10 July 2014, Abuja – The chief executive of French oil major Total is giving himself until the end of the year to strike oil at a big new field somewhere in the world before considering whether to change direction and cut the exploration budget.
The Paris-based oil major, which launched a drilling strategy that it termed “high-risk, high-reward” two years ago, has had disappointing explorations results so far.
“It’s not a success in terms of results for the moment,” Christophe de Margerie told Reuters in an interview. “But exploration takes more than two years to yield results.”
De Margerie was asked whether the group could drop the expensive strategy, which had been a shift from Total’s previous, more cautious approach. “Not before the end of the year; at the end of the year we’ll see if we didn’t get enough,” he said.
“If we have to change, we’ll do it, but there won’t be a revolution where we stop everything and start over,” he said, adding that the company had yet to drill so far in countries such as Angola, South Africa and Bulgaria.
In any event, he expected Total’s exploration budget to drop next year from the $2.9 billion set for this year, which represented an increase of about 12 percent compared with 2012.
Total, like other big oil majors, has been under pressure from shareholders to cut costs and raise dividends. France’s biggest company by market value and the Western world’s No 4 oil and gas firm said last year it would engage in what De Margerie called a “soft-landing” in capital investments. De Margerie also played down the importance of reaching the production capacity target he set for 2017: 3 million barrels of oil equivalent per day.
“It’s clear that if we continue to have problems like today in Nigeria, Venezuela, Libya and elsewhere, countries with problems beyond our control, then we can’t reach the 3 million,” he said.
Total has cut its staff in Libya to the bare minimum due to increasing violence in the North African country, for example, while security issues and oil theft have hurt its output in Nigeria.
De Margerie said he should be judged based on new projects launched under his watch such as a string of African fields including Angola’s CLOV and Nigeria’s Egina and Ofon Phase 2 as well as Laggan-Tormore off the coast of Scotland, not on existing production areas affected by political tensions.