the definition of operating income and net operating income, see Note 2 to the Consolidated Financial Statements. |
(b) | Adjusted for special items and the inventory valuation effect. See Notes 2 and 4 to the Consolidated Financial Statements. |
20102011 vs. 20092010
For the full year 2010,2011, the Group’s European Refining Margin Indicator (ERMI) was 27.4 $/$17.4/t, an increasea decrease of 54%36% compared to 2009.
Downstream segment sales (excluding sales to other segments) were €123,245€141,907 million in 2011 compared to€123,245 million in 2010, an increase of 15% essentially due to the impact of higher hydrocarbon prices.
Refined product sales (including trading operations) were 3,639 kb/d in 2011, a decrease of 4% compared to 3,776 kb/d in 2010. Refinery throughput in 2011 was 1,863 kb/d, a 7% decrease compared to 2,009 kb/d in 2010 essentially due to the sale of the Group’s interest in CEPSA and a higher level of major turnarounds than in
2010. In 2011, major turnarounds took place in the Antwerp, Grandpuits, Leuna, Lindsey and Port Arthur refineries. For the full year 2011, the refinery utilization rate based on crude throughput was 78% (83% for crude and other feedstock) compared to 73% in 2010 (77% for crude and other feedstock). In 2010, the utilization rate was impacted by the shutdown of the Dunkirk refinery and a distillation unit at the Normandy refinery as well as impacts from strikes in France.
In 2011, Downstream net operating income increased to€1,686 million (for 2010,€922 million) from operating income of€1,694 million (for 2010,€982 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of€409 million (for 2010,€201 million), partially
offset by income from equity affiliates and other items of€401 million (for 2010,€141 million). The increase in net operating income in 2011 compared to 2010 was due primarily to the impact of higher hydrocarbon prices, gains on asset sales and lower impairment charges.
The Downstream segment’s adjusted net operating income in 2011 was€1,083 million compared to€1,168 million in 2010. The decrease was essentially due to the negative impact of the deterioration in refining margins in 2011.
Adjusted net operating income for the Downstream segment excludes any after-tax inventory valuation effect and special items. The adjustment for the inventory valuation effect had a negative impact on Downstream adjusted net operating income in 2011 of€859 million compared to a negative impact of€640 million in 2010. The exclusion of special items (comprised essentially of impairments on European refining assets (as described below), partially offset by gains on asset sales) in 2011 had a positive impact of€256 million on adjusted net operating income. In 2010, the exclusion of special items (comprised essentially of impairments on European refining assets partially offset by gains on asset sales) had a positive impact of€886 million on adjusted net operating income.
The persistence of an unfavorable economic environment for refining, affecting Europe in particular, led the Group to recognize an impairment in the Downstream segment on European refining assets in the third and fourth quarters of 2011 in the amount of€700 million in operating income and€478 million in net income. These elements have been treated as adjustment items.
Investments by the Downstream segment were€1,870 million in 2011, a decrease of 20% compared to€2,343 million in 2010. Divestments by the Downstream segment were€3,235 million in 2011, comprised essentially of the Group’s stake in CEPSA and certain distribution activities in the United Kingdom, compared to€499 million in 2010.
ROACE for the Downstream segment was 7% in 2011 compared to 8% in 2010.
2010 vs. 2009
For the full year 2010, the Group’s ERMI was $27.4/t, an increase of 54% compared to 2009.
Downstream segment sales (excluding sales to other segments) were€123,245 million in 2010, an increase of 23% from €100,518€100,518 million in 2009.
Refined product sales (including trading operations) were 3,776 kb/d in 2010, an increase of 4% compared to 3,616 kb/d in 2009. Refinery throughput in 2010 was 2,009 kb/d, a 7% decrease compared to 2,151 kb/d in
2009. For the full year 2010, the refinery utilization rate based on crude throughput was 73% (77% for crude and other feedstock) compared to 78% in 2009 (83% for crude and other feedstock), reflecting essentially the shutdown of the Dunkirk refinery and a distillation unit at the Normandy refinery as well as impacts from strikes in France. In 2010, the level of scheduled turnarounds for refinery maintenance was low, with turnaround activity expected to increase notably in 2011.
In 2010, Downstream net operating income decreased to €922€922 million (for 2009, €1,773€1,773 million) from operating income of €982€982 million (for 2009, €2,237€2,237 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of €201€201 million (for 2009, €633€633 million), partially offset by income from equity affiliates and other items of
71
The Downstream segment’s adjusted net operating income in 2010 was €1,168€1,168 million compared to €953€953 million in 2009. The increase iswas essentially due to the positive impact of the refining margin improvement, which was partially offset by lower throughput and reliability of the Group’s refineries in 2010 and less favorable conditions for supply optimization.
Adjusted net operating income for the Downstream segment excludes any after-tax inventory valuation effect and special items. The adjustment for the inventory valuation effect had a negative impact on Downstream adjusted net operating income in 2010 of €640€640 million compared to a negative impact of €1,285€1,285 million in 2009. The exclusion of special items (comprised essentially of impairments on European refining assets (as described below), partially offset by gains on asset sales) in 2010 had a positive impact of €886€886 million on adjusted net operating income. In 2009, the exclusion of special items (relating mainly to refining asset impairments and other elements) had a positive impact of €465€465 million on adjusted net operating income.
The persistence of an unfavorable economic environment for refining, affecting Europe in particular, led the Group to recognize an impairment in the Downstream segment, essentially on French and UK refining assets, in the fourth quarter 2010 in the amount of €1,192€1,192 million in operating income and €913€913 million in net operating income. These elements have been treated as adjustment items.
Investments by the Downstream segment were €2,343€2,343 million in 2010, compared to €2,771€2,771 million in 2009.
ROACE for the Downstream segment was 8% in 2010 compared to 7% in 2009.
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Chemicals results
(M€) | 2011 | 2010 | 2009 | |||||||||
Non-Group sales | 19,477 | 17,490 | 14,726 | |||||||||
Operating income(a) | 658 | 964 | 553 | |||||||||
Equity in income (loss) of affiliates and other items | 471 | 215 | (58 | ) | ||||||||
Tax on net operating income | (225 | ) | (267 | ) | (92 | ) | ||||||
Net operating income(a) | 904 | 912 | 403 | |||||||||
Adjustments affecting net operating income | (129 | ) | (55 | ) | (131 | ) | ||||||
Adjusted net operating income(b) | 775 | 857 | 272 | |||||||||
Investments | 847 | 641 | 631 | |||||||||
Divestments | 1,164 | 347 | 47 | |||||||||
ROACE | 10% | 12% | 4% |
(M€) | 2010 | 2009 | 2008 | |||||||||
Non-Group sales | 17,490 | 14,726 | 20,150 | |||||||||
Operating income(a) | 964 | 553 | (58 | ) | ||||||||
Equity in income (loss) of affiliates and other items | 215 | (58 | ) | (34 | ) | |||||||
Tax on net operating income | (267 | ) | (92 | ) | 76 | |||||||
Net operating income(a) | 912 | 403 | (16 | ) | ||||||||
Adjustments affecting net operating income | (55 | ) | (131 | ) | 684 | |||||||
Adjusted net operating income(b) | 857 | 272 | 668 | |||||||||
Investments | 641 | 631 | 1,074 | |||||||||
Divestments | 347 | 47 | 53 | |||||||||
ROACE | 12% | 4% | 9% |
(a) | ||
For the definition of operating income and net operating income, see Note 2 to the Consolidated Financial Statements. |
(b) | Adjusted for special items and the inventory valuation effect. See Notes 2 and 4 to the Consolidated Financial Statements. |
20102011 vs. 20092010
For the full year 2010,2011, Chemicals segment sales, excluding intra-Group sales, were €17,490€19,477 million, an increase of 19%11% compared to 2009.
In 2010,2011, net operating income for the Chemicals segment was €912€904 million (for 2009, €4032010,€912 million) from an operating income of €964€658 million (for 2009, €5532010,€964 million), with the difference between net operating income and operating income resulting primarily from a gainincome from equity affiliates and other items of €215€471 million (for 2009, a loss2010, income of €58€215 million) offset by a loss from taxes on net operating income of €267€225 million (for 2009,2010, a tax loss of €92€267 million).
The adjusted net operating income for the Chemicals segment in 20102011 was €857€775 million compared to €272€857 million in 2009.2010, due essentially to the impact of the sale of the Group’s interest in CEPSA and a portion of the Resins activities. The adjusted net operating income for the Base chemicals increased by €377Chemicals division decreased from€393 million from 2009in 2010 to 2010, due to an improved environment and€373 million in 2011. Globally, for the ramp up of new production units in Qatar. In 2010,full-year 2011, the Specialties chemicalsBase Chemicals division benefited from strong operational performanceramp-ups in its activities in Qatar and good positioningSouth Korea, but suffered from deteriorating margins in growth markets.
Adjusted net operating income for the Chemicals segment excludes any after-tax inventory valuation effect and special items. The exclusion of the inventory valuation effect had a negative impact on Chemicals adjusted net operating income of €113€10 million in 2010,2011, compared to a
negative impact of€113 million in 2010. In 2011, the exclusion of special items had a negative impact on Chemicals adjusted net operating income of€119 million, where special items consisted essentially of €254 million in 2009.gains on asset sales. In 2010, the exclusion of special items had a positive impact on Chemicals adjusted net operating income of €58€58 million. In 2009, the exclusion of special items (comprised primarily of asset impairments and other elements) had a positive impact on Chemicals adjusted net operating income of €123 million.
Investments by the Chemicals segment increased 32% to €641€847 million in 20102011 compared to €631€641 million in 2009.
ROACE for the Chemicals segment was 10% in 2011 compared to 12% in 2010, compareddue essentially to 4% in 2009 due principally to the significant increasea decrease in adjusted net operating income.
20092010 vs. 20082009
For the full year 2010, Chemicals segment sales, (excludingexcluding intra-Group sales, were€17,490 million, an increase of 19% compared to other segments) were €14,726 million in 2009, a decrease of 27% from €20,150 million in 2008.
In 2009,2010, net operating income for the Chemicals segment was €403€912 million (for 2008, a loss of €162009,€403 million) from an operating income of€ 553964 million (for 2008, an operating loss of €582009,€553 million), with the difference between net operating income and operating income resulting primarily from lossesincome from equity affiliates and other items of €58€215 million (for 2008, €342009, a loss of€58 million) andoffset by a loss from taxes on net operating income of €92€267 million (for 2008,2009, a tax gainloss of €76€92 million).
The Chemicals segment’s adjusted net operating income for the Chemicals segment in 20092010 was €272€857 million as compared to €668€272 million in 2008, a decrease of 59% that was essentially due to the significantly weaker market conditions2009. The adjusted net operating income for the Base chemicals activityChemicals division increased by€377 million from 2009 to 2010, due to an improved environment and to a lesser degree, lower sales and results fromthe ramp-up of new production units in Qatar. In 2010, the Specialties activity.Chemicals division benefited from strong operational performance and good positioning in growth markets.
Adjusted net operating income for the Chemicals segment excludes any after-tax inventory valuation effect and special items. The exclusion of the inventory valuation effect had a negative impact on Chemicals adjusted net operating income of €254€113 million in 2009,2010, compared to a negative impact of€254 million in 2009. In 2010, the exclusion of special items had a positive impact on Chemicals adjusted net operating income of €504 million in 2008.€58 million. In 2009, the exclusion of special items (comprised primarily of
asset impairments and other elements) had a positive impact on Chemicals adjusted net operating income of €123€123 million. In 2008, the exclusion of special items (relating principally to restructuring costs, asset impairment and other elements) had a positive impact of €180 million on adjusted net operating income.
Investments by the Chemicals segment decreasedincreased to €631€641 million in 20092010 compared to €1,074€631 million in 2008.
ROACE for the Chemicals segment was 3.8%12% in 20092010 compared to 9.2%4% in 20082009 due principally to the significant decreaseincrease in adjusted net operating income.
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(M€) | 2011 | 2010 | 2009 | |||||||||
Cash flow from operating activities | 19,536 | 18,493 | 12,360 | |||||||||
Including (increase) decrease in working capital | (1,739 | ) | (496 | ) | (3,316 | ) | ||||||
Cash flow used in investing activities | (15,963 | ) | (11,957 | ) | (10,268 | ) | ||||||
Total expenditures | (24,541 | ) | (16,273 | ) | (13,349 | ) | ||||||
Total divestments | 8,578 | 4,316 | 3,081 | |||||||||
Cash flow used in financing activities | (4,309 | ) | (3,348 | ) | (2,868 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | (736 | ) | 3,188 | (776 | ) | |||||||
Effect of exchange rates | 272 | (361 | ) | 117 | ||||||||
Cash and cash equivalents at the beginning of the period | 14,489 | 11,662 | 12,321 | |||||||||
Cash and cash equivalents at the end of the period | 14,025 | 14,489 | 11,662 |
(M€) | 2010 | 2009 | 2008 | |||||||||
Cash flow from operating activities | 18,493 | 12,360 | 18,669 | |||||||||
Including (increase) decrease in working capital | (496 | ) | (3,316 | ) | 2,571 | |||||||
Cash flow used in investing activities | (11,957 | ) | (10,268 | ) | (11,055 | ) | ||||||
Total expenditures | (16,273 | ) | (13,349 | ) | (13,640 | ) | ||||||
Total divestments | 4,316 | 3,081 | 2,585 | |||||||||
Cash flow used in financing activities | (3,348 | ) | (2,868 | ) | (793 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | 3,188 | (776 | ) | 6,821 | ||||||||
Effect of exchange rates | (361 | ) | 117 | (488 | ) | |||||||
Cash and cash equivalents at the beginning of the period | 11,662 | 12,321 | 5,988 | |||||||||
Cash and cash equivalents at the end of the period | 14,489 | 11,662 | 12,321 |
TOTAL’s cash requirements for working capital, share buybacks, capital expenditures, acquisitions and acquisitionsdividend payments over the past three years were financed primarily by a combination of funds generated from operations, borrowings and divestments of non-core assets. In the current environment, TOTAL expects its external debt to be principally financed from the international debt capital markets. The Group continually monitors the balance between cash flow from operating activities and net expenditures. In the Company’s opinion, its working capital is sufficient for its present requirements.
Capital expenditures
The largest part (approximately 85%) of TOTAL’s capital expenditures isin 2011 was made up of additions to intangible assets and property, plant and equipment (approximately 73%), with the remainder attributable to equity-method affiliates and to acquisitions of subsidiaries. In the Upstream segment, as described in more detail under “Supplemental Oil and Gas Information (Unaudited) — Costs incurred in oil and gas property acquisition, exploration and development activities”, capital expenditures arein 2011 were principally development costs (approximately 65%50%, mainly for construction of new production facilities), exploration expenditures (successful or unsuccessful, approximately 10%5%) and acquisitions of proved and unproved properties (approximately 25%40%). In the Downstream segment, about 70%55% of capital expenditures arein 2011 were related to refining activities (essentially 40%70% for existing units including maintenance and major turnarounds and 60%30% for
new construction), the balance being used inrelated to marketing/retail activities and for information systems. In the Chemicals segment, capital expenditures relaterelated to all activities in 2011 and arewere split between Base Chemicals (approximately 75%60%) and Specialties Chemicals (approximately 25%40%). For information on expenditures by business segment, please refer to the discussion of TOTAL’s results for each segment above.
Cash flow
Cash flow from operating activities was €18,493€19,536 million in 2011 compared to€18,493 million in 2010 compared to €12,360and€12,360 million in 2009 and €18,669 million in 2008.2009. The €6,133€1,043 million increase in cash flow from operating activities from 20092010 to 20102011 was due in part to higher net income (Group share), which increased by €2,124€1,705 million over the same period. The cash flow from operating activities was also affected by the effect of changes in oil and oil product prices on the Group’s working capital requirement. As IFRS rules require TOTAL to account for inventories of petroleum products according to the FIFO method, an increase in oil and oil product prices at the end of the relevant period compared to the beginning of the same period generates, all other factors remaining equal, an increase in inventories and accounts receivable net of an increase in accounts payable, resulting in an increase in working capital requirements. Similarly, a decrease in oil and oil products prices generates a decrease in working capital requirements. In 2010,2011, the Group’s working capital requirement increased by €496 million. In 2009, the Group’s working capital requirement increased by €3,316€1,739 million, due primarily to
the increase in oil and oil products prices over the course of the year.
Cash flow used in investing activities was €11,957€15,963 million in 2011 compared to€11,957 million in 2010 compared to €10,268and€10,268 million in 2009 and €11,0552009. The increase from 2010 to 2011 was due essentially to the higher level of acquisitions made in 2011 as well as to the larger portfolio of upstream projects that were under development in 2011.
Total expenditures were€24,541 million in 2008.
Divestments, based on selling price and net of cash sold, were €4,316€8,578 million in 2011, compared to€4,316 million in 2010 compared to €3,081and€3,081 million in 20092009. In 2011, the Group’s principal divestments were asset sales of€7,705 million, consisting mainly of the Group’s interests in CEPSA, of its Marketing assets in the United Kingdom, of its photocure and €2,585 millioncoatings resins businesses, of its interests in 2008.Total E&P Cameroun and of Sanofi shares. In 2010, the Group’s principal divestments were asset sales of €3,442€3,452 million, consisting mainly of Sanofi-AventisSanofi shares and the
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Cash flow used in financing activities was €3,348€4,309 million in 2011, compared to€3,348 million in 2010 compared to €2,868and€2,868 million in 2009 and €793 million in 2008.2009. The increase in cash flow used in financing activities in 2011 compared to 2009 is2010 was due primarily to a lowerhigher decrease in current borrowings (€(3,870) million in 2011 compared to€(731) million in 2010), partly offset by a higher issuance of non-current financial debt (€4,069 million in 2010, partially offset by a lower decrease2011 compared to€3,789 million in 2010) and an increase in current borrowingsfinancial assets and liabilities (€896 million in 20102011 compared to 2009.
Indebtedness
TOTAL’s non-current financial debt was €20,783€22,557 million at year-end 2011 compared to€20,783 million at year-end 2010 compared to €19,437and€19,437 million at year-end 2009 and €16,191 million at year-end 2008.2009. For further information on the Company’s level of borrowing and the type of financial instruments, including maturity profile of debt and currency and interest rate structure, see Note 20
to the Consolidated Financial Statements. For further information on the Company’s treasury policies, including the use of instruments for hedging purposes and the currencies in which cash and cash equivalents are held, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.
Cash and cash equivalents were €14,489€14,025 million at year-end 2011 compared to€14,489 million at year-end 2010 compared to €11,662and€11,662 million at year-end 2009 and €12,321 million at year-end 2008.
Shareholders’ equity
Shareholders’ equity was €61,271€69,389 million at December 31, 2010,2011, compared to €53,539€61,271 million at year-end 20092010 and €49,950€53,539 million at year-end 2008.2009. Changes in shareholders’ equity in 2011 were primarily due to the addition of net income and translation adjustments, which were only partially offset by the payment of dividends. Changes in shareholders’ equity in 2010 were primarily due to the addition of net income and translation adjustments, which were only partially offset by the payment of dividends. Changes in shareholders’ equity in 2009 were primarily due to the addition of net income, which was only partially offset by the payment of dividends and translation adjustments. Changes in shareholders’ equity in 2008 were primarily due to the addition of net income, which was only partially offset by the payment of dividends, translation adjustments and share buybacks. Whereas during 2010 and 2009, TOTAL did not repurchase any of its own shares TOTAL repurchased 27.6 million of its own shares for €1,339 million during 2008.
Net-debt-to-equity
As of December 31, 2010,2011, TOTAL’s net-debt-to-equity ratio, which is net debt (i.e., the sum of current borrowings, other current financial liabilities and non-current financial debt, net of current financial assets, hedging instruments on non-current financial debt and cash and cash equivalents,equivalents) divided by the sum of shareholders’ equity and minoritynon-controlling interests after expected dividends payable, was 22%23%, compared to 27%22% and 23%27% at year-ends 20092010 and 2008,2009, respectively. Over the2008-2010 2009-2011 period, TOTAL used its net cash flow (cash flow from operating activities less investments plus divestments) to maintain this ratio generally in its targettargeted range of around 25% to 30%, primarily by managing net debt, (as described above), while net income increased shareholders’ equity and dividends paid throughout the period and repurchases of shares performed in 2008 decreased shareholders’ equity. As of December 31, 2010,2011, TOTAL S.A. had $9,592$10,139 million of long-term confirmed lines of credit, of which $9,581$10,096 million were unused.
In 2011,2012, based on the Group’s capital expenditures budget and after payment of dividends, the Company expects to maintain its netdebt-to-equity ratio in the targetedtarget range of around 25%20% to 30% in an $80a $100 per barrel market environment. For information on the Group’s capital expenditures budget, please refer to the discussion in “— Overview”.
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As part of certain project financing arrangements, Total S.A. provided in 2008 guarantees in connection with the financing of the Yemen LNG project for an amount of €1,335€1,208 million, presented under “Guarantees given against borrowings” in Note 23 to the Consolidated Financial Statements. In turn, certain partners involved in this project have given commitments that could, in the case of Total S.A.’s guarantees being called for the maximum amount, reduce the Group’s exposure by up to €427€404 million, recorded under “Other commitments received” in the same Note. “Guarantees given against borrowings” also include the guarantees provided in 2010 by Total S.A. in connection with the financing of the Jubail project (operated by SAUDI ARAMCO TOTAL Refining and Petrochemical Company (SATORP)) of up to €2,385€2,463 million, proportional to TOTAL’s share in the project (37.5%). In addition, Total S.A. provided in 2010 a
guarantee in favor of its partner in the Jubail project (Saudi Arabian Oil Company) with respect to Total Refining Saudi Arabia SAS’s obligations under the shareholders agreement with respect to SATORP. As of December 31, 2010,2011, this guarantee is of up to €1,271€1,095 million and has been presented under “Other operating commitments” in Note 23 to the Consolidated Financial Statements. These guarantees and other information on the Company’s commitments and contingencies are presented in Note 23 to the Consolidated Financial Statements. The Group does not currently consider that these guarantees, or any other off-balance sheet arrangements of Total S.A. nor any other members of the Group, have or are reasonably likely to have, currently or in the future, a material effect on the Group’s financial condition, changes in financial condition, revenues or expenses, results of operation, liquidity, capital expenditures or capital resources.
CONTRACTUAL OBLIGATIONS
Less | More | |||||||||||||||||||
than | 1-3 | 3-5 | than | |||||||||||||||||
Payment due by period (M€) | 1 year | years | years | 5 years | Total | |||||||||||||||
Non-current debt obligations(a) | — | 6,831 | 5,561 | 6,346 | 18,738 | |||||||||||||||
Current portion of non-current debt obligations(b) | 3,483 | — | — | — | 3,483 | |||||||||||||||
Finance lease obligations(c) | 23 | 68 | 61 | 46 | 198 | |||||||||||||||
Asset retirement obligations(d) | 177 | 486 | 386 | 4,868 | 5,917 | |||||||||||||||
Operating lease obligations(c) | 582 | 757 | 504 | 1,105 | 2,948 | |||||||||||||||
Purchase obligations(e) | 6,347 | 7,511 | 6,916 | 40,519 | 61,293 | |||||||||||||||
Total | 10,612 | 15,653 | 13,428 | 52,884 | 92,577 | |||||||||||||||
Payment due by period (M€) | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | Total | |||||||||||||||
Non-current debt obligations(a) | — | 8,052 | 5,069 | 7,308 | 20,429 | |||||||||||||||
Current portion of non-current debt obligations(b) | 3,488 | — | — | — | 3,488 | |||||||||||||||
Finance lease obligations(c) | 25 | 70 | 64 | 18 | 177 | |||||||||||||||
Asset retirement obligations(d) | 272 | 469 | 335 | 5,808 | 6,884 | |||||||||||||||
Operating lease obligations(c) | 762 | 968 | 651 | 940 | 3,321 | |||||||||||||||
Purchase obligations(e) | 11,049 | 11,058 | 9,476 | 45,770 | 77,353 | |||||||||||||||
Total | 15,596 | 20,617 | 15,595 | 59,844 | 111,652 |
(a) | ||
Non-current debt obligations are included in the items “Non-current financial debt” and “Hedging instruments of non-current financial debt” of the Consolidated Balance Sheet. The figure in this table is net of the non-current portion of issue swaps and swaps hedging bonds, and excludes non-current finance lease obligations of |
(b) | The current portion of non-current debt is included in the items “Current borrowings”, “Current financial assets” and “Other current financial liabilities” of the balance sheet. The figure in this table is net of the current portion of issue swaps and swaps hedging bonds and excludes the current portion of finance lease obligations of |
(c) | Finance lease obligations and operating lease obligations: the Group leases real estate, retail stations, ships, and other equipment through non-cancelable capital and operating leases. These amounts represent the future minimum lease payments on non-cancelable leases to which the Group is committed as of December 31, |
(d) | The discounted present value of Upstream asset retirement obligations, primarily asset removal costs at the completion date. |
(e) | Purchase obligations are obligations under contractual agreements to purchase goods or services, including capital projects. These obligations are enforceable and legally binding on TOTAL and specify all significant terms, including the amount and the timing of the payments. These obligations mainly include: hydrocarbon unconditional purchase contracts (except where an active, highly liquid market exists and when the hydrocarbons are expected to be re-sold shortly after purchase), reservation of transport capacities in pipelines, unconditional exploration works and development works in Upstream, and contracts for capital investment projects in Downstream. This disclosure does not include contractual exploration obligations with host states where a monetary value is not attributed and purchases of booking capacities in pipelines where the Group has a participation superior to the capacity used. |
For additional information on the Group’s contractual obligations, see Note 23 to the Consolidated Financial Statements. The Group has other obligations in connection with pension plans which are described in Note 18 to the Consolidated Financial Statements. As these obligations are not contractually fixed as to timing and amount, they have not been included in this disclosure. Other non-current liabilities, detailed in Note 19 to the Consolidated Financial Statements, are liabilities related to risks that are probable and amounts that can be reasonably estimated. However, no contractual agreements exist related to the settlement of such liabilities, and the timing of the settlement is not known.
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In 2010, research2011, Research & developmentDevelopment (R&D) expenses amounted to €715€776 million, compared to €650€715 million in 20092010 and €612€650 million in 2008.(1)2009. The process initiated in 2004 to increase R&D budgets continued in 2010.2011. In addition, the Group implementedset up in 2009 a financial devicestructure to contribute to the development ofstart-ups that specialize in the development of innovative technologies in the field of energy.
In 2010, 4,0872011, 3,946 employees were dedicated to R&D, compared to 4,087 in 2010 and 4,016 in 2009 and 4,2852009. The reduction in 2008.
There are six major R&D focuses at TOTAL:
developing knowledge, tools and technological mastery to discover and profitably operate complex oil and gas resources to help meet the global demand for energy;
developing and industrializing solar, biomass and carbon capture and storage technologies to help prepare for future energy needs;
developing practical, innovative and competitive materials that meet customers’ specific needs, contribute to the emergence of new features and systems, enable current materials to be replaced by materials showing higher performance for users, and address the challenges of improved energy efficiency, lower environmental impact and toxicity, better management of their life cycle and waste recovery;
developing, industrializing and improving first-level competitive processes for the conversion of oil, coal and biomass resources to adapt to changes in resources and markets, improve reliability and safety, achieve better energy efficiency, reduce the
environmental footprint and maintain the Group’s economic margins in the | |
understanding and measuring the impacts of the Group’s operations and products on ecosystems (water, soil, air, biodiversity) to improve environmental safety, in conformity with existing regulation, and reduce the Group’s environmental footprint to achieve sustainability in its operations; and
mastering and using innovative technologies such as biotechnologies, materials sciences, nanotechnologies, high-performance computing, information and communications technologies and new analytic techniques.
The Group intends to increase R&D in all of its business units through cross-functional themes and technologies. Attention is paid to synergies of R&D efforts between business units.
The Group has twenty-two R&D sites worldwide and has developed approximately 600 partnerships with other industrial groups and academic or specialhighly specialized research institutes. TOTAL also has a permanently renewed network of scientific advisors worldwide that monitor and advise on matters of interest to the Group’s R&D activities. Long-term partnerships with universities and academic laboratories deemed strategic in Europe, the United States, Japan and China, as well as innovative small businesses, are part of the Group’s approach.
Each business unit is actively developing an activeits intellectual property activity, aimed at protectingpolicy in order to protect its innovations, allowingto permit its activity to develop without constraints as well as facilitatingand to facilite its partnerships. In 2010,2011, more than 250 new patent applications were issued by the Group.
Composition of the Board of Directors Directors are appointed by the shareholders for a In case of the resignation or death of a director between two Shareholders’ Meetings, the Board may temporarily appoint a replacement director. This appointment must be ratified by the next Shareholders’ Meeting. The terms of office of the members of the Board are staggered to more evenly space the renewal of appointments. The Board of Directors appoints the Chairman of the Board from among its members. The Board of Directors also appoints the Chief Executive Officer who may or may not be a member of the Board. As of December 31, three-year3-year term (Article 11 of the Company’s by-laws).2010,2011, the Board of Directors hashad fifteen members. Of these,members, including one director has been electedappointed by the shareholders to represent employee shareholders.(1) Including, starting in 2009, expenses for Exploration & Production pilot facilities.77 Twelve of the members of the Board were independent.
Christophe de Margerie
Born on August 6, 1951 (French)
Mr. de Margerie joined the Group after graduating from theÉcole Supérieure de Commercein Paris in 1974. He served in several positions in the Group’s Finance Department and Exploration & Production division. He becameIn 1995, he was appointed President of Total Middle East in 1995 before joiningEast. In May 1999, he joined the Group’s executive committeeExecutive Committee as the President of the Exploration & Production division in May 1999.division. He then became Senior Executive Vice President of Exploration & Production of the new TotalFinaElf group in 2000. In January 2002, he became President of the Exploration & Production division of TOTAL. He was appointed a member of the Board of Directors by the Shareholders’ Meeting held on May 12, 2006 and became Chief
Executive Officer of TOTAL on February 14, 2007. On May 21, 2010, he was appointed Chairman and Chief Executive Officer of TOTAL.
Director of TOTAL S.A. since 2006 and until 2012 (last— Last renewal: May 15, 2009).
Chairman of the Strategic Committee.
Holds 85,230105,556 TOTAL shares and 48,52953,869 shares of the TOTAL“TOTAL ACTIONNARIAT FRANCEFRANCE” collective investment fund.
Principal other directorships
• | |
Member of the Supervisory Board ofVivendi* |
• | Manager ofCDM Patrimonial SARL |
Thierry Desmarest
Born on December 18, 1945 (French)
A graduate of theÉcole Polytechniqueand an Engineer of the FrenchCorps des Mines, Mr. Desmarest served as Director of Mines and Geology in New Caledonia, then as technical advisor at the Offices of the Minister of Industry and the Minister of Economy. He joined TOTAL in 1981, where he held various management positions, then served as President of Exploration & Production until 1995. He served as Chairman and Chief Executive Officer of TOTAL from May 1995 until February 2007, and then as Chairman of the Board of TOTAL until May 21, 2010. He was appointed Honorary Chairman and remains a director of TOTAL and Chairman of the TOTAL foundation.Foundation.
Director of TOTAL S.A. since 1995 and until 2013 (last— Last renewal: May 21, 2010).
Chairman of the Nominating & Governance Committee, member of the Compensation Committee and the Strategic Committee.
Holds 360,576 shares.
Principal other directorships
• | Director ofSanofi*(2) |
• | |
Director ofAir Liquide* |
• | Director ofRenault |
• | Director ofRenault |
• | Director ofBombardier Inc. (Canada)* |
(1) | As of May 13, 2011, the directorships of Bertrand Jacquillat and Lord Levene of Portsoken expired. |
(2) | Non-consolidated company which was removed from the Company’s scope of consolidation on July 1, 2010. |
* | Company names marked with an asterisk are publicly listed companies. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
Patrick Artus
Born on October 14, 1951 (French)
Independent director
A graduate from theÉcole Polytechnique, the ÉcoleÉcole Nationale de la Statistique et de l’Administration de l’Économie(ENSAE) and theInstitut d’Études Politiques de Paris,, Mr. Artus began his career at the INSEE (French National Institute for Statistics and Economic Studies) where his work included economic forecasting and modeling. He then worked at the Economics Department of the OECD (1980), later becoming the Head of Research at the ENSAE from 1982 to 1985. He was scientific adviser
at the research department of theBanque de France,, before joining the Natixis Group as the head of the research department. He is a professor at theEcole Polytechniqueandan associate professor at the University of Paris I, Sorbonne. He is also a member of the council of economic advisors to the French Prime Minister and of the French National Economic Commission.
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79
80
Director of TOTAL S.A. since 1996May 15, 2009 and until 2011 (last2012.
Member of the Compensation Committee.
Holds 1,000 shares.
Principal other directorships
• | Director ofIPSOS |
Patricia Barbizet
Born on April 17, 1955 (French).
Independent director.
A graduate of theÉcole Supérieure de Commerce of Paris in 1976, Ms. Barbizet started her career in the Renault Group as the Treasurer of Renault Véhicules Industriels and Chief Financial Officer of Renault Crédit International. She joined the Pinault group in 1989 as the Chief Financial Officer. In 1992, she became the Chief Executive Officer of Financière Pinault. She was the President of the Supervisory Board of the Pinault Printemps Redoute group until May 2005 and became Vice-President of the Board of Directors of PPR in May 2005. Patricia Barbizet is also a member of the Board of Directors of TOTAL, TF1, Air France-KLM andFonds stratégique d’investissement.
Director of TOTAL S.A. since 2008 — Last renewal: May 16, 2008).
Chairperson of the Audit Committee and member of the Strategic Committee.
Holds 3,6001,000 shares.
Principal other directorships
Vice Chairman of PPR* Board
Chief Executive Officer and Director of Artémis
Chief Executive Officer (non-Director) of Financière Pinault
Director and Deputy Chief Executive Officer of Société Nouvelle du Théâtre Marigny
Permanent representative of Artémis at the Board of Directors of Agefi
Permanent representative of Artémis at the Board of Directors of Sebdo le Point
Member of the Management Board of Château Latour (SCI)
Chief Member of the Supervisory Board of Yves Saint Laurent
• | Administratore Delagatoandadministratore of Palazzo Grazzi |
Non-executive Director of Tawa Plc*
Chairman of the Board of Directors of Christie’s International Plc
Board member of Gucci Group N.V.
• | Director ofAir France-KLM* |
• | Director ofBouygues* |
• | Director ofTF1* |
• | DirectorFonds stratégique d’investissement (French government sovereign fund) |
* | Company names marked with an asterisk are publicly listed companies. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
Daniel Bouton
Born on April 10, 1950 (French).
Independent director.
Inspector General of Finance, Mr. Bouton has held various positions within the French Ministry of Economy. He served as Budget Director at the Ministry of Finance from 1988 to 1990. He joined Société Générale in 1991, where he was appointed Chief Executive Officer in 1993, then Chairman and Chief Executive Officer in November 1997. He served
as Chairman of the Société Générale group until May 12, 2008 and has been the Honorary Chairman since May 6, 2009.
Director of TOTAL S.A. since 1997 — Last renewal: May 15, 2009 until 2012.
Holds 3,200 shares.
Principal other directorships
• | Director of |
Gunnar Brock
Born on April 12, 1950 (Swedish).
Independent director.
Graduated from the Stockholm School of Economics with an MBA grade in Economics and Business Administration, Mr. Brock held various international positions at Tetra Pak. He served as Chief Executive Officer of Alfa Laval from 1992 to 1994 and as Chief Executive Officer of Tetra Pak from 1994 to 2000. After serving as Chief Executive Officer of Thule International, he was appointed Chief Executive Officer of Atlas Copco AB from 2002 to 2009. He is currently Chairman of the Board of Stora Enso Oy. Mr. Brock is also a member of the Royal Swedish
Academy of Engineering Sciences and of the Board of Directors of the Stockholm School of Economics.
Director of TOTAL S.A. since May 21, 2010 and until 2013.
Member of the Strategic Committee.
Holds 1,000 shares.
Principal other directorships
Chairman of the Board of Stora Enso Oy
• | Chairman of the Board ofMölnlycke Health Care Group |
• | Member of the |
• | Chairman of the Board ofRolling Optics |
• | Member of theBoard of Stena AB* |
Claude Clément
Born on November 17, 1956 (French).
Mr. Clément joined the Group in February 1977 and started his career at Compagnie Française de Raffinage, which offered him professional training. He held various positions at the Refining Manufacturing Department in French and African refineries (Gabon, Cameroon). He is currently Manager of the Refining Manufacturing Methods at the Refining Manufacturing Division. Mr. Clément has been an elected member of the Supervisory Board of the “TOTAL ACTIONNARIAT FRANCE” collective investment
fund since 2009, an elected member of the Supervisor Board of the “TOTAL ACTIONS EUROPÉENNES”, “TOTAL DIVERSIFIE A DOMINANTE ACTIONS” and “TOTAL ÉPARGNE SOLIDAIRE” collective investment funds since 2010 and an elected member of the Supervisor Board of the “TOTAL DIVERSIFIÉ A DOMINANTE OBLIGATIONS”, “TOTAL MONETAIRE” and “TOTAL OBLIGATIONS” collective investment funds since 2010.
Director of TOTAL S.A. since May 21, 2010 and until 2013.
Holds 820 TOTAL shares and 3,442 shares of the “TOTAL ACTIONNARIAT FRANCE” collective investment fund.
* | Company names marked with an asterisk are publicly listed companies. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
Marie-Christine Coisne-Roquette
Born on November 4, 1956 (French).
Independent director.
A graduate of the University of Paris X Nanterre (law and English) and admitted to the Paris and New York Bar Associations in 1980, Ms. Coisne-Roquette worked as an attorney in Paris and New York until 1988, when she joined the family-owned Sonepar group. From 1988 to 1998, while also serving as Chief Executive Officer of the family-owned Colam Entreprendre holding company, she held several consecutive operational directorships at Sonepar S.A., where she was appointed Chairman of the Board in 1998. She has served as Chairman and Chief Executive Officer of Sonepar since 2002. A member of the Executive Board of MEDEF since 2000, Ms. Coisne-Roquette has chaired that organization’s Tax Commission since 2005.
Director of TOTAL S.A. since May 13, 2011 and until 2014.
Member of the Audit Committee since May 13, 2011.
Holds 1,130 shares.
Principal other directorships
Chairperson and Chief Executive Officer of Sonepar S.A.
Chairman and Chief Executive Officer of Colam Entreprendre
Director of Hagemeyer Canada, Inc.
President of the Supervisory Board of OTRA N.V.
Director of Sonepar Canada, Inc.
President of the Supervisory Board of Sonepar Deutschland GmbH
Director of de Sonepar Ibérica
Director of de Sonepar Italia Holding
Chairperson of the Board of Directors of Sonepar Mexico
Member of the Supervisory Board of Sonepar Nederland B.V.
Director of Sonepar USA Holdings, Inc.
Director of Feljas and Masson SAS
Permanent representative of Colam Entreprendre, member of the Board of Directors at Cabus & Raulot (S.A.S.)
• | Permanent representative of Colam Entreprendre and Sonepar, co-administrators of Sonedis (société civile) |
Permanent representative of Sonepar, Director of Sonepar France
Permanent representative of Sonepar, President of Sonepar International (S.A.S.)
Permanent representative of Colam Entreprendre, Director of Sovemarco Europe (S.A.)
• | Co-manager ofDéveloppement Mobilier & Industriel(D.M.I.) (société civile) |
• | Manager ofKer Coro (société civile immobilière) |
Bertrand Collomb
Born on August 14, 1942 (French).
Independent director.
A graduate of theÉcole Polytechnique and a member of France’s engineeringCorps des Mines, Mr. Collomb held a number of positions within the Ministry of Industry and other cabinet positions from 1966 to 1975. He joined the Lafarge group in 1975, where he served in various management positions. He served as Chairman and Chief Executive Officer of Lafarge from 1989 to 2003, then as Chairman of the Lafarge Board of Directors from 2003 to 2007, and has been the Honorary Chairman since 2007.
He is also Chairman of theInstitut des Hautes Études pour la Science et la Technologie (IHEST) and a Board member of theInstitut Européen de la Technologie.
Director of TOTAL S.A. since 2000 — Last renewal: May 15, 2009 until 2012.
Member of the Compensation Committee and the Nominating & Governance Committee.
Holds 4,712 shares.
Principal other directorships
Director of Lafarge*
• | Director ofDuPont* (United States) |
• | Director ofAtco* (Canada) |
* | Company names marked with an asterisk are publicly listed companies. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
Paul Desmarais Jr.(1)
Born on July 3, 1954 (Canadian).
Independent director.
A graduate of McGill University in Montreal and INSEAD in Fontainebleau, Mr. Desmarais was elected Vice Chairman (1984) then Chairman of the Board (1990) of Corporation
Financière Power, a company he helped to found. Since 1996, he has served as Chairman of the Board and Co-Chief Executive Officer of Power Corporation of Canada.
Director of TOTAL S.A. since 2002 — Last renewal: May 13, 2011 until 2014.
Holds 2,000 ADRs (corresponding to 2,000 shares).
Principal other directorships
Chairman of the Board, Co-Chief Executive Officer and Member of the Executive Committee of Power Corporation of Canada*
Co-Chairman of the Board and member of the Executive Committee of Corporation Financière Power* (Canada)
Vice Chairman and Acting Managing Director of Pargesa Holding S.A.* (Switzerland)
Director and member of the Executive Committee of La Great-West Compagnie d’assurance-vie (Canada)
Director and member of the Executive Committee of First Great-West Life & Annuity Insurance Company (United States)
Director and member of the Executive Committee of Great-West Lifeco Inc.* (Canada)
Director of Great West Financial (Canada) Inc. (Canada)
Director and member of the Permanent Committee of Groupe Bruxelles Lambert S.A.* (Belgium)
Director and member of the Executive Committee of Groupe Investors Inc. (Canada)
Director and member of the Executive Committee of Groupe d’assurance London Inc. (Canada)
Director and member of the Executive Committee of London Life, compagnie d’assurance-vie (Canada)
Director and member of the Executive Committee of Mackenzie Inc.
Director and Deputy Chairman of the Board of La Presse Ltée (Canada)
Director and Deputy Chairman of Gesca Ltée (Canada)
• | Director ofGDF Suez* |
• | Director ofLafarge* |
Director and member of the Executive Committee of Compagnie d’Assurance du Canada sur la Vie (Canada)
Director and member of the Executive Committee of the Corporation Financière Canada Life (Canada)
Director and member of the Executive Committee of IGM Inc.* (Canada)
Director and Chairman of the Board of 171263 Canada Inc. (Canada)
Director of 152245 Canada Inc. (Canada)
Director of GWL&A Financial Inc. (United States)
Director of Great West Financial (Nova Scotia) Co. (Canada)
Director of First Great-West Life & Annuity Insurance Company (United States)
Director of Power Communications Inc.
Director and Vice Chairman of the Board of Power Corporation International
Director and member of the Executive Committee of Putnam Investments LLC
Member of the Supervisory Board of Power Financial Europe B.V.
Director of Canada Life Capital Corporation Inc. (Canada)
Director and member of the Executive Committee of The Canada Life Assurance Company of Canada (Canada)
Director and member of the Executive Committee of Crown Life Insurance Company (Canada)
Director and Deputy Chairman of the Board of Square Victoria Communications Group Inc.
Member of the Supervisory Board of Parjointco N.V.
(1) | Mr. Desmarais Jr. is a director of Groupe Bruxelles Lambert, which acting in concert with Compagnie Nationale à Portefeuille, to the Company’s knowledge, owns 5.5% of the Company’s shares and 5.5% of the voting rights. Mr. Demarais Jr. disclaims beneficial ownership of such shares. |
* | Company names marked with an asterisk are publicly listed companies. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
Barbara Kux
Born on February 26, 1954 (Swiss).
Independent director.
Holder of an MBA (with honors) from INSEAD in Fontainebleau, Ms. Kux joined McKinsey & Company in 1984 as a Management Consultant, where she was responsible for strategic assignments for international groups. After serving as manager for development of emerging markets at ABB and then at Nestlé between 1989 and 1999, she was appointed Executive Director of Ford in Europe from 1999 to 2003. In 2003, Ms. Kux became a member of the Management Committee of the
Philips group and, starting in 2005, was in charge of sustainable development. Since 2008, she has been a member of the Management Board of Siemens AG. She is also responsible for sustainable development at the Group and is in charge of the Group’s supply chain.
Director of TOTAL S.A. since May 13, 2011 and until 2014.
Member of the Strategic Committee.
Holds 1,000 shares.
Principal other directorships
Member of the Management Board of Siemens AG*
Anne Lauvergeon
Born on August 2, 1959 (French)
Independent director
Chief Mining Engineer and a graduate of theÉcole Normale Supérieurewith a doctorate in physical sciences, Mrs.Ms. Lauvergeon held various positions in industry before becoming Deputy Chief of Staff in the Office of the President of the Republic in 1990. She joined Lazard Frères et Cie as Managing Partner in 1995. From 1997 to 1999, she was Executive Vice President and member of the Executive Committee of Alcatel, in charge of industrial partnerships.partnerships and international affairs. Ms. Lauvergeon
served as Chairman of the Management Board of AREVA sinceAreva from July 2001 to June 2011 and Chairman and Chief Executive Officer of Areva NC (formerly Cogema) sincefrom June 1999.
Director of TOTAL S.A. since 2000 and until 2012 (last— Last renewal: May 15, 2009).
Member of the Strategic Committee.
Holds 2,000 shares.
Principal other directorships
• | |
Director ofGDF Suez* |
• | Director ofVodafone Group Plc* |
Lord Levene of Portsoken
Born on January 9, 1942 (French)
Independent director
A graduate of theÉcole Polytechniqueand a General Engineer from theFrance’s engineering school Corps des Mines, Mr. Mandil served as a Mining Engineer in the Lorraine and Bretagne regions. He then served as a Project Manager at theDélégation de l’Aménagement du Territoire et de l’Action Régionale(City
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Géologiques et Minières(BRGM) from 1988 to 1990. From 1990 to 1998, Mr. Mandil was Chief Executive Officer for Energy and Commodities at the French Industry Ministry and the first representative for France atto the Management Board of the International Energy International Agency (EIA) Executive Committee.(IEA). He served as the Chairman of the EIA inIEA from 1997 andto 1998. In 1998, he was appointed Deputy Chief Executive Officer of Gaz de France and, in April 2000, Chairman of theInstitut Français du Pétrole (French(French Institute offor Oil). From 2003 to 2007, he was the Executive Director of the EIA.
Director of TOTAL S.A. since 2008 — Last renewal: May 16, 200813, 2011 and until 2011.
Member of the Strategic Committee.
Holds 1,000 shares.
Principal other directorships
• | |
Director ofInstitut Veolia Environnement |
• | Director ofSchlumberger SBC Institute |
* | Company names marked with an asterisk are publicly listed companies. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
Michel Pébereau(1)(1)
Born on January 23, 1942 (French)
Independent director
Honorary Inspector General of Finance, Mr. Pébereau held various positions in the Ministry of Economy and Finance, before serving, from 1982 to 1993, as Chief Executive Officer and then as Chairman and CEOChief Executive Officer of Crédit Commercial de France (CCF). He was Chairman and Chief Executive Officer of BNP then BNP Paribas from 1993 to 2003, and is currently Chairman of the Board of BNP Paribas. He has also been theDirectors from 2003 to December 1, 2011, and is currently Honorary Chairman of European Financial Round Table (EFRT) since 2009.BNP Paribas.
Director of TOTAL S.A. since 2000 and until 2012 (last— Last renewal: May 15, 2009).
Chairman of the Compensation Committee and member of the Nominating & Governance Committee.
Holds 2,356 shares.
Principal other directorships
Director of BNP Paribas*
• | |
Director ofSaint-Gobain* |
• | |
Director ofAXA* |
• | |
Director ofEADS N.V.* |
• | Director ofPargesa Holding S.A.* (Switzerland) | |
Director of BNP Paribas Suisse
Member of the Supervisory Board of Banque marocaine pour le Commerce et l’Industrie*
• | Non-voting member (Censeur) ofGaleries Lafayette |
Thierry de Rudder(2)(2)
Born on September 3, 1949 (Belgium(Belgian and French)
Independent director
A graduate of theUniversité de Genèvein mathematics, theUniversité Libre de Bruxellesand Wharton (MBA), Mr. de Rudder served in various positions at Citibank from 1975 to 1986 before joining Groupe Bruxelles Lambert, where he was appointed Acting Managing Director.
Director of TOTAL S.A. since 1999 and until 2013 (last— Last renewal: May 21, 2010).
Member of the Audit Committee and the Strategic Committee.
Holds 3,956 shares.
Principal other directorships
Acting Managing Director of Groupe Bruxelles Lambert*
Director of Brussels Securities (Belgium)
Director of GBL Treasury Center (Belgium)
Director of Sagerpar (Belgium)
Director of GBL Energy Sàrl (Luxembourg)
Director of GBL Verwaltung Sàrl (Luxembourg)
Director of GBL Verwaltung GmbH (Germany)
Director of Ergon Capital Partners (Belgium)
Director of Ergon Capital Partners II (Belgium)
Director of Ergon Capital Partners III (Belgium)
• | Director ofGDF Suez* |
• | Director ofLafarge* |
• | Director ofElectrabel |
At the meeting held on January 12, 2012, the Board of Directors took note of the resignation of Mr. Thierry de Rudder from his position as a director as of the end of the Board meeting, and consequently decided to co-opt Mr. Gérard Lamarche to replace Mr. de Rudder for the
remaining term of his predecessor’s directorship until the Shareholders’ Meeting to be held in 2013 to approve the 2012 accounts. The nomination of Mr. Lamarche is subject to the ratification of the Shareholders’ general meeting on May 11, 2012.
(1) | Mr. Pébereau is Honorary Chairman of BNP Paribas, which, to the Company’s knowledge, owns 0.2% of the Company’s shares and 0.2% of the voting rights. Mr. Pébereau is also a director of Pargesa Holding SA, part of Group Bruxelles Lambert, which acting in concert with Compagnie Nationale à Portefeuille, to the Company’s knowledge, owns 5.5% of the Company’s shares and 5.5% of the voting rights. Mr. Pébereau disclaims beneficial ownership of such shares. |
Mr. de Rudder was Acting Managing Director of Groupe Bruxelles | |
Portefeuille and to the Company’s knowledge, owns 5.5% of the Company’s shares and 5.5% of the voting rights. Mr. de Rudder disclaims beneficial ownership of such shares. Since January 2012, Mr. Gérard Lamarche is Acting Managing Director of | |
* | Company names marked with an asterisk are publicly listed companies. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
(1) Gérard Lamarche
Born July 15, 1961 (Belgian).
Independent director.
Mr. Pébereau isLamarche graduated in economic science from Louvain-La-Neuve university and the INSEAD business school (Advanced Management Program for Suez Group Executives). He also followed the Global Leadership Series course of training at the Wharton International Forum in 1998-99. He started his career in 1983 with Deloitte Haskins & Sells in Belgium, before becoming a consultant in mergers and acquisitions in Holland in 1987. In 1988, Mr. Lamarche joined Société Générale de Belgique as an investment manager and management controller between 1989 and 1991, then as a consultant in strategic operations from 1992 to 1995. He joined Compagnie Financière de Suez as a project manager for the Chairman of BNP Paribas, which, to the Company’s knowledge, owns 0.2%and Secretary of the Company’s sharesExecutive Committee (1995-1997), before taking part in the merger between Compagnie de Suez and 0.2%Lyonnaise des Eaux, which became Suez Lyonnaise des Eaux (1997), and then being appointed as the acting Managing Director in charge of Planning, Management Control and Accounts. In 2000, Mr. Lamarche pursued his career in industry by joining
NALCO (the American subsidiary of the voting rights. Mr. Pébereau is also a directorSuez group and the world leader in the treatment of Pargesa Holding SA, partindustrial water) as the Director and Chief Executive Officer. In March 2004, he was appointed Chief Executive Officer in charge of Group Bruxelles Lambert, which acting in concert with Compagnie Nationale à Portefeuille, to the Company’s knowledge, owns 5.6%Finance of the Company’s sharesSuez group, before being appointed Senior Executive and 5.6%Vice President in charge of Finance and member of the voting rights.Management Committee and the Executive Committee of the GDF Suez group in July 2008. On April 12, 2011, Mr. Pébereau disclaims beneficial ownershipLamarche became a Director on the Board of such shares.
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Member of office: May 21, 2010).
Holds 1,575 shares.
Principal other directorships
Acting Managing Director and Director of Groupe Bruxelles Lambert*
• | Director and member of the Audit Committee ofLegrand* |
Other information
The Board noted the absence of potential conflicts between the Directors’ duties in the best interests of the Company and the private interests of its meeting on September 15, 2009,directors. To the Company’s knowledge, the members of the Board of Directors appointed Mr. Charles Paris de Bollardière SecretaryTOTAL S.A. are not related by close family ties; there are no arrangements or agreements with clients or suppliers that facilitated their appointment; there is no service agreement binding a director of the Board.
The current members of the Board of Directors of the Company have informed the Company that they have not been convicted, have not been associated with a bankruptcy, receivership or liquidation, and have not been incriminated or publicly sanctioned or disqualified, as stipulated in item 14.1 of Annex I of EC Regulation 809/2004 of April 29, 2004.
At its meeting held on February 9, 2012, the Board of Directors decided to propose the renewal of the directorships of Ms. Lauvergeon and Messrs. de Margerie, Artus, Collomb, and Pébereau, which are due to expire. At
the general Shareholders’ meeting on May 11, 2012, the Board will also propose the nomination of a new independent director, Ms. Anne-Marie Idrac, who will place her expertise of the world of industry at the Board’s disposal and will broaden the representativeness and the diversity of the Board. If the resolution is approved by the Shareholders’ Meeting, the proportion of women sitting in the Board will be one-third.
Representative of the Worker’s Council: accordingpursuant to Article L.2323- 62 of the French LabourLabor Code, two members of the Worker’s Council attend, with consultative rights, all meetings of the Board. In compliance with the second paragraph of the abovesuch article, this number increased tosince July 7, 2010, four members as of July 7, 2010.
At its meeting on September 15, 2009, the Board of Directors appointed Mr. Charles Paris de Bollardière Secretary of the Board.
Director independence
At its meeting on February 10, 2011,9, 2012, the Board of Directors, acting on a proposal fromthe recommendation of the Nominating & Governance Committee, reviewed the independence of the Company’s
* | Company names marked with an asterisk are publicly listed companies. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
directors as of December 31, 2010. Also based on2011. At the Committee’s proposal,suggestion, the Board considered that, pursuant to the AFEP-MEDEF Code, a director is independent when “he or she has no relationship of any nature,kind with the company,Company, its group,Group or the management of either,its Management, that may compromise the exercise of his or her freedom of judgment”.
For each director, this assessment relies on the independence criteria set forth in the AFEP-MEDEF Code as reminded thereafter:hereafter:
not to be an employee or a director of the Company, or a Group company, and not having been in such a position for the previous five years;
not to be a director of a company in which the Company holds a directorship or in which an employee appointed as such or an executive director of the company is a director;
not to be a material customer, supplier, investment banker or commercial banker of the Company or Group and for which the Company or the Group is not a material part of their business; not to be related by close family ties to a corporate executive officer; not to have been an auditor of the Company within the previous five years; not to have been a director of the Company for more than twelve years (upon expiry |
The AFEP-MEDEF Code expressly stipulates that the Board can decide that the implementation of certain defined criteria is not relevant or induces an interpretation that is particular to the Company.
With regard to the criterion applying to twelve years of service, the AFEP-MEDEF code states that “the status of independent director due to the application of this criterion shall only be relinquished at the end of the directorship during which the 12-year period is exceeded”. Pursuant to the report of the Nominating & Governance Committee, on February 9, 2012, the Board observed that Mr. Bouton and Mr. de Rudder had exceeded twelve years of service on December 31, 2011. Since the directorships of Messrs. Bouton and de Rudder had been renewed before the twelve-year period expired, the Board decided that they can still be considered as independent directors, according to the AFEP-MEDEF code.
Concerning “material” relationships, as a client, supplier, investment or finance banker, between a director and the
Company, the Board deemed that the level of activity between Group companies and the bank at which one of its Directors is an officer, which is less than 0.1% of its net banking income and less than 5% of the Group’s overall assets, represents neither a material portion of the overall activity of such bank nor a material portion of the Group’s external financing. The Board concluded that Mr. Pébereau should be considered as independent.
Similarly, the Board of Directors deemed that the level of activity between Group companies and one of its suppliers, Stena AB, of which Mr. Brock is a director, which is less than 2.68% of Stena AB’s turnover, represents neither a material portion of the supplier’s overall activity nor a material portion of the Group’s purchasing. The Board concluded that Mr. Brock could be considered as an independent director.
Mmes. Barbizet, Coisne-Roquette, Kux and Lauvergeon and Messrs. Artus, Bouton, Brock, Collomb, Desmarais, Jacquillat, Mandil, Pébereau and de Rudder and Lord Levene of Portsoken were deemed to be independent directors.
80% of the directors are independent.
Moreover, the Board noted that the directorships of Ms. Lauvergeon and Messrs. Collomb and Pébereau will exceed twelve years on March 22, 2012 for Messrs. Collomb and Pébereau, and on May 25, 2012 for Ms. Lauvergeron, after the Shareholders’ meeting that will be invited to renew her directorship on May 11, 2012. The Board also noted the absence of potential conflicts between the interestsDirectors deemed that, for a company with a long-term activity and investment cycles of the Companymore than ten years, extended directorships and the private interestscorresponding experience represent an asset for the Group and a means of consolidating the independence of judgment of its directors. ToDirectors. The Board concluded that the Company’s knowledge,proposal to renew the membersdirectorships of Ms. Lauvergeon and Messrs. Collomb and Pébereau at the Shareholders meeting in May 11, 2012, does not call their independence into question, according to the AFEP-MEDEF code, in view of their independence of judgment.
In addition, the Board of TOTAL S.A.Directors has examined the situations of the directors whose nomination or ratification will be submitted to the Shareholders’ meeting on May 11, 2012. Ms. Idrac and Mr. Lamarche are not related
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General Management
Management form
Based on the recommendation by the Nominating and& Governance Committee, the Board of Directors decided at its meeting on May 21, 2010 to reunify the positions of Chairman of the Board and Chief Executive Officer and appoint the Chief Executive Officer to the position of Chairman of the Board until its term of office expires, that is until the Shareholders’ Meeting called to approve the financial statements for the fiscal year 2011.
As a result, Mr. de Margerie has been appointed Chairman and Chief Executive Officer of the GroupTOTAL S.A. since May 21, 2010.
The Board of Directors deemed that the unified management form was the most appropriate to the Group’s business and specificities of the oil and gas sector. This decision was made taking into account the advantage of the unified management and the majoritycomposition of independent directors appointed to the Committees of the Board that comprise a significant portion of independent directors, which ensures balanced authority.
The management form selected shall remain in effect until a decision to the contrary is made by the Board of Directors.
The Executive Committee
The Executive Committee, under the responsibility of the Chairman and Chief Executive Officer, is the primary decision-making body of the Group.
It implements the strategy formulated by the Board of Directors and authorizes related investments, subject to the approval by the Board of Directors for investments exceeding 3% of the Group’s equity or the notification of the Board for investments exceeding 1% of equity.
As of December 31, 2011, the members of TOTAL’s Executive Committee were membersas follows:
Christophe de Margerie, Chairman of the Executive Committee as(Chairman and Chief Executive Officer);
François Cornélis, Vice Chairman of December 31, 2010:the Executive Committee (President of the Chemicals division);
Michel Bénézit (President of the Refining & Marketing division);
Yves-Louis Darricarrère (President of the Exploration & Production division);
Jean-Jacques Guilbaud (Chief Administrative Officer); and
Patrick de La Chevardière (Chief Financial Officer).
In the context of the reorganization of its Downstream and Chemicals segments, TOTAL’s Executive Committee was changed on January 1, 2012. As of that date, the members of TOTAL’s Executive Committee are:
Christophe de Margerie, Chairman of the Executive Committee (Chairman and Chief Executive Officer);
Philippe Boisseau (President of the Supply & Marketing segment);
Yves-Louis Darricarrère (President of the Exploration & Production division and Gas & Power division);
Jean-Jacques Guilbaud (Chief Administrative Officer);
Patrick de La Chevardière (Chief Financial Officer); and
Patrick Pouyanné (President of the Refining & Chemicals segment).
The Management Committee
The Management Committee facilitates coordination among the divisionsdifferent entities of the Group and monitors the operating results of the operational divisions and the activity reports of thesethe functional divisions.
In addition to the members of the Executive Committee, the following eighteentwenty-two individuals from various operating divisions and non-operating departments and operating divisions served as members of the Management Committee as of December 31, 2010:
• | |
Corporate: René Chappaz, | |
Peter Herbel, | |
Jean-Marc Jaubert, | |
Manoelle Lepoutre, | |
Jean-François Minster, | |
Jean-Jacques Mosconi, |
• |
Upstream: Marc Blaizot, | |
Philippe Boisseau, | |
Arnaud Breuillac, Michel Hourcard, Jacques Marraud des |
• |
Downstream: Pierre Barbé, | |
Alain Champeaux, | |
Bertrand Deroubaix, | |
Eric de Menten, |
• |
Chemicals: Françoise Leroy, |
In addition to the members of the Executive Committee, the following twenty-five individuals from various operating divisions and non-operating departments served as members of the Management Committee as of January 16, 2012:
• | Corporate: René Chappaz, Peter Herbel, Jean-Marc Jaubert, Helle Kristoffersen, Manoelle Lepoutre, Françoise Leroy, Jean-François Minster, Jacques-Emmanuel Saulnier, François Viaud; |
• | Upstream: Marc Blaizot, Arnaud Breuillac, Olivier Cleret de Langavant, Isabelle Gaildraud, Michel Hourcard, Jacques Marraud des Grottes; |
• | Refining & Chemicals: Pierre Barbé, Bertrand Deroubaix, Jacques Maigné, Jean-Jacques Mosconi, Bernard Pinatel, Bernadette Spinoy; and |
• | Supply & Marketing: Benoît Luc, Momar Nguer, Jérôme Paré, Jérôme Schmitt. |
In addition, Jérôme Schmitt servesserved as the Group’s Treasurer until January 1, 2012. Effective January 2, 2012, Humbert de Wendel is the Group’s Treasurer.
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Board Compensation
The overall amount of directors’ fees allocated to members of the Board of Directors was set at €1.1€1.1 million for each fiscal year by the Shareholders’ Meeting on May 11, 2007.
In 2010,2011, the overall amount of directors’ fees allocated to the members of the Board of Directors was €0.96€1.07 million, noting that there were fifteen directors as of December 31, 2010,2011, as at year-end 2009.
The allocation of the overall amount of fees for 2011 remains based on an allocation scheme comprised of a fixed compensation and a variable compensation based on fixed amounts per meeting, which contributesmade it possible to takingtake into account each director’s effectiveactual attendance toat the meetings of the Board of Directors and its Committees. At its meeting on February 10, 2010,
To take into account the creation of the Strategic Committee, the Board of Directors decided at its meeting of October 27, 2011, to readjustset out the allocation of fees and the fixed and variable amounts per meeting as follows:
• | |
a fixed amount of | |
an amount of€5,000 per director for each Board of Directors’ meeting actually attended;
an amount of€3,500 per director for each Compensation Committee, Nominating & Governance Committee or Strategic Committee meeting actually attended;
an amount of€7,000 per director for each Audit Committee meeting actually attended;
a premium of€2,000 for travel from a country outside of France to attend a Board of Directors or Committee meeting;
the Chairman and Chief Executive Officer does not receive directors’ fees as director of TOTAL S.A. or any other company of the Group.
See the table “Directors’ Fees and Other Compensation Received by Directors” below for additional compensation information.
Policy for determining the compensation and other benefits of the Chairman and the Chief Executive Officercorporate executive officers
Based on a proposal by the Compensation Committee, the Board adopted the following policy for determining the compensation and other benefits of the corporate executive officers (the Chairman and of the Chief Executive Officer:Officer):
Compensation and benefits for the Chairman and the Chief Executive Officer are set by the Board of Directors after considering proposals from the Compensation Committee. Such compensation shall be reasonable and fair, in a context that values both teamwork and motivation within the Company.
Compensation for the Chairman and the Chief Executive Officer is related to market practice, work performed, results obtained and responsibilities held.
Compensation for the Chairman and the Chief Executive Officer includes both a fixed portion and a variable portion. The fixed portion is reviewed at least every two years.
The amount of variable compensation is reviewed each year and may not exceed a stated percentage of fixed compensation. Variable compensation is determined based on pre-defined quantitative and qualitative criteria that are periodically reviewed by the Board of Directors. Quantitative criteria are limited in number, objective, measurable and adapted to the Group’s strategy.
Variable compensation is designed to reward short-term performance and progress towards medium-term objectives. The qualitative criteriacompensation is determined in line with the annual assessment of the performance of the Chairman and the Chief Executive Officer and the Company’s medium-term strategy.
The Board of Directors keeps track of the fixed and variable portions of the compensation of the Chairman and the Chief Executive Officer over several years and in light of the Company’s performance.
The Group does not have a specific pension plan for variable compensationthe Chairman and the Chief Executive Officer. They are eligible for retirement benefits and pensions available to certain employee categories in the Group under conditions determined by the Board.
Stock options and performance shares are designed to allow exceptional circumstancesalign the long-term interests of the Chairman and the Chief Executive Officer with those of the shareholders.
The allocation of options and performance shares to be taken into account, when appropriate.
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Stock options and performance shares are awarded at regular intervals to prevent any opportunistic behavior.
The exercise of options and the definitive allocation of performance shares to which the Chairman and the Chief Executive Officer are entitled are subjected to performance criteria that must be met over several years.
The Board has putputs in place restrictions on the transfer of a portion of shares issuedheld upon the exercise of options.
The Chairman and “Compensationthe Chief Executive Officer may be entitled to stock options or performance shares when they leave office.
After three years in office, the Chairman and Chief Executive Officer are required to hold at least the number of Company shares set by the Board.
The components of the compensation of the Chairman and the Chief Executive Officer” below for additional compensation information.Officer are made public after the meeting of the Board of Directors that approves them.
Compensation of the Chairman and Chief Executive Officer
The compensation paid to Mr. de Margerie for his duties as Chairman and Chief Executive Officer was set by the
86
recommendation by the Compensation Committee in line with the guidance of the AFEP-MEDEF Corporate Governance Code.
It includes an annual fixed base salary of €1,500,000,€1,500,000, and a variable portion not to exceed 165% of the fixed base salary. The fixed base salary was set by comparison with the compensation paid to the Chairman and Chief Executive Officer of other French companies included in the CAC 40 index. The maximum percentage of the fixed base salary represented by the variable portion is based on equivalent practice at a reference sample of companies, including oil and gas companies.
The variable portion is based on criteria determined by the Board of Directors. The equivalent of up to 100% of the fixed base salary is linked to economic criteria, which varies on astraight-line basis to avoid threshold effects. The criteria based on the Chairman and Chief Executive Officer’s personal contribution account for an additional amount that cannot exceed 65% of the fixed base salary.
The economic criteria have beenwere selected so as to not only reward short-term performance in terms of return on investment for shareholders, but also the progress made by the Group toward medium-term objectives by comparison with data for the oil and gas industry as a whole. They include:
return on equity for a maximum of 50% of the base salary; and
• | |
the Company’s earnings performance compared with that of the four other major international oil companies that are its competitors(1), assessed by reference to the average growth over three years of two indicators, earnings per share and consolidated net income. Each indicator represents a maximum of 25% of the base salary. |
The Chairman and Chief Executive Officer’s personal contribution is evaluated on the basis of objective, mainly operational criteria related to the Group’s business segments and established in line with its strategy, including health, safety and environment (HSE) performance and oil and gas production and reserves growth.
With respect to the fiscal year 2011, the Board of Directors at its meeting of February 9, 2012, after having found that
the Chairman and Chief Executive Officer’s objectives related to personal contribution were deemed to be substantially fulfilled in 2010. After assessingand assessed to what extent financial performance criteria had been met, the Board based on a recommendation by the Compensation Committee, set the
(1) | ExxonMobil, BP, Shell and Chevron. |
variable portion payable to Mr. de Margerie in 20112012 at €1,058,408€1,530,000 for his contribution between May 22 and December 31, 2010,in 2011, equivalent to 115.1%102% of his fixed base salary.
The total gross compensation paid to Mr. de Margerie in his role as Chairman and Chief Executive Officer was made up of a fixed base salary of€1,500,000 and a variable portion of€1,530,000 for the 2011 fiscal year, to be paid in 2012.
Mr. de Margerie’s total gross compensation as Chief Executive Officer for the period between January 1, 2010 and May 21, 2010 was€1,030,359, composed of a fixed base salary of€507,097 and a variable portion of€523,262 paid in 2011. Mr. de Margerie’s total gross compensation as Chairman and Chief Executive Officer for the period between May 22, 2010 and December 31, 2010 consistedwas€1,977,763, composed of a fixed base salary of €919,355 (prorated from an annual fixed base salary of €1,500,000)€919,355 and a variable portion of €1,058,408€1,058,408 paid in 2011.
As Chairman and Chief Executive Officer, Mr. de Margerie has the use of a company car.
See the tables “Summary of compensation, stock options and restrictedperformance shares awarded to the Chairman and the Chief Executive Officer” and “Compensation of the Chairman“Chairman and the Chief Executive Officer”Officer’s compensation” below for additional compensation information.
Executive Officer Compensationofficer compensation
In 2010,2011, the aggregate amount paid directly or indirectly by the French and foreign affiliatescompanies belonging to the Group of the Company as compensation to the executive officers of TOTAL in office as ofat December 31, 20102011 (members of the Management Committee and the Treasurer) as a group was €18.9€20.4 million (twenty-five(twenty-nine individuals), including €8.4€9 million paid to the six members of the Executive Committee. Variable compensation accounted for 46%42.4% of the aggregate amount of €18.9€20.4 million paid to executive officers.
Pensions and other commitments
1) | |
Pursuant to applicable law, the Chairman and |
contribution pension plan and the defined benefit supplementary pension plan, |
The sum of the supplementary pension plan benefits and external pension plan benefits may not exceed 45% of the compensation used as the calculation basis. In the event this percentage is exceeded, the supplementary pension is reduced accordingly.
The compensation taken into account when calculating the supplementary pension is the retiree’s final three-year average gross compensation (fixed and variable portions).
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2) | |
The Chairman and |
To be eligible for this supplementary pension plan, participants must meet specific age and length of service criteria. They must also still be employed by the Company upon retirement, unless they retire due to disability or had taken early retirement at the Group’s initiative after the age of 55.
The plan provides participants with a pension equal to the plan depend onsum of 1.8% of the participants’portion of the reference compensation between eight and forty times the annual ceiling for calculating French social security contributions, and 1% of the reference compensation between forty and sixty times the annual ceiling for calculating French social security contributions, which is multiplied by the number of years of service (up to twenty years) and the portion of their gross annual compensation (fixed and variable portions) that exceeds eight times the ceiling for calculating French social security contributions. They are. It is adjusted in line with changes in the value of the ARRCO pension point and strictly capped as described in item 1)point 1 above.
As of December 31, 2010,2011, the Group’s pension obligations to Mr. de Margerie under the defined
benefit supplementary pension plan represented the equivalent of 19.47%18.01% of his gross annual compensation paid in 2010.
3) | The Chairman and |
This retirement benefit cannot be combined with the compensation for loss of office described in item 5)point 5 below.
4) | The |
5) | If the Chairman and Chief Executive Officer is removed from office or his term of office is not renewed by the Company, he is entitled to compensation for loss of office equal to two years’ gross annual compensation. The calculation will be based on the gross compensation (including both fixed and variable portions) paid in the12-month period preceding the termination or non-renewal of his term of office. |
This compensation for loss of office to be paid in the event of a change of control or a change of strategy of the Company would not be due in the casecases of gross negligence or willful misconduct or if the Chairman and Chief Executive Officer leaves the Company of his own volition, accepts new responsibilities within the Group, or may claim full retirement benefits within a short time period.
Pursuant to the provisions of the French law of August 21, 2007, which modifiesArticle L. 225-42-1 of the French Commercial Code, such compensation for loss of officethis benefit is subject to the performance conditions describeddetailed in item 7)point 7 below.
6) | Commitments with regard to the pension and life insurance plans for the Chairman and Chief Executive Officer and the retirement benefit and compensation for loss of office arrangements set out in point 5 were approved on May 21, 2010, by the Board of Directors and by the Shareholders’ Meeting. |
7) | In addition, in compliance with Article L.225-42-1 of the French Commercial Code, the commitments described in |
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performance conditions that are deemed to be met if at least two of the following three criteria are satisfied: |
the average ROE (return on equity) over the three years immediately preceding the year in which the officer retires is at least 12%;
the average ROACE (return on average capital employed) over the three years immediately preceding the year in which the officer retires is at least 10%;
TOTAL’s oil and gas production growth over the three years immediately preceding the year in which the officer retires is greater than or equal to the average production growth rate of the four other major international oil companies that are its competitors: ExxonMobil, Shell, BP and Chevron.
In compliance with the AFEP-MEDEF Corporate Governance Code, the Board of Directors decided that payment of the lump-sum retirement benefit or compensation for loss of office shall be subject to demanding performance conditions combining both internal and external performance criteria.
The three criteria were selected to take into account the Company’s general interest, shareholder interests and standard market practices, especially in the oil and gas industry.
More specifically, ROE enables the payment of the retirement benefit or compensation for loss of office to be tied to the Company’s overall shareholder return. Shareholders can use ROE to gauge the Company’s ability to generate profit from the capital they have invested and from prior years’ earnings reinvested in the Company.
ROACE is used by most oil and gas companies to assess the operational performance of average capital employed, regardless of whether it is funded by equity or debt. ROACE is an indicator of the return on capital employed by the Company for operational activities and, as a result, makes it possible to tie the payment of the retirement benefit or compensation for loss of office to the value created for the Company.
The third and last criterion used by the Board of Directors is the Group’s oil and gas production growth compared with that of its competitors. This indicator is widely used in the industry to measure operational performance and the ability to ensure the sustainable development of the Group, most of whose capital expenditure is allocated to exploration and production activities.
8) | In addition, regarding the implementation of the pension commitments described in |
above made by the Company for directors for fiscal year |
9) | |
As of December 31, |
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Chairman and Chief Executive Officer Summary table at February 29, 2012 | Employment contract | Retirement benefit and supplementary pension plans | ||||||||
Benefits or advantages | ||||||||||
due or likely to be due upon termination or change of office | Benefits related | |||||||||
to a non-compete agreement | ||||||||||
Christophe de Margerie Chairman and Chief Executive Officer Start of the Term of current office: The Shareholders’ Meeting called in 2012 to approve the financial statements for the year ending December 31, 2011 | NO | YES (retirement benefit) (internal defined supplementary pension plan(c) and corporate RECOSUP defined contribution pension plan(d) also applicable to certain Group employees) | ||||||||
YES (compensation for loss of office)(e) | NO | |||||||||
(a) | ||
Chief Executive Officer since February 13, 2007, and Chairman and Chief Executive Officer since May 21, 2010. |
Payment subject to | ||
Representing an annual pension that would be equivalent, as of December 31, |
Mr. de Margerie’s pension benefit represented a booked expense of |
(e) | Payment subject to performance conditions in accordance with the decision of the Board of Directors on February 11, 2009, and confirmed by the Board of Directors on May 15, 2009 and May 21, 2010. Details of these commitments are set out in points 5 and 7 above. |
Stock options and restrictedperformance share grants policy
General policy
Stock options and restrictedperformance share grants put in place by TOTAL S.A. concern only TOTAL shares. No options for or restricted grants of performance shares of any of the Group’s listed subsidiaries are awarded.
All plansgrants are approved by the Board of Directors, based on recommendations by the Compensation Committee. For each plan, the Compensation Committee recommends a list of beneficiaries, the conditions and the number of options or restrictedperformance shares awarded to each beneficiary. The Board of Directors then gives final approval for this list.
Stock options have a term of eight years, with an exercise price set at the average of the closing TOTAL share prices on Euronext Paris during the twenty trading days prior to the grant date, without any discountdiscount. The exercising of the options is subject to a presence condition and performance conditions (based on the return on equity
(ROE) of the Group) that vary depending on the plan and beneficiary category. As of 2011, all options granted are subject to performance conditions. Subject to the presence condition and applicable performance conditions being applied. For the option plans established after 2002,met, options may only be exercised after an initial two-year vesting period and the shares issued upon exercise are subject to a two-year mandatory holding period. ForHowever, for the 2007 2008, 2009 and 2010to 2011 option plans, options awarded to employees ofbeneficiaries employed by non-French subsidiaries at the grant date can be converted to bearer form or transfered as soon astransferred after the2-year non-transferability vesting period ends.
Performance shares awarded under selective plans become final after a two-year vesting period, subject to a continued employmentpresence condition and a performance condition based on the return on equity (ROE) of the Group. This performance condition is defined in advance by the Board of Directors on recommendations by the Compensation Committee. At the end of this vesting period, and provided that the conditions set are satisfied, the restrictedperformance share grants are finally awarded. However, these shares may not be transferred prior to the end of an additional two-year mandatory holding period. For beneficiaries outside of France,employed by non-French subsidiaries on the grant date, the vesting period for restrictedperformance shares
may be increased to four years; in such case,cases, there would be no mandatory holding period.
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Stock options and performance share grants to be more closely associated with TOTAL’s financialthe Chairman and stock market performance.
Grants to the Chairman theand Chief Executive Officer
The Chairman and Chief Executive Officers
Pursuant to Article L.225-185 of the French Commercial Code, as modified by the provisions of French lawNo. 2006-1770 of December 20, 2006, the Board of Directors decided that, for the 2007 2008, 2009 and 2010to 2011 share subscription option plans, the corporate officers (the Chairman of the Board and the Chief Executive Officer, and as from May 21, 2010 the Chairman and Chief Executive Officer) will haveare required to hold for as long as they remain in office, a number of TOTAL shares representing 50% of the capital gains, net of tax and other deductions, resulting from the exercise of stock options under these plans. Once the Chairman and Chief Executive Officer holdholds a number of shares (directly or through collective investment funds invested in Company stock) corresponding to more than five times theirhis current gross annual fixed compensation, this holding requirement will be reduced to 10%. If in the future this ratio is no longer met, the previous 50% holding requirement will once again apply.
As of 2011, the Board of Directors until May 21, 2010, was not awarded any share subscription options under the 2008, 2009 and 2010 plans. In addition, he was not awarded any restricted shares under plans in the period from 2005 to 2010.
On the Group’s ROE and ROACE. The reasons for selecting these criteria are detailed in “— Pensions and Other Commitments — 8)” above.
Chief Executive Officer holds a number of shares (directly or through collective investment funds invested in Company stock) corresponding to more than five times his gross annual fixed compensation at that time, this holding requirement will be reduced to 10%. If in the period 2006future this ratio is no longer met, the previous 50% holding requirement will once again apply.
In light of this holding requirement, the acquisition of the performance shares is not subject to 2010.
The Chairman and Chief Executive Officer has given a commitment not to hedge the price risk on the TOTAL stock options and shares he has been granted up to date, and on the shares he holds.
20102011 share subscription option plan:as part The Board of the 2010 share subscription option plan, the Board of
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