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The challenges of an oil and gas company today

The challenges of an oil and gas company today. Jean-Pierre Biguenet TOTAL Austral Cartagena, July 3rd, 2008. ENERGY LANDSCAPE. Billions. Trillions $ 2005. Mboe/d. Average growth per year 2005-2030(e). 1.2%. 10. 200. 350. 1 %. 4.2 %. 1.8 %. 8. 150. 250. 6. 1.8 %. 100. 1.2 %.

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The challenges of an oil and gas company today

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  1. The challenges of an oil and gas company today Jean-Pierre Biguenet TOTAL Austral Cartagena, July 3rd, 2008

  2. ENERGY LANDSCAPE

  3. Billions Trillions $ 2005 Mboe/d Average growth per year 2005-2030(e) 1.2% 10 200 350 1 % 4.2 % 1.8 % 8 150 250 6 1.8 % 100 1.2 % 150 5.7% 4 50 2 0.6 % 2.2% 50 0.2 % 1980 2005 2030(e) 1980 2005 2030(e) 1980 2005 2030(e) Global energy demand growth Population GDP Energy demand (purchasing power parity) OECD Non-OECD Energy demand growth mainly driven by transportation and power generation sources : Total estimates 12

  4. 80% of the energy mix still derived from fossil fuels in 2030 World energy demand* Million boe/day + 1,2% / year + 0.8% / year 2015-2030 328 + 1.8% / year 2005-2015 + 1,8% / year 15 % Renewables (including hydro & biomass) 49 6 % 244 19 Nuclear 13 % 31 27 % 87 6 % 15 Coal 152 25 % 62 13 % 22 % 20 Gas 3 % 73 79 % 4 21 % 25 % 37 52 Oil 17 % 26 30 % 35 % 100 84 43 % 65 1980 2005 2030 * Primary energy Sources: IEA World Energy Outlook 2006 and Total

  5. FSU 07 30(e) Mature areas OECD Mature areas Asia 07 30(e) Heavy Oil Americas Middle East 07 30(e) 07 30(e) of which Saudi Arabia, Iran, Iraq Africa Mature areas South America 07 30(e) of which Nigeria 07 30(e) 07 30(e) Oil production capacity below 100 million of barrels per day towards 2020 - 2030 Oil production • Plenty of resources but technically challenging • Geopolitical uncertainties delaying development of new capacities • Growing role of OPEC sources : Total estimates 14

  6. Russia World gas production Mature areas 07 30(e) Liquefaction +5% per year Pipeline Gas +1% per year Australia 07 30(e) Middle East 07 30(e) 07 30(e) Africa of which Saudi Arabia, Iran, Iraq of which Nigeria 07 30(e) 07 30(e) Natural gas production growth driven by LNG • Large gas resources concentrated in Russia and the Middle East Growth of gas supply constrained by the pace of development of liquefaction projects sources : Total estimates 15

  7. Gas Liquids Processing gains Production growth concentrated in three major regions Change in global hydrocarbon production through 2015(e) (approx. 25 Mboe/d of additional production) Mboe/d • Decline in mature areas offset notably by ramp-up in heavy oil 25 Africa+3.5%/year • Growth in Middle East driven by Saudi Arabia and LNG Central Asia / Russia+2.5%/year 15 Middle East +4%/year • Growth of about 5% per year on average for West African production Americas Europe-0.5%/year 5 Asia+0.5%/year base 2006 production 2015(e) Growing share of OPEC in hydrocarbon supply source : Total estimates

  8. New environment marked by structurally higher oil price Impact of cost inflation Profitability of major projects (Example of an integrated heavy oil project) Market supply to remain tight Changes or uncertainties in fiscal or contractual framework IRR 60 $/b scenario 40 $/b scenario Hurdle rate Growing role of OPEC 40 $/b scenario 25 $/b scenario Sustained demand growth Persistent insecurity 2005 Vision 2007 Vision • Planned production growth delayed or postponed • Venezuela, Nigeria, Iran, Iraq and Russia • Aging installations in mature areas • Significant cost inflation • Although certain costs increasing at slower pace • Risk of delays for certain projects Vision of crude oil price above 50-60 $/b supported by sustained demand, persistent uncertainties on supply and inflation

  9. Increasing complexity of new projects Tight market fueling a high price environment Breakeven oil price of new projects in $/bbl Arctic 80 Ultra deep water Enhanced Recovery Deep water 60 Heavy oil 40 Other Conventional Oil need from 2005 to 2030 20 OPEC Middle East 1000 2000 3000 Oil resourcesin billion barrels Sources: IEA, Total

  10. WHAT an O&G COMPANY CAN DO?

  11. Bboe* 5 2007 Appraisal 4 2006 3 Projects in preparation 2005 2 2004 In development 1 2003 In production …Take Risks in Exploration1 billion boe added from exploration in 2007 Rapid confirmation of projects discovered through exploration Numerous exploration successes in 2007 • Block 32 • Block 14 • Egina • Moho North • MTPS • Tormore • Kessog • Bongkot • Shah Deniz • Mahakam Exploration in 2007 Discoveries & positive appraisals New permits Average discovery cost of 1.7 $/boe** Sustained exploration effort in 2008(e) : 1.8 B$ * reserve potential added from exploration ** 2007 average discovery cost : outlays for exploration and appraisal divided by additions to reserve potential from exploration for the year (discoveries, revisions and appraisals)

  12. 19 B$ Chemicals 16 B$ Downstream Usan Alwyn / Jura Pazflor Upstream 2007 2008(e) Moho Bilondo Increase Investment ProgramSubstantial 2008 Capex program to fuel future growth Capex by segment* Main 2008 investments(e) (Group share) Mahakam Kashagan Akpo Ekofisk area Between 0.6 and 1.0 B$ Canadian heavy oil Between 0.3 and 0.6 B$ Angola LNG Port Arthur coker Ofon II • 75% of the increase in Capex activity related • including increase in costs • 25% related to foreign exchange Anguille Lindsey Jubail Gonfreville styrenics Less than 0.3 B$ Increasing R&D budget by more than 20% to 1 B$ in 2008(e) * including net investment in equity affiliates and non-consolidated companies, excluding acquisitions and based on 1 € = 1.50 $ for 2008(e)

  13. Production from main projects 2007-2010(e)* kboe/d 600 Non-operated Yemen LNG, Akpo, Qatargas II, Tahiti, Tombua Landana, Ofon II… 400 Total-operated Moho, Jura 200 Dalia, Rosa, Dolphin 2007 2008(e) 2009(e) 2010(e) 2010(e) 80% of new production through 2010 operated by Total Tombua Landana (20%) Ofon II (40%) Tahiti (17%) Qatargas II TB (16.7%) Akpo (24%) • Plateau : 130 kboe/d • Start-up : 2H09(e) • Progress : approx. 55%** • Plateau : 100 kboe/d • Start-up : 2010(e) • Progress : approx. 5%** • Plateau : 135 kboe/d • Start-up : 2H09(e) • Progress : approx. 88%** • Plateau : 250 kboe/d • Start-up : 1H09(e) • Progress : approx. 45%** • Plateau : 225 kboe/d • Start-up : winter 08-09(e) • Progress : approx. 65%** Yemen LNG (39.6%) • Plateau : 195 kboe/d • Start-up : winter 08-09(e) • Progress : approx. 70%** Jura (100%) • Plateau : 45 kboe/d • Start-up : 2Q08(e) • Progress : approx. 70%** Moho Bilondo (53.5%) • Plateau : 90 kboe/d • Start-up : 2Q08(e) • Progress : approx. 95%** * estimates based on Brent at 60 $/b in 2008 and thereafter, Total share ** at 1/01/2008

  14. Brass LNG (17%) Mt/y Total 30 +13% per year on average(e) 20 2006 base 2010(e) growth projects 10 2015(e) growth projects 2006 2010(e) 2015(e) RDS XOM BP CVX Mobilize O&G resourcesChanging scale of Total’s LNG portfolio Yemen LNG (39.6%) Qatargas II TrB (16.7%) Angola LNG (13.6%) NLNG T7 (15%) Ichthys LNG (24%) Shtokman (25%) • Capacity: 6.7 Mt/y • Start-up winter 08-09(e) • US, Asia • Capacity : 7.8 Mt/y • Start-up 2009(e) • Europe, US • Capacity : 5.2 Mt/y • FID Dec. 2007 • US • Capacity : 8.5 Mt/y • FID 2008-2009(e) • US • Capacity : 8.4 Mt/y • FID 2008-2009(e) • Asia • Capacity : 10 Mt/y • FID 2008-2009(e) • US, Europe • Capacity : 7.5 Mt/y • FID 2009(e) • US, Europe LNG sales* Important developments since the start of 2007 • Took 25% interest in Shtokman Phase I • Launched development of Angola LNG • Development of Yemen LNG on track • Started production on Snøhvit and NLNG T6 Major LNG producer with approx 17% of Group production in 2010(e) * sales, Group share, excluding trading ; estimates for other majors

  15. Biomass Clean coal Progressively expanding Total’s energy offerings • Growing new energies business in context of high hydrocarbon prices • Complementary to hydrocarbon value chain • Demonstrated ability to manage major projects and master new technologies • Acceptable returns • Sharing expertise with other industrial players • Strengthening position in solar • Increasing production of photovoltaic cells (Photovoltech) • Proposing nuclear projects in oil producing countries • Accelerating R&D • Clean coal and XTL, second-generation biomass and CO2 sequestration Photovoltaic cell production capacity* (Photovoltech) MWp/y** 600 400 200 2007 2009(e) 2015(e) Outlook for technological improvements and scale effects to allow for the development of competitive new energy sources * at year-end for each period ; Photovoltech is a 47.8% owned subsidiary of Total ** megawatt peak, equivalent to one million peak watts 15

  16. Nuclear power: a necessary renaissance whose impact will only be felt in the long term • Development determined by nuclear power’s acceptability and the strength of its revival • Substantial investment, given the need to replace most existing nuclear power plants within 30 years TWh Nuclear power generation 5,000 4,000 China Other non-OECD 3,000 North America 2,000 1,000 Other OECD 0 2005 2015(e) 2030(e) Total’s growth in nuclear based on partnership : Suez, Areva Total estimates 17

  17. The Lacq CO2 capture and sequestration pilot:flagship contribution to CCS technology Transportation 13% Deforestation 17% Oil and Gas33.5% Construction 8% Industry incl. power generation 7.5% Agriculture 14% Production and refining(operations) 5% Other GHGs, other 12.5% Coal CO2 capture and sequestrationSolutions for CO2-intensive industries Power generation and Industry 18% Other5 % Combined effects of energy efficiency, energy mix evolution and CO2 sequestration will be necessary to reduce CO2 emissions 18

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