By Tara Patel
Jan. 13 (Bloomberg) -- Total SA, Europe’s third-largest petroleum company, will invest more this year in exploration and production even as oil prices fall, an executive said today.
“With a perspective on the long term we will continue to invest,” according to Laurent Maurel, vice president for business strategy at Total’s exploration and production division. “We will invest more in 2009 than in 2008 despite the drop in oil prices,” he said at an energy conference in Paris.
Spending on exploration and production will rise by about 15 percent, Maurel said in a subsequent interview, adding that the company will invest in the same “traditional geographic zones” as previous years.
Total Chief Executive Officer Christophe de Margerie has said the company will report lower earnings for the fourth quarter and the current quarter on declining oil prices, which have plunged more than $100 a barrel in the past six months. Total will announce fourth-quarter results next month.
Crude trading below $50 a barrel is a “danger” because investment by smaller companies may drop, according to the CEO.
Oil prices need to be higher for profitable investment in Canadian oil sands and deepwater fields off Angola, Maurel said today. Total requires prices of about $80 to $85 a barrel to profitably develop the oil sands and around $60 for Blocks 31 and 32 off Angola, he said.
Oil traded as low as $36.10 a barrel today in New York.
“We don’t know today whether we have seen the bottom” of the oil price, he said, adding that Total doesn’t have to make decisions on investment in Canadian projects before the end of this year, by which time development costs may have dropped.
The Paris-based company, whose European competitors include Royal Dutch Shell Plc and BP Plc, expects world crude output to “stabilize” at around 95 million barrels a day, including production of heavy oils and condensates, before 2020, he said.
To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net
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