Oil major Total says it expects to scale back on its investment programme from next year as oil and gas production closes in on previously set targets.
The company is also aiming to start up projects in Norway, Angola and the North Sea in the coming months.
Capital spending is expected to fall to around $24billion by 2017 compared with up to $29billion this year, according to the company’s chief financial officer Patrick de la Chevardiere.
“The biggest part of the investment program is now behind us,” chief executive Christophe de Margerie said during a presentation to brief investors on strategy. “The next step is to bring the cash in.”
De Margerie has pledged to raise oil and natural gas output, explore more aggressively for new deposits and sell assets. A second-quarter production increase was the first year- on-year gain since the last three months of 2010. The explorer has also set a goal of $15 billion to $20 billion in asset sales from 2012 to 2014.
“The group anticipates investments to trend down starting in 2014 as it enters a growth phase for production and free cash flow,” Total said in a statement. It expects a “strong increase in cash flow from upstream startups and downstream restructuring.”
Total said it is planning to drill “high potential” wells in the Gulf of Mexico, Iraq, Brazil and Angola by the end of 2014.
The oil explorer reiterated a goal to raise output potential to about 3 million barrels of oil equivalent a day in 2017 and said it would reach 2.6 million barrels of oil equivalent a day in 2015. Production advanced 1.3 percent to 2.29 million barrels of oil equivalent a day in the second quarter.
The number of projects starting up in the next three years will almost double compared with the previous three, Total said in a presentation. It also plans to sanction investment in the Yamal LNG project as well as one at Fort Hills in Canada this year, both of which would begin production in 2017.
Total confirmed a target to reduce its European refining and petrochemicals business by 20 percent from last year to 2017. It pledged to raise a profitability target to 13 percent from 9.5 percent currently for the division overall while lowering capex 30 percent through 2017.
In the marketing and services division, Total plans to “adapt its positions in Europe and expand in growing markets particularly in Africa and the Middle East,” it said.
The number of retail stations in Africa and the Middle East will increase to 5,400 in 2017 from 4,400, Total said.
As the biggest refiner in western Europe, where it operates eight plants including five in France, the company has borne the brunt of lower margins and a drop in the consumption of fuel products.
“Consumption and demand are declining in Europe,” de la Chevardiere said today at a press conference in London. “We may reduce capacity of some plants.”
The explorer won’t close a European refinery in the next two years, he said.
As well as investing in new fields, Total has sold assets such as a gas network in France and a field offshore Nigeria.
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