Total to Boost Exploration Spending to $6.5 Billion
Total to Boost Exploration Spending to $6.5 Billion
Bloomberg/Jakarta
Total SA, Europe's third-largest oil company, plans to increase its exploration and production spending to US$6.5 billion this year after crude oil prices rose to a record.
"Last year was slightly less and next year will be much, much bigger," Christophe de Margerie, head of exploration and production, said in an interview in Kuala Lumpur, without providing details. "The majority will be on Africa."
Total, which aims to boost production by about 4 percent a year through 2010, is investing in Nigeria and Russia to increase its oil and gas reserves. Total's output fell to 2.56 million barrels of oil equivalent a day in the first quarter of this year.
The Paris-based company, Africa's largest oil and gas producer, said on June 9 that it agreed to acquire 40 percent of an offshore Nigerian exploration block. About 27 percent of Total's output comes from contracts with countries such as Indonesia and Angola that cut the amount of oil that Total keeps as prices rise.
Oil futures have risen 40 percent in the past year in New York as demand grew at a faster pace than supply.
"The current oil price will justify the oil that's harder to find," de Margerie said at the Asia Oil and Gas Conference in Kuala Lumpur today.
Total in February said its capital expenditure budget for 2005 was about $12 billion, about 70 percent of which was earmarked for exploration and production. The figure would equal about $8.4 billion and included plans to spend about $900 million on a 25 percent stake in Russia's OAO Novatek.
Total said in June 1 that it will cancel plans to buy 25 percent of Novatek if the company, Russia's second-largest natural gas producer, offers shares to public. Total agreed in September to buy 25 percent of Novatek for more than $900 million. Moscow-based Novatek was scheduled to vote on the sale of shares to the public abroad.
De Margerie said that he hasn't received notification from Novatek relating to the vote to sell shares.
Total has been banking on the Novatek purchase to help revive output growth after first-quarter production fell 3 percent. The acquisition could help Total catch up with rivals such as BP Plc who are investing in Russia to offset declining production from U.K. fields.
Novatek's gas reserves of 1.5 trillion cubic meters are a 12th of those of larger Russian competitor OAO Gazprom, the world's biggest gas producer.