Total CEO keeps costly drilling strategy to end: 2014

Tue Jul 8, 2014 2:14am EDT
 
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By Michel Rose

PARIS (Reuters) - The chief executive of French oil major Total (TOTF.PA: Quote) is giving himself until the end of the year to strike oil at a big new field somewhere in the world before considering whether to change direction and cut the exploration budget.

The Paris-based oil major, which launched a drilling strategy that it termed "high-risk, high-reward" two years ago, has had disappointing explorations results so far.

"It's not a success in terms of results for the moment," Christophe de Margerie told Reuters in an interview. "But exploration takes more than two years to yield results."

De Margerie was asked whether the group could drop the expensive strategy, which had been a shift from Total's previous, more cautious approach. "Not before the end of the year; at the end of the year we'll see if we didn't get enough," he said.

"If we have to change, we'll do it, but there won't be a revolution where we stop everything and start over," he said, adding that the company had yet to drill so far in countries such as Angola, South Africa and Bulgaria.

In any event, he expected Total's exploration budget to drop next year from the $2.9 billion set for this year, which represented an increase of about 12 percent compared with 2012.

Total, like other big oil majors, has been under pressure from shareholders to cut costs and raise dividends. France's biggest company by market value and the Western world's No 4 oil and gas firm said last year it would engage in what De Margerie called a "soft-landing" in capital investments.

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Christophe de Margerie, CEO of the French oil and gas company Total SA, speaks during an interview with Reuters in Paris July 7, 2014.   REUTERS/Benoit Tessier