TOTAL CAN RESIST

French oil major Total SA is well placed to weather the recent oil-price volatility, with new production scheduled to come on stream over the next two years set to bolster the company, its new Chief Executive Patrick Pouyanné told a London industry conference Thursday.

"If one company is well positioned to resist the volatility, we are the one," said Mr. Pouyanné, speaking a week after his appointment following the sudden death of predecessor Christophe de Margerie in an airplane accident last week. Mr. Pouyanné, a Total veteran, was given a standing ovation by delegates at the Oil and Money conference after paying tribute to Mr. de Margerie.

The company's new CEO said, however, that some areas of the business face more pressure than others.

Europe's refining industry has been particularly hard hit by competition from new and more sophisticated plants in the Middle East and Asia and from U.S. plants that benefit from cheaper feedstock costs.

Total, the largest refiner in Europe, plans to focus on its investments in its largest and most integrated platforms, Mr. Pouyanné said.

"We cannot sustain plants that are losing €100 million a year of cash," he said.

Projects in Russia are also facing financing constraints because of Western sanctions on companies and individuals in the country. Mr. Pouyanné said Total may consider financing some of its projects in Russia in euros, because dollar financing is no longer possible. Total’s main investment in Russia is its $27 billion Yamal liquefied natural gas project in Russia’s Arctic region.

The company is also carefully considering future acquisition opportunities, including potential investments in the U.S., though over the last year valuations in the region have seemed expensive, Mr. Pouyanné said.

“We are not against taking more positions in the U.S.,” he said. “The question is to be pragmatic. He added that to grow as big as some of Total’s competitors in the U.S. could be challenging.

“We are strong in other continents. We are strong in Africa; we are strong in the Middle East. We can also have a strategy to continue to reinforce our advantage compared to our competitors,” he added.

wsj.com