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French Total eyes upstream assets in Brazil, Venezuela: CEO
WASHINGTON
Petroleumworld.com, Feb 16, 2009French oil major Total is interested in entering the upstream offshore Brazil to help develop the huge resources in the Santos basin and is also eying new acreage in Venezuela, the company's CEO Christophe de Margerie said Friday.
"We have had discussions with [Brazilian oil company] Petrobras and told them officially that we would be interested either in entering existing discoveries or taking part in the next bids on new acreage," de Margerie told reporters at a briefing in London.
He stressed that Petrobras needed financing to develop the reserves in the offshore basin, but that Total was not interested in merely becoming a financial partner in Brazil.
Since late 2007, Petrobras and its partners--including the UK's BG Group and Spain's Repsol YPF--have discovered more than 12 billion recoverable barrels of oil in the pre-salt province of Santos basin.
De Margerie also said Total would be interested in bidding for new exploration acreage in the extra heavy crude oil Orinoco Belt in Venezuela.
"There is room for additional development [in the region] and we will be one of the companies to get access to the data, and we may bid," he said.
"We need to operate in Venezuela in good conditions, but it is an important target in terms of acreage," he said.
De Margerie said Total was right to stay in Venezuela despite the nationalization by President Hugo Chavez of large swathes of the country's oil industry in 2007.
Chavez nationalized oil fields when crude prices were on what looked like an unstoppable bull run, and as a result ExxonMobil and ConocoPhillips left
Venezuela and are still fighting legal battles over projects. It was reported in January this year that Chavez and PDVSA, the state-run oil company, were looking for new bids to develop fields from both global majors and state-run oil companies.
Total saw its stake in the Sincor project reduced from 47% to 30.3% in July 2007, and the company remains committed to the project.
"We have to make sure our existing Sincor project delivers--this is still a real challenge," he said.
De Margerie said, however, that the falling oil price had impacted on the speed of development of the heavy oil projects in Venezuela, as well as other similar projects such as oil sands development in Canada.
"We are seeing delays in heavy oil projects in Canada and Venezuela," he said.
In Canada, Total believes that a minimum oil price of $80/barrel is necessary to develop oil sands acreage. At current prices--which have fallen in recent days to lows around $34/b--solutions need to be found, de Margerie said.
"We would need to reduce costs by 20% to make the projects viable," he said.
"We need to find solutions or their development will be very difficult." De Margerie said he welcomed the recent cuts in output by oil exporters' group OPEC designed to boost prices. He said it showed OPEC was being "more disciplined than usual" and that they were "scared" of the impact of low prices.
Meanwhile, in the UK North Sea, Total has reviewed its capital expenditure for 2009 because of the fall in oil prices. "We are trying to reduce costs, but some work has had to be canceled," Total UK head of upstream Roland Festor told reporters.
Total's senior vice president for Northern Europe, Michel Contie, added that an oil price of $40/b was still needed to develop new fields in the North Sea. However, he said, the North Sea remains "costly" to develop new reserves, and many new discoveries are "not economic today."
He added that industry costs are now double what they were in 2004 despite the oil price being the same at around $40/b.
Story by Stuart Elliott from Platts
-stuart_elliott@platts.com
Platts 02/13/2009
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