Total's production should grow to about 2.8MMboe/d in 2017, as 15 major projects start-up in the period from now, the French super major said today (22 September).
But, strict capital discipline will also be key, in addition to selling an additional US$10 billion of assets in 2015-17, on top of $15-20 billion due to have been sold off in 2012-14, said the firm.
Image: Christophe de Margerie, Total's CEO, speaking at Total's investor day, today.
Organic investment, which reached a peak of $28 billion in 2013, is projected to decrease to $26 billion in 2014 and to $25 billion in 2017.
The group also announced a major program to reduce operating costs by $2 billion/yr by 2017, with an immediate impact as of 2015, without compromising a priority to safety.
Arnaud Breuillac, recently appointed President, Exploration & Production, said there would be three objectives:
"If we do this reduction... we should be able to $1/bbl equivalent in 2017," said Breuillac. Breuillac also said that while Total's "base case" was $100/bbl, the firm was looking at an $80/bbl barrel.
The firm has already demonstrated how to reduce costs on a project, he said, citing Kaombo, the firm's latest deeowater project offshore Angola. Read more
He said when the company was about to sanction Kaombo, it had all the tender offers on the table and saw "it was too expensive, it was not meeting our threshold for economic returns." The firm cut back on redunant euqipment, and cut back on some provisions for upside, without reducing safety, which reduced the capital cost by $2 billion.
"We then looked at contractors and looked at how to manage risk, how we could better manage risk than contractors, and through that cit back $1 billion capex." By talking to the Angolan authorities about local content requirements, a further $1 billion was saved. "Then the project met our requirement," he said.
But, he said such measures should in future be done earlier in the design phase, which Total had started to do, citing Edradour, a subsea tie-back in the UK North Sea. "We call is value engineering and good alignment with suppliers and mitigating the effect of local content," said Breuillac.
He said the 15 projects due on stream by 2015 will contribute 600,000bbl/d new production by 2017. Of the 15 projects, 10 are operated by Total. They include Laggan-Tormore, which has been hit by delays, but Breuillac Total had a strong engagement plan with main contractor and was aiming to get the project back on track. Others in the 15 projects include Ichthys, which is more than 50% completed, and a "stream of new deep offshore projects," Moho, Egina, Kaombo - "our next wave of deep offshore projects west Africa."
Breuillac also said Total's exploration results had been disappointing. As a result, the firm has appointed Canadian national Kevin McLachlan, previously at Nexen, and ExxonMobil before that, Senior Vice President Exploration. He is due to start in early 2015 and will help the firm create change in its exploration plans.
"This is a major event for Total to take somebody from outside the company at that level," said Breuillac.
In a separate announcement, it was announced that Total had acquired Faroe Petroleum's 10% stake in the Glenlivet field, west of Shetland for £10 million. Glenlivet was discovered in 2009, in 500m water depth, about 35km north east of the Laggan gas field and 19km north of the Edradour discovery. Glenlivet is planned to be developed in conjunction with the Edradour gas discovery
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