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.