PARIS, Feb. 14 -- Total SA plans a $19 billion capital expenditure for this year, with refining and marketing accounting for $2.5 billion and petrochemicals $1.3 billion. The balance is dedicated to upstream where a $1.8 billion sustained exploration effort is planned.
Last year, the company dedicated $16 billion and added 1 billion boe from exploration. Margerie said, "We will find barrels by exploration and not acquisition."
"Henceforward, he said, one must invest twice as much than a few years ago to find the same number of barrels."
Total's upstream production last year grew by 1.5% over 2006 to 2.39 million boe/d, reported CEO Christophe de Margerie.
De Margerie maintained his expectations of an average 4%/year production growth to 2010 based on $60 Brent crude. At $80/bbl, production would be less by 50,000 b/d in 2010 under production-sharing contracts.
De Margerie said although 2008 production is uncertain because of the current economic and geopolitical environment, "even at an $80/bbl, [2008 production] will exceed that of 2007." Total is banking on new fields due on stream in Yemen and Congo, and the ramping up of Anguille in Gabon, Dolphin in Qatar, and Rosa in Angola.
The group's proved reserves replacement rate fell to 23% from 102% partially because renegotiation of the Sincor contract in Venezuela reduced Total's stake to 30% from 47%.
Maintaining a proved reserve life of 12 years and proved and probable reserve life over 20 years will require development of new capacities, he said. Numerous projects extending to 2015 should bring production close to 3.3 million boe/d.
By 2010, Total is banking on its LNG to account for 17% of its overall hydrocarbon production. Besides Snohvit and Nigeria LNG T6 which have started production, the Yemen 6.7 million-tonne/year project in which it has a 39.6% stake is due on stream in winter 2008-09.
Qatargas II, with a capacity of 7.8 million tpy in which Total has 16.7%, is scheduled start up in 2009, while the 5.2 million tpy Angola LNG (Total stake 13.6%) received final investment decision at yearend 2007.
The Total executive said he "is not yet ready to take a decision on the Pars LNG project" in Iran. "We have not burned our bridges in Iran. We will find solutions to maintain our long-term presence," he said, hinting at the French president's recent call for Total and Gaz de France to refrain from investing in Iran.
Alterrnative energy, refining
Total is increasing fuel cells production and recently signed a joint venture with Suez and France's nuclear giant Areva for potential nuclear projects in oil-producing countries.
It also is accelerating research in clean coal and coal-to-liquids technologies, second-generation biomass, and carbon dioxide sequestration with its ongoing Lacq project. Total is looking at other technologies to sequester carbon dioxide in saline cavities and abandoned gas fields.
With its recently announced Port Arthur, Tex., refinery coker project and the finalizing of the front-end engineering and design for the Total-Saudi Arabia Jubail refinery project in Saudi Arabia with the final investment decision due in 2008, Total sees "robust economics" in refining despite cost increases. This is because of the "high correlation of distillate conversion margins to crude price."
In Europe it is targeting investment in the UK Lindsey, Leuna Germany, and Cepsa Spain refineries to adapt to market changes by increasing the throughput of heavier and high-sulfur crude and output of distillates.