Total announces cost, investment cuts
Total unveiled Monday a cost-cutting programme and further asset sales that will also see the French oil company invest less as it tries to lift its profitability.
Chief Financial Officer Patrick de la Chevardiere told investors in London that Total would strive to reduce its operating costs by $2 billion by 2017, but that no layoffs were foreseen in France.
Chevardiere said overcapacity in the refining sector in Europe was forcing Total to adapt, but said no decisions had yet been taken and that the cost-cutting drive would affect all segments including exploration and extraction.
Investments, which peaked at $28 billion in 2013, are set to fall to $26 billion this year and to $25 billion in 2017.
The company said it aimed to sell $15 billion in assets between 2015 and 2017, having met its goal of $15-20 billion in disposals in 2012-2014.
"Total is continuing its transformation by focusing on strategic assets providing growth and high profitability," it said in a statement in which it targeted profitability above 15 percent.
The company saw its second quarter net profit fall 12.0 percent on a current cost basis, excluding the effects of changes in inventory values, to $3.15 billion.
It forecast production will rise to 2.8 million barrels per day in 2017 from 2.3 million mbd in the second quarter of this year as a number of new projects come on line.
This is down from earlier forecasts of 3.0 mbd due to asset sales and delays, however.
Chevardiere said work on constructing a natural gas liquefaction plant in Yamal in northwestern Siberia was continuing despite EU and US sanctions on Russia.
He said the project could no longer be financed in dollars so Total was looking for funding in euros, rubles or yuan.
© 2014 AFP