Company Quick10K Filing
Total
20-F 2019-12-31 Filed 2020-03-20
20-F 2018-12-31 Filed 2019-03-20
20-F 2017-12-31 Filed 2018-03-16
20-F 2016-12-31 Filed 2017-03-17
20-F 2015-12-31 Filed 2016-03-16
20-F 2014-12-31 Filed 2015-03-26
20-F 2013-12-31 Filed 2014-03-27
20-F 2012-12-31 Filed 2013-03-28
20-F 2011-12-31 Filed 2012-03-26
20-F 2010-12-31 Filed 2011-03-28
20-F 2009-12-31 Filed 2010-04-01

TOT 20F Annual Report

Item 1. Identity of Directors, Senior Management and Advisers
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
Item 3
Item 3 - Risk Factors
Item 4. Information on The Company
Item 4 - Business Overview
Item 4
Item 4 - Other Matters
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects
Item 5 - Operating and Financial Review and Prospects
Item 6. Directors, Senior Management and Employees
Item 6 - Directors and Senior Management
Item 6
Item 6 - Compensation
Item 6 - Corporate Governance
Item 6 - Employees and Share Ownership
Item 7 - Major Shareholders and Related Party Transactions
Item 7. Major Shareholders and Related Party Transactions
Item 8 - Financial Information
Item 8. Financial Information
Item 9. The Offer and Listing
Item 10. Additional Information
Item 10 - Additional Information
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Item 12. Description of Securities Other Than Equity Securities
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications To The Rights Of
Item 15. Controls and Procedures
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemptions From The Listing Standards for Audit Committees
Item 16E. Purchases of Equity Securities By The Issuer and Affiliated Purchasers
Item 16F. Change in Registrant's Certifying Accountant
Item 16G. Corporate Governance
Item 16G - Summary of Significant Corporate Governance Differences
Item 16H. Mine Safety Disclosure
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
EX-1 d664274dex1.htm
EX-7.1 d664274dex71.htm
EX-7.2 d664274dex72.htm
EX-12.1 d664274dex121.htm
EX-12.2 d664274dex122.htm
EX-13.1 d664274dex131.htm
EX-13.2 d664274dex132.htm
EX-15 d664274dex15.htm

Total Earnings 2013-12-31

Balance SheetIncome StatementCash Flow

20-F 1 d664274d20f.htm 20-F 20-F
Table of Contents

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

Form 20-F

 

 

(Mark One)

 

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from             to            

OR

 

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report

Commission file number: 1-10888

 

 

TOTAL S.A.

(Exact Name of Registrant as Specified in Its Charter)

Republic of France

(Jurisdiction of Incorporation or Organization)

2, place Jean Millier

La Défense 6

92400 Courbevoie

France

(Address of Principal Executive Offices)

Patrick de La Chevardière

Chief Financial Officer

TOTAL S.A.

2, place Jean Millier

La Défense 6

92400 Courbevoie

France

Tel: +33 (0)1 47 44 45 46

Fax: +33 (0)1 47 44 49 44

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

 

 

Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

 

 

Title of each class

  

Name of each exchange on which registered

Shares    New York Stock Exchange*
American Depositary Shares    New York Stock Exchange

 

* Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

2,377,678,160 Shares, par value 2.50 each, as of December 31, 2013

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  þ    No  ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No  þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).**

Yes  ¨    No  ¨

 

** This requirement is not currently applicable to the registrant.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer  þ   Accelerated filer  ¨   Non-accelerated filer  ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

U.S. GAAP  ¨  

International Financial Reporting Standards as issued by the International

Accounting Standards Board  þ

   Other   ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item17  ¨    Item 18   ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ

 

 


Table of Contents

TABLE OF CONTENTS

 

     Page  

CERTAIN TERMS

     i   

ABBREVIATIONS

     ii   

CONVERSION TABLE

     iii   

Item 1.

  

Identity of Directors, Senior Management and Advisers

     1   

Item 2.

  

Offer Statistics and Expected Timetable

     1   

Item 3.

  

Key Information

     1   
  

Selected Financial Data

     1   
  

Exchange Rate Information

     2   
  

Risk Factors

     2   

Item 4.

  

Information on the Company

     9   
  

History and Development

     9   
  

Business Overview

     9   
  

Other Matters

     46   

Item 4A.

  

Unresolved Staff Comments

     78   

Item 5.

  

Operating and Financial Review and Prospects

     78   

Item 6.

  

Directors, Senior Management and Employees

     91   
  

Directors and Senior Management

     91   
  

Compensation

     99   
  

Corporate Governance

     118   
  

Employees and Share Ownership

     128   

Item 7.

  

Major Shareholders and Related Party Transactions

     132   

Item 8.

  

Financial Information

     134   

Item 9.

  

The Offer and Listing

     137   

Item 10.

  

Additional Information

     138   

Item 11.

  

Quantitative and Qualitative Disclosures About Market Risk

     151   

Item 12.

  

Description of Securities Other than Equity Securities

     152   

Item 13.

  

Defaults, Dividend Arrearages and Delinquencies

     152   

Item 14.

  

Material Modifications to the Rights of Security Holders and Use of Proceeds

     152   

Item 15.

  

Controls and Procedures

     152   

Item 16A.

  

Audit Committee Financial Expert

     153   

Item 16B.

  

Code of Ethics

     153   

Item 16C.

  

Principal Accountant Fees and Services

     153   

Item 16D.

  

Exemptions from the Listing Standards for Audit Committees

     154   

Item 16E.

  

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

     154   

Item 16F.

  

Change in Registrant’s Certifying Accountant

     154   

Item 16G.

  

Corporate Governance

     154   

Item 16H.

  

Mine Safety Disclosure

     157   

Item 17.

  

Financial Statements

     157   

Item 18.

  

Financial Statements

     157   

Item 19.

  

Exhibits

     157   


Table of Contents

Basis of presentation

Financial information included in this Annual Report is presented according to International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and IFRS as adopted by the European Union (EU) as of December 31, 2013.

Statements regarding competitive position

Unless otherwise indicated, statements made in “Item 4. Information on the Company” referring to TOTAL’s competitive position are based on the Company’s estimates, and in some cases rely on a range of sources, including investment analysts’ reports, independent market studies and TOTAL’s internal assessments of market share based on publicly available information about the financial results and performance of market participants.

Additional information

This Annual Report on Form 20-F reports information primarily regarding TOTAL’s business, operations and financial information relating to the fiscal year ended December 31, 2013. For more recent updates regarding TOTAL, you may inspect any reports, statements or other information TOTAL files with the United States Securities and Exchange Commission (“SEC”). All of TOTAL’s SEC filings made after December 31, 2001, are available to the public at the SEC website at http://www.sec.gov and from certain commercial document retrieval services. See also “Item 10. Additional Information — Documents on Display”.

Certain terms

Unless the context indicates otherwise, the following terms have the meanings shown below:

 

“acreage”

The area, expressed in acres, over which TOTAL has interests in exploration or production.

 

“ADRs”

American Depositary Receipts evidencing ADSs.

 

“ADSs”

American Depositary Shares representing the shares of TOTAL S.A.

 

“association”/“consortium”/“joint venture”

Terms used to generally describe a project in which two or more entities participate. For the principles and methods of consolidation applicable to different types of joint arrangements according to IFRS, refer to Note 1 to the Consolidated Financial Statements.

 

“barrels”

Barrels of crude oil, condensates, NGL or bitumen.

 

“Company”

TOTAL S.A.

 

“condensates”

Condensates are a mixture of hydrocarbons that exist in a gaseous phase at original reservoir temperature and pressure, but that, when produced, exist in a liquid phase at surface temperature and pressure. Condensates are sometimes referred to as C5+.

 

“crude oil”

Crude oil is a mixture of compounds (mainly pentanes and heavier hydrocarbons) that exists in a liquid phase at original reservoir temperature and pressure and remains liquid at atmospheric pressure and ambient temperature. “Crude oil” or “oil” are sometimes used as generic terms to designate crude oil plus condensates plus NGL.

 

“Depositary”

The Bank of New York Mellon.

 

“Depositary Agreement”

The depositary agreement pursuant to which ADSs are issued, a copy of which is attached as Exhibit 1 to the registration statement on Form F-6 (Reg. No. 333-172005) filed with the SEC on February 1, 2011.

 

“Group”

TOTAL S.A. and its subsidiaries and affiliates. The terms TOTAL and Group are used interchangeably.

 

“hydrocracker”

A refinery unit which uses a catalyst and extraordinarily high pressure, in the presence of surplus hydrogen, to shorten molecules.

 

“liquids”

Liquids consist of crude oil, bitumen, condensates and NGL.

 

“LNG”

Liquefied natural gas.

 

“LPG”

Liquefied petroleum gas is a mixture of hydrocarbons, the principal components of which are propane and butane, in a gaseous state at atmospheric pressure, but which is liquefied under moderate pressure and ambient temperature. LPG is included in NGL.

 

“NGL”

Natural gas liquids (NGL) are a mixture of light hydrocarbons that exist in the gaseous phase at atmospheric pressure and are recovered as liquids in gas processing plants; NGL include very light hydrocarbons (ethane, propane and butane).

 

“oil and gas”

Generic term which includes all hydrocarbons (e.g., crude oil, condensates, NGL, bitumen and natural gas).

 

“project”

As used in this report, “project” may encompass different meanings, such as properties, agreements, investments, developments, phases, activities or components,

 

2013 Form 20-F TOTAL S.A.   i


Table of Contents
 

each of which may also informally be described as a “project”. Such use is for convenience only and is not intended as a precise description of the term “project” as it relates to any specific governmental law or regulation.

 

“proved reserves”

Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations, prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The full definition of “proved reserves” that we are required to follow in presenting such information in our financial results and elsewhere in reports we file with the SEC is found in Rule 4-10 of Regulation S-X under the U.S. Securities Act of 1933, as amended (including as amended by the SEC “Modernization of Oil and Gas Reporting” Release No. 33-8995 of December 31, 2008).

 

“proved developed reserves”

Proved developed oil and gas reserves are proved reserves that can be expected to be recovered (i) through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and (ii) through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well. The full definition of “developed reserves” that we are required to follow in presenting such information in our financial results and elsewhere in reports we file with the SEC is found in Rule 4-10 of Regulation S-X under the U.S. Securities Act of 1933, as amended (including as amended by the SEC “Modernization of Oil and Gas Reporting” Release No. 33-8995 of December 31, 2008).

 

“proved undeveloped reserves”

Proved undeveloped oil and gas reserves are proved reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. The full definition of “undeveloped reserves” that we are required to follow in presenting such information in our financial results and elsewhere in reports we file with the SEC is found in Rule 4-10 of Regulation S-X under the U.S. Securities Act of 1933, as amended (including as amended by the SEC “Modernization of Oil and Gas Reporting” Release No. 33-8995 of December 31, 2008).

 

“steam cracker”

A petrochemical plant that turns naphtha and light hydrocarbons into ethylene, propylene, and other chemical raw materials.

 

“TOTAL”

TOTAL S.A. and its subsidiaries and affiliates. We use such term interchangeably with the term Group. When we refer to the parent holding company alone, we use the term TOTAL S.A. or the Company.

 

“trains”

Facilities for converting, liquefying, storing and off-loading natural gas.

 

“ERMI”

ERMI is an indicator intended to represent the refining margin after variable costs for a theoretical complex refinery located around Rotterdam in Northern Europe that processes a mix of crude oil and other inputs commonly supplied to this region to produce and market the main refined products at prevailing prices in the region.

 

“turnarounds”

Temporary shutdowns of facilities for maintenance, overhaul and upgrading.

Abbreviations

 

b

   barrel    k    thousand

cf

   cubic feet    M    million

boe

   barrel of oil equivalent    B    billion

t

   metric ton    W    watt

m3

   cubic meter    GWh    gigawatt-hour

/d

   per day    TWh    terawatt-hour

/y

   per year    Wp    watt peak
      Btu    British thermal unit

 

ii   TOTAL S.A. Form 20-F 2013


Table of Contents

Conversion table

 

1 acre

   = 0.405 hectares   

1 b

   = 42 U.S. gallons   

1 boe

   = 1 b of crude oil    = 5,403 cf of gas in 2013(a)
      = 5,434 cf of gas in 2012
      = 5,447 cf of gas in 2011

1 b/d of crude oil

   = approximately 50 t/y of crude oil   

1 Bm3/y

   = approximately 0.1 Bcf/d   

1 m3

   = 35.3147 cf   

1 kilometer

   = approximately 0.62 miles   

1 ton

   = 1 t    = 1,000 kilograms (approximately 2,205 pounds)

1 ton of oil

   = 1 t of oil    = approximately 7.5 b of oil (assuming a specific gravity of 37° API)

1 Mt of LNG

   = approximately 48 Mcf of gas   

1 Mt/y LNG

   = approximately 131 Mcf/d   

 

(a) 

Natural gas is converted to barrels of oil equivalent using a ratio of cubic feet of natural gas per one barrel. This ratio is based on the actual average equivalent energy content of TOTAL’s natural gas reserves during the applicable periods, and is subject to change. The tabular conversion rate is applicable to TOTAL’s natural gas reserves on a group-wide basis.

 

2013 Form 20-F TOTAL S.A.   iii


Table of Contents

Cautionary statement concerning forward-looking statements

TOTAL has made certain forward-looking statements in this document and in the documents referred to in, or incorporated by reference into, this Annual Report. Such statements are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of the management of TOTAL and on the information currently available to such management. Forward-looking statements include information concerning forecasts, projections, anticipated synergies, and other information concerning possible or assumed future results of TOTAL, and may be preceded by, followed by, or otherwise include the words “believes”, “expects”, “anticipates”, “intends”, “plans”, “targets”, “estimates” or similar expressions.

Forward-looking statements are not assurances of results or values. They involve risks, uncertainties and assumptions. TOTAL’s future results and share value may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results and values are beyond TOTAL’s ability to control or predict. Except for its ongoing obligations to disclose material information as required by applicable securities laws, TOTAL does not have any intention or obligation to update forward-looking statements after the distribution of this document, even if new information, future events or other circumstances have made them incorrect or misleading.

You should understand that various factors, certain of which are discussed elsewhere in this document and in the documents referred to in, or incorporated by reference into, this document, could affect the future results of TOTAL and could cause results to differ materially from those expressed in such forward-looking statements, including:

 

   

material adverse changes in general economic conditions or in the markets served by TOTAL, including changes in the prices of oil, natural gas, refined products, petrochemical products and other chemicals;

   

changes in currency exchange rates and currency devaluations;

   

the success and the economic efficiency of oil and natural gas exploration, development and production programs, including, without limitation, those that are not controlled and/or operated by TOTAL;

   

uncertainties about estimates of changes in proven and potential reserves and the capabilities of production facilities;

   

uncertainties about the ability to control unit costs in exploration, production, refining and marketing (including refining margins) and chemicals;

   

changes in the current capital expenditure plans of TOTAL;

   

the ability of TOTAL to realize anticipated cost savings, synergies and operating efficiencies;

   

the financial resources of competitors;

   

changes in laws and regulations, including tax and environmental laws and industrial safety regulations;

   

the quality of future opportunities that may be presented to or pursued by TOTAL;

   

the ability to generate cash flow or obtain financing to fund growth and the cost of such financing and liquidity conditions in the capital markets generally;

   

the ability to obtain governmental or regulatory approvals;

   

the ability to respond to challenges in international markets, including political or economic conditions (including national and international armed conflict) and trade and regulatory matters (including actual or proposed sanctions on companies that conduct business in certain countries);

   

the ability to complete and integrate appropriate acquisitions, strategic alliances and joint ventures;

   

changes in the political environment that adversely affect exploration, production licenses and contractual rights or impose minimum drilling obligations, price controls, nationalization or expropriation, and regulation of refining and marketing, chemicals and power generating activities;

   

the possibility that other unpredictable events such as labor disputes or industrial accidents will adversely affect the business of TOTAL; and

   

the risk that TOTAL will inadequately hedge the price of crude oil or finished products.

For additional factors, you should read the information set forth under “Item 3. Risk Factors”, “Item 4. Information on the Company — Other Matters”, “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.

 

iv   TOTAL S.A. Form 20-F 2013


Table of Contents

Items 1 - 3

 

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

 

 

SELECTED FINANCIAL DATA

 

 

The following table presents selected consolidated financial data for TOTAL on the basis of IFRS as issued by the IASB and IFRS as adopted by the EU for the years ended December 31, 2013, 2012, 2011, 2010 and 2009. Following the application of revised accounting standard IAS 19 effective January 1, 2013, the information for 2012, 2011, 2010 and 2009 has been restated; however, the impact on such restated results is not significant (for further information concerning this restatement, see the introduction to the Notes to the Consolidated Financial Statements included elsewhere herein). Ernst & Young Audit and KPMG S.A., independent registered public accounting firms and the Company’s auditors, audited the historical consolidated financial statements of TOTAL for these periods from which the financial data presented below for such periods are derived, except for the application of the revised accounting standard IAS 19 for the years ended 2009 and 2010. All such data should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included elsewhere herein.

SELECTED CONSOLIDATED FINANCIAL DATA

 

(M, except share and per share data)(a)    2013     2012      2011      2010      2009  

INCOME STATEMENT DATA

             

Revenues from sales

     171,655        182,299         166,550         140,476         112,153   

Net income, Group share

     8,440        10,609         12,309         10,597         8,400   

Earnings per share

     3.73        4.70         5.48         4.74         3.77   

Fully diluted earnings per share

     3.72        4.68         5.45         4.72         3.75   

CASH FLOW STATEMENT DATA

             

Cash flow from operating activities

     21,473        22,462         19,536         18,493         12,360   

Total expenditures

     25,922        22,943         24,541         16,273         13,349   

BALANCE SHEET DATA

             

Total assets

     173,491        171,224         163,705         143,441         127,476   

Non-current financial debt

     25,069        22,274         22,557         20,783         19,437   

Non-controlling interests

     2,281        1,280         1,352         857         987   

Shareholders’ equity — Group share

     72,629        71,185         66,945         59,648         51,860   

Common shares

     5,944        5,915         5,909         5,874         5,871   

DIVIDENDS

             

Dividend per share (euros)

     2.38 (b)      2.34         2.28         2.28         2.28   

Dividend per share (dollars)

     $3.16 (b)(c)      $3.05         $2.97         $3.15         $3.08   

COMMON SHARES(d)

             

Average number outstanding of common shares 2.50 par value (shares undiluted)

     2,264,349,795        2,255,801,563         2,247,479,529         2,234,829,043         2,230,599,211   

Average number outstanding of common shares 2.50 par value (shares diluted)

     2,271,543,658        2,266,635,745         2,256,951,403         2,244,494,576         2,237,292,199   

 

(a) 

Following the application of revised accounting standard IAS 19 effective January 1, 2013, the information for 2012, 2011, 2010 and 2009 has been restated; however, the impact on such restated results is not significant (for further information concerning this restatement, see the introduction to the Notes to the Consolidated Financial Statements included elsewhere herein).

(b) 

Subject to approval by the shareholders’ meeting on May 16, 2014.

(c) 

Estimated dividend in dollars includes the first quarterly interim dividend of $0.80 paid in October 2013 and the second quarterly interim dividend of $0.81 paid in January 2014, as well as the third quarterly interim dividend of 0.59 payable in March 2014 (ADR-related payment in April 2014) and the proposed final dividend of 0.61 payable in June 2014 (ADR-related payment in June 2014), both converted at a rate of $1.30/.

(d) 

The number of common shares shown has been used to calculate per share amounts.

 

2013 Form 20-F TOTAL S.A.   1


Table of Contents

Item 3

 

 

EXCHANGE RATE INFORMATION

 

 

 

For information regarding the effects of currency fluctuations on TOTAL’s results, see “Item 5. Operating and Financial Review and Prospects”.

Most currency amounts in this Annual Report on Form 20-F are expressed in euros (“euros” or “”) or in U.S. dollars (“dollars” or “$”). For the convenience of the reader, this Annual Report on Form 20-F presents certain translations into dollars of certain euro amounts.

The following table sets out the average dollar/euro exchange rates expressed in dollars per 1.00 for the years indicated, based on an average of the daily European Central Bank (“ECB”) reference exchange rate.(1) Such rates are used by TOTAL in preparation of its Consolidated Statement of Income and Consolidated Statement of Cash Flow in its Consolidated Financial Statements. No representation is made that the euro could have been converted into dollars at the rates shown or at any other rates for such periods or at such dates.

DOLLAR/EURO EXCHANGE RATES

 

Year

   Average Rate  

2009

     1.3948   

2010

     1.3257   

2011

     1.3920   

2012

     1.2848   

2013

     1.3281   

The table below shows the high and low dollar/euro exchange rates for the four months ended December 31, 2013, and for the first months of 2014, based on the daily ECB reference exchange rates published during the relevant month expressed in dollars per 1.00.

DOLLAR/EURO EXCHANGE RATES

 

Period

   High      Low  

September 2013

     1.3545         1.3117   

October 2013

     1.3805         1.3493   

November 2013

     1.3611         1.3365   

December 2013

     1.3814         1.3536   

January 2014

     1.3687         1.3516   

February 2014

     1.3813         1.3495   

March 2014(a)

     1.3942         1.3732   

 

(a) 

Through March 25, 2014.

The ECB reference exchange rate on March 25, 2014, for the dollar against the euro was $1.3789/.

 

 

 

RISK FACTORS

 

 

 

The Group and its businesses are subject to various risks relating to changing competitive, economic, political, legal, social, industry, business and financial conditions. These conditions, along with TOTAL’s approaches to managing certain of these risks, are described below and discussed in greater detail elsewhere in this Annual Report, particularly under the headings “Item 4. Information on the Company — Other Matters”, “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.

Our operating results and future rate of growth are exposed to the effects of changing commodity prices.

Prices for oil and natural gas historically have fluctuated widely due to many factors over which TOTAL has no control. These factors include:

 

 

global and regional supply and demand;

 

global and regional economic and political developments in resource-producing regions, particularly in the Middle East, Africa and South America;

 

the ability of the Organization of Petroleum Exporting Countries (OPEC) and other producing nations to influence global production levels and prices;

 

prices of unconventional energies as well as evolving approaches for developing oil sands, which may affect the Group’s realized prices, notably under its long-term gas sales contracts and asset valuations, notably in North America;

 

cost and availability of new technology;

 

governmental regulations and actions;

 

global economic and financial market conditions;

 

war or other conflicts;

 

changes in demographics, including population growth rates and consumer preferences; and

 

adverse weather conditions (such as hurricanes) that can disrupt supplies or interrupt operations of the Group’s facilities.

Substantial or extended declines in oil and natural gas prices would adversely affect TOTAL’s results of operations by reducing its profits. For the year 2014, we estimate that a decrease of $1.00 per barrel in the average annual price of Brent crude would have the effect of reducing our annual adjusted net operating income from the Upstream segment by approximately 0.12 billion (calculated with a base case exchange rate of $1.30 per 1.00 and a Brent price of $100 per barrel). In addition to the adverse effect on revenues, margins and profitability from any fall in oil and natural gas prices, a prolonged period of low prices or other indicators could lead to a review of the Group’s properties and oil and natural gas reserves. Such review would reflect the Company’s view based on estimates, assumptions and judgments and could result in a reduction in the Group’s reported reserves and/or a charge for impairment that could have a significant effect on the Group’s results in the period in which it occurs. Lower oil and natural gas prices over prolonged periods may also reduce the economic viability of projects planned or in development, negatively impact the asset sale program of the Group and reduce liquidity, thereby decreasing the Group’s ability to finance capital expenditures and/or causing it to cancel or postpone investment

 

 

 

(1)

For the period 2009 — 2013, the averages of the ECB reference exchange rates expressed in dollars per 1.00 on the last business day of each month during the relevant year are as follows: 2009 — 1.40; 2010 — 1.32; 2011 — 1.40; 2012 —1.29; and 2013 —1.33.

 

2   TOTAL S.A. Form 20-F 2013


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Item 3 - Risk Factors

 

projects. If TOTAL is unable to follow through with investment projects, the Group’s opportunities for future revenue and profitability growth would be reduced, which could materially impact the Group’s financial condition.

However, in a high oil and gas price environment, the Group can experience significant increases in cost and fiscal take, and, under some production-sharing contracts, the Group’s entitlement to reserves could be reduced. Higher prices can also reduce demand for the Group’s products.

The Group’s earnings from its Refining & Chemicals and Marketing & Services segments are primarily dependent upon the supply and demand for refined products and the associated margins on refined product sales, with the impact of changes in oil and gas prices on earnings on these segments being dependent upon the speed at which the prices of refined products adjust to reflect movements in oil and gas prices.

Our long-term profitability depends on cost effective discovery, acquisition and development of new reserves; if we are unsuccessful, our results of operations and financial condition would be materially and adversely affected.

A significant portion of the Group’s revenues and the majority of its operating income are derived from the sale of oil and gas that the Group extracts from underground reserves developed as part of its Upstream business. The development of oil and gas fields, the construction of facilities and the drilling of production or injection wells is capital intensive, requires advanced technology and moreover, due to constantly changing market conditions and difficult environmental challenges, cost projections are uncertain. In order for this Upstream business to continue to be profitable, the Group needs to replace its reserves with new proved reserves. Furthermore, the Group needs to accomplish such replacement in a manner that allows subsequent production to be economically viable. However, TOTAL’s ability to discover or acquire and develop new reserves successfully is uncertain and can be negatively affected by a number of factors, including:

 

 

the geological nature of oil and gas fields, notably unexpected drilling conditions, including pressure or irregularities in geological formations;

 

the risk of dry holes or failure to find expected commercial quantities of hydrocarbons;

 

equipment failures, fires, blow-outs or accidents;

 

the Group’s inability to develop or deploy new technologies that permit access to previously inaccessible fields;

 

the Group’s inability to anticipate market changes in a timely manner;

 

adverse weather conditions;

 

compliance with both anticipated and unanticipated governmental requirements, including U.S. and EU regulations that may give a competitive advantage to companies not subject to such regulations;

 

shortages or delays in the availability or delivery of appropriate equipment;

 

industrial action;

 

competition from publicly held and state-run oil and gas companies for the acquisition and development of assets and licenses, as well as from other major international oil companies (see “Item 4. Other Matters — Competition”);

 

increased taxes and royalties, including retroactive claims; and

 

problems with legal title.

Any of these factors could lead to cost overruns and impair the Group’s ability to make discoveries and acquisitions or complete a development project, or to make production economical. It is impossible to guarantee that new reserves of oil and gas will be discovered in sufficient quantities to replace the Group’s reserves currently being developed, produced and marketed. Furthermore, some of these factors may also affect the Group’s projects and facilities further down the oil and gas chain. If TOTAL fails to develop new reserves cost-effectively on an ongoing basis, the Group’s results of operations, including profits, and the Group’s financial condition, would be materially and adversely affected.

Our oil and gas reserves data are only estimates, and subsequent downward adjustments are possible. If actual production from such reserves is lower than current estimates indicate, our results of operations and financial condition would be negatively impacted.

The proved reserves figures of the Group are estimates reflecting applicable reporting regulations. Proved reserves are those reserves which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible — from a given date forward, from known reservoirs and under existing economic conditions, operating methods and government regulations — prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. Reserves are estimated by teams of qualified, experienced and trained geoscientists, petroleum engineers and project engineers, who rigorously review and analyze in detail all available geosciences and engineering data (e.g., seismic, electrical logs, cores, fluids, pressures, flow rates, facilities parameters). This process involves making subjective judgments, including with respect to the estimate of hydrocarbons initially in place, initial production rates and recovery efficiency, based on available geological, technical and economic data. Consequently, estimates of reserves are not exact measurements and are subject to revision. In addition, they may be negatively impacted by a variety of factors that are beyond the Group’s control and that could cause such estimates to be adjusted downward in the future, or cause the Group’s actual production to be lower than its currently reported proved reserves indicate. The main such factors include:

 

 

a decline in the price of oil or gas, making reserves no longer economically viable to exploit and therefore not classifiable as proved;

 

an increase in the price of oil or gas, which may reduce the reserves to which the Group are entitled under production sharing and risked service contracts and other contractual terms;

 

changes in tax rules and other government regulations that make reserves no longer economically viable to exploit; and

 

the actual production performance of the Group’s reservoirs.

The Group’s reserves estimates may therefore require substantial downward revisions to the extent its subjective judgments prove not to have been conservative enough based on the available geosciences and engineering data, or the Group’s assumptions regarding factors or variables that are beyond its control prove to be incorrect over time. Any downward adjustment would indicate lower future production amounts, which could adversely affect the Group’s results of operations, including profits as well as its financial condition.

 

 

 

2013 Form 20-F TOTAL S.A.   3


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Our production growth depends on the delivery of our major development projects.

The Group’s targeted production growth relies heavily on the successful execution of its major development projects, which are complex and capital-intensive. These major projects are subject to a number of challenges, including:

 

 

negotiations with partners, governments, suppliers, customers and others;

 

cost overruns and delays related to the availability of skilled labor or delays in manufacturing and delivery of critical equipment, or shortages in the availability of such equipment;

 

unforeseen technical difficulties that could delay project startup or cause unscheduled project downtime;

 

the actual performance of the reservoir and natural field decline; and

 

timely issuance or renewal of permits and licenses by government agencies.

Poor delivery of any major project that underpins production or production growth could adversely affect the Group’s financial performance. In addition, many of TOTAL’s projects under developments are larger and more complex than past major projects, which increases the potential execution risk.

Many of our projects are conducted by equity affiliates. This may reduce our degree of control, as well as our ability to identify and manage risks.

A significant and growing number of the Group’s projects are conducted by equity affiliates. In cases where a company in which the Group holds an interest is not the operator, it may have limited influence over, and control of, the behavior, performance and costs of the partnership, its ability to manage risks may be limited and it may, nevertheless, be pursued by regulators or claimants in the event of an incident. Additionally, the partners of the Group may not be able to meet their financial or other obligations to the projects, which may threaten the viability of a given project, and they may not have the financial capacity to fully indemnify the Group in the event of an incident.

We have significant production and reserves located in politically, economically and socially unstable areas, where the likelihood of material disruption of our operations is relatively high.

A significant portion of TOTAL’s oil and gas production and reserves is located in countries outside of the Organisation for Economic Co-operation and Development (OECD). In recent years, a number of these countries have experienced varying degrees of one or more of the following: economic instability, political volatility, civil war, violent conflict, social unrest and actions of terrorist groups. Any of these conditions alone or in combination could disrupt the Group’s operations in any of these regions, causing substantial declines in production. In addition, uncertainties surrounding enforcement of contractual rights in these regions may adversely impact the Group’s results. In Africa, which represented 29% of the Group’s 2013 combined liquids and gas production, certain of the countries in which the Group has production have recently suffered from some of these conditions, including Nigeria, which has been the main contributing country to the Group’s production of hydrocarbons since 2012, and Libya. The Middle East, which represented 23% of the Group’s 2013 combined liquids and gas production, has recently suffered increased political volatility in connection with violent conflict and social unrest, including Syria, where European Union (EU) and U.S. economic sanctions have prohibited TOTAL from producing oil

and gas since 2011, and Yemen. In South America, which represented 7% of the Group’s 2013 combined liquids and gas production, certain of the countries in which TOTAL has production have recently suffered from some of the above-mentioned conditions, including Argentina and Venezuela. Furthermore, in addition to current production, TOTAL is also exploring for and developing new reserves in other regions of the world that are historically characterized by political, social and economic instability, such as the Caspian Sea region where TOTAL has large projects currently underway. The occurrence and magnitude of incidents related to economic, social and political instability are unpredictable. It is possible that they could have a material adverse impact on the Group’s production and operations in the future and/or cause certain investors to reduce their holdings of TOTAL’s securities.

TOTAL, like other major international energy companies, has a geographically diverse portfolio of reserves and operational sites, which allows it to conduct its business and financial affairs so as to reduce its exposure to political and economic risks. However, there can be no assurance that such events will not have a material adverse impact on the Group.

Our operations throughout emerging countries are subject to intervention by the governments of these countries, which could have an adverse effect on our results of operations.

TOTAL has significant exploration and production activities, and in some cases refining, marketing or chemicals operations, in developing countries whose governmental and regulatory framework is subject to unexpected change and where the enforcement of contractual rights is uncertain. In addition, the Group’s exploration and production activity in such countries is often done in conjunction with state-owned entities, for example as part of a joint venture, where the state has a significant degree of control. In recent years, in various regions globally, TOTAL has seen governments and state-owned enterprises imposing more stringent conditions on companies pursuing exploration and production activities in their respective countries, increasing the costs and uncertainties of the Group’s business operations, which is a trend TOTAL expects to continue. Potential increasing intervention by governments in such countries can take a wide variety of forms, including:

 

 

the award or denial of exploration and production interests;

 

the imposition of specific drilling obligations;

 

price and/or production quota controls and export limits;

 

nationalization or expropriation of assets;

 

unilateral cancellation or modification of license or contract rights;

 

increases in taxes and royalties, including retroactive claims;

 

the renegotiation of contracts;

 

payment delays; and

 

currency exchange restrictions or currency devaluation.

Imposition of any of these factors by a host government in a developing country where TOTAL has substantial operations, including exploration, could cause the Group to incur material costs or cause the Group’s production or value of the Group’s assets to decrease, potentially having a material adverse effect on its results of operations, including profits.

For example, the Nigerian government has been contemplating new legislation to govern the petroleum industry which, if passed into law, could have an impact on the existing and future activities of the Group in that country through increased taxes and/or costs of operation and could adversely affect financial returns from projects in that country.

 

 

4   TOTAL S.A. Form 20-F 2013


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Ethical misconduct or breaches of applicable laws by our employees could expose us to criminal and civil penalties and be damaging to our reputation and shareholder value.

The Code of Conduct of the Group, which applies to all of its employees, defines the Group’s commitment to integrity, compliance with all applicable legal requirements, high ethical standards and the behaviors and actions the Group expects of the businesses and people of the Group wherever it operates (for additional information on the Group’s Code of Conduct, see “Item 4. Other Matters — Fair operating practices”). Ethical misconduct or non-compliance with applicable laws and regulations, including non-compliance with anti-bribery and anticorruption laws, by TOTAL, its partners, agents or others that act on the Group’s behalf, could expose TOTAL and its employees to criminal and civil penalties and could be damaging to TOTAL’s reputation and shareholder value. In addition, ethical misconduct or non-compliance with applicable law may lead the competent authorities to impose other measures, such as the appointment of an independent monitor in charge of reviewing the Group’s compliance and internal control procedures and, if need be, recommending improvements of such procedures. Regarding this point, refer to “Item 8. Legal or arbitration proceedings — Iran” for an overview of the settlements between TOTAL, the SEC and the Department of Justice (DoJ) providing for the appointment of an independent monitor, who was appointed in late 2013.

We are exposed to risks related to the safety and security of our operations.

TOTAL engages in a broad scope of activities, which include, in particular, drilling, oil and gas production, processing, transportation, refining and petrochemical activities, storage and distribution of petroleum products, specialty chemicals and solar energy. These activities involve a wide range of operational risks, such as explosions, fires, accidents, equipment failures, leakage of toxic products, emissions or discharges into the air, water or soil, and related environmental and health risks. In the transportation area, the type of risk depends not only on the hazardous nature of the products transported, but also on the transportation methods used (mainly maritime, river-maritime, rail, road and pipelines), the volumes involved and the sensitivity of the regions through which the transport passes (quality of infrastructure, population density, environmental considerations). Most of the Group’s activities will also eventually require environmental site remediation, closure and decommissioning after production is discontinued.

The industrial events that could have the most significant impact are primarily: a major industrial accident (fire, explosion, leakage of highly toxic products); and large-scale accidental pollution or pollution at a particularly sensitive site.

Each of the described risks corresponds to events that could potentially harm human health, cause death, damage property, disrupt business activities or cause environmental damage. The Group’s employees, contractors, residents living near the facilities or customers can suffer injuries. Property damage can involve the facilities of the Group as well as the property of third parties. The seriousness of the consequences of these events varies according to the vulnerability of the people, ecosystems and business activities impacted, on the one hand, and the number of people in the impact area and the location of the ecosystems and business activities in relation to TOTAL’s facilities or to the trajectory of the products after the event, on the other hand.

Acts of terrorism against the Group’s plants and sites, pipelines, transportation and computer systems could also severely disrupt business and operations and could cause harm to people, the environment and property.

Like most industrial groups, TOTAL is impacted by reports of occupational illnesses, particularly those caused by past exposure of the Group’s employees to asbestos. Asbestos exposure has been subject to close monitoring at all of the Group’s business segments. As of December 31, 2013, the Group estimates that the ultimate cost of all pending or future asbestos-related claims is not likely to have a material impact on the Group’s financial position.

Certain segments or activities face specific additional risks.

TOTAL’s Upstream segment activities face, notably, risks related to the physical characteristics of oil or gas fields. These risks include eruptions of oil or gas, discovery of hydrocarbon pockets with abnormal pressure, crumbling of well openings, leaks that can harm the environment and explosions or fires. These events, which may cause injury, death or environmental damage, can also damage or destroy oil or gas wells as well as equipment and other property, lead to a disruption of the Group’s operations or reduce its production. In addition, since exploration and production activities may take place on sites that are ecologically sensitive (for example, in tropical forests or in a marine environment), each site requires a risk-based approach to avoid or minimize the impact on human health, flora and fauna, the ecosystem and biodiversity. In certain situations where the operator is not a Group entity, the Group may have reduced influence and control over third parties, which may limit its ability to manage and control these risks.

The activities of the Refining & Chemicals and Marketing & Services business segments also entail additional health, safety and environmental risks related to the overall life cycle of the products manufactured, as well as the raw materials used in the manufacturing process, such as catalysts, additives and monomers. These risks can arise from the intrinsic characteristics of the products involved (flammability, toxicity or long-term environmental impacts such as greenhouse gas emissions), their use (including by customers), emissions and discharges resulting from their manufacturing process (such as greenhouse gas emissions), and from material and waste disposal (recycling, regeneration or other process, or waste elimination).

Contracts signed by the Group’s entities may provide for indemnification obligations either by TOTAL in favor of the contractor or third parties or by the contractor or third parties in favor of TOTAL if, for example, an event occurs leading to death, personal injury or property or environmental damage.

With respect to joint ventures in which an entity of the Group has an interest and the assets of which are operated by such Group entity under an operating agreement between the joint venture and such entity, contractual terms generally provide that the operator assumes full liability for damages caused by its gross negligence or willful misconduct.

With respect to joint ventures in which an entity of the Group has an interest but the assets of which are operated by a third party, contractual terms generally provide that the operator assumes full liability for damages caused by its gross negligence or willful misconduct.

In the absence of the operator’s gross negligence or willful misconduct, other liabilities are generally borne by the joint venture and the cost thereof is assumed by the partners of the joint venture in proportion to their respective ownership interests.

 

 

2013 Form 20-F TOTAL S.A.   5


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With respect to third-party providers of goods and services, the amount and nature of the liability assumed by the third party depends on the context and may be limited by contract. With respect to their customers, the Group’s entities ensure that their products meet applicable specifications and abide by all applicable consumer protection laws. Failure to do so could lead to personal injury, environmental harm and loss of customers, which could negatively impact the Group’s results of operations, financial position and reputation.

Crisis management systems are necessary to respond effectively to emergencies and to avoid potential disruptions in our business and operations.

TOTAL has crisis management plans in place to deal with emergencies. However, these plans cannot exclude the risk that the Group’s business and operations may be severely disrupted in a crisis situation or ensure the absence of impacts on third parties or the environment. TOTAL also has implemented business continuity plans in order to continue or resume operations following a shutdown or incident. An inability to restore or replace critical capacity in a timely manner could prolong the impact of any disruption and could have a material adverse effect on the Group’s business and operations. For more information on the Group’s crisis management systems, see “Item 4. Other Matters — Management and monitoring of industrial and environmental risks”.

While our insurance coverage is in line with industry practice, we are not insured against all possible risks.

The Group maintains insurance to protect itself against the risk of damage to Group property and/or business interruption to the Group’s main refining and petrochemical sites. In addition, the Group also maintains worldwide third-party liability insurance coverage for all of its subsidiaries. The Group’s insurance and risk management policies are described under “Item 4. Other Matters — Insurance and risk management”. TOTAL believes that its insurance coverage is in line with industry practice and sufficient to cover normal risks in its operations. However, the Group is not insured against all potential risks. In the event of a major environmental disaster, for example, TOTAL’s liability may exceed the maximum coverage provided by its third-party liability insurance. The loss TOTAL could suffer in the event of such disaster would depend on all the facts and circumstances of the event and would be subject to a whole range of uncertainties, including legal uncertainty as to the scope of liability for consequential damages, which may include economic damage not directly connected to the disaster. The Group cannot guarantee that it will not suffer any uninsured loss and there can be no guarantee, particularly in the case of a major environmental disaster or industrial accident, that such loss would not have a material adverse effect on the Group.

We are subject to stringent environmental, health and safety laws in numerous countries and may incur material costs to comply with these laws and regulations.

TOTAL’s workforce and the public are exposed to risks inherent to the Group’s operations that potentially could lead to loss of life, injuries, property damage or environmental damage and could result in regulatory action and legal liability against the entities of the Group and its officers as well as damage to the Group’s reputation.

TOTAL incurs, and will continue to incur, substantial expenditures to comply with increasingly complex laws and regulations aimed at protecting worker health and safety and natural habitats.

These expenditures include:

 

 

costs incurred to prevent, control, eliminate or reduce certain types of air and water emissions, including those costs incurred in connection with measures taken to address climate change;

 

remedial measures related to environmental contamination or accidents at various sites, including those owned by third parties;

 

indemnification of individuals or entities claiming damages caused by accidents or by the Group’s activities;

 

increased production costs and costs related to changes in product specifications; and

 

costs related to the decommissioning of drilling platforms and other facilities.

Such expenditures incurred could have a material effect on the results of operations of the Group and its financial position, if the Group’s reserves prove inadequate.

Furthermore, in countries where the Group operates or plans to operate, the introduction of new laws and regulations, stricter enforcement or news interpretations of existing laws and regulations or the imposition of tougher license requirements may also cause the Group’s entities to incur higher costs resulting from actions taken to comply with such laws and regulations, including:

 

 

modifying operations;

 

installing pollution control equipment;

 

implementing additional safety measures; and

 

performing site clean-ups.

As a further result of, notably, the introduction of any new laws and regulations, the Group could also be compelled to curtail, modify or cease certain operations or implement temporary shutdowns of facilities, which could diminish the Group’s productivity and have a material adverse impact on its results of operations.

All TOTAL entities monitor legal and regulatory developments in order to remain in compliance with local and international rules and standards for the assessment and management of industrial and environmental risks. With regard to the permanent shutdown of an activity, the Group’s environmental contingencies and asset retirement obligations are addressed in the “Asset retirement obligation” and “Provisions for environmental contingencies” sections of the Group’s Consolidated Balance Sheet (see Note 19 to the Consolidated Financial Statements). Future expenditures related to asset retirement obligations are accounted for in accordance with the accounting principles described in Note 1Q to the Consolidated Financial Statements.

Laws and regulations related to climate change and its physical effects may adversely affect our businesses.

Growing public concern in a number of countries over greenhouse gas emissions and climate change, as well as a multiplication of stricter regulations in this area, could adversely affect the Group’s businesses and product sales, increase its operating costs and reduce its profitability.

More of TOTAL’s future production could come from unconventional sources in order to help meet the world’s growing demand for energy. Since energy intensity of oil and gas production from unconventional sources can be higher than that of production from conventional sources, the CO2 emissions produced by the Group’s activities may increase. Therefore, TOTAL may need to incur additional costs related to certain projects. For information concerning the regulation of CO2 emission allowances in Europe, see “Item 4. Other Matters —

 

 

6   TOTAL S.A. Form 20-F 2013


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Item 3 - Risk Factors

 

Management and monitoring of industrial and environmental risks — Health, safety and environmental regulations — European Union — CO2 emission allowances”.

Finally, TOTAL’s businesses operate in varied locales where the potential physical impacts of climate change, including changes in weather patterns, are highly uncertain and may adversely impact the results of the Group’s operations.

We face foreign exchange risks that could adversely affect our results of operations.

The Group faces foreign exchange risks because a large percentage of its revenues and cash receipts are denominated in dollars, the international currency of petroleum sales, while a significant portion of its operating expenses and income taxes accrue in euros and other currencies. Movements between the dollar and euro or other currencies may adversely affect the Group’s business by negatively impacting its booked revenues and income, and may also result in significant translation adjustments that impact its shareholders’ equity.

We are exposed to trading risks that could adversely affect our business.

TOTAL’s trading business is particularly sensitive to market risk and more specifically to price risk as a consequence of the volatility of oil prices, to liquidity risk (inability to buy or sell oil cargoes at quoted prices) and to performance risk (counterparty does not fulfill its contractual obligations). The Group uses various instruments such as futures, forwards, swaps and options on organized markets or over-the-counter markets to hedge against fluctuations in the price of crude oil, refined products, natural gas, power, coal, emissions and freight-rates. Although TOTAL believes it has established appropriate risk management procedures, large market fluctuations may adversely affect the Group’s business and results of operations and make it more difficult to optimize revenues from the Group’s oil and gas production and to obtain favorable pricing to supply the Group’s refineries.

Disruption of our critical IT services or breaches of information security could adversely affect our operations.

The businesses of the Group depend heavily on the reliability and security of its information technology (“IT”) systems. If the integrity of the IT systems were compromised due to, for example, technical failure or cyber attack, the business operations and assets of the Group could sustain serious damage, material intellectual property could be divulged and, in some cases, personal injury, environmental harm and regulatory violations could occur, potentially having a material adverse effect on the Group’s results of operations, including profits.

We have activities in certain countries that are targeted by economic sanctions under relevant U.S. and EU laws, and if our activities are not conducted in accordance with the relevant conditions, we could be sanctioned or otherwise penalized.

The United States has adopted various laws and regulations designed to restrict trade with Cuba, Iran, Sudan and Syria, and the U.S. Department of State has identified these countries as state sponsors of terrorism. The European Union (“EU”) has similar restrictions with respect to Iran and Syria. A violation of these laws or regulations could result in criminal and material financial penalties, including being prohibited from transacting in U.S. dollars. The Group currently has limited marketing and trading

activities in Cuba and a limited presence in Iran and Syria (for more information, see “Item 4. Other Matters — Cuba, Iran and Syria”). Since the independence of the Republic of South Sudan on July 9, 2011, TOTAL is no longer present in Sudan.

With respect to Iran, the United States has adopted a number of measures since 1996 that provide for the possible imposition of sanctions against non-U.S. companies engaged in certain activities in and with Iran, including in Iran’s energy sector. The United States first adopted legislation in 1996 authorizing sanctions against non-U.S. companies doing business in Iran and Libya (the Iran and Libya Sanctions Act, referred to as “ILSA”). In 2006, ILSA was amended to concern only business in Iran (then renamed the Iran Sanctions Act, referred to as “ISA”). Pursuant to ISA, which as described below has since been amended and expanded, the President of the United States is authorized to initiate an investigation into the activities of non-U.S. companies in Iran’s energy sector and to consider the possible imposition of sanctions against persons found, amongst other activities, to have knowingly made investments of $20 million or more in any 12-month period in the petroleum sector in Iran. In May 1998, the U.S. government waived the application of ISA sanctions for TOTAL’s investment in the South Pars gas field. This waiver, which has not been modified since it was granted, does not address any of TOTAL’s other activities in Iran. In each of the years between the passage of ILSA and 2007, TOTAL made investments in Iran in excess of $20 million (excluding the investments made as part of the development of South Pars). These investments will not be subject to investigation by the U.S. authorities due to the application of the Special Rule granted on September 30, 2010, as further described below. Since 2008, TOTAL’s position has consisted essentially in being reimbursed for its past investments as part of buyback contracts signed between 1995 and 1999 with respect to permits on which the Group is no longer the operator. Since 2011, TOTAL has had no production in Iran.

ISA was amended in July 2010 by the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (“CISADA”), which expanded both the list of activities with Iran that could lead to sanctions and the list of sanctions available. In particular, CISADA authorized sanctions for knowingly providing refined petroleum products above certain monetary thresholds to Iran and for providing goods, services, technology, information or support that could directly and significantly either facilitate Iran’s domestic production of refined petroleum products or contribute to Iran’s ability to import refined petroleum products. TOTAL had already discontinued potentially sanctionable sales of refined petroleum products to Iran prior to CISADA’s enactment. On September 30, 2010, the U.S. State Department announced that the U.S. government, pursuant to the “Special Rule” provision of ISA added by CISADA that allows it to avoid making a determination of sanctionability under ISA with respect to any party that provides certain assurances, would not make such a determination with respect to TOTAL. The U.S. State Department further indicated at that time that, as long as TOTAL acts in accordance with its commitments, TOTAL will not be regarded as a company of concern for its past Iran-related activities.

Since the applicability of the “Special Rule” to TOTAL was announced by the U.S. State Department, the United States has imposed a number of additional measures targeting activities in Iran. On November 21, 2011, President Obama issued Executive Order 13590, which authorized sanctions for knowingly, on or after November 21, 2011, selling, leasing, or providing to Iran goods, services, technology or support above certain monetary thresholds that could directly and significantly contribute to the maintenance

 

 

2013 Form 20-F TOTAL S.A.   7


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or expansion of Iran’s ability to develop petroleum resources located in Iran, or domestic production of petrochemical products. TOTAL does not conduct activities in Iran that it believes would be sanctionable under Executive Order 13590. In any event, there is no provision in Executive Order 13590 that modifies the aforementioned “Special Rule”, and the U.S. State Department issued guidance that completion of existing contracts is not sanctionable under Executive Order 13590.

On July 30, 2012, President Obama issued Executive Order 13622, which authorized sanctions for, amongst other activities, (i) knowingly, on or after July 30, 2012, engaging in a significant transaction for the purchase or acquisition of petroleum, petroleum products or petrochemical products from Iran, or (ii) materially assisting, sponsoring or providing financial, material, or technological support for, or goods or services in support of, the National Iranian Oil Company, the Naftiran Intertrade Company (“NICO”), or the Central Bank of Iran. There is no provision in Executive Order 13622 that modifies the aforementioned “Special Rule”. In addition, Executive Order 13622 contains an exception for the Shah Deniz gas field pipeline project, in which TOTAL (10%) and NICO (10%) participate, to supply natural gas from the Shah Deniz gas field in Azerbaijan to Europe and Turkey. This Executive Order was amended and expanded by Executive Order 13645 (discussed in further detail below), in order to capture as potentially sanctionable conduct a wider range of petroleum-related activities. TOTAL does not conduct activities that it believes would be sanctionable under Executive Order 13622 as amended by Executive Order 13645.

On August 10, 2012, President Obama signed into law the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”), which, amongst other things, amended ISA and CISADA. ITRA, like CISADA before it, expanded both the list of activities with Iran that could lead to sanctions and the list of sanctions available. Amongst other things, ITRA authorized sanctions for (i) the provision to Iran of goods, services, technology, information or support above a certain market value that could directly and significantly facilitate the maintenance or expansion of Iran’s domestic production of refined petroleum products, including any direct and significant assistance with the construction, modernization, or repair of petroleum refineries or infrastructure directly associated with petroleum refineries, (ii) participation in a joint venture established on or after January 1, 2002 with respect to the development of petroleum resources outside of Iran where either the Government of Iran is a substantial partner or investor or where the joint venture could enhance Iran’s ability to develop petroleum resources in Iran, and (iii) owning, operating, controlling or insuring a vessel used to transport crude oil from Iran to another country. ITRA also contains an exception for the Shah Deniz gas field project. TOTAL does not conduct activities that it believes would be sanctionable under ITRA.

ITRA also added Section 13(r) to the Securities Exchange Act of 1934, as amended (“Exchange Act”), which requires TOTAL to disclose whether it or any of its affiliates has engaged during the calendar year in certain Iran-related activities, including those targeted under ISA, without regard to whether such activities are sanctionable under ISA, and any transaction or dealing with the Government of Iran that is not conducted pursuant to a specific authorization of the U.S. government (see “Item 4. Other Matters — Iran”). For any annual report that contains responsive Section 13(r) disclosure, an “Iran Notice” is separately filed with the United States Securities and Exchange Commission (“SEC”). The SEC must notify the President and U.S. Congress, and the President must initiate an investigation and make a sanctions determination within 180 days after initiating the investigation.

TOTAL believes that its Iran-related activities required to be disclosed by Section 13(r) are not sanctionable, and TOTAL has not been informed that it is at risk of possible imposition of sanctions for activities previously disclosed.

The United States has adopted other sanctions measures, including the National Defense Authorization Act of Fiscal Year 2012 (“NDAA 2012”),which authorizes the imposition of sanctions on foreign financial institutions engaged in certain transactions, the Iran Freedom and Counter-Proliferation Act of 2012 (“IFCA”), which, amongst other things, authorizes the imposition of sanctions on entities that knowingly provided goods or services to the energy, shipbuilding, and shipping sectors, or to port operations, of Iran, and Executive Order 13645, which, in addition to amending Executive Order 13622 as discussed above, implements certain provisions of IFCA and authorizes additional sanctions against, amongst other things, foreign financial institutions that engage in certain transactions, potentially including those for the sale, supply, or transfer to or from Iran of natural gas, and for the purchase of petroleum or petroleum products from Iran. TOTAL does not conduct activities that it believes would be sanctionable under IFCA, NDAA 2012 or Executive Order 13645.

Also with regard to Iran, France and the EU have adopted measures, based on United Nations Security Council resolutions, which restrict the movement of certain individuals and goods to or from Iran as well as certain financial transactions with Iran, in each case when such individuals, goods or transactions are related to nuclear proliferation and weapons activities or likely to contribute to their development. In July and October 2010, the EU adopted new restrictive measures regarding Iran. Among other things, the supply of key equipment and technology in the following sectors of the oil and gas industry in Iran are prohibited: refining, liquefied natural gas, exploration and production. The prohibition extends to technical assistance, training and financial assistance in connection with such items. Extension of loans or credit to, acquisition of shares in, entry into joint ventures with or other participation in enterprises in Iran (or Iranian-owned enterprises outside of Iran) engaged in any of the targeted sectors also is prohibited. Moreover, with respect to restrictions on transfers of funds and on financial services, any transfer of at least 40,000 or equivalent to or from an Iranian individual or entity shall require a prior authorization of the competent authorities of the EU Member States. TOTAL conducts its activities in compliance with these EU measures.

On January 23, 2012, the Council of the EU prohibited the purchase, import and transport of Iranian oil and petroleum and petrochemical products by European persons and by entities constituted under the laws of an EU Member State. Prior to that date, TOTAL had ceased these now-prohibited activities.

With respect to Syria, the EU adopted measures in May 2011 with criminal and financial penalties that prohibit the supply of certain equipment to Syria, as well as certain financial and asset transactions with respect to a list of named individuals and entities. These measures apply to European persons and to entities constituted under the laws of an EU Member State. In September 2011, the EU adopted further measures, including, notably, a prohibition on the purchase, import or transportation from Syria of crude oil and petroleum products. Since early September 2011, the Group ceased to purchase hydrocarbons from Syria. On December 1, 2011, the EU extended sanctions against, among others, three state-owned Syrian oil firms, including General Petroleum Corporation, TOTAL’s co-contracting partner in the production sharing agreement signed in 1988 (Deir Es Zor licence) and the Tabiyeh contract. The United States also has various

 

 

8   TOTAL S.A. Form 20-F 2013


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Items 3 - 4

 

measures regarding Syria. Since early December 2011, the Group has ceased its activities that contribute to oil and gas production in Syria.

In addition, the U.S. Treasury Department’s Office of Foreign Assets Control (referred to as “OFAC”) administers and enforces economic sanctions programs, some of which are based on the United Nations Security Council resolutions referred to above, against targeted foreign countries, territories, entities and individuals (including those engaged in activities related to terrorism or the proliferation of weapons of mass destruction and other threats to the national security, foreign policy or economy of the United States). The activities that are restricted depend on the sanctions program and targeted country or parties, and civil and/or criminal penalties, imposed on a per transaction basis, can be substantial. These OFAC sanctions generally apply to U.S. persons and activities taking place in the United States or that are otherwise subject to U.S. jurisdiction. Sanctions administered by OFAC target, among others, Cuba, Iran, Sudan and Syria. TOTAL does not believe that these sanctions are applicable to any of its activities in the OFAC-targeted countries.

Moreover, many U.S. states have adopted legislation requiring state pension funds to divest themselves of securities in any company with active business operations in Iran, and state contracts not to be awarded to such companies. State insurance regulators have adopted similar initiatives relating to investments

by insurance companies in companies doing business with the Iranian oil and gas, nuclear and defense sectors. If TOTAL’s presence in Iran were determined to fall within the prohibited scope of these laws, and TOTAL were not to qualify for any available exemptions, certain U.S. institutions holding interests in TOTAL may be required to sell their interests. If significant, sales of securities resulting from such laws and/or regulatory initiatives could have an adverse effect on the prices of TOTAL’s securities.

TOTAL continues to closely monitor legislative and other developments in France, the EU and the United States, including the Joint Plan of Action recently announced among Iran and the P5+1 countries (China, France, Russia, the United Kingdom and the United States of America, as well as Germany) regarding limits on Iran’s nuclear activities and the suspension of certain United States and European Union sanctions regarding Iran, in order to determine whether its limited activities or presence in sanctioned or potentially sanctioned jurisdictions could subject TOTAL to the application of sanctions.

TOTAL is also closely monitoring developments of the situation in Crimea and any related regulations and/or economic sanctions that could be adopted by the authorities.

TOTAL cannot assure that current or future regulations or developments will not have a negative impact on its business or reputation.

 

 

ITEM 4. INFORMATION ON THE COMPANY

 

 

HISTORY AND DEVELOPMENT

 

 

 

TOTAL S.A., a French société anonyme (limited company) incorporated in France on March 28, 1924, together with its subsidiaries and affiliates, is the fifth largest publicly-traded integrated international oil and gas company in the world(1).

With operations in more than 130 countries, TOTAL has activities in every sector of the oil industry: including in the upstream (oil and gas exploration, development and production, liquefied natural gas) and downstream (refining, petrochemicals, specialty chemicals, the trading and shipping of crude oil and petroleum products, marketing). In addition, TOTAL has equity stakes in coal mines and operates in the power generation and renewable energy sectors.

TOTAL began its Upstream operations in the Middle East in 1924. Since that time, the Company has grown and expanded its

operations worldwide. In early 1999, the Company acquired control of PetroFina S.A. (hereafter referred to as “PetroFina” or “Fina”) and, in early 2000, the Company acquired control of Elf Aquitaine S.A. (hereafter referred to as “Elf Aquitaine” or “Elf”).

The Company’s corporate name is TOTAL S.A. Its registered office is 2, place Jean Millier, La Défense 6, 92400 Courbevoie, France. Its telephone number is +33 (0)1 47 44 45 46.

TOTAL S.A. is registered in France at the Nanterre Trade Register under the registration number 542 051 180. The length of the life of the Company is 99 years from March 22, 2000, unless it is dissolved or extended prior to such date.

 

 

 

BUSINESS OVERVIEW

 

 

 

TOTAL’s worldwide operations in 2013 were conducted through three business segments: Upstream, Refining & Chemicals and Marketing & Services. The table below gives information on the

geographic breakdown of TOTAL’s activities and is taken from Note 5 to the Consolidated Financial Statements included elsewhere herein.

 

 

(M)    France      Rest of
Europe
     North
America
     Africa      Rest of
world
     Total  

2013

                 

Non-Group sales(a)

     43,412         96,876         16,815         17,428         15,011         189,542   

Property, plant and equipment, intangible assets, net

     4,533         19,463         14,204         27,444         23,456         89,100   

Capital expenditures

     1,335         4,736         3,130         8,060         8,661         25,922   

2012

                 

Non-Group sales(a)

     45,981         103,862         17,648         17,921         14,649         200,061   

Property, plant and equipment, intangible assets, net

     4,560         17,697         15,220         24,999         19,714         82,190   

Capital expenditures

     1,589         4,406         3,148         7,274         6,526         22,943   

2011

                 

Non-Group sales(a)

     42,626         81,453         15,917         15,077         29,620         184,693   

Property, plant and equipment, intangible assets, net

     5,637         15,576         14,518         23,546         17,593         76,870   

Capital expenditures

     1,530         3,802         5,245         5,264         8,700         24,541   

 

(a) 

Non-Group sales from continuing operations.

 

 

(1) 

Based on market capitalization (in dollars) as of December 31, 2013.

 

2013 Form 20-F TOTAL S.A.   9


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UPSTREAM SEGMENT

 

 

TOTAL’s Upstream segment includes the activities of Exploration & Production and Gas & Power. The Group has exploration and production activities in more than fifty countries and produces oil or gas in approximately thirty countries. Gas & Power conducts activities downstream from production related to natural gas, liquefied natural gas (LNG) and liquefied petroleum gas (LPG), as well as power generation and trading, and other activities. Effective July 1, 2012, the Upstream segment no longer includes the activities of New Energies, which are now reported with Marketing & Services. As a result, certain information has been restated according to the new organization.

Exploration & Production

 

 

 

Exploration and development

TOTAL’s Upstream segment aims at continuing to combine long-term growth and profitability at the level of the best actors of the industry.

TOTAL evaluates exploration opportunities based on a variety of geological, technical, political, economic (including taxes and license terms), environmental and societal factors, and on projected oil and gas prices. Discoveries of new fields and extensions of existing fields have brought an additional 2,260 Mboe to the Upstream segment’s proved reserves during the 3-year period ended December 31, 2013 (before deducting production and sales of reserves in place and adding any acquisitions of reserves in place during this period). The level of revisions during this 3-year period is close to nil (-11 Mboe) since the positive revisions on a large majority of the fields have been significantly impacted by the effects of the increase of the

reference oil price (from $79.02/b in 2010 to $108.02/b in 2013 for Brent crude), the variations of the U.S. onshore gas price (from $4.38/MBtu in 2010 to $4.21/MBtu in 2011, $2.85/MBtu in 2012 and $3.67/MBtu in 2013 for Henry Hub) and by a perimeter change in four projects.

In 2013, the exploration investments of consolidated subsidiaries amounted to 2,809 million (including exploration bonuses included in the unproved property acquisition costs). Exploration investments were made primarily in the United States, United Kingdom, Australia, Norway, Iraq, French Guiana, Angola, Kenya, Côte d’Ivoire and Mauritania. In 2012, the exploration investments of consolidated subsidiaries amounted to 2,634 million (including exploration bonuses included in the unproved property acquisition costs). The main exploration investments were made in Angola, the United Kingdom, the United States, Norway, Iraq, Nigeria, Brazil, Malaysia, the Republic of Congo and French Guiana. In 2011, the exploration investments of consolidated subsidiaries amounted to 1,629 million (including exploration bonuses included in the unproved property acquisition costs) notably in Norway, the United Kingdom, Angola, Brazil, Azerbaijan, Indonesia, Brunei, Kenya, French Guiana and Nigeria.

The Group’s consolidated Exploration & Production subsidiaries’ development investments amounted to 16 billion in 2013, primarily in Norway, Angola, Australia, Nigeria, Canada, United Kingdom, the Republic of the Congo, Gabon, Indonesia, Russia, the United States and Kazakhstan. The Group’s consolidated Exploration & Production subsidiaries’ development investments amounted to 14 billion in 2012, primarily in Angola, Norway, Canada, Australia, Nigeria, the United Kingdom, Gabon, Kazakhstan, Indonesia, the Republic of the Congo, the United States and Russia. The Group’s consolidated Exploration & Production subsidiaries’ development investments amounted to 10 billion in 2011, mostly in Angola, Nigeria, Norway, Kazakhstan, the United Kingdom, Australia, Canada, Gabon, Indonesia, the Republic of the Congo, the United States and Thailand.

Reserves

The definitions used for proved, proved developed and proved undeveloped oil and gas reserves are in accordance with the United States Securities & Exchange Commission (SEC) Rule 4-10 of Regulation S-X as amended by the SEC Modernization of Oil and Gas Reporting release issued on December 31, 2008. Proved reserves are estimated using geological and engineering data to determine with reasonable certainty whether the crude oil or natural gas in known reservoirs is recoverable under existing regulatory, economic and operating conditions.

TOTAL’s oil and gas reserves are consolidated annually, taking into account, among other factors, levels of production, field reassessments, additional reserves from discoveries and acquisitions, disposal of reserves and other economic factors. Unless otherwise indicated, any reference to TOTAL’s proved reserves, proved developed reserves, proved undeveloped reserves and production reflects the Group’s entire share of such reserves or such production. TOTAL’s worldwide proved reserves include the proved reserves of its consolidated subsidiaries as well as its proportionate share of the proved reserves of equity affiliates. For further information concerning changes in TOTAL’s proved reserves for the years ended December 31, 2013, 2012 and 2011, see “Supplemental Oil and Gas Information (Unaudited)”.

The reserves estimation process involves making subjective judgments. Consequently, estimates of reserves are not exact measurements and are subject to revision under well-established control procedures.

The reserves booking process requires, among other things:

 

 

internal peer reviews of technical evaluations to ensure that the SEC definitions and guidance are followed; and

 

that management makes significant funding commitments towards the development of the reserves prior to booking.

For further information regarding the preparation of reserves estimates, see “Supplemental Oil and Gas Information (Unaudited)”.

Proved reserves for years 2013, 2012 and 2011

In accordance with the amended Rule 4-10 of Regulation S-X, proved reserves at December 31, are calculated using a 12-month average price determined as the unweighted arithmetic average of the first-day-of-the-month price for each month of the relevant year unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. The reference prices for 2013, 2012 and 2011 were, respectively, $108.02/b, $111.13/b and $110.96/b for Brent crude.

As of December 31, 2013, TOTAL’s combined proved reserves of oil and gas were 11 526 Mboe (49% of which were proved developed reserves). Liquids (crude oil, condensates, natural gas

 

 

10   TOTAL S.A. Form 20-F 2013


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liquids and bitumen) represented approximately 47% of these reserves and natural gas the remaining 53%. These reserves were located in Europe (mainly in Norway and the United Kingdom), in Africa (mainly in Angola, Gabon, Nigeria and the Republic of the Congo), in the Americas (mainly in Canada, Argentina and Venezuela), in the Middle East (mainly in Qatar, the United Arab Emirates and Yemen), and in Asia (mainly in Australia, Kazakhstan and Russia).

As of December 31, 2012, TOTAL’s combined proved reserves of oil and gas were 11,368 Mboe (51% of which were proved developed reserves). Liquids (crude oil, condensates, natural gas liquids and bitumen) represented approximately 50% of these reserves and natural gas the remaining 50%. These reserves were located in Europe (mainly in Norway and the United Kingdom), in Africa (mainly in Angola, Gabon, Libya, Nigeria and the Republic of the Congo), in the Americas (mainly in Canada, Argentina and Venezuela), in the Middle East (mainly in Qatar, the United Arab Emirates and Yemen), and in Asia (mainly in Australia, Kazakhstan and Russia).

As of December 31, 2011, TOTAL’s combined proved reserves of oil and gas were 11,423 Mboe (53% of which were proved developed reserves). Liquids (crude oil, condensates, natural gas liquids and bitumen) represented approximately 51% of these reserves and natural gas the remaining 49%. These reserves were located in Europe (mainly in Italy, Norway and the United Kingdom), in Africa (mainly in Angola, Gabon, Libya, Nigeria and the Republic of the Congo), in the Americas (mainly in Canada, the United States, Argentina and Venezuela), in the Middle East (mainly in Qatar, the United Arab Emirates and Yemen), and in Asia (mainly in Australia, Indonesia, Kazakhstan and Russia).

Sensitivity to oil and gas prices

Changes in the price used as a reference for the proved reserves estimation result in non-proportionate inverse changes in proved reserves associated with production sharing and risked service contracts (which together represent approximately 25% of TOTAL’s reserves as of December 31, 2013). Under such contracts, TOTAL is entitled to a portion of the production, the sale of which is meant to cover expenses incurred by the Group. As oil prices increase, fewer barrels are necessary to cover the same amount of expenses. Moreover, the number of barrels retrievable under these contracts may vary according to criteria such as cumulative production, the rate of return on investment or the income-cumulative expenses ratio. This decrease is partly offset by an extension of the duration over which fields can be produced economically. However, the increase in reserves due to extended field life resulting from higher prices is generally less than the decrease in reserves under production sharing or risked service contracts due to such higher prices. As a result, higher prices lead to a decrease in TOTAL’s reserves.

Furthermore, changes in the price used as a reference for the proved reserves estimation have an impact on the volume of royalties in Canada and thus TOTAL’s share of proved reserves.

Lastly, for any type of contract, a decrease of the reference price of petroleum products may involve a significant reduction of proved reserves.

Production

For the full year 2013, average daily oil and gas production was 2,299 kboe/d compared to 2,300 kboe/d in 2012 and 2,346 kboe/d in 2011. Liquids accounted for approximately 51% and natural gas for approximately 49% of TOTAL’s combined liquids and natural gas production in 2013.

The table on the next page sets forth by geographic area TOTAL’s average daily production of liquids and natural gas for each of the last three years.

Consistent with industry practice, TOTAL often holds a percentage interest in its fields rather than a 100% interest, with the balance being held by joint venture partners (which may include other international oil companies, state-owned oil companies or government entities). TOTAL frequently acts as operator (the party responsible for technical production) on acreage in which it holds an interest. See the table “Presentation of production activities by geographic area” on the following pages for a description of TOTAL’s producing assets.

As in 2012 and 2011, substantially all of the liquids production from TOTAL’s Upstream segment in 2013 was marketed by the Trading & Shipping division of TOTAL’s Refining & Chemicals segment (see table “—Trading & Shipping —Trading’s crude oil sales and supply and refined products sales”, below).

The majority of TOTAL’s natural gas production is sold under long term contracts. However, its North American production, and part of its production from the United Kingdom, Norway and Argentina, is sold on the spot market. The long-term contracts under which TOTAL sells its natural gas usually provide for a price related to, among other factors, average crude oil and other petroleum product prices, as well as, in some cases, a cost-of-living index. Though the price of natural gas tends to fluctuate in line with crude oil prices, a slight delay may occur before changes in crude oil prices are reflected in long-term natural gas prices. Due to the interaction between the contract price of natural gas and crude oil prices, contract prices are not usually affected by short-term market fluctuations in the spot price of natural gas.

Some of TOTAL’s long-term contracts, notably in Argentina, Indonesia, Nigeria, Norway, Qatar and Russia, specify the delivery of quantities of natural gas that may or may not be fixed and determinable. Such delivery commitments vary substantially, both in duration and in scope, from contract to contract throughout the world. For example, in some cases, contracts require delivery of natural gas on an as-needed basis, and, in other cases, contracts call for the delivery of varied amounts of natural gas over different periods of time. Nevertheless, TOTAL estimates the fixed and determinable quantity of gas to be delivered over the period 2014-2016 to be 3,795 Bcf. The Group expects to satisfy most of these obligations through the production of its proved reserves of natural gas, with, if needed, additional sourcing from spot market purchases (see “Supplemental Oil and Gas Information (Unaudited)”).

 

 

2013 Form 20-F TOTAL S.A.   11


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PRODUCTION BY REGION

 

      2013      2012      2011  
      Liquids
kb/d
     Natural
gas
Mcf/d
     Total
kboe/d
     Liquids
kb/d
     Natural
gas
Mcf/d
     Total
kboe/d
     Liquids
kb/d
     Natural
gas
Mcf/d
     Total
kboe/d
 

Africa

     531         699         670         574         705         713         517         715         659   

Algeria

     5         82         21         6         90         23         16         94         33   

Angola

     175         62         186         172         44         179         128         39         135   

Cameroon

                                                     2         1         3   

Gabon

     55         16         59         54         19         57         55         17         58   

Libya

     50                 50         62                 62         20                 20   

Nigeria

     158         511         261         173         521         279         179         534         287   

The Congo, Republic of

     88         28         93         107         31         113         117         30         123   

North America

     28         256         73         25         246         69         27         227         67   

Canada(a)

     13                 13         12                 12         11                 11   

United States

     15         256         60         13         246         57         16         227         56   

South America

     54         627         166         59         682         182         71         648         188   

Argentina

     13         366         78         12         394         83         14         397         86   

Bolivia

     4         129         28         3         124         27         3         118         25   

Colombia

                             1         23         6         5         27         11   

Trinidad & Tobago

     2         52         12         4         70         16         4         47         12   

Venezuela

     35         80         48         39         71         50         45         59         54   

Asia-Pacific

     30         1,170         235         27         1,089         221         27         1,160         231   

Australia

             25         4                 29         5                 25         4   

Brunei

     2         59         13         2         54         12         2         56         13   

China

             46         8                 7         1                           

Indonesia

     17         605         131         16         605         132         18         757         158   

Myanmar

             129         16                 127         16                 119         15   

Thailand

     11         306         63         9         267         55         7         203         41   

CIS

     32         1,046         227         27         909         195         22         525         119   

Azerbaijan

     5         82         20         4         64         16         4         57         14   

Russia

     27         964         207         23         845         179         18         468         105   

Europe

     168         1,231         392         197         1,259         427         245         1,453         512   

France

     1         45         9         2         58         13         5         69         18   

The Netherlands

     1         195         35         1         184         33         1         214         38   

Norway

     136         575         243         159         622         275         172         619         287   

United Kingdom

     30         416         105         35         395         106         67         551         169   

Middle East

     324         1,155         536         311         990         493         317         1,370         570   

United Arab Emirates

     247         71         260         233         70         246         226         72         240   

Iran

                                                                       

Iraq

     7         1         7         6                 6                           

Oman

     24         66         37         24         61         37         24         62         36   

Qatar

     36         558         137         38         560         139         44         616         155   

Syria

                                                     11         218         53   

Yemen

     10         459         95         10         299         65         12         402         86   

Total production

     1,167         6,184         2,299         1,220         5,880         2,300         1,226         6,098         2,346   

Including share of equity affiliates

     325         1,955         687         308         1,635         611         316         1,383         571   

Algeria

                                                     10         3         10   

Angola

             16         3                                                   

Colombia

                                                     4                 4   

Venezuela

     35         7         37         38         7         40         44         7         45   

United Arab Emirates

     240         61         253         225         61         237         219         62         231   

Oman

     23         66         35         23         60         34         22         62         34   

Qatar

     8         385         78         7         364         74         8         382         78   

Russia

     19         962         197         15         844         171         9         465         95   

Yemen

             458         84                 299         55                 402         74   

 

(a) 

The Group’s production in Canada consists of bitumen only. All of the Group’s bitumen production is in Canada.

 

12   TOTAL S.A. Form 20-F 2013


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PRESENTATION OF PRODUCTION ACTIVITIES BY REGION

The table below sets forth, by country, TOTAL’s producing assets, the year in which TOTAL’s activities commenced, the Group’s interest in each asset and whether TOTAL is operator of the asset.

 

TOTAL’s producing assets as of December 31, 2013 (a)      
      Year of
entry into
the country
  

Operated

(Group share in %)

  

Non-operated

(Group share in %)

Africa

              

Algeria

   1952         Tin Fouye Tabankort (35.00%)

Angola

   1953    Girassol, Jasmim, Rosa, Dalia, Pazflor (Block 17) (40.00%)    Cabinda Block 0 (10.00%)
              

Kuito, BBLT, Tombua-Landana (Block 14) (20.00%)(b)

Angola LNG (13.60%)

Gabon

   1928   

Anguille (100.00%)

Anguille Nord Est (100.00%)

Anguille Sud-Est (100.00%)

Atora (40.00%)

Avocette (57.50%)

Ayol Marine (100.00%)

Baliste (50.00%)

Barbier (100.00%)

Baudroie Marine (50.00%)

Baudroie Nord Marine (50.00%)

Coucal (57.50%)

Girelle (100.00%)

Gonelle (100.00%)

Grand Anguille Marine (100.00%)

Grondin (100.00%)

Hylia Marine (75.00%)

Lopez Nord (100.00%)

Mandaros (100.00%)

M’Boukou (57.5%)

M’Boumba (100.00%)

Mérou Sardine Sud (50.00%)

Pageau (100.00%)

Port Gentil Océan (100.00%)

Port Gentil Sud Marine (100.00%)

Tchengue (100.00%)

Torpille (100.00%)

Torpille Nord Est (100.00%)

  
               Rabi Kounga (47.50%)

Libya

   1959        

Zones 15, 16 & 32 (75.00%)(c)

Zones 70 & 87 (75.00%)(c)

Zones 129 & 130 (30.00%)(c)

Zones 130 & 131 (24.00%)(c)

Nigeria

   1962   

OML 58 (40.00%)

OML 99 Amenam-Kpono (30.40%)

OML 100 (40.00%)

OML 102 (40.00%)

   OML 102-Ekanga (40.00%)
     

OML 130 (24.00%)

OML 138 (20.00%)

  
              

Shell Petroleum Development Company (SPDC 10.00%)

OML 118 - Bonga (12.50%)

 

2013 Form 20-F TOTAL S.A.   13


Table of Contents

Item 4 - Business Overview

 

TOTAL’s producing assets as of December 31, 2013 (a)      
      Year of
entry into
the country
  

Operated

(Group share in %)

  

Non-operated

(Group share in %)

The Congo, Republic of

   1928   

Kombi-Likalala-Libondo (65.00%)

Moho Bilondo (53.50%)

Nkossa (53.50%)

Nsoko (53.50%)

Sendji (55.25%)

Tchendo (65.00%)

Tchibeli-Litanzi-Loussima (65.00%)

Tchibouela (65.00%)

Yanga (55.25%)

  
              

Loango (50.00%)

Zatchi (35.00%)

North America

              

Canada

   1999         Surmont (50.00%)

United States

   1957         Several assets in the Barnett Shale area (25.00%)(d)
Several assets in the Utica Shale area (25.00%)(d)
Chinook (33.33%)
Tahiti (17.00%)

South America

              

Argentina

   1978   

Aguada Pichana (27.27%)

Aguada San Roque (24.71%)

Aries (37.50%)

Cañadon Alfa Complex (37.50%)

Carina (37.50%)

Hidra (37.50%)

Kaus (37.50%)

  
               Sierra Chata (2.51%)

Bolivia

   1995        

San Alberto (15.00%) San Antonio (15.00%)

Itau (41.00%)

Venezuela

   1980         PetroCedeño (30.323%) Yucal Placer (69.50%)

Asia-Pacific

              

Australia

   2005       Various fields in UJV GLNG (27.50%)(e)

Brunei

   1986    Maharaja Lela Jamalulalam (37.50%)     

China

   2006         South Sulige (49.00%)

Indonesia

   1968   

Bekapai (50.00%)

Handil (50.00%)

Peciko (50.00%)

Sisi-Nubi (47.90%)

South Mahakam (50.00%)

Tambora (50.00%)

Tunu (50.00%)

  
              

Badak (1.05%)

Nilam-gas and condensates (9.29%)

Nilam-oil (10.58%)

Ruby-gas and condensates(15.00%)

Myanmar

   1992    Yadana (31.24%)     

Thailand

   1990       Bongkot (33.33%)

Commonwealth of Independant States

    

Azerbaijan

   1996         Shah Deniz (10.00%)

Kazakhstan

   1992         Kashagan (16.81%)

Russia

   1991    Kharyaga (40.00%)   
               Several fields through the participation in Novatek (16.96%)

Europe

              

France

   1939   

Lacq (100.00%)

Lagrave (100.00%)

    

 

14   TOTAL S.A. Form 20-F 2013


Table of Contents

Item 4 - Business Overview

 

      Year of
entry into
the country
  

Operated

(Group share in %)

  

Non-operated

(Group share in %)

Norway

   1965   

Atla (40.00%)

Skirne (40.00%)

  
              

Åsgard (7.68%)

Ekofisk (39.90%)

Ekofisk South (39.90%)

Eldfisk (39.90%)

Embla (39.90%)

Gimle (4.90%)

Glitne (21.80%)

Gungne (10.00%)

Heimdal (16.76%)

Huldra (24.33%)

Islay (5.51%)(f)

Kristin (6.00%)

Kvitebjørn (5.00%)

Mikkel (7.65%)

Morvin (6.00%)

Oseberg (14.70%)

Oseberg East (14.70%)

Oseberg South (14.70%)

Sleipner East (10.00%)

Sleipner West (9.41%)

Snøhvit (18.40%)

Stjerne (14.70%)

Tor (48.20%)

Troll I (3.69%)

Troll II (3.69%)

Tune (10.00%)

Tyrihans (23.145%)

Vale (24.24%)

Vilje (24.24%)

Visund (7.70%)

Visund South (7.70%)

Visund North (7.70%)

Yttergryta (24.50%)

The Netherlands

   1964   

F6a gaz (55.66%)

F6a huile (65.68%)

F15a Jurassic (38.20%)

F15a/F15d Triassic (32.47%)

F15d (32.47%)

J3a (30.00%)

K1a (40.10%)

K1b/K2a (60.00%)

K2c (60.00%)

K3b (56.16%)

K3d (56.16%)

K4a (50.00%)

K4b/K5a (36.31%)

K5b (50.00%)

K6/L7 (56.16%)

L1a (60.00%)

L1d (60.00%)

L1e (55.66%)

L1f (55.66%)

L4a (55.66%)

L4d (55.66%)

  
              

E16a (16.92%)

E17a/E17b (14.10%)

J3b/J6 (25.00%)

Q16a (6.49%)

 

2013 Form 20-F TOTAL S.A.   15


Table of Contents

Item 4 - Business Overview

 

     Year of
entry into
the country
 

Operated

(Group share in %)

 

Non-operated

(Group share in %)

United Kingdom

  1962  

Alwyn North, Dunbar, Forvie North, Ellon, Grant ,Jura Nuggets (100.00%)

Elgin-Franklin, West Franklin (EFOG 46.17%)(g)

Glenelg (49.47%)

Islay (94.49%)(f)

 
           

Bruce (43.25%)

Markham unitized fields (7.35%)

Keith (25.00%)

Middle East

           

U.A.E.

  1939   Abu Dhabi-Abu Al Bu Khoosh (75.00%)  
           

Abu Dhabi offshore (13.33%)(h)

Abu Dhabi onshore (9.50%)(i)

GASCO (15.00%)

ADGAS (5.00%)

Iraq

  1920       Halfaya (18.75%)(j)

Oman

  1937      

Various fields onshore (Block 6) (4.00%)(k)

Mukhaizna field (Block 53) (2.00%)(l)

Qatar

  1936   Al Khalij (100.00%)  
           

North Field-Bloc NF Dolphin (24.50%)

North Field-Bloc NFB (20.00%)

North Field-Qatargas 2 Train 5 (16.70%)

Yemen

  1987   Kharir/Atuf (Block 10) (28.57%)  
            Various fields onshore (Block 5) (15.00%)

 

(a)

The Group’s interest in the local entity is approximately 100% in all cases except for Total Gabon (58.28%) and certain entities in Abu Dhabi and Oman (see notes b through l below).

(b)

Stake in the company Angola Block 14 BV (TOTAL 50.01%).

(c)

TOTAL’s stake in the foreign consortium.

(d)

TOTAL’s interest in the joint venture with Chesapeake.

(e)

TOTAL’s interest in the unincorporated joint venture.

(f)

The field of Islay extends partially in Norway. TOTAL E&P UK holds a 94.49 % and TOTAL E&P Norge 5.51%.

(g)

TOTAL holds a 46.17% indirect interest through its interest in EFOG (company 100% owned by TOTAL).

(h)

Through ADMA (equity affiliate), TOTAL holds a 13.33% interest and participates in the operating company, Abu Dhabi Marine Operating Company.

(i)

Through ADPC (equity affiliate), TOTAL holds a 9.50% interest and participates in the operating company, Abu Dhabi Company for Onshore Oil Operation.

(j)

TOTAL holds an interest of 18.75% in the consortium.

(k)

TOTAL holds an indirect interest of 4.00% in Petroleum Development Oman LLC, operator of Block 6, via its 10% interest in Pohol. TOTAL also holds a 5.54% interest in the Oman LNG facility (trains 1 and 2), and an indirect participation of 2.04% through OLNG in Qalhat LNG (train 3).

(l)

TOTAL holds a direct interest of 2.00% in Block 53.

 

Africa

In 2013, TOTAL’s production in Africa was 670 kboe/d, representing 29% of the Group’s overall production, compared to 713 kboe/d in 2012 and 659 kboe/d in 2011.

In South Africa, TOTAL acquired an interest in the 11B-12B license (50%, operator) in September 2013. This license, which covers an area of 19,000 km2, is located approximately 175 km south of the South African coast in water depths ranging from 200 m to 1,800 m. The drilling of an exploration well is planned for 2014.

In addition, in August 2013, the Group was granted approval by the South African authorities to convert its technical cooperation license for the Outeniqua Block (100%) into an exploration license, subject to the sale by TOTAL of 20% of its stake when the corresponding license agreement will have been negotiated and signed. The Outeniqua Block, which covers approximately 76,000 km2, is located to the southwest of the 11B-12B license in water depths ranging from 400 m to 4,000 m. A 2D seismic campaign of 7,000 km combined with sea bed core drilling activities is expected to be launched.

In Algeria, TOTAL’s production was 21 kboe/d during 2013, compared to 23 kboe/d in 2012 and 33 kboe/d in 2011. The decline in production between 2011 and 2012 was mainly due to

the sale of TOTAL’s interest in CEPSA (48.83%), which was completed in July 2011. All of the Group’s production in Algeria now comes from the Tin Fouyé Tabenkort (TFT) field (35%). TOTAL also has stakes of 37.75% and 47% in the Timimoun and Ahnet gas development projects, respectively.

 

 

On the TFT field, plateau production was maintained at 170 kboe/d.

 

The development of the Timimoun field continued in 2013 and the responses for the main calls for tender (plant construction and drilling devices) have been reviewed. In February 2014, the main contract was allocated. Commercial gas production could start in 2017, with anticipated plateau production of 1.6 Bm3/year (160 Mcf/d). The 3D seismic survey of an area of 2,240 km2, which started in December 2012, was completed in July 2013. The data is currently being analyzed.

 

Within the framework of the Ahnet project, discussions are continuing between the project partners and the authorities, particularly in light of the provisions of the new 13-02 oil legislation, which provide greater incentives for the development of unconventional hydrocarbons. The anticipated plateau production is 4 Bm3/year (400 Mcf/d) as of 2018.

In Angola, the Group’s production in 2013 was 186 kboe/d, compared to 179 kboe/d in 2012 and 135 kboe/d in 2011, and

 

 

16   TOTAL S.A. Form 20-F 2013


Table of Contents

Item 4 - Business Overview

 

comes from Blocks 0, 14 and 17. Recent highlights include the launch of the CLOV project in 2010, the start-up of production on Pazflor in 2011, several discoveries on Blocks 15/06 and 17/06, and, finally, the acquisition of interests in exploration Blocks 25, 39 and 40 in the Kwanza basin.

 

 

Deep-offshore Block 17 (40%, operator) is TOTAL’s principal asset in Angola. It is composed of four major hubs: Girassol, Dalia, Pazflor, which are all in production, and CLOV, which is currently being developed. The Pazflor project, consisting of the Perpetua, Zinia, Hortensia and Acacia fields, has achieved plateau production (220 kb/d). The CLOV project, which was launched in 2010, will result in the installation of a fourth Floating Production, Storage and Offloading unit (FPSO) with a production capacity of 160 kbd/d. Production start-up is expected mid-2014.

 

On the ultra-deep-offshore Block 32 (30%, operator), the basic engineering studies for the Kaombo project were completed and the final investment decision is expected to be made in the first half of 2014. The project will permit the development of the discoveries made in the southeast portion of the block through two FPSOs with a capacity in excess of 100 kb/d each.

 

On Block 14 (20%(1)), production comes from the Tombua-Landana and Kuito fields as well as the BBLT project, comprising the Benguela, Belize, Lobito and Tomboco fields.

 

Block 14K (36.75%) corresponds to the offshore unitization zone between Angola (Block 14) and the Republic of Congo (Haute Mer license). The development of the Lianzi field, which was started in 2012, will be achieved by means of a connection to the existing BBLT platform (Block 14). Production start-up is planned for 2015. TOTAL’s interest in the unitized block is held 10% through Angola Block 14 BV and 26.75% through Total E&P Congo.

 

On Block 0 (10%), the development of Mafumeira Sul was approved by the partners and the authorities in 2012. This project constitutes the second phase of the development of the Mafumeira field. Production start-up is planned for 2016.

 

On Block 15/06 (15%), the development of a first production hub, including the discoveries located in the northwest portion of the block, began in early 2012. In February 2014, TOTAL signed an agreement to sell its entire interest in Block 15/06. The closing of this transaction is expected to take place during the first half of 2014.

TOTAL has operations on exploration Blocks 33 (58.67%, operator), 17/06 (30%, operator), 25 (35%, operator), 39 (15%) and 40 (50%, operator). The Group plans to drill pre-salt targets in Blocks 25, 39 and 40 in 2014 in the deep offshore Kwanza basin. TOTAL signed a disposal agreement to reduce its interest in Block 40 to 40%. The closing of this transaction is expected to take place during the first half of 2014.

TOTAL is also developing its LNG activities through the Angola LNG project (13.6%), which includes a gas liquefaction plant near Soyo supplied in particular by the gas associated with production from Blocks 0, 14, 15, 17 and 18. LNG production started in June 2013 but, due to various incidents, the plant has not yet reached full capacity (5.2 Mt/y).

In Cameroon, TOTAL no longer holds any exploration or production assets since the sale of its subsidiary Total E&P Cameroun in 2011. Production was 3 kboe/d in 2011.

In Côte d’Ivoire, TOTAL is active in four deep offshore exploration licenses located 50 km to 100 km from the coast and covering approximately 5,200 km2 at water depths ranging from 1,000 m to 3,000 m.

TOTAL is the operator of the CI-100 (60%) license in the Tano basin and holds stakes in the CI-514 (54%, operator), CI-515 (45%) and CI-516 (45%) licenses in the San Pedro basin.

A comprehensive 3D seismic survey has been conducted on the CI-100 license and a first exploration well (Ivoire-1X) was drilled in early 2013 in the northwest portion of the block at a water depth of more than 2,300 m. This well has encountered a good-quality oil horizon. The recorded data is currently undergoing analysis in order to assess the potential of the discovered reservoirs and define an exploration and additional works program.

A 3D seismic survey campaign covering the whole of the three licenses CI-514, CI-515 and CI-516 was completed in December 2012. The interpretation of the data is ongoing.

Following the drilling of a first exploration well on license CI-514, two more wells are due to be drilled on licenses CI-515 and CI-516 during the course of 2014.

In Egypt, TOTAL is the operator of Block 4 (East El Burullus Offshore) and reduced its stake in this license from 90% to 50% in January 2013. The license, located in the Nile river basin, covers a 4-year initial exploration period and includes a commitment to carrying out 3D seismic work and drilling exploration wells. Following the 3D seismic campaign covering 3,374 km2 that was conducted in 2011, an exploration well (Kala-1) was drilled in late 2013, whose results have been disappointing.

In Gabon, the Group’s production in 2013 was 59 kboe/d compared to 57 kboe/d in 2012 and 58 kboe/d in 2011. The Group’s exploration and production activities in Gabon are mainly carried out by Total Gabon(2), one of the Group’s oldest subsidiaries in sub-Saharan Africa.

 

 

As part of the Anguille field redevelopment project (estimated production capacity of 20 kboe/d), the AGM North platform, from which twenty-one additional development wells are expected to be drilled, was installed in 2012. Production started as planned with two wells in March 2013.

 

On the deep-offshore Diaba license, the operator Total Gabon sold off part of its interest in 2012 and now has a stake of 42.5%. An initial exploration well (Diaman-1B) was drilled during 2013 at a water depth of more than 1,700 m. This well revealed an accumulation of gas and condensates in the pre-salt reservoirs of the Gamba Formation. Data analysis is currently underway in order to assess this discovery and reassess the surrounding prospects.

 

The Nguongui-updip well was drilled on the Mutamba-Iroru license (50%) in 2012 and revealed the presence of hydrocarbons. Work is currently being conducted to evaluate the commercial viability of this discovery. A 2D seismic survey was conducted on the Nziembou license (20%) in 2012. Drilling preparation activities are being conducted for a first exploration well scheduled in 2014.

In Kenya, TOTAL acquired a 40% stake in five offshore licenses in the Lamu basin in 2011, namely licenses L5, L7, L11a, L11b and L12, representing a total surface area of more than 30,600 km2 at water depths of between 100 m and 3,000 m. Following the 3D

 

 

 

(1)

Interest held by the company Angola Block 14 BV (TOTAL 50.01%, INPEX Corporation 49.99% since February 2013).

(2) 

Total Gabon is a Gabonese company listed on Euronext Paris. The Group holds 58.28%, the Republic of Gabon holds 25% and the public float is 16.72%.

 

2013 Form 20-F TOTAL S.A.   17


Table of Contents

Item 4 - Business Overview

 

seismic survey campaign covering 3,500 km2 that was conducted during the initial exploration period, 25% of the surface area of the five blocks was relinquished. In 2013, two exploration wells were drilled in Blocks L7 and L11b, but did not result in positive results. In 2012, the Group also acquired the L22 offshore license (100%, operator), located in the same basin and covering a surface area of more than 10,000 km2 in water depths ranging from 2,000 m to 3,500 m. In December 2013, TOTAL sold 30% of its stake in this license. A 2D seismic survey and sea core drilling operations are planned for 2014 on the L22 offshore license.

In Libya, the Group’s production in 2013 was 50 kb/d compared to 62 kb/d in 2012 and 20 kb/d in 2011. TOTAL is a partner in the following contract zones: 15, 16 & 32 (75%(1)), 70 & 87 (75%(1)), 129 & 130 (30%(1)) and 130 & 131 (24%(1) and Block NC191 (100%(1), operator).

Production which, in 2012, had returned to its level prior to the events of 2011 was affected from mid-2013 onward by the blockade of most of the country’s terminals and pipelines due to social and political unrest.

 

 

In onshore zones 70 and 87 (Mabruk), production has been affected since August 2013 due to the blockade of the Es Sider export terminal. Development of the Garian field was approved in July 2013 and production at the field is expected to start in the third quarter 2014.

 

In onshore zones 129, 130 and 131, production was stopped in 2013 during several months due to the blocking of the production installation and the evacuation pipeline. The seismic survey campaign, which was interrupted in 2011 due to force majeure, has not yet resumed. However, the exploration of these blocks continued in 2013 with the drilling of three wells.

 

In the onshore Murzuk basin, a plan for the development of Block NC 191 was submitted to the authorities in 2009. Discussions have resumed following the interruptions associated with the events of 2011.

 

In offshore zones 15, 16 and 32 (Al Jurf), production has not been affected by the social unrest in the country. The drilling of two exploration wells scheduled for the second quarter of 2013 was postponed due to technical reasons. The first of these wells was started at the end of 2013.

In Madagascar, TOTAL is active on the Bemolanga 3102 license (60%, operator). Since the exploitation of oil sand accumulations is no longer planned, TOTAL is refocusing on the conventional exploration of the block, which is expected to continue in 2014 with a 2D seismic survey following the approval of an additional 2-year extension of the exploration phase by the local authorities.

In Morocco, the Anzarane offshore reconnaissance contract covering an offshore zone of 100,000 km2, which was granted in December 2011 to TOTAL and ONHYM (National Bureau of Petroleum and Mines), was extended for one year in December 2013. A 3D seismic survey campaign covering 5,900 km2 that started in late 2012 was completed in July 2013. The collected data is currently being processed.

In Mauritania, the Group has exploration operations on the Ta7 and Ta8 licenses (60%, operator) located in the Taoudenni basin. In 2012, TOTAL acquired interests in two exploration licenses

(90%, operator): Block C9 in ultra-deep offshore, and Block Ta29 onshore in the Taoudenni basin. During 2013, TOTAL sold 18% of its stake in Block Ta29, but retains operatorship and a 72% interest.

 

 

Following a 2D seismic survey performed in 2011 on license Ta7, well Ta7-1 was drilled in 2013. Tests have been conducted, but they did not allow to highlight hydrocarbons in commercial quantity.

 

On Block Ta29, a 900 km2 seismic was performed in 2012. The processing and the interpretation of these seismic data have been completed. Studies are underway to identify a prospect on this block.

 

A 3D seismic survey campaign covering 4,700 km2 was conducted on Block C9 in 2013. The data is currently being processed and interpreted.

In Mozambique, TOTAL acquired in 2012 a 40% stake in the production sharing contract regarding offshore Blocks 3 and 6. Located in the Rovuma basin, these two blocks cover a total surface area of 15,250 km² in water depths ranging from 0 m to 2,500 m. An exploration well was drilled in 2012 and half of the surface area of the two blocks was relinquished in 2013 at the start of the second exploration period.

In Nigeria, Group production in 2013 was 261 kboe/d compared to 279 kboe/d in 2012 and 287 kboe/d in 2011. These declines are primarily due to the sharp increase in oil bunkering and in 2013 the blockade of Nigeria LNG export cargos. Despite such factors negatively affecting production, Nigeria remained the main contributor to the Group’s production.

TOTAL, which has been present in the country since 1962, operates six production licenses (OML) out of the thirty-eight in which it has a stake, and one out of the four exploration licenses (OPL) in which it is present.

Regarding variations in TOTAL’s licenses:

 

 

In September 2013, TOTAL was granted approval by the authorities to increase its stake in exploration license OPL 285 from 26.67% to 60%. In May 2013, TOTAL obtained the approval of the authorities for the renewal of licenses OML 99, 100 and 102 for a period of twenty years.

 

On the OML 138 license (20%), TOTAL started production in the Usan offshore field in 2012 (180 kb/d, FPSO capacity), which reached the level of 130 kboe/d in 2013. Since February 2014, TOTAL is no longer the operator of the OML 138 license. In 2012, TOTAL signed an agreement for the sale of its 20% stake in Block OML 138. The approval by the authorities has not yet been received.

 

TOTAL decided not to continue its exploration activities in JDZ Block 1 (48.6%, operator) following the analysis of the results of wells drilled in 2012. Block was relinquished in September 2013. Also, the Block OPL 221 was relinquished in November 2013.

 

TOTAL sold its 10% stake in Blocks OML 26 and 42 in 2011 and in Blocks OML 30, 34 and 40 in 2012. These interests had previously been indirectly controlled via the joint venture Shell Petroleum Development Company (SPDC).

 

 

 

(1) 

TOTAL’s stake in the foreign consortium.

 

18   TOTAL S.A. Form 20-F 2013


Table of Contents

Item 4 - Business Overview

 

TOTAL continues, with its developments, to meet the growing domestic demand for gas and to strengthen its ability to supply gas to the LNG projects in which it owns a stake:

 

 

As part of its joint venture with the Nigerian National Petroleum Company (NNPC), TOTAL is pursuing the project to increase the gas production capacity of the OML 58 license (40%, operator) from 370 Mcf/d to 550 Mcf/d.

 

On the OML 102 license (40%, operator), TOTAL is continuing to develop the Ofon phase 2 project, which was launched in 2011, with an expected capacity of 70 kboe/d and production start-up is scheduled for the end of 2014. In 2011, the Group also discovered Etisong North, located 15 km from the currently-producing Ofon field. The exploration campaign continued in 2012 with the drilling of the Eben well, which is also south of Ofon. The positive results produced by this well further enhance the interest of the future Etisong-Eben development hub as a satellite of the Ofon field.

 

On the OML 130 license (24%, operator), the development of the Egina field (capacity of 200 kboe/d) was launched in June 2013 and contracts have been awarded. Production start-up is expected at year-end 2017.

 

On the OML 99 license (40%, operator), engineering work is underway to develop the Ikike field, where production is expected to start in 2017 (estimated capacity of 55 kboe/d).

 

On the OML 112/117 licenses (40%), development studies have been suspended waiting for the resolution of contractual issues that arose in 2013

 

TOTAL is also active in the LNG sector with a 15% holding in the company Nigeria LNG, which possesses a liquefaction plant of a total capacity of 22 Mt/y. In addition, TOTAL holds a 17% stake in Brass LNG, which is continuing to study the project for a gas liquefaction plant with two LNG trains of a capacity of 5 Mt/y each.

The production that is not operated by the Group in Nigeria comes mainly from the SPDC joint venture, in which TOTAL holds a 10% stake. The sharp increase of oil bunkering in 2013 had an impact on onshore production, as well as on the integrity of the facilities and the local environment.

In addition, TOTAL also holds a 12.5% stake in the OML 118 deep-offshore license. In connection with this license, the Bonga field contributed 15 kboe/d to Group production in 2013. The partners continued the development of the Bonga Northwest project in 2013. On the OML 118 license, a pre-unitization agreement relating to the Bonga South West discovery has been signed in December 2013.

In Uganda, TOTAL has been active since 2012 and holds a 33.33% interest in the EA-1, EA-1A and EA-2 licenses as well as the Kingfisher license. All of these licenses are located in the Lake Albert region, where oil resources have already been discovered. TOTAL is the operator of licenses EA-1 and EA-1A and a partner on the other licenses.

 

 

On the appraisal license EA-1, a campaign of wells, production tests and a 3D seismic survey are underway. Five development plans will be submitted to the authorities before the end of 2014: Ngiri (submitted in December 2013), Jobi-Rii (April 2014), and Mpyo, Gunya and Jobi East (December 2014).

 

The EA-1A license expired in February 2013, following a campaign involving the drilling of five exploration wells that resulted in one discovery (Lyec). With the exception of the scope relating to this discovery, the license has been returned to the authorities.

 

On the appraisal license EA-2, the campaign of wells and production tests started in 2012 continued during 2013. An additional well is due to be drilled in 2014. Two development plans were submitted to the authorities in June 2013 (Kasamene and Wahrindi fields, as well as those of Kigogole, Ngege, Ngara and Nsoga).

 

The development plan for the Kingfisher field, which is located on the EA-3 production license, was approved by the authorities in September 2013. The basic engineering studies are currently being prepared.

 

The Kanywataba exploration well was drilled in June 2012 with negative results. The Kanywataba license expired in August 2012 and was returned to the authorities.

At the initiative of the Ugandan government, discussions are underway concerning the construction of a refinery that will be developed in two phases (30 kb/d in the first phase followed by a second phase providing an additional 30 kb/d), as well as an export pipeline.

In the Republic of Congo, the Group’s production in 2013 was 93 kboe/d compared to 113 kboe/d in 2012 and 123 kboe/d in 2011. The decrease in production was due in particular to the end of plateau production at Moho Bilondo in mid-2010 and to a planned shut-down on the Nkossa field.

 

 

The development of the Lianzi field was approved in 2012. Located in the offshore unitization zone Block 14K (36.75%) between Angola and the Republic of Congo (Haute Mer license), this field will be developed by a tieback to the existing Benguela-Belize-Lobito-Tomboco platform (Block 14 in Angola). Production start-up is expected in 2015. TOTAL’s interest in the unitized block is held 26.75% through Total E&P Congo and 10% through Angola Block 14 BV.

 

The Moho Bilondo offshore field (53.5%, operator) reached plateau production of 90 kboe/d in mid-2010. The field has now started its decline. The Phase 1b and Moho North projects were launched in March 2013 following agreements on the contractual and fiscal conditions in 2012. Production start-up is planned for 2015 and 2016, respectively, with estimated production capacity of 140 kboe/d (40 kboe/d for Phase 1b and 100 kboe/d for Moho North).

 

Production at Libondo (65%, operator), which is part of the Kombi-Likalala-Libondo operating license, started in 2011. Plateau production reached 12 kboe/d in 2011.

 

In July 2013, TOTAL obtained the Haute Mer B license (34.62%, operator) in association with other partners.

 

As part of the renewal of the Loango and Zatchi licenses, an agreement on the related contractual and fiscal conditions was signed in October 2013. This agreement is subject to approval by the parliament. TOTAL’s interest in these licenses will change respectively from 50% to 42.50% for Loango and from 35% to 29.75% for Zatchi with retroactive effect in October 2013.

 

In December 2013, in connection with a share capital increase of Total E&P Congo, Qatar Petroleum International Upstream (QPI) entered into the share capital of this subsidiary at a level of 15%.

In the Democratic Republic of the Congo, following the Presidential decree approving TOTAL’s entry in 2011 as operator with a 60% interest in Block III of the Graben Albertine, the exploration permit was issued in January 2012 by the Minister of Hydrocarbons for a period of three years and subsequently extended by an additional year due to the postponement of the works in light of the general security situation in the eastern part of

 

 

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the country. This block is located in the Lake Albert region. TOTAL acquired an additional 6.66% of this block in March 2012. The prospecting program is limited to the northern portion of the license, which is outside the Virunga park. A helicopter acquisition of gravimetric and magnetic data was completed in August 2012 with encouraging results. The 2D seismic survey campaign prepared in 2013 is scheduled to start in 2014.

In the Republic of South Sudan, TOTAL is negotiating a new contract with the state authorities that would make it possible to resume exploration activities in part of Block B. Since the independence of the Republic of South Sudan on July 9, 2011, TOTAL is no longer present in Sudan.

North America

In 2013, TOTAL’s production in North America was 73 kboe/d, representing 3% of the Group’s total production, compared to 69 kboe/d in 2012 and 67 kboe/d in 2011.

In Canada, the Group’s production in 2013 was 13 kboe/d compared to 12 kboe/d in 2012 and 11 kboe/d in 2011. The Group’s oil sands portfolio is focused around two main hubs: on the one hand, a Steam Assisted Gravity Drainage (SAGD) hub focused on continuing developments at Surmont’s (50%), and, on the other, a mining hub, which includes the Joslyn (38.25%, operator), Fort Hills (39.2%) and Northern Lights (50%, operator) mining projects as well as a 100% stake in a number of oil sands leases acquired through a series of auction sales.

 

 

On the Surmont lease, additional wells were drilled in 2013 in order to optimize production. The decision to construct an additional steam generation unit was also made with the same aim in mind. The drilling of additional wells is expected to continue in 2014.

In early 2010, the partners involved in the project decided to launch the construction of the second development phase. The goal of production start-up from Surmont Phase 2 has been set for 2015 and overall production capacity from the field is expected to increase to 130 kboe/d.

 

 

On the Fort Hills project (production capacity estimated at 180 kb/d), the final investment decision was made in October 2013. Site preparation work is underway and production start-up is planned for the end of 2017.

 

On the Joslyn license, engineering studies are currently being conducted in order to optimize production from the Joslyn North Mine project.

 

In March 2013, TOTAL concluded an agreement for the sale of its 49% stake in the Voyageur upgrader project.

In the United States, the Group’s production in 2013 was 60 kboe/d compared to 57 kboe/d in 2012 and 56 kboe/d in 2011.

 

 

In the Gulf of Mexico:

   

Phase 2 of the deep-offshore Tahiti oil field (17%) was launched in 2010. This phase comprises drilling four injection wells and two producing wells. The injection of water started in 2012. The first producing well was put into operation in late 2013 and the second producing well, the drilling of which is currently being completed, is due to start production in 2014.

   

The Chinook 4 well in the deep-offshore Chinook project (33.33%) started production in the third quarter of 2012.

   

Drilling of the Chinook 5 well was completed in 2013 and started production in early 2014.

   

The TOTAL (40%) — Cobalt (60%, operator) alliance’s exploratory drilling campaign, which was launched in 2009, was resumed in 2012 after the U.S. government lifted the moratorium on deep-offshore drilling operations. This resulted in the drilling of the Ligurian 2 well (dry well) together with the North Platte well at which a major oil discovery was made and for which studies are currently being conducted. The Ardennes well, which was drilled in 2013, gave disappointing results, just like the Aegean well, which was completed in December 2013. The Aegean well is the last one of the drilling campaign.

 

TOTAL is active in shale gas production in Texas and has a 25% stake in the Chesapeake portfolio in the Barnett Shale basin through its participation in a joint venture with Chesapeake. Given the drop in gas prices in the United States, drilling operations have been sharply reduced from 2012 onwards (approximately sixty wells drilled in 2013 compared to 100 in 2012 and more than 300 in 2011).

TOTAL is also active in the production of shale gas in Ohio and has a 25% stake in the liquid-rich Utica shale gas play through a joint venture with Chesapeake and EnerVest. More than 200 liquids-rich gas wells were drilled in 2013 (compared to approximately 100 in 2012) and approximately 190 of these have been connected and started producing (compared to forty-seven in 2012).

Engineers from TOTAL are assigned to the teams led by Chesapeake.

 

 

The Group holds a 50% stake in American Shale Oil LLC (AMSO) to develop in situ shale oil technology. The first in situ heating tests have been performed and are resulting in adaptations to the selected technology.

 

In 2012, TOTAL entered into a 50/50 association with Red Leaf Resources for the ex-situ development of oil shale and agreed to fund a production pilot before any larger-scale development. In addition, TOTAL finalized an agreement to purchase approximately 120 km2 of additional land in Colorado and Utah, with a view to developing in situ shale oil techniques (AMSO technique) or ex-situ techniques (Red Leaf technique).

In Mexico, TOTAL is conducting various studies with state-owned PEMEX under a general technical cooperation agreement renewed in July 2011 for a period of five years.

South America

In 2013, TOTAL’s production in South America was 166 kboe/d, representing 7% of the Group’s total production, compared to 182 kboe/d in 2012 and 188 kboe/d in 2011.

In Argentina, where TOTAL has been present since 1978, the Group operated about 30%(1) of the country’s production in 2013. The Group’s production in 2013 was 78 kboe/d compared to 83 kboe/d in 2012 and 86 kboe/d in 2011. In order to encourage investment in exploration and production, the Argentinean government has concluded gas price agreements with various producers as of December 2012. Under the terms of these agreements, the Argentinean government guarantees the price of gas for quantities above a fixed production level in exchange for

 

 

 

(1)

Source: Argentinean Ministry of Federal Planning, Public Investment and Services — Energy Secretary.

 

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compliance with defined production targets and applicable penalties (i.e., “Deliver or Pay”). In February 2013, TOTAL signed an agreement of this type for a period of five years with retroactive effect from December 1, 2012.

 

 

In Tierra del Fuego, the Group notably operates the Carina and Aries offshore fields (37.5%). Following the re-appraisal of the reserves of the Carina field, three additional wells are expected to be drilled from the existing platform. These wells should allow production levels from the facilities operated by the Group in Tierra del Fuego to be maintained at about 630 Mcf/d until the Vega Pleyade field (37.5%, operator) starts up in 2015. Development of this field started in October 2013.

 

In the Neuquén basin, TOTAL started a drilling campaign on its mining licenses in 2011 in order to assess their shale gas and oil potential. In 2012 and 2013, this campaign, which started on the Aguada Pichana license (27.3%, operator), was extended to all the blocks operated by the Group: San Roque (24.7%, operator), Rincón la Ceniza and La Escalonada (85%, operator), Aguada de Castro (42.5%, operator), and Pampa de las Yeguas II (42.5%, operator), as well as to the blocks operated by third parties: Cerro Las Minas (40%), Cerro Partido (45%), Rincón de Aranda (45%), and Veta Escondida (45%). The first results, all positive, of the production tests on the wells drilled during this campaign permit envisaging various development scenarios in the region. A pilot development intended to test the unconventional production potential at the Aguada Pichana Block is expected to enter into production in late 2014.

In Bolivia, the Group’s production, primarily gas, was 28 kboe/d in 2013 compared to 27 kboe/d in 2012 and 25 kboe/d in 2011. TOTAL has stakes in seven licenses: three production licenses, San Alberto and San Antonio (15%) and Block XX Tarija Oeste (41%), two licenses in the development phase, Aquio and Ipati (60%, operator), and two licenses in the exploration or appraisal phase, Rio Hondo (50%) and Azero (50%, operator).

 

 

Production started in 2011 on the Itaú gas and condensates field located on Block XX Tarija Oeste; it is routed to the existing facilities of the neighboring San Alberto field. Phase 2 of the development of the field entered into production at the end of 2013.

 

In 2004, TOTAL discovered the Incahuasi gas field on the Ipati Block. In 2011 and 2013, two additional wells confirmed the extension of the discovery northwards onto the adjacent Aquio Block as well as southwards onto the Ipati license. In April 2013, TOTAL was granted approval by the authorities to start development of Phase 1 of the project, including the connection of three existing wells to a central processing plant of 6.5 Mm3/d. The key contracts relating to the construction of the plant and its connection to the export network were granted in October 2013. In July 2013, TOTAL sold 20% stakes in the Aquio and Ipati fields thereby reducing its interest in these fields from 80 to 60%.

 

In August 2013, TOTAL acquired a 50% stake in the Azero exploration license in the Andean Piedmont. This is located to the west of the Ipati and Aquio Blocks and covers an area of more than 7,800 km2.

In Brazil, the Group has stakes in fourteen exploration licenses.

 

 

In October 2013, TOTAL acquired a 20% stake in the Libra field. This field is currently being assessed and is the largest pre-salt oil field discovered to date in the Santos basin off the coast of Brazil. The field is located in very deep water (2,000 m) approximately 170 km off the coast of Rio de Janeiro and covers an area of 1,550 km2. Additional

   

exploration works including contractual obligations to be realized by the end of 2017 and appraisal and development studies of the field were launched.

 

Following the eleventh call for tender organized by the Brazilian authorities in May 2013, TOTAL acquired a stake in ten new operating licenses. Holding a 40% stake, the Group operates five blocks (FZA-M-57, FZA-M-86, FZA-M-88, FZA-M-125 and FZA-M-127) located in the Foz do Amazonas basin and has a 45% interest in a block (CE-M-661) located in the Ceara basin. TOTAL also has a 25% stake in three blocks (ES-M-669, ES-M-671 and ES-M-743) located in the Espirito Santo basin and a 50% share in another block (BAR-M-346) located in the Barreirinhas basin.

 

TOTAL also has a stake in the Xerelete field, which the Group has operated since 2012. This stake is primarily located on Block BC-2 (41.2%) and extends into Block BM-C-14 (50%). The drilling of a well targeting pre-salt horizons was launched at the beginning of January 2014.

 

A well was drilled in 2012 in the Gato Do Mato field, which is located in Block BM-S-54 (20%) and was discovered in the Santos basin in 2010. The encouraging results are currently being analyzed in order to define the next stages in the assessment of the field.

In Colombia, TOTAL no longer has production since the sale in 2012 of one of its subsidiaries, TEPMA BV, which held a stake in the Cusiana field. Production was 6 kboe/d in 2012 and 11 kboe/d in 2011.

Following the discovery of Huron-1 on the Niscota (50%) license in 2009 and the drilling of the second well, Huron-2, which yielded positive test results in April 2013, a third well, Huron-3, was drilled with disappointing results. The conceptual development studies have started for a declaration of commerciality that is expected during the second quarter of 2014.

After selling 10% of its stake in the Ocensa pipeline in 2011 and reducing its interest in this asset to 5.2%, TOTAL sold its entire stake in 2013, but kept its transport rights. TOTAL has relinquished its stakes in the OAM and ODC pipelines that were previously held by TEPMA BV.

In French Guiana, TOTAL owns a 25% stake in the Guyane Maritime license. This license, located approximately 150 km from the coast in water depths ranging from 200 m to 3,000 m, covers an area of approximately 24,000 km². At the end of 2011, the authorities extended the research permit until May 31, 2016.

In 2011, drilling at the GM-ES-1 well, which is located on the Zaedyus prospect at a water depth of more than 2,000 m, revealed two hydrocarbon columns in sandstone reservoirs. Two 3D seismic survey campaigns covering a total area of more than 5,000 km2 were conducted in the center and extreme eastern portions of the block in 2012. A drilling campaign consisting of four wells was conducted from July 2012 until the end of 2013. The results of this campaign did not make it possible to prove the existence of an exploitable hydrocarbon reservoir, but the results did provide additional information that is currently being analyzed.

In Trinidad and Tobago, where TOTAL has been active since 1996, the Group’s production in 2013 was 12 kboe/d compared to 16 kboe/d in 2012 and 12 kboe/d in 2011. In September 2013, TOTAL sold all of its exploration and production assets by disposing of the companies Total E&P Trinidad BV, which held a 30% stake in the Angostura offshore field located in Block 2C, and Elf Exploration Trinidad BV, which owned an 8.5% share in the adjacent exploration Block 3A. The Group no longer owns any exploration or production assets in the country.

 

 

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In Uruguay, TOTAL holds a 100% stake in three exploration licenses: offshore Block 14, and onshore Blocks B1 and B2.

 

 

In October 2013, TOTAL signed two exploration and production contracts for Blocks B1 and B2 for unconventional plays. These two blocks, which cover a total area of 5,200 km2, are primarily located in the Artigas province in the northwestern part of the country. The commitments undertaken in respect of these licenses relate to the conduct of geological, geochemical and environmental studies.

 

In 2012, TOTAL acquired a stake in Block 14, which is located approximately 250 km offshore in water depths ranging from 2,000 m to 3,500 m and covers an area of some 6,700 km². In particular, TOTAL agreed to conduct a 3D seismic survey of the entire block, which was completed in early 2014. The Group has also agreed to drill one well in the first 3-year exploration phase.

In Venezuela, where TOTAL has had operations since 1980, the Group’s production was 48 kboe/d in 2013 compared to 50 kboe/d in 2012 and 54 kboe/d in 2011. TOTAL has equity stakes in PetroCedeño (30.3%), which produces and upgrades extra heavy oil in the Orinoco Belt, in Yucal Placer (69.5%), which produces gas dedicated to the domestic market, and in the offshore exploration Block 4, located in Plataforma Deltana (49%). The development phase of the southern zone of the PetroCedeño field, which started in 2011, is continuing with forty-three producing wells having been drilled at the end of 2013. The postponement of a debottlenecking project in addition with a performance study performed on the field in 2013 led to a revision of PetroCedeño’s reserves. Pursuant to an amendment to the gas sale contract, a new development phase of the Yucal Placer field, which is expected to boost the production capacity from 100 Mcf/d to 300 Mcf/d, was launched in June 2012.

Asia-Pacific

In 2013, TOTAL’s production in Asia-Pacific was 235 kboe/d, representing 10% of the Group’s total production, compared to 221 kboe/d in 2012 and 231 kboe/d in 2011.

In Australia, the Group produced 4 kboe/d in 2013 compared to 5 kboe/d in 2012 and 4 kboe/d in 2011. TOTAL has held leasehold rights in the country since 2005. The Group owns 30% of the Ichthys project, 27.5% of the Gladstone LNG project (GLNG), and nine offshore exploration licenses off the northwest coast in the Browse, Bonaparte and Carnarvon basins, including five that it operates, as well as four onshore shale gas exploration licenses in the southern part of the South Georgina basin. The acquisition of the fourth license located in the Northern Territory remains subject to the approval of authorities.

 

 

In early 2013, TOTAL acquired an additional 6% in the Ichthys project, increasing its stake to 30%. This project, launched in early 2012, is aimed at the development of the Ichthys gas and condensates field located in the Browse basin. This development includes a floating platform designed for gas production, treatment and export, an FPSO (with a maximum capacity of 100 kb/d of condensates) to stabilize and export condensates, an 889 km gas pipeline and an onshore liquefaction plant (capacities of 8.4 Mt/y of LNG and 1.6 Mt/y of NGL) located in Darwin. The LNG has already been sold mainly to Asian buyers under long-term contracts. Production start-up is expected at year-end 2016.

 

TOTAL has an indirect interest of 27.5% in the GLNG project. This integrated gas production, transport and liquefaction project is based on the development of coal gas from the Fairview, Roma, Scotia and Arcadia fields. The final investment decision was made in early 2011 and start-up is

   

expected in 2015. LNG production is expected to eventually reach 7.2 Mt/y. The upstream development of the project and the construction of the gas pipeline and liquefaction plant are underway.

 

In June 2013, the WA-492 and WA-493 licenses in the Carnarvon basin were awarded to TOTAL (100%, operator). TOTAL has undertaken to conduct a 2D seismic survey on these licenses during the coming years.

 

At the end of 2012, TOTAL reduced its share in the WA-408 license located in the Browse basin (50%, operator) by disposing of 50% of its stake to partners. Two exploration wells were drilled in 2013. The first well, Bassett West 1, which was drilled during the first half of 2013, highlighted hydrocarbons. Studies are currently underway. The second one, which was completed at the end of 2013, has been definitively abandoned due to the negative results obtained.

 

In 2012, TOTAL signed an agreement to enter four shale gas exploration licenses in the South Georgina basin in the center of the country. This agreement, which allows TOTAL to increase its stake to 68% and become the operator in the event of development, has now been finalized. Work started on the three blocks in Queensland during the course of 2013 in the form of a 2D seismic survey that was acquired during the second half of the year. The first exploration wells are due to be drilled during 2014.

 

Two wells were drilled in 2011 on the WA-403 license (60%, operator) in the Bonaparte basin. As one well demonstrated the presence of hydrocarbons, additional appraisal work was performed on this block during 2013, including a 3D seismic survey, the results of which are currently being interpreted.

In Brunei, where TOTAL has been present since 1986, the Group operates the offshore Maharaja Lela Jamalulalam gas and condensates field located on Block B (37.5%). The Group’s production in 2013 was 13 kboe/d compared to 12 kboe/d in 2012 and 13 kboe/d in 2011. The gas is delivered to the Brunei LNG liquefaction plant.

The study of the development project started in 2010 for the production of the new reserves discovered in the south of the field (Maharaja Lela South) was finalized in 2013. The project was officially launched in early 2014 with the execution of most of the related industrial contracts and with the formal signature of the 20-year extension of the present petroleum contract.

Studies are currently being conducted to reassess the potential of deep-offshore exploration Block CA1 (54%, operator) and are expected to result in a new operating strategy. In addition, discussions have started in the perspective of possible unitization with regards to the hydrocarbon identified in the southeast part of the block (Jagus East well) in 2012 and the discovery made by BSP (Geronggong) in a neighboring block.

In China, TOTAL has been present since 2006 on the South Sulige Block located in the Ordos basin in the Inner Mongolia province. Following appraisal work by TOTAL, China National Petroleum Corporation (CNPC) and TOTAL agreed to a development plan pursuant to which CNPC is the operator and TOTAL has a 49% stake. The first development wells have been drilled and test-phase production has been underway since August 2012. The Group’s production in 2013 was 8 kboe/d compared to 1 kboe/d in 2012.

In March 2013, TOTAL and Sinopec concluded a joint study agreement relating to shale gas potential on the Xuancheng license (4,000 km2) close to Nanjing. 2D seismic survey activities have been realized from October 2013 to February 2014 (600 km). A drilling campaign is scheduled for 2014 and 2015. If the results

 

 

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of this campaign are favorable, an agreement relating to the long-term development of these resources might subsequently be negotiated with Sinopec.

In Indonesia, where TOTAL has had operations since 1968, the Group’s production in 2013 was 131 kboe/d compared to 132 kboe/d in 2012 and 158 kboe/d in 2011.

TOTAL’s operations in Indonesia are primarily concentrated on the Mahakam permit (50%, operator), which covers in particular the Peciko and Tunu gas fields. TOTAL also has a stake in the Sisi-Nubi gas field (47.9%, operator). The Group delivers most of its natural gas production to the Bontang LNG plant. The overall capacity of the eight liquefaction trains at this plant is 22 Mt/y.

In 2013, TOTAL’s gas production operations amounted to 1,757 Mcf/d. This value is down from the 2012 production level (1,871 Mcf/d) due to the maturity of most of the fields on the Mahakam permit, even though this decline was partially offset in 2013 by an increase in production in the South Mahakam fields. The gas operated and delivered by TOTAL accounted for approximately 80% of Bontang’s LNG supply. This gas production is supplemented by condensate and oil production from the Handil and Bekapai fields, which are operated by the Group.

 

 

With regard to the Mahakam permit:

   

On the Tunu field, in 2013, additional development wells were drilled in the main reservoir alongside in the shallow gas reservoirs.

   

On the Peciko field, Phase 7 drilling, which started in 2009, is continuing.

   

On South Mahakam, where production started in 2012 and which contains the Stupa, West Stupa and East Mandu condensate gas fields, other development wells are currently being drilled.

   

On the Sisi-Nubi field, which began production in 2007, drilling operations are continuing within the framework of a second phase of development. The gas from Sisi-Nubi is produced through Tunu’s processing facilities.

 

On the Sebuku license (15%), production started at the Ruby gas field in October 2013. Production capacity is estimated at 100 Mcf/d. Ruby’s production is transported by pipeline for processing and separation at the Senipah terminal operated by TOTAL.

 

On the Sageri exploration Block (50%), the first exploration well (Lempuk-1X), completed in early 2012, produced negative results. The license is currently being relinquished.

 

On the South East Mahakam exploration Block (50%, operator), the Tongkol South-1 exploration well, completed in September 2013, produced negative results.

 

In 2013, TOTAL took the necessary steps vis-à-vis the authorities to withdraw from the Sadang (30%), Arafura Sea (24.5%) and Amborip VI (24.5%) Blocks. In addition, and following the withdrawal of the other partners, the Group’s stake in the South Sageri Block increased from 45% to 100% (operator), while its share in the South Mandar Block increased from 33% to 49.3%.

 

In February 2013, TOTAL sold 10% in the South West Bird’s Head exploration Block (90%, operator). This block is located onshore and offshore in the Salawati basin in the province of West Papua. Results from the Anggrek Hitam 1 exploration well, where drilling was completed in September 2013, were negative.

 

In 2012, TOTAL acquired a 100% stake in the exploration Block Bengkulu I — Mentawai in the offshore Bengkulu basin, southwest of Sumatra. The preparatory work on the Rendang 1 exploration well started at the end of 2013 and drilling start-up is planned during the first half of 2014. The

   

Group also acquired a stake in the exploration Block Telen (100%, operator) in the offshore Kutai basin in East Kalimantan province.

 

In 2011, the Group acquired an 18.4% stake in a coal bed methane (CBM) block on Kutai II in East Kalimantan province as well as a 50% stake in the similar Kutai Timur Block.

In Malaysia, on deep-offshore exploration Block SK 317 B (85%, operator), which is located in Sarawak, an exploration well was started in December 2013. Following disappointing geological exploration results, TOTAL withdrew from the PM303 offshore exploration block at the start of 2011 and should do the same for the PM324 license (50%, operator) in May 2014 upon expiration of the operating period. An agreement has been reached with the regulator to convert the second commitment well on PM324 into expenditures on other exploration blocks.

In Myanmar, Group production in 2013 was 16 kboe/d compared to 16 kboe/d in 2012 and 15 kboe/d in 2011. TOTAL is the operator of the Yadana field (31.2%). This field, which is located on offshore Blocks M5 and M6, primarily produces gas for delivery to PTT (the Thai state-owned company) for use in Thai power plants. The Yadana field also supplies the domestic market via two pipelines built and operated by MOGE, a Myanmar state-owned company.

In 2012, TOTAL acquired a 40% share in a production sharing agreement on the M-11 offshore Block in the Martaban basin. The first exploration well, Manizawta-1, drilled in 2013 is dry.

In Papua New Guinea, TOTAL acquired in 2012 a 40% stake in the PPL234 and PPL244 offshore permits, as well as 50% in the PRL10 offshore permit and an option for 35% of the PPL338 and PPL339 onshore permits. The results of two exploration wells drilled on PPL244 are unsuccessful. An onshore 2D seismic survey was also conducted in 2013.

In March 2014, TOTAL acquired a stake in Block PRL-15 (40.1%) and an option to acquire an interest in exploration Blocks PPL-474, PPL-475, PPL-476 and PPL-477 and in the Triceratops discovery (PRL-39) located in the same zone. The government of Papua New Guinea retains the right to back-in for 22.5% when the final decision is made. In such scenario, TOTAL will hold a 31.1% participating interest when the final decision is made. Block PRL-15 contains two major discoveries: Elk and Antelope.

In the Philippines, TOTAL has held since 2012 a 75% stake in the SC56 license in the southern Sulu Sea. The program of operations includes the refurbishment of older seismic lines and a new seismic campaign that was realized at the beginning of 2013. The collected data is currently being interpreted.

In Thailand, the Group’s production in 2013 was 63 kboe/d compared to 55 kboe/d in 2012 and 41 kboe/d in 2011. This production comes from the Bongkot (33.33%) offshore gas and condensates field. PTT purchases all of the natural gas and condensates production from this field.

 

 

In the northern portion of the Bongkot field, new investments are in progress to allow gas demand to be met and plateau production to be maintained:

   

phase 3J (two wellhead platforms) was launched as scheduled in 2012;

   

phase 3K (two wellhead platforms) was launched as scheduled in 2013;

   

phase 3L (two wellhead platforms) was approved in 2012 with start-up scheduled for 2014;

 

 

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phase 3M (four wellhead platforms) was approved in March 2013 with start-up scheduled for 2015; and

   

the fourth series of low-pressure compressors, which make it possible to boost gas production, was approved in 2012 and start-up is expected in late 2014.

 

The southern portion of the field (Greater Bongkot South) is also being developed in several phases. This development is designed to include a processing platform, a residential platform and thirteen production platforms:

   

phase 4A (six well platforms) was launched as scheduled in 2012;

   

phase 4B (four well platforms) is continuing and start-up is scheduled for 2014; and

   

development of phase 4C (three well platforms) will take place following the other two phases.

The exploration on these licenses continues with the drilling of several wells every year (seven in 2013).

In Vietnam, the Group no longer possesses any exploration asset following the sale in August 2013 of its stake in offshore Block 15-1/05 (35%).

Commonwealth of Independent States (CIS)

In 2013, TOTAL’s production in the CIS was 227 kboe/d, representing 10% of total Group production, compared to 195 kboe/d in 2012 and 119 kboe/d in 2011.

In Azerbaijan, where TOTAL has been present since 1996 on the Shah Deniz field (10%), production amounted to 20 kboe/d in 2013 and has been growing regularly year-on-year since 2010. TOTAL also has a 10% stake in the South Caucasus Pipeline Company (SCP) gas pipeline, which transports the gas produced at Shah Deniz to the Turkish and Georgian markets. TOTAL also holds a 5% stake in the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, which connects Baku and the Mediterranean Sea and, among other functions, evacuates the condensates from the gas transported from Shah Deniz.

Gas deliveries to Turkey and Georgia continued throughout 2013, at a lower pace for Turkey due to weaker demand than initially expected. As in 2012, however, the Azerbaijan state-owned SOCAR continued to take greater quantities of gas than provided for by the agreement, thus making it possible for the facilities to operate at maximum capacity.

Following the agreements signed in 2011 regarding the sale of additional gas volumes to Turkey and the transfer conditions for volumes intended for the European market, the final investment decision concerning the second phase of development at Shah Deniz was made in December 2013. In September 2013, gas sales agreements representing a total volume of 10 Gm3/y were signed with European buyers. These volumes are expected to be transported from 2021 through Turkey via the Trans Anatolian pipeline (TANAP) within the framework of a project headed by SOCAR, and via the Trans Adriatic Pipeline (TAP) that is expected to link Turkey to Italy and in which TOTAL acquired a 10% stake in July 2013.

With regard to the Absheron Block in the Caspian Sea, TOTAL (40%) is the operator during the exploration phase and a joint operating company will manage operations during the development and production phase. A discovery and commerciality declaration was filed in 2012 following a significant discovery in 2011. The development plan for the field is currently being prepared. Discussions are underway for the construction of a drilling rig in the Caspian Sea in order to prepare for the development of this discovery.

In Kazakhstan, TOTAL has been active since 1992 through its 16.81% stake in the North Caspian license, which covers the Kashagan field in particular.

The Kashagan project is expected to develop the field in several phases. Production from the first phase (300 kb/d) started on September 11, 2013 and was first halted on September 24, 2013, and then, after having been restarted, a second time on October 9, 2013, due to leaks detected on the gas export pipeline. Investigations are underway in order to identify the origin of these technical malfunctions and to allow production to resume rapidly.

In November 2012, TOTAL acquired a 75% share in the North and South Nurmunai onshore exploration blocks. These two blocks cover an area of 14,600 km2 and are located in the southwest of the country. A 2D seismic survey was conducted on each of these blocks in 2013. The data is currently being interpreted and a well is planned to be drilled in 2014.

In Russia, where TOTAL has had operations through its subsidiary since 1991, the Group’s production in 2013 was 207 kboe/d compared to 179 kboe/d in 2012 and 105 kboe/d in 2011. This production comes from the Kharyaga field and from TOTAL’s stake in the Russian company Novatek, which is listed in Moscow and London.

 

 

On the Kharyaga field (40%, operator), work related to the development plan for Phases 3 and 4 is ongoing. This plan aims to maintain plateau oil production above 30 kboe/d. Phase 3 is expected to be completed in 2015 with the end of the flaring of the associated gas.

 

In compliance with the strategic partnership agreement signed in 2011 with Novatek, TOTAL continued to increase its share in Novatek to 16.9636% as of December 31, 2013 and intends to further increase its share up to 19.4%.

TOTAL is currently participating in two projects with Novatek:

 

   

Termokarstovoye: This onshore deposit of gas and condensates is located in the Yamalo-Nenets district. The development and production license for the Termokarstovoye field is owned by ZAO Terneftegas, a joint venture between Novatek (51%) and TOTAL (49%). Development of this field started in late 2011, with production start-up being expected for mid-2015 at a capacity of 65 kboe/d.

   

Yamal LNG: The aim of this project, which has been declared to be of national interest by Russian authorities, is to develop the South Tambey gas and condensates field in the Yamal Peninsula and to construct a three-train gas liquefaction plant with an LNG production capacity of 16.5 Mt/y. The first production is expected late 2017. The LNG produced is intended for sale in Europe and Asia using ice-class LNG tankers. The final investment decision was made in December 2013. The company Yamal LNG is jointly-owned by Novatek (60%), TOTAL (20%) and, as of January 2014, CNPC (20%).

In January 2014, Novatek increased its stake in the company Severenergia (production of 100 kb/d in 2013) by acquiring ENI’s shares through the company Arcticgaz (50/50 Joint venture between Novatek and Gazpromneft). In December 2013, Novatek exchanged its interest held in Sibneftegas for the entirety of Rosneft’s interests in Severenergia. Since June 2013, Novatek has held a 50 % stake in the Nortgaz field.

   

In 2013, TOTAL undertook conceptual studies showing that new technical solutions could allow a viable development of the Shtokman field. Discussions with Gazprom for further studies are required to find a

 

 

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technical, contractual and economically viable solution for the development of the Shtokman field.

In Tajikistan, TOTAL acquired a 33.3% stake in the Bocktar Block in the first half of 2013. The agreement represents the start of TOTAL’s activity in the country. Environmental and societal studies started at the beginning of 2014. The first phase of a seismic campaign covering 800 km is due to start in 2014, with initial drilling operations planned for late 2015.

Europe

In 2013, TOTAL’s production in Europe was 392 kboe/d, representing 17% of the Group’s overall production, compared to 427 kboe/d in 2012 and 512 kboe/d in 2011.

In Bulgaria, the Khan Asparuh license, which covers 14,220 km2 in the Black Sea, was awarded to TOTAL in 2012. In March 2013, TOTAL sold 60% of its stake and has retained 40% of this block. TOTAL will be the operator as of April 2014. A 2D and 3D seismic survey was performed from June 2013 to January 2014. The data is due to be processed and interpreted in 2014 in order to define drilling objectives in 2015 and 2016.

In Cyprus, TOTAL has been present since February 2013 in the deep-offshore exploration Blocks 10 (100%, operator) and 11 (100%, operator) located southwest of the country. A 3D seismic survey was completed on Block 11 in 2013. A 2D seismic survey on Block 10 started in February 2014.

In Denmark, TOTAL has, since 2010, owned an 80% stake in and the operatorship of licenses 1/10 (Nordjylland) and 2/10 (Nordsjaelland, formerly Frederoskilde). These onshore licenses, of which the shale gas potential continues to be assessed, cover areas of 3,000 km² and 2,300 km², respectively. Following geoscience surveys on license 1/10 in 2011, the decision was made to drill a well. Initially planned for 2013, this well is now scheduled for 2014 due to additional environmental studies requested by the local authorities. Geoscience studies are ongoing on license 2/10 and a gravimetry acquisition was made in 2013.

In France, the Group’s production in 2013 was 9 kboe/d compared to 13 kboe/d in 2012 and 18 kboe/d in 2011. TOTAL’s major assets are the Lacq (100%) and Meillon (100%) gas fields, located in the southwest part of the country.

On the Lacq field, which started production in 1957, a carbon dioxide capture, injection and storage pilot was commissioned in 2010. In connection with this project, a boiler was modified to operate in an oxy-fuel combustion environment and the CO2 emitted was captured and re-injected in the depleted Rousse field. As part of TOTAL’s Sustainable Development policy, this project allowed the Group to assess one of the technological possibilities for reducing CO2 emissions. Most of the objectives of the experiment having been reached, the injection of CO2 came to an end in the first quarter of 2013. As anticipated, TEPF ended the operations on Lacq in October 2013.

The sale agreements of Itteville, Vert-le-Grand, Vert-le-Petit and La Croix Blanche assets were signed in 2011, while those of Dommartin Lettrée, Vic-Bilh, Lacq, Lagrave and Pécorade assets were signed in 2012. The approval of the authorities has been obtained for the sale of all of these licenses, with the exception of the Lacq asset, for which approval is expected to be granted in 2014.

The Montélimar exclusive exploration license awarded to TOTAL in 2010 to assess, in particular, the shale gas potential of the area, was revoked by the government in October 2011. This revocation

stemmed from the law of July 13, 2011, prohibiting the exploration and extraction of hydrocarbons by drilling followed by hydraulic fracturing. The Group had submitted the required report to the government in which it undertook not to use hydraulic fracturing in light of the current prohibition. An appeal filed in December 2011 with the administrative court requesting that the judge cancel the revocation of the license is still pending.

In Italy, TOTAL holds a stake in two exploration licenses and has an interest in the Tempa Rossa field (50%, operator), discovered in 1989 and located on the Gorgoglione concession (Basilicate region). Although preparation work started in 2008, the proceedings initiated by the Prosecutor of the Potenza Court against Total Italia led to a freeze in the preparation work (for additional information on this dispute, see “Item 8. Legal or arbitration proceedings — Italy”). After resuming the preparation work, the final investment decision was made in July 2012 and production start-up is expected for 2016 at a capacity of 55 kboe/d. Following a call for tenders, all the civil engineering and construction contracts were awarded in 2012 and are currently in progress. The Gorgoglione 2 well was tested in 2012 and confirmed the results obtained from the other wells. The drilling of a sidetrack at well TR-2 started in November 2013.

In March 2013, TOTAL finalized an agreement to sell 25% of the stake acquired in Tempa Rossa in 2011. This transfer, which reduced the Group’s holding from 75% to 50%, took place in June 2013 following the approval of the Italian authorities.

In Norway, where the Group has had operations since the mid-1960s, TOTAL has equity stakes in 104 production licenses on the Norwegian continental shelf, 31 of which it operates. In 2013, the Group’s production was 243 kboe/d, with 74 kboe/d from the Greater Ekofisk Area located in the southern sector of the North Sea, 103 kboe/d from the central and northern portions of the North Sea and 66 kboe/d from the Haltenbanken region (in the Norwegian Sea) and the Barents Sea. The Group’s production in Norway in 2012 was 275 kboe/d and 287 kboe/d in 2011. The decrease in production between 2011 and 2013 was mainly due to the decline of mature fields. Production should increase again and reach a level of around 300 kboe/d at the horizon 2017 with the start-up of several new fields, the developments of which have already been launched (Martin Linge, Ekofisk South, Eldfisk II).

 

 

In the Norwegian North Sea, the most substantial contribution to the Group’s production, which is for the most part non-operated, comes from the Greater Ekofisk Area (e.g., Ekofisk, Eldfisk, Embla).

 

   

In the southern Norwegian North Sea:

In the Greater Ekofisk Area, the Group owns a 39.9% stake in the Ekofisk and Eldfisk fields. The Ekofisk South and Eldfisk 2 projects, each with a capacity of 70 kboe/d, were launched in 2011. Production at Ekofisk South started in October 2013, while start-up at Eldfisk 2 is expected in early 2015. The project relating to the construction and installation of the new Ekofisk accommodation and field services center platform has now been completed and the accommodation has been operational as of November 2013.

 

   

In the central part of the Norwegian North Sea:

Gas production start-up at the Atla field, located on license PL102C (40%, operator) and Beta West field (10%), a satellite of Sleipner, took place in October 2012 and April 2011, respectively.

The development of the Gina Krog structure (38%), formerly known as Dagny and located to the north of

 

 

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Sleipner, was approved in 2013. Production start-up is planned for 2017.

On license PL036D (24.24%), the fast-track development of Vilje South was launched in 2011. Production start-up is expected in March 2014.

 

   

In the northern part of the Norwegian North Sea:

The Islay field (100%, operator) was put into production in 2012. This field extends on each side of the Norwegian/Great Britain border and the Group’s interest in the Norwegian part is 5.51%.

The Stjerne field, located on license PL104 (14.7%), and Visund South field, located on license PL120 (7.7%), were put into production in July 2013 and November 2012, respectively.

On license PL120 (7.7%), the fast-track development of Visund North, which started in late 2011, made it possible to start production on the field in November 2013.

 

   

On the Greater Hild Area (51%, operator), located in the north, the Martin Linge development scheme was approved by the authorities in 2012, with production start-up scheduled end 2016 at an estimated capacity of 80 kboe/d.

The Oseberg Delta phase 2 project (14.7%), located on production licenses PL104 and PL79, was approved by the authorities in October 2013 and production start-up is planned for 2015.

 

 

In the Norwegian Sea, the Haltenbanken area includes the Tyrihans (23.2%), Linnorm (20%), Mikkel (7.7%) and Kristin (6%) fields as well as the Åsgard field (7.7%) and its satellites Yttergryta (24.5%) and Morvin (6%).

The Åsgard sub-sea compression project, which will increase hydrocarbon recovery on the Åsgard and Mikkel fields, was approved by the Norwegian authorities in 2012. All the main contracts have been awarded.

Development of the Linnorm gas field is still under study following the lower than expected results obtained at the Onyx South exploration well, which was drilled in 2013. It was planned to export the gas from Linnorm to the Nyhamna onshore terminal by installing a new pipeline (Polarled project).

The Polarled project (5.11%) was approved in December 2012. The project consists of the installation of a 481 km long pipeline from the Aasta Hansen field to the Nyhamna terminal and in the expansion of the terminal.

 

 

In the Barents Sea, a project intended to improve the performance of the Snøhvit liquefaction plant (18.4%, capacity of 4.2 Mt/y) was launched in 2012. This plant is supplied with gas from the Snøhvit, Albatross and Askeladd fields.

Several exploration wells were successfully drilled on a number of licenses during the 2011-2013 period and revealed the presence of hydrocarbons at the structures of Smørbukk North (PL479, 7.68%) and Rhea (PL120, 7.68%) in 2013, Garantiana (PL554, 40%, operator) and King Lear (PL146 and 333, 22.2%) in 2012, and Alve North (PL127, 50%, operator) and Norvarg (PL535, 40%, operator) in 2011. The Novarg appraisal well drilled in 2013 confirmed the presence of gas in the structure, but the well results, which are under study as of December 31, 2013, are below expectations.

In addition, the Group is continuing to optimize its asset portfolio in Norway by obtaining new licenses and divesting a number of non-strategic assets.

In the Netherlands, TOTAL has had natural gas exploration and production operations since 1964 and currently owns twenty-four offshore production licenses, including twenty that it operates, and two offshore exploration licenses, E17c (16.92%) and K1c (30%). In 2013, the Group’s production was 35 kboe/d compared to 33 kboe/d in 2012 and 38 kboe/d in 2011.

 

 

Following the acquisition of additional stakes at the end of 2013, TOTAL now holds 50% stakes in Block K5b and 60% in Blocks K1b/K2a and K2c. TOTAL is the operator of these three blocks.

 

A 3D seismic survey of several offshore permits covering an area of 3,500 km2 was conducted in 2012. The results of this campaign are currently being interpreted.

 

The development project K4-Z (50%, operator) started production in August 2013. This development project was launched in 2011 and consists of two sub-sea wells connected to the existing production and transport facilities.

 

The L4-D field (55.66%, operator) started production in 2012.

 

Production from the K5-CU project (49%, operator) started in early 2011.

In Poland, at the beginning of 2012, TOTAL signed an agreement to acquire a 49% stake in the Chelm and Werbkowice exploration concessions in order to assess their shale gas potential. A well was drilled and tested on the Chelm permit in 2011. The results from the well were analyzed in 2012 and 2013. In December 2013, following the departure of the operator, TOTAL increased its stake to 100% and became the operator of this permit. In 2012, the Werbkowice permit was relinquished.

In the United Kingdom, where TOTAL has had operations since 1962, the Group’s production in 2013 was 105 kboe/d compared to 106 kboe/d in 2012 and 169 kboe/d in 2011. About 90% of production comes from operated fields located in two major zones: the Alwyn zone in the northern North Sea, and the Elgin/Franklin zone in the Central Graben. In 2012, the shutdown of the Elgin, Franklin and West Franklin fields, due to a gas leak from well G4 in Elgin, severely impacted production. Production at these three fields was resumed in March 2013.

 

 

In the Alwyn zone (100%), the start-up of satellite fields or new reservoir compartments made it possible to compensate in part for the natural decline in production potential. Consequently, wells N54 and N53 were put into production in 2012 and 2011, respectively. Well N55, which was drilled in 2012 in the Brent South West panel, is expected to be put into production in the middle of 2014.

On the Dunbar field (100%), a new drilling campaign (Dunbar phase IV) is due to begin during the second quarter 2014 and is expected to include three work-overs and six new wells.

The Islay field (100%, operator) was put into production in 2012. This field extends on each side of the Norwegian/Great Britain border and the Group’s interest in the UK portion is 94.49%.

In 2012, TOTAL finalized the divestment of its stake in the Otter field.

 

 

In Central Graben, TOTAL increased its stake in Elgin Franklin Oil & Gas (EFOG), a company through which it holds an interest in the Elgin and Franklin fields (46.2%, operator), from 77.5% to 100% at the end of 2011. Production at the Elgin, Franklin and West Franklin fields was stopped following a gas leak on the Elgin field in March 2012. In May 2012, TOTAL confirmed that the leak from well G4 had been successfully stopped and, at the end of October 2012, well G4 was definitively secured by installing five cement plugs. The

 

 

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enquiry led by TOTAL permitted the clear identification of the causes of the accident and the definition of new criteria for well integrity to allow the resumption of production at Elgin/Franklin in total safety. Production in the Elgin/Franklin area resumed in March 2013 following the approval of the safety case by the UK Health and Safety Executive (HSE). Production has gradually risen to 55 kboe/d (approximately 25 kboe/d on the Group’s account), representing 40% of the production potential of these fields. In order to recover the production level expected before the Elgin incident by 2015, a redevelopment project envisaging the drilling of new infill wells on Elgin and Franklin started in July 2013. Drilling work is due to start on Elgin in early 2015.

In addition, the West Franklin Phase II development project remains ongoing with production start-up scheduled for mid-2014.

 

 

In addition to Alwyn and the Central Graben, a third area, west of Shetland, is undergoing development. This area covers the fields of Laggan and Tormore (80%, operator) and the P967 license (50%, operator), which includes the Tobermory gas discovery. The decision to develop the Laggan and Tormore fields was made in 2010 and production is scheduled to start in 2014 with an expected capacity of 90 kboe/d. The development scheme includes: sub-sea production facilities; off-gas treatment (gas and condensates) at a plant located near the Sullom Voe terminal in the Shetland Islands, 150 km away; and a new gas pipeline connected to the Frigg gas line (FUKA) for the export of gas to the Saint Fergus terminal.

In early 2011, a gas and condensate discovery was made on the Edradour East license (75%, operator) near Laggan and Tormore. The decision to develop Edradour East using the existing infrastructure was made at the end of 2012. The Edradour development scheme is currently being optimized in order to include other possible fields in the same zone. Next to the Edradour East discovery, a second well (Spinnaker) started in September 2013 and is currently being drilled.

TOTAL also holds a stake in three assets operated by other parties: the Bruce (43.25%), Keith (25%), and Markham (7.35%) fields. The Group’s stakes in other fields operated by third parties (Seymour, Alba, Armada, Maria, Moira, Mungo/Monan and Everest) were sold off in 2012.

Nine new licenses (three in the northern North Sea, three in Central Graben and three in West Shetland) were awarded to TOTAL in 2012 during the twenty-seventh exploration round.

Early 2014, TOTAL acquired a 40% stake in two shale gas exploration licenses (PEDL 139 et 140) located in the Gainsborough Trough basin of the East Midlands, and signed an agreement that permits the Group to acquire a 50% stake in the licence PEDL 209 located in the same area.

Middle East

In 2013, TOTAL’s production in the Middle East was 536 kboe/d, representing 23% of the Group’s production, compared to 493 kboe/d in 2012 and 570 kboe/d in 2011.

In the United Arab Emirates, where TOTAL has had operations since 1939, the Group’s production in 2013 was 260 kboe/d compared to 246 kboe/d in 2012 and 240 kboe/d in 2011. In 2013, the country maintained a steady rhythm of production which

led to an increase in TOTAL’s share of production. The increase in production in 2013 was mainly due to higher production by Abu Dhabi Company for Onshore Oil Operations (ADCO).

TOTAL holds a 75% stake (operator) in the Abu Al Bu Khoosh field, a 9.5% stake in ADCO, which operates the five major onshore fields in Abu Dhabi, and a 13.3% stake in Abu Dhabi Marine (ADMA), which operates two offshore fields. TOTAL also has a 15% stake in Abu Dhabi Gas Industries (GASCO), which produces NGL (natural gas liquids) and condensates from the associated gas produced by ADCO as well as from the gas and condensates and associated gases produced by ADMA. TOTAL also has a 5% stake in Abu Dhabi Gas Liquefaction Company (ADGAS), which processes the associated gas produced by ADMA in order to produce LNG, NGL and condensates, and further possesses a 5% holding in National Gas Shipping Company (NGSCO), which owns eight LNG tankers and exports the LNG produced by ADGAS.

The ADCO license expired in January 2014 and the Abu Dhabi authorities have issued a call for tenders for the renewal of the license as of January 1, 2015.

The Group holds a 24.5% stake in Dolphin Energy Ltd. in partnership with Mubadala, a company owned by the government of Abu Dhabi, in order to market gas produced in Qatar primarily to the United Arab Emirates.

The Group also owns 33.33% of Ruwais Fertilizer Industries (FERTIL), which produces urea. The FERTIL 2 project was started in July 2013 and enabled FERTIL to more than double its production capacity to 2 Mt/y.

In Iraq, the Group’s production was 7 kboe/d in 2013 compared to 6 kboe/d on average for the year 2012. TOTAL holds an 18.75% stake in the consortium that was awarded the development and production contract for the Halfaya field in the Missan province. Production of Phase 1 of the project, which has a capacity of 100 kb/d, started in June 2012. Phase 2, under construction, is expected to increase the production up to 200 kb/d by the end of 2014. The definitive development plan, which is expected to make it possible to achieve a plateau of 535 kb/d, was approved by the authorities in August 2013.

In early 2013, TOTAL acquired an 80% stake and became operator of the Baranan exploration Block (729 km2, southeast of Soulaymaniyah, in the Kurdistan area). A 2D seismic survey of 213 km was completed in January 2014. The data of this seismic is expected to result in the drilling of a first exploration well at the end of 2014.

Since 2012, TOTAL has held a 35% stake in the Safen and Harir exploration Blocks (424 km2 and 705 km2, respectively, located to the northeast of Erbil), as well as a 20% stake in the Taza Block (505 km2, located southwest of Sulaymaniyah). During 2013, four exploration wells were drilled and resulted in two discoveries located in the Taza and Harir Blocks. The drilling of five new wells is planned for 2014 on three of these four blocks. In early 2014, TOTAL increased its stake in the Safen Block to 80% and became the operator.

In Iran, the Group has had no production since 2010. For further information on TOTAL and Iran, see “— Other Matters — Cuba, Iran and Syria”, below.

In Oman, the Group’s production in 2013 was 37 kboe/d, stable compared to 2012 and 2011. TOTAL primarily produces oil on

 

 

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Block 6 (4%)(1) as well as on Block 53 (2%)(2), and it also produces LNG through its stake in the Oman LNG (5.54%)/Qalhat LNG (2.04%)(3) liquefaction plant, which has a capacity of 10.5 Mt/y. In December 2013, TOTAL obtained the license for ultra-deep-offshore Block 41.

In Qatar, where TOTAL has had operations since 1936, the Group’s production in 2013 was 137 kboe/d compared to 139 kboe/d in 2012 and 155 kboe/d in 2011. The Group has equity stakes in the Al Khalij field (40%), the NFB Block (20%) in the North field and the Qatargas 1 liquefaction plant (10%). The Group also holds a 16.7% stake in train 5 of Qatargas 2.

 

 

In 2012, TOTAL and state-owned Qatar Petroleum signed a new agreement to continue their partnership on the Al Khalij field for an additional 25-year period as of 2014. TOTAL will continue to be the operator (40%) alongside Qatar Petroleum (60%).

 

The production contract for the Dolphin gas project, signed in 2001 with Qatar Petroleum, provides for the sale of 2 Bcf/d of gas from the North Field for a 25-year period. The gas is processed in the Dolphin plant in Ras Laffan and exported to the United Arab Emirates through a 360 km gas pipeline.

 

The production capacity of train 5 of Qatargas 2 is 8 Mt/y. TOTAL has been a shareholder in this train since 2006. An agreement to share the two liquefaction trains of the Qatargas 2 project (trains 4 and 5) was signed in 2011. The agreement provides for an equal split of the physical production of the two trains as well as of the associated operating costs and capital outlay. In addition, TOTAL offtakes part of the LNG produced in compliance with the contracts signed in 2006, which provide for the purchase of 5.2 Mt/y of LNG from Qatargas 2 by the Group.

The Group became a partner in the offshore BC exploration permit (25%) in 2011. The first exploration well is due to be drilled during the first half of 2014.

In Syria, TOTAL has a 100% stake in the Deir Ez Zor permit, which is operated by the joint-venture company DEZPC in which TOTAL and the state-owned company SPC each have a 50% share. TOTAL also holds the Tabiyeh contract, which came into effect in 2009. The Group had no production in the country in 2013 or in 2012 compared to 53 kboe/d in 2011. TOTAL suspended its activities contributing to the production of hydrocarbons in Syria in December 2011, in compliance with the European Union’s regulations regarding this country. For additional information, see “— Other Matters — Cuba, Iran and Syria”, below.

In Yemen, where TOTAL has had operations since 1987, the Group’s production was 95 kboe/d in 2013 compared to 65 kboe/d in 2012 and 86 kboe/d in 2011.

TOTAL owns a 39.62% stake in the Yemen LNG liquefaction plant (capacity of 6.7 Mt/y), which is located in Balhaf on the country’s southern coast. This plant is supplied with the gas produced on Block 18, located near Marib in the center of the country, via a 320 km gas pipeline. The Balhaf plant suffered two rocket attacks in December 2013 and January 2014, but production was not impacted because one of the rockets resulted in slight damage and the other landed in the sea. Security measures have since been adopted due to the evolving risks.

TOTAL also has stakes in two oil basins, as the operator of Block 10 (Masila Basin, East Shabwa license, 28.57%) and as a partner on Block 5 (Marib basin, Jannah license, 15%).

TOTAL owns stakes in five onshore exploration licenses: 40% in Blocks 69 and 71, 50.1% in Block 70 (operator); 36% in Block 72 (operator); and 40% in Block 3 (operator).

 

 

 

(1)

TOTAL holds an indirect interest of 4% in Petroleum Development Oman LLC, operator of Block 6, via its 10% interest in via Pohol (equity affiliate).

(2)

TOTAL holds an indirect interest of 2% in Block 53.

(3)

TOTAL’s indirect stake in Qalhat LNG through its stake in Oman LNG.

 

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OIL AND GAS ACREAGE

 

As of December 31,

(in thousands of acres at year-end)

  2013     2012     2011  
     Undeveloped
acreage
(a)
    Developed
acreage
    Undeveloped
acreage
(a)
    Developed
acreage
    Undeveloped
acreage
(a)
    Developed
acreage
 

Europe

  Gross     10,804        722