Total sends ‘business as usual’ message after death of chief

Total, France’s national oil champion, is keen to deliver a message of business as usual after spending the past month recovering from the death of its chief, Christophe de Margérie, in a plane crash on a Moscow runway.

In Abu Dhabi for Adipec, Arnaud Breuillac, the head of Total's worldwide exploration and production division, said the company is looking forward to a period of increased production as a slew of major projects bear fruit.

Last month, Total reported that its oil and gas production in the third quarter fell 8 per cent to 2.1 million barrels of oil equivalent per day (boepd), mainly owing to the expiry of the company’s Adco concession in Abu Dhabi.

Mr Breuillac said that Total expects to get production up sharply, to 2.8 million boepd, by 2017 as 15 projects reach their production phase.

"We are unique in this," he said. "No other major oil company has that kind of production growth profile."

Nevertheless, the company has trimmed back its original estimates for higher production, and has targeted asset sales of US$10 billion and cuts in operating costs of $2bn a year through 2017. This focus on the bottom line was emphasised by Mr de Margérie and will continue to be the company’s ethos under the new chief executive, Patrick Pouyanné, Mr Breuillac said.

He said this year's decision to pull out of the huge but difficult Shah Deniz gas project off Azerbaijan, which is operated by BP, reflected this discipline.

“We tried as a partner in the venture to push for a design that would be more efficient, but the outcome of the process was not satisfactory for us as a 10 per cent equity owner,” said Mr Breuillac. “We would have kept it, but we found a good client and said ‘there you go’.”

The Turkish state-owned company TPAO bought the stake for $1.5bn in May.

Total’s ruthlessness on project costs has made it the lowest-cost operator among the so-called supermajor oil companies and given it what it hopes is a competitive advantage in winning new business.

Total is one of several companies that are pushing to maintain their relationship with Abu Dhabi by getting a piece of the new Adco concessions, which are expected to be announced any day now.

As well as cost control and delivery of major projects – such as the CLOV floating production facility off Angola, which came in just three weeks later than originally scheduled three years before – Total is also focusing on its technological advances to win business in the face of tough competition from Asian and Russian companies, plus the more aggressive Norwegian state operator, Statoil.

In Abu Dhabi, for example, Total has been running a pilot project to enhance the oil recovered from its giant offshore project with Adnoc, the Abu Al Bukhoosh. The pilot project started last year and involves injecting a polymer and surfactant solution into the well. ABK, as the field is known, has already been able to reach record recuperation level on some reservoirs of 55 per cent.

“Abu Dhabi is a bit unique in that it has maintained a continuity of relationships over the years,” said Mr Breuillac. “That is important as we have intimate knowledge of things like the reservoir pressure, the latest information on reservoir modelling and so on. So we can apply technologies and expertise we’ve accumulated all over the world.”

He is aware, however, that Adnoc has to consider how the market has changed, particularly the rise of Asian oil-buying power. “This is a unique opportunity and I have no doubt they will look at all aspects in opening this new chapter. The world has changed and you don’t have to go back 75 years to realise that. It is quite logical that they would change the partnerships to reflect that.”

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