university of Stirling
University of Stirling Finance & Investment seminar Ian Howat, Senior Vice President Strategy Edinburgh, May 16, 2006
Investor Relations - www.total.com
Short-term oil markets
Investor Relations - www.total.com
Oil prices are volatile: today’s price is no guide to the future ! $2005/b (monthly average)
Mb/d 120
120
Brent real price 100
100
Oil demand 80
80
60
60
40
40
20
20
Total’s annual net result of $ 8 bn 0 1970
Sources : IEA, Bloomberg, Total 1
Investor Relations – 3C1078
0 1975
1980
1985
1990
1995
2000
2005
Today’s price is « detached » from the fondamentals of the market WTI $/b
OECD stocks 70
40
Days of demand (inverted scale)
42 60 44 46 50 48 40
50 52
30 54
OECD stocks
20
(inverted scale)
WTI price 10 01-1997
Sources : IEA 2
Investor Relations – 3C1078
56 58 60
01-1998
01-1999
01-2000
01-2001
01-2002
01-2003
01-2004
01-2005
01-2006
How long will the oil market remain in a state of tension ? Spare production capacity in OPEC countries is very low Less than 2 Mb/d
Mb/d
35 30 1.1
25
1.7
Pira
2.5
Total IEA*
20 Projection range for 2006
15 10 5 0 1980
* Excluding Iraq 3
Investor Relations – 3C1078
1985
1990
1995
Production
Capacity OPEC
2000
2005
2006
« Managing » the market is more difficult than you think: IEA forecasts for 2004 Mb/d
Changes vs 2003
2.5
Increasing demand
2.0
Decreasing non-OPEC production
1.5
1.0
0.5
0
Strong call on OPEC production
-0.5
-1.0
November December 2003
January 2004
February March
World Demand in 2004
4
Investor Relations – 3C1078
April
May
June
Non-OPEC Production 2004
Julu
August September
Call on OPEC 2004
Medium term oil markets
Investor Relations - www.total.com
Has «peak oil» already arrived in the OECD countries ? Mb/d 25
True peak ? False peak
20
15
Declining production 10
5
0 1965
1970 US L48 onshore
5
Investor Relations – 3C1078
1975
1980
US L48 offshore
1985 Alaska
Canada
1990 North Sea
1995
2000
Other OECD
Mexico
2005
What “target” price is OPEC going to be aiming for ? Budget Balance % GDP
Budget Balances in selected OPEC countries
60%
Brent Price $/bbl 60
to 55 $/bbl 50%
40%
50
From 25 $/bbl in 2002
40
30%
30
20%
20
10%
10
0%
0
-10% 2001
- 5% to 5%
- 5% to 5% 2002 Saudi Arabia
2003 Algeria
-10 2005
2004 Iran
Nigeria
Venezuela
Despite high oil prices, some OPEC countries still face budget deficits. Since 2000, the breakeven price to balance national budgets has sharply increased 6
Investor Relations – 3C1078
Today’s world economy seems able to cope with a high oil price GDP growth and inflation in OECD countries
GDP growth (%) in real 7 terms
CPI (%)
16 14
6
12
5
10
4
8 3
6
2
4
1
2
0
0 1970
Source : IMF 7
Investor Relations – 3C1078
1975
1980
1985
1990
1995
2000
2005
Long-term oil markets
Investor Relations - www.total.com
Proven oil reserves cover today more than 40 years of demand… Proven Reserves (as of 1/1/2005) 1110
Oil Resources: ~
Billion barrels 600 ~ 650
CONVENTIONAL OIL Proven Reserves
Reserve growth
Undiscovered Reserves
Former Soviet Union 77
Europe 17
~ 600
Extra Heavy Oil North America 52
Africa 100
Estimated Reserves
Latin America 99
Middle East 729
Asia-Pacific 36
… but are very concentrated in the Middle East
Source: O&G Journal, USGS 2000, IEA 8
Investor Relations – 3C1078
The IEA forecasts a dramatically growing dependence on OPEC production Mb/d 120 100 80
54 Mb/j from nonOPEC
48 Mbd from nonOPEC
60
23
18
12
11
53 Mb/j from nonOPEC
15
40 20
55 Mb/j from nonOPEC
34 Mbd from OPEC
38 Mb/j from OPEC
26
34
49 Mb/j from OPEC
42
0 2005
9
2010
2020
2030
OPEP HorsSaudi Arabie Saoudite OPEC excl. Arabia
Arabie Saoudite Saudi Arabia
CEI CIS
North America Amérique du nord Latin America (nonnon OPEC) Amérique latine OPEP
Europe Europe Afrique nonOPEC) OPEP Africa (non
Asie Asia Middle East (non OPEC) Moyen Orient non OPEP
Investor Relations – 3C1078
60 Mb/j from OPEC
How to respond on the demand side?
Investor Relations - www.total.com
Slowing demand growth would help manage the tensions on oil markets Reducing oil demand growth to less than 1% per annum would be the best solution. But is it realistic? Mb/d 120
IEA 2005 100
Demand 0.7%
80
Demand 1% Demand 1.5%
60
2004 proved reserves
40
20
0 1950
Source: IEA, TOTAL 10
Investor Relations – 3C1078
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
2060
2070
To avoid a crisis, oil demand should stabilise in the OECD to allow demand to grow in the non-OECD Oil demand growth of 1% over 2005-2020 OECD Demand
Mb/d
Mb/d
60
60
50
50
40
Non-OECD demand
40
Transportation
Transportation
30
30
20
20
Petrochemicals
Petrochemicals 10
1981
Source: IEA, TOTAL 11
Heating
Electricity
0 1971
10
Heating
Investor Relations – 3C1078
1991
2001
2011
2021
Electricity
0 1971
1981
1991
2001
2011
2021
This implies a 1% annual improvement in car energy efficiency Car fleet (in millions)
North America
Europe
Millions
Asia non-OECD
Millions
Millions 500
500
500
400
400
400
300
300
300
200
200
200
100
100
100
0 2000
2010 Gasoline
Source: TOTAL 12
Investor Relations – 3C1078
2020 Diesel
Hybrid
2030
0 2000
2010 Gasoline
2020 Diesel
Hybrids
2030
0 2000
2010
2020
2030
How to respond on the supply side ? Contributions from the majors
Investor Relations - www.total.com
The oil majors are investing more than their share of production Oil companies production and investment in 2004*
Investments** 150
36%
45%
Others 100 base 100
Total
50%
14%
32%
National Oil Companies
23%
Majors
Average of other majors
50
0 Production
Investments
2002
2003
2004
2005
Total : approx. USD 10 billions per year invested in the Upstream to ensure a production growth close to 4% per year until 2010
* public sources, based on 2004 data ** expressed in dollars, excludes acquisitions 13
Investor Relations – 3C1078
Production base : solid and well-positioned for the future 4000
1999-2005 production
3000
Mboe/d
Growth areas (non-OECD)
2000 2
2nd largest producer among the majors Well diversified portfolio
1000 1
Price effect impact on production profiles 0
Total
Exxon Mobil
BP
Shell
Chevron
Total
Exxon Mobil
BP
Shell
Chevron
4000
Mboe/d
Mature areas (OECD) Less exposed to regions with declining production
3000 3
2000 2
1000 1
0
estimates based on company reports 14
Investor Relations – 3C1078
Growing diversification of proved and probable reserves Proved and probable reserves* : 20 Bboe
Distribution by type* Gas
Norway
Canada
Oil
United Kingdom Kazakhstan
LNG Qatar
Heavy oil
U.A.E.
Deep-offshore oil
Venezuela Yemen
Nigeria
Indonesia
Congo
Reserve life extended by 2 years to nearly 22 years at year-end 2005
Angola
Large new ventures pending finalization ≥ 1 Bboe
0.5 - 1 Bboe
≤ 0.5 Bboe
Well positioned on most of the major growth areas * limited to proved and probable reserves at year-end 2005 covered by E&P contracts on fields that have been drilled and for which technical studies have demonstrated economic development in a 40 $/b Brent environment, also includes Joslyn tar sands to be developed with mining 15
Investor Relations – 3C1078
Production growth target : close to 4% per year on average from 2005 to 2010 Hydrocarbon production
Start-up
(projection based on 40 $/b Brent) 4Q 2005
Mboe/d
+ 4% per year on average 3
2006(e)
New projects
2
2007(e)
Base 1
2008(e)
Share
Target peak kboe/d 100%
Ekofisk AG Kristin Bonga Forvie North
39.9% 6% 12.5% 100%
100 220 225 20
BBLT NLNG T4 and T5 Glenelg Joslyn SAGD Ph. II Surmont Ph. I Dalia Shah Deniz
20% 15% 49.5% 84% 50% 40% 10%
200 175 35 10 30 240 170
Rosa Dolphin Snøhvit NLNG T6 Sisi Nubi
40% 24.5% 18.4% 15% 47.9%
150 >370 120 90 70
3 3
Moho Bilondo Tahiti Qatargas II* Akpo Yemen LNG Kashagan Ph. I
53.5% 17% 16.7% 24% 39.6% 18.5%
90 135 >200 225 185 450
3
Tyrihans
21.5% 50% 20%
70 50 100
3
dev. FID basic
20% 40% 84% 30%
150 200 50 >300
3 3 3 3
basic basic basic basic
Main projects
2009(e) Tempa Rossa Tombua Landana
2005
2007(e) 2005
2010(e)
2010(e)
* pending finalization ** Total or operating company 16
Investor Relations – 3C1078
Usan Pole III, Block 17 (Pazflor) Joslyn Ph. I mining Pars LNG
Operator** Status
3
3 3 3
3
3 3
prod. prod. prod. prod. prod. prod. prod. dev. dev. dev. dev. dev. dev. dev. dev. dev. dev. dev. dev. dev. dev. dev.
Well balanced between high-growth and mature zones through 2010 Production : 32 countries in 2010*
2000
Africa and Middle East to remain important
2005 2010(e)
Russia - Central Asia 2000
2005
2010(e)
North America 2000
2005
Numerous incremental developments in mature areas
2010(e)
Europe
Progressively increasing the weight of new growth areas
kboe/d 1,200
Central Asia, Canada… 800
2000 2000
2005 2010(e)
South America
2005 2010(e)
Middle East Asia
400
2000
2005 2010(e)
Africa
Oil
Gas
Strategy combines growth and profitability * 2010 production based on 40 $/b Brent 17
Investor Relations – 3C1078
Strong visibility on 2010-2015 growth Post-2010 production growth driven by exploration success
Exploration success* by year in Bboe 5
2005
4
2004
3 2
New development poles in West Africa Block 32 and Block 17 4th pole in Angola, deep-offshore Nigeria and Congo
2003
Growing importance of Kashagan
2002
Intensive exploration in mature areas
2001 1 2000
New giant gas & heavy oil projects (Bboe)
North Sea, Cameroon…
New themes Deep horizons…
Post-2010 production profile strengthened by large base of new giant gas and heavy oil projects (including mining)
5 Joslyn 4 3 2
20-30 year production plateaus Surmont Pars LNG
Highly leveraged to hydrocarbon prices Strong value creation over the long term
Qatargas II** 1
Yemen LNG
Significant R&D upside
Dolphin * 2000-2005 cumulative contribution of exploration to reserve replacement potential ** pending finalization 18
Investor Relations – 3C1078
New developments in non-conventional, extra heavy oil represent a major opportunity Surmont (50%)
Joslyn (84%, op.) SAGD development underway Potential production of more than 200 kb/d*
Athabasca Extra Heavy Oil Production (Mb/d)* 3
Phase I SAGD development underway (30 kb/d) Potential production of more than 200 kb/d*
Mb/d
2
1
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
To become a major player in the development of Canadian heavy oil…
Completed acquisition of Deer Creek Increased stake in Surmont to 50% Studying different options for upgrading Acquiring additional leases
…within existing constraints Energy efficiency CO2 emissions Human resources
Source: Canadian Association of Petroleum Producers 19
Investor Relations – 3C1078
Mining
In-Situ
Progressive development of a new major production area
A lighter product mix will necessitate new refining conversion capacities World Production
Mb/d 45
Transport fuels
30
Heavy fuel + coke
Refineries conversion 15
Heat Others (chemicals, bitumen…) 0 1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
Total is developing a hydrocracker at the Normandy refinery to produce 40 000 b/d of diesel to help answer Europe demand Source: IEA 20
Investor Relations – 3C1078
2001
Five projects to adapt the refining system to changing markets Lindsey : desulphurization unit Normandy : hydrocracker
Share of HS crude : 45% J 55% +1.3 Mt of diesel, +0.5 Mt of naphta Capex : 500 M€ Start-up mid-2006(e)
HS crude supply : 10% J 70% +1.8 Mt of diesel Capex : 200 M€ Start-up end-2008(e)
Diesel production +20% 43 Mt 36 Mt
2005 2010(e)
High-sulphur (HS) crude processing
North America : coker To process heavy oil Capex : 0.9 B$ Start-up approx. 2010(e)
48%
Huelva (Cepsa*) : hydrocracker and vacuum distillation
Increase capacity : +3.6 Mt/year +2.7 Mt of distillates, +0.8 Mt of naphta Capex : 1 B€ Start-up 2009(e)
* Total 45.3% 21
Investor Relations – 3C1078
58%
Donges : desulphurization unit
HS crude supply : 40% J 70% +1 Mt of diesel Capex : 120 M€ Start-up 2010(e)
2005 2010(e)
Strong performance by Total among the majors in 2005 Increase in adjusted EPS* %
ROACE %
Shareholder returns** % 20 20
40 40
30 30 15 15
30 30
20 20 10 10
20 20
10 10
10 10
0
55
0
0
Total Exxon Mobil
BP
RD Chevron Shell
Exxon Total Mobil
BP
RD Chevron Shell
Total
BP
Shell Exxon Chevron (RDS A) Mobil
Capital discipline Self-help programs Strong project management Accretive impact of share buybacks (3% of shares in 2005) estimates based on company reports * adjusted results expressed in dollars ** return calculation assumes 12/31/2004 share purchase plus dividends received and 12/31/2005 closing value (expressed in $) 22
Investor Relations – 3C1078
Total : relative share price performance since 2000*
Total
200
ExxonMobil
150
Chevron BP RD Shell base 100
50 déc-99
déc-00
déc-01
* in $, based on monthly closing prices of the shares or the ADRs 23
Investor Relations – 3C1078
déc-02
déc-03
déc-04
déc-05
Disclaimer This document may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, business, strategy and plans of Total. Such statements are based on a number of assumptions that could ultimately prove inaccurate, and are subject to a number of risk factors, including currency fluctuations, the price of petroleum products, the ability to realize cost reductions and operating efficiencies without unduly disrupting business operations, environmental regulatory considerations and general economic and business conditions. Total does not assume any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Further information on factors which could affect the company’s financial results is provided in documents filed by the Group and its affiliates with the French Autorité des Marchés Financiers and the US Securities and Exchange Commission. The business segment information is presented in accordance with the Group internal reporting system used by the Chief operating decision maker to measure performance and allocate resources internally. Due to their particular nature or significance, certain transactions qualified as “special items” are monitored at the Group level and excluded from the business segment figures. In general, special items relate to transactions that are significant, infrequent or unusual. However, in certain instances, certain transactions such as restructuring costs or assets disposals, which are not considered to be representative of normal course of business, may be qualified as special items although they may have occurred within prior years or are likely to recur within following years. In accordance with IAS 2, the Group values inventories of crude oil and petroleum products in the financial statements in accordance with the FIFO (First in, First out) method and other inventories using the weighted-average cost method. However, in the note setting forth information by business segment, the Group continues to present the results for the Downstream segment according to the replacement cost method and those of the Chemicals segment according to the LIFO (Last in, First out) method in order to ensure the comparability of the Group’s results with those of its main competitors, notably from North America. The inventory valuation effect is the difference between the results according to the FIFO method and the results according to the replacement cost or LIFO method. In this framework, performance measures such as adjusted operating income, adjusted net operating income and adjusted net income are defined as incomes using replacement cost, adjusted for special items and excluding Total’s equity share of the amortization of intangibles related to the SanofiAventis merger. They are meant to facilitate the analysis of the financial performance and the comparison of income between periods. Cautionary Note to U.S. Investors - The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as “proved and probable reserves”, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20F, File N° 1-10888, available from us at 2, place de la Coupole - La Défense 6 - 92078 Paris la Défense cedex - France. You can also obtain this form from the SEC by calling 1-800-SEC-0330.
24
Investor Relations – 3C1078
Investor Relations - www.total.com
Short-term oil markets
Investor Relations - www.total.com
Oil prices are volatile: today’s price is no guide to the future ! $2005/b (monthly average)
Mb/d 120
120
Brent real price 100
100
Oil demand 80
80
60
60
40
40
20
20
Total’s annual net result of $ 8 bn 0 1970
Sources : IEA, Bloomberg, Total 1
Investor Relations – 3C1078
0 1975
1980
1985
1990
1995
2000
2005
Today’s price is « detached » from the fondamentals of the market WTI $/b
OECD stocks 70
40
Days of demand (inverted scale)
42 60 44 46 50 48 40
50 52
30 54
OECD stocks
20
(inverted scale)
WTI price 10 01-1997
Sources : IEA 2
Investor Relations – 3C1078
56 58 60
01-1998
01-1999
01-2000
01-2001
01-2002
01-2003
01-2004
01-2005
01-2006
How long will the oil market remain in a state of tension ? Spare production capacity in OPEC countries is very low Less than 2 Mb/d
Mb/d
35 30 1.1
25
1.7
Pira
2.5
Total IEA*
20 Projection range for 2006
15 10 5 0 1980
* Excluding Iraq 3
Investor Relations – 3C1078
1985
1990
1995
Production
Capacity OPEC
2000
2005
2006
« Managing » the market is more difficult than you think: IEA forecasts for 2004 Mb/d
Changes vs 2003
2.5
Increasing demand
2.0
Decreasing non-OPEC production
1.5
1.0
0.5
0
Strong call on OPEC production
-0.5
-1.0
November December 2003
January 2004
February March
World Demand in 2004
4
Investor Relations – 3C1078
April
May
June
Non-OPEC Production 2004
Julu
August September
Call on OPEC 2004
Medium term oil markets
Investor Relations - www.total.com
Has «peak oil» already arrived in the OECD countries ? Mb/d 25
True peak ? False peak
20
15
Declining production 10
5
0 1965
1970 US L48 onshore
5
Investor Relations – 3C1078
1975
1980
US L48 offshore
1985 Alaska
Canada
1990 North Sea
1995
2000
Other OECD
Mexico
2005
What “target” price is OPEC going to be aiming for ? Budget Balance % GDP
Budget Balances in selected OPEC countries
60%
Brent Price $/bbl 60
to 55 $/bbl 50%
40%
50
From 25 $/bbl in 2002
40
30%
30
20%
20
10%
10
0%
0
-10% 2001
- 5% to 5%
- 5% to 5% 2002 Saudi Arabia
2003 Algeria
-10 2005
2004 Iran
Nigeria
Venezuela
Despite high oil prices, some OPEC countries still face budget deficits. Since 2000, the breakeven price to balance national budgets has sharply increased 6
Investor Relations – 3C1078
Today’s world economy seems able to cope with a high oil price GDP growth and inflation in OECD countries
GDP growth (%) in real 7 terms
CPI (%)
16 14
6
12
5
10
4
8 3
6
2
4
1
2
0
0 1970
Source : IMF 7
Investor Relations – 3C1078
1975
1980
1985
1990
1995
2000
2005
Long-term oil markets
Investor Relations - www.total.com
Proven oil reserves cover today more than 40 years of demand… Proven Reserves (as of 1/1/2005) 1110
Oil Resources: ~
Billion barrels 600 ~ 650
CONVENTIONAL OIL Proven Reserves
Reserve growth
Undiscovered Reserves
Former Soviet Union 77
Europe 17
~ 600
Extra Heavy Oil North America 52
Africa 100
Estimated Reserves
Latin America 99
Middle East 729
Asia-Pacific 36
… but are very concentrated in the Middle East
Source: O&G Journal, USGS 2000, IEA 8
Investor Relations – 3C1078
The IEA forecasts a dramatically growing dependence on OPEC production Mb/d 120 100 80
54 Mb/j from nonOPEC
48 Mbd from nonOPEC
60
23
18
12
11
53 Mb/j from nonOPEC
15
40 20
55 Mb/j from nonOPEC
34 Mbd from OPEC
38 Mb/j from OPEC
26
34
49 Mb/j from OPEC
42
0 2005
9
2010
2020
2030
OPEP HorsSaudi Arabie Saoudite OPEC excl. Arabia
Arabie Saoudite Saudi Arabia
CEI CIS
North America Amérique du nord Latin America (nonnon OPEC) Amérique latine OPEP
Europe Europe Afrique nonOPEC) OPEP Africa (non
Asie Asia Middle East (non OPEC) Moyen Orient non OPEP
Investor Relations – 3C1078
60 Mb/j from OPEC
How to respond on the demand side?
Investor Relations - www.total.com
Slowing demand growth would help manage the tensions on oil markets Reducing oil demand growth to less than 1% per annum would be the best solution. But is it realistic? Mb/d 120
IEA 2005 100
Demand 0.7%
80
Demand 1% Demand 1.5%
60
2004 proved reserves
40
20
0 1950
Source: IEA, TOTAL 10
Investor Relations – 3C1078
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
2060
2070
To avoid a crisis, oil demand should stabilise in the OECD to allow demand to grow in the non-OECD Oil demand growth of 1% over 2005-2020 OECD Demand
Mb/d
Mb/d
60
60
50
50
40
Non-OECD demand
40
Transportation
Transportation
30
30
20
20
Petrochemicals
Petrochemicals 10
1981
Source: IEA, TOTAL 11
Heating
Electricity
0 1971
10
Heating
Investor Relations – 3C1078
1991
2001
2011
2021
Electricity
0 1971
1981
1991
2001
2011
2021
This implies a 1% annual improvement in car energy efficiency Car fleet (in millions)
North America
Europe
Millions
Asia non-OECD
Millions
Millions 500
500
500
400
400
400
300
300
300
200
200
200
100
100
100
0 2000
2010 Gasoline
Source: TOTAL 12
Investor Relations – 3C1078
2020 Diesel
Hybrid
2030
0 2000
2010 Gasoline
2020 Diesel
Hybrids
2030
0 2000
2010
2020
2030
How to respond on the supply side ? Contributions from the majors
Investor Relations - www.total.com
The oil majors are investing more than their share of production Oil companies production and investment in 2004*
Investments** 150
36%
45%
Others 100 base 100
Total
50%
14%
32%
National Oil Companies
23%
Majors
Average of other majors
50
0 Production
Investments
2002
2003
2004
2005
Total : approx. USD 10 billions per year invested in the Upstream to ensure a production growth close to 4% per year until 2010
* public sources, based on 2004 data ** expressed in dollars, excludes acquisitions 13
Investor Relations – 3C1078
Production base : solid and well-positioned for the future 4000
1999-2005 production
3000
Mboe/d
Growth areas (non-OECD)
2000 2
2nd largest producer among the majors Well diversified portfolio
1000 1
Price effect impact on production profiles 0
Total
Exxon Mobil
BP
Shell
Chevron
Total
Exxon Mobil
BP
Shell
Chevron
4000
Mboe/d
Mature areas (OECD) Less exposed to regions with declining production
3000 3
2000 2
1000 1
0
estimates based on company reports 14
Investor Relations – 3C1078
Growing diversification of proved and probable reserves Proved and probable reserves* : 20 Bboe
Distribution by type* Gas
Norway
Canada
Oil
United Kingdom Kazakhstan
LNG Qatar
Heavy oil
U.A.E.
Deep-offshore oil
Venezuela Yemen
Nigeria
Indonesia
Congo
Reserve life extended by 2 years to nearly 22 years at year-end 2005
Angola
Large new ventures pending finalization ≥ 1 Bboe
0.5 - 1 Bboe
≤ 0.5 Bboe
Well positioned on most of the major growth areas * limited to proved and probable reserves at year-end 2005 covered by E&P contracts on fields that have been drilled and for which technical studies have demonstrated economic development in a 40 $/b Brent environment, also includes Joslyn tar sands to be developed with mining 15
Investor Relations – 3C1078
Production growth target : close to 4% per year on average from 2005 to 2010 Hydrocarbon production
Start-up
(projection based on 40 $/b Brent) 4Q 2005
Mboe/d
+ 4% per year on average 3
2006(e)
New projects
2
2007(e)
Base 1
2008(e)
Share
Target peak kboe/d 100%
Ekofisk AG Kristin Bonga Forvie North
39.9% 6% 12.5% 100%
100 220 225 20
BBLT NLNG T4 and T5 Glenelg Joslyn SAGD Ph. II Surmont Ph. I Dalia Shah Deniz
20% 15% 49.5% 84% 50% 40% 10%
200 175 35 10 30 240 170
Rosa Dolphin Snøhvit NLNG T6 Sisi Nubi
40% 24.5% 18.4% 15% 47.9%
150 >370 120 90 70
3 3
Moho Bilondo Tahiti Qatargas II* Akpo Yemen LNG Kashagan Ph. I
53.5% 17% 16.7% 24% 39.6% 18.5%
90 135 >200 225 185 450
3
Tyrihans
21.5% 50% 20%
70 50 100
3
dev. FID basic
20% 40% 84% 30%
150 200 50 >300
3 3 3 3
basic basic basic basic
Main projects
2009(e) Tempa Rossa Tombua Landana
2005
2007(e) 2005
2010(e)
2010(e)
* pending finalization ** Total or operating company 16
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Usan Pole III, Block 17 (Pazflor) Joslyn Ph. I mining Pars LNG
Operator** Status
3
3 3 3
3
3 3
prod. prod. prod. prod. prod. prod. prod. dev. dev. dev. dev. dev. dev. dev. dev. dev. dev. dev. dev. dev. dev. dev.
Well balanced between high-growth and mature zones through 2010 Production : 32 countries in 2010*
2000
Africa and Middle East to remain important
2005 2010(e)
Russia - Central Asia 2000
2005
2010(e)
North America 2000
2005
Numerous incremental developments in mature areas
2010(e)
Europe
Progressively increasing the weight of new growth areas
kboe/d 1,200
Central Asia, Canada… 800
2000 2000
2005 2010(e)
South America
2005 2010(e)
Middle East Asia
400
2000
2005 2010(e)
Africa
Oil
Gas
Strategy combines growth and profitability * 2010 production based on 40 $/b Brent 17
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Strong visibility on 2010-2015 growth Post-2010 production growth driven by exploration success
Exploration success* by year in Bboe 5
2005
4
2004
3 2
New development poles in West Africa Block 32 and Block 17 4th pole in Angola, deep-offshore Nigeria and Congo
2003
Growing importance of Kashagan
2002
Intensive exploration in mature areas
2001 1 2000
New giant gas & heavy oil projects (Bboe)
North Sea, Cameroon…
New themes Deep horizons…
Post-2010 production profile strengthened by large base of new giant gas and heavy oil projects (including mining)
5 Joslyn 4 3 2
20-30 year production plateaus Surmont Pars LNG
Highly leveraged to hydrocarbon prices Strong value creation over the long term
Qatargas II** 1
Yemen LNG
Significant R&D upside
Dolphin * 2000-2005 cumulative contribution of exploration to reserve replacement potential ** pending finalization 18
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New developments in non-conventional, extra heavy oil represent a major opportunity Surmont (50%)
Joslyn (84%, op.) SAGD development underway Potential production of more than 200 kb/d*
Athabasca Extra Heavy Oil Production (Mb/d)* 3
Phase I SAGD development underway (30 kb/d) Potential production of more than 200 kb/d*
Mb/d
2
1
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
To become a major player in the development of Canadian heavy oil…
Completed acquisition of Deer Creek Increased stake in Surmont to 50% Studying different options for upgrading Acquiring additional leases
…within existing constraints Energy efficiency CO2 emissions Human resources
Source: Canadian Association of Petroleum Producers 19
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Mining
In-Situ
Progressive development of a new major production area
A lighter product mix will necessitate new refining conversion capacities World Production
Mb/d 45
Transport fuels
30
Heavy fuel + coke
Refineries conversion 15
Heat Others (chemicals, bitumen…) 0 1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
Total is developing a hydrocracker at the Normandy refinery to produce 40 000 b/d of diesel to help answer Europe demand Source: IEA 20
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2001
Five projects to adapt the refining system to changing markets Lindsey : desulphurization unit Normandy : hydrocracker
Share of HS crude : 45% J 55% +1.3 Mt of diesel, +0.5 Mt of naphta Capex : 500 M€ Start-up mid-2006(e)
HS crude supply : 10% J 70% +1.8 Mt of diesel Capex : 200 M€ Start-up end-2008(e)
Diesel production +20% 43 Mt 36 Mt
2005 2010(e)
High-sulphur (HS) crude processing
North America : coker To process heavy oil Capex : 0.9 B$ Start-up approx. 2010(e)
48%
Huelva (Cepsa*) : hydrocracker and vacuum distillation
Increase capacity : +3.6 Mt/year +2.7 Mt of distillates, +0.8 Mt of naphta Capex : 1 B€ Start-up 2009(e)
* Total 45.3% 21
Investor Relations – 3C1078
58%
Donges : desulphurization unit
HS crude supply : 40% J 70% +1 Mt of diesel Capex : 120 M€ Start-up 2010(e)
2005 2010(e)
Strong performance by Total among the majors in 2005 Increase in adjusted EPS* %
ROACE %
Shareholder returns** % 20 20
40 40
30 30 15 15
30 30
20 20 10 10
20 20
10 10
10 10
0
55
0
0
Total Exxon Mobil
BP
RD Chevron Shell
Exxon Total Mobil
BP
RD Chevron Shell
Total
BP
Shell Exxon Chevron (RDS A) Mobil
Capital discipline Self-help programs Strong project management Accretive impact of share buybacks (3% of shares in 2005) estimates based on company reports * adjusted results expressed in dollars ** return calculation assumes 12/31/2004 share purchase plus dividends received and 12/31/2005 closing value (expressed in $) 22
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Total : relative share price performance since 2000*
Total
200
ExxonMobil
150
Chevron BP RD Shell base 100
50 déc-99
déc-00
déc-01
* in $, based on monthly closing prices of the shares or the ADRs 23
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déc-02
déc-03
déc-04
déc-05
Disclaimer This document may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, business, strategy and plans of Total. Such statements are based on a number of assumptions that could ultimately prove inaccurate, and are subject to a number of risk factors, including currency fluctuations, the price of petroleum products, the ability to realize cost reductions and operating efficiencies without unduly disrupting business operations, environmental regulatory considerations and general economic and business conditions. Total does not assume any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Further information on factors which could affect the company’s financial results is provided in documents filed by the Group and its affiliates with the French Autorité des Marchés Financiers and the US Securities and Exchange Commission. The business segment information is presented in accordance with the Group internal reporting system used by the Chief operating decision maker to measure performance and allocate resources internally. Due to their particular nature or significance, certain transactions qualified as “special items” are monitored at the Group level and excluded from the business segment figures. In general, special items relate to transactions that are significant, infrequent or unusual. However, in certain instances, certain transactions such as restructuring costs or assets disposals, which are not considered to be representative of normal course of business, may be qualified as special items although they may have occurred within prior years or are likely to recur within following years. In accordance with IAS 2, the Group values inventories of crude oil and petroleum products in the financial statements in accordance with the FIFO (First in, First out) method and other inventories using the weighted-average cost method. However, in the note setting forth information by business segment, the Group continues to present the results for the Downstream segment according to the replacement cost method and those of the Chemicals segment according to the LIFO (Last in, First out) method in order to ensure the comparability of the Group’s results with those of its main competitors, notably from North America. The inventory valuation effect is the difference between the results according to the FIFO method and the results according to the replacement cost or LIFO method. In this framework, performance measures such as adjusted operating income, adjusted net operating income and adjusted net income are defined as incomes using replacement cost, adjusted for special items and excluding Total’s equity share of the amortization of intangibles related to the SanofiAventis merger. They are meant to facilitate the analysis of the financial performance and the comparison of income between periods. Cautionary Note to U.S. Investors - The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as “proved and probable reserves”, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20F, File N° 1-10888, available from us at 2, place de la Coupole - La Défense 6 - 92078 Paris la Défense cedex - France. You can also obtain this form from the SEC by calling 1-800-SEC-0330.
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