TotalEnergies SE (TTE) 2016 Q4 法說會逐字稿

Good afternoon.

Welcome to our -- this session.

I hope you have been convinced that we are prepared to face any risks.

So, I welcome you together with the whole executive committee team, which is here today in London, who will join us on the stage for the Q&A session.

And we're together with Patrick, who will (inaudible) through his presentation, which will last around one hour, and then we'll face your questions.

As an introduction, I would like to first state, just to give you some, what we want you to maybe remember at the end of the presentation.

First is that it is true that the 2015/2016 years have been, I would say, tough years.

We've faced adverse market conditions, but we have been able to demonstrate that we -- our capacity to adapt ourselves and our resilience, thanks to a strong discipline of all the teams of the Company.

And we will show you, and Patrick will show you, we consider that we are, somewhere, emerging stronger out of these two years.

It does not mean that the volatility of the oil price is ended.

Not at all.

I still consider that the markets are volatile.

But, from our perspective, after these two years, as I said to you before in the previous presentations, we are landing on the sustainable level of investments of CapEx, and somewhere we are turning the corner, and you will see that in terms of breakeven, turning the corner, that means that our cash flows will cover our investments, and more than that, at an acceptable price level.

And so, this turning the corner means that on the one side we need to maintain, and we will maintain, the discipline that we have demonstrated in the last two years.

And on the other side, we can -- we have begun to do it, but we will continue, to take advantage of the market conditions to prepare the future of building on our strengths.

In a certain way, we can say that what we will tell you is that we go from a form of defensive approach to a more offensive ones.

I remind you that we will not update the five-year business plan, because we do that once per year, but we will give you enough indications about, of course, the 2016 reserves, the 2017's objectives, and what we want to do to prepare, I will say, benefiting and taking advantage of the market conditions to prepare the post-2020 pipelines.

Before to do that, I will begin to speak about, as we always do in our presentation, [thinking] about HSE -- safety, and also environment, i.e.

climate change; and then about the market conditions, and -- before Patrick will come and explain the results for 2016 and the objectives for 2017.

So, first, safety.

Safety, as you know, we -- is a value -- has been elevated to the level of a value in the Company.

We -- here, we have broken two records.

The first one -- it was for the first time in the history of the Company, our total recordable injury rate is under 1, which mean one incident per million man-hours in 2016.

It's very little.

It's one incident in the life of somebody who stayed alive 740 years.

So, it's very minimum.

And we are really there -- I think, if we search the record, we'll be also in safety at the workplace among the best among the majors, not only in financial terms but also for safety.

And the second record is that we have experienced 435 days, consecutive fatality-free days.

435 consecutive fatality-free days.

Unfortunately, it ended, the end of (inaudible) 2016, at -- in December, with a road accident -- a road fatality in India.

Which, remember [us], that zero risk does not exist, but (inaudible) can be fragile.

It's a permanent discipline and consciousness that we need to have, to be aware about safety.

But on the same side, it was -- it's a big improvement for all of us.

We insist on safety because, again, the value which we need to exercise as the leaders on safety is discipline, and it's awareness of our capacity to be excellent.

This is exactly what we need to do on the operational side.

Last year we were presenting you the link between safety and operational performance availability in refining and chemicals.

This year, we can show you the same schematic for E&P for the upstream.

It's good, because it demonstrates on the one side that, even if the upstream safety records were already low, they continue to be better; and it's also good because it demonstrates that upstream has taken the same recipe [than] refining and chemicals in terms of improving availability, and it's part of the results -- of the reason why upstream has been very resilient this year compared to its peers.

HSE is also environment, and I want to speak about climate change.

We have moved in 2016 very explicitly by delivering a report called Integrating Climate into our Strategy.

It's clearly a challenge for all the oil and gas companies.

We recognize it.

But I would like to underline that in fact, when we speak about climate change, we speak about evolution of energy mix, which means in fact anticipating the market trends.

And so, when we want to say to you integrating climate into a strategy, it's in fact thinking through a strategy in lines, what could be the anticipated market trends?

Which is a way you can read this picture.

So, it's a matter of being conscious of our responsibility in terms of climate change.

But it's also important for oil and gas company, if you want to remain a major energy company in the future, to think about it.

What does it say?

It say that you have a potential growth of natural gas for the next 20, 25 years, and beyond.

So, that means that, why we say it in our strategy, we want to expand our gas value chain.

It also say in this schematic that [oil] should pick somewhere -- 2035, 2040 -- so, the conclusion for us is less position, less focus on low-cost oil projects.

And it's also mean that renewables could grow.

And so, conclusion in terms of strategy is, let's try to build a profitable foot in this low-carbon business.

So, [when] (inaudible) the markets [will] come back to oil and gas?

First, oil.

The oil market -- first, I would insist, there is still volatile.

I don't believe at all that there is a flow at $50, that I can read in newspapers.

Let's stay -- give that to journalist.

There is no ceiling, neither, nowhere.

I think there is volatility.

It's (inaudible) of this commodity business.

Having said that, what is true that the OPEC/non-OPEC agreement in last November is in some way an historic agreement.

But I remember in September, and during the road shows, after the AGM meeting, I said to some of investors that I was convinced that this country were really facing difficulties, and we could [into] an agreement.

They've done it.

I think they are serious about it.

The level of compliance for the time being is quite strong -- very strong.

Because clearly, $44 per barrel -- a lot of countries -- of producing countries are facing difficulties.

Having said that -- so, this is an important element.

But as you see on the schematic, by end of 2016 the supply was still above the demand.

Even if the demand is strong -- remains strong, 1.5 million barrel of oil per day probably in 2016, so it's quite a nice, strong increase.

But at the same times, as well, the inventories are very high.

We should not forget it.

The inventories -- we have statistics on the OECD inventories.

We don't have the rest of the world.

But they are high globally in terms of crude and in terms of products.

So, it will take time before this market will be fully rebalanced.

We could also add, as you know, that [investments] are much lower -- the last two years have been much lower than previously.

I don't think that will increase so rapidly this year, when we see the various announcements.

And so, we consider that we are still in a -- yes, I would say, the price is increasing, but there is volatility, and we must continue to focus on what we control; not to try to guess the oil price.

But what we control is the breakeven of the Company, and this is on what we've focused in the last two years, and on what we will continue.

A word about the gas markets.

The gas markets have been clearly -- have even suffered this year a stronger decrease.

I think the average gas price declined by 25% compared to last year, while the oil price was more in the range of 16%.

So, the gas markets have been even lower this year.

We know that we face a situation where we have a lot of supply, in particular LNG supply coming into the market, from Australia, from the US.

One of the things which we would like to underline is that the demand has been strong because the price was quite low.

So, on the LNG, you can see an increase of demand of 7% this year, with very big -- with high figures of increase of demand in China, 40%; in India, which is a new country to LNG this year, there is (inaudible) demand for LNG; in the Middle East, 90%.

So, that proves that in the gas, like in oils, when you have lower prices, you accelerate the demand.

It's a good lesson.

And another [hint] of it is that you can see on the map, the number of projects of floating storage regasification units, which are started around the world.

Today you have 70 million tons of floating regas capacities being already installed in the world, and there is more than almost 200 million tons being started.

Why?

Because there have been some improvement in technologies, and the cost of a floating storage regasification unit is much lower than before and give potential access to LNG to more countries.

This is a good message for gas, by the way, and I -- certainly on FSRU, but we need to work on cost.

Also, in the LNG plants, we've a target to be able to come back to $500 per ton of LNG production, would be good, if we want to continue to develop the gas market.

So, the gas market is facing, on the one side, quite strong new supply; but is also -- this has an influence on the price, but it also helps the demand to come back.

So, result of all of that is that the price today, during this winter period, are quite good, including in Southeast Asia.

So, there is also strong volatility there, and that's why we need to continue to work on the costs.

That's all for my introduction, but -- for, I will say, the global elements.

And now I will leave the floor to Patrick, who will explain you and present you the results of 2016 and the objective of 2017, before I will come back.

Good afternoon.

Sorry.

All the (inaudible) have the flu, actually.

The mood is obviously much more positive today than it was a year ago.

We are in fact facing a very volatile environment.

And keep in mind that, actually, 2016 was pretty challenging.

Total quarterly result improved steadily all over the year, quarter after quarter.

We posted $8.3 billion adjusted net income.

It was a tough year for the exploration and production.

Nevertheless, Total was the most profitable E&P among the major, basically thanks to production growth and efficiency gains.

As I mentioned to you, [I were] at [three] most profitable every quarter, despite the harsh environment.

Of course, and you see that on the left side of the slide, the backbone of the Group resilience was the downstream.

Downstream results are about two-thirds of the Group adjusted net income, despite also a sharp drop in European refining margin.

We also point out on this graph the pro forma contribution of the gas, renewable and power segment -- new segment that is taking place in the Group.

If it was there in 2016, it would have produced $400 million of net profit.

For the year, Brent averaged $44 per barrel, a decrease of 17% in comparison to 2015.

NBP, the gas price in Europe, was only $4.70 per million BTU, a drop of 27%.

And the European Refining Margin Indicator was $34 per ton, down by 30%.

So, as you see, do not forget that 2016 was a difficult year in term of environment.

On the right side, if you compare Total performance to our peers, honestly, for the past two years, we outperform our peers, and we repeat it in 2016.

The y axis is production.

The x axis is adjusted net income.

The size of the bubble is the size of the net income.

Of course, you see us on the top of the chart.

The downstream is delivering good results.

This explain -- this is part of the explanation.

Another part of the explanation is that we continue to increase production, 4.5% this year, which is a great achievement after 9% the year before.

And structurally, we are improving upstream for cost reduction.

So, all in all, a very good year, and a very favorable comparison of Total performance in comparison to its peers.

Moving to the costs, you know that Total started to cut costs and to restructure its downstream (inaudible).

Now, cost reduction played a major role in producing our best-in-class result.

Compared to our 2014 base, the sustainable cost for 2016 was $2.8 billion.

We expect $3.5 billion for this year, 2017.

And we have a target of $4 billion for 2018.

Upstream represent two-third of those figures.

This is also because the downstream restructuring took place before and started before 2014, which is the baseline for those figures.

On the right, you see the positive effect on our OpEx per barrel, where we are currently at $5.90 per BOE.

For 2017, we target $5.50 per BOE.

We have the lowest operating cost among the majors.

Basically, this was said by Patrick, but we are changing the Company culture and concentrating us on controllable costs, and this is working.

For 2017, we are ramping up the new Total Global Services, unique that (inaudible) was a centralized purchasing of the fourth operating segment and the headquarter.

You know, and you see that on your screens, the world is much nicer with an oil price above $50 per barrel; but we are still committed to reduce costs, to reduce breakeven, in order to increase our available cash flow.

Moving to CapEx and investment, for 2016 our CapEx was $18.3 billion.

This include $800 million of resources renewal that we acquired -- basically, the [balance].

For 2017, we gave guidance of $16 billion to $17 billion.

This included $2 billion of asset renewal acquisition.

So, organic CapEx should be $14 billion to $15 billion, plus the $2 billion of acquisition of new resources.

And then we gave an overall guidance for the period 2018 and after, of $15 billion to $17 billion, also including the $2 billion asset renewal.

These figures include $3 billion to $4 billion a year for downstream and the new gas, renewable and power segment.

Basically, we are doing more for less at the moment.

Of course, this is due to the deflation that we are able to harvest; but this is also due to our own effort to reduce our own costs.

On the right, you have two example showing how we optimize execution and design.

One is Maharajah in Brunei.

The other one is Zinia 2. And you know Zinia 2, where we cut costs by half.

Basically -- and my comment is, outside of the onshore US market, where drilling activity has recently increased, there is far more capacity in the service sector that there are project.

So, we believe that there is a window today of (inaudible) opportunity to lock in low-cost project.

Since 2014, service costs have deflated by 30%.

This is an average.

On certain area, like deep offshore drilling, the deflation is much higher, sometimes 50%.

So, we currently believe that in our market, it is a buyer market, and we want to take advantage of it.

Moving to production, you remember, 2015, we announced a 9% production increase, and Total continued to execute and deliver an unmatched production growth with, in 2016, plus 4.5%.

And we expect to grow, in 2017, above 4% again.

On the right, you see the mix of new venture, in dark blue; ramp-ups; and start-ups.

You see that, for 2017, most of our growth is coming not only from new venture but also from ramp-up of start-up already done in 2015 and 2016.

The contribution of the start-up of 2017, the top light blue on the 2017 bar, is limited because most of our project -- Tempa Rossa, Ichthys, Yamal -- will start end of the year, and as we are prudent, we do not take into account any contribution of those field in our 2017 production.

We confirm our target of 5% average production growth for the period 2014-2020.

And the takeaway message here is that we are de-risking the (inaudible) production, as I show you with the ramp-up of the existed start-up, and our portfolio is rich, with giant [young] plateau -- long-plateau projects that are nearly complete or closed, to coming onstream.

Reserve replacement.

Future production growth is well-supported by our expanded reserve base.

We added 1.2 billion barrel equivalent of proved reserve in 2016, giving us a reserve replacement rate of 136%, using a constant Brent price.

We have more than 12 years of proved reserves and more than 20 years of proved and provable reserves.

You know the SEC rules for reporting reserve.

The current SEC rules require that we use the average oil price for the year based on the first day of each month.

This average for 2016 give $42.82 per barrel.

This is not the average number you have in mind, the $44 per barrel, but that's as per SEC rules.

Using this $42.82 per barrel, we add, and we have to de-book some out, because the NPV (inaudible) at $42.80 per barrel is negative.

Actually, it's positive above $45 per barrel.

So, if we were using the same methodology with the SEC number, using current oil price, we should rebook again Surmont positively.

So, this is the result of the SEC rules.

We are more focused on the reserve replacement rate at constant price, which is something you are much able to appreciate the value, and we increased our reserve by 130%.

Exploration.

You remember that in the past we faced difficulties in our exploration.

We are turning now to exploration with a new leadership team, which is starting to deliver promising result.

You have our main successes in red star on this map.

And basically, we added 500 million barrel of resources in 2016.

And on top of that -- and you have a look on the top left of the map -- we are doing more for less.

In 2016, we spend $1.4 billion; drill 19 wells.

For 2017, due to deflation and our own ability to reduce costs, with a $1.25 billion budget we will drill 27 wells.

Obviously, for 2017, we are extremely happy with the positive results on North Platte in the US on the left; with Libra in Brazil; with Owowo in Nigeria, among others.

There are also some giant prospect in the Vaca Muerta, and offshore Myanmar, and onshore PNG.

Exploration, as you know, is vital for the long-term sustainability of the E&P, because it brings prospect of organic growth.

Basically, our CapEx figure -- $16 billion, $17 billion I gave you -- includes around $3 billion of resource renewal; roughly $1 billion of CapEx for exploration.

Among the $1.4 billion in 2016 there were $1 billion of CapEx, $400 million of OpEx; and $2 billion of acquisition of resources discovered by others.

So, this slide was a big debate between Patrick and myself to know who will show to you, on the top -- on the bottom left, the robot on Mars.

We are growing a profitable low-carbon business, and we are continuing and growing our R&D budget for the cycle.

On the left, you have the gas, renewable and power positive contribution.

A few figures for this new segment in the Company.

$500 million of cash flow from operation; more than 9% ROACE; and a little bit less than $5 billion of capital employed.

And Total is one of the largest global gas and LNG player.

And this robot you see on Mars is powered with Sunpower solar panel and Saft battery.

And as some people told me, the market on Mars is small, but we have a big share of it.

R&D is very important, and we haven't reduced our R&D effort during this downturn of the cycle.

And R&D is also key in our ongoing cost reduction.

As you see, we increased the R&D cost.

On the right side, this is excluding Hutchinson, Saft and Sunpower.

So, this is purely the oil and gas business, and we increased our R&D budget by 5%.

Turning to the downstream, obviously the downstream is extremely resilient.

It's provide steadily $7 billion of cash flow from operation.

We do maintain a $7 billion contribution at $35 per ton of refining margin for 2017.

The ROACE of our downstream operation compare extremely favorably to our peers, with a number of 34%.

Basically, I can tell you, we have established a track record on our downstream operation, and we feel confident that we can provide a sustainable cash flow contribution of about $7 billion per year.

Asset sale program.

I know some of you were skeptical about our ability to deliver the $10 billion asset sale program for the period 2015-2017.

January 31, we closed Atotech for $3.2 billion.

We have already complete 80% of our program; still about $2 billion to be closed.

We are confident that we will achieve the $5 billion target for 2017, which includes the Atotech sale, which is already in our book.

Honestly, when you correctly select your asset or your buyers, you are -- we are able to sell our asset at very reasonable price -- at, for Atotech, 12 times the EBITDA, which is extremely favorable for the sellers.

The balance sheet.

Financial strength and flexibility are built on a strong balance sheet.

We have managed to keep our gearing on 30%.

End of 2016, the gearing was 27%.

Our guidance is that we are moving over the long term towards a gearing of 20%.

As Patrick told you, volatility is here to stay -- this is our thinking -- and reducing the breakeven is the most effective strategy to prepare for volatility.

And I would say that a lower gearing is also a key objective for the same reason.

Total was the most profitable of the super-major, with a return on equity of 9%.

We are far from our all-time record in 28%, 29%; but posting an ROE of 9% with a Brent of 44[%], it is really an achievement, and we are the best-in-class on these metrics.

Following our review of the gas prices all over the world -- I have told you the NBP was down by 27% -- we have reviewed the value of some of our gas assets in the upstream division, like [Antomor], Angola LNG, GLNG in Australia, and we [impair] $2.8 billion in 2016, basically because of the lower gas price assumption we were using.

And my last slide.

We used the same slide last year to show you that what we promise you, what target we were giving to you last year, were basically realized.

We gave you a $19 billion CapEx target, including asset renewal.

We realized $18.3 billion.

The cost reduction -- we went from $2.4 billion target to $2.8 billion realization.

Upstream OpEx down to $5.90 per BOE.

Production growth above the 4% target.

Cash flow from operations for the downstream -- close to $7 billion.

Asset sale -- done.

Resource addition -- we have been able to add 1.7 billion barrel of oil equivalent below $1.50 per BOE, which is very much in line to our initial target, which was only 1.2 billion barrel of oil equivalent below $3.00 per BOE, with -- so, we once again do more, and use less of our capital.

Thank you.

That's next for Patrick again.

Thank you.

And as a transition, [he too] left me the best slide, which is that, yes, and it's good to be the last one on the results, because we are able to provide the slide, so we can make our own advertising in case you don't make it for us.

Yes, we are outperforming our peers.

It's the second year in a row.

And ROE at 9%.

The second of our peers is at 5%.

The adjusted net income, despite that we are smaller in size somewhere in our production, we have the second reserves (inaudible) the first, and far above some companies which are larger than us.

And our cash flow from operations was quite resilient despite the environment, minus 17%, our peers between minus 41% and minus 27%.

So, it's -- I think is demonstrating that -- and this is important if I just, for me as the Chairman and CEO of the Company, but I think that there, again, we have been able to adapt ourselves to put in place the programs of what we were telling you, which was to be excellent in what we control.

And I think we laid down the foundations during the two years, maybe because the times were difficult, to be innovative enough, to be disciplined enough -- it came together, by the way -- in order to emerge stronger out of this period.

And these figures, of course, give us a strong confidence in the way we can now take advantage of the situation.

And this will be the [thematics] of my presentation now, which is in fact to capitalize on our strengths, to work on our future growth by taking advantage of the current market conditions.

I already told you that, for me, the right strategy in a commodity business is to be able to invest when the price are low because the costs are lower, and because the competitors could suffer more than the big players.

So, the first two years of the downturn cycle, we are not able to do that, really, because we had to face high investments, high CapEx.

So, we were in no way to take more on board, even if we were able to make some acquisitions.

But now, we are able to do it.

And while not -- while maintaining -- and it's very important; don't misunderstand my speech (inaudible).

We will maintain the strong discipline.

Patrick show you that we are maintaining the cost saving program.

We have even reinforce it -- $3.5 billion of savings for 2017, $4 billion, and we will continue to work on it, because we strongly believe that what we can do is reduce our breakeven.

So, you should not understand my message about taking advantage, sanctioning new projects, adding attractive resource, by forgetting these disciplines.

Of course, management exercise is a little more complex internally, but we will manage to do it, because all teams today are convinced by the success on the previous slide I show you.

They are proud of it, but it gives us a lot of comfort to tell them, we need to continue, because there we have the recipe of the future success.

So, taking advantage of low-cost environments means sanctioning new projects -- I will come back on it -- and adding attractive resource.

Because if costs are low -- because, again, some competitors do not have the same financial strength and flexibility that we have.

The other point I want to raise during this presentation, to answer to some of the questions that I read in papers, is that by doing this growth that we are giving and delivering, this near-term growth is clearly accretive -- cash-accretive.

And in particular, we are increasing our leverage to oil price, and I will come back on it.

And with these two ingredients giving more visibility to the post-2020 growth, [again], we're showing you that we have higher leverage, increasing our leverage on oil price, is the best way to explain you why and how we will continue to create value to our shareholders.

So, first, about sanction of new projects.

We have a number of projects which are now ready to be sanctioned in the coming 18 months.

And as Patrick said, we are fully convinced that maybe you could see in the US onshores more activities, and some price increasing again; but, on the rest of the world, after two years of very low sanctions activities, all suppliers, all service companies, are desperate -- are hungry for projects, and are fighting for contracts.

We've seen that on the two example we've -- what was shown to you by Patrick, but we have other examples.

And so, we will be able to sanction projects at a very low cost per CapEx per barrel.

So, you have there a list of 10 FIDs on which we are focusing.

In fact, we have 11, because we have only one -- also one in the downstream, of our cracker in the US.

And this is a mix of giant projects, mainly deep offshore, but also some in conventional offshore and onshore, and some satellite developments.

At $50 per barrel, with the costs that we are targeting, all these projects are offering IRR in the high teens, I would say you have there.

They represent 350,000 barrel per day of new productions at very good rate of return, with an average of less than $8 per barrel.

If we are able to produce them at $6 per barrel, that means that the global CapEx plus OpEx as an average should be under $15.

So, it's quite an improvement.

But this paves the way for the future enhancement of the profitability of the Company.

The other activity is adding attractive resource.

And in September I told you there is a lot of opportunity in the market, but I was not able to give you names of opportunities, because of course we were negotiating them.

There is -- it's business secret.

I think you have seen that we were quite active in the last weeks of December, signing a number of deals that we were cooking during the previous months.

I will come back on some of them, but they represent 2 billion barrels of resources at less than $2 per barrel of acquisition cost.

And I can say that we have been quite strict in terms of selecting these opportunities.

The first, and it's important, is back to focusing on our strengths on the previous slide, that I mentioned.

We selected resources where we have the feeling -- a strong -- that we have strong, the feeling that we can add value for investors.

And the strength of Total are in deep offshore -- are recognizing deep offshore, in LNG, and in Middle East and in Africa.

So, we clearly targeted assets where we will be able to deliver the value.

Deep offshore Brazil -- I will come back on it.

Integrated gas and LNG also.

Middle East, I will also come back.

Just a word about Africa and Lake Albert in Uganda.

Clearly, we were in a situation where we -- one of our partner is facing some few financial difficulties.

We have been able to strike a deal, which is a win-win deal, where we will consolidate the operatorship position, where we have aligned -- are now in alignment with [the partners].

But at the same time we have solved the political debate about the export route for Tanzania.

And so, now, the next -- we have put in place all what was needed to be able to sanction the project in the coming 18 months.

A word about Brazil.

Brazil, obviously -- when you speak about deep offshore, we strongly believe deep offshore can be profitable, even at $50 per barrel, when you are developing giant fields.

So, you don't have to be a genius in terms of strategy to look to the map, and where do you find giant fields?

It's Brazil.

So, we developed an approach, and we have been able to convince Petrobras to enter into a direct negotiation.

Because we use one of our strengths, which is to be an integrated Company.

So, we went to Petrobras and tell them, okay, obviously, we are interested by your upstream assets.

We are also ready to develop a larger alliance and being committed on the downstream part of your -- of Brazil -- on the Brazil market.

By the way, the Brazil market is quite a large market for the downstream.

And so, we have moved together, and we have put a package together with Petrobras about upstream assets -- some gas and (inaudible) assets -- regas terminal, gas pipelines and power plants.

And also, by the way, a cooperation on technology, because both companies are strong in deepwater and want to share technologies in order to lower the cost of the development on the pre-salt.

This has been -- I would say, these value proposal, what we put on the table to Petrobras, was obviously from their point of view quite appealing, and they entered into that package deal.

So, we'll have access to two big fields in the pre-salt.

Lapa, which started end of 2016.

We should become operator of it, which will be -- we will be the first IOC being operator in the pre-salt; and Iara, which will start up in 2018.

It came on the top, of course, of participation to Libra.

In 2016 we have a very successful appraisal of Libra.

We know that we have in the northwest part of the field more than 3 billion barrels of oil.

So, now we are all convinced that the minimum-capacity development would be 650,000 barrel per day, at a CapEx plus OpEx under $20 per barrel.

So, this deal is offering us a very good position in one of the most prolific deepwater basin, together with a partner, Petrobras, which -- with whom we share a lot of common points, and we are excited about it.

The second area is the Middle East, and I want there, through this slide -- this simple slide -- maybe to fight a sort of wrong idea, which I can read in papers, that in the Middle East the margins are low.

And that the profits and the return to the investors is not the same that in other part of the world.

We have been able, in the last two years, to sign three big deals, one in Abu Dhabi, one in Qatar with Al-Shaheen; the last one in Iran.

So, one in Abu Dhabi, I remember, we were quite criticized by some of our peers, and I'm quite happy to see one of them joining us, by the way; but maybe we were quite right to sign early-stage, because we were thinking that, yes, we are able to improve fiscal terms; and being the first one there, offering us a better profitability, because we are leaders on more assets than our competitors.

Al-Shaheen was a very -- is give us a strong base of production and resource, with a very low cost of access, and the profitability of future investments is very good.

In Iran, we benefit -- we will benefit if sanctions do not move over first-mover advantage, in this country.

Together, these three projects represent more than 3 billion barrel of resource, more than 300,000 barrel of oil per day of production, more than $1 billion per year of cash flow, and a 15% ROACE.

So, I hope that with these figures -- we cannot give you more details per project because of confidentiality agreements about the terms, but these global figures will demonstrate -- will convince you that, yes, in the Middle East, we can structure deals which are profitable and give (inaudible) cash flows as to returns on the top of very long-plateau fields and low-cost fields, which is another characteristics.

And so, fitting well with the anticipated market trends that I mentioned at the beginning.

The other part is LNG.

So, on LNG, we told you that we want to develop in the gas value chain the same strategy we have on the oil, which needs to be more integrated down through the chain, in particular because we need to be able to develop the LNG demand around the world.

We have a strong position upstream, but we need also to develop the demand in a market where there is a lot of supply coming in the market.

And so, we have a portfolio.

We have built an interesting LNG portfolio.

We need to continue to develop it.

We are among the three top players in the LNG business.

And so, we have taken some positions in the last month in line with this strategy, being the leader of a regas terminal in -- [is] Ivory Coast, [these] regards Brazilian assets in the package here with Petrobras, and we just announced yesterday or two days ago with Qatar that we are working with QP on a regas terminal in Pakistan.

These three projects of regas terminal will offer to Total more than 2.5 million ton per year of new demand for LNG.

It comes on the top of the 2 million ton we signed last year with some Asian company in China, Indonesia and Japan.

So, we are active.

We are integrating the chain, and we are creating the demand which we require by our portfolio.

We have taken another decision, which is to enter into a very early stage in the Tellurian company, which is developing the Driftwood LNG projects.

You know, that is promoted by the founder of Cheniere in Sabine Pass.

Maybe we were [in right] not to have taken a strong position in that project, but we trust him to be able to develop a profitable project.

By the way, we will follow it.

For me, it's like an exploration well.

But it's also the same thinking, that it's good to have a stronger position on this US low-cost gas towards LNG, because LNG is part of our strategy.

This gave me to the next slide, which is maybe less of use to you, because mentioning the US among the strengths of the Company is maybe not so obvious.

But in fact, it is clear that in the US first, in 2016, we have delivered more than -- around $1 billion of operations, mainly downstream.

But it is recognition that there is clearly a gas and oil revolution there.

And what we want to do is continue to develop our US portfolio; but, again, in the areas where we can add value.

Which means, for example, Tellurian LNG, as I mentioned, because we understand LNG, which is about the side cracker petrochemicals in Port Arthur.

We are in a [part of] in businesses but we are perfectly -- where we are among the leaders.

In the Gulf of Mexico.

So, Patrick mentioned the -- to you that we have made the two nice discovery.

One of them this year is North Platte, which is above 500 million barrels of oil.

So, we should be able to develop it.

We are still -- there is still a side track going down which could even enhance this figure.

So, we have the North Platte discovery.

I will say the Gulf of Mexico, when you look to -- is probably a playing field which is good for major companies like Total.

It's deepwater, and since Macondo we've seen some -- a lot of US independents shifting from the Gulf of Mexico to US onshore for different reasons.

And know there is still a lot of reserves there which could be developed, probably at an acceptable cost, thanks to this new era in our business.

And so, we have to look -- so, now you have opportunity like Brazil, I will say, for deepwater development.

You also know that we have taken an opportunistic approach on the Barnett by preempting a sale there.

And by the way, since we acquired it, this field makes profits, which is good news.

So, US -- we recognize things are happening, but we want to develop a portfolio there, but based on our strengths.

The second part of (inaudible) message is to also answer to -- and I hope I convince you with what we just mentioned, that we are giving you more visibility of what will be the post-2020 growth for the Company, with the new projects and with the new resources.

I would like -- I wanted also to answer to another question, which is that we are considered to be less leverage to oil than some of our peers.

It is true that in 2015 we gave you a metrics that we were -- we had $2 billion cash flows, increased per $10 per barrel of Brent, which means by that time, by the way, we have a $20 billion cash flow at $55 per barrel -- $54, $55.

So, that means 10%.

This figure is changing -- is moving upwards -- and the new metrics we gave you today is $2.5 billion cash flow impact in 2017.

And I will explain you why.

And it will even increase next year.

We anticipate around $2.8 billion cash flow impact in 2018.

With these metrics we are, I will say, in the middle of the pack of the majors in terms of leverage to oil price.

So, it's an important message to you, is that our Company is as leveraged as the others to the oil price; it's not less-than leveraged, as I can read sometimes.

Why do we have this situation?

We have it, firstly, because all the near-term growth that we have delivered already and that we will deliver in coming two years, is a cash-accretive growth.

The projects -- the margins per barrels, so cash flow from operation per barrel -- you have there the figures, $60 per barrel.

Coming out as a start-up of 2015, 2016, is around 40% to 50% higher [than our] existing producing assets, and the margin per barrel of the 2017-2018 start-ups will be even twice higher than the producing assets.

So, we -- and if I just zoom on these 2017-2018 start-ups -- and by the way, you have a nice table that you like, where you have (inaudible) so you have the slide there, with all the list of the projects, with the advance -- the level of progress of them, which will be started during the years since 2017-2018.

They represent 550,000 barrel per day of net production, and they are either hold or holding at 85%, with some of them having very high margin per barrel, like the deepwater Moho Nord, Kaombo, Egina, or Tempa Rossa, or Ichthys.

So, [oil] leverage (inaudible) will -- is already increasing because of the start of 2015/2016, and it will be even higher in the coming years.

I would also add that all the efforts which have been done by the upstream E&P division under the leadership of Arnaud, to lower the cost under $6 per barrel -- I remind you, we were at $9.90 two years ago -- are also part of these accretive -- of this higher leverage to oil.

And it's also important to notice, because it's an important contribution to that higher leverage.

As Patrick told you, also the downstream, and I would like to insist and give you maybe even more information about it, to convince you that the $7 billion that Patrick has qualified as sustainable contribution, will be sustainable.

It's sustainable.

And why?

Because it's in fact, I will say, threefold.

It's refining for 40%, chemicals for 30%, marketing and services for [40%].

So, refining of Total in 2017 is a new refining compared to what we had in 2012, for several reasons.

First, we have eliminated more than 300,000 barrel per day of loss-making capacities.

The refinery in Provence is closed, is shut down, since December.

Like the refinery in Lindsey in UK, (inaudible) has been -- so, capacity has been divided by two since December as well.

So, the restructuring has been done.

And we -- the refining -- on the top of it, we have started some good assets like SATORP, which is giving the contribution as expected; and also, the modernization of Antwerp, which will be delivered by mid-2017, will contribute to reinforce even more the refining cash flow from operations.

So, it's an improvement of 50%.

And all these, what I describe to you as restructuring on one sides, these new assets on the other sides, will allow us to maintain the $7-billion sustainable development, even if there is a decrease of $10 per ton, which represent $500 million or $600 million.

Besides the refining, we have some petrochemicals.

And there, it's less well-known, but this year, in 2016, the three big platforms we have on the eastern hemisphere, in Saudi Arabia, in Qatar and Korea, have delivered almost $1 billion of net results.

These are very best-in-class platforms, more than 30% of ROACE, with some capacity increase to come.

Expansion opportunities -- we plan to debottleneck SATORP with Saudi Aramco by more than 20%.

We have a 20% increase of capacities in Korea, very -- and we have a more than 40% increase of capacity in [line] with a side cracker in Qatar.

And when you built on existing platform, this is the way to even enhance the profitability of each platform.

So, these assets are in the Company and they are at the core of the success of the petrochemicals like, I would say, the US platform in Port Arthur, on which we want to build a new cracker as well.

And the third part of -- last 30% is represents the batteries and non-cyclical business, marketing and services, which is also growing by -- we remind you, we have an objective of 4% per year of increasing sales.

When you compare the 2012 cash flow from operations to 2016, 2017, it's an improvement of 40%.

And this has been made possible because also some more structuring in Europe.

We have focused our activity in Europe on the main markets -- France, Benelux, and Germany.

We have sold the markets where we are too small, like UK and Switzerland.

We will divest Italy this year.

But it's also a contribution of Asia.

Our lubricant business -- we have invested in some big blendings in Singapore; also, by the way, in Dubai.

But China, now, is among our top five countries in marketing and services with the lubricant business.

And we have also Africa, of course, for the networks.

And all the businesses, you can see that we have five countries, the five large country, with strong position -- Morocco, Nigeria, South Africa, Kenya, and Egypt.

So, this business is a non-cyclical business, but it's growing.

It's growing.

We continue to invest a little more than $1 billion per year, and under the leadership of Momar we are able to continue to steadily grow on our position.

So, this is the base of why we strongly believe that the $7 billion contribution of downstream is sustainable.

So, with all what we said, it's -- as I said in my introduction, 2017 is a year of turning the corner of a cash breakeven.

And I would think the benefits of all our production growth and the cost reduction, which is -- again, is not finished.

So, in 2016, at $44 per barrel, our cash flow from operations was around $17 billion, and our CapEx $18.3 billion.

So, we are not able to cover.

But, from 2017, we are able to cover.

And in fact, we are able to cover our CapEx, $16 billion to $17 billion, at -- pre-dividends, we would break even under $40 per barrel.

So, this, of course, is very important in terms of strength of the Company, balance sheet, and financial flexibility.

If we have -- with the scrip dividend, being the cashout of the scrip dividend at $50 per barrel, which means, I would say, a take-up of the scrip of around 50% -- so, breakeven is at $50 per barrel.

We mentioned to you in September $55 on this figure, if you remember well.

So, it's an improvement.

$55 is down to $50.

It's down for $50 for three main reason.

The first one is because we have an assumption of $35 per ton on the refining instead of $25 per ton, which represent more or less $500 million to $600 million, as I told you.

We have -- a second source is that we have savings of around $500 million -- additional savings.

So, we continue to lower the breakeven, $3.5 billion instead of $3 billion.

And the last source is that we have some improved fiscal terms, like the one we will benefit on ATCO, which are offering quite an interesting return in terms of cash to us.

So, we will be in this situation, the $50 per barrel.

And on the top of it, as you can -- it's mentioned, because of the growth we have an additional $1 billion coming from the growth.

This situation, of course, makes the Board of Directors of Total quite comfortable.

We have the strong balance sheet.

The gearing is at 27%, under our expectations.

We are turning the corner in terms of cash flow breakeven.

And this is the reason why we have taken some decisions in terms of shareholder returns, which of course are the core of our thinkings.

We -- on our side, we want to preserve the financial flexibility of the Company, because we -- as I told you, we consider, and Patrick reminded you, but volatility is still in the market, and it will be a mistake to believe that the trees grow to skies.

It doesn't work like that.

So, this is important, which means that, yes, we give a priority to lowering our gearing, even to a medium-term objective of 20%.

And we consider from this point of view, but the scrip dividend is offering some flexibility, even if it's 0% scrip dividend.

A 0% dividend, the take-up will be less than 20%.

But for -- as you know, to implement such scrip dividend, you need to go to a General Assembly of Shareholders.

So, it's a yearly event.

And we prefer to keep a 0% scrip dividend than eliminating the scrip dividend at this stage, because of the volatility of the oil environment.

But at the same time, as we told you, we are ready to eliminate the discount at -- with a Brent at $60 per barrel.

So, a 0% discount.

We have made a first step in December by reducing the discount to 5%, and we are committed, and the Board of Directors is committed, to eliminate the discount at $60 per barrel.

Because in fact the breakeven, if you take a 0% discount on the scrip dividend, a take-up of less than 20%, the breakeven is around $60 per barrel.

So, we are just continuing to monitor the cash flow of the Company.

So, the reason is just there.

It could come soon.

We'll see.

And at the same time, we consider there was no contradiction between maintaining a 0% scrip dividend and beginning to think to increasing the shareholder return.

We selected the tool of increasing the dividend.

It's a small increase, 1.6%, on the quarterly -- the last quarter dividend, $0.62 per share.

But it is the strong willingness of the Board of Directors to demonstrate that, yes, we are very confident in the strength of the balance sheet, and we are even more confident in the capacity of the Company to increase its cash flows for the future, as I demonstrated to you, and to have an increasing leverage to oil.

Of course, the commitment is not only for the last quarter of the year; it's for the coming quarters.

So, you will not see, as you've never seen in Total, a decrease of the dividend, so the $0.62 per -- it's why I can speak about 1.6%.

And again, we believe that it is a combination of maintaining the financial flexibility with a 0% scrip dividend, but also beginning to return -- to increase the return to shareholders, because we have higher cash flows.

So, as a conclusion, I just would like to summarize the three messages we delivered to you today.

The first one is that we are fully committed to maintain the strong discipline that we have demonstrated during the last two years.

All the program on the big saving is in place, will be executed as we have executed; even we have done better than we anticipated.

We gave you a CapEx in guidelines in September of $15 billion to $17 billion.

We are in the guidelines.

And all the program that I mentioned to you, about new sanctions adding new resources, will be developed within the $15 billion to $17 billion guideline.

We have room to do that, and we -- because, again, as Patrick told you rightly, we can do more with less in this market.

And the second message -- we have near-term accretive growth and an increasing leverage to oil.

We have been able to deliver this growth.

The projects are there.

They are progressing steadily.

2017, 2018, we still have 12 major projects to come, and we will deliver -- we'll feed that growth and this leverage to all.

And the last one -- yes, we have entering in a period where we are strong enough to use our financial flexibility, but within the discipline I mentioned to you, in order to take advantage of this environment by sanctioning new projects, low-cost projects, and adding low-cost resources on which we will be able to deliver more value to our shareholders.

Thank you.

And so, I will invite the whole Executive Committee to join me around the table to answer all your question.

It's Theepan from Exane BNP.

I had a question on projects.

And firstly, if you could just flesh out to the market, you talk about financial flexibility for Total.

So -- and very much confirming the $15 billion to $17 billion on a medium-term (inaudible).

So, perhaps you could give us a little bit of color on where or how the project spend on the existing asset base is sort of falling, to give you that flexibility in the next couple of years.

And then, secondly, I think you have a very differentiated method, perhaps, versus your peers, in terms of looking to sanction projects.

I think you've mentioned the 10 projects, seven of which are Total-operated.

So, I wanted to understand again, perhaps, or get reassurances in terms of how you can execute in terms of delivering the most efficient projects.

Does the organization have the capacity to really develop 10 projects successfully over the next three, five years, or will we see some of the same mistakes we've seen previously?

Thank you.

Okay.

The first question is around -- the answer is 50%.

In fact, when we gave you the guidelines in September, of $15 billion to $17 billion of CapEx for the next, say, four years, 2017 to 2020, the existing developments which are being developed were representing around 50% of this amount.

So, we have room.

It's why I can confirm you today, that we'll stick in these guidelines.

We have room to launch new projects and to even add new resources in this portfolio.

So, this is the first point.

Can we have the -- so, I will give the floor to Arnaud to answer you that questions.

Again, just a word before.

It will give him time to think.

I have two remark.

First, you will remember, but in terms of human resources, we did not make any layoff.

We decided deliberately to recruit less people, but not to make layoff in the Company.

Yes, some contracting people have gone, but we have kept the core of the Company intact.

And we've done it deliberately, because we wanted them to work on costs, strongly; and we wanted also -- we were sure that one day we will need them.

So, it's time to have them in the Company, and we will use them.

The second remark is that all the 10 are not big projects -- we have five big and five small.

But Arnaud will probably complement that answer.

Just to complement quickly, it's clear that, as you know, we are starting our projects year on year, and delivering them on plan.

And so, we are demobilizing our [operated] projects, and so we are actually getting our teams ready to engage in new projects.

I can share with you that in the last couple of years there were questions internally in Total about, what are going to be our next projects?

Now, they know where the next projects are coming from.

I think there is another aspect to it.

It's what happen in the industry.

Because, as you all know, there was clearly an overeating situation in the industry, which actually impacted also a lot of the supply chain.

And as was mentioned before, today, it's clear that the supply chain today, our contractors, engineering companies, are short of work.

So, there will be capacity there.

And they have kept -- clearly, all of them have tried to retain the best of their people.

So, we believe the capacity today to engage in new projects is better than it was three, four years ago.

Yes.

I would say that, on the top, some of the big projects which were being developed have stopped, are now ending, so we will use part of the staff that -- which was -- which will be -- no sorry.

And, sorry, I did not -- no, just to mention about -- so, when you will see the list, among the giant ones, we have three operated and two non-operated.

So, the burden is less.

It's not five operated.

Even if you were right to remark, but seven of the ten are under our control.

Oswald Clint at Bernstein.

Could I ask a question about the LNG?

You talked about adding 2.5 million tons of new demand yourselves -- creating demand.

Could you talk about that number?

Is that something we could see repeatable each and every year?

Do you see scope to create that type of magnitude for Total?

And also, do you think you could extend further down the gas value chain in countries?

I know you talked about Brazil, but what about China, India, and become the customer yourselves in some of these countries, from the LNG side?

Second question.

Patrick, you mentioned, getting into Brazil, you promised or pitched the idea of technology to lower the costs of the pre-salt oil to Petrobras, and that maybe helped you access that asset.

What exactly are you talking about there?

What type of reduction in cost is possible?

Thank you.

Okay.

First, the 2.5 million tons, for Philip -- explain where they are, between Brazil, and Ivory Coast, and Pakistan.

Yes.

Well, first, one comment.

We, in 2016, managed to contract around 2 million ton of additional LNG demand for ourselves.

And for 2017, we are working, as Patrick mentioned, on several projects.

You at least know three of them.

Ivory Coast.

Ivory Coast should turn up, if it materializes, by 1 million ton per year of LNG demand for Total's share.

Pakistan should be close to the same.

And Brazil should add a bit less than 0.5 million ton for the short/medium term.

Over the long term, it might be much more.

So, you see that, only with these project, and [continuing to] -- we are working on many others, we have the potential today within Total, of generating this 2.5 million tons of additional demand, each year.

So, we are -- we feel safe.

And as you've seen, the real strength of the market, what was shown almost everywhere, including in China and India, is giving us the confidence that these countries will also contribute highly to additional LNG demand for the whole market, but including for Total in the medium term.

Yes.

In terms of, can we repeat it, yes; we have other ideas to -- we have other ideas on which we work.

We believe that in LNG, this is a market today which is more, I would say, a buyer market than a seller market.

If we want to create a demand, we need to be more integrated.

When you go down through the chain, a regas terminal is not a big investment, when you think about it.

You can even have some financing on it.

It's more complex to us to go down through the chain, to take shares in power plants or things like that.

We have accepted to do that in Brazil, but it's part of a larger package.

It's not a strategy per se.

But if we need to do it in order to have a leverage on the demand, yes, we can do it.

India -- obviously, when you think to India -- because we know it, like in Pakistan, you can say there is a buyer, but you have to find the right people, we will pay the gas [at the end].

So, it's also a way to secure, some way, the payments of the gas.

On the other point, on Brazil, I think Libra is a good example.

You know, in Libra, we are working hard together with Petrobras.

And I think we are targeting 30%, 35%?

Yes.

35% lower cost than we had one year ago.

So, the teams are working together.

And they have many ideas.

I mean, maybe you can describe some of them, Arnaud.

Yes.

One of the key -- the characteristics of Libra is the productivity of the wells.

The exploration well was tested at 50,000 barrel per day, each well.

So, you have a very concentrated structure, we said about 3 billion to 4 billion [dollar] barrels.

And this is the same [freedom].

So, if you compare this to our Block 17 in Angola, we will be able to have the same FPSO, repeated several times.

We are thinking at up to four FPSO on the block.

So, this standardization will give us some advantage.

It's clear we are also trying to capture the market situation that we can see, and particularly on drilling.

And we are also working, and this is part of the strategic cooperation with Petrobras, on some innovation with regard to the [compaxification] of units, trying to get more condensed and compact design for the FPSO.

But, to be -- to tell you, it works well, because I visited myself the same place in Brazil, in Rio.

Pedro Parente is coming to (inaudible) [soon], and Arnaud and Solange Guedes are working together and managing a number of topics that we want to work together.

So, it's part of the alliance we have done.

The technology is also there.

And in fact, both companies, from this [point of view] -- when you look to deepwater, Petrobras was one of probably the ancestor of deepwater, and Total came just after, so we have some common points now to work together.

Another question?

Thomas Adolff from Credit Suisse.

I have two questions.

And firstly, I want to start with just capital allocation, and specifically the priorities around the excess cash, whenever you get to the excess cash.

You have a framework in place, but often decisions can be taken in a more dynamic manner.

And as far as resource replenishment is concerned, you've taken the conscious decision to go for the inorganic approach, or the bolt-ons.

But whenever we get to the excess cash and the priorities around the excess cash, the questions I had is, should I think about, you're going to do more deals to high-grade the portfolio?

Should I think about a removal of the scrip dividend, if that's still part of the plan?

Should I think about share buybacks, if you get the gearing down to 20%?

Or should I be thinking about setting your dividend at a level to keep the dollar payout unchanged?

That's the first question, and I have a follow-up.

Okay.

Maybe we will have the right to ask a question.

I think we say, to lead, the -- in terms of -- if we have excess cash flow someday, and we don't have much excess cash now, to be honest -- around $55 compared to what Patrick (inaudible) gave you, we don't have much.

But gearing is clearly a first objective.

We want to deleverage the Company.

We want -- clearly, Patrick told you, and it's our first objective.

We never said that we will remove the scrip dividend.

We say that we will end the discounted scrip dividend.

We confirm it today.

So -- and again, it's mainly back, the take-up will be less than 20%, so it's not far from a full dividend, but we want to keep the flexibility in case of the volatility.

And we want with -- and then, if we have more than that, we can see.

We will buy back shares.

But, for the time being, I don't have that cash.

So, it's beyond it.

It's beyond this point.

Patrick, you want maybe to continue to complement my answer?

No.

It's a question for rich people.

You know?

And --

Maybe we are the richer [in the industry], but we are not so rich today, you know.

No, but I will be glad you asking this question again in three years' time when we have plenty of cash available around us.

But this is not the case today.

But remember, I believe that the best strategy is to maintain a sustainable level of CapEx and investments.

So, you will not see me -- I told you last time, and I told the Board of Directors, if you see me asking for more than, I would say, what, $19 billion of CapEx -- stop me.

It's a mistake.

So, return it to the shareholders.

It's better.

The second question I have is, last year in September -- I'm still here -- you showed a chart that, by 2020, based on your demand and supply forecast, that there will be a big deficit.

I'm not sure whether that's still your base case.

But let's imagine a world that looks slightly different.

That OPEC can produce more.

And maybe Libya and Nigeria, or Iraq, Iran, Saudi Arabia, will pump more.

Russia can certainly produce more.

The US shale can potentially produce a lot more.

And Brazil will also contribute.

Now, when I look at your portfolio, you do have decent exposure to the Middle East.

From my numbers, the cash margin is a little lower.

Brazil is great.

You went into Brazil, which -- Russia, you're not there, apart from LNG.

The margins are fairly attractive.

And US shale.

US shale can surprise significantly on the upside, and you don't really have exposure to that.

So, I wondered, in the world where that deficit doesn't exist, so that shale is a much better swing producer and much lower-cost, how should I think about Total's hedge against that?

How should I think about the big resource base that Total has in its portfolio, and how should I think about how much of it you would work, say at a $50 oil price?

Thank you.

This idea of shale oil being the best asset because it is a flexible investment -- it's on and off, like this -- it might be correct.

But as far as I see, even in the US where it was extremely successful, most of the small E&P companies are facing trouble.

There are some very good guys.

I won't give you name, but you know them.

But this industry is facing trouble.

So, it is not so easy to make money on this matter.

I would remind you also that we do have very large resources in the Vaca Muerta.

I know that this is in Argentina; that Argentina, it is not in the US.

It might be more difficult.

There is a political risk attached.

You don't have the same [granulometry] of industry available in Argentina, but it is important.

And we are currently developing pilot in Argentina, and our capability to produce, and we are reorganizing ourself within the industry to cope with future development.

And one can imagine future development with the support of the World Bank, for instance, in order to mitigate the political risk.

Okay.

We'll be clear, the US shale is too expensive for me.

I will be very straight.

I've studied -- we've spent, both of us, a lot of -- with Patrick, a lot of (inaudible).

I don't want to buy assets at $80 per barrel or more.

I think we have more opportunities to add value to our investors by doing a deal like the one we've done in Brazil, and we have other ideas about spending and buying assets.

We have to justify it.

And I've studied all of them.

We would need $80 per barrel.

So, maybe I'm wrong, but -- and at the top of it, I repeat, I would be a financial investor.

I don't have the human resources.

So, what is the best for my -- the Company?

Is it to be a financial investor, or is it to use our industrial capacities and our people in order to leverage the know-how of the Company and to create value?

So, again, this is the situation today, and we work on it.

I'm not fully convinced that at $50 per barrel is the best hedge for the Company.

Bertrand Hodee, Kepler Cheuvreux.

One question, if I may.

Coming back on slide 21, where there is a list of these 10 FID over the next 18 months, where do you see a risk on those FID, either political or either, I would say, in terms of cost?

What are the project where you are extremely confident that the cost are already right?

Where are the project where you think you still have some work to do in terms of cost?

And also, finally, can you elaborate more on the Vaca Muerta opportunity?

Is it gas?

Is it liquids?

And also, are the costs right or the fiscal terms right there?

Thank you.

Okay.

The main risk, of course, is South Pars in Iran.

It's not to -- if I don't answer you that, you would be surprised.

To be clear, on South Pars, the timetable is quite clear to me.

The US President and the US Secretary of State will have to sign some waivers, to renew the waivers by April and May if -- in order to stay within the scope of the treaty with Iran.

Either they do it or they don't do it.

Our own timetable is to finalize the contracts and to take the FID by middle of the year.

So, it's going well from [our] (inaudible) point of view.

We'll have the answer.

So, either the US continue or it don't continue.

If they continue, we can go -- we will move on.

Because, again, we have all the economic terms, and the contract is very good.

We want to sanction the project.

If the US decide not to stick on the treaty, then we'll have to obey to the international rules.

That's clear to me.

For the others -- Libra 1, I will say that you know that there is an issue about --

Local [content].

Local content.

The Brazilian authorities, that we have met several times, myself, (inaudible), Arnaud, with the minister.

Told you that we will have a positive answer -- a good surprise, a nice surprise, in the coming two months.

So, I'm trusting them.

But, again, as soon as we have these local content regulation being lifted, it will move quickly, because we are -- all the partners are dedicated to that.

Lake Albert -- it's in our hand.

Bonga South West is operated by one of our peer, but is working hard on the modified project, with announcing very good, very competitive costs.

The satellite projects are all in our hand.

And a word about Vaca Muerta.

Vaca Muerta, we have developed -- we have, in fact, quite (inaudible), Patrick's told you, a huge domain.

There is a limitation with (inaudible), which is linked to the history of economic governance in Argentina.

We have to face the reality.

But we have a gas domain which is very easy to develop for us, and we have a first development trench which we have ready to sanction, of more than $500 million, because we have already the surface treatment capacities.

They are there because it was all conventional domain.

So, conventional position has declined, and so we have available capacity.

So, it's a matter of drilling and connecting.

So, this is quite profitable.

We are waiting -- the Argentinean government has announced what they call -- I don't know.

Gas plan.

A gas plan or -- with quite good prices, around $7 per million BTUs.

And we told them, if you confirm that by writing -- but we want a paper.

We are in Argentina.

Sometimes you need to see the papers.

We have been paid for that.

We will announce the project.

And then we have another area, which is more with liquids, which we just appraised positively.

But this one, we need to have built the facilities, and probably this what was -- Patrick was suggesting, together with other operators, in order to be smart.

So, this is a matter for me of, at which pace do we develop there, Argentina; but the first tranche is ready.

We sanction it internally, subject to having the papers.

It's Irene Himona at Societe Generale.

The downstream is continuing to pay all of your cash dividend cost.

So, I had two downstream questions, if I may.

Firstly, in marketing and services -- not new energies; the conventional marketing and services -- you mentioned it's a non-cyclical business.

It's very stable, et cetera.

But surely, if you're growing your volumes 4% a year, as you did last year, and you're growing into high-margin businesses like lubes, surely the outlook for that business is of improving rather than stable profitability.

So, I was wondering if you can give us some guidance on the outlook.

My second question is on Hutchinson specialty chemicals.

It's clearly non-core.

It's a sizeable business.

I wonder if you can share your thoughts about the potential for Hutchinson to free up some capital for you to use in your core business.

Momar, you take the first question about M&S and growing the M&S, and the reserves and the cash flow.

Yes.

You're right, we've delivered on the growth of 4%.

We've had good results in Europe.

I mean, that's our base.

We've had good results, good margins.

We've had good results in Africa.

There's probably, on the lubricants -- the marine lubricant had been quite difficult here, because of the freight -- the situation of the freight market, where we've had pressure on prices, stiff competition.

But otherwise, we are delivering on the 4%.

And we're pretty confident that in the coming years we'll deliver on margins and on volumes.

On Hutchinson, I will repeat what I mention already.

It's a sizeable asset.

There is in Hutchinson some capacities which could be of interest for us, in terms of manufacturing, if we want to develop other businesses like our battery business.

So, we see some synergies from manufacturing know-how somewhere.

Having said that, you are right, Irene, it's not core.

But I'm not sure that Saft is core as well, from this point of view.

Core to oil and gas is clear; but frankly, with the balance sheet we show you, we don't need to sell Hutchinson.

I don't want to sell Hutchinson.

There is no reason to sell it.

And I prefer to keep these type of assets.

If we face a downturn once, I will be happy to do it.

So, it's a big asset.

It's not easy to sell.

It's much bigger in terms of value than Atotech.

And we managed to sell Atotech at a very high price.

But, the bigger it is, and the more complex it is also, to monetize these type of assets.

And so, frankly, it's not on the agenda at all, you've seen.

With the $10 billion we have executed them, like Patrick told you, at 80%, we have few assets that we will announce soon, but we will -- it's done.

And we don't need, in terms of financial strength of the Company and balance sheet, to sell more assets for the years after, with the breakeven we have done.

So, Hutchinson will remain in Total, even if it's not core, unless we have a big -- some other big plans.

Yes.

It's Iain Reid from Macquarie.

Just a couple of questions on some of the projects you mentioned.

The write-down you took on Surmont was interesting me, because Surmont is -- well, it seems to me to be quite a good asset.

And Fort Hills, which is the poorer asset, you don't seem to have taken a write-down on.

So, I'm just curious as to what the kind of cost or, if you like, breakeven, or price situation is on Fort Hills.

So, I know you (inaudible) out of that, if you can.

Also, on the Papua New Guinea Elk-Antelope, that used to be one of the projects in your kind of about-to-be-FID'd, or certainly in the next 12 months or so list, and it seems to have dropped off there.

I just wonder what you're seeing there now, which has kind of pushed that one down the pecking order a little bit.

And the last one is on your oil price sensitivity.

You've made some changes to the PSCs, or you've negotiated some changes to the PSCs in Angola, et cetera.

I just wonder whether that has enhanced the oil price sensitivity of those projects, or has dampened it, as oil prices move up?

Okay.

So, first, the reserve write-down.

There are rules.

The rules are the rules.

It's a difficult exercise, by the way.

Because you have to understand, what we have to do in the Company is, we have to imagine a world which will stay forever at $42.80 per barrel.

And that means that, for example, we have to decide which level of OpEx we will take at $42.80 per barrel, if the world was permanently at that level.

So, we take assumptions.

Of course, there is some -- it's not [so here were] OpEx.

We have to project that on 20 years.

So, on Surmount, we work, and we don't -- we didn't work alone, by the way.

We have a partner there as well, as you know, an operator.

So, we exchange data.

And we took some assumptions about lowering the OpEx.

But we considered that it was more reasonable to write down the Surmont 1P reserve, being known, let me be clear, we will come back next year.

For next year, we'll have the 300 million barrels, we'll come back, unless we are again at an average of 45 -- less than 45.

So, it did not disappear.

The proven reserves are developed.

We have even produced.

But the SEC has some rules, and are observing the rules, and we have decided with the operator, which was done (inaudible).

On Fort Hills, we worked also on the operator.

There is a difference between both projects, is that on one side you need to pay for the gas, if you remember.

On the other side, the OpEx per barrel is pure -- is more, I would say, is less expensive.

So, we have the NPV zero for Fort Hills would have -- if we had been under $40 per barrel, more or less, we would have add to the book.

So, there was a difference when we took the -- in terms of margins per barrel for the future, we'll see what will be the best.

So, again, it's a little theoretical exercise.

And we work with both operators on both assets.

We took some assumptions, but what was the reserves of the values calculation.

So -- and I -- we have done it honestly, and we are ready to answer to more questions.

Elk-Antelope -- by the way, it's a good -- I will -- why is it not?

Because we save the list of 18 months, FIDs.

So, maybe it's 24.

By the way, the situation is a little more complex there, because for the time being we have a partner which is supposed to be bought by somebody else.

It's not done.

So, we are [ready to] -- obliged to wait, even if we work.

A remark that I want to do is that, some people were wondering why we were giving up on Elk-Antelope.

One of the reasons why, but in our portfolio we were thinking on the (inaudible) also to Brazil already.

And so, the decision we have to take internally was, do we continue to [have a] bid on Elk-Antelope, or do we prefer to put our money on the Brazilian deal?

And the decision was also this one.

So, it's part of the discipline that we had internally, we stopped.

But again, we have met with the potential buyer together with the previous CEO, with the new CEO, and we all agree that we will find a way to be smart together and to make the most efficient project.

But we need to have them around the table.

So, maybe 24 months and not 18 months, but we'll work on it.

It's part -- we did not mention the whole list.

I could have added that, of course.

I would say this discovery in the Gulf of Mexico, North Platte, is part of the projects that we'll have to develop in -- not in 18 months, but 24, 30 months.

Owowo in Nigeria as well, we have a discovery.

So, we have other FIDs.

But we wanted to show you what was the list of the projects on which we work immediately, soon.

We have for the next 18 months on the table of Arnaud and his team, [there] is a lot to do.

We have also to maintain the discipline to continue to maintain the cost saving program.

The last question about oil price sensitivity -- improved sensitivity.

Yes.

I would say, yes and no.

The moves that we've done on the Block 32, it has an improvement on the sensitivity, but this was more to cover the low -- the price under $60 per barrel.

There was no change in sensitivity above $70 per barrel.

The PSC was unchanged globally for the price at which we sanctioned the project.

We didn't ask for anything.

We were more -- we have negotiated new terms in order to cover the low price, where obviously the project was not profitable enough.

So, from this point of view, it helps us to have a bit of sensitivity between, I would say, $40 and $60 per barrel.

[Chris Gemini] from JPMorgan.

Two questions, please.

First, on your financial framework, today you've increased the dividend and you're investing countercyclically.

Yet you talk about oil volatility, and therefore want to keep the script optionality.

Can I understand, in a world where oil is potentially low, what exactly is the priority, or the pecking order, in terms of dividend, CapEx, and in the context of that, the scrip?

The second question is more broadly speaking in terms of the industry and the potential listing of Saudi Aramco.

You are clearly best in class across a variety of metrics.

How do you think your portfolio will change in the context of a listing of Saudi Aramco?

Where would you put capital in the context of your growth potential?

How would you change your thinking, industrially?

I think I answer the first one.

So, Patrick will answer you with his own words and his own vision of CFO of the Company.

To make it clear, I think we make it clear today that we wanted to maintain the scrip because we are facing a very volatile environment.

So, as at today, facing this world -- and we do not foresee in the near future another world than the one we are facing today -- the scrip will be maintained, maybe with a zero discount, if we face a $60-per-barrel oil price.

But the priority is to maintain this flexibility.

Dividend is a must.

We have maintained and continuously increased the dividend for the past, I think, 30 years.

I think Patrick make it clear that it is not our intention to reduce the dividend.

We increase slightly, I recognize, 1.6%.

This is not 10%.

But this is to give a sign of comfort.

We are able to slightly increase our quarterly dividend.

And the -- as I mentioned to you, the dividend for us is a must.

We have to pay a dividend and it's part of our cash flow allocation.

And we have establish a level of CapEx, $15 billion to $17 billion, including $2 billion of asset renewal, which we believe, thanks to our OpEx cost reduction, lower breakeven, enable us in the current oil price environment to finance, from cash flow from operation, [vose] CapEx at this level, plus a dividend, partially or [majoritally] in cash, depending on the discount that we will use on the scrip.

To continue on that, I think we will -- I hope, anyway, we probably go very shortly to the 0% scrip dividend.

Again, it [lets] flexibility to take, if will be less than 20%, but if I were facing more -- again, a downturn in the cycle, we could react easily to that.

By the way, I have some -- we have met some investors.

We are -- for fiscal reasons, in some countries of the world, there are people, investors, who are interested to have the optionality of having the dividend in shares.

Not much, but you have some.

You can find investors who has these interests.

So, we can live with a 0% scrip dividend.

And again, there is no contradiction with that tool and increasing the dividend.

That's important to have in mind.

Of -- does IPO of Saudi Aramco change the world for you?

I have been offered a position (laughter).

But --

That's not true.

May not.

I will say at the top.

No, frankly, I'm -- we'll see what will really happen with this IPO, and what is the value of the Company.

I'm not sure it's changing a lot of things for us.

But we'll see.

If we speak about 5% -- I didn't know that the value of an oil company was a multiplicator of the reserves of the company.

I had a feeling that was discounted factor somewhere.

So, we'll see what will be [really the] value of the Company.

No, I don't see the world changing for us from that perspective.

So, it's Brendan Warn from BMO Capital Markets.

Thanks for confirming about the ADCO change in terms.

Can I just confirm whether there's any retrospective catch-up or windfall from those change of terms?

You've been there for a while now.

And then my second question relates to, you've got a couple of very big LNG projects coming on at the back end of this year.

Australia -- I apologize for us.

We start strong; we often finish quite poorly.

Most projects -- actually, I think nearly every project in Australia in LNG has been over schedule in that part of the world.

What sort of the key risks and concerns and worries do you have, going into commissioning, certainly at Ichthys, and if you could also touch on Yamal?

The terms were applicable at the date [where we were] signed.

So, they were signed, and we're already in the concession, so we've benefited from the terms immediately.

That's all.

Nothing else to add on that.

But I will not disclose the terms, I'll be clear.

There are some confidentiality on it.

The second question, I think, was on Yamal and Ichthys.

So maybe, Arnaud, you can answer on Ichthys first, about where are we in terms of completion of Ichthys, the timetable -- the [sailaway] (inaudible)?

Yes.

So, Ichthys -- the offshore part of the project is almost completed now, in terms of all of the subsystem installation, preparing for the arrival of the two offshore structure that will come, the CPF and the FPSO.

Both of these units are actually still in Korea, ready to sail away, according to the operator, in March or April.

They've actually used the season of monsoon, of storms, to complete commissioning a bit further.

So, they have advanced -- so that they reduce the amount of work that will be done offshore.

And in Darwin, last, in the LNG plant, work is progressing.

There has been, as you know, some difficulties with one subcontractor, but this is on the power plant and it's not on the critical path of the project.

So, according to us, we are still in line for a start-up before the end of the year on this project.

Yamal -- I can tell you what -- Mr. Michelson is himself on board.

He promised me that before his birthday we'll deliver LNG by October 17, so I'm observing him, but I'm trusting.

No, it's progressing well.

It's a huge project.

The two in one -- [all] the package are there.

On -- they are there in Yamal.

It's a matter now of commissioning all that.

It's a huge effort.

You have 30,000 people working in the peninsula of Yamal.

It's absolutely an incredible project.

But I think good news is that the quality of all the modules delivered by the Chinese yards is quite good.

It's quite excellent.

No, it's a huge coordination effort.

We have put a lot of teams in terms of commissioning.

We have increased the number of people -- experienced people from Total -- to help our Russian partners there.

So, we'll see.

But today -- as of today, I think we have in our plans end 2017.

But Leonid Michelson promised me October, so we'll see.

Yes.

It's Jon Rigby from UBS.

I've got a question about the financial framework and then a portfolio question.

So, on the financial framework, just want to go back to this dividend decision.

It seems extraordinary to me that you start moving the dividend before you've right-sized the financial structure of the Company in reaction to the change in oil prices, and I was trying to figure out why that would be the case.

Because clearly, the cycle -- the first part of this cycle showed yourselves and your peers unable to fund both CapEx and dividend commitments.

And yet, before we've got to the end of the cycle, you're already upping your dividend commitments.

I just wondered whether you could just, again, walk through that decision to sort of preempt the delivery of the efficiencies by lifting the dividend.

And does it actually imply, if I take away from your answers to some of the questions, that the scrip portion is effectively a permanent feature of the dividend now, in order that you are well below your expectation of oil price?

That's the first part of the first question.

The second is, one of the other features of the fact that you are running a cash shortage over the last three or four years is, you've put about $10 [billion] of hybrid debt into equity.

Is there an intention to deal with that at some point as free cash flow starts to rise?

And then, to move away from the financial framework, just on portfolio, you've talked in fairly glowing terms about Brazil.

Is there an appetite to deepen further into the Brazilian deepwater pre-salt if the opportunity exists?

Thanks.

To be clear, yes, the plan is, when the gearing will be at 20%, we will buy back the [hybrid] debt.

It will depend of where the interest rates are.

The average is a fixed rate, right, if I remember.

It's a fixed rate.

Maybe in two, three years it will be good.

If interest are high, we will see.

We are conscious of what we have done.

But, yes, if we have buy back it, we'll buy back it.

There's no problem about it.

Is scrip permanent?

(Inaudible), what I told you is that the tool at 0% scrip is not a big issue for the Board of Directors.

The take-up will be minimum, but it gives some flexibility.

So, can we keep it?

Yes, we can keep it.

But again, somebody tell me -- asked me the question, if you have plenty of cash, what will we do?

If we need to -- if we have -- if the market is moving up again, and we have the feeling that the volatility is more in the high side, we could remove it.

But for the time being, with the perspective that we see, some of you -- one of your peer told me, what happens if the US share increase, if the world is going back to $50 -- I prefer to have to keep it in place -- we prefer to keep it in place, in order to be able to react.

And this why we decided that it was no contradiction between a 0% scrip dividend and moving on the dividend.

Looking bigger to Brazil, let's finalize the first deal.

It's a strong alliance.

There is potentially some other steps.

I want the first step.

And, you know, if you want to marry with somebody, you have to give proof of love before to enter into a longer duration.

So, I think, on both sides -- frankly, I will say the marriage is well on its track, and the two -- the husband and his wife -- I don't know who is who -- are quite happy to be together.

So, we'll see.

I mean, again, for me, it's -- as I told you, it was quite an involved -- many people around this table, at the top level of the Company, to be able to convince our peers of Petrobras that we could be -- we could do a direct negotiation.

And this type of -- it's a good basis to be able to develop it.

And it's up to us, of course, to be able to prove that the trust they gave us will be well-deserved.

But, yes, I told you, deepwater, I can work, and I exercise my competencies, deepwater, Brazil.

So, we moved there.

It's Martijn Rats from Morgan Stanley.

I wanted to ask you two things.

First of all about Saft.

I've heard you say in the past that to start understanding the electricity value chain in these new energy businesses, you sort of have to be in some of these companies.

You can't just learn about it, just standing by the sidelines.

And I was wondering, now that you've had the Company for, well, a good number of months, and you've seen the books, whether the investment is living up to expectations, and where there are any lessons learned so far.

The second thing I wanted to ask is about tax.

Particularly with the ATCO contract kicking in, could you help us guide a bit to what the tax rate could be in 2017, both from a P&L as well as from a cash perspective?

Tax rate for Patrick, maybe.

Okay.

This is a very simple question, as you can imagine.

Using a $50 per barrel, our average tax rate for 2017 should be in the range of 40%; something like this.

But you know it's extremely volatile.

There are countries, due to the gas price mainly, which is not reflected in the $50 oil price scenario, where we are close to paying or not paying taxes.

So, my figure may be completely wrong.

But that's my best estimate at the moment.

Philippe, on Saft.

Well, Saft has been now with us since less than six months.

And so, we are still in the process of discovering what is this company, and what is its potential -- its additional potential within Total.

What we can tell you is that it's even better that what we have imagine, and we on our side are learning a lot about the potential of different battery technologies.

And on the other side, we are starting in fact to study, really, potential developments that would combine the know-how of certain of our other affiliates with the one of Saft in order to imagine some new development.

But it's just the start.

But so far, we are very satisfied with the ability to develop, both at the same time, cash and R&D programs.

Saft -- Philippe is more happy with Saft with (inaudible), to be honest with you, at least in terms of results.

But there is one difference.

So, one -- this company is 120 years old, and they have a (inaudible) a business model which works.

So, for us, the challenge is, how can we help them to change of size, in fact.

(Inaudible) is just -- is still trying to look for his own business model, a sustainable one.

Lydia?

It's Lydia.

Two questions, if I could, the first one on the Global Business Services unit.

Can you talk about the benefits you see from that and help us understand how big a change that really is for Total, in terms of the way it operates?

And the second one was to go back to the slide that you showed on the FIDs, and all of them being mid-teens upwards, which are impressive rate of returns.

Can you talk about the process as to how you ensure that they really are as good a returns as they can be, and that you have maximized the value coming out of those, rather than just taking advantage of the market?

Thank you, Lydia.

I see the solidarity between women.

So, you will have the chance to hear the voice of Namita, because she is covering many things of the Company at the Ex Comm level, in particular TGS.

So, Namita, (inaudible) the floor to answer on TGS.

Well, as -- you've heard a lot today about how, despite all the good news, we continue to talk about discipline and lowering our cost, and TGS is definitely part of that.

We've initially talked about cost savings of around $500 million.

TGS was put in place on January 1 this year.

We've given the teams a little bit of time to breathe, to find themselves together.

It's 1,400 people who find themselves moved from their original homes and put together into a new organization.

It's very clear for them what their objective is.

They'll be working on putting things together to start delivering cost savings by the end of this year, for 2017.

And just to give you an example of how different it is in terms of working within Total, just the procurements part of it was very distributed amongst the branches and amongst the affiliates, and it's been completely centralized, with very few people in procurement left in each of the business organizations.

Because we realized that it was a huge lever for us to reduce costs, to start neutralizing things; to have -- to speak with one voice to our contractors; to have the same kinds of technical requirements.

And so, that's all very much on track, and we will definitely be delivering for 2017.

I think it's -- internally, it's a very strong change.

In fact, I think we are creating a real group together, and not having businesses side by side.

And the (inaudible), by the way, the way we discuss on many issues, we're working like that.

We are now thinking to see how we will organize at a country level.

We speak about concept like (inaudible), which was impossible to discuss three, four years ago.

So, there is a strong -- there is still some efficiency, and so -- on both sides.

It's not only, by the way, a matter of cost.

It's also a matter of business.

For example, these regas terminal in Ivory Coast, I can tell you, the success has been possible because, of course, of gas and power gas teams, from Philippe; but Momar helped because M&S was well implemented in Ivory Coast; and even Arnaud and (inaudible) African president, because we're there with the authorities for exploration, helped to do the business.

So, it's a matter of putting everybody together.

And when we have one objective, like Brazil, when we work on an objective -- Brazil, imagining a deal, a package deal, where you put together upstream, downstream, gas people -- it's a lot of effort.

But you need to have everybody aligned.

So, this is a mentality -- the mindset that we are changing at the Company, and TGS is at the forefront.

And so, we are pushing for that.

And I think it will deliver -- it's more than just $500 million of objective.

It's being able to deliver more value, being a whole group and working together.

The second questions.

Can we do better IRR than the ones we shown?

They are not bad.

I know that you want always more, but -- I would -- if all the projects that we sanctioned in the year 2010, 2013, 2014, was at 15% at $50, I would not be there today.

I would not discuss about scrip dividend.

But we will discuss about a lot of things [much easier].

So, frankly, maybe we don't have -- it's not enough.

We work hard.

I mean, let me be clear, we are not people -- and the market will give us the truth, because as long as you don't go to the market -- we had good surprises, the market.

Zinia 2 -- we've mentioned that project before.

We mentioned the one in Brunei.

Each time we went to the market, we had better surprise in term of cost [but on] expectations.

So, maybe we are prudent on what we said.

And Arnaud will add a word on it.

Arnaud?

So, I will learn of -- you will do better figures, Arnaud.

Just one point to mention about the continuous improvement that goes on in the Company.

We have also restructured our technical support division in E&P, where we are actually studying conceptual design for new projects, by reorganizing them in what we call product line, so that we have a product line for deep offshore; one for offshore conventional; onshore conventional; LNG; and unconventional.

And the focus is really for them, at the conceptual, pre-projects stage, to come up with the most optimum solution from the point of view of cost benefit, doing value engineering, and by having a transformation from the traditional [metier] where we had subsurface, surface, and putting them inside what is effectively focusing on the type of project that has to be sanctioned, we believe we will go further in optimizing the profitability of our projects in the future.

It's Rob West from Redburn.

I like your slide on page 17, showing the targets and how you've realized them all.

So, you like beating your targets.

In particular, I want to ask about your production target for this year, and how much you think you could beat it, if everything goes right.

Specifically, I mean, some contingencies that might be in that number.

So, whether it's Libya or whether it's some of the projects coming on later, or some of the volumes being impacted by the OPEC deal.

So, if you could give us more of a range -- so, 4% plus -- what could that be?

And maybe to -- there's a second part of that question.

(inaudible) maybe an alternative interpretation of that guidance, just to rule out, are there any assets in the portfolio where the production this year is not coming in maybe as you'd hoped, or the production-sharing contracts are bouncing back quite steeply?

So, thank you.

First question.

When we say more than 4%, frankly, I don't know if we will be able to do 4.5% like this year; we'll see.

I mean, keep in mind, for more than 4%, we did not -- when we made that figures, the OPEC quota were not in place.

The OPEC quota represent potentially for us 20,000 barrel less, which is 0.8%.

But, on the other side, we had the good news, because our El Sharara field in Libya opened and represent more or less the OPEC quota.

So, from this point of view, we are immune if Libya maintain its production and El Sharara [wakes] up, it will compensate more or less the OPEC quota.

But, it's the advantage.

We have a large portfolio of fields.

Some are going better; some are going not so good.

As Patrick's told you, I think, we are very confident about the production in 2017.

You've seen on the chart.

But the size of the start-up is quite small.

In fact, it's mainly Moho Bilondo.

I was in Congo with Arnaud in December together.

Teams told us it will be started by March/April.

They were very confident.

So, if Moho-Bilondo starts as planned and the (inaudible) is [fine], this figure is ensured.

So, we are -- this year, 2017, when we saw the prospection (inaudible), we have quite a little unknown, in fact, (inaudible) price of oil and the price of gas, which are being announced.

But in terms of execution, we have probably less challenge.

But what is more important is the delivery of the big projects, which are all coming by year end.

But of course, this will be important for the 2018.

The second question -- I don't know what you -- what was the question?

What would production growth target -- [no, but] I just answered to you.

I'm not sure to have taken the second question -- to remember it rightly.

It was just to say, are there any assets in the portfolio that are not performing as you hoped, that you could flag, or the production-sharing contracts bouncing back and taking more of the production away that you want to just rule out?

No.

At this stage, we are -- again, so you have plus and minus, but there are no major assets.

By the way, the ones we impaired were already existing assets.

It was linked to price assumptions, not because of problem of reserves or things like that.

It's Anish Kapadia from Tudor, Pickering, Holt.

I had a question on the downstream, first of all.

Trying to get some sense of oil price impacts and OPEC cuts on the downstream.

So, the first part is your petrochemicals business.

I was wondering if you could say how much of your petrochemicals business is exposed to liquid feedstocks as opposed to gas advantage feedstocks.

And then, on the refining side of things, just wondering, what kind of sensitivity do you have to higher oil prices in that costs go up in a higher oil price environment, but also in terms of the OPEC cuts, with the potential for light/heavy differentials to narrow?

And then the second question is on the impact of the marine fuel regulation changes.

So, the falling sulfur for shipping, going forwards.

Just wondering how you think about it as -- is it a bigger opportunity for the refining business in terms of higher diesel demand going forwards?

Is it a bigger opportunity for the LNG business from a substitution perspective?

And how's Total positioning itself to take advantage?

Bernard will answer the first question first, Bernard, about petrochemicals.

So, as you saw, a large part of the projects we are looking after are projects which are based on gas, on ethane.

As we showed in the slide show, the platforms where we are growing the most east of Suez are platforms which are also based on ethane-based petrochemicals.

So, clearly, the strategy we are going after is to grow the gas and then (inaudible) stock petrochemical part of the portfolio.

Regarding the liquid, it's more on leveraging the integration between refining and base chemicals.

This is what we have done over the last few years, which has proven to be extremely successful.

That's mainly for the European part of our portfolio.

So, this is doing well, thanks to integration.

And the target now is really to increase the proportion of gas-based petrochemicals versus liquids.

About the marine fuels, what we can -- okay, we have a -- there are two people around the table who can answer, Momar and Philippe, and Bernard.

Everybody is concerned about it.

But basically, you can provide them diesel.

You can provide them LNG.

And we are working on it.

We had recently a good success, I think, Momar, with an [FRIENDS] on LNG.

You can mention it.

Yes.

We've -- definitely, we've decided to go down the value chain on LNG, especially on those markets.

You've seen that we've signed with Brittany Ferries last week, and we've signed an agreement with (sim ansejem).

Patrick did that last week.

What customers are asking for -- to us now is, okay, there's this cap coming in.

You guys are LNG providers.

Therefore, we consider ourself as solution providers, and we are working with them on the best solution.

Best solutions group is not -- are not yet decided, but we will be there.

We -- that's the discussion we are having with them.

We'll provide them with whatever solution is the best for the market.

And for now, we've signed those two deals and definitely we're going to be a big player on solutions.

To be honest, it's not very clear today, when you speak with the shippers, but we have engaged with [CMR], which one of the three largest on these studies together, because they have three options -- either to take diesel, or to take [bunkers] -- heavy fuel oil with scrubbers, or to take LNG.

And we have to better understand the way they, themselves, they think for their own economics, to know so we can (inaudible) three project -- the three things.

And we'll have diverse interests.

But we have decided to (inaudible) six months to see what will be the optimum from a shipper like them, in terms of arbitration.

And it's not very obvious what will be their choices.

So, we will work with them.

It depends probably also, when you speak about LNG you need to have some rules, because it's quite a lot of infrastructure.

It's quite heavy.

I can tell you, if all the players began to make LNG marine fuel, it would be a disaster from an economic point of view.

We don't have the space for too many players.

So, we need to probably coordinate the logistics and all that.

So, it's the start of the story.

But we are definitely willing to not only -- to be part of the game.

It's part of the integration.

It's Lucas Herrmann with Deutsche.

Patrick, I wanted to come back to two things around capital frame and capital choices.

In terms of the future, you've talked about 1% to 2% production growth.

I don't want to obsess about production growth as a vision, but first question is, to what extent the FIDs that you're indicated you will take over the next 18 months, take you towards that number?

And within that, what constrains capital, Patrick?

Is it, capital is absolutely constrained between $15 billion to $17 billion?

Absolutely is too harsh, but you used the term earlier -- you talked about, if I'm at $19 billion, then tap me on the shoulder.

I want to start by tapping you on the shoulder at $15 billion to $17 billion, in ways, and saying, or asking, do you cycle the projects to -- or, within the $15 billion to $17 billion of intended spend, is the idea to stay in that range, and if the opportunity gets better, well, some opportunities get deferred.

We stay with those which offer us the best return, the best IRR on the capital we're putting down.

Which in effect is, do we believe the capital that we're putting down is sufficient to drive cash below growth into the medium term?

And, sorry, the second part is just, is there an intent to remove the dilution when scrip is issued, or the scrip presented to shareholders over the last two years, or at least the enhanced element of the scrip is presented to shareholders?

So, first question -- yes.

We say that we were targeting growth, at least [as the present market] (inaudible) come in 1% to 2%.

Maybe we were not enough ambition.

I think we are probably more around 2% than 1%, if we could begin to add on the first year the various projects that we -- if we are able to sanction at the pace benefiting to the market, this could result maybe in the -- more in the high range than the low range.

We'll come back on that to you in September.

Sorry, but we don't plan everything.

But when I see -- and particularly, as you know, the success in Brazil is enhancing us, so when we begin to put figures -- but we didn't make the full exercise, but you could probably keep in mind 2% rather than 1%.

Just to -- on this first point.

And then the second point -- how hard is the ceiling?

First, I would remind what Patrick told you, for example, [this year's] organic part of CapEx is $14 billion, $15 billion, plus $2 billion of resource addition.

So, what we call CapEx, organic CapEx, [net of] development, is more under $15 billion, and you have the $2 billion of addition of resource.

Last year, we've done for less than that.

We managed to renew a resource of less.

Maybe this year we could have more opportunities.

We'll see.

So, it's not -- this part could be, I will say, fluctuating.

It was less last year.

We spent, I think, $1 billion -- around $1 billion to renew the resource, because the deal in Qatar was very low-cost deal, to have access to Al-Shaheen.

So, we'll see what are the opportunities.

But, again, I strongly have the feeling that, with the type of market we have for the -- until the end of the decade, in particular on the supply chain side, we can execute all the projects, and delivering 2% growth with a $15 billion on organic CapEx.

I'm -- maybe add again, if there is something -- a huge project which we would have to defer, we'll come back to you.

But I -- for the time being, with the figures -- again, I answered to Theepan, I think, that we had some room to take on board new projects.

We knew that.

The bulk of the big projects will be delivered by 2018.

So, we have room to put, in this range -- in this $15 billion of organic CapEx -- the new projects we want to sanction, and we can take even more of -- and not only the list that you have seen.

So, we see the figures.

And I think, again, it's good to be disciplined at this level, because otherwise you will tell us, you begin to spend the money, and then it's back -- a question of -- back to your second -- last question.

If you have more cash, yes, I know, but I have to return part of it to shareholders.

I'm not able to put in place buyback of scrip shares.

I won't lie to you.

I don't have the cash.

But I know that we (inaudible) some shareholders within this period of time.

We (inaudible) in mind.

But promising you today something that I cannot execute, is not my management style.

So, I prefer to tell you when we will be ready.

We have more cash, so we can reallocate it.

So, today what we think is that return to shareholders is important.

We are very honest with you about the way we see the situation.

The Board of Directors think to it.

We are trusting in this type of environment, I will say, $50 and $60 per barrel, that we can -- we have a strong balance sheet, but the cash flow will grow.

We will deliver higher cash flows.

So, yes, we may be, by giving one sense, it's a signal that we trust ourselves.

We are able to deliver.

Board of Directors also has a strong feeling that our share is undervalued compared to our peers.

When you make the price-to-cash ratio, I can demonstrate you, that is undervalued.

And so, we like to share our trust and our confidence in the Company deliverability -- able -- capacity to deliver these additional cash flows with our investors, and enlarging the base of our investors.

What was your other question?

Again, a 0% discount.

I mean, if we have such a success with a 0% scrip, but it's above 20%, maybe I will revise the impact of the dilution.

But I don't anticipate that.

I think there is a strong difference with our shareholders.

When they discuss with some investors between a 5%, even a 2% discount, and a 0% discount -- the 0% discount, most of the people -- most of investors will take the cash.

If I'm wrong on this assumption, and that there was a larger dilution, maybe we'll have to look at it more carefully.

But this is -- we base this reasoning on the fact that a 0% discount scrip should reduce drastically the dilution.

If it's not the case, because the investors love the shares of Total, that maybe we'll have to monitor it differently.

But that's a basic -- that's the assumption we have taken, when we make this reasoning about the dividend.

So, we didn't do it, but we think there that is a strong difference between 5% and 0%, or 2% and 0%.

Jean-Pierre Dmirjiian from Raymond James.

I have three quick questions, if I may.

The first one is maybe not that quick.

It relates to Argentina, Vaca Muerta.

I recently came across a press release you published in January 2011, when you first entered this area, and it was saying that your licenses were awarded for a period of six years.

So, they recently expired, and I understand that you renewed three out of the four licenses for another four years, and that the last one was relinquished.

I wonder whether the relatively short duration of these licenses was not an issue for you to effectively inject capital in this area, and effectively make the most, and produce, actually, oil from this area.

Don't you believe that it would make sense to perhaps first have a longer duration for these licenses before injecting more capital?

The second question is about your dividend pattern.

I noticed this morning that you will actually pay two dividends in the second quarter of this year.

So, my question is, should we expect five quarters of dividend this year, or four quarters?

Four.

Four.

It's clear, because we will maintain the scrip dividend, even at 0% discount.

So, it's only the year where we will eliminate the scrip dividend that we would have to pay five.

So, it's not [this] year.

Okay.

And the third question, very quick, on production, if you could update us on the decline rate for your base; the assumption you're making this year in terms of the OPEC impact, given the production limitations for the first six months of this year; and the sensitivity of PSC.

Thank you.

OPEC I answered, that is around 20,000 barrel per day of impact potentially.

It's mainly Abu Dhabi and Qatar -- main two big countries.

The others are the smaller cuts.

I'll let you answer to the question on Argentina, Arnaud.

Yes.

So, the license we are getting in Argentina are expiration licenses, and the commitment we make is to actually de-risk the development phase.

It is, of course, unconventional.

So, what we have to do is to do some pilot.

And then the model is that, as -- if we are convinced that there is enough potential, then you get a 35-year concession.

So, that's the limited commitment to make in the pilot phase to begin with, and four years is more than enough for us to confirm the quite promising results we've had in some of the area.

So, on -- the PSC price effect is less than 1%.

I think it's very minimum.

But people in the room will be able to answer more precisely to your question, [what is] the minimum impact on the dividend?

So, again -- so, we pay dividends in January, April, June, and December.

Because it's -- because the General Assembly is changing the pattern, and there is a (inaudible).

We have a six-month delay between the quarter and the dividend payment, basically.

It's Kim Fustier of HSBC.

Just a quick follow-up to an earlier question on production.

You've reaffirmed today the 5% production growth guidance all the way to 2020.

Yet, since last September, you've added big, new producing assets, in Brazil in particular.

So, just wondered if these additions have been offset by negatives elsewhere.

And I'm thinking of things like license expiries such as Mahakam in Indonesia, for example.

Or are you simply being conservative?

So, any detail you could offer on that would be helpful.

Thanks.

First, again, Brazil's deals are not fully closed.

So, we need to close them.

Second, on Mahakam, we told you in September, I think, but the Mahakam was -- the extension was not included in the 5%.

Which is not done, because we are -- we continue the discussion over -- there have been some moves recently, so we'll see if really -- it's a matter of value, frankly.

We have discussion with the Indonesian authorities.

But we want to stay, but for something material.

If it's not material enough, we don't see why we should -- it's -- again, let's remember, we are not chasing for volume.

It's a question of value over volume, of allocation of our staff.

We have scarce resources in terms of human resources.

Theepan rightly asked us, do you have all the people to deliver the projects?

So, we will -- we don't want to mobilize -- today, we have around 100 expatriates there, I think.

If we have to mobilize people for a small share, even if it's for production, we have to have a real value out of these assets.

So again, no, but we didn't make -- maybe we have -- no, we don't make -- we have plus and minus, you know.

Remember that, in our 5% projection, Yemen is supposed to come back by -- before 2020.

So, Brazil could replace Yemen, if Yemen does not come back.

And frankly, on Yemen, I'm just looking to the news on CNN every day, but I have no special news to give.

So, it's a big upside.

So, it's the advantage.

We have a large portfolio.

We have assets coming in, assets coming out.

Let's keep the 5% as a good guideline (inaudible) but, for example, these examples.

A last question, maybe.

So, thank you.

I hope that you were satisfied.

We are satisfied by the reserves of the Company.

We are satisfied by your question also.

We took something -- maybe some people will say a bold decision.

I see Jon in front of me.

I understand it was bold.

But at least it's the proof that we are thinking to our shareholders (inaudible).

We on one side deliver, and I think it's important for me -- deliver what we told to investors in the last two years.

And a good sets of results.

And I'm convinced that the market will reward us for that.

Thank you for your listening and for all your questions, and we have -- I think we invite you now to have more questions or more answers from you, [maybe], for drinks together with us.

Thank you.