Registration document 2007 - Total.com

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3 Borrowing requirements and funding structure The net-debt-to-equity ratio was 34% as of December 31, 2006, compared to 32% at year-end 2005. The Group’s policy for long-term debt is to borrow primarily at variable rates, or at a fixed rate depending on the level of interest rates at the time, in dollars or in euros based on the Group’s general needs. Long-term rate and currency swaps may be used in conjunction with debt issues and bonds to create a synthetic, variable-rate debt. TOTAL may also enter into long-term interest rate swaps in order to partially modify the rate structure of its long-term debt. Long-term financial debt in dollars are generally contracted for by the Group’s treasury department, either directly in dollars or in euros, or in currencies systematically exchanged for dollars or euros, based on the Group’s general needs, through swaps. Any bank counterparty with which the Group wishes to work in market transactions must first be authorized after an assessment of its financial position and its ratings from Standard & Poor’s and Moody’s, which must be of high-quality. An authorized aggregate limit is defined for each bank and divided among the subsidiaries and the Group’s treasury department based on needs for financial activities. Condition for the use of external financing The total amount of the confirmed lines of credit granted by international banks to Group companies (including TOTAL S.A.) was $11,638 million at December 31, 2006 (compared to $9,978 million at December 31, 2005), $9,268 million of which has not been used (vs. $8,414 million a year ago). TOTAL S.A. has confirmed lines of credit granted by international banks that allow the company to fund a significant cash reserve. These credit lines totaled $7,701 million at December 31, 2006 70 Management Report of the Board of Directors Liquidity and capital resources TOTAL – Registration Document 2006 ($7,335 million at December 31, 2005), $7,649 million of which has not been used ($7,293 million a year ago). The contracts for the lines of credit granted to TOTAL S.A. contain no provisions that tie the terms and conditions of the loan to the Company’s financial ratios, to its financial ratings from specialized agencies, or to the occurrence of events that could have a material negative impact on its financial position. The lines of credit granted to Group companies other than TOTAL S.A. are not intended to finance the Group’s general needs; they are intended to finance either the general needs of the borrowing subsidiary or a specific project. As of December 31, 2005, there was no restriction on the use of the capital received by the Group’s companies (including TOTAL S.A.) which could have a direct or indirect material impact on the Group’s operations. Anticipated sources of financing In 2006, investments, working capital, dividend payments and stock buybacks were financed essentially by the cash flow generated from operating activities and, to a lesser extent, by asset disposals and net borrowings. For the coming years and based on the current financing conditions, the Company intends to maintain this policy of financing its investments and activities.
Research and development Research and development costs incurred by TOTAL amounted to 569 M€ in 2006 compared to 510 M€ in 2005 and 464 M€ in 2004 (1) . The staff dedicated to these research and development activities was 4,091 people, compared to 3,964 people in 2005 and 3,843 people in 2004 (1) . Research and development challenges for TOTAL can be defined along four main lines: • Knowledge of the resources and their quality, mainly oil and gas, but also for biomass and renewable energies. • Competitiveness, renewal and quality of products, including the ability to meet market needs, their life cycle and their impacts. • Efficiency, reliability and duration of production facilities, notably their energy output. • Environmental challenges with regard to water, air and soil on production sites, and the future of residual gases such as carbon dioxide. These challenges are addressed in synergy rather than competitively. The approach varies according to the different business segments. Exploration & Production Many challenges in this business segment have led TOTAL to strengthen its operations on various fields, notably for seismic data acquisition and processing, digital simulation of oil and gas reservoirs (such as low permeability or very deep reservoirs), issues related to acidic gas processing and gas chemical conversion with regard to gas activities. Enhanced oil recovery in operated reservoirs and issues connected to heavy oil recovery are two major concerns which led the Group to increase the Research budget. CO2 capture and its geological storage in a deep depleted gas reservoirs are the subject of a new major project in France. Gas & Power The main R&D themes concern energy conversion: new technical options for LNG terminals, new processes for GTL (Gas to Liquids), notably including the emergence of DME (Di-Methyl- Ether) production, the Group’s commitment in direct production processes and CTL (Coal-to-Liquids) processes to convert coal into liquid hydrocarbons. This business segment is also (1) 2004 and 2005 figures exclude Arkema. Management Report of the Board of Directors Research and development committed in power generation (the means to improve output) and CO2 capture in power plants. For renewable energies, major themes for R&D concern possible evolutions of photovoltaic technology with the new cell generation and power generation from biomass. TOTAL also entered into a partnership in wave power. Refineries For refining and marketing, TOTAL is preparing to include in its activities resources of the future, whether from non-conventional oil or from first or second biomass generation. TOTAL is also developing new high performance fuels, additives and lubricants adapted to the market, car manufacturers and energy. This business segment is also developing processes and catalysts, considered as two major R&D drivers, to improve productivity and reduce environmental impacts. Petrochemicals In Petrochemicals, R&D is directed toward the discovery of new resources from gas, coal or renewable energies and also the improvement of the energy efficiency of the facilities, as well as the development of new specialized polymers, the products of the future. Specialties Atotech is part of the rapid global development of microelectronics, dealing with engraving, brasing and electroplating technologies. 3 Hutchinson is innovating in the field of clean production technologies connected to thermoplastic products and attractive systems for major clients. Bostik and Cray Valley-Sartomer are working on the development of new products (glue, resins) derived from clean production technologies, notably using biomass resources. Environment Controlling and reducing the environmental impact of its activities is a challenge common to the whole Group, such as the reduction of gas emissions, the reduction of water contamination to comply with the European water framework and the REACH directives, as well as the reduction of greenhouse gas emission whether through the improvement of energy efficiency or efforts leading to carbon capture and sequestration. TOTAL – Registration Document 2006 71
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Registration Document 2006
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Registration Document 2006 This is
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Key figures Selected financial info
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116,842 Key figures Operating and m
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Refined product sales including Tra
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Business overview History and strat
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Upstream TOTAL’s Upstream segment
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Exploration & Production Exploratio
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Production For the full year 2006,
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Presentation of production activiti
Page 21 and 22: Europe Business overview Exploratio
Page 23 and 24: Africa TOTAL has been present in Af
Page 25 and 26: this zone through its subsidiaries
Page 27 and 28: North America Since 2004, TOTAL has
Page 29 and 30: Trinidad & Tobago TOTAL holds a 30%
Page 31 and 32: TOTAL also has a 50% interest in th
Page 33 and 34: Europe TOTAL’s production in Euro
Page 35 and 36: K6-GT platform, in anticipation of
Page 37 and 38: The Group also holds a 20% interest
Page 39 and 40: Gas & Power The Gas & Power divisio
Page 41 and 42: Asia Pacific The Hazira re-gasifica
Page 43 and 44: In Morocco, Temasol, in which TOTAL
Page 45 and 46: Refining & Marketing As of December
Page 47 and 48: Refined products The table below se
Page 49 and 50: capacity oil recycling plant in Fra
Page 51 and 52: In 2006, the principal market bench
Page 53 and 54: Base Chemicals TOTAL’s Base Chemi
Page 55 and 56: Specialties TOTAL’s Specialties s
Page 57 and 58: Investments Main investments made o
Page 59 and 60: Property, Plant and Equipment TOTAL
Page 61 and 62: Board of Directors Executive Commit
Page 63 and 64: Management Report of the Board of D
Page 65 and 66: Market environment 2006 2005 2004 E
Page 67 and 68: Upstream results Liquids and gas pr
Page 69 and 70: Downstream results For the full yea
Page 71: Liquidity and capital resources Lon
Page 75 and 76: Trends and outlook Outlook Since th
Page 77 and 78: Risk Factors Market risks p. 76 •
Page 79 and 80: The Group has implemented strict po
Page 81 and 82: The non-current debt in dollars des
Page 83 and 84: Grande Paroisse An explosion occurr
Page 85 and 86: Myanmar Under the Belgian “univer
Page 87 and 88: Risk management Risk evaluations le
Page 89 and 90: TOTAL, like other major internation
Page 91 and 92: Insurance and risk management Organ
Page 93 and 94: Corporate Governance Board of Direc
Page 95 and 96: Daniel Bouton 56 years old. Inspect
Page 97 and 98: Bertrand Jacquillat 62 years old. A
Page 99 and 100: Michel Pébereau 64 years old. Hono
Page 101 and 102: Management General Management On Ma
Page 103 and 104: Corporate Governance Compensation o
Page 105 and 106: Pensions and other commitments (Art
Page 107 and 108: Within this framework, the Board’
Page 109 and 110: Members of the Audit Committee may
Page 111 and 112: Messrs. Bouton, Collomb, Desmarais,
Page 113 and 114: establishes and maintains procedure
Page 115 and 116: Employees, Share Ownership, Stock O
Page 117 and 118: Corporate Governance Employees, Sha
Page 119 and 120: TOTAL stock options Corporate Gover
Page 121 and 122: Corporate Governance Employees, Sha
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Corporate Governance Employees, Sha
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Restricted share plans as of Decemb
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TOTAL and its shareholders Listing
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Four-for-one stock split The Genera
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Information Summary TOTAL and its s
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Dividends Dividend policy In accord
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Share buybacks The General Meeting
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Summary table of transactions compl
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cancels and replaces the unused por
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which was approved by the French Co
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Shareholder structure Distribution
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Non-resident individual taxpayers e
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The Committee also worked on the co
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2007 Calendar February 14 Results f
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Financial information Historical fi
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Additional information Financial in
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General information Share capital p
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Pursuant to this authorization, the
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Potential capital as of December 31
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General information Share capital J
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Directors’ Charter and Committees
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Other matters Employee incentives a
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Information on holdings General inf
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Statutory auditors’ report on the
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Consolidated statement of income TO
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Consolidated statement of cash flow
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On February 13, 2007, the Board of
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G. Earnings per share Earnings per
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equal to the market price. For unli
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The net periodic pension cost is re
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(iii) Portion of intangible assets
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A. Information by business segment
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Appendix 1 - Consolidated financial
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ADJUSTMENTS TO OPERATING INCOME 200
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In 2006, gains and losses on sales
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Property, plant and equipment prese
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14) Other non-current assets As of
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The variation of the weighted-avera
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18) Employee benefits obligations P
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The components of the net periodic
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20) Financial debt and related fina
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Impact on net income The amount of
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23) Commitments and contingencies A
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Other guarantees given Non-consolid
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25) Payroll and staff For the year
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The classification by strategy and
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B) Financial instruments related to
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29) Market risks Oil and gas market
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As a result of its policy for manag
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3) The Group has recorded provision
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53.2% 95.7% Elf Aquitaine 99.5% 100
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Oil and gas reserves p. 238 • Cha
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Changes in liquids reserves Appendi
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Changes in liquids and gas reserves
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Costs incurred in oil and gas prope
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Appendix 2 - Supplemental oil and g
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Other information Accounting for ex
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Appendix 3 - TOTAL S.A. Special aud
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(Free translation of a French langu
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Balance Sheet (TOTAL S.A.) Appendix
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Statement of changes in Shareholder
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2) Property, plant and equipment As
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6) Shareholders’ equity A) Common
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7) Contingency reserves As of Decem
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11) Translation adjustment The appl
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20) Commitments As of December 31 (
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TOTAL share purchase options plans
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Appendix 3 - TOTAL S.A. Parent comp
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List of marketable securities held
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Distribution of earnings 2006 Net d
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Social and environmental informatio
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AVERAGE COMPENSATION PER MONTH - TO
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Environment Pursuant to French law
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Consolidated financial information
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European Cross Reference List 10. C
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TOTAL S.A. Registered Office: 2, pl
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Registration document 2007 - Total.com

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