TotalEnergies SE (TTE) 2012 Q4 法說會逐字稿

Ladies and gentlemen, it's time to start now. Welcome to Total 2012 results and outlook. I'd like to welcome, also, those of you who are joining us via webcast.

A few reminders before we start. In case of emergency, you have two exit doors in this room, on the left of the room. Also, for courtesy for everyone, if you could keep your electronic device on silent mode.

Today we'll have a presentation that will be followed by your Q&A sessions. Again, thank you for your attention. Welcome, and, Christophe, the floor is yours.

Just before I start, I'm very pleased to be back in this room. If you remember, we were there before, and then the floor fell, not on you, thanks God. And in France, you know, we don't like when the sky falls on our head. (Spoken in French.)

That's okay, Martin?

Okay. Well, good afternoon, everyone. Thank you, Martin. So, Patrick, our CFO, you know him well, will present our 2012 results, and we'll come back afterwards to summarize what we call the outlook. But first I will make some brief comments, a sort of introduction.

Compared to a year ago, the worldwide economic situation is improving, and this creates a better environment for Total. The market, in terms of oil prices, has been relatively stable, and well above $100 per barrel for more than two years now.

Looking at 2012, despite the unexpected challenges we faced in the UK and in Nigeria, and in Yemen, the Group delivered strong and competitive results. So, I say I'm proud of our many accomplishments for the year.

For example, in the upstream we started up six new projects and made significant discoveries in Argentina, Norway, Nigeria, and in the Gulf of Mexico, I would say, at last. In the downstream, our marketing activities remain robust. The Normandy upgrade was completed, and we are on track with the Jubail startup.

We reduced our gearing, strengthened the balance sheet, and increased the dividend, which helped to give us, for 2012, the best total shareholders' return of the supermajors.

What are we doing now? Our path forward is clear, and we are focusing on execution. We are committed to delivering on time and in budget a portfolio of more than 20 high-quality projects.

We are moving fast with our $15 billion to $20 billion asset sale program. We have an exciting exploration program. We are restructuring the downstream. And, before passing the microphone to Patrick, I want to be clear that I am, that we are, very enthusiastic about our near term.

Production is set to increase. I am pleased to announce that we are in the process of restarting Elgin in the coming days or weeks, I hope days.

We are working on several giant exploration prospects. For example, Ivory Coast and Kenya, actually, we spudded in the last days, and now, soon, Gabon.

And we are on track to accelerate the growth of free cash flow to fund future growth and dividends.

We have improved our visibility for growth, and we remain committed to being a safe and responsible world class operator. It's an exciting time at Total. Now, we'll have to prove it.

Patrick, if you want to present the 2012 results, and I will follow with the outlook.

Good afternoon, everyone. I'm quite pleased to have, actually, a strong set of results to talk about today. That's why I am presenting those results without any concern.

Let's talk, first, with our health, safety, and environment. You know, the priority of Total is to be a responsible company. We made significant progress in the rate of injury, starting 2006, we were down by 18% last year.

Of course, we had those big incidents in Elgin and Ibewa, but I think our responses to these incidents were appropriate and efficient. We have incorporated lessons from both experiences in our safety culture.

We have also improved our impact on emission, energy efficiency, and we limit we footprint on local environment. We believe that acting responsibly is good for the business and good for the Company.

A few words about the environment. As you see, 2012 environment was generally favorable to our business. The average oil price for 2012 was above $110 per barrel. This is partially due to the growth in oil demand of about 0.8 million barrels per day, despite the relative weak economic environment we were facing.

Natural gas price in Europe was about $9 per million BTU, $16 for Asia. Those are the two markets where we are more playing. That's why, globally, for both oil and gas the environment was tolerable to us.

A competitive performance for 2012. Total 2012 adjusted net income was $16 billion. Our -- you see that on the graph in yellow or orange. The downstream performance is improving. We captured the margin given by the market. The upstream contribution is slightly lower due to partially a weaker volume due to Elgin/Franklin and Ibewa, and also Yemen disruption on the pipeline.

There were also an impact of rising costs, mainly higher DD&A on the new startups. If you compare Total to the major companies, you see that we do compare favorably. The one on the left side is Shell, the others being Exxon, Chevron, and BP. Basically, what I'd like to say on this slide is that we were able to overcome the negative one-off events we had to face, and that our stable performance was, in fact, very competitive in comparison to the others.

We are on track to execute our $15 billion to $20 billion divestment program. We announced the Usan sale last year. We recently announced TIGF for EUR2.4 billion. The $15 billion asset sales program is already closed or well in progress.

At Total, we completely integrate the divestment program into our strategy. All funds are fungible, and we will reinvest the money for future growth.

We had a solid cashflow generation. We basically fund our organic investment of $23.8 billion, a dividend of $6.8 billion, maintaining, all in all, the gearing at a low level of 21%.

We are pleased to report this strong cashflow in line with the production. We maintain our financial flexibility, and we are preparing for future growth without negatively impacting the balance sheet.

A word on production. We think, initially, that 2012 was a tough year, particularly due to the Elgin/Franklin and Ibewa events. We also lose the production from Syria. We had issues with the pipeline in Yemen, but, in fact, if you look at the right side of the slide, we compare favorably in comparison to our competitors.

A word on exploration. We are continuing to add prospective acreage around the world, both onshore, offshore, in established areas, or in frontier areas. A few areas which was pointed out by Christophe is Ivory Coast, Kenya. Gabon is not on the slide, we will drill it this year.

We had successful operation in Argentina. We made-- this is one of the first discoveries we made. A discovery in the Gulf of Mexico, the North Platte discovery. And then we have, in our garden, I would say, discoveries in Nigeria and Norway. The drilling campaign we have scheduled for 2013 gives a very high potential for important discoveries.

You know the reserves are key for us. This is what we own. Our proved reserve base of 11.4 billion BOE represents more than 13 years of production. The organic replacement rate was 100%. Replacing reserves organically remained a key target for the Company.

The three-year average on the right side of the slide, all-in reserve replacement for the last three years, 2010 to 2012, was 136%, quite high. This includes Novatek.

On the projects, you have the usual suspects that you know. Delivering the major projects to achieve our targets, this is what we are focused on today. You are familiar with those names. I will point out CLOV, Laggan-Tormore, and Icthys. CLOV and Laggan-Tormore are examples of two major offshore projects that -- where we are the operator and that we are pushing hard to stay on time and on budget. Both projects are two-thirds complete, and both are on schedule today. In fact, all the new startups we need to achieve our 2015 production target are either already producing or well advanced into development.

LNG -- LNG continues to be an important part of our upstream story. This is representing 25% of the upstream result today. Using 2007 as a basis, we increased LNG production by 40% if you compare 2012 to 2007. And by 2016-17, we anticipate a 17 million tonne LNG capacity for the Group.

About 70% -- this is on the right side -- 70% of our LNG is sold in Asia today. You remember the LNG price in Asia, which is quite high, and about 50% of our LNG cargoes are currently redirected to Asia or to other destinations.

Refining and Chemicals, the downstream restructuring is having a positive effect. Despite volatility of the refining margin that you can see on the left side, the refining and chemical segment increased net operating results in 2012, up to $1.8 billion, up to plus 48% in comparison to 2010. Improving margin capture is key to sustain a better performance for the Refining and Chemicals.

Jubail -- the Refining and Chemicals segment is concentrating on major integrated platforms. Jubail is one of them. We have a 37.5% interest in this project. It's a 400,000 barrel per day refinery.

The pre-commissioning is about 40% today. The startup is proceeding as planned and the ramp-up to nominal capacity should be achieved by end of this year.

Once Jubail is fully operational, let's say by end of the year, it will be one of the most modern and efficient refineries in the world, able to capture the highest margin available in virtually all markets and all environments.

Marketing and Services -- this includes the network, specialties, and other business, including solar and new energies. This segment contributed up to more than $1 billion of net operating income. This segment has a track record of delivering a stable stream of results, and represents a valuable asset for the Group.

A word about our exploration for the new 12 months, and then I'll give the floor to Christophe. This is one of the most exciting parts of the Total story for 2013, with the high potential exploration programs that we are showing -- Ivory Coast, Gabon, Angola, Kenya, Brazil, Argentina, French Guiana, Libya, Egypt, Australia and Indonesia.

This map shows the location of the Big Cat and Elephant-size prospects we are targeting. We intend to drill more than 60 exploration wells this year. We increased the budget by 10%, up to $2.8 billion. And 90% of the rigs we need to drill those wells are already under contract.

And this finishes my presentation. No, I have one more about our net investment.

Our budget for this year is $22 billion of net investment, $28 billion organic, minus $6 billion of net asset sales. 80% of the budget is dedicated to upstream. It is important to point out that we have expanded the resource base in the past years and now we are relying on exploration to create future development opportunities.

We are confident of achieving the $6 billion net asset sales target. I mentioned to you that we announced Usan. We announced TIGF, and other assets are currently under negotiation.

Our strategy is to reinvest for future growth, according to strict return criteria, which are based on conservative assumption of $80 per barrel for short-plateau conventional projects and $100 per barrel for long-plateau projects. Thank you.

Thank you, Patrick. It's good you ended with investment, because I always like to say that without investment there is no cash and no profit, and especially when those investments are well-controlled and definitely profitable, well, that is the way you build the future of a dynamic company.

So, the outlook. Outlook -- I like the title of this slide because it means that in our world there is change, but, finally, the impact on what we call fundamentals is limited.

What is changing you know -- new production of tight oil, shale oil, in the US, even more production of shale gas. All of this is having an impact, of course, on the US, especially on North America, as a whole, but globally, at the world level, it still remains, I would say, not only under control but with limited impact on our view of the long term.

You cannot have a vision, you cannot have a strategy of a group, without having to tell your investors what are your views on price of energy. Here, to make it short, Patrick told you that 2011-2012 it was almost flat, average, at $111 per barrel for oil. Today we are at $120.

We definitely consider in Total that to launch our projects to make budgets and plans, it's too high and we need to be more conservative, so we are still using the $100 per barrel, and even less when we consider that plateau might be short and maybe a little bit more risky. In that case, we use the $80 per barrel.

But otherwise, we don't see any reason to change this forecast when we see the result of all of those changes on the fundamentals. Fundamentals are clear. We have resources much more than we thought, which is good news for our energy sector, which is good news for the oil and gas companies, but at the same time, concern about having access of those resources, having the capabilities to develop them, and definitely the geopolitics, which is taking more and more importance in our business.

If you look at this, you'll see that the capacities remain almost at the same level. We should consider that by the year 2020, 2025, the not peak -- because there is no more peak, thanks to all of those resources -- but the capacities available will stay, probably, a little bit below 100 million barrels, which means, at the end, long-term views, long-term projects, but at the same time still, I would say, little available capacities to cover the needs of the additional demand, if needed.

We consider that the spare capacity today, which are somewhere below 5% and, by the way, it's almost only Saudi Arabia, all other countries are producing at full speed. We see this for the year 2013 at around 2%-4%, which is relatively low, and historically low.

And with this and still, I would say, a strong demand coming from the world population growing, while we definitely consider that is the best support for the price of oil, the way we see it today. If we had to have something on the top, on the top it will be the cost of developing those resources and to move resources into reserves is getting higher and higher, and even if it's not the best part of the explanation, it's also giving support to those relatively high levels.

We'd like, also, to make you focus or zoom on LNG, first because we always did it, so it would be surprising that we suddenly stop. On the top there is a lot of debates on what could be the price of LNG with those new exports coming from the US. Well, first that still needs to be come. I've been told recently, why don't you buy HH gas for export? I said, because there is still not yet any export.

Now, it will come. That's part of our assumptions, but when you look at the need on the right part of the slide, well, you see that for the demand, the way we see it, which is almost the double of what we have today by the year 2013, there is still almost 50% of the projects which have not yet been sanctioned. So, it's good to say that there will be gas available, but it still needs to be developed, and you know that it's always the easiest thing to do.

So, we continue to invest. Yes, we will look for new opportunities. At the same time, with the strict discipline we are having on all of those giant projects, keeping our costs within budget and delivering on time. Today you know that the production of LNG, the LNG business, as a whole, represents almost 25% of the result of our upstream.

Exciting pipeline of major startups. Well, I come back afterwards on our target for production growth.

I know a lot of you here and I know a lot of you have still some concern about are they going to deliver. Well, we are going to deliver. Those projects, by definition, 2012 are already in production, but they are moving into, I would say, increased plateau.

2013 -- I mean, all the projects you have here have been or will be starting in the weeks and months to come, and the same for 2014, '15, and '16. All of these represents the 750,000 barrels per day of additional capacities, which means, in fact, production for Total, and that's where our new production are going to come from.

On the top, there's been a debate on are we sufficiently OECD, non-OECD. Well, today we have, from those new production 50% coming from OECD. When you look at the total production of Total today, it's 45% OECD, 55% non-OECD, and our reserves, 2P reserves, it's almost 50/50.

So, with this, definitely we are moving into a production which will be 50/50 between OECD and non-OECD countries. What's important is those projects are good, sound, profitable projects all over the world and in all of our, I would say, skills.

So, with this, that's why I start with the projects and then I come to production, and production targets, which is our commitment. We have announced last time, when we have been discussing our strategy, that our target for the year 2017 would be a production capacity target of 3 million barrels per day, which is a real challenge in a way. Today you know that 2012 we have been producing 2.3 million barrels per day, but if we present, in fact, during the two periods, 3% annual average growth of during the period 2015 -- 2011-2015, and then reaching with the remaining '15, 2015, '16, '17, the 3 million barrel per day target. Of course, it's not oil, it's oil and gas, which means oil equivalent.

90% of the projects which are going to bring the 2017 production are now already in production or under development. It was 75% last time when we discussed it, and projects still remaining to be decided, FIDs, one is in Angola and the second one is Egina in Nigeria, and should be starting, not production, now, but getting the approvals which are still needed.

And, at the same time, we continue to reduce our decline rate. We used to talk about 4% to 5%. Now we are at 3% to 4%. 2012, I think, Patrick, it was just below 4%, 3.8%. So, on track to achieve our targets.

The same way for production. We need it for our investment.

High-quality upstream projects, well, that's the continuity of the message that you heard by Patrick. They still, let's us say, on the new projects of Total are not profitable enough. They are, and definitely they are better than the ones of our competitors. That's not coming from Total sources -- I insist on this -- it's coming from Wood Mackenzie, and that's where the figures are coming from.

So, if you look on the rate of return, we are the best of the class in terms of NPV among the leaders, which is important is that represents definitely large investment program, but under control, especially on a net basis.

And what's even more important, we still are moving on a very strict discipline on this projects, first at the time of the decision-making process, and then in the way we operate those fields.

So, of course, you can tell me we don't operate all of the fields, but even when we don't operate, we are looking carefully at the way our partners are doing it.

So, investing with discipline and expertise for profitable growth. That's definitely the strategy of the Group, definitely, as Patrick said, it began in the upstream first with 80% of our investment.

What will be the foundation for 2017, plus, because, I mean, that's already on what we are working? I won't that 2017 is already done, but at least it's decided. I told you 90%.

Here Patrick told you about the expectations we have for 2013 in terms of exploration, exploration targets. Here we're talking about risked exploration. The figure of 5 billion was non-risked.

Risked, which means that we have this percentage, which is usually depending on what time we are drilling, but between 15% and 30% of probability of success, that give us for the period after 2017 with the new acreage we have been taking, the potential of 6 billion barrels equivalent. That will be, definitely, an important of the part of the replacement of our reserves.

Production base, our resources. Our resources have been continuing to increase. Now we are more than 45 years of resources, but, again, it's true they are only resources, but our 2Ps have been also increasing the same way our 1P. What is important is to continue to deliver our potential growth on where we have today what we call our production base, which is the deep offshore, brownfield development, like in the North Sea, and satellite tie-backs, which are important to bring the small fields, small reserves connected with existing facilities, and on a marginal basis, even if they are not huge figures in terms of size, it represents a lot of cash and a lot of profit.

And still keeping what is fitted for a company like Total, keeping these long-term plateau projects, which are making the cash and the sustainability of the Company, giant fields, LNG, and conventional, oil sands in Canada. That's the long term, but if we can do it, as I represented in an acceptable way and sustainable way, that's definitely also part of what will be the future of the energy industry, and the one of Total.

Not to talk only of upstream, even if upstream is the priority of our businesses, we decided at the beginning of 2012 to restructure our downstream, and especially to bring together refining and chemicals to get the benefit of what we call important industrial platforms, but, even more, to get the synergies to think that definitely these businesses are, really, very, very equivalent, especially when you compare the refining business to the chemical process. When you talk, I mean, polymers, it becomes a little bit different, but, at least, that is what we're doing today in northern in France or Antwerp or in other places, like Jubail. We also try to move, more and more, into integrated platforms which means refining and chemicals.

That slide, I would not make it-- I mean, I think it's better to be commented on a one-to-one, but just keep something in mind. We said -- and that's not what we've said -- we have 6% ROACE in 2010, and we said that we will try to achieve a 13% ROACE in 2015, using the same environment, or the one of 2010.

If you do this, we still keep the four categories of where we see the improvement of our profitability. It starts with what we call the new major projects on main platforms, plus 1.5%, then specialty chemicals, plus 1%, portfolio changes 2%, and synergies and efficiency 2.5%. That's not new. What's important is we are now producing it and showing it to you in the most transparent way what has been already achieved since 2010, what is to be achieved in 2013 -- that's the light blue -- and what remains to be done, which is the white part.

So, glass half empty/half full. Some prefer that it is already all blue, but if it is all blue, as far as we had that 9%, I would be not only surprised, but I would be sad. It proved that we still have improve, especially things on synergies, and we should follow this program, we should definitely get this 13% target done, as we've said, by 2013. What is important, again, is to see that it has been working and what we still consider as something new and a kind of a challenge, moving together the refining and the petrochemical, proves already to be a success, and we can say now, after a little bit more than one year of experience is working as one group, one entity, just like it would have been always like this.

Cash flow to support our investment strategy. Well, it's a follow-up of 2012 and 2013. We have been using a different period, which you know. Today we are in the period of 2012-2014, but we still are investing large amounts, keeping the investment, net, under control at $22 billion, but at the same time, we see the benefit in 2015-2017 of large cash flows coming from the projects, which will be on production at that time.

And you see, if you see the very right part of the slide, that the -- what we call the cash flow coming from operations is definitely covering much more than what we need to pay a dividend, so then, it will be discussed on what will be the best way to use this extra cash, but what is important, it gives us all the flexibility to pursue our competitive dividend growth, our strategy based on dividend, and, at the same time, keeping our financial position, our balance sheet, as strong as it can be, which is the case today.

You'll notice that our gearing at the end of 2012 is at 21, and 2% below the figure of 2011, and definitely on the top with very low interest rates. I mean, that gives us at the same time the flexibility and definitely a very low cost of financing.

At the same time, we are executing our $20 billion, $25 billion program. It's clear today that we are moving much more to the $25 billion than the $20 billion. I would say that the $20 billion is not already in the pipeline, but almost. So, this is considered for us as being part of our strategy, strategy of the Company is now, plus/minus, to be compared in a different way, with the combination of the two. We have been successfully doing important divestment recently.

That will continue, not only 2013, but also in 2014 and '15, and probably more, because, as you know, the intent in this strategy is not to reduce our investment, even if that's what it does, but it's much more, also, to add a real, I would say, wish to sell and buy assets when we consider that they should be sold, because the market is giving it, probably, more value than we can, and we don't see any long-term benefit in keeping them in our portfolio, which is making it a lively, I would say, management of our investment, and that will continue over the years.

So, rebalancing our capital employed, well, that's just the rest of what has been our strategy during the past years. Well, two figures to keep in mind. In 2007, we were at 50% of capital employed coming from upstream. In 2017 it will be 80%. In 2012, 75%. At the same time, Patrick told you we have capital employed at 75%, but investment at 80%. That's why we moved to 80% in 2017, and what's important, too, and which is linked, definitely, with the startup of our new projects, what we call the non-producing assets percentage is going back to the figure we had in 2007, so 22%. It's a peak in 2012 at 35%, and goes back to 22% in 2017.

What is the right figure for this? I don't know. In the past, we used to say it was between 20% and 25%. That's where we are. At the same time, I think it's important that we can explain to our investors, to our shareholders, why sometimes it's better to be with a higher level and sometimes with a lower level. It also depends on opportunities, and what is important, again, is to bring new projects and new production with cash and profit.

On the upstream capital employed, that's just a small look on OECD, non-OECD. We are in 2017 45% coming from OECD, 55% coming from non-OECD. At the same period, reserves will be 50/50, so you see, which is normal, that there is a link between the two, but, again, I still think it's more important than to be OECD or non-OECD is to be in countries where you feel you are confident to be in a position to respect the code of conduct, definitely be, I would say, in a position to secure your people and your business and, of course, to be almost certain that the government will be keeping some long-term views on the way they tax companies.

That's always the message we bring here in the UK, but I know the message has been already received by the Chancellor.

So, a strong financial position and dividend policy. Well, that's the result of the past years, gearing moving from 27% in 2009 to 21% in 2012. We keep our target between 20% and 30%. It's clear today that we are much more on the 20%-25% level. The net debt is, by definition, in line with what I'm saying.

We have a good access to the capital markets. Patrick and his team have been doing a, I would say, quite successful issaunces in the recent past, especially on the US domestic market. So, it gives us, if needed, an even more good sense of confidence and trust for the future.

You have the total shareholders' return, which we call the TSR. On that one, it's the opposite of some of the slides you've seen, we have the name of the company because it's official figures. They are not published by Total, so you know that the return is based on the mix of the yield and the value of the stock during a year. Well, on 2012, Total has been the first. Okay, you can tell me in advance, what about 2011, what about --. Okay, but let's take it one by one. In 2012, that's what it was and not what I've heard.

So, that's good news for our shareholders. I'm talking with what we call (spoken in French) in France. They know this figure and they are quite happy with it.

Well, of course, we don't take into account the buyback shares program. I leave it as a debate for the one-to-one meetings, because it's much more philosophy than anything else. Here we're talking about cash directly to our shareholders with the, if we can, improvement in the share value.

So, committed to operating in a responsible manner. Well, that's, as we told you, not only communication. It's really now part of our strategy. It's based on commitments vis-a-vis the population where we have to operate. It's not always an easy subject. On the left part, you have a lady who represents in a brilliant way a country which is famous, Myanmar. It proved that, without being provocative, our long-term strategy to say that it will be working it's worth staying.

Well, we were pleased to hear this directly from the mouth with the voice of the lady with the Nobel Prize. We have to make it not only a source of pride, but, I mean, it's true that if we can prove that it's worth continuing developing our activities even when countries are entering into difficult periods, we can make it in respecting people and being, at the end, respected.

Respecting the environment, it's worth of respect, that's part of our commitment, and to start with everything which is linked with CO2 emissions. So, we have a lot of new commitments that you will see in our what we call our CSR report based on flaring, based on water, and all concern about emissions and definitely the climate change.

Access to energy -- well, that's our first commitment, is to deliver energy to our clients, to the people on earth.

It's building our strategy and relationship on long-term partnership. That's what we're doing in a lot of countries, in Africa, in Middle East, but also in Latin America. Well, I will say everywhere we operate we definitely try to be always in close cooperation with local companies and local governments, at least, when we can talk to them, and definitely, which is important and expected from any company when you work somewhere, it's important that you are part of the local development, local becoming more and more country and less and less only the local part surrounding your activities.

In a lot of countries, being recently in Africa, we are developing this new philosophy, new politics, is to really go and help for what is needed. One of the best examples is those five schools which we have been creating and developing in Angola. It's only -- it's not only good for us, it's good for the country, but, at the end, they could also become one day employees of Total.

So, that means, definitely, a clear path forward. We have to make this exploration strategy a success. Patrick told you about all the new acreage we took, the more than 60 wells in 2013, several wells being already spudded. That's to give results after the ones in 2011 and 2012, and you might even see the possibility of being more active, also, on how we could buy and sell acreages, which we have been taking quite often at the 100% basis. They are a source of commerce, a source of swaps, a source of making money and looking for the best, I would say, future reserves.

Delivering the next generation of projects, well, that's 2017-plus. Already we have a large scope in front of us. I would say most of our teams are well on their -- I mean, doing their job properly, but it takes time. We have now to prepare the longer term. That's underway.

And without forgetting that we still are an integrated company, moving quickly on improving the profitability of all of our downstream, which is the case on marketing, on refining and chemicals. We have to pursue this program of being ready to be faced with, probably, more and more competition, and the reason why we need to start not only now, we need to continue and to be in a position where, I mean, including with the additional competition we prove and we can prove that even if it is a small part of our capital employed, it can be a way to make money.

And on the top never forget that most of the countries where we operate, we are asked to come as a global partner, and not only as upstream. They're looking for partners knowing on how to invest in petrochemicals, in refining. It doesn't mean that we will always say yes, but when we can help and definitely make it profitable, it's a plus. Never forget this, especially when you want to enter into new countries or to restart your investment in countries where they need to help to restart the development and the growth of countries which have been hurt by wars, like Iraq, like Libya, like some others. But, again, in a responsible and sustainable manner, and giving priority to the security of our staff, first.

That's the end of the outlook presentation, after the presentation of 2012 and '13 made by Patrick. And now we are ready, the two of us, and, if needed, some other persons in this room to answer to your questions.

Peter Hutton from RBC. Just two quick questions --

Wait a moment. Wait a moment. Ladies and gentlemen, for the Q&A, once given the go-ahead by Christophe, I will ask, if you don't mind, to stand up to present yourself, and please restrict yourself to one question in order to give the opportunity to your colleagues to participate. Okay?

Sorry for that.

Sorry. I'm sorry. Peter Hutton from RBC.

Just some definitional questions on the -- on the cash flow guidance that you give on page 25. Can we just check what exchange rate you're using? Is it 1.3? Because when I'm looking at the average for 2012 to '14, it looks like about $28 billion average, so about 21.5, 22 in euros, which it looks around flat from where you were in 2012 over the remaining two years in that period. So, just questioning what the exchange rate is.

And also, I note that last year was $110 Brent and you're using $100 Brent. What's the kind of sensitivity of that extra $10 on Brent?

We use 1.3 euro/dollar exchange rate. For our project, we use two oil price scenarios -- the $80 per barrel scenario for short plateau, the $100 per barrel for long plateau. That's basically the main sensitivity we use to assess our projects.

The sensitivity for $10 per barrel for our cash flow is $1.7 billion of cash flow.

On the top, the euro/dollar rate has a limited impact on our accounts, of course, not for the euro one, but you know that our dollar accounts are probably much more reflecting the situation of the Company. The euro/dollar rate has an impact on refining and for all activities which are in Europe, so it's mainly downstream. But let's say that in upstream the impact of euro/dollar is really, really limited to zero, except for translating the dollar into Europe.

Yes, one can add that the Brent sensitivity increased because of taxes.

Hi. It's Iain Reid from Jefferies. Christophe, a couple of questions, please. You don't talk much about the Canadian oil sands mining projects any more. And also Uganda, two projects which have, obviously, got some challenges.

Could you explain where you think the challenges are from your point of view and what sort of volumes you're expecting from those two in your 2017 target?

And a kind of related question, in Nigeria, Egina, which has also been delayed in terms of FID, is that purely a kind of project management issue, or is there any influence of the -- the influence of the PIB on your decision-making there?

Okay. On Canada and Uganda, I mean, it's not that I want to avoid it. We are working hard with it, because it's not the easiest part of our portfolio, not only in terms of environment, but also in terms of cost.

So, we have been, as you know, working largely with Suncor to see the synergies between our two groups, and to, in a way, rejoin the development of Fort Hills and Joslyn. That's underway. As you probably know, there are discussions on what we should do or not do with the upgrader we wanted to develop, which is Voyageur, but sometimes it's important that you take the time to keep your costs under control and to make sure that you are taking the right decision.

Things have changed. When I said we don't believe the fundamentals have not changed, well, they have changed in North America, as I said, and not only for the price of oil, WTI versus Brent, but also with the fact that bringing new additional condensate from the States to Canada it's changing the -- probably the environment and due to this, some aspects have to be reviewed.

But at the same time, it's still part of our production pie, 2017, so we've delayed it. It's part of our, also, forecast, so it's already included, I mean, the delay. But what's important is to see the existing production moving along. That's the case of our project with ConocoPhillips, and for the rest it will all take a little bit more time.

But when we talk of the potential development of long-term plateau for after 2017, definitely you will find Canada and I hope at that time, based on a sustainable way of developing those reserves, which as you know today are at a cost per barrel which is not far off $90 per barrel.

So, it's worth making sure that we are not making any mistakes. But, again, it's part of our long-term reserves. So, we will discuss it on a regular basis, but there is nothing -- there is nothing to hide on that.

You talked about Uganda too, no?

Yes.

Well, on Uganda it's a little bit different, because it's not heavy oil. Even if it's waxy, but that's not the same.

Well, the discussions today are much more with the government. So, everything is ready to start, but they still are discussing at the government level and between the parliament and the government on what should be the development of a refinery. You know the subject. And we've said very clearly to the authorities that if the outlets of the production of Uganda are a refinery inland, I mean, there will be no project.

So, I can't be more transparent than to say, if we cannot achieve to have a pipe to be able to export the production to the sea through Kenya or Tanzania, but more probably Kenya, this project, I mean, will be -- I don't know, we might have to consider what we do, but no pipe, no project. Today we still are waiting for getting the approval of the pipe.

And Egina?

Sorry?

(Inaudible question -- microphone inaccessible).

Egina.

Egina. Well, Egina is going to be starting very soon. I mean, that's -- there were last questions on the tendering of the EPC contract between two Korean countries. I'm not going to enter into details. It's classical in our operation. We have now reached an agreement with the authorities. So, the announcement of the FID is really a question of not months, less.

This lady first, and then.

Thank you. It's Lydia Rainforth from Barclays. I have -- my question concerns cashflow, but it comes in two parts if I could. Firstly, just following from the earlier question on the cashflow levels, it does look like to achieve the average $32 billion to $33 billion you were talking about 2012 to 2014 that you need quite a big step-up in cashflow from the 2012 levels. How comfortable are you that that is actually achievable with the production levels that you have?

And then secondly, just picking up, Christophe, you said about it being a dollar company, and just around the dividend, and that is set in euro terms. Is there any consideration of actually setting that in dollar terms?

I can answer about the cashflow. Yes, we are comfortable with the cashflow average for 2012-2014. We show in the pack that our net investment was maintained at $22 billion level, and we will continue and maintain it, and, as I was mentioning in my presentation, sale of assets is definitely part of our program.

The dividend in dollar, you want to answer? This is your favorite question.

(Laughs). (Inaudible). That's usually because it gives us a chance to talk for hours on something which I cannot predict. Because, I mean, definitely, the dividend is still and has to be assessed in euros, because we are a French company. So, we have no right to say it's a dollar dividend.

And then it's true that when you receive the dividend you might have plus or minus depending on the euro/dollar rate. So, that's why we try to tell our investors, we give you an advance date when, I mean, you will be receiving your dividend in dollars. You know that it's in euro. You know in advance the amount which will be paid by the Company, so try to find a solution if you want to avoid the exchange risk to cover the dividend.

But I have no way, for the time being, of telling you that we could make it a dollar dividend. It's not legal.

At the same time, we try to improve things in making it in a quarterly basis, so it helps for the -- our, I would say, US investors or those who are using dollars, also, as their currency, to predict everything, because it's smaller amount and with definitely dates which are shorter than being just on a euro basis.

But, again, I'm always very happy when I see that you receive more in dollars than you should because of the improvement of the euro, which is the case today. But if it's not the case, so, for the time being no change. We can't escape from the euro dividend.

What we like to do, but we don't do it any more, I remember we used to say when it was good to say that the dividend was increasing thanks to the dollar or euro rate. We were making it, as you see, it's an important increase. We don't do this any more.

So, it's a 3.5% increase in euros.

You and then, please.

Thank you. Irene Himona, Societe Generale. Christophe, you referred to the 2017 target of 3 million barrels a day as a capacity target. Of course, this is an industry where things like Yemen and Elgin can and do happen. So, I just wanted to clarify, is the 3% target, targeted growth to 2015, capacity or a production target? And if it is production growth, then what sort of capacity utilization do you internally assume, in terms of contingencies? Thank you.

Thank you. It helps to give an initial explanation, and that's why we are splitting, if I could say this, the period in two, 2015 and then 2017.

The 3 million barrels per day capacity is in 2017. So, looking at all the pipeline of new projects coming on stream and those projects are delivering their production. Those projects are part of the investments we are talking about today, and those are going to bring the additional cash to the Company.

Now, it's true that it's difficult to predict what's happening in Yemen, even if we think the situation is improving there. I mean, recently, I mean two attacks have been stopped by the army before they had any damage on the pipe. So, we hope that we are now entering into a new era, but cross fingers. But that's definitely not part of the capacities, as you can imagine.

For 2015, where we have the 3% increase, I mean, that is based on production. Now, I mean, if there is some major events stopping it, it will be stopped, but the impact is not the same as not bringing from new projects. I always insist to say what counts are those new projects, because it's those on which we are investing. So, it's important that they deliver the growth and value.

But when we say -- and you know this, I've been discussing this often with you -- that we first replace our production, which is roughly 900 million barrels equivalent per year, I mean, that's already new production. So, the decline, when we face it, is with new production, new investment, and new value.

So, in fact, the initial production doesn't start from the level you had the year before. It's starts including the decline, and we are, today, capable to reduce the decline. So, yes, the 3% average, we believe in it.

Now, on the 3 million barrels per day in 2017, as I told you, it's a challenge. But, I mean, as far as we are working on existing new projects, that's what will be delivered, and we are absolutely confident in bringing those projects on stream and on time.

Now, all those things which might happen in between, well, I'd like to say that we are capable to predict or to make it as an average of -- no, I would never do this. I mean, I don't think it's good to say we'll have a percentage of problems on our fields, and that's part of our development plan. I have difficulties with this.

Again, Elgin, we've said it, when we had this leak. The leak has not changed the reserves. So, the value of the Company has not changed, independently of what I've been reading. I mean, I don't know, still, by the way, how those figures have been produced, but we stopped the leak. We are now restarting the production. It will take a little time to come back to the previous level, but the reserves are still there.

So, there is no reduced value, certainly in terms of cash, to get in now, but on the long run, the value of Elgin remains what it was, and, as you know, before this explosion happened, we were -- at the time, we were announcing that reserves would be, probably, more than expected. Well, it's not the right time to say this any more. Let's restart and then we will re-discuss what is the future of the additional reserves of Elgin-Franklin.

Yes, Alejandro Demichelis from Exane BNP Paribas. Coming back to the cash flow and dividend question, given your 2015-2017 target of cash flow up $40 billion, it's quite a big difference between what your net investment is going to be and what your cash flow is going to be. So, what's your priority for what that cash use? And, probably, as a follow-up, what is the level of disposals that you're using in terms of getting to that net investment level?

You mean, after 2017?

No, your target is 2015-2017.

Well, the priority today is -- there is no priority. I mean, the priority -- I mean, the Company has its long-term plan. You cannot change it every day. So, we have our investments, as you call them, organic, then divestment, that's investment based on which we are very strict, and we keep it at $22 billion, and that's the commitment of the Company and proved to be realistic.

Then we have our strategy on -- it's Board policy on dividends. We increased the dividend by 3.5%. We have a payout which is just below 44% in 2012, which gives us a certain flexibility on the average on the long term, which is 50%.

So, the priority is to do everything. I mean, I cannot set priorities to pay dividend and not doing investment. Definitely, I mean, if we do provide the Company, which means our shareholders, with good projects, well, there will be the return to pay additional dividends. And when you see the period 2015-2017, you see that there is an additional cash on the top of the $7 billion, which represents the level of today's dividend, but will it be, at that time, the use of those quote/unquote additional cashflow -- but I don't like the word "additional" cashflow. It's not additional. It's the cashflow available.

So, what you do with it? Well, either you reduce your gearing or you increase dividend, or you do both, or you think about something nice. But, I mean, I shall not say even this, because when you say this, oh, what is he having in mind? Nothing at all.

Organic growth is, for the time being, absolutely enough to cover our pressure to deliver growth in a profitable way to our shareholders. But no priority. I could say, in a way, that the priorities are first salaries. You need to pay your employees, especially the ones of Patrick, who is very stingy, but without joking on this...

I'm waiting 'til 2015.

(laughter)

Better wait. But --

(laughter)

But, seriously, I mean, dividend and investment are the same priority and have to be living together. I would never tell you that I will pay dividend without investment and the opposite.

So, we have to prove that we have the cash for delivering the two, and when you see the gearing at 21%, frankly, I mean, it's difficult to consider that the Group is facing any concern about its flexibility to cover, I mean, even things which today could be considered as, in our view, not doable. I'm talking a short drop on oil price -- maybe, you never know, cannot predict. We're in a world which is becoming more and more volatile.

But at the same time, when you look at the assumptions, well, it's difficult, also, to see, as certain people are doing, to see that the barrel might be back one day at $75. I don't know what -- well, for the time being, it's more than $110. It's $120. We don't take it as for granted, but at least it's what it is. So, before talking about $75, let's enjoy the $120, and be optimistic.

(Spoken in French).

Hi. Hello. It's Martin Rats of Morgan Stanley. I just wanted to ask you a brief two questions.

In terms of the improvement in the guidance for operating cashflow that you're hinting it, what share of that is coming from the downstream, particularly with the Jubail refinery going on stream? Is there any way of sort of giving it an order of magnitude? I know the -- you've quantified the improvement in return on capital employed, but in dollars of additional cashflow, something, sort of an indication, would be helpful.

The second question I wanted to ask is about the macroeconomic -- the macro outlook where you've bullish on oil markets. At the same time, over the last couple of months, we've seen very forecasts from the IEA, (inaudible), OPEC, the BP Energy Outlook, which at least, maybe not between now and 2030, but at least over the next couple of years are calling for a much more significant build in spare capacity, and a decline in (inaudible) OPEC.

Between your internal forecast and those forecasts, where would you see sort of the difference that sort of gives you the confidence that that spare capacity build will not happen, or at least not to the same extent? Is it in Iraq, or is it somewhere else? Any comments to that would be much appreciated.

Okay. Well, I wouldn't say that we are bullish, because when we use $100 and $80 and the price is $120, if you call that bullish, well, I don't know what it means.

At the opposite, and it's a time where we decided in Total to be even more drastic with our teams to say don't forget that it's $100 and not more, and don't be too much focusing on the price today, because it might not be sustainable at that level, at the time where the price goes to $120.

Okay? Can I say bad luck? No, it's good luck, especially if you work on $100, because it means that all the $20 is additional cash. And that's what happened last year. That's why last year we had finally better results on cash, because we have been getting the benefit of the $111, which is not $100.

So, I would not say that we are bullish. Now, you hear so many things in the market, which is normal. I was in Davos and we had a discussion. Saudi Aramco, which is now one of our best partners, we exchange all information, and have an extremely good relationship, they were surprised to hear that OPEC did not exist any more. But they are existing.

Because today, which is the country which is making all the loot? It's Saudi Arabia and they have been very well driving the problem we face with Iran.

If they were not able to increase their production very quickly to face the fact that Iran dropped its export by more than 1 million barrels per day, the price of oil would have been at $200, and I don't know who would be saying it's going at $60. But I can tell, if Iran stops exporting, it will go up, and that's life.

When we talk about spare capacities, look at IEA. They are absolutely in line with what we say for two reasons. First, they have been creating some kind of nervousness recently in raising their targets for production of coal, but instead of using the same 2013 year for the target, they've been using 2020.

So, it's very difficult to match the two, because you have one at 2020, one at 2013. Of course, it's done on purpose, because they don't have the answer. But they've increased, finally, the proportion of coal versus other sources of energy. Why? Because the price of coal is very low.

And whatever you said, I'm being bullish, I'm not bullish. I don't know what it is, but when the price of coal is so cheap in the US and can go to Germany at a cheaper price than gas, people are using coal and not gas. And that's not Total, that's the market forces.

So, just to go back to these capacities available, we have and we will use it again a slide which we usually use for the -- what we call the strategy meetings, which are taking place in September, we have this slide where you the spare capacity with a line which is more optimistic and a line, less optimistic. On a more optimistic, you have efficiency, you have the additional production, which means that the 5% is moving to 6% or 7%.

And then we use something which is just delay the projects, thanks God not of Total, but of our competitors, by, what was it, six months? By six months you lose more than 3% spare capacity.

I mean, I think that people don't have in mind, personally. They talk about fundamentals just like if it was based on 6 billion, 8 billion. It's behind operations, behind you have capacity to develop those fields, behind you have the cost of projects we have been talking of. Behind this, you have a lot of delays in FIDs. Behind of this, you have geopolitics triggering a delay in approvals. And when you take all of this, it's nothing to do with being pessimistic, optimistic, it's just being real.

And what I'm trying to do when I speak, being in Davos or elsewhere, I speak as a man of the industry, and not using billions of reserves coming from I don't know where. I use the UK, I would say, formula of dividing an acreage by reserves and you find the production. That has never worked in Saudi Arabia. And I've been told many times that, I mean, Saudi Arabia would have 20 billions barrel per day. I've been treated almost of a liar, if not stupid. I mean, now nobody says any more it will be 20, nobody, but I've been hearing it for at least 10 years, 20, 20, 20. Now, it's 12, and everybody says it's 12.

Iraq -- even the Iraqi government decided recently for all of their projects, one by one, to reduce the production target. Is that Total? Is that Christophe de Margerie saying, that's what we want? That's what it is.

So, nothing to do with being bullish, just being pragmatic, looking at figures, being conservative in what we use to launch our new projects, $100, with $80. That's, we consider, sound. If we can get more, it's good for us. If it will be less for a period of time, we have also flexibility to cover this kind of momentum.

At the same time, looking at the cost of projects, the cost of developing new barrels, the resistance will be certainly there, first, and second, OPEC, because of the opposite of certain brilliant spirits, OPEC still exists. It's called Saudi Arabia.

I'll try to answer your first question about cashflow coming from downstream. In 2012, the cashflow from operations coming from downstream was about $4 billion. By 2015, we expect an increase in the return on capital employed by up to 13%. We expect to increase the cashflow from operations by $2 billion to $3 billion.

Just to give you a magnitude, Jubail, in 2012 environment, will generate about $800 million of cashflow per year.

To give an additional vision, I will say that for the downstream we are entering a period where downstream will be a source for the rest of the Group. I know sometimes we have a problem to explain that it's not because you have high levels of return that it means no cash. If you remember the old days of Total, during the '90s, the downstream has been financing the upstream, thanks to the cash from downstream, thanks to the depreciation, et cetera.

So, I mean, what's happening to Jubail is a very good example. We have with Jubail, with now Gonvreville and Port Arthur in the US, made most of what we had to do in terms of new investment. There are still investments to come, probably, if we can reach an acceptable agreement with all the parties involved in Antwerp, but most of our big investment is now behind us. Now we want to get the benefit of the new organization and of those new projects.

Hi. Oswald Clint at Sanford Bernstein. A question on exploration, please. You've added a lot of acreage in the last couple of years in quite a lot of countries. You've got a big reliance on exploration to fill the hopper at the back. Could you be a bit more specific and say how much oil and gas did you find last year in those four significant discoveries? And is it enough? And does it give you confidence in a reliance on almost greater exploration from here?

Well, I mean, in 2012 we have not been draining a lot of what we call new acreage. The real start is now on with Ivory Coast, with Kenya, with -- even if they're not being announced, but soon-to-be-announced Togo, so that is part of what our new, additional volunteer of increasing the exploration program. So, we will see the result there.

But Patrick told you that it represents, for 2013, 5 million barrels of oil equivalent. What is the mix of this 5 between oil and gas?

55 oil.

Okay. Be careful, it's exploration. So, 50/50 is not bad, 55/45 or more is a bit embarrassed. But, again, if you remember, in our production of gas, today we have 40% of that gas coming from oil-related formulas.

So, when you see the split between oil and gas in Total, in terms of production, you have to look at it also in terms of what is the marketing of this gas. Is it on local markets, domestic prices, or oil-related? Oil-related today, 40%.

Jon?

It's Jon Rigby, from UBS. Can I -- in the old days, you used to talk about technical costs. I understand why you dropped them, because it doesn't really measure what you're doing, but I note that your depreciation in the upstream has gone up by about 20% this year over last year.

So, it's a two part question. So, part A, can you just explain what the moving parts of that are this year? Is it just new projects coming on that have dramatically changed your DD&A, and what would those be?

And then the second is I note that your Capex on the upstream is now running at over 3 times your depreciation. So, can we expect this sort of profound change in DD&A to impact earnings over that period, sort of 2016-17, that you tend to refer to in the framework of cashflow? Thanks.

I will leave it to Patrick for a part, but, first, on exploration, it's true that in 2012 we have been increasing the exploration being depreciated. And, if I am correct, it would be something like 500 additional million dollars of charges. But, I mean, when you are more active on exploration, it's normal that you have more charges, as far as you are not always successful before you get the benefit of the barrels, you first have the non-benefit of drilling more, so the unsuccessful part is being charged to your profit and loss.

But, I mean, I don't consider, until further notice, that is bad news. It's just the result of our strategy to increase the budget from 2.2 billion to 2.8 billion. I mean, that's part of the reason.

On the DD&A, before Patrick answers, we have been not disclosing the technical cost this time. We will do it again in September. The reason why is we didn't get the figures of our competitors. So, we have ours. We'll have theirs. Definitely you're right in saying that we are increasing for the DD&A reason, but we are totally certain that's the case for everybody.

So, Patrick, you might say more now, but you will get the full presentation, as usual, in September.

Yes, you're right that the DD&A increased. The technical cost, which is about $23 per BOE, includes a $2 per BOE increase in DD&A in 2012. We expect the DD&A to increase by about 10% in 2013, and then to plateau.

And it's linked with the capital employed producing/non-producing.

Thanks. It's Lucas Herrmann with Deutsche Bank. In ways, following on from Jon's question, when we look at cashflow, we can see that your expectation is for, broadly, a 50% or so increase in operating cash over the course of the 2000 -- or through the '15-'17 period and now.

If I was out to ask you what your expectations are for net income over the same period, wherein I'm trying to take account of what's going to be happening with depreciation, and what's going to be to the difference between tax paid and accounting tax, could you give us some indication, Patrick, of how you see accounting profits, for want of a better phrase, or net income, moving over a similar period relative to that 50% improvement in cash?

Okay. Net income will grow, but at a lower pace than the cash flow. The return on capital employed will increase beyond 2015, 2016, 2017, and, as I was mentioning to you, the net income will grow at a lower pace because of the DD&A, but the DD&A will plateau at 2015 and beyond.

Look at the slide with the high-quality upstream projects, so you will see that our new projects are getting an IRR which is at the upper level, and that's how you calculate your income at the end, but be careful with technical cost. Technical cost cannot mean directly that you will have less profits. It depends where it is, and by whom it's fed, and sometimes people are saying that we have too many production-sharing contracts. Well, the good thing with production-sharing contracts, the technical cost is paid by the government.

So, for instance, in Angola, if you have an increase in technical cost, it will not have a direct impact on your bottom line. It will have one, of course, but less than, because it's not directly $2 less. It's $2 after tax, after split, between profit oil and between the different -- between partners. So, to offset this on the technical cost, you really have to look at it on a contract-by-contract basis.

But, I mean, I will not be so pessimistic to say that, of course, I mean, if you have higher technical costs, it cannot have a positive impact on your profits, but at the same time, it can be really reduced, even, sometimes, to missing, if it is part of a system where you recover all of your cost through cost oil.

So, again, look at it in details. That is the only way. I always say this when I'm presenting the different figures between Total and our peers, because it's good to say that we are usually below them, and it's good, and we have to continue. All the industry is definitely climbing, but, again, look at it on a case-by-case basis, because it's very different when it happens in the North Sea or when it happens in Angola, and especially today, with higher taxes, it's not good for our today's result, but the impact of additional cost is also less important, because it's probably paid by states, and you really need to have a look at it like Norway.

When we're in Norway, we have 78% of tax rate, marginal. You have had very high price, very high costs recently, huge inflation, but on the bottom line, the impact has been relatively limited thanks to the system where you can start depreciating at the time you start developing, and not at the time you start producing.

So, one by one, you have to go through it, and at the end, you will see that the impact is not as big as this.

Patrick, just can I come back to you on tax? Is there a build in the differential between accounting tax, for want of a better phrase, and tax paid, as we move through this period of very heavy investment, much higher capital allowances, and a significant benefit, one would have expected, to your cashflow statement relative to your P&L?

The tax rate, for upstream I'm talking about, remains about -- if I have looked at the long-term plan, the tax rate for upstream remains stable at about 59% over the period. This answers, I think, your question.

For $100.

For $100 per barrel.

If it moves to $120, it will be more, but that's good news, I mean, for the producers.

It's Neill Morton with Investec. You're clearly moving into a higher growth phase over the next few years, but one of your slides shows that the capital employed not in service as falling back to a more normal level by 2017. Is it fair to assume, then, that your growth rate will fall, beyond that period? Thank you.

Well, you remember, first, that, I mean, that is why today we are faced with organic investments which are relatively high. It's based on the fact that we had, at the time, to make certain acquisitions and to have increased investment, which are linked with it, because we were a little bit concerned by a sudden drop in our, at the time, 1P reserves.

That's not the case any more. We made the necessary acquisitions, which were not really acquisitions. That's what we call the DRO, which is you buy non-developed resources that you have, then, to change into reserves, and then into developing reserves, and then into production.

So, that why today we are faced with organic investments which are today higher than they were and higher than they will be in the longer term. Why? Because we will go back to a more sustainable development planning of our investment. But it doesn't mean that we will stop investing after 2017. Total still considers that a stop-and-go policy is the worst thing we can do in our industry. It has always been hurting those who have been following this strategy, because, I mean, when the price of oil or gas moves, it never moves at the time you wish.

So, let's be conservative on the criteria you use for launching your projects, and then you run them on the longer term. But more and more we'll be talking on after 2017. Today, we're focusing on the first part, because that has been the concern of our investors, about cashflow, are we capable, too? We are. We deliver, and then, definitely, we'll have to say a little bit more about the future of our industry for the years 2020-plus, which is, I insist, tomorrow.

But when you talk about exploration, that's exactly what you're doing, because the exploration of today, it doesn't production, at the best, at the best, before 2020-plus.

Just to add one point, if you look beyond 2017, you will have projects like Canada oil sands and Ichthys, and keep in mind that our capital employed will basically double from today to 2017. And so, the overall amount of cash available is great, and the big projects I was mentioning to you are part of the beyond-2017 production and projects.

The last question?

(Spoken in French.)

Sometimes the risk is to be on the front line. Nobody sees you.

Thanks. Jason Gammel with Macquarie. Just a couple around the LNG portfolio.

First of all, the level of flexibility you've maintained in the existing portfolio has clearly been beneficial in the current spot-pricing environment in Asia, but given that we're in a pretty tight market right now, are you strategically looking to put more term structure around the portfolio while prices are high?

The second part of the question is, you had looked to be growing beyond the 17 million tonnes per annum that you have targeted in 2017 if you look at the project list. Would you be able to put any priority around Shtokman, Yamal, Brass LNG, and perhaps even an expansion trade at GLNG, just which had the best economics, or which seem most likely to move forward?

Well, it's not the easiest part, I mean, using Brass LNG and Shtokman. I'd like to know what it is.

Frankly, on Brass in Nigeria, for those who don't know, it's a big question mark. I mean, as Patrick said, it's after 2017, before it, no chance. And, again, it's a place which is not very secure, safe, but it's a strong wish of today's president, but no decision has been taken yet. You know that one partner has decided to quit and we don't know who would be replacing it. So, I mean, no dates for Brass.

No dates for Shtokman. I don't know if you read the press recently, but they said it was a typo, but something has been published in Russia saying that Shtokman will be starting producing in 2013. Okay? That was the newspapers. When we called them, they said, no, it's a typo. It's 2019.

Strange typo error, but that's to give you my feeling on those two projects. They are there. The reserves are there. They will be developed, but when, it's impossible to say.

But we don't count on them for more than the longer term. It's not part of our short term or even medium term target.

Yamal is different. Yamal is really, I mean, now moving. The FID is not yet taken. It should be taken before the year end, and we got, already, a lot of good answers to our request. There are still a few missing, as you know, discussions with Gazprom on the volatility of exporting gas, especially when it is LNG. But if you know the subject, you know things are moving in the right direction, which means that the government asked Gazprom to enter into discussions with Novatek and Yamal LNG, and they continue. That's underway.

So, when will it be sorted out? Difficult to say, but I am relatively optimistic on this project. On the top, it has a lot of potential, because what we're developing today are really one part of the existing reserves. So, the good thing with Yamal, if it starts in a good way, it's a long-term positioning for Total and Novatek, and you have Total as a partner in Yamal, but as a partner in Novatek, so we are getting the benefit of the two.

But for this energy project long term, that's what I said when I presented the slide of LNG, and that's why we're confident that, yes, a demand is there. Yes, the resources are there. But before it will become really LNG available for the consumers, it will take a longer term, period.

So, all of those thinking that all of those projects would start and then LNG, on the top, coming from the US, wow, it means that the price will be decreasing a lot, as I was saying for oil production and oil development, you cannot say at the same time that the energy industry is facing problems to develop their projects, but it will be all developed, and then it will make a crash on prices.

That's not the way we see it. So, we remain extremely positive on LNG. So, if we can lock more, yes, we will.

Theepan, for the last question.

Thank you. Theepan Jothilingam from Nomura.

Just a question, coming back to disposals, but since your earnings numbers last year were very resilient, just going forward, though, could you talk about, perhaps, the impact of the disposal program? So, looking at the 2014 cashflow number, relative to 2012?

And then, sort of a follow-up question to that, I guess, is that if, perhaps, the impact on earnings from the current disposal program is relatively muted, if you were to pursue a disposal program, would that eat more into sort of cash-generating assets, or not?

Yes, the impact on earnings of the sale of assets, it's already included in our forecast. If you take the example of TIGF, which will bring an overall enterprise value of EUR2.4 billion, TIGF provides little income, actually. The return on capital employed for this regulated business is quite small.

So, all in all, the overall impact of the asset sales program is not big. The magnitude of it is, maybe, $100 million in aggregate, something like this. I leave aside Usan.

And the others, no, as far as I told you, we know now most of the disposals we will be doing until 2014. It's easy to say how much it will represent in terms of reserves and production. It's, by definition, limited, because we are targeting projects which are having little impact on production and reserves.

But at the same time, it's all included in our forecast. So, it's good you said this, because we cannot use this as an excuse if we cannot beat our targets to say, yes, but we are selling. No, that's included, and for what represents, for instance, the next to come, we already also have reserved part of this for it will not be part of the 3 million.

So, to be very clear, we will not use as an excuse, except if we go to additional sales. But today, in the $20-$25 billion sales program, it's all included in our targets and forecasts.

And when you have our internal presentation -- I don't know if we do this for everybody -- we have a detailed explanation on what are the pluses and what are the minuses compared with our budgets and planning. We have something which we call perimeter (spoken in French), and that is, okay, we sold or we acquired something, so we are putting those categories as independent from what we call organic production coming from existing developments.

We -- to be precise enough, we have no formal target of asset sales beyond 2015.

(Spoken in French.)

There is no target, but as I told you, not in terms of amounts, but in terms of strategy, I think the strategy, which is to make your portfolio of assets moving, will be continued. It makes sense to continue to -- not to keep in your portfolio assets when you consider that they don't have real potential, that they will become more and more costly, and, on the top, some people will make a better use of those assets than you are.

So, for instance, when we sold Cameroon, it had nothing to do with balancing our cash. It was, really, based on well, Cameroon is a nice country. We stayed in the marketing, but as far as those reserves and production are concerned, it can only be dropping. So, companies who don't have any concern about commitments on production, they continue to do it. For us, it was becoming a burden. So, disposal.

And I think we need to continue to work on this as being part of the way this Company needs to be managed, in a dynamic way, not to please, but just because we consider that it is the best way to bring value to our shareholders, but without targets.

Okay, Martin says that's the end of the session. So, he must be right. Well, thank you for spending the time with us. Thank you for your attention. We really think that Total is moving ahead in full transparency, meeting our targets, our commitments. But I wanted to say something very clear. It's important to meet your targets vis-a-vis your shareholders, investors, financial analysts, but if we are doing it, it is because we trust in it as a long-term strategy. So, it's not a strategy to please, it is a strategy which has been supported, approved, by the Board, that the management consider as the best opportunity to bring value to its shareholders, and that's the reason why we are committing ourselves to those targets.

So, of course, we will answer, always, to your questions, and especially to be as transparent as we have to be, but, at the same time, don't think that we did this or that because we are told this or that. We listen to you, but at the same time, it's important that the long-term strategy has to be driven as a long-term strategy.

So, when we're asked what did you change, we changed our habits. We changed our way of doing business. We changed the Company organization. We have been reinforcing this momentum on using more our skill that we were doing in moving our portfolio of assets, and if to do it is being more proactive.

But at the end, we are strong supporters of as far as you see, the price of energy will remain at levels that will make it profitable. Energy is the only thing which is on earth which (inaudible) the way to continue to grow in the world. So, we consider that we are in one of the most fascinating industries with a huge potential, with a huge potential for additional technology, for young engineers, and with a very long term, bright future.

So, that's the reason why we were pleased today to offer you the results of 2012, which have been, as Patrick said, good and, definitely, we expect to re-deliver this kind of news, even better, in the years to come. Thank you for your attention.