TotalEnergies SE (TTE) 2013 Q4 法說會逐字稿

Ladies and gentlemen, welcome to Total 2013 results and outlook.

I'd like to welcome, also, those of you who are following us through the Web.

A few reminders before we start.

Safety -- safety first, of course.

You have, in case of emergency, two fire exits at the back of the room.

Also, as a courtesy to everyone, please keep your electronic device on silent mode.

That will be nice.

Our program today will start with the opening remarks from Christophe de Margerie, our Chairman and CEO.

Then we'll have Patrick de La Chevardiere presenting the results.

Christophe will come back for the outlook.

And after, we'll open the floor for Q&A.

Again, thanks a lot for coming here.

We are -- it's always a pleasure for us to be in London and to meet with you.

Thank you for your attention.

And, Christophe, the floor is yours.

Thank you, Martin.

I still love your English.

And, first of all, good afternoon to all and welcome to this conference presentation.

I don't know what the word is.

But definitely all the team of Total is keen to have you with us, and especially today for presenting our 2013 results, and definitely we need to start talking about the future.

So, Patrick de La Chevardiere and myself, we will make the presentation, and then, as Martin said, we will go as quickly as we can to the Q&A session, which is always the expected part of our discussions.

So, just a quick introduction in four points.

I'm trying over the years to be quicker to the points, Lucas.

First, always remember that Total is a company living in a world of long term, and even if we know that we also have to accept the short term -- what I mean to accept is not to accept.

We live in the short term, and the expectation of our shareholders might be short term.

It's important that we can, at the same time, say that we are good with our short-term forecasts and commitments at the same time keep on the long-term projections, vision, of the Group.

Remember that we decline a vision, a strategy, based on 2012-2014, and then 2015-2017, and then after, and we told you, I told you, that 2012-2014 will be years of transition, years of implementing the new strategy of the Group, which means investing more, which means, definitely, using our cash for this investment without forgetting our strategy of return to our investors.

But those three years would be not as good in terms of cash and profits than what we expect from 2015 and after.

At the same time, it doesn't mean that we are not confident with the result we've had in 2013.

The opposite, this is what we call a solid year.

We have, more than ever a solid balance sheet, 23% gearing, which covered all of our investment.

That's more than normal.

On the top a dividend, and I will come back to this.

And on the top, which is unusual, not with Total, but it's unusual for us, we have been better than all of our competitors.

Well, I prefer to say this, we are confident in the future, not just to say we are just better than others, because that we will not be sufficient, because if the others are not as good as you would like, you might consider Total as not as good as you would like.

But Total is not only better, Total is on track.

Total is delivering, and that's what we're going to prove.

So, for two years we have been telling you that we are building the future, that we are investing, that we are investing in new projects, that those list of new projects are on track.

You will see this in the presentation made by Patrick.

It's not only now any more words, they are facts, and, of course, those facts cannot just hide what is part of the unknown.

The unknown is Libya, okay, we produced less.

Nigeria, yes, we produced less.

And at the end, we produced less than expected, but still with being producing less as expecting, we're producing on a year-to-year basis a flat production, 2.3 million barrels per day, and if you compare us with our peers, we are better than them, but, again, I prefer to say that, even in a difficult environment, we have been producing as much as we could, and at the top, again, I insist, preparing the future.

And the future is now more than just 2017.

It's 2017-plus.

We've made deals during 2013 which are for after 2017, like Libra, like Yamal, so two projects which have been decided in 2013, but full production coming after.

So, Patrick will tell you about 2013 and part of '14.

I will be committing myself on 2015 and '17, but seeing already that we are definitely committed to the rest.

Because, I mean, you will tell me, and I know you very well, when I am telling you it's done for 2017, I will be asked, what about after?

So, we will answer to both, and with facts, with not only promises, but realities, and definitely in terms of cash.

Third point is CapEx, level of CapEx, which I think we've, ourselves, introduced as the enemy of our industry.

What I mean by this is the inflation of cost.

CapEx are not enemies.

CapEx is life.

You cannot say that you want to produce more oil, more gas, that you need between now and 2030 to replaced something which is -- and that's shared by everybody -- 55 million barrels of per day equivalent, and it will not come from investment.

So, that's very important.

That's 5 times the Saudi Arabia production.

That's very simple.

Don't ask me to produce the equivalent in terms of reserves, because 5 times Saudi Arabia is more than the reserves of the world.

So, it doesn't match.

But our production is what it is.

55 is 5 times the production of Saudi Arabia, and that's what we need to cover the demand, not to be better, not to be whatever, that is the world demand from people asking for energy, and that's our commitment.

But the thing is, going back to Total in this environment, which is a strong and wealthy environment, Total has to be careful.

We have been investing more than we used to, but that was an important link with our strategy to be better in terms of bringing additional production, additional reserves.

I know you are challenging us on the 3 million.

Good, keep on with this.

You are helping me.

But, I mean, I strongly believe that this is a good commitment, and is a doable target.

Patrick will come to it partly, and I will follow this.

But we need to do definitely is now to make a soft landing on our capital expenditures.

The peak is in 2013, $28 billion in organic, and now, Lucas, and some others, I will not challenge you any more about organic.

Okay?

I accepted it.

I mean, what's important is to have a common language, even if I think we could do it differently.

But organic $28 billion, organic in 2014, $26 billion.

That is our capital expenditures budget, and we will make it.

And then, for the future, I'll come back to it, but we'll still be capital intensive, because with this target of growth, you cannot say you will not keep investing, but at a lower level.

And, more important, not only to reduce our level of CapEx, but to reduce our cost.

Because if we want to meet our targets in terms of capital expenditures, being in a soft landing position, we have to fight against inflation on cost.

And I will come back to it in the overlook on the future, but even more on what is the way Total is doing it.

So, definitely, control our capital expenditure, and reduce our operating expenses.

That's our commitment, and we will prove it.

I will tell you, I intend to make it a reality, because, I mean, that is, for me, the most important challenge of our industry -- cost inflation.

That is just not sustainable.

I told you this already a year ago.

I definitely intend to make of Total one of the leaders of this extremely important challenge.

Even if I told you this before, we cannot do it by ourselves, but we will not wait for others.

We will start, especially on OpEx.

CapEx is probably in need of more common, I would say, partnership role in the industry.

The last point, because I like always to make four points.

When I say four points, there are four.

So, one, two, three.

The fourth one is we trust in our strategy, and that's our dividend policy.

We told you that we would be increasing the dividend to give an actual return, expected return, to our shareholders.

We told you that we will do it without waiting for the additional cash coming from our additional investment, which means new production.

That's what we did yesterday with the Board asking the AGM to approve the increase in dividend.

We will see.

I cannot commit, because that is the AGM, but knowing that we represent some of them, I don't think there will be any concern on this increase.

This increase is the second one in a row.

We will do it again, but, I mean, I think it was necessary to say that, yes, we trust in our strategy, not because it's a strategy, because now it's coming into facts, and coming into facts, it means also live it.

I had 10 minutes.

I have just done it in 10 minutes.

I said that I would do it in five minutes.

That was just totally crazy, but now I leave the floor to Patrick, and I leave him with something he hates -- not really, but a little bit -- he has to start with CSR.

I know I'm bringing and poaching a little bit of your presentation, but you will start with the first slide on CSR, and CSR is important for our Company.

Thank you, Christophe.

I knew, since the beginning, that you were enjoying the CSR slide I will present to you as my first slide.

A few words about our culture, maybe not our philosophy, but our culture, because both are important drivers for every company.

We are convinced that long-term sustainability depends on both acceptability and profit.

That's why you have profit on the left, acceptability on the right, on the same slide.

You see on the result the -- so quite strong result in comparison to our peers.

The financial metrics are, honestly, good.

The balance sheet is strong.

The return on equity is good, also.

On top of that, we offer some good dividend, and it has been recently increased.

In terms of acceptability, we emphasize the priority to safety with some good metrics, also, the total recordable injury rate being down by 14% versus 2012.

Most of you have been with us in the field trip, and I think you recognize that Total is a welcome and valuable partner towards the countries where we work with.

On top of that, we think that this balance between result and acceptability is giving us a competitive advantage in terms of accessing resources in new countries or in existing countries where we already are.

A few words about environment.

You see that prices in oil and gas has been relatively stable over the past three years, around $100, $110 per barrel.

For Brent, spare capacity has remained low.

It is about 4% today, and demand growth has accelerated.

Our view on the oil market has not changed.

Globally, we believe that oil demand is ultimately constrained by supply.

For natural gas, on the right, there are different areas, the US, Europe, and Asia.

You see some depressed gas price in the US, nothing new for you.

Keep in mind that our exposure to US domestic gas price is extremely low and that we are well positioned in both Europe and Asia to take advantage of the good pricing you can see there.

And globally speaking, both prices were supportive of the investments launched by the industry, including ourselves.

So, what about our results?

The $14.3 billion adjusted net income positions us relatively well in comparison to our peers.

The story for all of our major companies has been about overcoming external challenges.

Disruption in some production, like in Nigeria, like in Libya.

Delays on major projects, and I would say on major projects which are not operated by us.

And depressed margin for European margin.

Those are the three main goals and challenges we had to face.

Upstream generated $12.4 billion, a decrease which reflects mainly changes in the production mix, some higher costs, notably exploration, and higher taxes.

The downstream increased its production up to $3.4 billion, despite the lower refining margin in Europe.

This is reflecting, I think, the benefit of the self-help and growth in stronger markets, and most of it I would say about the restructuring programs we have launched in Refining & Chemicals.

It is important, also, to point out while we are reshaping the portfolio by selling assets, building new assets in order to create a larger and more competitive company, that we still perform in 2013 a competitive level, relative to our peers.

Despite of all the effort we had to build this new company, we had some good results in 2013.

And I remind you that the period 2012-2014 is a major transition phase for Total.

Production -- compared to 2012, production in 2013 was stable at 2.3 million barrels per day, despite some one-offs, including security issues in Nigeria and in Libya.

These issues were offset mainly by ramp-ups in new fields, the reversal of some 2012 one-offs, like Elgin, for instance, or OML-58 in Nigeria, and, as well as a greater contribution from Novatek.

For 2014, you know that the Adco license in Abu Dhabi expired in January 2014, and we are currently negotiating for a new license, and we have not included in the 2014 production forecast any volume from Adco, so that we are quite conservative.

Just to let you know, Adco represented 140,000 barrels per day of production in 2013.

Excluding Adco, we expect to grow production by 4% in 2014, mainly from the startup of our projects, CLOV, Laggan-Tormore, and Ofon 2, the ramp-up of Angola LNG, which restarted in January, and Kashagan, but with only a limited contribution, and some ramp-up, also, from Utica in the US.

And I remind you that the new barrels going forward are accretive in terms of cash flow.

2013 was a milestone year for launching new projects and adding new resources.

We launched Fort Hills, Yamal, for instance.

We added some new resources in Brazil with Libra, in Papua-New Guinea with Elk-Antelope.

Please note that to be prudent we haven't included in 2017 any production coming from Fort Hills or Yamal.

Libra and Elk-Antelope will need some exploration wells to be drilled or appreciation wells to be drilled in 2014 and maybe '15.

Honestly, when you see this map, there is, I think, a good mix of long-plateau production, as well as deep offshore and LNG.

LNG is an important part of our Upstream story and of our portfolio.

It represents close to 20% of our production, and more than 25% of the Upstream net operating income in 2013.

In 2013, we had the startup of Angola LNG, the sanction of Yamal, and we acquired interest in the Elk-Antelope.

You can see on the left that we are on our way to more than doubling our LNG production from 2007 to 2017.

Our 2013 LNG production was 12 million tonnes, which represents 19% of the total production of the Upstream division.

The light blue portion on the 2017 bar represents those projects which are in development, GLNG, Ichthys, and Yamal.

Sanctioning Yamal was, obviously, a milestone event in 2013, and we show it to the right that Yamal, in terms of breakeven, is one of the best positioned projects among the currently existing projects in the LNG business at the moment.

It is an onshore project, with low cost, and with competitive fiscal terms.

The same type of comment on deep offshore.

Deep offshore you know that Total is one of the leaders in deep offshore.

You see on the left that our production from deep offshore more than doubles from 2007 to 2017.

The same with the light blue on the 2017 bar, which are the projects under construction -- CLOV, Laggan, Moho, and Egina, not mentioning Kaombo, which is not yet sanctioned, despite the very efficient cost reduction we have obtained, and you will see that later on.

Not taking into account Kaombo, by 2017 we will operate eight deep offshore FPSOs.

An important point, also, to understood is that deep offshore is where huge amount of new resources are coming from.

Our goal is to continue and strengthen this business of deep offshore.

That's why we took a 20% stake in Libra.

The range of resources in Libra is between 8 billion to 12 billion barrels.

And we added to our portfolio and we are drilling those prospects this year, the Kwanza Basin in Angola, South Africa, Ivory Coast, and, of course, Brazil.

2013 showed a strong reserve replacement rate of 119%.

Organically, the reserve replacement rate is at 109%.

Over a period of three years, 2011-2013, the replacement rate is at 130%, and basically with 11.5 billion barrels of 1P reserves end of last year, we have more than 13 years of proved reserve life.

The restructuring of downstream -- you know that basically two years ago we split on one side Marketing & Services, and on the other side Refining & Chemicals.

Those two segments have an important role to play in the Group, and if you compare 2011 and 2013 where the refining margins were quite comparable, $17 and $18 per tonne, we added to the downstream adjusted net operating income more than $1 billion of results.

On the right side, you see for the same period, 2011-2013, that we, Total, had, by far, the strongest improvement in performance in the downstream, and we are continuing to implement our restructuring program and transformation program.

Focusing on Refining & Chemicals, this segment is well into its restructuring.

I mean, every quarter most of the financial community is surprised, positively surprised, by the result of this segment of the Company.

In 2013, it generated $1.9 billion, with a return on capital employed of 9%.

On the right of the slide, you have the main actions taken, some comments about the main actions taken.

For instance, where we planned $200 million of synergies and efficiencies we achieved $250 million.

Another focus about the Satorp refinery in Jubail, where we hope to have all those units in operation by end of March, mid of March, this year.

I think the robust result you see on 2013 where the refining margin was at $18 per tonne in comparison to the refining margin of 2012, which was $36 per tonne, and where we show better net operating income in 2013 than in 2012, shows that we are making good progress, despite the weaker environment.

Marketing & Services increased its contribution by more than 40%, up to $1.5 billion for the year 2013 from $1.1 billion a year before.

Our objective is to continue growing this already profitable business.

This is a mix of network, lubricant, commercial sales, specialties, which are, honestly, making extremely good progress, both in mature countries where we do consolidate our position, and in growing countries like Africa and Middle East, where we follow the growth of those countries.

The ROACE, excluding new energies -- I remind you that new energies is included in the Marketing & Services -- the ROACE without new energies was about 20% last year.

The asset sale -- I mean, I think this is one of the most dynamic areas of our reshaping -- when reshaping our portfolio.

Following the sale of $15 billion of assets in 2010-2011, we launched a program to sell an additional $15 billion to $20 billion of non-core assets over the period 2012-2014.

We are well on track to achieve our target and potentially to make more than that.

For instance, last week we finalized the sale of 15/06 in Angola for about $1 billion.

In 2013, we sold $3 billion of mid-stream and downstream assets that you probably even didn't know they existed.

For instance, the TIGF Pipeline in south of France, the fertilizer business in Europe, and the last being our interest in the Ocensa Pipeline in Colombia.

In Upstream, we brought strategic partners.

For instance, in Congo, where we brought Qatar Petroleum Industry as a shareholder of TEP Congo, our affiliate there.

Finally, once Usan in Nigeria sale is closed, we will be at $16 billion within our $15 billion to $20 billion asset sales program for the period 2012-2014.

So, we are working on a number of other sales.

Honestly, these should bring the total of 2012-2014 figure to the top end of our target, and potentially exceed it.

Cash flow -- cash flow was as important for you than for me.

We managed through this period of high CapEx intensity to maintain a strong balance sheet with a gearing of 23%.

I remind you that at the end of 2013 we had about $3 billion of pending asset sales, that we took the opportunity of acquiring the 20% stake in Libra.

So, these two things account for most of the additional debt you see on the graph.

The cash flow from operations was about $28.5 billion.

The net asset sale was about $2 billion, and the change in debt was about $4 billion.

Organic investment -- you know that we were at the peak at $28 billion, and the dividend is about $7 billion.

Last slide, I think, for me is the evidence that we are still committed to growing shareholder value.

For last year we posted a 20% share price appreciation.

As I already said, we increased the dividend by 3.4%, demonstrating our confidence in the future.

You see on the right that over a period of 10 years we more than doubled the dividend, and that the total shareholder return averaged more than 8% per year on the same period.

Total has delivered the highest total return to shareholders among the super majors for the past two years, but I still believe, and I think we still believe, that it is still undervalued.

I know you will enjoy the English of Christophe, which is better than mine, and Martin, as I understood what you said.

I talked about Martin, not you.

But I like you like to share our values, which is solidarity.

Thank you, Patrick.

Enjoy.

First, I'm sorry I said "overlook," and that was, by definition, "outlook," which proves that my English is not as good as I thought.

But let's go now to after the results to what we expect to do.

First, I will start on macro, which has been always our drive.

I mean, without macro, without views on the assumption on price of crude and gas, I still, as I've been saying now for many years, these things you cannot lead, manage a company.

So, you have to take, as for everything, your responsibility.

So, the first is, as we did many times, to talk about the oil demand.

We didn't change a lot versus the presentation I made last September, 0.6% growth in the world demand for oil.

I come back to one other point I mentioned during the opening of this presentation is, well, you need only for this 0.6% growth in 16 year times.

You have to understand that now 2030 is 16 years' time, which is, in our industry, tomorrow.

I know people say to me, I mean, 2030.

It's tomorrow, and tomorrow we need 55 million barrels additional, with being relatively conservative in the decline of existing fields, that yields the 5 times Saudi Arabia, and we still have limited, I would say, unused capacities in the world.

So, we have, as an industry, we have as a company, to accompany this demand for oil and gas, which means for energy.

And what we need to do on the top, as Total, is not only to do it for doing it, but do it with profit.

Do it with, as Patrick said, added value to the Company, which means to our shareholders.

So, all of those additional barrels of Total need to be bringing value, and that's the case.

On the gas, we have a focus on LNG.

I could -- we'll certainly be challenged on what our forecast on gas price in the world.

Let's start with LNG, in which we are extremely implicated.

We see a 5% growth as an average between now and 2030, which means that you'll be in a need for finding 100% more new projects.

Today, we are net 250 million tonnes per year.

In 2030, it's almost the same figure, which means that with the new sanctioned projects not yet delivering production, we will just be able to sustain the today's capacities, and then we will need to bring an almost-equivalent, and, in fact, more new projects on stream by that time if we want to cover the demand.

And I'm always surprised to hear people say, we can bring more LNG, but without projects.

You need new projects, and projects are getting old, if they are not, I will say, reinvested.

If you don't reinvest in it, if you don't find new ones.

So, Total definitely believes in new projects.

We have said it with the FID of Yamal.

Again, we insist on having breakeven of those projects being as much as we can below 12.

That's the case for Yamal, if possible, below 14.

I will come back on this, probably, in September.

But definitely today, if you believe in LNG, you cannot expect to do it with price of gas being HH.

So, we need -- and that is a challenge of the industry is to invest in new projects.

What I mean by challenging in terms of technology, not always in the easiest environment, like Yamal, but with breakeven which are bringing, again, I insist, value to the shareholder.

Always the problem for a company like Total is to deliver oil and gas which is needed and, also to deliver it in being profitable.

So, as Patrick likes to say, the two sides of the slides are always important.

Cover the need; be profitable.

Major projects on track in the -- that has been always our challenge, but it's getting closer and closer to not the end, to the beginning of production, and that's the great news.

There's three projects starting in 2014, one in the third quarter, one in the -- sorry, one in the second, one in the third, one in the fourth.

And those are the three new projects for 2014, which will definitely not only the benefit of the startup in 2014, but also the ramp-up in 2015 and plus.

That is following the commitment we took vis-a-vis our Board and our investors, and it's there.

And all the others, coming after, will be also done in the same way.

By the way, we have nine of those projects being operated by Total.

Is it better?

Yes, we think it's better, because, first, it's part of our skills.

It's our technology, and, at least if it doesn't come into production on time, you know who is responsible.

It will be Total and nobody else.

But today, frankly, on all of those projects which are year '13, none of them is a concern for the Company and for the management.

So, we have to deliver.

We have to continue, but that is the trust you can have on this Company, on your Company, is when we ask something to our teams and we then commit ourselves vis-a-vis our shareholders, it's done.

And I am taking a risk in saying this, but that's my role.

Confirming production growth targets, which is not the easiest one, because you like to challenge us on this, and I will not say, like Patrick, I, but you also like to challenge me.

But the cash flows, Patrick, are not yours, they are the one of Total.

I'm teasing you.

But that is our commitment, is this 3 million barrels per day in terms of capacity in 2017.

Well, you have the list of the projects in the document you receive, which now we are using as an appendix, and not any more as one of the major slides.

But what is important is, all of those projects, the new ones, represent, as you can see on the slide, the 700,000 barrels per day additional in 2017, and all are on track to achieve the startup.

So, that's why we are confident.

At the same time here, we are talking about new projects, on which we have a direct impact, especially when we operate them.

But it's true that if you ask me to tell you that I am certain of what will be the production of Libya and the production of Nigeria, no, I will not tell you what it is, because I don't know, even if I can tell you about Libya, it cannot be worse than what it is today.

So -- well, it can, but normally it should be higher than what it is today.

So, I'm not taking too much risk, but it's definitely the importance is recommit on what is under our control, and what's not under our control we don't commit, but it's what it is, and if it's hurting us, it's hurting others, and that's life.

So, the 3 million is based on our strong -- will?

No.

Strong belief that it will be producing.

I insist, because I know, I've been told, that you are still considering that this figure is too high.

It is our figure.

I am committed to it, and I will be responsible for it.

Now, the most important thing is 2015, because it comes before 2017.

It's sometimes better to say it that way, which is already 2.6 million, which is a quite impressive increase compared to what we have today, which is 2.3 million, even if, as Patrick said, a 2.3 million is not so bad, because it's a flat production on a year-to-year basis, which is better than our competitors, but I don't like to be satisfied just with it.

So, definitely, this 2015 figure is important, because it will be the proof that we are going to the 3 million, and for this, we'll have much (inaudible) to had what I've said, if you remember, the list of the three projects for 2014 and the one we have 2015.

There are two things on which, definitely, there are things which are not totally under control.

It's Adco, in Abu Dhabi, the new concession, which we definitely intend to see as part of our new productions.

I say "new," because it's a new concession.

It's part of our target for 2015, but, don't worry, it will not change the figure even if -- I hate to say this -- even if we are not successful.

So, again, don't be thinking that our target is only 2017.

It starts with 2014, '15, '16, '17, and adding value.

I could add that on those new barrels, on an equivalent basis, they are $50 barrel equivalent of cash.

High potential exploration program -- thanks, God.

It's potential, but just don't take my words as being nasty for our Company results.

I'm in charge of this Company, and I am responsible for the results, but I think a normal CEO is, especially with his shareholders, has to be transparent and fair.

2013 has been the first year of our new exploration program, and, as Patrick said, it was not totally at the level of our expectations, even if we -- and that's where we have to be careful -- even if we said on a year you cannot judge a company policy, and especially your geoscience people.

And I've been learning, even if I'm in this industry now for more than 38 years, that sometimes we are too greedy, or we are too much expecting from our people.

Two years is short term, and I must say when we asked -- I mean, one year give results, it's too short.

So, I've told you that I will be telling you what is the result of our new exploration -- intensive exploration program.

It will be done by the end of 2014, and I will not wait the end of the year.

We will certainly have a strong discussion on this in September, when we have the discussion on the new outlook and the strategy of Total.

But just to say 2013, Patrick said what it was, two real new, I would say, discoveries, which are Kurdistan and Argentina, and two potential main discoveries, but potential -- Ivory Coast, and I would add, which is not on the slide, Gabon, where, for the same reasons, we discovered what we call a play, a kitchen, as our geologists like to say, which means hydrocarbons.

But, at the same time, today not at a commercial level.

And we continue to work on this and, especially, the first on Ivory Coast.

I will not come back on what was said.

The same 2.8.

We keep the same budget for 2014.

It's not increased.

60 wells, and definitely, which is more important, a 1 billion barrel target risked net share, and (inaudible) what it means, because, I mean, don't produce slides if you have to explain what it means by "risked." It means that we use a percentage of discovery, and, by definition, it's our share in terms of percentage in those blocks.

1 billion -- again, I will not repeat that it is mostly Brazil, Angola, Ivory Coast, and South Africa.

But we have to be committed.

At the same time, Total is also moving on what we now call DRO, which means getting access, like Libra, which is a mix of new resources and exploration, but with new resources which have been discovered, but not developed, and certainly not yet delineated.

That's still part of our industry and our skills.

I mean, I hate to hear that it's exploration or its acquisition.

No.

It's everything cheap.

And talking to investors, you should be only interested by return to shareholder, and not by is it coming from exploration or from so-called delineation.

What counts is the return to shareholders and the skills of Total.

If it is coming from exploration, good.

If it's coming from not purely new exploration, but like in Brazil, with the need of Petrobras to get access to technology with Shell and Total, that's also good news.

It's also part of our strategy.

It's also part of our culture of partnership.

So, at the end, what counts is how much barrels do you have in your portfolio in terms of 3P, 2P, and 1P reserves.

Martin, that was not part of the presentation, but I added it, if you don't mind, because I really believe in it.

R&C on track to achieve the ROACE target.

I mean, Patrick has been extremely clear on this.

That is exactly the same slide you know, now, I hope, by heart, with how we intend to achieve the 13% target by 2015.

Remember, it's based on 2010 environment.

That's where, sometimes we are making, maybe, the life not as easy as you would like, but we are here to help.

That's where, if you see the 13%, you see that the 11.5 is in 2014 is with a 2010 environment, not with the environment which will be what it will be.

But it means that with a 2010 environment, in 2014, we are at 1.5% of the target we have for 2015, which means that what remains to be done by the R&C division -- and I can tell you, they have been already delivering a lot -- is the, I would say, well, what it is, is not dark blue, so what is not dark blue is light blue in English, okay?

So, the light blue and the white part as what remains to be done to achieve our targets, and I can tell you that's all underway, and definitely we can say that Refining & Chemicals have been above our expectations, thanks, God, because the refining margin has been below our expectations.

We are today at less than zero, as a European margin.

Today, it's a little bit higher, but, as an average, it's below zero.

So, in 2013, it was at almost 19.

It's true that we are below our forecast.

I don't think it will remain at that level, for it would mean that even with low margin, and even with low margin, I mean, we are capable to bring more value, thanks to the synergies, thanks to the way we have had to develop our platforms as one single industry, as one single project, and not any more as refining and petrochemicals.

And if you ask me once more, why didn't you do it sooner, I don't know, but at least what's important is to do it now.

Same for Marketing & Services.

What is important is to keep the same profitability, the same return in a branch and a division where we increase our investment and where we want to -- definitely want to be more aggressive.

Definitely we need to be more aggressive in countries where you have natural growth and, for us, it's mainly Africa and Middle East.

We are, as you know, much more careful than we have been at a time about Asia.

Asia is great, but it's sometimes surprising.

So, we prefer to get in places we know.

It's part, also, of the culture of Total.

Africa and Middle East is much more in our, quote/unquote, backyard, but that's where we intend, definitely, to increase the size of our market shares, and to do it in a profitable way, which also means sustainable and acceptable and respecting the people, respecting the environment.

So, that's for the growth of the Marketing division.

Lubricants, we insist on this, because we had definitely some gap to fill versus our competitors.

If you know well the lubricants, you will know that three of our competitors among the four are -- well, now, I would say the four are bigger than us and are doing better.

So, we still have room for improving our position.

That's what we're doing with lubricants, and definitely, I mean, changing our model, which we call the business model, we can develop additional market share without having to invest too much.

We need to be careful with Marketing.

It needs to remain a division in which the capital employed remains low versus the profit, and that's how you achieve the profitability, and the return, to equity and to shareholders.

We don't insist on leveraging brands and innovation, because that's true for all of our divisions, for all of our developments.

But the target is to remain above 17% in Marketing & Services.

As you've seen, it's excluding new energies, new energies being solar, but if you remember, solar is, first, not only working, Sun Power today and I've been -- that's a normal question about our investment.

It's true that last time I think we made a presentation it was at $6 per share.

Today, I have the pleasure to say it is at $31.

So, for those who said it would never go back to higher levels than the one you had to acquire the company, well, it's (inaudible).

I can tell you I would not bet it will be at $31 today.

So, let's get the benefit of this for the time being, which is more important for new energies like solar.

Let's be careful.

Let's be confident in this new energy, but at the same time, let's be careful.

We still have to reduce our cost, reduce our breakeven, and make sure we can compete with other sources of energies, which means electricity.

But today, the price is $31, and I can tell you, it's not Total buying shares to increase the value.

Mobilizing the whole team on cost reduction.

That's definitely the new strategy or the new part of the strategy I developed last time we've met is clear in the strength of our industry.

It's inflation on cost, inflation on capital expenditures cost, inflation on operating expenditures cost, and we definitely have to change this mood.

I mean, that's not, I would say, to use a word I've heard, it's not definitely forever.

I don't know why people are saying, that's the way it is.

It's 10% more, it will remain at this.

No.

I've even seen price being reduced.

We are not so optimistic considering capital expenditures, because we know that for capital expenditures we need, still, to take care of the environment, by security, by sustainability, and that has a cost.

But the cost base on what you're adding in terms of additional investment, not in inflation.

So, the 10% inflation cannot last, and will not last, but we'll have to prove it.

We will take the time for this, which means today we have been putting in place a new system to get this as becoming a target for the Company.

We will give you the target in terms of figures next September.

That's my commitment.

Of course, it's a target.

I will not tell you that we've reduced our costs suddenly with a "coup de baguette magique," as we say in France.

Too many people in France think there will be baguette magic.

We are not part of those.

It needs to come from discipline, from changing our culture, and definitely we have a responsibility on this.

I have a responsibility in this.

We told our engineers -- and they are good engineers -- that what we want is security first, environment, sustainability, acceptability, and profitability, the profitability being the average of what we are telling you when we say short-term project needs to be profitable, double digit-return, at $80, long term, $100 per barrel, but also with double-digit profitability.

But we've lost, and it's important to understand this.

We lost the capacity to think that some of our projects -- I will not name the countries, not to make it as a target -- but in certain countries, we are doing much more than 13%, much more than 15%, and those projects were part of the way we were achieving the average.

If today, we take the average as a target, by definition, we will do less.

That's exactly what is happening in our industry.

So, we have to keep people thinking that when they were doing 20% return, it can still be done, and they don't need to go to 13, because 13 is what we accept.

Because if we accept everything at 13, there will be some below, which is normal, and then we will not do 13%.

I'm not talking about return on equity.

I'm talking about IRR on projects.

So, it's before leverage and before everything which makes at the end ROACE and ROE.

So, we will definitely fight this inflation on capital expenditures, and on OpEx ask from first top to bottom request, asking our subsidiaries to give us a budget and a roadmap on what they can do to achieve a reduction in their costs, and then we will make it a global package to be delivered to the management of the Company, and to you.

But I don't know why we don't believe that it is doable.

I can tell you, if you don't believe, nobody will believe.

It's normal to be challenged, and it's helping again.

But I don't know why there is this view which is, by definition, they will not do it.

We did it before, so we can do it again.

It's just a question of, yes, we can, and how we deliver.

No comparison with an anything coming from elsewhere.

And definitely, it is on the slide, safety first.

On the peak organic CapEx in 2013, Patrick mentioned it, especially the $26 billion for 2014.

That's a firm commitment of the Company, of the Management.

We said we will not continue on the same raising our, not cost, but capital expenditures.

There is a difference between capital expenditures and cost.

What's important is our view for the future, which is for 2017 and plus.

While we said that we will stop increasing our capital expenditures.

We'll definitely slow down our intensity of expenses, but it's sometimes believing in growth, believing that the 3 million is a target, and then we will have to continue to grow.

Definitely not at the same pace.

We cannot expect to do additional increase in production than the one we have for 2015-2017, but, I mean, without entering into the targets, we will discuss in September, I mean, having a 1% to 2% increase in our production is already a challenge, and we think that with this $24 billion - $25 billion potential cost in our capital expenditures -- not cost, sorry, level -- I mean, we would be capable, first, to maintain our R&C, Marketing & Services strategies, to also keep these 3 million barrels per day level of production at E&P, and continue to grow with a low pace of growth for the long term.

Same time, we don't -- got your message.

We knew it, that we cannot continue with $28 billion of organic capital expenditures for more than a period of time.

But, at the same time, when you commit yourself with production, you have to accept that you need to invest.

I'm going to repeat this many times.

If you believe that there is a need for additional oil and gas, there will be a need for additional investment and additional investment means profit, because profit without investing does not exist, except if you sell, but that's another story where we've continued to divest, but not to make only money, even if we are, not to protect our cash flow, but just to manage our portfolio of assets in a more, I would say, clever way, which means new projects, younger projects, delivering more upside are more interesting and attractive than some old ones.

So, we can sell and continue to grow, which means make our assets strategy a living one.

On track to deliver free cash flow growth.

That's where, I mean, we already showed you these figures.

2013, Patrick said what it is.

2015 it's the $10 billion plus free cash flow coming from accretive upstream startups, I went through the list, I will not come back to it.

All of this is just the result of the strategy I described to you.

Definitely, it means a control of OpEx and CapEx.

So, it's obvious that if we continue with this double-digit inflation, that will be triggering part of this new cash flow coming from operations, but having a free cash flow of $10 billion plus in 2015 and $15 billion plus in 2017 is a normal, I would say, forecast for the result of our new developments.

It's not aggressive.

It's not conservative.

It's our view, but definitely it will strengthen our financial position.

Definitely it will help for those who are scared about our capacity to pay dividends, and even to increase them.

You've seen that we've increased the dividend of Total.

Sorry, we are asking the AGM to accept to increase the dividend of Total.

I have to be careful with our lawyers.

The Board doesn't decide, they propose.

But, I mean, with this, with the $7 billion of dividends, you see there is room for either reducing our gearing or increasing the dividend, or doing both, but I will have the time to discuss this in the months and years to come.

The Board is seeing it's coming from all of our different businesses.

It's not only Upstream.

Upstream has to, definitely, bring back cash flow to the Company, but Refining & Chemicals have to continue on the tracks they are developing today, and Marketing & Services you remember that the peak investment of Marketing & Services in 2014, so they still have one year left before they have, just like the others, to slow down their investment and they will be part of those bringing the cash to the Company, and then they bring what we call a competitive shareholder return, the same way it has been the case in 2013, definitely.

So, the last slide, because I have no more time, so I am on time.

Maybe I was already late, I don't know.

Yes?

That's okay.

No, but my teacher over there refused to answer.

But the last one, which is just more -- not more than what you know, it's creation value and what's important as a message is in Total we want this to become not any more a management message, but definitely an individual message.

I mean, it needs to become back, as it has been, the responsibility of everyone to see at all levels that participate to the creation of value.

And this word is not an awful word.

I mean, creating value is not against acceptability.

Making profits and return is not against acceptability, and even if we still have a small debate in one country from which I am coming from, don't forget that Total is a national company, that Total is investing in many countries, and that Total respects all the laws of the countries where we operate.

And that's where we are paying our taxes, and that's where we are bringing value, and that's where we are making the cash to be delivered to all of our stakeholders, and, by definition, to our shareholders.

So, no need to repeat that we need to execute all of our Upstream projects, and definitely even if that cost control strategy is for the whole Group, it definitely has to be much more the commitment of Upstream, because that's where the investments today are.

So, Upstream has to be extremely careful on the way they take for their own account this concern of just be careful with your cost.

Refining & Chemicals, no need to say that even if they've been able already to change the way the situation was moving, which means declining in return, that's not any more the case, but we still have to be concerned about what we are facing, an unknown environment.

I am even saying, maybe, strange.

I am much comfortable with price of oil and price of gas and refining margin or petrochemicals margin.

And that's life.

That's why they have to be, more than ever, concerned about diminishing their breakeven and being faced to what is normal competition, and which could, maybe, become unfair competition, but you know that this word is unacceptable, so we don't use it.

But main thing, just clearly, with cheap price of gas, that means cheap price of polymers, which means dangerous competition for European products.

And this branch has to really be ready to this.

On Marketing & Services, certainly also to consider that it's not because they have been extremely good in terms of return, but thanks to growth, they can also think that they can go back to the average.

They have to be higher in terms of return than the rest of the Group, and I have no problem, and I'd like to say this, including for our own people, if the return of Marketing & Services is higher than the one of Upstream, why not?

I mean, let's stop to think that Upstream is there, and then you have Marketing & Services and then you have Refining & Chemicals.

It's not true.

Depends on the time, and it was important the cash coming from our operation.

And sometimes you have more cash coming from lower return than high return with less cash.

If you want a specific, I will leave it to Martin to do it during the one-to-ones.

So, to end on this, it's definitely not a change of culture.

The culture existed before, but it's true that we have been forcing our people to think, and that was good and necessary, more to acceptability, environment, that is still the priority.

We cannot accept any incident, any fatality, but at the same time, we can't go back to what was the case in the past.

It's good to have new technologies.

It's good to be the best in terms of we have the nicest FPSO in the world, but, I mean, why not also taking care of why cannot it be, at the same time, the more profitable.

And returns and acceptability are the two keys of the success of this Company, on which I strongly believe, especially after this 2013 result, which has not been more than last year, but less, which are, in my view, definitely preparing the future in a very, I would say -- Patrick, what's the word you would use?

I'm not good English.

Who said this?

(laughter).

I don't know why.

I mean, you took what I said to Martin for you.

This is my friend.

Okay.

That's acceptability, also.

But I don't know, by the way, what I wanted to say, but it's a solid and robust result, which are preparing well the Group for the delivery of our commitments in 2014, but '15, '16, '17, and after.

I'm ready for the Q&A.

I just wanted to end this by a funny way.

You know what partnership is?

I had this kind of box for many years in front of me.

I never had a way to open it without definitely breaking my nails, becoming nervous and stressed, but being stressed with this, I am not stressed to talk to you.

Now I know it just is enough to do this.

And it's open.

Thank you, Christophe.

Thank you, Patrick.

So, we'll open now the Q&A session.

As usual, ladies and gentlemen, I will ask you, when asking a question, to stand up, to present yourself, and, Christophe, I will use my magic wand, baguette magique, having you being limited to one question at a time, please, in order to give a chance to everybody to participate.

Peter, go ahead.

Good afternoon.

Peter Hutton from RBC.

You spent a lot of time talking about the importance of cost reduction and focusing on OpEx.

Can you just give some guidance in terms of the profile on DD&A, given the number of new projects that are coming on stream and you've got more than 50%, more than $50 cash margin, but what's the DD&A that we should be looking at?

And also, relating to costs, some guidance on the Group tax and effective tax rate we might be expecting over the next couple of years?

Thank you.

About DD&A in 2013, it was about $13.6 billion.

It might go up to $16 billion at plateau in 2015, basically.

So, going -- coming from something like close to $14 billion to close to $16 billion at -- in 2015 and beyond.

About the tax rate, you saw that the tax rate increased a little bit in 2014 -- in 2013, sorry.

I'm not expecting another increase of the tax rate, which shall, for the Upstream division remain in the range of 60%.

I just would say that, as you know, that the tax rate, in itself, doesn't mean less profit.

So, just be careful.

Sometimes, especially 2013, we have a lower tax rate because of less Libya and less Nigeria.

So, okay, it's not as simple.

So, of course, we don't ask for higher taxes, but sometimes the fact to have lower tax means that the splits in our production is in countries where you have plus or minus taxes.

It's just a warning on be careful.

It doesn't mean that lowering our tax rate as an average means that we are making more profits.

And, Martijn?

Hi.

Hello.

It's Martijn Rats.

I wanted to follow up on the question from Peter on cost savings, but in this case, particularly on CapEx.

On one of the slides, you talked about a $4 billion cost saving on the Kaombo project.

Reading the Tullow release from this morning, they're talking about Uganda in terms of the project that you're in, a multi-billion-dollar cost saving.

It all sounds like you're making quite good progress in this area, and I was wondering if you could sort of say a few words about where you think the size of the prize is, in this particular domain?

I'm not so sure exactly the number I'm sort of looking for, but any idea of how -- what is success in this particular effort?

That's why I wanted to be, not careful, but just to be giving us a time to give you something which is more sustainable as an answer than just Kaombo or Uganda.

On Kaombo, the $4 billion are real.

But it's Kaombo, and on Kaombo you know that we said that if we cannot find a way to reduce the costs of the project, we would not launch it.

So, that was very clear.

We make it clear to our teams, and they've done the job for this.

So, I don't -- I'm not saying that because we ask, then we get.

That will be too easy, and they will say, okay, if the boss says, cut it, they do it.

No.

That's why we will be waiting for September.

I will give you more.

But it's true that for Kaombo we have been able to achieve a $4 billion reduction, but coming from a huge increase.

I told you this before.

We started from $12 billion.

We are at $16 billion.

So, it's less than $20 billion.

So, $20 billion minus $4 billion is $16 billion, but $12 billion is less than $16 billion.

So, I want to be very clear.

That's why I don't want to give you expectations which are wrong.

Yes, we are certain that there are ways to keep our costs under control, but at the same time, as an average, with all of what we are asking to our teams in terms of security, in terms of safety, in terms of environment, don't expect to see real cost cutting in capital expenditures.

I said control our costs, stopping the inflation.

That's different for operating expenses where we can really cut the cost in moving to something where we are just picking -- being careful on how to use the, I don't know, can go to very simple things.

I mean, we talked with the Executive Committee of improving the way we are using the head office in La Defense, and to give a signal to a team that today we are probably not as many people in the tower.

Which means, don't worry, we're not going to increase the numbers, but, I mean, we have to find a way to have less, which means more people per square meter.

And that's the kind of thing which seems to be small.

That's the way you change the culture.

Now, we have to go back to what we were doing at the time we were scared by the price of oil being at $7.

Even if I don't think we will go to $7, we have to go back to this culture of no, we cannot just spend money because there is no problem.

That's a change in culture.

But on capital expenditures, please give me the time.

Give us the time for September, when we can explain with more details how we achieve this.

But today, it's true that on Kaombo we had a specific request from the Board, which means the COMEX.

If we cannot reduce the cost, this project was not acceptable in terms of profitability.

So, that all.

So, I mean, either our people had a chance to find a solution, or, as we told them, this project would not be developed.

And it was a message for everybody, including the local authorities, and I think the message has been well received.

But, again, before telling you what kind of long-term views and long-term ideas we can get from this, it's too early.

But, I mean, if you want during the one-to-one to have discussion on how we achieved the $4 billion reduction of cost we can do it.

But what I want to do first is to avoid that we move from $12 billion to $20 billion.

Irene.

Good afternoon.

It's Irene Himona, Societe Generale.

I had a question on production, please.

Can you clarify, in your 2015 target of 2.6 million barrels a day, how much is there for Adco?

And what do you assume for Kashagan?

And talking about Kashagan, is there any update at all you can give us on that project, please?

Thank you.

On Adco, in 2015, we use a probability scheme by which we apply we had a 10% stake at 50% probability, which is to say 70,000 barrels per day for 2015.

On Kashagan, honestly, we had, let's say, 100% for about 100,000 barrels per day, for 100% of Kashagan.

The status of Kashagan, Christophe will answer this question.

I don't answer it, but I will take the responsibility to say a word on the subject, which we don't have the final idea, and the final vision, because I mean, the undergoing studies are not yet finalized, and, especially, we've sent what we call intelligent pigs, so two on the two pipes, and we have the result on the gas, but not on the oil one.

The good news is, there is nothing, apparently leaking on the offshore part, but definitely leaking on the onshore, which is easier to repair in terms of cost and time.

At the same time, we don't have yet sufficient information to give you a date on what could be the potential restarting date.

But short term, no chance, because it's leaking, and we gave the priority to restarting the production before we answer into the debate on who is responsible of what.

You see, when we do this politics what you achieve.

First we restart the production, and then we will see why it happened.

But today, we don't consider that the gas part is a real problem.

The oil we don't have yet the answer, but, in any case, it will mean there will be far lower production in 2014.

As Patrick said, while we were developing and starting the production at 70,000 barrels per day, the phase one is at 300,000 per day, plus, and that is the part where we definitely have to wait for the result of the leakage repairing before we can give you a new, I would say, forecast of production.

At the same time, at 70, with the 17% of Total, it's not a high level of production, so the impact on 2014 for Total production will be lower.

It's true for 2017 it will be more, but let's wait for what will be the result of the ongoing studies being done by the still ENI operating company, and then we can say more.

But, again, I will say, because I'm hearing a lot of things about Kashagan, and it's true that I've been one of the first to say that it was not the best image of the industry.

It's even worse that I thought, because even pipes.

Now it's not high tech.

Prove that it's not high tech's problem, but we will say it afterwards.

But at the same time, all the high-tech part, which means the offshore part, is working.

So, please, I agree and I understand that everybody feels totally upset, to start with us, on the result, but be careful not to mix problems on pipes with the technology, which has been developed offshore to control all the problem of H2S, because it proved to work.

I cross fingers.

I hope I am not wrong.

But at the same time, today's it a problem of pipe.

It has an impact on production, but it's not a tremendous challenge in terms of technology.

Michele?

Hi.

Michele Della Vigna from Goldman Sachs.

If I may come back to costs, the industry has clearly been plagued by a double-digit level of cost inflation for pretty much a decade.

Now that everybody's reducing their capital expenditure and a lot of companies are delaying or scrapping or redesigning the most complex projects, do you actually think we could achieve, not immediately, but for your outlook to '17, some actual cost deflation?

And do you start seeing some signs, especially in -- in some of your key areas, like for the deepwater, heavy oil, et cetera, of industry costs showing signs of coming down?

It's true that it's easier to reduce costs when you reduce your capital expenditures, but it was worth saying it, because, I mean, sometimes simple things like this are not said.

But it's not enough, because, I mean, because of technology, because of complexity in our projects, there is a risk that, even with the lower level of capital expenditures, we still keep this inflation.

That's why we still need to fight, because I could just go with you to say, why do you worry?

I mean, we will reduce our capital expenditures, so costs will be reduced, thank you, Mr. Michele, you've helped me, and I stop.

No.

We need to do more, because we are not only linked with size of capital expenditures.

It helps.

There is much more to say, but then you are trying to force me to answer into what you do -- what we did in Kaombo.

No, we have been able to chase where the -- let's use the word "leaks" in where the money was going to.

Because at the end, I don't want, again, to appear I'm reading your papers, sometimes, which means always.

I mean, if the companies are decreasing the level of capital expenditures, it will be bad news for contractors.

Headlines.

So, listen to Total, listen to Shell.

They reduce.

It's bad news for Technip, Saipem, Halliburton.

I don't want to be part of this game.

I mean, that's not my game.

I don't want to be said, because of what he says, I mean, there is an impact.

We need good contractors.

I don't want to re-enter and to fight with contractors as we did in the past.

So, they need to make money, but today, as you know, they don't get the benefit of this inflation.

It's somewhere else.

So, let's find where it is, and I have pretty good ideas, but wait for September, please.

Alejandro?

Hi.

Alejandro Demichelis from Exane BNP Paribas.

You have been talking a lot about cost and so on, but maybe you can talk to us in terms of execution from the oil companies, and especially in Total, and how you see that going forward?

You talk, also, about the operated projects versus the non-operated projects, and what you're doing in terms of controlling that cost in the non-operated projects, as well?

Well, in operating projects, I mean, first you know that inflation on our projects has always been before FID.

We have had, on operating projects by Total, very little, I would say, overrun on cost.

I don't mean there have been none, but when this happened it was almost under control, which means below 10%.

We have a system in Total where when costs of a project are going above 10% increase, they have to go back to the Executive Committee for asking permission to continue.

My (inaudible) to be, okay, what does it mean?

I mean, can you stop a project?

No, we cannot stop a project.

We can force people to come back and explain and force them to say, okay, that's not acceptable.

And that's the way we are doing things, but the way we are moving, and that's Total.

I mean, I don't know if you believe it or you don't believe, that's what it is.

We are extremely anxious on keeping the costs under control.

Most of the inflation on cost, for Total operating, has been before FID.

That's what I was saying about Kaombo.

Kaombo, when we said what it is, you know that Total has been approving the projects, Kaombo is approved by Total, is approved by all of our partners.

We still are waiting for the Sonangol stamp, which is not the first time, and which not -- I mean, we can explain, sometimes, the delays in our projects because of approval.

But at the same time, we are quite good in keeping our costs under control.

Now, non-operating project, what can we do?

Well, to choose the best operator, and when it's not the case, to find solutions to help them to control their costs, but there is no, how do you say, magic -- magic what?

Magic wand.

"Il n'y a pas de baguette magique." It's easier in French.

As I asked just before, I'm sorry but I like to do one of those and then I stop.

I asked one of my Anglo Saxon colleagues to say, how do you spell "Cacahuetes" in French and he told me "peanuts." So, that's exactly the same thing.

For those things, we can just help, but at the same time, the best to do is to choose the operator before, and then be part of the way you go to the FID.

Make sure that the contracts which are signed are really controlled.

If they said they are turnkey contracts, they are real turnkey contracts.

That's exactly what we have been doing on Yamal.

So, Yamal, to go to real examples and not to words, Yamal Total, even with 20%, has been extremely involved in all the process of accepting the contracts and accepting the FID, and we strongly believe that this project has been controlled as a Total project, and, even better, I think that all of the good expertise and governance of Total have been used by Novatek, and we also get the benefit of what they can do in those areas where definitely they're better than we are in the way to operate and even to spend money.

So, that's what I call the win/win.

We win from them.

They win from us.

But definitely this one, Yamal, that's why we are confident in the breakeven level.

This one has been done if it was operated by Total, but it's operated by Novatek.

Thank you.

"Un homme, une femme."

Thank you.

[Kristine Discrana] from S&P.

A lot of your peers are going, well, some might say overboard, in terms of adopting new technologies.

They think it's sort of the solution to efficiencies and cost control.

So, I wanted to know if you could give a few words as to what is your opinion?

Is it -- what is Total's approach to embracing technology?

Is really -- is it really changing the way the industry operates?

Is it a whole new ball game?

What do you think is happening in the industry?

Thank you.

Well, by definition, new technology is our day-to-day business.

And that the difference between technology and research.

Research is on the side.

It's based on breakthrough findings, breakthrough technologies, but technologies is when we build a new FPSO versus an old one, and we use the benefit of the knowledge.

That is technology.

And sometimes technology has been a source of cost inflation.

So, I will be very careful in saying that technology is the only way to reduce costs.

Technology is one way to go to areas which were not, I would say, you couldn't not have access to without new technology.

It's how we move to water depths of 1,400 to 2,000 meters water depth.

That's thanks to technology.

But then we have to be careful that technology doesn't become a source of inflation, because each time you have something new and you will have a specific contractor giving you the specific product for one project, then you will have a new one for the new one.

So, each time you have one new piece of equipment, and, by definition, if you have only one, you cannot have a cost reduction.

So, that's why we have, now, the technology innovation.

And if you heard Patrick, he said innovation as being the way we need to have a look to our new projects.

But innovation includes technology, but not only technology.

Innovation is based on everything you do to build a new project.

You make the innovation on what shall I do to keep my costs under control.

That includes everything -- human resources, skills, local content.

All of this is part of innovation, which means innovation is what?

It's just thinking differently.

And a lot of people are still thinking that innovation is technology.

No, human resources policy is innovation.

The way to develop a project in Angola in a different way, just to say, to be nice, I will increase the local content, that's innovation.

Before it was just, we increase the local content.

We increase the local content, we're good people.

No.

We are worse on top with repaying for this additional cost.

Those are Angolan people and the Angolan government, which is not really the same.

That's not good news.

And on Kaombo, which I refuse to discuss, by step by step I will do it, there's a large part which has been to reduce the local content.

So, innovation first.

Technology is part of it, but cannot be an answer for everything, because technology can mean inflation.

And, Jason?

I'm changing the rules of this.

Thanks.

Jason Kenney from Santander.

Thanks for your presentation today.

So, I just want to concentrate a bit on the future, and new resource potential.

And I think you referred to the potential of Libra, 8 billion to 12 billion barrels.

We know about that in the press.

Recently, Statoil suggested that the Dilolo prospect in the Kwanza could be bigger than Libra.

And I know you have, I think, a 15% stake in that asset.

So, I'm wanting to know on your operated exploration activities, and you've highlighted Kwanza, South Africa, Brazil, and Ivory Coast in 2014 as high impact, of your operated positions, which are the most exciting?

Are they all as material as this?

I'm assuming not, but I mean, which one would be most attractive to you on a longer-term basis?

And then secondly, if I may, just one for Patrick.

There's one question each.

Just on the affiliates, very strong in 2013.

I just wanted to get a view on your opinion of which affiliates are going to drive growth over the next three to four years the strongest, and in which divisions?

Thanks.

Okay.

About affiliates, it's true that the contribution of affiliates this year was much higher in 2013 than it was in the past.

A large part of it is coming from LNG business, where we have been able to divert cargoes from Europe to Asia, from the US to Asia, which include -- increased, sorry, the contribution of those affiliates by making better margin.

So, this is basically Qatargas 2, Yemen LNG, and Qatargas 1.

On the second one, which is more value than quantities, well, I mean, you always prefer the place where you are than the one in which you're not.

So, as far as I know, Statoil is not in Libra, so they don't consider Libra as good or as good as.

What I would say, which is more simple, is, in Libra there has been a well drilled, which is a successful well.

So, I always prefer a successful well than not-yet-drilled wells.

So, Kwanza is a huge potential, but Libra is a potential, which has been, as Patrick said, already discovered partly.

It needs to be delineated.

There are a lot of different panels to be looked at.

So, there is still exploration on Libra, but at least on the western panel, that is a discovery well, and there are already 2P reserves.

So, I cannot say which is the best at the end, but in terms of existing knowledge, Libra has more value than an exploration well.

But it doesn't mean, again, what is the best.

Today, there is one with more understanding, information, and data than on the other one.

Now, as far as we're seeing that there is a link between the two, the more we think that Libra is good, potentially that means that Kwanza should be also better.

But that's typical of when you -- you're in charge of a company, you try to defend, which is normal where you are.

So, I'm not saying that Statoil is saying things which are not real, because, I mean, I don't know exactly what they've said.

But what is for sure, Libra has a successful well, and in Kwanza, except on the blocks of Cobalt, I don't think that any of us have been doing yet any well, so we need to perform, and then we can discuss.

But I deeply, and hopefully, think that if Kwanza can be better than Libra, good news for everybody.

Yes, Jon?

If I was interpreting your thought processes about controlling internal targets, and then I look at what you've already set out as targets for the downstream, and as you move into a more steady state in the business, is it your thought process that something like return on average capital employed or return on equity -- I think you referenced that, actually, in your outputs this year -- is something that you ought to be putting into the marketplace as a means of judging how you perform, certainly relative, and maybe even on an absolute basis, going forward?

Thanks.

A short answer for you is that part of my salary, part of my free shares, are correlated to the return on equity, and I would say that 100% of the free shares [hikes] I enjoy are correlated to the return on equity.

So, it is a main focus of the Company, or I hope so.

(laughter)

I don't want to add any more to what Patrick said.

I can give you the targets.

They are known.

They are in our reports and all documents.

The -- you get the full quantity of what we call AGA in our Company, if you have a ROE of 16%, and at 8% you have zero, and between 8% and 16%, it's a pro rata basis.

Now, that's what it is for the AGA.

It doesn't mean that we want to keep the ROE below 16%, because we always consider and I follow totally, Patrick, even if it's a new way of defining the strategy of the Company, but, by definition, as far as we like to have 100%, because we know why we should get less, we need to have ROE above 16%.

And definitely, in our industry, I certainly believe that we need more than 16%.

So, today, we are getting close to ranges which are below our forecast, but that's linked with the fact we have been investing a lot.

So, there is no surprise, surprise, but with the new production, with the new cash flow, with a soft landing in our capital expenditures, we should go back to more appropriate rate of return, not only because of the AGA of Patrick, of the Executive Committee, and myself, but just because it's the normal way for a company which is still doing business in potentially risky areas.

So, when I'm asked, I mean, why do you request ROE of that size when a lot of other industries are working with lower levels?

I said, but that's normal, we also are taking more risk, and risk/reward exists.

Maria?

I'm Maria Drew from Goldman Sachs Asset Management.

So, in September, when you had your analyst day, you started a trend by announcing that you had reached your peak CapEx level, and I was wondering if we could get your opinion as to why you think some of your peers are also announcing the same programs now?

Is it because it's just the natural investment lifecycle of the industry?

Is it because we've seen such excessive cost escalation, which is making projects unattractive?

Is it shareholder pressure, or is it concern over the short-term outlook for oil prices?

I'm just curious to get your views?

Well, my view -- sorry, but my view is very simple.

They saw the effect of this announcement made by us on our share price.

I'm sorry to say that this way, but I truly think that they follow us because of that.

We didn't did it for this purpose, but the effect was positive, and we like it.

Because we're not only working for the benefit of our competitors, even if sometimes we like it, because without giving names, it's true that one of them gave me a call to say, what did you do, and I said, what you said.

But at the same time, we didn't do it for the share value.

We did it first, because, I mean, we did discuss with a lot of you, I had this debate with a lot of you, in public and in an individual way, and I always said, we are not willing to expand our capital expenditures forever, but we need to spend this because of what we want in terms of production level.

And the problem we've had, was we don't believe in your production level, so we don't believe in your capital expenditures.

Okay, I agree.

But now we are doing our best to prove that we were right in the sense we are having to spend money to achieve those new targets.

At the same time, as far as we don't want to continue with the growth, as I said, we don't need to spend as much money.

So, we need just to reduce, because it's a fact.

You increase your production.

You spend.

You increase your production at a lower pace.

You reduce.

It's a simple -- it's simple.

If you keep your costs under control.

And I think there is a small not problem, but we have to be very careful in explaining what we do in terms of what I call capital expenditure intensity, and costs of producing a barrel.

And that's not the same thing.

And if we want to achieve our soft landing, we have, also, to achieve a cost-cutting in our operating cost, which is different of just lowering your capital expenditures, because we'll be lowering our target in terms of additional production.

So, we did it just because of our strategy, not to please, even if we received a message very well that you considered it was already high, and I agree on this, but at the same time, we thought it was necessary to increase the production.

That's why when I was told, reduce capital expenditures now, I said, okay, but, I mean, you should reduce your production target.

I said, well, if I reduce my production target and I keep my capital expenditures -- I know that some of you can remember certain of our talks during field trips or whatever, I refuse to tell, even internally, that they can spend this amount of money and reducing their targets in production.

Because, otherwise, we shouldn't spend all of that money.

So, it's linked with this.

Now, it's true that the message was well received by our competitors, as, be careful, the market is extremely sensitive on the level of capital expenditures, and, okay, now they do whatever they want to do with their "communication financiere," but, I mean, on our side, it was not to please, it was just to say that is the end of what we need to produce the 3 million.

And, as far as it is the end, we don't need to spend as much money than this.

We are running out of time, so we'll take one more question.

Lucas?

Okay, and thanks very much.

It's Lucas Herrmann from Deutsche.

Sorry, Martin, it's actually two questions, one to Christophe and -- well, maybe both to Christophe.

You've put two things to the AGM today.

One, obviously, is the dividend.

Very grateful.

Thank you.

But the second is extension of retirement age, both the Chairman and CEO.

So, I wonder whether that means we're going to have the pleasure of your company for more years than, perhaps, we were going to beforehand?

The second was on refining, and the world's changed over the last two or three years.

Whether it stays as it is, who knows.

But the industry, certainly in Europe, is facing, I think, much more challenging conditions than it was, and it looks as though the outlook is much tougher than it was.

Where does that leave you in terms of reconsidering and pushing harder than you are, doing what you're doing in terms of the restructuring of the downstream, and to what extend is the industry, the refining industry, the downstream industry in Europe, actually starting to talk full stop about trying to do something around the excess capacity and -- or be more aggressive around the excess capacity and try and push profitability to levels which are, shall we say, more sustainable?

Well, more sustainable is the wrong word.

Sustainable, full stop, since they're not as they are at the moment.

The first one is easier than the second one.

The only thing we are doing, because I mean the -- what we are asking to the Annual General Meeting, the extraordinary part of it, because it's a change of the bylaws, is to move the date of the CEO in place from 65 to 67, which is two years, and for the Non-Executive Chairman from 65 to 70.

As you remember, we refused to enter into details.

It will be in the resolution of the AGM.

We first will put it in the communique.

In fact, today, the age of the Chairman is 65, but you can have two years if, bah, bah.

Okay, forget it.

It's too complex.

It's moving from 65 to 70.

Today, most of the companies of the CAC-40, at least, have their Chairman being able to keep on board until 70.

So, it's just making the bylaws of Total in line with the benchmark, and, on the top, for those who don't know, in France the date of retirement is 70.

So, 70 for the Chairman, 70 for anybody.

For the CEO, we still keep a date which is a little bit lower, probably, I mean, because the CEO becomes exhausted after so many years in place and answering to questions.

But, I mean, we thought that, in fact, with both, we were giving to the Board a bigger flexibility on the way they can choose on what will be next to be running this Company.

So, it's just purely flexibility, because you know that at the end, first the AGM has to approve the new bylaws, and then the Board can decide if they want, first, a CEO and a Chairman, which means PDG, or if they want to split the two, and they can decide this, by the way, at any time, because, in fact, the Annual General Meeting -- I have to repeat this because it's not known -- the Annual General Meeting only nominates the director, and then it's the Board which decides of CEO or not.

It's truly that usually when you go for being nominated or elected as a Board member, you tell the assembly what is supposed to be the job of the guy, but at the end, it's the responsibility of the Board.

So, just to take my example, which I love, I will be going to reelection in May 2015 as a Board member.

So, as a Board member, I go there, they don't reelect me, finished, "Khalas," I go fishing.

Second thing, they re-vote for me, and I am at the Board for an additional three years, which is til 2018.

Then there is a Board taking place after this AGM in May 2015, and they will decide what they want to do with the CEO, the Chairman, or the Chairman and CEO.

So, you will have to wait for May 2015 to know what will be the decision of the Board.

But moving the limits to 65 to 67 and for the Chairman from 65 plus whatever to 70, it gives the Board more flexibility to take the best decision for the benefit of your Company.

I will not decide.

I can just say yes or no, because I still have my freedom.

But, at the same time, the Board will decide who and when.

And I think to give the Board more flexibility, it's improving the way the Company can be managed, and I think it's good for the shareholders.

It doesn't mean that I am better than others, but at least the Board can choose with more flexibility with additional vision.

Excellent.

That's just very simple.

But it's true that if you go to the point, some people will say, but I mean, yes, in 2015 it will be to help you.

It's easy to check, but I am even confident on those dates than on the production in 2015.

I will be -- I like it or not -- 63 in May 2015.

So, then you check, three years, doesn't go to the full mandate.

If you go to 65/67, I can have a full additional mandate as CEO and Chairman.

But, again, that's just the reality of figures.

Then it's a Board decision.

So, again, I insist what I wanted the Board to accept, as it did, is to give them the possibility to make the best decision at the time it's needed, which is May 2017.

And, Lucas, this is giving me a chance, also.

(laughter)

That's why there had been some debate at the Company and in the Board.

So, does that mean if they do this, et cetera?

No.

Nothing personal, and, frankly, I mean, I just think that it was better to change the rules, especially at the time we had other changes to do in our bylaws.

So, we decided it was better to do it now and not in 2015, and, at the top, to get rid of any pressure on what will be the decision.

Because with this flexibility, we don't need any more, if it is voted, to say what will happen.

And I think the worst thing is, when you start to have people starting to say, bah, is he going, et cetera.

Then, with this, you have the freedom to think if you personally consider it's better, I stay in, but it will be the Board decision, and they will take their decision at the appropriate time.

I tried to avoid answering and making it long on the first.

Now, on refining it's -- it's not -- first, I mean, in 2014, we've said it.

There is nothing in our forecast, in our plan.

And it's also important to respect our employees.

I mean, definitely, we have to be clear, transparent, vis-a-vis our shareholders, but also we have, as we say, we are an acceptable company or we want to be sustainable, respecting stakeholders, and employees are.

And definitely we cannot tell them nothing or tell them things indirectly through you.

So today, I can say bluntly, there is no specific reorganization in 2014.

And now they know that there will be things afterwards, and even in saying this, they will not like it.

But, I mean, at the same time, I cannot do things just to please.

We will have to adapt the size of our capacities to the market, the same way we did it with Dunkirk, the same way we did it with Normandy, and the same way we did it in closing Carling.

But in closing Carling, we did it in a new way.

I don't know if you noticed it, which is to -- not to wait for the last day, which could have been done, especially if I am not reelected.

I could have been waiting, say, okay, the next guy, they will be in charge.

But, no, we decided that two years in advance was better, and to start working on the new plans so that when we will have to stop this famous cracker, I mean, then we will be doing it at the time where the new facilities will be already close to be starting.

So, there will be less anxiety, and definitely less problem on, I would say, risk of destroying employment, because people will move from one to the other.

And I think we have created the sense of a new way of developing our people to understand that sustainability doesn't mean to keep anything, even if it's not any more profitable and it has no future.

But, at the same time, to say, we respect our people, and we tell them in advance.

So, today, there is nothing to tell in advance.

There will be, certainly, things in Europe which you will see.

I don't think they will be messy, but it's no secret who is restructuring, but disposal of assets?

Yes.

Okay.

I know that Christophe doesn't like when I cut the Q&A session, but I have to do it.

And we'll continue -- and we'll continue over a few drinks.

Thank you for your interest in the Company.

Thank you for your attention.

Thank you, Christophe.

Thank you, Patrick.

And see you next time.