Total SA 2012 Investor's Day

FP.PA - Total SA
Total SA 2012 Investor's Day
Sep 24, 2012 / 07:30AM GMT 

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Corporate Participants
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   *  Martin Deffontaines
      Total SA - VP, IR
   *  Christophe de Margerie
      Total SA - Chairman, CEO
   *  Michel Hourcard
      Total SA - SVP, Development
   *  Marc Blaizot
      Total SA - SVP Exploration
   *  Philippe Sauquet
      Total SA - President, Gas & Power
   *  Patrick Pouyanne
      Total SA - President of Refining & Chemicals
   *  Patrick de la Chevardiere
      Total SA - CFO

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Conference Call Participants
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   *  Theepan Jothilingam
      Nomura International - Analyst
   *  Peter Hutton
      Royal Bank of Canada - Analyst
   *  Oswald Clint
      Sanford Bernstein - Analyst
   *  Marc Kofler
      Macquarie Securities - Analyst
   *  Kim Fustier
      Credit Suisse - Analyst
   *  Jon Rigby
      UBS - Analyst
   *  Lucas Herrmann
      Deutsche - Analyst
   *  Sofia Harte
      Societe Generale - Analyst
   *  Jason Kenney
      Santander - Analyst
   *  Alastair Syme
      Citi - Analyst
   *  Colin Smith
      VTB Capital - Analyst
   *  Martijn Rats
      Morgan Stanley - Analyst

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Presentation
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 Martin Deffontaines,  Total SA - VP, IR   [1]
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 Welcome to 2012 Total Investors' Day. I am Martin Deffontaines, in charge of the investor relations.

 We are very pleased to be here today. I would like also to welcome those of you who are joining us via webcast this morning.

 Before our program begins, just a few reminders; first of all about safety. Please take a moment to locate the nearest exit. You have two emergency exits on the right side of the room. Also, as a courtesy to everyone in the room, I will ask you to keep your electronic devices on silent mode.

 Our program today, first of all we'll have outlook and objectives presented by Christophe de Margerie, our Chairman and CEO. Then we will focus on four subjects -- exploration, upstream projects, LNG, and refining chemicals.

 Exploration will be presented by Marc Blaizot, our Senior VP of Exploration. Upstream projects will be presented by Michel Hourcard, our Senior VP, Development. Then Philippe Sauquet will present LNG. Philippe Sauquet is our President of Gas and Power. After, we will have Patrick Pouyanne presenting Refining & Chemicals. Patrick is our President, Refining & Chemicals. And then after, for the conclusion, Christophe and Patrick de la Chevardiere, our CFO, will present the conclusion.

 In terms of Q&A, what we plan is a general session of Q&A with Christophe at the end of his conclusion. And also we will take a few questions at the end of each of the four presentations I mentioned. I will ask, if you don't mind, to limit yourself to one or two questions in order to give a chance to everybody to have the microphone.

 Now, we also planned a break after Michel's presentation. And we will be happy to share a cocktail with all of you at the end of our program, let's say at around one o'clock.

 Thank you for your attention. Now it's my pleasure to introduce Christophe de Margerie, Chairman and CEO.

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 Christophe de Margerie,  Total SA - Chairman, CEO   [2]
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 Well, I always start by a few words in French. (Spoken in French). And then I switch to English. So, bonjour to everybody. That is the only difference.

 And as a person in charge of our financial communications said, we are very pleased to have you here, but not only because it's another time or another way to meet. It's definitely two years after we announced our, let's say, new policy, new strategy, new angle of taking care of the environment and of our strategy.

 That's also a few months after, which was part of this, we decided to re-shuffle the group. I don't like to use the word restructure, and that's why today we have, among other things, but it's not the least -- we [particularly wanted] to tell you about this new division, Refining & Chemicals. But as you know, we started by reshuffling, also, I like this expression finally this morning, the exploration and production and the upstream together.

 So you have a presentation made by two of our best managers of E&P, one representing exploration, which means [not yet] of Total, but one part of the strategy, which is to reinforce definitely our risk-taking. And as far as we are taking risk, we have to handle this risk; [other words], not just to exploration. You have the development. Of course, we could have also a special session on operations. But I mean we have to focus sometimes, and maybe another day we'll do it.

 And then, Philippe Sauquet, who will definitely tell you about gas, and how Gas & Power is definitely a part of our global strategy and even more with all these risks of taking additional risk, but in a sustainable way. And as we say in the Total attitude, bonus doesn't mean being crazy.

 So, to start with, because it's always better to start with short term, so before talking about long term, even talking in the benefit of our new strategy, well, the new strategy at first to deliver right now, and second, the Company is still running. And as you know, you can adapt your strategy; you can make things moving in a way you consider most appropriate or that's appropriate to the new environment.

 At the same time, you cannot change the strategy of a Company every day. So, definitely, first is delivering this near-term profitable growth on which we committed ourselves in the past, and the very recent past.

 You know that I always like to start with the market fundamentals. I still insist, when you have a strategy, it's difficult to say that you don't know about the environment. And the environment will be what it is. And we'll have to cope with it.

 But yes, yes, you have to be flexible if the environment doesn't go the way you like. But at the same time, you have to say how you're building your strategy, your tactics and why you consider that what you're doing is right. Then you can be challenged first by the market, second by our investors. But that is our job.

 And definitely I will still continue to talk about price of oil, price of gas, and the price of other energies because at the end it's a global view we have. Hydrocarbons are part of what we call [foresight energies], and foresight energies are part of the access to energy as a whole.

 So oil production capacity, we still and -- even if there have been a lot of changes, we still consider that demand remains relatively strong, depending on the years, depending definitely on the areas. But coming from non-OECD countries, coming from emerging countries -- [it will not] come back under EUR7 billion, EUR9 billion in EBITDA [to 2050]. But definitely there is definitely a need for additional energy, whatever it is. And we consider that oil and gas are the best, at least for the long, long time -- the long, long years to come.

 If you go directly to the bottom part of the slide, you see the spare capacities with a black line. It's moving from 5% 2010, today, with a bit more -- 3% to 4%. And at the end of the period we stayed relatively low at 3%.

 Now it's true that there are a few parts of the environment we shall not yet totally know. One is definitely the quote/unquote news about shale oil in the US. And the other one -- so shale oil and tight oil, and we consider this as in the same category. So we see on that slide that we consider it might be a potential for more oil coming from there than we expected it just only two, three years ago.

 On the other side you have something you've seen, unfortunately, in all the energy sector. I hope more with our competitors than with Total, but in delay in projects; not only a delay in implementing the projects, but in launching the projects. And the impact of this on the spare capacity is definitely as big [add one] of tight oil. What is it? People talking about something like 2 million, 3 million barrels per day, plus or minus. Minus if it is -- I'm talking about spare capacity, so less spare capacity is if there is more tight oil, and more definitely if the potential on delays of startup is there.

 So -- and you've seen this recently. So it's still a market which can be well driven by OPEB. People like to forgive it or forget it. It exists, as you've seen recently what happened when Saudi Arabia just said that they might allow their clients to take more oil to answer to a so-called request from OECD countries, it has a very direct impact to the market.

 We fell from [$116, $114, and then $109] in [two days'] time. And you can look at everything. There was nothing else than this Saudi Aramco saying that, if needed, we will make it a way which is acceptable for the market, which is no more than $110.

 On global gas demand, even if a lot of things have happened since my last presentation, we still believe in these three zones of pricing -- North America, Europe, and Asia. North America definitely confirmed its position of being -- we knew this, but self-sufficient. Probably more than this, but the price of gas remained very low in the US. And that's going to be the case for a long period of time.

 So that's why we see only a growth in demand, which seems -- at the same time, is a little bit awkward to say that is this, and only 1%. But 1% because already most of the power plants which were coal-fired are now being switched to gas. And there is a limit to what you can do with gas altogether.

 The remaining question is, by definition, exports. But we strongly believe that an export, which are good news for the market and you know that we recently decided to make a long-term purchase of gas from the Cheniere future LNG project. At the same time, we think that the US government and especially the DOE will do everything to maintain the price under control due to the importance to the US economy.

 We have been surprised, probably like you, we might come back on it if you ask questions on that. But I mean by the impact on the growth in the US, not only in terms of unemployment/employment, in the case of employment, but in terms of growth in the percentage of GDP.

 Europe, still a certain growth, 1.3%, plus/minus on 20 years' time. Definitely still linked with the post-Fukushima, which means a real concern about nuclear. At the same time, demand for energy in Europe is not strong; it's weak.

 Here the impact on gas is much more a substitution, we hope, one day, from coal to gas. I don't think that countries like Germany could stay on this policy of replacing nuclear by coal. And knowing of what is being discussed today with different parts in the region with the geopolitics, it's interesting to see how much Germany is willing to talk about long-term access to gas, even if for the time being they don't prove it.

 Asia, still an important growth, even if it's a little bit less than what we had in mind in the past. Altogether, it means 2% growth for gas. That is the mix of the three different categories. And definitely, but I mean -- Philippe, it's okay; we'll come back on it. It leaves room, an important room for LNG.

 The problem with LNG, it's a long-lasting project in terms of the time it takes before it can be developed and producing. It's extremely high capital intensive, but definitely it's also -- and we proved it in the past -- one of the best way to not only supply the market, but also to make it as a very sustainable source of profit in a sustainable way also for our Company.

 Result in 2012, quickly, but it's a summary of what you have been presented and Patrick de la Chevardiere commented it [long way] at the end of July after we published the first semester results, so today definitely difficult to say that our environment -- even if to be used we stacked in French, doesn't mean it's difficult to say that we are happy to -- of the environment when some countries' economy are really weak. But it's true that the price of oil is the above $110. And whatever has been said by many people, it remained there for the reason I've just described.

 The refining margin here is much more volatile. But today we say above $30. That is the average figure until the beginning of the year. Today we see figures which are much higher, because it's almost twice this and it went even higher before.

 At the same time, we remain not skeptical on the refining margin, but cautious. Here it's definitely a result of the numbers of capacities which have been shut down being in Europe or elsewhere.

 At the same time, there are also problems with the numbers of refineries and certain also -- and big ones which are what we call in the period of maintenance. So let's still be cautious on this. But if we continue like this, if the policy that Patrick Pouyanne will tell you is successful, and it will be, definitely we consider that it is a place where you can make money if, again, you choose the place and a way of doing it in the appropriate manner.

 Cash breakeven -- and during, you know this, and it certainly will be part of our subjects, but we deeply consider that our financial strengths, our view on the discipline on the way we deliver our projects, we decide to take the appropriate environment to make the proper decision of investment. Keeping this $180 per barrel, I would say criteria, with one for the long-term plateau; one for the short-term, definitely we see this as a strength of the Group.

 Exploration, we've acquired a lot of blocks recently. And you can see our chief of exploration smiling, even with his beard. When you can smile with a beard, that is not contradictory. But it's true that we face some difficult times; it's known.

 Today we made the strong and important discoveries. And certainly with the new acquisitions of blocks acreage in frontier zones or not frontier, he will tell you about it, we consider that we have on top of what we're developing, because this exploration policy will not bring, I would say, additional barrels until after 2017. So when we give you the figures of 2017, that's the base of what we have been developing or acquiring before.

 That's how we came and we come to the four new startups during this period of the year, including Usan and five FIDs, final investment dates, of major projects including Ekofisk and Tempa Rossa. I'd like to talk about Tempa Rossa because it's probably now the biggest field of the group even if, who knows, the reserves in place -- which I'll call resources -- are huge. And definitely the way we are seeing those reserves is changing. But it proves that if you keep on, you finally can make it.

 It's true that at the time we tried to continue to work with it, but we were feeling a little bit desperate of being able to succeed. That's here.

 Downstream restructuring in progress and a new organization in place. That's true for the old group. Here we use the word restructuring. Patrick will explain the part concerning Refining & Chemicals but I must say, and I want to share this with you, I have been myself surprised by the capacity of the Group to react quickly, even it was not easy.

 We change more than what people might think -- taking out marketing and bringing Refining & Chemicals all together, even if it seems normal maybe now to all of you. That was not so obvious. It has been done, and I must say, with not only people supporting it but being extremely pleased with it and now extremely willing to deliver.

 We will see this, I hope in the near term. And that is why, with this confidence on the different parts of our Group and its capacity to deliver growth for the future, we decided to increase our dividend. Well, 3.5% can be considered I'm sure by certain of you as small, but as far as you were expecting nothing, it's always better than nothing.

 But that's not the message; I will come back on it. It's definitely -- and that was the real message we wanted to deliver. Yes, we can increase the dividend.

 So as you see, security and environment, top priority. To speed up a little bit, I will go quickly on it even if it's certainly the part on which we cannot go quickly, and on which we have to tackle things every day, every day, repeat, repeat, and repeat.

 And after what happened to us in Elgin, frankly, and in Nigeria, you cannot say it's happening only to others. It happens to us. So even if we have definitely extremely good figure since a few years, we are now among the best of the class, if not sometimes the best.

 We still have to be definitely humble and continue to repeat that if we like what we're doing, we cannot do it with risks. And maybe we'll come back to it on, for instance, exploration, because here talking about security and environment. But I see that certain companies are taking too much risk and exploring in areas where any leak, any leak will probably be not only a game changer, but a Company's killing. And I don't want Total to be killed, especially if we don't take the appropriate measures to avoid it.

 And definitely security and environment, here, we've taken the example of the gas flaring and the improving energy efficiency, water management. And we'll come back to it, but we have now specialization on the CSR, and I think it's the appropriate place to discuss this in details because but it does merit to be discussed in details. And as far as we cannot do it now, it doesn't mean, again, that it's second priority by far. It's not.

 So, upstream, it's normal to start with upstream and it's where we spend most of our money. Today it's going to represent, in the five years to come, something like 75% of our capital employed. And if we take a longer-term view, including in investing in the other part of the group, the 75% goes very quickly to 80%.

 But for those who think that Total is investing more in non-upstream assets, well, it's not the result, I can tell you, of the policy of the Company. It's exactly what we've decided and we are exactly in line with our targets, 70% moving to 75%, and in the longer term, 80%.

 50% again, it's true for everybody, but we've seen it on Elgin. Exploration, we will discuss it this morning. And I think we have not only the capacity and the financial capacity to do it, but definitely, and that's something new, we have now a strong wells-to-be-drilled program, and definitely the first result of what we call the reserves which we are acquiring from exploration. We call it our PotEx. PotEx means potential of exploration.

 Now it's good to have this PotEx, but first is delivering growth, delivering production. That's where usually people are expecting me to say something. And I will do it again.

 Yes, we've seen that with all of we have decided recently, you know that for 2015 almost all of our projects are under way. And for 2017, 70% have already had their FIDs. --. So now it's really in our hands, which means the hands of the shareholder.

 That is why he is here today, not to tell you, but to explain how we will achieve this. And I deeply think that the Company has all the skills for doing this, even if we note it's a challenge. But it's a challenge with merits, I mean, profits. And for this, that's why we are investing.

 We have decided to announce, let's say -- well, call it target, whatever; what we would like definitely is to deliver, by 2017, a potential of around 3 million barrels per day. But this is not to bring production. It's to bring profitable production.

 And we'll explain how, with just the project today under development, we are bringing $30 billion of additional value on this project. And without anticipating on the presentation of Patrick de la Chevardiere, our CFO, I can tell you we'd be surprised by the benchmark compared to this, because it is a benchmark with our competitors and colleagues.

 So, optimizing portfolio with more active asset sales, well, I re-insist it is now part of the strategy of the Group -- could have almost have started by this, security then asset management. It's not any more just due to be able to keep our gearing at the level we like. It's part of it, but there is definitely much more -- to invest more, to invest in more, I would say, clever developments for the long-term. It's also sometimes better to sell assets in which you don't consider that they will bring value for the long term to the Company.

 Sometimes it's difficult. We know that engineers, or non-engineers, sometimes don't like to sell assets on which they've been working for life. But that is over. And the strategy which we have on a yearly basis for this capacity of investing and keeping our investments under control is taking into account our yearly investment program, which is part of our decision of investing for the sustainable.

 Now, if the price of oil is higher, and to answer in advance, we will continue to sell assets. So it's not only part of, well, we can sell if we need; if we don't need, we sell less. Let's say we might be more flexible than this, but again, I insist it is part of the strategy of the Company.

 Sanction projects fueling production growth -- well, that's what I mentioned, so again, I will go quicker now. On the 2011, 2015, we have an average of 3% growth per annum. That's our first commitment.

 And the second one, which seems, if you see the figures, a little bit more aggressive, and it is, but it's not aggressive. It's just the result of the investments which are being implemented today. So as far as -- it started; it's launched; it is moving. Michel and his team will do everything to make sure that those investments are bringing the production which is needed to be delivered.

 And if, sometimes, you have problems in one part of the world where the production doesn't come because you have an incident, that's different. And that is, by definition, cannot be considered as being totally and fully under control. But I insist with 70% of new production already sanctioned, which is very unusual for a Company of our size, I feel extremely comfortable with 3 million barrels per day in 2017.

 The main projects for 2017 and after, already there; talking about here about Egina, Kaombo, Moho. And there are many others, because 2017, as you can understand, is definitely not the end of the story because the story is much more on 30 years than 5 or even 10.

 So, 3 million, as you see, sanctioned projects and under study compared with the basis is 1 million barrels plus, 2 million coming from what we call [Lisook]. How do you say Lisook in English?

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 Michel Hourcard,  Total SA - SVP, Development   [3]
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 Production base.

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 Christophe de Margerie,  Total SA - Chairman, CEO   [4]
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 Production base, okay; (spoken in French) production base, good. So [1 billion] more, Michel -- welcome to the club.

 High quality of upstream projects -- I'm starting here a little bit with a benchmark. Patrick will come back to it. But it's just here we are using a very simple comparison.

 You have on one side the rate of return; on the other side what we call the ERC or the NPV on CapEx. Well, you see Total is definitely -- [that's not] having a large circle, because we are investing. But definitely being in terms of return or in terms of what we call enrichment, well, I think we are well placed.

 And definitely what is important in life is to deliver growth, and growth can only be delivered through investment. And I know that's challenging sometimes with certain of you on -- we can produce growth and value without investment. I disagree. Now we have to prove that it is coming and it's really bringing cash and value.

 We are on the value creation side at $100 per barrel and using the WACC to discount our NPV. Total WACC of Total, to avoid to ask, it is roughly 8%. So, discounting those NPV at $100, you see the impact of what are the new projects for Total. And it is the $30 billion I was telling you just in starting, by definition.

 We will certainly have to come back on this to tell you. Probably not one by one, [what you] like it on a per-project -- per project. But I mean, with discipline, with strong skills, you can develop new production, profitable and which are going to be the real value creation for our shareholders.

 Refining & Chemicals, I let it to Patrick. I just wanted to highlight it to start with, to prove that it's not only him who is committed, but the whole executive committee and myself. So 13%, it's a challenge for 2015, but it's doable. We will tell you how it works.

 And again, it cannot be made only from destroying value, and I mean what I mean. You can definitely increase in appearance the profitability of a division. But if it is in destroying value, I don't think in the end you are, by definition, bringing value to your shareholders.

 And just like for E&P, because all divisions of the Group are committed to have this new management of assets, portfolios management, it's also true for Refining & Chemicals. They will have to make it this way if they want, and I think they want, to continue to increase their new model of large integrated platforms in countries where you can find more growth probably than in Europe.

 Supply & Marketing, there will no presentation today, a specific one, but you know where it is. Next time we will make special highlights on marketing, Supply & Marketing. It's certainly one strong value of the Company's which has, as I told you last time, probably even behind Refining, it proves to be not only very successful but a real difference between Total and some of our competitors.

 And we can explain why we consider this as a plus for the Company. When you have the size, when you have the skills, when you have the [capture], you can make it definitely a big game changer for the Company without taking into account that sometimes, which means often being in marketing, helps the introduction of our other activities and especially the investment in upstream.

 Increasing free cash flow -- that's our commitment. So you have -- we split it into the past and the future with $80 and $100 per barrel. Definitely we have been -- and that was our wish -- willing to invest more. During the year 2010, 2014, we were a little bit, I would say, lacking of new projects for a period of time. It was the need to catch up.

 And catching up means investing more. While for some people it means while you were investing, yes, I said yes. But if you want us to recover a certain size, and profitable size, we'll have to invest.

 Now this definitely is proving that we have sufficient cash to cover our capital expenditures, net capital expenditures, and definitely with a strong dividend policy. And for this, and that is a result, it means we'll -- it means we need to also accelerate the free cash flow growth for the period 2015, 2017 where now you see the benefit of most of the projects becoming in production; remaining part, not yet, but small.

 And for 2017 we should be, frankly, at the head of an important source of cash which is going to be used definitely for the return to our shareholders, and to continue the policy of investment for the long term.

 Net debt to equities, that is our balance sheet since 2009. So, gearing moving from 27% in 2009, which was probably not the best year also; [1%] in June 2012. We stay in our target of 20% to 30%. Definitely, we preferred the bottom part or the lower part than the upper part, but we have all the capacities to definitely at the same time invest and pay dividend.

 And again, that is why we increased it by 3.5% starting with the second quarter of 2012. So the definitely it will be a little bit less than the 3.5% on 2012 compared to 2011, because it started with one quarter later than we could have done it. But definitely on an annualized period, it is 3.5% and we will continue this policy.

 As we can say, it is true that for a period of time we have not been increasing the dividend. But when you see that on a period of time which is only 2005, it's, well, doubled. So it always depends on what you take in terms of period of reference.

 But definitely, again, with this policy of payout of 50% average, we have the margin to increase, and especially to increase the dividend with the result of the additional profit coming from our new productions.

 And that is the end of my presentation, which was a little bit longer than expected, but it is always the case. I will now leave the floor to Exploration, because that's the beginning of the story. And we will, as you say, we will end this presentation with Patrick de la Chevardiere at the end of this morning.



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Presentation
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 Marc Blaizot,  Total SA - SVP Exploration   [1]
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 Bonjour. Good morning, ladies and gentlemen. I'm delighted today to speak about a new dynamic at Total. In many ways, I think Total willingness to be bold, not crazy, Christophe, is not visible in our exploration efforts, programs and results. And I would like first to take you through some details, witnessing that new trend.

 So, first of all, a word about our exploration portfolio in general. As you may see, our exploration potential has grown by 80% since 2009, thanks to a lot of new ideas and new acreages recently acquired. This strategy has been and is still based on two main components. Increase, as said by Christophe, our high-risk high rewards prospects, both in intensive exploration and frontier basins; and also -- and it is shown in the right part of the slide -- try to focus on liquids. I mean, oil and condensates, which amount of liquids today is reaching two-third of our prospect portfolio, which is quite a new trend.

 I'm glad also to show that this strategy has been quickly implemented and has been already successful. As you have seen last year, we've three major elephant-size, even more discovery in Azerbaijan, French Guiana and Bolivia. These discoveries are already in appraisal phase, which is also very quick appraising phase. And I must say it seems big is even becoming bigger, as that is mainly the case for Azerbaijan, where we just finished the first appraisal leg.

 Our new portfolio has been extended, thanks to six main core plays. We have them at the top of the slides. Since three years, we concentrate on grabens, carbonates, big deltas, abrupt margins, and foothills, where we think are still to be found elephant-sized discoveries. And also, unconventional. And I will come back on these unconventional plays.

 I think that selection has been done for geological knowledge and science, relying on a large worldwide database, on analogies, and also on new out-of-the-box thinkings. These new targets are shown here -- geographically speaking, South and North America, West and East Africa, Europe, and Southeast Asia and Australia. This rebuilding of our portfolio will certainly permit a middle to long-term goal through these diversified plays, to develop our production in Africa and Europe, and increase largely our supply in Asia and Americas.

 And if you like, I will now offer cues on six of our main geological plays. First of all, the South Atlantic basin, where we have two main major plays. One of them being abrupt margin, like we tried to do in Ivory Coast as a mirror of what has been discovered last year in French Guiana. And that will be extended to the very south of Atlantic with our entering in Uruguay Block 14.

 A second target is clearly the pre-salt carbonates. After the fantastic story of Santos and then Campos Basin in Brazil, we are operating Xerelete prospects in the Campos Basin. And we see more or less the same carbonates on the other side Eastern part of Atlantic Ocean in Angola in the Kwanza Basin.

 So, as you can see also, we are operating more than before. A lot of these new permits are Total operated -- Uruguay, Brazil, Angola, and Ivory Coast. So, a few details about first the deep carbonates setting below-salt and I will clearly exemplify that by the Kwanza Basin. Thanks to the Cameia discovery in Block 21, I think south of Angola is clearly the new oil province in Africa. This discovery has confirmed what we thought, thanks to the geological outcrops and to the first 2-D lines we have seen in recent years, prolific source rocks and refall carbonate reserve walls co-exist below salt.

 We completed last week already the whole 3D program in our two Blocks 25 and 40. We achieve very quickly these 3D seismic. And I think with very good results, we should be able to drill end of next year or beginning 2014. I hope this new exploration in Angola will renew the so-large successes we have in the Congo Basin in the '90s in Block 17, and after that in Block 32, north of the country.

 Ivory Coast. Following our operating in Block CI 100 close to the Jubilee and the new Tweneboa discoveries, we enter also in three new blocks with Anadarko in the Western San Pedro Basin, where we think another abrupt margin, very similar to the one of Jubilee, has been located, thanks to 2D original lines interpretation and new concepts. We have already -- we are already shooting a 3D there, so very quickly after attribution, our location of a block. And in the CI 100, following our 3G seismic acquisition and reinterpretation, we are now ready to spud and we have secured a rig for December this year.

 Uruguay. I think the result of 2012 deep offshore round have been for everybody striking. We have incredible competition between BP, Shell, Exxon, BG, Tallow and Total, even if there is to date no idle carbon shows there in this so-called Pelotas Basin, which encompass South of Brazil and North of Uruguay deep offshore. I think this very competitive bidding clearly shows the interest of our industry for abrupt margins, which could be the new worldwide El Dorado.

 Total will be the first to drill there. In this totally new frontier play, we should start our 3D acquisition October/November this year. And I think if there is good results in Uruguay, you imagine, then we will be able to open probably a new page in the search for oil in South Atlantic, because Uruguay will only be the first place.

 And I would like, if I may now, to show you our last baby in the abrupt margins setting, the Khan Asparuh Block, deep offshore Bulgaria. I think it's a very good example of how Total is testing a new basin, covering a large part of unexplored basin, unexplored margins. This block is more than 40,000 square kilometers, so, that's the only manner to look to a frontier basin -- you have to work at original scale.

 One well on the shallow platform close to the shore has shown the existence of good turbiditic reserve walls, which was a first in Bulgaria, associated with excellent source rocks. We know these source rocks is the same one in Caspian Sea. And through calibration seismic picking, we see now in the deep waters part of this margin we could be able to combine both large turbiditic finds and very deeply buried mature excellent source rock.

 I think that's the first acquisition in abrupt margins outside Atlantic basins. And we are clearly the frontrunner worldwide for this abrupt margin, which have shown already very good results, having in mind clearly both Guiana and French Guiana. For doing this work at the global scale, we need to combine very good global analog database and 3D edge technologies. And I think Total is for this very reason the frontrunner in this new play.

 Just to finish with abrupt margins, maybe one question -- how many North Sea we have in this kind of setting? I think the answer is not clear today. Is it 10, 20 new basins to be explored? It's absolutely incredible.

 To come back now onshore, we recently announced we have been also capable to enter maybe even most promising onshore foothills in the world. I mean the Iraq distant Province, where so many anticline or large structures are still to be drilled.

 We therefore are presently a partner on the Harir drilling already started, spudded, operated by Marathon; and also in the southern part of the Province in the Taza well, where we look for elephants even more sized prospect. Both in tertiary big reservoirs, very close to Kirkuk, as you can see on this map.

 And we are looking for the Kirkuk formation, and also for Jurassic and Cretaceous levels on Harir and Safen, which has been very successful recently in Atrush and Chegan discoveries. It's a clear renaissance, I think, for exploration in the Middle East, more than 40 years after OGM discovered in Iraq and Iran foothills also.

 Finally, one word, as I promised, about unconventional plays. We started our drilling campaign in Neuquen Basin, Central onshore Argentina, where we aim to develop both gas and oil in the Vaca Muerta reservoir between Block 8 Jurassic source rock.

 We have presented two wells drilled and fracked, one in Aguada Pichana and the other one in San Roque permit, both operated by Total. And these two wells are presently test and even in production, because we are close to our facilities. And first flows are very encouraging -- forecasts in Aguada Pichana and for oil of several hundred barrels in San Roque.

 And we will clearly continue this campaign. We plan to have four rigs drilling for unconventional next year. And you have of a map all the wells we intend to drill -- the blue dots -- in order to be able to differentiate where is gas, where is wet gas, and where is oil. And that will be our appraisal task next year. But we have also facilities for gas and oil there, so we can really test and produce quickly.

 Even if we focused today on high risk/high reward big elephant-sized prospect, I don't want to forget our still very active and, I think, fruitful nearby exploration around our fields. Because we have still a great number of smaller but near-term delivering exploration wells adjacent to our facilities.

 It is -- it has always been the case in the North Sea, mainly around Alwyn and Franklin, but it has been also very successful last year and the year before in Brunei around Maharaja Lela field. And we have implemented this policy in Congo, in Angola, and Indonesia. I have taken recent examples in Alwyn North, because I think that's also a striking well. A single exploration well produced more than 20,000 barrels a day a few weeks after drilling and completion, thanks, I think, to a deep cooperation between the exploration and development teams.

 To conclude, I hope on these few examples I gave you, give an idea of how we have great geoscientists, global database, good analogies, high technologies, but also bold and dedicated strategy. We have added significant resources, increasing our potential for more giant discoveries, which will bring supply and value.

 This new portfolio will allow us to continue to drill recently proven plays, like French Guiana, Kwanza, Iraq foothills; but we will also be the first to test new provinces, like Uruguay, Mauritania or Ivory Coast. And interesting also, these new plays will be drilled soon. Because clearly, we are very pleased to have, this last year, three major discoveries, but I would like -- we want more. More elephant-sized drillings.

 As you can see on this map, we have already spudded all of our wells in Americas from North Platt in the Gulf of Mexico to the Neuquen in Argentinian Basin, I already told you. Also spudded French Guiana appraisal and exploration well, and the foothills wells appraisal and exploration in Colombia and Southern Bolivia.

 In Africa, we will soon test our well in Nigeria, and I think 2013 will be a very great -- very great year for Africa. Ivory Coast, Kenya, Libya, Egypt, Mauritania, Nigeria, and last but not least, Kwanza Basin, Angola, end of 2013 will be our next coming drilling. As we said already, we are participating already in Iraqi wells in the Kurdistan Province, and next year will be also important for Big Cat and Elephant in Indonesia and Australia in Verbose Basin. So we will also continuing our exploring and appraisal programs in the North Sea, UK, Norway, and maybe resuming exploration also in the Netherlands.

 So I am sure our geologists and geophysicists will be very busy in the years to come generating and maturing prospects and discoveries. And I think that's the very good way to renew our organic growth and our results.

 Thanks a lot for your listening. And if you have any questions, I think that's a good time to go for that, as said by Martin.



==============================
Questions and Answers
------------------------------
 Theepan Jothilingam,  Nomura International - Analyst   [1]
------------------------------
 Good morning, Marc. It's Theepan here from Nomura. Thank you for your presentation. Two questions. Firstly, I guess looking at the map, you certainly seem a little bit lighter in North America. And I think some of your peers have moved very recently again in unconventional liquids there. So I was just wondering what your thoughts on the upside there is.

 Secondly, I think from two years ago, when you took us to Poe and the Technology Center, you talked about some of the challenges Total faced, in terms of increasing the level of competing technology and your G&G teams, the size of the G&G teams, relative to your peers. And I was just wondering relative to two years ago, what has happened in terms of your access to computing and the size of your teams? Thank you.

------------------------------
 Marc Blaizot,  Total SA - SVP Exploration   [2]
------------------------------
 Thank you for your question. So, first of all, North America. It's not indicated on this map, but clearly, we are now presenting the Utica Basin, which is a big operator for wet gas and liquid rich gas. So here we are. It's not so much exploration. It's more appraisal. Good result for the time being in terms of liquid to gas ratio. So, it's a good -- I think it will be a good year for Utica.

 I have indicated gum North Platt, we will follow by two other wells again, and Ardennes in Vagone. So it's a complete campaign with three wells back to back in the end of 2012 and 2013. Clearly, we could be more present in North America, and if we have good opportunities, we are looking at them as a classical strategy for us.

 Second question, about our computers. This year will be the year of implementing a new Ash PC info, as you said. So, we will reach around 3 to 4 petaflop. And we will be able, thanks to that, the variable being to be able to have a processing and mainly on what is the most complicated processing, geophysically speaking, a pre-salt carbonate below salt and the foothills.

 So all we are doing today, all we just finished to acquired in the Kwanza Basin, will be processed in this new computer center info. In terms of human resources, we have been able to have new guys, expert and senior people, mainly for the various areas, where, as I told you two years ago, we were a bit weak, and mainly in Southeast Asia, where we have been able, I think, to hire the good senior people.

 Yes?

------------------------------
 Jason Kenney,  Santander - Analyst   [3]
------------------------------
 Hi. It's Jason Kenney from Santander. So this morning, you've announced entering into Mozambique, of course, with -- in the press release, I think, commenting that the oil could be as big as the gas prospectivity to the north. I'm just wondering where Mozambique would fit into your priority, relative to your Uruguay, Mauritania, Ivory Coast, Angola prospects? And if you could give us some indication of the presumably multibillion BOE prospects sizes there, that would be interesting.

 And then, secondly, on Argentina, I note your strapline there was the most promising unconventional play, ex-North America. It appears to me that the better the resource potential in a country like Argentina, the more chance of it being taxed or taken. And I was just wondering if you could comment about the political risk exposures of that country in particular?

------------------------------
 Marc Blaizot,  Total SA - SVP Exploration   [4]
------------------------------
 Okay. First question about Mozambique. As you clearly stated, we announced this morning we enter in Block 3 and 6 of Petronas South and part of Varro Ruma Basin, where, as you mentioned, for the time being, gas discoveries -- huge gas discoveries have been done, mainly in Anadarko and E&I acreages, and the Bhandari with Tanzania.

 What we are looking there it's not gas any more but oil. And that is, for that, we are doing this move towards the southern part, less buried part of this Rovuma Basin. We think then the source rock, which have been clearly able to generate so much gas in the north, could generate a lot of oil in the South. So, it is the very reason for entering in this block, which I think is very well located for that.

 It's not in conflict with other projects. We could drill already this year. And I think to have these kind of billion-barrel prospect oil prone is a good move for the Total exploration portfolio. So no competition at all. And even increasing our presence in East Africa, I think, is also a quite strategic move.

 For Argentina, yes, I think it's one of the best -- maybe the best basin outside North America. It's maybe comparable to Basin North in Western Siberia, which is clearly also one of the biggest basins in terms of maybe more shale oil than shale gas.

 So, the first result you remember the reps' old story have been quite striking for them, if I may say that. Now we have to know how much we have, because before thinking of physicality, how much we can deliver for a well. As I told you, we are very good starting flowing, but the very question in unconventional is, how much time can you ensure this kind of production? What will be the decline of the wells?

 And that, the question is not known and I think even the Argentinian government doesn't know.

 So I will maybe let Patrick answer for physicality, maybe well located and actually better than I.

------------------------------
Unidentified Audience Member   [5]
------------------------------
 Yes, I had a question. You show an increase of 80% in your recent exploration potential since about 2009. I wonder how the average risk factor has changed, i.e., increased since then?

 And then, secondly, to put it in a group context, how have group total resources, including your exploration, increased since 2009? Thank you.

------------------------------
 Marc Blaizot,  Total SA - SVP Exploration   [6]
------------------------------
 So first question about the risk. Clearly, the risks have increased, you are right. The medium probability of success five years ago was around 20% -- 22%. It's now more to 18% for the whole potex -- or potential. So, 5.6 billion barrel. Clearly -- I don't want to do the multiplication by 5.6 billion by the complementary of probability of success, would give you more than 20-maybe-a-billion barrel and the risk potential, because sometimes exploration wells are dry. So I will not do this.

 As I have seen some of my colleagues doing it, I'm not very pleased with manner of presenting things. So, that has to be on top of more than 20 years reserve and resources we have already, and which can be developed.

------------------------------
Unidentified Audience Member   [7]
------------------------------
 [Christine Disguena] from SB Capital IQ. Could you comment what your thoughts are in Russia, and whether you have any plans to try to enter into some sort of agreement further to the position that you already have?

------------------------------
 Marc Blaizot,  Total SA - SVP Exploration   [8]
------------------------------
 I will let the floor to Christophe. Maybe he likes the pristine Arctic regions. So, clearly, we look at some opportunities mainly offshore Russia, both in Barents Sea, North Kara Sea, Laptev Sea, and also in the Black Sea. Because we could have maybe the same kind of plays than in Bulgaria.

 We have not been able to have an agreement today with a Russian company, so it's a bit complicated there. Maybe also much more expensive at the Invan in Bulgaria. For Arctic oceans, we look at possible gas prospects there; but clearly, when you look at the Kara Sea from the few seismic lines you have, you will have many discoveries there. It's probably the highest height to find today worldwide, with maybe the visual growth in Iraq and Iran.

 So I think all the major companies are interested -- you are right, by these areas. But it is gas. We are already in the Amal. Do we have to continue? I think it will depend of the interest in terms of reserves and of clearly the price of entering.

------------------------------
 Peter Hutton,  Royal Bank of Canada - Analyst   [9]
------------------------------
 Peter Hutton, from RBC. In February, you showed slides saying about 60 wells in the exploration program a year, over the next couple of years. And I couldn't see that in this presentation. Without having targets for target sake, is there any change in that target? Is there any implications in terms of rig availability or activity or refocus?

------------------------------
 Marc Blaizot,  Total SA - SVP Exploration   [10]
------------------------------
 I don't think so. I think we have around 20 wells dealing with big cats and elephant size prospects. On 40 wells, it was in one of the slides, as nearby exploration wells. So we have still the same number, the same figure for 2013. And that will be, I think, our goal for the years to come. And that is comprising, clearly, both operated and non-operated oil.

------------------------------
 Christophe de Margerie,  Total SA - Chairman, CEO   [11]
------------------------------
 Those are questions, so maybe, Michel, we can proceed with development, with the upstream projects, if you don't mind. Thank you, Marc.

------------------------------
 Marc Blaizot,  Total SA - SVP Exploration   [12]
------------------------------
 Thank you.



==============================
Presentation
------------------------------
 Michel Hourcard,  Total SA - SVP, Development   [1]
------------------------------
 Good morning to you all. It's a pleasure to be with you today. I have to apologize for my voice, I got caught by the British weather yesterday, but I will try to survive.

 Last year, if you remember, I presented to you a new organization for development for managing projects from appraisal to first oil or gas. And, as well, our vision to deliver our new production safely, on time and on budget.

 My presentation today features clearly an update on our portfolio, our main achievements, and our main steps ahead. I will try to focus on optimization and value creation. In other words, I'm not here to show you that Total is busy; I think you know all of that. But I hope to tell you we will make money with these projects, as Christophe said before.

 First, in terms of managing the projects and delivering the project execution performance, in 2011 and 2012 was good. It confirmed the trend that I highlighted before. Pazflor, as you know, was ahead of schedule; Usan was on time, and that was despite the complexities of the local content implementation in Algeria, as we discussed before.

 When I compare the left-hand side of the screen, the performance of our operated project to the performance of our non-operated projects, Total performs better by a margin of nearly 20%, in terms of delivering the project. And you have, as well, on the screen the updated graph. The last two dots are, of course, Pazflor and Usan in terms of schedule variation from approval for our operated projects.

 I must say my strongest concern and focus remains on safety first, with no shortcuts. I don't want to deliver project with shortcuts in the Indian drilling and the fabrication. And clearly, world discipline is on my agenda, just making sure that all teams are aligned towards achieving first oil or first gas safely.

 Of course, being able to deliver megaprojects on time is one thing; but, clearly, cost control is equally vital, certainly in the changing environment that we witness today.

 It's been clear over the past years, the oil and gas contractor industry has undergone major reshuffle. I would say the impact in terms of cost has not been very good for controlling the upstream cost. But that was because of strong backlogs, local content issues and, of course, less competition.

 You can see, on the left-hand side, the capital costs have surged. The industry witnessed more than a doubling, since 2005, of the E&P cost, according to the CERA Index. In that context, Total has put all its force to maintain competition; to trim down OpEx and contracts during the 2009 slump. I made sure as well that designs kept the contractor's appetite for costly and unnecessary designs or specification under control. I would say that our technical guidelines -- we call it technical referential -- which has been recently qualified ISO-9001, has been certainly a help in that effect.

 The effort to promote local content have been successful. They have borne some share of the cost, but the results today are visible. We have capabilities in Africa to have competitive yards to manufactures subsea equipment, and even to have yards to integrate -- integration capabilities of FPSOs. I would say that, on the right hand side of the screen, you can see technical costs. And Total enjoys very competitive technical costs, keeping below $20 a barrel for its consolidated subsidiary. I think it's thanks to all the efforts I just mentioned. But I will say that Total has maintained, as well, the necessary spendings in CapEx to ensure the mechanical integrity of our assets.

 Now, the oil industry is currently undergoing a very upbeat and profound evolution in terms of technology. I tried to gather on this slide the three main thoughts we can have on technology today. First of all, technology allows us to unlock existing and new resources and to improve recovery as well. In the field of reservoir modeling, Marc just mentioned the computing capabilities in Pau and the range of the petaflop, I call that petaflop is 1000 trillion operation per seconds. It helps for our most biggest models in terms of reservoir engineering. It divided the running time by 20 or even 30. It is considerable, and the impact is huge for infields or [UR] designs.

 Second, technology helps to reduce development costs. The well-to-shore design is a very good example, by pushing multi-phase transportation further. I think we'll develop later on on talking about Laggan Tormore, but this is, for me, a breakthrough in terms of technology. And it will extend even more.

 Finally, technology allows us to optimize our designs, stand ready to target on-time, on-budget projects despite their complexities; and discuss resources of some of our contractors, I would say. In the field of LNG, which is indicated there, we have a very smooth ramp-up commissioning of Yemen; and, of course, despite the disruptions you all know in terms of feed gas, the plant in this month, has rated a very strong ability for operations. In Russia, Yamal LNG is progressing well in terms of design. We have some very innovative designs that we share with Novatek.

 Now, project, what you have here is the -- it's my day-to-day menu of operated and non-operated projects, as well as their degree of maturity that we expressed in percentage of EPC main contract achievement. The operated projects are in orange -- we've got OML 58 in Nigeria; Laggan Tormore in the UK; CLOV just passed 50% in terms of the EPC achievement. Ofon 2 in Nigeria; Ofon 2 is very important. Kristof mentioned the reduction of the flaring. It's one of the major projects we have for reducing flaring in Nigeria offshore. And it's on time to be operational in 2014. We have Martin Linge, previously called Hild, in Norway; and Tempa Rossa in Italy, in the south of Italy, that we just announced.

 The non-operated projects are in gray. We've got Angola LNG, just about to start; Kashagan; Ekofisk/Eldfisk in Norway; GLNG in Australia; Surmont 2 in Canada; and Ichthys in Australia.

 I would say I'm not concerned about the broad range of technical challenges. You can see here, I think Total have the teams to control and to react. I know it's never easy to safely harbor a project into first oil or first gas. But I think the most important is to detect in advance, as early as possible, the minimum deviations from plan, and to react safely.

 I mentioned Kashagan. Of course, when I used to talk to you in Investor Relations, some about 15 years ago, I was mentioning a startup in 2005. That was -- yes, that was one day that was said. But, so, we are late, of course? But for those who have been on-site, it's a huge realization and it's a fantastic achievement, despite, of course, considerable delays.

 All our projects on the right-hand side of the screen, whether it is a long plateau, high arrangement or shorter plateau, higher profitability, respect our internal guidelines for selection. Operated project OML 58; Laggan, Hild and Tempa Rossa are on track. And for non-operated projects, our contribution is very active, and adjusted according to the partner capabilities.

 Deep-offshore. I think, over the years, Total has developed very strong know-how for floating units, FPSOs and FPUs. Total has delivered and currently operates, you can see them on the screen, six new-built ships, and has five more to come. Kaombo counts for two, because we have two FPSOs there. Average CapEx per barrel was, for the six built ships, in the range of $10 per barrel. That was an extremely competitive, and OpEx is around $3 per operated barrel, as well.

 There will be clearly and upward trend in CapEx figures for the next project. But our visibility allows us, I think, a good planning for the yards; that's the most critical; and offshore campaigns to come.

 I think for the next steps, such as FNLG or (inaudible) FPSO as for Kaombo, the know-how we have developed has allowed us to optimize the design while maintaining a very good operability and the mechanical integrity management at the top.

 With CLOV, block 17, we put use around 800,000 barrels a day with the four ships onsite -- Girassol, Dahlia, Pazflor and CLOV. And following Kaombo, I mean when all the ships on the screen are operated, we will be operating 11 ships across Nigeria, Congo and Angola. And we will be clearly ready to apply the expertise for the next generation of projects that Marc mentioned earlier ago.

 CLOV -- on track for production mid-2014. I think CLOV was sanctioned early 2010; and is currently, as we said, halfway to first oil, which is targeted mid-2014. It's a very competitive timing, but I've been recently to South Korea, and the steps are quite noticeable. The first steel for the hull was cut in July, 2011. We had the successful hull launching in March 2012. And the FPSO today is forecast for leaving South Korea by mid-2013. So it's a very rapid pace, thanks to good engineering and a good yard.

 I think it's important to remind as well that CLOV local content is much higher than the previous projects. You can see on the right hand part of the screen the yard in Paenal in Angola, and one of the top sides module of CLOV currently fabricated in Paenal will be integrated in the FPSO in Angola.

 As far as subsea is concerned, CLOV is quite an innovation as well. We have multi-phase pump for the most extended subsea line for the [Myacin] production; they have just been recently tested up to 2.3 megawatts, so we are ready for the next step in terms of subsea production.

 Laggan Tormore, set for 2014 as well, is, I told you, very innovative well-to-shore design. And it's been designed as a hub for the west of Shetland, and it is such a very important element in our portfolio. It's, I would say, a technological model we can be used elsewhere in the world, where offshore structures, offshore ships, FPSOs cannot be used because of environmental or economical reasons.

 Laggan is showing clearly the way in subsea, I strongly believe, thanks to advanced research in fluorescence, in multiphase pumps, subsea processing, and gas compression even. More well-to-shore designs will be selected in the future. The development scheme of Laggan Tormore is based on two subsea templates. You can see the size of the elements on the screen. They have been load out in May to be put in place before the summer on Laggan Tormore field. So two production templates tied back to the new Shetland gas plant we have in the Shetlands, and connected with two 18-inch trunk lines, 90 miles long. Ties for the future developments are set, as for [etadual] gas field, which we have been contemplating.

 Ichthys -- Ichthys is certainly a giant for many aspects, giant project offshore; giant project onshore. And the development of Ichthys is based on subsea wells with 200 meters water depth. The drilling centers are connected permanently, so fuel lines and risers to the central process platform, the CPF; and the FPSO for condensate process facilities. It's good to note that both the CPF and the FPSO are permanently moored and cyclone rated.

 The gas is exported through 42-inch pipe; that's about 550 miles long to Darwin. And the production will be by two trains of LNG, 8.4 million tons a year, together with associated condensate and gas liquid production. The CPF, the central process platform, is a piece of engineering. It's being built today in South Korea. It will be the world's largest submersible to date, with one of the 10,000 tons dry weight. For those who know the place, you have to figure out Dolphin basically puts on the platform; that's what we've done on the CPF.

 All the contracts for Ichthys are in place. Construction works have started on the site in Darwin; you can see on the picture on the right-hand side. And 25% of the line pipe has been delivered; work in progress; is in line with 2016, end of 2016 for the startup. My good friend Antoine Serceau is the project director for Ichthys and I'm sure will make it, he's pretty confident, once all the contracts are in place.

 We have had in our portfolio -- Marc mentioned it -- numerous tie-backs. They increase value; they maintain production; and they've been sanctioned over the past two years. They required a very strong effort to extend the plateau of different projects; and to unlock, as I said before, additional resources into reserves.

 These tie-backs are developed for one, two, or more wells. They enable us to increase injection capacity, maintain production, with lower wellhead pressure; thanks to, as well, multi-phase pumping. These projects require a very strong project methodology just to adapt the planning of the project to the existing project; and, most important, to fine-tune the intervention period on the mature field shutdowns.

 Islay, in the North Sea, also features elevated pipeline heating, equipment to optimize fluorescence and to minimize chemical product OpEx. GirRI, which stands for Girassol Resource Initiative, added all in all 120 million barrels of 2P reserves, swing field oiling, injection pattern and multiphase pumping.

 That slide is, for me, extremely important. It shows our process to deliver the project. Basically, we don't work by gates. Gates, for me, are synonymous of consensus. We don't work by consensus. We have two landmarks; the first one is the end of the conceptual study by which we -- after appraisal, after engineering, after the safety case -- we're able to build what we call a SOR, statement of requirements.

 That's a very important step which frees us, basically, all the conceptual work before we enter what is called the, for me, the project phase. The project phase, or the FEED, which will lead to the FID, the final investment decision. But it's important to know that after the SOR, normally the concept is frozen we cannot change anymore -- unless we have to. But in that case, we have to re-go under the process of appraisal and conceptual. And I will be extremely stringent on the modifications to be applied to the SOR.

 I think it's really important to understand that process. It allows us to execute on the smoother and easier way once we launch the project. And it makes all the parties together aligned at the moment of the SOR for one specific project.

 I think E&P is committed to accelerate and sanction our next (inaudible) project. Christophe mentioned some of that this morning. We've got, of course, the Canadian oil sands. We've got Uganda, Bolivia, Absheron, Yamal LNG, BOSS LNG, and the Argentinian gas shale mentioned by Marc. They are all under the process of pre-project and basic engineering, which has got to lead to FID.

 I think, again, it's most important to get all the necessary information and appraisal before we did the proper statement of requirements and before entering the FID phase. I think this is vital to make sure the EPC contract will be, at the end of the day, executed on time and on budget.

 I think the cost challenge, of course, is in front of us, is important. And I have to make sure that we gather all the necessary expertise in the early steps of the study to perform a proper optimization. That's exactly what we do today in Canada for the early oils with our partner Simcoe; trying to optimize to do some good value engineering, to make sure that the projects are able to be launched with a good profitability and a good level of CapEx and a good level of production.

 Our contracting strategy, I must say, is extremely important as well. Tendering remain the rules to capture of course the benefit of competition. But I must say that strategic partnership with some contractors will allow us to secure equipment and yields in advance to make planning more tangible.

 On Kaombo, I've got good news. It will be -- there were the question of whether re-injection of the water production could be managed or not, with high pressure or low pressure. It's a success of R&D because we just qualified the ceramic filtration equipment. So we'll be able to reinject fully the water production on Kaombo using ceramic filtration. And on Joslyn, as I said, value engineering is ongoing to try to lift the profitability of Joslyn as we see it today.

 Finally, I think, to conclude those remarks, Total is clearly starting to reap the rewards of our new organization, the E&P organization we put in place last year, early 2011. The organization clearly allows for complete project chain, from reservoir to project. And for having developed and managed it since the beginning, I can tell you the results are visible and tangible.

 Our expertise in deep offshore and LNG is clearly the key for the future. And I believe very much, as you have seen it, in the technological drive for optimizing our resources and unlocking value. The quality of our portfolio is quite unique. It's a commitment, clearly, to achieve on-time, on-budget projects and deliver the profitability they deserve. This is all thanks, of course, to the quality of the teams and their discipline.

 I thank you for your attention. I think we've got some time to get some questions now. Thank you.



==============================
Questions and Answers
------------------------------
Unidentified Audience Member   [1]
------------------------------
 I wanted to ask a question on the Tempa Rossa. It is a Total-operated project. It has slipped over the years. Back in February, the startup was supposed to be 2015; you now show 2016. I wonder if you can explain what the one or two key challenges have been with Tempa Rossa. Thank you.

------------------------------
 Michel Hourcard,  Total SA - SVP, Development   [2]
------------------------------
 Well, Tempa Rossa, it's different stories. The first one is Italy. It's been not very easy in Italy to address the competitive bidding and to make sure that we can proceed on the project. Now I think the project is on track. We have had competitive bids. We have got all the authorizations to FID, safely, the project; and now we are running in the execution mode.

 As Marc said before, it's a large stake of 2P reserves. It is nevertheless not a very easy drilling. I remember the first drillings in the 80s in Tempa Rossa were challenging already. And they remain challenging; it's deep. But the wells have good productivity. So we should be now on good track to realize first oil by 2015. And we have got, as Christophe mentioned, pretty good news on the 2P sides, in terms of reserves and resources. So I'm pretty confident on this one, despite the difficulties we have had. We are just lacking authorizations, basically; and everything has been caught.

------------------------------
Unidentified Audience Member   [3]
------------------------------
 Thank you.

------------------------------
 Oswald Clint,  Sanford Bernstein - Analyst   [4]
------------------------------
 Thank you. Oswald Clint, Sanford Bernstein. Christophe mentioned at the beginning that 70% of your development projects by 2017 have started. And that's unusual for the size of a company of Total. Could you just -- obviously, that's venturing into the unknown. Can you talk about the risks around delivering that, given it is quite different? And then, secondly, just on Yamal LNG, you highlighted how quickly Yemen LNG came on. Do you think Yamal poses any significant further challenges, such -- (technical difficulty)

------------------------------
 Michel Hourcard,  Total SA - SVP, Development   [5]
------------------------------
 -- are progressing well. We have the day-to-day follow-up on the different projects. They have different location, different perspectives, different technologies. But so far I would say, so far, so good. Of course you've got to steer those projects, basically, on the day-to-day because of the market; because of the contractors; because of the conventions of the different factors and the different partners to the selected solutions.

 But on the project that we mentioned which are contributing -- 2015, 2016, 2017 -- I've got today a pretty good visibility on their stake and the first oil, and the first oil or first gas date. No big announce on that. It's more -- the one that we mentioned on the second-last slide was clearly Canada, on which we benefited from the merger with Suncor. And because of Suncor, we decided to revisit, namely for Joslyn, the mine plan; the force treatment capability; the tailing process; and the export pipe converting to a medium temperature; hot bitumen pipe to a high-temperature hot bitumen pipe. And that's allowed us to make a very good savings on the design. And that will be integrated with our partner, Suncor.

 Yamal LNG. The challenges are multiple. First of all, it's Arctic, so we had to put definitely some new designs for the LNG tankers. We had to assess properly the dredging of the [Ob] river. We had to address properly the settling of the big trains, liquefaction train and compression trains, on the permafrost. And I think today the studies we've performed with Novatek and our engineering has performed to find good and relatively easy solution to implement for Yamal LNG.

 So we built, progressively, confidence in Yamal LNG. It's a huge challenge; it remains a huge challenge. To stuff, to integrate the upstream into the downstream, to make sure that the downstream will be on-time. But so far I would say that the cooperation with Novatek is good, and they accepted to welcome a lot of Total's second (technical difficulty) which is good for us and for the project. So far, yes, there are challenges. But they seem to be under control at the moment.

------------------------------
 Oswald Clint,  Sanford Bernstein - Analyst   [6]
------------------------------
 Thank you.

------------------------------
Unidentified Audience Member   [7]
------------------------------
 (inaudible) from Standard and Poor's Capital IQ. You have a very significant number of projects. So if we could find out, as you get them all together, have you seen the costs increasing? Is there inflation coming on in the industry that you see further down? And in terms of availability of services, do you think you'll be able to cover that?

 And lastly, within the same theme, do you think you'll be able to have enough people to replace the people that are retiring, that would have the capability to deliver all the projects?

------------------------------
 Michel Hourcard,  Total SA - SVP, Development   [8]
------------------------------
 Thank you. Well, of course, people in -- it's a requirement. I mean, everything is possible when you've got good people. And I've got an excellent team. And what we need in addition to the people is, of course, 1 million miles. We have to cover all those projects, and to make sure that our seconded people to the specific project are really and fully in good conditions and being able to cope with the difficulties.

 But that's a problem of manning. Of course the manning is involved. The organization has changed. And why we have done the reorganization is to put the focus on the chain of project, as we mentioned before. There's 3000 people, I quoted on the slides, are clearly -- about 800 in the office, mostly for the engineering and conceptual phase. And the rest of it, the 2200 people, are second and mostly as managers on the execution phase of the project.

 So, yes, it's an issue. But so far, we have maintained the quality of our teams, and they deliver. The point you mentioned about costs and competition and the service contractors is extremely important. You remember the slide and the graph of the costs. It's clearly a trend. My utmost interest, clearly, is to maintain competition as far as we can.

 The cost-wise, we have seen in some sectors, in the FPS segment of the offshore, in the soft packages for the offshore, is something which is not normal I would say. And some, of course, contractors are benefiting from squeeze situation, in terms of ability of the ships and the ability of the manufacturing processes. But all that is under control.

 I think we tied very strong ties with some of our contractors at being able to give good visibility. And the fact that we have sanctioned those 70% contribution, in terms of project, gives us the good visibility. And that's very attractive for the contractors. They prefer to work with Total on some dedicated [IR] because they know the visibility we have, and they know our projects, and they know the timing for the projects.

 What's extremely difficult -- Marc can testify on that; myself and Marc, we receive how many calls a day from other companies? Do you have a rig? Oh. Do you have a subsea platform? Oh. Do you have a crane? Well, everything is short, but it needs planning and a very good and very comprehensive understanding of the contractors and how they perform; how they can be helped; but, at the same, time by controlling that cost. I mean, it's been -- I've seen, on the past two years, really some increase of cost which was absolutely not justified. So we have to be extremely clear on that. When we see something absurd in terms of cost, we just don't do it, and we think about it twice.

 But the market is extremely tense. But, so far, we manage. And the -- I would say, local content is difficult. But at the same time, it's giving additional capabilities. We know we can perform a lot of jobs now in Angola. We know we can perform a lot of jobs in Congo and in Angola. And that helps a lot.

 It's not only Houston; it's not only Aberdeen; it's not only Singapore. So we are developing in cooperation with our contractors and the stated companies some capabilities which enable us further to develop and to make sure that our timings, our prospects, are in good hands.

------------------------------
Unidentified Audience Member   [9]
------------------------------
 (Inaudible - microphone inaccessible)

------------------------------
 Michel Hourcard,  Total SA - SVP, Development   [10]
------------------------------
 Sorry?

------------------------------
Unidentified Audience Member   [11]
------------------------------
 (Inaudible - microphone inaccessible)

------------------------------
 Michel Hourcard,  Total SA - SVP, Development   [12]
------------------------------
 In some projects, we are not the operator -- or we could be the operator, but the fact that we second people, we can manage to have a good grip on the project, at the same time to develop capabilities locally. That's very important. 54 years in Southeast Asia. That helps.

------------------------------
 Theepan Jothilingam,  Nomura International - Analyst   [13]
------------------------------
 Hi, it's Theepan from Nomura International. Just following up on operatorship, Marc mentioned the importance of operatorship or the increasing exposure Total is making on that. You took showed two slides -- firstly, just on planning control and how Total is better than -- as an operator than some of your peers. Then you look at the schedule of projects. And then clearly there, 50% of your project pipeline is non-operated. I guess you've talked about how closely you're working with your peers. But do your targets incorporate some sort of delays or cost overruns when we look at the, let's say, 3% target out to 2015 or the 3 million barrels per day?

 And then, one of the recent adds is Uganda, where you are the operator. And you talk about it being in study. I was just wondering what your thoughts are there on the development?

------------------------------
 Michel Hourcard,  Total SA - SVP, Development   [14]
------------------------------
 Okay, thanks, Theepan. Well, I clearly expected the questions; operated, non-operated. We perform better, so what's happening with the other projects? Again, it's -- the question is to second the proper people right in advance from the very beginning. All the discussions we've had with some of our operated operators and non-operated operators is clearly, how much we can second; how many people we can send there and what level.

 We try to agree very much up front on all the projects, whether it is been on Surmont 2; whether it has been on GLNG; whether it has been on Novatek for Yamal. Try to get a grip on the methodology, and to make sure that at the level of the conceptual study, we've got all the steps clearly put forward.

 Now, delays -- I think the operators are the operators. Our task, at least, to monitor and to make sure that we detect at the same time they detect any variation from the plan. And then we can try to reinforce team to change slightly the contractors decisions. But the most important is to make sure, again, that we have people inside the teams. We talk; we detect; and we can react. And it's been the case so far.

 I cannot talk of any project being a long development resulting in problems; it doesn't exist. They have ups and downs, but the capability of the teams is the most important to be able to react. So, yes, today I'm pretty confident despite the tension on the subsea, despite the tension on the yards. We know very well the South Korean yards. We know very well their capabilities. We use most of them. And they are pretty confident and we are pretty confident they can achieve the big modules or the big ships on time, because of their methodology and the fact that we know them quite well.

 So, today, I'm pretty comfortable.

------------------------------
 Theepan Jothilingam,  Nomura International - Analyst   [15]
------------------------------
 If you take a step back, when you categorize those types of developments, where are the biggest risks, broad-brush? Do you think it's a tighter LNG market, or the deep offshore with the rigs, and the (technical difficulty) risk these type of developments?

------------------------------
 Michel Hourcard,  Total SA - SVP, Development   [16]
------------------------------
 The most difficult is to get people. So all the areas where the workforce is tight, that's clearly creating people problems, with the contractors and the progress of the projects. It's been the case, and it's on watch in Canada; it's been the case and it's on watch in Australia, every time we try to find solutions with the contractors, to make sure that we've got enough people for those projects.

 I mean, you're talking about thousands of people to be sent on-site. In the Middle East, it was easy. The workforce was behind, and it was easy to get the workforce and the people on site to build the Qatar and to build the [IE]. On some regions, it's a bit more difficult. So that's the first problem. But it's in hand with the contractors and the state countries. They understand very well the problem.

 If they want the project to benefit from a good progress, we have to get the people to weld. We have the people to be on-site to lift, to assemble, and to make sure that the area it's working. So that's the first issue.

 The second issue will be on the offshore, in the deep offshore. Because of the Gulf of Mexico starting again, because of the expansion in Brazil, because of the acceleration as well in Angola, because of the prospect in the Kwanzaa, we'll see clearly attention on the rigs and we have to anticipate. We have not waited for that to happen. But ties with the contractors, advance booking of the rigs, all that is clearly on the plate. And we have to make sure that we've got the rigs to make the wells, and we've got the rigs to make the wells producing. That's one of the biggest challenges ahead of us in terms of the subsea but, again, it's anticipation.

 In Uganda -- you raised a question. It's well in progress. We performed a lot of appraisal on the field. It's a very peculiar field. It's quite shallow. The oil is challenging, but the reserve and the resources are more or less in line with what we expected. We draw the profile. We agreed with the partners and the state on the profile. Now, of course, the question about exporting and treating the oil in Uganda, it's on the plate. And we have to find something which is fit for all the parties. But the prospect is quite exciting.

 It's a good-sized development, good resources. And what we expect -- where we expected the difficulties, in terms of productivity of the well, actually it's a bit better than what we expected. So it's ongoing. But the particularity of that field, because it is shallow, low in LG, we need to start water injection as soon as possible, and possibly to put an [anselek away] as soon as possible to get more reserve. But it's a challenge, but it's a good prospect. Thank you.

------------------------------
 Marc Kofler,  Macquarie Securities - Analyst   [17]
------------------------------
 Hi there. It's Marc Kofler from Macquarie Securities. I just had a similar question, I suppose, to what Theepan just asked. Looking at the estimated returns from sanctioned versus non-sanctioned projects, I was a little bit surprised to see the deep offshore and conventional onshore -- for, like, groupings on the non-sanctioned projects to be so close together. Is it right to infer from that, then, it's these pinch points in the deep offshore which you think are going to effectively lower returns on those unsanctioned projects? Or do you think it's more conventional and onshore issues there? Or, basically, just looking for a bit more color, really, on the relative movement of those dots.

------------------------------
 Michel Hourcard,  Total SA - SVP, Development   [18]
------------------------------
 Well, it's really depending -- it's a good question -- it's really depending on the portfolio of projects. Clearly, the deep offshore confirm, it's higher cost but good profitability in the shorter plateau. LNG confirms, in terms of reserve, lengths of the plateau; and despite of the costs, they give a very good rent.

 In terms now of conventional and onshore, it's mostly because of, as I said, the complexity and the size of those developments; the country in which we operate; the difficulty to get people; and, finally, for Canada, the value engineering which has to be done.

 Mining is not rocket science. I would say it's a -- but it's huge in terms of size. And really optimizing, as I said before, everything from the mine plant to the tailing treatment is extremely important. So all this is relative to every project. But I think, today, we have the solutions to safely harbor most of the launching.

 I think Kaombo, [Mohinoffs] in Congo; Egina, they should be not very far from FID. And the rest, we mentioned [Viga Pillard]; we mentioned [Ekawasi]; should be soon on those. And so, it's -- despite the 70% who we gave to you, I think we are pretty confident of the next 12 projects to be sanctioned later.

------------------------------
 Kim Fustier,  Credit Suisse - Analyst   [19]
------------------------------
 Hi, good morning. Kim Fustier from Credit Suisse. Just a quick question. You've talked a lot about optimizing designs for developments, and also matching the development concept to the subsurface. Now, some of your peers in the industry seem to put a lot more emphasis on standardization, both on project management and equipment. It seems to me you are kind of standing at the other end of that spectrum. So could you talk about the pros and cons you see in the trade-off between optimization and standardization?

------------------------------
 Michel Hourcard,  Total SA - SVP, Development   [20]
------------------------------
 Well, not really; if you remember, I quoted the appetite for some of our contractors for new designs and unnecessary, costly modifications. We'll try to standardize. But unfortunately, every development is a prototype, so what we have to face is a sequence of prototypes which have to be optimized according to the cost and the difficulties and the discoveries of Marc.

 I'm really pushing for standardization. But sometimes if you don't invent, if you don't innovate, you won't be able to discover and you won't be able to produce. Look at Pazflor. Without the subsea separation, we wouldn't be producing Pazflor. Look at CLOV. Without the multi-phase pump, 2.3 megawatts, as I said, we won't be able to produce as much as is there from CLOV.

 So, innovation, yes; optimization, yes. But it has a cost, and we have to optimize that. So it's not black-and-white; it's not we standardize. It's not we innovate. It's a combination of both. We have to be cost effective. But at the same time, there are technological breakthroughs which allow you to unlock reserves and develop resources, despite what was done before.

 So it's really a combination of those. You cannot -- if somebody is telling you, yes, we do standardize. Fine. But they will optimize one type of development; they will not make progress in developing additional 2P reserves or additional resources. And if somebody tells you, we have to innovate to innovate, it's a mistake because, at the same time, we have got to make sure that we cut the cost and we standardize what can be standardized.

 It's true, notably in terms of subsea. Subsea is a never-ending technology, and you can harness that technology. But you have to stand firm on what can be standardized and what can be used as normal. But you have also to be open to new developments and new technologies to produce more.

------------------------------
 Peter Hutton,  Royal Bank of Canada - Analyst   [21]
------------------------------
 Peter Hutton, RBC. Can you just outline, quickly, the process and the timeline for moving Egina and Block 32 Kaombo to FID? And what you were waiting for?

------------------------------
 Michel Hourcard,  Total SA - SVP, Development   [22]
------------------------------
 Kaombo is well in progress. You know, Kaombo is two ships to convert to the FPSOs. We are doing good business today with our partners and the Senegal company. Today we have more or less frozen the design. And we are really in the process of moving ahead with the contractors and selecting the different equipment. So it's moving well.

 No particular difficulties on Block 32, except that, because of the two ships, because of the complexity of the subsea, it's a bit deeper than before. We have clearly to keep an eye on the costs. So that's for Kaombo in Angola.

 For Egina, I think we are ready in terms of engineering; we are ready in terms of recommendation to award. It's a bit in the end of the government in Nigeria to accept and to sanction the awards. But at the same time, there is the unknown of the PID in Nigeria so we can assess all that. One, we've got the return of the awards. We'll know exactly where we are in terms of cost. And then we have to assess what could be the changes, if any, in the PID for Egina.

------------------------------
Unidentified Participant   [23]
------------------------------
 Okay, ladies and gentlemen, if there are no further questions, we'll go for a break. Thank you, Michel.

------------------------------
 Michel Hourcard,  Total SA - SVP, Development   [24]
------------------------------
 Thank you.

------------------------------
Unidentified Participant   [25]
------------------------------
 And we'll be back at 11 o'clock.



==============================
Presentation
------------------------------
 Philippe Sauquet,  Total SA - President, Gas & Power   [1]
------------------------------
 Okay, well, ladies and gentlemen good morning. We will switch now to LNG. LNG, which doesn't mean -- or doesn't mean only a long negotiating game, as the President of JAPEX said in Tokyo last week, but you will see that LNG means also growth, and in particular, growth for Total. And not only growth in volume, but also growth in profit, which is obviously much more important.

 But let's start by some market fundamentals first on LNG, gas demand on one side, gas prices on the other. As you see on the left-hand part, the worldwide gas market has been growing at an average of 3% per year during the last 10 years with emerging countries being the show, especially Latin America and even more Asia.

 And you should be aware that the recent trends of the industry have made gas even more competitive. It is greener, we might say, as needed complement to the intermittent renewables that are developing fast in developing -- in developed countries. It is even more evident what we anticipated with clearly unconventional revolution and also some new conventional discoveries.

 It is also more cost competitive in relative terms compared to nuclear, which now has to cope with additional concern about safety, and this is driving, obviously, its cost upward.

 And so this means that the forecast that Christophe gave you at the very beginning of our presentation of 2% to 3% growth for year for the future is on the cautious side.

 Gas then on the right-hand part, and you see the different prices for the US at the bottom and Asia at the top and Europe being at the middle. You must remember that gas is not a mobile commodity, just simply because it is very costly to transport. And, therefore, it should have been no surprise to see very, very different price levels in different market areas. Supply/demand balance is being different in each of them.

 And, nevertheless, even if we know that I am sure that some of us have been surprised by the magnitude of these differences since 2009, which spreads as high as $15 per million BTU between the US and Asia.

 And these spreads have created huge opportunities of value creation for LNG, LNG being the only way to bridge the gap between the different continents, but being a too small bridge to equalize these prices. And this means that even if we as a LNG producer, and Michel showed you that, we must work hard in order to bring projects -- project costs as low as possible, chasing cents per million BTU cost saving. But we must not forget about chasing dollars per million BTU in trading and marketing profit by optimizing permanently the sale of our LNG on the highest-price market.

 As I said, we are very confident about gas demand growth, but we feel even more confident about LNG growth, LNG having proven since 40 years its reliability, and also more recently its exceptional flexibility, allowing to respond to unanticipated customer demand, be it to severe weather condition somewhere or worse, to situations of urgency as in Japan last year.

 And our LNG growth forecast is 5% a year. We have obviously strong contribution for more than 75% from east of Suez, with China and India in particular. And even if this might sound very reasonable compared to past trends, that means a need of close of 400 million tons per year of additional production in 2013 compared to 2010. And considering the decision already taken, a need of new project for about 340 million tons per year.

 This means roughly between 80 and 90 new liquefaction trains to be identified, developed, built, more than all the liquefaction plans existing or in construction today worldwide.

 So there is a clear opportunity for new projects. And as you are aware, we have a number of some of these projects, and they are challenging, but clearly they have a huge potential, huge potential to be improved, optimized and made competitive, especially because the market needs them.

 As for Total, we have been since the very birth of LNG among leaders of the industry. We are partners today in nine liquefaction plants in operation, or soon to be in operation with Angola LNG starting in the coming days. Two under construction, and all of these plants being located in Asia, Middle East, Africa and in Arctic. And we have also integrated the gas chain with five free gas terminals, giving us long-term access to all the main LNG market, including Asia in particular.

 And LNG is clearly one of our core businesses, driving today 20% of our production, and even larger share of our upstream profits. And this long and vast experience gives us confidence to our mission to remain at the forefront of the industry, working among the most challenging new projects, like Brass in Nigeria, Shtokman and Yamal in Russia.

 And to meet these new synergies we will also, not only, but we will also continue to take advantage or integration along the chain for the constitution of a LNG trading portfolio, which today is comprised of more than 100 cargoes per year. This portfolio allowing us, first, to speed up the long-term marketing of our liquefaction project, because we can propose to this project long-term purchase contracts signed by us.

 It also allows us to keep control of the final destination of the cargoes during the life of the project in order to try to send them where the maximum value is. And, so in short, this portfolio allows us to create additional value -- additional value for our upstream partners, for our customers and obviously for us.

 And when you consider that these spreads can reach $5 to $10, $15 per million BTU you can realize that for each trip of 10 cargoes the value created might reach more than $500 million, and it cannot definitely be neglected.

 And we have started to implement this strategy, which allowed us in the past to launch Yemen LNG, Qatargas 2, and more recently Gladstone and Ichthys. And on the other side this strategy has also allowed us to create additional value by rerouting close to 30% of our LNG portfolio for 2011. And we are -- we have more or less already secured 50% of rerouting for 2014.

 So meeting our 10-year's target should lead us, when you add our equity part of the market shares of the liquefaction project we are in, and our own direct market share from the global LNG position of close to 20 million tons in 2011, which puts us just behind Shell, to a position of close to more than 30 million tons in 2020.

 And, obviously, we have already progressed to, while securing this target of, let's say, 10 million to 15 million tons to be added, with an increment of 5 million tons already secured by our new liquefaction project, including Angola LNG, and an increment of close to 2 million tons already secured in our LNG downstream portfolio, including the last deal that we disclosed last week, and that Christophe mentioned, the 700,000 tons ex US GOM, ex Sabine Pass.

 So as a conclusion I would say that the LNG outlook seems quite favorable for the industry and quite favorable to a group such as Total, which combines significantly a worldwide portfolio of LNG assets, a large pipeline of new projects, technical competencies, financial strength, and also, trading and marketing expertise.

 So thank you for your attention and, obviously, I ready to answer some questions that you might have.



==============================
Questions and Answers
------------------------------
 Jon Rigby,  UBS - Analyst   [1]
------------------------------
 Jon Rigby, UBS. Can I just ask a very quick question? As you are negotiating new contracts in the Far East -- I guess, this links with your decision to enter Sabine Pass -- are you being asked to consider whether you should include a portion of Henry Hub indexing within the contracts that you agree?

------------------------------
 Philippe Sauquet,  Total SA - President, Gas & Power   [2]
------------------------------
 Obviously, the US export project are creating the buzz today on the market, including in Asia. And, yes, there is a clear demand for Henry Hub-priced LNG. Having said that, the long-term customers, and including Japanese utilities, are realizing that over the long term there might be very high risk to base, at least a significant part of their purchase, on the basis of Henry Hub price. And most of them have seemed to be more realistic about that.

 As for us, clearly, for instance, if you take the 700,000 tons that we have been buying from Sabine Pass, we have already secured in our portfolio access to Asian markets which are, in fact, GCC or Brent Index [or the] other.

 Last year we signed with COGAS already a 10 million tons per year contract, Brent indexed. So this new supply can easily fit, for instance, in this contract. So no need for us, in fact, to propose today Henry Hub-priced LNG.

------------------------------
 Lucas Herrmann,  Deutsche - Analyst   [3]
------------------------------
 It is Lucas Herrmann at Deutsche. Can I just ask about your range of future growth options? When I look at your portfolio as it stands today, the next few years very good growth coming through, obviously, from GLNG and Ichthys. But, however, I have look at the options for growth beyond that in terms of the upstream that are concentrated in Russia and Nigeria, both of which have been relatively challenging to execute in recent years, and beyond that the portfolio actually looks relatively limited in terms of optionality. So how do you feel about options? Where do you go for options?

 And can I ask the second question, which is on US export? You looked extremely well-positioned, given your relationship with Cheniere, to take significant capacity from the outset. You have come in rather late. I just wonder around the thinking, given historically Total has seem very much a bear on US gas price and a bull on Asian gas price. Yet in the context of the most seemingly obvious trade you have shown what to me seems like considerable hesitance in acting.

------------------------------
 Philippe Sauquet,  Total SA - President, Gas & Power   [4]
------------------------------
 Okay, well, first in term of option, obviously, we are concentrating today as regard our option projects on Russia and Nigeria. And that you should consider that these are huge projects, and obviously we will go for other option. But if we could -- and we are confident, but we will at least secure I would say at least two of these projects. And obviously we'll work to go for the three or even for the four, because in Nigeria there are two projects. We are confident that over the years we will find other opportunities.

 For instance, Gladstone is a good example of a project that was not anticipated five years or 10 years prior to us joining the project. But we are confident that through the different capabilities that we have in terms of competitive advantages, as I mentioned, we can join and add value to a lot of projects that are being discussed or that will be discussed. So if we need, we are confident that we can complete our set of options.

 US, honestly, is one of these options. Are we late? Some have been quicker than us. And, obviously, we were very well-placed to discuss the Sabine Pass project, having special relation with Cheniere for our regas contracts. Frankly speaking, we didn't want in fact to be overexposed to possible hike of Henry Hub, or overexposed to possible US political decision to restrain in the future the LNG export. And one train that -- one full train at that stage was a bit maybe too much for our ambition.

 Second, we didn't like the two first contracts of the two first trains. And you have to look at the fourth measure close. I can tell you that the fourth measure that we like. And we selected train 3 for a different reason. First, the contract is better, even if the price is slightly higher, but the fourth measure close is much better.

 Second, it was important for us to partner with COGAS on such a project. You have to remember that Korea is maybe the only one big LNG importer which has signed a free trade agreement with US. And which -- and this is, obviously, a significant protection in terms of what could happen in the future if the Henry Hub price would increase.

 And, last, we managed also to secure, and I am sure that you have seen in the press we have signed also an agreement on the -- which is related to train 3 with Cheniere, and maybe to possible train 5, but especially in train 3, and we got a rebate of $30 million a year on our regas contract.

 In this represents for train 4 for the 700,000 tons -- this represents an advantage of $0.8 per million BTU, which is not negligible. So, yes, we are not the first mover, but from the very beginning we have tried to make the best possible deal of -- about this project, and we are satisfied from what we have achieved. And the story is not complete yet.

------------------------------
 Sofia Harte,  Societe Generale - Analyst   [5]
------------------------------
 [Sofia Harte], Societe Generale. Two questions, please. The first one is what is your insight on what is happening in Japan, please? They have only two nuclear reactors out of 54 back online. It seems that the market is expecting probably a quicker return then maybe the people who are involved in LNG. Could you tell us what your thoughts are on the demand for LNG out of Japan?

 And the second question is just looking at some of the slides today in terms of the NPVs. I am just intrigued by basically your first slide showing quite a strong profitability of the LNG business, 27% of upstream results out of 20% of the year production. But then going forward we have LNG at the bottom of the scale in one of the first slides from Mr. de Margerie. So are you expecting LNG projects to come down in terms of returns, please?

------------------------------
 Philippe Sauquet,  Total SA - President, Gas & Power   [6]
------------------------------
 The first question, on Japan. Obviously, this is one of the hottest topic of the industry around now. I was just, in fact, in Tokyo last Wednesday. The meeting having been organized -- organizing a huge conference with all of the industry about the future of LNG.

 Clearly, the situation for nuclear is still very controversial in Japan. The utilities are still fighting to convince the government and the local authorities to restart the nuclear facilities. But you have to realize, and you realize that when you are in Japan the trauma is really very, very deep in all the Japanese population. And my anticipation is that irrespective of the decision that have been announced, maybe not completely confirmed, but clearly in the coming years I have difficulty to imagine a restart of a lot of nuclear plants in the future.

 Will it be a complete phaseout, as has been announced maybe a bit quickly, but not certain? And, obviously, you have to take into account that this kind of decision has to be pursued sustainably for 10 to 20 years before they are effective. But in the coming years I definitely think that there won't be enough nuclear plants restarted to avoid Japan having to import maximum LNG as it can currently, and even increasing that with new CCGTs that will prove to be needed for the Japanese market.

 So I think they have no other option, LNG, and they know that very well. And the purpose of the conference was to say -- well, we would like to have gas prices as were in the US. As I said, the US is US. We have domestic gas; Japan has not. Gas is not a mobile commodity, so you can have LNG maybe priced at Henry Hub plus, but the plus is significant. And even if they are complaining about Brent indexation, the solution to Brent indexation is not to index their LNG on another commodity, because US gas is another commodity, it is not the Japan gas price.

 Profitability of upstream. Well, 27% is just a fact, so it is already. So this is an easy answer for me. What about the future? Obviously, one part of the explanation why, in fact, the LNG profitability might turn better that is anticipated at the time when we launch a project, is largely due not only, but largely due in fact to optimization.

 For instance, when we launched Yemen LNG some years ago, as you know, two-thirds of the project were based, in fact, on US gas prices. At that time the price that was taken into account for our economics was slightly less than $4 per million BTU. So when we launched the project it was not $10, $15, we didn't dream about that. When we launched it was less than $4.

 What is happening today? What is happening is that when we go to the US, well, we have a bit less than what we had anticipated, but not significant less. But when we can reroute these cargoes to Asia or to Europe, which was not anticipated in our economics at the very beginning, obviously, the profit is enormous. And we share, obviously, this profit with Yemen LNG. We take our share as a trader. We give appropriate share to Yemen LNG. We take our share as an equity holder. But, obviously, it improves a lot the profitability of the project.

 So will it be the same in the future? I tend to believe, yes, because of the optionality that we have on this project. So what is clear for us is that we will not launch a LNG project if we are not satisfied with acceptable economics on the base case, but will be secured by long-term contract.

 But once this is done and launched, you have always the flexibility, if you are a global player, if you have invested in access to the different markets, India, China, as we have done during the past -- Europe, not to be forgotten -- you have the opportunity to do better. So we are confident, or I am confident, that the profitability in the future will be better than what is shown on the standardized LNG project profitability.

------------------------------
 Jason Kenney,  Santander - Analyst   [7]
------------------------------
 Jason Kenney, Santander. So I've got a couple of questions. Can you give us an indication of the competitive pressures you can see coming from East Africa gas and those significant gas volumes that have been found along that coastline? Maybe for Australian gas into Northeast Asia, but also, it with an eye to the FEED projects, such as Shtokman and Snohvit.

 And then, secondly, on Shtokman, we know about Gazprom's decision to delay and defer. I mean, do you actually see a credible start date this decade or are we going much further out?

------------------------------
 Philippe Sauquet,  Total SA - President, Gas & Power   [8]
------------------------------
 Okay, well, East Africa -- yes, obviously, East Africa, as we mentioned this morning, we are most aware of the discoveries that have been made in this part of the world. They are really significant. And, obviously, we take that into account in our competitive environment for LNG, and in the figures that we showed we have included, in fact, a significant volume coming from East Africa.

 But, having said that, there are some projects on which we are already discussing with buyers today. And, for instance, a bit on Yamal, a bit on Brass, where on Brass we have already completed 100% of the marketing of the project, the East African project are not existing today.

 So, yes, they will come. Yes, they will have an impact on the market. But there are still some work to do before we are in a situation to visit customers and to propose [SPA] to be decided in some weeks. So we are with the project that we mentioned [are ready], and when the East African project will come, we will maybe have another project.

 Shtokman, there has been a lot of news in the press which seemed incorrect. Gazprom was the first to say that. Clearly what we can say is that the project is not stalled. What we can say is that on the technical scheme that has been considered so far the economics were not robust enough to convince the partners, including Total obviously, to take a positive decision vis-a-vis the project. But we are now back, in fact, to revisit the technical scheme.

 The studies are continuing today. Total is taking its share. And we are confident that in the coming months we can have a better project that would allow Gazprom to select its partners and decide of launching the project.

------------------------------
 Alastair Syme,  Citi - Analyst   [9]
------------------------------
 Alastair Syme, Citi. Can you just remind us on Bontang, where we are in terms of contract renegotiations and what you assumed in the forecast?

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 Philippe Sauquet,  Total SA - President, Gas & Power   [10]
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 On contract, you mean (multiple speakers)?

------------------------------
 Alastair Syme,  Citi - Analyst   [11]
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 Contract renegotiations and extensions and what you assume.

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 Philippe Sauquet,  Total SA - President, Gas & Power   [12]
------------------------------
 Okay, on Bontang, as you know, the PSC is ending in 2017. And for the time being I am not sure that there is any news that we can release on the subject. But, obviously, we are working on the issue, and we are -- obviously, we will be more than satisfied, in fact, to extend the duration of the PSC. But today it is premature. 2017 is not tomorrow, so we still have time and still need to have a discussion with the Indonesian government about it.

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 Colin Smith,  VTB Capital - Analyst   [13]
------------------------------
 Colin Smith, VTB Capital. Within the last decade or so the cost of LNG plants has probably tripled, certainly liquefaction has tripled. And we have seen that very much in the prices of the last major plants that have been sanctioned in Australia and PNG. Maybe the US LNG marks a break with that pricing terms. It all depends whether [Bantal] can deliver the project at the price they say they can.

 But I think also coming back to the issue about the new discoveries that have been made in other places, can you just give us Total's view more broadly about where you think longer-term cost structures might go, whether the kind of levels that we have seen in Australia might be challenged by other places? And can you put that in context with what it means for your Russian projects and for Yamal as well as Shtokman? Thank you.

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 Philippe Sauquet,  Total SA - President, Gas & Power   [14]
------------------------------
 I would think that Michel is much more competent than I am to answer on this cost solution, if you want.

------------------------------
 Michel Hourcard,  Total SA - SVP, Development   [15]
------------------------------
 While it is true that we (inaudible). It is true that the cost of EPC are rising, but not so much actually, it depends on the size of the plant. And relatively on the last huge plants that we have seen, whether it is on GLNG, whether it is on some other place, relatively by the size of reserves we can still remain competitive.

 That being said, LNG is a combination of reserves -- you need to have huge reserves, and in front of that you need to have plants, and then the market. So far I didn't see the limitation in terms of cost of the EPC plants. We can optimize the plants to be competitive. The size of the trains, the number of the trains, and the optimization of the FEED gas, all that is really on the table in terms of liquefaction. Apart from that, of course, the price will be on the other side.

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Unidentified Company Representative   [16]
------------------------------
 Okay, thank you, Philippe, now we will move to Refining & Chemicals with Patrick Pouyanne.



==============================
Presentation
------------------------------
 Patrick Pouyanne,  Total SA - President of Refining & Chemicals   [1]
------------------------------
 Okay, good morning everybody. I'm pleased to have the opportunity to share with you our views about Refining & Chemicals eight months after having been in charge of this new division. As you know we have reshuffled, restructured, reorganized for sure these full downstream activities and on the refining and chemical sides embarked into the integration of these two businesses not only on the sides but also in the central division, so it has been quite active.

 Before entering into the strategy of our new divisions, maybe I should share with you our views about the evolution of the market in terms of demand and offer. I am not sure I will be able to predict in front of you the future margins of refining and petrochemicals, but at least I would like to share with you some fundamentals.

 On the petroleum product side, on the refined product side, the market, as you know, has a small growth worldwide, 1.1%, which means 1 million barrels per day per year of growth. But today there is a great disparity between the two big zones, on the one side the Atlantic Basin, US and Europe, there is no growth. That is in fact a decrease which is anticipated. In our model, we anticipate a reduction of 0.7% per year of demand of refined products in the Atlantic Basin, North America and Europe. And on the contrary, over the rest of the world, a growth of almost 3%, even above 4% in China, 3% in the Middle East and the rest of the world 2.7%.

 The same situation in fact on the petrochemical demand side, (inaudible) is a market that is worldwide, has larger growth, 4%, but there again, two different areas, Europe and North America where the anticipated growth is around 1.5%, so it's mature markets, Europe around 2%, North America around 1%. And the rest of the world, in particularly Asia, Middle East but all the rest of the world around 6%.

 Just to remind that the markets don't have the same size. It's 4000 million tons per year on the refined product side, and 250 million tons per year on the polymer side. So same demand image mature markets on the Atlantic Basin decreasing on refined products and a little growth on polymer and emerging markets much bigger growth.

 On the other side, if I begin by the right-hand side of the slide, for petrochemicals, in fact the situation is the following. There has been a huge increase of capacity in 2010, mainly in the Middle East and Asia. These have affected the margin of petrochemicals since the end of 2011 because these new capacities have been fully on stream. I will say full capacity since the end of 2011. They are still affecting the market today. The margins, petrochemical margins have been low since the beginning of -- since mid-2011.

 But the good news are in front of us, at least until 2015, '16, because, as you know, there are little new capacities which will be put on stream during the coming five years, less the additional demand that I mentioned before and the new capacity being concentrated mainly in China in fact.

 Then in 2012, as confirmed by trend, we will have a new wave of petrochemical capacity coming on stream in the US. In the first half 2012, almost 7 million tons per year of capacity have been announced for four or five very large projects. This new wave we obviously hit as a market, because as I told you before the demand in North America is mature; there is no growth. So these projects would be for export, mainly South America, like today, Asia, but the arbitrage to be opened to Europe, and so Europe could face, from 2017, let's say, competition from the Middle East but also from crackers from North America. But for the coming years, we anticipate the margin should be -- I would say the average trend that we have in mind.

 On the refining side in terms of offer, as you can see, most of the capacity -- and this is largely new capacity -- will be put on stream in China and the Middle East, around 6 million barrels per day of new capacity in the next five years. Some OECD capacity in Asia, in Japan and Australia would be closed, have been announced in particular this year. But globally speaking, the new capacities are balancing the new demand on Asia and the Middle East as it is anticipated.

 Then you have of course the Atlantic Basin again. I told you there would be a reduction of demand, so we have to adapt there the capacities. And I will make a zoom on Europe because Europe, as you know, is for Total a cornerstone of our portfolio. We have today -- we are the number one refiner in Europe. We have 85% of refining portfolio in Europe, 10% in the US. There is a small share in Asia and the Middle East, and in petrochemicals but Europe, it's 60% of our portfolio is in Europe, 25% in Americas, and 15% in Asia. So Europe is of the most importance for us.

 A clear rationalization is underway since the last -- I will say even the last three years. In the last three years in Europe, 1 million barrels per day of capacity, refining capacity, has been really shut down, and we still -- which is not enough. By year-end, the utilization rate of refining in Europe was still low, and we were -- the markets are still [under] capacity of 1 million barrels per day. But since the beginning of the year 2012, there is (inaudible) acceleration. This is rationalization. As you all know, Corriton has been closed, [Lionel Basil] is cocooned. We have closed Rome in Italy with TotalErg, and so there is again 500,000 barrels per day of additional capacity which are being shut down in six months.

 Of course, the market is decreasing. So we have to continue the trend but the trend is clearly there and we'll say all the actors of European markets are working on this rationalization. And part of the -- I really think that part of the enhancement we have seen in the European margins in the last three or four months is clearly due to restructural change. There is a rationalization and the market is taking that into account.

 Of course, from Total's side, it's very important. We have ourselves lowered our exposure to the European market in the refining. We committed in 2007 to lower our capacity by 500,000 barrels per day. We have done a little more, 550,000 barrels per day in five years, so we fulfilled our commitment. We have done the same, by the way, in petrochemicals. There was no commitment that has been done. In the same period of time, we have reduced our exposure to the European market by 22%, 23%. And this trend we will have to continue to follow. This is a good strategy. We need to -- we are one of the main actors in the European market, number one in refining, number two in petrochemicals, so we have to take our share of that rationalization. And we pursue that strategy and as I will explain to you, we have an objective to reduce our exposure to the European market by 20% in the coming five years, so in the same trend to what has been done in the last five years.

 So the strategy now is logically derived from what I just explained to you, our position in Europe and the US, so growth is mainly in Asia and the Middle East. So it's logical that, on one side, we need, on the mature markets, to adapt the capacities to the demand revolution and to enhance the profitability on these competitive markets. And the way we want to do it is to focus most of investments on the large platforms and maximizing the synergies. This is one of the fundamental reasons, the [industry] reason behind the move which has been decided by our CEO last year and we are implementing.

 And on the other side, we want to grow and expand in Asia and the Middle East in order there to benefit from the growth in these markets and by adding access to advantage feedstock for petrochemicals or to the (inaudible) like in Jubail. I will come back on that.

 A good portfolio management Christophe told you, but in this sector, in the downstream sector, it has been the case, in particular in chemicals, since 10 years, less in refining, a few difficulties sometimes, but we are really convinced that portfolio management in a large company like Total is part of what we must do in order to revisit the interest of each asset on a continuous basis, and renew our portfolio.

 The last six months have enabled us to confirm the roadmap to enhance profitability. The 6% and 13% show that you can see there are totally consistent with the figures which have been given to you by Christophe and Patrick last year. It was 9% starting point and 14% difference but supplied marketing is not included in these figures, so you know the spread. You can make your calculations, but for Refining & Chemicals, we go from a lower point, 6%, and we have to reach, so it's a little harder to reach a 13%. But we have confirmed for the last six months and are planning the size, the way to do it, and we have four -- identified four blocks there on which I will come back after. The first one is that concentrating our projects from some main platforms should help us to enhance our profitability by 1% to 5%.

 We have some specialty chemicals. I will not make any presentation about that, but these specialty chemicals are (inaudible) profitability by the [ways] of the portfolio, we are continuing to grow and should give us 1% or so. Then portfolio changes, we have done that in the past. I mentioned we would be active. I mentioned we want to lower our exposure on the European market. We have done few operations since the beginning of 2012, sitting -- divesting a small subsidized business in France (inaudible) campus like distribution business in the US. So we will continue.

 And then the last part which is (inaudible) efficiencies and synergies, $650 million is much more than what was announced last year, which was EUR400 million for refining chemical and supply marketing. But it's probably one of the benefits of the new organization. We have identified by I would say rebuilding this organization and observing and looking carefully to these businesses, some areas of improvement. I will come back on it as well.

 You have for your interest for your calculation the sensitivity of the 2015 target to higher European margin, $25 per ton, which is what we use for planning.

 So first of all, the projects. I told you we want to focus on major integrated platforms. We really think that's sort of the most profitable platforms in the future which will be large platforms (inaudible) in order to be able to export integrated, refine -- integrating refining and petrochemicals in order to attract a maximum of the value of each molecule in order to optimize the utilities and energy which is absolutely (inaudible) in this business if you want to lower and control your costs.

 And so the strategy we have in mind is to focus our investments on these six platforms. Maybe we could add another one in the future in Asia but we have six in our mind, two only in Europe the other being the largest one in Normandy. And the reserve (inaudible) is that we want to have more than 70% of our capital employed in refining and petrochemicals concentric even on this platforms. These of course should deliver cash. This is what you are expecting. And so these platforms with new investments which are being -- which will be down, should deliver $2.5 billion, around $2.5 billion of cash flow from their operations -- you have sensitivity of $25, $35 per ton -- compared to less than $1 billion last year.

 The share of the Asian Middle East platform will increase as well. Jubail is our new project in Saudi Arabia, which will come onstream in 2014, the first installation unit by the beginning of the year, but the plant will be fully operational by year-end. The project is on schedule, more than 90% complete. Even the gas is in the lines today. I remind you that is a very large project, 400,000 volt per day based on the dedicated source of (inaudible) coming from the managed field, which allowed us to make a specific design in order to have a very low fixed cost per ton, so it's a highly competitive platform. It's integrated as well with petrochemicals as we will produce there paraxylene, benzene, and propylene.

 Then we have Qatar, which is our historical base in the Middle East which is today among our best, if not the best of our assets considered globally. We have two crackers. We have a condensate refinery there. We intend to debottleneck these crackers I would say to continue to make our job as we are doing that for last 30 years in order to continue to benefit to of course advantage feedstock, and very good operations in Qatar.

 And then Korea, Korea is a 50-50 venture with Samsung in (inaudible). It was initially a petrochemical platform, 5 million tons per year of products out of which 80% today are petrochemicals. We have decided end of the year our large project, $1.8 billion, in order to add some condensate splitter aromatic complex which will transform platforms, 10 million tons will double the capacity of the platforms. And part of the projects will be in fact more petroleum products like jet fuel and diesel, which will help the profitability of the platform.

 Europe, at the same time, I told you already that we want to reduce our exposure to Europe. But we have some -- our two large platforms in Normandy, in Antwerp, in which we will continue to invest. We are just, in Normandy, in the course of completing a large investment, EUR1 billion, EUR750 million on the refining side, EUR250 million on the cracker side, so it will be modernized. The capacity will be reduced but more diesel, less gasoline, a modernized cracker as well. So, it's a large program.

 After this program, we'll embark into a new investment in Antwerp to consolidate this platform which is by far the best of our assets in Europe and a program which will be around EUR1.1 billion, EUR1.2 billion as well. But in the meantime, we will have to apply strict discipline of investment which means that beyond these two projects, we will concentrate our investments on the safety and integrity on the other platforms but not much more. And what we have in mind is to spend around $7 per ton per year of CapEx, without including the turnarounds, because the turnarounds (inaudible) $3 to $4 per ton. In Europe and US, down from $14 per ton per year in the last five years.

 It was a Golden Age of refining. We embarked into many projects. Now, we need to deliver. This is a message that we give to all our teams out on the projects, and concentrate on few of the large platforms. And this strict discipline of investment in Europe and the US should allow us to rebalance our portfolio of capital employed, like you can see on this map, on the slide. And Europe should represent around 45%, down from 60% of our capital employed. I.e., $10 billion decreasing to $8 billion. So the US should go down. Today it's affected by the fact we have just invested in the coker by the end of 2011 so no amortization at all in (inaudible) first, so it will naturally decline.

 But Asia and the Middle East, with the new investments, should take 35% of the capital employed in refining and petrochemicals.

 We are in the last blocks, the one which is in our hands, synergies and operational efficiency plans. First of all, on synergies, last year, we announced EUR200 million of net operating reserve of synergy for refining chemicals and supply marketing. It was EUR150 million for refining chemicals. We have embarked as soon as the new division has been set up in identifying these synergies and in particular in the Normandy platform and Antwerp platform. And it's amazing how many (inaudible) came on the paper so we are behind this figure action plans. We've identified initiatives which have been taken, so the fact that today these two platforms are under a unified management makes -- many ideas are raised in terms of optimizing product flows, utilities, logistics and of course having -- streamlining the organization as well.

 We have done -- we embarked also in the program of central services and we will lower the central services by 15% in the coming three years. So, this makes us very confident in the figures which are on this paper, and we confirm that we can reach synergies around $250 million, which means actions which are benefiting from putting these two divisions together, it does not include other benefits like one which is spectacular is in Antwerp, the projects which consist to take the refinery of gas and transform them as feedstock of the cracker was difficult to move before having all the teams together since we are together refining and petrochemicals this project is moving quickly and should be able to sanctioning beginning of next year.

 On the right side, the efficiency plan. We have identified, as I told you, some potential actions which are in our hands in order to enhance the profitability of these divisions in terms of availability, in terms of cost savings and energy efficiency.

 In terms of availability, we have observed that in the last years we have a lower availability, 90% of our plans compared to what we had before. It's probably linked to the fact that we had many projects, and you know sometimes our engineers or teams or management, when you have projects, you cannot concentrate on availability. And from that point of view, we decided to change clearly and it's linked to what I told you about the willingness to have a strength, investment discipline in Europe and the US. We changed our motto and today the motto is priority is to deliver the valuable assets and to spend all the time we need, our expertise on availability of the plants rather than on new projects. So this is a trend change, but it's -- we consider that's a very basic, but it's back to basic in terms of industrial (inaudible) but we have to do that. So we'll embark in systematic vulnerability assessments of the tools which are not at the level we want.

 That is another point on which we need work, which is this corporate turnaround, to control cost and duration, in fact managing turnaround to like projects, like Michel explained to you in E&P, and which will help to invest in discipline and control -- and to enhance the availability of our plans as well. This action is clearly benefiting us well for having put together all the specialists that we had on both sides. We have a larger ones, some specialists, they are sharing the views. We are revisiting all the standards we are using, taking the best of each part, and these specialists are today mainly concentrating on helping the plants to enhance availability. This will deliver, if we manage its point of availability, will deliver $40 million of net results per point, so it's worth working on that.

 Then the cost saving plans. The beginning of the year was tough, not only because we were reshuffling for (inaudible) stuff but because the margins were low. So refining margins were low. So petrochemical margins were so low, the lowest in the last 10 years. So the results were not very positive, and so it's helped us to launch a global initiative of cost saving plan, and so since May, we have done already (inaudible) sites, making a full review of all the expenses with the coast owners, with the project team, and asking them a question. The scope is all that non-manpower fixed costs. We have an objective of 15% of reduction there. And the first wave of these projects has been completed. There, again, 800 initial actions have been identified. The 15% objective is confirmed after the first wave on half of the sites and some central services. So this is important because in these businesses I don't know if it's difficult to think that the inflation will be reflected in your margin. And so we need to fight against the inflation. Of course in the fixed costs, the wages part, each year the people are -- you can control the number of people but you have also to accept that their wages will be increased because of the inflation, if not more. So we need to fight to lower the other fixed costs permanently. And this will help of course to enhance the probability of our business.

 Energy I told you is very important. We purchase around EUR1 million, $1.3 billion per year of energy. It does not take into account offset consumption. In fact, we consume twice more than that. So that means that energy efficiency is of essence. We have worked a lot on this part in petrochemicals in the last five years and today our steam crackers are positioned, well-positioned in (inaudible) index. And refining is not exactly the same situation, so we need to continue to improve even if we are very good refineries there like Antwerp (inaudible) [releasing them]. So 1% per year of improvement in energy efficiency will be our target and it could (inaudible) reserves is saving some purchased energy, 10%, i.e. around EUR100 million per year.

 So this -- to conclude, what we wanted to show you is that we have defined and we have clarified our views (inaudible) profitability of our businesses in Refining & Chemicals. There is an absolute priority given to safety in all what our choices. We need to permanently improve our management system, safety management systems and the awareness of our team's and the management on this safety and of course -- and safety. It's for us as a first priority and our strategy is a cornerstone of all our strategy. We know that (inaudible) does not exist in the industry but we aim but it could exist in our -- for Total in our portfolio.

 Then as I told you we will focus -- we have two different strategy -- two different areas of strategy. One is in Europe, overall exposure to Europe to be -- to invest only on the large integrated -- mainly in the large integrated platforms, to have a strict investment discipline on the other part, to shift our portfolio to Asia and the Middle East on profitable projects, and to put an emphasis on operational efficiency. Thank you.



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Questions and Answers
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Unidentified Company Representative   [1]
------------------------------
 Questions?

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 Martijn Rats,  Morgan Stanley - Analyst   [2]
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 Hi, it's Martijn Rats at Morgan Stanley. Two questions if I may. Just want to make sure that I understand the right-hand chart on Page 52 properly. It talks about the cash flow contribution from major platforms. Major platforms, what percentage of the overall refining and chemical business does that constitute? Is that the vast majority or is it only a proportion?

 And secondly, early on in the presentation, Mr. de Margerie mentioned the $15 billion to $20 billion disposal target. I was wondering what the contribution for Refining & Chemicals would be to that target.

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 Patrick Pouyanne,  Total SA - President of Refining & Chemicals   [3]
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 Okay. The first question, I told you that the last platform represents 70% of refining and petrochemical capital employed. They are probably more profitable than the other part.

 If your question is what are the type -- the target for cash flow that we can have for the full business, I understand what you want to know. So you have $2.5 billion coming for the platforms. You should add around -- you have part around $1 billion coming from specialty chemicals, a little less than that. And then for the rest of it, I think the global target should be around $4.5 billion to $5 billion. Coming from a situation where in 2011 we were around -- in 2011 were around $3 billion. So the enhancement of course of the profitability should be transformed in cash flow from operations going from $3 billion to $4.5 billion to $5 billion.

 So the second question, please could you repeat it?

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 Martijn Rats,  Morgan Stanley - Analyst   [4]
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 Yes. Earlier on in the presentation there was mention of a $15 billion to $20 billion disposal target for the period 2012 to 2014. I was wondering what the contribution of the downstream to that overall target would be?

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 Patrick Pouyanne,  Total SA - President of Refining & Chemicals   [5]
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 No, I have a strong view on that point of view, like on the (inaudible) Europe. But if you want to sit on that side, you don't explain but you will sell it. Okay. So we take a commitment. I think Christophe and Patrick will repeat for the Group -- are taking some commitments. You have to let us work, and show you what we will do it. But I don't intend to answer that question. You just have the (inaudible) that I mentioned but it is part of my strategy as well. That's enough. Maybe it's not enough for you, but for me.

 Christophe told me to you, but to reach $15 billion to $20 billion, it's not only with downstream assets. If I would dream to sell off my assets for that amount, so upstream will be in the portfolio, in that picture, otherwise it will not reach its commitment. So it's for Michel and Marc.

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Unidentified Audience Member   [6]
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 Just a question on the threats to the refining business. Under the assumption that the US keeps increasing its exports of gasoline and diesel into Europe, what is -- have you looked at that risk? Is that baked into your assumptions here? And also sort of some of the improvements are compressing of differentials in terms of your crude prices as well.

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 Patrick Pouyanne,  Total SA - President of Refining & Chemicals   [7]
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 Yes, for the time being, one of the explanations was margins are very high, it's because the US are importing more and more gasoline. It's probably linked to partly of the (inaudible) by you -- by your productions there. But today we are happy this summer to export gasoline to the US. We have better margins than in Europe itself. So the situation when you have from over points about the crude, we have benefit -- there is a benefit from European refiners today which is not (inaudible) mention, is that the African crudes which are generally adenium compared to other crudes we are using, we are going before to the US. There are not more going there to the US because we have more light oil production in the US. So these crudes are valuable to there for European refiners, and help us for our margin as well. But it's true, we could face a situation where we have -- the US could export gasoline. That means we need to continue to have to continue to rationalize the European capacities that I told you before.

 But today the situation in Europe is that the situation on gasoline is very -- the inventories are very low. And gasoline is very high today in Europe because there is a lack of gasoline in the US.

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Unidentified Audience Member   [8]
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 Thanks Patrick. Your presentation clearly indicates the value of integration in the downstream. And if I look back on other restructuring decisions, the spin out of [Akamai] was clearly successful and showed where it's not core business, the sort of focus of management directly on that business is probably better independently than it is within a group the size of Total. So when you look at the shape of your downstream business, is there any thought to spinning out the specialty chemicals business that remains with you?

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 Patrick Pouyanne,  Total SA - President of Refining & Chemicals   [9]
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 I will not try to demonstrate you but the specialty chemicals are core business for Total. You would not believe me. But there are for me and for Patrick, for Christophe I think there is other value. These businesses are profitable, self-financed. I can assure you they are not much time-consuming for me even if I am directly reporting to myself, because we manage them as an autonomous company with their own strategy. We support them. We give value to them because I think Total -- as a shareholder, I can tell you when you are (inaudible) and that you are subcontractor for car makers, it helps them a lot to position themselves on the market because they have the financial strength of Total behind him. So then as long as we don't consider with this core value because they are in the portfolio, I think they are well positioned there, but again it's a reserve of value for the Group. We see when we will need it or not.

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Unidentified Audience Member   [10]
------------------------------
 I'd just like to focus a little bit on France. I mean, 60% of your portfolio is in Europe. Is it, what, a little bit more than 30% in France. We are having a new government who is not particularly pro-restructuring or reshuffling. We've had some bargaining getting for you in Dunkirk between refining and LNG terminal. I mean how do you see the situation in terms of reducing your exposure in that in France, and how difficult is it going to be?

------------------------------
 Patrick Pouyanne,  Total SA - President of Refining & Chemicals   [11]
------------------------------
 First of all, I think the situation in France, maybe you noticed on the map, but we reduced quite a lot already the capacity of France. We went down from 100 million tons a year to 80 million, and we (inaudible) under BASEL it could go down to 70 million tons compared to market which was almost the size so there has been already quite a big rationalization in France. It doesn't mean that we don't have in our portfolio things to be done. We will have to do it in a responsible manner, I think. That's part of our duty as being Total, we know. But I think if we have to do moves, we will prepare them and do them because it's our responsibility.

 But again, and it's -- and I know that you all think we have a risk there not to be able to execute it, but we have demonstrated, by the way with Dunkirk, but we have done it in conditions that would see but it has a lot of advantage to have been done that move including vis-a-vis the French government, we know that we can do it if we need to do it.

 But again, it's a question of looking to our portfolio and -- it will be part of what I said to you, but it's a question for me more of execution rather than of -- it can be done properly. It's done in a responsible manner. That's my view.

 Unidentified Audience Member You referred to the Golden Age of refining when the Company took a lot of actions. And as it turned out, it was the Golden Moment of refining. And the reality is you show a 6% return on capital in 2010. If you strip out what you just described, very profitable specialties, you're looking at what, I don't know, 3% to 4% versus 8% work? How do investors gain confidence that within the next three years that 3% or 4% becomes 12% or 13%? And how much of your synergies and efficiencies realistically can flow through to the bottom line when the rest of the industry, which is also suffering from low returns, is working on achieving synergies and efficiencies, meaning a proportion will be completed away? Thank you.

------------------------------
 Patrick Pouyanne,  Total SA - President of Refining & Chemicals   [12]
------------------------------
 Okay. I understand the question, but you can have in mind that we try to answer to that. If I am managing to costs to save 15% of my fixed cost and to reduce them, it will be translated in my net reserve. It's concrete.

 I would tell you, in all these blocks, we have the block of the new projects will come onstream. I'm optimistic about the fact that Jubail, an extension Qatar and in Korea, will be profitable as we expect them. They are good projects, and we have some structural points in which we think that they will be a little bit better than what you just described.

 Then portfolio management is in our hands. If we consider that we have some assets which are a burden for our portfolio, then we have to take some decisions about them. It's part of our duty, our responsibility, so it's, again, it's in our hand.

 So - and then the last part on operational efficiency, I would say what is reducing costs clearly I consider we will manage that. Energy-saving purchase, we (inaudible) to be done, and (inaudible) availability could be a longer term. Of course it's a navy industry, it's a trend on which we could work. As I told you, each percent of the announcement enhanced availability will deliver $40 million of debt reserve, so it's not given like that. It could take more time than by 2015. But for the rest of that, I think we can manage that.

 When you even listen from what I (inaudible) from what you describe is that -- and this is what we tried to do by I think coming back to a target of $7 per ton per year in refining in Europe in the US, which was a previous target more or less is that, in these businesses, you need to be quite steadily -- to invest quite steadily and to avoid to have big pickle investments because then, as the margins which are very volatile, are eating you when these businesses are coming onstream, it could be -- could (inaudible) you.

 So I think one of the lessons that I wrote is more to define a sort of permanent level of investment. And even if the margins are good like today, not to change our strategy, and I can tell you the $60 per ton we observed on the screen today does not help me (inaudible) my teams but our message is still the same. Yes, we need to reduce our costs by 15%, and no we don't invest more because suddenly there is a good margin to the screen. So we have to keep that in mind.

 And again, to keep the right focus on the large platforms, not to begin to invest in many platforms, because part of what has been done is that (inaudible) large platforms are resisting well. Our cash -- our breakeven point is lower, so even if the margin is going down, they can resist, but unfortunately if you are on an older platform, we have a cash breakeven point which is higher. Even if you have invested, you have to amortize your investment and value reserves are poor. So that's the overall lesson that I took from what I observed. But it's true, we are in navy industry and we've done transformed that very quickly. Let's keep it. Yes.

------------------------------
Unidentified Company Representative   [13]
------------------------------
 Last question.

------------------------------
Unidentified Audience Member   [14]
------------------------------
 (inaudible) RBC. Could you just remind us how much the overall capital employed for the business goes up as a result of Jubail, Qatar, and Korea?

------------------------------
 Patrick Pouyanne,  Total SA - President of Refining & Chemicals   [15]
------------------------------
 It goes up by $2 billion. But globally speaking, there is a stabilization of the capital -- there is a little increase of the capital because of that. But after that, all the plans we have mind are stabilizing the capital employed in the businesses.

------------------------------
Unidentified Audience Member   [16]
------------------------------
 So that's $2 billion and the overall capital employed of the business at the moment is --?

------------------------------
 Patrick Pouyanne,  Total SA - President of Refining & Chemicals   [17]
------------------------------
 It was given by Christophe before -- the rule downstream at $30 billion. So I think you can derive from supply marketing, so we can find something like $24 billion. It's dollars, $24 billion, not euros. And it represents around 15% of the book.

 And clearly, the ambition is not to grow that. It's to keep a sort of level. And I told you we want to lower the capital employed in Europe -- in Europe, and to compensate the growth of that in Asia and Middle East where there is a sort of stabilization.

------------------------------
Unidentified Company Representative   [18]
------------------------------
 Thank you Patrick. We'll move to the first part of the conclusion with Patrick de la Chevardiere, CFO.



==============================
Presentation
------------------------------
 Martin Deffontaines,  Total SA - VP, IR   [1]
------------------------------
 Thank you, Patrick. We will move to the first part of the conclusion with Patrick de la Chevardiere, CFO.

------------------------------
 Patrick de la Chevardiere,  Total SA - CFO   [2]
------------------------------
 Don't worry, I won't be too long. I know that you have already followed us for about 60 slides. We show you this morning how confident we were in our exploration strategy, in the development of our projects, in the Refining & Chemicals strategy. Christophe provided you with some guidance regarding the Group projection in terms of production, cash flow, and shareholder return. But I think it's important also to revisit the Group position and compare it to others.

 So we have only two slides that I would like you to keep in mind, at least the last one. I started with the first one. On the top left, this shows the production of the year 2011 compared to 2006. As the graph illustrates, all of the majors have been challenged to grow production during this period, but Total has outperformed the average of its peers with respect to production. Basically, we maintain our production comparison in 2011 comparison to 2006, where the major and the European peers as declining production rates. The European peers include ENI, Shell, BP; the major peers include the European peers plus Exxon plus Chevron, and we are using Wood Mac data for those comparisons.

 Of the right upside, the proved reserve life, and as of year-end 2011, Total was also above the average of its peers regarding reserve life. We are above 13 years, whereas the others are below 13 years.

 Technical costs Michel already touched a little bit about it, but it is extremely important to maintain our reputation of being a good operator, which gives us access to the new resources, to maintain the lowest technical cost of the industry. We are at about $19 per BOE, where the major peers are, on average, at $24 per BOE.

 And last, these go to the upstream net operating income. Our upstream net operating income per barrel was competitive. We were in the average. So both for comparison which are based on neutral data from Wood Mac shows that we are quite competitive in comparison to our peers. And that's a slide I would like you to keep in mind.

 On the left part, we show the change in upstream NPV, once again using Wood Mac data in 2015 and 2017 versus 2012; i.e., the net present value of the asset of the Company will increase by more than 20% in 2017 and by about 13% by 2015. This is largely more than what the major peers are achieving in the future, where they will increase their net present value by 7% to 8%. That's for the major peers, and the European by about 4% to 5%. So there is obviously from Wood Mac data a large upside in total project.

 On the right side, you have the enterprise value per BOE, which shows that despite the high quality of our asset base, which are offering a substantial upside, Total is undervalued relative to our competitors, based on the enterprise value per barrel of oil equivalent.

 And I hope that our presentation from Christophe, Michelle, Phillippe, Marc, Patrick has provided you visibility and the confidence in Total that the market needs to close this valuation gap. I leave the floor to Christophe for its conclusion.

------------------------------
 Christophe de Margerie,  Total SA - Chairman, CEO   [3]
------------------------------
 Well, of course, it's not a conclusion; it's a conclusion of the day and a conclusion before you have your Q&A. So by definition, you will have the conclusion.

 But first, on the slides which were presented by Patrick, we were a little bit hesitating because this (inaudible) concern by comparing ourselves with others. And benchmark is necessary, but gives a feeling of a kind of the defense, etc. We are not defending ourselves. But to the some point, I was surprised by the result because sometimes it's important that we do what we say we will be doing, and we focus on this, and not always thinking that, I mean, are we better or worse, etc. It's sometimes true that when I discovered those figures, those slides, I was surprised to see that even if we didn't meet our targets in production, but we are less worse.

 So it's not a strong message. But a strong message is, at least let's get rid of this concern about are we better or less than the others, and focus on what we have to deliver ourselves. And if the energy as a whole has a problem, it doesn't mean that we should continue to [have won] ourselves. So that is the real message. The message is just, okay, that's what it is. When we say it's Wood Mac; no, Patrick, it's not Wood Mac. It's we use Wood Mac figures, but this is what it is, which is value, not just figures. And that's important. Another part which is market value versus fair value, whatever it is, the message is not to say we complain or whatever. It's just to say that's what it is, again. And then we don't turn the page, but we deliver. And that's more important than anything else.

 So if you go to this last slide, which is in fact the same as the first one, proof that it cannot be a conclusion. First -- and I would insist on this -- what's important today for us is just to do what we say. And I will bring back on certain questions which were raised which are still -- not amazingly, but interesting to see why you are answering this or you are -- sorry -- asking, and what kind of answer can we give.

 The first, growth reported by project already in production, high equity portfolio of projects and deep offshore and LNG. Okay, you had the presentation on Michel Hourcard, and I can't do more than to say, I trust him. Okay? I trust him -- not only him, or else I would be crazy. But we have very good teams and we prove that we can deliver. And the fact that we have numerous projects -- it's a good sign. So okay, when we have more projects, people say, okay, you have too many projects. When we have less, you are too much exposed in one country.

 Okay, let's find a solution and let's judge on the project one by one. But just answering -- is it good to have 50% operated/non-operated? I could go, as you know, because you know me well, into far more details today. You know that we operate fields without being the operator. Is it good or not good? I don't know. I think it's good.

 It is? Okay, who is behind them? Okay, without saying anything nasty to our best partner, Inpex, it's Total. And Total was requested by the banks to come and be more active. Should we do it or not do it? Yes, but we could say we have only 30%. So with 30%, that's normal; we take additional risk? We don't take additional risk. We make it a success for everybody. And good if it's good for Inpex because Inpex is a good partner to Total and is valued somewhere maybe in this project or in others. That's called partnership.

 And I can give you a lot of examples where Total plays a role which is above or more important than the one he officially is. Gladstone, many others -- is it good or not good? That's a different way of life. The world is changing. We have to learn on -- as it has been said many times, on a sustainable way how to use more the local presence. It is plus and minus, but you cannot say something and do the opposite. When we want to be in Australia, we are working with Australian companies. Frankly, do they have the same level of skill than we have, no names? The answer is no.

 So what do we do? Well, we still think it's better to be with an Australian company in Australia, and then we can exchange our capabilities. In certain things, we have better understanding on what is the technology, and others -- it's good to have a local company to tell us how we should maneuver in countries where you are not local, and especially with no history. And we didn't make too much presentation on geopolitics, but we could because it's behind everything we said. All of this cannot just be, as it has been said by people, black or white. Take the example of Tempa Rossa. Okay, I was sure that I will be asked, I mean this time, what -- okay, first you said 2015. Now it's 2016. How can, this time, can we trust you?

 Well, because this time we have all the answers on the requests we've made, which means all the approvals. Not one single is missing. Last year, it was not the case. So do we have to give you the final targets when we have the final approvals? Well in that case, do you ask us every day what is this, what is your forecast, what do you aim to? Well, we aim to say what it is. And until we have the final approvals, we cannot have the FID. That's what happened with Italy. Now, Italy, we have everything. So when I was on purpose answering -- that's why I didn't turn my back when it was what's the reason why it was delayed last year by one year.

 The first reason is Italy, second reason is Italy, and third reason is Italy. And that's all. Now we have the answer. We have the approvals. But sometimes it's important to say this because otherwise we can't explain things just by saying it's technical and it's sometimes our -- I think we're making mistakes in trying to explain things with technical answers when they are not technical. But at the same time, it's also part of our duty.

 I take the example of how can we believe in your 13% on Refining & Chemicals. Well, because we change everything. When you say the others are moving -- but we were, and now we have to admit it -- we were not as good as they were. Exxon was far better and integrated its refinery and chemicals operations, even if they don't have the same structure.

 But we did a step further. We moved our -- I said I would not use those words today -- but we decided to be a little bit more active (inaudible); now, we need to have Refining & Chemicals together, and it is. And when I'm asked where are the profits coming from -- from synergies, which has nothing to do with others. They are our own synergies. Even, again, quote Patrick -- he told me, well, I was a little bit embarrassed what I should commit during the following year -- now I can tell you, I know there are even more synergies on the ground. It has nothing to do with the others.

 If, in having two persons doing better at the same platform, it's better independently of what the others are doing. The synergy is based on our own way of developing our business. And we were not as good, we thought. And, definitely, we were not using the synergies which existed behind the walls. Now that we can deliver, I can tell you it will be delivered.

 The best example of that is a real one. Patrick said 13%; I helped him to say this. The executive committee helped him, and the Board of Directors like it. But he proved and said it, and that's where you have the difference between what we think and what it is. It's based, this 13%, on $27 per ton, if I'm correct, of refining margin. And then you have a slide, the same which says if we use $35, this 13% becomes 14.5%. Today, we are closer to $35 than to $30 or $27. Are we going to use this? No, because this is the part where it's true, and I agree with you. The risk is the refining margin will change because of the others also making progress. And they will be making progress.

 That's why we cannot believe that the refining margin will stay at a level we like. But when we use $27 and this 13%, well, I'd like to say $37 with 13% and not 14.5% with $35, because that's not what we said, because I fully agree with you that we have to take the others' progresses into account. But that plays on the environment, on the margin. It doesn't play on what we can deliver by ourselves. And what we have to do today is to deliver by ourselves things which are not being done in the past. But it's now the time for doing it.

 On the potential for giant discoveries that has been covered by Marc Blaizot, I will not give you his nickname. But if you know the nickname, you know that this guy is very good for finding new plays and new ideas. Now, again, we showed it. We have to deliver. But at least -- and that was the difference with the past -- the acreage is now in Total portfolio. It's not any more. Are we going to -- are we going to Mozambique, etc.? No, we have it.

 Now, is it going to be, each time, a discovery? No. Do we have at the same time to talk about dry well? Thanks, God, I agree, no. But we have done the potential. And if you do, like others, use something which is barrels per square meters or whatever, which I don't like, but you will see that by definition we are closer of what we tried to do before. And I must say result in success or not sufficient.

 And that's why we are now emphasizing this important part of our business be more active on exploration. But I will not remake the presentation of Mr. Blaizot. It was my pleasure to hear him, but what he has to know -- that the executive committee will push not only -- well, will push in any case the fact that we have now to bring this to something important.

 The last, which on purpose I left a little bit on this slide because it has been always a challenge to the Company to say. If we say that we sell, until we sell -- are you going to sell? So we went through this undertaking commitment to say no more than $23 billion for the three years average to come.

 We were told during the 1-to-1, and some of you knows what it is and said, yes, but I mean no, no; we don't want only net investment. We want to how much you're going to sell. Okay, we are going to sell during the years 2012 to 2014 $15 million to $20 billion of assets. Now, it's true that if you asked me to tell you it is sold before being sold, I cannot. But I cannot do more than think it will be done. The plan is there. The assets are known.

 It's true that Patrick was a little bit embarrassed to answer, because being in Europe and thus being open, it's not as easy to say things in advance, and even less in France, for obvious reasons. It's called the project (inaudible); it's called the fact that you have two give the priority to trade unions, which is normal, but it's not the case everywhere, and especially for E&P. And again, most of our sales, disposal of assets, will come from E&P. We cannot sell $20 billion of assets coming from downstream. It would be known, and in that case it will mean that the value of the Company will be even higher. So that is a firm commitment of the Company vis-a-vis their investors, their shareholders, our Board. And it will be done, as we said during those three years. And we will have to continue, because it's not a policy for three years. It's a policy which is now part of our way of just, let's say, having a strategy which is active for the Group.

 So creating value for shareholders -- well, definitely that's going to be the answer to all of your next questions. But I wanted to just finish on this, as I started. You have a group and the members of the executive committee, and all the members of the group who are in charge at high levels and lower levels, totally dedicated to, frankly, deliver this value in this new dynamic we're -- not invented, we developed two years ago. It's moving; it's starting to move. And the good thing will be it will be proved on a regular basis.

 I insisted when I had meetings with all of our divisions that to deliver, not waiting for the last year because it would be the worst. When we say something like being 2017, are we going to make it with our year 2016? The answer is no. It has to start in 2013, 2014, 2015, 2016 and 2017 and others. And that will be the commitment of the Group with this report of our investors.

 So a strong belief, which we will share with you, and as far -- I'm sure you've got, certainly, questions on how we get to this. We are ready with the members present to answer to your questions for those questions which have not been already raised. But usually, you keep something for me.



==============================
Questions and Answers
------------------------------
 Jason Kenney,  Santander - Analyst   [1]
------------------------------
 Hi, Christophe, it's Jason Kenney from Santander. So I've got a couple of questions, if I may. Keeping your gearing level at the 20% to 30% level could be quite challenging post 2015. If you deliver those divestments and you look at the growth in cash flow, you could actually quite easily see much lower gearing, suboptimal levels, some might say, unless you do plan material investments beyond that three-year period. And that could be inorganic or organic, of course.

 Or, are you planning on bringing a share buyback in by mid-decade in order to keep gearing levels in that level? It's difficult to kind of square the circle on that one, I think, from outside the Company, at least.

 And then secondly, on Patrick's slide on the valuation, the EV to BOE, that's a Group market -- that's a Group EV number. I just wondered if you had any data on, say, an upstream EV to reserves multiple so you can extract the data stream bias from the companies that you are comparing.

------------------------------
 Christophe de Margerie,  Total SA - Chairman, CEO   [2]
------------------------------
 Okay, we'll see for a second if I'm sure that I understood. First, I can say I like your first question for two reasons. First, I think you have been looking at our figures very closely. And second, for those who are still asking where is the cash, you are already asking me what are you going to do with the cash which is above what you need to cover the gearing. So thank you for the others.

 So it means that you understand that, of course, if we deliver there is more cash that we need to cover, today, the dividend, the way we see it, and the capital expenditures. We need to keep certain flexibility in the Group.

 And before I will commit, certainly, on buying back shares, first we have to deliver. And second, it's true that to keep flexibility is important. Because today, when we say certain levels of sales, which is 15 to 20, even if, as I said many times, we have already made sufficient acquisition both on what we call the GRO and the exploration -- if something comes which is of interest, we cannot just say we will not do it because we promised that we will keep the organic estimate at a level. That's why net investment is still important.

 But today, we know that we will normally have a certain flexibility if we keep the price at $100. Now, let's also give us a chance to find new opportunities. Marc Blaizot might have new ideas, and so this (inaudible) program could be increased from the 2.5 billion what it is today. And that's the way we see these things. But today, I prefer not to say that this is extra cash. It's still -- and then I come back to you -- it's still to be delivered on first oil for those productions, and then we will see.

 But you know that the buyback program of shares is not something I consider really attractive. And if I have a choice, not me, the shareholders, because that's them to decide between buyback shares and dividend. I have a preference. Probably also as a shareholder of Total, I have a preference for the dividend.

 On the second, can you -- which is the slide, so I make sure that I follow your --

------------------------------
 Jason Kenney,  Santander - Analyst   [3]
------------------------------
 Yes, page 61. And looking at EV to BOE, but if you were to take out the downstream EV, (inaudible) (multiple speakers) --

------------------------------
 Christophe de Margerie,  Total SA - Chairman, CEO   [4]
------------------------------
 Just one thing -- when we make the breakeven, and it's true that, when I said the breakeven is $105, it's $105. And with the sales of assets, the target is to bring it below $100. That's clear. At the same time, when I read certain of the papers on the Company, they use breakeven without the sales of assets. So you can say whatever you want, but in that case it's better to say that you can trust in our capacity to sell those assets.

 But when we make it at the level of branches, we are doing the breakeven per branch. So the dividend has to be discussed, if I can say this, at the level not of the holding, but the executive committee and then the Board. So we don't affect parts of the dividend, X% to Refining & Chemicals, X% to Upstream, X% to Marketing; we leave it as a whole.

 Today, when you look at the Upstream, which is an important part, by definition, after sales of assets, the target we have today for Upstream, without taking the dividend, is below $80 per barrel. And what I mean below is clearly below. So what's important, because you're [AT] is always considered -- and for good reasons -- something in people's minds.

 Patrick, can you elaborate a little bit more?

------------------------------
 Patrick de la Chevardiere,  Total SA - CFO   [5]
------------------------------
 Yes, just to give some figures, when we said -- when I said that the enterprise value was $12 per BOE, that was just to give you simple messages. If you pay Total -- currently Total $12 per BOE, you have also Downstream for free. So you pay Total today on the market a $12 per BOE, plus 0 for anything else.

------------------------------
 Christophe de Margerie,  Total SA - Chairman, CEO   [6]
------------------------------
 That's why. On that slide, it's interesting to see in comparison with the others. Well, you know the story, because even if you use only our good friends of Wood Mac -- we had never met so much publicity to them. And today, Wood Mac, the value of the companies are all far above the market share, even by definition, when we use enterprise value because for Total, it's easy; we have 15 billion indebtedness. So it's easy to know what's the enterprise value. So market cap is enterprise value. And by all means, all calculation was the value to Downstream, being Refining & Chemicals or Marketing. The value of the Company is definitely above one of the market.

 But that's not the one on which I wanted to make the emphasizing. I wanted to emphasize that it's undervalued compared to the others. And then the market decides because the market is the market.

------------------------------
 Theepan Jothilingam,  Nomura International - Analyst   [7]
------------------------------
 Thank you, Christophe -- Theepan from Nomura. Thank you, first of all, for giving us some guidance on the disposals. I want to just understand what the impact may be on production and cash flow, and just a point of clarification if your targets in terms of production are -- and cash flow rates ex-these disposals or not.

 And, second, just in terms of organic investment, I've been assuming that group CapEx rises to about $25 billion by 2014-2015. Is that the right sort of assumptions to make? And I guess is there a limit where you would want organic CapEx to go to before you feel, actually, the returns being delivered are inefficient?

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 Patrick de la Chevardiere,  Total SA - CFO   [8]
------------------------------
 Well, on the first one, it's clear that, of course, when we gave you the figures for what we call the potential for production and CapEx, it's all linked with the program of sales. So it would not be -- after sales, it's different, and you know you wanted sales so you will not get the production. That's clear.

 Now, it's a good point because it has not always been like this. So here, it's net production after sales and net capital expenditures after sales. So it's integrated.

 For the second part, on the organic, well, the first impact which has been interesting in doing this important work on seeing what we should sell, why and having to choose between different assets -- we have been also taking into account the impact on the organic investment, because when you sell, of course, it has an impact on production, an impact on reserves. But here, we are not choosing the one with the best potential for bringing new reserves. But at the same time, it's true you also reduce your investment, and especially your organic investment. So the impact of the sales is to reduce your organic investment. The organic investment we had in mind before those sales were higher. So you helped us in a way in forcing us to say how much are we going to sell, because in fact, now we know that we will not reach a level you had in mind, so above $30 billion.

------------------------------
 Theepan Jothilingam,  Nomura International - Analyst   [9]
------------------------------
 Just, again, a point of clarification -- I guess, versus 12 months ago or even the February update, is your 2015 underlying production number internally higher than where you thought it was?

------------------------------
 Christophe de Margerie,  Total SA - Chairman, CEO   [10]
------------------------------
 As an average, it's almost the same. Now, it's true that 2012, with Elgin and Franklin, we will not deliver what we said. But I hope this time it's understood, but after which it's almost the same. So it's well on track.

 And also, to answer about the other question you didn't raise, which was our commitment on net investment, which was at 23, what we have today is probably a little lower than this. But keep the 23.

------------------------------
Unidentified Audience Member   [11]
------------------------------
 Just one question on your view of the old market fundamentals -- in the very beginning you spoke about plus/minus 2 million to 3 million barrels a day of potential capacity above and below your base, because I just wondered what happens to your, let's say, planning oil price view if we end up with plus versus minus 3, which is a huge difference in a market that is quite marginal, actually.

------------------------------
 Christophe de Margerie,  Total SA - Chairman, CEO   [12]
------------------------------
 I agree. But if you only take one part, it's always like this. You don't take the historic because the stories don't -- only one. I could also say what happened if we don't find oil plus in the US, but only the delays. In that case, the price of oil will be the sky. So what's important is to have a global view on what it is.

 And [I suggest] not to forget that with those spare capacities, OPEC has all the elements to maneuver. I was using the example recently of Saudi Arabia, as you put it, trying to put pressure downwards on price. And they just made the one statement with details. It has impacted the market in two days. So it proved that, for those who don't think it's true, that OPEC has still -- by definition, but it needs to be recognized -- an important impact on the so-called fundamentals.

 But what we say is clearly that it's true that, today, there have been new figures on shale oil/tight oil in the states. But again, it's not the same than the shale gas. And it's true that we probably underestimate the size of shale gas in the states.

 Now we probably have to be careful not to overestimate the shale gas, with all the problems coming from, I would say, this society, the stakeholders, environment and everything, and we know this. So the speed might be a little bit different than it used to be. And the fact that big companies are involved -- there will probably be more at stake, which is normal, than smaller companies. So that's just to be looked at carefully.

 Second, on shale oil/tight oil, well, it's true that on certain basins, the increase in production has been much quicker than predicted. And today, we are not far off 1 million barrels per day. You have to take into account also the fact that the production -- the need of, sorry, of consumption of oil in the US is decreasing. But the impact on price on a macro term is still limited because you are talking of 2 million barrels per day out of 1995, so it's 2% plus.

 So at the macro level, it's far -- sorry -- not far off what are the misunderstanding we have on the consumption in China and India and everything. So it's -- if we have to put figures in front of figures, at the level of the United States, it's very important. And for the United States, it would change a lot.

 And we had a debate on this recently with our Advisory Board on what could be the impact of this to even geopolitics and even the policy of the United States of America and its government, being one or the other, because here it seems very different. But until this will make, like for gas, the US market totally independent from the rest of the world -- and in that case, you will be, quote-unquote the price of oil for the US like we have today, the price of gas for the US. But until then, too, you will have this access to the rest of the world markets, the marginal price will prevail.

 So for the US economy, it's going to change a lot of things and it will impact on Europe. Patrick Pouyanne explained this before about [Islay] and about all of those things. But again, and for the time being, frankly, even taking the most optimistic figure, it's difficult to see how the US could become self-sufficient in oil. And if it will, we will see. But, for the time being, we don't fill the gap, there is not such an impact on the macro.

 And then, if we [pre-react] in doing this and says, okay, we don't invest because, etc., that's where we are going to make a mistake. So at the same times, you have to review things on a regular basis and make a difference between, okay, what happens if the United States don't need any more to buy oil from the Middle East and they will buy it from Latin America or Africa. And that has an impact on geopolitics.

 But in terms of price, it will mean that they need to buy oil from outside. Today, they are importing 8.5 million barrels per day. If you decrease it by 2 more, it's 6.5 million. If the increased efficiency is going to be 5 million, if they increase even more, etc., you will go to 4 million and then maybe to 3 million, I don't know.

 But 3 million is still access to the market, which means still an international price prevailing. And then what is impact on the rest of the world -- limited. But we took it into account in this what happens if there is more oil, which means spare capacities being different.

 But what happened at the same times is for other reasons, and especially people might become scared about the price of oil and might decide not to invest. But then I can tell you the impact on the price of oil will be much higher because what has been always keeping the price of oil under certain control -- investment. Without investment, the price of oil will be much higher. Jon?

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 Jon Rigby,  UBS - Analyst   [13]
------------------------------
 Two questions, one specifically on the left-hand chart on page 61. How are you defining upstream? I presume -- is a 2P number, pre-FID figure, or what? If it was just projects we could see now, everybody would be the same because the discount factor would just get you to the same answer. So I'm interested to know how you are defining what goes into the value of upstream between those two days.

 The second question is a bit more philosophical. But the point that Lucas made earlier today -- I think the in-depth discussion on LNG, the in-depth discussion we've had today on the actions you are taking in the Downstream, joining Refining & Chemicals, which, from memory, we talked about when you bought Elf well over 10 years ago now, and a relatively bullish view on oil that you held for a long period of time, but only have recently acted on in terms of increased activity in portfolio management and exploration. I just wonder, are you at penalty for discussing your strategic thoughts out loud, and therefore, we are just seeing the time it takes from the thought taking place within a large company like yourselves to actions taking place? Or, has there been, historically, an impediment between insights into what you are seeing taking place in the energy space and, actually, the Company Total acting on those? Because it does seem to me to take quite a long time between those two aspects of your business.

 I don't want to fight, by the way, if it's just a --

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 Christophe de Margerie,  Total SA - Chairman, CEO   [14]
------------------------------
 (laughs) I'm getting older; I'm not anymore 54 like Michel.

 But the first -- Patrick may help me if I'm not giving the right answer. Upstream now is very clear. It's E&P plus gas and power. And the new energies part is, today, in the -- even if it's a separate division, is taken to where the marketing.

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 Jon Rigby,  UBS - Analyst   [15]
------------------------------
 Sorry, I may not be clear. What I'm saying is, what's the delta between the two years that you are comparing? It can't be just the discount rate. You must be adding something to that when you measure it.

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 Patrick de la Chevardiere,  Total SA - CFO   [16]
------------------------------
 Christophe, may I give the figures? I mean, by 2015, we will increase E&P by about 13 billion -- by 13%, sorry -- and by 22% by 2017.

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 Jon Rigby,  UBS - Analyst   [17]
------------------------------
 And that's, presumably, additional projects. But when do you define when those projects come in to the point where you are measuring (multiple speakers)?

------------------------------
 Patrick de la Chevardiere,  Total SA - CFO   [18]
------------------------------
 You take all the NPV from 2012 and you compare that to the NPV computed on all of your assets down to 2015 or 2017.

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 Jon Rigby,  UBS - Analyst   [19]
------------------------------
 But unless you change what's in it, it's just the accretion of the discount. Right? So there must be something else going through.

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 Christophe de Margerie,  Total SA - Chairman, CEO   [20]
------------------------------
 Yes, it's the value creation of new projects.

------------------------------
 Patrick de la Chevardiere,  Total SA - CFO   [21]
------------------------------
 Yes, that's the creation of new projects.

------------------------------
 Christophe de Margerie,  Total SA - Chairman, CEO   [22]
------------------------------
 That is the $30 billion we mentioned.

------------------------------
 Jon Rigby,  UBS - Analyst   [23]
------------------------------
 So it's just spend rate?

------------------------------
 Christophe de Margerie,  Total SA - Chairman, CEO   [24]
------------------------------
 Yes. And against [check], I mean, we did it. I did it. It's equivalent. Sometimes we say -- and that's the way -- sometimes we say 6% constant terms. But 6% constant term, it's the WAC in Total. Sometimes in certain slide, you will find 6% constant term or the WAC. WAC is 8, so if you take 6 plus inflation, you have the WAC. So there is no difference between the way we calculate the discounted NPV, and that is the difference.

 You take what you have, you add the others, and you make the subtraction. That is what we bring and that's -- we want to describe is what we bring as new investment brings more profit than the existing one. I know that sometimes people don't like to hear this, but it's a fact. But we can redo it with our teams. I'm sure there will be pleased. (Spoken in French). Now he's talking with whomever. (Spoken in French).

 Okay, the second one is a little bit more -- not embarrassing, but it's a little bit more the life of the Company and what happens after a big merger, what after happened incident like (inaudible) and some other things, unfortunately. But what is important is not to come back on the past and why we should have done this or not that, because, I mean, I've been telling you this many times -- I cannot go back. I tried, but I cannot.

 What I can do is to learn from the past. I know this Company that I know by heart, I mean, was probably living in a nice atmosphere of -- thanks to the merger between the three companies, I'd probably to rethink a little bit more and be more proactive and aggressive, including in changing the organizations.

 Okay, we did it. Maybe we should have done it earlier. But I mean, who cares? What's important today is what is missing in the value of the Company which we are creating and reacting. Life on the -- we were trying to discuss with a drink or waiting for the books, and we are certainly right.

 One day, I will tell you a little bit more about geopolitics, about what happened in the world, which is not always black and white. So we can say a lot of things are happening today, for instance in Russia. But we cannot answer to this year. We can do this during field trips, or like this. But then the life of a company is anything except you are at the Board and you say I have this and that, 10%, 12%, I'll take the 12%. No.

 Now, what's important today is, is this Group well on track? We have been working on what could be the next person in charge of the management of the Company at all levels. Are we preparing the future not only on assets, but on people in the management of people? The answer is yes. And that accounts for me. It is to bring this Company at a higher level. And today, no message. I had to leave, make sure that people in place will be doing the job properly, and definitely bringing their own personalities and, I hope, their own added value to the Group which is yours.

------------------------------
 Martin Deffontaines,  Total SA - VP, IR   [25]
------------------------------
 Maybe one last question?

------------------------------
Unidentified Audience Member   [26]
------------------------------
 Christophe, from here on, can I ask how you feel about your cupboard of opportunities going forwards? And I guess I ask in part because the commentary from Suncor around Sans is perhaps more hesitant in light of what has been happening to prices than was the commentary around Shtokman. I think it's probably much less certain than -- well, if it was ever certain. That's probably an inappropriate phrase.

 So just looking into the medium to longer term, exploration is a wild card which I hope works very well for you. But beyond that, in terms of the opportunities you've gathered, how do you feel today relative to a year ago? How much more do you feel that you need to do, to put it or to establish, shall we say, even greater visibility, confidence about sustainability of what you now have in the upstream?

------------------------------
 Christophe de Margerie,  Total SA - Chairman, CEO   [27]
------------------------------
 Well, it's a good point because we definitely decided that on -- for instance, the heavy oil of Athabasca, we are better with a company like Suncor. And I still believe it was the best choice. Now, when you consider as the best choice is having, itself, problems, that's just like having an operator. It's good to choose an operator, but what's more important is to have a good operator, but not only to operate everything. Here, we decided that Suncor should be are driving force. They themselves raised questions about their own future. Good, so we learned some from them.

 So I'm not saying it's good news, but it means that in fact we decided to take Suncor. What a good decision! Because, if they help us to say be careful, it might be time to delay a little bit those investments, which we are going to do because we are in the same boat, and I see that we will need those heavy oil.

 But, today, that may be not as important because of the tight oil. And you know what's happening with the refining system in the US. By the way, it's not hurting us, it's hurting others. But it's true that having this new tight oil, especially in the northern part of the US, has had a tremendous impact on the bitumen. And it's not only because the bitumen are more expensive; it's because they're less competitive. Okay? That is different.

 And we've learned from this. But we are happy to see that Suncor is seeing it. You know what it is because we are not following them. We are, by definition, taking their advice because they operate Fort Hills, and we are in Fort Hills. So if they decide to delay Fort Hills, we will delay Fort Hills.

 So at your posit, I consider it's good news to be more transparent on when we say. In certain countries, we don't think we are the best to take the lead on what has to be done. And I still consider that Suncor is better than Total on developing, I mean, mines in Athabasca. So if they have a problem, we will not have a problem. We, at the opposite, take the benefit of also reducing our expenditures before it becomes too late. And that's how we adapt ourselves, and that's how we -- sometimes, that's what you have to get in mind.

 We need -- it was a long-term strategy; we need to be flexible and adapt the companies to this, because at the end it means there will be less crude coming from this part of the world in our production, not in the long, long term, but in the short/medium term. And we have to find other source of reduction.

 Same with Shtokman and Yamal -- we could take the time for this, but it would take time. Today, it's true that Shtokman is a little bit on the declining side of probability of success, and Yamal climbing. Three years ago, I would have told you the opposite. Why? Because we tried to be transparent. And I know sometimes, you like transparency, but then you tell me, you said this and that's not what happened -- because I am not God, unfortunately.

 But when I'm saying something, it's because we believe it at the time. Shtokman, by the way -- and I agree with what has been answered. Shtokman today, as you've probably seen they said Statoil is out, but not Total. That's not me; I said nothing. You have seen, we have been very low profile. It's just that one thing.

 When the guy of Gazprom, who is an unknown person, or at least he is not number one or number two, said something which was probably or not wrongly translated. He said the project is canceled. Well, I don't know what happened to him. But I think he will have problems, because it's better to ask the boss first, especially in Russia.

 So Shtokman -- we will see what happens. It's true that today it has been said very clearly that, in any case, it will be delayed. In any case, it has to be reviewed because the costs of the project were not acceptable. But during that time, Yamal is definitely taking additional benefit, and probably, to a certain extent, certain benefit of Shtokman, especially on the marketing side.

 So on the marketing side today, and especially you are talking to the Japanese because they could have added a few things that Philippe Sacquet -- I met yesterday a person very important in the industry in Japan who told me the story of what's going on with the two reactors. And it's true that the government said recently that it will be the end of the nuclear, and then they came back because it was a little bit too aggressive. And the industry as a whole reacted strongly to say, you are crazy because, I mean, who is going to take for the difference?

 But now, if I remember well, they had 55 reactors. There are four out -- the one at Fukushima; it remains 51. If I am correct, there are already three which are probably not in a capacity to restart. So you go back to 48. So between two and 48, guess what it is? What we don't know. But for sure, as Phillippe made it very clearly at the end, it's for sure that for the time being it's going to be, quote-unquote, good for the sales of gas in Japan. Now, what's going to be the numbers of reactors at the end?

 Okay, come in a little bit from the Middle East, and we said, okay, you have 50 divided by 2 is 25. That's probably going a bit not too far off this. But we try to explain things, and then you have plus coming from a minus. But that's why we have so many projects. But when we say 70% of projects being launched, they are. Those ones exist. Now, Shtokman -- Shtokman is not in it.

 Okay, so when he says this, it means the last one. No, not a last one? No, Patrick doesn't want a last one. So there will be no last one. But again, let me thank you for coming. Thank you for those who are listening and participating without being present.

 I think it's important, especially in these days, to be extremely transparent on, first, the fundamentals of our energy sector, then to also say what we are doing and why and how we can adapt ourselves. We then go into details on how we could stop certain investments, if needed. But we have what we call a plan B in case of a real catastrophe. But we will continue in being very strict on figures and discipline, to tell you sometimes what are our feelings with the risk of bringing certain uncertainties.

 But they exist, so don't think that we are bringing the uncertainties. They exist in the market. People sometimes -- they like to tell you no names of companies. It's easy, it's X [percentage] and Y, and you love it. But don't believe it's true.

 So again, thank you for the time, and we will continue. There is no conclusion. But I can tell you, I feel -- and I told you this already last time -- I feel far better today with the new strategy, with the new mood we have brought to this Company than a few years ago. Okay? Maybe there was reason for this. We will discuss it with [Jon]. But at least today it exists, it's going on, it's implemented. We know that we will have to prove it exists, but I am not at all scared of the result.

 Thank you.






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