Registration document 2007 - Total.com

Trends and outlook
Outlook
Since the beginning of 2007, the oil market environment has
remained generally favorable with oil and gas prices at relatively
high levels and refining margins in Europe comparable to the
average level of 2006.
In the Upstream segment, TOTAL intends to pursue its strategy
of profitable organic growth and increase hydrocarbon
production by more than 5% per year on average over the period
2006 to 2010 (1) , including production growth of 6% in 2007 (2) ,
which takes into account a reduction of 1% for the estimated
impact of OPEC quotas. This growth will be particularly sensitive
to the LNG activities, which are expected to grow by 13% per
year on average. Through 2010, TOTAL’s portfolio of projects
offers strong visibility, notably due to the number of exploration
successes in recent years and to major new projects in LNG and
heavy oil.
In the Downstream segment, the Group is pursuing a strategy to
upgrade its refining system by adding conversion and
desulphurization projects, as well as through programs to
modernize and improve the reliability of its units.
In petrochemicals, TOTAL’s objective is to continue to increase its
polymers production, particularly in Asia and the Middle East,
while improving the competitiveness of its operations in mature
markets.
Implementing the Group’s growth strategy depends on a
sustained investment program. The 2007 budget for investments
is approximately $16 billion (3) , 75% of it for the Upstream.
The Group maintains its net-debt-to-equity ratio target at around
25% to 30%.
TOTAL intends to pursue a dynamic dividend policy, in line with
its strategy for profitable growth over the long term. Cash flow
Management Report of the Board of Directors
Trends and outlook
remaining after investments and the payment of the dividend will
be available for share buybacks.
Highlights of 2007 should include the ramp up of production at
Dalia in Angola and the distillate hydrocracker at Normandy as
well as the start-up of major Upstream projects like Rosa in
Angola and Dolphin in Qatar.
Risks and uncertainties
3
Due to the nature of its business, the Company is subject to
market risks (sensitivities to oil and gas and financial markets
environment), industrial and environmental risks related to their
operations, and to geopolitical risks stemming from the global
presence of most of its activities.
In addition, risks related to cash management activities and to
interest rate and foreign exchange rate financial instruments are
managed according to strict rules set by the Company’s
Management, which also oversees the systematic centralization
of liquidity positions and the management of financial
instruments.
A detailed description of these risks is included in this
Registration Document (pages 76 to 90). Also included in the
Registration Document, in accordance with Article L 225-102-1
of the French Commercial Code, is information on the manner in
which TOTAL S.A. accounts for the social and environmental
effects of its activities (pages 279 to 280).
2007 SENSITIVITIES TO THE MARKET ENVIRONMENT
Estimated impact Estimated impact on net
Market parameters Scenario Change on operating results operating results
Euro-dollar exchange rate 1.25 $/€ +0.10 € per $ +2.2 B€ +1.1 B€
Brent $60/b +$1/b +0.38 B€ +0.15 B€
European refining margins TRCV $30/t +$1/t +0.09 B€ +0.06 B€
(1) Based on Brent at $60/b in 2007 and $40/b thereafter.
(2) Excluding the effect of portfolio changes.
(3) Excluding acquisitions and based on 1€ = $1.25.
TOTAL – Registration Document 2006 73