French oil major Total SA (TOT) expects to continue growing despite a fragile economic environment, and it will continue to adapt its downstream refining and distribution operations, as well as its chemicals businesses to reflect market developments, the company's chief executive says in a newsletter to shareholders released Friday.
French oil major Total SA (TOT) expects to continue growing despite a
fragile economic environment, and it will continue to adapt its downstream
refining and distribution operations, as well as its chemicals businesses to
reflect market developments, the company's chief executive says in a newsletter
to shareholders released Friday.
"In an environment that is still fragile in the short term despite the
fact that we are emerging from the crisis, I am confident in the Group's
ability to continue to generate growth thanks to the quality and diversity of
our portfolio of projects," Total CEO Christophe de Margerie said in the
fall edition of the company's investor newsletter. "In the long term,
faced with a changing economic, geopolitical and technological environment, our
watchwords are twofold--to adapt and anticipate."
De Margerie said BP PLC's (BP) oil spill catastrophe in the U.S. Gulf of Mexico
has led Total to undertake a full review of its drilling procedures. He said
the company's exposure to the Gulf is limited at 1% of the company's production
and that Total no longer is an operator in Gulf fields.
"We still have three assets: Tahiti operated by Chevron (CVX), Chinook, a
field in development operated by Petrobras (PZE), and since April 2009, we
share mining rights with Cobalt (CIE) for about 200 operating permits in which
we hold a 40% stake," the Total chief said, adding: "The moratorium
affects this exploration campaign which is presently stalled, as well as the
Tahiti project where the drilling of two wells could be delayed."
With the capping of the runaway BP well off the coast of
Louisiana
, the
administration of President Barak Obama has recently lifted the restrictions on
new offshore drilling in the
U.S.
; but
oil companies fear that heightened government oversight will slow and
complicate the approval process for new drilling.
Elsewhere in its investor newsletter, Total said the company is rethinking its
marketing strategy in
France
and
has been experimenting by offering low-priced fuels at 36 of its Total service
stations around the country. "The increased market share of low-price
players--like the hypermarkets and supermarkets--and the altered purchasing
behavior of individuals, who are consuming less and for whom the top criteria
is increasingly becoming about choice, is prompting Total to try out a new
marketing positioning while maintaining the quality of the service and
products," the company said.
"With an 18% market share, Total is
France
's
leading fuel distribution network. But faced with an environment undergoing
profound change, the strategy adopted by the France Network, part of the
Group's Refining & Marketing division, must adapt," Total added. It
said it expects to have closed over 150 service stations in
France
by
the end of 2010 and around 50 more in early 2011. But Total said it is
"doing everything possible to preserve the density of its network, and is
strengthening its positions by investing in new stations.
In exploration and production, "resources are still difficult to access,
and new players are appearing," de Margerie said, adding: "In order
to ensure the replacement of our reserves, we must not only be more daring in
exploration, but we must also enter into more innovative partnerships." He
said that the company will intensify its diversification strategy through
research in the new energies.
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