A Review of the Nigerian Energy Industry

Total cuts 2017 output target over outages in Nigeria, others

23 September 2014, Lagos – French oil major Total has cut its 2017 production target to 2.8 million barrels of oil equivalent per day, from a previous three million, as it struggles with production outages in Nigeria, Libya and Kazakhastan, and also unveiled plans to speed up asset sales and overhaul exploration.

France’s biggest company by market value, said it launched a “high-risk, high-reward” drilling strategy two years ago, with disappointing results, as high-cost investments did not lead to large discoveries.

De Margerie

“We have more than 15 major projects to fuel the future growth… Two thirds of those projects are operated by us, so that gives us confidence we will achieve the targets,” Reuters quoted the Chief Financial Officer, Patrick de La Chevardiere, as saying yesterday at Total’s Investor Day in London.

Chief Executive Officer of the company, Mr. Christophe De Margerie, told a conference call with investors yesterday that he was optimistic despite production target cuts.

“Total is still well positioned as one of the fastest growing global major companies between now and 2017,” he said.

The company, like other big oil companies, has been under pressure from shareholders to cut costs and raise dividends as rising costs in the oil industry and weaker oil prices squeeze profitability.

The company plans to sell $10 billion of assets between 2015 and 2017, having hit a target of $15 to 20 billion of sales from 2012 to 2014.

Since 2010, Total has generated a total of $30 billion from asset sales, according to De La Chevardiere, making it one of the most ambitious sell-off programmes in the industry alongside BP’s $50 billion sell-off plan.

De La Chevardiere declined to comment on what assets the company could sell, adding that under the previous asset sale plan, it had sold both upstream and downstream businesses.

The oil and gas group has however put one of its offshore Nigerian oilfields up for sale again, the company said recently, after a 2012 deal with Sinopec Corporation failed.

Total has hired BNP Paribas to find buyers for its Usan deepwater oil field located in Oil Prospecting Lease (OML) 138, which could be worth about $2.5 billion.

Total E&P Nigeria, a wholly-owned subsidiary of Total, which formerly operated the field, holds a working interest of 20 per cent in the project.
Other partners include Chevron Petroleum Nigeria (30 per cent), Esso Exploration and Production Nigeria (Offshore East) (30 per cent) and Nexen Petroleum Nigeria, owned by Chinese state company, CNOOC Limited (20 per cent).

THISDAY gathered that Total has handed over operatorship of Usan to Esso Exploration and Production, an affiliate of ExxonMobil.

Before deciding to sell the asset, which is about 100 kilometres off the coast, Total was planning to drill several horizontal deepwater wells and build a deep offshore drilling rig.

Total said in November 2012 that it had sold its 20 per cent interest in the field to China’s Sinopec for about $2.5 billion in cash but it was not clear why the sale failed.


– This Day

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