UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 20-F

(Mark One)

¨
(Mark One)
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

OR
xþ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

OR

For the fiscal year ended December 31, 2010¨
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

OR

¨For the transition period fromto
OR
o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report

Date of event requiring this shell company report

Commission filenumber: 1-10888

TOTAL S.A.

(Exact Name of Registrant as Specified in Its Charter)

Republic of France

(Jurisdiction of Incorporation or Organization)

2, place Jean Millier

La Défense 6

92400 Courbevoie

France

(Address of Principal Executive Offices)

Patrick de La Chevardière

Chief Financial Officer

TOTAL S.A.

2, place Jean Millier

La Défense 6

92400 Courbevoie

France

Tel: +33 (0)1 47 44 45 46

Fax: +33 (0)1 47 44 49 44

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class

 

Name of each exchange on which registered

Shares

American Depositary Shares

 

New York Stock Exchange*

New York Stock Exchange

*Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

2,349,640,931

2,363,767,313 Shares, par value €2.50€2.50 each, as of December 31, 2010

2011

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  xþ    No  o¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  o¨    No  xþ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  xþ    No  o¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).**

Yes  o¨    No  o¨

** This requirement is not currently applicable to the registrant.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” inRule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  xþ
Accelerated filer  o Accelerated filer  ¨Non-accelerated filer  o¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  ¨

  
U.S. GAAP  o

International Financial Reporting Standards as issued by the International

Accounting Standards Board  xþ

 Other  o¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  o¨    Item 18  o¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act).      Yes  o¨     No  xþ

TABLE OF CONTENTS

      Page
 

CERTAIN TERMS

   iii  

ABBREVIATIONS

   iv  

CONVERSION TABLE

   v  

Item 1.

  

Identity of Directors, Senior Management and Advisers

   1  

Item 2.

  

Offer Statistics and Expected Timetable

   1  

Item 3.

  

Key Information

   1  
  

Selected Financial Data

   1  
  

Exchange Rate Information

   3  
  

Risk Factors

   4  

Item 4.

  

Information on the Company

9
History and Development9
Business Overview

   10  
  

Other MattersHistory and Development

   5110  
Item 4A.
  

Unresolved Staff CommentsBusiness Overview

   6211  
Item 5.
  

Other Matters

54

Item 4A.

Unresolved Staff Comments

65

Item 5.

Operating and Financial Review and Prospects

   6265  

Item 6.

  

Directors, Senior Management and Employees

   7781  
  

Directors and Senior Management

   7781  
  

Compensation

   8592  
  

Corporate Governance

   108112  
  

Employees and Share Ownership

   114121  

Item 7.

  

Major Shareholders and Related Party Transactions

   118124  

Item 8.

  

Financial Information

   120126  

Item 9.

  

The Offer and Listing

   125132  

Item 10.

  

Additional Information

   127133  

Item 11.

  

Quantitative and Qualitative Disclosures About Market Risk

   138146  

Item 12.

  

Description of Securities Other than Equity Securities

   138147  

Item 13.

  

Defaults, Dividend Arrearages and Delinquencies

   139148  

Item 14.

  

Material Modifications to the Rights of Security Holders and Use of Proceeds

   139148  

Item 15.

  

Controls and Procedures

   140148  

Item 16A.

  

Audit Committee Financial Expert

   140149  

Item 16B.

  

Code of Ethics

   140149  

Item 16C.

  

Principal Accountant Fees and Services

   141149  

Item 16D.

  

Exemptions from the Listing Standards for Audit Committees

   141149  

Item 16E.

  

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

   142150  

Item 16F.

  

Change in Registrant’s Certifying Accountant

   142150  

Item 16G.

  

Corporate Governance

   143150  

Item 17.

  

Financial Statements

   145153  

Item 18.

  

Financial Statements

   145153  

Item 19.

  

Exhibits

   146153  
EX-1
EX-12.1
EX-12.2
EX-13.1
EX-13.2
EX-15


i

Basis of Presentation

Financial information included in this Annual Report is presented according to International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and IFRS as adopted by the European Union (EU) as of December 31, 2010.

2011.

Statements Regarding Competitive Position

Unless otherwise indicated, statements made in “Item 4. Information on the Company” referring to TOTAL’s competitive position are based on the Company’s estimates, and in some cases rely on a range of sources, including investment analysts’ reports, independent market studies and TOTAL’s internal assessments of market share based on publicly available information about the financial results and performance of market participants.

Additional Information

This Annual Report onForm 20-F reports information primarily regarding TOTAL’s business, and operations and financial information relating to the fiscal year ended December 31, 2010.2011. For more recent updates regarding TOTAL, you may read and copyinspect any reports, statements or other information TOTAL files with the United States Securities and Exchange Commission (“SEC”). All of TOTAL’s SEC filings made after December 31, 2001, are available to the public at the SEC Web site athttp://www.sec.gov and from certain commercial document retrieval services. See also “Item 10. Additional Information — Documents on Display”.


ii

CERTAIN TERMS

Unless the context indicates otherwise, the following terms have the meanings shown below:

“acreage’’

acreage”

The total area, expressed in acres, over which TOTAL has interests in exploration or production.

“ADRs’’

ADRs”

American Depositary Receipts evidencing ADSs.

“ADSs’’

ADSs”

American Depositary Shares representing the shares of TOTAL S.A.

“barrels’’

barrels”

Barrels of crude oil, natural gas liquids (NGL) or bitumen.

“Company’’

Company”

TOTAL S.A.

“condensates’’

condensates”

Condensates are a mixture of hydrocarbons that exist in a gaseous phase at original reservoir temperature and pressure, but that, when produced, exist in a liquid phase at surface temperature and pressure. Condensates are sometimes referred to as C5+.

“crude oil’’

oil”

Crude oil is a mixture of compounds (mainly pentanes and heavier hydrocarbons) that exists in a liquid phase at original reservoir temperature and pressure and remains liquid at atmospheric pressure and ambient temperature. “Crude oil” or “oil” are sometimes used as generic terms to designate crude oil plus natural gas liquids (NGL).

“Depositary’’

Depositary”

The Bank of New York Mellon.

“DepositaryAgreement’’

 Agreement”

The depositary agreement pursuant to which ADSs are issued, a copy of which is attached as Exhibit 1 to the registration statement onForm F-6 (Reg.No. 333-172005) filed with the SEC on February 1, 2011.

“Group’’

Group”

TOTAL S.A. and its subsidiaries and affiliates. The terms TOTAL and Group are used interchangeably.

“hydrocracker’’

hydrocracker”

A refinery unit which uses a catalyst and extraordinarily high pressure, in the presence of surplus hydrogen, to shorten molecules.

“liquids’’

liquids”

Liquids consist of crude oil, bitumen and natural gas liquids (NGL).

“LNG’’

LNG”

Liquefied natural gas.

“LPG’’

LPG”

Liquefied petroleum gas is a mixture of hydrocarbons, the principal components of which are propane and butane, in a gaseous state at atmospheric pressure, but which is liquefied under moderate pressure and ambient temperature

“NGL’’

NGL”

Natural gas liquids consist of condensates and liquefied petroleum gas (LPG).LPG.

“oil and gas”

Generic term which includes all hydrocarbons (e.g., crude oil, natural gas liquids (NGL), bitumen and natural gas).

“proved reserves’’reserves”

Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations, prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The full definition of “proved reserves” that we are required to follow in presenting such information in our financial results and elsewhere in reports we file with the SEC is found inRule 4-10 ofRegulation S-X under the U.S. Securities Act of 1933, as amended (including

iii

as amended by the SEC “Modernization of Oil and Gas Reporting” ReleaseNo. 33-8995 of December 31, 2008).


iii

“proved developed reserves’’

reserves”

Proved developed oil and gas reserves are proved reserves that can be expected to be recovered (i) through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and (ii) through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well. The full definition of “developed reserves” that we are required to follow in presenting such information in our financial results and elsewhere in reports we file with the SEC is found inRule 4-10 ofRegulation S-X under the U.S. Securities Act of 1933, as amended (including as amended by the SEC “Modernization of Oil and Gas Reporting” ReleaseNo. 33-8995 of December 31, 2008).

“provedundeveloped reserves’’

reserves”

Proved undeveloped oil and gas reserves are proved reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. The full definition of “undeveloped reserves” that we are required to follow in presenting such information in our financial results and elsewhere in reports we file with the SEC is found inRule 4-10 ofRegulation S-X under the U.S. Securities Act of 1933, as amended (including as amended by the SEC “Modernization of Oil and Gas Reporting” ReleaseNo. 33-8995 of December 31, 2008).

“steam cracker’’

cracker”

A petrochemical plant that turns naphtha and light hydrocarbons into ethylene, propylene, and other chemical raw materials.

“TOTAL’’

TOTAL”

TOTAL S.A. and its subsidiaries and affiliates. We use such term interchangeably with the term Group. When we refer to the parent holding company alone, we use the term TOTAL S.A. or the Company.

“trains’’

trains”

Facilities for converting, liquefying, storing and off-loading natural gas.

“ERMI’’

ERMI”

ERMI is an indicator intended to represent the refining margin after variable costs for a theoretical complex refinery located around Rotterdam in Northern Europe that processes a mix of crude oil and other inputs commonly supplied to this region to produce and market the main refined products at prevailing prices in the region.

“turnarounds’’

turnarounds”

Temporary shutdowns of facilities for maintenance, overhaul and upgrading.

ABBREVIATIONS

b

 barrel k  thousand

cf

 cubic feet M  million

boe

 barrel of oil equivalent B  billion

t

 metric ton W  watt

m3

 cubic meter GWh  gigawatt-hour

/d

 per day TWh  terawatt-hour

/y

 per year Wp  watt peak
  Btu  British thermal unit


iv

CONVERSION TABLE

1 acre

  = 0.405 hectares  

1 b

  = 42 U.S. gallons  

1 boe

  = 1 b of crude oil  = 5,447 cf of gas in 2011(a)
= 5,478 cf of gas in 2010(a)
  
  = 5,490 cf of gas in 2009
= 5,505 cf of gas in 2008

1 b/d of crude oil

  = approximately 50 t/y of crude oil  

1 Bm3/y

  = approximately 0.1 Bcf/d  

1 m3

  = 35.3147 cf  

1 kilometer

  = approximately 0.62 miles  

1 ton

  = 1 t  = 1,000 kilograms (approximately 2,205 pounds)

1 ton of oil

  = 1 t of oil  = approximately 7.5 b of oil (assuming a specific gravity of 37° API)

1 tMt of LNG

  = approximately 48 kcfMcf of gas  

1 Mt/y LNG

  = approximately 131 Mcf/d  

(a)
(a)Natural gas is converted to barrels of oil equivalent using a ratio of cubic feet of natural gas per one barrel. This ratio is based on the actual average equivalent energy content of TOTAL’s natural gas reserves during the applicable periods, and is subject to change. The tabular conversion rate is applicable to TOTAL’s natural gas reserves on a group-wide basis.


v

Cautionary Statement Concerning Forward-Looking Statements

TOTAL has made certain forward-looking statements in this document and in the documents referred to in, or incorporated by reference into, this Annual Report. Such statements are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of the management of TOTAL and on the information currently available to such management. Forward-looking statements include information concerning forecasts, projections, anticipated synergies, and other information concerning possible or assumed future results of TOTAL, and may be preceded by, followed by, or otherwise include the words “believes”, “expects”, “anticipates”, “intends”, “plans”, “targets”, “estimates” or similar expressions.

Forward-looking statements are not assurances of results or values. They involve risks, uncertainties and assumptions. TOTAL’s future results and share value may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results and values are beyond TOTAL’s ability to control or predict. Except for its ongoing obligations to disclose material information as required by applicable securities laws, TOTAL does not have any intention or obligation to update forward-looking statements after the distribution of this document, even if new information, future events or other circumstances have made them incorrect or misleading.

You should understand that various factors, certain of which are discussed elsewhere in this document and in the documents referred to in, or incorporated by reference into, this document, could affect the future results of TOTAL and could cause results to differ materially from those expressed in such forward-looking statements, including:

material adverse changes in general economic conditions or in the markets served by TOTAL, including changes in the prices of oil, natural gas, refined products, petrochemical products and other chemicals;

• material adverse changes in general economic conditions or in the markets served by TOTAL, including changes in the prices of oil, natural gas, refined products, petrochemical products and other chemicals;
• changes in currency exchange rates and currency devaluations;
• the success and the economic efficiency of oil and natural gas exploration, development and production programs, including, without limitation, those that are not controlledand/or operated by TOTAL;
• uncertainties about estimates of changes in proven and potential reserves and the capabilities of production facilities;
• uncertainties about the ability to control unit costs in exploration, production, refining and marketing (including refining margins) and chemicals;
• changes in the current capital expenditure plans of TOTAL;
• the ability of TOTAL to realize anticipated cost savings, synergies and operating efficiencies;
• the financial resources of competitors;
• changes in laws and regulations, including tax and environmental laws and industrial safety regulations;
• the quality of future opportunities that may be presented to or pursued by TOTAL;
• the ability to generate cash flow or obtain financing to fund growth and the cost of such financing and liquidity conditions in the capital markets generally;
• the ability to obtain governmental or regulatory approvals;
• the ability to respond to challenges in international markets, including political or economic conditions, including international armed conflict, and trade and regulatory matters (including actual or proposed sanctions on companies that conduct business in certain countries);
• the ability to complete and integrate appropriate acquisitions, strategic alliances and joint ventures;
• changes in the political environment that adversely affect exploration, production licenses and contractual rights or impose minimum drilling obligations, price controls, nationalization or expropriation, and regulation of refining and marketing, chemicals and power generating activities;
• the possibility that other unpredictable events such as labor disputes or industrial accidents will adversely affect the business of TOTAL; and
• the risk that TOTAL will inadequately hedge the price of crude oil or finished products.

changes in currency exchange rates and currency devaluations;

the success and the economic efficiency of oil and natural gas exploration, development and production programs, including, without limitation, those that are not controlled and/or operated by TOTAL;

uncertainties about estimates of changes in proven and potential reserves and the capabilities of production facilities;

uncertainties about the ability to control unit costs in exploration, production, refining and marketing (including refining margins) and chemicals;

changes in the current capital expenditure plans of TOTAL;

the ability of TOTAL to realize anticipated cost savings, synergies and operating efficiencies;

the financial resources of competitors;

changes in laws and regulations, including tax and environmental laws and industrial safety regulations;

the quality of future opportunities that may be presented to or pursued by TOTAL;

the ability to generate cash flow or obtain financing to fund growth and the cost of such financing and liquidity conditions in the capital markets generally;

the ability to obtain governmental or regulatory approvals;

the ability to respond to challenges in international markets, including political or economic conditions (including national and international armed conflict) and trade and regulatory matters (including actual or proposed sanctions on companies that conduct business in certain countries);

the ability to complete and integrate appropriate acquisitions, strategic alliances and joint ventures;

changes in the political environment that adversely affect exploration, production licenses and contractual rights or impose minimum drilling obligations, price controls, nationalization or expropriation, and regulation of refining and marketing, chemicals and power generating activities;

the possibility that other unpredictable events such as labor disputes or industrial accidents will adversely affect the business of TOTAL; and

the risk that TOTAL will inadequately hedge the price of crude oil or finished products.

For additional factors, you should read the information set forth under “Item 3. Risk Factors”, “Item 4. Information on the Company — Other Matters”, “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.


vi

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

SELECTED FINANCIAL DATA

The following table presents selected consolidated financial data for TOTAL on the basis of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and IFRS as adopted by the European Union for the years ended December 31, 2011, 2010, 2009, 2008 2007 and 2006.2007. The historical consolidated financial statements of TOTAL for these

periods, from which the financial data presented below for such periods are derived, have been audited by Ernst & Young Audit and KPMG S.A., independent registered public accounting firms, and the Company’s auditors. All such data should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included elsewhere herein.


1

SELECTED CONSOLIDATED FINANCIAL DATA
                     
(M€, except per share data) 2010  2009  2008  2007  2006 
INCOME STATEMENT DATA
                    
Revenues from sales  140,476   112,153   160,331   136,824   132,689 
Net income, Group share  10,571   8,447   10,590   13,181   11,768 
Earnings per share  4.73   3.79   4.74   5.84   5.13 
Fully diluted earnings per share  4.71   3.78   4.71   5.80   5.09 
CASH FLOW STATEMENT DATA(a)(b)
                    
Cash flow from operating activities  18,493   12,360   18,669   17,686   16,061 
Total expenditures  16,273   13,349   13,640   11,722   11,852 
BALANCE SHEET DATA(b)
                    
Total assets  143,718   127,753   118,310   113,541   105,223 
Non-current financial debt  20,783   19,437   16,191   14,876   14,174 
Minority interests  857   987   958   842   827 
Shareholders’ equity — Group share  60,414   52,552   48,992   44,858   40,321 
Common shares  5,874   5,871   5,930   5,989   6,064 
DIVIDENDS
                    
Dividend per share (euros)  €2.28(c)  €2.28   €2.28   €2.07   €1.87 
Dividend per share (dollars)  $3.02(c)(d)  $3.08   $3.01   $3.14   $2.46 
COMMON SHARES(e)
                    
Average number outstanding of common shares €2.50 par value (shares undiluted)  2,234,829,043   2,230,599,211   2,234,856,551   2,255,294,231   2,293,063,190 
Average number outstanding of common shares €2.50 par value (shares diluted)  2,244,494,576   2,237,292,199   2,246,658,542   2,274,384,984   2,312,304,652 

(M€ , except share and per share data) 2011  2010  2009  2008  2007 

INCOME STATEMENT DATA

     

Revenues from sales

  166,550    140,476    112,153    160,331    136,824  

Net income, Group share

  12,276    10,571    8,447    10,590    13,181  

Earnings per share

  5.46    4.73    3.79    4.74    5.84  

Fully diluted earnings per share

  5.44    4.71    3.78    4.71    5.80  

CASH FLOW STATEMENT DATA

     

Cash flow from operating activities

  19,536    18,493    12,360    18,669    17,686  

Total expenditures

  24,541    16,273    13,349    13,640    11,722  

BALANCE SHEET DATA

     

Total assets

  164,049    143,718    127,753    118,310    113,541  

Non-current financial debt

  22,557    20,783    19,437    16,191    14,876  

Non-controlling interests

  1,352    857    987    958    842  

Shareholders’ equity — Group share

  68,037    60,414    52,552    48,992    44,858  

Common shares

  5,909    5,874    5,871    5,930    5,989  

DIVIDENDS

     

Dividend per share (euros)

  €2.28(a)   €2.28    €2.28    €2.28    €2.07  

Dividend per share (dollars)

  $3.10(a)(b)   $3.15    $3.08    $3.01    $3.14  

COMMON SHARES(c)

     

Average number outstanding of common shares€2.50 par value (shares undiluted)

  2,247,479,529    2,234,829,043    2,230,599,211    2,234,856,551    2,255,294,231  

Average number outstanding of common shares€2.50 par value (shares diluted)

  2,256,951,403    2,244,494,576    2,237,292,199    2,246,658,542    2,274,384,984  

(a)
(a)See Consolidated Statement of Cash Flows included in the Consolidated Financial Statements.
(b)Comparative cash flow information for 2006 includes Arkema, which was spun off on May 12, 2006.
(c)Subject to approval by the shareholders’ meeting on May 13, 2011.11, 2012.
(d)(b)Estimated dividend in dollars includes the first quarterly interim dividend of $1.542$0.763 paid in November 2010September 2011 and the second quarterly interim dividend of $0.742 paid in December 2011, as well as the third quarterly interim dividend of€0.57 payable in March 2012 (ADR-related payment in April 2012) and the proposed final dividend of €1.14,€0.57 payable in June 2012 (ADR-related payment in July 2012), both converted at a rate of $1.30/$1.40/€.
(e)(c)The number of common shares shown has been used to calculate per share amounts.


2

EXCHANGE RATE INFORMATION

For information regarding the effects of currency fluctuations on TOTAL’s results, see “Item 5. Operating and Financial Review and Prospects”.

Most currency amounts in this Annual Report onForm 20-F are expressed in euros (“euros” or “€“€”) or in U.S. dollars (“dollars” or “$”). For the convenience of the reader, this Annual Report onForm 20-F presents certain translations into dollars of certain euro amounts.

The following table sets out the average dollar/euro exchange rates expressed in dollars per €1.00€1.00 for the years indicated, based on an average of the daily European Central Bank (“ECB”) reference exchange rate.(1) Such rates are used by TOTAL in preparation of its Consolidated Statement of Income and Consolidated Statement of Cash Flow in its Consolidated Financial Statements. No representation is made that the euro could have been converted into dollars at the rates shown or at any other rates for such periods or at such dates.

DOLLAR/EURO EXCHANGE RATES

Year  Average Rate 

2007

   1.3705  

2008

   1.4708  

2009

   1.3948  

2010

   1.3257  

2011

   1.3920  
     
Year Average Rate 
2006  1.2556 
2007  1.3705 
2008  1.4708 
2009  1.3948 
2010  1.3257 

The table below shows the high and low dollar/euro exchange rates for the three months ended December 31, 2010,2011, and for the first three months of 2011,2012, based on the daily ECB reference exchange rates published during the relevant month expressed in dollars per €1.00.

€1.00.

DOLLAR/EURO EXCHANGE RATES

         
Period High  Low 
October 2010  1.41   1.37 
November 2010  1.42   1.30 
December 2010  1.34   1.31 
January 2011  1.37   1.29 
February 2011  1.38   1.34 
March 2011(a)
  1.42   1.38 

Period  High   Low 

October 2011

   1.4160     1.3181  

November 2011

   1.3809     1.3229  

December 2011

   1.3511     1.2889  

January 2012

   1.3176     1.2669  

February 2012

   1.3454     1.2982  

March 2012(a)

   1.3312     1.3057  

(a)
(a)Through March 21.22, 2012.

The ECB reference exchange rate on March 21, 2011,22, 2012, for the dollar against the euro was $1.42/$1.3167/€.

 
(1)  For the period 2006 — 2010, the averages of the ECB reference exchange rates expressed in dollars per €1.00 on the last business day of each month during the relevant year are as follows: 2006 — 1.26; 2007 — 1.38; 2008 — 1.47; 2009 — 1.40; and 2010 — 1.32.


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(1)For the period 2007 — 2011, the averages of the ECB reference exchange rates expressed in dollars per€1.00 on the last business day of each month during the relevant year are as follows: 2007 — 1.38; 2008 — 1.47; 2009 — 1.40; 2010 — 1.32; and 2011 — 1.40.

RISK FACTORS

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The Group and its businesses are subject to various risks relating to changing competitive, economic, political, legal, social, industry, business and financial conditions. These conditions, along with TOTAL’s approaches to managing certain of these risks, are described below and discussed in greater detail elsewhere in this Annual Report, particularly under the headings “Item 4. Information on the Company — Other Matters”, “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.

A substantial or extended decline in oil or natural gas prices would have a material adverse effect on our results of operations.

Prices for oil and natural gas historically have fluctuated widely due to many factors over which we have no control. These factors include:

global and regional economic and political developments in resource-producing regions, particularly in the Middle East, Africa and South America;

global and regional supply and demand;

• global and regional economic and political developments in resource-producing regions, particularly in the Middle East, Africa and South America;
• global and regional supply and demand;
• the ability of the Organization of Petroleum Exporting Countries (OPEC) and other producing nations to influence global production levels and prices;
• prices of alternative fuels which affect our realized prices under our long-term gas sales contracts;
• governmental regulations and actions;
• global economic and financial market conditions;
• war or other conflicts;
• cost and availability of new technology;
• changes in demographics, including population growth rates and consumer preferences; and
• adverse weather conditions (such as hurricanes) that can disrupt supplies or interrupt operations of our facilities.

the ability of the Organization of Petroleum Exporting Countries (OPEC) and other producing nations to influence global production levels and prices;

prices of alternative fuels which affect our realized prices under our long-term gas sales contracts;

governmental regulations and actions;

global economic and financial market conditions;

war or other conflicts;

cost and availability of new technology;

changes in demographics, including population growth rates and consumer preferences; and

adverse weather conditions (such as hurricanes) that can disrupt supplies or interrupt operations of our facilities.

Substantial or extended declines in oil and natural gas prices would adversely affect our results of operations by reducing our profits. For the year 2011,2012, we estimate that a decrease of $1.00 per barrel in the average annual price of Brent crude would have the effect of reducing our annual adjusted net operating income from the Upstream segment by approximately €0.13€0.11 billion (calculated with a base case exchange rate of $1.30$1.40 per €1.00)€1.00). In addition to the adverse effect on revenues, margins and profitability

from any fall in oil and natural gas prices, a prolonged period of low prices or other indicators could lead to reviews for impairment of the Group’s oil and natural gas properties and could impact reserves. Such reviews would reflect management’s view of long-term oil and natural gas prices and could result in a charge for impairment that could have a significant effect on our results of operations in the period in which it occurs. Lower oil and natural gas prices over prolonged periods may also reduce the economic viability of projects planned or in development, causing us to cancel or postpone capital expansion projects, and may reduce liquidity, thereby potentially decreasing our ability to finance capital expenditures. If we are unable to follow through with capital expansion projects, our opportunities for future revenue and profitability growth would be reduced, which could materially impact our financial condition.

However, in a high oil and gas price environment, we can experience sharp increases in cost and fiscal take, and, under some production-sharing contracts, our entitlement to reserves could be reduced. Higher prices can also reduce demand for our products.

We face foreign exchange risks that could adversely affect our results of operations.

Our business faces foreign exchange risks because a large percentage of our revenues and cash receipts are denominated in dollars, the international currency of petroleum sales, while a significant portion of our operating expenses and income taxes accrue in euros and other currencies. Movements between the dollar and euro or other currencies may adversely affect our business by negatively impacting our booked revenues and income, and may also result in significant translation adjustments that impact our shareholders’ equity.
Our long-term profitability depends on cost effective discovery, acquisition and development of new reserves; if we are unsuccessful, our results of operations and financial condition would be materially and adversely affected.

A significant portion of our revenues and the majority of our operating income are derived from the sale of crude oil and natural gas which we extract from underground reserves discovered and developed as part of our Upstream business. In order for this business to continue to be profitable, we need to replace depleted reserves with new proved reserves. Furthermore, we need to accomplish such replacement in a manner that allows subsequent production to be economically viable. However, our ability to discover or acquire and develop new reserves successfully is uncertain and can be negatively affected by a number of factors, including:

unexpected drilling conditions, including pressure or irregularities in geological formations;

the risk of dry holes or failure to find commercial quantities of hydrocarbons;

equipment failures, fires, blow-outs or accidents;

our inability to develop new technologies that permit access to previously inaccessible fields;

 
• unexpected drilling conditions, including pressure or irregularities in geological formations;
• equipment failures or accidents;
• our inability to develop new technologies that permit access to previously inaccessible fields;
• adverse weather conditions;


4

• compliance with unanticipated governmental requirements;
• shortages or delays in the availability or delivery of appropriate equipment;
• industrial action; and
• problems with legal title.

adverse weather conditions;

compliance with both anticipated and unanticipated governmental requirements;

shortages or delays in the availability or delivery of appropriate equipment;

industrial action;

competition from publicly held and state-run oil and gas companies for the acquisition of assets and licenses;

increased taxes and royalties, including retroactive claims; and

problems with legal title.

Any of these factors could lead to cost overruns and impair our ability to make discoveries and acquisitions or complete a development project, or to make production economical. If we fail to discover and develop new reserves cost-effectively on an ongoing basis, our results of operations, including profits, and our financial condition, would be materially and adversely affected.

Our crude oil and natural gas reserve data are only estimates, and subsequent downward adjustments are possible. If actual production from such reserves is lower than current estimates indicate, our results of operations and financial condition would be negatively impacted.

Our proved reserves figures are estimates reflecting applicable reporting regulations as they may evolve. Proved reserves are those reserves which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible — from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations — prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. Reserves are estimated by teams of qualified, experienced and trained earth scientists,geoscientists, petroleum engineers and project engineers, who rigorously review and analyze in detail all available geosciences and engineering data (e.g., seismic, electrical logs, cores, fluids, pressures, flow rates, facilities parameters). This process involves making subjective judgments, including with respect to the estimate of hydrocarbons initially in place, initial production rates and recovery efficiency, based on available geological, technical and economic data. Consequently, estimates of reserves are not exact measurements and are subject to revision. In addition, they may be negatively impacted by a variety of

factors which are beyond our control and which could cause such estimates to be adjusted downward in the future, or cause our actual production to be lower than our currently reported proved reserves indicate. The main such factors include:

a decline in the price of oil or gas, making reserves no longer economically viable to exploit and therefore not classifiable as proved;

• a decline in the price of oil or gas, making reserves no longer economically viable to exploit and therefore not classifiable as proved;
• an increase in the price of oil or gas, which may reduce the reserves that we are entitled to under production sharing and risked service contracts;
• changes in tax rules and other government regulations that make reserves no longer economically viable to exploit; and
• the actual production performance of our reservoirs.

an increase in the price of oil or gas, which may reduce the reserves that we are entitled to under production sharing and risked service contracts and other contractual terms;

changes in tax rules and other government regulations that make reserves no longer economically viable to exploit; and

the actual production performance of our reservoirs.

Our reserves estimates may therefore require substantial downward revisions to the extent our subjective judgments prove not to have been conservative enough based on the available geosciences and engineering data, or our assumptions regarding factors or variables that are beyond our control prove to be incorrect over time. Any downward adjustment would indicate lower future production amounts, which could adversely affect our results of operations, including profits as well as our financial condition.

We have significant production and reserves located in politically, economically and socially unstable areas, where the likelihood of material disruption of our operations is relatively high.

A significant portion of our oil and gas production occurs in unstable regions around the world, most significantly Africa, but also the Middle East, Asia-Pacific and South America. Approximately 32%28%, 22%24%, 10% and 8%, respectively, of our 20102011 combined liquids and gas production came from these four regions. In recent years, a number of the countries in these regions have experienced varying degrees of one or more of the following: economic instability, political volatility, civil war, violent conflict and social unrest. In Africa, certain of the countries in which we have production have recently suffered from some of these conditions. conditions, including Nigeria, where we had in 2011 our second highest hydrocarbon production, and Libya.

The Middle East in general has recently suffered increased political volatility in connection with violent conflict and social unrest. A number of countries in South America where we have production and other facilities, including Argentina, Bolivia and Venezuela, have suffered from political or economic instability and social unrest and related

problems. In Asia-Pacific, Indonesia has suffered some of these conditions. Any of these conditions alone or in combination could disrupt our operations in any of these regions, causing substantial declines in production. Furthermore, in addition to current production, we are also exploring for


5

and developing new reserves in other regions of the world that are historically characterized by political, social and economic instability, such as the Caspian Sea region where we have a number of large projects currently underway. The occurrence and magnitude of incidents related to economic, social and political instability are unpredictable. It is possible that they could have a material adverse impact on our production and operations in the future.

We are exposed to risks regarding the safety and security of our operations. In addition, while our insurance coverage is in line with industry practice, we are not insured against all possible risks.

TOTAL engages in a broad scope of activities, which include drilling, oil and gas production, processing, transportation, refining and petrochemical activities, storage and distribution of petroleum products, and production of base chemical and specialty products, and involve a wide range of operational risks. Among these risks are those of explosion, fireexplosions, fires, accidents, equipment failures or leakage of toxic products as well as environmental risks related toor emissions andor discharges into the air, water or soil, and the management of waste.including related environmental risks. We also face risks, once production is discontinued, because our activities require environmental site remediation. In the transportation area, the type of risk depends not only on the hazardous nature of the products transported, but also on the transportation methods used (mainly pipelines, maritime, river-maritime, rail, road), the volumes involved, and the sensitivity of the regions through which the transport passes (quality of infrastructure, population density, environmental considerations).

Acts of terrorism against our plants and offices, pipelines, transportation or computer systems could severely disrupt businesses and operations and could cause harm to people.

Certain branches or activities face specific additional risks. In Exploration & Production, we face risks related to the physical characteristics of our oil or gas fields. These include the risks of eruptions of crude oil or of natural gas, discovery of hydrocarbon pockets with abnormal pressure, crumbling of well openings, leaks that can harm the environment and risks of fire or explosion. These events may cause injury or death, damage or destroy crude oil or natural gas wells as well as equipment and other property, lead to a disruption of activity or cause environmental damage. In addition, since exploration and production activities may take place on sites that are ecologically sensitive (tropical forest,(for example, in tropical forests or in a marine environment, etc.)environment), each site requires a

risk-based approach to avoid or minimize the impact on human health, flora and fauna, the ecosystem and biodiversity. In certain situations where TOTAL is not the operator, the Group may have reduced influence and control over third parties, which may limit its ability to manage and control these risks. TOTAL’s activities in the Chemicals segment and the Refining & Chemicals and Supply & Marketing divisionsegments also entail additional health, safety and environmental risks related to the overall life cycle of the products manufactured, as well as raw materials used in the manufacturing process, such as catalysts, additives and monomer feedstocks. These risks can arise from the intrinsic characteristics of the products involved (flammability, toxicity, or long-term environmental impacts such as greenhouse gas emissions), their use (including by customers), emissions and discharges resulting from their manufacturing process, and from recycling or disposing of materials and wastes at the end of their useful life.

If an event occurs leading to personal injury, death, property damage or discharge of hazardous materials into the environment, contractual

Contractual terms may provide for indemnification obligations, either by TOTAL in favor of third-parties or by third-parties for TOTAL’s benefit.benefit, if, notably, an event occurs leading to personal injury, death, property damage or discharge of hazardous materials into the environment. With respect to joint ventures the assets of which are operated by TOTAL, contractual terms generally provide that TOTAL assumes liability for damages caused by its gross negligence or willful misconduct. With respect to joint ventures in which TOTAL has an interest but that assets of which are operated by others, contractual terms generally provide that the operator assumes liability for damages caused by its gross negligence or willful misconduct. All other liabilities of any type of joint venture are generally assumed by the partners in proportion to their respective ownership interests. With respect to third party providers of goods and services, the amount and nature of liabilities assumed by the third party depends on the context and may be limited by contract. With respect to the Group’s customers, TOTAL seeks to ensure that its products meet applicable specifications and that TOTAL abides by all applicable consumer protection laws.

To manage these risks, we maintain worldwide third-party liability Failure to do so could lead to personal injury, environmental harm, regulatory violations and loss of customers, and could negatively impact our results of operations, financial condition and reputation.

While our insurance coverage foris in line with industry practice, we are not insured against all of our subsidiaries. In addition, we alsopossible risks.

We maintain insurance to protect us against the risk of damage to Group propertyand/or business disruption.disruption to our main refining and petrochemical sites. In addition, we also maintain worldwide third-party liability insurance

coverage for all of our subsidiaries. Our insurance and risk management policies are described under “Item 4. Other Matters — Insurance and risk management”. While we believe our insurance coverage is in line with industry practice and sufficient to cover normal risks in our operations, we are not insured against all possible risks. In the event of a major environmental disaster, for example, our liability may exceed the maximum coverage provided by our third-party liability insurance. The loss we could suffer in the event of such a disaster would depend on all the facts and circumstances and would be subject to a whole range of uncertainties, including legal uncertainty as to the scope of liability for consequential damages, which may include economic damage not directly connected to the disaster. The Group cannot guarantee that it will not suffer any uninsured loss and there can be no assurance,


6

particularly in the case of a major environmental disaster or industrial accident, that such loss would not have a material adverse effect on the Group.

We are subject to stringent environmental, health and safety laws in numerous jurisdictions around the world and may incur material costs to comply with these laws and regulations.

Our workforce and the public are exposed to risks inherent to our operations that potentially could lead to injuries, loss of life or environmental damage and could result in regulatory action, legal liability and damage to our reputation.

We incur, and expect to continue to incur, substantial capital and operating expenditures to comply with increasingly complex laws and regulations covering the protection of the natural environment and the promotion of worker health and safety, including:

costs to prevent, control, eliminate or reduce certain types of air and water emissions, including those costs incurred in connection with government action to address climate change;

• costs to prevent, control, eliminate or reduce certain types of air and water emissions, including those costs incurred in connection with government action to address climate change;
• remedial measures related to environmental contamination or accidents at various sites, including those owned by third parties;
• compensation of persons claiming damages caused by our activities or accidents; and
• costs in connection with the decommissioning of drilling platforms and other facilities.

remedial measures related to environmental contamination or accidents at various sites, including those owned by third parties;

In addition, growing public concerns

compensation of persons claiming damages caused by our activities or accidents; and

costs in connection with the EUdecommissioning of drilling platforms and globally that rising greenhouse gas emissions and climate change may significantly affect the environment and society could adversely affect our businesses, including by the addition of stricter regulations that increase our operating costs, affect product sales and reduce profitability.other facilities.

If our established financial reserves prove inadequate, environmental costs could have a material effect on our results of operations and our financial position. Furthermore, in the countries where we operate or expect to operate in the near future, new laws and regulations, the

imposition of tougher license requirements, increasingly strict enforcement or new interpretations of existing laws and regulations or the discovery of previously unknown contamination may also cause us to incur material costs resulting from actions taken to comply with such laws and regulations, including:

modifying operations;

• modifying operations;
• installing pollution control equipment;
• implementing additional safety measures; and
• performing siteclean-ups.

installing pollution control equipment;

implementing additional safety measures; and

performing site clean-ups.

As a further result of any new laws and regulations or other factors, we may also have to curtail, modify or cease certain operations or implement temporary shutdowns of facilities, which could diminish our productivity and materially and adversely impact our results of operations, including profits.

Security threats require continuous assessment

Regulatory measures designed to address climate change and response measures. Actsphysical effects attributed to climate change may adversely affect our businesses.

Growing public concerns in the EU and globally that rising greenhouse gas emissions and climate change may significantly affect the environment and society could adversely affect our businesses, including by the addition of terrorism againststricter regulations that increase our plantsoperating costs, affect product sales and offices, pipelines, transportation or computer systems could severely disrupt businessesreduce profitability. Furthermore, our business operates in varied locales where the potential physical impacts of climate change, including changes in weather patterns, are highly uncertain and operations and could cause harm to people.

may adversely impact the results of our operations.

Our operations throughout the developing world are subject to intervention by various governments, which could have an adverse effect on our results of operations.

We have significant exploration and production, and in some cases refining, marketing or chemicals operations, in developing countries whose governmental and regulatory framework is subject to unexpected change and where the enforcement of contractual rights is uncertain. In addition, our exploration and production activity in such countries is often done in conjunction with state-owned entities, for example as part of a joint venture, where the state has a significant degree of control. In recent years, in various regions globally, we have seen governments and state-owned enterprises exercising greater authority and imposing more stringent conditions on companies pursuing exploration and production activities in their respective countries, increasing the costs and uncertainties of our business operations, which is a trend we expect to

continue. Potential increasing intervention by governments in such countries can take a wide variety of forms, including:

the award or denial of exploration and production interests;

• the award or denial of exploration and production interests;
• 

the imposition of specific drilling obligations;

• priceand/or production quota controls;
• nationalization or expropriation of our assets;
• unilateral cancellation or modification of our license or contract rights;
• increases in taxes and royalties, including retroactive claims;
• the establishment of production and export limits;
• the renegotiation of contracts;
• payment delays; and
• currency exchange restrictions or currency devaluation.


7

price and/or production quota controls;

nationalization or expropriation of our assets;

unilateral cancellation or modification of our license or contract rights;

increases in taxes and royalties, including retroactive claims;

the establishment of production and export limits;

the renegotiation of contracts;

payment delays; and

currency exchange restrictions or currency devaluation.

Imposition of any of these factors by a host government in a developing country where we have substantial operations, including exploration, could cause us to incur material costs or cause our production to decrease, potentially having a material adverse effect on our results of operations, including profits.

We face foreign exchange risks that could adversely affect our results of operations.

Our business faces foreign exchange risks because a large percentage of our revenues and cash receipts are denominated in dollars, the international currency of petroleum sales, while a significant portion of our operating expenses and income taxes accrue in euros and other currencies. Movements between the dollar and euro or other currencies may adversely affect our business by negatively impacting our booked revenues and income, and may also result in significant translation adjustments that impact our shareholders’ equity.

Ethical misconduct or breaches of applicable laws by our employees could expose us to criminal and civil penalties and be damaging to our reputation and shareholder value.

Our Code of Conduct, which applies to all of our employees, defines our commitment to integrity, compliance with all applicable legal requirements, high ethical standards and the behaviors and actions we expect of our businesses and people wherever we operate. Ethical misconduct or non-compliance with applicable laws and regulations, including non-compliance with anti-bribery, anticorruption and other applicable laws, could expose TOTAL and our employees to criminal and civil penalties

and could be damaging to our reputation and shareholder value.

Disruption of our critical IT services or breaches of information security could adversely affect our operations.

Our businesses depend heavily on the reliability and security of our information technology (“IT”) systems. If the integrity of our IT systems were compromised due to, for example, technical failure or cyber attack, our business operations and assets could sustain serious damage, material intellectual property could be divulged and, in some cases, personal injury, environmental harm and regulatory violations could occur.

We have activities in certain countries which are subject to U.S. and EU sanctions and our activities in Iran and Syria could lead to sanctions under relevant U.S. and EU legislation.

The United States and the European Union (“EU”) have adopted legal restrictions with respect to certain activities in Cuba, Iran, Sudan and Syria, and the U.S. Department of State has identified these countries as state sponsors of terrorism. We currently have investments in Iran and, to a lesser extent, Syria Myanmar, Sudan and Cuba. U.S. legislation and regulations currently impose economic sanctions on these countries.

In 1996,

With respect to Iran, the United States adopted legislation in 1996 implementing sanctions againstnon-U.S. companies doing business in Iran and Libya (the Iran and Libya Sanctions Act, referred to as “ILSA”), which in 2006 was amended to concern only business in Iran (then renamed the Iran Sanctions Act, referred to as “ISA”).

Pursuant to this statute, the President of the United States is authorized to initiate an investigation into the activities ofnon-U.S. companies in Iran and the possible imposition of sanctions (from a list that includes denial of financing by the U.S. Export-Import Bank, limitations on the amount of loans or credits available from U.S. financial institutions and prohibition of U.S. federal procurements from sanctioned persons) against persons found, in particular, to have knowingly made investments of $20 million or more in any12-month period in the petroleum sector in Iran. In May 1998, the U.S. government waived the application of sanctions for TOTAL’s investment in the South Pars gas field. This waiver, which has not been modified since it was granted, does not address TOTAL’s other activities in Iran, although TOTAL has not been notified of any related sanctions.

In November 1996, the Council of the European Union adopted regulations which prohibit TOTAL from complying with any requirement or prohibition based on or resulting

directly or indirectly from certain enumerated legislation, including ILSA (now ISA). It also prohibits TOTAL from having its waiver for South Pars extended to other activities.

In each of the years since the passage of ILSA and until 2007, TOTAL made investments in Iran in excess of $20 million (excluding the investments made as part of the development of South Pars). Since 2008, TOTAL’s position has consisted essentially in being reimbursed for its past investments as part of buyback contracts signed between 1995 and 1999 with respect to permits on which the Group is no longer the operator. In 2010, TOTAL’s2011, TOTAL had no production in Iran represented less than 0.1% of the Group’s worldwide production.

Iran.

ISA was amended in July 2010 by the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (“CISADA”), which expanded the scope of ISA and restricted the President’s ability to grant waivers. In addition to sanctionable investments in Iran’s petroleum sector, parties may now be sanctioned for any transaction exceeding $1 million or series of transactions exceeding $5 million in any12-month period for knowingly providing to Iran refined petroleum products, and for knowingly providing to Iran goods, services, technology, information or support that could directly and significantly either (i) facilitate the maintenance or expansion of Iran’s domestic production of refined petroleum products, or (ii) contribute to the enhancement of Iran’s ability to import refined petroleum products. The sanctions to be imposed against violating firmsparties generally prohibit transactions in foreign exchange by the sanctioned company,party, prohibit any transfers of credit or payments between, by, through or to any financial institution to the extent that such transfers or payments involve any interest of the sanctioned company,party, and require blocking of any property of the sanctioned companyparty that is subject to the jurisdiction of the United States. Investments in the petroleum sector commenced prior to the adoption of CISADA appear to remain subject to thepre-amended version of ISA. The new sanctions added by CISADA would be available with respect to new investments in the petroleum sector or any other sanctionable activity occurring on or after July 1, 2010. Prior to CISADA’s enactment, TOTAL discontinued now-prohibitedprohibited sales under ISA, as amended by CISADA, of refined products to Iran.

On September 30, 2010, the U.S. State Department announced that the U.S. government, pursuant to the “Special Rule” provision of ISA added by CISADA that allows it to avoid making a determination of sanctionability under ISA with respect to any party that provides certain assurances, would not make such a determination with respect to TOTAL. The U.S. State Department further

indicated at that time that, as long as TOTAL acts in accordance with its commitments, TOTAL will not be regarded as a company of concern for its past Iran-related activities.


8

On November 21, 2011, President Obama issued Executive Order 13590, which authorized sanctions that are similar to those available under ISA for knowingly, on or after November 21, 2011, selling, leasing, or providing to Iran goods, services, technology, or support that (i) has a fair market value of $1 million or more or that, during a 12-month period, has an aggregate fair market value of $5 million or more, and that could directly and significantly contribute to the maintenance or enhancement of Iran’s ability to develop petroleum resources located in Iran, or (ii) has a fair market value of $250,000 or more or that, during a 12-month period, has an aggregate fair market value of $1 million or more, and that could directly and significantly contribute to the maintenance or expansion of Iran’s domestic production of petrochemical products. TOTAL does not conduct activities in Iran that could be sanctionable under Executive Order 13590, and there is no provision in Executive Order 13590 that modifies the aforementioned “Special Rule”. In addition, the U.S. State Department has published guidance that states the completion of existing contracts is not sanctionable under Executive Order 13590.

France and the European UnionEU have adopted measures, based on United Nations Security Council resolutions, which restrict the movement of certain individuals and goods to or from Iran as well as certain financial transactions with Iran, in each case when such individuals, goods or transactions are related to nuclear proliferation and weapons activities or likely to contribute to their development. In July and October 2010, the European Union adopted new restrictive measures regarding Iran (the “EU Measures”).Iran. Among other things, the supply of key equipment and technology in the following sectors of the oil and gas industry in Iran are prohibited: refining, liquefied natural gas, exploration and production. The prohibition extends to technical assistance, training and financial assistance in connection with such items. Extension of loans or credit to, acquisition of shares in, entry into joint ventures with or other participation in enterprises in Iran (or Iranian-owned enterprises outside of Iran) engaged in any of the targeted sectors also is prohibited. Moreover, with respect to restrictions on transfers of funds and on financial services, any transfer of at least €40,000€40,000 or equivalent to an Iranian individual or entity shall require a prior authorization of the competent authorities of the EU Member States.

On January 23, 2012, the Council of the European Union prohibited the purchase, import and transport of Iranian oil

 

and petroleum and petrochemical products by European persons and by entities constituted under the laws of an EU Member State. Prior to that date, TOTAL had ceased these now-prohibited activities.

TOTAL continues to closely monitor legislative and other developments in France, the European UnionEU and the United States in order to determine whether its limited activities in Iran, Syria and other sanctioned or potentially sanctioned jurisdictions could subject it to the application of sanctions. However, theThe Group cannot assure that current or future regulations or developments regarding Iran will not have a negative impact on its business or reputation.

The United States also imposes sanctions based on

With respect to Syria, the United Nations Security Council resolutions described above,EU adopted measures in May 2011 with criminal and financial penalties that prohibit the supply of certain equipment to Syria, as well as broadcertain financial and comprehensive economicasset transactions with respect to a list of named individuals and entities. These measures apply to European persons and to entities constituted under the laws of an EU Member State. In September 2011, the EU adopted further measures, including, notably, a prohibition on the purchase, import or transportation from Syria of crude oil and petroleum products. Since early September 2011, the Group ceased to purchase hydrocarbons from Syria. On December 1, 2011, the EU extended sanctions which are administrated byagainst, among others, three state-owned Syrian oil firms, including General Petroleum Corporation, TOTAL’s co-contracting partner in PSA 1988 (Deir Es Zor licence) and the Tabiyeh contract. TOTAL has ceased its activities that contribute to oil and gas production in Syria.

The U.S. Treasury Department’s Office of Foreign Assets Control (referred to as “OFAC”). administers and enforces broad and comprehensive economic sanctions programs, as well as sanctions that are based on the United Nations Security Council resolutions referred to above and that target individuals engaged in terrorism or weapons proliferation in Iran, using the blocking of assets and trade restrictions. The activities that are restricted depend on the sanctions program and targeted country or parties, and

civil and/or criminal penalties, imposed on a per transaction basis, can be substantial. These OFAC sanctions generally apply to U.S. persons and activities taking place in the United States or that are otherwise subject to U.S. jurisdiction. Since August 16, 2010, transactions between Iranian entities andnon-U.S. financial institutions holding U.S. bank accounts in the United States have been subject to OFAC restrictions. Sanctions administered by OFAC target, among others, Cuba, Iran, Myanmar (Burma), Sudan and Syria. TOTAL does not believe that these sanctions are applicable to any of its activities in these countries.

the OFAC-targeted countries and, since the independence of the Republic of South Sudan on July 9, 2011, TOTAL is no longer present in Sudan.

On December 8, 2011, OFAC amended the Sudanese Sanctions Regulations with the publication of two general licenses that authorize all activities and transactions relating to the petroleum and petrochemical industries in the Republic of South Sudan and related financial transactions, and the transshipment of goods, technology and services through Sudan to or from the Republic of South Sudan and related financial transactions.

In addition, many U.S. states have adopted legislation requiring state pension funds to divest themselves of securities in any company with active business operations in Iran or Sudan.Sudan, and state contracts not to be awarded to such companies. State insurance regulators have adopted similar initiatives relating to investments by insurance companies in companies doing business with the Iranian oil and gas, nuclear, and defense sectors. TOTAL has no business operations in Sudan and, to date, has not made any significant investments or industrial investments there. The Genocide Intervention Network (formerly known as Sudan Divestment Task Force) report states that TOTAL should be regarded as “inactive” in Sudan by the U.S. states that have adopted such divestment legislation. CISADA and the Sudan Accountability and Divestment Act, which was adopted by the U.S. Congress on December 31, 2007, supportsupports these state legislative initiatives. If TOTAL’s operations in Iran or Sudan were determined to fall within the prohibited scope of these laws, and TOTAL were not to qualify for any available exemptions, certain U.S. institutions holding interests in TOTAL may be required to sell their interests. If significant, sales of securities resulting from such lawsand/or regulatory initiatives could have an adverse effect on the prices of TOTAL’s securities.

For more information on TOTAL’s presence in Cuba, Iran, Sudan and Syria, see “Item 4. Other Matters — Business Activities in Cuba, Iran, Sudan and Syria”.

 

ITEM 4. INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT

TOTAL S.A., a Frenchsociété anonyme(limited (limited company) incorporated in France on March 28, 1924, together with its subsidiaries and affiliates, is the fifth largest publicly-traded integrated international oil and gas company in the world.world(1).

With operations in more than 130 countries, TOTAL has activities in every sector of the oil industry, includingindustry: in the Upstreamupstream (oil and gas exploration, development and production, LNG)liquefied natural gas) and Downstreamdownstream (refining, petrochemicals, specialty chemicals, marketing and the

(1)Based on market capitalization (in dollars) as of December 31, 2011.

trading and shipping of crude oil and petroleum products) segments.

TOTAL also has operations in Base Chemicals (petrochemicals and fertilizers) and Specialty Chemicals, mainly for the industrial market.. In addition, TOTAL has interestsequity stakes in coal mines and operates in the coal mining and power generation and renewable energy sectors.
(1)  Based on market capitalization (in dollars) as of December 31, 2010.


9

TOTAL began its Upstream operations in the Middle East in 1924. Since that time, the Company has grown and expanded its operations worldwide. Early inIn early 1999, the Company acquired control of PetroFina S.A. (hereafter referred to as “PetroFina” or “Fina”) and in early 2000, the Company acquired control of Elf Aquitaine S.A. (hereafter referred to as “Elf Aquitaine” or “Elf”).

The Company’s corporate name is TOTAL S.A. Its registered office is 2, place Jean Millier, La Défense 6, 92400 Courbevoie, France. Its telephone number is +33 (0)1 47 44 45 46.

TOTAL S.A. is registered in France at the Nanterre Trade Register under the registration number 542 051 180. The length of the life of the Company is 99 years from March 22, 2000, unless it is dissolved or extended prior to such date.

 
TOTAL S.A. is registered in France with the Nanterre Trade Register under the registration number 542 051 180.

BUSINESS OVERVIEW

TOTAL’s worldwide operations arein 2011 were conducted through three business segments: Upstream, Downstream, and Chemicals. The table below gives

information on the geographic breakdown of TOTAL’s activities and is taken from Note 5 to the Consolidated Financial Statements included elsewhere herein.

                         
     Rest of
  North
          
(M€) France  Europe  America  Africa  Rest of world  Total 
2010
                        
Non-Group sales(a)
  36,820   72,636   12,432   12,561   24,820   159,269 
Property, plant and equipment, intangible assets, net  5,666   14,568   9,584   20,166   13,897   63,881 
Capital expenditures  1,062   2,629   3,626   4,855   4,101   16,273 
                         
2009
                        
Non-Group sales(a)
  32,437   60,140   9,515   9,808   19,427   131,327 
Property, plant and equipment, intangible assets, net  6,973   15,218   8,112   17,312   11,489   59,104 
Capital expenditures  1,189   2,502   1,739   4,651   3,268   13,349 
                         
2008
                        
Non-Group sales(a)
  43,616   82,761   14,002   12,482   27,115   179,976 
Property, plant and equipment, intangible assets, net  7,260   13,485   5,182   15,460   10,096   51,483 
Capital expenditures  1,997   2,962   1,255   4,500   2,926   13,640 
                         

 

(M€)  France   Rest of
Europe		   North
America		   Africa   Rest of
world		   Total 

2011

            

Non-Group sales(a)

   42,626     81,453     15,917     15,077     29,620     184,693  

Property, plant and equipment, intangible assets, net

   5,637     15,576     14,518     23,546     17,593     76,870  

Capital expenditures

   1,530     3,802     5,245     5,264     8,700     24,541  

2010

            

Non-Group sales(a)

   36,820     72,636     12,432     12,561     24,820     159,269  

Property, plant and equipment, intangible assets, net

   5,666     14,568     9,584     20,166     13,897     63,881  

Capital expenditures

   1,062     2,629     3,626     4,855     4,101     16,273  

2009

            

Non-Group sales(a)

   32,437     60,140     9,515     9,808     19,427     131,327  

Property, plant and equipment, intangible assets, net

   6,973     15,218     8,112     17,312     11,489     59,104  

Capital expenditures

   1,189     2,502     1,739     4,651     3,268     13,349  

(a)
(a)Non-Group sales from continuing operations.

UPSTREAM

Upstream

TOTAL’s Upstream segment includes the Exploration & Production and Gas & Power divisions. The Group has exploration and production activities in more than forty countries and produces oil or gas in approximately thirty countries. The Group’s Gas & Power division conducts

activities downstream from production related to natural gas, liquefied natural gas (LNG) and liquefied petroleum gas (LPG), as well as power generation and trading, and other activities.

 

Exploration & Production

Exploration and development

TOTAL’s Upstream segment aims at continuing to combine long-term growth and profitability at the level of the best in the industry.

TOTAL evaluates exploration opportunities based on a variety of geological, technical, political and economic factors (including taxes and license terms), and on projected oil and gas prices. Discoveries and extensions of existing fields accounted for approximately 46%76% of the 2,4452,037 Mboe added to the Upstream segment’s proved reserves during the three-year period ended December 31, 2010

2011 (before deducting production and sales of reserves in place and adding any acquisitions of reserves in place during this period). The remaining 54%24% comes from revisions of previous estimates. The level of revisions during this three year period was significantly impacted by the effect of successive increases of the reference oil price (from $36.55/b at the end of 2008 to $110.96/b in 2011 for Brent crude) which induced a substantial negative revision.

In 2011, the exploration investments of consolidated subsidiaries amounted to€1,629 million (including exploration bonuses included in the unproved property

 

acquisition costs). Exploration investments were made primarily in Norway, the United Kingdom, Angola, Brazil, Azerbaijan, Indonesia, Brunei, Kenya, French Guiana and Nigeria. In 2010, the exploration investments of consolidated subsidiaries amounted to €1,472€1,472 million (comprising(including exploration bonuses included in the unproved property acquisition costs). The main exploration investments were made in Angola, Norway, Brazil, the United Kingdom, the United States, Indonesia, Nigeria and Brunei. In 2009, the


10

exploration investments of consolidated subsidiaries amounted to €1,486€1,486 million (comprising(including exploration bonuses included in the unproved property acquisition costs). The main exploration investments were made notably in the United States, Angola, the United Kingdom, Norway, Libya, Nigeria and the Republic of the Congo. In 2008, exploration investments of consolidated subsidiaries amounted to €1,243 million (comprising exploration bonuses included in the unproved property acquisition costs) notably in Angola, Nigeria, Norway, the United Kingdom, Australia, the United States, Libya, Brunei, Gabon, Cameroon, Indonesia, China, the Republic of the Congo and Canada.

The Group’s consolidated Exploration & Production subsidiaries’ development investments amounted to €8€10 billion in 2011, primarily in Angola, Nigeria, Norway, Kazakhstan, the United Kingdom, Australia, Canada, Gabon, Indonesia, the Republic of the Congo, the United States and Thailand. The Group’s consolidated Exploration & Production subsidiaries’ development investments amounted to€8 billion in 2010, primarily in Angola, Nigeria, Kazakhstan, Norway, Indonesia, the Republic of the Congo, the United Kingdom, the United States, Canada, Thailand, Gabon and Australia. The Group’s consolidated Exploration & Production subsidiaries’In 2009, development investments amounted to nearly €8€8 billion, in 2009, primarilypredominantly in Angola, Nigeria, Norway, Kazakhstan, Indonesia, the Republic of the Congo, the United Kingdom, the United States, Gabon, Canada, Thailand, Russia and Qatar. In 2008, development investments amounted to €7 billion, predominantly in Angola, Nigeria, Norway, Kazakhstan, Indonesia, the Republic of the Congo, the United Kingdom, Gabon, Canada, the United States, and Qatar.

Reserves

The definitions used for proved, proved developed and proved undeveloped oil and gas reserves are in accordance with the United States Securities & Exchange Commission (SEC)(“SEC”) Rule 4-10 ofRegulation S-X as amended by the SEC Modernization of Oil and Gas Reporting release issued on December 31, 2008. Proved reserves are estimated using geological and engineering data to determine with reasonable certainty whether the crude oil or natural gas in known reservoirs is recoverable under existing regulatory, economic and operating conditions.

TOTAL’s oil and gas reserves are consolidated annually, taking into account, among other factors, levels of production, field reassessment,reassessments, additional reserves from discoveries and acquisitions, disposal of reserves and other economic factors. Unless otherwise indicated, any reference to TOTAL’s proved reserves, proved developed reserves, proved undeveloped reserves and production reflects the Group’s entire share of such reserves or such production. TOTAL’s worldwide proved reserves include the proved reserves of its consolidated subsidiaries as well as its

proportionate share of the proved reserves of equity affiliates and of two companies accounted for under the cost method.affiliates. For further information concerning changes in TOTAL’s proved reserves for the years ended December 31, 2011, 2010 2009 and 2008,2009, see “Supplemental Oil and Gas Information (Unaudited)”.

The reserves estimation process involves making subjective judgments. Consequently, estimates of reserves are not exact measurements and are subject to revision under well-established control procedures.

The reserves booking process requires, among other things:

internal peer reviews of technical evaluations to ensure that the SEC definitions and guidance are followed; and

that management makes significant funding commitments towards the development of the reserves prior to booking.

• internal peer reviews of technical evaluations to ensure that the SEC definitions and guidance are followed; and
• that management makes significant funding commitments towards the development of the reserves prior to booking.

For further information regarding the preparation of reserves estimates, see “Supplemental Oil and Gas Information (Unaudited)”.

Proved reserves

In accordance with the amendedRule 4-10 ofRegulation S-X, proved reserves for the years ended on or after December 31, 2009, are calculated using a12-month average price determined as the unweighted arithmetic average of thefirst-day-of-the-month price for each month of the relevant year unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. The reference prices for 2011, 2010 and 2009 were, respectively, $110.96/b, $79.02/b and $59.91/b for Brent crude. The

As of December 31, 2011, TOTAL’s combined proved reserves forof oil and gas were 11,423 Mboe (53% of which were proved developed reserves). Liquids (crude oil, natural gas liquids and bitumen) represented approximately 51% of these reserves and natural gas the year ended December 31, 2008remaining 49%. These reserves were calculated using December 31 price ($36.55/b)located in Europe (mainly in Italy, Norway and the United Kingdom), in Africa (mainly in Angola, Gabon, Libya, Nigeria and the Republic of the Congo), in the Americas (mainly in Canada, the United States, Argentina and Venezuela), in the Middle East (mainly in Qatar, the United Arab Emirates and Yemen), and in Asia (mainly in Australia, Indonesia, Kazakhstan and Russia).

As of December 31, 2010, TOTAL’s combined proved reserves of oil and gas were 10,695 Mboe (53% of which were proved developed reserves). Liquids (crude oil, natural gas liquids and bitumen) represented approximately 56% of these reserves and natural gas the remaining 44%. These reserves were located in Europe (mainly in Norway

and the United Kingdom), in Africa (mainly in Angola, Gabon, Libya, Nigeria and the Republic of the Congo), in the Americas (mainly in Canada, the United States, Argentina and Venezuela), in the Middle East (mainly in Qatar, the United Arab Emirates and Yemen), and in Asia (mainly in Indonesia and Kazakhstan).

As of December 31, 2009, TOTAL’s combined proved reserves of oil and gas were 10,483 Mboe (56% of which were proved developed reserves). Liquids (crude oil, natural gas liquids and bitumen) represented approximately 54% of these reserves and natural gas the


11

remaining 46%. These reserves were located in Europe (mainly in Norway and the United Kingdom), in Africa (mainly in Angola, Gabon, Libya, Nigeria and the Republic of the Congo), in the Americas (mainly in Canada, the United States, Argentina and Venezuela), in the Middle East (mainly in Oman, Qatar, the United Arab Emirates and Yemen), and in Asia (mainly in Indonesia and Kazakhstan).
As of December 31, 2008, TOTAL’s combined proved reserves of oil and gas were 10,458 Mboe (50% of which were proved developed reserves). Liquids represented approximately 54% of these reserves and natural gas the remaining 46%. These reserves were located in Europe (mainly in Norway and the United Kingdom), in Africa (mainly in Algeria, Angola, Gabon, Libya, Nigeria and the Republic of the Congo), in the Americas (mainly in Canada, Bolivia, Argentina, and Venezuela), in the Middle East (mainly in Oman, Qatar, the United Arab Emirates, and Yemen), and in Asia (mainly in Indonesia and Kazakhstan).

Sensitivity to oil and gas prices

Changes in the price used as a reference for the proved reserves estimation result in non-proportionate inverse changes in proved reserves associated with production sharing and risked service contracts (which together represent approximately 30%26% of TOTAL’s reserves as of December 31, 2010)2011). Under such contracts, TOTAL is entitled to a portion of the production, the sale of which is meant to cover expenses incurred by the Group. As oil prices increase, fewer barrels are necessary to cover the same amount of expenses. Moreover, the number of barrels retrievable under these contracts may vary according to criteria such as cumulative production, the rate of return on investment or the income-cumulative expenses ratio. This decrease is partly offset by an extension of the duration over which fields can be produced economically. However, the increase in reserves due to extended field life resulting from higher prices is generally less than the decrease in reserves under production sharing or risked service contracts due to such higher prices. As a result, higher prices lead to a decrease in TOTAL’s reserves.

Furthermore, changes in the price used as a reference for the proved reserves estimation impact the volume of royalties in Canada and thus TOTAL’s share of proved reserves.

Production

For the full year 2010,2011, average daily oil and gas production was 2,3782,346 kboe/d compared to 2,2812,378 kboe/d in 2009.

2010.

Liquids accounted for approximately 56%52% and natural gas accounted for approximately 44%48% of TOTAL’s combined liquids and natural gas production in 2010.2011.

The table on the next page sets forth by geographic area TOTAL’s average daily production of liquids and natural gas for each of the last three years.

Consistent with industry practice, TOTAL often holds a percentage interest in its fields rather than a 100% interest, with the balance being held by joint venture partners (which may include other international oil companies, state-owned oil companies or government entities). TOTAL frequently acts as operator (the party responsible for technical production) on acreage in which it holds an interest. See the table “Presentation of production activities by geographic area”region” on the following pages for a description of TOTAL’s producing assets.

As in 20092010 and 2008,2009, substantially all of the liquids production from TOTAL’s Upstream segment in 20102011 was marketed by the Trading & Shipping division of TOTAL’s Downstream segment. See the table “— Business Overview — Trading & Shipping — SupplyTrading division’s supply and sales of crude oil”.

The majority of TOTAL’s natural gas production is sold under long-term contracts. However, its North American production, and to some extentpart of its production from the United Kingdom, Norway and Argentina, is sold on the spot market. The long-term contracts under which TOTAL sells its natural gas usually provide for a price related to, among other factors, average crude oil and other petroleum product prices, as well as, in some cases, a cost-of-living index. Though the price of natural gas tends to fluctuate in line with crude oil prices, a slight delay may occur before changes in crude oil prices are reflected in long-term natural gas prices. Due to the interaction between the contract price of natural gas and crude oil prices, contract prices are not usually affected by short-term market fluctuations in the spot price of natural gas.

Some of TOTAL’s long-term contracts, notably in Argentina, Indonesia, Nigeria, Norway, Qatar and Qatar,Russia, specify the delivery of quantities of natural gas that may or may not be fixed and determinable. Such delivery commitments vary substantially, both in duration and in scope, from contract to contract throughout the world. For example, in some cases, contracts require delivery of natural gas on an as-needed basis, and, in other cases, contracts call for the delivery of varied amounts of natural gas over different periods of time. Nevertheless, TOTAL estimates the fixed and determinable quantity of gas to be delivered over the period2011-2013 2012-2014 to be 3,6654,051 Bcf. The Group expects to satisfy most of these obligations through the production of its proved reserves of natural gas, with, if needed, additional sourcing from spot market purchases. See “Supplemental Oil and Gas Information (Unaudited)”.


12

PRODUCTION BY GEOGRAPHIC AREAREGION
                                       
  2010   2009   2008 
     Natural
         Natural
         Natural
    
  Liquids
  gas
  Total
   Liquids
  gas
  Total
   Liquids
  gas
  Total
 
  kb/d  Mcf/d  kboe/d   kb/d  Mcf/d  kboe/d   kb/d  Mcf/d  kboe/d 
Africa
  616   712   756    632   599   749    654   659   783 
Algeria  25   87   41    47   143   74    51   145   79 
Angola  157   34   163    186   33   191    200   33   205 
Cameroon  9   2   9    12   2   12    13   2   14 
The Congo, Republic of  115   27   120    101   27   106    85   23   89 
Gabon  63   20   67    67   20   71    73   20   76 
Libya  55   —   55    60   —   60    74   —   74 
Nigeria  192   542   301    159   374   235    158   436   246 
North America
  30   199   65    20   22   24    11   15   14 
Canada(a)
  10   —   10    8   —   8    8   —   8 
United States  20   199   55    12   22   16    3   15   6 
South America
  76   569   179    80   564   182    119   579   224 
Argentina  14   381   83    15   364   80    14   365   81 
Bolivia  3   94   20    3   91   20    3   105   22 
Colombia  11   34   18    13   45   23    14   45   23 
Trinidad & Tobago  3   2   3    5   2   5    6   2   6 
Venezuela  45   58   55    44   62   54    82   62   92 
Asia-Pacific
  28   1,237   248    33   1,228   251    29   1,236   246 
Australia  —   6   1    —   —   —    —   —   — 
Brunei  2   59   14    2   49   12    2   60   14 
Indonesia  19   855   178    25   898   190    21   857   177 
Myanmar  —   114   14    —   103   13    —   117   14 
Thailand  7   203   41    6   178   36    6   202   41 
CIS
  13   56   23    14   52   24    12   75   26 
Azerbaijan  3   54   13    3   50   12    4   73   18 
Russia  10   2   10    11   2   12    8   2   8 
Europe
  269   1,690   580    295   1,734   613    302   1,704   616 
France  5   85   21    5   100   24    6   103   25 
The Netherlands  1   234   42    1   254   45    1   244   44 
Norway  183   683   310    199   691   327    204   706   334 
United Kingdom  80   688   207    90   689   217    91   651   213 
Middle East
  308   1,185   527    307   724   438    329   569   432 
United Arab Emirates  207   76   222    201   72   214    228   74   243 
Iran  2   —   2    8   —   8    9   —   9 
Oman  23   55   34    22   56   34    23   59   34 
Qatar  49   639   164    50   515   141    44   434   121 
Syria  14   130   39    14   34   20    15   2   15 
Yemen  13   285   66    12   47   21    10   —   10 
Total production
  1,340   5,648   2,378    1,381   4,923   2,281    1,456   4,837   2,341 
Including share of equity andnon-consolidated affiliates
  300   781   444    286   395   359    347   298   403 
Algeria  19   4   20    20   3   21    19   4   20 
Colombia  7   —   7    6   —   6    5   —   5 
Venezuela  45   6   46    44   6   45    82   6   83 
United Arab Emirates  199   66   212    191   62   202    218   64   231 
Oman  22   55   32    22   56   34    23   59   34 
Qatar  8   367   75    3   221   42    —   165   30 
Yemen  —   283   52    —   47   9    —   —   — 
                                       

    2011   2010   2009 
    Liquids
kb/d		   Natural
gas
Mcf/d		   Total
kboe/d		   Liquids
kb/d		   Natural
gas
Mcf/d		   Total
kboe/d		   Liquids
kb/d		   Natural
gas
Mcf/d		   Total
kboe/d		 

Africa

   517     715     659     616     712     756     632     599     749  

Algeria

   16     94     33     25     87     41     47     143     74  

Angola

   128     39     135     157     34     163     186     33     191  

Cameroon

   2     1     3     9     2     9     12     2     12  

Gabon

   55     17     58     63     20     67     67     20     71  

Libya

   20     —     20     55     —     55     60     —     60  

Nigeria

   179     534     287     192     542     301     159     374     235  

The Congo, Republic of

   117     30     123     115     27     120     101     27     106  

North America

   27     227     67     30     199     65     20     22     24  

Canada(a)

   11     —     11     10     —     10     8     —     8  

United States

   16     227     56     20     199     55     12     22     16  

South America

   71     648     188     76     569     179     80     564     182  

Argentina

   14     397     86     14     381     83     15     364     80  

Bolivia

   3     118     25     3     94     20     3     91     20  

Colombia

   5     27     11     11     34     18     13     45     23  

Trinidad & Tobago

   4     47     12     3     2     3     5     2     5  

Venezuela

   45     59     54     45     58     55     44     62     54  

Asia-Pacific

   27     1,160     231     28     1,237     248     33     1,228     251  

Australia

   —     25     4     —     6     1     —     —     —  

Brunei

   2     56     13     2     59     14     2     49     12  

Indonesia

   18     757     158     19     855     178     25     898     190  

Myanmar

   —     119     15     —     114     14     —     103     13  

Thailand

   7     203     41     7     203     41     6     178     36  

CIS

   22     525     119     13     56     23     14     52     24  

Azerbaijan

   4     57     14     3     54     13     3     50     12  

Russia

   18     468     105     10     2     10     11     2     12  

Europe

   245     1,453     512     269     1,690     580     295     1,734     613  

France

   5     69     18     5     85     21     5     100     24  

The Netherlands

   1     214     38     1     234     42     1     254     45  

Norway

   172     619     287     183     683     310     199     691     327  

United Kingdom

   67     551     169     80     688     207     90     689     217  

Middle East

   317     1,370     570     308     1,185     527     307     724     438  

United Arab Emirates

   226     72     240     207     76     222     201     72     214  

Iran

   —     —     —     2     —     2     8     —     8  

Oman

   24     62     36     23     55     34     22     56     34  

Qatar

   44     616     155     49     639     164     50     515     141  

Syria

   11     218     53     14     130     39     14     34     20  

Yemen

   12     402     86     13     285     66     12     47     21  

Total production

   1,226     6,098     2,346     1,340     5,648     2,378     1,381     4,923     2,281  

Including share of equity affiliates

   316     1,383     571     300     781     444     286     395     359  

Algeria

   10     3     10     19     4     20     20     3     21  

Colombia

   4     —     4     7     —     7     6     —     6  

Venezuela

   44     7     45     45     6     46     44     6     45  

United Arab Emirates

   219     62     231     199     66     212     191     62     202  

Oman

   22     62     34     22     55     32     22     56     34  

Qatar

   8     382     78     8     367     75     3     221     42  

Russia

   9     465     95     —     —     —     —     —     —  

Yemen

   —     402     74     —     283     52     —     47     9  

(a)
(a)The Group’s production in Canada consists of bitumen only. All of the Group’s bitumen production is in Canada.


13

PRESENTATION OF PRODUCTION ACTIVITIES BY GEOGRAPHIC AREAREGION

The table below sets forth, by country, TOTAL’s producing assets, the year in which TOTAL’s activities started,commenced, the Group’s interest in each asset and whether TOTAL is operator of the asset.

TOTAL’s producing assets as of December 31, 20102011(a)
    Year of
entry into
the country

Operated

(Group share in %)

Non-operated

(Group share in %)

Africa

         
Year of
entry into
Operated
Non-operated
the country(Group share in %)(Group share in %)
Africa

Algeria

  1952    
Ourhoud (19.41%)(b)
RKF (48.83%)(b)
         Tin Fouye Tabankort (35.00%)

Angola

  1953  Blocks 3-85, 3-91 (50.00%

Girassol, Jasmim,

Rosa, Dalia, Pazflor (Block 17) (40.00%)

  
         Girassol, Jasmim,

Block 0 (10.00%)

Kuito, BBLT, Tombua-Landana (Block 14) (20.00%)

Oombo (Block 3/91) (50.00%)

The Congo, Republic of

  1928

Kombi-Likalala-Libondo (65.00%)

Moho Bilondo (53.50%)

Nkossa (53.50%)

Nsoko (53.50%)

Sendji (55.25%)

Tchendo (65.00%)

Tchibeli-Litanzi-Loussima (65.00%) Tchibouela (65.00%)

Yanga (55.25%)

         Rosa, Dalia (Block 17) (40.00%

Loango (50.00%)

Zatchi (35.00%)

Cabinda (Block 0) (10.00%)
Kuito, BBLT, Tombua-Landana (Block 14) (20.00%)
Cameroon
1951Bakingili (25.50%)
Bavo-Asoma (25.50%)
Boa Bakassi (25.50%)
Ekundu Marine (25.50%)
Kita Edem (25.50%)
Kole Marine (25.50%)
Mokoko - Abana (10.00%)
Mondoni (25.00%)
The Congo, Republic of

Gabon

  1928  Kombi-Likalala (65.00%)
Nkossa (53.50%)
Nsoko (53.50%)
Moho Bilondo (53.50%)
Sendji (55.25%)
Tchendo (65.00%)
Tchibeli-Litanzi-Loussima (65.00%)
Tchibouela (65.00%)
Yanga (55.25%)
Loango (50.00%)
Zatchi (35.00%)
Gabon
1928

Anguille (100.00%)

Anguille Nord EstNord-Est (100.00%)

Anguille Sud-Est (100.00%)

Atora (40.00%)

Avocette (57.50%)

Ayol Marine (100.00%)

Baliste (50.00%)

Barbier (100.00%)

Baudroie Marine (50.00%)

Baudroie Nord Marine (50.00%)

Coucal (57.50%)

Girelle (100.00%)

Gonelle (100.00%)

Grand Anguille Marine (100.00%)

Grondin (100.00 %)
(100.00%)

Hylia Marine (75.00%)

Lopez Nord (100.00%)

Mandaros (100.00%)

M’Boumba (100.00%)

Mérou Sardine Sud (50.00%)

Pageau (100.00%)

Port Gentil Océan (100.00%)

Port Gentil Sud Marine (100.00%)

Tchengue (100.00%)

Torpille (100.00%)

Torpille Nord Est (100.00%)

  
         Rabi Kounga (47.50%)

Libya

1959

Zones 15, 16 & 32 (ex C 137, 75.00%(b)) Zones 70 & 87 (ex C 17, 75.00%(b))

Zones 129 & 130 (ex NC 115, 30.00%(b)) Zones 130 & 131 (ex NC 186, 24.00%(b))

Nigeria

1962

OML 58 (40.00%)

OML 99 Amenam-Kpono (30.40%)

OML 100 (40.00%)

OML 102 (40.00%)

OML 102-Ekanga (40.00%)
OML 130 (24.00%)
         

Shell Petroleum Development Company (SPDC 10.00%)

OML 118-Bonga (12.50%)


14

    Year of
entry into
the country

Operated

(Group share in %)

Non-operated

(Group share in %)

North America

         

Canada

  Year of
1999		    
entry into
Operated
Non-operated
the country(Group share in %)(Group share in %)
Libya
1959C 17 (Mabruk) (15.00%)
         Surmont (50.00%)

United States

  C 137 (Al Jurf) (20.25%)1957
         NC 115 (El Sharara) (3.90%

Several assets in the Barnett Shale

area (25.00%)(c)

Several assets in the Utica Shale area (25.00%)(c)

Tahiti (17.00%)

NC 186 (2.88%)

South America

         
Nigeria
1962OML 58 (40.00%)
OML 99 Amenam-Kpono (30.40%)
OML 100 (40.00%)
OML 102 (40.00%)OML 102 - Ekanga (40.00%)
OML 130 (24.00%)
Shell Petroleum Development Company
(SPDC 10.00%)
OML 118 - Bonga (12.50%)
North America
Canada
1999Surmont (50.00%)
United States
1957Several assets in the Barnett Shale area (25.00%)
Tahiti (17.00%)
South America

Argentina

  1978  

Aguada Pichana (27.27%)

Aries (37.50%)

Cañadon Alfa Complex (37.50%)

Carina (37.50%)

Hidra (37.50%)

San Roque (24.71%)

  
         Sierra Chata (2.51%)

Bolivia

  1995    San Alberto (15.00%)
         

San Alberto (15.00%) San Antonio (15.00%)

Itau (41.00%)

Colombia

  1973    Caracara (34.18%)(i)
         Cusiana (11.60%)

Trinidad & Tobago

  1996    Espinal (7.32%)(i)
         Angostura (30.00%)

Venezuela

  San Jacinto/Rio Paez (8.14%)(i)1980
         PetroCedeño (30.323%) Yucal Placer (69.50%)

Trinidad & TobagoAsia-Pacific

1996

      Angostura (30.00%)

Australia

2005
         
Venezuela
1980PetroCedeño (30.323%GLNG (27.50%)
Yucal Placer (69.50%)
Asia-Pacific
Australia
2005GLNG (20.00%)

Brunei

  1986  Maharaja Lela Jamalulalam (37.50%)   

Indonesia

  1968  

Bekapai (50.00%)

Handil (50.00%)

Peciko (50.00%)

Sisi-Nubi (47.90%)

Tambora (50.00%)

Tunu (50.00%)

  
         Handil (50.00%

Badak (1.05%)

Nilam-gas and condensates (9.29%)

Nilam-oil (10.58%)

Myanmar

1992Yadana (31.24%)   

Thailand

1990
         Peciko (50.00%Bongkot (33.33%)

Commonwealth of Independent States

   

Azerbaijan

  1996    Sisi-Nubi (47.90%)
   Tambora (50.00%)
Tunu (50.00%)
Badak (1.05%)
Nilam - gas and condensates (9.29%)
Nilam - oil (10.58%)
Myanmar
1992Yadana (31.24%)
Thailand
1990Bongkot (33.33%)
CIS
Azerbaijan
1996      Shah Deniz (10.00%)

Russia

1991Kharyaga (40.00%)
    Several fields through the participation in Novatek (14.09%)

Europe

         
Russia
1989Kharyaga (40.00%)
Europe

France

  1939  

Lacq (100.00%)

Meillon (100.00%)

Pécorade (100.00%)

Vic-Bilh (73.00%)

Lagrave (100.00%)

Lanot (100.00%)

Itteville (78.73%)

La Croix-Blanche (100.00%)

Vert-le-Grand (90.05%)

Vert-le-Petit (100.00%)

  
Meillon (100.00%)
Pecorade (100.00%)

15

Year of
entry into
Operated
Non-operated
the country(Group share in %)(Group share in %)
Vic-Bilh (73.00%)
Lagrave (100.00%)
Lanot (100.00%)
         Dommartin-Lettrée (56.99%)

    Year of
entry into
the country		  

Operated

(Group share in %)

  Itteville (78.73%

Non-operated

(Group share in %)

Norway

1965Skirne (40.00%)  
         La Croix-Blanche (100.00%

Åsgard (7.68%)

Ekofisk (39.90%)

Eldfisk (39.90%)

Embla (39.90%)

Gimle (4.90%)

Glitne (21.80%)

Gungne (10.00%)

Heimdal (16.76%)

Huldra (24.33%)

Kristin (6.00%)

Kvitebjørn (5.00%)

Mikkel (7.65%)

Morvin (6.00%)

Oseberg (10.00%)

Oseberg East (10.00%)

Oseberg South (10.00%)

Sleipner East (10.00%)

Sleipner West (9.41%)

Snøhvit (18.40%)

Snorre (6.18%)

Statfjord East (2.80%)

Sygna (2.52%)

Tor (48.20%)

Tordis (5.60%)

Troll I (3.69%)

Troll II (3.69%)

Tune (10.00%)

Tyrihans (23.18%)

Vale (24.24%)

Vigdis (5.60%)

Vilje (24.24%)

Visund (7.70%)

Yttergryta (24.50%)

The Netherlands

  1964

F6a gas (55.66%)

F6a oil (65.68%)

F15a Jurassic (38.20%)

F15a/F15d Triassic (32.47%)

F15d (32.47%)

J3a (30.00%)

K1a (40.10%)

K1b/K2a (54.33%)

K2c (54.33%)

K3b (56.16%)

K3d (56.16%)

K4a (50.00%)

K4b/K5a (36.31%)

K5b (45.27%)

K6/L7 (56.16%)

L1a (60.00%)

L1d (60.00%)

L1e (55.66%)

L1f (55.66%)

L4a (55.66%)

         Rousse (100.00%

E16a (16.92%)

E17a/E17b (14.10%)

J3b/J6 (25.00%)

Q16a (6.49%)

 Year of
entry into
the country

Operated

(Group share in %)

Non-operated

(Group share in %)

United Kingdom

1962

Alwyn North, Dunbar, Ellon, Grant Nuggets (100.00%)

Elgin-Franklin (EFOG 46.17%)(d)

Forvie Nord (100.00%)

Glenelg (49.47%)

Jura (100.00%)

West Franklin (EFOG 46.17%)(d)

      Vert-le-Grand (90.05%

Alba (12.65%)

Armada (12.53%)

Bruce (43.25%)

Markham unitized fields (7.35%)

ETAP (Mungo, Monan) (12.43%)

Everest (0.87%)

Keith (25.00%)

Maria (28.96%)

Otter (50.00%)

Seymour (25.00%)

Middle East

U.A.E.

1939Abu Dhabi-Abu Al Bu Khoosh (75.00%) 
      Vert-le-Petit (100.00%

Abu Dhabi offshore (13.33%)(e)

Abu Dhabi onshore (9.50%)(f)

GASCO (15.00%)

ADGAS (5.00%)

Oman

 1937
      

Various fields onshore (Block 6) (4.00%)(g)

Mukhaizna field (Block 53) (2.00%)(h)

Qatar

 
Norway
1936		 1965Skirne (40.00%Al Khalij (100.00%) 
      Åsgard (7.68%)
Ekofisk (39.90%)
Eldfisk (39.90%)
Embla (39.90%)
Gimle (4.90%)
Glitne (21.80%)
Gungne (10.00%)
Heimdal (16.76%)
Huldra (24.33%)
Kristin (6.00%)
Kvitebjørn (5.00%)
Mikkel (7.65%)
Morvin (6.00%)
Oseberg (10.00%)
Oseberg East (10.00%)
Oseberg South (10.00%)
Sleipner East (10.00%)
Sleipner West (9.41%)
Snøhvit (18.40%)
Snorre (6.18%)
Statfjord East (2.80%)
Sygna (2.52%)
Tor (48.20%)
Tordis (5.60%)
Troll I (3.69%)
Troll II (3.69%)
Tune (10.00%)
Tyrihans (23.18%)
Vale (24.24%)
Vigdis (5.60%)
Vilje (24.24%)
Visund (7.70%)
Yttergryta (24.50%)
The Netherlands
1964F6a gaz (55.66%)
F6a huile (65.68%)
F15a Jurassic (38.20%)
F15a/F15d Triassic (32.47%)
F15d (32.47%)
J3a (30.00%)
K1a (40.10%)
K1b/K2a (54.33%)
K2c (54.33%)
K3b (56.16%)
K3d (56.16%)
K4a (50.00%)
K4b/K5a (36.31%)
K5b (45.27%)
K6/L7 (56.16%)
L1a (60.00%)

16

Year of
entry into
Operated
Non-operated
the country(Group share in %)(Group share in %)
L1d (60.00%)
L1e (55.66%)
L1f (55.66%)
L4a (55.66%)
E16a (16.92%)
E17a/E17b (14.10%)
J3b/J6 (25.00%)
Q16a (6.49%)
United Kingdom
1962Alwyn North Dunbar, Ellon, Grant
Nuggets (100.00%)
Elgin-Franklin (EFOG 46.17%)(c)
Forvie Nord (100.00%)
Glenelg (49.47%)
Jura (100.00%)
Otter (81.00%)
West Franklin (EFOG 46.17%)(c)
Alba (12.65%)
Armada (12.53%)
Bruce (43.25%)
Markham unitized fields (7.35%)
ETAP (Mungo. Monan) (12.43%)
Everest (0.87%)
Keith (25.00%)
Maria (28.96%)
Seymour (25.00%)
Middle East
U.A.E.
1939Abu Dhabi -Abu Al Bu Khoosh (75.00%)
Abu Dhabi offshore (13.33%)(d)
Abu Dhabi onshore (9.50%)(e)
GASCO (15.00%)
ADGAS (5.00%)
Oman
1937Various fields onshore (Block 6) (4.00%)(f)
Mukhaizna field (Block 53) (2.00%)(g)
Qatar
1936Al Khalij (100.00%)
North Field - BlockField-Block NF Dolphin (24.50%)
North Field - BlockField-Block NFB (20.00%)

North Field -QatargasField-Qatargas 2 Train 5 (16.70%)

Syria

 1988 Deir Ez Zor (Al Mazraa, Atalla North, Jafra, Marad, Qahar, Tabiyeh) (100.00%)(h)(i)  

Yemen

 1987 Kharir/Atuf (bloc(Block 10) (28.57%) 
      Various fields onshore (Block 5) (15.00%)

(a)
(a)The Group’s interest in the local entity is approximately 100% in all cases except for Total Gabon (58.3%), Total E&P Cameroon (75.80%(58.28%) and certain entities in the United Kingdom, Algeria, Abu Dhabi and Oman (see notes b through ih below).
(b)TOTAL’s stake in the foreign consortium.
(c)TOTAL has an indirect 19.41%TOTAL’s interest in the Ourhoud field and a 48.83% indirect interest in the RKF field through its interest in CEPSA (equity affiliate).joint venture.
(c)(d)TOTAL has a 35.8%46.17% indirect interest in Elgin Franklin through its interest in EFOG.
(d)(e)Through ADMA (equity affiliate), TOTAL has a 13.33% interest and participates in the operating company, Abu Dhabi Marine Operating Company.
(e)(f)Through ADPC (equity affiliate), TOTAL has a 9.50% interest and participates in the operating company, Abu Dhabi Company for Onshore Oil Operation.
(f)(g)TOTAL has a direct interest of 4.00% in Petroleum Development Oman LLC, operator of Block 6, in which TOTAL has an indirect interest of 4.00% via Pohol (equity affiliate). TOTAL also has a 5.54% interest in the Oman LNG facility (trains 1 and 2), and an indirect participation of 2.04% through OLNG in Qalhat LNG (train 3).
(g)(h)TOTAL has a direct interest of 2.00% in Block 53.
(h)(i)Operated by DEZPC, which is 50.00%50% owned by TOTAL and 50.00%50% owned by SPC.
(i)GPC. Following the extension of European Union sanctions against Syria on December 1, 2011, TOTAL has an indirect 34.18% interestceased its activities that contribute to oil and gas production in the Caracara Block, 8.14%Syria. For further information on U.S. and European restrictions relevant to TOTAL’s activities in the San Jacinto/Rio Paez Block and 7.32% in the Espinal Block through its interest in CEPSA (equity affiliate)Syria, see “Item 3. Key Information — Risk Factors”.

17

Africa

In 2010,2011, TOTAL’s production in Africa was 756

659 kboe/d, representing 32%28% of the Group’s overall production, compared to 756 kboe/d in 2010 and

749 kboe/d in 2009 and 783 kboe/d in 2008.

2009.

InAlgeria, TOTAL’s production amountedwas 33 kboe/d in 2011, compared to 41 kboe/d in 2010 compared toand 74 kboe/d in 2009 and 79 kboe/d in 2008. 2009.

This decline is mainlywas due on the one hand to the termination of the Hamra contract in October 2009.2009 and on the other hand to the divestment of TOTAL’s stake in CEPSA (48.83%), which was finalized in July 2011. The Group’s production camenow comes entirely from its direct interest in the TFT field (Tin Fouyé Tabenkort, 35%) and from its 48.83% interest in CEPSA(1), a partner of Sonatrach (the Algerian national oil and gas company) on the Ourhoud and Rhourde El Krouf fields.. TOTAL also holds a directhas 37.75% interestand 47% stakes in the Timimoun gas project alongside Sonatrach (51%) and CEPSA (11.25%) as well as a 47% interest in the Ahnet gas project alongside Sonatrach (51%) and Partex (2%).development projects respectively.

 

•
• 

On the TFT field, plateau production was maintained at 185 kboe/d. A 3D seismic survey covering 1,380 km2on the compression project commissionedEast and West portions of the field was completed in October 2011. The data is currently being processed and interpreted.

•

Launched in 2010 is expected to extend plateau production to 185 kboe/d.

• Basicfollowing approval of the development plan by the ALNAFT national agency, the basic engineering studiesphase for the Timimoun project were launched in 2010 following approval by the ALNAFT national agency.Start-up of the projecthas been completed. Commercial gas production is scheduled to start up in 20142016, with commercialanticipated plateau production of natural gas estimated at approximately 160 Mcf/d (1.61.6 Bm3/y) at plateau.y (160 Mcf/d).

• 
• As part of

Under the Ahnet project, the technical section of a development plan is expected to bewas submitted to the authorities before mid-2011,in July 2011. Discussions are underway withstart-up of production scheduled for 2015 the project partners and an expectedthe authorities with regard to bringing the gas to market, with anticipated plateau production of at least 400 Mcf/d (44 Bm3/y)y (400 Mcf/d).

InAngola, the Group’s production was 135 kboe/d in 2011, compared to 163 kboe/d in 2010 compared toand 191 kboe/d in 2009 and 205 kboe/d in 2008.2009. Production comes mainly from Blocks 17, 0, 14 and 14.17. Highlights of the period 20082009 to 20102011 included several discoveries on Blocks 15/06 and 17/06, and progress on the major Pazflor and CLOV projects.

Deep-offshore Block 17 (40%, operator) is TOTAL’s principal asset in Angola. It is composed of four major zones: Girassol, Dalia, Pazflor and CLOV.

• Deep-offshore Block 17 (40%, operator) is TOTAL’s principal asset in Angola. It is composed of four major zones: Girassol, Dalia, Pazflor and CLOV.

On the Girassol pole,hub, production from the Girassol, Jasmim and Rosa fields was more than 190220 kb/d in 2010.

2011.

On the Dalia pole,hub, production was more thannearly 240 kb/d in 2010.

On2011.

Production on Pazflor, the third pole, Pazflor, comprisedhub consisting of the Perpetua, Zinia, Hortensia and Acacia fields, production is scheduled to beginstarted up in lateAugust 2011 and reached 170 kb/d at the end of 2011. This project provides for the installation of an FPSO with aThe production capacity of the FPSO is 220 kb/d.

The development of CLOV, the fourth pole, was launchedhub, started in 2010 with the award of the main contracts. This developmentand will result in the installation of a fourth FPSO with a production capacity of 160 kb/d.Start-up of production is expected in 2014.

On Block 14 (20%), production on the Tombua-Landana field started in August 2009 and adds to production from the Benguela-Belize-Lobito-Tomboco and Kuito fields.

On ultra-deep offshore Block 32 (30%, operator), appraisal is continuing and pre-development studies for a first production zone in the central/southeastern portion of the block are underway (Kaombo project).

On Block 15/06 (15%), a first development hub including the discoveries located on the northwest portion of the block has been identified. The development plan for the hub has been submitted to the authorities.

• On Block 14 (20%), production on theTombua-Landana field started in August 2009 and adds to production from the Benguela-Belize-Lobito-Tomboco and Kuito fields.
• On ultra-deep offshore Block 32 (30%, operator), appraisal is continuing and pre-development studies for a first production zone in the central/southeastern portion of the block are underway (Kaombo project).
• On Block15/6 (15%), four major discoveries were announced in 2010. Studies are underway to demonstrate the feasibility of a first development area that would include the discoveries located on the northwest portion of the block.

TOTAL also has operations on exploration Blocks 33 (55%, operator) and, 17/06 (30%, operator), 25 (35%, operator), 39 (15%) and 40 (50%, operator).

At year-end 2010, TOTAL sold its 5% interest in Block 31.

TOTAL is also developing in LNG through the Angola LNG project (13.6%) with the construction of, which includes a gas liquefaction plant near Soyo. The plant will be supplied in particular by the gas associated with production from Blocks 0, 14, 15, 17 and 18. Construction work is ongoing andstart-up is expected in 2012.

InCameroon, the Group’s production was 3 kboe/d in 2011, compared to 9 kboe/d in 2010 compared toand 12 kboe/d in 2009 and 14 kboe/d in 2008.

2009. In November 2010,April 2011, TOTAL finalized an agreement in principle with Perenco to sell the Group’s 75.8% interestdivestment of its stake in its Exploration & Productionupstream subsidiary Total E&P Cameroon, a Cameroonian company in Cameroon. The agreement is subject towhich the approval byGroup had a 75.8% holding. Since that time, the Cameroonian authorities.
Group no longer owns any exploration and production assets in the country.

InCôte d’Ivoire, TOTAL signed in October 2010 an agreement to acquireis operator of the Cl-100 exploration license, with a 60% interest (operator) in theCI-100 exploration license. The transaction has been approved by the relevant authorities.stake. The 2,000 km2 license is located approximately 100 km southeast of Abidjan in water depths ranging from 1,500 to 3,100 meters.m. Exploration work will includestarted with a new3D seismic survey of over 1,000 km2 at the end of 2011, which completed the 3D coverage of the entire block. Initial exploratory drilling is planned for the end of 2012.

In February 2012, TOTAL acquired interests in three ultra-deepwater exploration licenses : CI-514 (54%, operator), CI-515 (45%) and CI-516 (45%). For the two last blocks TOTAL will become the operator upon the first commercial discovery. The work program includes a 3D seismic survey which will complete coverage of the block,whole acreage and a firstone well is expected to be drilled in 2012.

(1)  In February 2011, TOTAL signed an agreement to dispose of its 48.83% interest in CEPSA. The transaction is conditioned on obtaining all requisite approvals.


18

each block during the initial three-year exploration period.

InEgypt, TOTAL signed a concession agreement in February 2010 and became operator of Block 4 (El(East El Burullus offshore Est)Offshore) with an interest ofa 90%. stake. The license, located in the Nile Basin where a number of gas discoveries have been made, covers a4-year initial exploration period and includes a commitment to carrying out 3D seismic work and drilling exploration wells. TheFollowing the 3,374 km2 3D seismic campaign startedsurvey shot in November 2010 and ended in February 2011.
2011, drilling is under preparation.

InGabon, the Group’s share of production was 58 kboe/d in 2011, compared to 67 kboe/d in 2010 compared toand 71 kboe/d in 2009, and 76 kboe/d in 2008, due to the natural decline of fields. The Group’s exploration and production activities in Gabon are mainly carried out

by Total Gabon(1)( is1), one of the Group’s oldest subsidiaries insub-Saharan Africa. Africa.

Under the Anguille field redevelopment project, the AGM N platform, from which twenty-one additional development wells are to be drilled, left the Fos-sur-Mer shipyard at the end of 2011 for Gabon. The drilling campaign is expected to start at the beginning of the second quarter of 2012.

•
• On the Anguille field, five development wells were drilled in 2010 from existing platforms and the construction of a new well platform has been launched.
• 

On the deep-offshore Diaba license (Total Gabon 63.75%, operator), following the 2D seismic survey that was shotperformed in 2008 and 2009, a 6,000 km2 3D seismic was shot in 2010.

• Licenses for This new seismic survey has been processed and the Avocette and Coucal fields have been renewed in the form of an operating and production sharing agreement effective as of January 1, 2011, each for a10-yearresults are currently being interpreted. period renewable for two subsequent5-year periods.
• Total Gabon farmed into the onshore Mutamba-Iroru (50%), DE7 (30%), and Nziembou (20%) exploration licenses in 2010.

Total Gabon farmed into the onshore Mutamba-Iroru (50%), DE7 (30%) and Nziembou (20%) exploration licenses in 2010. Following negative exploratory drilling on license DE7, Total Gabon relinquished the license in 2011. Studies are underway to shoot a seismic survey on the Nziembou license and drill an exploration well on the Mutamba license in 2012.

InKenya, TOTAL acquired in September 2011 a 40% stake in five offshore licenses in the Lamu Basin: L5, L7, L11a, L11b and L12. This transaction has been approved by the Kenyan authorities.

InLibya, the Group’s production was 20 kb/d in 2011, compared to 55 kb/d in 2010 compared toand 60 kb/d in 20092009. Events in the country forced the entire industry to stop production and 74 kb/d in 2008. Decliningfreeze development. Depending on the field, production was primarily due tosuspended from late February or early March 2011. The new EPSA IV contracts came into effect in 2010. At that time, the implementation of OPEC quotas and new contractual provisions for Blocks C 17 (75%)(2), C 137 (75%)(2), NC 115 (30%)(2) and NC 186 (24%)(2) oncontract zones in which TOTAL is a partner. The EPSA IV agreements (exploration and production sharing agreements) on Blockspartner were redefined: 15, 16 & 32 (formerly C 137, and75%(2)), 70 & 87 (formerly C 17, were ratified by the Libyan government75%(2)), 129 & 130 (formerly NC 115, 30%(2)) and 130 & 131 (formerly NC 186, 24%(2)).

In offshore zones 15, 16 and 32, production resumed in September 2011 and reached its former level within a few days. Exploration work is expected to restart in 2012.

In onshore zones 70 and 87, production resumed in January 2010 and now extend2012. It will gradually be ramped back up to 2032.plateau level.

Having regard to the security context in Libya in the first quarter of 2011, the Group’s production in Libya has been significantly reduced since early March. Furthermore,

In addition, the Group is reviewingexpects to continue the impacts on its operationsdevelopment of the Dahra and the measuresGarian fields.

In onshore zones 129, 130 and 131, production resumed in October 2011. A return to be taken for the projects mentioned below.plateau level

• On Block C 17, the Dahra and Garian fields are in the development phase.
• On Block C 137, drilling of two offshore exploration wells is planned for 2011.
 
• On Blocks NC 115 and NC 186,

production is expected during 2012. The seismic campaign started before the nearly 5,000 km2 seismic campaignevents is expected to be completed in 2011.resume by the end of 2012.

• 
• On

In the onshore Murzuk Basin, following a successful appraisal well drilled on the discovery made on a portion of Block NC 191 (100%(2)(2), operator), a development plan was submitted to the authorities in 2009.

• In December 2010, After the Group relinquished Block 42 2/4 (60%(2), operator) located ininterruption related to the Cyrenaic Basin atevents, discussions with the contract expiration date following an exploration well’s disappointing results.authorities have resumed.

InMadagascar, TOTAL acquired in 2008 a 60% intereststake in the Bemolanga permitlicense (operator), which containsto appraise the oil sand accumulations. A firstaccumulations it contains. The appraisal phase was launched todid not confirm the bitumen resources needed for afeasibility of the mining development. Drilling operations were carried out in two phases duringdevelopment of the dry season between July and November 2009 and between April and July 2010.

resources. However, the contract was extended by one year until June 2012 to assess the conventional exploration potential of the license.

InMauritania, TOTAL has exploration operations on the Ta7 and Ta8 licenses (60%, operator), located in the Taoudenni Basin alongside Sonatrach (20%)Basin. In January 2012, TOTAL (90%, operator) acquired interests in two exploration licenses: Block C9 in ultra-deep offshore, and Qatar Petroleum International (20%).Block Ta29 onshore in the Taoudenni Basin.

On the Ta7 license, a 1,220 km 2D seismic survey was shot in 2011 and is being interpreted.

• On the Ta8 license, drilling of the exploration well ended in 2010. Results from the well are disappointing.
• On Block Ta7, shooting of a 1,000 km 2D seismic started in 2011.

On the Ta8 license, drilling of the exploration well ended in 2010. Results from the well were disappointing.

On the C9 and Ta29 licenses, a seismic acquisition campaign is planned as the first phase of the exploration program.

InNigeria, the Group’s production amountedwas 287 kboe/d in 2011, compared to 301 kboe/d in 2010 compared toand 235 kboe/d in 2009 and 246 kboe/d in 2008. This increase is due in particular to improved security conditions in the Niger Delta.2009. TOTAL has been present in Nigeria since 1962. It operates seven production licenses (OML) out of the forty-four in which it holds an interest,has a stake, and two exploration licenses (OPL) out of the eight in which it holds an interest.has a stake. The Group is also active in LNG through Nigeria LNG and the Brass LNG project. With regard to recent changes in acreage:

In 2010,2011, TOTAL acquired a(operator) increased its stake from 45.9% interestto 48.3% in Block 1 inof the Joint Development Zone, governedadministered jointly by Nigeria and São Tomé and PríncipePrincipe.

The divestment of 10% of the Group’s stakes held through the joint venture operated by Shell Petroleum Development Company (SPDC) in Blocks OML 26 and was awarded operatorship in this block.42 has been finalized.

 

(1)
• Total Gabon is a Gabonese company whose shares are listed on Euronext Paris. TOTAL holds a 15% interest58.28%, the Republic of Gabon holds 25% and the public float is 16.72%.
(2)TOTAL’s stake in the Nigeria LNG gas liquefaction plant, located on Bonny Island, with an overall capacity of 22 Mt/y of LNG. In 2010, an improvement in the security situation for onshore facilities resulted in increased LNG production. NLNG’s utilization rate was approximately 72% in 2010, compared to approximately 50% in 2009.foreign consortium.

TOTAL owns 15% of the Nigeria LNG gas liquefaction plant, located on Bonny Island, with an overall LNG capacity of 22.7 Mt/y. In 2011, the plant’s operating rate continued to increase and reached 81%, compared to 72% in 2010 and 50% in 2009, mainly due to the increased reliability of gas deliveries from the other suppliers.

(1)  Total Gabon is

Preliminary work continued in 2011 prior to launching the Brass LNG gas liquefaction plant project (17%), which calls for the construction of two trains, each with a Gabonese company whose sharescapacity of 5 Mt/y. Calls for tenders for the construction of the plant and loading facilities are listed on Euronext Paris. underway.

TOTAL holds 58%,continues its efforts to strengthen its ability to supply gas to the Republic of Gabon holds 25%LNG projects in which it owns a stake and to meet the public float is 17%.

(2)  Interest held in the foreign consortium.growing domestic demand for gas:


19

Preliminary work prior to launching the Brass LNG project (17%), which calls for the construction of two trains, each with a capacity of 5 Mt/y, continued in 2010.
• TOTAL strengthened its ability to supply gas to the LNG projects in which it has interests and to meet the growing domestic demand in gas:
 –

On the OML 136 license (40%), the positive results for the Agge 3 appraisal well confirmed the development potential of the license. Development studies are underway.

 –

As part of its joint venture with the Nigerian National Petroleum CorporationCompany (NNPC), TOTAL launched ais continuing with the project to increase the production capacity of the OML 58 license (40%, operator) from 370 Mcf/d to 550 Mcf/d of gas in 2011.2012. A second phase of this project which is currently being assessed, is expected to allow the development of other reservesresources through these facilities.

 –

On the OML 112/117 licenses (40%), TOTAL continued development studies in 20102011 for the Ima gas field.

On the OML 102 license (40%, operator), TOTAL confirmed the launch of the Ofon phase 2 project in 2011 with the signing of the main construction contracts, with production start-up scheduled for 2014. In 2011 the Group also discovered Etisong North, located 15 km from the Ofon field, which is currently producing. This is the second exploration well on the Etisong hub after the Etisong Main discovery made in 2008. The exploration campaign is expected to continue with two additional wells in 2012.

On the OML 130 license (24%, operator), the Akpo field, which started up in March 2009, reached plateau production of 225 kboe/d in 2010. Production was limited between March and September 2011 by a technical issue on the engine of the gas reinjection compressor (liquids production of 160 kb/d instead of 190 kb/d). On this license, the Group is actively working on the Egina field, for which a development

• On the OML 102 license (40%, operator), TOTAL is expected to make the final investment decision for the Ofon phase 2 project in 2011 with astart-up scheduled in 2014. The Group also launched in 2010 an appraisal campaign for the Etisong field, located 15 km from the Ofon field, which is currently producing.
 
• On the OML 130 license (24%, operator), the Akpo field, which started up in March 2009, reached in 2010 plateau production of 225 kboe/d (in 100%). The Group is actively developing the Egina field, for which a development

plan washas been approved by the Nigerian authorities. Basic engineering studies carried out in NigeriaCalls for tender are now completedunderway and call for tenders for the projects have been launched.

• On the OML 138 license (20%, operator), development of the Usan project (180 kb/d, production capacity) continued in 2010, in particular with the drilling of production wells, the construction of the FPSO and the start of the installation ofsub-sea equipment. Production is expected tostart-up start in 2012.
• TOTAL also consolidated deep offshore positions with the ongoing development of the Bonga Northwest project on the OML 118 license (12.5%).

On the OML 138 license (20%, operator), TOTAL finalized the development of the Usan offshore project (180 kb/d, production capacity) with the drilling of production wells, installation of sub-sea equipment and connection to the FPSO. Production started up in February 2012.

Improved security conditions

TOTAL also strengthened its deep offshore position with the ongoing development of the Bonga Northwest project on the OML 118 license (12.5%).

Due to the relative calm with regard to safety in the Niger Delta region resulted in a substantial increase in the2011, it has been possible to maintain oil production operated by the Shell Petroleum Development Company (SPDC)SPDC joint venture, in which TOTAL ownshas a 10%. stake, at close to 2010 levels. The Soku processing plant resumed operationsSPDC joint venture’s gas production was higher in 20092011 as a result of the contribution of the Gbaran-Ubie project, which started up in 2010.

InUganda, TOTAL finalized in February 2012 its farm-in for an interest of 33.33%, which covers the EA-1 and EA-2 licenses as well as the new Kanywataba license and the Gbaran-Ubie development project was completedKingfisher production license. All of these licenses are located in 2010 with the commissioningLake Albert region, where oil resources have already been discovered and a substantial potential remains to be explored.

TOTAL will be the operator of EA-1 and partner on the other licenses. TOTAL and its partners Tullow and CNOOC are embarking on an ambitious exploration and appraisal program from 2012 onwards. First priority will be given to the exploration of Kanywataba and EA-1 licenses west of the 1 Bcf/d production facility.

In 2010, TOTAL disposed of the interests it held (10%) through the operated SPDC joint venture in the
OML 4, 38 and 41 licenses.
Nile.

In theRepublic of the CongoMiddle East, the Group’s share of production was 120 kboe/d in 2010, compared to 106 kboe/d in 2009 and 89 kboe/d in 2008.

U.A.E.

1939Abu Dhabi-Abu Al Bu Khoosh (75.00%)

Abu Dhabi offshore (13.33%)(e)

Abu Dhabi onshore (9.50%)(f)

GASCO (15.00%)

ADGAS (5.00%)

Oman

1937

Various fields onshore (Block 6) (4.00%)(g)

Mukhaizna field (Block 53) (2.00%)(h)

Qatar

1936Al Khalij (100.00%)

North Field-Block NF Dolphin (24.50%) North Field-Block NFB (20.00%)

North Field-Qatargas 2 Train 5 (16.70%)

Syria

1988Deir Ez Zor (Al Mazraa, Atalla North, Jafra, Marad, Qahar, Tabiyeh) (100.00%)(i)

Yemen

1987Kharir/Atuf (Block 10) (28.57%)
Various fields onshore (Block 5) (15.00%)

• On the Moho Bilondo field (53.5%, operator), which started up in April 2008, drilling of development wells continued in 2010. The field reached plateau production of 90 kboe/d (in 100%) in June 2010. Growth potential of the northern part of the field was confirmed by the Moho North Marine 3 appraisal well drilled at year-end 2008 following the Moho North Marine 1 and 2 discoveries, and later in 2009 by the Moho North Marine 4 exploration well that discovered new resources. Finally, two positive appraisal wells (Bilondo Marine 2 & 3) drilled at year-end 2010 in the southern portion of the field confirmed an additional growth potential as an extension of existing facilities.
• Production on Libondo (65%, operator), which is part of the Kombi-Likalala-Libondo operating license, started up in March 2011. Anticipated plateau production is 8 kb/d (in 100%). A substantial portion of the equipment was sourced locally in Pointe-Noire through the redevelopment of a construction site that had been idle for several years.
InSudan, the Group holds interests in an exploration license in the southern part of the country, although no activity is currently underway in this country. For additional information on TOTAL’s operations in Sudan, see “— Other Matters — Business Activities In Cuba, Iran, Sudan and Syria”.
North America(a)
In 2010, TOTAL’s production in North America was 65 kboe/d, representing 3% of the Group’s overall production, compared to 24 kboe/d in 2009 and 14 kboe/d in 2008.
InCanada, TOTAL signed in December 2010 a strategic partnership with Suncor related to the Fort Hills and Joslyn mining projects and theVoyageur upgrader. This partnership allows TOTAL to reorganize around two major poles the different oil sands assets that it has acquired over the last few years: a mining and upgrading pole, which includes the TOTAL-operated Joslyn (38.25%) and Suncor-


20

operated Fort Hills (39.2%) mining projects as well as the Suncor-operatedVoyageur upgrader (49%), and a SAGD(1) pole focused on Surmont’s (50%) ongoing development. The Group also holds a 50%Group’s interest in the Northern Lights (operator) mining projectlocal entity is approximately 100% in all cases except for Total Gabon (58.28%) and 100% of a number of leases (Oil Sand Leases) acquired through several auction sales. The Group’s 2010 production amounted to 10 kb/d, compared to 8 kb/d in 2009 and 2008.
• On the Surmont lease, commercial production in SAGD mode from the first development phase (Surmont Phase 1A) started in late 2007.
Construction work for phases 1B and 1C was completed, which should allow these phases to reach production level estimated at 24 kb/d (in 100%). The wells of phase 1B gradually started production in 2009 and 2010 and those of phase 1C are expected to be connected and to start production in 2011.
In early 2010, the partners of the project decided to launch the construction of the second phase of development.Start-up of production from Surmont Phase 2 is scheduled in 2015 and overall production capacity from Surmont (phases 1 and 2) is expected to increase to 110 kb/d (in 100%).
• The Joslyn lease, located approximately 140 km north of Surmont, is expected to be developed through mining in two phases of 100 kb/d of bitumen each.
The comprehensive review of the first phase (Joslyn North Mine), notably to meet the requirements of the February 2009 new regulation related to tailings management, was completed in February 2010 concurrent with the filing of an updated administrative file. Continuation of the preparation work for Joslyn North Mine was approved in early March 2010 and basic engineering studies were launched that are expected to end in mid-2011. Public hearings that are necessary for the project to be approved by the Canadian authorities were held in September and October 2010. The project was recommended as being in the public’s interest on January 27, 2011, subject to TOTAL satisfying twenty conditions mainly related to the protection of the environment. Preliminary site preparation work is expected to be carried out from the winter2011-2012 and production is scheduled to start in 2017/2018. However, the final schedule is subject to the Energy Resources Conservation Board’s (ERCB) administrative approval process. As part of the partnership agreement signed at year-end 2010 with Suncor, the Group decreased its interest in Joslyn to 38.25% from 75%.
• TOTAL closed in September 2010 the acquisition of UTS and its sole asset: a 20% interest in the Fort Hills lease. In December 2010, as part of their partnership, TOTAL acquired from Suncor an additional 19.2% interest in the Fort Hills lease and increased its interest to 39.2%.Start-up of the Fort Hills project, which was approved by the relevant authorities for a first development phase of 160 kb/d, is expected in 2016.
• TOTAL also acquired in late December 2010 a 49% interest in Suncor’sVoyageur upgrader project. TOTAL and Suncor agreed to develop the Fort Hills andVoyageur projects in parallel. ThisVoyageurupgrader project that Suncor mothballed at year-end 2008 will resume in 2011 and will start up concurrently with the Fort Hills project. As a consequence, the Group has abandoned its upgrader project in Edmonton.
• In 2008, the Group closed the acquisition of Synenco, the two principal assets of which are a 60% interest in the Northern Lights project and 100% of the adjacent McClelland lease. In early 2009, the Group sold to Sinopec, the other partner in the project, a 10% share in the Northern Lights project and a 50% share in the McClelland lease, reducing its interest in each of the assets to 50%. The Northern Lights project, located approximately 50 km north of Joslyn, is expected to be developed through mining techniques.
In theUnited States, the Group’s 2010 production amounted to 55 kboe/d, compared to 16 kboe/d in 2009 and 6 kboe/d in 2008. This increase is due in particular to the acquisition of an interestcertain entities in the Barnett Shale Basin at year-end 2009.
• In the Gulf of Mexico:United Kingdom, Abu Dhabi and Oman (see notes b through h below).
– The deep-offshore Tahiti oil field (17%) started producing in May 2009 and rapidly reached plateau production of 135 kboe/d. Phase 2 was launched in September 2010 with the drilling of the first water injection well.
– Development of the first phase of the deep-offshore Chinook project (33.33%) is ongoing. The production test is scheduled to start in the first half of 2011.
– The TOTAL (40%) — Cobalt (60%, operator) alliance’s exploration drilling campaign was
(1)  Steam Assisted Gravity Drainage.(b)


21

launched in 2009 and the drilling of the first wells produced disappointing results. This campaign was disrupted due to the U.S. government’s moratorium on offshore drilling operations from May to October 2010 and may resume by mid-2011. In April 2009, TOTAL and Cobalt had signed an agreement related to the merger of their deep offshore acreage. Cobalt is operating the exploration phase.
– In April 2010, the Group disposed of its interests in the Matterhorn and Virgo operated fields.
• Following the signature of an agreement in December 2009, a joint venture was set up with Chesapeake to produce shale gas in the Barnett Shale Basin, Texas. As part of this joint venture, TOTAL holds 25% of Chesapeake’s portfolio in the Barnett Shale area. In 2010, 400 wells were drilled to increase gas production from 700 Mcf/d at the beginning of the year to 800 Mcf/d at year-end. Engineers from TOTAL are assigned to the teams led by Chesapeake.
• In January 2009, the Group closed the acquisition of a 50% interest in American Shale Oil LLC (AMSO) to develop oil shale technology. The pilot to develop this technology is underway in Colorado.
• In Alaska, TOTAL acquired in 2008 a 30% interest in several onshore exploration blocks known as “White Hills”. Most of them were relinquished in mid-2009 following disappointing results.
InMexico, TOTAL is conducting various studies in cooperation with state-owned PEMEX under a technical cooperation agreement signed in 2003 which is
TOTAL’s stake in the process of being renewed.
South Americaforeign consortium.
In 2010, TOTAL’s production in South America was 179 kboe/d, representing 8% of the Group’s overall production, compared to 182 kboe/d in 2009 and 224 kboe/d in 2008.
InArgentina, where TOTAL has been present since 1978, the Group operates a quarter of the country’s gas production(1). The Group’s production was 83 kboe/d in 2010, compared to 80 kboe/d in 2009 and 81 kboe/d in 2008.
• In the Neuquén Basin, the connection of satellite discoveries and an increase in compression capacity resulted in the extension of the San Roque (24.7%, operator) and Aguada Pichana (27.3%, operator) fields’ plateau production.
In 2009, TOTAL and the Argentinean authorities signed an agreement extending the Aguada Pichana and San Roque concessions for ten years (from 2017 to 2027). As part of this agreement, 3D seismic was shot in late 2009 in the Las Carceles canyons area to allow the development of Aguada Pichana to continue westward.
In early 2011, TOTAL acquired interests in four licenses located in the Neuquén basin in order to assess their shale gas potential. The Group acquired 42.5% interests in and the operatorship of the Aguada de Castro and Pampa las Yeguas II licenses, a 40% interest in the Cerro Las Minas license and a 45% interest in the Cerro Partido license.
• In Tierra del Fuego, where the Group notably operates the offshore Carina and Aries fields (37.5%), gas production capacity increased from 424 Mcf/d to 565 Mcf/d in 2007 thanks to the installation of a fourth medium-pressure compressor to debottleneck the facilities. Work to increase the capacity of the pipeline that routes the gas to the region of Buenos Aires was completed in July 2010. This allowed the Group to increase production up to the maximum capacity of the processing plant during the southern winter.
InBolivia, the Group’s share of production, primarily gas, amounted to 20 kboe/d in 2010, stable compared to 2009, compared to 22 kboe/d in 2008. TOTAL holds interests in six licenses: three producing licenses — San Alberto and San Antonio (15%) and Block XX Tarija Oeste (41%); and three licenses in the exploration or appraisal phase — Aquio and Ipati (60%, operator) and Rio Hondo (50%).
• Production started up in February 2011 on the gas and condensates Itaú field located on Block XX Tarija Oeste; it is routed to the existing facilities of the neighboring San Alberto field. In 2010, TOTAL decreased its interest to 41% in Block XX Tarija Oeste after divesting 34% and is no longer the operator.
• In 2004, TOTAL discovered the Incahuasi gas field on the Ipati Block. Following the interpretation of the 3D seismic shot in 2008, an appraisal well is ongoing on the adjacent Aquio Block to confirm the extension of the discovery to the north. In 2010, TOTAL signed an agreement to dispose of 20% in the Aquio and Ipati licenses. Under this agreement, which is subject to the approval by the Bolivian authorities,
(c)TOTAL’s interest in the licenses will be 60%.
(1)  Source: Argentinean Ministry of Federal Planning, Public Investment and Services — Energy Secretary.


22

In 2008, TOTAL entered into a cooperation agreement with Gazprom and Yacimientos Petrolíferos Fiscales Bolivianos to explore the Azero Block as part of a joint venture company. TOTAL and Gazprom will be partners with equal interests in this joint venture company.
InBrazil, TOTAL holds interests in three exploration blocks: Blocks BC-2 (41.2%) and BM-C-14 (50%) in the Campos Basin, and Block BM-S-54 (20%) in the Santos Basin.
• On Block BC-2, following seismic reprocessing, a pre-salt prospect was found under the Xerelete (formerly Curió) discovery made in 2001 at a water depth of 2,400 m.
• The southern extremity of Xelerete is located on Block BM-C-14, which is adjacent to Block BC-2. A unitization agreement was completed by the partners on both blocks. This agreement is subject to approval by the ANP (Agência National do Petroléo).
• In June 2010, the Group acquired a 20% interest in the BM-S-54 license. Preliminary assessment of data from the exploration drilling, which was completed in November 2010, was positive and a second drilling is expected in 2011.
InColombia, where TOTAL has been present since 1973, the Group’s production was 18 kboe/d in 2010, compared to 23 kboe/d in 2009 and 2008. Following the termination of the Santiago de Los Andes license, TOTAL relinquished the Cupiagua field, and its interest in the joint venture that ownsventure.
(d)TOTAL has a 46.17% indirect interest in Elgin Franklin through its interest in EFOG.
(e)Through ADMA (equity affiliate), TOTAL has a 13.33% interest and participates in the two remaining licenses (that coveroperating company, Abu Dhabi Marine Operating Company.
(f)Through ADPC (equity affiliate), TOTAL has a 9.50% interest and participates in the Cusiana field) decreased to 11.6% from 19%operating company, Abu Dhabi Company for Onshore Oil Operation.
(g)TOTAL has a direct interest of 4.00% in Petroleum Development Oman LLC, operator of Block 6, in which TOTAL has an indirect interest of 4.00% via Pohol (equity affiliate). TOTAL also has a 50%5.54% interest in the NiscotaOman LNG facility (trains 1 and 2), and an indirect participation of 2.04% through OLNG in Qalhat LNG (train 3).
(h)TOTAL has a direct interest of 2.00% in Block 53.
(i)Operated by DEZPC, which is 50% owned by TOTAL and 50% owned by GPC. Following the extension of European Union sanctions against Syria on December 1, 2011, TOTAL has ceased its activities that contribute to oil and gas production in Syria. For further information on U.S. and European restrictions relevant to TOTAL’s activities in Syria, see “Item 3. Key Information — Risk Factors”.

Africa

In 2011, TOTAL’s production in Africa was

659 kboe/d, representing 28% of the Group’s overall production, compared to 756 kboe/d in 2010 and

749 kboe/d in 2009.

InAlgeria, TOTAL’s production was 33 kboe/d in 2011, compared to 41 kboe/d in 2010 and 74 kboe/d in 2009.

This decline was due on the one hand to the termination of the Hamra contract in October 2009 and on the other hand to the divestment of TOTAL’s stake in CEPSA (48.83%), which was finalized in July 2011. The Group’s production now comes entirely from the TFT field (Tin Fouyé Tabenkort, 35%). TOTAL also has 37.75% and 47% stakes in the Timimoun and Ahnet gas development projects respectively.

•

On the TFT field, plateau production was maintained at 185 kboe/d. A 3D seismic survey covering 1,380 km2on the East and West portions of the field was completed in October 2011. The data is currently being processed and interpreted.

•

Launched in 2010 following approval of the development plan by the ALNAFT national agency, the basic engineering phase for the Timimoun project has been completed. Commercial gas production is scheduled to start up in 2016, with anticipated plateau production of 1.6 Bm3/y (160 Mcf/d).

•

Under the Ahnet project, the technical section of a development plan was submitted to the authorities in July 2011. Discussions are underway with the project partners and the authorities with regard to bringing the gas to market, with anticipated plateau production of 4 Bm3/y (400 Mcf/d).

InAngola, the Group’s production was 135 kboe/d in 2011, compared to 163 kboe/d in 2010 and 191 kboe/d in 2009. Production comes mainly from Blocks 0, 14 and 17. Highlights of the period 2009 to 2011 included several discoveries on Blocks 15/06 and 17/06, and progress on the major Pazflor and CLOV projects.

Deep-offshore Block 17 (40%, operator) is TOTAL’s principal asset in Angola. It is composed of four major zones: Girassol, Dalia, Pazflor and CLOV.

On the Girassol hub, production from the Girassol, Jasmim and Rosa fields was 220 kb/d in 2011.

On the Dalia hub, production was nearly 240 kb/d in 2011.

Production on Pazflor, the third hub consisting of the Perpetua, Zinia, Hortensia and Acacia fields, started up in August 2011 and reached 170 kb/d at the end of 2011. The production capacity of the FPSO is 220 kb/d.

The development of CLOV, the fourth hub, started in 2010 and will result in the installation of a fourth FPSO with a capacity of 160 kb/d. Start-up of production is expected in 2014.

On Block 14 (20%), production on the Tombua-Landana field started in August 2009 and adds to production from the Benguela-Belize-Lobito-Tomboco and Kuito fields.

On ultra-deep offshore Block 32 (30%, operator), appraisal is continuing and pre-development studies for a first production zone in the central/southeastern portion of the block are underway (Kaombo project).

On Block 15/06 (15%), a first development hub including the discoveries located on the northwest portion of the block has been identified. The development plan for the hub has been submitted to the authorities.

TOTAL has operations on exploration Blocks 33 (55%, operator), 17/06 (30%, operator), 25 (35%, operator), 39 (15%) and 40 (50%, operator).

TOTAL is also developing in LNG through the Angola LNG project (13.6%), which includes a gas liquefaction plant near Soyo. The plant will be supplied in particular by the gas associated with production from Blocks 0, 14, 15, 17 and 18. Construction work is ongoing and start-up is expected in 2012.

InCameroon, the Group’s production was 3 kboe/d in 2011, compared to 9 kboe/d in 2010 and 12 kboe/d in 2009. In April 2011, TOTAL finalized the divestment of its stake in its upstream subsidiary Total E&P Cameroon, a Cameroonian company in which the Group had a 75.8% holding. Since that time, the Group no longer owns any exploration and production assets in the country.

InCôte d’Ivoire, TOTAL is operator of the Cl-100 exploration license, with a 60% stake. The 2,000 km2 license is located approximately 100 km southeast of Abidjan in water depths ranging from 1,500 to 3,100 m. Exploration work started with a 3D seismic survey of over 1,000 km2 at the end of 2011, which completed the 3D coverage of the entire block. Initial exploratory drilling is planned for the end of 2012.

In February 2012, TOTAL acquired interests in three ultra-deepwater exploration licenses : CI-514 (54%, operator), CI-515 (45%) and CI-516 (45%). For the two last blocks TOTAL will become the operator upon the first commercial discovery. The work program includes a 3D seismic survey of the whole acreage and one well to be drilled on each block during the initial three-year exploration period.

InEgypt, TOTAL signed a concession agreement in February 2010 and became operator of Block 4 (East El Burullus Offshore) with a 90% stake. The license, located in the Nile Basin where a number of gas discoveries have been made, covers a 4-year initial exploration period and includes a commitment to carrying out 3D seismic work and drilling exploration wells. Following the 3,374 km2 3D seismic survey shot in 2011, drilling is under preparation.

InGabon, the Group’s production was 58 kboe/d in 2011, compared to 67 kboe/d in 2010 and 71 kboe/d in 2009, due to the natural decline of fields. The Group’s exploration and production activities in Gabon are mainly carried out

by Total Gabon(1), one of the Group’s oldest subsidiaries in sub-Saharan Africa.

Under the Anguille field redevelopment project, the AGM N platform, from which twenty-one additional development wells are to be drilled, left the Fos-sur-Mer shipyard at the end of 2011 for Gabon. The drilling campaign is expected to start at the beginning of the second quarter of 2012.

•

On the deep-offshore Diaba license (Total Gabon 63.75%, operator), following the 2D seismic survey that was performed in 2008 and 2009, a 6,000 km2 3D seismic was shot in 2010. This new seismic survey has been processed and the results are currently being interpreted.

Total Gabon farmed into the onshore Mutamba-Iroru (50%), DE7 (30%) and Nziembou (20%) exploration licenses in 2010. Following negative exploratory drilling on license DE7, Total Gabon relinquished the license in 2011. Studies are underway to shoot a seismic survey on the Nziembou license and drill an exploration well on the Mutamba license in 2012.

InKenya, TOTAL acquired in September 2011 a 40% stake in five offshore licenses in the Lamu Basin: L5, L7, L11a, L11b and L12. This transaction has been approved by the Kenyan authorities.

InLibya, the Group’s production was 20 kb/d in 2011, compared to 55 kb/d in 2010 and 60 kb/d in 2009. Events in the country forced the entire industry to stop production and freeze development. Depending on the field, production was suspended from late February or early March 2011. The new EPSA IV contracts came into effect in 2010. At that time, the contract zones in which TOTAL is a partner were redefined: 15, 16 & 32 (formerly C 137, 75%(2)), 70 & 87 (formerly C 17, 75%(2)), 129 & 130 (formerly NC 115, 30%(2)) and 130 & 131 (formerly NC 186, 24%(2)).

In offshore zones 15, 16 and 32, production resumed in September 2011 and reached its former level within a few days. Exploration work is expected to restart in 2012.

In onshore zones 70 and 87, production resumed in January 2012. It will gradually be ramped back up to plateau level.

In addition, the Group expects to continue the development of the Dahra and Garian fields.

In onshore zones 129, 130 and 131, production resumed in October 2011. A return to plateau level

production is expected during 2012. The seismic campaign started before the events is expected to resume by the end of 2012.

•

In the onshore Murzuk Basin, following a successful appraisal well drilled on the discovery made on a portion of Block NC 191 (100%(2), operator), a development plan was submitted to the authorities in 2009. After the interruption related to the events, discussions with the authorities have resumed.

InMadagascar, TOTAL acquired in 2008 a 60% stake in the Bemolanga license (operator), to appraise the oil sand accumulations it contains. The appraisal phase did not confirm the feasibility of the mining development of the resources. However, the contract was extended by one year until June 2012 to assess the conventional exploration potential of the license.

InMauritania, TOTAL has exploration operations on the Ta7 and Ta8 licenses (60%, operator), located in the Taoudenni Basin. In January 2012, TOTAL (90%, operator) acquired interests in two exploration licenses: Block C9 in ultra-deep offshore, and Block Ta29 onshore in the Taoudenni Basin.

On the Ta7 license, a 1,220 km 2D seismic survey was shot in 2011 and is being interpreted.

On the Ta8 license, drilling of the exploration well ended in 2010. Results from the well were disappointing.

On the C9 and Ta29 licenses, a seismic acquisition campaign is planned as the first phase of the exploration program.

InNigeria, the Group’s production was 287 kboe/d in 2011, compared to 301 kboe/d in 2010 and 235 kboe/d in 2009. TOTAL has been present in Nigeria since 1962. It operates seven production licenses (OML) out of the forty-four in which it has a stake, and two exploration licenses (OPL) out of the eight in which it has a stake. The Group is also active in LNG through Nigeria LNG and the Brass LNG project. With regard to recent changes in acreage:

In 2011, TOTAL (operator) increased its stake from 45.9% to 48.3% in Block 1 of the Joint Development Zone, administered jointly by Nigeria and São Tomé and Principe.

The divestment of 10% of the Group’s stakes held through the joint venture operated by Shell Petroleum Development Company (SPDC) in Blocks OML 26 and 42 has been finalized.

(1)Total Gabon is a Gabonese company whose shares are listed on Euronext Paris. TOTAL holds 58.28%, the Republic of Gabon holds 25% and the public float is 16.72%.
(2)TOTAL’s stake in the foreign consortium.

TOTAL owns 15% of the Nigeria LNG gas liquefaction plant, located on Bonny Island, with an overall LNG capacity of 22.7 Mt/y. In 2011, the plant’s operating rate continued to increase and reached 81%, compared to 72% in 2010 and 50% in 2009, mainly due to the increased reliability of gas deliveries from the other suppliers.

Preliminary work continued in 2011 prior to launching the Brass LNG gas liquefaction plant project (17%), which calls for the construction of two trains, each with a capacity of 5 Mt/y. Calls for tenders for the construction of the plant and loading facilities are underway.

TOTAL continues its efforts to strengthen its ability to supply gas to the LNG projects in which it owns a stake and to meet the growing domestic demand for gas:

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On the OML 136 license (40%), the positive results for the Agge 3 appraisal well confirmed the development potential of the license. Development studies are underway.

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As part of its joint venture with the Nigerian National Petroleum Company (NNPC), TOTAL is also activecontinuing with the project to increase the production capacity of the OML 58 license (40%, operator) from 370 Mcf/d to 550 Mcf/d of gas in the country through its interest in CEPSA(1), which has operated the Caracara Block since 2008.

• On Cusiana, construction of the facilities intended to increase gas production capacity from 180 Mcf/d to 250 Mcf/d was completed in December 2010. In addition, start up of a project to extract 6 kb/d of LPG is expected in 2011.
• On Niscota, drilling of the Huron-1 well led to the discovery in 2009 of a gas and condensate field. A 3D seismic survey completed in 2010 aimed at determining the size of the discovery and the location of new appraisal wells. Drilling of an appraisal well is expected in 2011.
InFrench Guiana, TOTAL acquired a 25% interest in the Guyane Maritime license in December 2009. The acquisition is subject to approval by the French authorities. The license, located about 150 km off the coast, covers an area of approximately 32,000 km2 in water depths ranging from 2,000 to 3,000 meters. 3D seismic acquisition and interpretation work were carried out in 2009 and 2010. Drilling of an exploration well is expected in 2011.
InTrinidad & Tobago, where TOTAL has been present since 1996, the Group’s production was 3 kb/d in 2010, compared to 5 kb/d in 2009 and 6 kb/d in 2008. TOTAL holds a 30% interest in the offshore Angostura field located on Block 2C.2012. A second phase forof this project is expected to allow the development of other resources through these facilities.

–

On the OML 112/117 licenses (40%), TOTAL continued development studies in 2011 for the Ima gas reserves, is underway, with production expected to begin in the second quarter of 2011.field.

On the OML 102 license (40%, operator), TOTAL confirmed the launch of the Ofon phase 2 project in 2011 with the signing of the main construction contracts, with production start-up scheduled for 2014. In 2011 the Group also discovered Etisong North, located 15 km from the Ofon field, which is currently producing. This is the second exploration well on the Etisong hub after the Etisong Main discovery made in 2008. The exploration campaign is expected to continue with two additional wells in 2012.

On the OML 130 license (24%, operator), the Akpo field, which started up in March 2009, reached plateau production of 225 kboe/d in 2010. Production was limited between March and September 2011 by a technical issue on the engine of the gas reinjection compressor (liquids production of 160 kb/d instead of 190 kb/d). On this license, the Group is actively working on the Egina field, for which a development

InVenezuela, where TOTAL

plan has been present since 1980, the Group’s production was 55 kboe/d in 2010, compared to 54 kboe/d in 2009 and 92 kboe/d in 2008. TOTAL holds interests in PetroCedeño (30.323%), Yucal Placer (69.5%) and in the offshore exploration Block 4, located in the Plataforma Deltana (49%).

• Pursuant to the decision by the Venezuelan authorities to terminate all operating contracts signed in the 1990s, the Sincor association in which TOTAL held an interest was transformed into a mixed public/private company: PetroCedeño. Under this agreement that led to the transfer of operatorship to PetroCedeño, TOTAL’s interest in the project decreased from 47% to 30.323% and PDVSA’s interest increased to 60%. The transformation process was completed in February 2008.
PDVSA agreed to compensate TOTAL for the reduction of its interest in Sincor by assuming $326 million of debt and by paying, mostly in crude oil, $834 million. The compensation process was completed in 2009.
• On Block 4, the exploration campaign, which involved three wells, was completed in 2007. In 2008, the authorities agreed to let the partners retain the Cocuina discovery zone (lots B and F) and relinquish the rest of the block.
• In early 2008, TOTAL signed two agreements for joint studies with PDVSA on the Junin 10 Block, in the Orinoco Belt.
Asia-Pacific
In 2010, TOTAL’s production in the Asia-Pacific region was 248 kboe/d, representing 10% of the Group’s overall production, compared to 251 kboe/d in 2009 and 246 kboe/d in 2008.
InAustralia, where TOTAL has held leasehold rights since 2005, the Group owns 24% of the Ichthys project, 27.5% of the GLNG project and ten offshore exploration licenses,
(1)  In February 2011, TOTAL signed an agreement to dispose of its 48.83% interest in CEPSA. The transaction is conditioned on obtaining all requisite approvals.


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including four that it operates, off the northwest coast in the Browse, Vulcan and Bonaparte Basins. In 2010, the Group produced 1 kboe/d due to its interest in GLNG.
• FEED studies for the development of the gas and condensates Ichthys field located in the Browse Basin are ongoing. The studies launched in 2009 include a floating platform designed for gas production, treatment and export, an FPSO to stabilize and export condensates, an 885 km gas pipeline and a liquefaction plant located in Darwin.
Production capacity is expected to be 8.4 Mt/y of LNG and 1.6 Mt/y of LPG as well as production capacity of 100 kb/d of condensates. The operator plans astart-up of the field at year-end 2016.
• In late 2010, TOTAL acquired a 20% interest in the GLNG project, followed by an additional 7.5% interest for which the acquisition was closed in March 2011. This integrated gas production, transport and liquefaction project is based on the development of coal gas from the Fairview, Roma, Scotia and Arcadia fields. The final investment decision was made in January 2011 andstart-up is expected in 2015. LNG production is expected to eventually reach 7.2 Mt/y.
• Major seismic acquisition activity occurred in 2008 on the four exploration licenses operated by TOTAL, followed by the interpretation of data in 2009. A drilling campaign involving two wells started in early 2011 on the WA403 license (60%, operator).
• In 2010, following unsuccessful results, TOTAL relinquished the exploration licenses located in the Carnarvon Basin.
InBrunei, where TOTAL has been present since 1986, the Group operates the offshore Maharaja Lela Jamalulalam gas and condensates field located on Block B (37.5%). The Group’s production was 14 kboe/d in 2010, compared to 12 kboe/d in 2009 and 14 kboe/d in 2008. The gas is delivered to the Brunei LNG liquefaction plant.
On Block B, a new drilling campaign started in July 2009 that includes a development well, which started production in April 2010, and two exploration wells drilled in 2010 in the southern portion of the field that discovered oil and gas. Development studies for these new reserves are underway.
On deep-offshore exploration Block CA1 (54%, operator), formerly Block J, exploration operations that had been suspended since May 2003 due to a border dispute between Brunei and Malaysia resumed in September 2010. Both countries reached a border agreement in 2009 that led to adapting the production sharing agreement signed in 2003, resulting in two new partners selectedapproved by the government of Malaysia farming into the exploration block. TOTAL’s share decreased to 54% from 60%Nigerian authorities. Calls for tender are underway and TOTAL remains the operator. A drilling campaign involving several wellsconstruction is expected to start in the second half of 2011.
InChina, the Group is present on the South Sulige Block, located in the Ordos Basin, in the Inner Mongolia province. Appraisal work was conducted on this block between 2006 and 2008, in particular seismic acquisition, the drilling of four new wells and tests on existing wells. The development plan proposed by TOTAL in January 2010, in partnership with China National Petroleum Corporation (CNPC), was then adjusted to take advantage of the synergies achieved with the development of CNPC-operated Great Sulige. It was adopted in November 2010 by both partners and the approval process with the authorities is ongoing.
Both partners agreed that TOTAL’s share in cofinancing the development would be 49% and CNPC’s share would be 51% (operator). The development will be operated by CNPC where a number of specialists from TOTAL will be assigned.
InIndonesia, TOTAL has been present since 1968 with production of 178 kboe/d in 2010, compared to 190 kboe/d in 2009 and 177 kboe/d in 2008.
TOTAL’s operations in Indonesia are primarily concentrated on the Mahakam permit (50%, operator), which covers several gas fields, including Peciko and Tunu. TOTAL also holds an interest in the Sisi-Nubi gas field (47.9%, operator). TOTAL delivers most of its natural gas production to the Bontang LNG plant operated by the Indonesian company PT Badak. The overall capacity of the eight liquefaction trains of the Bontang plant is 22 Mt/y.
In 2010, gas production operated by TOTAL amounted to 2,488 Mcf/d. The gas operated and delivered by TOTAL accounted for nearly 80% of Bontang LNG’s supply. In addition to gas production, operated condensates and oil production from the Handil and Bekapai fields amounted to 49 kb/d and 23 kb/d, respectively.
2012.

• On the Mahakam permit:

On the OML 138 license (20%, operator), TOTAL finalized the development of the Usan offshore project (180 kb/d, production capacity) with the drilling of production wells, installation of sub-sea equipment and connection to the FPSO. Production started up in February 2012.

– Drilling of additional wells on the Tunu field continued in 2010 as part of the twelfth and thirteenth development phases. The 3D seismic campaign on the central/southeastern portion of the field was completed in 2010 and drilling of development wells to discover shallow gas reservoir started in 2010.


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TOTAL also strengthened its deep offshore position with the ongoing development of the Bonga Northwest project on the OML 118 license (12.5%).

– On Peciko, following

Due to the relative calm with regard to safety in the Niger Delta region in 2011, it has been possible to maintain oil production operated by the SPDC joint venture, in which TOTAL has a 10% stake, at close to 2010 levels. The SPDC joint venture’s gas production was higher in 2011 as a result of the contribution of the Gbaran-Ubie project, which started up in 2010.

InUganda, TOTAL finalized in February 2012 its farm-in for an interest of 33.33%, which covers the EA-1 and EA-2 licenses as well as the new Kanywataba license and the Kingfisher production license. All of these licenses are located in the Lake Albert region, where oil resources have already been discovered and a substantial potential remains to be explored.

TOTAL will be the operator of EA-1 and partner on the other licenses. TOTAL and its partners Tullow and CNOOC are embarking on an ambitious exploration and appraisal program from 2012 onwards. First priority will be given to the exploration of Kanywataba and EA-1 licenses west of the Nile.

start-up of a new platform (phase 5) in late 2008, a new phase of drilling operations (phase 7) started in 2009 and continued in 2010. New low-pressure compression capacities (phase 6) were commissioned in May 2010.

– On Bekapai, debottlenecking operations to increase gas production were completed in July 2010.
– Development of the South Mahakam permit continued with the award of the Engineering, Procurement and Construction contract (EPC) in August 2010 to develop the Stupa, West Stupa and East Mandu discoveries.Start-up of production is expected in early 2013.
• On the Sisi-Nubi field, which began production in 2007, drilling operations continue. The gas from Sisi-Nubi is produced through Tunu’s processing facilities.
• In 2008, a seismic campaign was conducted on the Southeast Mahakam exploration block (50%, operator), located in the Mahakam Delta. Drilling of the first exploration well (Trekulu 1) was completed in late 2010.
• In May 2010, the Group acquired a 24.5% interest in two exploration blocks — Arafura and Amborip VI — located in the Arafura sea. Drilling of a first well started in mid-November 2010 on the Amborip VI license, which was followed by a second drilling that started in early 2011 on the Arafura license.
• In October 2010, the Group closed the acquisition of a 15% interest in the Sebuku license where the Ruby gas discovery is located, the development of which was launched in mid-February 2011 with targeted production of 100 Mcf/d of natural gas and expectedstart-up in 2013.
In October 2010, the Group signed an agreement with the consortium Nusantara Regas (Pertamina-PGN) for the delivery of 11.75 Mt of LNG over the period2012-2022 to a re-gasification terminal located near Jakarta.
The Heads of Agreement that TOTAL, Inpex and state-owned Pertamina signed in 2009 with a consortium of LNG buyers in Japan (Western Buyers) came into effect in March 2010. As part of this agreement, the Bontang LNG plant is expected to deliver 25 Mt of LNG to Japan for the period2011-2020. The gas supplied will come from the Mahakam permit.
InMalaysia, TOTAL signed a production sharing contract in 2008 with state-owned Petronas for the offshore exploration Blocks PM303, which TOTAL relinquished in early 2011, and PM324 (70%, operator).
A drilling campaign in high pressure/high temperature conditions is expected to be launched in the second half of 2011 on Block PM324.
TOTAL also signed in November 2010 a new production and sharing agreement with Petronas for the deep offshore exploration Block SK 317 B (85%, operator) located off the state of Sarawak.
InMyanmar, TOTAL operates the Yadana field (31.2%). Located on offshore Blocks M5 and M6, this field produces gas that is delivered mainly to PTT (the Thai state-owned company) to be used in Thai power plants. The Yadana field also supplies the domestic market via a land pipeline and, since June 2010, via asub-sea pipeline built and operated by Myanmar’s state-owned company MOGE.
The Group’s production was 14 kboe/d in 2010, compared to 13 kboe/d in 2009 and 14 kboe/d in 2008.
InThailand, the Group’s production was 41 kboe/d in 2010, compared to 36 kboe/d in 2009 and 41 kboe/d in 2008. The rise in production in 2010 is the result of sustained gas demand, driven by economic growth in the country. The Group’s main asset is the offshore Bongkot gas and condensates field (33.3%). PTT purchases all of the natural gas and condensates production.
• On the northern portion of the Bongkot field, the 3F (three wellhead platforms) and 3G (two platforms) development phases came onstream in 2008 and 2009, respectively. New investments allow gas demand to be met and plateau production to be maintained:
– the three platforms from the 3H development phase were installed in 2010 and production started up in early 2011;
– phase 3J (two platforms) was launched in late 2010; and
– additional low-pressure compressors have been installed to increase gas production.
• The southern portion of the field (Great Bongkot South) is also being developed in several phases. This development is designed to include a processing platform, a residential platform and thirteen production platforms. Construction of the facilities, which began in 2009, accelerated in 2010 and production is expected to start up in early 2012.
In 2009, three successful exploration wells were drilled on Bongkot that are expected to be developed subsequently to maintain plateau production. In 2010, an exploration well was drilled on Bongkot North and a second well was drilled on Block G12-48 (33.3%), which neighbors the


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Bongkot field. The positive results from both wells are under interpretation.
InVietnam, TOTAL holds a 35% interest in the production sharing contract for the offshore 15-1/05 exploration block following an agreement signed in 2007 with PetroVietnam. A 1,600 km2 3D seismic survey was shot in the summer of 2008 on this block. Two oil discoveries were made on the southern portion of the block, one in November 2009 and the other in October 2010. A new drilling campaign that involves five wells started in November 2010.
In 2009, TOTAL and PetroVietnam signed a production sharing agreement for Blocks DBSCL-02 and DBSCL-03. The onshore blocks, located in the Mekong Delta region, are held by TOTAL (75%, operator) and PetroVietnam (25%). A first 2D seismic survey was shot between November 2009 and April 2010.
Commonwealth of Independent States (CIS)
In 2010, TOTAL’s production in the CIS was 23 kboe/d, representing 1% of the Group’s overall production, compared to 24 kboe/d in 2009 and 26 kboe/d in 2008.
InAzerbaijan, TOTAL has been present since 1996 with production of 13 kboe/d in 2010, compared to 12 kboe/d in 2009 and 18 kboe/d in 2008. The Group’s production is focused on the Shah Deniz field (10%). TOTAL holds a 10% interest in South Caucasus Pipeline Company, owner of the SCP (South Caucasus Pipeline) gas pipeline that transports the gas produced in Shah Deniz to the Turkish and Georgian markets. TOTAL also holds a 5% interest in BTC Co., owner of the BTC (Baku-Tbilisi-Ceyhan) oil pipeline, which connects Baku and the Mediterranean Sea.
• Gas deliveries to Turkey and Georgia from the Shah Deniz field continued throughout 2010, at a lower pace for Turkey due to weaker demand. In 2010, SOCAR, the Azerbaijan state-owned company, took gas quantities superior to those provided for by the agreement.
An agreement was made with Botas, a Turkish state-owned company, to revise the price of gas sold to Turkey as part of Shah Deniz Phase 1, applicable with retroactive effect from April 15, 2008.
Development studies and business negotiations for the sale of additional gas needed to launch a second development phase in Shah Deniz continued in 2010. SOCAR and Botas signed in June 2010 a Memorandum of Understanding for the sale of additional gas volumes and the transfer conditions for volumes intended for the European market. This agreement is expected to allow FEED studies to start in 2011 for the second phase.
• On the BTC oil pipeline, notably used to transport the condensates produced at Shah Deniz, equipment was installed in 2009 to inject additives to reduce drag. This resulted in the oil pipeline capacity increasing from 1 Mb/d to 1.2 Mb/d.
In 2009, TOTAL and SOCAR signed an exploration, development and production sharing agreement for a license located on the Absheron block in the Caspian Sea. TOTAL (40%) is the operator during the exploration phase and a joint operating company will manage operations during the development phase. Drilling of an exploratory well started in early 2011.
InKazakhstan, TOTAL has held since 1992 an interest in the North Caspian license that covers notably the Kashagan field where the substantial reserves may eventually allow production to reach more than 1 Mb/d (in 100%).
The Kashagan project is expected to be developed in several phases. The development plan for the first phase (300 kb/d) was approved in February 2004 by the Kazakh authorities, allowing work to begin on the field. Drilling of development wells, which began in 2004, continued in 2010. The consortium continues to target first commercial production by year-end 2012.
In October 2008, the members of the North Caspian Sea Production Sharing Agreement (NCSPSA) consortium and the Kazakh authorities signed agreements to end the disagreement that began in August 2007. Their implementation led to a reduction of TOTAL’s share in NCSPSA from 18.52% to 16.81%. The operating structure was reconfigured and the North Caspian Operating Company (NCOC), a joint operating company, was entrusted with the operatorship in January 2009. NCOC supervises and coordinates NCSPSA’s operations.
InRussia, where TOTAL has been present since 1989, the Group’s production was 10 kboe/d in 2010, compared to 12 kboe/d in 2009 and 8 kboe/d in 2008. Production comes mainly from the Kharyaga field (40%, operator).
• In 2007, TOTAL and Gazprom signed an agreement for the first phase of development on the giant Shtokman gas and condensates field, located in the Barents Sea. Under this agreement, Shtokman Development AG (TOTAL, 25%) was created in 2008 to design, build, finance and operate this first development phase whose overall production capacity is expected to be 23.7 Bm3/y (0.4 Mboe/d). Engineering studies are underway for the portion of the project that will allow the transport of gas by pipeline through the Gazprom network (offshore development, gas pipeline and onshore gas and condensates processing facilities — Teriberka site),


26

with a final investment decision expected in 2011, and for the LNG part of the project that will allow the export of 7.5 Mt/y of LNG from a new harbor located in Teriberka, representing approximately half of the gas produced by the first development phase.
• In December 2009, TOTAL closed the acquisition from Novatek of a 49% interest in Terneftegas, which holds a development and production license on the onshore Termokarstovoye field. An appraisal well was drilled in 2010, the results of which are expected to lead to a final investment decision by year-end 2011.
• On the Kharyaga field, work related to the development plan of phase 3 is ongoing. This development plan is intended to maintain plateau production at the30 kboe/d (in 100%) level reached in late 2009. In December 2009, TOTAL signed an agreement, effective January 1, 2010, to sell 10% of the field to state-owned Zarubezhneft, and decreased its interest to 40%.
• In October 2009, TOTAL signed an agreement setting forth the principles of a partnership with KazMunaiGas (KMG) for the development of the Khvalynskoye gas and condensates field, located offshore in the Caspian Sea on the border between Kazakhstan and Russia, under Russian jurisdiction. Gas production is expected to be transported to Russia. Pursuant to this agreement, TOTAL is planning to acquire a 17% interest in KMG’s share.
• On March 2, 2011, TOTAL and Novatek signed two agreements in principle providing for:
–  TOTAL becoming the main international partner on the Yamal LNG project with a 20% interest, and Novatek holding a 51% interest in the project. As part of the agreement, the transaction is expected to be closed by July 2011.
–  TOTAL taking a 12.08% interest in Novatek with both parties intending that TOTAL increases its interest to 15% within 12 months and to 19.40% within 36 months.
Europe
In 2010, TOTAL’s production in Europe was 580 kboe/d, representing 24% of the Group’s overall production, compared to 613 kboe/d in 2009 and 616 kboe/d in 2008.
InDenmark, TOTAL was awarded in June 2010 an 80% interest in and the operatorship for licenses 1/10 (Nordjylland) and 2/10 (Frederoskilde), following the approval by the Danish Energy Agency. These onshore licenses cover areas of 3,000 km2 and 2,300 km2, respectively, and are expected to be appraised for shale gas.
InFrance, the Group’s production was 21 kboe/d in 2010, compared to 24 kboe/d in 2009 and 25 kboe/d in 2008. TOTAL’s major assets are the Lacq (100%) and Meillon (100%) gas fields, located in the southwest part of the country.
On the Lacq field, operated since 1957, a carbon capture and storage pilot was commissioned in January 2010. In connection with this project, a boiler has been modified to operate in an oxy-fuel combustion environment and the carbon dioxide emitted is captured and re-injected in the depleted Rousse field. As part of the Group’s sustainable development policy, this project will allow the Group to assess one of the technological possibilities for reducing carbon dioxide emissions.
In 2010, TOTAL was awarded the Montélimar (100%) license to assess the shale gas potential of the area once authorizations to operate are given.
InItaly, the Tempa Rossa field (50%, operator), discovered in 1989 and located on the unitized Gorgoglione concession (Basilicate region), is one of TOTAL’s principal assets in the country.
Site preparation work started in early August 2008, but the proceedings initiated by the Prosecutor of the Potenza Court against Total Italia led to a freeze in the preparation work. New calls for tenders have been launched related to certain contracts that had been cancelled. Drilling of the Gorgoglione 2 appraisal well that started in May 2010 is ongoing. The partners on Tempa Rossa are expected to make the final investment decision in 2011 for this project that has an expected capacity of 55 kboe/d. The extension plan for the Tarente refinery export system, needed for the development of the Tempa Rossa field, was submitted to the Italian authorities in May 2010 for an approval expected in 2011.Start-up of production is currently expected in 2015.
InNorway, where the Group has been present since the mid-1960s, TOTAL holds interests in seventy-eight production licenses on the Norwegian continental shelf, fifteen of which it operates. Norway is the largest single-country contributor to the Group’s production, with volumes of 310 kboe/d in 2010, compared to 327 kboe/d in 2009 and 334 kboe/d in 2008.
• In the Norwegian North Sea, production was 226 kboe/d in 2010. The most substantial contribution to production, for the most part non-operated, comes from the Greater Ekofisk Area (Ekofisk, Eldfisk, Embla, etc.), located in the south.


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The Greater Hild Area (Hild East, Central, West, etc.) is located in the north.
–  Several projects are ongoing or are under study in the Greater Ekofisk Area, where the Group has a 39.9% participation in the Ekofisk and Eldfisk fields. The Ekofisk South and Eldfisk 2 projects are expected to be launched in 2011 after receiving the approval from the Norwegian authorities.
–  In 2010, the Group sold its interests in the Valhall/Hod fields.
–  On the Greater Hild Area, the Group holds a 49% interest (operator). The development scheme was selected at year-end 2010. The project is expected to be approved in 2011 and production is scheduled to start up in 2016.
–  On Frigg, decommissioning is completed.
• In the Norwegian Sea, the Haltenbanken area includes the Tyrihans (23.2%), Mikkel (7.7%) and Kristin (6%) fields as well as the Åsgard (7.7%) field and its satellites Yttergryta (24.5%) and Morvin (6%). Morvin started up in August 2010 as planned, with two producing wells. In 2010, the Group’s production in the Haltenbanken area was 61 kboe/d.
• In the Barents Sea, LNG production on Snøhvit (18.4%) started in 2007. This project includes development of the natural gas fields, Snøhvit, Albatross and Askeladd, as well as the construction of the associated liquefaction facilities. Due to design problems, the plant experienced reduced capacity during thestart-up phase. A number of maintenance turnarounds were scheduled to fix the issue and the plant is now operating at its design capacity (4.2 Mt/y).
Between 2008 and 2010, exploration and appraisal work was carried out on various licenses. In the Norwegian North Sea, the oil discovery on Dagny (PL 048, 21.8%) and the Pan/Pandora (PL 120, 11%) discovery, made in 2008, substantially increased the potential of the Sleipner and Visund areas, respectively. Pan/Pandora is to be developed as a fast track satellite. The development project is expected to be launched in 2011 after receipt of approval from the Norwegian authorities. The Dagny project is scheduled for approval in 2012.
A number of discoveries were made in 2009, in particular on Beta Vest (PL 046, 10%) near Sleipner, Katla (PL 104, 10%), located south of Oseberg, and Vigdis North East (PL 089, 5.6%), located south of Snorre. Katla and Vigdis North East are expected to be developed as fast track satellites, with the approval of the projects by the partners on both licenses planned for the first half of 2011. In the Central North Sea, TOTAL (40% operator) made a gas and condensate discovery in 2010 on the David structure (PL 102C -Heimdal area). The structure could be developed through a tie-back to Heimdal via Skirne-Byggve. In the Barents Sea, TOTAL was awarded in 2009 a new exploration license — PL 535 (40%) — during the twentieth licensing round. On this license, a 3D seismic acquisition was completed in 2009 and drilling is expected to begin in 2011. In 2011, TOTAL was awarded four new exploration licenses, including one for which TOTAL is operator, during the 2010 APA (Awards in Predefined Areas).
In theNetherlands, TOTAL has been active in natural gas exploration and production since 1964 and currently holds twenty-four offshore production permits, including twenty that it operates, and an offshore exploration permit, E17c (16.92%) awarded in 2008. In 2010, the Group’s share of production amounted to 42 kboe/d, compared to45 kboe/d in 2009 and 44 kboe/d in 2008. In 2008, TOTAL acquired Goal Petroleum (Netherlands) B.V.
• On the K5F field (40.39%, operator), production began in 2008. This project is comprised of twosub-sea wells connected to the existing production and transport facilities. K5F is the first project in the world to use only electrically drivensub-sea well heads and systems.
• Development of the K5CU project (49%, operator) was launched in 2009 and production started up in early 2011. This development includes four wells supported by a platform that has been installed in September 2010 and is connected to the K5A platform by a 15 km gas pipeline.
In late 2010, TOTAL disposed of 18.19% of its shares in the NOGAT gas pipeline and decreased its interest to 5%.
In theUnited Kingdom, TOTAL has been present since 1962 with production in 2010 of 207 kboe/d, compared to 217 kboe/d in 2009 and 213 kboe/d in 2008. 86% of this production comes from operated fields located in two major zones: the Alwyn zone in the northern North Sea, and the Elgin/Franklin zone in the Central Graben.
• On the Alwyn zone,start-up of satellite fields or new reservoir compartments allowed production to be maintained. The processing and compressing capacities of the Alwyn platform increased from 530 Mcf/d to 575 Mcf/d during the summer of 2008 planned shutdown for maintenance.
The N52 well drilled on Alwyn (100%) in a new compartment of the Statfjord reservoir came onstream in February 2010 with initial flow of 15 kboe/d (gas and condensates).


28

The Jura field (100%), discovered in late 2006, started production in May 2008 through twosub-sea wells connected to the oil pipeline linking Forvie North and Alwyn. The production capacity of this field is 50 kboe/d (gas and condensates).
Development studies were completed on Islay (100%), a second gas and condensates discovery made in 2008 and located in a faulted panel immediately east of Jura, and the development was approved in July 2010.Start-up of production is expected in the second half of 2011 with a production capacity of 15 kboe/d.
In late 2008, TOTAL increased its interest in the Otter field from 54.3% to 81%. An agreement to dispose of this interest was reached in 2010 and is expected to be completed under two phases between 2011 and 2012.
The development of the Elgin (35.8%) and Franklin fields (35.8%), in production since 2001, contributed substantially to the Group’s operations in the United Kingdom. On the Elgin field, the infill well drilled between November 2008 and September 2009 came onstream in October 2009 with production of 18 kboe/d. Drilling of a second infill well was completed in 2010 with production of 12 kboe/d starting up in May. Drilling of such a well in a high pressure/high temperature highly depleted field is a significant technical milestone.
Additional development of West Franklin through a second phase (drilling of three additional wells and installation of a new platform connected to Elgin) was approved in November 2010. This phase is expected to result in the development of approximately 85 Mboe in 100%.Start-up of production is expected at year-end 2013.
As part of an agreement signed in 2005, TOTAL acquired a 25% interest in two blocks located near Elgin and Franklin by drilling an appraisal well on the Kessog structure. This interest was increased to 50% in 2009.
• In the West of Shetland area, TOTAL increased its interest to 80% in the Laggan and Tormore fields in early 2010.
The final investment decision for the Laggan/Tormore project was made in March 2010 and commercial production is scheduled to start in 2014 with an expected capacity of 90 kboe/d. The joint development scheme selected by TOTAL and its partner includessub-sea production facilities and off-gas treatment (gas and condensates) at a plant located near the Sullom Voe terminal in the Shetland Islands. The gas would then be exported to the Saint-Fergus terminal via a new pipeline connected to the Frigg pipeline (FUKA).
In 2010, the Group’s interest in the P967 license (operator), which includes the Tobermory gas discovery, increased to 50% from 43.75%. This license is located north of Laggan/Tormore.
In early 2011, a gas and condensate discovery was made on the Edradour license (75%, operator).
TOTAL holds interests in ten assets operated by third parties, the most important in terms of reserves being the Bruce (43.25%) and Alba (12.65%) fields. The Group disposed of its interest in the Nelson field (11.5%) in 2010.
Middle East
In 2010, TOTAL’s production in the Middle East was 527 kboe/d, representing 22% of the Group’s overall production, compared to 438 kboe/d in 2009 and 432 kboe/d in 2008.
In theUnited Arab Emirates, where TOTAL has been present since

U.A.E.

1939 the Group’s production in 2010 was 222 kboe/d, compared to 214 kboe/d in 2009 and 243 kboe/d in 2008. The changes that have been recorded since 2008 are mainly due to the implementation of OPEC quotas.
In
Abu Dhabi-Abu Al Bu Khoosh (75.00%)

Abu Dhabi TOTAL holds a 75%offshore (13.33%)(e)

Abu Dhabi onshore (9.50%)(f)

GASCO (15.00%)

ADGAS (5.00%)

Oman

1937

Various fields onshore (Block 6) (4.00%)(g)

Mukhaizna field (Block 53) (2.00%)(h)

Qatar

1936Al Khalij (100.00%)

North Field-Block NF Dolphin (24.50%) North Field-Block NFB (20.00%)

North Field-Qatargas 2 Train 5 (16.70%)

Syria

1988Deir Ez Zor (Al Mazraa, Atalla North, Jafra, Marad, Qahar, Tabiyeh) (100.00%)(i)

Yemen

1987Kharir/Atuf (Block 10) (28.57%)
Various fields onshore (Block 5) (15.00%)

(a)The Group’s interest in the local entity is approximately 100% in all cases except for Total Gabon (58.28%) and certain entities in the United Kingdom, Abu Al Bu Khoosh field (operator), a 9.5%Dhabi and Oman (see notes b through h below).
(b)TOTAL’s stake in the foreign consortium.
(c)TOTAL’s interest in the joint venture.
(d)TOTAL has a 46.17% indirect interest in Elgin Franklin through its interest in EFOG.
(e)Through ADMA (equity affiliate), TOTAL has a 13.33% interest and participates in the operating company, Abu Dhabi Marine Operating Company.
(f)Through ADPC (equity affiliate), TOTAL has a 9.50% interest and participates in the operating company, Abu Dhabi Company for Onshore Oil Operations (ADCO),Operation.
(g)TOTAL has a direct interest of 4.00% in Petroleum Development Oman LLC, operator of Block 6, in which operates the five major onshore fields in Abu Dhabi, and a 13.3%TOTAL has an indirect interest in Abu Dhabi Marine (ADMA), which operates two offshore fields.of 4.00% via Pohol (equity affiliate). TOTAL also has a 15%5.54% interest in the Oman LNG facility (trains 1 and 2), and an indirect participation of 2.04% through OLNG in Qalhat LNG (train 3).
(h)TOTAL has a direct interest of 2.00% in Block 53.
(i)Operated by DEZPC, which is 50% owned by TOTAL and 50% owned by GPC. Following the extension of European Union sanctions against Syria on December 1, 2011, TOTAL has ceased its activities that contribute to oil and gas production in Syria. For further information on U.S. and European restrictions relevant to TOTAL’s activities in Syria, see “Item 3. Key Information — Risk Factors”.

Africa

In 2011, TOTAL’s production in Africa was

659 kboe/d, representing 28% of the Group’s overall production, compared to 756 kboe/d in 2010 and

749 kboe/d in 2009.

InAlgeria, TOTAL’s production was 33 kboe/d in 2011, compared to 41 kboe/d in 2010 and 74 kboe/d in 2009.

This decline was due on the one hand to the termination of the Hamra contract in October 2009 and on the other hand to the divestment of TOTAL’s stake in CEPSA (48.83%), which was finalized in July 2011. The Group’s production now comes entirely from the TFT field (Tin Fouyé Tabenkort, 35%). TOTAL also has 37.75% and 47% stakes in the Timimoun and Ahnet gas development projects respectively.

•

On the TFT field, plateau production was maintained at 185 kboe/d. A 3D seismic survey covering 1,380 km2on the East and West portions of the field was completed in October 2011. The data is currently being processed and interpreted.

•

Launched in 2010 following approval of the development plan by the ALNAFT national agency, the basic engineering phase for the Timimoun project has been completed. Commercial gas production is scheduled to start up in 2016, with anticipated plateau production of 1.6 Bm3/y (160 Mcf/d).

•

Under the Ahnet project, the technical section of a development plan was submitted to the authorities in July 2011. Discussions are underway with the project partners and the authorities with regard to bringing the gas to market, with anticipated plateau production of 4 Bm3/y (400 Mcf/d).

InAngola, the Group’s production was 135 kboe/d in 2011, compared to 163 kboe/d in 2010 and 191 kboe/d in 2009. Production comes mainly from Blocks 0, 14 and 17. Highlights of the period 2009 to 2011 included several discoveries on Blocks 15/06 and 17/06, and progress on the major Pazflor and CLOV projects.

Deep-offshore Block 17 (40%, operator) is TOTAL’s principal asset in Angola. It is composed of four major zones: Girassol, Dalia, Pazflor and CLOV.

On the Girassol hub, production from the Girassol, Jasmim and Rosa fields was 220 kb/d in 2011.

On the Dalia hub, production was nearly 240 kb/d in 2011.

Production on Pazflor, the third hub consisting of the Perpetua, Zinia, Hortensia and Acacia fields, started up in August 2011 and reached 170 kb/d at the end of 2011. The production capacity of the FPSO is 220 kb/d.

The development of CLOV, the fourth hub, started in 2010 and will result in the installation of a fourth FPSO with a capacity of 160 kb/d. Start-up of production is expected in 2014.

On Block 14 (20%), production on the Tombua-Landana field started in August 2009 and adds to production from the Benguela-Belize-Lobito-Tomboco and Kuito fields.

On ultra-deep offshore Block 32 (30%, operator), appraisal is continuing and pre-development studies for a first production zone in the central/southeastern portion of the block are underway (Kaombo project).

On Block 15/06 (15%), a first development hub including the discoveries located on the northwest portion of the block has been identified. The development plan for the hub has been submitted to the authorities.

TOTAL has operations on exploration Blocks 33 (55%, operator), 17/06 (30%, operator), 25 (35%, operator), 39 (15%) and 40 (50%, operator).

TOTAL is also developing in LNG through the Angola LNG project (13.6%), which includes a gas liquefaction plant near Soyo. The plant will be supplied in particular by the gas associated with production from Blocks 0, 14, 15, 17 and 18. Construction work is ongoing and start-up is expected in 2012.

InCameroon, the Group’s production was 3 kboe/d in 2011, compared to 9 kboe/d in 2010 and 12 kboe/d in 2009. In April 2011, TOTAL finalized the divestment of its stake in its upstream subsidiary Total E&P Cameroon, a Cameroonian company in which the Group had a 75.8% holding. Since that time, the Group no longer owns any exploration and production assets in the country.

InCôte d’Ivoire, TOTAL is operator of the Cl-100 exploration license, with a 60% stake. The 2,000 km2 license is located approximately 100 km southeast of Abidjan in water depths ranging from 1,500 to 3,100 m. Exploration work started with a 3D seismic survey of over 1,000 km2 at the end of 2011, which completed the 3D coverage of the entire block. Initial exploratory drilling is planned for the end of 2012.

In February 2012, TOTAL acquired interests in three ultra-deepwater exploration licenses : CI-514 (54%, operator), CI-515 (45%) and CI-516 (45%). For the two last blocks TOTAL will become the operator upon the first commercial discovery. The work program includes a 3D seismic survey of the whole acreage and one well to be drilled on each block during the initial three-year exploration period.

InEgypt, TOTAL signed a concession agreement in February 2010 and became operator of Block 4 (East El Burullus Offshore) with a 90% stake. The license, located in the Nile Basin where a number of gas discoveries have been made, covers a 4-year initial exploration period and includes a commitment to carrying out 3D seismic work and drilling exploration wells. Following the 3,374 km2 3D seismic survey shot in 2011, drilling is under preparation.

InGabon, the Group’s production was 58 kboe/d in 2011, compared to 67 kboe/d in 2010 and 71 kboe/d in 2009, due to the natural decline of fields. The Group’s exploration and production activities in Gabon are mainly carried out

by Total Gabon(1), one of the Group’s oldest subsidiaries in sub-Saharan Africa.

Under the Anguille field redevelopment project, the AGM N platform, from which twenty-one additional development wells are to be drilled, left the Fos-sur-Mer shipyard at the end of 2011 for Gabon. The drilling campaign is expected to start at the beginning of the second quarter of 2012.

•

On the deep-offshore Diaba license (Total Gabon 63.75%, operator), following the 2D seismic survey that was performed in 2008 and 2009, a 6,000 km2 3D seismic was shot in 2010. This new seismic survey has been processed and the results are currently being interpreted.

Total Gabon farmed into the onshore Mutamba-Iroru (50%), DE7 (30%) and Nziembou (20%) exploration licenses in 2010. Following negative exploratory drilling on license DE7, Total Gabon relinquished the license in 2011. Studies are underway to shoot a seismic survey on the Nziembou license and drill an exploration well on the Mutamba license in 2012.

InKenya, TOTAL acquired in September 2011 a 40% stake in five offshore licenses in the Lamu Basin: L5, L7, L11a, L11b and L12. This transaction has been approved by the Kenyan authorities.

InLibya, the Group’s production was 20 kb/d in 2011, compared to 55 kb/d in 2010 and 60 kb/d in 2009. Events in the country forced the entire industry to stop production and freeze development. Depending on the field, production was suspended from late February or early March 2011. The new EPSA IV contracts came into effect in 2010. At that time, the contract zones in which TOTAL is a partner were redefined: 15, 16 & 32 (formerly C 137, 75%(2)), 70 & 87 (formerly C 17, 75%(2)), 129 & 130 (formerly NC 115, 30%(2)) and 130 & 131 (formerly NC 186, 24%(2)).

In offshore zones 15, 16 and 32, production resumed in September 2011 and reached its former level within a few days. Exploration work is expected to restart in 2012.

In onshore zones 70 and 87, production resumed in January 2012. It will gradually be ramped back up to plateau level.

In addition, the Group expects to continue the development of the Dahra and Garian fields.

In onshore zones 129, 130 and 131, production resumed in October 2011. A return to plateau level

production is expected during 2012. The seismic campaign started before the events is expected to resume by the end of 2012.

•

In the onshore Murzuk Basin, following a successful appraisal well drilled on the discovery made on a portion of Block NC 191 (100%(2), operator), a development plan was submitted to the authorities in 2009. After the interruption related to the events, discussions with the authorities have resumed.

InMadagascar, TOTAL acquired in 2008 a 60% stake in the Bemolanga license (operator), to appraise the oil sand accumulations it contains. The appraisal phase did not confirm the feasibility of the mining development of the resources. However, the contract was extended by one year until June 2012 to assess the conventional exploration potential of the license.

InMauritania, TOTAL has exploration operations on the Ta7 and Ta8 licenses (60%, operator), located in the Taoudenni Basin. In January 2012, TOTAL (90%, operator) acquired interests in two exploration licenses: Block C9 in ultra-deep offshore, and Block Ta29 onshore in the Taoudenni Basin.

On the Ta7 license, a 1,220 km 2D seismic survey was shot in 2011 and is being interpreted.

On the Ta8 license, drilling of the exploration well ended in 2010. Results from the well were disappointing.

On the C9 and Ta29 licenses, a seismic acquisition campaign is planned as the first phase of the exploration program.

InNigeria, the Group’s production was 287 kboe/d in 2011, compared to 301 kboe/d in 2010 and 235 kboe/d in 2009. TOTAL has been present in Nigeria since 1962. It operates seven production licenses (OML) out of the forty-four in which it has a stake, and two exploration licenses (OPL) out of the eight in which it has a stake. The Group is also active in LNG through Nigeria LNG and the Brass LNG project. With regard to recent changes in acreage:

In 2011, TOTAL (operator) increased its stake from 45.9% to 48.3% in Block 1 of the Joint Development Zone, administered jointly by Nigeria and São Tomé and Principe.

The divestment of 10% of the Group’s stakes held through the joint venture operated by Shell Petroleum Development Company (SPDC) in Blocks OML 26 and 42 has been finalized.

(1)Total Gabon is a Gabonese company whose shares are listed on Euronext Paris. TOTAL holds 58.28%, the Republic of Gabon holds 25% and the public float is 16.72%.
(2)TOTAL’s stake in Abu Dhabi Gas Industries (GASCO)the foreign consortium.

TOTAL owns 15% of the Nigeria LNG gas liquefaction plant, located on Bonny Island, with an overall LNG capacity of 22.7 Mt/y. In 2011, the plant’s operating rate continued to increase and reached 81%, compared to 72% in 2010 and 50% in 2009, mainly due to the increased reliability of gas deliveries from the other suppliers.

Preliminary work continued in 2011 prior to launching the Brass LNG gas liquefaction plant project (17%), which calls for the construction of two trains, each with a capacity of 5 Mt/y. Calls for tenders for the construction of the plant and loading facilities are underway.

TOTAL continues its efforts to strengthen its ability to supply gas to the LNG projects in which it owns a stake and to meet the growing domestic demand for gas:

–

On the OML 136 license (40%), the positive results for the Agge 3 appraisal well confirmed the development potential of the license. Development studies are underway.

–

As part of its joint venture with the Nigerian National Petroleum Company (NNPC), TOTAL is continuing with the project to increase the production capacity of the OML 58 license (40%, operator) from 370 Mcf/d to 550 Mcf/d of gas in 2012. A second phase of this project is expected to allow the development of other resources through these facilities.

–

On the OML 112/117 licenses (40%), TOTAL continued development studies in 2011 for the Ima gas field.

On the OML 102 license (40%, operator), TOTAL confirmed the launch of the Ofon phase 2 project in 2011 with the signing of the main construction contracts, with production start-up scheduled for 2014. In 2011 the Group also discovered Etisong North, located 15 km from the Ofon field, which is currently producing. This is the second exploration well on the Etisong hub after the Etisong Main discovery made in 2008. The exploration campaign is expected to continue with two additional wells in 2012.

On the OML 130 license (24%, operator), the Akpo field, which started up in March 2009, reached plateau production of 225 kboe/d in 2010. Production was limited between March and September 2011 by a technical issue on the engine of the gas reinjection compressor (liquids production of 160 kb/d instead of 190 kb/d). On this license, the Group is actively working on the Egina field, for which a development

plan has been approved by the Nigerian authorities. Calls for tender are underway and construction is expected to start in 2012.

On the OML 138 license (20%, operator), TOTAL finalized the development of the Usan offshore project (180 kb/d, production capacity) with the drilling of production wells, installation of sub-sea equipment and connection to the FPSO. Production started up in February 2012.

TOTAL also strengthened its deep offshore position with the ongoing development of the Bonga Northwest project on the OML 118 license (12.5%).

Due to the relative calm with regard to safety in the Niger Delta region in 2011, it has been possible to maintain oil production operated by the SPDC joint venture, in which TOTAL has a 10% stake, at close to 2010 levels. The SPDC joint venture’s gas production was higher in 2011 as a result of the contribution of the Gbaran-Ubie project, which started up in 2010.

InUganda, TOTAL finalized in February 2012 its farm-in for an interest of 33.33%, which covers the EA-1 and EA-2 licenses as well as the new Kanywataba license and the Kingfisher production license. All of these licenses are located in the Lake Albert region, where oil resources have already been discovered and a substantial potential remains to be explored.

TOTAL will be the operator of EA-1 and partner on the other licenses. TOTAL and its partners Tullow and CNOOC are embarking on an ambitious exploration and appraisal program from 2012 onwards. First priority will be given to the exploration of Kanywataba and EA-1 licenses west of the Nile.

In theRepublic of the Congo, the Group’s production was 123 kboe/d in 2011, compared to 120 kboe/d in 2010 and 106 kboe/d in 2009.

On the Moho Bilondo field (53.5%, operator), which started up in April 2008, drilling of development wells continued until 2010. The field reached plateau production of 90 kboe/d in June 2010.

Two positive appraisal wells (Bilondo Marine 2 & 3) drilled at year-end 2010 in the southern portion of the field confirmed an additional growth potential as an extension of existing facilities. Studies are underway for the development of these additional reserves.

The development of the resources in the northern portion of the field, the potential of which was bolstered by appraisal and exploration wells drilled in 2008 and 2009, is also being examined (Moho North project).

Production on Libondo (65%, operator), which is part of the Kombi-Likalala-Libondo operating license, started up in March 2011. Plateau production has reached 12 kb/d. A substantial portion of the equipment was sourced locally in Pointe-Noire through the redevelopment of a construction site that had been idle for several years.

In theDemocratic Republic of the Congo, following the Presidential decree approving TOTAL’s entry as operator with a 60% interest in Block III of the Graben Albertine, the exploration permit was issued in January 2012 by the Minister of Hydrocarbons for a period of three years. This block is located in the Lake Albert region.

In theRepublic of South Sudan, which became an independent state on July 9, 2011, TOTAL holds an interest in Block B and is preparing with state authorities the resumption of exploration activities on this block.

North America

In 2011, TOTAL’s production in North America was 67 kboe/d, representing 3% of the Group’s overall production, compared to 65 kboe/d in 2010 and 24 kboe/d in 2009.

InCanada, TOTAL signed in December 2010 a strategic partnership with Suncor related to the Fort Hills and Joslyn mining projects and the Voyageur upgrader. The partnership was finalized in March 2011 and allows TOTAL to reorganize around two major hubs the different oil sands assets that it has acquired over the last few years: on the one hand, a Steam Assisted Gravity Drainage (SAGD) hub focused on Surmont’s (50%) ongoing development and, on the other hand, a mining and upgrading hub, which includes the TOTAL-operated Joslyn (38.25%) and Suncor-operated Fort Hills (39.2%) mining projects and the Suncor-operated Voyageur upgrader (49%) project. The Group also has a 50% stake in the Northern Lights mining project (operator) and 100% of a number of oil sands leases acquired through several auction sales. In 2011, the Group’s production was 11 kb/d, compared to 10 kb/d in 2010 and 8 kb/d in 2009.

On the Surmont lease, commercial production in SAGD mode of the first development phase, which started up in late 2007, is now producing around 25 kb/d of bitumen from thirty-five well pairs. The operator plans to drill additional wells in 2012 and to continue to convert the activation method on the existing wells from gas lift to electric submersible pump (ESP) in order to improve production.

In early 2010, the partners of the project decided to launch the construction of the second development

phase. The goal of production start-up from Surmont Phase 2 has been set for 2015 and overall production capacity from the field is expected to increase to 130 kb/d. In April 2011, the authorities issued a license permitting production (phases 1 and 2) of up to 136 kb/d.

The Joslyn lease is expected to be developed through mining, with a first development phase having an anticipated capacity of 100 kb/d.

The basic engineering for the Joslyn North Mine started in March 2010. To take into account changes to the project following the partnership with Suncor, the revision of the basic engineering is expected to be finalized in 2012. A decision to launch the project is planned for 2013.

Public hearings that are necessary for the project to be approved by the Canadian authorities were held in autumn 2010. The project was recommended as being in the public interest in January 2011, and approval from the Alberta authorities (Order in Council, OIC) was obtained in April 2011. The provincial authorizations from the Energy Resources Conservation Board (ERCB) and Alberta Environment were also obtained in May and September 2011, respectively. The project received federal approval (Federal OIC and approval from the Canadian Ministry of the Environment) at the end of 2011. As a result, preliminary site preparation work began in early 2012 and production is scheduled to start in 2018.

TOTAL closed in September 2010 the acquisition of UTS and its main asset: a 20% stake in the Fort Hills lease. In December 2010, as part of their partnership, TOTAL acquired from Suncor an additional 19.2% stake in the lease, thereby increasing its stake to 39.2%. Basic engineering and site preparation work are underway. Start-up of the Fort Hills mining project, which has already been approved by the relevant authorities for a first development phase with a capacity of 160 kb/d, is expected in 2016.

TOTAL had also acquired in late December 2010 a 49% stake in Suncor’s Voyageur upgrader project. This Voyageur upgrader project, which Suncor mothballed at year-end 2008, resumed in 2011 and is expected to start up concurrently with the Fort Hills project. As a consequence, the Group has abandoned its upgrader project in Edmonton.

In 2008, the Group closed the acquisition of Synenco, the two principal assets of which are a 60% stake in the Northern Lights project and 100% of the adjacent McClelland lease. In early 2009, the Group sold to

Sinopec, the other partner in the project, a 10% stake in the Northern Lights project and a 50% stake in the McClelland lease, reducing its equity stake in each of the assets to 50%. The Northern Lights project is expected to be developed through mining.

In theUnited States, the Group’s production was 56 kboe/d in 2011, compared to 55 kboe/d in 2010 and 16 kboe/d in 2009.

In the Gulf of Mexico:

–

The deep-offshore Tahiti oil field (17%) started producing in 2009 and reached production of 135 kboe/d. Phase 2, which produceswas launched in September 2010, comprises drilling four injection wells and two producing wells. Water injection started in February 2012. This phase should partly offset the production decline seen on wells currently in production.

–

Development of the first phase of the deep-offshore Chinook project (33.33%) is ongoing. The production test is scheduled to start in mid-2012 after sub-sea work carried out following an incident on one of the risers.

–

In 2009, TOTAL and Cobalt had signed an agreement related to the merger of their deep offshore acreage, with Cobalt operating the exploration phase. The TOTAL (40%) — Cobalt (60%, operator) alliance’s exploratory drilling campaign was launched in 2009 and the drilling of the first three wells produced disappointing results. This campaign was disrupted due to the U.S. government’s moratorium on offshore drilling operations from May to October 2010 and resumed at the beginning of 2012 with the start of drilling of the Ligurian 2 well.

–

In April 2010, the Group disposed of its equity stakes in the Matterhorn and Virgo operated fields.

Following the signature of an agreement in late 2009, a joint venture was set up with Chesapeake to produce shale gas in the Barnett Shale Basin, Texas. Under this joint venture, TOTAL owns 25% of Chesapeake’s portfolio in the area. In 2011, approximately 300 additional wells were drilled, enabling gas production reaching 1.4 Bcf/d in 100% at the end of 2011. Engineers from TOTAL are assigned to the teams led by Chesapeake.

At the end of 2011, TOTAL signed an agreement with Chesapeake and EnerVest to enter into a joint venture. Pursuant to the agreement, TOTAL acquired a 25% share in Chesapeake’s and EnerVest’s liquid-rich area

of the Utica shale play (Ohio). At the end of 2011, thirteen wells have been drilled across the acreage with very promising results seen from each well in terms of productivity and liquid content.

In 2009, the Group closed the acquisition of a 50% stake in American Shale Oil LLC (AMSO) to develop shale oil technology. The pilot to develop this technology is underway in Colorado.

InMexico, TOTAL is conducting various studies with state-owned PEMEX under a general technical cooperation agreement renewed in July 2011 for a period of five years.

South America

In 2011, TOTAL’s production in South America was 188 kboe/d, representing 8% of the Group’s overall production, compared to 179 kboe/d in 2010 and 182 kboe/d in 2009.

InArgentina, where TOTAL has been present since 1978, the Group operates 30%(1) of the country’s gas production. The Group’s production was 86 kboe/d in 2011, compared to 83 kboe/d in 2010 and 80 kboe/d in 2009.

In Tierra del Fuego, the Group notably operates the Carina and Aries offshore fields (37.5%). The award of the contracts to build the offshore facilities for the development of the Vega Pleyade gas and condensates field is scheduled for 2012. The project is scheduled to start production in 2014 and should make it possible to maintain the production operated by the Group in Tierra del Fuego at around 615 Mcf/d.

In the Neuquén Basin, TOTAL started a drilling campaign in 2011 on its operated licenses in order to assess their shale gas potential. The campaign, which started on the Aguada Pichana (27.3%, operator) and San Roque (24.7%, operator) fields, will be extended subsequently to the Rincon la Ceniza and La Escalonada licenses acquired in 2010 (85%, operator) and to the four fields acquired in 2011: Aguada de Castro (42.5%, operator), Pampa de la Yeguas II (42.5%, operator), Cerro Las Minas (40%) and Cerro Partido (45%).

The connection of satellite discoveries on the edge of the main Aguada Pichana field, particularly in the Las Carceles canyons area, and the increase in compression capacity at San Roque, have extended plateau production of the mature fields in these two blocks.

InBolivia, the Group’s production, primarily gas, amounted to 25 kboe/d in 2011, compared to 20 kboe/d

(1)Source: Argentinean Ministry of Federal Planning, Public Investment and Services — Energy Secretary.

in 2010 and 2009. TOTAL has stakes in six licenses: three producing licenses — San Alberto and San Antonio (15%) and Block XX Tarija Oeste (41%), and three licenses in the exploration or appraisal phase — Aquio and Ipati (80%, operator) and Rio Hondo (50%).

Production started up in February 2011 on the gas and condensates Itaú field located on Block XX Tarija Oeste; it is routed to the existing facilities of the neighboring San Alberto field. A development plan for a second phase at Itaú was approved by the local authorities in June 2011. In early 2011, TOTAL decreased its stake in Block XX Tarija Oeste to 41% after divesting 34% and is no longer the operator.

In 2004, TOTAL discovered the Incahuasi gas field on the Ipati Block. Following the interpretation of the 3D seismic shot in 2008, an appraisal well was drilled on the adjacent Aquio Block and the extension of the discovery to the north was confirmed in 2011.

Due to the positive results from the well, TOTAL filed a declaration of commerciality for the Aquio and Ipati Blocks, which was approved by the local authorities in April 2011. Additional appraisal work is underway, notably with the drilling of a second well on the Ipati Block in 2012.

In 2010, TOTAL signed an agreement to dispose of 20% in the Aquio and Ipati licenses to Gazprom. Following approval of the agreement by the Bolivian authorities, TOTAL will have a 60% stake in the licenses.

InBrazil, TOTAL has equity stakes in three exploration blocks: Blocks BC-2 (41.2%) and BM-C-14 (50%) in the Campos Basin, and Block BM-S-54 (20%) in the Santos Basin.

The Xerelete field is mainly located on Block BC2, with an extension on Block BM-C-14. A unitization agreement was finalized by the partners on both blocks and submitted to the authorities for approval in April 2011.

In 2012, pending the authorities’ approval, TOTAL is expected to become operator of the unitized Xerelete field. After seismic reprocessing, a pre-salt prospect was found under the Xerelete discovery made in 2001 at a water depth of 2,400 m. TOTAL is planning to resume drilling activities on the block in 2012.

On Block BM-S-54, a first well was drilled in the pre-salt at the end of 2010 on the Gato do Mato structure, and a significant oil column was found. The appraisal plan approved by the authorities in October 2011 includes testing the Gato do Mato well and, if

that test is successful, drilling a second well on the structure in 2012. As the Gato do Mato structure extends beyond the boundaries of Block BM-S-54 into a free zone, a draft unitization agreement has been submitted to the authorities.

At the end of 2011, a second structure (Epitonium) identified on Block BM-S-54 was drilled. The results of the well are under analysis.

InColombia, where TOTAL has had operations since 1973, the Group’s production was 11 kboe/d in 2011, compared to 18 kboe/d in 2010 and 23 kboe/d in 2009. The decline in production in 2011 was mainly due to the divestment of TOTAL’s stake in CEPSA, which was finalized in July 2011.

On the Cusiana field (11.6%), production from the project to extract 6 kb/d of LPG started at the end of 2011.

Following the discovery of Huron-1 in 2009 on the Niscota (50%) exploration license and a 3D seismic survey in 2010, the first appraisal well has been underway since mid-2011. A second appraisal well is expected in 2012.

In 2011, TOTAL sold 10% of its stake in the Ocensa oil pipeline, reducing its holding to 5.2%.

In February 2012, TOTAL signed an agreement to sell TEPMA BV. This wholly-owned affiliate of TOTAL holds the working interest in the Cusiana field as well as a participation in OAM and ODC pipelines in Colombia. This transaction is subject to approval by the relevant authorities.

InFrench Guiana, TOTAL owns a 25% stake in the Guyane Maritime license. The license, located about 150 km off the coast, covers an area of approximately 26,000 km2 in water depths ranging from 200 to 3,000 m.

Located around 170 km northeast off Cayenne, drilling of the GM-ES-1 well on the Zaedyus prospect took place in 2011. The well was drilled at water depths of over 2,000 m and reached a vertical depth of 5,908 m below sea level. It revealed two hydrocarbon columns in gravelly reservoirs.

This discovery follows on from the shooting of a 3D seismic survey covering 2,500 km2 on the eastern zone of the Guyane Maritime license.

An extensive drilling campaign and a further 3D seismic survey are planned on the license starting in 2012.

InTrinidad & Tobago, where TOTAL has had operations since 1996, the Group’s production was 12 kboe/d in 2011, compared to 3 kboe/d in 2010 and 5 kboe/d in 2009. TOTAL holds a 30% stake in the offshore Angostura

field located on Block 2C. Production started up in May 2011 on Phase 2, which corresponds to the gas reserves development phase. A drilling campaign on three wells started in mid-2011 in order to increase oil production. An exploration well was also drilled in 2011 and revealed additional gas resources.

In Venezuela, where TOTAL has had operations since 1980, the Group’s production was 54 kboe/d in 2011, compared to 55 kboe/d in 2010 and 54 kboe/d in 2009. TOTAL has equity stakes in PetroCedeño (30.323%), which produces and upgrades extra heavy oil in the Orinoco Belt, in Yucal Placer (69.5%), which produces gas dedicated to the domestic market, and in the offshore exploration Block 4, located in the Plataforma Deltana (49%).

The development phase of the southern portion of the PetroCedeño field was launched in the second half of 2011.

An additional development phase on the Yucal Placer field to increase production capacity from 100 Mcf/d to 300 Mcf/d is under discussion with the authorities.

Asia-Pacific

In 2011, TOTAL’s production in Asia-Pacific was 231 kboe/d, representing 10% of the Group’s overall production, compared to 248 kboe/d in 2010 and 251 kboe/d in 2009.

InAustralia, where TOTAL has held leasehold rights since 2005, the Group owns 24% of the Ichthys project, 27.5% of the GLNG project and nine offshore exploration licenses, including four that it operates, off the northwest coast in the Browse, Vulcan and Bonaparte Basins. In 2011, the Group produced 4 kboe/d due to its stake in GLNG, compared to 1 kboe/d in 2010.

The Ichthys LNG project is aimed at the development of the Ichthys gas and condensates field, located in the Browse Basin. This development includes a floating platform designed for gas production, treatment and export, an FPSO to stabilize and export condensates, an 889 km gas pipeline and an onshore liquefaction plant located in Darwin. The project was launched in early 2012 following completion of the engineering studies, calls for tender and subcontractor selection. The LNG has already been sold under long-term contracts mainly to Asian buyers.

Production capacity is expected to be 8.4 Mt/y of LNG and nearly 1.6 Mt/y of LPG as well as a production of 100 kb/d of condensates at peak. Production start-up is expected at year-end 2016.

In late 2010, TOTAL acquired a 20% stake in the GLNG project, followed by an additional 7.5% stake in

March 2011. This integrated gas production, transport and liquefaction project is based on the development of coal gas from the Fairview, Roma, Scotia and Arcadia fields. The final investment decision was made in January 2011 and start-up is expected in 2015. LNG production is expected to eventually reach 7.2 Mt/y. The preliminary project development and engineering work are continuing. The 420 km pipeline for transporting the gas has received environmental approval. Off the coast near Gladstone, on Curtis Island, site preparations have started with civil engineering, dredging and construction of the initial jetty and the residential compound.

Following extensive seismic surveying in 2008 and interpretation of the data in 2009, a drilling campaign on two wells started in early 2011 on license WA-403 (60%, operator). As one well demonstrated the presence of hydrocarbons, additional appraisal work will take place on this block (3D seismic).

Three new exploration wells are planned for 2012/2013 on license WA-408 (100%, operator).

In Brunei, where TOTAL has been present since 1986, the Group operates the offshore Maharaja Lela Jamalulalam gas and condensates field located on Block B (37.5%). The Group’s production was 13 kboe/d in 2011, compared to 14 kboe/d in 2010 and 12 kboe/d in 2009. The gas is delivered to the Brunei LNG liquefaction plant.

On Block B, the drilling campaign that started in 2009 continued in 2010 and 2011. Production on the first well started in 2010. The next two wells, which were exploratory, revealed new reserves in the southern portion of the field, for which development studies are underway. A fourth well drilled in 2011 in the southern portion of the field was connected to the production facilities at the end of the year. A ten-year extension of the mining rights period was recently granted by the Brunei government.

On deep-offshore exploration Block CA1 (54%, operator), formerly Block J, exploration operations that had been suspended since May 2003 due to a border dispute between Brunei and Malaysia resumed in September 2010. A seismic survey started before the summer of 2011 and an initial campaign of three drillings started in October 2011.

InChina, the Group has had operations since 2006 on the South Sulige Block, located in the Ordos Basin in the Inner Mongolia province. Following appraisal work by TOTAL, China National Petroleum Corporation (CNPC) and TOTAL agreed in November 2010 to submit to the authorities for approval a development plan under which CNPC is the operator and provides the benefit of its experience in

developing Great Sulige. TOTAL has a 49% stake and provides support in its areas of expertise.

The authorities gave the operator permission to undertake preliminary development work in the spring of 2011. Drilling operations started and additional 3D seismic data was shot in 2011 in preparation for the upcoming drilling campaigns. Start-up of production is expected in 2012.

InIndonesia, where TOTAL has had operations since 1968, the Group’s production was 158 kboe/d in 2011, compared to 178 kboe/d in 2010 and 190 kboe/d in 2009.

TOTAL’s operations in Indonesia are primarily concentrated on the Mahakam permit (50%, operator), which covers in particular the Peciko and Tunu gas fields. TOTAL also has a stake in the Sisi-Nubi gas field (47.9%, operator). TOTAL delivers most of its natural gas production to the Bontang LNG plant operated by the Indonesian company PT Badak. The overall capacity of the eight liquefaction trains of the Bontang plant is 22 Mt/y.

In 2011, gas production operated by TOTAL amounted to 2,227 Mcf/d. The gas operated and delivered by TOTAL accounted for nearly 80% of Bontang LNG’s supply. In addition to gas production, operated condensates and oil production from the Handil and Bekapai fields amounted to 59 kb/d and 23 kb/d, respectively.

On the Mahakam permit:

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In 2011, the scheduled drilling of additional wells in the main reservoir of the Tunu field continued with increasing density. The second phase of drilling development wells to discover shallow gas reservoirs has started.

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On the Peciko field, Phase 7 drilling, which started in 2009, is continuing.

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The development of South Mahakam, which includes the Stupa, West Stupa and East Mandu fields, is ongoing. Start-up of production is expected in early 2013.

On the Sisi-Nubi field, which began production in 2007, drilling operations continue within the framework of a second phase of development. The gas from Sisi-Nubi is produced through Tunu’s processing facilities.

In October 2010, TOTAL closed the acquisition of a 15% stake in the Sebuku permit, where the gas field Ruby was discovered. Development of the field, with the aim of producing 100 Mcf/d of natural gas, started in February 2011. Production start-up is scheduled for the end of 2013.

On the Southeast Mahakam exploration block (50%, operator), the first exploration well (Trekulu 1) completed at the end of 2010 produced negative results.

In May 2010, the Group acquired a 24.5% stake in two exploration blocks — Arafura and Amborip VI — located in the Arafura Sea. Two wells were drilled on these blocks in late 2010/early 2011. The results were negative.

In September 2011, TOTAL signed an agreement to acquire a stake in three exploration blocks located in the southern Makassar Strait (Sageri, 50%, South Sageri, 35% and Sadang, 20%). A first well was drilled on the Sageri block at the end of 2011.

In September 2011, TOTAL also signed an agreement to acquire a stake in an exploration block located in the southern Makassar Strait (South Mandar, 33%). Under the agreement, the Group acquired additional 10% stakes in the South Sageri and Sadang blocks.

In May 2011, TOTAL acquired a 100% stake in the South West Bird’s Head exploration block. The block is located onshore and offshore in the Salawati Basin, in the province of West Papua.

The Group signed a production sharing agreement in March 2011, for a 50% stake in a coal bed methane (CBM) field on the Kutai Timur Block in East Kalimantan province.

In the autumn of 2010, the Group signed an agreement with the consortium Nusantara Regas (Pertamina-PGN) for the delivery of 11.75 Mt of LNG over the period 2012-2022 to a re-gasification terminal located near Jakarta. The first deliveries are expected in the second quarter of 2012.

InMalaysia, TOTAL signed a production sharing agreement in 2008 with state-owned Petronas for the offshore exploration Blocks PM303 and PM324. Following the seismic studies performed in 2009 and 2010, TOTAL withdrew from offshore exploration Block PM303 in early 2011. Exploration work continued on Block PM324 (50%, operator); initial drilling in high pressure/high temperature conditions started in October 2011 and continues in 2012.

TOTAL also signed in November 2010 a new production sharing agreement with Petronas for the deep offshore exploration Block SK 317 B (85%, operator) located off the state of Sarawak. 3D seismic surveys have been carried out on the zone. The results should be available shortly.

InMyanmar, the Group’s production was 15 kboe/d in 2011, compared to 14 kboe/d in 2010 and 13 kboe/d in 2009. TOTAL operates the Yadana field (31.2%), located on offshore Blocks M5 and M6, which produces gas that is delivered primarily to PTT (the Thai state-owned company) to be used in Thai power plants. The Yadana field also supplies the domestic market via a land pipeline and, since June 2010, via a sub-sea pipeline built and operated by Myanmar’s state-owned company MOGE.

InThailand, the Group’s production was 41 kboe/d in 2011 and 2010, compared to and 36 kboe/d in 2009. This comes from the Bongkot (33.33%) offshore gas and condensates field. PTT purchases all of the natural gas and condensates production.

On the northern portion of the Bongkot field, the 3H (three wellhead platforms) development phase came onstream in early 2011. New investments are being made to meet gas demand and maintain plateau production:

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phase 3J (two well platforms) was launched in late 2010 with start-up scheduled for 2012;

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phase 3K (two well platforms) was approved in September 2011 with start-up scheduled for 2013; and

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the second low-pressure compressor installation phase to increase gas production was completed in the first quarter of 2012.

The southern portion of the field (Greater Bongkot South) is also being developed in several phases. This development is designed to include a processing platform, a residential platform and thirteen production platforms. Construction of the facilities started in 2009 and accelerated in 2011 with the installation of the residential and gas processing platforms in August. Production is expected to start in the spring of 2012, with a capacity of 350 Mcf/d.

InVietnam, TOTAL holds a 35% stake in the production sharing agreement for the offshore 15-1/05 exploration block following an agreement signed in 2007 with PetroVietnam. Two oil discoveries were made on the southern portion of the block, one in November 2009 and the other in October 2010. The results from the additional wells drilled on these discoveries between November 2010 and October 2011 are being assessed.

In 2009, TOTAL and PetroVietnam signed a production sharing agreement for Blocks DBSCL-02 and DBSCL-03. The onshore blocks, located in the Mekong Delta region, are held by TOTAL (75%, operator) and PetroVietnam (25%). Based on the seismic information obtained in 2009 and 2010, the partners have decided not to continue the exploration work.

Commonwealth of Independent States (CIS)

In 2011, TOTAL’s production in the CIS was 119 kboe/d, representing 5% of the Group’s overall production, compared to 23 kboe/d in 2010 and 24 kboe/d in 2009.

InAzerbaijan, where TOTAL has had operations since 1996, production was 14 kboe/d in 2011, compared to

13 kboe/d in 2010 and 12 kboe/d in 2009. The Group’s production comes from the Shah Deniz field (10%). TOTAL also holds a 10% stake in South Caucasus Pipeline Company, owner of the South Caucasus Pipeline (SCP) gas pipeline that transports the gas produced in Shah Deniz to the Turkish and Georgian markets. TOTAL also holds a 5% stake in BTC Co., owner of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, which connects Baku and the Mediterranean Sea. In 2009, TOTAL and state-owned SOCAR signed an exploration, development and production sharing agreement for a license located on the Absheron block in the Caspian Sea. TOTAL (40%) is the operator during the exploration phase and a joint operating company will manage operations during the development phase. Drilling of an exploratory well started in early 2011. In September 2011, the well showed the existence of a substantial gas accumulation. The well will be tested in 2012.

Gas deliveries to Turkey and Georgia from the Shah Deniz field continued throughout 2011, at a lower pace for Turkey due to weaker demand than initially forecast. Conversely, SOCAR took greater quantities of gas than provided for by the agreement.

Development studies and business negotiations for the sale of additional gas needed to launch a second development phase in Shah Deniz continued in 2011. In October 2011, SOCAR and Botas, a Turkish state-owned company, signed an agreement on the sale of additional gas volumes and the transfer conditions for volumes intended for the European market. The agreement is expected to enable the start of FEED studies for this second phase in the first quarter of 2012, although some of the commercial provisions of the agreement have yet to be finalized.

InKazakhstan, TOTAL has owned since 1992 a stake in the North Caspian license, which covers the Kashagan field in particular.

The Kashagan project is expected to be developed in several phases. The development plan for the first phase (300 kb/d) was approved in February 2004 by the Kazakh authorities, allowing work to begin on the field. The consortium continues to target first production by year-end 2012.

In October 2008, the members of the North Caspian Sea Production Sharing Agreement (NCSPSA) consortium and the Kazakh authorities signed agreements to end the disagreement that began in August 2007. Their implementation led to a reduction of TOTAL’s share in NCSPSA from 18.52% to 16.81%. The operating structure was reconfigured and the North Caspian Operating Company (NCOC), a joint operating company, was entrusted with the operatorship in January 2009. NCOC supervises and coordinates NCSPSA’s operations.

InRussia, where TOTAL has had operations through its subsidiary since 1991, the Group’s production was 105 kboe/d in 2011, compared to 10 kboe/d in 2010 and 12 kboe/d in 2009. This comes from the Kharyaga field (40%, operator) and TOTAL’s stake in Novatek.

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In 2007, TOTAL and Gazprom signed an agreement for the first phase of development on the giant Shtokman gas and condensates field, located in the Barents Sea. Under this agreement, Shtokman Development AG (TOTAL, 25%) was created in 2008 to design, build, finance and operate this first development phase, with estimated overall production capacity of 23.7 Bm3/y (0.4 Mboe/d). Engineering studies are underway for the portion of the project that will allow the transport of gas by pipeline through the Gazprom network (offshore development, gas pipeline and onshore gas and condensates processing facilities on the Teriberka site) and for the LNG part of the project, which will allow the export of 7.5 Mt/y of LNG from a new harbor located in Teriberka, representing approximately half of the associated gas produced by ADCO,the first development phase.

In late 2009, TOTAL closed the acquisition from Novatek of a 49% stake in Terneftegas, which holds a development and production license on the onshore Termokarstovoye field. An appraisal well was drilled in 2010. The results of this well and of the pre-project studies allowed for the final investment decision to be made at year-end 2011.

On the Kharyaga field, work related to the development plan of phase 3 is ongoing. This development plan is intended to maintain plateau production at the 30 kboe/d (in 100%) level reached in late 2009. TOTAL sold 10% of the field to state-owned Zarubezhneft in January 2010, thereby decreasing its interest to 40%.

In the autumn of 2009, TOTAL signed an agreement setting forth the principles of a partnership with KazMunaiGas (KMG) for the development of the Khvalynskoye gas and condensates field, located offshore in the Caspian Sea on the border between Kazakhstan and Russia, under Russian jurisdiction. Gas production is expected to be transported to Russia. Pursuant to this agreement, TOTAL is planning to acquire 17% of KMG’s share.

In March 2011, TOTAL and the Russian listed company Novatek signed a strategic partnership agreement pursuant to which TOTAL acquired a 12.09% stake in Novatek in April 2011, with the intention of both parties for TOTAL to increase its

holding to 15% within 12 months and a 5%19.40% within three years. In December 2011, TOTAL increased its stake in Abu Dhabi Gas Liquefaction Company (ADGAS)Novatek by 2% to 14.09%.

In October 2011, TOTAL and Novatek signed the final agreements for the joint development of the Yamal LNG project. With a 20% stake, TOTAL has become Novatek’s main international partner in the gas liquefaction project. Novatek, which will retain a 51% stake, intends to dispose of the remaining 29% to other partners. The Yamal LNG project covers the development of the South Tambey gas and condensates field, located on the Yamal Peninsula in the Arctic.

Europe

In 2011, TOTAL’s production in Europe was 512 kboe/d, representing 22% of the Group’s overall production, compared to 580 kboe/d in 2010 and 613 kboe/d in 2009.

InDenmark, TOTAL has owned since June 2010 an 80% stake in and the operatorship for licenses 1/10 (Nordjylland) and 2/10 (Nordsjaelland, formerly Frederoskilde). These onshore licenses, the shale gas potential of which has yet to be assessed, cover areas of 3,000 km2 and 2,300 km2, respectively. Following geoscience surveys on license 1/10 in 2011, the decision was made to drill a well during the second half of 2012. Geoscience surveys are ongoing on license 2/10.

InFrance, the Group’s production was 18 kboe/d in 2011, compared to 21 kboe/d in 2010 and 24 kboe/d in 2009. TOTAL’s major assets are the Lacq (100%) and Meillon (100%) gas fields, located in the southwest part of the country.

On the Lacq field, operated since 1957, a carbon capture and storage pilot was commissioned in January 2010, and carbon injection is expected to continue until 2013. In connection with this project, a boiler has been modified to operate in an oxy-fuel combustion environment and the carbon dioxide emitted is captured and re-injected in the depleted Rousse field. As part of TOTAL’s sustainable development policy, this project will allow the Group to assess one of the technological possibilities for reducing carbon dioxide emissions.

Agreements were signed in December 2011 for the sale of the Itteville, Vert-le-Grand, Vert-le-Petit, La Croix Blanche, Dommartin Lettrée and Vic-Bilh assets. Operatorship and production rights for these assets were transferred in January 2012.

The Montélimar exclusive exploration license, awarded to TOTAL in March 2010 (100%) to assess, in particular, the

shale gas potential of the area, was revoked by the government in October 2011. This revocation stemmed from the law of July 13, 2011, prohibiting the exploration and extraction of hydrocarbons by drilling followed by hydraulic fracturing. The Group had, however, submitted the required report to the government, in which it undertook not to use hydraulic fracturing in light of the current prohibition. An appeal has therefore been filed in December 2011 with the administrative court requesting that the judge cancel the revocation of the license.

InItaly, the Tempa Rossa field (75%, operator), discovered in 1989 and located on the unitized Gorgoglione concession (Basilicate region), is one of TOTAL’s principal assets in the country.

In 2011, Total Italia acquired an additional 25% in the Tempa Rossa field, bringing its stake to 75%, as well as shares in two exploration licenses.

Site preparation work started in early August 2008, but the proceedings initiated by the Prosecutor of the Potenza Court against Total Italia led to a freeze in the preparation work (for additional information, see “Item 8. Financial Information — Legal or arbitration proceedings — Italy”). New calls for tenders were launched related to certain contracts that had been cancelled. Drilling of the Gorgoglione 2 appraisal well that started in June 2010 reached its final depth, confirming the results of the other wells. It is expected to be tested in 2012. The extension plan for the Tarente refinery export system, needed for the development of the Tempa Rossa field, was submitted to the Italian authorities in May 2010 and approved at the end of 2011. Site preparation work began and start-up of production is expected in 2015 with a capacity of 55 kboe/d.

InNorway, where the Group has had operations since the mid-1960s, TOTAL has equity stakes in eighty production licenses on the Norwegian continental shelf, seventeen of which it operates. Norway is the largest single-country contributor to the Group’s production, with volumes of 287 kboe/d in 2011, compared to 310 kboe/d in 2010 and 327 kboe/d in 2009.

In the Norwegian North Sea, where numerous development projects have recently been launched, the Group’s production was 205 kboe/d in 2011. The most substantial contribution to production, for the most part non-operated, comes from the Greater Ekofisk Area (Ekofisk, Eldfisk, Embla, etc.).

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Several projects are underway on the Greater Ekofisk Area, located in the south. The Group owns a 39.9% stake in the Ekofisk and Eldfisk

fields. The Ekofisk South and Eldfisk 2 projects were launched in June 2011 following approval of the development and operation plans by the authorities. The project relating to the construction and installation of the new Ekofisk living quarters and utilities platform is now in its second year.

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On the Greater Hild Area, located in the north and in which the Group has a 51% stake (operator), the Hild development scheme was selected at the end of 2010. The development and operation plan has been submitted to the authorities in early 2012. Approval is expected in 2012, with production start-up scheduled for 2016.

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A number of successful exploration and appraisal activities were carried out in the North Sea in the 2009-2011 period. These activities have led to the launch of several development projects, which are already underway or for which approval by the authorities is expected in 2012:

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In the central section of the North Sea, on license PL102C (40%, operator), a fast-track development project has been launched for the Atla field (formerly known as David), which produces LNG, LPG and condensates.

In early 2009, TOTAL signed agreements for a20-year extensionwas discovered in 2010. Start-up of its participationgas production is expected in late 2012.

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Gas production on the Beta West field (a satellite of Sleipner, 10%), located in the GASCO joint venture starting on October 1, 2008.

In early 2011, TOTAL and IPIC, a government-owned entity in Abu Dhabi, signed a Memorandum of Understanding with a view to developing projects of common interest in the upstream oil and gas sectors.
The Group holds a 25% interest in Dolphin Energy Ltd. alongside Mubadala, a company owned by the governmentcentral section of the Abu Dhabi Emirate, to market gas producedNorth Sea, started in QatarApril 2011.

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In the Visund area of the Nordic North Sea on license PL120 (7.7%), the Visund South fast-track development project for the Pan/Pandora discoveries is underway. Start-up of production is expected in particular to the United Arab Emirates.

2012.

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The Group also holds a 33.3% interest in Ruwais Fertilizer Industries (FERTIL), which produces urea. FERTIL 2, a newStjerne project was launched in 2011 to develop the Katla structure discovered in 2009, to build a new granulated urea unit with a capacitylocated on license PL104 (10%) south of 3,500 t/d (1.2 Mt/y). This project


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Oseberg in the Nordic North Sea. Start-up of oil production is expected to allow FERTIL to more than double production so as to reach nearly 2 Mt/y in January 2013.
InIraq

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The fast-track development project for the Vigdis North East structure (PL089, 5.6%), TOTAL biddiscovered in 2009 and located south of Snorre, was launched in 2011. It will also allow for enhanced hydrocarbon recovery from the nearby Vigdis East field. Start-up of oil production is expected in late 2012.

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A positive appraisal well was drilled in 2010 on the three calls for tenders launched bysouthern slope of the Iraqi MinistryDagny-Ermintrude structure (6.54%) north of Oil. The PetroChina-led consortium that includes TOTAL (18.75%) was awardedSleipner. Approval of the development project is expected at the end of 2012 and production contract for the Halfaya field during the second call for tenders held in December 2009. This field is located in the province of Missan, north of Basra. The agreement became effective in March 2010 and the preliminary development plan was approved by the Iraqi authoritiesscheduled to start in late September 2010. Development operations have started. It plans for first production of nearly 70 kb/d of oil in 2012.

InIran, the Group’s production, under buyback agreements, amounted to 2 kboe/d in 2010, compared to 8 kboe/d in 2009 and 9 kboe/d in 2008. For additional information on TOTAL’s operations in Iran, see “— Other Matters — Business Activities In Cuba, Iran, Sudan and Syria”.
InOman, the Group’s production in 2010 was 34 kboe/d, stable compared to 2009 and 2008. The Group produces oil on Block 6 mainly and on Block 53 as well as liquefied natural gas through its interests in the Oman LNG (5.54%)/Qalhat LNG (2.04%)(1) liquefaction plant, which has a capacity of 10.5 Mt/y.
InQatar, TOTAL has been present since 1936 and holds interests in the Al Khalij field (100%), the NFB Block (20%) in the North field, the Qatargas 1 liquefaction plant (10%), Dolphin (24.5%) and train 5 of Qatargas 2 (16.7%). The Group’s production was 164 kboe/d in 2010, compared to 141 kboe/d in 2009 and 121 kboe/d in 2008. Production substantially increased with thestart-up of Qatargas 2.2016.

 
• Production from Dolphin started during the summer of 2007 and reached its full capacity in the first quarter of 2008. The contract, signed in 2001 with state-owned Qatar Petroleum, provides for the sale of 2 Bcf/d of gas from the North field for a25-year period. The gas is processed in the Dolphin plant in Ras Laffan and exported to the United Arab Emirates through a 360 km gas pipeline.

In the Norwegian Sea, the Haltenbanken area includes the Tyrihans (23.2%), Mikkel (7.7%) and Kristin (6%) fields as well as the Åsgard (7.7%) field and its satellites Yttergryta (24.5%) and Morvin (6%). Morvin started up in August 2010 as planned, with two producing wells. In 2011, the Group’s production in the Haltenbanken area was 63 kboe/d.

• Production from train 5 of Qatargas 2, which started in September 2009, reached its full capacity(7.8 Mt/y) at year-end 2009. TOTAL has owned an interest in this train since 2006. In addition, TOTAL began to off-take part of the LNG produced in compliance with the contracts signed in 2006, which provide for the purchase of 5.2 Mt/y of LNG from Qatargas 2 by the Group.
The Group also holds a 10% interest in Laffan Refinery, a 146 kb/d condensate splitter that started up in September 2009.
InSyria, TOTAL is present on the Deir Ez Zor license (100%, operated by DEZPC, 50% of which is owned by TOTAL) and through the Tabiyeh contract that became effective in October 2009. The Group’s production for both assets was 39 kboe/d in 2010, compared to 20 kboe/d in 2009 and 15 kboe/d in 2008.
Three agreements were ratified:

The partners decided to go ahead with the Åsgard sub-sea compression project, which will increase hydrocarbon recovery on the Åsgard and Mikkel fields, and the development and operation plan has been submitted to the authorities.

In 2011, TOTAL successfully drilled an exploration well on the Alve North structure on license PL127 (50%, operator) near the Norne field.

In the Barents Sea, LNG production on Snøhvit (18.4%) started in 2007. This project includes development of the Snøhvit, Albatross and Askeladd natural gas fields, as well as the construction of the associated liquefaction facilities. Due to design problems, the plant experienced reduced capacity during the start-up phase. A number of maintenance turnarounds were scheduled to address the issue and the plant is now operating at its design capacity (4.2 Mt/y). In 2011, the Group’s production was 19 kboe/d.

In 2011, TOTAL drilled a positive exploration well on the Norvarg structure in the Barents Sea on license PL535 (40%, operator), which was awarded during the twentieth licensing round.

The Group improved its asset portfolio in Norway by obtaining new licenses and divesting a number of non-strategic assets:

In 2011, TOTAL obtained four new exploration licenses during licensing round APA 2010 (Awards in Predefined Areas), including one as operator. The Group also acquired in 2011 a 40% stake and the role of operator of license PL554, north of Visund. Drilling of an exploration well is expected on the license in 2012. At the beginning of 2012, during licensing round APA 2011, TOTAL obtained eight new licences, including five as operator.

In 2010, the Group divested its stake in the Valhall/Hod fields.

In June 2011, TOTAL announced that it had signed an agreement for the planned sale of its entire stake in Gassled (6.4%) and the associated entities. The sale was effective at the end of 2011.

In theNetherlands, TOTAL has had natural gas exploration and production operations since 1964 and

currently owns twenty-four offshore production licenses, including twenty that it operates, and two offshore exploration licenses, E17c (16.92%) and K1c (30%). In 2011, the Group’s production was 38 kboe/d, compared to 42 kboe/d in 2010 and 45 kboe/d in 2009.

The K5CU development project (49%, operator) was launched in 2009 and production started up in early 2011. This development includes four wells supported by a platform that was installed in 2010 and connected to the K5A platform by a 15 km gas pipeline.

The K4Z development project (50%, operator) began in 2011. This development is comprised of two sub-sea wells connected to the existing production and transport facilities. Start-up of production is expected in early 2013.

In late 2010, TOTAL disposed of 18.19% of its equity stake in the NOGAT gas pipeline and decreased its stake to 5%.

InPoland, at the end of March 2011, TOTAL signed an agreement to acquire a 49% stake in the Chelm and Werbkowice exploration concessions in order to assess their shale gas potential. On the Chelm license, drilling has taken place, the well has been tested and the results from the well are being examined.

In theUnited Kingdom, where TOTAL has had operations since 1962, the Group’s production was 169 kboe/d in 2011, compared to 207 kboe/d in 2010 and 217 kboe/d in 2009. Around 90% of this production comes from operated fields located in two major zones: the Alwyn zone in the northern North Sea, and the Elgin/Franklin zone in the Central Graben.

On the Alwyn zone, start-up of satellite fields or new reservoir compartments allowed production to be maintained. The N52 well drilled on Alwyn (100%) in a new compartment of the Statfjord reservoir came onstream in February 2010 with initial production of 15 kboe/d (gas and condensates). The N53 well was also drilled on Alwyn on the same type of reservoir in 2011 and came onstream in September 2011 with initial production of 4 kboe/d (gas and condensates).

The development project for Islay (100%), a gas and condensates discovery made in 2008 located south of Alwyn, was approved in July 2010. Development is underway and production start-up is expected in the first half of 2012 with a production capacity of 15 kboe/d.

In 2010, TOTAL signed an agreement to divest its stake in the Otter field; its holding fell from 81% to 50% in 2011 and was completely disposed of in February 2012.

 
• in 2008, the10-year extension, to 2021, of the production sharing agreement of the Deir Ez Zor license;
• in 2009, the Tabiyeh agreement, which primarily provides for an increase in the production from the gas and condensates Tabiyeh field; and
• in 2009, the Cooperation Framework Agreement, which provides for the development of oil projects in partnership with the Syrian company General Petroleum Corporation.

In the Central Graben, the development of the Elgin (46.2%, operator) and Franklin (46.2%, operator) fields, in production since 2001, contributed substantially to the Group’s presence in the United Kingdom. At the end of 2011, TOTAL acquired the remaining 22.5% of Elgin Franklin Oil & Gas (EFOG), a company through which it holds a stake in the Elgin and Franklin fields. On the Elgin field, a first infill well came onstream in October 2009 with production of 18 kboe/d. A second infill well started up in May 2010 with production of 12 kboe/d.

Following a gas leak on the Elgin field on March 25, 2012, the production on the Elgin, Franklin and West Franklin fields was stopped and the personnel of the site were evacuated. Investigations are ongoing to determine the causes and the remediation of the gas leak. The Group is actively monitoring the situation (situation as of March 26, 2012).

Additional development of West Franklin through a second phase (drilling of three additional wells and installation of a new platform connected to Elgin) was approved in November 2010. Start-up of production is expected at year-end 2013. The decision was made in 2011 to install a new well platform on the Elgin field. This new platform will be installed in parallel with the West Franklin project and will enable the drilling of new wells on the Elgin field as of 2014.

In addition to Alwyn and the Central Graben, a third area, West of Shetland, is undergoing development. TOTAL increased its equity stake to 80% in the Laggan and Tormore fields in early 2010.

The decision to develop the Laggan/Tormore fields was made in March 2010 and production is scheduled to start in 2014 with an expected capacity of 90 kboe/d. The joint development scheme selected by TOTAL and its partner includes sub-sea production facilities and off-gas treatment (gas and condensates) at a plant located near the Sullom Voe terminal in the Shetland Islands. The gas would then be exported to the Saint-Fergus terminal via a new pipeline connected to the Frigg gas pipeline (FUKA).

In 2010, the Group’s stake in the P967 license (operator), which includes the Tobermory gas discovery, increased to 50% from 43.75%. This license is located north of Laggan/Tormore.

In early 2011, a gas and condensate discovery was made on the Edradour license (75%, operator), near Laggan and Tormore. The development of Edradour using the infrastructures in place is being examined.

TOTAL has stakes in ten assets operated by third parties, the most important in terms of reserves being the Bruce (43.25%) and Alba (12.65%) fields. The Group disposed of its stake in the Nelson field (11.5%) in 2010.

Middle East

In 2011, TOTAL’s production in the Middle East was 570 kboe/d, representing 24% of the Group’s overall production, compared to 527 kboe/d in 2010 and 438 kboe/d in 2009.

In theUnited Arab Emirates, where TOTAL has had operations since 1939, the Group’s production was 240 kboe/d in 2011, compared to 222 kboe/d in 2010 and 214 kboe/d in 2009. The increase in production in 2011 was mainly due to higher production by Abu Dhabi Company for Onshore Oil Operations (ADCO) and Abu Dhabi Marine (ADMA).

In Abu Dhabi, TOTAL holds a 75% stake in the Abu Al Bu Khoosh field (operator), a 9.5% stake in ADCO, which operates the five major onshore fields in Abu Dhabi, and a 13.3% stake in ADMA, which operates two offshore fields. TOTAL also has a 15% stake in Abu Dhabi Gas Industries (GASCO), which produces LPG and condensates from the associated gas produced by ADCO, and a 5% stake in Abu Dhabi Gas Liquefaction Company (ADGAS), which produces LNG, LPG and condensates.

In early 2009, TOTAL signed agreements for a 20-year extension of its stake in the GASCO joint venture starting on October 1, 2008.

In early 2011, TOTAL and IPIC, a government-owned entity in Abu Dhabi, signed a Memorandum of Understanding with a view to developing projects of common interest in the upstream oil and gas sectors.

The Group has a 24.5% stake in Dolphin Energy Ltd. alongside Mubadala, a company owned by the government of the Abu Dhabi Emirate, to market gas produced primarily in Qatar to the United Arab Emirates.

The Group also owns 33.33% of Ruwais Fertilizer Industries (FERTIL), which produces urea. FERTIL 2, a new project, was launched in 2009 to build a new granulated urea unit with a capacity of 3,500 t/d (1.2 Mt/y). This project is expected to allow FERTIL to more than double production so as to reach nearly 2 Mt/y in January 2013.

InIraq, TOTAL bid in 2009 and 2010 on the three calls for tenders launched by the Iraqi Ministry of Oil. The PetroChina-led consortium that includes TOTAL (18.75%) was awarded the development and production contract for the Halfaya field during the second call for tenders held in December 2009. This field is located in the

province of Missan, north of Basra. The agreement became effective in March 2010 and the preliminary development plan was approved by the Iraqi authorities in September 2010. Development operations started with the shooting of the 3D seismic survey, drilling and the construction of surface facilities. A production level of 70 kb/d of oil is expected to be reached in 2012.

InIran, the Group’s production under buy back agreements was zero in 2011, having been 2 kb/d in 2010 and 8 kb/d in 2009. For additional information on TOTAL’s operations in Iran, see “— Other Matters — Business Activities in Cuba, Iran, Sudan and Syria”.

InOman, the Group’s production was 36 kboe/d in 2011, stable compared to 2010 and 2009. TOTAL produces oil mainly on Block 6 as well as on Block 53 and liquefied natural gas through its stakes in the Oman LNG (5.54%)/Qalhat LNG (2.04%(1)) liquefaction plant, which has a capacity of 10.5 Mt/y.

InQatar, where TOTAL has had operations since 1936, the Group has equity stakes in the Al Khalij field (100%), the NFB Block (20%) in the North field, the Qatargas 1 liquefaction plant (10%), Dolphin (24.5%) and train 5 of Qatargas 2 (16.7%). The Group’s production was 155 kboe/d in 2011, compared to 164 kboe/d in 2010 and 141 kboe/d in 2009.

The production contract for Dolphin, signed in 2001 with state-owned Qatar Petroleum, provides for the sale of 2 Bcf/d of gas from the North Field for a 25-year period. The gas is processed in the Dolphin plant in Ras Laffan and exported to the United Arab Emirates through a 360 km gas pipeline.

Production from train 5 of Qatargas 2, which started in September 2009, reached its full capacity (7.8 Mt/y) at year-end 2009. TOTAL has owned an equity stake in this train since 2006. In addition, TOTAL takes part of the LNG produced in compliance with the contracts signed in 2006, which provide for the purchase of 5.2 Mt/y of LNG from Qatargas 2 by the Group.

The Group also has a 10% stake in Laffan Refinery, a condensate splitter with a capacity of 146 kb/d that started up in September 2009. Finally, since May 2011 the Group has been a partner (25%) in the offshore BC exploration license.

InSyria, TOTAL is present on the Deir Ez Zor license (100%, operated by DEZPC, 50% of which is owned by TOTAL) and through the Tabiyeh contract that became effective in October 2009. The Group’s production from these two assets was 53 kboe/d in 2011, compared to 39 kboe/d in 2010 and 20 kboe/d in 2009. In early December 2011, TOTAL ceased its activities that contribute to oil and gas production in Syria.

For additional information on TOTAL’s operations in Syria, see “— Other Matters — Business Activities in Cuba, Iran, Sudan and Syria”.

InYemen, where TOTAL has had operations since 1987, the Group’s production was 86 kboe/d in 2011, compared to 66 kboe/d in 2010 and 21 kboe/d in 2009.

TOTAL has an equity stake in the Yemen LNG project (39.62%). As part of this project, the Balhaf liquefaction plant on the southern coast of Yemen is supplied with the gas produced on Block 18, located near Marib in the center of the country, through a 320 km gas pipeline. The two liquefaction trains were commissioned in October 2009 and April 2010, respectively. The plant has a nominal capacity of 6.7 Mt/y of LNG.

TOTAL also has stakes in the country’s two oil basins, as the operator of Block 10 (Masila Basin, East Shabwa license, 28.57%) and as a partner on Block 5 (Marib Basin, Jannah license, 15%).

TOTAL owns stakes in four onshore exploration licenses: 40% in Blocks 69 and 71, 50.1% in Block 70 (operated by TOTAL since July 2010), and 36% in Block 72 (operated by TOTAL since October 2011).

In March 2012, TOTAL acquired a 40% interest in the Block 3 exploration license, which it will operate. The acquisition is subject to the approval of Yemen’s Ministry of Oil and Mineral Resources.

(1)TOTAL’s operations in Syria, “— Other Matters — Business Activities In Cuba, Iran, Sudan and Syria”.
InYemen, TOTAL has been present since 1987 with production of 66 kboe/d in 2010, compared to 21 kboe/d in 2009 and 10 kboe/d in 2008.
TOTAL has an interest in the Yemen LNG project (39.62%). As part of this project, the liquefaction plant built in Balhaf on the southern coast of Yemen is supplied with the gas produced on Block 18, located near Marib in the center of the country, through a 320 km gas pipeline. The two liquefaction trains were commissioned in October 2009 and April 2010. Overall production capacity from both trains is 6.7 Mt/y of LNG.
TOTAL also has interests in the country’s two oil basins, as the operator on Block 10 (Masila Basin, East Shabwa license, 28.57%) and as a partner on Block 5 (Marib Basin, Jannah license, 15%).
In 2010, TOTAL consolidated positions in onshore exploration through the acquisition of a 36% interest in Block 72 and by increasing its interest to 50.1% from 30.9% in Block 70. TOTAL also acquired 40% interests in Blocks 69 and 71 in 2007. Appraisal of gas discoveries on Block 71 is underway. The first well drilled on Block 70 discovered positive oil shows. The potential of this discovery has yet to be assessed.
(1)  Indirect interest through the 36.8% shareindirect stake in Qalhat LNG owned bythrough its stake in Oman LNG.


30

OIL AND GAS ACREAGE
                              
As of December 31,     2010  2009  2008 
(in thousand of acres at
     Undeveloped
  Developed
  Undeveloped
  Developed
  Undeveloped
  Developed
 
year-end)     acreage(a)  acreage  acreage(a)  acreage  acreage(a)  acreage 
Europe   Gross   6,802   776   5,964   667   5,880   647 
                              
    Net   3,934   184   2,203   182   2,191   181 
                              
Africa   Gross   72,639   1,229   85,317   1,137   85,883   1,112 
                              
    Net   33,434   349   45,819   308   41,608   292 
                              
Americas   Gross   16,816   1,022   9,834   776   8,749   484 
                              
    Net   5,755   319   4,149   259   4,133   186 
                              
Middle East   Gross   29,911   1,396   33,223   204   33,223   199 
                              
    Net   2,324   209   2,415   97   2,415   69 
                             ��
Asia   Gross   36,519   539   29,609   397   25,778   387 
                              
    Net   17,743   184   16,846   169   12,529   131 
                              
Total
   Gross   162,687   4,962   163,947   3,181   159,513   2,829 
                              
    Net(b)  63,190   1,245   71,432   1,015   62,876   859 
                              

OIL AND GAS ACREAGE

As of December 31,

(in thousand of acres)

 2011   2010   2009 
       Undeveloped
acreage(a)		   Developed
acreage		   Undeveloped
acreage(a)		   Developed
acreage		   Undeveloped
acreage(a)		   Developed
acreage		 

Europe

  Gross  6,478     781     6,802     776     5,964     667  
   Net  3,497     185     3,934     184     2,203     182  

Africa

  Gross  110,346     1,229     72,639     1,229     85,317     1,137  
   Net  65,391     333     33,434     349     45,819     308  

Americas

  Gross  15,454     1,028     16,816     1,022     9,834     776  
   Net  5,349     329     5,755     319     4,149     259  

Middle East

  Gross  31,671     1,461     29,911     1,396     33,223     204  
   Net  2,707     217     2,324     209     2,415     97  

Asia

  Gross  40,552     930     36,519     539     29,609     397  
   Net  19,591     255     17,743     184     16,846     169  

Total

  Gross  204,501     5,429     162,687     4,962     163,947     3,181  
   Net(b)  96,535     1,319     63,190     1,245     71,432     1,015  

(a)Undeveloped acreage includes leases and concessions.Undeveloped acreage includes leases and concessions,
(b)Net acreage equals the sum of the Group’s fractional interest in gross acreage.
NUMBER OF PRODUCTIVE WELLS
                            
As of December 31,    2010  2009  2008 
     Gross
  Net
  Gross
  Net
  Gross
  Net
 
     productive
  productive
  productive
  productive
  productive
  productive
 
(number of wells at year-end)    wells  wells(a)  wells  wells(a)  wells  wells(a) 
Europe  Liquids  569   151   705   166   700   166 
                            
   Gas  368   132   328   125   328   127 
                            
Africa  Liquids  2,250   628   2,371   669   2,465   692 
                            
   Gas  182   50   190   50   112   34 
                            
Americas  Liquids  884   261   821   241   621   176 
                            
   Gas  2,532   515   1,905   424   254   79 
                            
Middle East  Liquids  7,519   701   3,766   307   3,762   264 
                            
   Gas  360   49   136   32   83   15 
                            
Asia  Liquids  196   75   157   75   184   68 
                            
   Gas  1,258   411   1,156   379   1,049   271 
                            
Total
  Liquids  11,418   1,816   7,820   1,458   7,732   1,366 
                            
   Gas  4,700   1,157   3,715   1,010   1,826   526 
                            
(b)Net acreage equals the sum of the Group’s equity stakes in gross acreage.

NUMBER OF PRODUCTIVE WELLS

As of December 31,

(number of wells)

      2011   2010   2009 
        Gross
productive
wells		   Net
productive
wells(a)		   Gross
productive
wells		   Net
productive
wells(a)		   Gross
productive
wells		   Net
productive
wells(a)		 

Europe

  Liquids   576     151     569     151     705     166  
   Gas   358     125     368     132     328     125  

Africa

  Liquids   2,275     576     2,250     628     2,371     669  
   Gas   157     44     182     50     190     50  

Americas

  Liquids   877     247     884     261     821     241  
   Gas   2,707     526     2,532     515     1,905     424  

Middle East

  Liquids   7,829     721     7,519     701     3,766     307  
   Gas   372     49     360     49     136     32  

Asia

  Liquids   209     75     196     75     157     75  
   Gas   1,589     498     1,258     411     1,156     379  

Total

  Liquids   11,766     1,770     11,418     1,816     7,820     1,458  
   Gas   5,183     1,242     4,700     1,157     3,715     1,010  

(a)Net wells equal the sum of the Group’s equity stakes in gross wells.

NUMBER OF NET OIL AND GAS WELLS DRILLED ANNUALLY

As of December 31,    2011  2010  2009 
      Net
productive
wells
drilled(a)		  Net
dry  wells
drilled(a)		  Total net
wells
drilled(a)		  Net
productive
wells
drilled(a)		  Net
dry  wells
drilled(a)		  Total net
productive
wells
drilled(a)		  Net
wells
drilled(a)		  Net
dry  wells
drilled(a)		  Total
net  wells
drilled(a)		 

Exploratory

 

Europe

  1.5    1.7    3.2    1.7    0.2    1.9    0.4    3.7    4.1  
 

Africa

  2.9    1.5    4.4    1.6    4.3    5.9    5.9    3.2    9.1  
 

Americas

  1.2    1.3    2.5    1.0    1.6    2.6    0.8    1.6    2.4  
 

Middle East

  1.2    0.8    2.0    0.9    0.3    1.2    0.3    —    0.3  
 

Asia

  2.1    3.7    5.8    3.2    1.2    4.4    1.7    1.2    2.9  
  

Subtotal

  8.9    9.0    17.9    8.4    7.6    16.0    9.1    9.7    18.8  

Development

 

Europe

  7.5    —    7.5    5.0    —    5.0    5.0    —    5.0  
 

Africa

  24.7    —    24.7    18.1    —    18.1    27.5    0.2    27.7  
 

Americas

  113.1    82.2    195.3    135.3    112.5    247.8    31.2    104.3    135.5  
 

Middle East

  32.6    2.6    35.2    29.6    1.4    31.0    42.6    3.4    49.0  
 

Asia

  118.4    —    118.4    59.3    —    59.3    63.5    0.3    63.8  
  

Subtotal

  296.3    84.8    381.1    247.3    113.9    361.2    172.8    108.2    281.0  

Total

    305.2    93.8    399.0    255.7    121.5    377.2    181.9    117.9    299.8  

(a)Net wells equal the sum of the Group’s equity stakes in gross wells.

DRILLING AND PRODUCTION ACTIVITIES IN PROGRESS

As of December 31,     2011   2010   2009 
(number  of wells)     Gross   Net(a)   Gross   Net(a)   Gross   Net(a) 

Exploratory

 

Europe

   2     2.0     3     2.1     1     0.5  
 

Africa

   2     0.8     4     1.4     4     1.3  
 

Americas

   3     1.0     2     0.9     2     0.6  
 

Middle East

   —     —     2     1.2     1     0.4  
 

Asia

   1     0.6     2     1.1     —     —  
  

Subtotal

   8     4.4     13     6.7     8     2.8  

Development

 

Europe

   21     4.5     21     3.8     5     2.2  
 

Africa

   31     11.3     29     6.4     31     8.5  
 

Americas

   22     5.7     99     29.2     60     17.8  
 

Middle East

   26     3.5     20     5.1     40     4.8  
 

Asia

   11     5.1     23     9.8     12     5.5  
  

Subtotal

   111     30.1     192     54.3     148     38.8  

Total

     119     34.5     205     61.0     156     41.6  

(a)Net wells equal the sum of the Group’s equity stakes in gross wells.

INTERESTS IN PIPELINES

The table below sets forth TOTAL’s interests in oil and gas pipelines as of December 31, 2011.

(a)Net wells equal the sum of the Group’s fractional interest in gross wells.


31

NUMBER OF NET OIL AND GAS WELLS DRILLED ANNUALLY
                                        
As of December 31,    2010  2009  2008 
     Net
        Net
        Net
       
     productive
  Net dry
  Total
  productive
  Net dry
  Total
  productive
  Net dry
  Total
 
     wells
  wells
  net wells
  wells
  wells
  net wells
  wells
  wells
  net wells
 
     drilled(a)  drilled(a)  drilled(a)  drilled(a)  drilled(a)  drilled(a)  drilled(a)  drilled(a)  drilled(a) 
Exploratory(b)
  Europe  1.7   0.2   1.9   0.4   3.7   4.1   1.3   2.0   3.3 
                                        
   Africa  1.6   4.3   5.9   5.9   3.2   9.1   4.7   3.2   7.9 
                                        
   Americas  1.0   1.6   2.6   0.8   1.6   2.4   —   2.6   2.6 
                                        
   Middle East  0.9   0.3   1.2   0.3   —   0.3   0.4   —   0.4 
                                        
   Asia  3.2   1.2   4.4   1.7   1.2   2.9   4.1   2.2   6.3 
                                        
   Subtotal  8.4   7.6   16.0   9.1   9.7   18.8   10.5   10.0   20.5 
                                        
Development  Europe  5.0   —   5.0   5.0   —   5.0   6.2   —   6.2 
                                        
   Africa  18.1   —   18.1   27.5   0.2   27.7   38.3   6.4   44.7 
                                        
   Americas  135.3   112.5   247.8   31.2   104.3   135.5   41.5   270.9   312.4 
                                        
   Middle East  29.6   1.4   31.0   42.6   3.4   49.0   61.2   7.6   68.8 
                                        
   Asia  59.3   —   59.3   63.5   0.3   63.8   58.7   —   58.7 
                                        
   Subtotal  247.3   113.9   361.2   172.8   108.2   281.0   205.9   284.9   490.8 
                                        
Total
     255.7   121.5   377.2   181.9   117.9   299.8   216.4   294.9   511.3 
                                        
(a)Net wells equal the sum of the Group’s fractional interest in gross wells.
(b)Previously published data for 2009 have been restated.
DRILLING AND PRODUCTION ACTIVITIES IN PROGRESS
                            
As of December 31,    2010  2009  2008 
(number of wells at year-end)    Gross  Net(a)  Gross  Net(a)  Gross  Net(a) 
Exploratory  Europe  3   2.1   1   0.5   2   1.1 
                            
   Africa  4   1.4   4   1.3   7   2.5 
                            
   Americas  2   0.9   2   0.6   1   0.5 
                            
   Middle East  2   1.2   1   0.4   1   0.3 
                            
   Asia  2   1.1   —   —   1   0.1 
                            
   Subtotal  13   6.7   8   2.8   12   4.5 
                            
Development  Europe  21   3.8   5   2.2   7   3.7 
                            
   Africa  29   6.4   31   8.5   19   4.3 
                            
   Americas  99   29.2   60   17.8   9   3.2 
                            
   Middle East  20   5.1   40   4.8   5   2.2 
                            
   Asia  23   9.8   12   5.5   23   7.8 
                            
   Subtotal  192   54.3   148   38.8   63   21.2 
                            
Total
     205   61.0   156   41.6   75   25.7 
                            
(a)Net wells equal the sum of the Group’s fractional interest in gross wells.


32

INTERESTS IN PIPELINES
The table below sets forth TOTAL’s interests in oil and gas pipelines as of December 31, 2010.
%
Pipeline(s)OriginDestinationinterestOperatorLiquidsGas
EUROPE
France
TIGFNetwork South West100.00xx
Norway
Frostpipe (inhibited)Lille-Frigg, FroyOseberg36.25x
Gassled(a)7.76x
Heimdal to Brae Condensate LineHeimdalBrae16.76x
Kvitebjorn pipelineKvitebjornMongstad5.00x
Norpipe OilEkofisk Treatment centerTeeside (UK)34.93x
Oseberg Transport SystemOseberg, Brage and VeslefrikkSture8.65x
Sleipner East Condensate PipeSleipner EastKarsto10.00x
Troll Oil Pipeline I and IITroll B and CVestprosess (Mongstad refinery)3.71x
The Netherlands
Nogat pipelineF3-FBDen Helder5.00x
WGT K13-Den HelderK13ADen Helder4.66x
WGT K13-ExtensionMarkhamK13 (via K4/K5)23.00x
United Kingdom
Alwyn Liquid Export LineAlwyn NorthCormorant100.00xx
Bruce Liquid Export LineBruceForties (Unity)43.25x
Central Area Transmission System (CATS)Cats Riser PlatformTeeside0.57x
Central Graben Liquid Export Line (LEP)Elgin-FranklinETAP15.89x
Frigg System : UK lineAlwyn North, Bruce and othersSt.Fergus (Scotland)100.00xx
Ninian Pipeline SystemNinianSullom Voe16.00x
Shearwater Elgin Area Line (SEAL)Elgin-Franklin, ShearwaterBacton25.73x
SEAL to Interconnector Link (SILK)BactonInterconnector54.66xx
AFRICA
Algeria
MedgazAlgeriaSpain9.77(b)x
Gabon
Mandji PipesMandji fieldsCap Lopez Terminal100.00(c)xx
Rabi PipesRabi fieldsCap Lopez Terminal100.00(c)xx
AMERICAS
Argentina
Gas AndesNeuquen Basin (Argentina)Santiago (Chile)56.50xx
TGNNetwork (Northern Argentina)15.40xx
TGMTGNUruguyana (Brazil)32.68xx
Bolivia
TransierraYacuiba (Bolivia)Rio Grande (Bolivia)11.00x
Brazil
TBGBolivia-Brazil borderPorto Alegre via São Paulo9.67x
Colombia
OcensaCusianaCovenas Terminal15.20x
Oleoducto de Alta MagdalenaTenayVasconia0.93x
Oleoducto de ColombiaVasconiaCovenas9.55x
ASIA
YadanaYadana (Myanmar)Ban-I Tong (Thai border)31.24xx
REST OF WORLD
BTCBaku (Azerbaijan)Ceyhan (Turkey, Mediterranean)5.00x
SCPBaku (Azerbaijan)Georgia/Turkey Border10.00x
Pipeline(s)OriginDestination

%

interest

OperatorLiquidsGas 

EUROPE

France

TIGF

South West Network100.00xx

Norway

Frostpipe (inhibited)Lille-Frigg, FroyOseberg36.25x
Heimdal to Brae Condensate LineHeimdalBrae16.76x
Kvitebjorn pipelineKvitebjornMongstad5.00x
Norpipe OilEkofisk Treatment centerTeeside (UK)34.93x
Oseberg Transport SystemOseberg, Brage and VeslefrikkSture8.65x
Sleipner East Condensate PipeSleipner EastKarsto10.00x
Troll Oil Pipeline I and IITroll B and CVestprosess (Mongstad refinery)3.71x

The Netherlands

Nogat pipeline

F3-FBDen Helder5.00x

WGT K13-Den Helder

K13ADen Helder4.66x

WGT K13-Extension

MarkhamK13 (via K4/K5)23.00x

United Kingdom

Alwyn Liquid Export Line

Alwyn NorthCormorant100.00xx

Bruce Liquid Export Line

BruceForties (Unity)43.25x

Central Area Transmission System (CATS)

Cats Riser PlatformTeeside0.57x

Central Graben Liquid Export Line (LEP)

Elgin-FranklinETAP15.89x

Frigg System : UK line

Alwyn North, Bruce and othersSt.Fergus (Scotland)100.00xx

Ninian Pipeline System

NinianSullom Voe16.00x

Shearwater Elgin Area Line (SEAL)

Elgin-Franklin, ShearwaterBacton25.73x

SEAL to Interconnector Link (SILK)

BactonInterconnector54.66xx

AFRICA

Gabon

Mandji Pipes

Mandji fieldsCap Lopez Terminal100.00(a)xx

Rabi Pipes

Rabi fieldsCap Lopez Terminal100.00(a)xx

AMERICAS

Argentina

Gas Andes

Neuquen Basin (Argentina)Santiago (Chile)56.50xx

TGN

Network (Northern Argentina)15.40x

TGM

TGNUruguyana (Brazil)32.68x

Bolivia

Transierra

Yacuiba (Bolivia)Rio Grande (Bolivia)11.00x

Brazil

TBG

Bolivia-Brazil borderPorto Alegre via São Paulo9.67x

Colombia

Ocensa

CusianaCovenas Terminal5.20x

Oleoducto de Alta Magdalena

TenayVasconia0.93x

Oleoducto de Colombia

VasconiaCovenas9.55x

ASIA

Yadana

Yadana (Myanmar)Ban-I Tong (Thai border)31.24xx

REST OF WORLD

BTC

Baku (Azerbaijan)Ceyhan (Turkey, Mediterranean)5.00x

SCP

Baku (Azerbaijan)Georgia/Turkey Border10.00x

Dolphin (International transport and network)

 Ras Laffan (Qatar) U.A.E.  24.50            x  

(a)(a)Gassled: unitization of Norwegian gas pipelines through a new joint venture in which TOTAL has an interest of 7.761%. In addition to its direct interest in Gassled, TOTAL holds a 14.4% interest in a joint venture with Norsea Gas AS, which holds 2.839% in Gassled.
(b)Through the Group’s interest in CEPSA (48.83%).
(c)Interest of Total Gabon. The Group has a financial interest of 58.3% in Total Gabon.


33

Gas & Power
The Gas & Power division is primarily focused on the optimization of the Group’s gas resources. The division is active in transport, trading, marketing of natural gas and liquefied natural gas (LNG), LNG re-gasification and natural gas storage, liquefied petroleum gas (LPG) shipping and trading, power generation from gas-fired power plants or renewable energies, and coal production, trading and marketing.
The Gas & Power division is also developing new energies that emit less greenhouse gases to complement hydrocarbons so as to meet the increasing global demand for energy. For this purpose, the Group has threea financial interest of 58.28% in Total Gabon.

Gas & Power

The Gas & Power division is primarily focused on the optimization of the Group’s gas resources. The division is active in the transport, trading and marketing of natural gas, liquefied natural gas (LNG) and electricity, LNG re-gasification and natural gas storage. It is also engaged in shipping and trading of liquefied petroleum gas (LPG), power generation from gas-fired power plants or renewable energies, and coal production, trading and marketing.

The Gas & Power division is also developing new energies that emit fewer greenhouse gases to complement hydrocarbons so as to meet the increasing global demand for energy. For this purpose, the Group has two main focuses:

the upstream/downstream integration of the solar photovoltaic channel (achieved through the acquisition of a 60% stake in SunPower in 2011);

the thermochemical and biochemical conversion of feedstock into fuels or chemicals.

In these fields, TOTAL pursues and strengthens R&D in solar energy, conversion processing of biomass, gas and coal, energy storage, carbon capture and storage and gas technologies.

In parallel, the Group is closely monitoring nuclear power generation and its outlook.

Liquefied natural gas

A pioneer in the LNG industry, TOTAL today ranks second worldwide among international oil companies(1) and has sound and diversified positions both in the upstream and downstream portions of the LNG chain. LNG development is key to the Group’s strategy, with TOTAL strengthening positions in most major production zones and markets.

Through its stakes in liquefaction plants located in Indonesia, Qatar, the United Arab Emirates, Oman, Nigeria, Norway and, since 2009, Yemen, TOTAL markets LNG in all worldwide markets. In 2011, TOTAL sold 13.2 Mt of LNG, an increase of 7.3% compared to 2010 LNG sales (12.3 Mt) and of 48.3% compared to 2009 sales (8.9 Mt). The start-up of the Angola LNG plant in 2012, together with the Group’s liquefaction projects in Australia, Nigeria and Russia, are expected to allow for growth to continue in the coming years.

The Gas & Power division is responsible for LNG operations downstream from liquefaction plants.(2) It is in

charge of LNG marketing to third parties on behalf of the Exploration & Production division, building up the Group’s LNG portfolio for its trading, marketing and transport operations as well as re-gasification terminals.

InNigeria, TOTAL holds a 15% interest in the Nigeria LNG plant (NLNG). The Group signed an LNG purchase agreement, initially intended for deliveries to the United States and Europe, for an initial 0.23 Mt/y over a 23-year period starting in 2006, to which an additional 0.94 Mt/y was added when the sixth train came on stream in December 2007.

TOTAL also holds a 17% stake in the Brass LNG project, which calls for the construction of two liquefaction trains, each with a capacity of 5 Mt/y. In conjunction with this acquisition, TOTAL signed a preliminary agreement with Brass LNG Ltd setting forth the principal terms of an LNG purchase agreement for approximately one-sixth of the plant’s capacity over a 20-year period. This contract is subject to the final investment decision for the project by Brass LNG.

InNorway, as part of the Snøvhit project, in which the Group holds an 18.4% stake, TOTAL signed in 2004 a purchase agreement for 0.78 Mt/y of LNG over a 15-year period primarily intended for North America and Europe. Deliveries started in 2007.

InQatar, TOTAL signed purchase agreements in 2006 for 5.2 Mt/y of LNG from train 5 (TOTAL, 16.7%) of Qatargas 2 over a 25-year period. This LNG is expected to be marketed mainly in France, the United Kingdom and North America. LNG production from this train started in September 2009.

InYemen, TOTAL signed an agreement with Yemen LNG Ltd (TOTAL, 39.62%) in 2005 to purchase 2 Mt/y of LNG over a 20-year period, starting in 2009, which is initially intended for delivery in the United States and Europe. LNG production from Yemen LNG’s first and second trains started in October 2009 and April 2010, respectively.

Since 2009, part of the volume purchased by the Group pursuant to its long-term contracts related to the LNG projects mentioned above has been diverted to higher-value markets in Asia.

InAngola, TOTAL is involved in the construction of the Angola LNG liquefaction plant (TOTAL, 13.6%), which includes a 5.2 Mt/y train expected to start up in 2012. As

 

• the upstream/downstream integration of the solar photovoltaic channel;
• thermochemical and biochemical conversion of feedstock into fuels or chemicals; and
• nuclear power generation with the long-term objective of becoming a power plant operator.
In these fields, TOTAL pursues and strengthens R&D in solar energy, gas, coal and biomass conversion processes, energy storage, carbon capture and storage and gas technologies.
Liquefied natural gas
A pioneer in the LNG industry, TOTAL today ranks second worldwide among international oil companies(1) and has sound and diversified positions both in the upstream and downstream portions of the LNG chain. LNG development is key to the Group’s strategy, with TOTAL strengthening positions in most major production zones and markets.
From its interests in liquefaction plants located in Indonesia, Qatar, the United Arab Emirates, Oman, Nigeria, Norway and, since 2009, Yemen, TOTAL markets LNG mainly in Asia and Continental Europe, as well as in the United Kingdom and North America. In 2010, TOTAL sold 12.3 Mt of LNG, an increase of approximately 40% compared to 2009, due in particular to thestart-up of the train 5 of Qatargas 2 and Yemen LNG. Thestart-up of the Angola LNG plant, which is currently under construction, and the Group’s liquefaction projects in Australia, Nigeria and Russia are expected to result in ongoing growth for its sales.
The Gas & Power division is responsible for LNG operations downstream from liquefaction plants(2). It is in charge of LNG marketing to third parties on behalf of the Exploration & Production division, building up of the Group’s LNG portfolio for its trading, marketing and transport operations as well as re-gasification terminals.
InAngola, TOTAL is involved in the construction of the Angola LNG liquefaction plant (TOTAL, 13.6%) that includes a 5.2 Mt/y train expected tostart-up in 2012. As part of this project, TOTAL signed in 2007 a re-gasified gas purchase agreement for 13.6% of the quantities produced over a20-year period.
InNigeria, TOTAL holds a 15% interest in the Nigeria LNG plant (NLNG). The Group signed an LNG purchase agreement for an initial 0.23 Mt/y over a23-year period starting in 2006, to which an additional 0.94 Mt/y was added when the sixth train came on stream.
TOTAL also holds a 17% interest in the Brass LNG project, which calls for the construction of two liquefaction trains, each with a capacity of 5 Mt/y. In conjunction with this acquisition, TOTAL signed a preliminary agreement with Brass LNG Ltd setting forth the principal terms of an LNG purchase agreement for approximately one-sixth of the plant’s capacity over a20-year period. This contract is subject to the final investment decision for the project by Brass LNG.
InNorway, as part of the Snøvhit project, in which the Group holds a 18.4% interest, TOTAL signed in 2004 a purchase agreement for 35 Bcf/y (0.78 Mt/y) of LNG over a15-year period primarily intended for North America and Europe. Deliveries started in 2007.
InQatar, TOTAL signed purchase agreements in 2006 for up to 5.2 Mt/y of LNG from train 5 (TOTAL, 16.7%) of Qatargas 2 over a25-year period. This LNG is expected to be marketed mainly in France, the United Kingdom and North America. LNG production from this train started in September 2009.
InYemen, TOTAL signed an agreement with Yemen LNG Ltd (TOTAL, 39.62%) in 2005 to purchase2 Mt/y of LNG over a20-year period, starting in 2009, which are initially intended for deliveries in the United States and Europe. LNG production from Yemen LNG’s first and second trains started in October 2009 and April 2010, respectively.
In 2009 and 2010, part of the volumes that were bought by the Group pursuant to itslong-term contracts related to the LNG projects mentioned above were diverted tohigher-value markets in Asia.
InChina, TOTAL signed in 2008 an LNG sale agreement with China National Offshore Oil Company (CNOOC). This
(1)Based on publicly available information; upstream and downstream LNG portfolios.
(2)The Exploration & Production division is in charge of the Group’sGroup's natural gas liquefaction and production and liquefaction operations.


34

part of this project, TOTAL signed in 2007 a re-gasified gas purchase agreement for 13.6% of the quantities produced over a 20-year period.

InAustralia, TOTAL holds a 24% stake in the Ichthys LNG project, which calls for the construction of two LNG trains, each with a capacity of 4.2 Mt/y. In conjunction with this acquisition, TOTAL signed an LNG purchase agreement for 0.9 Mt/y over a 15-year period. The final investment decision of the partners of the Ichthys LNG project was made in January 2012.

InChina, TOTAL signed in 2008 an LNG sale agreement with China National Offshore Oil Company (CNOOC). This agreement, starting in 2010 for a 15-year period, provides for the supply by TOTAL of up to 1 Mt/y of LNG to CNOOC. The gas supplied comes from the Group’s global LNG portfolio.

InSouth Korea, TOTAL signed an LNG sale agreement in 2011 with Kogas. Under this agreement, TOTAL will deliver up to 2 Mt/y of LNG to Kogas between 2014 and 2031. This gas will come from the Group’s global LNG portfolio.

With regard to LNG transport operations, since 2004 TOTAL has been the direct long-term charterer of the Arctic Lady, a 145,000 m3 LNG tanker that ships TOTAL’s share of production from the Snøvhit liquefaction plant in Norway. In November 2011, TOTAL signed a second long-term contract for the chartering of a 165,000 m3 LNG tanker, the Maersk Meridian, in order to strengthen its transport capacities with regards again to its lifting commitments in Norway.

The Group also holds a 30% stake in Gaztransport & Technigaz (GTT), which focuses mainly on the design and engineering of membrane cryogenic tanks for LNG tankers. At year-end 2011, out of a worldwide tonnage estimated at 386 LNG tankers(1), 258 active LNG tankers were equipped with membrane tanks built under GTT licenses.

Trading

In 2011, TOTAL continued to pursue its strategy of developing its operations downstream from natural gas and LNG production. The aim of this strategy is to optimize access for the Group’s current and future production to traditional markets (with long-term contracts) and to markets open to international competition (with short-term contracts and spot sales). In the context of deregulated markets, which allow customers to more freely access suppliers, in turn leading to new marketing arrangements

agreement, starting in 2010 for a15-year period, provides for the supply by TOTAL of up to 1 Mt/y of LNG to CNOOC. The gas supplied comes from the Group’s global LNG resources.
As part of its LNG transport operations, TOTAL is also the direct charterer of the Arctic Lady, a long-term 145,000 m3 LNG tanker that ships TOTAL’s share of production from the Snøvhit liquefaction plant in Norway.
The Group also holds a 30% interest in Gaztransport & Technigaz (GTT), which focuses mainly on the design and engineering of membrane cryogenic tanks for LNG tankers. At year-end 2010, 245 active LNG tankers were equipped with membrane tanks built under GTT licenses out of a world tonnage estimated at 367 LNG tankers.(1)
Trading
In 2010, TOTAL continued to pursue its strategy of developing its operations downstream from natural gas and liquefied natural gas production in order to optimize access for the Group’s current and future production to traditional markets (with long-term contracts) and to markets open to international competition (with short-term contracts and spot sales). In the context of deregulated markets, which allow customers to more freely access suppliers, in turn leading to new marketing arrangements that are more flexible than traditional long-term contracts, TOTAL is developing trading, marketing and logistics businesses to offer its natural gas and LNG production directly to customers.
In parallel, the Group has operations in electricity trading and LPG and coal marketing. Teams of the Gas & Power division are located mainly in London, Houston and Geneva.
Gas and electricity
TOTAL has gas and electricity trading operations in Europe and North America with a view to selling the Group’s production and supplying its marketing subsidiaries.
InEurope, TOTAL marketed 1,278 Bcf (36.2 Bm3) of natural gas in 2010, compared to 1,286 Bcf (36.5 Bm3) in 2009 and 1,240 Bcf (35.2 Bm3) in 2008, approximately 14% of which came from the Group’s production. In addition, TOTAL marketed 27.1 TWh of electricity in 2010, compared to 35 TWh in 2009 and 38.5 TWh in 2008, which came mainly from external sources.
InNorth America, TOTAL marketed 1,798 Bcf (51 Bm3) of natural gas in 2010, compared to 1,586 Bcf (45 Bm3) in 2009 and approximately 1,652 Bcf (46.9 Bm3) in 2008, supplied by its own production or external sources.
LNG
TOTAL has LNG trading operations through spot sales and fixed-term contracts. Since 2009, new purchase (Qatargas 2, Yemen LNG) and sale (CNOOC) agreements resulted in the substantial development of the Group’s LNG marketing operations. This spot and fixed-term LNG portfolio allows TOTAL to supply its main customers worldwide with gas, while retaining a certain degree of flexibility to react to market opportunities.
In 2010, TOTAL purchased ninety-four contractual cargos and twelve spot cargos from Qatar, Yemen, Nigeria, Norway, Russia and Egypt, compared to twenty-three and twelve, respectively, in 2009.
LPG
In 2010, TOTAL traded and sold approximately 4.5 Mt of LPG (butane and propane) worldwide, compared to 4.4 Mt in 2009 and 5.2 Mt in 2008. Approximately 27% of these quantities come from fields or refineries operated by the Group. LPG trading involved the use of five time-charters, representing 100 voyages in 2010, and approximately 150 spot charters.
Coal
In 2010, the Group marketed 7.3 Mt of coal in the international market, compared to 7.3 Mt in 2009 and 8.4 Mt in 2008. More than half of this coal comes from South Africa, with three quarters exported to Asia, where it is mainly intended for power generation, and the remaining quarter exported to Europe.
Marketing
To unlock value from the Group’s production, TOTAL has gradually developed gas, electricity and coal marketing operations with end users in the United Kingdom, France and Spain.
In theUnited Kingdom, TOTAL sells gas and power to the industrial and commercial segments through its subsidiary Total Gas & Power Ltd. In 2010, volumes of gas sold amounted to 173 Bcf (4.9 Bm3), compared to 130 Bcf (3.7 Bm3) in 2009 and 134 Bcf (3.8 Bm3) in 2008. Electricity sales amounted to approximately 4.1 TWh in 2010, stable compared to 2009, and 4.6 TWh in 2008.
InFrance, TOTAL markets natural gas through its subsidiary Total Énergie Gaz (TEGAZ), the overall sales of which were 226 Bcf (6.4 Bm3) in 2010, compared to 208 Bcf (5.9 Bm3) in 2009 and 229 Bcf (6.5 Bm3) in 2008. The Group also markets coal to its French customers through its subsidiary CDF Energie, with sales of

that are more flexible than traditional long-term contracts, TOTAL is developing trading, marketing and logistics businesses to offer its natural gas and LNG production directly to customers.

In parallel, the Group has operations in electricity trading and LPG as well as coal marketing.

Furthermore, in 2011 TOTAL began to market the petcoke production of the Port Arthur refinery (United States) on the international market.

The Gas & Power division’s trading teams are located in London, Houston, Geneva and Singapore and conduct most of their business through the Group’s wholly-owned subsidiaries Total Gas & Power and Total Gas & Power North America.

Gas and electricity

TOTAL has gas and electricity trading operations in Europe and North America with a view to selling the Group’s production and supplying its marketing subsidiaries.

InEurope, TOTAL marketed 1,500 Bcf (42.5 Bm3) of natural gas in 2011, compared to 1,278 Bcf (36.2 Bm3) in 2010 and 1,286 Bcf (36.5 Bm3) in 2009, including approximately 12% coming from the Group’s production. In addition, TOTAL marketed 24.2 TWh of electricity in 2011, compared to 27.1 TWh in 2010 and 35 TWh in 2009, which came mainly from external resources.

InNorth America, TOTAL marketed 1,694 Bcf (48 Bm3) of natural gas in 2011, compared to 1,798 Bcf (51 Bm3) in 2010 and 1,586 Bcf (45 Bm3) in 2009, supplied by its own production or external resources.

LNG

TOTAL has LNG trading operations through spot sales and fixed-term contracts as described in “— Liquefied natural gas” above. Since 2009, new purchase agreements (Qatargas 2, Yemen LNG) and new sale agreements (China, India, Thailand, South Korea and Japan) have substantially developed the Group’s LNG marketing operations, particularly in Asia’s most buoyant markets. This spot and fixed-term LNG portfolio allows TOTAL to supply gas to its main customers worldwide, while retaining a sufficient degree of flexibility to react to market opportunities.

In 2011, TOTAL purchased 99 contractual cargos and 10 spot cargos from Qatar, Yemen, Nigeria, Norway, Russia and Egypt, compared to 94 and 12, respectively, in 2010 and 23 and 12, respectively, in 2009.

(1)Gaztransport & Technigaz data.


35

LPG

In 2011, TOTAL traded and sold approximately 5.7 Mt of LPG (butane and propane) worldwide, compared to 4.5 Mt in 2010 and 4.4 Mt in 2009. Approximately 28% of these quantities came from fields or refineries operated by the Group. LPG trading involved the use of 7 time-charters, representing 188 voyages in 2011, and approximately 142 spot charters.

Coal

In 2011, TOTAL marketed 7.5 Mt of coal in the international market, compared to 7.3 Mt in 2010 and 2009. Approximately 70% of this coal comes from South Africa. More than three-quarters of the volume was sold in Asia, where coal is used primarily to generate electricity, with the remaining volume marketed in Europe.

Petcoke

In 2011, TOTAL began to market the petcoke produced by the coker at the Port Arthur refinery. Approximately 0.6 Mt of petcoke was sold on the international market in 2011 to cement plants and electricity producers, mainly in Mexico, Brazil, Turkey and China.

Marketing

To unlock value from the Group’s production, TOTAL has gradually developed gas, electricity and coal marketing operations with end users in the United Kingdom, France, Spain and Germany.

In theUnited Kingdom, TOTAL sells gas and power to the industrial and commercial segments through its subsidiary Total Gas & Power Ltd. In 2011, volumes of gas sold amounted to 162 Bcf (4.6 Bm3), compared to 173 Bcf (4.9 Bm3) in 2010 and 130 Bcf (3.7 Bm3) in 2009. Sales of electricity totaled approximately 4.1 TWh in 2011, stable compared to 2010 and 2009.

InFrance, TOTAL markets natural gas through its subsidiary Total Energie Gaz (TEGAZ), the overall sales of which were 208 Bcf (5.9 Bm3) in 2011, compared to 226 Bcf (6.4 Bm3) in 2010 and 208 Bcf (5.9 Bm3) in 2009. The Group also markets coal to its French customers through its subsidiary CDF Energie, with sales of approximately 1.2 Mt in 2011, compared to 1.3 Mt in 2010 and 1 Mt in 2009.

InSpain, TOTAL markets natural gas to the industrial and commercial segments through Cepsa Gas Comercializadora, in which it holds a 35% stake. In 2011, volumes of gas sold amounted to 85 Bcf (2.4 Bm3), like in 2010 and compared to 70 Bcf (2 Bm3) in 2009.

InGermany, Total Energie created a marketing subsidiary in 2010, Total Energy Gas GmbH, which began

commercial operations in 2011, making its first sales to industrial customers and service companies.

The Group also holds stakes in the marketing companies that are associated with the Altamira and Hazira LNG re-gasification terminals located in Mexico and India, respectively.

Gas facilities

TOTAL develops and operates its natural gas transport networks, gas storage facilities (both liquid and gaseous) and LNG re-gasification terminals downstream from its natural gas and LNG production.

Transport of natural gas

InFrance, the Group’s transport operations located in the southwest of the country are grouped under Total Infrastructures Gaz France (TIGF), a wholly-owned subsidiary of the Group. This subsidiary operates a regulated transport network of 5,000 km of gas pipelines. As part of the development of Franco-Spanish interconnections, TOTAL decided in 2011 to complete the Euskadour (France-Spain link) project with commissioning scheduled in 2015. This decision followed the decisions made in 2010 to invest in the Artère du Béarn and Girland gas pipeline projects (reinforcement of Artère de Guyenne), with commissioning scheduled in 2013.

Another highlight of 2011 was the implementation by TIGF of the Third Energy Package adopted by the European Union in July 2009, which entails splitting network operations from production and supply operations.

InSouth America, TOTAL owns interests in several natural gas transport companies in Argentina, Chile and Brazil. These assets represent a total integrated network of approximately 9,500 km of pipelines serving the Argentinean, Chilean and Brazilian markets from gas-producing basins in Bolivia and Argentina, where the Group has natural gas reserves. These natural gas transport companies are challenged by a difficult operational and financial environment in Argentina stemming from the absence of an increase in transport tariffs and the restrictions imposed on gas exports. The Group successfully negotiated in 2011 financial arrangements with some of its customers, which resulted in a significant improvement in earnings for GasAndes, a company in which TOTAL holds a 56.5% stake.

Storage of natural gas and LPG

InFrance, the Group’s storage operations located in the southwest are grouped under TIGF. This subsidiary operates two storage units under a negotiated legal regime with a usable capacity of 92 Bcf (2.6 Bm3).

approximately 1.3 Mt in 2010, compared to 1 Mt in 2009 and 1.9 Mt in 2008.
InSpain, TOTAL markets natural gas to the industrial and commercial segments through Cepsa Gas Comercializadora(1). In 2010, volumes of gas sold amounted to 85 Bcf (2.4 Bm3), compared to approximately 70 Bcf (2 Bm3) in 2009 and 2008.
The Group also holds interests in the marketing companies that are associated with the Altamira and Hazira LNG re-gasification terminals located in Mexico and India, respectively.
Gas facilities
TOTAL develops and operates its natural gas transport and marketing networks, gas storage facilities — both liquid and gaseous — and LNG re-gasification terminals downstream from natural gas and liquefied natural gas production.
Transport of natural gas
InFrance, the Group’s transport operations located in the southwest of the country are grouped under TIGF, a wholly-owned subsidiary of the Group. This subsidiary operates a regulated transport network of 5,000 km of gas pipelines. Highlights of 2010 included decisions for the development of Franco-Spanish interconnections:
 
• following the open season launched in 2009, TIGF intends to develop two new projects, the Artère du Béarn and phase B of the Artère de Guyenne gas pipelines, which are scheduled to be commissioned in 2013; and

Through its 35.5% stake in Géométhane, TOTAL owns natural gas storage in a salt cavern in Manosque with a capacity of 10.5 Bcf (0.3 Bm3). A proposed 7 Bcf (0.2 Bm3) increase in storage capacity was approved in February 2011, with commissioning scheduled in 2017-2018.

InIndia, TOTAL holds a 50% stake in South Asian LPG Limited (SALPG), a company that operates an underground import and storage LPG terminal located on the east coast of the country. This cavern, the first of its kind in India, has a storage capacity of 60 kt. In 2011, inbound vessels transported 850 kt of LPG, compared to 779 kt in 2010 and 606 kt in 2009.

LNG re-gasification

TOTAL has entered into agreements to obtain long-term access to LNG re-gasification capacity on the three continents that are the largest consumers of natural gas: North America (the United States and Mexico), Europe (France and the United Kingdom), and Asia (India). This diversified presence allows the Group to access new liquefaction projects by becoming a long-term buyer of a portion of the LNG produced at these plants, thereby strengthening its LNG supply portfolio.

InFrance, TOTAL holds a 27.6% stake in Société du Terminal Méthanier de Fos Cavaou (STMFC) and has, through its affiliate Total Gas & Power, a re-gasification capacity of 2.25 Bm3/y. The terminal received 59 vessels in 2011.

In 2011, TOTAL acquired a 9.99% stake in Dunkerque LNG (EDF 65%, operator) in order to develop a methane terminal project with a capacity of 13 Bm3/y. Trade agreements have also been signed which allow TOTAL to reserve up to 2 Bm3/y of re-gasification capacity over a 20-year period. Commissioning of the terminal is scheduled for the end of 2015.

In theUnited Kingdom, through its equity interest in the Qatargas 2 project, TOTAL holds an 8.35% stake in the South Hook LNG re-gasification terminal and an equivalent right of use to the terminal. Phase 2 of the terminal was commissioned in April 2010, which increased the terminal’s total capacity to 742 Bcf/y (21 Bm3/y). The terminal operates at nearly 80% of its capacity and in 2011 re-gasified nearly 100 cargoes from Qatar.

InCroatia, TOTAL is involved in the study of an LNG re-gasification terminal on Krk Island, on the northern Adriatic coast.

InMexico, TOTAL sold in 2011 its entire stake in the Altamira re-gasification terminal. However, TOTAL retained

• another open season launched in 2010, which involved four French and Spanish transport operators including TIGF, is expected to result in the completion of the Euskadour project by 2015.

its 25% reservation of the terminal’s capacity,i.e., 59 Bcf/y (1.7 Bm3/y) through its 25% stake in Gas del Litoral.

In theUnited States, TOTAL has reserved a re-gasification capacity of approximately 353 Bcf/y (10 Bm3/y) at the Sabine Pass terminal (Louisiana) for a 20-year period ending in 2029.

InIndia, TOTAL holds a 26% stake in the Hazira terminal, which has a natural gas re-gasification capacity of 177 Bcf/y (5 Bm3/y). The terminal, located on the west coast of India in the Gujarat state, is a merchant terminal with operations that cover both LNG re-gasification and gas marketing. After a year of sluggish activity in 2010, the terminal’s full capacities are under contract for 2011 and 2012. The Indian market’s strong growth prospects have led to a decision to increase the terminal’s capacity to 230 Bcf/y (6.5 Bm3/y) starting in 2013.

Electricity generation

In a context of increasing global demand for electricity, TOTAL has developed expertise in the power generation sector, especially through cogeneration and combined cycle power plant projects.

The Group is also involved in power generation projects from renewable sources and is closely monitoring nuclear power generation and its outlook.

Electricity from conventional energy sources

In addition, following the enactment of the Third Energy Package by the European Union in July 2009, which provides for splitting network operations from production and supply operations, TOTAL and TIGF are reviewing adaptations to be implemented before the regulation becomes effective in France starting in March 2012.

InSouth America, TOTAL owns interests in several natural gas transport companies in Argentina, Chile and Brazil. These assets represent a total integrated network of approximately 9,500 km of pipelines serving the Argentine, Chilean and Brazilian markets from gas-producing basins in Bolivia and Argentina, where the Group has natural gas reserves. In Argentina, in the absence of an increase in the tariff granted to utilities and given the restrictions on gas exports, the Group continued to manage its assets in the most appropriate way in a difficult operating and financial environment.
Storage of natural gas and LPG
InFrance, the Group’s storage operations located in the southwest are grouped under TIGF. This subsidiary operates two storage units under a negotiated scheme with a usable capacity of 92 Bcf (2.6 Bm3). Highlights of 2010 included an increase in Lussagnet’s storage capacity by 3.5 Bcf (0.1 Bm3).
TOTAL, through its interest in Géosud, also participates in Géométhane, an Economic Interest Grouping that owns natural gas storage in a salt cavern with a capacity of 10.5 Bcf (0.3 Bm3), located in Manosque, in southeastern France. In March 2010, the Group’s interest in Géométhane increased to 35.5% from 26.2% following the buyback of a partner’s stake. A project is under study to increase the storage capacity by 7 Bcf (0.2 Bm3).
InIndia, TOTAL holds a 50% interest in South Asian LPG Limited (SALPG), a company that operates an underground import and storage LPG terminal located on the east coast of the country. This cavern, the first of its kind in India, has a storage capacity of 60 kt. In 2010, it received 779 kt of LPG, compared to 606 kt in 2009 and 535 kt in 2008.
LNG re-gasification
TOTAL has entered into agreements to obtain long-term access to LNG re-gasification capacity on the three continents that are the largest consumers of natural gas: North America (the United States and Mexico), Europe (France and the United Kingdom), and Asia (India). This diversified presence allows the Group to access new liquefaction projects by becoming a long-term buyer of a portion of the LNG produced at the plants, thereby strengthening its LNG supply portfolio.
InFrance, TOTAL’s interest in Société du Terminal Méthanier de Fos Cavaou (STMFC) decreased to 28.03% from 28.8% in 2010 without impacting the re-gasification volumes reserved by TOTAL. This terminal has a capacity of 291 Bcf/y (8.25 Bm3/y) of natural gas, 79 Bcf/y (2.25 Bm3/y) of which has been reserved by TOTAL. Commercial operations started in April 2010 and prefectorial authorities authorized the terminal to operate at full capacity in August 2010.
(1)  Held by TOTAL (35%), CEPSA (35%) and Sonatrach (30%). In February 2011, TOTAL signed an agreement to dispose of its 48.83% interest in CEPSA. The transaction is conditioned on obtaining all requisite approvals.


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TOTAL and EDF signed in March 2010 a letter of intent whereby TOTAL will reserve re-gasification capacity in the planned Dunkirk LNG terminal being developed by Dunkerque LNG, a wholly-owned EDF subsidiary, and will also acquire an interest in the company.
In theUnited Kingdom, TOTAL holds an 8.35% interest in the South Hook LNG re-gasification terminal in connection with the interest held in the Qatargas 2 project. The terminal was commissioned in October 2009 for phase 1 (371 Bcf/y or 10.5 Bm3/y) and in April 2010 for phase 2, increasing its overall capacity to 742 Bcf/y (21 Bm3/y).
InCroatia, TOTAL owns an interest in Adria LNG, a company in charge of studying the construction of an LNG re-gasification terminal on Krk island, on the northern Adriatic coast.
InMexico, TOTAL holds a 25% interest in the Altamira re-gasification terminal that was commissioned in 2006. This terminal, located on the east coast of the country, has a re-gasification capacity of 236 Bcf/y (6.7 Bm3/y) that has been entirely reserved by Gas del Litoral in which TOTAL has a 25% interest.
In theUnited States, TOTAL has reserved re-gasification capacity of 353 Bcf/y (approximately 10 Bm3/y) at the Sabine Pass terminal (Louisiana) for a20-year period starting in April 2009, concurrent with the delivery of the Group’s first LNG cargo. The terminal was inaugurated in April 2008.
InIndia, TOTAL holds a 26% interest in the Hazira terminal that has natural gas re-gasification capacity of 177 Bcf/y (5 Bm3/y). The terminal, located on the west coast of India in the Gujarat state, is a merchant terminal with operations that cover both LNG re-gasification and gas marketing. TOTAL has agreed to provide up to 26% of the LNG for the Hazira terminal. Due to market conditions in 2010, Hazira was operated on the basis of short-term contracts, both for the sale of gas on the Indian market and the purchase of LNG from international markets.
Electricity generation
In a context of increasing global demand for electricity, TOTAL has developed expertise in the power generation sector, especially through cogeneration and combined cycle power plant projects.
The Group is also involved in power generation projects from renewable sources and has a long-term goal of becoming a nuclear operator.
Electricity from conventional energy sources
InAbu Dhabi, the Taweelah A1 plant combines electricity generation and water desalination. It is owned by Gulf Total Tractebel Power Cy, in which TOTAL hasholds a 20% interest.stake. The Taweelah A1 power plant, in operation since 2003, currently has net power generation capacity of 1,600 MW and a water desalination capacity of 385,000 m3 per day. The plant’s production is sold to ADWEC (AbuAbu Dhabi Water and Electricity Company)Company (ADWEC) as part of a long-term agreement.

InNigeria, TOTAL and its partner, the state-owned NNPC (NigerianNigerian National Petroleum Corporation)Corporation (NNPC), own interests in two gas-fired power plant projects that are part of the government’s objectives to develop power generation and increase the share of natural gas production for domestic use:

The Afam VI project, part of the Shell Petroleum Development Company (SPDC) joint venture in which TOTAL holds a 10% stake, concerns the development of a 630 MW combined-cycle power plant. Commercial operations started in December 2010.

The development of a new 417 MW combined-cycle power plant near the city of Obite (Niger Delta) in

 

• The Afam VI project, part of the SPDC (Shell Petroleum Development Company) joint venture in which TOTAL holds a 10% interest, concerns the development of a 630 MW combined-cycle power plant. Commercial operations started in December 2010.
 
• The development of a new 400 MW combined-cycle power plant near the city of Obite (Niger Delta) in

connection with the OML 58 gas project, part of the joint venture between NNPC and TOTAL (40%, operator). A final investment decision is expected in the first half of 20112012 and commissioning is scheduled in the first half of 20132014 in open cycleopen-cycle and in early 20142015 in closed cycle.closed-cycle. The power plant will be connected to the existing power grid through a new 108 km high-voltage transmission line.

InThailand, TOTAL owns 28% of EPEC (EasternEastern Power and Electric Company Ltd),Ltd, which operates the combined-cycle gas power plant ofin Bang Bo, with a capacity of 350 MW, in operation since 2003. The plant’s production is sold to EGAT (Electricitythe Electricity Generating Authority of Thailand) as part ofThailand under a long-term agreement.

Electricity from nuclear energy sources

InFrance, TOTAL partners with EDF and other players through its 8.33% interest in the second French EPR project in Penly, in the northwest of the country, for which studies are underway.

The Group continues to review other opportunities in the countries where it operates and favors partnerships with experienced, recognized nuclear operators, and is closely monitoring the impact that the serious situation in Japan may have on the development of certain nuclear projects worldwide.


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power generation and its outlook.

Electricity from renewable energy sources

In concentrated solar power, TOTAL, (20%), in partnership with Spanish company Abengoa (20%),Solar, won the call for tenders for the construction and 20-year operation for twenty years of a 109 MW concentrated solar power plant in Abu Dhabi. As part of thisThe Shams project TOTAL(TOTAL, 20%) is partneringbeing carried out in partnership with MASDARMasdar through the Abu Dhabi Future Energy Company, (ADFEC), which ownsholds a 60% intereststake in the joint venture created for the project. Construction work started in July 2010 andstart-up is expected induring the summersecond semester of 2012. The plant’s production will be sold to Abu Dhabi Water and Electricity Company (ADWEC).

ADWEC.

In wind power, TOTAL owns a 12 MW wind farm in Mardyck (near Dunkirk, France), which was commissioned in 2003.

With respect to marine energy, TOTAL holds a 16% interest26.6% share in Scotrenewables Marine Power, located in the Orkney Islands in Scotland.Start-up and tests of Tests are being conducted on a 250 kW prototype are expected in 2011.

prototype.

Solar photovoltaicenergy

As part of its strategy to develop energy resources to complement oil and gas, TOTAL continued in 2010 to strengthen its positions in solar photovoltaic power, where the Group has been present since 1983.
In the photovoltaic sector based on crystalline silicon technology,

TOTAL is developing upstream operations through industrial production and downstream marketing activities.activities in the photovoltaic sector based on crystalline silicon technology. The Group is also pursuing R&D in this field through several partnerships.

Regarding channels other than crystalline silicon, TOTAL is broadening its business portfolio through industrialpartnerships, as well as in the fields of thin films, transverse systems research and R&D partnerships, in particular for organic and thin film technologies. The Group is also committed to research programs for solar energy storage.

In 2011, TOTAL took a major step toward implementing its solar photovoltaic strategy, where the Group has been active since 1983, by acquiring a majority stake in the U.S. company SunPower.

Production of solar-grade polysiliconSolar photovoltaic

SunPower

In June 2010,2011, following a friendly takeover bid, TOTAL announcedacquired 60% of SunPower, a U.S. company based in San Jose, California and listed on NASDAQ (NASDAQ: SPWR). TOTAL now appoints the majority of the members of SunPower’s board of directors. SunPower is an integrated player that it acquired a 25.4% interestdesigns, manufactures and supplies the highest-efficiency solar panels in theU.S. start-up AE Polysilicon Corporation (AEP) market. It is active throughout the solar chain, from cell production to the design and construction of turnkey large power plants.

Upstream, SunPower manufactures all of its cells in Asia (Philippines, Malaysia). In 2011, SunPower operated twelve cell manufacturing lines at its cell manufacturing plant in Melaka, Malaysia (SunPower, 50%), which has developed a new processcapacity of 600 MWp/y. SunPower’s overall cell production capacity at the beginning of 2012 was 1,300 MWp/y.

Downstream, SunPower is present in most major geographic markets (United States, Europe, Australia and Asia), with operations ranging from residential roof tiles to large solar power plants.

A specific R&D agreement between TOTAL and SunPower has also been signed.

As of January 2012, TOTAL owns 66% of SunPower following the Tenesol transaction described below.

Tenesol

Tenesol is a French company that designs, manufactures, markets, installs and operates continuously to produce cost-competitive solar-grade granular polysilicon. The technology developed by AEP is currently being industrialized. This production unit,solar photovoltaic systems. In October 2011, TOTAL became the commissioningsole shareholder of Tenesol after having finalized the acquisition of its EDF partner’s shares (excluding overseas activities). Tenesol owns solar panel manufacturing plants (South Africa, France), which started in 2010, is expected to eventually have a nominaltotal capacity equivalent to 1,800 t/y of solar-grade polysilicon.

Productionnearly 200 MWp/y.

TOTAL and SunPower reached an agreement whereby, in 2012, Tenesol’s operations, along with the solar panel plant in Moselle, northeastern France (see “— Other assets” below), became part of photovoltaic solar cellsSunPower.

Photovoltech

TOTAL holds a 50% interest in Photovoltech, a Belgian company specialized in manufacturing multicrystalline photovoltaic cells. In 2010,2011, Photovoltech increasedfinalized the overallramp-up of its third production line, raising the total production capacity of its Tirlemont (Tienen) plant in Tienen, Belgium to 155 MWc/y following the installation of a third production line. Photovoltech’s sales in 2010 were approximately €104 million in 2010, an increase of about 30% compared to 2009.MWp/y.

 

Other assets

In R&D,2011, TOTAL is continuing its partnership with the IMEC (Interuniversity MicroElectronics Center), based at the University of Leuven (Belgium), to sharply reduce the use of silicon while increasing the efficiency of cells in order to substantially lower costs of this technology.

Production of solar panels and marketing of photovoltaic solar systems
TOTAL holds a 50% interest in Tenesol, a French company that designs, manufactures, markets, installs and operates solar photovoltaic systems. Tenesol owns a solar panel manufacturing plant in South Africa, the annual production capacity of which increased to 85 MWp/y from 60 MWp/y in 2010, and another in France, the annual production capacity of which also increased to 85 MWp/y from 50 MWp/y. In 2010, Tenesol’s consolidated sales were approximately €304 million, an increase of about 22% compared to 2009.
In November 2010, TOTAL announcedbegan the construction of a solar panel production and assembly plant in Frenchthe northeastern region of Moselle in France, which is expected to eventually havebegin operations in 2012 with an overall capacity of 5044 MWp/y.Start-up

In addition, Tenesol’s overseas activities remain 50-50 subsidiaries of construction workTOTAL and EDF through a new company named Sunzil.

Finally, the Group is expected in the first half of 2011 with a commissioning at year-end.

The Group also conductscontinuing its projects to display solar application solutions as part of decentralized rural electrification projects in a number of countries, notablyincluding in South Africa.Africa via Kwazulu Energy Services Company (KES) in which TOTAL holds a 35% stake. New projects are under studybeing studied in Africa and Asia.

Solar photovoltaic market context in 2011

In 2011, the photovoltaic sector was forced to cope with a difficult environment marked by excess cell production capacity and modification or cancellation of subsidy programs. This transition period is expected to result in a consolidation of the sector followed by the emergence of a competitive industry. As a clean energy, solar power has a large potential and should eventually become an indispensible part of the energy mix.

New solar technologies

TOTAL has committed to developing innovative technologies to improve its portfolio of solar projects. The Group has major R&D programs through partnerships with major laboratories and international research institutes in France and abroad (includingabroad.

In the United States, Switzerland,upstream solar chain, TOTAL holds a 30% stake in AE Polysilicon Corporation (AEP), a U.S. company based near Philadelphia, Pennsylvania. AEP has developed a new continuous process to produce solar-grade granular polysilicon.

With respect to the production of crystalline silicon cells and panels, the Group is continuing its partnership with the Interuniversity MicroElectronics Center (IMEC) near the University of Leuven, Belgium, in an effort to increase the efficiency of solar cells.

Regarding thin-film technologies and Germany).silicon-based nano-materials, in 2009 the Group partnered with the Laboratoire de Physique des Interfaces et des Couches Minces de l’Ecole Polytechnique (LPICM) and the French National Center for Scientific Research (CNRS) to set up a joint research team in the Saclay area in France. TOTAL also entered into a research partnership with Toulouse-based Laboratoire d’analyse et d’architecture des

systèmes (LAAS) to develop associated electrical systems. The aim of these partnerships is to improve the efficiency of the photovoltaic chain in order to substantially lower costs in this sector.

In organic solar organic technologies, the Group acquired a stake inapproximately 25% of theU.S. start-up Konarka in 2008 and owns approximately 25%.2008. Since 2009, Konarka Technologies Inc has carried out research projects in cooperation with TOTAL to develop solar film on a large scale.

Regarding thin-film technologies and silicon-based nano-materials, the Group partnered with LPICM (Laboratoire de Physique des Interfaces et des Couches Minces) in 2009 to set up a joint research team — named Nano PV — in the Saclay area in France. TOTAL also


38

entered into a research partnership with Toulouse-basedLaboratoire d’analyse et d’architecture des systèmes (LAAS) to develop associated electrical systems.
Regarding solar energy storage, TOTAL entered in 2009 into a research agreement with the MIT (MassachussettsMassachusetts Institute of Technology)Technology (MIT) in the United States to develop a new stationary battery technology.

ConversionBiotechnologies — conversion of biomass

TOTAL is exploring a number of avenues for developing biomass depending on the resource used, (type, location, harvesting, transportation, etc.)the nature of the target markets (e.g., the type of molecules and markets targeted (fuels,fuels, lubricants, petrochemicals, specialty chemicals, etc.)chemicals) and the conversion processes.

The Group focuses onhas chosen to target the two primary conversion processes: biological and thermochemical biomass conversion processes.

Biotechnologies
thermochemical.

In June 2010, TOTAL entered into a strategic partnership with Amyris Inc., aU.S. start-up specializing in biotechnologies. The Group acquired an interesta stake in Amyris’ share capital (approximately 22% at year-end 2010)(21.28% as of February 24, 2012) and signed a collaboration framework agreement that includes research, development, production and marketing partnerships as well aswith the creation of an R&D team.

Two programs have been approved in 2011 to develop a biojet fuel as well as a biodiesel. At the end of 2011, partners agreed to create a joint-venture to produce and commercialize advanced molecules intended for the fuels, lubricants and special fluids markets.

Amyris owns a cutting-edge industrial synthetic biological platform designed to create and optimize micro-organisms (yeasts, algae, bacteria) that can convert sugarsugars into fuels and chemicals. Amyris owns research laboratories and a pilot unit in California as well as a pilot plant and a demonstration facility in Brazil. Today,Industrial production of farnesene began in 2011 at three partner sites (in Brazil, the projectUnited States and Spain) representing a nominal annual capacity of 50,000 m³. A fourth production site is in the industrialization phaseas well under construction and production is expected tostart-upshall be completed in 2012.

In April 2010, the Group announced that it had acquired an interest in Coskata, a company based in Chicago that develops a technology allowing biological conversion of synthetic gas into alcohols for fuels and petrochemical usages. Coskata deployed this technology on a large scale on a demonstration unit that produces bioethanol and continues its efforts towards commercialization.

In addition, the Group continues to develop a network of R&D collaborationspartnerships, including with the Joint BioEnergy Institute (JBEI) Novogy (United States), the University of Wageningen (Holland) and the Toulouse White Biotechnology consortium (TWB) (France) in the field of technologiestechnology segments that are complementary with Amyris’ platform: deconstruction of ligno-cellulose,lignocelluloses and new biosynthesis processes.

The Group is also assessing the potential of phototrophic processes and bio-engineering of microalgae. In December 2011, it entered into a partnership with Cellectis S.A. in exploratory research on molecules similar to petroleum products, from microalgae, for microalgaethe energy and other phototrophic organisms.

chemicals markets.

Carbochemistry

DME

InJapan, TOTAL is involved with eight Japanese companies in a program intended to heighten consumer awareness of DME (Di-Methyl Ether), a new generation fuel. The 80 kt/y production plant (TOTAL, 10%), located in Niigata, started up in 2009.
InSweden, TOTAL is involved in the “bio-DME” European project, which is intended to test the whole DME chain, from its production using black liquor, a paper pulp residue, to its use by a fleet of trucks in four Swedish cities. Productionstart-up at the pilot plant located in Pitea is expected in the first half of 2011.
Carbon capture and storage

TOTAL is involved in a program to develop new carbon capture and storage technologies to reduce the environmental footprint of the Group’s industrial projects based on fossil energy.

In partnership with the FrenchIFP Énergies Nouvelles(French (French Institute for Oil and New Energies Institute)Alternative Energies), TOTAL is involved in an R&D program related to chemical looping combustion, a new process to burn solid and gas feedstock that includes carbon capture at a very low energy cost. In 2010, this partnership resulted in the construction of a demonstration pilot at the Solaize site (France).in France. A large-scale pilot is expected to be commissioned in 2013.

The Group is also involved in the EU-co-funded Carbolab project that intends to validate the carbon storage technology in coal seams.seams and coalbed methane recovery.

DME

TOTAL is involved in the European “Bio-DME” project in Sweden, the goal of which is to validate a di-methyl ether

(DME) production chain through gasification of black liquor generated by a pulp mill. The pilot plant located in Pitea successfully came into production at the end of 2011. To date, three metric tons of bio-DME that meet the Group’s specifications for use as fuel have already been produced.

In addition, to support the commercial development of DME, TOTAL is involved with eight Japanese companies in a program intended to heighten consumers’ awareness of this new fuel in Japan. The 80 kt/y production plant (TOTAL, 10%), located in Niigata, started up in 2009.

Finally, via the International DME Association (IDA), TOTAL is participating in studies on the combustion of blends that include DME and in standardization efforts regarding the use of DME as fuel.

Coal production

TOTAL has exported coal for

For nearly thirty years, TOTAL has produced and exported coal from South Africa primarily to Europe and Asia.

In 2011, TOTAL produced 3.8 Mt of coal.

With thestart-up of production on the TumeloDorstfontein East mine in 2009,2011, the subsidiary Total Coal South Africa (TCSA) owns and operates fourfive mines in South Africa. A fifth mine is under construction in Dorstfontein, withstart-up expected at year-end 2011, and development of a sixth mine is underway in Forzando withstart-up expected in 2013. The Group is also studying severalcontinues to study other projects aimed at developing its mining development projects.

resources.

The South African coal produced by TCSA or bought from third-party’sthird-parties’ mines is either marketed locally or exported through the port of Richard’s Bay, in which TOTAL hasholds a 5.7% interest.

 


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DOWNSTREAM

Downstream

The 2011 Downstream segment comprisescomprised TOTAL’s Refining & Marketing and Trading & Shipping divisions.

In October 2011, the Group announced a proposed reorganization of its Downstream and Chemicals segments. The procedure for informing and consulting with employee representatives took place and the reorganization became effective on January 1, 2012.

This led to organizational changes, with the creation of:

A Refining & Chemicalssegment, a large industrial center that encompasses refining, petrochemicals,

fertilizers and specialty chemicals operations. This segment also includes oil trading and shipping activities.

A Supply & Marketing segment, which is dedicated to worldwide supply and marketing activities in the oil products field.

The Downstream activities described below, including the data as of December 31, 2011, are presented based on the organization in effect up to December 31, 2011.

 

Refining & Marketing

TOTAL’s worldwide refining capacity was 2,3632,088 kb/d at year end 2010,2011, compared to 2,363 kb/d in 2010 and 2,594 kb/d in 2009 and 2,604 kb/d in 2008.2009. The Group’s worldwide refined products sales (including trading operations) in 20102011 were 3,639 kb/d, compared to 3,776 kb/d (including trading operations), compared toin 2010 and 3,616 kb/d in 2009 and 3,658 kb/d in 2008. 2009.

TOTAL is among the largest refiner/marketerrefiners/marketers in Western Europe(1), and the leading marketer in Africa(2). TOTAL’s

Directly or via its holdings, TOTAL has a worldwide marketingretail network consisted of 17,49014,819 service stations at year end 2011, compared to 17,490 in 2010 compared toand 16,299 in 2009 and 16,425 in 2008,2009. Through its retail network, TOTAL provides fuels to more than 50% of which are owned by the Group.3 million customers every day. In addition, TOTAL’s refineries allow the Group to produceTOTAL produces a broad range of specialty products, such as lubricants, liquefied petroleum gas (LPG), jet fuel, special fluids, bitumen, heavy fuel, marine fuel and petrochemical feedstock.

The Group continues to adapt its business and improve positions in a context of recoveringgrowing demand worldwide, mainly in non-OECD countries, by focusing on three areas:

adapting to mature markets in Europe, supportingEurope;

developing its positions in growth in Africa,markets (Africa, Asia and the Middle East,East); and

developing specialty products worldwide.

As

In July 2011, TOTAL closed the sale to IPIC of its 48.83% stake in CEPSA as part of the optimization of the Group’s Downstream portfolio in Europe, TotalErg (TOTAL 49%) was created in October 2010 in Italy by merger of Total Italia and ERG Petroli. TotalErg has become the third largest operator in the Italian market.(3) In addition, in the United Kingdom, TOTAL offered for sale in 2010 its marketing business and the Lindsey refinery.

In February 2011, TOTAL announced that it had signed an agreement to sell to IPIC its 48.83% interest in CEPSA pursuant to a public takeover bid on the entire share capital of CEPSA. The transaction is conditioned on obtaining all requisite approvals. In operating terms inWith respect to Refining & Marketing operations, this sale concerns mainly four Spanish refineries (Huelva, Algesiras,Algeciras, Tenerife, Tarragone)Tarragona) and some marketing activities in Spain and Portugal.

In October 2011, TOTAL sold its network of service stations and its fuel and heating oil marketing business in the United Kingdom, the Channel Islands and the Isle of Man.

Refining

TOTAL holds interestshas equity stakes in twenty-fourtwenty refineries (including ten that it operates), located in Europe, the United States, the French West Indies, Africa and China. Highlights of 2010 included a slight recovery of the refining environment that led to improved refining margins in refineries worldwide, even though margins are still recording low levels.

In 2010,2011, TOTAL continued its program of selective investments in Refining, focusingwhich is focused on three areas: pursuing major ongoing projects (deep conversion at the Port Arthur refinery and construction of the Jubail refinery),

adapting the European refining system to structural market changes, and strengtheningincreasing safety and energy efficiency.

InWestern Europe, TOTAL’s refining capacity was 1,792 kb/d in 2011, compared to 2,049 kb/d in 2010 and 2,282 kb/d in 2009, accounting for 85% of the Group’s overall refining capacity. The decrease in 2011 was due to the sale of the Group’s stake in CEPSA. The Group operates nine refineries in Western Europe and owns stakes in the Schwedt refinery in Germany and two refineries in Italy through its interest in TotalErg.

InFrance, where it owns five refineries, the Group continues to adapt its refining capacities and shift the production emphasis to diesel, in a context of structural decline in petroleum products demand in Europe and an increase in gasoline surpluses.

• InWestern Europe, TOTAL’s refining capacity was 2,049 kb/d in 2010, accounting for more than 85% of the Group’s overall refining capacity at year-end 2010. The Group operates nine refineries in Western Europe, and holds interests in the German refinery of Schwedt, in four Spanish refineries through its interest in CEPSA(4) and in two refineries in Italy through its interest in TotalErg. Once finalized, the Group’s disposal of its interest in CEPSA is expected to lead to a decrease of nearly 260 kb/d in TOTAL’s refining capacities in Europe.
— InFrance, the Group continues to adapt its refining capacities and shift the production emphasis to diesel, in a context of structural decline in petroleum products demand in Europe and increase in gasoline surpluses.
In October 2010, TOTAL was authorized by a court ruling to implement its project to repurpose the Flanders site (Dunkirk refinery with a distillation capacity of 7 Mt/y). The shutdown of the refining business will lead to gradually dismantling the units. The Group confirmed its project of repurposing the site through the creation of a technical support center, a refining training school, an oil depot and business offices.

Since autumn 2010, TOTAL has been implementing its project to repurpose the Flanders site. The shutdown of the refining business will lead to gradually dismantling the units. The Group has commenced repurposing the site through the creation of a technical support center, a refining training school, an oil depot and business offices.

In addition, the industrial plan started in 2009 to adapt the Group’s refining base in France is ongoing. This plan is intended to reconfigure the Normandy refinery and rescale certain corporate departments at the Paris headquarters. At the Normandy refinery, the project is intended to upgrade the refinery and shift the production

(1)  Based on publicly available information, refining capacities and quantities sold.
(2)  PFC Energy January 2011, based on quantities sold.
(3)  Based on publicly available information.
(4)  Group’s share in CEPSA: 48.83% as of December 31, 2010.


40

emphasis to diesel. For this purpose, investment scheduled over four yearsthe investments will result in the eventual reduction of the annual distillation capacity to 12 Mt from 16 Mt, upsizing the distillate hydrocracker and improving the energy efficiency by lowering carbon dioxide emissions.
The new structure is expected to become operational at the end of 2013.

In Julysummer 2010, the Group closed the disposal ofdivested its minority interest (40%) in the Société de la Raffinerie de Dunkerque (SRD), a company that specializes in bitumen and base oil production.

In theUnited Kingdom, the hydrodesulphurization (HDS) unit at the Lindsey refinery was commissioned in February 2011. The unit makes it possible to process up to 70% of high-sulphur crudes, compared to 10% previously, and increase low-sulphur diesel production. In 2010, the Group announced that it

 

(1)

Based on publicly available information, refining capacities and quantities sold.

(2)PFC Energy, based on quantities sold.

 — In theUnited Kingdom, commissioning of the hydrodesulphurization (HDS) unit at the Lindsey refinery is expected in the first half of 2011. This will result in processing up to 70% of high-sulphur crudes, compared to 10% currently, and increase low-sulphur diesel production. In parallel, TOTAL announced that it offered

would offer for sale theits Lindsey refinery in 2010.

— InGermany, the HDS unit that started up in September 2009 atUnited Kingdom. Due to the Leuna refinery was operated successfully in 2010. This unit is designed to supplydifficult market conditions and the German market with low-sulphur heating oil.
— InItaly, TotalErg (TOTAL, 49%) has operated the Rome refinery (100%) since October 2010lack of sufficiently attractive and holds a 25.9% interest in the Trecate refinery.
— InSpain, CEPSA completed its investments intended to improve the conversion capacity of the Huelva refinery so as to meet the growing demand for middle distillates in the Spanish market. A hydrocracker unit, two additional distillation units (one atmospheric and one vacuum) and a desulphurization unit were inaugurated in October 2010. Distillation capacity increased to 178 kb/d from 100 kb/d. In February 2011,competitive offers, the Group announced the signature of an agreement with IPICdecided in early 2012 to dispose of its 48.83% interest in CEPSA. The transaction is conditioned on obtaining all requisite approvals.
• In theUnited States, TOTAL operates the Port Arthur refinery in Texas, with a capacity of 174 kb/d. In 2008, TOTAL launched a modernization program that includes the construction of a desulphurization unit commissioned in July 2010, a vacuum distillation unit, a deep-conversion unit (or coker) and other associated units. This project is designed to process more heavy and high-sulphur crudes and to increase production of lighter products, in particular low-sulphur distillates. Construction is completed and commissioning was ongoing in March 2011.
• InSaudi Arabia, TOTAL and Saudi Arabian Oil Company (Saudi Aramco) created a joint venture in September 2008,Saudi Aramco Total Refining and Petrochemical Company (SATORP), to build a400 kb/d refinery in Jubail held by Saudi Aramco (62.5%) and TOTAL (37.5%). TOTAL and Saudi Aramco each plans to retain a 37.5% interest with the remaining 25% expected to be listed on the Saudi stock exchange, subject to approval by the relevant authorities. The main contracts for the construction ofmaintain the refinery were signed in July 2009, concurrent with thestart-up of work. Commissioning is expected in 2013.
The heavy conversion process of this refinery is designed for processing heavier crudes (Arabian Heavy) and producing fuels and lighter products that meet strict specifications and are mainly intended for export.
• InAfrica, the Group holds minority interests in five refineries in South Africa, Senegal, Côte d’Ivoire, Cameroon and Gabon.within its refining network.

InGermany, an additional HDS unit designed to supply the German market with low-sulphur heating oil started up in autumn 2009 at the Leuna refinery.

InItaly, TotalErg (TOTAL, 49%) has operated the Rome refinery (100%) since October 2010 and holds a 25.9% stake in the Trecate refinery.

In theUnited States, TOTAL operates the Port Arthur refinery in Texas, with a capacity of 174 kb/d. In 2008, TOTAL launched an upgrading program that included the construction of a desulphurization unit commissioned in July 2010 and a vacuum distillation unit, a deep-conversion unit (or coker) and other associated units, which were successfully commissioned in April 2011. This project enables the refinery to process more heavy and high-sulphur crudes and to increase production of lighter products, in particular low-sulphur distillates.

InSaudi Arabia, TOTAL and Saudi Arabian Oil Company (Saudi Aramco) created a joint venture in 2008, Saudi Aramco Total Refining and Petrochemical Company (SATORP), to build a 400 kb/d refinery in Jubail held by Saudi Aramco (62.5%) and TOTAL (37.5%). TOTAL and Saudi Aramco each plan to retain a 37.5% interest with the remaining 25% expected to be listed on the Saudi stock exchange. The main contracts for the construction of the refinery were signed in mid-2009, concurrent with the start-up of work. Commissioning is expected in 2013.

The heavy conversion process of this refinery is designed for processing heavier crudes produced nearby and selling fuels and lighter products that meet strict specifications and are mainly intended for export. The refinery will also be integrated with petrochemical units.

InAfrica, the Group has minority stakes in five refineries in South Africa, Senegal, Côte d’Ivoire, Cameroon and Gabon.

In theFrench West Indies, the Group has a 50% stake in the company Société Anonyme de la Raffinerie des Antilles (SARA), which owns a refinery in Martinique.

InChina, TOTAL has a 22.4% intereststake in the WEPEC refinery, located in Dalian, in partnership with Sinochem and PetroChina.

Crude oil refining capacity

The table below sets forth TOTAL’s daily crude oil refining capacity(a):

             
As of December 31, (kb/d) 2010  2009  2008 
Refineries operated by the Group
            
 
Normandy (France)  199   338   339 
 
Provence (France)  158   158   158 
 
Flanders (France)  —   137   137 
 
Donges (France)  230   230   230 
 
Feyzin (France)  117   117   117 
 
Grandpuits (France)  101   101   101 
 
Antwerp (Belgium)  350   350   350 
 
Leuna (Germany)  230   230   230 
 
Rome (Italy)(b)
  —   64   64 
 
Lindsey — Immingham (United Kingdom)  221   221   221 
 
Vlissingen (Netherlands)(c)
  81   81   81 
 
Port Arthur, Texas (United States)  174   174   174 
 
Sub-total
  1,861   2,201   2,202 
 
Other refineries in which the Group has an interest(d)
  502   393   402 
 
Total
  2,363   2,594   2,604 
 

As of December 31, (kb/d)  2011   2010   2009 

Refineries operated by the Group

               

Normandy (France)

   199     199     338  

Provence (France)

   158     158     158  

Flanders (France)

   —     —     137  

Donges (France)

   230     230     230  

Feyzin (France)

   117     117     117  

Grandpuits (France)

   101     101     101  

Antwerp (Belgium)

   350     350     350  

Leuna (Germany)

   230     230     230  

Rome (Italy)(b)

   —     —     64  

Lindsey — Immingham (United Kingdom)

   221     221     221  

Vlissingen (Netherlands)(c)

   82     81     81  

Port Arthur, Texas (United States)

   174     174     174  

Subtotal

   1,862     1,861     2,201  

Other refineries in which the Group has equity stakes(d)

   226     502     393  

Total

   2,088     2,363     2,594  

(a)
(a)For refineries not 100% owned by TOTAL, the indicated capacity representsshown is TOTAL’s equity share of the site’s overall refining capacity.
(b)TOTAL’s intereststake was 71.9% until September 30, 2010.
(c)TOTAL’s intereststake is 55%.
(d)TOTAL has interestsequity stakes ranging from 12% to 50% in fourteenten refineries (five in Africa, four in Spain, two in Italy, one in Germany, one in Martinique and one in China). TOTAL divested its stake in the Indeni refinery in Zambia in 2009. Since October 1, 2010, includingthe amounts include the Group’s share in the Rome and Trecate refineries through its intereststake in TotalErg. TOTAL disposed ofdivested its 50% intereststake in the Indeni refineryCEPSA (four refineries) in Zambia in 2009.2011.


41

Refined products

The table below sets forth by product category TOTAL’s net share of refined quantities produced at the Group’s refineries(a):

             
(kb/d) 2010  2009  2008 
Gasoline  345   407   443 
 
Avgas and jet fuel(b)
  168   186   208 
 
Diesel and heating oils  775   851   987 
 
Heavy fuels  233   245   257 
 
Other products  359   399   417 
 
Total
  1,880   2,088   2,312 
 

(kb/d)  2011   2010   2009 

Gasoline

   350     345     407  

Aviation fuel(b)

   158     168     186  

Diesel and heating oils

   804     775     851  

Heavy fuels

   179     233     245  

Other products

   335     359     399  

Total

   1,826     1,880     2,088  

(a)
(a)IncludingFor refineries not 100% owned by TOTAL, the production shown is TOTAL’s equity share of refineries in which the Group holds interests.site’s overall production.
(b)Avgas, jet fuel and kerosene.
Utilization rate
 

Utilization rate

The tables below set forth the utilization rate of the Group’s refineries.

             
  2010  2009  2008 
On crude and other feedstock(a)(b)
            
 
France  64%  77%  89%
 
Rest of Europe  85%  88%  93%
 
Americas  83%  77%  88%
 
Asia  81%  80%  76%
 
Africa  76%  77%  79%
 
Net share of CEPSA and TotalErg(c)
  94%  93%  106%
 
Average
  77%  83%  91%
 
refineries:

    2011  2010  2009 

On crude and other feedstock(a)(b)

             

France

   91%   64%   77% 

Rest of Europe (excluding CEPSA and TotalERG)

   77%   85%   88% 

Americas

   81%   83%   77% 

Asia

   67%   81%   80% 

Africa

   80%   76%   77% 

CEPSA and TotalERG(c)

   83%   94%   93% 

Average

   83%   77%   83% 

 

(a)    Including equity share of refineries in which the Group has a stake.

(b)    Crude + crackers’ feedstock/capacity and distillation at the beginning of the year.

(c)    For CEPSA in 2011: calculation of the utilization rate based on production and capacity prorated on the first seven months of the year.

 

       

        

        

    2011  2010  2009 

On crude(a)(b)

             

Average

   78%   73%   78% 

(a)
(a)Including equity share of refineries in which the Group holds interests.has a stake.
(b)Crude + crackers’ feedstock/capacity and distillation at the beginning of the year.
(c)For TotalErg: calculation of the utilization rate based on production and prorated capacity.
             
  2010 2009 2008
On crude(a)(b)
            
 
Average
  73%  78%  88%
 
(b)
(a)Including equity share of refineries in which the Group holds interests.
(b)Crude/capacity and distillation at the beginning of the year.

Marketing

TOTAL is one of the leading marketers in Western EuropeEurope.(1)(1) The Group is also the largest marketer in Africa, with a market share of nearly 14%.(2)(.

2)

TOTAL markets a wide range of specialty products which it producesproduced from its refineries and other facilities. TOTAL is among the leading companies in the specialty products market,(3), in particular for lubricants, LPG, jet fuel, special fluids, bitumen, heavy fuels and marine fuels, with products marketed in approximately 150 countries(4)(3).

Europe

In Europe, TOTAL has a network of 12,062more than 9,400 service stations in France, Belgium, the Netherlands, Luxembourg Germany and the United Kingdom,Germany, as well as Spain and Portugal through its interest in CEPSA (48.83%) and Italy through its interestshare in TotalErg (49%).

TOTAL also operates a network of more than 579615 AS24-branded service stations dedicated to commercial transporters.

TOTAL is among the leaders in Europe for fuel-payment cards, with approximately 3.5 million cards issued in twenty-eighttwenty-seven European countries.

InWestern Europe, TOTAL continued to optimize its Marketing business in 2011.

InFrance, the TOTAL-branded network benefits from a wide number of service stations and a diverse selection of products (such as theBonjourconvenience stores and car washes). Elf-branded service stations offer quality fuels at prices that are particularly competitive. Nearly 2,1002,000 TOTAL-branded service stations and 280270 Elf-branded service stations are operated in France. TOTAL also markets fuels at nearly 1,9001,800 Elan-branded retailservice stations, generally located in rural areas.

In October 2011, TOTAL launched Total access, a new service station concept combining low prices with TOTAL brand fuel and service quality. The Total access network will be made up of around 600 service stations in France, including the 270 Elf-branded service stations that will be rebranded as Total access. The project is expected to be fully implemented by 2014.

At the end of 2011, TOTAL finished implementing the project to adapt oil logistics operations announced in January 2010. The Pontet and Saint Julien oil depots were closed in October 2010. Operatorship of the Hauconcourt depot was transferred to a third party in October 2010. In July 2011, operatorship of the Le Mans oil depot was transferred to a third party and the Ouistreham oil depot was divested. In January 2010, TOTAL also divested half of its stake (reduced from 50% to 25%) in Dépôts Pétroliers de La Corse and transferred operatorship. Dyneff and TOTAL’s logistics assets in Port La Nouvelle were pooled in December 2011 under the umbrella of new company Entrepôt Pétrolier de Port La Nouvelle, which was created in July 2011.

In 2012, TOTAL is expected to complete the adaptation of oil logistics operations by implementing the project announced in September 2011. In the first half of 2012, the Brive and Chambéry depots are expected to be closed, and operatorship of the Lorient and Lyon depots is expected to be transferred to third parties. At the same time, TOTAL is expected to divest 24% of its current 50% stake in Entrepôt Pétrolier de Lyon. The Honfleur depot, which belongs to wholly-owned TOTAL subsidiary BTT, is expected to be closed in the second half of 2012.

 
InWestern Europe, TOTAL continued in 2010 its efforts to optimize its Marketing business.

(1)Based on publicly available information, quantities sold.
(2)Market share for the markets where the Group operates, based on publicly available information, quantities sold.
(3)Including via national distributors.

•

InItaly, as part of the optimization of the Group’s downstream portfolio in Europe, TotalErg (TOTAL, 49%) was created in Octoberautumn 2010 through the merger of Total Italia and becameERG Petroli. TotalErg has become the third largest marketeroperator in the Italian market with a network market share of nearly 13%(5)(1) and more than 3,2003,350 service stations.

• InFrance, TOTAL started to implement the project to adapt oil logistics operations in January 2010. Closure of the Pontet and Saint Julien oil depots is ongoing. Hauconcourt’s operations were transferred to the Raffinerie du Midi company on October 1, 2010. Transfer of the Mans oil depot’s operations and divesting of the Ouistreham oil depot are scheduled

In theUnited Kingdom, TOTAL announced in June 2011 that it had signed an agreement to sell its network of service stations and its fuel and heating oil marketing business in the first half of 2011.

In January 2010, TOTAL also closed the disposal of half of its share (50%) in Société des Dépôts Pétroliers de Corse.
• In theUnited Kingdom, TOTAL announced in September 2010 its intention to offer for sale its marketing business, except for certain specialties (lubricants, etc.).
(1)  Based on publicly available information, quantities sold. Scope: France, Benelux, United Kingdom, Germany, Italy,the Channel Islands and through CEPSA, Spainthe Isle of Man. This sale was closed in October 2011. TOTAL continues to operate in specialty products in the United Kingdom, particularly lubricants and Portugal.
(2)  Market share for the markets where the Group operates, based on publicly available information, quantities sold.
(3)  Based on publicly available information, quantities sold.
(4)  Including via national distributors.
(5)  PFC Energy, Unione Petrolifera, based on quantities sold.aviation fuel.


42

InNorthern, Central andEastern Europe, the Group is developing its positions primarily in the specialty products market. In 2010,2011, TOTAL continued to expand its direct presence in the growing markets of Eastern Europe, in particular for lubricants. The Group intends to accelerate the growth of its specialty products business in Russia, Ukraine and Ukrainethe Balkans through the development of its direct presence in these markets since 2008.

AS24, which is active in twenty-fivetwenty-six European countries, continued to expand its network, in 2010 byexceeding the milestone of 600 service stations and opening new marketing outlets in particular in two new countries, (SwedenUkraine (2011) and Serbia)Georgia (early 2012). The AS24 network is expected to continue to grow, and expand to other countriesmainly through expansion in Europe, the Caucasus and the Mediterranean Basin.

Basin and Russia, by strengthening its position in strategic countries and through its toll payment card service, which covers more than seventeen countries.

Africa & the Middle East

TOTAL is the leading marketer of petroleum products on the African continent, with a market share of nearly 14%.(1)(2) Following the acquisition of marketing and logistics assets in Kenya and Uganda in 2009, the Group runs more than 3,6003,500 service stations in more than forty countries and operates two major networks in South Africa, Nigeria, Kenya and Nigeria.Morocco. As part of the optimization of its portfolio, the Group divested its subsidiary in Benin in Decemberlate 2010.

TOTAL also has a large presence in the Mediterranean Basin, principallyTurkey and Lebanon, and is developing a network of large service stations in Turkey, Morocco and Tunisia.

Jordan.

In the Middle East, the Group is active mainly in the specialty products market and is pursuing its growth strategy in the region, notably through the production and marketing of lubricants.

Asia-Pacific

At year-end 2010,2011, TOTAL was present in nearly twenty countries in the Asia-Pacific region, primarily in the specialty products market. The Group is developing its position as a fuel marketer in the region, in particular in China. TOTAL operates service stations in Pakistan, the Philippines, Cambodia, Indonesia, and is a significant player in the Pacific Islands.

InChina, the Group operated nearly 130160 service stations in 2010at year-end 2011 through two TOTAL/Sinochem joint ventures.

InIndia, TOTAL is expected to open in early 2012 its first lubricants, bitumen, special fluids and additives technical support center outside Europe.

InVietnam, TOTAL continues to strengthen its position in the specialty products market. The Group becamehas become one of the leaders in the Vietnamese lubricants market due to the acquisitions of lubricants assets at year-end 2009.

Americas

InLatin Americaand theCaribbean, TOTAL is active in nearly twenty countries, primarily in the specialty products market. In the Caribbean, the Group holds a significant position in the fuel distribution business, which was strengthened by the acquisition in 2008 of marketing and logistics assets in Puerto Rico, Jamaica and the Virgin Islands.

InNorth America, TOTAL markets specialty products, mainly lubricants, and is continuing to grow with the acquisition at year-end 2009 of lubricant assets in the province of Quebec in Canada.

Sales of refined products

The table below sets forth TOTAL’s sales of refined products by region(a):

             
(kb/d) 2010  2009  2008 
France  725   808   822 
             
Europe, excluding France(a)
  1,204   1,245   1,301 
             
United States  65   118   147 
             
Africa  292   281   279 
             
Rest of world  209   189   171 
             
Total excluding Trading
  2,495   2,641   2,720 
             
Trading  1,281   975   938 
             
Total including trading
  3,776   3,616   3,658 
             
region:

(kb/d)  2011   2010   2009 

France

   740     725     808  

Europe, excluding France(a)

   1,108     1,204     1,245  

United States

   47     65     118  

Africa

   304     292     281  

Rest of the World

   225     209     189  

Total excluding Trading

   2,424     2,495     2,641  

Trading

   1,215     1,281     975  

Total including Trading

   3,639     3,776     3,616  

(a)
(a)Including TOTAL’s share in CEPSA (up to end of July 2011) and, as from October 1, 2010, in TotalErg.
Service stations
 

(1)PFC Energy, Unione Petrolifera, based on quantities sold.
(2)Market share in the countries where the Group operates, based on 2011 publicly available information, quantities sold.

Service stations

The table below sets forth the number of service stations(a) of the Group:

             
As of December 31, 2010  2009  2008 
France  4,272(b)  4,606(b)  4,782 
             
CEPSA and TotalErg(c)
  4,958   1,734   1,811 
             
Europe, excl. France, CEPSA and TotalErg  2,832   4,485   4,541 
             
Africa  3,570   3,647   3,500 
             
Rest of world  1,858   1,827   1,791 
             
Total
  17,490   16,299   16,425 
             

As of December 31,  2011   2010   2009 

France(a)

   4,046     4,272     4,606  

Europe, excluding France

   5,375     7,790     6,219  

of which TotalErg

   3,355     3,221     —  

of which CEPSA

   —     1,737     1,734  

Africa

   3,464     3,570     3,647  

Rest of the World

   1,934     1,858     1,827  

Total

   14,819     17,490     16,299  

(a)
(a)Excluding AS24-branded service stations.
(b)Of which nearly 2,100 TOTAL-branded service stations, nearly 280 Elf-branded service stationsTotal-, Elf- and more than 1,900 Elan-branded service stations.
(c)1,737 CEPSA-branded service stations and, as from October 1, 2010, 3,221 TotalErg-branded service stations.

Biofuels

TOTAL is active in the biodiesel and biogasoline sectors. In 2010,2011, TOTAL produced and blended 549494 kt of ethanol(2)(1) in gasoline at its European refineries(3) (compared to 560 kt in

(1)  Market share for the markets where the Group operates, based on publicly available information, quantities sold.
(2)  Including ethanol from ETBE(Ethyl-Tertio-Buthyl-Ether) and methanol form MTBE (Methyl-Tertio-Butyl-Ether).
(3)  Including the Algesiras and Huelva refineries (CEPSA).


43

2009 and 425 kt in 2008) and 2,023 kt of VOME(1) in diesel at its European refineries(2) and several oil depots (compared to 1,870464 kt in 20092010 and 1,470510 kt in 2008)2009) and 1,859 kt of VOME(3) in diesel at its European refineries(4) and several oil depots (compared to 1,737 kt in 2010 and 1,655 kt in 2009).

TOTAL, in partnership with the leading companies in this area, is developing second generation biofuels derived from biomass. TOTAL is also working with leading worldwide public and private scientific partners on

biochemical and thermochemical biomass conversion.

The Group is alsothus participating in French, European and international bioenergy development programs.

In As part of this, framework, the Group announcedTOTAL is involved in 2009 that it would participate in the two demonstration projects:

BioTfueL, research project intendedwhich aims to develop a technology to transformconvert biomass into biodiesel.biodiesel; and

The Group is also involved in

Futurol, aan R&D project for cellulosic bioethanol, which intends to develop and promote on an industrial scale a production process for bioethanol by fermentation of non-food ligno-cellulosiclignocellulosic biomass.

Hydrogen and electric mobility

For several years,

TOTAL has been involved in research and testing programs for fuel cell andis continuing its hydrogen fuel technologies. The Group is a founding member of the European Industry Grouping for a Fuel Cell and Hydrogen Joint Technology Initiative created in 2007 to promote the development of research in the field.

In 2010,fueling demonstrations as part of the Clean Energy Partnership Berlin project, TOTAL inaugurated ain Germany. A new prototype hydrogen fueling station. Construction of a second hydrogen fueling station is underway.
The Groupbeing built in the center of Berlin and is scheduled to open in February 2012. TOTAL is also involved in a demonstration project forthe “H2 Mobility” study underway in Germany, which aims to identify the business model that would enable the creation of an infrastructure in light of the potential marketing electricity in four TOTAL-branded serviceof fuel cell vehicles between 2015 and 2020.

The number of prototype electric vehicle fueling stations (fast charge) is increasing. TOTAL now has twelve charging stations in Berlin,Belgium. In France, two stations have been completed in partnership with the utility company Vattenfall.Paris area as part of the SAVE project, and six are being built in the Netherlands.

 
In 2010, TOTAL inaugurated the first of twelve prototype electric fueling stations in the area of Brussels in Belgium.

Trading & Shipping

The Trading & Shipping division:

sells and markets the Group’s crude oil production;

• sells and markets the Group’s crude oil production;
• provides a supply of crude oil for the Group’s refineries;
• imports and exports the appropriate petroleum products for the Group’s refineries to be able to adjust their production to the needs of local markets;
• charters appropriate ships for these activities; and
• undertakes trading on various derivatives markets.

provides a supply of crude oil for the Group’s refineries;

imports and exports the appropriate petroleum products for the Group’s refineries to be able to adjust their production to the needs of local markets;

charters appropriate ships for these activities; and

undertakes trading on various derivatives markets.

The Trading & Shipping division’s main focus is serving the Group. In addition, the division’s expertise acquired also allows this divisionit to extend theits scope of its activities beyond its primary focus.

Trading & Shipping’s worldwide activities are conducted through various wholly-owned subsidiaries, including TOTSA Total Oil Trading S.A., Total International Ltd, Socap International Ltd, Atlantic Trading & Marketing Inc., Total Trading Asia Pte, Total Trading and Marketing Canada L.P., Total Trading Atlantique S.A. and Chartering & Shipping Services S.A.

 

(1)Including ethanol from ETBE (Ethyl-Tertio-Buthyl-Ether) and biomethanol from MTBE (Methyl-Tertio-Butyl-Ether).
(2)CEPSA’s refineries and oil depots are not included in 2011, 2010 and 2009 figures.
(3)VOME: Vegetable-Oil-Methyl-Ester. Including HVO (Hydrotreated Vegetable Oil).
(4)Including Total Erg’s Rome and Trecate refineries in Italy. CEPSA’s refineries and oil depots are not included in 2011, 2010 and 2009 figures.

(1)Contango is a term used to describe an energy market in which the anticipated value of the spot price in the future is higher than the current spot price. The reverse situation is described as backwardation.

Trading

TOTAL is one of the world’s largest traders of crude oil and refined products on the basis of volumes traded. The table below sets forth selected information with respect to the worldwide sales and sourcesources of supply of crude oil and sales of refined products for the Group’s Trading division for each of the last three years.

(1)  VOME: Vegetable-Oil-Methyl-Ester.
(2)  Including CEPSA’s Algesiras, Huelva

Trading of physical volumes of crude oil and Tarragona refineriesrefined products amounted to 4.4 Mb/d in Spain and TotalErg’s Rome and Trecate refineries in Italy.


44

2011.

Trading division’s supply and sales of crude oil and sales of refined products(a)
             
For the year ended December 31, (kb/d) 2010  2009  2008 
Worldwide liquids production
  1,340   1,381   1,456 
             
Purchased by the Trading division from the Group’s Exploration & Production division  1,044   1,054   1,102 
             
Purchased by the Trading division from external suppliers  2,084   2,351   2,495 
             
Total of Trading division’s supply(a)
  3,128   3,405   3,597 
             
Sales of Trading division to Group Refining & Marketing division  1,575   1,752   1,994 
             
Sales of Trading division to external customers  1,553   1,653   1,603 
             
Total of Trading division’s sales(a)
  3,128   3,405   3,597 
             

(kb/d)  2011   2010   2009 

Group’s worldwide liquids production

   1,226     1,340     1,381  

Purchased by the Trading division from the Group’s Exploration & Production division

   960     1,044     1,054  

Purchased by the Trading division from external suppliers

   1,833     2,084     2,351  

Total of Trading division’s supply

   2,793     3,128     3,405  

Sales by Trading division to Group Refining & Marketing division

   1,524     1,575     1,752  

Sales by Trading division to external customers

   1,269     1,553     1,653  

Total of Trading division’s sales

   2,793     3,128     3,405  

Total sales of refined products

   1,632     1,641     1,323  

(a)
(a)Including condensates and natural gas liquids.condensates.

The Trading division operates extensively on physical and derivatives markets, both organized and over the counter. In connection with its trading activities, TOTAL, like most other oil companies, uses derivative energy instruments (futures, forwards, swaps, options) to adjust its exposure to fluctuations in the price of crude oil and refined products. These transactions are entered into with various counterparties.

For additional information concerning Trading & Shipping’s derivatives, see Notes 30 (Financial instruments related to

commodity contracts) and 31 (Market risks) to the Consolidated Financial Statements.

All of TOTAL’s trading activities are subject to strict internal controls and trading limits.

Throughout 2010,

In 2011, the Trading division maintainedoil market tightened; as a level of activity similar to those recorded in 2009result, the oil price rise accelerated and 2008, with trading physical volumesthe structure of crude oil and refined products amountingprices flipped from contango to approximately 5 Mb/d.backwardation(1).

 
In 2010, the main market indicators extended the trends recorded since mid-2009. Theyear-on-year evolution was marked by increased crude and diesel spot prices, a flattened crude oil price structure and increased freight rates.
                               
     2010 2009  2008  min 2010  max 2010 
Brent ICE — 1st Line(a)
 ($/b) 80.34  62.73   98.52   69.55   (May 18)  94.75   (Dec. 24)
Brent ICE — 12th Line(b)
 ($/b) 84.61  70.43   102.19   75.29   (Jan. 29)  95.15   (Dec. 24)
Contango time structure (12th-1st)
 ($/b) 4.27  7.70   3.59   (0.55)  (Nov. 29)  6.98   (May 31)
Gasoil ICE — 1st Line(c)
 ($/t) 673.88  522.20   920.65   567.25   (Feb. 01)  784.50   (Dec. 16)
VLCC Ras Tanura Chiba — BITR(c)
 ($/t) 13.41  10.43   24.09   8.24   (Oct. 01)  23.66   (Jan. 12)

        2011   2010   2009   min 2011  max 2011 

Brent ICE — 1st Line(a)

   ($/b)   110.91     80.34     62.73     93.33     (Jan. 07)   126.65     (Apr. 08) 

Brent ICE — 12th Line(b)

   ($/b)   108.12     84.61     70.43     94.20     (Jan. 07)   121.74     (Apr. 29) 

Contango/Backwardation time structure (12th-1st)

   ($/b)   -2.79     4.27     7.70     -9.55     (Oct. 14)   2.65     (Feb. 07) 

Gasoil ICE — 1st Line(a)

   ($/t)   933.30     673.88     522.20     767.75     (Jan. 01)   1,053.00     (Apr. 08) 

(a)1stline: Quotation for first month nearby delivery ICE Futures.(a)
(b)12thLine: Quotation for1st line: Average quotation on ICE Futures for delivery during thefirst nearby month M+12.delivery.
(c)VLCC: Very Large Crude Carrier. BITR: Baltic International Tanker Routes.
(b)12th Line: Average quotation on ICE Futures for twelfth nearby month delivery.

In

The oil markets had ended 2010 significantly up, driven by the very strong upturn in demand for oil (+2.8 Mb/d). The outbreak of war in Libya in February 2011 quickly deprived the oil market of 1.6 Mb/d of crude supply. On the international markets, the shutdown of Libyan crude production was markedaggravated by recovering demand, due mainlyproduction losses in Nigeria (through attacks on oil infrastructure and diversion of the oil), Angola (with technical problems on several fields), Yemen (through attacks on oil infrastructure) and Syria (due to economic growth in emerging countries (China, India, Latin America, the Middle East)embargo). Meanwhile,The resulting crude oil deficit was offset mainly by Saudi Arabia, Kuwait and the United Arab Emirates, which all increased their production

considerably, thereby reducing the surplus available production capacity. Production in Libya gradually started up again from September 2011 and reached around 0.9 Mb/d at the end of 2011.

Overall in 2011, OPEC crude oil production was estimated to be slightly down compared to 2010 (-0.1 Mb/d), as was non-OPEC crude production (-0.2 Mb/d). The production of other liquids productionin 2011 (LPG, LNG, biofuels) outsiderose (+0.5 Mb/d).

With regard to demand, the significant price rise and generally weaker economic growth than in 2010 slowed

growth in oil demand, which fell from +2.8 Mb/d in 2010 to +0.5 Mb/d in 2011.

In this environment, crude oil prices, which started rising at the beginning of OPEC countries grew rapidlythe year, increased from an average of approximately $96/b (ICE Brent 1st Line) in January 2011 to $123/b in April 2011 while the market adjusted to the loss of Libyan supply. Prices fell slightly in the second half of 2011, particularly under the effect of the IEA’s emergency stock release (60 Mb offered, 35 Mb delivered) and the partial resumption of Libyan production. Crude oil prices remained high however, reaching an annual average in 2011 of $110.91/b.

As a result of the backwardation in the price structure on the crude oil market for almost the entire year, 2011 was also marked by a sharp fall in OECD oil industry inventories through October 2011 (year-on-year, crude -70 Mb and products -46 Mb), which diminished in the last 2 months of the year with the rise in Libyan crude production from OPEC countries increased only slightly despite(December 2011 year-on-year, crude -26 Mb and

products -36 Mb).

2011 also saw a softeningwidening of quotas that have been effective since year-end 2008. The increasethe price differential between WTI crude (confined to the central United States) and Brent crude (delivered in global oil storage, which has prevailed since early 2008, finally stopped in mid-2010 with a first major decrease mainlythe North Sea and accessible internationally). While Brent was experiencing upward pressure due to the strong increasebalance of crude oil on the international market, WTI was under downward pressure from a continuous rise in demandlocal production and exports from Canada, the combination of which exceeded local refining capacity requirements and potential exports outside the region. The price of WTI thus rose less quickly than Brent, increasing the gap to almost -$28/b in mid-October (at the height of the upward pressure on Brent).

The gap was more than halved at the end of the year, particularly with the announcement of the planned reversal of the Seaway pipeline, which should ease the pressure from the surplus of crude weighing down markets in the third quarter of 2010. Following this reversal, oil storage at year-end 2010 was at the year-end 2009 level.central United States.

 

Shipping

The

TOTAL’s Shipping division arranges the transportation of crude oil and refined products necessary to develop the Group’s activities. These needs are met through transactions on the spot market and the development of a balanced time charter policy. It has a rigorous safety policy that is due mainly to the strict selection of the vessels that the division charters. Like a certain number of other oil companies and shipowners, the Group uses freight rate derivative contracts in its shipping activity to adjust its exposure to freight-ratefreight rate fluctuations.

In 2010, the2011, TOTAL’s Shipping division chartered approximately 2,9003,000 voyages to transport approximately 119 Mt.110 Mt of crude oil and refined products. As of December 31, 2010, the Group2011, it employed a fleet of forty-sevenfifty vessels chartered under long-term or medium-term agreements (including fiveeight LPG carriers and no single-hulled vessels).carriers), of which none is single-hulled. The fleet has an average age of approximately fourfive years.

 

Freight rates average of three representative routes for crude transportation

        2011   2010   2009   min 2011  max 2011 

VLCC Ras Tanura Chiba — BITR(a)

   ($/t)   11.99     13.41     10.43     9.32     (Oct. 10)   18.54     (Feb. 15) 

Suezmax Bonny Philadelphia-BITR

   ($/t)   13.86     14.50     12.75     10.23     (Jan. 20)   19.85     (Mar. 22) 

Aframax Sullom Voe Wilhemshaven-BITR

   ($/t)   6.51     6.39     5.20     5.04     (Jan. 17)   9.46     (Mar. 4) 

(a)VLCC: Very Large Crude Carrier. BITR: Baltic International Tanker Routes.

In 2010, the tanker freight market suffered strong fluctuations.
Highlights of

2011 was a particularly eventful and difficult period for oil shipping activities.

During the first half of 2010 included:2011, events in Japan and North Africa had a strong impact on crude oil imports. Requirements in Japan fell suddenly and very markedly, but were quickly restored and returned to almost pre-crisis levels by the end of 2011. In the end, the impact on demand for shipping was relatively limited. In the Mediterranean, the shutdown of Libyan production resulted in the rebalancing of demand for long-haul VLCC shipments: imports, particularly to Europe, were offset by supply from further away, thus increasing the demand for transportation.

• increased crude oil imports to consumer countries, driven by the economic recovery and increased


45

On a more global level, the market was buoyed by demand from China, which is still growing strongly, and to a lesser extent the United States.

Despite this generally favorable demand structure, the freight market operated at overcapacity for most of 2011. Very few ships were decommissioned and 2011 saw a steady stream of new vessels being delivered as a result of the many orders placed by shipowners in 2007 and 2008.

onshore and offshore crude oil storage in the United States, Europe and China; and
• the resumption of crude oil floating storage that involved up to forty-five vessels in early May 2010 and resulted in limited growth of the active fleet of tankers despite the disposal of fewer vessels than expected.
The combination of these two trends led toThis situation severely damaged the relative resiliencefundamentals of the freight market for crude oil transport as recordedtransport. Following the extremely cold weather at the beginning of 2011, which sustained rates for a time, there was a collapse in the first half of 2010.

 

However, from

second quarter that left the second half of 2010, the fundamentals of the freight market deteriorated sharply, leading toat a collapse of freight rates at the end of July. This trend was the result of the sustained growth of the active fleet duehistoric low. With regard to the significant decrease in floating storage andproduct tanker market, the continued growth ofsituation remains

poor worldwide, with transatlantic traffic to the fleet.United States particularly slow.

 

CHEMICALS

Throughout 2010, the number of new vessels delivered by shipyards exceeded the number of vessels disposed of, despite the entry into force of the international regulation providing for the gradual disposal of single-hulled vessels, which led to an oversupply of vessels compared to demand for transport.

Chemicals

The 2011 Chemicals segment includesincluded the Base Chemicals (petrochemicals and fertilizers businesses) and Specialty Chemicals divisions:
• Base Chemicals encompasses the Group’s petrochemicals and fertilizers businesses; and
• Specialty Chemicals encompasses the Group’s rubber processing, resins, adhesives and electroplating businesses.
(elastomer processing, adhesives and electroplating chemistry businesses) divisions. TOTAL is one of the world’s largest integrated chemical producers.(1)

In October 2011, the Group announced a proposed reorganization of its Downstream and Chemicals segments. The procedure for informing and consulting with employee representatives took place and the reorganization became effective on January 1, 2012.

This led to organizational changes, with the creation of:

A Refining & Chemicalssegment, a large industrial center that encompasses refining, petrochemicals, fertilizers and specialty chemicals operations. This

segment also includes oil trading and shipping activities.

A Supply & Marketing segment, which is dedicated to worldwide supply and marketing activities in the oil products field.

The Chemicals activities described below, including the data as of December 31, 2011, are presented based on the organization in effect up to December 31, 2011.

Base Chemicals

The Base Chemicals division includes TOTAL’s petrochemicals and fertilizers activities.

In 2010,2011, the Base Chemicals division’s sales were €10.7€12.7 billion, compared to €8.7€10.7 billion in 20092010 and €13.2€8.7 billion in 2008. The 2010 market environment for Base Chemicals was marked by recovering demand for petrochemical products and improved integrated margins. The2009.

 
Group strengthened positions in Qatar with the

start-up of the steam cracker in Ras Laffan and of the linear low-density polyethylene plant in Messaied. In 2010, the Fertilizers business was adversely affected by manufacturing incidents, whereas the European market was recovering.

Petrochemicals

BREAKDOWN OF TOTAL’S MAIN PRODUCTION CAPACITIES

                         
  2010  2009  2008 
        Asia and
          
     North
  Middle
          
(in millions of tons) Europe  America  East(a)  Worldwide  Worldwide  Worldwide 
Olefins(b)
  4,695   1,195   1,300   7,190   6,895   7,285 
                         
Aromatics  2,500   940   755   4,195   4,195   4,360 
                         
Polyethylene  1,180   460   500   2,140   2,040   2,035 
                         
Polypropylene  1,335   1,150   295   2,780   2,780   2,750 
                         
Styrenics(c)
  1,050   1,260   640   2,950   3,090   3,220 
                         

(in thousands of tons)  2011   2010   2009 
  Europe   North America   Asia and Middle
East(a)		   Worldwide   Worldwide   Worldwide 

Olefins(b)

   4,695     1,195     1,460     7,350     7,190     6,895  

Aromatics

   2,500     940     770     4,210     4,195     4,195  

Polyethylene

   1,180     440     520     2,140     2,140     2,040  

Polypropylene

   1,315     1,175     345     2,835     2,780     2,780  

Styrenics(c)

   1,150     1,260     730     3,140     2,950     3,090  

(a)
(a)Including minority interests in Qatar and 50% of Samsung-Total Petrochemicals capacities.
(b)Ethylene, propylene and butadiene.
(c)Styrene and polystyrene.

The petrochemicalpetrochemicals business grouped under Total Petrochemicals, includes base petrochemicals (olefins and aromatics) and their polymer derivatives (polyethylene, polypropylene(polyolefins and styrenics).

InEurope, TOTAL’sthe main petrochemicalspetrochemical sites are located in Belgium, (Antwerp, Feluy)in Antwerp (steam crackers, polyethylene) and Feluy (polypropylene, polystyrene), and in France, (Carling,in Carling (steam cracker, polyethylene, polystyrene), Feyzin (steam cracker), Gonfreville (steam crackers, styrene, polyolefins, polystyrene) and Lavéra)ra (steam cracker, polypropylene).

(1)  Based on publicly available information, consolidated sales.


46

In theUnited States they, the main petrochemical sites are located in Carville, Louisiana (Carville)(styrene, polystyrene), and in

Texas, (Bayport,in Bayport (polyethylene), La Porte (polypropylene) and Port Arthur)Arthur (steam cracker, butadiene).

InAsia, TOTAL owns, in partnership with Samsung, a 50% interest in the Daesan integrated petrochemical site located in Daesan, South Korea.Korea (steam cracker, styrene, paraxylene, polyolefins). The Group is also active through its polystyrene plants located in Singapore and Foshan (China) plants.

.

InQatar, the Group holds interests in two steam crackers and several polyethylene lines.

Most of these sites are either adjacent to or connected by pipelines to Group refineries. As a result, most of TOTAL’s petrochemical operations are closely integrated within refining operations.

 

(1)Based on publicly available information, consolidated sales.

TOTAL continues to strengthen its leadership positions in the industry by focusing on the following three main strategic areas:

InEurope, TOTAL is improving the competitiveness of its long-established sites notably through cost management, better energy efficiency at its facilities and increased flexibility in the choice of feedstock.

• In mature markets, TOTAL is improving the competitiveness of its long-established sites notably through cost management, better energy efficiency at its facilities and more flexibility in the choice of feedstock.

In an increasingly competitive environment, the Group launched two reorganization plans mainly for the sites in Carling (eastern France) and Gonfreville (northwestern France):

sites:

 –

The first plan, launched in 2006, called for the closure of aone of the steam crackercrackers and the styrene plant at Carling and the construction of a new world-class(1) styrene plant at Gonfreville to replace the plant closed in late 2008. The reorganization plan was completed in the first quarter of 2009.

 –

The second plan, launched in 2009, is focused on a consolidation project to improve sitesthe sites’ competitiveness. This project includes a plan to upgrade the Group’s most efficient units by investing approximately €230€230 million over three years to increase energy efficiency and competitiveness of the steam cracker and the high-density polyethylene unit in Gonfreville, and to consolidate polystyrene production at the Carling facility. It also includes the shutdown of two structurally loss-making units:units, effective from the end of 2009: two low-density polyethylene lines, one in Carling and one in Gonfreville, and a polystyrene line in Gonfreville. The three lines were shut down at year-end 2009. This reorganization plan is also intended forimpacted the support services at both sites and the central services at Total Petrochemicals France.

Furthermore, following the

Following its sole customer’s termination of the supply contract for the secondary butyl alcohol produced at the Notre-Dame-de-Gravenchon facility in Normandy, this dedicated facility had to be closed in the second half of 2010.

At the end of 2011, TOTAL signed an agreement relating to the acquisition of 35% of ExxonMobil’s stake in Fina Antwerp Olefins, Europe’s second largest base petrochemicals (monomers) production plant. Following approval by the relevant authorities, the transaction was finalized in February 2012 and TOTAL became the sole shareholder in Fina Antwerp Olefins on March 1, 2012. The acquisition will open new

opportunities to strengthen the competitiveness of the assets and to pursue integration which is one of the foundations of Total’s strategy.

In theUnited States, TOTAL and BASF purchased in 2011 Shell’s stake in Sabina, one of the largest butadiene production plants in the world. TOTAL and BASF are now the only two shareholders in Sabina, with stakes of 40% and 60%, respectively. This new structure will allow for increased synergies with the TOTAL refinery and the jointly-owned steam cracker (TOTAL 40%, BASF 60%) located on the same site in Port Arthur, Texas.

TOTAL is continuing to expand in growth areas.

• TOTAL is continuing to expand in growth areas.

InAsia, the Samsung-Total Petrochemicals Co. Ltd joint venture (TOTAL, 50%) completed in 2008mid-2011 the first modernizationdebottlenecking phase of the units at the Daesan site in South Korea, its main production site inwith the region.aim of bringing them to full capacity. This major development increasedfirst phase included increasing the site’s initial production capacity by nearly one-third thanks to the extension of the steam cracking and styrene units, and thestart-up of a new polypropylene line and a new metathesis plant. A further debottlenecking of the steam cracker to 1 Mt/y and the polyolefin units to 1,150 kt/y.

The second phase is expected to take place in September 2012 and aromatic units wasinvolves increasing the capacity of the paraxylene unit to 700 kt/y.

In addition, to keep up with growth on the Asian markets, two major investments have been approved for planned start-up in 2010. The capacity extensions are scheduled to be effective in 2011 for the steam cracker and the polyolefin2014: a new 240 kt/y EVA(2) unit and in 2012 fora new aromatic unit with a capacity of 1.5 Mt/y of paraxylene and benzene, the aromatic unit.

The joint venture continues to expand its operations with thestart-upfeedstock of which will be supplied by a polypropylene compounding plant in China in 2009 and, on the Daesan site, thestart-ups of acondensate splitter that will also produce jet fuel and diesel. As a result, the site’s paraxylene production plantcapacity will be increased to develop co-products in June 2010 and a butane storage tank to increase flexibility for the steam cracker feedstock at year-end 2010.
1.8 Mt/y.

In theMiddle East, construction of athe 700 kt/y paraxylene unit at the Jubail refinery in Saudi Arabia was approved in 2008 by TOTAL and Saudi Aramco.is under construction. This world-class unit is mainly intended to supply the Asian market. The main construction contracts were signedStart-up is scheduled for 2013.

TOTAL is developing sites in 2009 andcountries with favorable access to raw materials.

start-up is expected in 2013.

• TOTAL is developing sites in countries with favorable access to raw materials.
InQatar, through its interest in Qatofin and Qapco, TOTAL holds a 49% interest in a world-class linear low-density polyethylene plant with a capacity of 450 kt/y in Mesaieed. This unit, operated by Qatofin,

started up in 2009. The Group also holds a 22% interest in an ethane-based steam cracker in Ras Laffan designed for processing 1.3 Mt/y of ethylene. The steam cracker started up in March 2010. In

(1)Facilities ranking among the first quartile for production capacities based on publicly available information.
(2)Ethylene Vinyl Acetate.

addition, construction of a 300 kt/y low-density polyethylene line has started at Qapco, in which TOTAL holds a 20% interest, with commissioningstart-up scheduled infor the second quarter of 2012.

(1)  Facilities ranking among the first quartile for production capacities based on publicly available information.


47

InAlgeria, TOTAL and Sonatrach, the Algerian state-owned oil company, are studying a project to build a petrochemical site in Arzew. This world class project would include an ethane-based steam cracker with production capacity of 1.1 Mt/y, two polyethylene units and a monoethylene glycol production unit. It would benefit from favorable access to ethane gas, a particularly competitive raw material, and would be ideally located to supply Europe, the Americas and Asia.
InChina, TOTAL and China Power Investment Corporation signed in November 2010 an agreement to study a project to build acoal-to-olefins plant and a polyolefins plant. TOTAL will bring to this partnership its expertise in the Methanol to Olefinsmethanol-to-olefins (MTO) and the Olefin Cracking Processolefin cracking process (OCP) technologies that Total Petrochemicals has tested extensively at its purpose-built semi-commercial plant in Feluy, Belgium. TOTAL will also study solutions with respect to carbon capture and storage (CCS) using the know-how gained from its CCS pilot project in Lacq, France.

Base petrochemicals

Base petrochemicals includeincludes olefins and aromatics (monomers) produced by the steam cracking of petroleum cuts, mainly naphtha and LPG, or of gas as well as propylene and aromatics manufactured in the Group’s refineries. The economic environment for these activities is strongly influenced by the balance between supply and demand and changes in feedstock prices, especially naphtha.

Highlights

The market was buoyant in the first half of 2010 included2011, followed by a significant slowing in volumes and falling margins, mainly in Europe and the recovery of global demand for monomers and improved marginsUnited States, in all geographical areas.the second half. Over 2011 as a whole, TOTAL’s production volumes increased by 8% in 2010.

remained stable.

TOTAL is consolidatingexpanding its positions in Asia and the Middle East with thestart-up of the Ras Laffan steam cracker in 2010 in Qatar and continued investments to increase capacities in South Korea. In Europe and the United States, TOTAL is improving energy efficiency at its sites, strengthening synergies with refining and increasing the flexibility of the steam cracker feedstock.

PolyethylenePolyolefins

TOTAL’s strategy for polyolefins (polyethylene, polypropylene) is based on lowering the breakeven point of its plants in Europe and the United States and continuing to differentiate its range of products, while meeting new market requirements for sustainable development. The Group is also continuing to expand its activities in growth areas, mainly through its stakes in joint ventures in South Korea and Qatar.

Polyethylene: Polyethylene is a plastic produced byresulting from the polymerization of ethylene manufactured inproduced by the Group’s steam crackers. It is primarily intended for the packaging, automotive, food, cable and pipe markets. Margins are strongly influenced by the level of demand and the price of ethylene. In Europe, margins are impacted by competition from expanding production in the Middle East, which benefits from favorable access to ethane, the raw material used in ethylene production.

2010

2011 was marked by the recovery of globala slowdown in growth in demand in every region, especiallyall geographical areas and by falling margins, more particularly in China.

TOTAL’sthe second half. Europe was most affected by this deterioration in the market environment.

The Group’s sales volumes increased 4.7%by 2% in 2010 compared to 2009 thanks to the2011.

start-up of the linear low-density plant in Qatar. High density polyethylene margins remained weak in Europe. In the United States, margins remained high mainly due to the competitive price of ethane-based ethylene.

TOTAL intends to focus on lowering the breakeven point in its plants in Europe and continuing to differentiate its range of products.
Polypropylene
: Polypropylene is a plastic produced byresulting from the polymerization of propylene manufactured inproduced by the Group’s steam crackers and refineries. It is primarily intended for the automotive, packaging, carpet, household appliances, fibers and hygiene markets. Margins are mainly influenced by the level of demand and the availability and price of propylene.
2010 was marked by sustained

As with polyethylene, 2011 saw a slowdown in growth in worldwide demand and falling margins in the global polypropylene market and all geographical areas, in particular North America and China. However, the European industry was affected by ongoing production difficulties throughoutsecond half of the year.

TOTAL’s sales volumes only slightly increaseddecreased by 2.5% compared to 2009 (+1%). Margins strongly increased in Europe in a tight market environment but they remained stable at a relatively weak level in the United States. To face increasing competition from new plants in the Middle East, TOTAL owns plants in Europe and the United States that place the Group among the industry’s leaders.

2010.

Styrenics

This business activity includes the production of styrene and polystyrene. Most of the styrene manufactured by the Group is used to produce polystyrene, a plastic principally used in food packaging, insulation, refrigeration, domestic appliances and electronic devices. Margins are strongly influenced by the level of polystyrene demand and the price of benzene, which is polystyrene’sstyrene’s principal raw material.

After two years of decrease, the global styrene

The worldwide styrenics market increased by approximately 2% in 2010 thanks to the resilience of the automotive, electronics and insulation markets. The global polystyrene market also increased in 2010,2011, driven by domestic demandAsia, while the markets in China.


48

Europe and the United States remained practically stable. Margins were low on the highly competitive European and Asian markets, but remained high in the United States.

In 2010, TOTAL’s polystyrene sales volumes increased by 1.5% consistently4% in all geographical areas. Styrene margins remained weak2011.

The Group continues to expand its styrenics business. In Feluy, Belgium, TOTAL is building a new-generation expandable polystyrene manufacturing plant. Start-up is scheduled for early 2013. The expandable polystyrene is intended for the insulation market, which is experiencing strong growth. In China, TOTAL doubled the capacity of the Foshan compact polystyrene plant to 200 kt/y in 2010 whereas polystyrene margins strongly increased due to the market stabilization and capacity reductions in mature areas.

early 2011.

Fertilizers

Through its French subsidiary GPN, TOTAL manufactures and markets nitrogen fertilizers made from natural gas. Margins are strongly influenced by the price of natural gas.

 

In 2010 and 2011, GPN’s production was affected by a number of manufacturing incidents that resulted in long shutdowns for maintenance of the Grandpuits and Rouen ammonia plants in France and a reduction ofreduced production at the downstream plants’ productionplants (nitric acid, urea and ammonium nitrate). These incidents adversely affected GPN’sthe results of GPN, which could not take advantage of favorable global market conditions.

GPN’s plans were strengthened through two major investments: the improved European market.

The Fertilizersconstruction of a nitric acid plant in Rouen, which started up in the second half of 2009, and a urea plant in Grandpuits, the start-up of which was ongoing in March 2012. This additional urea production will enable GPN to position itself in the growing markets of products that contribute to reducing nitrogen oxide emissions(1): DeNOx® for industrial applications and Adblue® for transportation applications. An Adblue unit has been maintained at Oissel waiting for the start-up of the Grandpuits plant.

In France, three obsolete nitric acid units in Rouen and Mazingarbe were closed in 2009 and 2010.

GPN’s mines and quarries business continuedat the Mazingarbe site was divested in January 2011. Sales for the divested lines of business were€30 million in 2010.

In November 2011, the Group initiated the process of divesting its major restructuring plan initiated since 2006:

• The complex fertilizers business was shut down in France, resulting in the closure of three sites (Bordeaux, Basse Indre and Granville). In addition, TOTAL sold its Dutch affiliate, Zuid Chemie, to Engrais Rosier (TOTAL, 57%).
• The core activity of the Fertilizers business, which is the production of nitrogen fertilizers, was strengthened through a major investment in the construction of a competitive nitric acid plant in Rouen, which started up in the second half of 2009, and a urea plant in Grandpuits, the start-up of which was ongoing in March 2011. This additional urea production enables GPN to position in the growing markets of products that contribute to reducing nitrogen oxide emissions(1): DENOX® for industrial applications, and Adblue® for transportation applications.
• In France, the Oissel site and three obsolete nitric acid units in Rouen and Mazingarbe were closed in 2009 and 2010.
• In early 2010, the Group launched a process to divest GPN’s mines and quarries business in Mazingarbe, northern France. This project was submitted for prior consultation with employee representative organizations and to the approval by the relevant authorities. This transaction was closed in January 2011.
This plan is expectedstake (50%) in Pec-Rhin. Having exercised its pre-emptive right on its partner’s 50%, GPN signed an agreement for the complete divestment of Pec-Rhin. Following approval by the relevant authorities, the disposal was finalized in January 2012. These actions are intended to improve the competitiveness of GPN by regrouping its operations at two sites that featurehave production capacity greater than the European average.

Specialty Chemicals

TOTAL’s Specialty Chemicals division includes rubberelastomer processing (Hutchinson), resins (Cray Valley, Sartomer and Cook Composites & Polymers), adhesives (Bostik) and electroplating chemistry (Atotech). The divisionIt serves consumerthe automotive, construction, electronics, aerospace and industrialconvenience goods markets, for which customer-oriented marketing, innovation and customer service as well as innovation are key drivers. TOTAL markets specialty products in more than fifty-fivesixty countries and intends to develop in the global market by combining internalorganic growth and targeted acquisitions. This development is focused on expandinghigh-growth markets and the marketing of innovative products with high added value that meet the Group’s sustainable development approach.

The ConsumersHutchinson consumer goods business (Mapa® and Spontex®) was divested in Aprilspring 2010. Sales for the divested lines of business were €530€530 million in 2009.

In late 2010, TOTAL also launched a process to partially dispose of the Resins business (coatings

The Cray Valley coating resins and Sartomer photocure resins).resins businesses were divested in July 2011. Sales for thesethe divested lines of business were €860€860 million in 2010. Disposal is subject to prior consultation with employee representativesThe structural and approval byhydrocarbon resins business lines were kept and have been incorporated into the relevant authorities, and may be effective by the second quarter of 2011.

In 2010, the market environment for Petrochemicals division.

Specialty Chemicals wasenjoyed a favorable thanksclimate in the first three quarters of 2011 due to the economic recovery in matureresilience of the European and North American markets which had faced difficult conditions in late 2008 and early 2009, and ongoingcontinued growth in the emerging countries. The situation deteriorated in the fourth quarter. In this context and on alike-for-like basis (excluding Consumers products)Mapa Spontex and Resins), 20102011 sales were €6.8€5.3 billion, a 21%9% increase compared to 2009.

2010.

RubberElastomer processing

Hutchinson manufactures and markets products derived from rubberelastomer processing that are principally intended for the automotive, aerospace and defense industries.

Hutchinson, among the industry’s leaders worldwide(2), provides its customers with innovative solutions in the areas of fluid transfer, air and fluid (or water) seals, transmission, mobility and vibration, as well asanti-vibration, sound and thermal insulation.

insulation, and transmission and mobility.

Hutchinson has eighty production sites worldwide, including fifty-two in Europe, fifteen in North America, seven in South America, five in Asia and one in Africa.

Hutchinson’s sales were €2.7€2.99 billion in 2010,2011, up 19%10% compared to 2009 in an uneven environment depending on the lines of business.2010. Sales for the automotive business substantially increased thanks11% due to the recovery in

(1)  Nitrogen oxide emissions are noxious to the environment and subject to regulation.
(2)  Basedstable sales on publicly available information, consolidated sales.


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the European and North American markets and increased sales on the growing Latin American and Chinese markets. In otherOn the industrial markets, sales decreased slightly in 2010 compared to 2009, due toincreased at a lower rate because of the decline in markets forthe business planes, helicopters and defense. The decline was partially offset by an increase indefense markets, while sales on other industrial markets (e.g., civil aviation, railway, and offshore) saw similar rises to the railway market.
automotive business.

To strengthen its position in the aerospace industry, in late 2008 Hutchinson acquired Strativer, in late 2008, a French company specialized in the expandinggrowing composite materials market.market, and, in early 2011, Hutchinson acquired Kaefer, a German company specialized in aircraft interior equipment (insulation, ventilation ducts, etc.). In the automotive sector, in April 2011 Hutchinson acquired Keum-Ah, a South Korean company specialized in fluid transfer systems.

 

(1)Nitrogen oxide emissions are noxious to the environment and subject to regulation.
(2)Based on publicly available information, consolidated sales.

Throughout 2010,

Hutchinson continuedcontinues to develop in expanding markets, primarily Eastern Europe, South America and China, relying notably on the Brasov (Romania), Lodz (Poland), Sousse (Tunisia) and Suzhou (China) sites and on the SousseCasa Branca site (Tunisia)(Brazil) opened in 2009.

2011.

ResinsAdhesives

TOTAL produces and markets resins for adhesives, inks, paints, coatings and composite materials through three subsidiaries: Cray Valley, Sartomer, and Cook Composites & Polymers.
In 2010, sales were €1.8 billion, up 24% compared to 2009, reflecting the economic recovery in North America and Europe, which are the main market segments for the Resins business.
The subsidiaries continued their fixed costs reduction programs in Europe and the United States. In addition, they continued to focus on their most profitable lines of business through a selective investment policy targeting in particular the most dynamic geographical areas.
In late 2010, TOTAL launched a process to partially dispose of the Resins business (coatings and photocure resins).

Adhesives

Bostik is one of the world leaders in the adhesive sector(1) with leadingand has significant positions inon the industrial, hygiene and construction andmarkets, complemented by both consumer and professional distribution markets.
channels.

Bostik has forty-six production sites worldwide, including twenty-one in Europe, nine in North America, seven in Asia, six in Australia and New Zealand, two in Africa and one in South America.

In 2010,2011, sales were €1.4€1.43 billion, up 14%3% compared to 2009. This strong performance confirms Bostik’s strategy of strengthening2010.

Bostik continues to strengthen its technological position in the construction and industrial market, which has been less affected thansectors, pursue its program for innovation focused on sustainable development, keep up with its expansion in high-growth countries and improve its operational performance.

2011 saw the construction industry, and continuing its development in growing markets, especially in the Asia-Pacific region.

Bostik expects to start upstart-up of two new production units in Egypt and Vietnam and the opening of a new regional technology center for Asia in Shanghai. In addition, Bostik plans to commission a third production unit in Changshu, China in 2012, which is expected to be Bostik’s largest plant worldwide. In the second halfUnited States, Bostik acquired StarQuartz in 2011, increasing its range of 2011 andconstruction adhesives.

Finally, Bostik continued to rationalize its industrial base with the closure of the Ibos site in India in 2012.France, which came into effect at year-end 2011.

Bostik is actively pursuing its program for innovation based on new products and integrated solutions, and focused on sustainable development.

Electroplating

Atotech which encompasses TOTAL’s electroplating business, is the second largest company in thisthe electroplating sector based on worldwide sales(1). It is active in bothon the markets for electronics (printed circuits, semiconductors) and general metal finishing markets (automotive, sanitary goods,construction, furnishing).

The electroplating business strongly recovered

Atotech has sixteen production sites worldwide, including seven in 2010, drivenAsia, six in particular by the growing automotiveEurope, two in North America and electronics markets. After decreasing 20% between 2008 and 2009, one in South America.

Atotech’s sales were €0.8€0.89 billion in 2010,2011, up 31%14% compared to 2009.

2010 due to favorable conditions on all of its markets and a significant increase in equipment sales on the electronics market.

In Germany,order to strengthen its position on the electronics market, in 2011 Atotech started up a new production unit intended foraimed at the semiconductorsemiconductors market was inaugurated in 2010.

Neuruppin (Germany) and acquired adhesive technologies (molecular interfaces) in the nanotechnology sector in the United States.

Atotech successfully pursued its strategy designed to differentiate its products through a comprehensive service provided to its customers in terms of equipment, processes, design and chemical products and through the development of green, innovative technologies to reduce the environmental footprint. This strategy relies on global coverage provided by its technical centers located near customers.

Atotech intends to continue to develop in Asia, which represents more than 50%almost 60% of its global sales.

 
(1)  Based on publicly available information, consolidated sales.


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OTHER MATTERS

Various factors, including certain events or circumstances discussed below, have affected or may affect TOTAL’s business and results.

Exploration and production legal considerations

TOTAL’s exploration and production activitiesoperations are conducted in many differentvarious countries and are therefore subject to an extremelya broad range of regulations. These cover virtually all aspects of exploration and production activities, operations,

including matters such as leasehold rights, production rates, royalties, environmental protection, exports, taxes and foreign exchange rates. The terms of the concessions, licenses, permits and contracts governing the Group’s ownership of oil and gas interests vary from country to country. These concessions, licenses, permits and contracts are generally granted by or entered into with a government entity or a state-owned company and are sometimes entered into with private owners. These arrangements usually take the form of concessions or production sharing agreements.contracts.

 

(1)Based on publicly available information, consolidated sales.

The oil concession agreement remains the traditional model for agreements entered into with States: the oil company owns the assets and the facilities and is entitled to the entire production.

In exchange, the operating risks, costs and investments are the oil company’s responsibility and it agrees to remit to the relevant State, usually the owner of the subsoil resources, a production-based royalty, income tax, and possibly other taxes that may apply under local tax legislation.

The production sharing contract (PSC) involves a more complex legal framework than the concession agreement: it defines the terms and conditions of production sharing and sets the rules governing the cooperation between the company or consortium in possession of the license and the host State, which is generally represented by a state-owned company. The latter can thus be involved in operating decisions, cost accounting and production allocation.

The consortium agrees to undertake and finance all exploration, development and production activities at its own risk. In exchange, it is entitled to a portion of the production, known as “cost oil”, the sale of which should cover all of these expenses (investments and operating costs). The balance of production, known as “profit oil”, is then shared in varying proportions, between the company or consortium, on the one hand, and with the State or the state-owned company, on the other hand.

In some instances, concession agreements and PSCs coexist, sometimes in the same country. Even though there are other contractual structures still exist,models, TOTAL’s license portfolio is comprised mainly of concession agreements.

In all countries,every country, the authorities of the host State, often assisted by international accounting firms, perform joint venture and PSC cost audits and ensure the observance of contractual obligations.

In some countries, TOTAL has also signed contracts called “risked service contracts”, which are similar to production sharing contracts. However, the profit oil is replaced by risked monetary remuneration, agreed by contract, which depends notably on the field performance. Thus, the remuneration under the Iraqi contract is based on an amount calculated per barrel produced.

Hydrocarbon

Oil and gas exploration and production activities are subject to authorization granted by public authorities (permits)(licenses), which can be different for each of these activities. These permits are granted for specific and limited periods of time and include an obligation to return a large portion, or the entire portion in case of failure, the entire portion, of the permit area covered by the license at the end of the exploration period.

TOTAL is required to paypays taxes on income generated from its oil and gas production and sales activities under its concessions, production sharing contracts and risked service contracts, as provided for by local regulations. In addition, depending on the country, TOTAL’s production and salesales activities may be subject to a rangenumber of other taxes, fees and withholdings, including special petroleum taxes and fees. The taxes imposed on oil and gas production and salesales activities may be substantially higher than those imposed on other industrial or commercial businesses.

The legal framework of TOTAL’s exploration and production activities, established through concessions, licenses, permits and contracts granted by or entered into with a government entity, a state-owned company or, sometimes, private owners, is subject to certain risks whichthat, in certain cases, can diminishreduce or challenge the protections offered by this legal framework.

Industrial and environmental considerations

TOTAL’s activitiesoperations involve certain industrial and environmental risks which are inherent in the productionhandling, processing and use of products that are flammable, explosive, polluting or toxic. Its

The broad scope of TOTAL’s activities, which include drilling, oil and gas production, on-site processing, transportation, refining and petrochemical activities, storage and distribution of petroleum products, and production of base and specialty chemicals, involve a wide range of operational risks. Among these risks are therefore subject to government regulations concerning environmental protectionthose of explosion, fire, leakage of toxic products, and industrial safety in most countries. More specifically, in Europe, TOTAL


51

operates industrial sites that meetpollution. In the criteriatransportation area, the type of risk depends not only on the hazardous nature of the European Union Seveso II directive for classification as high-risk sites. Someproducts transported, but also on the transportation methods used (mainly pipelines, maritime, river-maritime, rail, road), the volumes involved, and the sensitivity of the regions crossed (quality of infrastructure, population density, environmental considerations).

Most of these activities also involve environmental risks related to emissions into the air, water or soil and the production of waste, and also require environmental site remediation and closure and decommissioning after production is discontinued.

The industrial events that can have the most significant impact are primarily a major industrial accident (fire, explosion, leakage of highly toxic products) or large-scale accidental pollution.

All the risks described correspond to events that could potentially cause injury or death, damage property and business activities, cause environmental damage or harm human health. TOTAL employees, contractors, residents

living near the facilities or customers can suffer injuries. Property damage can involve TOTAL’s operated sites in the United States are subject to the Occupational Safety and Health Administration (“OSHA”) Process Safety Management of Highly Hazardous Materials,facilities as well as the property of third parties. The seriousness of the consequences of these events varies according to the vulnerability of the people, ecosystems and business activities impacted, on the one hand, and the number of people in the impact area and the location of the ecosystems and business activities in relation to TOTAL’s facilities or to the trajectory of the products after the event, on the other OSHA regulations.

hand.

Moreover, oil and gas exploration and production activities are particularly exposed to risks related to the physical characteristics of an oil or gas field. These risks include eruptions of crude oil or natural gas, which notably could result from drilling into abnormally pressurized hydrocarbon pockets.

TOTAL conforms to the REACH regulation, which purpose is to protect health and safety of products and chemical substances producers and users notably by providing detailed information through safety data sheets (SDS/ESDS). Like most other industrial groups, TOTAL is concerned by reports of occupational illnesses, in particular those caused by asbestos exposure. Asbestos exposure has been subject to close monitoring at all of the Group’s business units. As of December 31, 2011, the Group estimates that the ultimate cost of all asbestos-related claims paid or pending is not likely to have a material impact on the Group’s financial situation.

TOTAL’s entities actively monitor regulatory developments to comply with local and international rules and standards for the evaluation and management of industrial and environmental risks. In case of operations being stopped, the Group’s environmental contingencies and asset retirement obligations are addressed in “Asset retirement obligation” and “Provisions for environmental contingencies” in Note 19 to the Consolidated Financial Statements. Future expenses related to asset retirement obligations are accounted for in accordance with the principles described in paragraph Q of Note 1 to the Consolidated Financial Statements.

Health, safety and environment regulations

TOTAL is subject to extensive and increasingly strict health, safety and environmental (“HSE”) regulations in the European Union (“EU”), the United States and worldwide.

the rest of the world.

The following is a non-exhaustive list of HSE regulations and directives that affect TOTAL’s operations and products in the European Union:EU:

The Industrial Emissions Directive (“IED”) entered into force on January 6, 2011, and must be transposed

• The Integrated Pollution Prevention and Control

into national legislation by EU Member States by January 7, 2013. This Directive (“IPPC”) provides for a cost/benefit framework used to comprehensively assess the environmental quality standards of, and prior environmental impacts and potential additional emissions limits on, large industrial plants, including refineries and chemical sites. The Industrial Emission Directive (IED), adopted in 2010, is expected to replace in 2013replaced a number of existing industrial emission directives, including the IPPCIntegrated Pollution Prevention and Control Directive (2008/1/EC — “IPPC”) and the Large Combustion Plant Directive. It will progressively result in stricter emission limits on some of TOTAL’s facilities by making compulsory certain rules described in BREFs (Best available techniques REFerence documents), some of which are dedicated to specific industrial sectors. Certain BREFs are already published and will be revised (e.g., refining), and others will have to be developed.Directive (2001/80/EC).

By imposing the reduction of emissions from industrial installations, the IED will progressively result in stricter emission limits on some of TOTAL’s facilities by making compulsory certain rules described in BREFs (Reference documents on Best Available Techniques).

The Air Quality Framework Directive (2008/50/CE) and related directives on ambient air quality assessment and management, among other things, limit emissions of sulphur dioxide, nitrogen dioxide and oxides of nitrogen, particulate matter, lead, carbon monoxide, benzene and ozone.

Existing directives controlling and limiting exhaust emissions from cars and other motor vehicles are expected to continue to become more stringent over time. Since 2009, a maximum sulphur content of 10 ppm is mandatory throughout the EU.

The Sulphur Content Directive (1999/32/EC, as amended) limits sulphur in diesel fuel to 0.1% (since January 2008) and limits sulphur in heavy fuel oil to 1% (since January 2003), with certain exceptions for combustion plants provided that local air quality standards are met.

The 1996 Major Hazards Directive (Seveso II) requires emergency planning, public disclosure of emergency plans, assessment of hazards and effective emergency management systems. A revision process is currently pending to strengthen rules on the control of major accident hazards involving chemicals. The revision will align the legislation to changes in EU chemicals law and will clarify and update other provisions, including introducing stricter inspection standards and improving the level and quality of information available to the public in the event of an accident. The new directive is expected to apply from June 1, 2015.

In October 2011, the European Commission proposed a regulation on the safety of offshore oil and gas activities. The regulation introduces rules for the effective prevention of and response to a major accident that would be immediately applicable to new installations and with transitional periods for existing installations.

Numerous directives regulate the classification, labeling and packaging of chemical substances and

 
• The Air Quality Framework Directive and related directives on ambient air quality assessment and management, among other things, limit emissions for sulphur dioxide, oxides of nitrogen, particulate matter, lead, carbon monoxide, benzene and ozone.
• The Sulphur Content Directive limits sulphur in diesel fuel to 0.1% (since January 2008) and limits sulphur in heavy fuel oil to 1% (since January 2003), with certain exceptions for combustion plants provided that local air quality standards are met.
• The Large Combustion Plant Directive, effective since 2008, limits certain emissions, including sulphur dioxide, nitrogen oxides and particulates, from large combustion plants. It will be partly replaced in 2013 by the IED (see above).
• Existing Directives controlling and limiting exhaust emissions from cars and other motor vehicles are expected to continue to become more stringent over time. Since 2009, a maximum sulphur content of 10 ppm is mandatory throughout the European Union.
• The 1996 Major Hazards Directive (Seveso II) requires emergency planning, public disclosure of emergency plans, assessment of hazards and effective emergency management systems. A revision process has just begun.
• The Framework Directive on Waste Disposal is intended to ensure that waste is recovered or disposed of without endangering human health and without using processes or methods that could unduly harm the environment. Numerous related directives regulate specific categories of waste. In November 2008, the Framework Directive on Waste Disposal was partially modified by the Directive on Waste 2008/98, which features more precise definitions and stronger provisions. Transposition of this Directive in France occurred in December 2010.
• A number of Maritime Safety Directives were passed in the wake of the Erika and Prestige spills. Those regulations, found in the three Maritime Safety Packages, require that tankers have double hulls and that ship owners acquire improved insurance coverage, mandate improvements to traffic monitoring, accident investigations and in-port vessel inspection (Port State Control), and further regulate organizations that inspect and confirm conformity to applicable regulations (Classification Societies). The last package will enter into force in 2012.
• Numerous Directives impose water quality standards based on the various uses of inland and coastal waters, including ground water, by setting limits on the discharges of many dangerous substances and by imposing information gathering and reporting requirements.
Adopted and effective since 2003, a comprehensive Framework Water Directive is progressively replacing numerous existing Directives with a comprehensive set of requirements, including additional regulations obligating member countries to classify all water courses according to their biological, chemical and ecological quality, and to completely ban the discharges of approximately thirty toxic substances by 2017.
• Numerous Directives regulate the classification, labelling and packaging of chemical substances and

their preparation, as well as restrict and ban the use of certain chemical substances and products.


52

On the one hand, the EU Parliament and Council adopted a regulation in December 2008 (now in force) on the Classification, Labelling and Packaging of Substances and Mixtures that incorporates the classification criteria and labelling rules agreed at the UN level (the so-called Globally HarmonisedHarmonized System of classificationClassification and labellingLabelling of Chemicals (GHS)).

On the other hand, the EU Member States, the European Commission and the European Chemical Agency are in the process of implementing the Regulationregulation adopted in 2006 for the Registration, Evaluation and Authorization of Chemicals (REACH) that replaces or complements the existing rules in this area. REACH required the pre-registration of chemical substances manufactured and imported into the EU by December 1, 2008, to qualify for full registration under a phase in during the period2010-2018. The European Commission notified that the European Chemical Agency received more than 3 million notifications related to chemical substances classification at the end of phase 1, in December 2010. This regulation requires the registration and identification of chemical substances manufactured or imported in EU Member States, and can result in restrictions on the sales or uses of such substances. GHS and REACH imposes substantial costswill require us to evaluate the hazards of our chemicals and products and may result in future changes to warning labels and material safety data sheets.

The Framework Directive on TOTAL’s operationsWaste Disposal is intended to ensure that waste is recovered or disposed of without endangering human health and without using processes or methods that could unduly harm the environment. Numerous related directives regulate specific categories of waste. In November 2008, the Framework Directive on Waste Disposal was partially modified by the Directive on Waste 2008/98, which features more precise definitions and stronger provisions. Transposition of this Directive in France occurred with the Ordinance of December 17, 2010.

A number of Maritime Safety Directives were passed in the European Union.wake of the Erika and Prestige spills, and implemented in France by Ordinance n° 2011-635 dated June 9, 2011. Those regulations, found in the three Maritime Safety Packages, require that tankers have double hulls and that ship owners acquire improved insurance coverage, mandate improvements to traffic monitoring, accident investigations and in-port vessel inspection (Port State Control: objective of 100% inspection in the EU), and further regulate organizations that inspect and confirm conformity to applicable regulations (Classification Societies). The last package will enter into force in 2012.

Numerous directives impose water quality standards based on the various uses of inland and coastal waters, including ground water, by setting limits on the discharges of many dangerous substances and by imposing information gathering and reporting requirements.

Adopted and effective since 2000, a comprehensive Water Framework Directive is progressively replacing numerous existing directives with a comprehensive set of requirements, including additional regulations obligating member countries to classify all water courses according to their biological, chemical and ecological quality, and to completely ban the discharges of approximately thirty toxic substances by 2017.

The law n° 2011-835 was adopted in France in July 2011 to prohibit the exploration and operation of shale gas by hydro-fracking technique and to repeal the exclusive research permits for projects using this technique. Consequently, the exclusive research permits issued to TOTAL at Montelimar (in the south of France) were repealed by the French Government. An administrative procedure is currently pending against this repeal.

In March 2004, the EU adopted a Directive on Environmental Liability (2004/35/EC). The Directive seeks to implement a strict liability approach for damage to water resources, soils and protected species and habitats by authorized industrial activities.

Directives implementing the Aarhus Convention of June 25, 1998, concerning public information rights and certain public participation rights in a variety of activities affecting the environment were adopted in January and May 2003, respectively. French regulations on public inquiry and impact assessment were adopted in 2011 and will enter into force on June 2012. These regulations aim to reinforce public participation and information rights concerning projects that could affect the environment.

In November 2008, the EU adopted a directive on the protection of the environment through criminal law that obliges EU Member States to provide for criminal penalties in respect of serious infringements of EC law (Directive 2008/99/EC). This directive was transposed in France in January 2012.

With respect to the climate change issue, numerous initiatives in the EU are pending or currently being revised, including:

• In March 2004, the European Union adopted a Directive on Environmental Liability. This Directive was transposed into EU Member State national legislations in 2007 and 2008, and in France in August 2008. The Directive seeks to implement a strict liability approach for damage to water resources, soils and protected species and habitats by authorized industrial activities.
• Directives implementing the Aarhus Convention concerning public information rights and certain public participation rights in a variety of activities affecting the environment were adopted in January and May 2003, respectively, and implemented in most national EU legislations.
• In November 2008, the European Union adopted a Directive on the protection of the environment through criminal law that obliges EU Member States to provide for criminal penalties in respect of serious infringements of EC law. EU Member States were to have transposed this Directive into their national legislation by December 26, 2010.
• TOTAL’s facilities in the EU are also subject to extensive workplace safety regulations initiated by the European Community and defined and promulgated by each Member State.
• With respect to the climate change issue, numerous initiatives in the European Union are pending or currently being revised, including:
 –

A 2003 Directive implementing the Kyoto Protocol within the European UnionEU established an emissions trading

scheme effective as of January 2005 for greenhouse gas (“GHG”) emissions quotas. On the basis of this directive, carbon dioxide emissions permits are then delivered. This trading scheme required Member States to prepare, under the supervision of the EU Commission, national allocation plans identifying a global amount of quotas to be shared and delivered for free by the governments to each industrial installation offor specific sectors, in particular the energy intensive installations that have to surrender quotas inwith respect to their annually verified carbon dioxide emissions. In accordance with the 2009 revision of the aforementioned directive, a progressive quota auctioning mechanism is scheduled to be set up in 2013 together with transitional Community-wide rules for harmonized free allocation up to a level based on benchmarks for sectors exposed to international carbon leakage. These changes will end the free allocations for electricity production and have an expanded scope covering additional commercial sectors and emissions. When this system will beis established, TOTAL’s industrial facilities may incur capital and operating costs to comply with such legislation including the partial acquisition of emissions allowances.

 –At the UN summit in Copenhagen in December 2009, world leaders recognized the need to limit global temperature increases to two degrees Celsius above pre-industrial levels, but did not approve an international agreement on climate change, which could result in a future stringent reduction of GHG emissions in the European Union.
 – 

The first period of the Kyoto Protocol is reaching an end in 2012. Although debates occurred at the 2009 UN Summit in Copenhagen, no decision as to thefollow-up was made. The Cancun UN conference at the end of 2010 reaffirmed the principles of Kyoto, but did not result in the adoption of any new legally binding agreement with respect to the continuation of the Kyoto Protocol. The nextDurban conference is expectedof November 2011 resulted in the Kyoto principles being extended post-2012 to permit the possible adoption by 2015 of another legally-binding international agreement to be held in Durban in late 2011.signed by the negotiating countries as well as by the United States together with China, India and certain other developing nations.


53

 –

The Climate Action and Renewable Energy Package imposes an EU objective referred to as “3 x 20”, which commits EU Member States by 2020 to reduce overall GHG emissions to at least 20% below 1990 levels, by 2020, requires Member States to improve energy efficiency by 20% and to increase renewable energy usage. These latterusage by 20%. In 2011, the European Commission published its “Roadmap for moving to a competitive low-carbon economy in 2050” to look beyond these 2020 objectives and to set out a plan to meet the long-term target of reducing domestic emissions by 80 to 95% by mid-century. The sectors most responsible for emissions in the

EU (i.e., power generation, industry, transport, buildings and construction, as well as agriculture) are charged with making the transition to a low-carbon economy over the coming decades and these issues are expected to be further addressed in 2011 in a way likely tocould affect TOTAL’s operations in the future.

 –

The 2009 Directive on Carbon Capture and Storage (CCS) was transposed in France in 2010. This legal framework forms the basis for developing CCS projects that are expected to serve as one of the most valuable solutions for the reduction of carbon dioxide emissions. Such regulations will have technical and financial impacts, including on TOTAL’s projects.

– In France, the provisions of the 2010 financial bill establishing a carbon tax was deemed unconstitutional and referred back to the French government, which did not make a new proposal. The provisions of the 2011 financial bill made subject to payment a minor part of GHG emission allowance delivery for 2011 and 2012, which was initially allocated for free in the national plan of2008-2012.

With respect to biodiversity issues, this subject is increasingly taken into consideration. Following the 2010 Nagoya summit, the UN’s 65th General Assembly decided to form the IPBES (Intergovernmental Science-Policy Platform on Biodiversity) to share knowledge and future policies on biodiversity and ecosystem services.

The next UN Conference on Sustainable Development (“Rio +20”) is expected to be held in Rio in June 2012 and will focus on two themes: a green economy in the context of sustainable development and poverty eradication, and the institutional framework for sustainable development.

In the United States, where TOTAL’s operations are less extensive than in Europe, TOTAL is also subject to significant HSE regulations at both the state and federal levels. Of particular relevance to TOTAL’s lines of business are:

The Clean Air Act and its regulations, which require, among other measures: stricter phased-in fuel specifications and sulfur reductions; enhanced emissions controls and monitoring at major sources of volatile organic compounds, nitrogen oxides, and other designated hazardous and non-hazardous air pollutants; GHG regulation; stringent pollutant emission limits; construction and operating permits for major air emission sources at chemical plants, refineries, marine and distribution terminals and other facilities; and risk management plans for the handling and storage of hazardous substances.

The Clean Water Act, which regulates the discharge of wastewater and other pollutants from both onshore and offshore operations and, among other measures, requires industrial facilities to obtain permits for most wastewater and surface water discharges, install control equipment and treatment systems, implement operational controls, and preventative measures, including spill prevention and control plans and practices to control storm water runoff.

 

The Resource Conservation and Recovery Act, which regulates the generation, storage, handling, treatment, transportation and disposal of hazardous waste and imposes corrective action requirements on regulated facilities requiring investigation and remediation of potentially contaminated areas at these facilities.

•
• The Clean Air Act and its regulations, which require, among other measures: stricter phased-in fuel specifications and sulphur reductions; enhanced emissions controls and monitoring at major sources of volatile organic compounds, nitrogen oxides, and other designated hazardous and non-hazardous air pollutants; GHG regulation; stringent pollutant emission limits; construction and operating permits for major air emission sources at chemical plants, refineries, marine and distribution terminals and other facilities; and risk management plans for the handling and storage of hazardous substances.
 
• The Clean Water Act, which regulates the discharge of wastewater and other pollutants from both onshore and offshore operations and, among other measures, requires industrial facilities to obtain permits for most wastewater and surface water discharges, install control equipment and treatment systems, implement operational controls, and preventative measures, including spill prevention and control plans and practices to control storm water runoff.
• The Resource Conservation and Recovery Act (RCRA), which regulates the generation, storage, handling, treatment, transportation and disposal of hazardous waste and imposes corrective action requirements on regulated facilities requiring investigation and remediation of potentially contaminated areas at these facilities.
• 

The Comprehensive Environmental Response, Compensation, and Liability Act (also known as CERCLA or Superfund), under which waste generators, former and current site owners and operators, and certain other parties can be held jointly and severally liable for the entire cost of remediating active, abandoned or non-operating sites contaminated by releases of hazardous substances regardless of fault or the amount or share of hazardous substances sent by a party to a site. The U.S. Environmental Protection Agency (“EPA”) has authority under Superfund to order responsible parties to clean up contaminated sites and may seek recovery of the government’s response costs from responsible parties. States have similar legal authority to compel site investigations and cleanups and to recover costs from responsible parties. The U.S. government and states may also sue responsible parties under CERCLA for injuriesdamage to natural resources (e.g., rivers and wetlands) arising from contamination.

National and international maritime oil spill laws, regulations and conventions, including the Oil Pollution Act of 1990, impose significant oil spill prevention requirements, spill response planning and training obligations, ship design requirements (including phased in double hull requirements for tankers), operational restrictions, spill liability for tankers and barges transporting oil, offshore oil platform facilities and onshore terminals and establishes an oil liability spill fund paid for by taxes on imported and domestic oil.

In the wake of the Deepwater Horizon accident, the Bureau of Ocean Energy Management, Regulation and Enforcement was replaced by the Bureau of Ocean Energy Management, which is responsible for managing development of offshore resources, and the Bureau of Safety and Environmental Enforcement (“BSEE”), which is responsible for safety and environmental oversight of offshore oil and gas operations. The BSEE has implemented more stringent permitting requirements and oversight of offshore drilling. Among other changes, well design, casing and cementing standards have been upgraded and compliance must be certified by a professional engineer. In addition, plans must describe containment resources available in case of an underwater blowout

 
• National

and international maritime oil spill laws, regulationsworst case discharge, and conventions, including the Oil Pollution Act of 1990, which imposes significant oil spill prevention requirements, spill response planning obligations, ship design requirements (including phased in double hull requirements for tankers), operational restrictions, spill liability for tankers and barges transporting oil, offshore oil platform facilities and onshore terminals and sets up an oil liability spill fund paid for by taxes on imported and domestic oil.

• Although no substantive legislation has yet been passed following the April 2010 Deep Water Horizon accidentoperators in the Gulf of Mexico many legislative proposals have been proposedare required to develop and more will likely follow. New regulations have been issued regarding technicalimplement a Safety and safety issues. Amendments related to


54Environmental Management Systems program.

liability under OPA 90 and the Clean Water Act also may be forthcoming.
Similar initiatives are expected in Europe. The European Commission is considering amendments to several directives, including to the Environmental Impact Assessment Directive, Environmental Liability Directive or Seveso Directive.

Other significant U.S. environmental legislation includes the Toxic Substances Control Act, which regulates the development, testing, import, export and introduction of new chemical products into commerce, and the Emergency Planning and CommunityRight-to-Know Act, which requires emergency planning and spill notification as well as public disclosure of chemical usage and emissions.

TOTAL

TOTAL’s facilities in the United States are also subject to extensive workplace safety regulations promulgated by OSHA.the Occupational Safety and Health Administration (“OSHA”). Most notable among OSHA regulations is the Process Safety Management of Highly Hazardous Chemicals, (PSM), a comprehensive regulatory program that requires major industrial sources, including petroleum refineries and chemical manufacturing facilities, to undertake significant hazard assessments during the design of new industrial processes and during modifications to existing processes, as well as a comprehensive and continual monitoring and management process for these chemicals.

In 2009, the EPA issued a finding that

The EPA’s regulation of GHG emissions endanger public health and the environment. This endangerment finding allows the EPA to regulate these emissionsfrom industrial sources under the Clean Air Act. Based on its endangerment finding, the EPA issued final rules in 2010 that apply the federal Clean Air Act’s Prevention of Significant Deterioration and Title V operating permit programs to stationary sources of GHGs. GHG permitting requirements apply to certain stationary sources in two steps beginningformally commenced on January 2, 2011, with2011. The authority to regulate GHG emissions under the largest industrial facilities firstClean Air Act is the culmination of several EPA rulemakings promulgated in 2009 and 2010 as a result of the 2007 U.S. Supreme Court decision inMassachusetts v. EPAconfirming the authority of EPA to become subject to permitting.regulate GHG emissions under the Clean Air Act. Each of these rulemakings is under legal challenge. The EPA intends tomay issue future rulemakings, beyond 2011,regulations requiring additional industry sectors to report GHG emissions and has indicated its intention to phase in GHG permitting offor smaller industrial sources. Various state and regional requirements also govern GHG emissions and additional measures can be expected in the future. Depending upon the outcome of legal challenges and on the content of future GHG regulations, by the EPA, TOTAL subsidiaries in the United States may incur additional capital and operating costs to comply with control technologyand/or facility upgrade requirements for reducing GHG emissions.

In response to public concerns over the effects of climate change, a number of legislative initiatives have also been proposed in the U.S. Congress, seeking to limit GHG emissions from industrial sources either through“cap-and-trade” market mechanisms or through other means. To date these efforts have not been successful. Should a GHGcap-and-trade system, carbon tax or other GHG regulation become law in the future, industrial facilities owned by

TOTAL subsidiarieshas investments in the United States may incur additional capitalin unconventional gas plays that utilize hydraulic fracturing, or “fracking,” a process that involves pumping a mixture of water, sand and chemicals underground at high pressure to fracture rock formations and release natural gas and

liquids that are otherwise inaccessible. Currently, regulation of these practices occurs at the state level, although there are a number of federal legislative proposals that could alter the regulatory framework. In addition, various state initiatives could result in stricter regulation of fracking. Increased regulation could affect TOTAL’s operating costs, to comply with such legislation including the acquisition of emissions allowances to continue operating.

profitability and future investments in these unconventional gas plays.

Proceedings instituted by governmental authorities are pending or known to be contemplated against certainU.S.-based subsidiaries of TOTAL under applicable environmental laws that could result in monetary sanctions in excess of $100,000. No individual proceeding is, nor are the proceedings as a whole, expected to have a material adverse effect on TOTAL’s consolidated financial position or profitability.

Risk evaluation

Prior to developing their activitiesManagement and ongoing during their operation, business units evaluate the relatedmonitoring of industrial and environmental risks taking into account

TOTAL policies regarding health, safety and the environment

TOTAL has developed a “Health Safety Environment Quality Charter” which sets out the basic principles applicable within the Group regarding the protection of people, property and the environment. This charter is rolled out at several levels within the Group by means of management systems.

Along these lines, TOTAL has developed efficient organizations as well as safety, environmental and quality management systems, which it makes every effort to have certified or assessed (standards such as the International Safety Rating System, ISO 14001 and ISO 9001). For example, in 2010, TOTAL received ISO 9001 certification for “development and management of the database of technical businesses” in exploration and production.

Assessment

As part of its policy, TOTAL systematically assesses risks and impacts in the areas of industrial safety (particularly technological risks), the environment and the protection of workers and local residents:

prior to approving new projects, investments, acquisitions and disposals;

periodically during operations (safety studies, environmental impact studies, health impact studies and risk prevention plan in France as part of the 2003 legislation on the prevention of major technological risks);

prior to introducing new substances to the market (toxicological and ecotoxicological studies and life cycle analyses); and

based on the regulatory requirements inof the countries where these activities are located as well as recognizedcarried out and generally accepted good engineering practices.

On sites with significant technological risks, Process Hazard Analyses are performed on all new processes. These analyses are generally re-evaluated every five years and updated when significant changes are proposed on existing installations. To standardize and strengthen risk management, TOTAL has developed a shared risk management approach, which is being implemented progressively throughout the sites it operates. On the basis of these analyses, relevant sites have drafted safety management plans and emergency plans in the event of accidents. For example, regarding its petrochemical business in the United States, TOTAL is implementing a Process Safety Management Improvement Plan (PSMIP).
In France, all the sites that meet the criteria of the European Union Seveso II directive are contributing to drafting Risk Management Plans pursuant to the French law of July 30, 2003. Each of these plans will introduce various urban planning measures to reduce risks to urban environments surrounding industrial sites that are considered as high risk according to the criteria of the Seveso II directive. French administrative authorities are preparing such plans while taking into account input from site operators and neighboring residents.
Following the blow-out on the Macondo well in the Gulf of Mexico, TOTAL created three Task Forces in order to analyze risks and make recommendations. In Exploration & Production, Task Force No. 1 is responsiblestandards.


55

for reviewing the safety aspects of deep offshore drilling operations (architecture of wells, design of blow-out preventers, training of personnel based on lessons learned from the serious accidents that occurred recently in the industry). The two other Task Forces are described in the “Risk management” section hereafter.
Similarly, environmental impact studies are carried out prior to any industrial development through an initial site analysis, taking into account any special sensitivity as well as developing plans to prevent and reduce the impact of accidents. These studies also take into account the health impact of such operations on the local population. In countries where prior administrative authorization and supervision is required, projects are not undertaken without the authorization of the relevant authorities and are developed according to the studies provided to the authorities.
For new substances, risk characterizations and evaluations are

In particular, TOTAL has developed common methodologies for analyzing technological risks which must gradually be applied to all activities carried out. Furthermore, life cycle analyses for related risks are performed on certain products to study all the stages of a product’s life cycle from its conception until the end of its useful life.

TOTAL’s entities actively monitor regulatory developments to comply with local and international rules and standards for the evaluation and management of industrial and environmental risks. In case of operations being stopped,out by the Group’s environmental contingencies and asset retirement obligations are addressed in “Asset retirement obligation” and “Provisions for environmental contingencies” in Note 19 to the Consolidated Financial Statements. Future expenses related to asset retirement obligations are accounted for in accordance with the principles described in paragraph Q of Note 1 to the Consolidated Financial Statements.
companies.

Risk managementManagement

Risk

TOTAL develops risk management measures based on risk and impact assessments. These measures involve thefacility and structure design, of equipment and structures to be built, the reinforcement of safety devices and the protection against the consequencesremedies of environmental events.

degradations.

In addition to developing organizations and management systems as described above, TOTAL seeksstrives to minimize industrial and environmental risks that are inherent toin its operations and, to this end, has developed efficient organizations as well as quality, safety and environmental management systems. The Group is also targeting certification for or assessment of its management systems (including International Safety Rating System, ISO 14001, European Management and Audit Scheme) and conducts detailedby conducting thorough inspections and audits, trains appropriatetraining personnel heightensand raising awareness ofamong all the partiesthose involved, and implementsimplementing an active investment policy.

More specifically, following up on

In addition, performance indicators (in the Group’s2002-2005areas of HSE) and2006-2009 plans, an action plan was defined by the Group for the2010-2013 period that focuses on two initiatives for improvement: reducing the frequency risk monitoring have been put in place, objectives have been set and severity of work-related accidents, and strengthening the management of technological risks. The results related to reducingon-the-job accidents are in line with goals, with a significant decrease in the rate of accidents (with or without time-loss) per million hours worked by nearly 80% between the end of 2001 and the end of 2010. In terms of technological risks, this plan’s initiatives include specific organization and behavioral plans as well as plans to minimize risks at the source and to increase safety for people and equipment.

Several environmental action plans have been implemented to achieve these objectives.

Although the emphasis is on preventing risks, TOTAL takes regular steps to prepare for different activities of the Group. These plans are designed to improve environmental performance, particularly regarding the use of natural resources, air and water pollution, waste production and treatment, and pollution and site decontamination. They also include quantified objectives to reduce, most notably, greenhouse gas emissions, water pollution as well as sulphur dioxide emissions and to improve energy efficiency.

As part of its efforts to combat climate change and reduce greenhouse gas emissions, the Group committed to reducing gas flaring at its Exploration & Production sites. The Group intends to reduce gas flared by 50% by 2014 compared to 2005.
By the end of 2012, the Group intends to obtain ISO 14001 certification for all of its sites that it considers particularly important to the environment according to criteria updated in 2009. At year-end 2010, 92% of such sites are ISO 14001-certified. A total of more than 280 of the Group’s sites worldwide are certified. These activities are monitored through periodic and coordinated reporting by the Group’s entities.
In addition to Task Force No. 1 created following the blow-outcrisis management based on the Macondo well in the Gulf of Mexico that is described above,risk scenarios identified.

In particular, TOTAL has set two other internal Task Forces:

• Task Force No. 2, coordinated with the Global Industry Response Group (GIRG) created by the OGP (International Association of Oil and Gas Producers) is responsible for studyingdeep-offshore oil capture and containment operations in case a pollution event occurs in deep waters. The Group is also a member of the Coordination Group and other GIRG working


56

groups that pay special attention to prevention and procedures for and time of response.
• Task Force No. 3 relates to plans to fight accidental spills in order to strengthen the Group’s ability to respond to a major accidental pollution, such as a blow out or a total loss of containment from an FPSO (Floating Production, Storage and Offloading facility). Although the current response to accidental oil spills implemented in the industry proves to be efficient globally, TOTAL pays special attention to technical changes including those related tosub-sea dispersants that were recently used in the Gulf of Mexico. The Group is jointly reviewing these issues with the OGP and the IPIECA (Global oil and gas association for environmental and social issues).
TOTAL has responsedeveloped emergency plans and procedures in place to deal with the environmental impact that would occur in the event ofrespond to an oil spill or leak from its offshore operations.leak. These response plans and procedures are specific to each of TOTAL’s affiliates,TOTAL affiliate and adapted to its organization, activities and environment, and are consistent with a global plan at the Group level. In order to minimize the risk and extent of environmental impact in the event of an oil spill or leak, TOTAL periodically reviews and regularly tests these emergency plans and procedures.
Each affiliate or operational site of TOTAL is required to have in place an emergency response plan taking into account its specific activities (e.g., drilling, production, transport) and risks. Moreover, whenever an affiliate’s activities expose it to the risk of an oil spill, it has one or more oil spill contingency plan(s) and blowout contingency plan(s) to address any uncontrolled release.
These specific response plans take into account the organization adopted at all levels (site, affiliate, division and Group level) for managing any emergency or crisis situation.plan. They are generally designed to cover, among others, the following matters:
• listing all pertinent data and characteristics that may be useful in appraising the context (local, geographical, environmental, geological, etc., as the case may be);
• conducting risk analysis to identify the parameters, methods and tools necessary for evaluating the situation and its probable development, together with a definition of the appropriate measures or solutions;
• detailing the actions to be taken in response to the relevant situation(s), emphasizing the initial emergency actions;
• stipulating the interfaces and liaisons required for the specific situation(s) under consideration; and
• identifying the emergency/backup means and resources potentially necessary, and how they are to be mobilized.
reviewed regularly and tested through exercises.

At the Group level, TOTAL has set up the alert scheme PARAPOL (Plan to mobilizeMobilize Resources Against Pollution) to facilitate crisis management and assist withprovide assistance by mobilizing resources in case of pollution. PARAPOL is made available to TOTAL’s affiliates and its main aim is to facilitate access to both internal and external response resources in the event of a pollution of marine, coastal or inland waters, without geographical restriction. The PARAPOL Procedure describes the organization of the emergencyprocedure is made available to TOTAL affiliates and its main goal is to facilitate access to internal experts and physical response team’s efforts, which is led by a PARAPOL Coordinator who manages or monitors the incident in order to access additional resources, both in terms of equipment and response experts. PARAPOL allows the mobilization of Group experts previously cleared to provide specific assistance to emergency response teams.

resources.

Furthermore, TOTAL and its affiliates are currently registered withmembers of certain external oil spill cooperatives that are able to provide expertise, resources and equipment in all

geographic areas where TOTAL conducts its activities,has operations, including in particular:particular Oil Spill Response, CEDRE (Center of documentation, research and experimentation on accidental water pollution) and Clean Caribbean and Americas.

Following the blow-out on the Macondo well in the Gulf of Mexico in 2010 (concerning which the Group was not involved), TOTAL created three Task Forces in order to analyze risks and provide recommendations.

In Exploration & Production, Task Force No. 1 reviewed the safety aspects of deep offshore drilling operations (wells architecture, design of blow-out preventers, training of personnel based on lessons learned from the serious accidents that occurred recently in the industry). Its efforts have led to the implementation of even more stringent controls and audits on drilling operations.

Task Force No. 2, coordinated with the Global Industry Response Group (GIRG) created by the OGP (International Association of Oil and Gas Producers), is studying deep offshore oil capture and containment operations in case of a pollution event in deep waters. In the short term, capture devices will be available in several regions of the world where TOTAL has a strong presence in exploration-production (North Sea, Gulf of Guinea).

Task Force No. 3 related to plans to fight accidental spills in order to strengthen the Group’s ability to respond to a major accidental pollution, such as a blow out or a total loss of containment from an FPSO (Floating Production, Storage and Offloading facility). This initiative has led, in particular, to a sharp increase in the volume of dispersants available within the Group.

The Group believes that it is impossible to guarantee that the contingencies or liabilities related to the above mentioned health, safety and environmental concerns will not have a material impact on its business, assets and liabilities, consolidated financial situation, cash flow or income in the future.

Asbestos
Like many other industrial groups, TOTAL is affected by reports of occupational diseases caused by asbestos exposure. The circumstances described in these reports generally concern activities prior to the beginning of the 1980s, long before the adoption of more comprehensive bans on the new installation of asbestos-containing products in most of the countries where the Group operates (January 1, 1997, in France). The Group’s various businesses are not particularly likely to lead to significant exposure to asbestos-related risks, since this material was generally not used in manufacturing processes, except in limited cases. The main potential sources of exposure are related to the use of certain insulating components in industrial equipment. These components are being gradually eliminated from the Group’s equipment through asbestos-elimination plans


57

that have been underway for several years. However, considering the long period of time that may elapse before the harmful results of exposure to asbestos arise (up to 40 years), TOTAL anticipates that other reports may be filed in the years to come. Asbestos-related issues have been subject to close monitoring in all the Group’s business units. As of December 31, 2010, the Group estimates that the ultimate cost of all asbestos-related claims paid or pending is not likely to have a material effect on the financial situation of the Group.
Oil and gas exploration and production operations

Oil and gas exploration and production require high levels of investment and are associated with particular risks and opportunities. These activities are subject to risks related specifically to the difficulties of exploring underground, to the characteristics of hydrocarbons and to the physical characteristics of an oil or gas field. Of risks related to oil and gas exploration, geologic risks are the most important. For example, exploratory wells may not result in the discovery of hydrocarbons, or may result in amounts that

would be insufficient to allow for economic development. Even if an economic analysis of estimated hydrocarbon reserves justifies the development of a discovery, the reserves can prove lower than the estimates during the production process, thus adversely affecting the economic development.

Almost all the exploration and production operations of TOTAL are accompanied by a high level of risk of loss of the invested capital due to the risks related to economic or political factors detailed hereafter. It is impossible to guarantee that new resources of crude oil or of natural gas will be discovered in sufficient amounts to replace the reserves currently being developed, produced and sold to enable TOTAL to recover the capital it has invested.

The development of oil and gas fields, the construction of facilities and the drilling of production or injection wells require advanced technology in order to extract and exploit fossil fuels with complex properties over several decades. The deployment of this technology in such a difficult environment makes cost projections uncertain. TOTAL’s operations can be limited, delayed or cancelledcanceled as a result of numerousa number of factors, such asincluding administrative delays, particularly in termsparticular as part of the host states’ approval processes for development projects, shortages, late delivery of equipment and weather conditions, including the risk of hurricanes in the Gulf of Mexico. Some of these risks may also affect TOTAL’s projects and facilities further down the oil and gas chain.

Economic or political factors

The oil sector is subject to domestic regulations and the intervention of governments, directly or through state-owned companies, in such areas as:

the award of exploration and production interests;

• the award of exploration and production interests;
• authorizations by governments or by a state-controlled partner, especially for development projects, annual programs or the selection of contractors or suppliers;
• the imposition of specific drilling obligations;
• environmental protection controls;
• control over the development and abandonment of a field causing restrictions on production;
• calculating the costs that may be recovered from the relevant authority and what expenditures are deductible from taxes;
• cases of expropriation or reconsideration of contractual rights; and
• cases of nationalization.

authorizations by governments or by a state-controlled partner, in particular for development projects, annual programs or the selection of contractors or suppliers;

the imposition of specific drilling obligations;

environmental protection controls;

control over the development, exploitation and abandonment of a field causing restrictions on production;

calculating the costs that may be recovered from the relevant authority and what expenditures are deductible from taxes;

cases of expropriation, nationalization or reconsideration of contractual rights.

The oil industry is also subject to the payment of royalties and taxes, which may be high compared withhigher than those imposed with respectapplicable to other commercial activitiesbusinesses and which may be subject to material modificationschanges by the governments of certain countries.

 

Substantial portions of TOTAL’s oil and gas reserves are located in certain countries that may be considered as politically and economically unstable. TheseSuch oil and gas reserves and the related operations are subject to certain additional risks, including:

the implementation of production and export quotas;

• the establishment of production and export quotas;
• the compulsory renegotiation of contracts;
• the expropriation or nationalization of assets;
• risks relating to changes of local governments or resulting changes in business customs and practices;
• payment delays;
• currency exchange restrictions;
• depreciation of assets due to the devaluation of local currencies or other measures taken by governments that might have a significant impact on the value of activities; and
• losses and decreased activity due to armed conflicts, civil unrest or the actions of terrorist groups.

the compulsory renegotiation of contracts;

the expropriation or nationalization of assets;

risks related to changes of local governments or the resulting changes in business customs and practices;

payment delays;

currency exchange restrictions;

depreciation of assets due to the devaluation of local currencies or other measures taken by governments that might have a significant impact on the value of activities; and

losses and decreased activity due to armed conflicts, civil unrest, the actions of terrorist groups or sanctions that target activities or parties of certain countries.

TOTAL, like other major international oil companies, has a geographically diverse portfolio of reserves and operational sites, which allows it to conduct its business and financial affairs so as to reduce its exposure to such political and economic risks. However, there can be no assurance that such events will not adversely affect the Group.


58

Business Activities in Cuba, Iran, Sudan and Syria
The U.S. Department of State has identified Cuba, Iran, Sudan and Syria as state sponsors of terrorism.

Provided in this section is certain information relating to TOTAL’s activities in these jurisdictions.

Cuba, Iran, Sudan and Syria.

For more information on U.S. and other legalEU restrictions relevant to our activities in these jurisdictions, see “Item 3. Key Information — Risk Factors — We have activities in certain countries which are subject to U.S. and EU sanctions and our activities in Iran could lead to sanctions under relevant U.S. and EU legislation”Factors”.

Cuba

In 2010, TOTAL2011, TOTAL’s Refining & Marketing division had limited marketing activities for the sale of specialty products to non-state entities in Cuba and paid taxes on such activities. In addition, TOTAL’s Trading & Shipping division purchased hydrocarbons pursuant to spot contracts from a state-controlled entity for approximately €83€40 million.

Iran

TOTAL’s Exploration & Production division hashistorically had been active in Iran through buyback contracts. Under such contracts, the contractor is responsible for and finances development operations. Once development is completed, operations are handed over to the national oil company, which then operates the field. The contractor receives payments in cash or in kind to recover its expenditures as

well as a remuneration based on the field’s performance. Furthermore, upon the national oil company’s request, a technical services agreement may be implemented in conjunction with a buyback contract to provide qualified personnel and services until full repayment of all amounts due to the contractor.

To date,

TOTAL has entered into such buyback contracts between 1995 and 1999 with respect to the development of four fields: Sirri, South Pars 2 & 3, Balal and Dorood. For all of these contracts, development operations have been completed and TOTAL retains no operational responsibilities. A technical services agreement for the Dorood field expired in December 2010. As TOTAL is no longer involved in the operation of these fields, TOTAL has no information on the production from these fields. Some payments are yet to be reimbursed to TOTAL with respect to South Pars 2 & 3, Balal and Dorood. In 2010, TOTAL’sSince 2011, TOTAL has no production in Iran corresponding to such payments in kind, wascompared to 2 kboe/d.d in 2010 and 8 kboe/d in 2009. No royalties or fees are paid by the Group in connection with these buyback and service contracts. In 2010,2011, TOTAL made non-material payments to the Iranian administration with respect to certain taxes and social security.

With respect to TOTAL’s Refining & Marketing division’s 2011 activities in Iran, Beh Total, a company held 50/50 by Behran Oil and Total Outre-Mer, a subsidiary of the Group, producesproduced and marketsmarketed small quantities of lubricants (16,000(20,000 tons) for sale to domestic consumers in Iran. In 2010,2011, revenue generated from Beh Total’s activities was €34.9€43.5 million and cash flow was €5.9€4.6 million. Beh Total paid €800,000approximately€1 million in taxes. TOTAL does not own or operate any refineries or chemicals plants in Iran. In 2010,2011, Beh Total paid €5.6€5.6 million of dividends for fiscal year 20092010 (share of TOTAL: €2.8€2.3 million).

In 2010,2011, TOTAL’s Trading & Shipping division purchased in Iran pursuant to a mix of spot and term contracts approximately forty-fiveforty-nine million barrels of hydrocarbons from state-controlled entities for approximately €2.5€3.7 billion.

Prior to January 23, 2012, TOTAL’s Trading & Shipping division ceased its purchase of Iranian hydrocarbons.

Sudan

Since the independence of the Republic of South Sudan on July 9, 2011, TOTAL is not present in Sudan. TOTAL holds an interest in Block B in Southernwhat was, prior to July 9, 2011, the southern region of Sudan.

TOTAL disbursed in Sudan through a 1980 Exploration and Production Sharing Agreement (EPSA). Operations were voluntarily suspended in 1985 because of escalating security concerns, but the company maintained its exploration rights. The Group’s initial interest was 32.5%. Despite the withdrawal of a partner, TOTAL does not intend to increase its interest above its initial level. Consequently, the Group has entered into negotiations with new partners to transfer the former partner’s interests for which the Group financially carries a share.

The EPSA was revised, effectivebetween January 1, 2005, to provide that the parties (the Government of Sudan2011 and the consortium partners) would mutually agree upon a resumption date when the petroleum operations could be safely undertaken in the contract area. Such resumption date would mark the starting point of the Group’s work obligations as foreseen in the contract. A joint decision on the resumption date has not yet been made.
Pursuant to the EPSA in 2010, TOTAL, on behalf of the consortium, disbursed nearly $2.2July 8, 2011, approximately $0.7 million as scholarships and social development contributions, andas well as contributions to the construction of social infrastructure,

schools and water wells along with non-governmental organizations and other stakeholders involved in Southernsouthern Sudan.

As of March 23, 2011, TOTAL remains inactive in Sudan. Considering the current situation in Sudan, TOTAL will continue to monitor political changes and discuss with all stakeholders that are present

For more information on TOTAL’s activities in the country. If TOTAL were to resume its activities in SouthernRepublic of South Sudan, it would make sure to do so in strict compliance with applicable national, European and international laws and regulations, as well as with the Group’s Codesee “Item 4. Business Overview — Republic of Conduct and Ethics


59

South Sudan”.

Syria

Charter. Regarding humanitarian activities, TOTAL has entered into agreements with NGOs and provides financial and technical support for educational, health and infrastructure projects in Southern Sudan.
Syria
In 2010,2011, TOTAL had two contracts relating to oil and gas Explorationexploration & Productionproduction activities: a Production Sharing Agreement entered into in 1988 (“PSA 1988”) for an initial period of twenty years and renewed at the end of 2008 for an additional10-year period, and the Tabiyeh Gas Project risked Service Contract (the “Tabiyeh contract”) effective from the end of October 2009. TOTAL owns 100% of the rights and obligations under PSA 1988, and is operatingoperated until early December 2011 on various oil fields in the Deir Ez Zor area through a dedicated non-profit operating company owned equally by the Group and the state-owned General Petroleum Corporation (“GPC”) (the successor to the Syrian Petroleum Company (“SPC”)Company).

The main terms of PSA 1988 are similar to those normally used in the oil and gas industry. The Group’s revenues derived from PSA 1988 are made up of a combination of “cost oil” and “profit oil”. “Cost oil” represents the reimbursement of operating and capital expenditures and is accounted for in accordance with normal industry practices. The Group’s share of “profit oil” depends on the total annual production level. TOTAL receives its revenues in cash payments made by SPC.GPC. TOTAL pays to the state-owned Syrian company SCOT a transportation fee equal to $2/b for the oil produced in the area, as well as non-material payments to the Syrian government related to PSA 1988 for such items as withholding taxes and Syrian social security.

The Tabiyeh contract, signed with GPC, may be considered as an addition to PSA 1988 as production, costs and revenues for the oil and part of the condensates coming from the Tabiyeh field are governed by the contractual terms of PSA 1988. This project is designed to enhance liquids and gas output from the Tabiyeh field through the drilling of “commingled” wells and through process modifications in Deir Ez Zor Gas Plant operated by the Syrian Gas Company. Until early December 2011, TOTAL is financingfinanced and implementingimplemented the Tabiyeh Gas Project and operatesoperated the Tabiyeh field.

In 2010,2011, technical production for PSA 1988 and the Tabiyeh contract taken together amounted to 7463 kboe/d, of which 3953 kboe/d were accounted for as the Group’s

share of production. The amount identified as technical production under the agreements, minus the amount accounted for as the Group’s share of production, does not constitute the total economic benefit accruing to Syria under the terms of the agreements since Syria retains a margin on a portion of the Group’s production and receives certain production taxes.

In 2010, throughaddition, TOTAL and GPC entered into a Cooperation Framework Agreement in 2009, which provides for the co-development of oil projects in Syria.

Since early December 2011, TOTAL has ceased its subsidiary Total Middle East basedactivities that contribute to oil and gas production in Dubai, TOTAL sold 6,000 tons of lubricants in Syria via a distributor.

Syria.

In 2010,2011, TOTAL’s Trading & Shipping division purchased in Syria pursuant to a mix of spot and term contracts nearly teneleven million barrels of hydrocarbons from state-controlled entities for approximately €580€824 million.

Since early September 2011, the Group has ceased to purchase hydrocarbons from Syria.

Competition

TOTAL is subject to competition from other oil companies in the acquisition of assets and licenses for the exploration and production of oil and natural gas as well as for the sale of manufactured products based on crude and refined oil. TOTAL’s competitors are comprised of national oil companies and international oil companies.

In this regard, the major international oil companies in competition with TOTAL are ExxonMobil, Royal Dutch Shell, Chevron and BP. As of December 31, 2010,2011, TOTAL ranked fifth among these companies in terms of market capitalization.(1)

Insurance and risk management

Organization

TOTAL has its own insurance and reinsurance company, Omnium Insurance and Reinsurance Company (OIRC). OIRC is integrated intowith the Group’s insurance management and is used as a centralized global operations tool for covering the Group’s risks. It allows the Group to implement itsGroup’s worldwide insurance program to be implemented in compliance with the various regulatory environmentsspecific requirements of local regulations applicable in the countries where the Group operates.

Some countries may require the purchase of insurance from a local insurance company. If the local insurer accepts to cover the subsidiary of the Group in compliance with its worldwide insurance program, OIRC requests a retrocession of the covered risks from the local insurer. As

(1)Source: Reuters.

a result, OIRC negotiates reinsurance contracts with the subsidiaries’ local insurance companies, which transfer most of the risk to OIRC. When a local insurer covers the risks at a lower level than that defined by the Group, OIRC provides additional coverage so as to standardize coverage throughout the Group.

At the same time, OIRC negotiates a reinsurance program at the Group level with mutual insurance companies for the oil industry and commercial reinsurers. OIRC permits the Group to better manage price variations in the

(1)  Source: Reuters.


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insurance market by taking on a greater or lesser amount of risk corresponding to the price trends in the insurance market.

In 2010,2011, the net amount of risk retained by OIRC after reinsurance was a maximum of €50$75 million per third-party liability insurance claim and €50$75 million per property damageand/or business interruption insurance claim. Accordingly, in the event of any loss giving rise to an insurableaggregate insurance claim, the effect on OIRC would be limited to its maximum retention of €100$150 million per event.

Risk and insurance management policy

In this context, the Group risk and insurance management policy is to work with the relevant internal department of each subsidiary to:

define scenarios of major disaster risks (estimated maximum loss);

• define scenarios of major disaster risks (estimated maximum loss);
• assess the potential financial impact on the Group in case these catastrophic events should occur;
• help in implementing measures to limit the probability that a catastrophic event occurs and the extent of such events; and
• manage the level of risk from such events to be either covered internally by the Group or to be transferred to the insurance market.

assess the potential financial impact on the Group should a catastrophic event occur;

help to implement measures to limit the probability that a catastrophic event occurs and the financial consequences if such event should occur; and

manage the level of risk from such events to be either covered internally by the Group or transferred to the insurance market.

Insurance policy

The Group has worldwide third-party liability and property insurance coverage for all its subsidiaries. These programs are contracted with first-class insurers (or reinsurers and mutual insurance companies of the oil industry through OIRC).

The amounts insured depend on the financial risks defined in the disaster scenarios and the coverage terms offered by the market (available capacities and price conditions).

More specifically for:

Third-party liability insurance: since the maximum financial risk cannot be evaluated by a systematic approach, the amounts insured are based on market conditions and industry practice, in particular, the oil industry. In 2011, the Group’s third-party liability

• Third-party liability insurance: since the maximum financial risk cannot be evaluated by a systematic approach, the amounts insured are based on market conditions and industry practice, in particular, the oil industry. In 2010, the Group’s third-party liability

insurance for any liability (including potential accidental environmental liabilities) was capped at $850 million.

• Property damage and business interruption: the amounts insured vary by sector and by site and are based on the estimated cost of and reconstruction under maximum loss scenarios and on insurance market conditions. The Group subscribed for business interruption coverage in 2010 for its main refining and petrochemical sites.

Property damage and business interruption: the amounts insured vary by sector and by site and are based on the estimated cost of and reconstruction under maximum loss scenarios and on insurance market conditions. The Group subscribed for business interruption coverage in 2011 for its main refining and petrochemical sites.

For example, with respect to the highest estimated risks of the Group (floating production, storage and offloading units (FPSO) in Angola andfor the Group’s highest risks (platforms in the North Sea and main European refineries)refineries and petrochemical plants in Europe), in 2011 the Group’s share of coverage in 2010insurance limit was approximately $1.65 billion for the Downstream segment and approximately $1.5 billion.

billion dollars for the Upstream segment.

Deductibles for property damage and third-party liability fluctuate between €0.1€0.1 million and €10€10 million depending on the level of risk and liability, and are borne by the relevant subsidiary. For business interruption, coverage begins sixty days after the event giving rise to the interruption.

Other insurance contracts are bought by the Group in addition to property damage and third-party liability coverage, mainly for car fleets, credit insurance and employee benefits. These risks are entirely underwritten by outside insurance companies.

The above-described policy is given as an example of past practice over a certain period of time and cannot be considered as representative of future conditions. The Group’s insurance policy may be changed at any time depending on the market conditions, specific circumstances and on management’s assessment of the risks incurred and the adequacy of their coverage.

While TOTAL believes its insurance coverage is in line with industry practice and sufficient to cover normal risks in its operations, it is not insured against all possible risks. In the event of a major environmental disaster, for example, TOTAL’s liability may exceed the maximum coverage provided by its third-party liability insurance. The loss TOTAL could suffer in the event of such a disaster would depend on all the facts and circumstances and would be subject to a whole range of uncertainties, including legal uncertainty as to the scope of liability for consequential damages, which may include economic damage not directly connected to the disaster. The Group cannot guarantee that it will not suffer any uninsured loss and there can be no assurance,guarantee, particularly in the case of a major environmental disaster or industrial accident, that such loss would not have a material adverse effect on the Group.

 

Competition law

Competition laws apply to the Group’s companies in the vast majority of countries in which it does business. Violations of competition laws carry fines and expose the Group and its employees to criminal sanctions and civil suits. Furthermore, it is now common for persons or corporations allegedly injured by violations of competition laws to sue for damages.

The broad range of activities and countries in which the Group operates requires local analysis, by business segment, of the legal risks in terms of competition law. Some of the Group’s business segments have already been implementing competition law conformity plans for a long time. Moreover, a Group-wide policy designed to coordinate risk management measures and competition law conformity plans has been under development since the beginning of 2012.

Organizational Structure

TOTAL S.A. is the parent company of the TOTAL Group. As of December 31, 2010,2011, there were 687870 consolidated subsidiaries, of which 596783 were fully consolidated and 9187 were accounted for under the equity method. For a list of the principal subsidiaries of the Company, see Note 35 to the Consolidated Financial Statements.


61

Tender Offer by TOTAL S.A. for Outstanding Elf Aquitaine Shares
Pursuant to the public tender offer followed by a squeeze out announced on March 24, 2010, TOTAL S.A. now owns 100% of the securities issued by Elf Aquitaine.
The offer, which took place from April 16 to 29, 2010, at the price of €305 per share (including the remaining 2009 dividend), was intended for all of the Elf Aquitaine shares that were not held directly or indirectly by TOTAL S.A., representing 1,468,725 Elf Aquitaine shares (0.52% of the share capital and 0.27% of the company’s voting rights).
The squeeze out procedure was implemented on April 30, 2010 to acquire all the Elf Aquitaine shares targeted by the offer and which had not been tendered to the offer by the minority shareholders upon payment of a compensation per share set at the price of the offer (i.e., €305 per Elf Aquitaine share (including the remaining 2009 dividend)).
Elf Aquitaine shares were delisted from Euronext Paris on April 30, 2010 (AMF notice No. 210C0376).
Property, Plants and Equipment

TOTAL has freehold and leasehold interests in numerous countries throughout the world, none of which is material to TOTAL. See “— Business Overview — Upstream” for a description of TOTAL’s reserves and sources of crude oil and natural gas.

 

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

This section is the Company’s analysis of its financial performance and of significant trends that may affect its future performance. It should be read in conjunction with the Consolidated Financial Statements included elsewhere in this Annual Report. The Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB and IFRS as adopted by the European Union.

This section contains forward-looking statements which are subject to risks and uncertainties. For a list of important factors that could cause actual results to differ materially from those expressed in the forward-looking statements, see “Cautionary Statement Concerning Forward-Looking Statements” on page vi.

 

OVERVIEW

OVERVIEW

TOTAL’s results are affected by a variety of factors, including changes in crude oil and natural gas prices as well as refining and marketing margins, which are all generally expressed in dollars, and changes in exchange rates, particularly the value of the euro compared to the dollar. Higher crude oil and natural gas prices generally have a positive effect on the income of TOTAL, since its Upstream oil and gas business benefits from the resulting increase in revenues realized from production. Lower crude oil and natural gas prices generally have a corresponding negative effect. The effect of changes in crude oil prices on TOTAL’s Downstream activities depends upon the speed at which the prices of refined petroleum products adjust to reflect such changes. In the past several years, crude oil and natural gas prices have varied greatly. As TOTAL reports its results in euros, but conducts its operations mainly in dollars, the effect of an

increase in crude oil and natural gas prices is partly offset by the effect of the variation in exchange rates during periods of weakening of the dollar relative to the euro and strengthened during periods of strengthening of the dollar relative to the euro. TOTAL’s results are also significantly affected by the costs of its activities, in particular those related to exploration and production, and by the outcome of its strategic decisions with respect to cost reduction efforts. TOTAL’s results are also affected by general economic and political conditions and changes in governmental laws and regulations, as well as by the impact of decisions by OPEC on production levels. However, the Euro zone’s turbulences during the fiscal year 2011 did not affect the Group significantly. For more information, see “Item 3. Key Information — Risk Factors” and “Item 4. Information on the Company — Other Matters”.

 

In 2010,

The year 2011 witnessed a number of geopolitical events that put pressure on market supplies. Despite the market environment for the oil and gas industry was marked by the rebound in theeconomic slowdown, demand for oil gas and petroleum products drivencontinued to rise, fuelled by the global economic growth of emerging markets. Pressure on supply, plus rising demand, resulted in particulara sharp increase in emerging countries. Crude oilthe price of crude oil. The average price of Brent in 2011 was $111/b, compared with $80/b in 2010.

Gas spot prices increased in 2010continued to reach an average $80/b. Spot gas pricesrise in Europe and Asia also recovered. Followingin 2011, mainly due to increased demand on Asian markets. Spot prices for gas in the United States remained very low, due to the continued rise in production, driven by the development of non-conventional gases.

Despite the gradual adjustment of refining capacity, the overcapacity that has existed in the European refining market since 2009 recordcontinued into 2011, due to low levels, refiningdemand in Europe. Refining margins recovereddropped to an average of $17/t in 2011, compared with $27/t in Europe.2010(1). In the first half of 2011, the Chemicals segment enjoyed a globally favorable environment, which has deteriorated since then. In the second half of the year, the Base Chemicals and Specialty Chemicals divisions saw their margins shrink due to the drop in demand for polymers improved in all consuming areas and led to recovering petrochemical margins.


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caused by the economic slowdown.

In this context,environment, TOTAL’s 2010 net income (Group share) was €10,571 million,amounted to€12.3 billion, up 25%16% compared to €8,447€10.6 billion in 2010. This result essentially reflects a better Upstream environment, while the Downstream and Chemicals segments were faced with more difficult conditions than in 2010. The Upstream segment’s 2011 adjusted net operating income of€10.4 billion was up 21% compared with€8.6 billion in 2010 due to rising prices, but was also negatively impacted by the€-$ exchange rate. The Downstream segment’s adjusted net operating income dropped by 7% to€1.1 billion in 2011 compared to€1.2 billion in 2010. This result can be explained in particular by the impact of reduced refining margins and the sale of the Group’s stake in CEPSA, which were partially offset by an improvement in operational performance. The Chemicals segment’s adjusted net operating income dropped by 10% to€775 million in 2009,2011 from€857 million in 2010, due to the more difficult market environment at the end of the year and the asset sales in 2011 (resins, CEPSA).

The year 2011 saw numerous acquisitions and asset sales, reflecting the improved environmentGroup’s ambition to optimize its portfolio by creating value from certain mature assets and by developing its Upstream assets with high potential for growth.

TOTAL benefited from the soundrise in its operational cash flow and the€8 billion inflows from asset sales in 2011 to fund the increase in its investment program, while maintaining a dividend of€2.28 per share, which will be submitted for approval to the Shareholders’ meeting on May 11, 2012. The balance sheet remained strong, with a net-debt-to- equity ratio(2) of 23% at the end of 2011, compared with 22% at the end of 2010.

In terms of operations, 2011 saw the continued improvement of safety performance, with a 15% drop in the Group-wide TRIR(3) compared with 2010.

In the Upstream segment, three major discoveries in Azerbaijan, Bolivia and French Guiana were the first results of the Group,Group’s bolder exploration strategy. The year 2011 also witnessed the successful start-up of the Pazflor deep-offshore platform in particular with production growingAngolan waters, a project operated by TOTAL that illustrates the Group’s expertise in the development of major projects. Five new major projects, including the Ichthys LNG project in Australia (TOTAL, 24%), were also launched, in order to secure growth in the years to come.

Still in the Upstream segment, 2011 also saw the announcement of the acquisition of a 14.09% stake in the Russian company Novatek and an increase of the Group’s stakes in the Fort Hills project in Canada and in Tempa Rossa in Italy. At the end of 2011, the Group announced its entry into the Utica shale gas and condensates deposit in the United States. The Group continued to extend its oil and gas acreage by more than 4% comparedacquiring stakes in promising exploration areas, such as the pre-salt blocks in the Kwanza basin in Angola, and by acquiring stakes in deposits that have already been discovered, such as the Yamal LNG project in Russia.

At the same time, in 2011, TOTAL disposed of certain mature or non-strategic Upstream assets, including its exploration-production subsidiary in Cameroon and its stakes in pipelines in Colombia.

In the realm of new energies, TOTAL acquired in 2011 a 60% stake (now, 66%) in the U.S. company SunPower, to 2009.become one of the leaders in the solar industry. Although currently in the consolidation phase, this industry offers opportunities for strong growth.

In the Downstream and Chemicals segments, TOTAL deployed its strategy of increasing the competitive performance of its activities, scaling down its exposure to mature zones, mainly Europe, and bolstering its presence

 

(1)Based on TOTAL’s “European Refining Margin Indicator” (ERMI).
(2)Net-debt-to-equity ratio = net debt (i.e., the sum of current borrowings, other current financial liabilities and non-current financial debt, net of current financial assets, hedging instruments on non-current financial debt and cash and cash equivalents) divided by the sum of shareholders’ equity and non-controlling interests after expected dividends payable.
(3)Total Recordable Injury Rate.

Benefiting from a strong increase

in its cash flow from operations, TOTAL strengthened its balance sheet with a net debt to equity ratio of 22% at year-end 2010, down from 27% at year-end 2009 (forhigh-growth areas. Consequently, 2011 saw the computationstart-up of the net debt to equity ratio, see the Consolidated Financial Statements included elsewhere herein, Note 20) Financial debt and related financial instruments — C) Net-debt-to-equity ratio).

The year 2010 also marks a new dynamicdeep-conversion unit (or coker) in Port Arthur in the implementationUnited States, the continued modernization of TOTAL’s strategy, with a bolder exploration programthe refinery and profound changesthe petrochemicals platform in Normandy, France, and the construction of the Jubail refinery in Saudi Arabia. The Group also continued to scale down its refining capacity in Europe, by selling off its stake in the portfolioSpanish company CEPSA.

On the Marketing front, in each business segment. With a higher level of acquisitions and disposals,2011, the Group also showedcontinued its intentionoptimization drive by selling off its distribution activities in the United Kingdom and launching a program to optimize its portfolio of businesses.

In 2010, TOTAL reasserted the priorities of safety and the environment asmodernize part of its operations and investments throughout its business. For allservice station network in France with the Total access program. In the Specialty Chemicals division, the Group sold part of its projects conductedResins activity.

A restructuring of the Downstream and Chemicals sectors was announced in October 2011. The deployment of this project led to organizational changes on January 1, 2012, with the creation of:

a Refining & Chemicals segment, a large number of countries,industrial base that encompasses refining, petrochemicals, fertilizers and specialty chemicals operations. This segment also includes oil trading and shipping activities.

a Supply & Marketing segment, which is dedicated to worldwide supply and marketing activities in the Group put an emphasis on corporate social responsibility (CSR) challenges and the development of local industries.oil products field.

The process initiated in 2004 to increase R&D budgets continued with expenditures in 2011 of €715€776 million, up 10%9% compared to 2009,2010, with the aim of, in particular, the continued improvement of the Group’s technological expertise in the development of oil and gas resources and the development of solar, biomass, carbon capture and storage technologies in order to contribute to changes in the global energy mix.

In

Finally, in 2011, TOTAL reasserted the Upstream segment,priority on safety and the environment as part of its operations throughout its business. For all of its projects conducted in a large number of countries, the Group continued its ambitious investment program that includes launching seven new projects, including Laggan/Tormore inputs an emphasis on corporate social responsibility (CSR) challenges and the North Sea and CLOV in Angola. Highlights of 2010 also included the announcementdevelopment of the acquisition of an interest in two major projects: the Fort Hills field andVoyageur upgrader in Canada and GLNG in Australia. The Group continued to add to its acreage with new exploration plays focused on pre-salt projects, unconventional gas and new frontier areas. Finally, in 2010, TOTAL divested its interests in the Valhall and Hod fields in Norway and Block 31 in Angola, and announced the sale of its Exploration & Production subsidiary in Cameroon.

In the Downstream and Chemicals segments, major changes took place in 2010 that included the shutdown of the Dunkirk refinery in France and the upgrading of the refinery and the petrochemical plant in Normandy. This demonstrated the Group’s intention to adapt to changing demand in Europe while thestart-up of the Ras Laffan steam cracker in Qatar will contribute to taking better advantage of the growth in Middle Eastern and Asian markets. In Marketing and Specialty Chemicals, the Group continued to optimize its business by setting up TotalErg in Italy, offering for sale its marketing network in the United Kingdom and disposing of Mapa Spontex while seeking to consolidate its leading position with respect to these businesses.
local economies.

Outlook

In 2011,2012, TOTAL intends to consolidate its drivers for growth and enhance the priority given to the safety, reliability and acceptability of its operations.

Budgeted capital expenditures of the business segments for 2011 amount to €15.4

The 2012 net investment budget is $20 billion ($20 billion)(approximately€14.3 billion(1)). In addition, TOTAL intends to continue

to acquire targeted assetsactively manage its asset portfolio with, in particular, a program of non-strategic asset sales. The 2012 budget for organic investments (i.e., net investments excluding acquisitions and dispose of non strategic assets.

asset sales) is $24 billion (approximately€17.1 billion).

Capital expenditures will mostly be focused on the Upstream segment with an allocation of €12.3$20 billion ($16(approximately€14.3 billion)(1). 35%, or more than 80% of the investmentsGroup’s organic capital expenditure budget. About 30% of the investment in the Upstream segment shouldis expected to be dedicated to producing assets while 65% should70% is expected to be assigned to developdeveloping new projects. In the Downstream and Chemicals segments,organic capital expenditures willin the Refining & Chemicals and Supply & Marketing segments are expected to amount to nearly €3.1$3 billion ($4(approximately€2.1 billion)(1) and $1 billion (approximately€714 million), respectively, in 2011,2012. In line with the strategy to develop a number of major integrated platforms in particular dedicatedorder to stimulate growth and improve competitive performance, the main projects in the Refining & Chemicals segment in 2012 will be the upgrading of the Normandy refinery and petrochemical plant, andthe building of the Jubail refinery in Saudi Arabia. In addition, major turnaroundsArabia and the expansion of Group refineries should increase compared with the lower number recordedDaesan platform in 2010.

South Korea. Wherever it operates, TOTAL will continue to make capital expenditure in the maintenance and safety of its facilities a top priority.

The Group also confirms its commitment with respect to R&D with a budget increasing to nearly €0.8about $1.2 billion ($1 billion)(1)(approximately€857 million) in 2011.

2012.

In the Upstream segment, TOTAL expectswill deploy its strategy intended tostart-up a speed up growth of its production, while improving the profitability of its portfolio of assets. The year 2012 should see the launch of numerous projects. In 2012, TOTAL plans to bring eight new wave of major projects startingon-stream, which will contribute to expected growth in mid-2011 with,output in particular,2012 and achieving thestart-up target rate of Pazfloraverage annual production growth of 2.5% between 2010 and 2015: Usan and OML 58 Upgrade in Nigeria, Islay in the UK North Sea, Angola LNG in Angola, scheduledBongkot South in the fourth quarter of the year.Thailand, Halfaya in Iraq, Sulige in China and Kashagan in Kazakhstan. The Group will also carry on the study of a number ofcontinue to evaluate numerous other projects, in particular in Western Africa, Russia Australia, Canada and China. CommencementCanada. The anticipated launch of construction overthese projects during the course of the next couple oftwo years subject to final investment decisions, will contribute to increasingshould improve visibility on middle-term growth.growth in output after 2015. With an exploration budget increasingthat stands at $2.5 billion (approximately€1.8 billion), up 20% compared to €1.6 billion ($2.1 billion)(1) for 2011, the Group will also implement a boldercontinue to pursue an ambitious and more diversified approach with the expectation of making greater discoveries in the years to come.strategy.

 
(1)  Converted at a rate of $1.30/€.


63

(1)All euro figures in this section converted at a rate of $1.40/€.

In the Downstream sector, with a new organization that will allow it to take up the challenges specific to each activity of that sector, the Group should start to reap the first benefits of an integrated Refining & Chemicals segment and Chemicals segments,Supply & Marketing segment, each of which is closer to its markets. TOTAL will strive to improve its competitiveness by continuing to adaptadapting its assets portfolioactivities in Europe starting upand seeking to enhance its operational efficiency and synergies between its operations. The year 2012 will see continued development in high-growth zones, with the expected start-up of a new units atpolyethylene production unit in Qatar and the Port Arthur refinerycompletion

of the first step of the expansion of its Daesan platform in the United States and developing positions in growth markets.

With a soundSouth Korea.

In 2012, TOTAL can rely on its solid balance sheet at year-end 2010 and increased leewayon the start-up and ramp-up of new projects that should contribute to the growth of operating cash flow. Moreover, in an environment marked with crude oil prices over $80/b,2012, TOTAL will continue to develop its variousnew projects in 2011 through an ambitious investmentcapital expenditure program, while sticking tomaintaining a targeted net debt to equitytarget for the net-debt-to-equity ratio of between 25% and 30%20-30% and a dividend policy withbased on an average pay-out ratio of 50% based onof adjusted fully-diluted earnings per share(1). The Group also confirms its intention to divest the remainder of its stake in Sanofi-Aventis by 2012, which represented 5.5% of the outstanding share capital of Sanofi-Aventis as of December 31, 2010, for an estimated market value of €3.5 billion ($4.6 billion)(2).

 

CRITICAL ACCOUNTING POLICIES

A summary of the GroupGroup’s accounting policies is included in Note 1 to the Consolidated Financial Statements. Management believes that the application of these policies on a consistent basis enables the Group to report useful and reliable information about the Group’s financial condition and results of operations.

The Company has changed its method for reserve estimates due to the adoption of the Accounting Standards UpdateNo. 2010-03, Oil and Gas Reserve Estimation and Disclosures, effective for annual reporting periods ended on or after December 31, 2009.

The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of preparation of the financial statements and reported income and expenses for the period. Management reviews these estimates and assumptions on an ongoing basis, by reference to past experience and various other factors considered as reasonable which form the basis for assessing the book value of assets and liabilities. Actual results may differ significantly from these estimates, if different assumptions or circumstances apply.

Lastly, where the accounting treatment of a specific transaction is not addressed by any accounting standards or interpretation, management applies its judgment to define and apply accounting policies that will lead to relevant and reliable information, so that the financial statements:

give a true and fair view of the Group’s financial position, financial performance and cash flows;

• give a true and fair view of the Group’s financial position, financial performance and cash flows;
• reflect the substance of transactions;
• are neutral;
• are prepared on a prudent basis; and
• are complete in all material aspects.

reflect the substance of transactions;

are neutral;

are prepared on a prudent basis; and

are complete in all material aspects.

The following summary provides further information about the critical accounting policies that involve significant elements of management judgment, and which could have a significant impact on the results of the Group. It should be read in conjunction with Note 1 to the Consolidated Financial Statements.

The assessment of critical accounting policies below is not meant to be an all-inclusive discussion of the uncertainties in financial results that can occur from the application of the full range of the Company’s accounting policies. Materially different financial results could occur in the application of other accounting policies as well. Likewise, materially different results can occur upon the adoption of new accounting standards promulgated by the various rule-making bodies.

Successful efforts method of oil and gas accounting

The Group follows the successful efforts method of accounting for its oil and gas activities. The Group’s oil and gas reserves are estimated by the Group’s petroleum engineers in accordance with industry standards and SEC regulations. In December 2008, the SEC published a revised set of rules for the estimation of reserves. These revised rules were used for the year-end estimation of reserves beginning in 2009. Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations, prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic

(1)For the adjusted fully-diluted earnings per share, see the Consolidated Financial Statements included elsewhere herein, Note 4) Business segment information — A) Information by business segment.

methods are used for the estimation. These estimates do not include probable or possible reserves. Estimated oil

(1)  For the adjusted fully-diluted earnings per share, see the Consolidated Financial Statements included elsewhere herein, Note 4) Business segment information — A) Information by business segment.
(2)  Converted at a rate of $1.30/€.


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and gas reserves are based on available reservoir data and prices and costs in the accounting period during which the estimate is made and are subject to future revision. The Group reassesses its oil and gas reserves at least once a year on all its properties.

Exploration leasehold acquisition costs are capitalized when acquired. During the exploration phase, management exercises judgment on the probability that prospects ultimately would partially or fully fail to find proved oil and gas reserves. Based on this judgmental approach, a leasehold impairment charge may be recorded. This position is assessed and adjusted throughout the contractual period of the leasehold based in particular on the results of exploratory activity and any impairment is adjusted prospectively.

When a discovery is made, exploratory drilling costs continue to be capitalized pending determination of whether potentially economic oil and gas reserves have been discovered by the drilling effort. The length of time necessary for this determination depends on the specific technical or economic difficulties in assessing the recoverability of the reserves. If a determination is made that the well did not encounter oil and gas in economically viable quantities, the well costs are expensed and are reported in exploration expense.

Exploratory drilling costs are temporarily capitalized pending determination of whether the well has found proved reserves if both of the following conditions are met:

the well has found a sufficient quantity of reserves to justify, if appropriate, its completion as a producing well, assuming that the required capital expenditure is made; and

satisfactory progress toward ultimate development of the reserves is being achieved, with the Company making sufficient progress assessing the reserves and the economic and operating viability of the project.

• the well has found a sufficient quantity of reserves to justify, if appropriate, its completion as a producing well, assuming that the required capital expenditure is made; and
• satisfactory progress toward ultimate development of the reserves is being achieved, with the Company making sufficient progress assessing the reserves and the economic and operating viability of the project.

The Company evaluates the progress made on the basis of regular project reviews which take into account the following factors:

First, if additional exploratory drilling or other exploratory activities (such as seismic work or other significant studies) are either underway or firmly planned, the Company deems there is satisfactory progress. For these purposes, exploratory activities are considered firmly planned only if they are included in the Company’s three-year exploration plan/budget.

In cases where exploratory activity has been completed, the evaluation of satisfactory progress takes into account indicators such as the fact that

• First, if additional exploratory drilling or other exploratory activities (such as seismic work or other significant studies) are either underway or firmly planned, the Company deems there is satisfactory progress. For these purposes, exploratory activities are considered firmly planned only if they are included in the Company’s three-year exploration plan/budget.
 
• In cases where exploratory activity has been completed, the evaluation of satisfactory progress takes into account indicators such as the fact that

costs for development studies are incurred in the current period, or that governmental or other third-party authorizations are pending or that the availability of capacity on an existing transport or processing facility awaits confirmation.

The successful efforts method requires, among other things, that the capitalized costs for proved oil and gas properties (which include the costs of drilling successful wells) be amortized on the basis of reserves that are produced in a period as a percentage of the total estimated proved reserves. The impact of changes in estimated proved reserves is dealt with prospectively by amortizing the remaining book value of the asset over the expected future production. If proved reserve estimates are revised downward, earnings could be affected by higher depreciation expense or an immediate write-down of the property’s book value. Conversely, if the oil and gas quantities were revised upwards, futureper-barrel depreciation and depletion expense would be lower.

Valuation of long-lived assets

In addition to oil and gas assets that could become impaired under the application of successful efforts accounting, other assets could become impaired and require write-down if circumstances warrant. Conditions that could cause an asset to become impaired includelower-than-forecasted lower-than-expected commodity sales prices, changes in the Group’s business plans or a significant adverse change in the local or national business climate. The amount of an impairment charge would be based on estimates of an asset’sthe higher of the value in use or the fair value minus cost to sell compared with its book value. The fair value usuallyin use is based on the present valuesvalue of expected future cash flowsflow using assumptions commensurate with the risks involved in the asset group. The expected future cash flowsflow used for impairment reviews areis based on judgmental assessments of future production volumes, prices and costs, considering information available at the date of review.

Asset retirement obligations and environmental remediation

When legal and contractual obligations require it, the Group, upon application of International Accounting Standard (IAS) 37 and IAS 16, records provisions for the future decommissioning of production facilities at the end of their economic lives. Management makes judgments and estimates in recording liabilities. Most of these removal obligations are many years in the future and the precise requirements that will have to be met when the removal event actually occurs are uncertain. Asset removal technologies and costs are constantly changing,


65

as well as political, environmental, safety and public expectations.

 

The Group also makes judgments and estimates in recording costs and establishing provisions for environmentalclean-up and remediation costs, which are based on current information on costs and expected plans for remediation. For environmental provisions, actual costs can differ from estimates because of changes in laws and regulations, public expectations, discovery and analysis of site conditions and changes inclean-up technology.

Pensions and post-retirement benefits

Accounting for pensions and other post-retirement benefits involves judgments about uncertain events, including estimated retirement dates, salary levels at retirement, mortality rates, rates of return on plan assets, determination of discount rates for measuring plan obligations, healthcare cost-trend rates and rates of utilization of healthcare services by retirees. These assumptions are based on the environment in each country. The assumptions used are reviewed at the end of each year and may vary fromyear-to-year, based on the evolution of the situation, which will affect future results of operations. Any differences between these assumptions and the actual outcome will also impact future results of operations.

The significant assumptions used to account for pensions and other post-retirement benefits are determined as follows:

follows.

Discount and inflation rates primarily reflect the rates at which the benefits could be effectively settled, taking into account the duration of the obligation. Indications used in selecting the discount rate include rates of annuity contracts and rates of return on high-quality fixed-income investments (such as government bonds). The inflationhigh quality corporate bonds. Inflation rates reflect market conditions observed on acountry-by-country basis.

Salary increase assumptions (when relevant) are determined by each entity. They reflect an estimate of the actual future salary levels of the individual employees involved, including future changes attributed to general price levels (consistent with inflation rate assumptions), productivity, seniority, promotion and other factors.

Healthcare cost trend assumptions (when relevant) reflect an estimate of the actual future changes in the cost of the healthcare-related benefits provided to the plan participants and are based on past and current healthcare cost trends including healthcare inflation, changes in healthcare utilization, and changes in health status of the participants.

Demographic assumptions such as mortality, disability and turnover reflect the best estimate of these future events for the individual employees involved, based principally on available actuarial data.

Determination of expected rates of return on pension plan assets is made through compound averaging. For each plan, the distribution of investments among bonds, equities and cash and the expected rates of return on bonds,

equities and cash are taken into account. A weighted-average rate is then calculated.

The effect pensions had on results of operations, cash flow and liquidity is fully set out in Note 18 to the Consolidated Financial Statements. Net employee benefit expense in 20102011 amounted to €374€315 million and the Company’s contributions to pension plans were €269€347 million.

Differences between projected and actual costs and between the projected return and the actual return on plan assets routinely occur and are called actuarial gains and losses.

The Group applies the corridor method to amortize its actuarial losses and gains. This method amortizes the net cumulative actuarial gains and losses that exceed 10% of the greater of (i) the present value of the defined benefit obligation, and (ii) the fair value of plan assets, over the average expected remaining working lives of the employees participating in the plan.

The unrecognized actuarial losses of pension benefits as of December 31, 2010,2011, were €1,170€1,713 million compared to €1,045€1,170 million for 2009.2010. The increase in unrecognized actuarial losses is explained by actuarial losses due to a decrease in discount rates in 2010 partially offset by an increase2011 and due to a decrease in the value of plan assets. As explained above, pension accounting principles allow that such actuarial losses be deferred and amortized over future periods, in the Company’s case a period of fifteen years.

While the

The Company has not completed its calculations for 2011, it is considering a decreased weighted-average expected rate of return on pension plan assets of 5.35% for the year (5.90%2012 compared to the 20092011 rate of 6.39%), due to a decrease in discount rates in 2010.5.90%. The Company does not believe, based on currently available information, that it will be significantly modifying its discount rate in 2012 or the near future.

The Company’s estimates indicate that a 1% increase or decrease in the expected rate of return on pension plan assets would have caused a €60€62 million decrease or increase, respectively, in the 20102011 net periodic pension


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cost. The estimated impact on expensenet periodic pension cost of the amortization of the unrecognized actuarial losses of €1,170pension benefits of€1,713 million as of December 31, 2010,2011, is €51€102 million for 2011,2012, compared to €66the actual impact of€46 million for 2010.
2011.

Income tax computation

The computation of the Group’s income tax expense requires the interpretation of complex tax laws and regulations in many taxing jurisdictions around the world, the determination of expected outcomes from pending litigation, and the assessment of audit findings that are performed by numerous taxing authorities. Actual income tax expense may differ from management’s estimates.

 

RESULTS 2009-2011

As of and for the year ended December 31, (M€, except per share data)  2011   2010   2009 

Non-Group sales

   184,693     159,269     131,327  

Net income (Group share)

   12,276     10,571     8,447  

Diluted earnings per share

   5.44     4.71     3.78  

RESULTSGroup Results 2011 vs. 2010

The year 2011 witnessed a number of geopolitical events that put pressure on market supplies. Despite the economic slowdown, demand for oil products continued to rise, fueled by the growth of emerging markets. Pressure on supply, plus rising demand, resulted in a sharp increase in the price of crude oil.

2008-2010In the Upstream segment, the 2011 oil market environment was marked by a 40% increase in the average Brent price to $111.3/b from $79.5/b in 2010. In 2011, TOTAL’s average liquids price realization(1) increased by 38% to $105.0/b from $76.3/b in 2010, in line with the increase in the average Brent price of oil. TOTAL’s average natural gas price realization(1) increased by 27% to $6.53/MBtu in 2011 from $5.15/MBtu in 2010. The average euro-dollar exchange rate was 1.39 $/€ in 2011 compared to 1.33 $/€ in 2010.

In the Downstream segment, the Group’s European Refining Margin Indicator (ERMI) fell to $17.4/t in 2011 from $27.4/t in 2010. Despite the gradual reduction of refining capacity, the overcapacity that has existed in the European refining market since 2009 continued into 2011, due to low demand in Europe.

In the first half of 2011, the Chemicals segment enjoyed a globally favorable environment, which has since deteriorated. In the second half of the year, Petrochemicals and Specialty Chemicals saw their margins shrink due to the drop in demand caused by the economic slowdown.

Consolidated sales of TOTAL were€184.7 billion in 2011, an increase of 16% from€159.3 billion in 2010, as a result of an increase in non-Group sales in the Upstream, Downstream and Chemicals segments of 26%, 15% and 11%, respectively.

Net income (Group share) in 2011 increased by 16% to€12,276 million from€10,571 million in 2010, mainly due to the impact of the increase in hydrocarbon prices on the Upstream segment’s results. The after-tax inventory valuation effect (as defined below under “— Business

Segment Reporting”) had a positive impact on net income (Group share) of€834 million in 2011 and a positive impact of€748 million in 2010, in each case essentially due to the increase in oil prices. As from January 1, 2011, the Group accounts for changes in fair value of trading inventories and storage contracts (as defined below under “— Business Segment Reporting”). Changes in fair value of these items had a positive impact on net income (Group share) of€32 million in 2011. Special items had a negative impact on net income (Group share) of€14 million in 2011, comprised mainly of€1,014 million of impairments (essentially impairments on European refining and renewable energy assets) and€1,538 million of gains on asset sales. Special items had a negative impact on net income (Group share) of€384 million in 2010, comprised essentially of asset impairments that had a negative impact of€1,224 million (essentially impairments on European refining assets) and gains on asset sales that had a positive impact of€1,046 million. Effective July 1, 2010, the Group no longer accounts for its interest in Sanofi as an equity affiliate, but treats such interest as a financial asset available for sale in the line “Other investments” of the balance sheet. In 2010, the Group’s share of adjustment items related to Sanofi had a negative impact on net income (Group share) of€81 million.

In 2011, income taxes amounted to€14,073 million, an increase of 38% compared to€10,228 in 2010, primarily as a result of the increase in taxable income. The increase in the effective tax rate from 49% in 2010 to 53% in 2011 was mainly due to an increase in the portion of the Group’s income before tax attributable to entities with a local tax rate much higher than the French tax rate (36.10%). The portion of the Upstream income before tax represented 89% in 2011, unchanged from 2010.

The Group did not buy back shares in 2011. The number of fully-diluted shares at December 31, 2011, was 2,263.8 million compared to 2,249.3 million at December 31, 2010.

Fully-diluted earnings per share, based on 2,257 million weighted-average shares, was€5.44 in 2011 compared to€4.71 in 2010, an increase of 15%.

 
             
As of and for the year ended December 31, (M€, except per share data) 2010  2009  2008 
Non-Group sales  159,269   131,327   179,976 
Net income (Group share)  10,571   8,447   10,590 
Diluted earnings per share  4.71   3.78   4.71 

(1)Consolidated subsidiaries, excluding fixed margin and buyback contracts.

Group Results 2010 vs. 2009

In 2010, the oil and gas market environment was characterized by increased demand for oil and natural gas products. Crude oil prices were relatively stable during 2010, with an average Brent oil price of $79.5/b, an increase of 29% compared to $61.7/b in 2009. In 2010, TOTAL’s average liquids price realization(1) increased 31% to $76.3/b from $58.1/b in 2009, in line with the increase in the average Brent price of oil. TOTAL’s average natural gas price realization(1) decreased to $5.15/MBtu in 2010 from $5.17/MBtu in 2009. The average euro-dollar exchange rate was 1.33 $/€ on average in 2010 compared to 1.39 $/€ in 2009.

Refining margins rebounded in 2010 from historically low levels in 2009. For the full year 2010, the Group’s European Refining Margin Indicator (ERMI)ERMI was 27.4 $/$27.4/t, an increase of 54% compared to $17.8/t in 2009.

For the full year 2010, the Chemicals segment benefited from a strong rebound in demand and margins in the Base chemicalsChemicals division’s market, as well as an increase in demand in the Specialties chemicalsChemicals division’s market.

Consolidated sales of TOTAL were €159.3€159.3 billion in 2010, an increase of 21% from €131.3€131.3 billion in 2009, as a result of an increase in non-Group sales in the Upstream, Downstream and Chemicals segments of 15%, 23% and 19%, respectively.

Reported net income (Group share) in 2010 increased by 25% to €10,571€10,571 million from €8,447€8,447 million in 2009, mainly due to the increase in hydrocarbon prices and production, as well as a rebound in the Chemicals segment. The after-tax impact of prices on inventory valuation accounted for in the Downstream and Chemicals segments had a positive impact on net income (Group share) of €748€748 million in 2010 and a positive impact of €1,533€1,533 million in 2009, in each case due to the increase in oil prices. For a discussion of the impact of prices on inventory valuation in the Downstream and Chemicals segments see ‘‘—“— Business Segment Reporting” below. Special items had a negative impact on net income (Group share) of €384€384 million in 2010, comprised essentially of asset impairments that had a negative impact of €1,224€1,224 million and gains on asset sales that had a positive impact of €1,046€1,046 million. Special items had a negative impact of €570€570 million in 2009. Effective July 1, 2010, the Group no longer accounts for its interest in Sanofi-AventisSanofi as an equity affiliate, but treats such interest as a financial asset available for sale in the line “Other investments” of the balance sheet. The Group’s share of adjustment items

related to Sanofi-AventisSanofi had a negative impact on net income (Group share) of €81€81 million in 2010 (six months) and a negative impact of €300€300 million in 2009 (full year).

In 2010, income taxes amounted to €10,228€10,228 million, an increase of 32% compared to €7,751€7,751 in 2009, primarily as a result of the increase in taxable income. The increase in the effective tax rate from 47% in 2009 to 49% in 2010 was mainly due to an increase in the portion of the Group income before tax attributable to entities with a local tax rate much higher than the French tax rate (34.43%). The portion of the Upstream income before tax represented 89% in 2010 compared with 82% in 2009, with a mechanicalcorresponding impact on the Group effective tax rate.

The Group did not buy back shares in 2010. The number of fully-diluted shares at December 31, 2010, was 2,249.3 million compared to 2,243.7 million at December 31, 2009.

(1)  Consolidated subsidiaries, excluding fixed margin and buyback contracts.


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Fully-diluted earnings per share, based on 2,244.5 million weighted-average shares, was €4.71€4.71 in 2010, compared to €3.78€3.78 in 2009, an increase of 25%.
Group Results 2009 vs. 2008
In 2009, the oil and gas market environment was characterized by a sharp decline in the demand for oil, natural gas and refined products. Following a significant decrease in the fourth quarter of 2008, crude oil prices rebounded during 2009 to an average Brent oil price of $61.7/b, which represents a decrease of approximately 37% compared to the average Brent oil price of $97.30/b in 2008. Natural gas spot prices remained depressed throughout 2009, with an average of $5.17/Mbtu, which represents a decrease of 30% compared to $7.38/Mbtu in 2008. The decrease in oil and gas prices was partially offset by the slight strengthening of the dollar comparative to the euro: the average euro-dollar exchange rate was $1.39/€ in 2009 compared to $1.47/€ in 2008. Comparing 2009 to 2008, TOTAL’s average liquids price realization.(1) decreased by 36% and average natural gas price realization decreased by 30%.
Refining margins fell in 2009 to historically low levels, with TOTAL’s European Refining Margin Indicator (ERMI) falling by 65% to $17.8/t compared to $51.1/t in 2008. ERMI is a new indicator, reported by TOTAL since January 2010, intended to represent the margin after variable costs for a theoretical complex refinery located around Rotterdam in Northern Europe that processes a mix of crude oil and other inputs commonly supplied to this region to produce and market the main refined products at prevailing prices in this region. The indicator margin may not be representative of the actual margins achieved by TOTAL in any period because of TOTAL’s particular refinery configurations, product mix effects or other company-specific operating conditions. TOTAL’s refining margin indicator reported in previous quarters was TRCV. For comparative purposes, TRCV fell by 61% to $14.8/t in 2009, compared to $37.8/t in 2008. TRCV was discontinued effective in the first quarter 2010.
In the Chemicals segment, despite strong demand for polymers in China, the environment was affected by low margins and a sharp drop in demand for polymers and specialty chemicals in OECD markets.
Consolidated sales of TOTAL were €131.3 billion in 2009, a decrease of 27% from €180 billion in 2008, as a result of a decline in sales in the Upstream, Downstream and Chemicals segments of 34%, 26% and 27%, respectively.
TOTAL’s net income (Group share) decreased to €8,447 million in 2009 from €10,590 million in 2008. The 20% decrease in net income (Group share) in 2009 compared to 2008 was mainly due to the negative impact of lower hydrocarbon prices and refining margins (-€6.8 billion). Other factors contributing to a decrease in net income (Group share) in 2009 compared to 2008 included special items (-€0.1 billion). These negative impacts were partially offset by the positive impacts of: the after-tax impact of prices on inventory valuation accounted for in the Downstream and Chemicals segments (+€4.0 billion); the Group’s equity share of adjustments (concerning amortization and impairment of intangibles related to the Sanofi-Aventis merger) and, from 2009, selected items related to Sanofi-Aventis (+€0.1 billion); and a stronger dollar (+€0.5 billion).
In 2009, income taxes amounted to €7,751 million, a decrease of 45% compared to €14,146 in 2008, primarily as a result of the decline in taxable income. The decrease in the effective tax rate from 56% in 2008 to 47% in 2009 was mainly due to the fall in the portion of the Group income before tax attributable to entities with a local tax rate much higher than the French tax rate (34.43%), mainly entities from the Upstream segment. The portion of the Upstream income before tax represented 82% in 2009 compared with 99% in 2008, with a mechanical impact on the Group effective tax rate.
The Group did not buy back shares in 2009. The number of fully-diluted shares at December 31, 2009, was 2,243.7 million compared to 2,235.3 million at December 31, 2008.
Fully-diluted earnings per share, based on 2,237.3 million weighted-average shares, was €3.78 compared to €4.71 in 2008, a decrease of 20%.

Business Segment Reporting

The financial information for each business segment is reported on the same basis as that used internally by the chief operating decision maker in assessing segment performance and the allocation of segment resources. Due to their particular nature or significance, certain transactions qualified as “special items” are excluded from the business segment figures. In general, special items relate to transactions that are significant, infrequent or unusual. However, in certain instances, certain transactions such as restructuring costs or asset disposals, which are not considered to be representative of the normal course of business, may be qualified as special items although they may have occurred in prior years or are likely to recur in following years.

(1)  Consolidated subsidiaries, excluding fixed margin and buyback contracts.


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In accordance with IAS 2, the Group values inventories of petroleum products in the financial statements according to the FIFO(First-In, (First-In, First-Out) method and other inventories using the weighted-average cost method. Under the FIFO method, inventories are valuedthe cost of inventory is based on the historic cost of acquisition or manufacture rather than the current replacement cost. In volatile energy markets, this can have a significant distorting effect on the reported income. Accordingly, the segment measureadjusted results of profitability for the Downstream segment and Chemicals segment is based onare presented according to the replacement cost method in order to facilitate the comparability of the Group’s results

(1)Consolidated subsidiaries, excluding fixed margin and buyback contracts.

with those of its competitors and to help illustrate the operating performance of these segments excluding the impact of oil price changes on the replacement of inventories. In the replacement cost method, which is conceptually close toapproximates the LIFO(Last-In, (Last-In, First-Out) method, the variation of inventory values in the statement of income is, depending on the nature of the inventory, determined using either the month-end prices differential between one period and another or the average prices of the period. The inventory valuation effect is the difference between the results according tounder the FIFO and using the replacement cost method. Whenmethods.

As from January 1, 2011, the replacement cost is higher thaneffect of changes in fair value presented as an adjustment item reflects, for trading inventories and storage contracts, differences between internal measures of performance used by TOTAL’s management and the costaccounting for these transactions under IFRS. IFRS requires that trading inventories be recorded at their fair value using period-end spot prices. In order to best reflect the management of economic exposure through derivative transactions, internal indicators used to measure performance include valuations of trading inventories recorded at their fair value based on forward prices. Furthermore, TOTAL, in its trading activities, enters into storage contracts, the oldest inventory, usefuture effects of which are recorded at fair value in the replacement cost method lowers results. When the replacement cost is lower than the costGroup’s internal economic performance. IFRS, by requiring accounting for storage contracts on an accrual basis, precludes recognition of the oldest inventory, use of the replacement cost method, as opposed to FIFO, increases results. In the discussion of net income (Group share) we separately disclose the after-tax amount of the inventory valuationthis fair value effect.

Until June 30, 2010, the Group also adjusted for its equity share of adjustment items related to Sanofi-Aventis.Sanofi. As of July 1, 2010, Sanofi-AventisSanofi is no longer accounted for as an equity affiliate (but is instead treated as a financial asset available for sale in the line “Other investments” of the balance sheet).

The adjusted business segment results (adjusted operating income and adjusted net operating income) are defined as replacement cost results, adjusted for special items.items, excluding the effect of changes in fair value as from January 1, 2011. For further information on the adjustments affecting operating income on asegment-by-segment basis, and for a reconciliation of segment figures to figures reported in the Company’s audited consolidated financial statements, see Note 4 to the Consolidated Financial Statements.

In addition, the

The Group measures performance at the segment level on the basis of net operating income and adjusted net operating income. Net operating income comprises operating income of the relevant segment after deducting the amortization and the depreciation of intangible assets other than leasehold rights, translation adjustments and gains or losses on the sale of assets, as well as all other income and expenses related to capital employed (dividends from non-consolidated companies, income from equity affiliates and capitalized interest expenses), and after income taxes applicable to the above. The income and expenses not included in net operating income butthat are included in net income are interest expenses related to long-term liabilities net financial debt only,of interest earned on cash and cash equivalents, after applicable income taxes (net cost of net debt and minoritynon-controlling interests). Adjusted net operating income excludes the effect of the adjustments (special items and the inventory valuation effect and, until June 30, 2010, Sanofi-Aventis related items)effect) described above. For further discussion onof the calculation of net operating income and the calculation of return on average capital employed (ROACE)(1), see Note 2 to the Consolidated Financial Statements.

 

Upstream results

             
(M€) 2010  2009  2008 
Non-Group sales  18,527   16,072   24,256 
Operating income(a)
  17,450   12,858   23,468 
Equity in income (loss) of affiliates and other items  1,533   846   1,541 
Tax on net operating income  (10,131)  (7,486)  (14,563)
Net operating income(a)
  8,852   6,218   10,446 
Adjustments affecting net operating income  (255)  164   278 
Adjusted net operating income(b)
  8,597   6,382   10,724 
Investments  13,208   9,855   10,017 
Divestments  2,067   398   1,130 
             
ROACE  21%   18%   36% 

(M€)  2011  2010  2009 

Non-Group sales

   23,298    18,527    16,072  

Operating income(a)

   22,444    17,450    12,858  

Equity in income (loss) of affiliates and other items

   1,596    1,533    846  

Tax on net operating income

   (13,506)   (10,131)   (7,486) 

Net operating income(a)

   10,534    8,852    6,218  

Adjustments affecting net operating income

   (129)   (255)   164  

Adjusted net operating income(b)

   10,405    8,597    6,382  

Investments

   21,689    13,208    9,855  

Divestments

   2,656    2,067    398  

ROACE

   20%    21%    18%  

(a)
(a)For the definition of operating income and net operating income, see Note 2 to the Consolidated Financial Statements.
(b)Adjusted for special items. See Notes 2 and 4 to the Consolidated Financial Statements.

(1)(1)  ROACE = adjusted net operating income divided by average capital employed.

2011 vs. 2010

Upstream segment sales (excluding sales to other segments) increased by 26% to€23,298 million in 2011 from€18,527 million in 2010, reflecting essentially the impact of higher hydrocarbon prices.

Oil and gas production averaged 2,346 kboe/d in 2011, compared to 2,378 kboe/d in 2010. This 1.3% decrease was due essentially to the result of normal decline, net of production ramp-ups on new projects (-1.5%), security conditions, mainly in Libya (-1.5%) and the price effect(1) (-2%), partially offset by changes in the portfolio (+2.5%; integrating the net share of Novatek production and the impact of the sale of interests in CEPSA) and the end of OPEC reductions (+1%).

Proved reserves based on SEC rules were 11,423 Mboe at December 31, 2011 (Brent at $110.96/b), compared to 10,695 Mboe at December 31, 2010 (Brent at $79.02/b). Based on the 2011 average rate of production, reserve life is thirteen years.

See “Item 4. Information on the Company — Exploration & Production — Reserves” for a discussion of proved reserves and “Supplemental Oil and Gas Information (Unaudited)” contained elsewhere herein for additional information on proved reserves, including tables showing changes in proved reserves by region.

Upstream net operating income in 2011 amounted to€10,534 million (for 2010,€8,852 million) from operating income of€22,444 million (for 2010,€17,450 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of€13,506 million (for 2010,€10,131 million), partially offset by income from equity affiliates and other items of€1,596 million (for 2010,€1,533 million). The increase in net operating income in 2011 compared to 2010 was due primarily to the impact of higher hydrocarbon prices.

Adjusted net operating income for the Upstream segment was€10,405 million in 2011 compared to€8,597 million in 2010, an increase of 21%, essentially due to the impact of higher hydrocarbon prices partially offset by the impact of the mix effect, changes in foreign exchange rates and increased costs, exploration expenses and taxes. Technical costs for consolidated subsidiaries, in accordance with ASC 932(2) were $18.9/boe(3) in 2011, compared to $16.6/boe in 2010, mainly due to

depreciation, depletion and amortization (DD&A) charges related notably to the start-up of new projects and increased operating expenses per barrel.

Adjusted net operating income for the Upstream segment excludes special items. In 2011, the exclusion of special items had a negative impact of€129 million on adjusted net operating income dividedfor the Upstream segment and a negative impact of€255 million in 2010, in both cases comprised principally of capital gains on asset sales partially offset by averageasset impairments.

The Upstream segment’s total capital employed.


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expenditures increased by 64% to€21,689 million in 2011 from€13,208 million in 2010. Capital expenditures excluding acquisitions in 2011 mainly included projects in the following countries: Angola, Nigeria, Norway, Australia, Kazakhstan, the United Kingdom, Canada, Indonesia, Gabon, the Republic of the Congo and the United States.

ROACE for the Upstream segment decreased to 20% in 2011 from 21% in 2010. The decrease was mainly due to the increase in capital employed in 2011.

2010 vs. 2009

Upstream segment sales (excluding sales to other segments) increased by 15% to €18,527€18,527 million in 2010 from €16,072€16,072 million in 2009, reflecting essentially the impact of higher hydrocarbon prices and production growth.

For the full year 2010, oil

Oil and gas production averaged 2,378 kboe/d in 2010, compared to 2,281 kboe/d in 2009. This 4.3% increase was essentially the result of productionramp-ups on new projects, net of the normal decline, and a lower level of turnarounds (+3%), changes in the portfolio (+2%), lower OPEC reductions and an increase in gas demand (+1.5%) and improved security conditions in Nigeria (+1%), partially offset by the price effect(1) (-3%).

Proved reserves based on SEC rules were 10,695 Mboe at December 31, 2010 (Brent at $79.02/b), compared to 10,483 Mboe at December 31, 2009 (Brent at $59.91/b). At the 2010 average rate of production, the reserve life iswas more than twelve years.

See “Item 4. Information on the Company — Exploration & Production — Reserves” for a discussion of proved reserves and “Supplemental Oil and Gas Information (Unaudited)” contained elsewhere herein for additional information on proved reserves, including tables showing changes in proved reserves by region.

 

(1)The “price effect” refers to the impact of hydrocarbon prices on entitlement volumes from production sharing and buyback contracts. For example, as the price of oil or gas increases above certain pre-determined levels, TOTAL’s share of production normally decreases.
(2)Accounting Standards Codification Topic 932, Extractive industries — Oil and Gas.
(3)Excluding IAS 36 (impairment of assets).

Upstream net operating income in 2010 amounted to €8,852€8,852 million (for 2009, €6,218€6,218 million) from operating income of €17,450€17,450 million (for 2009, €12,858€12,858 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of €10,131€10,131 million (for 2009, €7,486€7,486 million), partially offset by income from equity affiliates and other items of €1,533€1,533 million (for 2009, €846€846 million).

The increase in net operating income in 2010 compared to 2009 was due primarily to the impact of higher hydrocarbon prices and production growth.

Over the full year 2010, adjusted net operating income for the Upstream segment was €8,597€8,597 million compared to €6,382€6,382 million in 2009, an increase of 35%, essentially due to hydrocarbon prices (+€2.3 billion). Technical costs for consolidated subsidiaries, in accordance with ASC 932(2) were $16.6/boe in 2010, compared to $15.4 $15.4/boe in 2009, mainly due to depreciation, depletion and amortization (DD&A) charges related notably to thestart-up of new projects and increased operating expenses per barrel.

Adjusted net operating income for the Upstream segment excludes special items. In 2010, the exclusion of special items (comprised principally of capital gains on asset sales partially offset by asset impairments) had a negative impact of €255€255 million on adjusted net operating income for the Upstream segment compared to a positive impact of €164€164 million in 2009 (comprised principally of asset impairments and other elements).

The Upstream segment’s total capital expenditures increased by 34% to €13,208€13,208 million in 2010 from €9,855€9,855 million in 2009. The capital expenditures in 2010 mainly included projects in the following countries: Angola, the United States, Nigeria, Canada, Norway, Kazakhstan, Australia, the United Kingdom, Indonesia, the Republic of the Congo, Libya, Gabon and Thailand.

ROACE for the Upstream segment increased to 21% in 2010 from 18% in 2009. The increase was mainly due to the adjusted net operating income having increased, principally due to increased hydrocarbon prices and production.

 
2009 vs. 2008
Upstream segment sales (excluding sales to other segments) were down 34% to €16,072 million in 2009 compared to €24,256 million in 2008, reflecting essentially lower average hydrocarbon prices and a decrease in production, which were partially offset by the impact of the appreciation of the dollar compared to the euro.
In 2009, TOTAL’s average liquids price realization(3) decreased 36% to $58.1/b from $91.1/b in 2008, in line with the decrease in the average Brent price of oil, which was $61.7/b in 2009 compared to $97.3/b in 2008. TOTAL’s average natural gas price realization(3) decreased 30% to $5.17/MBtu in 2009 from $7.38/MBtu in 2008.
For the full year 2009, oil and gas production averaged 2,281 kboe/d, compared to 2,341 kboe/d in 2008. This 2.6% decrease was due mainly to the negative impacts of OPEC reductions and lower gas demand (-3%), changes in the portfolio, essentially in Venezuela and Libya (-2%), and disruptions in Nigeria related to security issues (-1%), partially offset by the positive impact oframp-ups andstart-ups of new fields net of the normal decline on existing fields (+2%) and the price effect(1) (+1.5%). Excluding the impact of OPEC reductions, production was stable compared to 2008.
Proved reserves based on the revised rules published by the SEC in December 2008 were 10,483 Mboe at December 31, 2009 (Brent at $59.91/b), compared to 10,458 Mboe at December 31, 2008. At the 2009 average rate of production, the reserve life is more than twelve years.
See “Item 4. Information on the Company — Exploration & Production — Reserves” for a discussion of proved reserves and “Supplemental Oil and Gas Information (Unaudited)” contained elsewhere herein for additional
(1)  The “price effect” refers to the impact of hydrocarbon prices on entitlement volumes from production sharing and buyback contracts. For example, as the price of oil or gas increases above certain pre-determined levels, TOTAL’s share of production normally decreases.
(2)  Accounting Standards Codification Topic 932, Extractive industries — Oil and Gas.
(3)  Consolidated subsidiaries, excluding fixed margin and buyback contracts.


70

information on proved reserves, including tables showing changes in proved reserves by region.
Upstream net operating income in 2009 amounted to €6,218 million (for 2008, €10,446 million) from operating income of €12,858 million (for 2008, €23,468 million), with the difference resulting primarily from taxes on net operating income of €7,486 million (€14,563 million in 2008), partially offset by income from equity affiliates and other items of €846 million (€1,541 million in 2008).
Over the full year 2009, adjusted net operating income for the Upstream segment was €6,382 million compared to €10,724 million in 2008, a decrease of 40%, essentially due to lower hydrocarbon prices (-€4.6 billion), partially offset by the positive impact of a slightly stronger dollar compared to the euro (+€0.4 billion). Technical costs for consolidated subsidiaries, in accordance with ASC 932 were $15.4/boe in 2009, stable compared to 2008, with a decrease of 8% in operating expenses per barrel offsetting an increase in depreciation, depletion and amortization (DD&A) charges related notably to thestart-up of new projects.
Adjusted net operating income for the Upstream segment excludes special items. In 2009, the exclusion of special items (comprised principally of asset impairments and other elements) had a positive impact of €164 million on adjusted net operating income for the Upstream segment compared to a positive impact of €278 million in 2008 (comprised principally of an asset impairment of €171 million on the Joslyn project and the net impact of contract renegotiations of €106 million).
The Upstream segment’s total capital expenditures decreased by 2% to €9,855 million in 2009 from €10,017 million in 2008. The capital expenditures in 2009 mainly included the following projects: Kashagan in Kazakhstan; Pazflor, Angola LNG and Tombua Landana in Angola; Akpo, Usan and Ofon II in Nigeria; Ekofisk in Norway; the Mahakam zone in Indonesia; the Alwyn zone in the United Kingdom; Moho Bilondo in the Republic of the Congo; and Anguille in Gabon.
ROACE for the Upstream segment decreased to 18.2% in 2009 from 35.9% in 2008. The decrease was mainly due to the adjusted net operating income having decreased, principally due to lower hydrocarbon prices.
Downstream results
             
(M€) 2010  2009  2008 
Non-Group sales  123,245   100,518   135,524 
Operating income(a)
  982   2,237   826 
Equity in income (loss) of affiliates and other items  141   169   (158)
Tax on net operating income  (201)  (633)  (143)
Net operating income(a)
  922   1,773   525 
Adjustments affecting net operating income  246   (820)  2,044 
Adjusted net operating income(b)
  1,168   953   2,569 
Investments  2,343   2,771   2,418 
Divestments  499   133   216 
             
ROACE  8%   7%   20% 

(M€)  2011  2010  2009 

Non-Group sales

   141,907    123,245    100,518  

Operating income(a)

   1,694    982    2,237  

Equity in income (loss) of affiliates and other items

   401    141    169  

Tax on net operating income

   (409)   (201)   (633) 

Net operating income(a)

   1,686    922    1,773  

Adjustments affecting net operating income

   (603)   246    (820) 

Adjusted net operating income(b)

   1,083    1,168    953  

Investments

   1,870    2,343    2,771  

Divestments

   3,235    499    133  

ROACE

   7%    8%    7%  

(a)
(a)For the definition of operating income and net operating income, see Note 2 to the Consolidated Financial Statements.
(b)Adjusted for special items and the inventory valuation effect. See Notes 2 and 4 to the Consolidated Financial Statements.

20102011 vs. 20092010

For the full year 2010,2011, the Group’s European Refining Margin Indicator (ERMI) was 27.4 $/$17.4/t, an increasea decrease of 54%36% compared to 2009.

2010.

Downstream segment sales (excluding sales to other segments) were €123,245€141,907 million in 2011 compared to€123,245 million in 2010, an increase of 15% essentially due to the impact of higher hydrocarbon prices.

Refined product sales (including trading operations) were 3,639 kb/d in 2011, a decrease of 4% compared to 3,776 kb/d in 2010. Refinery throughput in 2011 was 1,863 kb/d, a 7% decrease compared to 2,009 kb/d in 2010 essentially due to the sale of the Group’s interest in CEPSA and a higher level of major turnarounds than in

2010. In 2011, major turnarounds took place in the Antwerp, Grandpuits, Leuna, Lindsey and Port Arthur refineries. For the full year 2011, the refinery utilization rate based on crude throughput was 78% (83% for crude and other feedstock) compared to 73% in 2010 (77% for crude and other feedstock). In 2010, the utilization rate was impacted by the shutdown of the Dunkirk refinery and a distillation unit at the Normandy refinery as well as impacts from strikes in France.

In 2011, Downstream net operating income increased to€1,686 million (for 2010,€922 million) from operating income of€1,694 million (for 2010,€982 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of€409 million (for 2010,€201 million), partially

offset by income from equity affiliates and other items of€401 million (for 2010,€141 million). The increase in net operating income in 2011 compared to 2010 was due primarily to the impact of higher hydrocarbon prices, gains on asset sales and lower impairment charges.

The Downstream segment’s adjusted net operating income in 2011 was€1,083 million compared to€1,168 million in 2010. The decrease was essentially due to the negative impact of the deterioration in refining margins in 2011.

Adjusted net operating income for the Downstream segment excludes any after-tax inventory valuation effect and special items. The adjustment for the inventory valuation effect had a negative impact on Downstream adjusted net operating income in 2011 of€859 million compared to a negative impact of€640 million in 2010. The exclusion of special items (comprised essentially of impairments on European refining assets (as described below), partially offset by gains on asset sales) in 2011 had a positive impact of€256 million on adjusted net operating income. In 2010, the exclusion of special items (comprised essentially of impairments on European refining assets partially offset by gains on asset sales) had a positive impact of€886 million on adjusted net operating income.

The persistence of an unfavorable economic environment for refining, affecting Europe in particular, led the Group to recognize an impairment in the Downstream segment on European refining assets in the third and fourth quarters of 2011 in the amount of€700 million in operating income and€478 million in net income. These elements have been treated as adjustment items.

Investments by the Downstream segment were€1,870 million in 2011, a decrease of 20% compared to€2,343 million in 2010. Divestments by the Downstream segment were€3,235 million in 2011, comprised essentially of the Group’s stake in CEPSA and certain distribution activities in the United Kingdom, compared to€499 million in 2010.

ROACE for the Downstream segment was 7% in 2011 compared to 8% in 2010.

2010 vs. 2009

For the full year 2010, the Group’s ERMI was $27.4/t, an increase of 54% compared to 2009.

Downstream segment sales (excluding sales to other segments) were€123,245 million in 2010, an increase of 23% from €100,518€100,518 million in 2009.

Refined product sales (including trading operations) were 3,776 kb/d in 2010, an increase of 4% compared to 3,616 kb/d in 2009. Refinery throughput in 2010 was 2,009 kb/d, a 7% decrease compared to 2,151 kb/d in

2009. For the full year 2010, the refinery utilization rate based on crude throughput was 73% (77% for crude and other feedstock) compared to 78% in 2009 (83% for crude and other feedstock), reflecting essentially the shutdown of the Dunkirk refinery and a distillation unit at the Normandy refinery as well as impacts from strikes in France. In 2010, the level of scheduled turnarounds for refinery maintenance was low, with turnaround activity expected to increase notably in 2011.

In 2010, Downstream net operating income decreased to €922€922 million (for 2009, €1,773€1,773 million) from operating income of €982€982 million (for 2009, €2,237€2,237 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of €201€201 million (for 2009, €633€633 million), partially offset by income from equity affiliates and other items of


71

€141 million (for 2009, €169€169 million). The decrease in net operating income in 2010 compared to 2009 was due primarily to the impairment charge for French and UK refining assets referred to below.

The Downstream segment’s adjusted net operating income in 2010 was €1,168€1,168 million compared to €953€953 million in 2009. The increase iswas essentially due to the positive impact of the refining margin improvement, which was partially offset by lower throughput and reliability of the Group’s refineries in 2010 and less favorable conditions for supply optimization.

Adjusted net operating income for the Downstream segment excludes any after-tax inventory valuation effect and special items. The adjustment for the inventory valuation effect had a negative impact on Downstream adjusted net operating income in 2010 of €640€640 million compared to a negative impact of €1,285€1,285 million in 2009. The exclusion of special items (comprised essentially of impairments on European refining assets (as described below), partially offset by gains on asset sales) in 2010 had a positive impact of €886€886 million on adjusted net operating income. In 2009, the exclusion of special items (relating mainly to refining asset impairments and other elements) had a positive impact of €465€465 million on adjusted net operating income.

The persistence of an unfavorable economic environment for refining, affecting Europe in particular, led the Group to recognize an impairment in the Downstream segment, essentially on French and UK refining assets, in the fourth quarter 2010 in the amount of €1,192€1,192 million in operating income and €913€913 million in net operating income. These elements have been treated as adjustment items.

Investments by the Downstream segment were €2,343€2,343 million in 2010, compared to €2,771€2,771 million in 2009.

ROACE for the Downstream segment was 8% in 2010 compared to 7% in 2009.

 
2009 vs. 2008
For the full year 2009, the ERMI was 17.8 $/t, a decrease of 65% compared to 2008.
Downstream segment sales (excluding sales to other segments) were €100,518 million in 2009, a decrease of 26% from €135,524 million in 2008.
Refined product sales (including trading operations) were 3,616 kb/d in 2009, decreasing slightly from 3,658 kb/d in 2008. Refinery throughput in 2009 was 2,151 kb/d, a 9% decrease compared to 2,362 kb/d in 2008. For the full year 2009, the refinery utilization rate based on crude throughput was 78% (83% for crude and other feedstock) compared to 88% in 2008 (91% for crude and other feedstock), reflecting the voluntary throughput reductions in the Group’s refineries. Five refineries had scheduled turnarounds for maintenance in 2009 compared to six in 2008.
In 2009, Downstream net operating income increased to €1,773 million (for 2008, €525 million) from operating income of €2,237 million (for 2008, €826 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of €633 million (for 2008, €143 million), partially offset by income from equity affiliates and other items of €169 million (for 2008, loss of €158 million).
The Downstream segment’s adjusted net operating income in 2009 decreased 63% to €953 million compared to €2,569 million in 2008, reflecting essentially the sharp decrease in the demand for refined products and in refining margins.
Adjusted net operating income for the Downstream segment excludes any after-tax inventory valuation effect and special items. The adjustment for the inventory valuation effect had a negative impact on Downstream adjusted net operating income of €1,285 million compared to a positive impact of €1,971 million in 2008. The exclusion of special items (relating mainly to refining asset impairments and other elements) in 2009 had a positive impact of €465 million on the adjusted net operating income. In 2008, the exclusion of special items (relating principally to restructuring charges of €70 million and other special items) had a positive impact of €73 million on adjusted net operating income.
Investments by the Downstream segment were €2,771 million in 2009, compared to €2,418 million in 2008.
ROACE for the Downstream segment was 6.6% in 2009 compared to 19.9% in 2008 due principally to the significant decrease in adjusted net operating income.


72

Chemicals results

(M€)  2011  2010  2009 

Non-Group sales

   19,477    17,490    14,726  

Operating income(a)

   658    964    553  

Equity in income (loss) of affiliates and other items

   471    215    (58) 

Tax on net operating income

   (225)   (267)   (92) 

Net operating income(a)

   904    912    403  

Adjustments affecting net operating income

   (129)   (55)   (131) 

Adjusted net operating income(b)

   775    857    272  

Investments

   847    641    631  

Divestments

   1,164    347    47  

ROACE

   10%    12%    4%  

Chemicals
             
(M€) 2010  2009  2008 
Non-Group sales  17,490   14,726   20,150 
Operating income(a)
  964   553   (58)
Equity in income (loss) of affiliates and other items  215   (58)  (34)
Tax on net operating income  (267)  (92)  76 
Net operating income(a)
  912   403   (16)
Adjustments affecting net operating income  (55)  (131)  684 
Adjusted net operating income(b)
  857   272   668 
Investments  641   631   1,074 
Divestments  347   47   53 
             
ROACE  12%   4%   9% 

(a)
(a)For the definition of operating income and net operating income, see Note 2 to the Consolidated Financial Statements.
(b)Adjusted for special items and the inventory valuation effect. See Notes 2 and 4 to the Consolidated Financial Statements.

20102011 vs. 20092010

For the full year 2010,2011, Chemicals segment sales, excluding intra-Group sales, were €17,490€19,477 million, an increase of 19%11% compared to 2009.

€17,490 million for 2010, reflecting essentially the globally favorable environment in the first half 2011, which has since deteriorated.

In 2010,2011, net operating income for the Chemicals segment was €912€904 million (for 2009, €4032010,€912 million) from an operating income of €964€658 million (for 2009, €5532010,€964 million), with the difference between net operating income and operating income resulting primarily from a gainincome from equity affiliates and other items of €215€471 million (for 2009, a loss2010, income of €58€215 million) offset by a loss from taxes on net operating income of €267€225 million (for 2009,2010, a tax loss of €92€267 million).

The decrease in 2011 in net operating income compared to 2010 was due primarily to the sale of the Group’s stake in CEPSA and a portion of the Resins activities.

The adjusted net operating income for the Chemicals segment in 20102011 was €857€775 million compared to €272€857 million in 2009.2010, due essentially to the impact of the sale of the Group’s interest in CEPSA and a portion of the Resins activities. The adjusted net operating income for the Base chemicals increased by €377Chemicals division decreased from€393 million from 2009in 2010 to 2010, due to an improved environment and€373 million in 2011. Globally, for the ramp up of new production units in Qatar. In 2010,full-year 2011, the Specialties chemicalsBase Chemicals division benefited from strong operational performanceramp-ups in its activities in Qatar and good positioningSouth Korea, but suffered from deteriorating margins in growth markets.

the second half of the year in Europe and in the United States. The Specialty Chemicals division, excluding the effect of changes in the portfolio, maintained results at a level close to the 2010 level, with an adjusted net operating income in 2011 of€426 million compared to€475 million in 2010.

Adjusted net operating income for the Chemicals segment excludes any after-tax inventory valuation effect and special items. The exclusion of the inventory valuation effect had a negative impact on Chemicals adjusted net operating income of €113€10 million in 2010,2011, compared to a

negative impact of€113 million in 2010. In 2011, the exclusion of special items had a negative impact on Chemicals adjusted net operating income of€119 million, where special items consisted essentially of €254 million in 2009.gains on asset sales. In 2010, the exclusion of special items had a positive impact on Chemicals adjusted net operating income of €58€58 million. In 2009, the exclusion of special items (comprised primarily of asset impairments and other elements) had a positive impact on Chemicals adjusted net operating income of €123 million.

Investments by the Chemicals segment increased 32% to €641€847 million in 20102011 compared to €631€641 million in 2009.

2010. Divestments by the Chemicals segment were€1,164 million in 2011, comprised essentially of the sale of the Group’s stake in CEPSA and certain Resins activities, compared to€347 million in 2010.

ROACE for the Chemicals segment was 10% in 2011 compared to 12% in 2010, compareddue essentially to 4% in 2009 due principally to the significant increasea decrease in adjusted net operating income.

income in 2011 compared to 2010.

20092010 vs. 20082009

For the full year 2010, Chemicals segment sales, (excludingexcluding intra-Group sales, were€17,490 million, an increase of 19% compared to other segments) were €14,726 million in 2009, a decrease of 27% from €20,150 million in 2008.

2009.

In 2009,2010, net operating income for the Chemicals segment was €403€912 million (for 2008, a loss of €162009,€403 million) from an operating income of€ 553964 million (for 2008, an operating loss of €582009,€553 million), with the difference between net operating income and operating income resulting primarily from lossesincome from equity affiliates and other items of €58€215 million (for 2008, €342009, a loss of€58 million) andoffset by a loss from taxes on net operating income of €92€267 million (for 2008,2009, a tax gainloss of €76€92 million).

The Chemicals segment’s adjusted net operating income for the Chemicals segment in 20092010 was €272€857 million as compared to €668€272 million in 2008, a decrease of 59% that was essentially due to the significantly weaker market conditions2009. The adjusted net operating income for the Base chemicals activityChemicals division increased by€377 million from 2009 to 2010, due to an improved environment and to a lesser degree, lower sales and results fromthe ramp-up of new production units in Qatar. In 2010, the Specialties activity.Chemicals division benefited from strong operational performance and good positioning in growth markets.

 

Adjusted net operating income for the Chemicals segment excludes any after-tax inventory valuation effect and special items. The exclusion of the inventory valuation effect had a negative impact on Chemicals adjusted net operating income of €254€113 million in 2009,2010, compared to a negative impact of€254 million in 2009. In 2010, the exclusion of special items had a positive impact on Chemicals adjusted net operating income of €504 million in 2008.€58 million. In 2009, the exclusion of special items (comprised primarily of

asset impairments and other elements) had a positive impact on Chemicals adjusted net operating income of €123€123 million. In 2008, the exclusion of special items (relating principally to restructuring costs, asset impairment and other elements) had a positive impact of €180 million on adjusted net operating income.

Investments by the Chemicals segment decreasedincreased to €631€641 million in 20092010 compared to €1,074€631 million in 2008.

2009.

ROACE for the Chemicals segment was 3.8%12% in 20092010 compared to 9.2%4% in 20082009 due principally to the significant decreaseincrease in adjusted net operating income.


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LIQUIDITY AND CAPITAL RESOURCES

(M€)  2011  2010  2009 

Cash flow from operating activities

   19,536    18,493    12,360  

Including (increase) decrease in working capital

   (1,739)   (496)   (3,316) 

Cash flow used in investing activities

   (15,963)   (11,957)   (10,268) 

Total expenditures

   (24,541)   (16,273)   (13,349) 

Total divestments

   8,578    4,316    3,081  

Cash flow used in financing activities

   (4,309)   (3,348)   (2,868) 

Net increase (decrease) in cash and cash equivalents

   (736)   3,188    (776) 

Effect of exchange rates

   272    (361)   117  

Cash and cash equivalents at the beginning of the period

   14,489    11,662    12,321  

Cash and cash equivalents at the end of the period

   14,025    14,489    11,662  

             
(M€) 2010  2009  2008 
Cash flow from operating activities
  18,493   12,360   18,669 
Including (increase) decrease in working capital  (496)  (3,316)  2,571 
Cash flow used in investing activities
  (11,957)  (10,268)  (11,055)
Total expenditures  (16,273)  (13,349)  (13,640)
Total divestments  4,316   3,081   2,585 
Cash flow used in financing activities
  (3,348)  (2,868)  (793)
Net increase (decrease) in cash and cash equivalents
  3,188   (776)  6,821 
Effect of exchange rates  (361)  117   (488)
Cash and cash equivalents at the beginning of the period  11,662   12,321   5,988 
             
Cash and cash equivalents at the end of the period
  14,489   11,662   12,321 

TOTAL’s cash requirements for working capital, share buybacks, capital expenditures, acquisitions and acquisitionsdividend payments over the past three years were financed primarily by a combination of funds generated from operations, borrowings and divestments of non-core assets. In the current environment, TOTAL expects its external debt to be principally financed from the international debt capital markets. The Group continually monitors the balance between cash flow from operating activities and net expenditures. In the Company’s opinion, its working capital is sufficient for its present requirements.

Capital expenditures

The largest part (approximately 85%) of TOTAL’s capital expenditures isin 2011 was made up of additions to intangible assets and property, plant and equipment (approximately 73%), with the remainder attributable to equity-method affiliates and to acquisitions of subsidiaries. In the Upstream segment, as described in more detail under “Supplemental Oil and Gas Information (Unaudited) — Costs incurred in oil and gas property acquisition, exploration and development activities”, capital expenditures arein 2011 were principally development costs (approximately 65%50%, mainly for construction of new production facilities), exploration expenditures (successful or unsuccessful, approximately 10%5%) and acquisitions of proved and unproved properties (approximately 25%40%). In the Downstream segment, about 70%55% of capital expenditures arein 2011 were related to refining activities (essentially 40%70% for existing units including maintenance and major turnarounds and 60%30% for

new construction), the balance being used inrelated to marketing/retail activities and for information systems. In the Chemicals segment, capital expenditures relaterelated to all activities in 2011 and arewere split between Base Chemicals (approximately 75%60%) and Specialties Chemicals (approximately 25%40%). For information on expenditures by business segment, please refer to the discussion of TOTAL’s results for each segment above.

Cash flow

Cash flow from operating activities was €18,493€19,536 million in 2011 compared to€18,493 million in 2010 compared to €12,360and€12,360 million in 2009 and €18,669 million in 2008.2009. The €6,133€1,043 million increase in cash flow from operating activities from 20092010 to 20102011 was due in part to higher net income (Group share), which increased by €2,124€1,705 million over the same period. The cash flow from operating activities was also affected by the effect of changes in oil and oil product prices on the Group’s working capital requirement. As IFRS rules require TOTAL to account for inventories of petroleum products according to the FIFO method, an increase in oil and oil product prices at the end of the relevant period compared to the beginning of the same period generates, all other factors remaining equal, an increase in inventories and accounts receivable net of an increase in accounts payable, resulting in an increase in working capital requirements. Similarly, a decrease in oil and oil products prices generates a decrease in working capital requirements. In 2010,2011, the Group’s working capital requirement increased by €496 million. In 2009, the Group’s working capital requirement increased by €3,316€1,739 million, due primarily to

the increase in oil and oil products prices over the course of the year.

In 2010, the increase was of€496 million.

Cash flow used in investing activities was €11,957€15,963 million in 2011 compared to€11,957 million in 2010 compared to €10,268and€10,268 million in 2009 and €11,0552009. The increase from 2010 to 2011 was due essentially to the higher level of acquisitions made in 2011 as well as to the larger portfolio of upstream projects that were under development in 2011.

Total expenditures were€24,541 million in 2008.

Total expenditures were €16,2732011, up 51% from€16,273 million in 2010, upafter having increased 22% from €13,349€13,349 million in 2009, after having decreased 2% from €13,640 million in 2008.2009. During 2010, 81%2011, 88% of the expenditures were made by the Upstream segment (as compared to 81% in 2010 and 74% in 2009 and 73% in 2008)2009), 14%8% by the Downstream segment (as compared to 14% in 2010 and 21% in 20092009) and 18% in 2008) and 4%3% by the Chemicals segment (as compared to 4% in 2010 and 5% in 2009 and 8% in 2008)2009). The main source of funding for these expenditures has been cash from operating activities.
For additional information on expenditures, please refer to the discussions in “— Overview” and “— Results 2009-2011”.

Divestments, based on selling price and net of cash sold, were €4,316€8,578 million in 2011, compared to€4,316 million in 2010 compared to €3,081and€3,081 million in 20092009. In 2011, the Group’s principal divestments were asset sales of€7,705 million, consisting mainly of the Group’s interests in CEPSA, of its Marketing assets in the United Kingdom, of its photocure and €2,585 millioncoatings resins businesses, of its interests in 2008.Total E&P Cameroun and of Sanofi shares. In 2010, the Group’s principal divestments were asset sales of €3,442€3,452 million, consisting mainly of Sanofi-AventisSanofi shares and the


74

Group’s interests in the Valhall/Hod fields in Norway and in Block 31 in Angola. In 2009, the Group’s principal divestments were asset sales of €2,663€2,663 million, consisting mainly of Sanofi-AventisSanofi shares. In 2008, the Group’s principal divestments were asset sales of €1,451 million, consisting mainly of Sanofi-Aventis shares and reimbursements for carried investments in Yemen, Venezuela and Nigeria.

Cash flow used in financing activities was €3,348€4,309 million in 2011, compared to€3,348 million in 2010 compared to €2,868and€2,868 million in 2009 and €793 million in 2008.2009. The increase in cash flow used in financing activities in 2011 compared to 2009 is2010 was due primarily to a lowerhigher decrease in current borrowings (€(3,870) million in 2011 compared to€(731) million in 2010), partly offset by a higher issuance of non-current financial debt (€4,069 million in 2010, partially offset by a lower decrease2011 compared to€3,789 million in 2010) and an increase in current borrowingsfinancial assets and liabilities (€896 million in 20102011 compared to 2009.

€(817) million in 2010).

Indebtedness

TOTAL’s non-current financial debt was €20,783€22,557 million at year-end 2011 compared to€20,783 million at year-end 2010 compared to €19,437and€19,437 million at year-end 2009 and €16,191 million at year-end 2008.2009. For further information on the Company’s level of borrowing and the type of financial instruments, including maturity profile of debt and currency and interest rate structure, see Note 20

to the Consolidated Financial Statements. For further information on the Company’s treasury policies, including the use of instruments for hedging purposes and the currencies in which cash and cash equivalents are held, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.

Cash and cash equivalents were €14,489€14,025 million at year-end 2011 compared to€14,489 million at year-end 2010 compared to €11,662and€11,662 million at year-end 2009 and €12,321 million at year-end 2008.

2009.

Shareholders’ equity

Shareholders’ equity was €61,271€69,389 million at December 31, 2010,2011, compared to €53,539€61,271 million at year-end 20092010 and €49,950€53,539 million at year-end 2008.2009. Changes in shareholders’ equity in 2011 were primarily due to the addition of net income and translation adjustments, which were only partially offset by the payment of dividends. Changes in shareholders’ equity in 2010 were primarily due to the addition of net income and translation adjustments, which were only partially offset by the payment of dividends. Changes in shareholders’ equity in 2009 were primarily due to the addition of net income, which was only partially offset by the payment of dividends and translation adjustments. Changes in shareholders’ equity in 2008 were primarily due to the addition of net income, which was only partially offset by the payment of dividends, translation adjustments and share buybacks. Whereas during 2010 and 2009, TOTAL did not repurchase any of its own shares TOTAL repurchased 27.6 million of its own shares for €1,339 million during 2008.

the years 2009, 2010 and 2011.

Net-debt-to-equity

As of December 31, 2010,2011, TOTAL’s net-debt-to-equity ratio, which is net debt (i.e., the sum of current borrowings, other current financial liabilities and non-current financial debt, net of current financial assets, hedging instruments on non-current financial debt and cash and cash equivalents,equivalents) divided by the sum of shareholders’ equity and minoritynon-controlling interests after expected dividends payable, was 22%23%, compared to 27%22% and 23%27% at year-ends 20092010 and 2008,2009, respectively. Over the2008-2010 2009-2011 period, TOTAL used its net cash flow (cash flow from operating activities less investments plus divestments) to maintain this ratio generally in its targettargeted range of around 25% to 30%, primarily by managing net debt, (as described above), while net income increased shareholders’ equity and dividends paid throughout the period and repurchases of shares performed in 2008 decreased shareholders’ equity. As of December 31, 2010,2011, TOTAL S.A. had $9,592$10,139 million of long-term confirmed lines of credit, of which $9,581$10,096 million were unused.

In 2011,2012, based on the Group’s capital expenditures budget and after payment of dividends, the Company expects to maintain its netdebt-to-equity ratio in the targetedtarget range of around 25%20% to 30% in an $80a $100 per barrel market environment. For information on the Group’s capital expenditures budget, please refer to the discussion in “— Overview”.


75

GUARANTEES AND OTHER OFF-BALANCE SHEET ARRANGEMENTS

As part of certain project financing arrangements, Total S.A. provided in 2008 guarantees in connection with the financing of the Yemen LNG project for an amount of €1,335€1,208 million, presented under “Guarantees given against borrowings” in Note 23 to the Consolidated Financial Statements. In turn, certain partners involved in this project have given commitments that could, in the case of Total S.A.’s guarantees being called for the maximum amount, reduce the Group’s exposure by up to €427€404 million, recorded under “Other commitments received” in the same Note. “Guarantees given against borrowings” also include the guarantees provided in 2010 by Total S.A. in connection with the financing of the Jubail project (operated by SAUDI ARAMCO TOTAL Refining and Petrochemical Company (SATORP)) of up to €2,385€2,463 million, proportional to TOTAL’s share in the project (37.5%). In addition, Total S.A. provided in 2010 a

guarantee in favor of its partner in the Jubail project (Saudi Arabian Oil Company) with respect to Total Refining Saudi Arabia SAS’s obligations under the shareholders agreement with respect to SATORP. As of December 31, 2010,2011, this guarantee is of up to €1,271€1,095 million and has been presented under “Other operating commitments” in Note 23 to the Consolidated Financial Statements. These guarantees and other information on the Company’s commitments and contingencies are presented in Note 23 to the Consolidated Financial Statements. The Group does not currently consider that these guarantees, or any other off-balance sheet arrangements of Total S.A. nor any other members of the Group, have or are reasonably likely to have, currently or in the future, a material effect on the Group’s financial condition, changes in financial condition, revenues or expenses, results of operation, liquidity, capital expenditures or capital resources.

 

CONTRACTUAL OBLIGATIONS

                     
  Less
        More
    
  than
  1-3
  3-5
  than
    
Payment due by period (M€) 1 year  years  years  5 years  Total 
Non-current debt obligations(a)
  —   6,831   5,561   6,346   18,738 
Current portion of non-current debt obligations(b)
  3,483   —   —   —   3,483 
Finance lease obligations(c)
  23   68   61   46   198 
Asset retirement obligations(d)
  177   486   386   4,868   5,917 
Operating lease obligations(c)
  582   757   504   1,105   2,948 
Purchase obligations(e)
  6,347   7,511   6,916   40,519   61,293 
                     
Total
  10,612   15,653   13,428   52,884   92,577 
                     

Payment due by period (M€)  Less
than
1 year		   1-3
years		   3-5
years		   More
than
5 years		   Total 

Non-current debt obligations(a)

   —     8,052     5,069     7,308     20,429  

Current portion of non-current debt obligations(b)

   3,488     —     —     —     3,488  

Finance lease obligations(c)

   25     70     64     18     177  

Asset retirement obligations(d)

   272     469     335     5,808     6,884  

Operating lease obligations(c)

   762     968     651     940     3,321  

Purchase obligations(e)

   11,049     11,058     9,476     45,770     77,353  

Total

   15,596     20,617     15,595     59,844     111,652  

(a)
(a)Non-current debt obligations are included in the items “Non-current financial debt” and “Hedging instruments of non-current financial debt” of the Consolidated Balance Sheet. The figure in this table is net of the non-current portion of issue swaps and swaps hedging bonds, and excludes non-current finance lease obligations of €175€152 million.
(b)The current portion of non-current debt is included in the items “Current borrowings”, “Current financial assets” and “Other current financial liabilities” of the balance sheet. The figure in this table is net of the current portion of issue swaps and swaps hedging bonds and excludes the current portion of finance lease obligations of €23€25 million.
(c)Finance lease obligations and operating lease obligations: the Group leases real estate, retail stations, ships, and other equipment through non-cancelable capital and operating leases. These amounts represent the future minimum lease payments on non-cancelable leases to which the Group is committed as of December 31, 2010,2011, less the financial expense due on finance lease obligations for €43€31 million.
(d)The discounted present value of Upstream asset retirement obligations, primarily asset removal costs at the completion date.
(e)Purchase obligations are obligations under contractual agreements to purchase goods or services, including capital projects. These obligations are enforceable and legally binding on TOTAL and specify all significant terms, including the amount and the timing of the payments. These obligations mainly include: hydrocarbon unconditional purchase contracts (except where an active, highly liquid market exists and when the hydrocarbons are expected to be re-sold shortly after purchase), reservation of transport capacities in pipelines, unconditional exploration works and development works in Upstream, and contracts for capital investment projects in Downstream. This disclosure does not include contractual exploration obligations with host states where a monetary value is not attributed and purchases of booking capacities in pipelines where the Group has a participation superior to the capacity used.

For additional information on the Group’s contractual obligations, see Note 23 to the Consolidated Financial Statements. The Group has other obligations in connection with pension plans which are described in Note 18 to the Consolidated Financial Statements. As these obligations are not contractually fixed as to timing and amount, they have not been included in this disclosure. Other non-current liabilities, detailed in Note 19 to the Consolidated Financial Statements, are liabilities related to risks that are probable and amounts that can be reasonably estimated. However, no contractual agreements exist related to the settlement of such liabilities, and the timing of the settlement is not known.


76

RESEARCH AND DEVELOPMENT

In 2010, research2011, Research & developmentDevelopment (R&D) expenses amounted to €715€776 million, compared to €650€715 million in 20092010 and €612€650 million in 2008.(1)2009. The process initiated in 2004 to increase R&D budgets continued in 2010.2011. In addition, the Group implementedset up in 2009 a financial devicestructure to contribute to the development ofstart-ups that specialize in the development of innovative technologies in the field of energy.

energy technologies.

In 2010, 4,0872011, 3,946 employees were dedicated to R&D, compared to 4,087 in 2010 and 4,016 in 2009 and 4,2852009. The reduction in 2008.

2011 can be explained, in particular, by the sale of part of the Specialty Chemicals’ Resins activity.

There are six major R&D focuses at TOTAL:

developing knowledge, tools and technological mastery to discover and profitably operate complex oil and gas resources to help meet the global demand for energy;

developing and industrializing solar, biomass and carbon capture and storage technologies to help prepare for future energy needs;

developing practical, innovative and competitive materials that meet customers’ specific needs, contribute to the emergence of new features and systems, enable current materials to be replaced by materials showing higher performance for users, and address the challenges of improved energy efficiency, lower environmental impact and toxicity, better management of their life cycle and waste recovery;

developing, industrializing and improving first-level competitive processes for the conversion of oil, coal and biomass resources to adapt to changes in resources and markets, improve reliability and safety, achieve better energy efficiency, reduce the

• developing knowledge, tools and technological mastery to discover and operate complex oil and gas resources to help meet the global demand for energy;
• developing and industrializing solar, biomass and carbon capture and storage technologies to contribute to changes in the global energy mix;
• developing practical, innovative and competitive materials that meet the market’s specific needs, contribute to the emergence of new features and systems, enable current materials to be replaced by materials showing higher performance for users, and address the challenges of improved energy efficiency, lower environmental impact and toxicity and achieve better management of their life cycle;
• developing, industrializing and improving conversion processes of oil, coal and biomass to adapt to changes in resources and markets, improve reliability and safety, achieve better energy efficiency, reduce the

environmental footprint and maintain the Group’s economic margins in the long-term;

• understanding and measuring the impacts of the Group’s operations and products on ecosystems (water, soil, air, biodiversity) to improve environmental safety, as part of the regulation in place, and reduce their environmental footprint to achieve sustainability in the Group’s operations; and
• mastering and using innovative technologies such as biotechnologies, nanotechnologies, high-performance computing, information and communications technologies and new analytic techniques.long term;

understanding and measuring the impacts of the Group’s operations and products on ecosystems (water, soil, air, biodiversity) to improve environmental safety, in conformity with existing regulation, and reduce the Group’s environmental footprint to achieve sustainability in its operations; and

mastering and using innovative technologies such as biotechnologies, materials sciences, nanotechnologies, high-performance computing, information and communications technologies and new analytic techniques.

The Group intends to increase R&D in all of its business units through cross-functional themes and technologies. Attention is paid to synergies of R&D efforts between business units.

The Group has twenty-two R&D sites worldwide and has developed approximately 600 partnerships with other industrial groups and academic or specialhighly specialized research institutes. TOTAL also has a permanently renewed network of scientific advisors worldwide that monitor and advise on matters of interest to the Group’s R&D activities. Long-term partnerships with universities and academic laboratories deemed strategic in Europe, the United States, Japan and China, as well as innovative small businesses, are part of the Group’s approach.

Each business unit is actively developing an activeits intellectual property activity, aimed at protectingpolicy in order to protect its innovations, allowingto permit its activity to develop without constraints as well as facilitatingand to facilite its partnerships. In 2010,2011, more than 250 new patent applications were issued by the Group.

 

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT

Composition of the Board of Directors

Directors are appointed by the shareholders for a three-year3-year term (Article 11 of the Company’s by-laws).

In case of the resignation or death of a director between two Shareholders’ Meetings, the Board may temporarily appoint a replacement director. This appointment must be ratified by the next Shareholders’ Meeting. The terms of office of the members of the Board are staggered to more evenly space the renewal of appointments.

The Board of Directors appoints the Chairman of the Board from among its members. The Board of Directors also appoints the Chief Executive Officer who may or may not be a member of the Board.

As of December 31, 2010,2011, the Board of Directors hashad fifteen members. Of these,members, including one director has been electedappointed by the shareholders to represent employee shareholders.

(1)  Including, starting in 2009, expenses for Exploration & Production pilot facilities.


77 Twelve of the members of the Board were independent.

The following individuals were members of the Board of Directors of TOTAL S.A. (information as of December 31, 2010).
2011(1)):

Christophe de Margerie

Born on August 6, 1951 (French)

.

Mr. de Margerie joined the Group after graduating from theÉcole Supérieure de Commercein Paris in 1974. He served in several positions in the Group’s Finance Department and Exploration & Production division. He becameIn 1995, he was appointed President of Total Middle East in 1995 before joiningEast. In May 1999, he joined the Group’s executive committeeExecutive Committee as the President of the Exploration & Production division in May 1999.division. He then became Senior Executive Vice President of Exploration & Production of the new TotalFinaElf group in 2000. In January 2002, he became President of the Exploration & Production division of TOTAL. He was appointed a member of the Board of Directors by the Shareholders’ Meeting held on May 12, 2006 and became Chief

Executive Officer of TOTAL on February 14, 2007. On May 21, 2010, he was appointed Chairman and Chief Executive Officer of TOTAL.

Director of TOTAL S.A. since 2006 and until 2012 (last— Last renewal: May 15, 2009).

2009 until 2012.

Chairman of the Strategic Committee.

Holds 85,230105,556 TOTAL shares and 48,52953,869 shares of the TOTAL“TOTAL ACTIONNARIAT FRANCEFRANCE” collective investment fund.

Principal other directorships

•
• 

Member of the Supervisory Board ofVivendi*

•

Manager ofCDM Patrimonial SARL

 

Thierry Desmarest

Born on December 18, 1945 (French)

.

A graduate of theÉcole Polytechniqueand an Engineer of the FrenchCorps des Mines, Mr. Desmarest served as Director of Mines and Geology in New Caledonia, then as technical advisor at the Offices of the Minister of Industry and the Minister of Economy. He joined TOTAL in 1981, where he held various management positions, then served as President of Exploration & Production until 1995. He served as Chairman and Chief Executive Officer of TOTAL from May 1995 until February 2007, and then as Chairman of the Board of TOTAL until May 21, 2010. He was appointed Honorary Chairman and remains a director of TOTAL and Chairman of the TOTAL foundation.Foundation.

Director of TOTAL S.A. since 1995 and until 2013 (last— Last renewal: May 21, 2010).

2010 until 2013.

Chairman of the Nominating & Governance Committee, member of the Compensation Committee and the Strategic Committee.

Holds 360,576 shares.

186,576 shares in full and 144,000 shares by usufruct.

Principal other directorships

•

Director ofSanofi*(2)

•Director of Sanofi-Aventis*
• 

Director ofAir Liquide*

•

Director ofRenault SAS.A.*

•

Director ofRenault SASS.A.S.

•

Director ofBombardier Inc. (Canada)*

 

(1)As of May 13, 2011, the directorships of Bertrand Jacquillat and Lord Levene of Portsoken expired.
(2)Non-consolidated company which was removed from the Company’s scope of consolidation on July 1, 2010.
*Company names marked with an asterisk are publicly listed companies.
Underlinedcompanies are companies excluded from the group in which the director has his or her main duties.

Patrick Artus

Born on October 14, 1951 (French)

.

Independent director

director.

A graduate from theÉcole Polytechnique, the ÉcoleÉcole Nationale de la Statistique et de l’Administration de l’Économie(ENSAE) and theInstitut d’Études Politiques de Paris,, Mr. Artus began his career at the INSEE (French National Institute for Statistics and Economic Studies) where his work included economic forecasting and modeling. He then worked at the Economics Department of the OECD (1980), later becoming the Head of Research at the ENSAE from 1982 to 1985. He was scientific adviser

at the research department of theBanque de France,, before joining the Natixis Group as the head of the research department. He is a professor at theEcole Polytechniqueandan associate professor at the University of Paris I, Sorbonne. He is also a member of the council of economic advisors to the French Prime Minister and of the French National Economic Commission.

Director of TOTAL S.A. since May 15, 2009 and until 2012.
Holds 1,000 shares.
Principal other directorships
• Director ofIPSOS
*     Company names marked with an asterisk are publicly listed companies.
Underlined companies are companies excluded from the group in which the director has his or her main duties.


78

Patricia Barbizet
Born on April 17, 1955 (French)
Independent director
A graduate of theÉcole Supérieure de Commerceof Paris in 1976, Mrs. Barbizet started her career in the Renault Group as the Treasurer of Renault Véhicules Industriels and Chief Financial Officer of Renault Crédit International. She joined the Pinault group in 1989 as the Chief Financial Officer and then served from 1992 as the Chief Executive Officer (non director) of Financière Pinault and Director and Chief Executive Officer of Artémis. Since 2005, she has been the Vice Chairman of the PPR Board of Directors and Chairman of Christie’s.
Director of TOTAL S.A. since May 16, 2008 and until 2011.
Holds 1,000 shares.
Principal other directorships
• Vice Chairman of PPR* Board
• Chief Executive Officer and Director of Artémis
• Non executive Director of Tawa Plc*
• Director ofAir France-KLM*
• Director ofBouygues*
• Director ofTF1*
Daniel Bouton
Born on April 10, 1950 (French)
Independent director
Inspector General of Finance, Mr. Bouton has held various positions within the French Ministry of Economy. He served as Budget Director at the Ministry of Finance from 1988 to 1990. He joined Société Générale in 1991, where he was appointed Chief Executive Officer in 1993, then Chairman and Chief Executive Officer in November 1997. He has been serving as the Chairman of the Société Générale group since May 12, 2008, and has been the Honorary Chairman since May 6, 2009.
Director of TOTAL S.A. since 1997 and until 2012 (last renewal: May 15, 2009).
Holds 3,200 shares.
Principal other directorships
• Director ofVeolia Environnement*
Gunnar Brock
Born on April 12, 1950 (Swedish)
Independent director
Graduated from the Stockholm School of Economics with an MBA grade in Economics and Business Administration, Mr. Brock held various international positions at Tetra Pak. He served as Chief Executive Officer of Alfa Laval from 1992 to 1994 and as Chief Executive Officer of Tetra Pak from 1994 to 2000. After he served as Chief Executive Officer of Thule International, he was appointed Chief Executive Officer of Atlas Copco AB from 2002 to 2009. He is currently Chairman of the Board of Stora Enso Oy.
Mr. Brock is also a member of the Royal Swedish Academy of Engineering Sciences and of the Board of the Stockholm School of Economics.
Director of TOTAL S.A. since May 21, 2010 and until 2013.
Holds 1,000 shares.
Principal other directorships
• Chairman of the Board of Stora Enso Oy.
• Chairman of the Board ofMölnlycke Health Care Group
• Chairman of the Board ofInvestor AB
• Member of the Supervisory Board ofSpencer Stuart Scandinavia
*     Company names marked with an asterisk are publicly listed companies.
Underlined companies are companies excluded from the group in which the director has his or her main duties.

79

Claude Clément
Born on November 17, 1956 (French)
Mr. Clément joined the Group in February 1977 and started his career at Compagnie Française de Raffinage which offered him professional training. He held various positions at the Refining Manufacturing Department in French and African refineries (Gabon, Cameroon). He is currently Manager of the Refining Manufacturing Methods at the Refining Manufacturing Division. Mr. Clément has been an elected member of the Supervisory Board of the TOTAL ACTIONNARIAT FRANCE collective investment fund since 2009 and has served as the Chairman of the TOTAL ACTIONS EUROPEENNES collective investment fund since 2010.
Director of TOTAL S.A. since May 21, 2010 and until 2013.
Holds 820 TOTAL shares and 2,599 shares of the TOTAL ACTIONNARIAT FRANCE collective investment fund.
Bertrand Collomb
Born on August 14, 1942 (French)
Independent director
A graduate of theÉcole Polytechniqueand a member of France’s engineeringCorps des Mines, Mr. Collomb held a number of positions within the Ministry of Industry and other cabinet positions from 1966 to 1975. He joined the Lafarge group in 1975, where he served in various management positions. He served as Chairman and Chief Executive Officer of Lafarge from 1989 to 2003, then as Chairman of the Lafarge Board of Directors from 2003 to 2007 and has been the Honorary Chairman since 2007.
He is also President of theInstitut des Hautes Études pour la Science et la Technologie(IHEST) and theInstitut Français des Relations Internationales(IFRI).
Director of TOTAL S.A. since 2000 and until 2012 (last renewal: May 15, 2009).
Holds 4,712 shares.
Principal other directorships
• Director of Lafarge*
• Director ofDuPont* (United States)
• Director ofAtco* (Canada)
Paul Desmarais Jr.(1)
Born on July 3, 1954 (Canadian)
Independent director
A graduate of McGill University in Montreal and INSEAD in Fontainebleau, Mr. Desmarais was elected Vice Chairman (1984) then Chairman of the Board (1990) of Corporation Financière Power, a company he helped to found. Since 1996, he has served as Chairman of the Board and Co-Chief Executive Officer of Power Corporation of Canada.
Director of TOTAL S.A. since 2002 and until 2011 (last renewal: May 16, 2008).
Holds 2,000 ADRs (corresponding to 2,000 shares).
Principal other directorships
• Chairman of the Board, Co-Chief Executive Officer and Member of the Executive Committee of Power Corporation of Canada *
• Co-Chairman of the Board and member of the executive committee of Power Financial Corporation * (Canada)
• Vice Chairman and Acting Managing Director of Pargesa Holding S.A.* (Switzerland)
• Member of the Board of Directors and Executive Committee of Great-West Lifeco Inc.* (Canada)
• Member of the Board of Directors and Executive Committee of Groupe Bruxelles Lambert S.A.* (Belgium)
• Director ofGDF Suez* (France)
• Director ofLafarge*
• Director and member of the Executive Committee of IGM Financial Inc.* (Canada)
(1)  Mr. Desmarais Jr. is a director of Groupe Bruxelles Lambert, which acting in concert with Compagnie Nationale à Portefeuille, to the Company’s knowledge, owns 5.6% of the Company’s shares and 5.6% of the voting rights. Mr. Demarais Jr. disclaims beneficial ownership of such shares.
*     Company names marked with an asterisk are publicly listed companies.
Underlined companies are companies excluded from the group in which the director has his or her main duties.


80

Bertrand Jacquillat
Born on April 11, 1944 (French)
Independent director
A graduate ofÉcole des Hautes Études Commerciales(HEC),Institut d’études politiques de Parisand Harvard Business School, Mr. Jacquillat holds a PhD in management. He has been a university professor (in both France and the United States) since 1969, a professor at theInstitut d’Études Politiquesin Paris since 1999, Vice-President of theCercle des Economistes, and founding chairman of Associés en Finance.
.

Director of TOTAL S.A. since 1996May 15, 2009 and until 2011 (last2012.

Member of the Compensation Committee.

Holds 1,000 shares.

Principal other directorships

•

Director ofIPSOS

Patricia Barbizet

Born on April 17, 1955 (French).

Independent director.

A graduate of theÉcole Supérieure de Commerce of Paris in 1976, Ms. Barbizet started her career in the Renault Group as the Treasurer of Renault Véhicules Industriels and Chief Financial Officer of Renault Crédit International. She joined the Pinault group in 1989 as the Chief Financial Officer. In 1992, she became the Chief Executive Officer of Financière Pinault. She was the President of the Supervisory Board of the Pinault Printemps Redoute group until May 2005 and became Vice-President of the Board of Directors of PPR in May 2005. Patricia Barbizet is also a member of the Board of Directors of TOTAL, TF1, Air France-KLM andFonds stratégique d’investissement.

Director of TOTAL S.A. since 2008 — Last renewal: May 16, 2008).

13, 2011 and until 2014.

Chairperson of the Audit Committee and member of the Strategic Committee.

Holds 3,6001,000 shares.

Principal other directorships

Vice Chairman of PPR* Board

Chief Executive Officer and Director of Artémis

Chief Executive Officer (non-Director) of Financière Pinault

Director and Deputy Chief Executive Officer of Société Nouvelle du Théâtre Marigny

Permanent representative of Artémis at the Board of Directors of Agefi

Permanent representative of Artémis at the Board of Directors of Sebdo le Point

Member of the Management Board of Château Latour (SCI)

Chief Member of the Supervisory Board of Yves Saint Laurent

•

Administratore Delagatoandadministratore of Palazzo Grazzi

Non-executive Director of Tawa Plc*

Chairman of the Board of Directors of Christie’s International Plc

Board member of Gucci Group N.V.

•

Director ofAir France-KLM*

•

Director ofBouygues*

•

Director ofTF1*

•

DirectorFonds stratégique d’investissement (French government sovereign fund)

 

*Company names marked with an asterisk are publicly listed companies.
Underlinedcompanies are companies excluded from the group in which the director has his or her main duties.

Daniel Bouton

Born on April 10, 1950 (French).

Independent director.

Inspector General of Finance, Mr. Bouton has held various positions within the French Ministry of Economy. He served as Budget Director at the Ministry of Finance from 1988 to 1990. He joined Société Générale in 1991, where he was appointed Chief Executive Officer in 1993, then Chairman and Chief Executive Officer in November 1997. He served

as Chairman of the Société Générale group until May 12, 2008 and has been the Honorary Chairman since May 6, 2009.

Director of TOTAL S.A. since 1997 — Last renewal: May 15, 2009 until 2012.

Holds 3,200 shares.

Principal other directorships

•Chairman and Chief Executive Officer

Director of Associés en FinanceVeolia Environnement*

Gunnar Brock

Born on April 12, 1950 (Swedish).

Independent director.

Graduated from the Stockholm School of Economics with an MBA grade in Economics and Business Administration, Mr. Brock held various international positions at Tetra Pak. He served as Chief Executive Officer of Alfa Laval from 1992 to 1994 and as Chief Executive Officer of Tetra Pak from 1994 to 2000. After serving as Chief Executive Officer of Thule International, he was appointed Chief Executive Officer of Atlas Copco AB from 2002 to 2009. He is currently Chairman of the Board of Stora Enso Oy. Mr. Brock is also a member of the Royal Swedish

Academy of Engineering Sciences and of the Board of Directors of the Stockholm School of Economics.

Director of TOTAL S.A. since May 21, 2010 and until 2013.

Member of the Strategic Committee.

Holds 1,000 shares.

Principal other directorships

Chairman of the Board of Stora Enso Oy

•

Chairman of the Board ofMölnlycke Health Care Group

•

Member of the Supervisory Board ofKlépierreInvestor AB

•

Chairman of the Board ofRolling Optics

•

Member of theBoard of Stena AB*

Claude Clément

Born on November 17, 1956 (French).

Mr. Clément joined the Group in February 1977 and started his career at Compagnie Française de Raffinage, which offered him professional training. He held various positions at the Refining Manufacturing Department in French and African refineries (Gabon, Cameroon). He is currently Manager of the Refining Manufacturing Methods at the Refining Manufacturing Division. Mr. Clément has been an elected member of the Supervisory Board of the “TOTAL ACTIONNARIAT FRANCE” collective investment

fund since 2009, an elected member of the Supervisor Board of the “TOTAL ACTIONS EUROPÉENNES”, “TOTAL DIVERSIFIE A DOMINANTE ACTIONS” and “TOTAL ÉPARGNE SOLIDAIRE” collective investment funds since 2010 and an elected member of the Supervisor Board of the “TOTAL DIVERSIFIÉ A DOMINANTE OBLIGATIONS”, “TOTAL MONETAIRE” and “TOTAL OBLIGATIONS” collective investment funds since 2010.

Director of TOTAL S.A. since May 21, 2010 and until 2013.

Holds 820 TOTAL shares and 3,442 shares of the “TOTAL ACTIONNARIAT FRANCE” collective investment fund.

*Company names marked with an asterisk are publicly listed companies.
Underlinedcompanies are companies excluded from the group in which the director has his or her main duties.

Marie-Christine Coisne-Roquette

Born on November 4, 1956 (French).

Independent director.

A graduate of the University of Paris X Nanterre (law and English) and admitted to the Paris and New York Bar Associations in 1980, Ms. Coisne-Roquette worked as an attorney in Paris and New York until 1988, when she joined the family-owned Sonepar group. From 1988 to 1998, while also serving as Chief Executive Officer of the family-owned Colam Entreprendre holding company, she held several consecutive operational directorships at Sonepar S.A., where she was appointed Chairman of the Board in 1998. She has served as Chairman and Chief Executive Officer of Sonepar since 2002. A member of the Executive Board of MEDEF since 2000, Ms. Coisne-Roquette has chaired that organization’s Tax Commission since 2005.

Director of TOTAL S.A. since May 13, 2011 and until 2014.

Member of the Audit Committee since May 13, 2011.

Holds 1,130 shares.

Principal other directorships

Chairperson and Chief Executive Officer of Sonepar S.A.

Chairman and Chief Executive Officer of Colam Entreprendre

Director of Hagemeyer Canada, Inc.

President of the Supervisory Board of OTRA N.V.

Director of Sonepar Canada, Inc.

President of the Supervisory Board of Sonepar Deutschland GmbH

Director of de Sonepar Ibérica

Director of de Sonepar Italia Holding

Chairperson of the Board of Directors of Sonepar Mexico

Member of the Supervisory Board of Sonepar Nederland B.V.

Director of Sonepar USA Holdings, Inc.

Director of Feljas and Masson SAS

Permanent representative of Colam Entreprendre, member of the Board of Directors at Cabus & Raulot (S.A.S.)

•

Permanent representative of Colam Entreprendre and Sonepar, co-administrators of Sonedis (société civile)

Permanent representative of Sonepar, Director of Sonepar France

Permanent representative of Sonepar, President of Sonepar International (S.A.S.)

Permanent representative of Colam Entreprendre, Director of Sovemarco Europe (S.A.)

•

Co-manager ofDéveloppement Mobilier & Industriel(D.M.I.) (société civile)

•

Manager ofKer Coro (société civile immobilière)

Bertrand Collomb

Born on August 14, 1942 (French).

Independent director.

A graduate of theÉcole Polytechnique and a member of France’s engineeringCorps des Mines, Mr. Collomb held a number of positions within the Ministry of Industry and other cabinet positions from 1966 to 1975. He joined the Lafarge group in 1975, where he served in various management positions. He served as Chairman and Chief Executive Officer of Lafarge from 1989 to 2003, then as Chairman of the Lafarge Board of Directors from 2003 to 2007, and has been the Honorary Chairman since 2007.

He is also Chairman of theInstitut des Hautes Études pour la Science et la Technologie (IHEST) and a Board member of theInstitut Européen de la Technologie.

Director of TOTAL S.A. since 2000 — Last renewal: May 15, 2009 until 2012.

Member of the Compensation Committee and the Nominating & Governance Committee.

Holds 4,712 shares.

Principal other directorships

Director of Lafarge*

•

Director ofDuPont* (United States)

•

Director ofAtco* (Canada)

*Company names marked with an asterisk are publicly listed companies.
Underlinedcompanies are companies excluded from the group in which the director has his or her main duties.

Paul Desmarais Jr.(1)

Born on July 3, 1954 (Canadian).

Independent director.

A graduate of McGill University in Montreal and INSEAD in Fontainebleau, Mr. Desmarais was elected Vice Chairman (1984) then Chairman of the Board (1990) of Corporation

Financière Power, a company he helped to found. Since 1996, he has served as Chairman of the Board and Co-Chief Executive Officer of Power Corporation of Canada.

Director of TOTAL S.A. since 2002 — Last renewal: May 13, 2011 until 2014.

Holds 2,000 ADRs (corresponding to 2,000 shares).

Principal other directorships

Chairman of the Board, Co-Chief Executive Officer and Member of the Executive Committee of Power Corporation of Canada*

Co-Chairman of the Board and member of the Executive Committee of Corporation Financière Power* (Canada)

Vice Chairman and Acting Managing Director of Pargesa Holding S.A.* (Switzerland)

Director and member of the Executive Committee of La Great-West Compagnie d’assurance-vie (Canada)

Director and member of the Executive Committee of First Great-West Life & Annuity Insurance Company (United States)

Director and member of the Executive Committee of Great-West Lifeco Inc.* (Canada)

Director of Great West Financial (Canada) Inc. (Canada)

Director and member of the Permanent Committee of Groupe Bruxelles Lambert S.A.* (Belgium)

Director and member of the Executive Committee of Groupe Investors Inc. (Canada)

Director and member of the Executive Committee of Groupe d’assurance London Inc. (Canada)

Director and member of the Executive Committee of London Life, compagnie d’assurance-vie (Canada)

Director and member of the Executive Committee of Mackenzie Inc.

Director and Deputy Chairman of the Board of La Presse Ltée (Canada)

Director and Deputy Chairman of Gesca Ltée (Canada)

•

Director ofGDF Suez*

•

Director ofLafarge*

Director and member of the Executive Committee of Compagnie d’Assurance du Canada sur la Vie (Canada)

Director and member of the Executive Committee of the Corporation Financière Canada Life (Canada)

Director and member of the Executive Committee of IGM Inc.* (Canada)

Director and Chairman of the Board of 171263 Canada Inc. (Canada)

Director of 152245 Canada Inc. (Canada)

Director of GWL&A Financial Inc. (United States)

Director of Great West Financial (Nova Scotia) Co. (Canada)

Director of First Great-West Life & Annuity Insurance Company (United States)

Director of Power Communications Inc.

Director and Vice Chairman of the Board of Power Corporation International

Director and member of the Executive Committee of Putnam Investments LLC

Member of the Supervisory Board of Power Financial Europe B.V.

Director of Canada Life Capital Corporation Inc. (Canada)

Director and member of the Executive Committee of The Canada Life Assurance Company of Canada (Canada)

Director and member of the Executive Committee of Crown Life Insurance Company (Canada)

Director and Deputy Chairman of the Board of Square Victoria Communications Group Inc.

Member of the Supervisory Board of Parjointco N.V.

(1)Mr. Desmarais Jr. is a director of Groupe Bruxelles Lambert, which acting in concert with Compagnie Nationale à Portefeuille, to the Company’s knowledge, owns 5.5% of the Company’s shares and 5.5% of the voting rights. Mr. Demarais Jr. disclaims beneficial ownership of such shares.
*Company names marked with an asterisk are publicly listed companies.
Underlinedcompanies are companies excluded from the group in which the director has his or her main duties.
• Member of the Supervisory Board ofPresses Universitaires de France (PUF)

Barbara Kux

Born on February 26, 1954 (Swiss).

Independent director.

Holder of an MBA (with honors) from INSEAD in Fontainebleau, Ms. Kux joined McKinsey & Company in 1984 as a Management Consultant, where she was responsible for strategic assignments for international groups. After serving as manager for development of emerging markets at ABB and then at Nestlé between 1989 and 1999, she was appointed Executive Director of Ford in Europe from 1999 to 2003. In 2003, Ms. Kux became a member of the Management Committee of the

Philips group and, starting in 2005, was in charge of sustainable development. Since 2008, she has been a member of the Management Board of Siemens AG. She is also responsible for sustainable development at the Group and is in charge of the Group’s supply chain.

Director of TOTAL S.A. since May 13, 2011 and until 2014.

Member of the Strategic Committee.

Holds 1,000 shares.

Principal other directorships

Member of the Management Board of Siemens AG*

 

Anne Lauvergeon

Born on August 2, 1959 (French)

.

Independent director

director.

Chief Mining Engineer and a graduate of theÉcole Normale Supérieurewith a doctorate in physical sciences, Mrs.Ms. Lauvergeon held various positions in industry before becoming Deputy Chief of Staff in the Office of the President of the Republic in 1990. She joined Lazard Frères et Cie as Managing Partner in 1995. From 1997 to 1999, she was Executive Vice President and member of the Executive Committee of Alcatel, in charge of industrial partnerships.partnerships and international affairs. Ms. Lauvergeon

Mrs. Anne Lauvergeon has

served as Chairman of the Management Board of AREVA sinceAreva from July 2001 to June 2011 and Chairman and Chief Executive Officer of Areva NC (formerly Cogema) sincefrom June 1999.

1999 to June 2011.

Director of TOTAL S.A. since 2000 and until 2012 (last— Last renewal: May 15, 2009).

2009 until 2012.

Member of the Strategic Committee.

Holds 2,000 shares.

Principal other directorships

•
• Chairperson of the Management Board of Areva*
• Chairperson and CEO of Areva NC
• 

Director ofGDF Suez*

•

Director ofVodafone Group Plc*

 

Lord Levene of Portsoken

Born on December 8, 1941 (British)
Independent director
Lord Levene served in various positions within the Ministry of Defense, the office of the Secretary of State for the Environment, the office of the Prime Minister and the Ministry of Trade in the United Kingdom from 1984 to 1995. He served as senior adviser at Morgan Stanley from 1996 to 1998 and was then appointed Chairman of Bankers Trust International from 1998 to 2002. He was Lord Mayor of London from 1998 to 1999. He is currently Chairman of Lloyd’s.
Director of TOTAL S.A. since 2005 and until 2011 (last renewal: May 16, 2008).
Holds 2,000 shares.
Principal other directorships
• Chairman of Lloyd’s
• Chairman ofGeneral Dynamics UK Ltd
• Director ofHaymarket Group Ltd
• Director ofChina Construction Bank*
• Director ofNBNK Investments Plc*
Claude Mandil

Born on January 9, 1942 (French)

.

Independent director

director.

A graduate of theÉcole Polytechniqueand a General Engineer from theFrance’s engineering school Corps des Mines, Mr. Mandil served as a Mining Engineer in the Lorraine and Bretagne regions. He then served as a Project Manager at theDélégation de l’Aménagement du Territoire et de l’Action Régionale(City

*     Company names marked with an asterisk are publicly listed companies.
Underlined companies are companies excluded from the group in which the director has his or her main duties.


81

(City and Department planning/DATAR) and as the Interdepartmental Head of Industry and Research and regional delegate of ANVAR. From 1981 to 1982, he served as the technical advisor on the staff of the Prime Minister, in charge of the industry, energy and research sectors. He was appointed Chief Executive Officer, then Chairman and Chief Executive Officer of theInstitut de Développement Industriel (Industry Development Institute)Institute — IDI) until 1988. He was Chief Executive Officer of theBureau de Recherches

Géologiques et Minières(BRGM) from 1988 to 1990. From 1990 to 1998, Mr. Mandil was Chief Executive Officer for Energy and Commodities at the French Industry Ministry and the first representative for France atto the Management Board of the International Energy International Agency (EIA) Executive Committee.(IEA). He served as the Chairman of the EIA inIEA from 1997 andto 1998. In 1998, he was appointed Deputy Chief Executive Officer of Gaz de France and, in April 2000, Chairman of theInstitut Français du Pétrole (French(French Institute offor Oil). From 2003 to 2007, he was the Executive Director of the EIA.

Director of TOTAL S.A. since 2008 — Last renewal: May 16, 200813, 2011 and until 2011.

2014.

Member of the Strategic Committee.

Holds 1,000 shares.

Principal other directorships

•
• 

Director ofInstitut Veolia Environnement

•

Director ofSchlumberger SBC Institute

 

*Company names marked with an asterisk are publicly listed companies.
Underlinedcompanies are companies excluded from the group in which the director has his or her main duties.

Michel Pébereau(1)(1)

Born on January 23, 1942 (French)

.

Independent director

director.

Honorary Inspector General of Finance, Mr. Pébereau held various positions in the Ministry of Economy and Finance, before serving, from 1982 to 1993, as Chief Executive Officer and then as Chairman and CEOChief Executive Officer of Crédit Commercial de France (CCF). He was Chairman and Chief Executive Officer of BNP then BNP Paribas from 1993 to 2003, and is currently Chairman of the Board of BNP Paribas. He has also been theDirectors from 2003 to December 1, 2011, and is currently Honorary Chairman of European Financial Round Table (EFRT) since 2009.BNP Paribas.

Director of TOTAL S.A. since 2000 and until 2012 (last— Last renewal: May 15, 2009).

2009 until 2012.

Chairman of the Compensation Committee and member of the Nominating & Governance Committee.

Holds 2,356 shares.

Principal other directorships

Director of BNP Paribas*

•
• Chairman of the Board of Directors of BNP Paribas*
• Director ofLafarge
• 

Director ofSaint-Gobain*

•
• Member of the Supervisory Board

Director ofAXA*

•
• 

Director ofEADS N.V.*

•

Director ofPargesa Holding S.A.* (Switzerland)

• Member of the Supervisory Board of Banque marocaine pour le Commerce et l’Industrie*

Director of BNP Paribas Suisse

Member of the Supervisory Board of Banque marocaine pour le Commerce et l’Industrie*

•

Non-voting member (Censeur) ofGaleries Lafayette

 

Thierry de Rudder(2)(2)

Born on September 3, 1949 (Belgium(Belgian and French)

.

Independent director

director.

A graduate of theUniversité de Genèvein mathematics, theUniversité Libre de Bruxellesand Wharton (MBA), Mr. de Rudder served in various positions at Citibank from 1975 to 1986 before joining Groupe Bruxelles Lambert, where he was appointed Acting Managing Director.

Director of TOTAL S.A. since 1999 and until 2013 (last— Last renewal: May 21, 2010).

2010 until 2013.

Member of the Audit Committee and the Strategic Committee.

Holds 3,956 shares.

Principal other directorships

Acting Managing Director of Groupe Bruxelles Lambert*

Director of Brussels Securities (Belgium)

Director of GBL Treasury Center (Belgium)

Director of Sagerpar (Belgium)

Director of GBL Energy Sàrl (Luxembourg)

Director of GBL Verwaltung Sàrl (Luxembourg)

Director of GBL Verwaltung GmbH (Germany)

Director of Ergon Capital Partners (Belgium)

Director of Ergon Capital Partners II (Belgium)

Director of Ergon Capital Partners III (Belgium)

•

Director ofGDF Suez*

•

Director ofLafarge*

•

Director ofElectrabel

 

At the meeting held on January 12, 2012, the Board of Directors took note of the resignation of Mr. Thierry de Rudder from his position as a director as of the end of the Board meeting, and consequently decided to co-opt Mr. Gérard Lamarche to replace Mr. de Rudder for the

remaining term of his predecessor’s directorship until the Shareholders’ Meeting to be held in 2013 to approve the 2012 accounts. The nomination of Mr. Lamarche is subject to the ratification of the Shareholders’ general meeting on May 11, 2012.

(1)Mr. Pébereau is Honorary Chairman of BNP Paribas, which, to the Company’s knowledge, owns 0.2% of the Company’s shares and 0.2% of the voting rights. Mr. Pébereau is also a director of Pargesa Holding SA, part of Group Bruxelles Lambert, which acting in concert with Compagnie Nationale à Portefeuille, to the Company’s knowledge, owns 5.5% of the Company’s shares and 5.5% of the voting rights. Mr. Pébereau disclaims beneficial ownership of such shares.
• (2)Mr. de Rudder was Acting Managing Director of Groupe Bruxelles Lambert*
• Director ofLambert which, acting in concert with Compagnie Nationale à Portefeuille*
• Portefeuille and to the Company’s knowledge, owns 5.5% of the Company’s shares and 5.5% of the voting rights. Mr. de Rudder disclaims beneficial ownership of such shares. Since January 2012, Mr. Gérard Lamarche is Acting Managing Director ofGDF Suez*
• Director ofLafarge* Groupe Bruxelles Lambert.
*Company names marked with an asterisk are publicly listed companies.
Underlinedcompanies are companies excluded from the group in which the director has his or her main duties.

(1)  Gérard Lamarche

Born July 15, 1961 (Belgian).

Independent director.

Mr. Pébereau isLamarche graduated in economic science from Louvain-La-Neuve university and the INSEAD business school (Advanced Management Program for Suez Group Executives). He also followed the Global Leadership Series course of training at the Wharton International Forum in 1998-99. He started his career in 1983 with Deloitte Haskins & Sells in Belgium, before becoming a consultant in mergers and acquisitions in Holland in 1987. In 1988, Mr. Lamarche joined Société Générale de Belgique as an investment manager and management controller between 1989 and 1991, then as a consultant in strategic operations from 1992 to 1995. He joined Compagnie Financière de Suez as a project manager for the Chairman of BNP Paribas, which, to the Company’s knowledge, owns 0.2%and Secretary of the Company’s sharesExecutive Committee (1995-1997), before taking part in the merger between Compagnie de Suez and 0.2%Lyonnaise des Eaux, which became Suez Lyonnaise des Eaux (1997), and then being appointed as the acting Managing Director in charge of Planning, Management Control and Accounts. In 2000, Mr. Lamarche pursued his career in industry by joining

NALCO (the American subsidiary of the voting rights. Mr. Pébereau is also a directorSuez group and the world leader in the treatment of Pargesa Holding SA, partindustrial water) as the Director and Chief Executive Officer. In March 2004, he was appointed Chief Executive Officer in charge of Group Bruxelles Lambert, which acting in concert with Compagnie Nationale à Portefeuille, to the Company’s knowledge, owns 5.6%Finance of the Company’s sharesSuez group, before being appointed Senior Executive and 5.6%Vice President in charge of Finance and member of the voting rights.Management Committee and the Executive Committee of the GDF Suez group in July 2008. On April 12, 2011, Mr. Pébereau disclaims beneficial ownershipLamarche became a Director on the Board of such shares.

(2)  Mr. de Rudder is acting managing directorDirectors of Groupe Bruxelles Lambert which,(GBL). He has been the acting in concert with Compagnie Nationale à Portefeuille and to the Company’s knowledge, owns 5.6%Managing Director since January 2012. Mr. Lamarche is also a Director of the Company’s shares and 5.6% of the voting rights. Mr. de Rudder disclaims beneficial ownership of such shares.
*     Company names marked with an asterisk are publicly listed companies.
Underlined companies are companies excluded from the group in which the director has his or her main duties.


82

Legrand.

Serge Tchuruk
Born on November 13, 1937 (French)
Independent director
A graduate of theÉcole Polytechniqueand anIngénieur de l’armement, Mr. Tchuruk held various management positions with Mobil Corporation, then with Rhône-Poulenc, where he was named Chief Executive Officer in 1983. He served as Chairman and CEO of CDF-Chimie/Orkem from 1986 to 1990, then as Chairman and CEO of TOTAL from 1990 to 1995. In 1995, he became Chairman and Chief Executive Officer of Alcatel. From 2006 to 2008, he was appointed Chairman of the Board of Alcatel-Lucent.
Director of TOTAL S.A. since 1989 (last renewal: May 11, 2007; term2012 — Nomination by cooptation: January 12, 2012 until 2013.

Member of office: May 21, 2010).

the Audit Committee and the Strategic Committee.

Holds 1,575 shares.

Principal other directorships

Acting Managing Director and Director of Groupe Bruxelles Lambert*

•

Director and member of the Audit Committee ofLegrand*

 
• Director of Weather Investment SPA

Other information

At

The Board noted the absence of potential conflicts between the Directors’ duties in the best interests of the Company and the private interests of its meeting on September 15, 2009,directors. To the Company’s knowledge, the members of the Board of Directors appointed Mr. Charles Paris de Bollardière SecretaryTOTAL S.A. are not related by close family ties; there are no arrangements or agreements with clients or suppliers that facilitated their appointment; there is no service agreement binding a director of the Board.

TOTAL S.A. to one of its subsidiary and providing for special benefits upon termination of such agreement.

The current members of the Board of Directors of the Company have informed the Company that they have not been convicted, have not been associated with a bankruptcy, receivership or liquidation, and have not been incriminated or publicly sanctioned or disqualified, as stipulated in item 14.1 of Annex I of EC Regulation 809/2004 of April 29, 2004.

At its meeting held on February 9, 2012, the Board of Directors decided to propose the renewal of the directorships of Ms. Lauvergeon and Messrs. de Margerie, Artus, Collomb, and Pébereau, which are due to expire. At

the general Shareholders’ meeting on May 11, 2012, the Board will also propose the nomination of a new independent director, Ms. Anne-Marie Idrac, who will place her expertise of the world of industry at the Board’s disposal and will broaden the representativeness and the diversity of the Board. If the resolution is approved by the Shareholders’ Meeting, the proportion of women sitting in the Board will be one-third.

Representative of the Worker’s Council: accordingpursuant to Article L.2323- 62 of the French LabourLabor Code, two members of the Worker’s Council attend, with consultative rights, all meetings of the Board. In compliance with the second paragraph of the abovesuch article, this number increased tosince July 7, 2010, four members as of July 7, 2010.

the Worker’s Council attend Board meetings.

At its meeting on September 15, 2009, the Board of Directors appointed Mr. Charles Paris de Bollardière Secretary of the Board.

Director independence

At its meeting on February 10, 2011,9, 2012, the Board of Directors, acting on a proposal fromthe recommendation of the Nominating & Governance Committee, reviewed the independence of the Company’s

*Company names marked with an asterisk are publicly listed companies.
Underlinedcompanies are companies excluded from the group in which the director has his or her main duties.

directors as of December 31, 2010. Also based on2011. At the Committee’s proposal,suggestion, the Board considered that, pursuant to the AFEP-MEDEF Code, a director is independent when “he or she has no relationship of any nature,kind with the company,Company, its group,Group or the management of either,its Management, that may compromise the exercise of his or her freedom of judgment”.

For each director, this assessment relies on the independence criteria set forth in the AFEP-MEDEF Code as reminded thereafter:hereafter:

not to be an employee or a director of the Company, or a Group company, and not having been in such a position for the previous five years;

not to be a director of a company in which the Company holds a directorship or in which an employee appointed as such or an executive director of the company is a director;

• not to be an employee or a director of the Company, or a Group company, and not having been in such a position for the previous five years;
• not to be an executive director of a company in which the Company holds a directorship or in which an employee appointed as such or an executive director of the company is a director;
• not to be a customer, supplier, investment banker or commercial banker for a significant part of whose business the company or its Group accounts;
• not to be related by close family ties to an executive director;
• not to have been an auditor of the Company within the previous five years;
• 

not to be a material customer, supplier, investment banker or commercial banker of the Company or Group and for which the Company or the Group is not a material part of their business;

not to be related by close family ties to a corporate executive officer;

not to have been an auditor of the Company within the previous five years;

not to have been a director of the Company for more than twelve years (upon expiry term of office during which the12-year limit is reached).

In addition, the Board of Directors acknowledged Mr. Desmarest’s term of office as member ofduring which the Supervisory Board of Areva has terminated since March 5, 2010.12-year limit is reached).

The AFEP-MEDEF Code expressly stipulates that the Board can decide that the implementation of certain defined criteria is not relevant or induces an interpretation that is particular to the Company.

With regard to the criterion applying to twelve years of service, the AFEP-MEDEF code states that “the status of independent director due to the application of this criterion shall only be relinquished at the end of the directorship during which the 12-year period is exceeded”. Pursuant to the report of the Nominating & Governance Committee, on February 9, 2012, the Board observed that Mr. Bouton and Mr. de Rudder had exceeded twelve years of service on December 31, 2011. Since the directorships of Messrs. Bouton and de Rudder had been renewed before the twelve-year period expired, the Board decided that they can still be considered as independent directors, according to the AFEP-MEDEF code.

Concerning “material” relationships, as a client, supplier, investment or finance banker, between a director and the

Company, the Board deemed that the level of activity between Group companies and the bank at which one of its Directors is an officer, which is less than 0.1% of its net banking income and less than 5% of the Group’s overall assets, represents neither a material portion of the overall activity of such bank nor a material portion of the Group’s external financing. The Board concluded that Mr. Pébereau should be considered as independent.

Mrs.

Similarly, the Board of Directors deemed that the level of activity between Group companies and one of its suppliers, Stena AB, of which Mr. Brock is a director, which is less than 2.68% of Stena AB’s turnover, represents neither a material portion of the supplier’s overall activity nor a material portion of the Group’s purchasing. The Board concluded that Mr. Brock could be considered as an independent director.

Mmes. Barbizet, Coisne-Roquette, Kux and Lauvergeon and Messrs. Artus, Bouton, Brock, Collomb, Desmarais, Jacquillat, Mandil, Pébereau and de Rudder and Lord Levene of Portsoken were deemed to be independent directors.

80% of the directors are independent.

were independent on December 31, 2011.

Moreover, the Board noted that the directorships of Ms. Lauvergeon and Messrs. Collomb and Pébereau will exceed twelve years on March 22, 2012 for Messrs. Collomb and Pébereau, and on May 25, 2012 for Ms. Lauvergeron, after the Shareholders’ meeting that will be invited to renew her directorship on May 11, 2012. The Board also noted the absence of potential conflicts between the interestsDirectors deemed that, for a company with a long-term activity and investment cycles of the Companymore than ten years, extended directorships and the private interestscorresponding experience represent an asset for the Group and a means of consolidating the independence of judgment of its directors. ToDirectors. The Board concluded that the Company’s knowledge,proposal to renew the membersdirectorships of Ms. Lauvergeon and Messrs. Collomb and Pébereau at the Shareholders meeting in May 11, 2012, does not call their independence into question, according to the AFEP-MEDEF code, in view of their independence of judgment.

In addition, the Board of TOTAL S.A.Directors has examined the situations of the directors whose nomination or ratification will be submitted to the Shareholders’ meeting on May 11, 2012. Ms. Idrac and Mr. Lamarche are not related


83

by close family ties; there are no arrangements or agreements with clients or suppliers that facilitated their appointment; there is no service agreement binding a director of TOTAL S.A.deemed to one of its subsidiary and providing for special benefits upon termination of such agreement.be independent directors.

 

Management

General Management

Management form

Based on the recommendation by the Nominating and& Governance Committee, the Board of Directors decided at its meeting on May 21, 2010 to reunify the positions of Chairman of the Board and Chief Executive Officer and appoint the Chief Executive Officer to the position of Chairman of the Board until its term of office expires, that is until the Shareholders’ Meeting called to approve the financial statements for the fiscal year 2011.

As a result, Mr. de Margerie has been appointed Chairman and Chief Executive Officer of the GroupTOTAL S.A. since May 21, 2010.

The Board of Directors deemed that the unified management form was the most appropriate to the Group’s business and specificities of the oil and gas sector. This decision was made taking into account the advantage of the unified management and the majoritycomposition of independent directors appointed to the Committees of the Board that comprise a significant portion of independent directors, which ensures balanced authority.

The management form selected shall remain in effect until a decision to the contrary is made by the Board of Directors.

The Executive Committee

The Executive Committee, under the responsibility of the Chairman and Chief Executive Officer, is the primary decision-making body of the Group.

It implements the strategy formulated by the Board of Directors and authorizes related investments, subject to the approval by the Board of Directors for investments exceeding 3% of the Group’s equity or the notification of the Board for investments exceeding 1% of equity.

The following individuals

As of December 31, 2011, the members of TOTAL’s Executive Committee were membersas follows:

Christophe de Margerie, Chairman of the Executive Committee as(Chairman and Chief Executive Officer);

François Cornélis, Vice Chairman of December 31, 2010:the Executive Committee (President of the Chemicals division);

• Christophe de Margerie, Chairman of the Executive Committee (Chairman and Chief Executive Officer);
• François Cornélis, Vice Chairman of the Executive Committee (President of the Chemicals segment);
• Michel Bénézit (President of the Refining & Marketing division);
• Yves-Louis Darricarrère (President of the Exploration & Production division);
• Jean-Jacques Guilbaud (Chief Administrative Officer); and
• Patrick de La Chevardière (Chief Financial Officer).

Michel Bénézit (President of the Refining & Marketing division);

Yves-Louis Darricarrère (President of the Exploration & Production division);

Jean-Jacques Guilbaud (Chief Administrative Officer); and

Patrick de La Chevardière (Chief Financial Officer).

In the context of the reorganization of its Downstream and Chemicals segments, TOTAL’s Executive Committee was changed on January 1, 2012. As of that date, the members of TOTAL’s Executive Committee are:

Christophe de Margerie, Chairman of the Executive Committee (Chairman and Chief Executive Officer);

Philippe Boisseau (President of the Supply & Marketing segment);

Yves-Louis Darricarrère (President of the Exploration & Production division and Gas & Power division);

Jean-Jacques Guilbaud (Chief Administrative Officer);

Patrick de La Chevardière (Chief Financial Officer); and

Patrick Pouyanné (President of the Refining & Chemicals segment).

The Management Committee

The Management Committee facilitates coordination among the divisionsdifferent entities of the Group and monitors the operating results of the operational divisions and the activity reports of thesethe functional divisions.

In addition to the members of the Executive Committee, the following eighteentwenty-two individuals from various operating divisions and non-operating departments and operating divisions served as members of the Management Committee as of December 31, 2010:

Corporate
2011:

•
• 

Corporate: René Chappaz, Vice President, Executive Career Management

• Yves-Marie Dalibard, Vice President, Corporate Communications
• Peter Herbel, General Counsel
• Jean-Marc Jaubert, Senior Vice President, Industrial Safety
• Manoelle Lepoutre, Executive Vice President, Sustainable Development and the Environment
• Jean-François Minster, Senior Vice President, Scientific Development
• Jean-Jacques Mosconi, Vice President, Strategic PlanningJacques-Emmanuel Saulnier, François Viaud;

•François Viaud, Senior Vice President, Human Resources
Upstream
• 

Upstream: Marc Blaizot, Senior Vice President, Geosciences, Exploration & Production

• Philippe Boisseau, President, Gas & Power
• Arnaud Breuillac, Michel Hourcard, Jacques Marraud des Grottes, Senior Vice President, Africa, Exploration & ProductionGrottes;

•Patrick Pouyanné, Senior Vice President, Strategy, Business Development and R&D, Exploration & Production
Downstream
• 

Downstream: Pierre Barbé, Senior Vice President, Trading & Shipping

• Alain Champeaux, Senior Vice President, Overseas
• Bertrand Deroubaix, General Secretary, Refining & Marketing
• Eric de Menten, Senior Vice President, Marketing Europe, Refining & MarketingAndré Tricoire; and

•André Tricoire, Senior Vice President, Refining, Refining & Marketing
Chemicals
• 

Chemicals: Françoise Leroy, General Secretary, ChemicalsJacques Maigné, Bernard Pinatel, Patrick Pouyanné.

In addition to the members of the Executive Committee, the following twenty-five individuals from various operating divisions and non-operating departments served as members of the Management Committee as of January 16, 2012:

•

Corporate: René Chappaz, Peter Herbel, Jean-Marc Jaubert, Helle Kristoffersen, Manoelle Lepoutre, Françoise Leroy, Jean-François Minster, Jacques-Emmanuel Saulnier, François Viaud;

•

Upstream: Marc Blaizot, Arnaud Breuillac, Olivier Cleret de Langavant, Isabelle Gaildraud, Michel Hourcard, Jacques Marraud des Grottes;

 

•

Refining & Chemicals: Pierre Barbé, Bertrand Deroubaix, Jacques Maigné, Jean-Jacques Mosconi, Bernard Pinatel, Bernadette Spinoy; and

•

Supply & Marketing: Benoît Luc, Momar Nguer, Jérôme Paré, Jérôme Schmitt.

In addition, Jérôme Schmitt servesserved as the Group’s Treasurer until January 1, 2012. Effective January 2, 2012, Humbert de Wendel is the Group’s Treasurer.

 


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COMPENSATION

COMPENSATION

Board Compensation

The overall amount of directors’ fees allocated to members of the Board of Directors was set at €1.1€1.1 million for each fiscal year by the Shareholders’ Meeting on May 11, 2007.

In 2010,2011, the overall amount of directors’ fees allocated to the members of the Board of Directors was €0.96€1.07 million, noting that there were fifteen directors as of December 31, 2010,2011, as at year-end 2009.

2010.

The allocation of the overall amount of fees for 2011 remains based on an allocation scheme comprised of a fixed compensation and a variable compensation based on fixed amounts per meeting, which contributesmade it possible to takingtake into account each director’s effectiveactual attendance toat the meetings of the Board of Directors and its Committees. At its meeting on February 10, 2010,

To take into account the creation of the Strategic Committee, the Board of Directors decided at its meeting of October 27, 2011, to readjustset out the allocation of fees and the fixed and variable amounts per meeting as follows:

•
• 

a fixed amount of €20,000 was€20,000 is to be paid to each director (paid(calculatedprorata temporisin case of a change during the period), apart from the Chairman of the Audit Committee, who wasis to be paid €30,000€30,000 and the other Audit Committee members, who wereare to be paid €25,000;

• an amount of €5,000 per director for each Board of Directors’ meeting effectively attended;
• an amount of €3,500 per director for each Compensation Committee or Nominating & Governance Committee’s meetings effectively attended;
• an amount of €7,000 per director for each Audit Committee’s meeting effectively attended;
• a premium of €2,000 in case the attendance to a Board of Directors or Committee meeting involves a trip from a country other than France;
• the Chairman and Chief Executive Officer does not receive directors’ fees as director of TOTAL S.A. or any other company of the Group; and
• until his duties of Chairman of the Board of TOTAL S.A. expired, Mr. Desmarest did not receive any directors’ fees as director of TOTAL S.A.€25,000;

an amount of€5,000 per director for each Board of Directors’ meeting actually attended;

an amount of€3,500 per director for each Compensation Committee, Nominating & Governance Committee or Strategic Committee meeting actually attended;

an amount of€7,000 per director for each Audit Committee meeting actually attended;

a premium of€2,000 for travel from a country outside of France to attend a Board of Directors or Committee meeting;

the Chairman and Chief Executive Officer does not receive directors’ fees as director of TOTAL S.A. or any other company of the Group.

See the table “Directors’ Fees and Other Compensation Received by Directors” below for additional compensation information.

Policy for determining the compensation and other benefits of the Chairman and the Chief Executive Officercorporate executive officers

Based on a proposal by the Compensation Committee, the Board adopted the following policy for determining the compensation and other benefits of the corporate executive officers (the Chairman and of the Chief Executive Officer:Officer):

Compensation and benefits for the Chairman and the Chief Executive Officer are set by the Board of Directors after considering proposals from the Compensation Committee. Such compensation shall be reasonable and fair, in a context that values both teamwork and motivation within the Company.

• Compensation and benefits for the Chairman and the Chief Executive Officer are set by the Board of Directors after considering proposals from the Compensation Committee. Such compensation shall be reasonable and fair, in a context that values both teamwork and motivation within the Company.

Compensation for the Chairman and the Chief Executive Officer is related to market practice, work performed, results obtained and responsibilities held.

Compensation for the Chairman and the Chief Executive Officer includes both a fixed portion and a variable portion. The fixed portion is reviewed at least every two years.

The amount of variable compensation is reviewed each year and may not exceed a stated percentage of fixed compensation. Variable compensation is determined based on pre-defined quantitative and qualitative criteria that are periodically reviewed by the Board of Directors. Quantitative criteria are limited in number, objective, measurable and adapted to the Group’s strategy.

• Compensation for the Chairman and the Chief Executive Officer includes both a fixed portion and a variable portion, each of which is reviewed annually.
• The amount of variable compensation may not exceed a stated percentage of fixed compensation. Variable compensation is determined based on pre-defined quantitative and qualitative criteria. Quantitative criteria are limited in number, objective, measurable and adapted to the Group’s strategy.

Variable compensation is designed to reward short-term performance and progress towards medium-term objectives. The qualitative criteriacompensation is determined in line with the annual assessment of the performance of the Chairman and the Chief Executive Officer and the Company’s medium-term strategy.

The Board of Directors keeps track of the fixed and variable portions of the compensation of the Chairman and the Chief Executive Officer over several years and in light of the Company’s performance.

The Group does not have a specific pension plan for variable compensationthe Chairman and the Chief Executive Officer. They are eligible for retirement benefits and pensions available to certain employee categories in the Group under conditions determined by the Board.

Stock options and performance shares are designed to allow exceptional circumstancesalign the long-term interests of the Chairman and the Chief Executive Officer with those of the shareholders.

The allocation of options and performance shares to be taken into account, when appropriate.

• The Group does not have a specific pension plan for the Chairman and the Chief Executive Officer. They are eligible for retirement benefits and pensions available to other employees of the Group under conditions determined by the Board.
• Stock options are designed to align the long-term interests of the Chairman and the Chief Executive Officer with those of the shareholders.
• Awards of stock options are considered in light of the amount of the total compensation paid to the Chairman and the Chief Executive Officer. The exercise of stock options to which the Chairman and the Chief Executive Officer are entitled is subject to a performance condition.


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the Chairman and the Chief Executive Officer is examined in the light of all the forms of compensation of each person.

The exercise price for stock options awarded is not discounted compared to the market price, at the time of the grant, for the underlying share.

Stock options and performance shares are awarded at regular intervals to prevent any opportunistic behavior.

The exercise of options and the definitive allocation of performance shares to which the Chairman and the Chief Executive Officer are entitled are subjected to performance criteria that must be met over several years.

The Board has putputs in place restrictions on the transfer of a portion of shares issuedheld upon the exercise of options.

• After three years in office, the Chairman and Chief Executive Officer are required to hold at least the number of Company shares set by the Board.
Compensation of the Chairman of the Board (until May 21, 2010)
Mr. Desmarest served in the position of Chairman of the Board of Directors until May 21, 2010, concurrent with the reunification of the positions of Chairman of the Board and Chief Executive Officeroptions and the appointmentdefinitive allocation of Mr. de Margerie to serve in this position. Having regard for his esteemed services for the Group, the Board of Directors decided to appoint Mr. Desmarest as Honorary Chairman of the Company and member of the Compensation Committee, and retain him in the position of Chairman of the Nominating & Governance Committee.
The compensation paid to Mr. Desmarest for his duties as Chairman of the Board between January 1, 2010 and May 21, 2010, was set by the Board of Directors of TOTAL S.A. based on a recommendation by the Compensation Committee. It includes a fixed base salary that amounted to €1,100,000, unchanged compared with fiscal year 2009 (€428,763 for the period between January 1 and May 21, 2010), and a variable portion paid in 2011 for the period between January 1, 2010 and May 21, 2010.
The variable portion is calculated by taking into account the Group’s return on equity, the Group’s earnings compared to those of the other major international oil companies that are its competitors, as well as the Chairman of the Board’s personal contribution to the Group’s strategy, corporate governance and performance. The objectives related to personal contribution were considered to be substantially fulfilled, and taking into account the comparison of TOTAL’s earnings with the major international oil companies that are its competitors, the variable portion paid to the Chairman and Chief Executive Officer in 2011 for his contribution in between January 1, 2010 and May 21, 2010, amounted to €322,644.
Mr. Desmarest’s total gross compensation for fiscal 2009, as Chairman of the Board of Directors, amounted to €1,971,852, composed of a fixed base salary of €1,100,000 and a variable portion of €871,852 paid in 2010.
See the tables “Summary of compensation, stock options and restrictedperformance shares, awardedapplicable to the Chairman and the Chief Executive Officer”Officer until the end of their term of office.

The Chairman and “Compensationthe Chief Executive Officer may be entitled to stock options or performance shares when they leave office.

After three years in office, the Chairman and Chief Executive Officer are required to hold at least the number of Company shares set by the Board.

The components of the compensation of the Chairman and the Chief Executive Officer” below for additional compensation information.Officer are made public after the meeting of the Board of Directors that approves them.

Compensation of the Chairman and Chief Executive Officer

In 2010, Mr. de Margerie served in the position of Chief Executive Officer of TOTAL S.A. until May 21, 2010 and in the position of Chairman and Chief Executive Officer as of that date.
The compensation paid to Mr. de Margerie for his duties as Chief Executive Officer between January 1, 2010, and May 21, 2010, was set by the Board of Directors of TOTAL S.A. based on a recommendation by the Compensation Committee. It includes an annual fixed base salary of €1,310,000, unchanged compared with fiscal year 2009 (€507,097 for the period between January 1 and May 21, 2010), and a variable portion paid in 2011 for the period between January 1, 2010 and May 21, 2010.
The variable portion is calculated by taking into account the Group’s return on equity, the Group’s earnings performance compared to that of the other major international oil companies that are its competitors, as well as the Chief Executive Officer’s personal contribution to the Group’s strategy, evaluated on the basis of objective operational criteria related to the Group’s business segments. The variable portion can reach a maximum amount of 140% of the fixed base salary, or up to 165% for exceptional performance. The objectives related to personal contribution were considered to be substantially fulfilled, and taking into account the comparison of TOTAL’s earnings performance with the major international oil companies that are its competitors, the variable portion paid to the Chief Executive Officer in 2011 for his contribution between January 1, 2010 and May 21, 2010, amounted to €523,262.
Mr. de Margerie’s total gross compensation as Chief Executive Officer for fiscal 2009 amounted to €2,666,991, composed of a fixed base salary of €1,310,000 and a variable portion of €1,356,991 paid in 2010.
As Chief Executive Officer, Mr. de Margerie had the use of a company car.

The compensation paid to Mr. de Margerie for his duties as Chairman and Chief Executive Officer was set by the


86

Board of Directors of TOTAL S.A. at its meeting of May 21, 2010,, based on a

recommendation by the Compensation Committee in line with the guidance of the AFEP-MEDEF Corporate Governance Code.

It includes an annual fixed base salary of €1,500,000,€1,500,000, and a variable portion not to exceed 165% of the fixed base salary. The fixed base salary was set by comparison with the compensation paid to the Chairman and Chief Executive Officer of other French companies included in the CAC 40 index. The maximum percentage of the fixed base salary represented by the variable portion is based on equivalent practice at a reference sample of companies, including oil and gas companies.

The variable portion is based on criteria determined by the Board of Directors. The equivalent of up to 100% of the fixed base salary is linked to economic criteria, which varies on astraight-line basis to avoid threshold effects. The criteria based on the Chairman and Chief Executive Officer’s personal contribution account for an additional amount that cannot exceed 65% of the fixed base salary.

The economic criteria have beenwere selected so as to not only reward short-term performance in terms of return on investment for shareholders, but also the progress made by the Group toward medium-term objectives by comparison with data for the oil and gas industry as a whole. They include:

return on equity for a maximum of 50% of the base salary; and

•
• return on equity;
 
• 

the Company’s earnings performance compared with that of the four other major international oil companies that are its competitors(1), assessed by reference to the average growth over three years of two indicators, earnings per share and consolidated net income. Each indicator represents a maximum of 25% of the base salary.

The Chairman and Chief Executive Officer’s personal contribution is evaluated on the basis of objective, mainly operational criteria related to the Group’s business segments and established in line with its strategy, including health, safety and environment (HSE) performance and oil and gas production and reserves growth.

At its meeting of February 10,

With respect to the fiscal year 2011, the Board of Directors at its meeting of February 9, 2012, after having found that

the Chairman and Chief Executive Officer’s objectives related to personal contribution were deemed to be substantially fulfilled in 2010. After assessingand assessed to what extent financial performance criteria had been met, the Board based on a recommendation by the Compensation Committee, set the

(1)ExxonMobil, BP, Shell and Chevron.

variable portion payable to Mr. de Margerie in 20112012 at €1,058,408€1,530,000 for his contribution between May 22 and December 31, 2010,in 2011, equivalent to 115.1%102% of his fixed base salary.

The total gross compensation paid to Mr. de Margerie in his role as Chairman and Chief Executive Officer was made up of a fixed base salary of€1,500,000 and a variable portion of€1,530,000 for the 2011 fiscal year, to be paid in 2012.

Mr. de Margerie’s total gross compensation as Chief Executive Officer for the period between January 1, 2010 and May 21, 2010 was€1,030,359, composed of a fixed base salary of€507,097 and a variable portion of€523,262 paid in 2011. Mr. de Margerie’s total gross compensation as Chairman and Chief Executive Officer for the period between May 22, 2010 and December 31, 2010 consistedwas€1,977,763, composed of a fixed base salary of €919,355 (prorated from an annual fixed base salary of €1,500,000)€919,355 and a variable portion of €1,058,408€1,058,408 paid in 2011.

As Chairman and Chief Executive Officer, Mr. de Margerie has the use of a company car.

car, receives the health coverage provided for Group employees and is eligible for the life insurance plan open to the Group’s executive officers (see “— Pensions and other commitments” below).

See the tables “Summary of compensation, stock options and restrictedperformance shares awarded to the Chairman and the Chief Executive Officer” and “Compensation of the Chairman“Chairman and the Chief Executive Officer”Officer’s compensation” below for additional compensation information.

Executive Officer Compensationofficer compensation

In 2010,2011, the aggregate amount paid directly or indirectly by the French and foreign affiliatescompanies belonging to the Group of the Company as compensation to the executive officers of TOTAL in office as ofat December 31, 20102011 (members of the Management Committee and the Treasurer) as a group was €18.9€20.4 million (twenty-five(twenty-nine individuals), including €8.4€9 million paid to the six members of the Executive Committee. Variable compensation accounted for 46%42.4% of the aggregate amount of €18.9€20.4 million paid to executive officers.

Pensions and other commitments

1)
1) Pursuant to applicable law, the Chairman and the Chief Executive Officer areis eligible for the basic French social security pension and for pension benefits under the ARRCO (Association pour le Régime de RetraiteComplémentaire des Salariés) and AGIRC (Association Générale des Institutions de Retraite des Cadres) government-sponsored supplementary pension schemes. TheyHe also participateparticipates in the internal defined
contribution pension plan and the defined benefit supplementary pension plan, calledknown as RECOSUP, created by the Company. This supplementary pension plan, which is not limited to the Chairman and Chief Executive Officer, is described in item 2)point 2 below.

The sum of the supplementary pension plan benefits and external pension plan benefits may not exceed 45% of the compensation used as the calculation basis. In the event this percentage is exceeded, the supplementary pension is reduced accordingly.

The compensation taken into account when calculating the supplementary pension is the retiree’s final three-year average gross compensation (fixed and variable portions).

(1)  ExxonMobil, BP, Shell and Chevron.


87

As of December 31, 2010,2011, Mr. de Margerie’s aggregate benefit entitlement under all of the above pension plans would amount to 24.40%22.31% of his gross annual compensation received in 2010 (fixed2011 (2011 fixed base salary from January 1 to May 21, 2010, as Chief Executive Officer and from May 22 to December 31, 2010, as Chairman and Chief Executive Officer, and variable portion for 2009,2010, paid in 2010)2011).

2)
2) The Chairman and the Chief Executive Officer also participateparticipates in a defined benefit supplementary pension plan financed and managed by TOTAL S.A. and open to all employees of the Group whose annual compensation is greater than eight times the ceiling for calculating French social security contributions (€35,352(€36,372 in 2011)2012). Compensation above this amount does not qualify as pensionable compensation under either government-sponsored or industry-widecontractual pension schemes.

To be eligible for this supplementary pension plan, participants must meet specific age and length of service criteria. They must also still be employed by the Company upon retirement, unless they retire due to disability or had taken early retirement at the Group’s initiative after the age of 55.

Benefits under

The plan provides participants with a pension equal to the plan depend onsum of 1.8% of the participants’portion of the reference compensation between eight and forty times the annual ceiling for calculating French social security contributions, and 1% of the reference compensation between forty and sixty times the annual ceiling for calculating French social security contributions, which is multiplied by the number of years of service (up to twenty years) and the portion of their gross annual compensation (fixed and variable portions) that exceeds eight times the ceiling for calculating French social security contributions. They are. It is adjusted in line with changes in the value of the ARRCO pension point and strictly capped as described in item 1)point 1 above.

As of December 31, 2010,2011, the Group’s pension obligations to Mr. de Margerie under the defined

benefit supplementary pension plan represented the equivalent of 19.47%18.01% of his gross annual compensation paid in 2010.

2011.

3)The Chairman and the Chief Executive Officer areis also entitled to a lump-sum retirement benefit equal to that available to eligible members of the Group under the French National Collective Bargaining Agreement for the Petroleum Industry. This benefit amounts to 25% of the gross annual compensation (fixed and variable portions) received in the12-month period preceding retirement. Pursuant to the provisions of the French law of August 21, 2007, which modifies Article L.225-42-1 of the French Commercial Code, such benefit is subject to the performance conditions detailed in item 7)point 7 below.
Upon his retirement in 2010, Mr. Demarest was paid a retirement benefit of €492,963, the Board of Directors having decided at its meeting of May 21, 2010, that each of the three applicable performance criteria had been met.

This retirement benefit cannot be combined with the compensation for loss of office described in item 5)point 5 below.

4)The CompanyChairman and Chief Executive Officer also fundsparticipates in the same life insurance plan as the Group’s employees, covering supplementary benefits or annuities in the event of temporary incapacity for work and disability, together with a life insurance policy forplan funded by the ChairmanCompany and open to the Chief Executive Officer thatexecutive officers of the Group. Upon death, the plan guarantees a payment upon death, equal to two years’ gross compensation (fixed and variable portions), increased to three years upon accidental death, as well as, in casethe event of disability, a payment proportional to the degree of disability.

5)If the Chairman and Chief Executive Officer is removed from office or his term of office is not renewed by the Company, he is entitled to compensation for loss of office equal to two years’ gross annual compensation. The calculation will be based on the gross compensation (including both fixed and variable portions) paid in the12-month period preceding the termination or non-renewal of his term of office.

This compensation for loss of office to be paid in the event of a change of control or a change of strategy of the Company would not be due in the casecases of gross negligence or willful misconduct or if the Chairman and Chief Executive Officer leaves the Company of his own volition, accepts new responsibilities within the Group, or may claim full retirement benefits within a short time period.

Pursuant to the provisions of the French law of August 21, 2007, which modifiesArticle L. 225-42-1 of the French Commercial Code, such compensation for loss of officethis benefit is subject to the performance conditions describeddetailed in item 7)point 7 below.

6)Commitments with regard to the pension and life insurance plans for the Chairman and Chief Executive Officer and the retirement benefit and compensation for loss of office arrangements set out in point 5 were approved on May 21, 2010, by the Board of Directors and by the Shareholders’ Meeting.

7)In addition, in compliance with Article L.225-42-1 of the French Commercial Code, the commitments described in items 3)points 3 and 5)5 are subject to


88

performance conditions that are deemed to be met if at least two of the following three criteria are satisfied:

• The average ROE (Return on Equity) over the three years immediately preceding the year in which the officer retires is at least 12%;
• The average ROACE (Return on Average Capital Employed) over the three years immediately preceding the year in which the officer retires is at least 10%;
• TOTAL’s oil and gas production growth over the three years immediately preceding the year in which the officer retires is greater than or equal to the average production growth rate of the four other major international oil companies that are its competitors: ExxonMobil, Shell, BP and Chevron.

the average ROE (return on equity) over the three years immediately preceding the year in which the officer retires is at least 12%;

the average ROACE (return on average capital employed) over the three years immediately preceding the year in which the officer retires is at least 10%;

TOTAL’s oil and gas production growth over the three years immediately preceding the year in which the officer retires is greater than or equal to the average production growth rate of the four other major international oil companies that are its competitors: ExxonMobil, Shell, BP and Chevron.

In compliance with the AFEP-MEDEF Corporate Governance Code, the Board of Directors decided that payment of the lump-sum retirement benefit or compensation for loss of office shall be subject to demanding performance conditions combining both internal and external performance criteria.

The three criteria were selected to take into account the Company’s general interest, shareholder interests and standard market practices, especially in the oil and gas industry.

More specifically, ROE enables the payment of the retirement benefit or compensation for loss of office to be tied to the Company’s overall shareholder return. Shareholders can use ROE to gauge the Company’s ability to generate profit from the capital they have invested and from prior years’ earnings reinvested in the Company.

ROACE is used by most oil and gas companies to assess the operational performance of average capital employed, regardless of whether it is funded by equity or debt. ROACE is an indicator of the return on capital employed by the Company for operational activities and, as a result, makes it possible to tie the payment of the retirement benefit or compensation for loss of office to the value created for the Company.

 

The third and last criterion used by the Board of Directors is the Group’s oil and gas production growth compared with that of its competitors. This indicator is widely used in the industry to measure operational performance and the ability to ensure the sustainable development of the Group, most of whose capital expenditure is allocated to exploration and production activities.

8)In addition, regarding the implementation of the pension commitments described in items 1)points 1 and 2) 2
above made by the Company for directors for fiscal year 2010:
• Mr. Desmarest received, due to his previous employment by the Group, a supplementary pension amounting to €320,341 for 2010 (retired since May 22, 2010). The value of2011, the annual supplementary pension for a complete year, would amount to nearly €549,155 (December 31, 2010 value) adjustedreceived by Mr. Desmarest in line with changes in the value of the ARRCO pension point.
• For Mr. Tchuruk, the annual supplementary pension relatedrelation to his previous employment by the Group was approximately €74,914€562,354 (December 31, 20102011 value), adjusted in line with changes in the value of the ARRCO pension point.

9)
9) As of December 31, 2010,2011, the total amount of the Group’s commitments under pension plans and similar for company officers is equal to €28.7€31.2 million.
 


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Chairman and Chief Executive Officer Summary table at February 29, 2012  Employment

contract

  Retirement benefit and supplementary pension plans  
Benefits or advantages
Benefits or Advantages
due or likely to be
due or likely to be due
upon termination or change of office		  Benefits related
due after
Summary table
Employment
upon termination or
to a non-compete
agreement		termination or
as of February 28, 2011contractchange of officeagreementchange of office
Thierry Desmarest

Christophe de Margerie

Chairman and Chief Executive Officer

Start of the Board of Directors
until May 21, 2010office: February 2007(a)
Member of the Board since May 1995(a)

Term of current office:
     May 21, 2010

The Shareholders’ Meeting called in 2012 to approve the financial statements for the year ending December 31, 2011

  NO  NONO

YES

(retirement benefit)(c)(b)

(internal defined supplementary pension plan(c) and corporate RECOSUP defined contribution pension plan(d) also applicable to certain Group employees)

  
Christophe de Margerie

YES

(compensation for loss of office)(e)

  NOYESNOYES
Chairman and Chief Executive Officer
Member of the Board since February 2007(b) Term of current office:
     The Shareholders’ Meeting called in 2012 to approve the financial statements for
the year ending December 31, 2011		(termination benefit)(e)(retirement benefit)(e)
(defined supplementary pension plan(f) and corporate RECOSUP defined contribution pension plan(g) also applicable to certain Group employees)

(a)
(a)Chairman and Chief Executive Officer until February 13, 2007, and Chairman of the Board of Directors from February 14, 2007 to May 21, 2010.
(b)Chief Executive Officer since February 13, 2007, and Chairman and Chief Executive Officer since May 21, 2010.
(c)(b)Payment subject to a performance condition in accordance with the decision of the Board of Directors on February 11, 2009.
(d)Mr. Desmarest’s pension benefit represented a booked expense of €813.57 for the period between January 1 and May 21, 2010.
(e)Payment subject to a performance conditionconditions in accordance with the decision of the Board of Directors on February 11, 2009, and confirmed by the Board of Directors on May 15, 2009 and May 21, 2010. TheDetails of these commitments are set out in points 3 and 7 above. This retirement benefit cannot be combined with the compensation for loss of office described above.below.
(f)(c)Representing an annual pension that would be equivalent, as of December 31, 2010,2011, to 19.47%18.01% of the annual compensation for 2010.2011.
(g)(d)Mr. de Margerie’s pension benefit represented a booked expense of €2,077.20€2,121 for fiscal year 2010.2011.
(e)Payment subject to performance conditions in accordance with the decision of the Board of Directors on February 11, 2009, and confirmed by the Board of Directors on May 15, 2009 and May 21, 2010. Details of these commitments are set out in points 5 and 7 above.

Stock options and restrictedperformance share grants policy

General policy

Stock options and restrictedperformance share grants put in place by TOTAL S.A. concern only TOTAL shares. No options for or restricted grants of performance shares of any of the Group’s listed subsidiaries are awarded.

awarded by TOTAL S.A.

All plansgrants are approved by the Board of Directors, based on recommendations by the Compensation Committee. For each plan, the Compensation Committee recommends a list of beneficiaries, the conditions and the number of options or restrictedperformance shares awarded to each beneficiary. The Board of Directors then gives final approval for this list.

list and the grant conditions.

Stock options have a term of eight years, with an exercise price set at the average of the closing TOTAL share prices on Euronext Paris during the twenty trading days prior to the grant date, without any discountdiscount. The exercising of the options is subject to a presence condition and performance conditions (based on the return on equity

(ROE) of the Group) that vary depending on the plan and beneficiary category. As of 2011, all options granted are subject to performance conditions. Subject to the presence condition and applicable performance conditions being applied. For the option plans established after 2002,met, options may only be exercised after an initial two-year vesting period and the shares issued upon exercise are subject to a two-year mandatory holding period. ForHowever, for the 2007 2008, 2009 and 2010to 2011 option plans, options awarded to employees ofbeneficiaries employed by non-French subsidiaries at the grant date can be converted to bearer form or transfered as soon astransferred after the2-year non-transferability vesting period ends.

Restrictedat the end of which the options may be exercised.

Performance shares awarded under selective plans become final after a two-year vesting period, subject to a continued employmentpresence condition and a performance condition based on the return on equity (ROE) of the Group. This performance condition is defined in advance by the Board of Directors on recommendations by the Compensation Committee. At the end of this vesting period, and provided that the conditions set are satisfied, the restrictedperformance share grants are finally awarded. However, these shares may not be transferred prior to the end of an additional two-year mandatory holding period. For beneficiaries outside of France,employed by non-French subsidiaries on the grant date, the vesting period for restrictedperformance shares

may be increased to four years; in such case,cases, there would be no mandatory holding period.

For the 2010 restricted share grants, the Board As of Directors decided that, provided that the continued employment condition is satisfied, for each beneficiary of more than 1002011, all performance shares half of the shares in excess of this number will be finally granted to executive officers are subject to a performance condition. This condition is based on the average ROE

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conditions.

calculated by the Group based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate:
• is equal to zero if the average ROE is less than or equal to 7%;
• varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and
• is equal to 100% if the average ROE is more than or equal to 18%.
For the 2009 restricted share grants, the Board of Directors decided that, provided that the continued employment condition is satisfied, for each beneficiary of more than 100 shares, half of the shares in excess of this number will be finally granted subject to a performance condition. This condition is based on the average ROE of the Group as published by TOTAL. The average ROE is calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate:
• is equal to zero if the average ROE is less than or equal to 7%;
• varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and
• is equal to 100% if the average ROE is more than or equal to 18%.
For the 2008 plan, the performance condition stated that the restricted shares will be finally granted based on the ROE of the Group related to the fiscal year preceding the year of the final grant. The acquisition rate:
• is equal to zero if the ROE is less than or equal to 10%;
• varies on a straight-line basis between 0% and 80% if the ROE is more than 10% and less than 18%;
• varies on a straight-line basis between 80% and 100% if the ROE is more than or equal to 18% and less than 30%; and
• is equal to 100% if the ROE is more than or equal to 30%.
Due to the application of the performance condition, the acquisition rate was 60% for the 2008 plan.
The grant of these options or restrictedperformance shares is used to extend, based upon individual performance assessments at the time of each plan, the Group-wide policy of developing employee shareholding (including savings plans(for further information, see “— Employees and capital increases reservedShare Ownership — Arrangements for employees), which allowsinvolving employees in the Company’s share capital” below).

Stock options and performance share grants to be more closely associated with TOTAL’s financialthe Chairman and stock market performance.

In addition, the Board of Directors decided at its meeting of May 21, 2010 to implement a global free share plan intended for the Group’s employees, that is more than 100,000 employees. On June 30, 2010, rights to 25 free shares were granted to every employee. The sharesChief Executive Officer are subject to a vesting period of two to four years depending on the case. The shares granted are not subject to anyspecific performance condition. They will be issued at the end of the vesting period.
conditions set out below.

Grants to the Chairman theand Chief Executive Officer

The Chairman and Chief Executive Officers

Officer has been awarded share subscription options, the exercise of which has been subject, since 2007, to a presence condition and performance conditions based on the Group’s ROE and ROACE. The reasons for selecting these criteria are detailed in point 7 of “— Pensions and other commitments” above.

Pursuant to Article L.225-185 of the French Commercial Code, as modified by the provisions of French lawNo. 2006-1770 of December 20, 2006, the Board of Directors decided that, for the 2007 2008, 2009 and 2010to 2011 share subscription option plans, the corporate officers (the Chairman of the Board and the Chief Executive Officer, and as from May 21, 2010 the Chairman and Chief Executive Officer) will haveare required to hold for as long as they remain in office, a number of TOTAL shares representing 50% of the capital gains, net of tax and other deductions, resulting from the exercise of stock options under these plans. Once the Chairman and Chief Executive Officer holdholds a number of shares (directly or through collective investment funds invested in Company stock) corresponding to more than five times theirhis current gross annual fixed compensation, this holding requirement will be reduced to 10%. If in the future this ratio is no longer met, the previous 50% holding requirement will once again apply.

Mr. Desmarest, Chairman

As of 2011, the Board of Directors until May 21, 2010, was not awarded any share subscription options under the 2008, 2009 and 2010 plans. In addition, he was not awarded any restricted shares under plans in the period from 2005 to 2010.

The Chairman and Chief Executive Officer has been awardedreceives performance share subscription options,grants, the exercisefinal awarding of which has beenis subject since 2007, to a presence condition and performance conditions based onconditions.

On the Group’s ROE and ROACE. The reasons for selecting these criteria are detailed in “— Pensions and Other Commitments — 8)” above.

TheSeptember 14, 2011 grant of TOTAL performance shares, the Board of Directors decided that the Chairman and Chief Executive Officer was not awarded any restricted shareswill have to hold for as partlong as he remains in office, 50% of the planscapital gains, net of tax and other deductions, from shares granted under performance share grant plans. Once the Chairman and

Chief Executive Officer holds a number of shares (directly or through collective investment funds invested in Company stock) corresponding to more than five times his gross annual fixed compensation at that time, this holding requirement will be reduced to 10%. If in the period 2006future this ratio is no longer met, the previous 50% holding requirement will once again apply.

In light of this holding requirement, the acquisition of the performance shares is not subject to 2010.

an additional purchase of the Company’s shares.

The Chairman and Chief Executive Officer has given a commitment not to hedge the price risk on the TOTAL stock options and shares he has been granted up to date, and on the shares he holds.

20102011 share subscription option plan:as part The Board of the 2010 share subscription option plan, the Board of


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Directors decided that, provided that the continued employmentpresence condition within the Group is satisfied, the number of options finally granted to the Chairman and Chief Executive Officer will be subject to two performance conditions:

• 

For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROE of the Group. The average ROE is calculated by the Group from the consolidated balance sheet and statement of income of the Group for fiscal years 2011 and 2012. The acquisition rate is equal to zero if the average ROE is less than or equal to 7%, varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%, and is equal to 100% if the average ROE is more than or equal to 18%.

For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROACE of the Group. The average ROACE is calculated by the Group from the consolidated balance sheet and statement of income of the Group for fiscal years 2011 and 2012. The acquisition rate is equal to zero if the average ROACE is less than or equal to 6%, varies on a straight-line basis between 0% and 100% if the average ROACE is more than 6% and less than 15%, and is equal to 100% if the average ROACE is more than or equal to 15%.

2010 share subscription option plan: The Board of Directors decided that, provided the presence condition within the Group is satisfied, the number of options finally granted to the Chairman and Chief Executive Officer will be subject to two performance conditions:

For 50% of the share subscription options granted, the performance condition states that the number of

options finally granted is based on the average ROE of the Group. The average ROE is calculated by the Group based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate is equal to zero if the average ROE is less than or equal to 7%, varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%, and is equal to 100% if the average ROE is more than or equal to 18%.

• For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROACE of the Group calculated based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate is equal to zero if the average ROACE is less than or equal to 6%, varies on a straight-line basis between 0% and 100% if the average ROACE is more than 6% and less than 15%; and is equal to 100% if the average ROACE is more than or equal to 15%.

For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROACE of the Group calculated based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate is equal to zero if the average ROACE is less than or equal to 6%, varies on a straight-line basis between 0% and 100% if the average ROACE is more than 6% and less than 15%, and is equal to 100% if the average ROACE is more than or equal to 15%.

2009 share subscription option plan: The Board of Directors decided that, provided the presence condition within the Group is satisfied, the number of options finally granted to the Chief Executive Officer will be subject to two performance conditions:

For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROE of the Group as published by TOTAL. The average ROE is calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate is equal to zero if the average ROE is less than or equal to 7%, varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%, and is equal to 100% if the average ROE is more than or equal to 18%.

In addition,

For 50% of the share subscription options granted, the performance condition states that the number of options granted is related to the average ROACE of the Group as published by TOTAL. The average ROACE is calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate is equal to zero if the average ROACE is less than or equal to 6%, varies on a straight-line basis between 0% and 100% if the average ROACE is more than 6% and less than 15%, and is equal to 100% if the average ROACE is more than or equal to 15%.

The acquisition rate applicable to the subscription options that were subject to the performance condition of the 2009 Plan was 100%.

2011 performance share plan:The Board of Directors decided that, provided the presence condition within the Group is satisfied, the number of shares finally granted to the Chairman and Chief Executive Officer will be subject to two performance conditions:

For 50% of the shares granted, the performance condition states that the number of shares finally granted is based on the average ROE of the Group. The average ROE is calculated by the Group from the consolidated balance sheet and statement of income of the Group for fiscal years 2011 and 2012. The acquisition rate is equal to zero if the average ROE is less than or equal to 7%, varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%, and is equal to 100% if the average ROE is more than or equal to 18%.

For 50% of the shares granted, the performance condition states that the number of shares finally granted is based on the average ROACE of the Group. The average ROACE is calculated by the Group from the consolidated balance sheet and statement of income of the Group for fiscal years 2011 and 2012. The acquisition rate is equal to zero if the average ROACE is less than or equal to 6%, varies on a straight-line basis between 0% and 100% if the average ROACE is more than 6% and less than 15%, and is equal to 100% if the average ROACE is more than or equal to 15%.

The Chairman and Chief Executive Officer was not awarded any performance shares as part of the plans in the period 2006 to 2010.

Grants to employees

Share subscription option plans

2011 share subscription option plan: The Board of Directors decided that, provided the presence condition within the Group is satisfied, for each grantee other than the Chairman and Chief Executive Officer, the options will be finally granted to the beneficiary provided that the performance condition is fulfilled. The performance condition states that the number of options finally granted is based on the average of the ROE of the Group. The average ROE is calculated by the Group from the consolidated balance sheet and statement of income of the Group for fiscal years 2011 and 2012. The acquisition rate:

is equal to zero if the average ROE is less than or equal to 7%;

varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and

is equal to 100% if the average ROE is more than or equal to 18%.

2010 share subscription option plan and provided that the continued employment condition is satisfied, theplan: The Board of Directors decided that:that, provided the presence condition within the Group was satisfied:

for each grantee of up to 3,000 options, other than the Chairman and Chief Executive Officer, the options will be finally granted;

for each grantee of more than 3,000 options and less than or equal to 50,000 options (other than the Chairman and Chief Executive Officer):

• For each grantee of up to 3,000 options, other than the Chairman and Chief Executive Officer, the options will be finally granted.
• For each grantee of more than 3,000 options and less than or equal to 50,000 options (other than the Chairman and Chief Executive Officer):
 –

the first 3,000 options and two-thirds of the options in excess of this number will be finally granted to their beneficiary;

 –

the outstanding options, that is one-third of the options in excess of the first 3,000 options, will be granted provided that the performance condition described below is fulfilled.fulfilled;

for each grantee of more than 50,000 options, other than the Chairman and Chief Executive Officer:

• For each grantee of more than 50,000 options, other than the Chairman and Chief Executive Officer:
 –

the first 3,000 options, two-thirds of the options above the first 3,000 options and below the first 50,000 options, and one-third of the options in excess of the first 50,000 options, will be finally granted to their beneficiary;

 –

the remaining options, that is one-third of the options above the first 3,000 options and below the first 50,000 options, and two-thirds of the options in excess of the first 50,000 options, will be finally granted provided that the performance condition is fulfilled.

This condition states that the number of options finally granted is based on the average Return on Equity (ROE)ROE of the Group. The average ROE is calculated by the Group based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate:

is equal to zero if the average ROE is less than or equal to 7%;

• is equal to zero if the average ROE is less than or equal to 7%;
• varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and
• is equal to 100% if the average ROE is more than or equal to 18%.

varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and

is equal to 100% if the average ROE is more than or equal to 18%.

2009 share subscription option plan:as part of the 2009 share subscription option plan, theThe Board of Directors decided that, provided that the continued employmentpresence condition is satisfied,within the number of options finally awarded to the Chief Executive Officer will be subject to two performance conditions:

• For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROE of the Group as published by TOTAL. The average ROE is calculated based on the Group’s consolidated balance sheet and statement of incomeGroup was met, for fiscal years 2009 and 2010. The acquisition rate is equal to zero if the average ROE is less than or equal to 7%, varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%, and is equal to 100% if the average ROE is more than or equal to 18%.
• For 50% of the share subscription options granted, the performance condition states that the number of options granted is related to the average ROACE of the Group as published by TOTAL. The average ROACE is calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate is equal to zero if the average ROACE is less than or equal to 6%, varies on a straight-line basis between 0% and 100% if the average ROACE is more than 6% and less than 15%; and is equal to 100% if the average ROACE is more than or equal to 15%.
In addition, the Board of Directors decided that, provided that the continued employment condition is satisfied, for


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each beneficiary, other than the Chief Executive Officer, of more than 25,000 options, one-third of the options granted in excess of this number will be finally granted subject to a performance condition. This condition is based on the average ROE of the Group as published by TOTAL. The average ROE is calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate:

is equal to zero if the average ROE is less than or equal to 7%;

• is equal to zero if the average ROE is less than or equal to 7%;
• 

varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and

• is equal to 100% if the average ROE is more than or equal to 18%.
2008 share subscription option plan:as part of the 2008 share subscription option plan, the Board decided that, provided that the continued employment condition is satisfied, for each beneficiary of more than 25,000 options, one-third of7% and less than 18%; and

is equal to 100% if the options granted in excess of this number be subject to a performance condition. This performance condition states that the number of options granted is based on the ROE of the Group. Theaverage ROE is calculated based on the consolidated accounts published by TOTAL and relatedmore than or equal to the fiscal year preceding the final grant. The acquisition rate:18%.

• is equal to zero if the ROE is less than or equal to 10%;
• varies on a straight-line basis between 0% and 80% if the ROE is more than 10% and less than 18%;
• varies on a straight-line basis between 80% and 100% if the ROE is more than or equal to 18% and less than 30%; and
• is equal to 100% if the ROE is more than or equal to 30%.

The acquisition rate applicable to the subscription options that were subject to the performance condition of the 2008 plan2009 Plan was 60%100%.

Performance share plans

2011 performance share plan: The Board of Directors decided that, provided that the presence condition within the Group is satisfied, for executives officers(1) other than the Chairman and Chief Executive Officer, the number of shares finally granted will be subject to the performance condition set out below. This condition is based on the average ROE as published by the Group and calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2011 and 2012. The acquisition rate:

is equal to zero if the average ROE is less than or equal to 7%;

varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and

is equal to 100% if the average ROE is more than or equal to 18%.

 

(1)Executive officers, excluding the Chairman and Chief Executive Officer, are employees other than directors.

Furthermore, the Board of Directors decided that, for each beneficiary (other than the Chairman and Chief Executive Officer and the executive officers) of more than 100 shares, the shares in excess of this number will be finally granted subject to a performance condition. This condition is based on the average ROE as published by the Group and calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2011 and 2012. The acquisition rate:

is equal to zero if the average ROE is less than or equal to 7%;

varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and

is equal to 100% if the average ROE is more than or equal to 18%.

2010 performance share plan: The Board of Directors decided that, provided that the presence condition within the Group is satisfied, for each beneficiary of more than 100 shares, half of the shares in excess of this number will be finally granted subject to a performance condition. This condition is based on the average ROE calculated by the Group based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate:

is equal to zero if the average ROE is less than or equal to 7%;

varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and

is equal to 100% if the average ROE is more than or equal to 18%.

2009 performance share plan: The Board of Directors decided that, provided that the presence condition within the Group is satisfied, for each beneficiary of more than 100 shares, half of the shares in excess of this number will be finally granted subject to a performance condition. This condition is based on the average ROE of the Group as published by TOTAL. The average ROE is calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate:

is equal to zero if the average ROE is less than or equal to 7%;

varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and

is equal to 100% if the average ROE is more than or equal to 18%.

Due to the application of the performance condition, the acquisition rate was 100% for the 2009 Plan.

In addition, the Board of Directors decided at its meeting of May 21, 2010 to implement a global free share plan intended for the Group’s employees, that is more than 100,000 employees. On June 30, 2010, rights to twenty-five free shares were granted to every employee. The shares are subject to a vesting period of two to four years depending on the case. The shares granted are not subject to any performance condition. They will be issued at the end of the vesting period.

SUMMARY OF COMPENSATION, STOCK OPTIONS AND RESTRICTEDPERFORMANCE SHARES
AWARDED TO THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER

         
For the year ended (€) 2010  2009 
Thierry Desmarest
        
Chairman of the Board of Directors
        
(until May 21, 2010)
        
         
Compensation due for fiscal year(a)
  1,604,039   1,971,852 
Value of options awarded  —   — 
Value of restricted shares awarded  —   — 
         
Total
  1,604,039   1,971,852 
         
Christophe de Margerie
Chief Executive Officer		        
(until May 21, 2010)
        
Chairman and Chief Executive Officer
        
(since May 21, 2010)
        
         
Compensation due for fiscal year as Chief Executive Officer(a)
  1,030,359   2,666,991 
Compensation due for fiscal year as Chairman and Chief Executive Officer(a)
  1,977,763   — 
In-kind benefits(b)
  6,908   6,780 
Value of options awarded(c)
  1,387,200   1,676,000 
Value of restricted shares awarded  —   — 
         
Total
  4,402,230   4,349,771 
         

For the year ended (€)  2011   2010 

Christophe de Margerie

Chairman and Chief Executive Officer (since May 21, 2010)

    

Compensation due for fiscal year as Chairman and Chief Executive Officer(a)

   3,030,000     3,008,122  

In-kind benefits(b)

   6,991     6,908  

Value of options awarded(c)

   702,400     1,387,200  

Value of performance shares awarded(d)

   437,440     —  

Total

   4,176,831     4,402,230  

(a)
(a)Compensation detailed in the table “— Compensationfollowing table. For the 2010 fiscal year, Mr. de Margerie received compensation of€1,030,359 as Chief Executive Officer for the period from January 1 to May 21, 2010, and compensation of€1,977,763 as Chairman and the Chief Executive Officer”.Officer for the period from May 22 to December 31, 2010.
(b)Mr. de Margerie has the use of a company car.car; he receives the health coverage provided for Group employees and is eligible for the life insurance plan open to the Group’s executive officers (see “— Pensions and other commitments”).
(c)Options awarded in 20102011 are detailed in the table “— Stock“Stock options awarded in 20102011 to the Chairman and the Chief Executive Officer”. The value of options awarded was calculated on the day when they were awarded using the Black-Scholes model based on the assumptions used for the consolidated accounts (see Note 25 to the Consolidated Financial Statement)Statements).


93

(d)The value of performance shares was calculated on the day when they were awarded.

COMPENSATION OF THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICEROFFICER’S COMPENSATION
                 
  For the year ended 2010  For the year ended 2009 
  Amount
  Amount
  Amount
  Amount
 
  due for
  paid in
  due for
  paid in
 
  2010 ��2010(a)  2009  2009(a) 
Thierry Desmarest
                
Chairman of the Board of Directors
                
(until May 21, 2010)
                
                 
Fixed compensation  428,763   428,763   1,100,000   1,100,000 
Variable compensation(b)
  322,644   871,852   871,852   969,430 
Extraordinary compensation(c)
  492,963   492,963   —    —  
Pension benefits(d)
  320,341   320,341   —    —  
Directors’ fees(e)
  39,328   39,328   —    —  
In-kind benefits  —    —    —    —  
                 
Total
  1,604,039   2,153,247   1,971,852   2,069,430 
                 
                 
  For the year ended 2010  For the year ended 2009 
  Amount
  Amount
  Amount
  Amount
 
  due for
  paid in
  due for
  paid in
 
  2010  2010(a)  2009  2009(a) 
Christophe de Margerie
                
Chief Executive Officer
                
(until May 21, 2010)
                
Chairman and Chief Executive Officer
                
(since May 21, 2010)
                
                 
Fixed compensation  1,426,452(f)  1,426,452(f)  1,310,000   1,310,000 
Variable compensation(g)
  1,581,670(h)  1,356,991   1,356,991   1,552,875 
Extraordinary compensation  —    —    —    —  
Directors’ fees  —    —    —    —  
In-kind benefits(i)
  6,908   6,908   6,780   6,780 
                 
Total
  3,015,030   2,790,351   2,673,771   2,869,655 
                 

    For the year ended 2011   For the year ended 2010 
For the year ended (€)  Amount due  Amount paid(a)   Amount due  Amount paid(a) 

Christophe de Margerie

Chairman and Chief Executive Officer (since May 21, 2010)

      

Fixed compensation

   1,500,000    1,500,000     1,426,452(b)   1,426,452(b) 

Variable compensation(c)

   1,530,000    1,581 670     1,581,670(d)   1,356,991  

Extraordinary compensation

   —    —     —    —  

Directors’ fees

   —    —     —    —  

In-kind benefits(e)

   6,991    6,991     6,908    6,908  

Total

   3,036,991    3,088,661     3,015,030    2,790,351  

(a)
(a)Variable portion paid for prior fiscal year.
(b)The variable portion for For more detailed information about these criteria, see “— Compensation of the Chairman of the Board is calculated by taking into account the Group’s return on equity during the relevant fiscal year, the Group’s earnings compared to those of the other major international oil companies that are its competitors, as well as the Chairman of the Board’s personal contribution to the Group strategy, corporate governance and performance. The variable portion can reach a maximum amount of 100% of the fixed base salary. The objectives related to personal contribution were considered to be substantially fulfilled in 2010.Chief Executive Officer”.
(c)(b)Retirement benefit received.
(d)Retirement benefit received in 2010 under the RECOSUP pension scheme and the defined supplementary pension plan.
(e)Directors’ fees received for the directorship after May 21, 2010; Mr. Desmarest did not receive any directors’ fees when serving in the position of Chairman of the Board.
(f)Includes a fixed portion of €507,097€507,097 for the period between January 1 and May 21, 2010 and €919,355€919,355 for the period between May 22 and December 31, 2010.
(g)(c)The variable portion for the Chairman and Chief Executive Officer is calculated by taking into account the Group’s return on equity during the relevant fiscal year, the Group’s earnings compared to those of the other major international oil companies that are its competitors as well as the Chairman and Chief Executive Officer’s personal contribution based on operational target criteria. The variable portion can reach a maximum amount of 165% of the fixed base salary. The objectives related to personal contribution were considered to be mostly met in 2010.have been substantially fulfilled.
(h)(d)Including a variable portion of €523,262€523,262 for the period between January 1 to May 21 2010, and €1,058,408€1,058,408 for the period between May 22 and December 31, 2010.
(i)(e)Mr. de Margerie has the use of a company car.car, receives the health coverage provided for Group employees and is eligible for the life insurance plan open to the Group’s executive officers (see “— Pensions and other commitments”).


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DIRECTORS’ FEES AND OTHER COMPENSATION RECEIVED BY DIRECTORS

Total compensation (including in-kind benefits) paid to each director in the year indicated (Article L.225-102-1 of the French Commercial Code, 1st1st and 2nd2nd paragraphs)

         
Gross amount (€) 2010  2009 
Christophe de Margerie  (a)  (a)
Thierry Desmarest(b)
  (a)  (a)
Patrick Artus(b)
  55,000   27,656 
Patricia Barbizet(c)
  107,000   94,192 
Daniel Bouton  55,000   60,000 
Gunnar Brock(d)
  39,328   —  
Claude Clément(d)
  127,929(e)  —  
Bertrand Collomb  71,000   75,000 
Paul Desmarais Jr.   45,000   48,000 
Bertrand Jacquillat  95,000   95,000 
Anne Lauvergeon  45,000   45,000 
Peter Levene of Portsoken  79,000   69,000 
Claude Mandil  55,000   55,000 
Michel Pébereau  71,000   70,000 
Thierry de Rudder  142,000   116,000 
Serge Tchuruk(f)
  104,639(g)  154,379(g)
:

Gross amount (€)  2011  2010 

Christophe de Margerie(a)

   (b)   (b) 

Thierry Desmarest (a)(b)

   639,854(d)   1,604,039(d) 

Patrick Artus(c)

   65,500    55,000  

Patricia Barbizet(a)

   115,500    107,000  

Daniel Bouton

   63,500    55,000  

Gunnar Brock(a)(e)

   75,500    39,328  

Claude Clément(e)

   156,365(f)   127,929(f) 

Marie-Christine Coisne-Roquette(g)

   48,460    —  

Bertrand Collomb

   72,500    71,000  

Paul Desmarais Jr.

   51,000    45,000  

Bertrand Jacquillat(h)

   55,040    95,000  

Barbara Kux(a)(i)

   26,770    —  

Anne Lauvergeon(a)

   63,500    45,000  

Peter Levene of Portsoken(j)

   19,230    79,000  

Claude Mandil(a)

   63,500    55,000  

Michel Pébereau

   77,500    71,000  

Thierry de Rudder(a)

   138,500    142,000  

(a)Member of the Strategic Committee.
(b)
(a)For Mr. Desmarest and the Chairman and Chief Executive Officer, see the summary compensation tables “— Summary“Summary of compensation, stock options and restrictedperformance shares awarded to the Chairman and the Chief Executive Officer” and “— Compensation of the“Chairman and Chief Executive Officer’s compensation”. The Chairman and the Chief Executive Officer”.Officer did not receive any directors’ fees.
(b)(c)Member of the Compensation Committee since May 21, 2010.
(c)(d)Including for 2011, fees received (Chairperson€77,500) and pension benefits received (€562,354), and including for 2010, fees received (€39,328), fixed and variable compensation for his role as Chairman of the Audit Committee since July 28, 2009.Board of Directors up to May 21, 2010 (€751,407), the retirement benefit (€492,963) and pension benefits received (€320,341).
(d)(e)Director since May 21, 2010.
(e)(f)Including for 2011, the directorsdirectors’ fees received, representing €32,328,€58,500, as well as the compensation received from Total Raffinage Marketing (a subsidiary of TOTAL S.A.), representing €95,601 in 2010.€97,865 and including for 2010, directors’ fees received, representing€32,328 as well as the compensation received from Total Raffinage Marketing, representing€95,601.
(f)(g)Director and member of the Audit Committee from May 13, 2011.
(h)Director and member of the Audit Committee until May 13, 2011.
(i)Director since May 13, 2011.
(j)Director until May 21, 2010.13, 2011.
(g)Including pension payments related to previous employment by the Group, which amounted to €74,379 in 2009 and €74,914 in 2010.

Over the past two years, the directors currently in office have not received any compensation or in-kind benefits from companies controlled by TOTAL S.A., except for Mr. Clément, who is an employee of Total Raffinage Marketing.Marketing, and Mr. Desmarest, Chairman of the Board of Directors until May 21, 2010. The compensation indicated in the table above (except for that of the Chairman and Chief Executive Officer and Messrs. Desmarest Clément and Tchuruk)Clément) consists solely of directors’ fees (gross amount) paid during the relevant period. None of the directors of TOTAL S.A. have service contracts whichlinking them to TOTAL S.A. or any of its subsidiaries that provide for benefits upon termination of employment.


95

STOCK OPTIONS AWARDED IN 20102011 TO THE CHAIRMAN AND
THE CHIEF EXECUTIVE OFFICER
                           
           Number of options
         
        Value of
  awarded during
  Exercise
  Exercise
  Performance
  Date of plan  Type of options  options (€)(a)  fiscal year(b)  price (€)  period  conditions
Thierry Desmarest
  2010 Plan   Subscription   —   —   —   —  —
Chairman of the Board of Directors
  09/14/2010   options                   
(until May 21, 2010)
                          
                           
Total
          —    —            
                           
Christophe de Margerie
  2010 Plan
09/14/2010		   Subscription
options		   1,387,200   240,000   38.20   09/15/2012
09/14/2018		   
Chief Executive Officer
(until May 21, 2010)
Chairman and Chief Executive Officer
(since May 21, 2010)		                         For 50% of the options, the condition is based on the average ROE for the Group’s 2010 and 2011 fiscal years.
                           
                          For 50% of the options, the condition is based on the average ROACE for the Group’s 2010 and 2011 fiscal years.
                           
Total
          1,387,200   240,000           
                           

The stock options awarded to the Chairman and Chief Executive Officer are detailed in the table “TOTAL stock options awarded to Mr. de Margerie, Chairman and Chief Executive Officer of TOTAL S.A.” below.

   Date of
Plan		  Type of
options		 Value of
options
(€)(a)		  Number of
options
awarded
during
fiscal  year(b)		  Exercise
price		  Exercise
period		  Performance
condition
Christophe de Margerie  

 

2011 Plan

09/14/2011

  

  

 Subscription
options		  702,400    160,000    33.00    
 		09/15/2013-
09/14/2019 		  
  		 

For 50% of the options, the condition is based on the average ROE for the Group’s 2011 and 2012 fiscal years. For 50% of the options, the condition is based on the average ROACE for the Group’s 2011 and 2012 fiscal years.

Chairman and Chief Executive Officer

                

Total

        702,400    160,000            

(a)
(a)The value of options awarded was calculated on the day they were awarded using the Black-Scholes model based on the assumptions used for the consolidated accounts (see Note 25 to the Consolidated Financial Statement)Statements).
(b)As part of the share subscription option plan awarded on September 14, 2010,2011, the Board of Directors decided that, for the Chairman and Chief Executive Officer, the number of share subscription options finally that are likely to be exercised at the end of the two-year vesting period will be subject to performance conditions.conditions being met (see “— Grants to the Chairman and Chief Executive Officer”).

STOCK OPTIONS EXERCISED IN 20102011 BY THE CHAIRMAN AND
THE CHIEF EXECUTIVE OFFICER

             
     Number of options
    
  Date of plan
  exercised during
  Exercise
 
  (Grant date)  fiscal year  price (€) 
Thierry Desmarest
  2002 Plan   25,372   39.03 
Chairman of the Board of Directors
  07/09/2002         
(until May 21, 2010)
            
             
Total
      25,372     
             
Christophe de Margerie
  —   —   — 
Chief Executive Officer
            
(until May 21, 2010)
            
Chairman and Chief Executive Officer
            
(since May 21, 2010)
            
             
Total
      —      
             


96

The stock options awarded to the Chairman and Chief Executive Officer are detailed in the table “TOTAL stock options awarded to Mr. de Margerie, Chairman and Chief Executive Officer of TOTAL S.A.” below.

    Date of Plan  Number of options
exercised during
fiscal year		   Exercise
price (€)		 

Christophe de Margerie

  2003 Plan   113,576     32.84  

Chairman and Chief Executive Officer

  07/16/2003          

Total

      113,576       

RESTRICTED SHARE GRANTSPERFORMANCE SHARES AWARDED IN 2010 FOR2011 TO THE CHAIRMAN
THE CHIEF EXECUTIVE OFFICER OR ANY DIRECTOR (CONDITIONAL GRANT) AND

                       
     Number of shares
            
     awarded during
  Value of
  Acquisition
  Availability
  Performance
  Date of plan  fiscal year  shares (€)  date  date  condition
Thierry Desmarest
  2010 Plan   —    —    —    —   — 
Chairman of the Board of Directors
  09/14/2010                   
(until May 21, 2010)
                      
                       
Christophe de Margerie
  2010 Plan   —    —    —    —   — 
Chief Executive Officer
  09/14/2010                   
(until May 21, 2010) 
                      
Chairman and Chief Executive Officer
                      
(since May 21, 2010)
                      
                       
Claude Clément
  2010 Plan   240   35.03   09/15/2012   09/15/2014   
Director representing employee shareholders
  09/14/2010                  Condition based on the Group’s average ROE for fiscal years 2010 and 2011(a)
   2010 Global
Plan		   25   32.70   07/01/2012   07/01/2014  — 
   06/30/2010                   
                       
Total
      265               
                       

(a)

The performance condition applies to half of the shares awarded in excess of 100 shares.
RESTRICTED SHARES FINALLY AWARDED IN 2010 FOR THE CHAIRMAN,  THE CHIEF EXECUTIVE OFFICER OR ANY DIRECTOR

    Date of
Plan		   Number of
shares
awarded
during
fiscal year		   Value of
shares (€)(a)		   Acquisition
date		   Availability
date		   

Performance

condition

Christophe de MargerieChairman and Chief Executive Officer   
 		2011 Plan
09/14/2011		  
  		   16,000     437,440     09/15/2013     09/15/2015    For 50% of the shares, the condition is based on the average ROE for the Group’s 2011 and 2012 fiscal years. For 50% of the shares, the condition is based on the average ROACE for the Group’s 2011 and 2012 fiscal years.
Claude ClémentDirector representing employee shareholders   
 		2011 Plan
09/14/2011		  
  		   240     6,562     09/15/2013     09/15/2015    Shares in excess of the first 100 shares are subject to a condition based on the average ROE for the Group’s 2011 and 2012 fiscal years.
Total        16,240                    

(a)The value of performance shares was calculated on the day when they were awarded.

PERFORMANCE SHARES FINALLY AWARDED IN 2011 FOR THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER OR ANY DIRECTOR

    Date of Plan

Number of shares

finally awarded during
fiscal year

Acquisition
condition

Christophe de Margerie

2009 Plan——

Chairman and Chief Executive Officer

09/15/2009          

Claude Clément

2009 Plan   —

Director representing employee shareholders

  Number of shares
09/15/2009		   —
       
finally awarded during

Total

  Acquisition
Date of planfiscal year(a)condition
Thierry Desmarest
2008 Plan    —    —
Chairman of the Board of Directors
10/09/2008
(until May 21, 2010)
Christophe de Margerie
2008 Plan —  —
Chief Executive Officer
10/09/2008
(until May 21, 2010)
Chairman and Chief Executive Officer
(since May 21, 2010)
Claude Clément
Director representing employee shareholders		2008 Plan
10/09/2008		300Condition based
on the Group’s
ROE for fiscal
year 2009
Total
300
(a)Shares finally awarded to the beneficiaries after a2-year vesting period, i.e. on October 10, 2010.
(b)The acquisition rate of the shares granted, linked to the performance condition, was 60%. By decision of the Board of Directors at its meeting on September 9, 2008, Mr. Clément was awarded 500 restricted shares on October 9, 2008. Moreover, the transfer of the restricted shares finally awarded will only be permitted after the end of a2-year mandatory holding period, i.e. from October 10, 2012.


97

TOTAL stock option plansSTOCK OPTION GRANTS

The following table gives a breakdown of stock options awarded by category of beneficiaries (executive(main executive officers, senior managersother executive officers and other employees) for the plans in effect during 2010.

                   
       Number of
     Average number
 
    Number of
  options
     of options per
 
    beneficiaries  awarded(a)  Percentage  beneficiary(a) 
2002 Plan(b)(d)(e):
                  
Purchase options
 Executive officers(c)  28   333,600   11.6%  11,914 
Decision of the Board on July 9, 2002 Senior managers  299   732,500   25.5%  2,450 
Exercise price: €158.30; discount: 0.0% Other employees  3,537   1,804,750   62.9%  510 
Exercise price as of May 24, 2006: €39.03(a)
                  
  Total  3,864   2,870,850   100%  743 
                   
2003 Plan(b)(d):
                  
Subscription options
 Executive officers(c)  28   356,500   12.2%  12,732 
Decision of the Board on July 16, 2003 Senior managers  319   749,206   25.5%  2,349 
Exercise price: €133.20; discount: 0.0% Other employees  3,603   1,829,600   62.3%  508 
Exercise price as of May 24, 2006: €32.84(a)
                  
  Total  3,950   2,935,306   100%  743 
                   
2004 Plan(d):
                  
Subscription options
 Executive officers(c)  30   423,500   12.6%  14,117 
Decision of the Board on July 20, 2004 Senior managers  319   902,400   26.8%  2,829 
Exercise price: €159.40; discount: 0.0% Other employees  3,997   2,039,730   60.6%  510 
Exercise price as of May 24, 2006: €39.30(a)
                  
  Total  4,346   3,365,630   100%  774 
                   
2005 Plan(d):
                  
Subscription options
 Executive officers(c)  30   370,040   24.3%  12,335 
Decision of the Board on July 19, 2005 Senior managers  330   574,140   37.6%  1,740 
Exercise price: €198.90; discount: 0.0% Other employees  2,361   581,940   38.1%  246 
Exercise price as of May 24, 2006: €49.04(a)
                  
  Total  2,721   1,526,120   100%  561 
                   
2006 Plan(d):
                  
Subscription options
 Executive officers(c)  28   1,447,000   25.3%  51,679 
Decision of the Board on July 18, 2006 Senior managers  304   2,120,640   37.0%  6,976 
Exercise price: €50.60; discount: 0.0% Other employees  2,253   2,159,600   37.7%  959 
  Total  2,585   5,727,240   100%  2,216 
                   
2007 Plan(d)(e):
                  
Subscription options
 Executive officers(c)  27   1,329,360   22.8%  49,236 
Decision of the Board on July 17, 2007 Senior managers  298   2,162,270   37.1%  7,256 
Exercise price: €60.10; discount: 0.0% Other employees  2,401   2,335,600   40.1%  973 
  Total  2,726   5,827,230   100%  2,138 
                   
2008 Plan(d)(e)(f):
                  
Subscription options
 Executive officers(c)  26   1,227,500   27.6%  47,212 
Awarded on October 9, 2008(g)
 Senior managers  298   1,988,420   44.7%  6,673 
Exercise price: €42.90; discount: 0.0% Other employees  1,690   1,233,890   27.7%  730 
  Total  2,014   4,449,810   100%  2,209 
                   
2009 Plan(d)(e):
                  
Subscription options
 Executive officers(c)  26   1,201,500   27.4%  46,211 
Decision of the Board on September 15, 2009 Senior managers  284   1,825,540   41.6%  6,428 
Exercise price: €39.90; discount: 0.0% Other employees  1,742   1,360,460   31.0%  781 
  Total  2,052   4,387,500   100%  2,138 
                   
2010 Plan(d)(e):
                  
Subscription options
 Executive officers(c)  25   1,348,100   28.2%  53,924 
Decision of the Board on September 14, 2010 Senior managers  282   2,047,600   42.8%  7,261 
Exercise price: €38.20; discount: 0.0% Other employees  1,790   1,392,720   29.0%  778 
  Total  2,097   4,788,420   100%  2,283 


98

2011.

      Number of
beneficiaries		  Number
of options
awarded(a)		  Percentage  Average
number of
options per
beneficiary(a)		 

2003 Plan(b)(d):: Subscription options

 Main executive officers(c)  28    356,500    12.2%   12,732  

Decision of the Board on July 16, 2003

 Other executive officers  319    749,206    25.5%   2,349  

Exercise price:€133.20; discount: 0.0%

 Other employees  3,603    1,829,600    62.3%   508  

Exercise price as of May 24, 2006:€32.84(a)

 Total  3,950    2,935,306    100%   743  

2004 Plan(d): Subscription options

 Main executive officers(c)  30    423,500    12.6%   14,117  

Decision of the Board on July 20, 2004

 Other executive officers  319    902,400    26.8%   2,829  

Exercise price:€159.40; discount: 0.0%

 Other employees  3,997    2,039,730    60.6%   510  

Exercise price as of May 24, 2006:€39.30(a)

 Total  4,346    3,365,630    100%   774  

2005 Plan(d): Subscription options

 Main executive officers(c)  30    370,040    24.3%   12,335  

Decision of the Board on July 19, 2005

 Other executive officers  330    574,140    37.6%   1,740  

Exercise price:€198.90; discount: 0.0%

 Other employees  2,361    581,940    38.1%   246  

Exercise price as of May 24, 2006:€49.04(a)

 Total  2,721    1,526,120    100%   561  

2006 Plan(d): Subscription options

 Main executive officers(c)  28    1,447,000    25.3%   51,679  

Decision of the Board on July 18, 2006

 Other executive officers  304    2,120,640    37.0%   6,976  

Exercise price:€50.60; discount: 0.0%

 Other employees  2,253    2,159,600    37.7%   959  
 Total  2,585    5,727,240    100%   2,216  

2007 Plan(d)(e): Subscription options

 Main executive officers(c)  27    1,329,360    22.8%   49,236  

Decision of the Board on July 17, 2007

 Other executive officers  298    2,162,270    37.1%   7,256  

Exercise price:€60.10; discount: 0.0%

 Other employees  2,401    2,335,600    40.1%   973  
 Total  2,726    5,827,230    100%   2,138  

2008 Plan(d)(e)(f): Subscription options

 Main executive officers(c)  26    1,227,500    27.6%   47,212  
Awarded on October 9, 2008, by decision of the Board of Directors on September 9, 2008 

Other executive officers

Other employees

  

 

298

1,690

  

  

  

 

1,988,420

1,233,890

  

  

  

 

44.7

27.7

% 

% 

  

 

6,673

730

  

  

Exercise price:€42.90; discount: 0.0%

 Total  2,014    4,449,810    100%   2,209  

2009 Plan(d)(e)(g): Subscription options

 Main executive officers(c)  26    1,201,500    27.4%   46,212  

Decision of the Board on September 15, 2009

 Other executive officers  284    1,825,540    41.6%   6,428  

Exercise price:€39.90; discount: 0.0%

 Other employees  1,742    1,360,460    31.0%   781  
 Total  2,052    4,387,500    100%   2,138  

2010 Plan(d)(e): Subscription options

 Main executive officers(c)  25    1,348,100    28.2%   53,924  

Decision of the Board on September 14, 2010

 Other executive officers  282    2,047,600    42.8%   7,261  

Exercise price:€38.20; discount: 0.0%

 Other employees  1,790    1,392,720    29.0%   778  
 Total  2,097    4,788,420    100%   2,283  

2011 Plan(d)(e): Subscription options

 Main executive officers(c)  29    846,600    55.7%   29,193  

Decision of the Board on September 14, 2011

 Other executive officers  177    672,240    44.3%   3,798  

Exercise price:€33.00; discount: 0.0%

 Other employees  —    —    —    —  
 Total  206    1,518,840    100%   7,373  

(a)
(a)To take into account the spin-off of Arkema, pursuant toArticles 174-9,174-12 and174-13 of DecreeNo. 67-236 of March 23, 1967, effective at that time and as of the provisions in effect on the date of the Shareholders’ Meeting on May 12, 2006, at its meeting of March 14, 2006, the Board of Directors resolved to adjust the rights of holders of TOTAL stock options.options holders. For each plan and each holder, the exercise prices for TOTAL stock options were multiplied by 0.986147 and the number of unexercised stock options was multiplied by 1.014048 (and then rounded up), effective as of May 24, 2006. In addition, to take into account thefour-for-one stock split approved by the Shareholders’ Meeting on May 12, 2006, the exercise price for stock options was divided by four and the number of unexercised stock options was multiplied by four. The presentation in this table of the number of options initially awarded has not been adjusted to reflect thefour-for-one stock split.
(b)Certain employees of the Elf Aquitaine group in 1998 also benefited in 2000, 2001, 2002 and 2003 from the vesting of Elf Aquitaine options awarded in 1998 subject to performance conditions related to the Elf Aquitaine group from 1998 to 2002. These Elf Aquitaine plans expired on March 31, 2005.
(c)Members of the Management Committee and the Treasurer as of the date of the Board meeting awarding the options. Mr. Desmarest has no longernot been a member of the Management Committee since February 14, 2007. Mr. Desmarest was awarded 110,000 options under the 2007 planPlan and no option under the 2008 and 2009 plans.options since 2008.
(d)The options are exercisable, subject to a continued employmentpresence condition, after a2-year vesting period from the date of the Board meeting awarding the options and expire eight years after this date. The underlying shares may not be transferred during the4-year period from the date of the Board meeting awarding the options (except for the 2008 plan)Plan). The continued employmentpresence condition states that the termination of the employment contract will also terminateresult in the grantee’semployee losing the right to exercise the options.
(e)The4-year transfer restriction period does not apply to employees of non-French subsidiaries as of the date of the grant, who may transfer the underlying shares after a2-year period from the date of the grant.
(f)For the 2008 plan,Plan, the options acquisition rate, linked to the performance condition, was 60%.
(g)Decision of the Board on September 9, 2008.


99

(g)For the 2009 Plan, the options acquisition rate, linked to the performance condition, was 100%.

TOTAL STOCK OPTIONS AS OF DECEMBER 31, 20102011
                                         
  2002 Plan
  2003 Plan
  2004 Plan
  2005 Plan
  2006 Plan
  2007 Plan
  2008 Plan
  2009 Plan
  2010 Plan
    
  Purchase
  Subscription
  Subscription
  Subscription
  Subscription
  Subscription
  Subscription
  Subscription
  Subscription
    
Type of options options  options  options  options  options  options  options  options  options  Total
 
Date of the Shareholders’ Meeting  05/17/2001   05/17/2001   05/14/2004   05/14/2004   05/14/2004   05/11/2007   05/11/2007   05/11/2007   05/21/2010     
Grant date(a)
  07/09/2002   07/16/2003   07/20/2004   07/19/2005   07/18/2006   07/17/2007   10/09/2008   09/15/2009   09/14/2010     
                                         
Total number of options awarded, including(b):
  11,483,400   11,741,224   13,462,520   6,104,480   5,727,240   5,937,230   4,449,810   4,387,500   4,788,420   68,081,824 
directors(c)
  240,000   240,000   240,000   240,720   400,720   310,840   200,660   200,000   240,000   2,312,940 
• D. Boeuf
  n/a   n/a   —    720   720   840   660   0   n/a   2,940 
• T. Desmarest
  240,000   240,000   240,000   240,000   240,000   110,000   —    —    —    1,310,000 
• C. de Margerie
  n/a   n/a   n/a   n/a   160,000   200,000   200,000   200,000   240,000   1,000,000 
• C. Clément
  n/a   n/a   n/a   n/a   n/a   n/a   n/a   n/a   —    —  
                                         
Additional grant
  —    —    24,000   134,400   —    —    —    —    —    158,400 
Adjustments related to the
spin-off of Arkema(d)
  165,672   163,180   196,448   90,280   —    —    —    —    —    615,580 
                                         
Date as of which the options may be exercised  07/10/2004   07/17/2005   07/21/2006   07/20/2007   07/19/2008   07/18/2009   10/10/2010   09/16/2011   09/15/2012     
Expiry date  07/09/2010   07/16/2011   07/20/2012   07/19/2013   07/18/2014   07/17/2015   10/09/2016   09/15/2017   09/14/2018     
Exercise price (€)(e)
  39.03   32.84   39.30   49.04   50.60   60.10   42.90   39.90   38.20     
                                         
Cumulative number of options exercised as of December 31, 2010
  6,878,373   6,072,598   1,050,178   38,497   8,620   —    —    1,080   —      
Cumulative number of options canceled as of December 31, 2010
  4,770,699   97,362   293,943   111,807   77,734   70,785   100,652   14,650   1,120     
                                         
Number of options:                                        
• outstanding as of January 1, 2010  5,935,261   6,811,629   12,495,709   6,185,440   5,645,686   5,871,665   4,441,630   4,377,010   —    51,764,030 
Awarded in 2010  —    —    —    —    —    —    —    —    4,788,420   4,788,420 
• Canceled in 2010(f)(g)
  (4,671,989)  (1,420)  (15,660)  (6,584)  (4,800)  (5,220)  (92,472)  (4,040)  (1,120)  (4,803,305)
• exercised in 2010  (1,263,272)  (1,075,765)  (141,202)  —    —    —    —    (1,080)  —    (2,481,319)
outstanding as of December 31, 2010
  —    5,734,444   12,338,847   6,178,856   5,640,886   5,866,445   4,349,158   4,371,890   4,787,300   49,267,826 
                                         

   2003 Plan  2004 Plan  2005 Plan  2006 Plan  2007 Plan  2008 Plan  2009 Plan  2010 Plan  2011 Plan  Total 
Type of options Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		     

Date of the Shareholders’ Meeting

  05/17/2001    05/14/2004    05/14/2004    05/14/2004    05/11/2007    05/11/2007    05/11/2007    05/21/2010    05/21/2010   

Grant date(a)

  07/16/2003    07/20/2004    07/19/2005    07/18/2006    07/17/2007    10/09/2008    09/15/2009    09/14/2010    09/14/2011      

Total number of options awarded, including(b):

  11,741,224    13,462,520    6,104,480    5,727,240    5,937,230    4,449,810    4,387,500    4,788,420    1,518,840    58,117,264  

Directors(c)

  240,000    240,000    240,720    400,720    310,840    200,660    200,000    240,000    160,000    2,232,940  

— C. de Margerie

  n/a    n/a    n/a    160,000    200,000    200,000    200,000    240,000    160,000    1,160,000  

— C. Clément

  n/a    n/a    n/a    n/a    n/a    n/a    n/a    —    —    —  

— D. Boeuf

  n/a    —    720    720    840    660    —    n/a    n/a    2,940  

— T. Desmarest

  240,000    240,000    240,000    240,000    110,000    —    —    —    n/a    1,070,000  

Additional grant

  —    24,000    134,400    —    —    —    —    —    —    158,400  

Adjustments related to the spin-off of Arkema(d)

  163,180    196,448    90,280    —    —    —    —    —    —    449,908  

Date as of which the options may be exercised

  07/17/2005    07/21/2006    07/20/2007    07/19/2008    07/18/2009    10/10/2010    09/16/2011    09/15/2012    09/15/2013   

Expiry date

  07/16/2011    07/20/2012    07/19/2013    07/18/2014    07/17/2015    10/09/2016    09/15/2017    09/14/2018    09/14/2019   

Exercise price (€)(e)

  32.84    39.30    49.04    50.60    60.10    42.90    39.90    38.20    33.00      

Cumulative number of options exercised as of December 31, 2011

  11,068,508    1,266,293    38,497    8,620    —    200    1,080    2,040    9,400   

Cumulative number of options canceled as of December 31, 2011

  835,896    322,151    128,127    95,114    86,865    113,912    28,740    86,337    1,000      

Number of options:

          

— outstanding as of January 1, 2011

  5,734,444    12,338,847    6,178,856    5,640,886    5,866,445    4,349,158    4,371,890    4,787,300    —    49,267,826  

— awarded in 2011

  —    —    —    —    —    —    —    —    1,518,840    1,518,840  

— canceled in 2011(f)(g)

  (738,534)   (28,208)   (16,320)   (17,380)   (16,080)   (13,260)   (14,090)   (85,217)   (1,000)   (930,089) 

— exercised in 2011

  (4,995,910)   (216,115)   —    —    —    (200)   —    (2,040)   (9,400)   (5,223,665) 

— outstanding as of December 31, 2011

  —    12,094,524    6,162,536    5,623,506    5,850,365    4,335,698    4,357,800    4,700,043    1,508,440    44,632,912  

(a)
(a)The grant date is the date of the Board meeting awarding the options, except for the share subscription option plan of October 9, 2008, approved by the Board on September 9, 2008.
(b)The number of options awarded before May 23, 2006, has been multiplied by four to take into account thefour-for-one stock split approved by the Shareholders’ Meeting on May 12, 2006.
(c)Options awarded to directors at the time of grant.
(d)Adjustments approved by the Board onat its meeting on March 14, 2006, pursuant toArticles 174-9,174-12 and174-13 of DecreeNo. 67-236 dated March 23, 1967 in effect at the time of the Board meeting as well as at the time of the Shareholders’ Meeting on May 12, 2006, related to the spin-off of Arkema. These adjustments were made on May 22, 2006 effective as of May 24, 2006.
(e)Exercise price as of May 24, 2006. To take into account thefour-for-one stock split that took place on May 18, 2006, the exercise price of stock options from plans then effective has been divided by four. In addition, to take into account the spin-off of Arkema, the exercise price of stock options was multiplied by an adjustment ratio of 0.986147, effective as of May 24, 2006. Exercise prices prior to May 24, 2006, are shown in Note 25 to the Consolidated Financial Statements.
(f)Out of the 4,671,989 options canceled in 2010, 4,671,145 options that were not exercised expired due to the expiry of the 2002 purchase option plan on July 9, 2010.
(g)Out of the 92,472 options awarded under the 2008 plan that were canceled, 88,532 options were canceled due to the application of the performance condition. The acquisition rate applicable to the subscription options that were subject to the performance condition of the 2008 plan was 60%.
If all the outstanding stock options as of December 31, 2010, were exercised, the corresponding shares would represent 2.05%(1) of the Company’s potential share capital as of such date.
(1) Out of a total potential share capital of 2,398,908,757 shares.


100

TOTAL STOCK OPTIONS AWARDED TO EXECUTIVE OFFICERS (MANAGEMENT COMMITTEE AND
TREASURER) AS OF DECEMBER 31, 2010
                                         
  2002 Plan
  2003 Plan
  2004 Plan
  2005 Plan
  2006 Plan
  2007 Plan
  2008 Plan
  2009 Plan
  2010 Plan
    
  
Purchase
  
Subscription
  
Subscription
  
Subscription
  
Subscription
  
Subscription
  
Subscription
  
Subscription
  
Subscription
    
Type of options options  options  options  options  options  options  options  options  options  Total
 
Expiry date  07/09/2010   07/16/2011   07/20/2012   07/19/2013   07/18/2014   07/17/2015   10/09/2016   09/15/2017   09/14/2018     
Exercise price (€)(a)
  39.03   32.84   39.30   49.04   50.60   60.10   42.90   39.90   38.20     
                                         
Options awarded by the Board(b)
  560,200   635,704   796,800   689,680   823,720   1,000,840   1,101,200   1,169,800   1,348,100   8,126,044 
Adjustments related to the spin-off of Arkema(c)
  7,568   8,120   11,248   9,608   —    —    —    —    —    36,544 
                                         
Options outstanding as of 01/01/10  243,232   291,337   705,048   699,416   823,720   1,000,840   1,101,200   1,169,800   —    6,034,593 
Options awarded in 2010  —    —    —    —    —    —    —    —    1,348,100   1,348,100 
Options exercised in 2010  (20,600)  (25,172)  (90,000)  —    —    —    —    —    —    (135,772)
Options canceled in 2010(d)(e)
  (222,632)  —    —    —    —    —    (78,399)  —    —    (301,031)
Options outstanding as of 12/31/10  —    266,165   615,048   699,416   823,720   1,000,840   1,022,801   1,169,800   1,348,100   6,945,890 
                                         
(a)Exercise price as of May 24, 2006. To take into account thefour-for-one stock split that took place on May 18, 2006, the exercise price of stock options from plans then effective has been divided by four. In addition, to take into account the spin-off of Arkema, the exercise price of stock options was multiplied by an adjustment ratio of 0.986147, effective as of May 24, 2006. Exercise prices prior to May 24, 2006, are shown in Note 25 to the Consolidated Financial Statements.
(b)The number of options awarded before May 23, 2006, has been multiplied by four to take into account thefour-for-one stock split approved by the Shareholders’ Meeting on May 12, 2006.
(c)Adjustments approved by the Board on its meeting on March 14, 2006 pursuant toArticles 174-9,174-12 and174-13 of DecreeNo. 67-236 dated March 23, 1967provisions in effect at the time of the Board meeting and at the time of the Shareholders’ Meeting on May 12, 2006, related to the spin-off of Arkema. These adjustments were made on May 22, 2006 effective as of May 24, 2006.
(d)(e)Exercise price as of May 24, 2006. The exercise prices of TOTAL subscription shares under the plans in force at that date were multiplied by 0.25 to take into account the four-for-one stock split on May 18, 2006. Moreover, following the spin-off of Arkema, the exercise prices of TOTAL stock options under these plans were multiplied by an adjustment factor equal to 0.986147 effective as of May 24, 2006. The exercise prices effective before May 24, 2006 are given in Note 25, points A, B and C to the Consolidated Financial Statements.
(f)Out of the 301,031930,089 options canceled in 2010, 222,6322011, 738,534 options that were not exercised expired due to the expiry of the 2002 purchase2003 subscription option plan on July 9, 2010.16, 2011.
(e)(g)78,399 options of the 2008 plan were canceled due to the application of the performance condition. The acquisition rate applicable to the subscription options that were subject to the performance condition of the 2008 plan2009 Plan was 60%100%.

If all the outstanding stock options as of December 31, 2011 were exercised, the corresponding shares would represent 1.85%(1)of the Company’s potential share capital as of such date.

(1)Out of a total potential share capital of 2,408,400,225 shares.

TOTAL STOCK OPTIONS AWARDED TO MAIN EXECUTIVE OFFICERS (MANAGEMENT COMMITTEE AND TREASURER) AS OF DECEMBER 31, 2011

   2003 Plan  2004 Plan  2005 Plan  2006 Plan  2007 Plan  2008 Plan  2009 Plan  2010 Plan  2011 Plan  Total 
Type of options Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		     

Expiry date

  07/16/2011    07/20/2012    07/19/2013    07/18/2014    07/17/2015    10/09/2016    09/15/2017    09/14/2018    09/14/2019   

Exercise price (€)(a)

  32.84    39.30    49.04    50.60    60.10    42.90    39.90    38.20    33.00      

Options awarded by the Board(b)

  680,904    848,800    711,440    851,240    1,032,120    1,138,300    1,215,300    1,406,400    846,600    8,731,104  

Adjustments related to the spin-off of Arkema(c)

  8,988    11,992    10,048    —    —    —    —    —    —    31,028  

Options outstanding as of January 01, 2011

  277,119    757,792    721,488    851,240    1,032,120    1,059,901    1,215,300    1,406,400     7,321,360  

Options awarded in 2011

  —    —    —    —    —    —    —    —    846,600    846,600  

Options exercised in 2011

  (277,119)   —    —    —    —    —    —    —    —    (277,119) 

Options canceled in 2011

  —    —    —    —    —    —    —    (59,000)   —    (59,000) 

Options outstanding as of December 31, 2011

  —    757,792    721,488    851,240    1,032,120    1,059,901    1,215,300    1,347,400    846,600    7,831,841  

(a)Exercise price as of May 24, 2006. The exercise prices of TOTAL subscription shares under the plans in force at that date were multiplied by 0.25 to take into account the four-for-one stock split on May 18, 2006. Moreover, following the spin-off of Arkema, the exercise prices of TOTAL stock options under these plans were multiplied by an adjustment factor equal to 0.986147 effective as of May 24, 2006. The exercise prices effective before May 24, 2006 are given in Note 25, points A, B and C to the Consolidated Financial Statements.
(b)The number of options awarded before May 23, 2006, has been multiplied by four to take into account the four-for-one stock split approved by the Shareholders’ Meeting on May 12, 2006.
(c)Adjustments approved by the Board at its meeting on March 14, 2006, pursuant to the provisions in effect at the time of the Board meeting and of the Shareholders’ Meeting on May 12, 2006, related to the spin-off of Arkema. These adjustments were made on May 22, 2006 effective as of May 24, 2006.

As part of the 2007, 2008 and 2009 share subscription option plans, the Board of Directors decided that for each beneficiary of more than 25,000 options, one-third of the options awarded in excess of this number be subject to a performance condition. For the 2010 share subscription option plan, beneficiaries of more than 3,000 options are subject to a performance condition for part of the options.

options (see “— Grants to the Chairman and Chief Executive Officer”). For the 2011 share subscription option plan, all of the options are subject to a performance condition.

In addition, Mr. Clément, the director representing employee shareholders, has not exercised any option in 20102011 and has not been awarded any share subscription options byunder the 2010 plan.


1012011 Plan.

TOTAL STOCK OPTIONS AWARDED TO MR. DESMAREST,
DE MARGERIE, CHAIRMAN OF THE BOARDAND

CHIEF EXECUTIVE OFFICER OF TOTAL S.A. UNTIL MAY 21, 2010

                                         
  2002 Plan
  2003 Plan
  2004 Plan
  2005 Plan
  2006 Plan
  2007 Plan
  2008 Plan
  2009 Plan
  2010 Plan
    
  
Purchase
  
Subscription
  
Subscription
  
Subscription
  
Subscription
  
Subscription
  
Subscription
  
Subscription
  
Subscription
    
Type of options options  options  options  options  options  options  options  options  options  Total
 
Expiry date  07/09/2010   07/16/2011   07/20/2012   07/19/2013   07/18/2014   07/17/2015   10/09/2016   09/15/2017   09/14/2018     
Exercise price (€)(a)
  39.03   32.84   39.30   49.04   50.60   60.10   42.90   39.90   38.20     
                                         
Options awarded by the Board(b)
  240,000   240,000   240,000   240,000   240,000   110,000   —    —    —    1,310,000 
Adjustments related to the spin-off of Arkema(c)
  3,372   2,476   3,372   3,372   —    —    —    —    —    12,592 
                                         
Options outstanding as of 01/01/10  25,372   —    243,372   243,372   240,000   110,000   —    —    —    862,116 
Options awarded in 2010  —    —    —    —    —    —    —    —    —    —  
Options exercised in 2010  (25,372)  —    —    —    —    —    —    —    —    (25,372)
Options canceled in 2010  —    —    —    —    —    —    —    —    —    —  
Options outstanding as of 12/31/10  —    —    243,372   243,372   240,000   110,000   —    —    —    836,744 
                                         

   2003 Plan  2004 Plan  2005 Plan  2006 Plan  2007 Plan  2008 Plan  2009 Plan  2010 Plan  2011 Plan  Total 
Type of options Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		  Subscription
options		     

Expiry date

  07/16/2011    07/20/2012    07/19/2013    07/18/2014    07/17/2015    10/09/2016    09/15/2017    09/14/2018    09/14/2019   

Exercise price (€)(a)

  32.84    39.30    49.04    50.60    60.10    42.90    39.90    38.20    33.00      

Options awarded by the Board(b)

  112,000    128,000    130,000    160,000    200,000    200,000    200,000    240,000    160,000    1,530,000  

Adjustments related to the spin-off of Arkema(c)

  1,576    1,800    1,828    —    —    —    —    —    —    5,204  

Options outstanding as of January 01, 2011

  113,576    129,800    131,828    160,000    200,000    176,667    200,000    240,000    —    1,351,871  

Options awarded in 2011

  —    —    —    —    —    —    —    —    160,000    160,000  

Options exercised in 2011

  (113,576)   —    —    —    —    —    —    —    —    (113,576) 

Options canceled in 2011

  —    —    —    —    —    —    —    —    —    —  

Options outstanding as of December 31, 2011

  —    129,800    131,828    160,000    200,000    176,667    200,000    240,000    160,000    1,398,295  

(a)
(a)Exercise price as of May 24, 2006. ToThe exercise prices of TOTAL subscription shares under the plans in force at that date were multiplied by 0.25 to take into account thefour-for-one stock split that took place on May 18, 2006, the exercise price of stock options from plans then effective has been divided by four. In addition, to take into account2006. Moreover, following the spin-off of Arkema, the exercise priceprices of TOTAL stock options wasunder these plans were multiplied by an adjustment ratio offactor equal to 0.986147 effective as of May 24, 2006. ExerciseThe exercise prices prior toeffective before May 24, 2006 are showngiven in Note 25, points A, B and C to the Consolidated Financial Statements.Statements (chapter 9).
(b)The number of options awarded before May 23, 2006, has been multiplied by four to take into account thefour-for-one stock split approved by the Shareholders’ Meeting on May 12, 2006.
(c)Adjustments approved by the Board onat its meeting on March 14, 2006, pursuant toArticles 174-9,174-12 and174-13 of DecreeNo. 67-236 dated March 23, 1967 the provisions in effect at the time of the Board meeting and at the time of the Shareholders’ Meeting on May 12, 2006, related to the spin-off of Arkema. These adjustments were made on May 22, 2006 effective as of May 24, 2006.

As part of the 2007 to 2011 Plans, the Board has made the grant of these options to the Chairman and Chief Executive Officer subject to performance conditions (see “— Grants to the Chairman and Chief Executive Officer”). For the 2009 Plan, the acquisition rate, linked to the performance conditions, was 100%.

As of December 31, 2010,2011, the outstanding options of the Chairman and Chief Executive Officer represented 0.058%(1) of the Company’s potential share capital as of such date.

Mr. Desmarest, Chairman of the Board of Directors until May 21, 2010, represented 0.035%(1) ofwas not awarded any share subscription options under the Company’s potential share capital as of such date.

(1) Out of a total potential share capital of 2,398,908,757 shares.


102

TOTAL STOCK OPTIONS AWARDED TO MR. DE MARGERIE, CHAIRMAN AND
CHIEF EXECUTIVE OFFICER OF TOTAL S.A.
                                         
  2002 Plan
  2003 Plan
  2004 Plan
  2005 Plan
  2006 Plan
  2007 Plan
  2008 Plan
  2009 Plan
  2010 Plan
    
  
Purchase
  
Subscription
  
Subscription
  
Subscription
  
Subscription
  
Subscription
  
Subscription
  
Subscription
  
Subscription
    
Type of options options  options  options  options  options  options  options  options  options  Total
 
Expiry date  07/09/2010   07/16/2011   07/20/2012   07/19/2013   07/18/2014   07/17/2015   10/09/2016   09/15/2017   09/14/2018     
Exercise price (€)(a)
  39.03   32.84   39.30   49.04   50.60   60.10   42.90   39.90   38.20     
                                         
Options awarded by the Board(b)
  112,000   112,000   128,000   130,000   160,000   200,000   200,000   200,000   240,000   1,482,000 
Adjustments related to the spin-off of Arkema(c)
  1,576   1,576   1,800   1,828   —    —    —    —    —    6,780 
                                         
Options outstanding as of 01/01/10  113,576   113,576   129,800   131,828   160,000   200,000   200,000   200,000   —    1,248,780 
Options awarded in 2010                                  240,000   240,000 
Options exercised in 2010                                  —    —  
Options canceled in 2010(d)(e)
  (113,576)                      (23,333)          (136,909)
Options outstanding as of 12/31/10  —    113,576   129,800   131,828   160,000   200,000   176,667   200,000   240,000   1,351,871 
                                         
(a)Exercise price as of May 24, 2006. To take into account thefour-for-one stock split that took place on May 18, 2006, the exercise price of stock options from plans then effective has been divided by four. In addition, to take into account the spin-off of Arkema, the exercise price of stock options was multiplied by an adjustment ratio of 0.986147, effective as of May 24, 2006. Exercise prices prior to May 24, 2006, are shown in Note 25 to the Consolidated Financial Statements.
(b)The number of options awarded before May 23, 2006, has been multiplied by four to take into account thefour-for-one stock split approved by the Shareholders’ Meeting on May 12, 2006.
(c)Adjustments approved by the Board on its meeting on March 14, 2006 pursuant toArticles 174-9,174-12 and174-13 of DecreeNo. 67-236 dated March 23, 1967 in effect at the time of the Board meeting and at the time of the Shareholders’ Meeting on May 12, 2006, related to the spin-off of Arkema. These adjustments were made on May 22, 2006 effective as of May 24, 2006.
(d)113,576 options that were not exercised expired due to the expiry of the 2002 purchase option plan on July 9, 2010.
(e)The acquisition rate applicable to the subscription options that were subject to the performance condition of the 2008 plan was 60%.
As part of the 2007, 2008, 2009, 2010 and 20102011 plans. In addition, he was not awarded any performance shares under plans in the Board has conditioned the grant of these optionsperiod 2005 to the Chairman and Chief Executive Officer on the satisfaction of performance conditions. For the 2008 plan, the acquisition rate, linked to the performance condition, was 60%.
As of December 31, 2010, the outstanding options of the Chairman and Chief Executive Officer represented 0.056%(1) of the Company’s potential share capital as of such date.
(1) Out of a total potential share capital of 2,398,908,757 shares.


103

2011.

(1)Out of a total potential share capital of 2,408,400,225 shares.

STOCK OPTIONS AWARDED TO THE TEN EMPLOYEES (OTHER THAN
DIRECTORS) CORPORATE EXECUTIVE OFFICERS) RECEIVING THE LARGEST AWARDS / AWARDS/STOCK OPTIONS
EXERCISED BY THE TEN EMPLOYEES (OTHER THAN DIRECTORS)
CORPORATE EXECUTIVE OFFICERS) EXERCISING THE LARGEST NUMBER OF OPTIONS
                 
  Total number of options
          
  awarded/ options
          
  exercised  Exercise price (€)
  Grant date(a)
  Expiry date
 
Options awarded in 2010 to the ten employees of TOTAL S.A., or any company in the Group, receiving the largest number of options  742,000   38.20   09/14/2010   09/14/2018 
                 
Options exercised in 2010 by the ten employees of  75,858   39.03   07/09/2002   07/09/2010 
TOTAL S.A., or any company in the Group,  79,793   32.84   07/16/2003   07/16/2011 
exercising the largest number of options(b)
  24,000   39.30   07/20/2004   07/20/2012 
                 
   179,651   36.32(c)        

    Total number of
options
awarded/exercised		   Exercise price (€)  Grant date(a)   Expiry date 

Options awarded in 2011 to the ten employees of TOTAL S.A., or any company in the Group, receiving the largest number of options

   430,400    33.00    09/14/2011     09/14/2019  

Options exercised in 2011 by the ten employees of TOTAL S.A., or any company in the Group, exercising the largest number of options(b)

   227,671     32.84    07/16/2003     07/16/2011  
   9,736     39.30    07/20/2004     07/20/2012  
   237,407     33.10(c)    

(a)
(a)The grant date is the date of the Board meeting awarding the options.
(b)Exercise price as of May 24, 2006. ToThe exercise prices of TOTAL stock options under the plans in force at that date were multiplied by 0.25 to take into account thefour-for-one stock split that took place on May 18, 2006, the exercise price of stock options from plans then effective has been divided by four. In addition, to take into account2006. Moreover, following the spin-off of Arkema, the exercise priceprices of TOTAL stock options wasunder these plans were multiplied by an adjustment ratio offactor equal to 0.986147 effective as of May 24, 2006. ExerciseThe exercise prices prior toeffective before May 24, 2006 are showngiven in Note 25, points A, B and C to the Consolidated Financial Statements.
(c)Weighted-average price.


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TOTAL restricted share grants
GLOBAL FREE AND PERFORMANCE SHARE GRANTS

TOTAL SHARE PLANglobal free share plan

In addition to the restrictedperformance shares granted, the Board of Directors decided at its meeting on May 21, 2010, to implement a global free share plan intended for all the Group employees, that is, more than 100,000 employees. On June 30, 2010, rights to 25twenty-five free shares were granted to every employee. The shares are subject to a vesting period of two to four years depending on the case. However, theThe shares awardedgranted are not subject to aany performance condition. Following the vesting period, the shares will be issued.

BREAKDOWN OF RESTRICTEDBreakdown of TOTAL SHARE GRANTSperformance share grants

The following table gives a breakdown of restrictedTOTAL performance share grants by category of grantee (executivebeneficiary (main executive officers, senior managersother executive officers and other employees).

                   
             Average number
 
       Number of
     of restricted
 
    Number of
  restricted shares
     shares per
 
    beneficiaries  awarded(a)  Percentage  beneficiary 
2005 Plan(b)
 Executive officers(c)  29   13,692   2.4%  472 
Decision of the Board on Senior managers  330   74,512   13.1%  226 
July 19, 2005 Other employees(d)  6,956   481,926   84.5%  69 
  Total  7,315   570,130   100%  78 
                   
2006 Plan(b)
 Executive officers(c)  26   49,200   2.2%  1,892 
Decision of the Board on Senior managers  304   273,832   12.0%  901 
July 18, 2006 Other employees(d)  7,509   1,952,332   85.8%  260 
  Total  7,839   2,275,364   100%  290 
                   
2007 Plan(b)
 Executive officers(c)  26   48,928   2.1%  1,882 
Decision of the Board on Senior managers  297   272,128   11.5%  916 
July 17, 2007 Other employees(d)  8,291   2,045,309   86.4%  247 
  Total  8,614   2,366,365   100%  275 
                   
2008 Plan(b)
 Executive officers(c)  25   49,100   1.8%  1,964 
Grant on October 9, Senior managers  300   348,156   12.5%  1,161 
2008, by decision of Other employees(d)  9,028   2,394,712   85.8%  265 
the Board                  
on September 9, 2008 Total  9,353   2,791,968   100%  299 
                   
2009 Plan Executive officers(c)  25   48,700   1.6%  1,948 
Decision of the Board on Senior managers  284   329,912   11.1%  1,162 
September 15, 2009 Other employees(d)  9,693   2,593,406   87.3%  268 
  Total  10,002   2,972,018   100%  297 
                   
2010 Plan(e)
 Executive officers(c)  24   46,780   1.6%  1,949 
Decision of the Board on Senior managers  283   343,080   11.4%  1,212 
September 14, 2010 Other employees(d)  10,074   2,620,151   87.0%  260 
  Total  10,381   3,010,011   100%  290 

      Number of
beneficiaries		  Number
of shares
awarded(a)		  Percentage  Average
number of
shares per
beneficiary		 

2005 Plan(b)

 Main executive officers(c)  29    13,692    2.4%   472  

Decision of the Board on July 19, 2005

 Other executive officers  330    74,512    13.1%   226  
 Other employees(d)  6,956    481,926    84.5%   69  
 Total  7,315    570,130    100%   78  

2006 Plan(b)

 Main executive officers(c)  26    49,200    2.2%   1,892  

Decision of the Board on July 18, 2006

 Other executive officers  304    273,832    12.0%   901  
 Other employees(d)  7,509    1,952,332    85.8%   260  
 Total  7,839    2,275,364    100%   290  

2007 Plan(b)

 Main executive officers(c)  26    48,928    2.1%   1,882  

Decision of the Board on July 17, 2007

 Other executive officers  297    272,128    11.5%   916  
 Other employees(d)  8,291    2,045,309    86.4%   247  
 Total  8,614    2,366,365    100%   275  

2008 Plan(b)

 Main executive officers(c)  25    49,100    1.8%   1,964  
Awarded on October 9, 2008, by decision of the Board of Directors on September 9, 2008 Other executive officers  300    348,156    12.5%   1,161  
 Other employees(d)  9,028    2,394,712    85.8%   265  
 Total  9,353    2,791,968    100%   299  

2009 Plan(b)

 Main executive officers(c)  25    48,700    1.6%   1,948  

Decision of the Board on September 15, 2009

 Other executive officers  284    329,912    11.1%   1,162  
 Other employees(d)  9,693    2,593,406    87.3%   268  
 Total  10,002    2,972,018    100%   297  

2010 Plan(e)

 Main executive officers(c)  24    46,780    1.6%   1,949  

Decision of the Board on September 14, 2010

 Other executive officers  283    343,080    11.4%   1,212  
 Other employees(d)  10,074    2,620,151    87.0%   260  
 Total  10,381    3,010,011    100%   290  

2011 Plan

 Main executive officers(c)  29    184,900    5.1%   6,376  

Decision of the Board on September 14, 2011

 Other executive officers  274    624,000    17.1%   2,277  
 Other employees(d)  9,658    2,840,870    77.8%   294  
 Total  9,961    3,649,770    100%   366  

(a)
(a)The number of restrictedperformance shares awarded shown in this table has not been recalculatedadjusted to take into account thefour-for-one stock split approved by the Shareholders’ Meeting on May 12, 2006.
(b)For the 2005, 2006, 2007 and 2007 plans,2009 Plans, the acquisition rates of the shares awarded, linked to the performance conditions, were 100%. For the 2008 plan,Plan, the acquisition rate, linked to the performance condition, was 60%.
(c)Members of the Management Committee and the Treasurer as of the date of the Board meeting granting the restrictedperformance shares. The Chairman of the Board and the Chief Executive Officer were not awarded any restricted shares.performance shares, with the exception of the 2011 Plan. On September 14, 2011, the Board of Directors of TOTAL S.A. decided to grant 16,000 performance shares to Mr. de Margerie.
(d)Mr. Clément, employee of Total Raffinage Marketing, a subsidiary of TOTAL S.A. and the director of TOTAL S.A. representing employee shareholders, was awarded 320 restrictedperformance shares under the 2005 plan,Plan, 200 restrictedperformance shares under the 2007 plan,Plan, 500 restrictedperformance shares under the 2008 plan andPlan, 240 restrictedperformance shares under the 2010 plan.Plan and 240 performance shares under the 2011 Plan.
(e)Excluding free shares granted as part of the 2010 global free share plan.

The grant of these restrictedperformance shares, which were bought back by the Company on the market, will become final after a2-year vesting period. This final grant is subject to continued employmenta presence condition and a performance condition performances.(see “— Stock options and performance share grants policy — General policy”). Moreover, the transfer of the restrictedperformance shares will not be permitted until the end of a2-year mandatory holding period.


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RESTRICTEDPERFORMANCE SHARE PLANS AS OF DECEMBER 31, 20102011
                         
  2005
                
  Plan(a)  2006 Plan  2007 Plan  2008 Plan  2009 Plan  2010 Plan 
Date of the Shareholders’ Meeting
  05/17/2005   05/17/2005   05/17/2005   05/16/2008   05/16/2008   05/16/2008 
Grant date(b)
  07/19/2005   07/18/2006   07/17/2007   10/09/2008   09/15/2009   09/14/2010 
Closing price on grant date(c)
  €52.13   €50.40   €61.62   €35.945   €41.615   €39.425 
Average repurchase price per share paid by the Company  €51.62   €51.91   €61.49   €41.63   €38.54   €39.11 
Total number of restricted shares awarded, including to  2,280,520   2,275,364   2,366,365   2,791,968   2,972,018   3,010,011 
• Directors(d)
  416   416   432   588   —   240 
• Ten employees with largest grants(e)
  20,000   20,000   20,000   20,000   20,000   20,000 
Start of the vesting period:  07/19/2005   07/18/2006   07/17/2007   10/09/2008   09/15/2009   09/14/2010 
Date of final grant, subject to specific condition (end of the vesting period)  07/20/2007   07/19/2008   07/18/2009   10/10/2010   09/16/2011   09/15/2012 
Transfer possible from (end of the mandatory holding period)  07/20/2009   07/19/2010   07/18/2011   10/10/2012   09/16/2013   09/15/2014 
                         
Number of restricted shares:                        
• Outstanding as of January 1, 2010  —   —   —   2,762,476   2,966,036     
• Awarded in 2010          —       —   3,010,011 
• Canceled in 2010(f)
  1,024(h)  3,034(h)  552(h)  (1,113,462)  (9,796)  (8,738)
• Finally granted in 2010(g)
  (1,024)(h)  (3,034)(h)  (552)(h)  (1,649,014)  (1,904)  (636)
• Outstanding as of December 31, 2010  —   —   —   —   2,954,336   3,000,637 
                         

    2005 Plan(a)  2006 Plan  2007 Plan  2008 Plan  2009 Plan  2010 Plan  2011 Plan 

Date of the Shareholders’ Meeting

   05/17/2005    05/17/2005    05/17/2005    05/16/2008    05/16/2008    05/16/2008    05/13/2011  

Grant date(b)

   07/19/2005    07/18/2006    07/17/2007    10/09/2008    09/15/2009    09/14/2010    09/14/2011  

Closing price on grant date(c)

   €52.13    €50.40    €61.62    €35.945    €41.615    €39.425    €32.69  

Average repurchase price per share paid by the Company

   €51.62    €51.91    €61.49    €41.63    €38.54    €39.11    €39.58  

Total number of performance shares awarded, including to

   2,280,520    2,275,364    2,366,365    2,791,968    2,972,018    3,010,011    3,649,770  

—Directors(d)

   416    416    432    588    —    240    16,240  

—Ten employees with largest grants(e)

   20,000    20,000    20,000    20,000    20,000    20,000    91,400  

Start of the vesting period:

   07/19/2005    07/18/2006    07/17/2007    10/09/2008    09/15/2009    09/14/2010    09/14/2011  

Date of final grant, subject to specific condition (end of the vesting period)

   07/20/2007    07/19/2008    07/18/2009    10/10/2010    09/16/2011    09/15/2012    09/15/2013  

Transfer possible from (end of the mandatory holding period)

   07/20/2009    07/19/2010    07/18/2011    10/10/2012    09/16/2013    09/15/2014    09/15/2015  

Number of performance shares:

        

— Outstanding as of January 1, 2011

   —    —    —    —    2,954,336    3,000,637    —  

—Awarded in 2011

   —    —    —     —    —    3,649,770  

—Canceled in 2011

   800(g)   700(g)   792(g)   356(g)   (26,214)   (10,750)   (19,579) 

—Finally granted in 2011(f)

   (800)(g)   (700)(g)   (792)(g)   (356)(g)   (2,928,122)   (1,836)   —  

—Outstanding as of December 31, 2011

   —    —    —    —    —    2,988,051    3,630,191  

(a)
(a)The number of restrictedperformance shares awarded has been multiplied by four to take into account thefour-for-one stock split approved by TOTAL Shareholders’ Meeting on May 12, 2006.
(b)The grant date is the date of the Board meeting awarding the restrictedperformance share grant, except for the restrictedperformance shares awarded on October 9, 2008, approved by the Board on September 9, 2008.
(c)To take into account thefour-for-one stock split in May 18, 2006, the closing price for TOTAL shares on July 19, 2005 (€(€208.50) has been divided by four.
(d)Mr. Desmarest, Chairman of the Board of Directors of TOTAL S.A. until May 21, 2010, was not awarded any restricted shares under the 2005, 2006, 2007, 2008 2009 and 2010 plans. Furthermore, Mr. de Margerie, director of TOTAL S.A. since May 12, 2006, Chief Executive Officer of TOTAL S.A. since February 14,13, 2007 and Chairman and Chief Executive Officer of TOTAL S.A. since May 21, 2010, were not awarded performance shares under the plans approved by the Board of Directors of TOTAL S.A. on July 18, 2006, July 17, 2007, September 9, 2008, September 15, 2009 and September 14, 2010. Furthermore, Mr. Desmarest was not awarded any restrictedperformance shares under the 2006, 2007, 2008, 2009 and 2010 plans.plan approved by the Board of Directors of TOTAL S.A. on July 19, 2005. On September 14, 2011, the Board of Directors of TOTAL S.A. decided to grant 16,000 performance shares to Mr. de Margerie was finally awarded on July 20, 2007, the 2,000 restricted shares he had been awarded under the 2005 plan since he was not a director of TOTAL S.A as of the date of the grant.Margerie. In addition, Mr. Boeuf, director of TOTAL S.A. representing employee shareholders until December 31, 2009, was awarded restrictedperformance shares under the plans approved by the Board of Directors of TOTAL S.A. on July 19, 2005, July 18, 2006, July 17, 2007 and September 9, 2008. Mr. Boeuf was not awarded any restrictedperformance shares under the plan approved by the Board of Directors of TOTAL S.A. on September 15, 2009.
Mr. Clément, director of TOTAL S.A. representing employee shareholders since May 21, 2010, was awarded 240 restrictedperformance shares under the plan approved by the Board of Directors of TOTAL S.A. on September 14, 2010.2011. In addition, Mr. Clément was finally awarded 300240 performance shares on October 10, 2010, under the restricted share plan approved by the Board of Directors of TOTAL S.A. on September 9, 2008.14, 2010.
(e)Employees of TOTAL S.A., or of any Group company, who were not directors of TOTAL S.A. as of the date of grant.
(f)Out of the 1,113,462 canceled rights to the grant share under the 2008 plan, 1,094,914 entitlement rights were canceled due to the performance condition. The acquisition rate for the 2008 plan was 60%.
(g)For the 2009 and 2010 plans,Plan, final grants following the death of the beneficiary.
(h)(g)RestrictedPerformance shares finally awarded for which the entitlement right had been canceled erroneously.

In case of a final grant of the outstanding restrictedperformance shares as of December 31, 2010,2011, the corresponding shares would represent 0.25%0.27%(1) of the Company’s potential share capital as of such date.

(1)  Out of a total potential share capital of 2,398,908,757 shares.


106

(1)Out of a total potential share capital of 2,408,400,225 shares.

FOLLOW-UP OF THE GLOBAL FREE SHARE PLAN AS OF DECEMBER 31, 2010
             
  2010 plan
  2010 plan
    
  (2+2)  (4+0)  Total 
Date of the Shareholders’ Meeting
  05/16/2008   05/16/2008     
Grant date(a)
  06/30/2010   06/30/2010     
Final grant date (end of vesting period)
  07/01/2012   07/01/2014     
Transfer possible from
  07/01/2014   07/01/2014     
             
Number of restricted shares awarded
            
Outstanding as of January 1, 2008
  —   —   — 
Awarded  —   —   — 
Canceled  —   —   — 
Finally granted  —   —   — 
Outstanding as of January 1, 2009
  —   —   — 
Awarded  —   —   — 
Canceled  —   —   — 
Finally granted  —   —   — 
Outstanding as of January 1, 2010
  —   —   — 
Awarded  1,508,850   1,070,650   2,579,500 
Canceled  (125)  (75)  (200)
Finally granted(c)
  (75)      (75)
Outstanding as of December 31, 2010
  1,508,650   1,070,575   2,579,225 
             

    2010 Plan
(2+2)(b)		  2010 Plan
(4+0)(c)		  Total 

Date of the Shareholders’ Meeting

   05/16/2008    05/16/2008   

Grant date(a)

   06/30/2010    06/30/2010   

Final grant date

   07/01/2012    07/01/2014   

Transfer possible from

   07/01/2014    07/01/2014      

Outstanding as of January 1, 2010

    

Awarded

   1,508,850    1,070,650    2,579,500  

Canceled

   (125)   (75)   (200) 

Finally granted(d)

   (75)    (75) 

Outstanding as of January 1, 2011

   1,508,650    1,070,575    2,579,225  

Awarded

   —    —    —  

Canceled

   (29,175)   (54,625)   (83,800) 

Finally granted(d)

   (475)   (425)   (900) 

Outstanding as of December 31, 2011

   1,479,000    1,015,525    2,494,525  

(a)
(a)The June 30, 2010 grant was decided by the Board of Directors on May 21, 2010.
(b)Vesting period of two years followed by a holding period of two years.
(c)Vesting period of four years without a holding period.
(d)Final grant following the death or disability of the beneficiary of the shares.

In case of a final grant of the outstanding shares as of December 31, 2010,2011, the corresponding shares would represent 0.11%0.10%(1) of the Company’s potential share capital as of such date.

RESTRICTEDPERFORMANCE SHARE GRANTS TO THE TEN EMPLOYEES (OTHER THAN DIRECTORS)CORPORATE EXECUTIVE OFFICERS) RECEIVING THE LARGEST AMOUNTNUMBER OF GRANTS / RESTRICTED SHARE FINALLY AWARDED TO THE TEN EMPLOYEES (OTHER THAN DIRECTORS) RECEIVING THE LARGEST AMOUNT OFPERFORMANCE SHARES

    Restricted shareNumber of
performance shares
granted/finally
awarded		   Grant date   
grants / SharesDate of
final grant
(end of
vesting
period)		   End of
mandatory
holding
period		 End of mandatory
finally awardedGrant date
Date of final grant
holding period
Restricted

Performance share grants approved by the Board meeting on September 14, 20102011 to the ten TOTAL S.A. employees (other than directors)corporate executive officers) receiving the largest amountnumber of grantsperformance shares(a)

   20,00091,400(b)   09/14/20102011     09/15/20122013     09/15/20142015  
Restricted share

Performance shares finally awarded in 20102011 following the restrictedperformance share plan approved by the Board meeting on September 9, 2008,15, 2009, to the ten employees (other than directors)corporate executive officers) at the time of such approval receiving the largest amountnumber of performance shares(c)(b)

   12,00020,000     10/09/200815/2009     10/10/201009/16/2011     10/10/2012
09/16/2013  

(a)
(a)Grant approved by the Board on September 14, 2010.2011. Grants of these restrictedperformance shares will become final, subject to a performance condition, after a2-year vesting period i.e.(i.e., on September 15, 2012.2013) (see “— Stock options and performance share grants policy — General policy”). Moreover, the transfer of the restrictedperformance shares will not be permitted until the end of a2-year mandatory holding period i.e.(i.e., on September 15, 2014.2015).
(b)In addition, as of June 30, 2010, as part of the global free share plan, the ten employees were granted rights to twenty-five free shares.
(c)Restricted share plan approved by the Board of Directors on September 9, 2008, and awarded on October 9, 2008. Grants of these restricted shares will becomeThis final grant is subject to a performance condition after a2-year vesting period, i.e. on October 10, 2010.(see “— Stock options and performance share grants policy — General policy”). The acquisition rate of the shares awarded, linked to the performance condition, was 60%100%. Moreover, the transfer of the restrictedperformance shares finally awarded will only be permitted after the end of a2-year mandatory holding period i.e.(i.e., from October 10, 2012.September 16, 2013).
(1)  Out of a total potential share capital of 2,398,908,757 shares.


107

(1)Out of a total potential share capital of 2,408,400,225 shares.

CORPORATE GOVERNANCE

For several years, TOTAL has been actively examining corporate governance matters. At its meeting on November 4, 2008, the Board of Directors confirmed its decision to userefer to the Corporate Governance Code for Listed Companies published by the principal French business confederations, theAssociation Française des Entreprises Privées(AFEP) and theMouvement des Entreprises de France (MEDEF) (“AFEP-MEDEF Code”) as its reference for corporate governance matters.

The AFEP-MEDEF Code was amended in April 2010 to make recommendations related to the balanced number of men and women sitting in Board and Committees’ meetings. The code recommends that a target of at least 20% of women be reached before April 2013 and at least 40% before April 2016. These requirements were also stipulated in the French law of January 27, 2011 regarding balanced representation of men and women on Boards of Directors and Supervisory Boards and equal opportunity. The law states that the 20% threshold must be attained at the end of the 2014 Shareholders’ Meeting and that the 40% threshold must be attained at the end of the 2017 Shareholders’ Meeting.

As of December 31, 2010,2011, the Company’s Board of Directors was comprised of twofour women out of a total of fifteen members (i.e.,13% 26%). At the Shareholders’ Meeting in May 2011,2012, it will be proposed to appoint twoone additional womenwoman to replace two directorsone director whose terms areterm is coming to an end. If the resolutions areresolution is approved by the Shareholders’ Meeting, the percentageproportion of women sitting inon the Board will rise to 26%.be one-third. The Board of Directors will keep examining corporate governance issues to continuekeep diversifying in the years to come.

The Company’s corporate governance

At its meeting on February 8, 2012, the Nominating & Governance Committee examined current practices differ from the recommendations contained in the Company in view of the AFEP-MEDEF Code oncode and concluded that the following limited matters:

• The AFEP-MEDEF Code recommends that a director no longer be considered as independent upon the expiry of the term of office during which the length of his service on the board reaches twelve years. The Board has not followed this recommendation with regards to one of its members considering the long-term nature of its investments and operation as well as the experience and authority of which this director is in possession, which reinforce his independence and contribute to the Board’s work. This directorship expired on May 21, 2010.
• Company complied with almost all the recommendations.

Mr. Thierry Desmarest, chairs the Nominating & Governance Committee since it was created in February 2007. Although Mr. Desmarest chaired the Board of Directors until May 2010, the Board and this Committee considered that Mr. Desmarest chairing the Nominating & Governance Committee would enable this Committee to benefit from his experience and his knowledge of the Company’s businesses, environment and executive teams, which is particularly useful to inform the Committee’s deliberations concerning the appointment of executives and directors. This committee is comprised of a majority of independent directors and the Chairman and the Chief Executive Officer do not attend deliberations concerning their own situation.

Mr. Desmarest, who was appointed Honorary Chairman of TOTALthe Company and renewed as a director, on May 21, 2010, can still be entrusted with representative missions for the Group.
In compliance with the AFEP-MEDEF Code, the Chairman and Chief Executive Officer does not have any employment contract with the Group, or any companyby decision of the Group.
Board of Directors on May 21, 2010.

Since 2004, the Board of Directors has had a Financial Code of Ethics that, in the overall context of the Group’s

Code of Conduct, sets forth specific rules for its Chairman, Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and the financial and accounting officers for its principal activities. The Board has made the Audit Committee responsible for implementing and ensuring compliance with this code.

In 2005, the Board approved the procedure for alerting the Audit Committee of complaints or concerns regarding accounting, internal accounting controls or auditing matters.

Rules of procedure of the Board of Directors

At its meeting on February 13, 2007, the Board of Directors adopted rules of procedure to replace the Directors’ Charter.

The Board’s rules of procedure specify the obligations of each director and set forth the mission and working procedures of the Board of Directors. They also define the respective responsibilities and authority of the Chairman and of the Chief Executive Officer. It is reviewed on a regular basis to match the changes in rules and practices related to governance.

An unabridged version of these rules of procedure, which were approved by the Board of Directors of TOTAL S.A.(1), is available herein.

Mission of the Board of Directors

The mission of the Board of Directors is to determine the strategic direction of the Group and supervise the implementation of this vision. With the exception of the powers and authority expressly reserved for shareholders


108

and within the limits of the Company’s legal purpose, the Board may address any issue related to the operation of the Company and take any decision concerning the matters falling within its purview. Within this framework, the Board’s duties and responsibilities include, but are not limited to, the following:

•
• 

appointing the Chairman and the Chief Executive Officer(2) and supervising the handling of their responsibilities;

defining the Company’s strategic orientation and, more generally, that of the Group;

• (1)definingIn these rules of procedure, TOTAL S.A. is referred to as the Company’s strategic orientation“Company” and, more generally, thatcollectively with all of its direct and indirect subsidiaries, as the Group;
• approving investments or divestments under study by the Group that concern amounts greater than 3% of shareholders’ equity, whether or not the project is part of the announced strategy;
• reviewing information on significant events related to the Company’s affairs, in particular for investments or divestments that are greater than 1% of shareholders’ equity;
• conducting audits and investigations as it may deem appropriate. The Board, with the assistance of the Audit committee where appropriate, ensures that:“Group”.
(2)The Chairman and Chief Executive Officer, if the Chairman of the Board of Directors is also responsible for the general management of the Company, the Chairman of the Board of Directors and the Chief Executive Officer, if this is not the case, and, where appropriate, any acting Managing Directors, in accordance with the organization adopted by the Board of Directors.

approving investments or divestments under study by the Group that concern amounts greater than 3% of shareholders’ equity;

reviewing information on significant events related to the Company’s affairs, in particular for investments or divestments that are greater than 1% of shareholders’ equity;

conducting audits and investigations as it may deem appropriate. The Board, with the assistance of the Audit Committee where appropriate, ensures that:

 –

the proper definition of authority within the Company has been properly delegated before it is exercised, and that the various entitiesproper exercise of duties and responsibilities by the bodies of the Company respect the authority, duties and responsibilities they have been given;are in place;

 –

no individual is authorized to contract on behalf of the Company or to commit to pay, or to make payments, on behalf of the Company, without proper supervision and control;

 –

the internal control function operates properly and that the statutory auditors are able to conduct their audits under appropriate circumstances; and

 –

the committees it has created duly perform their responsibilities;

• monitoring the quality of the information provided to the shareholders and the financial markets through the financial statements that it approves and the annual reports, or when major transactions are conducted;
• convening and setting the agenda for Shareholders’ Meetings;
• preparing, for each year, a list of the directors it deems to be independent under generally recognized corporate governance criteria; and
• the Board of Directors is regularly informed, through the Audit Committee, of the Group’s financial position, cash position and obligations.

monitoring the quality of the information provided to the shareholders and the financial markets through the financial statements that it approves and the annual reports, or when major transactions are conducted;

convening and setting the agenda for Shareholders’ Meetings or meetings of bondholders;

preparing, for each year, a list of the directors it deems to be independent under generally recognized corporate governance criteria.

Directors’ obligations

Before accepting a directorship, every candidate receives a copy of TOTAL S.A.’s by-laws and Rulesrules of Procedures.procedure. He ensures that he has broad knowledge of the general and particular commitments related to his duty, especially the laws and regulations governing directorships in French limited liability companies (société anonyme) whose shares are listed in one or several regulated markets.

Accepting a directorship involves upholding the RulesDirectors’ ethical rules as described in the Code of ProceduresCorporate Governance to which the Company refers. It also involves upholding the rules of procedure and the Group’s values as described in its Code of Conduct.

When directors participate in and vote at Board meetings, they are required to represent the interest of the shareholders and the Company as a whole.

Independence of judgment: Directors undertake, under any circumstance, to maintain the independence of their

analysis, judgment, decision making and actions as well as not to be unduly influenced, directly or indirectly, by other directors, particular groups of shareholders, creditors, suppliers and, more generally, any third-party.

third party.

Preparation of each Board’s meeting:Board meeting: Directors undertake to devote the amount of time required to consider the information they are given and otherwise prepare for meetings of the Board and of the committees on which they sit. Directors may request any additional information that they feel is necessary or useful from the Chairman and Chief Executive Officer. Directors, if they consider it necessary, may request training on the Company’s specificities, businesses and activities.

activities, and any other training that is of use in the exercise of their duties as Directors.

Directors attend all Board meetings and all committees or Shareholders’ Meetings, unless they have previously contacted the Chairman to inform him of scheduling conflicts.

Files reviewed at each meeting of the Board as well as the information collected before or during the meetings are confidential. Directors cannot use them for or share them with a third party whatever the reason. Directors take any necessary measures to keep them confidential. Confidentiality and privacy are lifted when such information areis made publicly available by the Company.

The Chairman of the Board makes sure that the Company provides the directors with the relevant information, including criticisms, in particular financial statement reports and press releases.

releases, and the main press articles about the Company.

Duty of loyalty:loyalty: Directors cannot take advantage of histheir office or duties to ensure, for himselfthemselves or a third party, any monetary or non-monetary benefit.


109

They notify the Board of Directors of any potential conflicts of interest with the Company or any other company of the Group. They refrain from participating in the vote relating to the corresponding resolution or even to the debate preceding the vote.

Directors must inform the Board of Directors of their entering ininto a transaction that involves directly the Company or any other company of the Group before such transaction is closed.

Directors cannot take any responsibility in a personal capacity in companies or businesses that are competing with the Company or any other company of the Group without previously informing the Board.

 

Directors are committed not to seek or accept directly or indirectly from the Company or any other company of the Group benefits that may be considered as compromising their independence.

Duty of expression:expression: Directors are committed to clearly expressing their opposition if they deem that a decision made by the Board of Directors is contrary to the Company’s corporate interest and should strive to convince the Board of the relevancy of their position.

Company’s securities and stock exchange rules:rules: While in office, directors are required to hold the minimum number of registered shares as set by the Company’s by-laws (i.e., 1,000 shares — with the exception of the director representing employee shareholders for whom the requirements are more flexible).

by-laws.

Directors refrain from trading any shares and ADRs of TOTAL S.A. and its publicly traded subsidiaries for which they hold non-public information that could impact the securities’ market value. To this purpose, directors act in compliance with the following procedures:

•
• 

any shares and ADRs of TOTAL S.A. and its publicly traded subsidiaries are to be held in registered form, either bearer shares with the Company or its agent (currently BNP-Paribas Securities Services for TOTAL shares and Bank of New-York Mellon for TOTAL ADRs)(1), or administered registered shares with a French broker (or U.S. broker for ADRs) whose contact details are communicated to the Board’s SecretariatSecretary by the director;

buying on margin or short selling (Paris option market (MONEP), warrants, exchangeable obligations, etc.) those same securities is also prohibited;

any transaction on the TOTAL share (or ADR) is strictly prohibited, including hedging transactions, on the day when the Company discloses its periodic earnings (quarterly, interim and annual) as well as the fifteen calendar days preceding such date; and

•buying on margin or short selling (Paris option market (MONEP), warrants, exchangeable obligations, etc.) those same securities is also prohibited;
• any transaction of the TOTAL share (or ADR) is strictly prohibited, including hedging transactions, on the day when the Company discloses its periodic earnings (quarterly, interim and annual) as well as the fifteen calendar days preceding such date; and
• 

directors make all necessary arrangements to declare to the French Financial Markets Authority (Autorité des marchés financiers) and inform the Board’s secretary, under the form and timeframe provided for by applicable laws, of any transaction on the company’s securities entered into by himself or any other individual with whom he is closely related.

Workings of the Board of Directors practices

The Board of Directors meets at least four times a year and as often as circumstances may require.

Before each meeting of the Board, the agenda is sent out to directors and, whenever possible, it is sent together with the documents that are necessary to consider.

Directors can delegate their authority to another director at the meetings of the Board, within the limit of one delegation per director per meeting.

Whenever authorized by the law, those directors attending the meeting of the Board via video conference (in compliance with the technical requirements set by applicable regulations) are considered present for the calculation of the quorum and majority.

The Board allocates directors’ fees to, and may allocate additional directors’ fees to, directors who participate on specialized committees within the total amount established by the Shareholders’ Meeting. The Chairman and the Chief Executive Officer are not awarded directors’ fees for their work on the Board and Committees.

The Board of Directors, based on the recommendation of its Chairman, appoints a Secretary. Every member of the Board of Directors can refer to the Secretary and benefit from his assistance. The Secretary is responsible for the working procedures of the Board of Directors. The Board shall review such procedures periodically.

The Board conducts, at regular intervals not to exceed three years, an assessment of its practices. Such assessment is carried out possibly under the supervision of an independent director or with the contribution of an outside counsel. In addition, the Board of Directors conducts an annual discussion of its methods.

Responsibility and authority of the Chairman

The Chairman represents the Board, and, except under exceptional circumstances, is the sole member authorized to act and speak on behalf of the Board.


110

He is responsible for organizing and presiding over the Board’s activities and monitors corporate bodies to ensure that they are functioning effectively and respecting corporate governance principles. He coordinates the activity of the Board and its committees. He sets the agenda for the meeting by including the issues proposed by the Chief Executive Officer.

He ensures that directors have in due course clear and appropriate information that areis necessary to carry out their duties.

He is responsible, with the Group’s general management, for maintaining relations between the Board and the Company’s shareholders. He monitors the quality of the information disclosed by the Company.

In close cooperation with the Group’s general management, he may represent the Group in high levelhigh-level discussions with government authorities and the Group’s important partners, on both a national and international level.

 

(1)Currently, BNP Paribas Securities Services for TOTAL shares and Bank of New York for TOTAL ADRs.

He is regularly informed by the Chief Executive Officer of events and situations that are important for the Group relating to the strategy, organization, monthly financial reporting, major investment and divestment projects and major financial operations. He may request that the Chief Executive Officer or other Company directors, provided the Chief Executive Officer is informed, provide any useful information for the Board or its committees to carry out their duties.

He may also work with the statutory auditors to prepare matters before the Board or the Audit Committee.

He presents every year in a report to the Shareholders’ Meeting, practices of the Board of Directors and potential limits set by the Board of Directors concerning the powers of the Chief Executive Officer. For this purpose, he receives from the Chief Executive Officer the relevant information.

Authority of the Chief Executive Officer

The Chief Executive Officer is responsible for the general management of the Company. He chairs the Group’s Executive Committee and Management Committee. Subject to the Company’s corporate governance rules and in particular the Rulesrules of Proceduresprocedure of the Board of Directors, (see above: “the Board of Directors’ mission”), he has the full extent of authority to act on behalf of the Company in all instances, with the exception of actions that are, by law, reserved to the Board of Directors or to Shareholders’ Meetings.

meetings.

The Chief Executive Officer is responsible for periodic reporting of the Group’s results and outlook to shareholders and the financial community.

At each meeting of the Board, the Chief Executive Officer reports the highlights inof the Group’s activity.

Committees of the Board of Directors

The Board of Directors approved the creation of:

an Audit Committee;

• an Audit Committee;
• a Nominating & Governance Committee; and
• a Compensation Committee.

a Nominating & Governance Committee;

a Compensation Committee; and

a Strategic Committee.

The missions and composition of these committees are defined in their relevant rules of procedure approved by the Board of Directors.

The Committees carry out their duty for and report to the Board of Directors.
Each committee reports on its activities to the Board of Directors.

Audit Committee

The Audit Committee’s role is to assistCommittees of the Board of Directors

The Committees of the Board of Directors are: an Audit Committee; a Nominating & Governance Committee; a Compensation Committee; and a Strategic Committee.

On April 28, 2011, the Board agreed in principle on the creation of a new Strategic Committee, the composition and rules of which it approved at its meeting on July 28, 2011. This Committee was set up and met for the first time on September 14, 2011.

The composition and an unabridged version of the rules of procedures of the Committees of the Board of Directors is available herein.

Audit Committee

Rules of procedure (unabridged version)

The Board of Directors of TOTAL S.A. (hereafter referred to as the “Company” and, collectively with all its direct and indirect subsidiaries, as the “Group”) has approved the following rules of procedure of the Company’s Audit Committee (hereafter, the “Committee”).

The members of the Committee are directors of the Company and therefore uphold the rules of procedure of the Board of Directors of TOTAL S.A.

Mission:To allow the Board of Directors of TOTAL S.A. to ensure that internal control is effective and that published information available to shareholders and financial markets is reliable, the duties of the Committee include:

recommending the appointment of statutory auditors and their compensation, ensuring effectivetheir independence and monitoring their work;

establishing the rules for the use of statutory auditors for non-audit services and verifying their implementation;

supervising the audit by the statutory auditors of the Company’s statutory financial statements and consolidated financial statements;

examining the accounting policies used to prepare the financial statements and examining the Company’s statutory financial statements and consolidated annual, semi-annual, and quarterly financial statements prior to their examination by the Board of Directors, after regularly monitoring the financial situation, cash position and obligations of the Company;

supervising the implementation of internal control and oversight overrisk management procedures and their effective application, with the assistance of the internal audit department;

supervising procedures for preparing financial reportinginformation;

monitoring the implementation and activities of the disclosure committee, including reviewing the conclusions of this committee;

reviewing the annual work program of internal and external auditors;

receiving information periodically on completed audits and examining annual internal audit reports and other reports (statutory auditors, annual report, etc.);

reviewing the choice of appropriate accounting principles and methods;

reviewing the Group’s policy for the use of derivative instruments;

reviewing, if requested by the Board of Directors, major transactions contemplated by the Group;

reviewing significant litigation annually;

implementing and monitoring compliance with the financial code of ethics;

proposing to the Board of Directors, for implementation, a procedure for complaints or concerns of employees, shareholders and others, related to accounting, internal accounting controls or auditing matters, and monitoring the financial markets.implementation of this procedure; and

The Audit Committee’s duties include:
• recommending the appointment of statutory auditors and their compensation, ensuring their independence and monitoring their work;
• establishing the rules for the use of statutory auditors for non-audit services and verifying their implementation;
• supervising the audit by the statutory auditors of the Company’s financial statements and consolidated financial statements;
• examining the accounting policies used to prepare the financial statements, examining the parent company’s annual financial statements and the consolidated annual, semi-annual, and quarterly financial statements prior to their examination by the Board, after regularly monitoring the financial situation, cash position and obligations of the Company;
• supervising the implementation of internal control and risk management procedures and their effective application, with the assistance of the internal audit department;
• supervising procedures for preparing financial information;
• monitoring the implementation and activities of the disclosure committee, including reviewing the conclusions of this committee;


111reviewing the procedure for booking the Group’s proved reserves.

• reviewing the annual work program of internal and external auditors;
• receiving information periodically on completed audits and examining annual internal audit reports and other reports (statutory auditors, annual reports, etc.);
• reviewing the choice of appropriate accounting principles and methods;
• reviewing the Group’s policy for the use of derivative instruments;
• reviewing, if requested by the Board, major transactions contemplated by the Group;
• reviewing significant litigation annually;
• implementing, and monitoring compliance with, the financial code of ethics;
• proposing to the Board, for implementation, a procedure for complaints or concerns of employees, shareholders and others, related to accounting, internal accounting controls or auditing matters, and monitoring the implementation of this procedure; and
• reviewing the procedure for booking the Group’s proved reserves.
Audit Committee membership and practices
Composition:The Committee is made up of at least three directors designated by the Board of Directors. Members must be independent directors.

In selecting the members of the Committee, the Board of Directors pays particular attention to their independence and their financial and accounting qualifications.

The Board of Directors appoints one of the members of the Committee to serve as the financial expert on the Committee.

Members of the Committee may not be executive officers of the Company or one of its subsidiaries, nor own more than 10% of the Company’s shares, whether directly or indirectly, individually or acting together with another party.

Members of the Audit Committee may not receive from the Company and its subsidiaries, whethereither directly or indirectly, any compensation other than: (i) directors’ fees paid for their services as directors or as members of the committee, or, if applicable, as members of another committee of the Company’s Board; and (ii) compensation and pension benefits related to prior employment by the Company, or another Group company, which are not dependent upon future work or activities.

The term of office of the members of the Committee coincides with the term of their appointment as director. The term of office as a member of the Committee may be renewed at the same time as the appointment as director.

However, the Board of Directors can change the composition of the Committee at any time.

• directors’ fees paid for their services as directors or as members of the Audit Committee or, if applicable, another committee of the Board; and
• compensation and pension benefits related to prior employment by the Company, or another Group company, which are not dependent upon future work or activities.

Organization of activities:The Committee appoints its own Chairman. The Chairman appoints the Committee secretary, who may be the Chief Financial Officer. Officer of the Company.

The Committee deliberates when at least one-half of its members are present. A member of the Committee cannot be represented.

The Committee meets at least four times a year to examinereview the consolidated annual and quarterly consolidated financial statements.

statements, and at the request of its Chairman, at least one-half of its members, the Chairman of the Board of Directors or the Chief Executive Officer of the Company. The Committee Chairman prepares the schedule of its meetings.

The Audit Committee may meet with the Chairman of the Board, the Chief Executive Officer, and, if applicable, any acting Managing Director of the Company and perform inspections and consult with managers of operating or non-operating departments, as may be useful in performing its duties.

The Chairman of the committee gives prior notice of such meeting to the Chairman of the Board or, if the latter is not the Chief Executive Officer, to both the Chairman of the Board of Directors and the Chief Executive Officer. In particular, the Committee is authorized to consult with those involved in preparing or auditing the financial statements (Chief Financial Officer and principal Finance Department managers, Audit Department, Legal Department) by asking the Company’s Chief Financial Officer to call them to a meeting.

The Committee consults with the statutory auditors. It has the capacity of consulting them without Company representatives attending. If it is informed of a substantial irregularity, it recommends that the Board of Directors take all appropriate action.

If it deems it necessary to accomplish its duties, the Committee may request from the Board of Directors the resources to engage external consultants.

The proposals made by the Committee to the Board of Directors are adopted by a majority of the members present at the Committee meeting. The Chairman of the Committee casts the deciding vote if an even number of members is present at the meeting.

The Committee can adopt proposals intended for the Board of Directors without meeting if all the members of the Committee so agree and sign each proposal.

A written summary of Committee meetings is drawn up.

Report:The Committee submits written reports to the Board of Directors regarding its work.

It periodically evaluates its performance based on these rules of procedure and, if applicable, offers suggestions for improving its performance.

 

Members of the Audit Committee in 2011

In 2010,2011, the Committee’s members were Mrs.Ms. Patricia Barbizet, Mr. Thierry de Rudder and Messrs.Mr. Bertrand Jacquillat, and Thierry de Rudder. until his term as director expired on May 13, 2011. At the Shareholders’ Meeting on May 13, 2011, Ms. Marie-Christine Coisne-Roquette was appointed a member of the Audit Committee to replace Mr. Jacquillat.

All of the members of the Committee are independent directors and have recognized experience in the financial and accounting fields, as illustrated in their summary biographies (see “— Directors and Senior Management — Composition of the Board of Directors”).

fields.

The Committee is chaired by Mrs. PatriciaMs. Barbizet.

The Board of Directors, at

At its meeting on July 30, 2009,28, 2011, the Board of Directors decided to appoint Mr. Bertrand JacquillatMs. Barbizet to serve as the Audit Committee financial expert based on a recommendation by the Audit Committee.

At its meeting on January 12, 2012, the Board of Directors decided to co-opt Mr. Gérard Lamarche as a director and to nominate him as a member of the Audit Committee in replacement of Mr. de Rudder, who is resigning from his position as a Director.

Compensation Committee

Rules of procedure (unabridged version)

The Board of Directors of TOTAL S.A. (hereafter referred to as the “Company” and, collectively with all its direct and indirect subsidiaries, as the “Group”) has approved the following rules of procedure of the Company’s Compensation Committee (hereafter, the “Committee”).

The members of the Committee are directors of the Company and therefore uphold the rules of procedure of the Board of Directors of TOTAL S.A.

The Committee is focused on:

examining the executive compensation policies implemented by the Group and the compensation of members of the Executive Committee;

evaluating the performance and recommending the compensation of each corporate executive officer, and

preparing reports which the Company must present in these areas.

Duties:The Committee’s duties include:

examining the main objectives proposed by the Company’s general management regarding compensation of the Group’s executive officers, including stock option and restricted share grant plans and equity-based plans, and advising on this subject;

presenting recommendations and proposals to the Board of Directors concerning:

• examining the executive compensation policies implemented by the Group and the compensation of members of the Executive Committee; and
• evaluating the performance and recommend the compensation of the Chairman of the Board and of the Chief Executive Officer.
Its duties include the following:
• examining the criteria and objectives proposed by management for executive compensation and advising on this subject;
• presenting recommendations and proposals to the Board concerning:
 − –

compensation, pension and life insurance plans, in-kind benefits and other compensation including(including severance benefits,benefits) for the Chairman and the Chief Executive Officercorporate executive officers of the Company,Company; in particular, the Committee proposes compensation structures that take into account the Company’s strategy, objectives and earnings and market practices,

 − –

stock optionsoption and restricted share grants, particularly grants of registered shares to the Chairman and the Chief Executive Officer; andcorporate executive officers;

• examining stock option plans, restricted share grants, equity-based plans and pension and insurance plans.


112examining the compensation of the members of the Executive Committee, including stock option and restricted share grant plans and equity-based plans, pension and insurance plans and in-kind benefits;

preparing and presenting reports in accordance with these rules of procedure;

Compensation Committee membership and practices

examining, for the parts within its remit, reports to be sent by the Board of Directors or its Chairman to the shareholders;

preparing recommendations requested at any time by the Chairman of the Board of Directors or the general management of the Company regarding compensation.

Composition:The Committee is made up of at least three directors designated by the Board of Directors.

A majority of the members must be independent directors.

Members of the Compensation Committee may not receive from the Company and its subsidiaries, either directly or indirectly, any compensation other than:

• directors’ fees paid for their services as directors or as members of the committee, or, if applicable, as members of another committee of the Company’s Board; and
• compensation and pension benefits related to prior employment by the Company which are not dependent upon future work or activities.
(i) directors’ fees paid for their services as directors or as members of the committee, or, if applicable, as members of another committee of the Company’s Board; (ii) compensation and pension benefits related to prior employment by the Company, or another Group company, which are not dependent upon future work or activities.

The term of office of the members of the Committee coincides with the term of their appointment as director. The term of office as a member of the Committee may be renewed at the same time as the appointment as director.

However, the Board of Directors can change the composition of the Committee at any time.

Organization of activities:The Committee appoints its chairmanChairman and its secretary. The secretary is a Company senior executive.

The Committee deliberates when at least one-half of its members are present. A member of the Committee cannot be represented.

 

The Committee meets at least twice a year.

It meets on an as-needed basis through notice by its Chairman or by one-half of its members.

The Committee invites the Chairman andof the Board or the Chief Executive Officer of the Company, as applicable, to present their recommendations.

Neither the Chairman nor the Chief Executive Officer may be present during the Committee’s deliberations regarding his own situation.
If the Chairman of the Board is not the Chief Executive Officer of the Company, the Chief Executive Officer may not be present during the Committee’s deliberations regarding the situation of the Chairman of the Board.

While maintaining the appropriate level of confidentiality for its discussions, the Committee may request thatfrom the Chief Executive Officer provide it with the assistance ofto be assisted by any senior executive of the Company whose skills and qualifications could facilitate the handling of an agenda item.

If it deems it necessary to accomplish its duties, the Committee may request from the Board of Directors the resources to engage external consultants.

The proposals made by the Committee to the Board of Directors are adopted by a majority of the members present at the Committee meeting. The Chairman of the Committee casts the deciding vote if an even number of Committee members is present at the meeting.

The Committee can adopt proposals intended for the Board of Directors without meeting if all the members of the Committee so agree and sign each proposal.

A written summary of Committee meetings is drawn up.

Report:The Committee reports on its activities to the Board of Directors.

At the request of the Chairman of the Board, the Committee examines all draft reports of the Company regarding compensation of the executive officers or any other issues relevant to its area of expertise.

Members of the Compensation Committee in 2011

In 2010,2011, the Committee’s members were Messrs. Patrick Artus, Bertrand Collomb, Michel Pébereau and, until May 21, 2010, Mr. Serge Tchuruk. Messrs. Patrick Artus and Thierry Desmarest were appointed members of this Committee as from May 21, 2010.and Michel Pébereau. Messrs. Artus, Collomb and Pébereau Tchuruk are independent directors.

Mr. Michel Pébereau chairs the Committee.

At its meeting on February 9, 2012, the Board of Directors decided to change the composition of the Compensation Committee. As of this date, the Committee’s members are Messrs. Patrick Artus, Gunnar Brock, Thierry Desmarest, Claude Mandil and Michel Pébereau. Messrs. Artus, Brock, Mandil and Pébereau are independent directors.

Nominating & Governance Committee

Rules of procedure (unabridged version)

The Board of Directors of TOTAL S.A. (hereafter referred to as the “Company” and, collectively with all its direct and indirect subsidiaries, as the “Group”) has approved the following rules of procedure of the Company’s Nominating and Governance Committee (hereafter, the “Committee”).

The members of the Committee are directors of the Company and therefore uphold the rules of procedure of the Board of Directors of TOTAL S.A.

The Committee is focused on:

recommending to the Board of Directors the persons that are qualified to be appointed as directors, so as to guarantee the scope of coverage of the Directors’ competencies and the diversity of their profiles;

recommending to the Board of Directors the persons that are qualified to be appointed as corporate executive officers;

preparing the Company’s corporate governance rules and supervising their implementation; and

examining any questions referred to it by the Board or the Chairman of the Board, in particular questions related to ethics and situations of conflicting interests.

Duties:The Committee’s duties include:

presenting recommendations to the Board for its membership and the membership of its committees, and the qualification in terms of independence of each candidate for Directors’ positions on the Board of Directors;

proposing annually to the Board of Directors the list of directors who may be considered as “independent directors”;

examining, for the parts within its remit, reports to be sent by the Board of Directors or its Chairman to the shareholders;

assisting the Board of Directors in the selection and evaluation of the corporate executive officers and examining the preparation of their possible successors, including cases of unforeseeable absence;

recommending to the Board of Directors the persons that are qualified to be appointed as directors;

recommending to the Board of Directors the persons that are qualified to be appointed as member of a Committee of the Board of Directors;

proposing methods for the Board of Directors to evaluate its performance, and in particular preparing means of regular self-assessment of the workings of the Board of Directors, and the possible assessment thereof by an external consultant;

 
• recommending to the Board of Directors the persons that are qualified to be appointed as directors, Chairman or Chief Executive Officer;
• preparing the Company’s corporate governance rules and supervise their implementation; and
• examining any questions referred to it by the Board or the Chairman of the Board, in particular questions related to ethics.

proposing to the Board of Directors the terms and conditions for allocating directors’ fees and the conditions under which expenses incurred by the directors are reimbursed;

Its

developing and recommending to the Board of Directors the corporate governance principles applicable to the Company;

examining any questions referred to it by the Board or the Chairman of the Board, in particular questions related to ethics and situations of conflicting interests;

preparing recommendations requested at any time by the Board of Directors or the general management of the Company regarding appointments or governance.

examining the conformity of the Company’s governance practices with the recommendations of the Code of Corporate Governance adopted by the Company;

examining changes in the duties includeof the following:Board of Directors.

• presenting recommendations to the Board for its membership and the membership of its committees;
• proposing annually to the Board the list of directors who may be considered as “independent directors” of the Company;
• assisting the Board in the selection and evaluation of the Chairman of the Board and the Chief Executive Officer and examining the preparation of their possible successors, in cooperation with the Compensation Committee;
• preparing a list of individuals who might be considered for election as Directors and those who might be named to serve on Board committees;
• proposing methods for the Board to evaluate its performance;
• proposing the procedure for allocating directors’ fees;
• developing and recommending to the Board the corporate governance principles applicable to the Company; and
• examining ethical issues at the request of the Board or its Chairman.

Nominating & Governance Committee membership and practices

Composition:The Committee is made up of at least three directors designated by the Board of Directors.
A majority of the members must be independent directors.

Members of the Nominating & Governance Committee, other than the Chairman of the Board and the Chief Executive Officer,Company’s corporate executive officers, may not receive from the Company and its subsidiaries any compensation other than:

• directors’ fees paid for their services as directors or as members of the committee, or, if applicable, as members of another committee of the Company’s Board; and


113

(i) directors’ fees paid for their services as directors or as members of the committee, or, if applicable, as members of another committee of the Company’s Board; (ii) compensation and pension benefits related to prior employment by the Company, or another Group company, which are not dependent upon future work or activities.

The term of office of the members of the Committee coincides with the term of their appointment as director. The term of office as a member of the Committee may be renewed at the same time as the appointment as director.

However, the Board of Directors can change the composition of the Committee at any time.

• compensation and pension benefits related to prior employment by the Company which are not dependent upon future work or activities.
Organization of activities:The Committee appoints its chairmanChairman and its secretary. The secretary is a Company senior executive.

The Committee deliberates when at least one-half of its members are present. A member of the Committee cannot be represented.

The Committee meets at least twice a year.

It meets on an as-needed basis through notice by its Chairman or by one-half of its members.

The Committee may inviteinvites the Chairman of the Board or the Chief Executive Officer of the Company, as applicable, to present recommendations. The corporate executive officers, whether they are members of the Committee or

Neither the Chairman nor the Chief Executive Officer

invited to its meetings, may not be present duringat deliberations regarding hisconcerning their own situation.

While maintaining the appropriate level of confidentiality for its discussions, the Committee may request thatfrom the Chief Executive Officer provide it with the assistance ofto be assisted by any senior executive of the Company whose skills and qualifications could facilitate the handling of an agenda item.

If it deems it necessary to accomplish its duties, the Committee may request from the Board of Directors the resources to engage external consultants.

The proposals made by the Committee to the Board of Directors are adopted by a majority of the members present at the Committee meeting. The Chairman of the Committee casts the deciding vote if an even number of Committee members is present at the meeting.

The Committee can adopt proposals intended for the Board of Directors without meeting if all the members of the Committee so agree and sign each proposal.

A written summary of Committee meetings is drawn up.

Report:The Committee reports on its activities to the Board of Directors.

Members of the Nominating & Governance Committee in 2011

In 2010,2011, the Committee’s members were Messrs. Bertrand Collomb, Thierry Desmarest and Michel Pébereau and, until May 21, 2010, Mr. Serge Tchuruk.bereau. Messrs. Collomb and Pébereau and Tchuruk are independent directors. The Committee is chaired by Mr. Desmarest. At its meeting on February 9, 2012, the Board of Directors decided to change the composition of the Nominating and Governance Committee. As of this date, the Committee’s members are Messrs. Patrick Artus, Gunnar Brock, Bertrand Collomb, Thierry Desmarest and Claude Mandil. Messrs. Artus, Brock, Collomb and Mandil are independent directors.

Strategic Committee

Rules of procedure (unabridged version)

The members of the Committee are directors of the Company and therefore uphold the rules of procedure of the Board of Directors of TOTAL S.A.

Duties:To allow the Board of Directors of TOTAL S.A. to ensure the Group’s development, the Committee’s duties include:

examining the overall strategy of the Group proposed by the Company’s general management;

examining operations that are of particular strategic importance;

reviewing competition and the resulting medium and long-term outlook for the Group.

 

Mr. Thierry Desmarest

Composition:The Committee is made up of at least five directors designated by the Board of Directors.

Members of the Committee may not receive from the Company and its subsidiaries, either directly or indirectly, any compensation other than:

directors’ fees paid for their services as directors or as members of the Committee, or, if applicable, as members of another committee of the Company’s Board; and

compensation and pension benefits related to prior employment by the Company, or another Group company, which are not dependent upon future work or activities.

The term of office of the members of the Committee coincides with the term of their appointment as director. The term of office as a member of the Committee may be renewed at the same time as the appointment as director.

However, the Board of Directors can change the composition of the Committee at any time.

Organization of activities:The Chairman of the Board of Directors of the Company chairs the Committee. The Chairman appoints the Committee secretary, who may be the Secretary of the Board of Directors.

The Committee deliberates when at least one-half of its members are present. A member of the Committee cannot be represented.

The Committee meets at least once a year and at the request of its Chairman, at least one-half of its members, or the Chief Executive Officer of the Company. The Committee Chairman prepares the schedule of its meetings.

Directors who are not members of the Committee are free to participate in the Committee’s meetings. This voluntary participation entitles them to the same directors’ fees as those paid to the members of the Committee for attending meetings.

The Committee may meet with the Chief Executive Officer, and, if applicable, any acting Managing Director of the Company and consult with managers of operating or non-operating departments, as may be useful in performing its duties. The Chairman of the Committee [, if the latter is not the Chief Executive Officer of the Company,] gives prior notice of such meeting to the Chief Executive Officer. In particular, the Committee is authorized to consult with the Vice President Strategy & Business Intelligence of the Company or the person delegated by the latter, by asking the Company’s Chief Executive Officer to call them to a meeting.

If it deems it necessary to accomplish its duties, the Committee may request from the Board of Directors the resources to engage external consultants.

A written summary of Committee meetings is drawn up.

Report:The Committee submits written reports to the Board of Directors regarding its work.

It periodically evaluates its performance based on these rules of procedure and, if applicable, offers suggestions for improving its performance.

Members of the Strategic Committee in 2011

In 2011, the Committee’s members were Mmes. Patricia Barbizet, Barbara Kux and Anne Lauvergeon and Messrs. Christophe de Margerie, Thierry Desmarest, Gunnar Brock, Claude Mandil and Thierry de Rudder.

At its meeting on January 12, 2012, the Board of Directors decided to co-opt Mr. Gérard Lamarche as a director and to nominate him as a member of the Strategic Committee in replacement of Mr. de Rudder, who resigned from his position as a Director.

Mmes. Barbizet, Kux and Lauvergeon and Messrs. Brock, Mandil and Lamarche are independent directors.

As a reminder, directors who are not members of the Committee are free to participate in the Committee’s meetings.

Mr. Christophe de Margerie chairs the Committee.

Board of Directors practices

Management form

On May 21, 2010, the Board of Directors decided to reunify the positions of Chairman and Chief Executive Officer and appoint the Chief Executive Officer to the duties of Chairman of the Board. This decision was made further to the work done by the Nominating & Governance Committee and in the best interests of the Company, taking into account the advantage of the unified management and the majority of independent directors appointed at the Committees, which ensures balanced authority.

The Board of Directors deemed that the unified management form was the most appropriate to the Group’s organization,modus operandi and business, and the specificities of the oil and gas sector. It respects the respective prerogatives of the various Company instances (Shareholders’ meeting, Board of Directors, general management).

 

Moreover, the Company by-laws and the respective rules of procedure of the Board of Directors and the Committees provide the guarantees required to implement best governance practices within a unified management framework. In particular, the by-laws allow the Board to nominate one or two Vice-Chairmen. They also state that the Board of Directors can be summoned by any means, even verbally, or at short notice in the event of an emergency, by the Chairman, a Vice-Chairman, or one third of the members, at any time and whenever the Company so requires. The rules of procedure of the Board of Directors also state that each Director is required to inform the Board of Directors of any conflicts of interest with the Company or with any other company in the Group, and to abstain from voting on the resolution in question, and even to refrain from taking part in the debate preceding the vote.

Performance and evaluation

At its meeting on February 10, 2011, the Board of Directors discussed its practices and stated it was globally satisfied with such practices.

Compliant with the recommendation by the Nominating and Governance Committee, the Board made suggestions for improvement with respect to broadening criteria when benchmarking with other companies, and for a thorough

study of the Group’s opportunities in the energy sector. These proposals were implemented at the meeting of the new Strategic Committee and when the report of the meeting was presented to the Board of Directors.

At its meeting of February 9, 2012, the Board of Directors discussed its practices on the basis of a formal evaluation carried out by means of a detailed questionnaire completed by all of the directors. The responses were then submitted for examination by the Nominating & Governance Committee and summarized. It is this summary that was discussed by the Board of Directors.

The formal evaluation showed a generally positive opinion of the practices of the Board of Directors and the Committees, which highlighted that the improvements requested by the directors in 2011 had been made. The Board therefore stated that it was globally satisfied with its practices and suggested improvements mainly relating to more in-depth strategic reflection. This has already been put in place with the Strategic Committee, and work in this area will continue for the benefit of the Board of Directors and the Group.

 

EMPLOYEES AND SHARE OWNERSHIP

Employees

The tables below set forth the number of employees, by division and geographic location, of the Group (fully consolidated subsidiaries) as of the end of the periods indicated:

    Upstream   Downstream   Chemicals   Corporate   Total 

2011

   23,563     29,423     41,665     1,453     96,104  

2010

   17,192     32,631     41,658     1,374     92,855  

2009

   16,628     33,760     44,667     1,332     96,387  

    France   Rest of Europe   Rest of the World   Total 

2011

   35,037     22,453     38,614     96,104  

2010

   35,169     24,931     32,755     92,855  

2009

   36,407     26,299     33,681     96,387  

                     
  Upstream  Downstream  Chemicals  Corporate  Total 
2010
  17,192   32,631   41,658   1,374   92,855 
2009  16,628   33,760   44,667   1,332   96,387 
2008  16,005   34,040   45,545   1,369   96,959 
                     
                     
     France  Rest of Europe  Rest of world  Total 
2010
      35,169   24,931   32,755   92,855 
2009      36,407   26,299   33,681   96,387 
2008      37,101   27,495   32,363   96,959 

TOTAL believes that the relationship between its management and labor unions is, in general, satisfactory.

Arrangements for involving employees in the Company’s share capital

Pursuant to agreements signed on March 15, 2002, as amended, the Group created a “Total Group Savings Plan” (PEGT), a “Partnership for Voluntary Wage Savings Plan” (PPESV, later becoming PERCO) and a “Complementary Company Savings Plan” (PEC) for employees of the Group’s French companies having adhered to these plans. These plans allow investments in a number of mutual funds including one invested in Company shares (“TOTAL

ACTIONNARIAT FRANCE”). A “Shareholder Group Savings Plan” (PEG-A) has also been in place since November 19, 1999 to facilitate capital increases reserved for employees of the Group’s French and foreign subsidiaries covered by these plans.


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Company savings plans

The various Company savings plans (PEGT, PEC) give the employees of French Group Companies belonging to these savings plans access to several collective investment funds (Fondsfonds communs de placement), including a Fundfund invested in shares of the Company (“TOTAL ACTIONNARIAT FRANCE”).

 

The capital increases reserved for employees are conducted under PEG-A through the “TOTAL ACTIONNARIAT FRANCE” fund for employees of the Group’s French subsidiaries and through the “TOTAL ACTIONNARIAT INTERNATIONAL CAPITALISATION” fund for the employees of foreign subsidiaries. In addition, U.S. employees participate in these operations through American Depositary Receipts (ADRs) and Italian employees (as well as German employees starting in 2011) may participate by directly subscribing to new shares at the GroupCaisse Autonomein Belgium.

IncentiveProfit-sharing agreements

Performance indicators used under

Under the June 26, 2009 profit-sharing agreements for employees ofconcerning ten Group companies, the amount available for employees profit-sharing is determined, when permitted by local law, link amounts available for profit sharing tobased on the return on equity (ROE) performance (ROE) of the Group as a whole.

Group.

Employee shareholding

The total number of TOTAL shares held by employees as of December 31, 2010,2011, is as follows:

“TOTAL ACTIONNARIAT FRANCE”

   78,607,765  

“TOTAL ACTIONNARIAT INTERNATIONAL CAPITALISATION”

   19,691,590  
TOTAL ACTIONNARIAT FRANCE

ELF PRIVATISATION N°1

   73,117,185929,494  
TOTAL ACTIONNARIAT INTERNATIONAL CAPITALISATION16,446,122
ELF PRIVATISATION No. 1977,948

Shares held by U.S. employees

   705,829454,305  

Group Caisse Autonome (Belgium)

   295,866436,431  

TOTAL shares from the exercise of the Company’s stock options and held as registered shares within a Company Savings Plan (PEE)(a)

   3,185,5103,293,822  

Total shares held by employee shareholder funds

   94,728,460
103,413,407  

(a)
(a)Company savings plans.

As of December 31, 2010,2011, the employees of the Group held, on the basis of the definition of employee shareholding contained in Article L.225-102 of the French Commercial Code, 94,728,460103,413,407 TOTAL shares, representing 4.03%4.37% of the Company’s share capital and 7.72%8.01% of the voting rights that could be exercised at a Shareholders’ Meeting on that date.

Capital increase reserved for Group employees
At the Shareholders’ Meeting held on May 21, 2010, the shareholders delegated to the Board of Directors the authority to increase the share capital of the Company in one or more transactions and within a maximum period of twenty-six months from the date of the meeting, reserving subscriptions for such issuance to the Group employees participating in a company savings plan in accordance with the provisions of Articles L.3332-2 and L.3332-18 and following of the French Labor Code, and Articles L.225-129-2, L.225-129-6 and L.225-138-1 of the French Commercial Code. The number of ordinary shares that are likely to be issued pursuant to this delegation of authority will not exceed 1.5% of the share capital outstanding on the date of the meeting of the Board of Directors at which a decision to proceed with an issuance is made.
Pursuant to this delegation of authority, the Board of Directors decided on October 28, 2010, to proceed with a capital increase of a maximum of 12 million shares reserved for TOTAL employees, bearing dividends as of January 1, 2010. The Board of Directors decided to delegate the authority to set the subscription period to the Chairman and Chief Executive Officer.
The Board of Directors had decided on November 6, 2007, to proceed with a capital increase of a maximum of 12 million shares with a subscription price of €44.40 per share reserved for TOTAL employees, bearing dividends as of January 1, 2007. Subscription was open from March 10, 2008, through March 28, 2008, and 4,870,386 new TOTAL shares were issued in 2008.
On March 14, 2011, the Chairman and Chief Executive Officer decided that the subscription period would be set from March 16 to April 1, 2011, and acknowledged that the subscription price per ordinary share would be set at €34.80.

The management of each of the three collective investment funds mentioned above is controlled by a dedicated supervisory board, two-third of its members representing holders of fund units and one-third representing the Company. This board is responsible for reviewing the collective investment funds’ management report and annual financial statements as well as the financial, administrative and accounting management, exercising voting rights attached to portfolio securities, deciding contribution of securities in case of a public tender offer, deciding mergers, spin-offs or liquidations, and granting its

approval prior to changes in the rules and procedures of the collective investment fund in the conditions provided for by the rules and procedures.


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These rules and procedures also stipulate a simple majority vote for decisions, except for decisions requiring a qualified majority vote of two-third plus one related to a change in a fund’s rules and procedures, its conversion or disposal, and decisions related to contribution of securities of the Elf Privatisation collective investment fund in case of a public tender offer.

For employees holding shares outside of the employee collective investment funds mentioned in the table above, voting rights are exercised individually.

Capital increase reserved for Group employees

At the Shareholders’ Meeting held on May 21, 2010, the shareholders delegated to the Board of Directors the authority to increase the share capital of the Company in one or more transactions and within a maximum period of twenty-six months from the date of the meeting, reserving subscriptions for such issuance to the Group employees participating in a company savings plan in accordance with the provisions of Articles L. 3332-2 and L. 3332-18 and following of the French Labor Code, and Articles L. 225-129-2, L. 225-129-6 and L. 225-138-1 of the French Commercial Code. The number of ordinary shares that are likely to be issued pursuant to this delegation of authority will not exceed 1.5% of the share capital outstanding on the date of the meeting of the Board of Directors at which a decision to proceed with an issuance is made.

Pursuant to this delegation of authority, the Board of Directors decided on October 28, 2010 to proceed with a capital increase of a maximum of 12 million shares reserved for TOTAL employees in 2011, bearing dividends as of January 1, 2010. The Board of Directors decided to delegate the authority to set the subscription period to the Chairman and Chief Executive Officer.

On March 14, 2011, the Chairman and Chief Executive Officer decided that the subscription period would be set from March 16 to April 1, 2011 and acknowledged that the subscription price per ordinary share would be set at€34.80.

The subscription resulted in the issuance in 2011 of 8,902,717 TOTAL shares.

Shares held by Directorsthe administration and Executive Officersmanagement bodies

As of December 31, 2010,2011, based on information from the members of the Board and the share registrar, the members of the Board and the Group Executive Officers (Management

(Management Committee and Treasurer) held a total of less than 0.5% of the share capital:

Members of the Board of Directors (including the Chairman and Chief Executive Officer): 317,306 shares;

• Members of the Board of Directors (including the Chairman and Chief Executive Officer): 474,450 shares;
• Chairman and Chief Executive Officer: 85,230 shares and 48,529 shares of the TOTAL ACTIONNARIAT FRANCE collective investment plan;
• Management Committee (including the Chief Executive Officer) and Treasurer: 572,527 shares.

Chairman and Chief Executive Officer: 105,556 shares and 53,869 shares of the “TOTAL ACTIONNARIAT FRANCE” collective investment plan;

Management Committee (including the Chief Executive Officer) and Treasurer: 572,527 shares.

By decision of the Board of Directors:

The Chairman and the Chief Executive Officer are required to hold a number of shares of the Company

• The Chairman and the Chief Executive Officer are required to hold a number of shares of the Company

equal in value to two years of the fixed portion of their annual compensation.

• Members of the Executive Committee are required to hold a number of shares of the Company equal in value to two years of the fixed portion of their annual compensation. These shares have to be acquired within three years from the appointment to the Executive Committee.

Members of the Executive Committee are required to hold a number of shares of the Company equal in value to two years of the fixed portion of their annual compensation. These shares have to be acquired within three years from the appointment to the Executive Committee.

The number of TOTAL shares to be considered includes:

directly held shares, whether or not they are subject to transfer restrictions; and

shares in collective investment funds invested in TOTAL shares.

 
• directly held shares, whether or not they are subject to transfer restrictions; and
• shares in collective investment funds invested in TOTAL shares.


116

Summary of transactions in the Company’s securities

The following table presents transactions, of which the Company has been informed, in the Company’s shares or related financial instruments carried out in 20102011 by the individuals concerned under paragraphs a) through c) of Article L.621-18-2 of the French Monetary and Financial Code.

Year 2010
                        
                 Exercise
 
                 of stock
 
     Acquisition  Subscription  Transfer  Exchange  options 
Thierry Desmarest(a)
  TOTAL shares  —   —   45,372   —   25,372 
                        
   Shares in collective investment plans (FCPE), and other related financial instruments(b)  —   —   —   —   — 
                        
Christophe de Margerie(a)
  TOTAL shares  —   —   —   —   — 
                        
   Shares in collective investment plans (FCPE), and other related financial instruments(b)  4,815.21   —   —   —   — 
                        
Michel Bénézit(a)
  TOTAL shares  —   3,170   —   —   — 
                        
   Shares in collective investment plans (FCPE), and other related financial instruments(b)  27.68   47.23   —   —   — 
                        
François Cornélis(a)
  TOTAL shares  —   —   —   —   — 
                        
   Shares in collective investment plans (FCPE), and other related financial instruments(b)  1,241.32   —   —   —   — 
                        
Yves-Louis Darricarrère(a)
  TOTAL shares  —   —   —   —   — 
                        
   Shares in collective investment plans (FCPE), and other related financial instruments(b)  4.61   —   —   —   — 
                        
Jean-Jacques Guilbaud(a)
  TOTAL shares  —   —   5,000   —   5,000 
                        
   Shares in collective investment plans (FCPE), and other related financial instruments(b)  345.33   259.48   652.79   —   — 
                        
Patrick de La Chevardière(a)
  TOTAL shares  —   —   —   —   — 
                        
   Shares in collective investment plans (FCPE), and other related financial instruments(b)  79.25   12.79   —   —   — 
                        

Year 2011      Acquisition   Subscription   Transfer   Exchange   Exercise
of stock
options		 
Christophe de Margerie(a)  TOTAL shares   —     —     93,250     —     113,576  
   Shares in collective investment plans (FCPE), and other related financial instruments(b)   5,340.09     —     —     —     —  

Michel Bénézit(a)

  TOTAL shares   —     —     —     —       
   Shares in collective investment plans (FCPE), and other related financial instruments(b)   626.95     13,341.83     6,828.94     —     —  

François Cornélis(a)

  TOTAL shares   —     —     9,000     —       
   Shares in collective investment plans (FCPE), and other related financial instruments(b)   1,883.86     11,440.06     5,876.63     —     —  
Yves-Louis Darricarrère(a)  TOTAL shares   —     —     14,412     —     6,412  
   Shares in collective investment plans (FCPE), and other related financial instruments(b)   901.20     20,088.29     10,319.28     —       
Jean-Jacques Guilbaud(a)  TOTAL shares   —     —     29,163     —     29,163  
   Shares in collective investment plans (FCPE), and other related financial instruments(b)   1,008.85     14,320.92     8,636.03     —     —  
Bertrand Jacquillat(a)(c)  TOTAL shares   300     —     33     —     —  
   Shares in collective investment plans (FCPE), and other related financial instruments(b)   —     —     —     —     —  
Patrick de La Chevardière(a)  TOTAL shares   —     —     —     —     —  
   Shares in collective investment plans (FCPE), and other related financial instruments(b)   756.08     14,998.66     7,587.71     —     —  

(a)
(a)Including the related individuals in the meaning of the provisions of the Article R.621-43-1 of the French Monetary and Financial Code.
(b)Collective investment funds (FCPE) primarily invested in Company shares.


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(c)Director and member of the Audit Committee until May 13, 2011.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major shareholders

Holdings of major shareholders

The major shareholders of TOTAL as of December 31, 2011, 2010 2009 and 20082009 are set forth in the table below:

                             
  2010  2009  2008 
        % of
             
  % of
  % of
  theoretical
  % of
  % of
  % of
  % of
 
  share
  voting
  voting
  share
  voting
  share
  voting
 
As of December 31, capital  rights  rights(a)  capital  rights  capital  rights 
Groupe Bruxelles Lambert(b)(c)
  4.0   4.0   3.7   4.0   4.0   4.0   4.0 
Compagnie Nationale à Portefeuille(b)(c)
  1.6   1.6   1.4   1.4   1.4   1.4   1.4 
Areva(b)
  0.0   0.0   0.0   0.0   0.0   0.3   0.6 
BNP Paribas(b)
  0.2   0.2   0.2   0.2   0.2   0.2   0.2 
                             
Group employees(b)(d)
  4.0   7.7   7.1   3.9   7.5   3.8   7.4 
                             
Other registered shareholders (non-Group)
  1.4   2.5   2.3   1.4   2.4   1.2   2.1 
                             
Treasury shares
  4.8   —   8.3   4.9   —   6.0   — 
of which TOTAL S.A. 
  0.5   —   0.5   0.6   —   1.8   — 
of which Total Nucléaire
  0.1       0.1   0.1   —   0.1   — 
of which subsidiaries of Elf Aquitaine
  4.2       7.7   4.2   —   4.1   — 
                             
Other bearer shareholders
  84.0   84.0   77.0   84.2   84.5   83.1   84.3 
of which holders of ADS(e)
  8.0   8.0   7.4   7.5   7.6   8.2   8.3 
                             
below.

   2011  2010  2009 
As of  December 31 % of
share
capital		  % of
voting
rights		  % of
theoretical
voting
rights(a)		  % of
share
capital		  % of
voting
rights		  % of
share
capital		  % of
voting
rights		 

Groupe Bruxelles Lambert(b)(c)

  4.0    4.0    3.7    4.0    4.0    4.0    4.0  

Compagnie Nationale à Portefeuille(b)(c)

  1.5    1.6    1.4    1.6    1.6    1.4    1.4  

BNP Paribas(b)

  0.2    0.2    0.1    0.2    0.2    0.2    0.2  

Group employees(b)(d)

  4.4    8.0    7.4    4.0    7.7    3.9    7.5  

Other registered shareholders (non-Group)

  1.7    2.8    2.6    1.4    2.5    1.4    2.4  

Treasury shares

  4.6    —    8.1    4.8    —    4.9    —  

of which TOTAL S.A.

  0.4    —    0.4    0.5    —    0.6    —  

of which Total Nucléaire

  0.1    —    0.2    0.1    —    0.1    —  

of which subsidiaries of Elf Aquitaine

  4.2    —    7.6    4.2    —    4.2    —  

Other bearer shareholders

  83.6    83.5    76.7    84.0    84.0    84.2    84.5  

of which holders of ADS(e)

  8.7    8.7    8.0    8.0    8.0    7.5    7.6  

(a)
(a)Pursuant toarticle 223-11 of the AMF General Regulation, the number of theoretical voting rights is calculated on the basis of all outstanding shares to which voting rights are attached, including treasury shares that are deprived of voting rights.
(b)Shareholders with an executive officer (or a representative of employees) or director serving as a director of TOTAL S.A.
(c)Groupe Bruxelles Lambert is a company controlled jointly by the Desmarais family and Frère-Bourgeois S.A., and for the latter mainly through its direct and indirect interest in Compagnie Nationale à Portefeuille. In addition, Groupe Bruxelles Lambert and Compagnie Nationale à Portefeuille declared their acting in concert.
(d)Based on the definition of employee shareholding pursuant to Article L.225-102 of the French Commercial Code.
(e)American Depositary Shares listed on the New York Stock Exchange.

As of December 31, 2010,2011, the holdings of the major shareholders were calculated based on 2,349,640,9312,363,767,313 shares, representing 2,350,274,5922,368,716,634 voting rights exercisable at Shareholders’ Meetings or 2,563,093,5392,578,602,075 theoretical voting rights(1)including:

9,222,905 voting rights attached to the 9,222,905 TOTAL shares held by TOTAL S.A. that are deprived of voting rights; and

200,662,536 voting rights attached to the 100,331,268 TOTAL shares held by TOTAL S.A. subsidiaries that cannot be exercised at Shareholders’ Meetings.

• 200,662,536 voting rights attached to the 100,331,268 TOTAL shares held by TOTAL S.A. subsidiaries that cannot be exercised at Shareholders’ Meetings; and
• 12,156,411 voting rights attached to the 12,156,411 TOTAL shares held by TOTAL S.A. that are deprived of voting rights.

For prior years, the holdings of the major shareholders were established on the basis of 2,349,640,931 shares, to which were attached 2,350,274,592 voting rights that could be exercised at the Shareholders’ Meeting, as of December 31, 2010, and of 2,348,422,884 shares to which were attached 2,339,384,550 voting rights that could be exercised at the Shareholders’ Meeting, as of December 31, 2009, and of 2,371,808,074 shares to which were attached 2,339,251,395 voting rights that could be exercised at the Shareholders’ Meeting, as of December 31, 2008.2009.

Identification of the holders of bearer shares

In accordance with Article 9 of its by-laws, the Company is authorized, to the extent permitted under applicable law, to identify the holders of securities that grant immediate or future voting rights at the Company’s Shareholders’ Meetings.

Temporary transfer of securities

Pursuant to legal obligations, any legal entity or individual (with the exception of those described in paragraph IV-3° of Article L. 233-7 of the French Commercial Code) holding alone or together a number of shares representing more than 0.5% of the Company’s voting rights pursuant to one or several temporary transfers or similar operations as described by Article L. 225-126 of the French Commercial Code is required to inform the Company and the French Financial Markets Authority of the number of shares temporarily held no later than the third business day preceding the shareholders’ meeting at midnight.

 

(1)Pursuant to Article 223-11 of the AMF General Regulation, the number of theoretical voting rights is calculated on the basis of all outstanding shares, including those shares held by the Group that are deprived of voting rights.

Declarations are to be e-mailed to the Company at: holding.df-shareholdingnotification@total.com.

Failing to declare such information, any share bought under any of the above described temporary transfer operations shall be deprived of voting rights at the relevant Shareholders’ Meeting and at any Shareholders’ Meeting that would be held until such shares are transferred again or returned.

Legal thresholdsThresholds notifications

In addition to the legal obligation to inform the Company and the French Financial Markets Authority within four business days when thresholds representing 5%, 10%, 15%, 20%, 25%, 30%, 331/3,%, 50%, 662/3,%, 90% or 95% of the share capital or voting rights(2)(1) are crossed (Article L.233-7 of the French Commercial Code), any individual or entity who directly or indirectly acquirescomes to hold a percentage of the share capital, voting rights or rights giving future access to the share capital of the Company which is equal to or greater than 1%, or a multiple of this percentage, is required to notify the Company within 15fifteen days by registered mail with return receipt requested, and declare the number of securities held.

(1)  Pursuant toArticle 223-11 of the AMF General Regulation, the number of theoretical voting rights is calculated on the basis of all outstanding shares, including those shares held by the Group that are deprived of voting rights.
(2)  Pursuant toArticle 223-11 of the AMF General Regulation, the number of voting rights is calculated on the basis of all outstanding shares, including those shares held by the Group that are deprived of voting rights.


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In case the shares above these thresholds are not declared, any undeclared shares held in excess of the threshold and undeclared may be deprived of voting rights at future Shareholders’ Meetings if, at that meeting, the failure to make a declaration is acknowledged and if one or more shareholders holding collectively at least 3% of the Company’s share capital or voting rights so request at that meeting.

All individuals and entities are also required to notify the Company in due form and within the time limits stated above when their direct or indirect holdings fall below each of the aforementioned thresholds.

Declarations are to be sent to the Vice President of the Investor Relations department in Paris.

Temporary transferLegal threshold notifications in 2011

Société Générale reported that it had passed:

on May 6, 2011, above the thresholds of securities

Pursuant to legal obligations, any legal entity or individual (with the exception of those described in paragraph 3 of Article L.233-75% of the French Commercial Code) holding alone or together a number of shares representing more than 0.5% ofshare capital and the Company’s voting rights pursuant to one or several temporary transfers or similar operations as described by Article L.225-126of the French Commercial Code is required to inform the Company, and that it held after crossing the French Financial Markets Authoritythresholds 6.86% of the numbershare capital and 6.29% of shares temporarily held no later than the third business days precedingvoting rights of the Shareholders’ Meeting at midnight.Company;

Declarations are to bee-mailed to

on May 25, 2011, below the thresholds of 5% of the share capital and the voting rights of the Company, at: holding.df-shareholdingnotification@total.com.

Failing to declare such information, any share bought under anyand that it held after crossing the thresholds 4.92% of the above described temporary transfer operations shall be deprivedshare capital and 4.50% of the voting rights atof the relevant Shareholders’ Meeting and at any Shareholders’ Meeting that would be held until such shares are transferred again or returned.Company.

Holdings above the legal thresholds

In accordance with Article L.233-13 of the French Commercial Code, only one shareholder, Compagnie Nationale à Portefeuille (CNP) and Groupe Bruxelles Lambert (GBL), acting in concert, holds 5% or more of TOTAL’s share capital at year-end 20102011(1)(2).

In addition, two known shareholders held 5% or more of the voting rights exercisable at TOTAL Shareholders’ Meetings at year-end 2010:2011:

CNP jointly with GBL:

• CNP jointly with GBL:

In the AMF notice No. 209C1156 dated September 2, 2009, CNP and GBL acting in concert declared that they held more than the threshold of 5% of the voting rights of TOTAL as of August 25, 2009 and held 127,149,464 TOTAL shares representing 127,745,604 voting rights,i.e.5.42% of the share capital and 5.0009% of the theoretical voting rights(2)(3) (based on a share capital of 2,347,601,812 shares representing 2,554,431,468 voting rights). To the Company’s knowledge, CNP, jointly with GBL, held, as of December 31, 2010, 5.56%2011, 5.52% of the share capital representing 5.59%5.53% of the voting rights exercisable at Shareholders’ Meetings and 5.12%5.08% of the theoretical voting rights(2)(3).

•
• 

The collective investment fund (fonds commun de placement) “TOTAL ACTIONNARIAT FRANCE”:

To the Company’s knowledge, the collective investment fund (fonds(fonds commun de placement)placement) “TOTAL ACTIONNARIAT FRANCE” held, as of December 31, 2010, 3.11%2011, 3.33% of the share capital representing 5.94%6.12% of the voting rights exercisable at a Shareholders’ Meeting and 5.44%5.62% of the theoretical voting rights(2)(3).

Shareholders’ agreements

TOTAL is not aware of any agreements among its shareholders.

 

(1)

Pursuant to Article 223-11 of the AMF General Regulation, the number of voting rights is calculated on the basis of all outstanding shares, including those shares held by the Group that are deprived of voting rights.

(2)

AMF notice No. 209C1156 dated September 2, 2009.

(3)

Pursuant to Article 223-11 of the AMF General Regulation, the number of theoretical voting rights is calculated on the basis of all outstanding shares, including those shares held by the Group that are deprived of voting rights.

Treasury shares

As of December 31, 2010,2011, the Company held 112,487,679109,554,173 TOTAL shares either directly or through its indirect subsidiaries, which represented 4.79%4.63% of the share capital, as of this date. By law, these shares are also deprived of voting rights.

TOTAL shares held directly by the Company (treasury shares)

The Company held 12,156,4119,222,905 treasury shares as of December 31, 2010,2011, representing 0.52%0.39% of the share capital, as of that date.

TOTAL shares held directly by Group companies

As of December 31, 2010,2011, Total Nucléaire, a Group company wholly-owned indirectly by TOTAL held 2,023,672 TOTAL shares. As of December 31, 2010, 2011,

Financière Valorgest, Sogapar and Fingestval, indirect subsidiaries of Elf Aquitaine, held respectively 22,203,704,

(1)  AMF notice No. 207C1811 dated September 2, 2009.
(2)  Pursuant toArticle 223-11 of the AMF General Regulation, the number of theoretical voting rights is calculated on the basis of all outstanding shares, including those shares held by the Group that are deprived of voting rights.


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4,104,000 and 71,999,892 TOTAL shares, representing a total of 98,307,596 TOTAL shares. As of December 31, 2010,2011, the Company held through its indirect subsidiaries, 4.27%4.24% of the share capital.

Related Party Transactions

The Group’s main transactions with related parties (principally all the investments carried under the equity method) and the balances receivable from and payable to them are shown in Note 24 to the Consolidated Financial Statements.

In the ordinary course of its business, TOTAL enters into transactions with various organizations with which certain of its directors or executive officers may be associated, but no such transactions of a material or unusual nature have been entered into during the period commencing on January 1, 2008,2009, and ending on March 24, 2011.23, 2012.

 

ITEM 8. FINANCIAL INFORMATION

Consolidated Statements and other supplemental information

See pages F-1 through F-97 andS-1 through S-20F-96 for TOTAL’s Consolidated Financial Statements and pages S-1 through S-19 for other supplemental information.

Legal or arbitration proceedings

There are no governmental, legal or arbitration proceedings, including any proceeding that the Company is aware of, threatened with or even pending (including the main legal proceedings described hereafter) that could have a material impact on the Group’s financial situation or profitability. While it is not feasible to predict the outcome of the pending claims, proceedings, and investigations described below with certainty, management is of the opinion that their ultimate disposition should not have a material adverse effect on the Company’s financial position, cash flows, or results of operations.

Antitrust investigations

The principal antitrust proceedings in which the Group’s companies are involved are described below.

Chemicals

•

As part of the spin-off of Arkema(1) in 2006, TOTAL S.A. or certain other Group companies agreed

to grant Arkema a guarantee for potential monetary consequences related to antitrust proceedings arising from events prior to the spin-off.

This guarantee covers, for a period of ten years from the date of the spin-off, 90% of amounts paid by Arkema related to (i) fines imposed by European authorities or European member-states for competition law violations, (ii) fines imposed by U.S. courts or antitrust authorities for federal antitrust violations or violations of the competition laws of U.S. states, (iii) damages awarded in civil proceedings related to the government proceedings mentioned above, and (iv) certain costs related to these proceedings. The guarantee related to anti-competition violations in Europe applies to amounts above a€176.5 million threshold. On the other hand, the agreements provide that Arkema will indemnify TOTAL S.A. or any Group company for 10% of any amount that TOTAL S.A. or any Group company are required to pay under any of the proceedings covered by this guarantee, in Europe.

If one or more individuals or legal entities, acting alone or together, directly or indirectly holds more than one-third of the voting rights of Arkema, or if Arkema transfers more than 50% of its assets (as calculated under the enterprise valuation method, as of the date

 

(1)

Arkema is used in this section to designate those companies of the Arkema group whose ultimate parent company is Arkema S.A. Arkema became an independent company after being spun-off from TOTAL S.A. in May 2006.

of the transfer) to a third party or parties acting together, irrespective of the type or number of transfers, this guarantee will become void.

In the United States, civil liability lawsuits, for which TOTAL S.A. has been named as the parent company, are closed without significant impact on the Group’s financial position.

Grande ParoisseIn Europe, since 2006, the European Commission has fined companies of the Group in its configuration prior to the spin-off an overall amount of€385.47 million, of which Elf Aquitaine and/or TOTAL S.A. were held jointly liable for€280.17 million, Elf Aquitaine being personally fined€23.6 million for deterrence. These fines are entirely settled as of today.

As a result, since the spin-off, the Group has paid the overall amount of€188.07 million(1), corresponding to 90% of the fines overall amount once the threshold provided for by the guarantee is deducted to which an amount of€31.31 million of interest has been added as explained hereinafter.

The European Commission imposed these fines following investigations between 2000 and 2004 into commercial practices involving eight products sold by Arkema. Five of these investigations resulted in prosecutions from the European Commission for which Elf Aquitaine has been named as the parent company, and two of these investigations named TOTAL S.A. as the ultimate parent company of the Group.

TOTAL S.A. and Elf Aquitaine are contesting their liability based solely on their status as parent companies and appealed for cancellation and reformation of the rulings that are still pending before the relevant EU court of appeals or supreme court of appeals.

During the year 2011, four of the proceedings have evolved and are closed as far as Arkema is concerned:

-

In one of these proceedings, the Court of Justice of the European Union (CJEU) has rejected the action of Arkema while the decisions of the European Commission and of the General Court of the European Union against the parent companies have been squashed. Consequently, this proceeding is definitively closed regarding Arkema as well as the parent companies.

-

In two other proceedings, previous decisions against Arkema and the parent companies have been upheld by the General Court of the European Union. While the parent companies have introduced an appeal before the CJEU, Arkema did not appeal to the CJEU.

-

Finally, in a last proceeding, the General Court has decided to reduce the amount of the fine initially ordered against Arkema while, in parallel, it has rejected the actions of the parent companies that have remained obliged to pay the whole amount of the fine initially ordered by the European Commission. Arkema has accepted this decision while the parent companies have introduced an appeal before the CJEU.

With the exception of the€31.31 million of interest charged by the European Commission to the parent companies, which has been required to pay in accordance with the decision concerning the last proceeding referred hereinabove, the evolution of the proceedings during the year 2011 did not modify the global amount assumed by the Group in execution of the guarantee.

In addition, civil proceedings against Arkema and other groups of companies were initiated in 2009 and 2011, respectively, before the German and Dutch courts by third parties for alleged damages pursuant to two of the above mentioned legal proceedings. TOTAL S.A. was summoned to serve notice of the dispute before the German court. At this point, the probability to have a favorable verdict and the financial impacts of these proceedings are uncertain due to the number of legal difficulties they give rise to, the lack of documented claims and evaluations of the alleged damages.

Arkema began implementing compliance procedures in 2001 that are designed to prevent its employees from violating antitrust provisions. However, it is not possible to exclude the possibility that the relevant authorities could commence additional proceedings involving Arkema regarding events prior to the spin-off, as well as Elf Aquitaine and/or TOTAL S.A. based on their status as parent company.

Within the framework of all of the legal proceedings described above, a€17 million reserve remains booked in the Group’s consolidated financial statements as of December 31, 2011.

 

(1)This amount does not take into account a case that led to Arkema, prior to Arkema’s spin-off from TOTAL, and Elf Aquitaine being fined jointly€45 million and Arkema being fined€13.5 million.

Downstream

Pursuant to a statement of objections received by Total Nederland N.V. and TOTAL S.A. (based on its status as parent company) from the European Commission, Total Nederland N.V. was fined€20.25 million in 2006, for which TOTAL S.A. was held jointly liable for€13.5 million. TOTAL S.A. appealed this decision before the relevant court and this appeal is still pending.

In addition, pursuant to a statement of objections received by Total Raffinage Marketing (formerly Total France) and TOTAL S.A. from the European Commission regarding another product line of the Refining & Marketing division, Total Raffinage Marketing was fined€128.2 million in 2008, which has been paid, and for which TOTAL S.A. was held jointly liable based on its status as parent company. TOTAL S.A. also appealed this decision before the relevant court and this appeal is still pending.

In addition, civil proceedings against TOTAL S.A and Total Raffinage Marketing and other companies were initiated before U.K and Dutch courts by third parties for alleged damages in connection with the prosecutions brought by the European Commission in this case. At this point, the probability to have a favorable verdict and the financial impacts of these procedures are uncertain due to the number of legal difficulties they gave rise to, the lack of documented claims and evaluations of the alleged damages.

Within the framework of the legal proceedings described above, a€30 million reserve is booked in the Group’s consolidated financial statements as of December 31, 2011.

Whatever the evolution of the proceedings described above, the Group believes that their outcome should not have a material adverse effect on the Group’s financial situation or consolidated results.

Grande Paroisse

An explosion occurred at the Grande Paroisse industrial site in the city of Toulouse in France on September 21, 2001. Grande Paroisse, a former subsidiary of Atofina which became a subsidiary of Elf Aquitaine Fertilisants on December 31, 2004, as part of the reorganization of the Chemicals segment, was principally engaged in the production and sale of agricultural fertilizers. The explosion, which involved a stockpile of ammonium nitrate pellets, destroyed a portion of the site and caused the death of thirty-one people, including twenty-one workers at the site, and injured many others. The explosion also caused

significant damage to certain property in part of the city of Toulouse.

This plant has been closed and individual assistance packages have been provided for employees. The site has been rehabilitated.

On December 14, 2006, Grande Paroisse signed, under the supervision of the city of Toulouse, the deed whereby it donated the former site of the AZF plant to the greater agglomeration of Toulouse (CAGT) and theCaisse des dépôts et consignationsand its subsidiary ICADE. Under this deed, TOTAL S.A. guaranteed the site restoration obligations of Grande Paroisse and granted a €10€10 million endowment to the InNaBioSanté research foundation as part of the setting up of a cancer research center at the site by the city of Toulouse.

Regarding the cause of the explosion, the hypothesis that the explosion was caused by Grande Paroisse through the accidental mixing of hundreds of kilos of a chlorine compound at a storage site for ammonium nitrate was discredited over the course of the investigation. As a result, proceedings against ten of the eleven Grande Paroisse employees charged during the criminal investigation conducted by the Toulouse Regional Court (Tribunal de grande instance) were dismissed and this dismissal was upheld by the Court of Appeal of Toulouse.on appeal. Nevertheless, the final experts’ report filed on May 11, 2006 continued to focus on the hypothesis of a chemical accident, although this hypothesis was not confirmed during the attempt to reconstruct the accident at the site. After having articulated several hypotheses, the experts no longer maintain that the accident was caused by pouring a large quantity of a chlorine compound over ammonium nitrate. Instead, the experts have retained a scenario where a container of chlorine compound sweepings was poured between a layer of wet ammonium nitrate covering the floor and a quantity of dry agricultural nitrate at a location not far from the principal storage site. This is claimed to have caused an explosion which then spread into the main storage site. Grande Paroisse was investigated based on this new hypothesis in 2006; Grande Paroisse is contesting this explanation, which it believes to be based on elements that are not factually accurate.

The Court of Appeal of Toulouse denied all

All the requests for additional investigations that were submitted by Grande Paroisse, the former site manager and various plaintiffs were denied on appeal after the end of the criminal investigation procedure. On July 9, 2007, the investigating judge brought charges against Grande Paroisse and the former plant manager before the criminal chamber of the Court of Appeal of Toulouse. In late 2008, TOTAL S.A. and Mr. Thierry Desmarest were summoned to appear in courtCourt pursuant to a request by a victims

association. The trial for this case began on February 23, 2009, and lasted approximately four months.


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On November 19, 2009, the Toulouse Criminal Court acquitted both the former Plant Manager, and Grande Paroisse due to the lack of reliable evidence for the explosion. The Court also ruled that the summonses against TOTAL S.A. and Mr. Thierry Desmarest, Chairman and CEO at the time of the disaster, were inadmissible.

Due to the presumption of civil liability that applied to Grande Paroisse, the Court declared Grande Paroisse civilly liable for the damages caused by the explosion to the victims in its capacity as custodian and operator of the plant.

The Prosecutor’s office, together with certain third parties, has appealed the Toulouse Criminal Court verdict. In order to preserve its rights, Grande Paroisse lodged a cross-appeal with respect to civil charges.

The appeal proceedings are expected to start before the Court of Appeal of Toulouse was completed on November 3, 2011.

March 16, 2012. The decision is expected on September 24, 2012.

A compensation mechanism for victims was set up immediately following the explosion. €2.3€2.3 billion werewas paid for the compensation of claims and related expenses amounts. As of December 31, 2010,2011, a €31€21 million reserve was recorded in the Group’s consolidated balance sheet.

Antitrust investigationsBuncefield

For the year ended 2010, the Group has not been fined pursuant to a Court ruling. The principal antitrust proceedings in which the Group is involved are described hereafter.
Chemicals segment
• As part of the spin-off of Arkema(1) in 2006, TOTAL S.A. or certain other Group companies agreed to grant Arkema guarantees for potential monetary consequences related to antitrust proceedings arising from events prior to the spin-off.
These guarantees cover, for a period of ten years, 90% of amounts paid by Arkema related to (i) fines imposed by European authorities or European member-states for competition law violations, (ii) fines imposed by U.S. courts or antitrust authorities for federal antitrust violations or violations of the competition laws of U.S. states, (iii) damages awarded in civil proceedings related to the government proceedings mentioned above, and (iv) certain costs related to these proceedings. The guarantee related to anti-competition violations in Europe applies to amounts above a €176.5 million threshold. On the other hand, the agreements provide that Arkema will indemnify TOTAL S.A. or any Group company for 10% of any amount that TOTAL S.A. or any Group company are required to pay under any of the proceedings covered by these guarantees.
If one or more individuals or legal entities, acting alone or together, directly or indirectly holds more than one-third of the voting rights of Arkema, or if Arkema transfers more than 50% of its assets (as calculated under the enterprise valuation method, as of the date of the transfer) to a third party or parties acting together, irrespective of the type or number of transfers, these guarantees will become void.
• In the United States, investigations into certain commercial practices of some subsidiaries of the Arkema group have been closed since 2007; no charges have been brought against Arkema. Civil liability lawsuits, for which TOTAL S.A. has been named as the parent company, are about to be closed and are not expected to have a significant impact on the Group’s financial position.
• In Europe, since 2006, the European Commission has fined companies of the Group in its configuration prior to the spin-off an overall amount of €385.47 million, of which Elf Aquitaineand/or TOTAL S.A. and their subsidiaries were held jointly liable for €280.17 million, Elf Aquitaine being personally fined €23.6 million for deterrence. These fines are entirely settled as of today.
As a result(2), since the spin-off, the Group has paid the overall amount of €188.07 million, corresponding to 90% of the fines overall amount once the threshold provided for by the guarantee is deducted.
The European Commission imposed these fines following investigations between 2000 and 2004 into commercial practices involving eight products sold by Arkema. Five of these investigations resulted in prosecutions from the European Commission for which Elf Aquitaine has been named as the parent company and two of these investigations named TOTAL S.A. as the ultimate parent company of the Group.
TOTAL S.A. and Elf Aquitaine are contesting their liability based solely on their status as parent companies and appealed for cancelation and reformation of the rulings that are still pending before the relevant EU court of appeals or supreme court of appeals.
(1)  Arkema is used in this section to designate those companies of the Arkema group whose ultimate parent company is Arkema S.A. Arkema became an independent company after being spun-off from TOTAL S.A. in May 2006.
(2)  This amount does not take into account a case that led to Arkema, prior to Arkema’s spin-off from TOTAL, and Elf Aquitaine being fined jointly €45 million and Arkema being fined €13.5 million. This case is referred to in past Registration Documents.


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Besides, a civil proceeding against Arkema and five groups of companies was initiated before a German regional court by a third party for an alleged damage pursuant to one of the above described legal proceedings. TOTAL S.A. was summoned to serve notice of the dispute before this court. At this point, the probability to have a favorable verdict and the financial impacts of this procedure are uncertain due to the number of legal difficulties it gave rise to, the lack of documented claim and the complex evaluation of the alleged damage.
Arkema began implementing compliance procedures in 2001 that are designed to prevent its employees from violating antitrust provisions. However, it is not possible to exclude the possibility that the relevant authorities could commence additional proceedings involving Arkema regarding events prior to the spin-off, as well as Elf Aquitaineand/or TOTAL S.A. based on their status as parent company.
Within the framework of the legal proceedings described above, a €17 million reserve is booked in the Group’s consolidated financial statements as of December 31, 2010.
Downstream segment
• Pursuant to a statement of objections received by Total Nederland N.V. and TOTAL S.A. (based on its status as parent company) from the European Commission, Total Nederland N.V. was fined in 2006 €20.25 million, which has been paid, and for which TOTAL S.A. was held jointly liable for €13.5 million. TOTAL S.A. appealed this decision before the relevant court and this appeal is still pending.
In addition, pursuant to a statement of objections received by Total Raffinage Marketing (formerly Total France) and TOTAL S.A. from the European Commission regarding another product line of the Refining & Marketing division, Total Raffinage Marketing was fined €128.2 million in 2008, which has been paid, and for which TOTAL S.A. was held jointly liable based on its status as parent company. TOTAL S.A. also appealed this decision that is still pending before the relevant court.
• Finally, TotalGaz and Total Raffinage Marketing received in July 2009 a statement of objections from the French Antitrust Authority (Autorité de la concurrence française) regarding alleged antitrust practices concerning another product line of the Refining & Marketing division. The case was dismissed by decision of the French antitrust authorities on December 17, 2010.
Given the discretionary powers granted to the antitrust authorities for determining fines relating to antitrust regulations, it is not currently possible to determine with certainty the outcome of these investigations and proceedings. TOTAL S.A. and Elf Aquitaine are contesting their liability and the method of determining these fines. Although it is not possible to predict the ultimate outcome of these proceedings, the Group believes that they will not have a material adverse effect on its financial situation or consolidated results.
Sinking of the Erika
Following the sinking in December 1999 of the Erika, a tanker that was transporting products belonging to one of the Group companies, theTribunal de grande instanceof Paris convicted TOTAL S.A. of marine pollution pursuant to a judgment issued on January 16, 2008, finding that TOTAL S.A. was negligent in its vetting procedure for vessel selection and ordering TOTAL S.A. to pay a fine of €375,000. The court also ordered compensation to be paid to those affected by the pollution from the Erika up to an aggregate amount of €192 million, declaring TOTAL S.A. jointly and severally liable for such payments together with the Erika’s inspection and classification firm, the Erika’s owner and the Erika’s manager.
TOTAL has appealed the verdict of January 16, 2008. In the meantime, it nevertheless proposed to pay third parties who so requested definitive compensation as determined by the court. Forty-one third parties have been compensated for an aggregate amount of €171.5 million.
By a decision dated March 30, 2010, the Court of Appeal of Paris upheld the lower court verdict pursuant to which TOTAL S.A. was convicted of marine pollution and fined €375,000. TOTAL appealed this decision to the French Supreme Court (Cour de cassation).
However, the Court of Appeal ruled that TOTAL S.A. bears no civil liability according to the applicable international conventions and consequently ruled that TOTAL S.A. be not convicted.
TOTAL S.A. believes that, based on the information currently available, the case should not have a significant impact on the Group’s financial situation or consolidated results.


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Buncefield
On December 11, 2005, several explosions, followed by a major fire, occurred at an oil storage depot at Buncefield, north of London. This depot was operated by Hertfordshire Oil Storage Limited (HOSL), a company in which TOTAL’s UK subsidiary holds 60% and another oil group holds 40%.

The explosion caused injuries, most of which were minor injuries, to a number of people and caused property damage to the depot and the buildings and homes located nearby. The official Independent Investigation Board has indicated that the explosion was caused by the overflow of a tank at the depot. The Board’s final report was released on December 11, 2008. The civil procedure for claims, which had not yet been settled, took place between October and December 2008. The Court’s decision of March 20, 2009, declared TOTAL’s UK subsidiary liable for the accident and solely liable for indemnifying the victims. The subsidiary appealed the decision. The appeal trial took place in January 2010. The Court of Appeals, by a decision handed down on March 4, 2010, confirmed the prior judgment. The Supreme Court of United Kingdom has partially authorized TOTAL’s UK subsidiary to contest the decision. TOTAL’s UK subsidiary finally decided to

withdraw from this recourse due to settlement agreements reached in mid-February 2011.

The Group carries insurance for damage to its interests in these facilities, business interruption and civil liability claims from third parties. The provision for the civil liability that appears in the Group’s consolidated financial statements as of December 31, 2010,2011, stands at €194€80 million after taking into account the payments previously made.

The Group believes that, based on the information currently available, on a reasonable estimate of its liability and on provisions recognized, this accident should not have a significant impact on the Group’s financial situation or consolidated results.

In addition, on December 1, 2008, the Health and Safety Executive (HSE) and the Environment Agency (EA) issued a Notice of prosecution against five companies, including TOTAL’s UK subsidiary. By a judgment on July 16, 2010, TOTAL’s UKthe subsidiary was fined £3.6 million.million and paid it. The decision takes into account a number of elements that have mitigated the impact of the charges brought against it.

MyanmarSinking of the Erika

Under

Following the Belgian “universal jurisdiction” lawssinking in December 1999 of Junethe Erika, a tanker that was transporting products belonging to one of the Group companies, theTribunal de grande instance of Paris convicted TOTAL S.A. of marine pollution pursuant to a judgment issued on January 16, 19932008, finding that TOTAL S.A. was negligent in its vetting procedure for vessel selection, and February 10, 1999,ordering TOTAL S.A. to pay a complaint was filed in Belgium on April 25, 2002, againstfine of€375,000. The Court also ordered compensation to be paid to those affected by the Company, its Chairmanpollution from the Erika up to an aggregate amount of€192 million, declaring TOTAL S.A. jointly and severally liable for such payments together with the Erika’s inspection and classification firm, the Erika’s owner and the former presidentErika’s manager.

TOTAL has appealed the verdict of its subsidiary in Myanmar. These laws were repealedJanuary 16, 2008. In the meantime, it nevertheless proposed to pay third parties who so requested definitive compensation as determined by the Belgian lawCourt. Forty-two third parties have been compensated for an aggregate amount of August 5, 2003 on “serious violations of international human rights”, which also provided a procedure for terminating certain proceedings that were underway. In this framework, the BelgianCour de cassationterminated the proceedings against TOTAL in€171.5 million.

By a decision dated June 29, 2005. The plaintiffs’ request to withdraw this decision was rejected by theCour de cassationon March 28, 2007.

Despite this decision, the Belgian Ministry of Justice asked the Belgian federal prosecutor to request that the investigating judge reopen the case. The Belgian federal prosecutor decided to submit the admissibility of this request to30, 2010, the Court of Appeal of Brussels. In its decisionParis upheld the lower Court verdict pursuant to which TOTAL S.A. was convicted of March 5, 2008,marine pollution and fined€375,000. However, the Court of Appeal confirmedruled that TOTAL S.A. bears no civil liability according to the applicable international conventions and consequently ruled that TOTAL S.A. be not convicted.

TOTAL challenged the criminal law-related issues of this decision before the French Supreme Court (Cour de cassation).

To facilitate the payment of damages awarded by the Court of Appeal in Paris to third parties against Erika’s controlling and classification firm, the ship-owner and the ship-manager, a global settlement agreement was signed late 2011 between these parties and TOTAL S.A. under the auspices of the IOPC Fund. Under this global settlement agreement, each party agreed to the withdrawal of all civil proceedings initiated against all other parties to the agreement.

TOTAL S.A. believes that, based on the information currently available, the case should not have a significant impact on the Group’s financial situation or consolidated results.

Blue Rapid and the Russian Olympic Committee — Russian regions and Interneft

Blue Rapid, a Panamanian company, and the Russian Olympic Committee filed a claim for damages with the Paris Commercial Court against Elf Aquitaine, alleging a so-called non-completion by a former subsidiary of Elf Aquitaine of a contract related to an exploration and production project in Russia negotiated in the early 1990s. Elf Aquitaine believed this claim to be unfounded and opposed it. On January 12, 2009, the Commercial Court of Paris rejected Blue Rapid’s claim against Elf Aquitaine and found that the Russian Olympic Committee did not have standing in the matter. Blue Rapid and the Russian Olympic Committee appealed this decision. On June 30, 2011, the Court of Appeal of Paris dismissed as inadmissible the claim of Blue Rapid and the Russian Olympic Committee against Elf Aquitaine, notably on the grounds of the contract’s termination. Blue Rapid and the Russian Olympic Committee appealed this decision to the French Supreme Court.

In connection with the same facts, and fifteen years after the termination of the proceedingsexploration and production contract, a Russian company, which was held not to be the contracting party to the contract, and two regions of the Russian Federation which were not even parties to the contract, have launched an arbitration procedure against TOTAL, its Chairmanthe aforementioned former subsidiary of Elf Aquitaine that was liquidated in 2005, claiming alleged damages of U.S.$22.4 billion. For the same reasons as those successfully adjudicated by Elf Aquitaine against Blue Rapid and the former president of its subsidiary, based onRussian Olympic Committee, the principle ofres judicata applyingGroup considers this claim to theCour de cassation’s decision of June 29, 2005. The plaintiffs appealed the decision of March 5, 2008. On October 29, 2008, theCour de cassationrejected the plaintiffs’ appeal, thus ending definitively the proceedings.

TOTAL has always maintained that the accusations made against the Company and its management arising out of the activities of its subsidiary in Myanmar were without substancebe unfounded as to a matter of factlaw or fact. The Group has lodged a criminal complaint to denounce the fraudulent claim which the Group believes it is a victim of and, as a matter of law.has taken and reserved its rights to take other actions and measures to defend its interests.

South AfricaIran

In a threatened class action proceeding in the United States, TOTAL, together with approximately 100 other multinational companies, is the subject of accusations by certain South African citizens who alleged that their human rights were violated during the era of apartheid by the army, the police or militias, and who consider that these companies were accomplices in the actions by the South African authorities at the time.
The claims against the companies named in the class action, which were not officially brought against TOTAL, were dismissed by a federal judge in New York. The plaintiffs appealed this dismissal and, after a procedural hearing on November 3, 2008, decided to remove TOTAL from the list of companies against which it was bringing claims.
Iran

In 2003, the United States Securities and Exchange Commission (SEC) followed by the Department of Justice (DoJ) issued a formal order directing an investigation in connection with the pursuit of business in Iran, by certain oil companies including, among others, TOTAL.

The inquiry concerns an agreement concluded by the Company with a consultant concerning a gas field in Iran


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and aims to verify whether certain payments made under this agreement would have benefited Iranian officials in violation of the Foreign Corrupt Practices Act (FCPA) and the Company’s accounting obligations.

Investigations are still pending and the Company is cooperating with the SEC and the DoJ. In 2010, the Company opened talks with U.S. authorities, without any acknowledgement of facts, to consider anout-of-court settlement. Generally,out-of-court settlements with U.S. authorities include payment settlement as it is often the case in this kind of finesproceeding.

Late in 2011, the SEC and the obligationDoJ proposed to improve internal compliance systems or other measures.

TOTAL out-of-court settlements that would close their inquiries, in exchange for TOTAL’s committing to a number of obligations and paying fines. As TOTAL was unable to agree to several substantial elements of the proposal, the Company is continuing discussions with the U.S. authorities. The Company is free not to accept an out-of-court settlement solution, in which case it would be exposed to the risk of prosecution in the United States.

In this same case,affair, a parallel judicial inquiry related to TOTAL was initiated in France in 2006. In 2007, the Company’s Chief Executive Officer was placed under formal investigation in relation to this inquiry, as the former President of the Middle East department of the Group’s Exploration & Production division. The Company has not been notified of any significant developments in the proceedings since the formal investigation was launched.

At this point, the Company cannot determine when these investigations will terminate, and cannot predict their results, or the outcome of the talks that have been initiated, or the costs of a potentialout-of-court settlement.initiated. Resolving this casethese cases is not expected to have a significant impact on the Group’s financial situation or any impactconsequences on its future planned operations.

Libya

In June 2011, the SEC issued to certain oil companies — including, among others, TOTAL — a formal request for information related to their operations in Libya. TOTAL is cooperating with this non-public investigation.

 

ItalyOil-for-Food Program

As part of an investigation led by the Prosecutor of the Republic of the Potenza court, Total Italia and certain Group’s employees are the subject of an investigation related to certain calls for tenders that Total Italia made for the preparation and development of the Tempa Rossa oil field. On February 16, 2009, as a preliminary measure before the proceedings go before the court, the preliminary investigation judge of Potenza served notice to Total Italia of a decision that would suspend the concession for this field for one year. Total Italia has appealed the decision by the preliminary investigation judge before the Court of Appeal of Potenza. In a decision dated April 8, 2009, the Court reversed the suspension of the Gorgoglione concession and appointed for one year,i.e.until February 16, 2010, a judicial administrator to supervise the operations related to the development of the concession, allowing the Tempa Rossa project to continue.
The criminal investigation was closed in the first half of 2010. The preliminary hearing judge, who will decide whether the case shall be returned to the Criminal Court to be judged on the merits, held the first hearing on December 6, 2010. The next hearing is scheduled during the first half of 2011.
In 2010, Total Italia’s exploration and production operations were transferred to Total E&P Italia and refining and marketing operations were merged with those of Erg Petroli.
Oil-for-Food Program

Several countries have launched investigations concerning possible violations related to the United Nations (UN)Oil-for-Food program in Iraq.

Pursuant to a French criminal investigation, certain current or former Group employees were placed under formal criminal investigation for possible charges as accessories to the misappropriation of corporate assets and as accessories to the corruption of foreign public agents. The Chairman and Chief Executive Officer of the Company, formerly President of the Group’s Exploration & Production division, was also placed under formal investigation in October 2006. In 2007, the criminal investigation was closed and the case was transferred to the Prosecutor’s office. In 2009, the Prosecutor’s office recommended to the investigating judge that the case against the Group’s current and former employees and TOTAL’s Chairman and Chief Executive Officer not be pursued.

In early 2010, despite the recommendation of the Prosecutor’s office, a new investigating judge, having taken over the case, decided to indict TOTAL S.A. on bribery charges as well as complicity and influence peddling. The indictment was brought eight years after the beginning of the investigation without any new evidence being added to the affair.

introduced.

In October 2010, the Prosecutor’s office recommended to the investigating judge that the case against TOTAL S.A., the Group’s current and former employees and TOTAL’s Chairman and Chief Executive Officer not be pursued. However, by ordinance notified in early August 2011, the investigating judge on the matter decided to send the case to trial. The investigating judge’s decision on this matter is pending.

hearings are expected in the first quarter of 2013.

The Company believes that its activities related to theOil-for-Food program have been in compliance with this program, as organized by the UN in 1996. The Volcker report released by the independent investigating committee set up by the UN had discarded any bribery grievance within the framework of theOil-For-Food program with respect to TOTAL.

Italy

As part of an investigation led by the Prosecutor of the Republic of the Potenza Court, Total Italia and certain Group’s employees are the subject of an investigation related to certain calls for tenders that Total Italia made for the preparation and development of an oil field. On February 16, 2009, as a preliminary measure before the proceedings go before the Court, the preliminary investigation judge of Potenza served notice to Total Italia

Blue Rapid andof a decision that would suspend the Russian Olympic Committee — Russian regions and Interneft

Blue Rapid,concession for this field for one year. Total Italia has appealed the decision by the preliminary investigation judge before the Court of Appeal of Potenza. In a Panamanian company, and the Russian Olympic Committee filed a claim for damages with the Paris Commercial Court against Elf Aquitaine concerning the withdrawal of one of its subsidiaries from an exploration and


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production project in Russia that was negotiated in the early 1990s. Elf Aquitaine believes this claim to be unfounded. On January 12,decision dated April 8, 2009, the Commercial Court reversed the suspension of Paris rejected Blue Rapid’s claimthe Gorgoglione concession and found thatappointed for one year,i.e.until February 16, 2010, a judicial administrator to supervise the Russian Olympic Committee did not have standingoperations related to the development of the concession, allowing the Tempa Rossa project to continue.

The criminal investigation was closed in the matter. This decision has been appealed. The hearings are expected to be held during the first half of 2011.

2010. The preliminary hearing judge, who will decide whether the case shall be returned to the Criminal Court to be judged on the merits, held the first hearing on December 6, 2010. The proceedings before the Judge of the preliminary hearing are still pending.

In connection with the same facts, and fifteen years after the termination of this2010, Total Italia’s exploration and production project, a Russian companyoperations were transferred to Total E&P Italia and two regionsrefining and marketing operations were merged with those of the Russian Federation have launched an arbitration procedure against a former subsidiary of Elf Aquitaine that was liquidated in 2005, claiming damages of an unspecified amount at this stage of the procedure. The Group considers this claim to be unfounded. The Group has reserved its rights to take any actionsand/or measures that would be appropriate to defend its interests.

Erg Petroli.

Dividend policy

The Company has paid dividends on its share capital in each year since 1946. Future dividends will depend on the Company’s earnings, financial condition and other factors. The payment and amount of dividends are subject to the recommendation of the Board of Directors and resolution by the Company’s shareholders at the annual shareholders’ meeting.

Since 2004,Shareholders’ Meeting.

Until the payment of the 2010 dividend, the Company has paid an interim dividend in November and the remainder after the Shareholders’ Meeting held in May of each year. TheConsequently, for 2010, an interim dividend of€1.14 per share and the remainder will still beof€1.14 per share were paid in compliance with this policy.

The Board of Directors metrespectively on July 29,November 17, 2010 and approved a 2010 interim dividend of €1.14 per share. The ex-dividend date for the interim dividend on Euronext Paris was November 12, 2010 and the payment date was November 17, 2010.
For 2010, TOTAL plans to continue its dividend policy by proposing a dividend of €2.28 per share at the Shareholders’ Meeting on May 13, 2011, including a remainder of €1.14 per share, with an ex-dividend date on May 23, 2011, and a payment on May 26, 2011. This €2.28 per share dividend is stable compared to the previous year. Over the past five fiscal years, the dividend has increased by an average of 5.1%(1) per year.

On October 28, 2010, the Board of Directors decided to change its interim dividend policy and to adopt a new policy based on quarterly dividend payments.payments, starting in 2011.

TOTAL paid three quarterly interim dividends for 2011:

The Board of Directors decided on the first quarterly interim dividend on April 28, 2011, with an ex-dividend date on September 19, 2011 and a payment date on September 22, 2011;

The Board of Directors decided on the second quarterly interim dividend on July 28, 2011, with an ex-dividend date on December 19, 2011 and a payment date on December 22, 2011;

 

Pending

The Board of Directors decided on the third quarterly interim dividend on October 27, 2011, with an ex-dividend date on March 19, 2012 and a payment date on March 22, 2011.

For 2011, TOTAL plans to continue its dividend policy by proposing a dividend of€2.28 per share at the Shareholders’ Meeting on May 11, 2012, including a remainder of€0.57 per share, with an ex-dividend date on June 18, 2012, and a payment on June 21, 2012. This€2.28 per share dividend is stable compared to the previous year.

Subject to the applicable legislative and regulatory provisions, and pending the approval by the Board of Directors for the interim dividends and by the shareholders at the Shareholders’ Meeting for the accounts and the final dividend, the ex-date calendar for the interim quarterly dividends and the final dividend for 20112012 should be as follows: September 19, 2011; December 19, 2011; March 19, 2012; and

•

1st interim dividend: September 24, 2012;

•

2nd interim dividend: December 17, 2012;

•

3rd interim dividend: March 18, 2013;

remainder: June 18, 2012. 24, 2013.

The provisionalex-dividend dates above relate to the TOTAL shares traded on the Euronext Paris.

Dividends paid to holders of ADRs will be subject to a charge by the Depositary for any expenses incurred by the Depositary in the conversion of euro to dollars. See “Item 10. Additional Information — Taxation”, for a summary of certain U.S. federal and French tax consequences to holders of shares and ADRs.

Significant changes

In February 2011, TOTAL signed an agreement to dispose of its 48.83% interest in CEPSA. The transaction is conditioned on obtaining all requisite approvals.
In early March 2011, the Group also announced the signature of two agreements on principle with the Russian Company Novatek and its major shareholders.

For a further description of significant changes that have occurred since the date of the Company’s Consolidated Financial Statements, see “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects”, which include descriptions of certain recent 20112012 activities.

 

ITEM 9. THE OFFER AND LISTING

Markets

The principal trading market for the shares is the Euronext Paris exchange in France. The shares are also listed on Euronext Brussels and the London Stock Exchange.

Offer and listing details

Trading on Euronext Paris

Official trading of listed securities on Euronext Paris, including the shares, is transacted through French investment service providers that are members of Euronext Paris and takes place continuously on each business day in Paris from 9:00 a.m. to 5:30 p.m. (Paris time), with a fixing of the closing price at 5:35 p.m. Euronext Paris may suspend or resume trading in a security listed on Euronext Paris, if the quoted price of the security exceeds certain price limits defined by the regulations of Euronext Paris.

The markets of Euronext Paris settle and transfer ownership three trading days after a transaction (T+3).

(1)  This increase does not take into account the Arkema share allotment right granted on May 18, 2006.


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Highly liquid shares, including those of the Company, are eligible for deferred settlement (Service de Règlement Différé— SRD). Payment and delivery for shares under the SRD occurs on the last trading day of each month. Use of the SRD service requires payment of a commission. Under this system, the determination date for settlement on the following month occurs on the fifth trading day prior to the last trading day (inclusive) of each month.

In France, the shares are included in the principal index published by Euronext Paris (the “CAC 40 Index”). The CAC 40 Index is derived daily by comparing the total market capitalization of 40 stocks traded on Euronext Paris to the total market capitalization of the stocks that made up the CAC 40 Index on December 31, 1987. Adjustments are made to allow for expansion of the sample due to new issues. The CAC 40 Index indicates trends in the French stock market as a whole and is one of the most widely followed stock price indices in France. In the UK, the shares are listed in both the FTSE Eurotop 100 and FTSEurofirst 300 index. As a result of the creation of Euronext, the shares are included in Euronext 100, the index representing Euronext’s blue chip companies based on market capitalization. The shares are also included in the Dow Jones Stoxx 50 and Dow Jones Euro Stoxx 50, blue chip indices comprised of the fifty most highly capitalized and most actively traded equities throughout Europe and within the European Monetary Union, respectively. Since June 2000, the shares have been included in the Dow Jones Global Titans Index which consists of fifty global companies selected based on market capitalization, book value, assets, revenue and earnings.

Pursuant to the vote of the May 12, 2006, shareholders’ meeting approving TOTAL’sfour-for-one stock split, each shareholder received on May 18, 2006, four new TOTAL shares, par value of €2.50 per share, in return for each old share with a par value of €10.

The table below sets forth, for the periods indicated, the reported high and low quoted prices in euros for the currently outstanding shares on Euronext Paris. Data prior to May 18, 2006, reported in this table has been adjusted to reflect this stock split by dividing stock prices by four. The May 12, 2006, shareholders’ meeting also approved the spin-off of Arkema and the allocation, as of May 18, 2006, of one Arkema share allocation right for each TOTAL share with a par value of €10, ten allocation rights entitling the holder to one Arkema share. Data prior to May 18, 2006, reported in the third and fourth columns of this table are adjusted in order to consider Arkema’s share allocation right partition.

                 
Price per share (€) High  Low  High adjusted  Low adjusted 
2006  58.15   46.52   57.40   46.52 
2007  63.40   48.33   —   — 
2008  59.50   31.52   —   — 
2009  45.785   34.25   —   — 
First Quarter  42.465   34.25   —   — 
Second Quarter  42.455   34.72   —   — 
Third Quarter  42.45   35.75   —   — 
Fourth Quarter  45.785   39.005   —   — 
2010
  46.735   35.655   —   — 
First Quarter  46.735   40.05   —   — 
Second Quarter  44.625   36.21   —   — 
Third Quarter  41.00   35.655   —   — 
September  39.67   36.77   —   — 
Fourth Quarter  41.275   36.91   —   — 
October  39.72   37.52   —   — 
November  41.275   36.91   —   — 
December  40.79   37.195   —   — 
2011 (through February 28)
  44.47   40.01   —   — 
January  43.575   40.01   —   — 
February  44.47   42.325   —   — 

 

Price per share (€)  High   Low 

2007

   63.40     48.33  

2008

   59.50     31.52  

2009

   45.785     34.25  

2010

   46.735     35.655  

First Quarter

   46.735     40.050  

Second Quarter

   44.625     36.210  

Third Quarter

   41.000     35.655  

Fourth Quarter

   41.275     36.910  

2011

   44.550     29.400  

First Quarter

   44.550     39.710  

Second Quarter

   43.730     37.305  

Third Quarter

   40.895     29.400  

September

   34.820     29.400  

Fourth Quarter

   39.810     31.730  

October

   39.810     31.730  

November

   38.705     34.570  

December

   39.605     35.940  

2012 (through February 29)

   42.400     38.570  

January

   40.890     38.570  

February

   42.400     40.225  

Trading on the New York Stock Exchange

ADSs evidenced by ADRs have been listed on the New York Stock Exchange since October 25, 1991. The Bank of New York Mellon serves as depositary with respect to the ADSs evidenced by ADRs traded on the New York

Stock Exchange. One ADS corresponds to one TOTAL share. The table below sets forth, for the periods indicated, the reported high and low prices quoted in dollars for the currently outstanding ADSs evidenced by ADRs on the New York Stock Exchange. After thefour-for-one stock split, which was approved by the shareholders’ meeting on May 12, 2006, and effective on May 18, 2006, and after the split of the ADRs by two on May 23, 2006, one ADR corresponds to one TOTAL share. Data prior to May 23, 2006, reported in this table


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has been adjusted to take into account this stock split by dividing ADR prices by two. The May 12, 2006, shareholders’ meeting also approved the spin-off of Arkema and the allocation, as from May 18, 2006, of one Arkema share allocation right for each TOTAL share with a par value of €10, ten allocation rights entitling the holder to one Arkema share. Data prior to May 23, 2006, reported in the third and fourth columns of this table has been adjusted in order to reflect Arkema’s share allocation right partition.
                 
Price Per ADR ($) High  Low  High adjusted  Low adjusted 
 
2006  73.46   58.06   73.46   58.06 
2007  87.34   63.89   —   — 
2008  91.34   42.60   —   — 
2009  65.98   42.88   —   — 
First Quarter  57.85   42.88   —   — 
Second Quarter  59.93   45.02   —   — 
Third Quarter  62.43   49.78   —   — 
Fourth Quarter  65.98   57.05   —   — 
2010
  67.52   43.07   —   — 
First Quarter  67.52   54.01   —   — 
Second Quarter  60.24   43.07   —   — 
Third Quarter  54.14   44.43   —   — 
September  52.46   48.15   —   — 
Fourth Quarter  58.06   48.08   —   — 
October  55.50   51.20   —   — 
November  58.06   48.08   —   — 
December  53.97   49.03   —   — 
2011 (through February 28)
  61.44   52.61   —   — 
January  59.84   52.61   —   — 
February  61.44   58.05   —   — 
 

Price per ADR ($)  High   Low 

2007

   87.34     63.89  

2008

   91.34     42.60  

2009

   65.98     42.88  

2010

   67.52     43.07  

First Quarter

   67.52     54.01  

Second Quarter

   60.24     43.07  

Third Quarter

   54.14     44.43  

Fourth Quarter

   58.06     48.08  

2011

   64.44     40.00  

First Quarter

   62.31     52.61  

Second Quarter

   64.44     53.04  

Third Quarter

   58.25     40.00  

September

   49.79     40.00  

Fourth Quarter

   55.93     41.85  

October

   55.93     41.85  

November

   52.89     46.72  

December

   52.46     47.00  

2012 (through February 29)

   57.06     48.82  

January

   53.41     48.82  

February

   57.06     53.01  

ITEM 10. ADDITIONAL INFORMATION

Memorandum and Articles of Association

Register Informationinformation

TOTAL S.A. is registered with the Nanterre Trade Register under the registration number 542 051 180.

Objects and Purposespurposes

The Company’s purpose can be found in Article 3 of its bylaws (statuts). Generally, the Company may engage in all activities relating to: (i) the exploration and extraction of mining deposits and the performance of industrial refining, processing, and trading of these materials, as well as their derivatives and by-products; (ii) the production and

distribution of all forms of energy; (iii) the chemicals, rubber and health industries; (iv) the transportation and shipping of hydrocarbons and other products or materials relating to the Company’s business purpose; and (v) all financial, commercial, and industrial operations and operations relating to any fixed or unfixed assets and real estate, acquisitions of interests or holdings in any business or company that may relate to any of the above-mentioned purposes or to any similar or related purposes, of such nature as to promote the Company’s extension or its development.

Director Issuesissues

Compensation

Directors receive attendance fees, the maximum aggregate amount of which, determined by the shareholders acting at a shareholders’ meeting, remains in effect until a new decision is made. The Board of Directors may apportion this amount among its members in whatever way it considers appropriate. In addition, the Board may also grant its Chairman compensation.

Retirement

The number of directors of TOTAL who are acting in their own capacity or as permanent representatives of a legal entity and are over seventy years old may not exceed one-third of the number of directors in office at the end of the fiscal year. If such number is exceeded, the oldest Board member is automatically deemed to have resigned. Directors who are the permanent representative of a legal


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person may not continue in office beyond their seventieth birthday.

Currently, the duties of the Chairman of the Board automatically cease on his sixty-fifth birthday at the latest. At their meeting of May 15, 2009, the shareholders adopted an amendment of the bylaws pertaining to the rules relating to the nomination of the Chairman. The amendment allows the Board, as an exception to the currently applicable sixty-five year age limit, to appoint as Chairman of the Board for a period of up to two years a director who is more than sixty-five years old but less than seventy years old.

Shareholdings

Each director must own at least 1,000 shares of TOTAL during his or her term of office, except the director representing the employees shareholder who shall hold, either individually or through an investment trust governed byArticle L.214-40 of the Monetary & Financial Code (French

(French FCPE), at least one share or a number of stocks in such investment trust amounting to at least one share.

Election

Directors are elected for a term of three years. In 2003, TOTAL amended its Articles of Incorporation to provide for the election of one director to represent employee shareholders. This director was appointed for the first time at the shareholders’ meeting held on May 14, 2004.

Description of Sharesshares

The following is a summary of the material rights of holders of fully paid shares and is based on the bylaws of the Company and French Company Law as codified in Volume II (Livre II) of the French Commercial Code (referred to herein as the “French Company Law”). For more complete information, please read the bylaws of TOTAL S.A., a copy of which has been filed as an exhibit to this Annual Report.

Dividend rights

The Company may make dividend distributions to its shareholders from net income in each fiscal year, after deduction of the overhead and other social charges, as well as of any amortization of the business assets and of any provisions for commercial and industrial contingencies, as reduced by any loss carried forward from prior years, and less any contributions to reserves or amounts that the shareholders decide to carry forward. These distributions are also subject to the requirements of French Company Law and the Company’s bylaws.

Under French Company Law, the Company must allocate 5% of its net profits in each fiscal year to a legal reserve fund until the amount in that fund is equal to 10% of the nominal amount of its share capital.

The Company’s bylaws provide that its shareholders may decide to allocate all or a part of any distributable profits among special or general reserves, to carry them forward to the next fiscal year as retained earnings, or to allocate them to the shareholders as dividends. The bylaws provide that the shareholders’ meeting held to approve the financial statements for the financial year may decide to grant an option to each shareholder between payment of the dividend in cash and payment in shares with respect to all or part of the dividend or interim dividends.

Under French Company Law, the Company must distribute dividends to its shareholders pro rata, according to their shareholdings. Dividends are payable to holders of outstanding shares on the date fixed by the shareholders’

meeting approving the distribution of dividends or, in the case of interim dividends, on the date fixed by the Company’s Board of Directors at the meeting that approves the distribution of interim dividends. Under French law, dividends not claimed within five years of the date of payment revert to the French State.

Voting rights

Each shareholder of the Company is entitled to the number of votes he or she possesses, or for which he or she holds proxies. According to French Company Law, voting rights may not be exercised in respect of fractional shares.

According to the Company’s bylaws, each registered share that is fully paid and registered in the name of the same shareholder for a continuous period of at least two years is granted a double voting right after such two-year period. Upon capital increase by capitalization of reserves, profits or premiums on shares, a double voting right is granted to each registered share allocated to a shareholder relating to previously existing shares that already carry double voting rights. The double voting right is automatically canceled when the share is converted into a bearer share or when the share is transferred, unless the transfer is due to inheritance, division of community property between spouses, or a donation during the lifetime of the shareholder to the benefit of a spouse or relatives eligible to inherit.


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French Company Law limits a shareholder’s right to vote notably in the following circumstances:

shares held by the Company or by entities controlled by the Company under certain conditions, which cannot be voted;

• shares held by the Company or by entities controlled by the Company under certain conditions, which cannot be voted;
• shares held by shareholders making a contribution in-kind to the Company, which cannot be voted with respect to resolutions relating to such in-kind contributions; and
• shares held by interested parties, which cannot be voted with respect to resolutions relating to such shareholders.

shares held by shareholders making a contribution in-kind to the Company, which cannot be voted with respect to resolutions relating to such in-kind contributions; and

shares held by interested parties, which cannot be voted with respect to resolutions relating to such shareholders.

Under the Company’s bylaws, the voting rights exercisable by a shareholder, directly, indirectly or by proxy, at any shareholders’ meeting are limited to 10% of the total number of voting rights attached to the shares on the date of such shareholders’ meeting. This 10% limitation may be increased by taking into account double voting rights held directly or indirectly by the shareholder or by proxy, provided that the voting rights exercisable by a shareholder at any shareholders’ meeting may never exceed 20% of the total number of voting rights attached to the shares.

According to the Company’s bylaws, these limitations on voting lapse automatically if any individual or entity acting

alone or in concert with an individual or entity holds at least two-thirds of the total number of shares as a result of a tender offer for 100% of the shares.

Liquidation rights

In the event the Company is liquidated, its assets remaining after payment of its debts, liquidation expenses and all of its other remaining obligations will first be distributed to repay the nominal value of the shares. After these payments have been made, any surplus will be distributed pro rata among the holders of shares based on the nominal value of their shareholdings.

Redemption provisions

The Company’s shares are not subject to any redemption provisions.

Sinking fund provisions

The Company’s shares are not subject to any sinking fund provisions.

Future capital calls

Shareholders are not liable to the Company for further capital calls on their shares.

Preferential subscription rights

Holders of shares have preferential rights to subscribe on a pro rata basis for additional shares issued for cash. Shareholders may waive their preferential rights, either individually or, under certain circumstances, as a specifically named group at an extraordinary shareholders’ meeting. During the subscription period relating to a particular offering of shares, shareholders may transfer their preferential subscription rights that they have not previously waived.

Changes in share capital

Under French Company Law, the Company may increase its share capital only with the approval of its shareholders at an extraordinary shareholders’ meeting (or with a delegation of authority from its shareholders). There are two methods to increase share capital: (i) by issuing additional shares, including the creation of a new class of securities and (ii) by increasing the nominal value of existing shares. The Company may issue additional shares for cash or for assets contributed in kind, upon the conversion of debt securities, or other securities giving access to its share capital, that it may have issued, by capitalization of its reserves, profits or issuance premiums or, subject to certain conditions, in satisfaction of its indebtedness.

 

Under French Company Law, the Company may decrease its share capital only with the approval of its shareholders at an extraordinary shareholders’ meeting (or with a delegation of authority from its shareholders). There are two methods to reduce share capital: (i) by reducing the number of shares outstanding, and (ii) by decreasing the nominal value of existing shares. The conditions under which the share capital may be reduced will vary depending upon whether the reduction is attributable to losses. The Company may reduce the number of outstanding shares either by an exchange of shares or by the repurchase and cancellation of its shares. If the reduction is attributable to losses, shares are cancelled through offsetting the Company’s losses. Any decrease must meet the requirements of French Company Law, which states, among other things, that all the holders of shares in each class of shares must be treated equally, unless the affected shareholders otherwise agree.

Form of shares

The Company has only one class of shares, par value €2.50€2.50 per share. Shares may be held in either bearer or registered form. Shares traded on Euronext Paris are cleared and settled through Euroclear France. The Company may use any lawful means to identify holders of shares, including a procedure known astitres au porteur identifiableaccording to which Euroclear France will, upon the Company’s request, disclose to the Company the name, nationality, address and number of shares held by each shareholder in bearer form. The information may only be requested by the Company and may not be communicated to third parties.


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Holding of shares

Under French Company Law and since the “dematerialization” of securities, the ownership rights of shareholders are represented by book entries instead of share certificates (other than certificates representing French securities, which are outstanding exclusively outside the territory of France and are not held by French residents). Registered shares are entered into an account maintained by the Company or by a representative that it has nominated, while shares in bearer form must be held in an account maintained by an accredited financial intermediary on the shareholder’s behalf.

For all shares in registered form, the Company maintains a share account with Euroclear France which is administered by BNP Paribas Securities Services. In addition, the Company maintains accounts in the name of each registered shareholder either directly or, at a shareholder’s request, through a shareholder’s accredited intermediary,

in separate accounts maintained by BNP Paribas Securities Services on behalf of the Company. Each shareholder’s account shows the name and number of shares held and, in the case of shares registered through an accredited financial intermediary, the fact that they are so held. BNP Paribas Securities Services, as a matter of course, issues confirmations to each registered shareholder as to shares registered in a shareholder’s account, but these confirmations do not constitute documents of title.

Shares held in bearer form are held and registered on the shareholder’s behalf in an account maintained by an accredited financial intermediary and are credited to an account at Euroclear France maintained by the intermediary. Each accredited financial intermediary maintains a record of shares held through it and will issue certificates of inscription for the shares that it holds. Transfers of shares held in bearer form only may be made through accredited financial intermediaries and Euroclear France.

Cancellation of treasury shares

After receiving authorization through a shareholders’ meeting, the Board of Directors of the Company may cancel treasury shares owned by the Company in accordance with French Company Law up to a maximum of 10% of the share capital within any period of twenty-four months.

Description of TOTAL Share Certificatesshare certificates

The TOTAL share certificates are issued by Euroclear France. French law allows Euroclear France to create certificates representing French securities provided that these certificates are intended to be outstanding exclusively outside the territory of France and cannot be held by residents of France. Furthermore, TOTAL share certificates may not be held by a foreign resident in France, either personally or in the form of a bank deposit, but the coupons and rights may be exercised in France.

Certificates for TOTAL shares are either in bearer form or registered in a securities trading account. Under Euroclear France regulations applicable to bearer stock certificates, TOTAL share certificates cannot be categorized as secondary securities, such as ADSs, issued by a foreign company to represent TOTAL shares.

TOTAL share certificates have the characteristics of a bearer security, meaning they are:

negotiable outside France;

transmitted by delivery; and

 
• negotiable outside France;
• transmitted by delivery; and
• fungible with TOTAL share certificates, which may be converted freely from bearer form to registration in an account.

fungible with TOTAL share certificates, which may be converted freely from bearer form to registration in an account.

All rights attached to TOTAL shares must be exercised directly by the bearer of the TOTAL share certificates.

 


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Share capital history

Share Capital History

Fiscal 2009

  
Fiscal 2008

July 30, 2009

  
April 25, 2008Certification of the subscription to 4,870,386 new shares, par value €2.50, as part of the capital increase reserved for Group employees approved by the Board of Directors on November 6, 2007, raising the share capital by €12,175,965, from €5,988,830,242.50 to €6,001,006,207.50.
July 31, 2008Reduction of the share capital from €6,001,006,207.50€5,929,520,185 to €5,926,006,207.50,€5,867,520,185, through the cancelation of 30,000,000 treasury shares, par value €2.50.
January 13, 2009Certification of the issuance of 1,405,591 new shares, par value €2.50 per share, between January 1 and December 31, 2008, raising the share capital by €3,513,977.50 from €5,926,006,207.50 to €5,929,520,185 (of which 1,178,167 new shares issued through the exercise of the Company’s stock options and 227,424 new shares through the exchange of 37,904 shares of Elf Aquitaine stock resulting from the exercise of Elf Aquitaine stock options and eligible for a guaranteed exchange for TOTAL shares).
Fiscal 2009
July 30, 2009Reduction of the share capital from €5,929,520,185 to €5,867,520,185, through the cancelationcancellation of 24,800,000 treasury shares, par value €2.50.€2.50.

January 12,1, 2010

  Certification of the issuance of 1,414,810 new shares, par value €2.50€2.50 per share, between January 1 and December 31, 2009, raising the share capital by €3,537,025€3,537,025 from €5,867,520,185€5,867,520,185 to €5,871,057,210€5,871,057,210 (of which 934,780 new shares issued through the exercise of the Company’s stock options and 480,030 new shares through the exchange of 80,005 shares of Elf Aquitaine stock resulting from the exercise of Elf Aquitaine stock options and eligible for a guaranteed exchange for TOTAL shares).

Fiscal 2010

  

January 12, 2011

  Certification of the issuance of 1,218,047 new shares, par value €2.50,€2.50, through the exercise of the Company’s stock options between January 1 and December 31, 2010, raising the share capital by €3,045,117.50€3,045,117.50 from €5,871,057,210€5,871,057,210 to €5,874,102,327.50.€5,874,102,327.50.

Fiscal 2011

April 28, 2011

Certification of the subscription to 8,902,717 new shares, par value€2.50, as part of the capital increase reserved for Group employees approved by the Board of Directors on October 28, 2010, raising the share capital by€22,256,792.50, from€5,874,102,327.50 to€5,896,359,120.

January 12, 2012

Certification of the issuance of 5,223,665 new shares, par value€2.50, through the exercise of the Company’s stock options between January 1 and December 31, 2011, raising the share capital by€13,059,162.50 from€5,896,359,120 to€5,909,418,282.50.

Authorized share capital not issued as of December 31, 2011

The following is a summary of the currently valid delegations and authorizations to increase share capital that have been granted by the Shareholders’ Meeting to the Board of Directors.

Seventeenth resolution of the Shareholders’ Meeting held on May 21, 2010

Delegation of authority granted by the Shareholders’ Meeting to the Board of Directors to increase the share capital by issuing common shares or other securities granting immediate or future rights to the Company’s share capital, maintaining shareholders’ pre-emptive subscription rights up to a maximum nominal amount of€2.5 billion,i.e., 1 billion shares (delegation of authority valid for twenty-six months).

Furthermore, the maximum nominal amount of the debt securities granting rights to the Company’s share capital that may be issued pursuant to the seventeenth resolution and the eighteenth resolution (mentioned below) may not exceed€10 billion, or their exchange value, on the date of issuance.

Eighteenth resolution of the Shareholders’ Meeting held on May 21, 2010

Delegation of authority granted by the Shareholders’ Meeting to the Board of Directors to increase the share capital by issuing common shares or other securities granting immediate or future rights to the Company’s share capital, canceling shareholders’ pre-emptive subscription rights, including the compensation comprised of securities as part of a public exchange offer, provided that they meet the requirements of Article L. 225-148 of the French Commercial Code. This resolution grants the Board of Directors the authority to grant a priority period for shareholders to subscribe to these securities pursuant to the provisions of Article L. 225-135 of the French Commercial Code. The total amount of the capital increases without pre-emptive subscription rights likely to occur immediately or in the future cannot exceed the nominal amount of€850 million,i.e., 340 million shares, par value€2.50 (delegation of authority valid for twenty-six months). The nominal amount of the capital increases is counted against the maximum aggregate nominal amount of€2.5 billion authorized by the seventeenth resolution of the Shareholders’ Meeting held on May 21, 2010.

 

Furthermore, the maximum nominal amount of the debt securities granting rights to the Company’s share capital that may be issued pursuant to the above mentioned seventeenth and eighteenth resolutions may not exceed€10 billion, or their exchange value, on the date of issuance.

Nineteenth resolution of the Shareholders’ Meeting held on May 21, 2010

Other IssuesDelegation of power granted by the Shareholders’ Meeting to the Board of Directors to increase the share capital by issuing new ordinary shares or other securities granting immediate or future rights to the Company’s share capital as compensation of in-kind contribution granted to the Company, by an amount not exceeding 10% of the share capital outstanding at the date of the Shareholders’ Meeting on May 21, 2010 (delegation of authority valid for twenty-six months). The nominal amount of the capital increases is counted against the maximum aggregate nominal amount of€850 million authorized by the eighteenth resolution of the Shareholders’ Meeting held on May 21, 2010.

Twentieth resolution of the Shareholders’ Meeting held on May 21, 2010

Delegation of authority to the Board of Directors to complete capital increases reserved for employees participating in the Company Savings Plan (Plan d’épargne d’entreprise), up to a maximum amount equal to 1.5% of the outstanding share capital on the date of the decision of the Board of Directors to proceed with the issue (delegation of authority valid for twenty-six months). It is being specified that the amount of the capital increase is counted against the maximum aggregate nominal amount of€2.5 billion authorized by the seventeenth resolution of the Shareholders’ Meeting held on May 21, 2010.

Given that the Board of Directors made use of this delegation of authority on October 28, 2010, under which 8,902,717 new TOTAL shares were issued in 2011, the authorized share capital not issued with respect to capital increases reserved for employees participating in a Company Savings Plan was€66,384,480 as of December 31, 2011, representing 26,553,792 shares.

As a result of the use of the delegation authorizing capital increases reserved for employees decided by the Board on October 28, 2010, and given that the Board of Directors did not make use of the delegations of authority granted by the seventeenth, eighteenth and nineteenth resolutions of the Shareholders’ Meeting held on May 21, 2010, the

authorized capital not issued was€2.48 billion as of December 31, 2011, representing 991 million shares.

Eleventh resolution of the Shareholders’ Meeting held on May 13, 2011

Authority to grant restricted outstanding or new TOTAL shares to employees of the Group and to executive officers up to a maximum of 0.8% of the share capital outstanding on the date of the meeting of the Board of Directors that approves the restricted share grants. In addition, the shares granted to the Company’s executive officers cannot exceed 0.01% of the outstanding share capital on the date of the meeting of the Board of Directors that approves the grants (authorization valid for thirty-eight months).

Pursuant to this authorization:

3,700,000 outstanding shares were awarded by the Board of Directors on September 14, 2011, including 16,000 outstanding shares awarded to the Chairman and Chief Executive.

As of December 31, 2011, 15,210,138 shares, including 220,376 to the Company’s corporate executive officers could, therefore, still be awarded pursuant to this authorization.

Twenty-first resolution of the Shareholders’ Meeting held on May 21, 2010

Authority to grant stock options reserved for TOTAL employees and to executive and officers up to a maximum of 1.5% of the share capital outstanding on the date of the meeting of the Board of Directors that approves the stock option grant. In addition, the options granted to the Company’s corporate executive officers cannot exceed 0.1% of the outstanding share capital on the date of the meeting of the Board of Directors that approves the grants (authorization valid for thirty-eight months).

Pursuant to this authorization:

4,925,000 stock options were awarded by the Board of Directors at its meeting on September 14, 2010, including 240,000 stock options to the Chairman and Chief Executive Officer;

1,600,000 stock options were awarded by the Board of Directors at its meeting on September 14, 2011, including 160,000 stock options to the Chairman and Chief Executive Officer.

As of December 31, 2011, 28,931,509 stock options, including 1,963,767 to the Company’s corporate executive officers, could still be awarded pursuant to this authorization.

 

Seventeenth resolution of the Shareholders’ Meeting held on May 11, 2007

Authority to cancel shares up to a maximum of 10% of the share capital of the Company existing as of the date of the operation within a twenty-four-month period. This authorization is effective until the Shareholders’ Meeting called to approve the financial statements for the year ending December 31, 2011. The Board did not make use of this delegation of authority during fiscal year 2011.

Based on 2,363,767,313 shares outstanding on December 31, 2011, the Company may, up until the conclusion of the Shareholders’ Meeting called to approve the financial statements for the fiscal year ending on December 31, 2011, cancel a maximum of 236,376,731 shares before reaching the cancellation threshold of 10% of share capital canceled during a twenty-four-month period.

Other issues

Shareholders’ meetings

French companies may hold either ordinary or extraordinary shareholders’ meetings. Ordinary shareholders’ meetings are required for matters that are not specifically reserved by law to extraordinary shareholders’ meetings: the election of the members of the Board of Directors, the appointment of statutory auditors, the approval of a management report prepared by the Board of Directors, the approval of the annual financial statements, the declaration of dividends and the issuance of bonds.bonds (if the bylaws so provide). Extraordinary shareholders’ meetings are required for approval of amendments to a company’s bylaws, modification of shareholders’ rights, mergers, increases or decreases in share capital, including a waiver of preferential subscription rights, the creation of a new class of shares, the authorization of the issuance of investment certificates or securities convertible, exchangeable or redeemable into shares and for the sale or transfer of substantially all of a company’s assets.

The Company’s Board of Directors is required to convene an annual shareholders’ meeting for approval of the annual financial statements. This meeting must be held within six months of the end of the fiscal year. However, the president of theTribunal de Commerceof Nanterre, the local French commercial court, may grant an extension of this six-month period. The Company may convene other ordinary and extraordinary meetings at any time during the year. Meetings of shareholders may be convened by the Board of Directors or, if it fails to call a meeting, by the Company’s statutory auditors or by a court-appointed

agent. A shareholder or group of shareholders holding at least 5% of the share capital, the employee committee or another interested party under certain exceptional circumstances, may request that the court appoint an agent. The notice of meeting must state the agenda for the meeting.

French Company Law requires that a preliminary notice of a listed company’s shareholders’ meeting be published in theBulletin des annonces légales obligatoires(“BALO”) at least thirty-five days prior to the meeting (or fifteen days in the event the Company is subject to a tender offer and the Company calls a shareholders’ meeting to approve measures, the implementation of which would be likely to cause such tender offer to fail). The preliminary notice must first be sent to the French Financial Markets Authority (Autorité des marchés financiers) (“AMF”) with an indication of the date it is to be published in the BALO.

The preliminary notice must include the agenda of the meeting and the proposed resolutions that will be submitted to a shareholders’ vote.

One or more shareholders holding a certain percentage of the Company’s share capital determined on the basis of a formula related to capitalization may propose to add on the shareholders’ meeting’s agenda additional resolutions to be submitted to a shareholders’ voteand/or matters without a shareholders’ vote (points), provided that the text of additional resolutions or matters be received by the Company on at least the twenty-fifth day preceding the meeting (or at least the tenth day in the event the


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Company is subject to a tender offer and the Company calls a shareholders’ meeting to approve measures which,that, if implemented, would likely cause such tender offer to fail). The demand of the shareholders’ that are eligible to require for the inscription of matters on the meeting agenda has to be duly motivated.

French Company Law also requires that the preliminary notice of a listed company’s shareholders’ meeting, as well as the additional resolutionsand/or matters presented by the shareholders under the terms and conditions prescribed under French law, be published on the Company’s Web site during a period starting at the latest on the twenty-first day prior to the meeting (or the fifteenth day in the event the Company is subject to a tender offer and the Company calls a shareholders’ meeting to approve measures which,that, if implemented, would likely cause such tender offer to fail).

Notice of a shareholders’ meeting is sent by postal or electronic mail at least fifteen days (or six days in the event of shareholders’ meetings convened in the situation where the Company was subject to a tender offer to approve

measures, the implementation of which would be likely to cause such tender offer to fail) before the meeting to all holders of registered shares who have held their shares for more than one month. However, in the case where the original meeting was adjourned because a quorum was not met, this time period is reduced to ten days (or four days in the event of shareholders’ meetings convened in the situation where the Company were subject to a tender offer to approve measures, the implementation of which would be likely to cause such tender offer to fail).

Attendance and the exercise of voting rights at both ordinary and extraordinary shareholders’ meetings are subject to certain conditions. Pursuant to French Company Law, participation at shareholders’ meetings is subject to the condition that an entry of registration has been made, for the owner of registered shares, in the records maintained by the Company, or, for the owner of bearer shares, in the records of an authorized intermediary, in each case at 12:00 a.m. (Paris time) on the third trading day preceding the shareholders’ meeting. For the owner of bearer shares, the registration is evidenced by a certificate of participation (attestation de participation) issued by the authorized intermediary.

Subject to the above restrictions, all of the Company’s shareholders have the right to participate in the Company’s shareholders’ meetings, either in person or by proxy. Each shareholder may delegate voting authority to another shareholder, the shareholder’s spouse, or the companion with whom the shareholder has registered a civil partnership (PACS). Every shareholder may also delegate voting authority to any other individual or legal entity he or she may choose, provided, among other things, that a written proxy be provided to the Company. Shareholders may vote, either in person, by proxy, or by postal or electronic mail, and each is entitled to as many votes as he or she possesses or as many shares as he or she holds proxies for, subject to the voting rights limitations provided by the Company’s bylaws. If the shareholder is a legal entity, it may be represented by a legal representative. A shareholder may grant a proxy to the Company by returning a blank proxy form. In this last case, the chairman of the shareholders’ meeting may vote the shares in favor of all resolutions proposed or agreed to by the Board of Directors and against all others. The Company will send proxy forms to shareholders upon request. In order to be counted, proxies must be received at least one daythree days prior to the shareholders’ meeting at the Company’s registered office or at another address indicated in the notice convening the meeting.meeting, or by 3:00 p.m. on the day prior to the shareholders’ meeting for electronic proxy forms. Under French Company Law, shares held by the Company or by entities controlled directly or indirectly by the

Company are not entitled to voting rights. There is no requirement that a shareholder have a minimum number of shares in order to be able to attend or be represented at shareholders’ meetings.

Under French Company Law, a quorum requires the presence, in person or by proxy, including those voting by mail, of shareholders having at least 20% of the shares entitled to vote in the case of (i) an ordinary shareholders’ meeting, (ii) an extraordinary meeting where shareholders are voting on a capital increase by capitalization of reserves, profits or share premium, or (iii) an extraordinary general meeting of shareholders convened in the situation where the Company is subject to a tender offer in order to approve an issuance of warrants allowing the subscription, at preferential conditions, of shares of the Company and the free allotment of such warrants to existing shareholders of the Company, the implementation of which would be likely to cause such tender offer to fail, or 25% of the shares entitled to vote in the case of any other extraordinary shareholders’ meeting. If a quorum is not present at any meeting, the meeting is adjourned. There is no quorum requirement when an ordinary shareholders’ meeting is reconvened, but the reconvened meeting may consider only questions whichthat were on the agenda of the adjourned meeting. When an extraordinary shareholders’ meeting is reconvened, the quorum required is 20% of the shares entitled to vote, except where the reconvened meeting is considering capital increases through capitalization of reserves, profits or share premium.premium or an issuance of warrants allowing the subscription, at preferential conditions, of shares of the Company and the free allotment of such warrants to existing shareholders of the Company, the implementation of which would be likely to cause such tender offer to fail. For these matters, no quorum is required at the reconvened meeting. If a quorum is not present at a reconvened meeting requiring a quorum, then the


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meeting may be adjourned for a maximum of two months.

At an ordinary shareholders’ meeting, approval of any resolution requires the affirmative vote of a simple majority of the votes of the shareholders present or represented by proxy. The approval of any resolution at an extraordinary shareholders’ meeting requires the affirmative vote of a two-thirds majority of the votes cast, except that (i) any resolution to approve a capital increase by capitalization of reserves profits, or share premium, or (ii) any resolution, in the situation where the Company is subject to a tender offer in order to approve an issuance of warrants allowing the subscription, at preferential conditions, of shares of the Company and the free allotment of such warrants to existing shareholders of the Company, the implementation of which would be likely to cause such tender offer to fail,

only requires the affirmative vote of a simple majority of the votes cast. Notwithstanding these rules, a unanimous vote is required to increase shareholders’ liabilities. Abstention from voting by those present or represented by proxy is counted as a vote against any resolution submitted to a vote.

As set forth in the Company’s bylaws, shareholders’ meetings are held at the Company’s registered office or at any other location specified in the written notice.

Requirements for temporary transfer of securities

French Company Law provides that any legal entity or individual (with the exception of those described inparagraph IV- 3°of Article L.233-7 of the French Commercial Code) holding alone or in concert a number of

shares representing more than 0.5% of the Company’s voting rights as a result of one or several temporary stock transfers or assimilated transactions within the meaning of Article L.225-126 of the French Commercial Code is required to inform the Company and the AMF of the number of the shares that are temporarily possessed no later than the third business day preceding the shareholders’ meeting at midnight.

If such declaration is not made, the shares bought under any of the above described temporary stock transfers or assimilated transactions shall be deprived of their voting rights at the relevant shareholders’ meeting and at any shareholders’ meeting that would be held until such shares are transferred again or returned.

Ownership of shares by non-French persons

There is no limitation on the right of non-resident or foreign shareholders to own securities of the Company, either under French Company Law or under the bylaws of the Company.

Requirement for holdings exceeding certain percentages

French Company Law provides that any individual or entity, acting alone or in concert with others, that holds, directly or indirectly, more than 5%, 10%, 15%, 20%, 25%, 30%, 331/1/3,%, 50%, 662/2/3,%, 90% or 95% of the outstanding shares or of the voting rights(1) attached to the shares, or that increases or decreases its shareholding or voting rights by any of the above percentages must notify the Company by registered letter, with return receipt, within four business days of crossing that threshold,any of the above-mentioned thresholds, of the number of shares and voting rights it holds. An individual or entity must also notify the AMF, the self-regulatoryself-

regulatory organization that has general regulatory authority over the French stock exchanges and whose members include representatives of French stockbrokers, by registered letter, with return receipt, within four trading days of crossing that threshold.any of the above-mentioned thresholds. In addition, every shareholder who, directly or indirectly, acting alone or in concert with others, acquires ownership or control of shares representing 10%, 15%, 20% or 25% of the Company’s share capital must notify the Company and the AMF of its intentions for the six months following such an acquisition. Any shareholder who fails to comply with thesethe above requirements (thresholds and intentions notifications) will have its voting rights in excess of such thresholds suspended for a period of two years from the date such shareholder complies with the notification requirements and may have all or part of its voting rights suspended for up to five years by the commercial court at the request of the Company’s Chairman, any of the Company’s shareholders or the AMF. In addition, every shareholder who, directly or indirectly, acting alone or in concert with others, acquires ownership or control of shares representing 10%, 15%, 20% or 25% of the Company’s share capital must notify the Company and the AMF of its intentions for the six months following such an acquisition. Failure to comply with this notification of intentions will result in the suspension of the voting rights attached to the shares exceeding the applicable threshold held by the shareholder for a period of two years from the date on which the shareholder has cured such default and, upon a decision of the commercial court part or all the shares held by such shareholder may be suspended for up to five years.

In addition, the Company’s bylaws provide that any person, whether a natural person or a legal entity, who comes to hold, directly or indirectly, 1% or more, or any multiple of 1%, of the Company’s share capital or voting rights or of securities that may include future voting rights

(1)  For purposes of shareholding threshold declarations, pursuant toArticle 223-11 of the General Regulation of the AMF, voting rights are calculated on the basis of all outstanding shares, whether or not these shares would have rights to vote at a shareholders’ meeting.


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or futuregive access to the Company’s share capital or voting rights, must notify the Company by registered letter with return receipt requested, within 15fifteen calendar days of crossing any such threshold. Failure to comply with these notification provisions will result in the suspension of the voting rights attached to the shares exceeding this 1% threshold held by the shareholder if acknowledged at a shareholders’ meeting and if requested at asuch shareholders’ meeting by one or more shareholders together holding shares representing at least 3% of the share capital.
capital or voting rights.

Any individual or legal entity whose direct or indirect holding of shares falls below each of the levels mentioned must also notify the Company in the manner and within the time limits set forth above.

Subject to certain limited exemptions, any person, or persons acting in concert, owning in excess of 331/1/3% of the share capital or voting rights of the Company must initiate a public tender offer for the balance of the share capital, voting rights and securities giving access to such share capital or voting rights.

Material Contracts

There have been no material contracts (not entered into in the ordinary course of business) entered into by members of the Group since March 25, 2009.23, 2010.

 

(1)

For purposes of shareholding threshold declarations, pursuant to Article 223-11 of the General Regulation of the AMF, voting rights are calculated on the basis of all outstanding shares, whether or not these shares would have rights to vote at a shareholders’ meeting.

Exchange Controls

Under current French exchange control regulations, no limits exist on the amount of payments that TOTAL may remit to residents of the United States. Laws and regulations concerning foreign exchange controls do require, however, that an accredited intermediary must handle all payments or transfer of funds made by a French resident to a non-resident.

Taxation

General

This section generally summarizes the material U.S. federal income tax and French tax consequences of owning and disposing of shares and ADSs of TOTAL to U.S. Holders that hold their shares or ADSs as capital assets for tax purposes. A U.S. Holder is a beneficial owner of shares or ADSs that is (i) a citizen or resident of the United States for U.S. federal income tax purposes, (ii) a domestic corporation or other domestic entity treated as a corporation for U.S. federal income tax purposes, (iii) an estate whose income is subject to U.S. federal income tax regardless of its source, or (iv) a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust.

This section does not apply to members of special classes of holders subject to special rules, including:

dealers in securities;

• dealers in securities;
• traders in securities that elect to use amark-to-market method of accounting for their securities holdings;
• tax-exempt organizations;
• life insurance companies;
• persons liable for alternative minimum tax;
• persons that actually or constructively own 10% or more of the share capital or voting rights in TOTAL;
• persons that hold the shares or ADSs as part of a straddle or a hedging or conversion transaction; or
• persons whose functional currency is not the U.S. dollar.

traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

tax-exempt organizations;

life insurance companies;

persons liable for alternative minimum tax;

persons that actually or constructively own 10% or more of the share capital or voting rights in TOTAL;

persons that purchase or sell shares or ADSs as part of a wash sale for U.S. federal income tax purposes;

persons that hold the shares or ADSs as part of a straddle or a hedging or conversion transaction; or

persons whose functional currency is not the U.S. dollar.

If a partnership holds ordinary shares or ADSs, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. Partners of a partnership holding these ordinary shares or ADSs should consult their tax advisors as to the tax consequences of owning or disposing of ordinary shares or ADSs, as applicable.

In addition, the discussion of the material French tax consequences is limited to U.S. Holders that (i) are residents of the United States for purposes of the Treaty (as defined below), (ii) do not maintain a permanent establishment or fixed base in France to which the shares or ADSs are attributable and through which the respective U.S. Holders carry on, or have carried on, a business (or, if the holder is an individual, performs or has performed independent personal services), and (iii) are otherwise eligible for the benefits of the Treaty in respect of income and gain from the shares or ADSs. In addition, this section is based in part upon the representations of the Depositary and the assumption that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms.

This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, and with respect to the description of the material French tax consequences, the laws of the Republic of France and French tax regulations, all as currently in effect, as well as on the Convention Between the United States and the Republic of France for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital dated August 31, 1994 as amended (the “Treaty”). These laws, regulations and the Treaty are subject to change, possibly on a retroactive basis.


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This discussion is intended only as a descriptive summary and does not purport to be a complete analysis or listing of all potential tax effects of the ownership or disposition of the shares and ADSs and is not intended to substitute competent professional advice. Individual situations of holders of shares and ADSs may vary from the description made below. The following summary does not address the French tax treatment applicable to dividends transferred to so calledso-called “Non Cooperative Countries and Territories” within the meaning of the newSection 238-0 A of the French Tax Code.

Holders are urged to consult their own tax advisors regarding the U.S. federal, state and local, and French and other tax consequences of owning and disposing shares or ADSs of TOTAL in their respective circumstances. In particular, a holder is encouraged to confirm with its advisor whether the holder is a U.S. Holder eligible for the benefits of the Treaty with its advisor.Treaty.

 

Taxation of Dividendsdividends

French taxestaxation

The term “dividends” used in the following discussion means dividends within the meaning of applicable income tax treaties, or, where not defined by such treaties, within the meaning of the French domestic tax law as set forth in administrative guidelines dated February 25, 2005(4 (4 J-1-05) (the “Administrative Guidelines”).

Dividends paid to non-residents of France are subject to French withholding tax at a rate of 25%30%. This withholding tax is reduced to 19%21% with respect to dividends received as from January 1, 2011,2012 by non-residents of France who are residents of certain States located within the European Economic Area.

However, the rate may be reduced pursuant to a tax treaty or similar agreement. Under the Treaty, a U.S. Holder is generally entitled to a reduced rate of French withholding tax of 15% with respect to dividends, provided the ownership of shares or ADSs is not effectively attributable to a permanent establishment or to a fixed base in France and certain other requirements are satisfied.

U.S. Holders should consult their own tax advisors in order to determine the effect of the Treaty and the applicable procedures in respect of the Administrative Guidelines, in light of such particular circumstances.

The Administrative Guidelines set forth the conditions under which the reduced French withholding tax at the rate of 15% may be available. The immediate application of the reduced 15% rate is available to those U.S. Holders that may benefit from the so-called “simplified procedure” (within the meaning of the Administrative Guidelines).

Under the “simplified procedure”, U.S. Holders may claim the immediate application of withholding tax at the rate of 15% on the dividends to be received by them, provided that:

(i)they furnish to the U.S. financial institution managing their securities account a certificate of residence conforming with the model attached to the Administrative Guidelines. The immediate application of the 15% withholding tax will be available only if the certificate of residence is sent to the U.S. financial institution managing their securities account before the dividend payment date. Furthermore, each financial institution managing the U.S. Holders’ securities account must also send to the French paying agent the figure of the total amount of dividends to be received which are eligible to the reduced withholding tax rate before the dividend payment date;
(ii)the U.S. financial institution managing the U.S. Holder’s securities account provides to the French paying agent a list of the eligible U.S. Holders and other pieces of information set forth in the Administrative Guidelines. Furthermore, the financial institution managing the U.S. Holders’ securities account should certify that each U.S. Holder is, to the best of its knowledge, a United States resident within the meaning of the Treaty. These documents must be sent as soon as possible, in all cases before the end of the third month computed as from the end of the month of the dividend payment date.

Where the U.S. Holder’s identity and tax residence are known by the French paying agent, the latter may release such U.S. Holder from furnishing to (i) the financial institution managing its securities account, or (ii) as the case may be, the Internal Revenue Service, the abovementioned certificate of residence, and apply the 15% withholding tax rate to dividends it pays to such U.S. Holder.

U.S. Pension Funds and Other Tax-Exempt Entities created and operating in accordance with the provisions of Sections 401 (a)401(a), 403 (b)403(b), 457 or 501 (c) 501(c)(3) of the U.S. Internal Revenue Code (IRC) are subject to the same general filing requirements except that, in addition, they have to supply a certificate issued by the U.S. Internal Revenue Service (“IRS”) or any other document stating that they have been created and are operating in accordance with the provisions of the abovementionedabove-mentioned Code Sections. This certificate must be produced


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together with the first request of application of the reduced rate, once together with the first request of immediate application of the 15% withholding tax and at French Tax AuthoritiesAuthorities’s specific request.

In the same way, regulated companies such as RIC, REIT or REMIC will have to send to the financial institution managing their securities account a certificate from the IRS indicating that they are classified as Regulated Companies (RIC, REIT or REMIC) within the provisions of the relevant sections of the IRC. In principle, this certification must be produced each year and before the dividend payment.

For a U.S. Holder that is not entitled to the “simplified” procedure and whose identity and tax residence are not known by the paying agent at the time of the payment, the 25%30% French withholding tax will be levied at the time the dividends are paid. Such U.S. Holder, however, may however, be entitled to a refund of the withholding tax in excess of the 15% rate under the “standard”, as opposed to the “simplified”, procedure, provided that the U.S. Holder furnishes to the French paying agent an application for refund onforms No. 5000-FRand/5000-FR and/or 5001-FR (or any

other relevant form to be issued by the French tax authorities), certified by the U.S. financial institution managing the U.S. Holder’s securities account (or, if not, by the competent U.S. tax authorities), before December 31 of the second year following the date of payment of the withholding tax at the 25%30% rate to the French tax authorities, according to the requirements provided by the Administrative Guidelines.

Copies offorms No. 5000-FR and 5001-FR (or any other relevant form to be issued by the French tax authorities) as well as the form of the certificate of residence and the U.S. financial institution certification, together with instructions, are available from the U.S. Internal Revenue Service and the FrenchCentre des Impôts des Non-Residentsat 10, rue du Centre, 93463 Noisy le Grand, France.

These forms, together with instructions, will also be provided by the Depositary to all U.S. Holders of ADRs registered with the Depositary. The Depositary will use reasonable efforts to follow the procedures established by the French tax authorities for U.S. Holders to benefit from the immediate application of the 15% French withholding tax rate or, as the case may be, to recover the excess 10%15% French withholding tax initially withheld and deducted in respect of dividends distributed to them by TOTAL. To effect such benefit or recovery, the Depositary shall advise such U.S. Holder to return the relevant forms to it, properly completed and executed. Upon receipt of the relevant forms properly completed and executed by such U.S. Holder, the Depositary shall cause them to be filed with the appropriate French tax authorities, and upon receipt of any resulting remittance, the Depositary shall distribute to the U.S. Holder entitled thereto, as soon as practicable, the proceeds thereof in U.S. dollars.

The identity and address of the French paying agent are available from TOTAL.

U.S. taxation

For U.S. federal income tax purposes and subject to the passive foreign investment company rules discussed below, the gross amount of any dividend a U.S. Holder must include in gross income equals the amount paid by TOTAL to the extent of the current and accumulated earnings and profits of TOTAL (as determined for U.S. federal income tax purposes). The dividend will be income from foreign sources. Dividends paid to a noncorporatenon-corporate U.S. Holder in taxable years beginning before January 1, 2013, that constitute qualified dividend income will be taxable to the holder at a maximum tax rate

of 15%, provided that the shares or ADSs are held for more than 60sixty days during the121-day period beginning 60sixty days before the ex-dividend date and the holder meets other holding period requirements. TOTAL believes that dividends paid by TOTAL with respect to its shares or ADSs will be qualified dividend income. The dividend will not be eligible for the dividends-received deduction allowed to a U.S. corporation under Section 243 of the Code. The dividend is taxable to the U.S. Holder when the holder, in the case of shares, or the Depositary, in the case of ADSs, receives the dividend, actually or constructively. To the extent that an amount received by a U.S. Holder exceeds the allocable share of TOTAL’s current and accumulated earnings and profits, it will be applied first to reduce such holder’s tax basis in shares or ADSs owned by such holder and then, to the extent it exceeds the holder’s tax basis, it will constitute capital gain.

The amount of any dividend distribution includible in the income of a U.S. Holder equals the U.S. dollar value of the euro payment made, determined at the spot euro/dollar exchange rate on the date the dividend distribution is includible in the U.S. Holder’s income, regardless of whether the payment is in fact converted into U.S. dollars. Any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is includible in the U.S. Holder’s income to the date the payment is converted into U.S. dollars will generally be treated as ordinary income or loss from sources within the United States and will not be eligible


136

for the special tax rate applicable to qualified dividend income.

Subject to certain conditions and limitations, French taxes withheld in accordance with the Treaty will generally be eligible for credit against the U.S. Holder’s U.S. federal income tax liability. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. In addition, special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the maximum 15% tax rate. To the extent a refund of the tax withheld is available to a U.S. Holder under French law or under the Treaty, the amount of tax withheld that is refundable will not be eligible for credit against such an individual’s United States federal income tax liability.

For this purpose, dividends distributed by TOTAL will constitute “passive income”, or, in the case of certain U.S. Holders, “general income”, which are treated separately from one another for purposes of computing the foreign tax credit allowable to the U.S. Holder. Alternatively, a U.S. Holder may claim all foreign taxes paid as an itemized deduction in lieu of claiming a foreign tax credit.

 

Taxation of Dispositiondisposition of Sharesshares

In general, a U.S. Holder who is eligible for the benefits of the Treaty will not be subject to French tax on any capital gain from the sale or exchange of the ADSs or redemption of the underlying shares unless those ADSs or shares form part of a business property of a permanent establishment or fixed base that the U.S. Holder has in France. Special rules may apply to individuals who are residents of more than one country.

A 3% registration dutytransfer tax assessed on the higher of the purchase price and the fair market value of the shares (subject to a maximum of €5,000 per transfer) applies to certain transfers of shares in French companies. Such transfer tax is equal to:

3% for the portion of the purchase price (or the fair market value, if higher) below€200,000;

0.5% for the portion of the purchase price (or the fair market value, if higher) between€200,000 and€500 million;

0.25% for the portion of the purchase price (or the fair market value, if higher) above€500 million.

The dutytransfer tax does not apply to transfers of shares in TOTAL, provided that the transfer is not evidenced by a written agreement, oragreement.

Recently enacted legislation applicable as from August 1, 2012, has introduced, under certain conditions, a financial transaction tax on the acquisition of shares of publicly traded companies registered in France having a market capitalization over€1 billion. A list of the companies within the scope of the financial transaction tax will be published in a forthcoming decree. We expect that TOTAL will be included in this list. The financial transaction tax will be due at a rate of 0.1% on the value of the acquired shares. Transactions that are subject to the financial transaction tax are exempt from the above-mentioned transfer tax (which was also modified by the same legislation). U.S. Holders should consult their tax advisors as to the tax consequences of such written agreement is executed outside France.

reforms.

For U.S. federal income tax purposes and subject to the passive foreign investment company rules discussed below, a U.S. Holder generally will recognize capital gain or loss upon the sale or disposition of shares or ADSs equal to the difference between the U.S. dollar value of the amount realized on the sale or disposition and the holder’s tax basis, determined in U.S. dollars, in the shares or ADSs. The gain or loss generally will be U.S. source gain or loss and will be long-term capital gain or loss if the U.S. Holder’s holding period of the shares or ADSs is more than one year at the time of the disposition. Long-term capital gain of a non-corporate U.S. Holder is generally

taxed at preferential rates. The deductibility of capital losses is subject to limitation.

Passive Foreign Investment Statusforeign investment status

TOTAL believes that the shares or ADSs will not be treated as stock of a passive foreign investment company, or PFIC, for United States federal income tax purposes, but this conclusion is a factual determination that is made annually and thus is subject to change. If TOTAL is treated as a PFIC, unless a U.S. Holder elects to be taxed annually on amark-to-market basis with respect to the shares or ADSs, gain realized on the sale or other disposition of the shares or ADSs would in general not be treated as capital gain. Instead, a U.S. Holder would be treated as if he or she had realized such gain and certain “excess distributions” ratably over the holding period for the shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, in addition to which an interest charge in respect of the tax attributable to each such year would apply. With certain exceptions, a U.S. Holder’s shares or ADSs will be treated as stock in a PFIC if TOTAL were a PFIC at any time during his or her holding period in the shares or ADSs. Dividends paid will not be eligible for the special tax rates applicable to qualified dividend income if TOTAL is treated as a PFIC with respect to a U.S. Holder either in the taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income.

French Estateestate and Gift Taxesgift taxes

In general, a transfer of ADSs or shares by gift or by reason of the death of a U.S. Holder that would otherwise be subject to French gift or inheritance tax, respectively, will not be subject to such French tax by reason of the Convention between the United States of America and the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Estates, Inheritances and Gifts, dated November 24, 1978 as amended, unless the donor or the transferor is domiciled in France at the time of making the gift, or at the time of his death, or if the ADSs or shares were used in, or held for use in, the conduct of a business through a permanent establishment or a fixed base in France.

French Wealth Taxwealth tax

The French wealth tax does not apply to a U.S. Holder (i) that is not an individual, or (ii) in the case of individuals


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who are eligible for the benefits of the Treaty and who own, alone or with related persons, directly or indirectly, TOTAL shares which give right to less than 25% of TOTAL’s earnings.

 

U.S. Statestate and Local Taxeslocal taxes

In addition to U.S. federal income tax, U.S. Holders of shares or ADSs may be subject to U.S. state and local taxes with respect to their shares or ADSs. U.S. Holders should consult their own tax advisors.

Dividends and Paying Agents

After BNP Paribas Securities Services performs centralizing procedures, dividends are paid through the accounts of financial intermediaries participating in Euroclear France’s direct payment procedures. The Bank of New York Mellon acts as paying agent for dividends distributed to ADS holders.

Documents on Display

TOTAL files annual, periodic, and other reports and information with the Securities and Exchange Commission. You may read and copyinspect any reports, statements or other information TOTAL files with the United States Securities and Exchange Commission (“SEC”) at the SEC’s public reference rooms by calling the SEC for more information at1-800-SEC-0330. All of TOTAL’s SEC filings made after December 31, 2001, are available to the public at the SEC Web site athttp://www.sec.gov and from certain commercial document retrieval services. You may also read and copyinspect any document the Company files with the SEC at the offices of The New York Stock Exchange, 20 Broad Street, New York, New York 10005.

 

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Please refer to Note 31 to the Consolidated Financial Statements included elsewhere herein for a qualitative and quantitative discussion of the Group’s exposure to market risks. Please also refer to Notes 29 and 30 to the Consolidated Financial Statements included elsewhere herein for details of the different derivatives owned by the Group in these markets.

As part of its financing and cash management activities, the Group uses derivative instruments to manage its exposure to changes in interest rates and foreign exchange rates. These instruments are principally interest rate and currency swaps. The Group may also use, on a less frequent basis, futures and options contracts. These operations and their accounting treatment are detailed in Note 1 paragraph M and Notes 20, 28 and 29 to the

Consolidated Financial Statements included elsewhere herein.

The financial performance of TOTAL is sensitive to a number of factors, the most significant being oil and gas prices, generally expressed in dollars, and exchange rates, in particular that of the dollar versus the euro. Generally, a rise in the price of crude oil has a positive effect on earnings as a result of an increase in revenues from oil and gas production. Conversely, a decline in crude oil prices reduces revenues. The impact of changes in crude oil prices on Downstream and Chemicals operations depends upon the speed at which the prices of finished products adjust to reflect these changes. All of the Group’s activities are, to various degrees, sensitive to fluctuations in the dollar/euro exchange rate.

 

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

American Depositary Receipts fees and charges

The Bank of New York Mellon, as a depositary, collects its fees for delivery and surrender of ADSsADRs directly from investors depositing shares or surrendering ADSsADRs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.


138

Investors must pay:  
Investors must pay:For:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)  

•     Issuance of ADSs,ADRs, including issuances resulting from a distribution of shares or rights or other property, stocks splits or merger

•     Cancellation of ADSsADRs for the purpose of withdrawal, including if the deposit agreement terminates

A fee equivalent to the fee that would be payable if securities distributed to the investor had been shares and the shares had been deposited for issuance of ADSs  

•     Distribution of securities distributed to holders of deposited securities that are distributed by the depositary to ADS registered holders

Registration or transfer fees  

•     Transfer and registration of shares on the Company’s share register to or from the name of the depositary or its agent when the investor deposits or withdraws shares

Expenses of the depositary  

•     Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)

•     Converting foreign currency to U.S. dollars

Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes  

•     As necessary

Any charges incurred by the depositary or its agents for servicing the deposited securities

  

•     As necessary

The depositary has agreed to reimburse expenses (“Reimbursed Expenses”) incurred by the Company for the establishment and maintenance of the ADS program that include, but are not limited to, exchange listing fees, annual meeting expenses, standardout-of-pocket maintenance costs for the ADRs (e.g., the expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. Federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls), shareholder identification, investor relations activities or programs in North America, accounting fees (such as external audit fees incurred in connection with the Sarbanes-Oxley Act, the preparation of the Company’sForm 20-F and paid to the FASB and the PCAOB), legal

fees and other expenses incurred in connection with the preparation of regulatory filings and other documentation related to ongoing SEC, NYSE and U.S. securities law compliance. In certain instances, the depositary has agreed to provide additional payments to the Company based on certain applicable performance indicators relating to the ADR facility. There are limits on the amount of expenses for which the depositary will reimburse the Company, but the amount of reimbursement available to the Company is not necessarily tied to the amount of fees the depositary collects from investors.

From March 16, 20102011 to March 15, 2011,2012, the Company received from the depositary a payment of €3,771,262.29$3,327,796.00 with respect to certain Reimbursed Expenses. The Bank of New-York Mellon has also paid $347,622 on behalf of the Company with respect to continuing annual stock exchange listing fees.

 

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF

SECURITY HOLDERS AND USE OF PROCEEDS

None.

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None.

ITEM 15. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Group’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness, as of the end of the period covered by this report, of the design and operation of the Group’s disclosure controls and procedures, which are defined as those controls and procedures designed to ensure that information required to be disclosed in reports filed under the U.S. Securities Exchange Act of 1934, as amended, is recorded, summarized and reported within specified time periods. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports that the Company files under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

The Group’s management is responsible for establishing and maintaining adequate internal control over financial

reporting. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, the effectiveness of an internal control system may change over time.

The Group’s management, including the Chief Executive Officer and the Chief Financial Officer, conducted an evaluation of the effectiveness of internal control over financial reporting using the criteria set forth in the Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the results of this evaluation, the Group’s management concluded that its internal control over financial reporting was effective as of December 31, 2010.

2011.

The effectiveness of internal control over financial reporting as of December 31, 2010,2011, was audited by KPMG S.A. and Ernst & Young Audit, independent registered public accounting firms, as stated in their report onpage F-2 of this Annual Report.

Changes in Internal Control Over Financial Reporting

There were no changes in the Group’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or that were reasonably likely to materially affect, the Group’s internal control over financial reporting.

 

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Mr. Bertrand Jacquillat

Ms. Patricia Barbizet is the Audit Committee financial expert. Mr. JacquillatMs. Barbizet is an independent member of the Board of Directors in accordance with the NYSE listing

standards applicable to TOTAL, as are the other members of the Audit Committee.

 

ITEM 16B. CODE OF ETHICS

At its meeting on February 18, 2004, the Board of Directors adopted a code of ethics that applies to its Chief Executive Officer, Chief Financial Officer, Chief Accounting

Officer and the financial and accounting officers for its principal activities. A copy of this code of ethics is included as an exhibit to this Annual Report.

 


140

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

During the fiscal years ended December 31, 20102011 and 2009,2010, fees for services provided by Ernst & Young Audit and KPMG were as follows:

                 
  
  KPMG
  Ernst & Young Audit
 
  Year Ended December 31,  Year Ended December 31, 
(M€) 2010  2009  2010  2009 
  
 
Audit Fees  15.1   16.0   15.2     17.7 
Audit-Related Fees(a)
  3.6   2.9   0.7   0.8 
Tax Fees(b)
  1.2   1.2   1.7   1.4 
All Other Fees(c)
  0.1   0.3   0.2   0.1 
 
 
Total
  20.0   20.4   17.8   20.0 
 
 

    

KPMG

Year Ended December 31,

   

Ernst & Young Audit

Year Ended December 31,

 
(M€)  2011   2010   2011   2010 

Audit Fees

   14.1     15.1     15.6     15.2  

Audit-Related Fees(a)

   3.8     3.6     1.9     0.7  

Tax Fees(b)

   1.6     1.2     1.4     1.7  

All Other Fees(c)

   0.2     0.1     0.2     0.2  

Total

   19.7     20.0     19.1     17.8  

(a)
(a)Audit-related fees are generally fees billed for services that are closely related to the performance of the audit or review of financial statements. These include due diligence services related to business combinations, attestation services not required by statute or regulation, agreed upon or expanded auditing procedures related to accounting or billing records required to respond to or comply with financial, accounting or regulatory reporting matters, consultations concerning financial accounting and reporting standards, information system reviews, internal control reviews and assistance with internal control reporting requirements.
(b)Tax fees are fees for services related to international and domestic tax compliance, including the preparation of tax returns and claims for refund, tax planning and tax advice, including assistance with tax audits and tax appeals, and tax services regarding statutory, regulatory or administrative developments and expatriate tax assistance and compliance.
(c)All other fees are principally for risk management advisory services.

Audit Committee Pre-Approval Policy

The Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy that sets forth the procedures and the conditions pursuant to which services proposed to be performed by the statutory auditors may be pre-approved and that are not prohibited by regulatory or other professional requirements. This policy provides for both pre-approval of certain types of services through the use of an annual budget approved by the Audit Committee

for these types of services and special pre-approval of services by the Audit Committee on acase-by-case basis. The Audit Committee reviews on an annual basis the services provided by the statutory auditors. During 2010,2011, no audit-related fees, tax fees or other non-audit fees were approved by the Audit Committee pursuant to thede minimisexception to the pre-approval requirement provided by paragraph (c)(7)(i)(C) ofRule 2-01 ofRegulation S-X.

 

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
None.


141

None.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Period

Total Number Of

Shares

Purchased

   

Average Price

Paid Per

Share (€)

   

Total Number Of

Shares Purchased,

As Part Of Publicly

Announced

Plans Or

Programs(a)

   

Maximum Number

Of Shares  That May

Yet Be Purchased

Under The Plans Or

Programs(b)

 
Total Number Of
Shares Purchased,
Maximum Number
As Part Of Publicly
Of Shares That May
Total Number Of
Average Price
Announced
Yet Be Purchased
Shares
Paid Per
Plans Or
Under The Plans Or
PeriodPurchasedShare (€)Programs(a)Programs(b)
January 2010———119,798,107
February 2010———119,813,214
March 2010———119,911,829
April 2010———120,319,759
May 2010———120,418,644
June 2010———120,724,568
July 2010———120,734,750
August 2010———120,742,346
September 2010———120,675,024
October 2010———122,411,798
November 2010———122,432,721
December 2010———122,476,414

January 2011

   —     —     —     122,526,633  

February 2011

   —     —     —     122,588,776  

March 2011

———122,626,999
(a)

April 2011

———123,539,732

May 2011

———123,567,601

June 2011

———123,655,175

July 2011

———123,891,589

August 2011

———123,892,274

September 2011

———126,818,649

October 2011

———126,819,834

November 2011

———126,822,199

December 2011

———126,822,558

January 2012

———126,824,217

February 2012

———126,836,267

(a)The shareholders’ meeting of May 21, 2010,13, 2011, cancelled and replaced the previous resolution from the shareholders’ meeting of May 15, 2009,21, 2010, authorizing the Board of Directors to trade in the Company’s own shares on the market for a period of 18 months within the framework of the stock purchase program. The maximum number of shares that may be purchased by virtue of this authorization or under the previous authorization may not exceed 10% of the total number of shares constituting the share capital, this amount being periodically adjusted to take into account operations modifying the share capital after each shareholders’ meeting. Under no circumstances may the total number of shares the Company holds, either directly or indirectly through its subsidiaries, exceed 10% of the share capital.
(b)Based on 10% of the Company’s share capital, and after deducting the shares held by the Company for cancellation and the shares held by the Company to cover the share purchase option plans for Company employees and restricted share grants for Company employees, as well as after deducting the shares held by the subsidiaries.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.


142

ITEM 16G. CORPORATE GOVERNANCE

Summary of Significant Differences between French Corporate Governance Practices and the NYSE’s Corporate Governance Standards

Overview

Overview

The following paragraphs provide a brief, general summary of significant differences between the corporate governance standards followed by TOTAL under French law and guidelines, and those required by the listing standards of the New York Stock Exchange (the “NYSE”) for U.S. companies that have common stock listed on the NYSE.

The principal sources of corporate governance standards in France are the French Commercial Code (Code de Commerce), the French Financial and Monetary Code (Code monétaire et financier), both as amendedinter aliasince August 2003 by the French Financial Security Act (Loi de sécurité financière) and the various subsequent acts, from time to time, and the regulations and recommendations provided by the French Financial Markets Authority (Autorité desmarchés financiers, AMF), as well as a number of general

recommendations and guidelines on corporate governance, most notably the Corporate Governance Code for Listed Companies published in December 2008 (as amended in April 2010) by the principal French business confederations, theAssociation Française des Entreprises Privées(AFEP) and theMouvement des Entreprises de France(MEDEF) (the “AFEP-MEDEF Code”). The AFEP-MEDEF Code includes, among other things, recommendations relating to the role and operation of the board of directors (creation, composition and evaluation of the board of directors and the audit, compensation and nominating committees) and the independence criteria for board members. TheArticles L. 820-1et seq. of the French Financial Security ActCommercial Code prohibits statutory auditors from providing certain non-audit services and defines certain criteria for the independence of statutory auditors. In France, the independence of statutory auditors is also monitored by an independent body, the High Council for Statutory Auditors (Haut Conseil du commissariat aux comptes).

 

Composition of Board of Directors; Independence

The NYSE listing standards provide that the board of directors of a U.S. listed company must consist of a majority of independent directors and that certain committees must consist solely of independent directors. A director qualifies as independent only if the board affirmatively determines that the director has no material relationship with the company, either directly or indirectly. In addition, the listing standards enumerate a number of relationships that preclude independence.

French law does not contain any independence requirement for the members of the board of directors of a French company, unless the board establishes an audit committee, as described below. Under French law, the functions of board chairman and chief executive officer may be performed by the same person. The AFEP- MEDEF Code recommends, however, that (i) at least half of the members of the board of directors be independent in companies that have a dispersed ownership structure and no controlling shareholder, and (ii) at least a third of the members of the board of directors be independent in companies that have a controlling shareholder. The AFEP-MEDEF Code states that a director is independent when “he or she has no relationship of any nature with the company, its group or the management of either, that may compromise the exercise of his or her freedom of judgment.” The AFEP-MEDEF Code also enumerates specific criteria for determining independence, which are on the whole consistent with the goals of the NYSE’s rules although the specific tests under the two standards may vary on some points.

Based on the proposal of TOTAL’s Nominating & Corporate Governance Committee, the Board of Directors of TOTAL at its meeting on February 10, 2011,9, 2012, examined the independence of the Company’s directors as of December 31, 2010,2011, and considered that all of the directors of the Company are independent, with the exceptions of Mr. de Margerie, Chairman and Chief Executive Officer of the Company since May 21, 2010, Mr. Desmarest, Chairman of the Board of Directors until May 21, 2010, and Mr. Clément, director representing employee shareholders.

Representation of women on corporate boards

The FrenchJournal Officielpublished a statuten°law No. 2011-103 dated January 27, 2011, relating to the representation of women on the boards of certain French companies, including French companies listed on Euronext-Paris.

Euronext Paris.

New rules provide for legally binding quotas to boost the percentage of women on boards of directors of French listed

companies, requiring that women represent: (i) at least 20% within threetwo years (following the first ordinary shareholders’ meeting held after January 1, 2014), and (ii) at least 40% within sixfive years (following the first ordinary shareholders’ meeting held after January 1, 2017). When the board of directors consists of less than nine members, the difference between the number of directors of each gender at the end of the six-yearfive-year period should not be higher than two. Any appointment of a director


143

made in violation of these rules shall be declared null and void and the payment of the directors’ compensation shall be suspended until the board composition complies with the law’s requirements.requirements (the management report shall also indicate the suspension of the directors’ compensation until the board composition complies with the law’s requirements). However, decisions of a board of directors that fails to comply with these quotas may not be declared null and void.

Board committees

Overview.The NYSE listing standards require that a U.S. listed company have an audit committee, a nominating/corporate governance committee and a compensation committee. Each of these committees must consist solely of independent directors and must have a written charter that addresses certain matters specified in the listing standards.

With the exception of an audit committee, as described below, French law requires neither the establishment of board committees nor the adoption of written charters.

The AFEP-MEDEF Code recommends, however, that the board of directors setsets up, in addition to an audit committee, a nominating committee and a compensation committee, indicating that the nominating and compensation committees may form only one committee. The AFEP-MEDEF Code also recommends that at least two-thirds of the audit committee members and a majority of the members of each of the compensation committee and the nominating committee be independent directors.

TOTAL has established an Audit Committee, a Nominating & Corporate Governance Committee and a Compensation Committee, and considers all of the members of these committees to be independent with the exception of Mr. Desmarest, who is a member of the Compensation Committee and chairs the Nominating & Corporate Governance Committee. For the membership of each committee, see “Item 6. Corporate Governance”. Each of these committees has a charter that defines the scope of its activity.

Audit committee. The NYSE listing standards contain detailed requirements for the audit committees of U.S. listed companies. Some, but not all, of these

requirements also apply tonon-U.S. listed companies, such as TOTAL.

French law requires the board of directors of companies listed in France to establish an audit committee (Article L. 823-19 of the French Commercial Code), at least one member of which must be an independent director and must be competent in finance or accounting.

Pursuant to French law and the AFEP-MEDEF Code, the audit committee is responsible for, among other things, examining the company’s risk exposure and material off-balance sheet commitments and the scope of consolidation, reviewing the financial statements and ensuring the relevance and consistency of accounting methods used in drawing up the consolidated and corporate accounts, examining the company’s risk exposure and material off-balance sheet commitments and the scope of consolidation, monitoring the process for the preparation of financial information, monitoring the efficiency of internal control procedures and risk management systems, managing the process of selecting statutory auditors, expressing an opinion on the amount of their fees and monitoring compliance with rules designed to ensure auditor independence, regularly interviewing statutory auditors without the executive management being present and calling upon outside experts if necessary.

Although the audit committee requirements under French law and recommendations under the AFEP-MEDEF Code are less detailed than those contained in the NYSE listing standards, the NYSE listing standards, French law and the AFEP-MEDEF Code share the goal of establishing a system for overseeing the company’s accounting that is independent from management and that ensures auditor independence. As a result, they address similar topics, and there is some overlap.

For the specific tasks performed by the Audit Committee of TOTAL that exceed those required by French law and those recommended by the AFEP-MEDEF Code, see “Item 6. Corporate Governance — Audit Committee”.

One structural difference between the legal status of the audit committee of a U.S. listed company and that of a French listed company concerns the degree of the committee’s involvement in managing the relationship between the company and the auditor. French law requires French companies that publish consolidated financial statements, such as TOTAL, to have two co-auditors. While the NYSE listing standards require that the audit committee of a U.S. listed company have direct responsibility for the appointment, compensation, retention, and oversight of the work of the auditor, French law provides that the election of the co-auditors is the sole responsibility of the shareholders’ meeting. In making its decision, the shareholders’ meeting may rely on proposals submitted to it by the board of

directors, the decision of the latter being taken upon consultation with the audit committee. The shareholders’ meeting elects the auditors for an audit period of six fiscal years. The auditors may only be dismissed by a court and only on grounds of professional negligence or incapacity to perform their mission.


144

Disclosure

Disclosure
The NYSE listing standards require U.S. listed companies to adopt, and post on their websites, a set of corporate governance guidelines. The guidelines must address, among other things: director qualification standards, director responsibilities, director access to management and independent advisers, director compensation, director orientation and continuing education, management succession, and an annual performance evaluation of the board. In addition, the chief executive officer of a U.S. listed company must certify to the NYSE annually that he or she is not aware of any violations by the company of the NYSE’s corporate governance listing standards.

French law requires neither the adoption of such guidelines nor the provision of such certification. The AFEP-MEDEF Code recommends, however, that the board of directors of a French listed company perform an annual review of its operation and that a formal evaluation, possibly with the assistance of an outside consultant, be undertaken every three years, which for TOTAL took place endin early 2012 without the assistance of 2009,an outside consultant, and that shareholders be informed each year in the annual report of the evaluations. In addition, the AFEP-MEDEF Code addresses deontology rules that the directors are expected to comply with.

Code of business conduct and ethics

The NYSE listing standards require each U.S. listed company to adopt, and post on its website, a code of business conduct and ethics for its directors, officers and employees. There is no similar requirement or recommendation under French law. However, under the SEC’s rules and regulations, all companies required to submit periodic reports to the SEC, including TOTAL, must disclose in their annual reports whether they have adopted a code of ethics for their principal executive officer and senior financial officers. In addition, they must file a copy of the code with the SEC, post the text of the code on their website or undertake to provide a copy upon request to any person without charge. There is significant, though not complete, overlap between the code of ethics required by the NYSE listing standards and the code of ethics for senior financial officers required by the SEC’s rules. For a discussion of the code of ethics adopted by TOTAL, see “Item 6. Corporate Governance” and “Item 16B. Code of Ethics”.

 

ITEM 17. FINANCIAL STATEMENTS

Not applicable.

ITEM 18. FINANCIAL STATEMENTS

The following financial statements, together with the report of Ernst & Young Audit and KPMG S.A. thereon, are held as part of this annual report.

   Page
 

Report of Independent Registered Public Accounting Firms on the Consolidated Financial Statements

   F-1  

Report of Independent Registered Public Accounting Firms on the Internal Control over Financial Reporting

   F-2  

Consolidated Statement of Income for the Years Ended December 31, 2011, 2010 2009 and 20082009

   F-3  

Consolidated Statement of Comprehensive Income for the Years Ended December 31, 2011, 2010 2009 and 20082009

   F-4  

Consolidated Balance Sheet at December 31, 2011, 2010 2009 and 20082009

   F-5  

Consolidated Statement of Cash Flow for the Years Ended December 31, 2011, 2010 2009 and 20082009

   F-6  

Consolidated Statement of Changes in Shareholders’ Equity for the Years Ended December  31, 2011, 2010 2009 and 20082009

   F-7  

Notes to the Consolidated Financial Statements

   F-8  

Supplemental Oil and Gas Information (Unaudited)

   S-1  

Schedules have been omitted since they are not required under the applicable instructions or the substance of the required information is shown in the financial statements.


145

ITEM 19. EXHIBITS

The following documents are filed as part of this annual report:

1

  
1Bylaws (Statuts) of TOTAL S.A. (as amended through December 31, 2010)2011)

8

  List of Subsidiaries (see Note 35 to the Consolidated Financial Statements included in this Annual Report)

11

  Code of Ethics (incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2005)

12.1

  Certification of Chairman and Chief Executive Officer

12.2

  Certification of Chief Financial Officer

13.1

  Certification of Chairman and Chief Executive Officer

13.2

  Certification of Chief Financial Officer

15

  Consent of ERNST & YOUNG AUDIT and of KPMG S.A.


146

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing onForm 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

TOTAL S.A.

TOTAL S.A.

By:

/s/ CHRISTOPHEDE MARGERIE

Name: Christophe de Margerie
Title: Chairman and Chief Executive Officer
Name: Christophe de Margerie
Title: Chairman and Chief Executive Officer

Date: March 28, 2011


14726, 2012

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

ON THE CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2010

2011

The Board of Directors and Shareholders

We have audited the accompanying consolidated balance sheets of TOTAL S.A. and subsidiaries (the “Company”) as of December 31, 2011, 2010 2009 and 2008,2009, and the related consolidated statements of income, comprehensive income, cash flows and changes in shareholders’ equity for each of the three years in the period ended December 31, 2010.2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2011, 2010 2009 and 2008,2009, and the consolidated results of its operations and its consolidated cash flows for each of the three years in the period ended December 31, 2010,2011, in conformity with International Financial Reporting Standards as adopted by the European Union and in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

As discussed in the Introduction of the Notes to the consolidated financial statements, the Company has changed its accounting policy regarding jointly controlled entities under standard IAS 31 “Interests in Joint Ventures”.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2010,2011, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria) and our report dated March 10, 20117, 2012 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Paris La Défense, March 10, 2011

7, 2012

KPMG AUDIT
Audit

A division of KPMG S.A.

  ERNST & YOUNG Audit

/s/Jay Nirsimloo    JAY NIRSIMLOO

  


/s/ Pascal Macioce    PASCAL MACIOCE

  

/s/ Laurent Vitse    LAURENT VITSE

Jay Nirsimloo
Partner		  Pascal Macioce
Partner		  Laurent Vitse
PartnerPartnerPartner


F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

ON THE INTERNAL CONTROL OVER FINANCIAL REPORTING

Year ended December 31, 2010

2011

The Board of Directors and Shareholders

We have audited TOTAL S.A. and subsidiaries’ (“the Company”) internal control over financial reporting as of December 31, 2010,2011, based on criteria established in Internal Control —- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying management’s annual report on internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010,2011, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 31, 2011, 2010 2009 and 20082009 and the related consolidated statements of income, comprehensive income, cash flows and changes in shareholders’ equity for each of the three years in the period ended December 31, 2010,2011, and our report dated March 10, 20117, 2012 expressed an unqualified opinion on those consolidated financial statements.

Paris La Défense, March 10, 2011

7, 2012

KPMG AUDIT
Audit

A division of KPMG S.A.

  ERNST & YOUNG Audit

/s/Jay Nirsimloo    JAY NIRSIMLOO

  


/s/Pascal Macioce    PASCAL MACIOCE

  

/s/Laurent Vitse    LAURENT VITSE

Jay Nirsimloo
Partner		  Pascal Macioce
Partner		  Laurent Vitse
PartnerPartnerPartner


F-2

CONSOLIDATED STATEMENT OF INCOME

TOTAL

                     
For the year ended December 31, (M€)(a)      2010   2009   2008 
Sales
   (Notes 4 & 5)   159,269    131,327    179,976 
Excise taxes        (18,793)   (19,174)   (19,645)
Revenues from sales        140,476    112,153    160,331 
Purchases net of inventory variation   (Note 6)   (93,171)   (71,058)   (111,024)
Other operating expenses   (Note 6)   (19,135)   (18,591)   (19,101)
Exploration costs   (Note 6)   (864)   (698)   (764)
Depreciation, depletion and amortization of tangible assets and mineral
interests		        (8,421)   (6,682)   (5,755)
Other income   (Note 7)   1,396    314    369 
Other expense   (Note 7)   (900)   (600)   (554)
Financial interest on debt        (465)   (530)   (1,000)
Financial income from marketable securities & cash equivalents        131    132    473 
Cost of net debt   (Note 29)   (334)   (398)   (527)
Other financial income   (Note 8)   442    643    728 
Other financial expense   (Note 8)   (407)   (345)   (325)
Equity in income (loss) of affiliates   (Note 12)   1,953    1,642    1,721 
Income taxes   (Note 9)   (10,228)   (7,751)   (14,146)
 
Consolidated net income
        10,807    8,629    10,953 
 
Group share        10,571    8,447    10,590 
Minority interests        236    182    363 
 
Earnings per share (€)        4.73    3.79    4.74 
Fully-diluted earnings per share (€)        4.71    3.78    4.71 
 

For the year ended December 31, (M€)(a)      2011  2010  2009 

Sales

   (Notes 4 & 5)   184,693    159,269    131,327  

Excise taxes

    (18,143)   (18,793)   (19,174) 

Revenues from sales

    166,550    140,476    112,153  

Purchases net of inventory variation

   (Note 6)   (113,892)   (93,171)   (71,058) 

Other operating expenses

   (Note 6)   (19,843)   (19,135)   (18,591) 

Exploration costs

   (Note 6)   (1,019)   (864)   (698) 

Depreciation, depletion and amortization of tangible assets and mineral interests

    (7,506)   (8,421)   (6,682) 

Other income

   (Note 7)   1,946    1,396    314  

Other expense

   (Note 7)   (1,247)   (900)   (600) 

Financial interest on debt

    (713)   (465)   (530) 

Financial income from marketable securities & cash equivalents

    273    131    132  

Cost of net debt

   (Note 29)   (440)   (334)   (398) 

Other financial income

   (Note 8)   609    442    643  

Other financial expense

   (Note 8)   (429)   (407)   (345) 

Equity in income (loss) of affiliates

   (Note 12)   1,925    1,953    1,642  

Income taxes

   (Note 9)   (14,073)   (10,228)   (7,751) 

Consolidated net income

       12,581    10,807    8,629  

Group share

    12,276    10,571    8,447  

Non-controlling interests

       305    236    182  

Earnings per share (€)

    5.46    4.73    3.79  

Fully-diluted earnings per share (€)

       5.44    4.71    3.78  

(a)

(a)

Except for per share amounts.


F-3

CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME

TOTAL

             
For the year ended December 31, (M€) 2010  2009  2008 
Consolidated net income
  10,807   8,629   10,953 
 
Other comprehensive income
            
Currency translation adjustment  2,231   (244)  (722)
Available for sale financial assets  (100)  38   (254)
Cash flow hedge  (80)  128   — 
Share of other comprehensive income of associates, net amount  302   234   173 
Other  (7)  (5)  1 
Tax effect  28   (38)  30 
             
Total other comprehensive income (net amount)(note 17)
  2,374   113   (772)
             
Comprehensive income
  13,181   8,742   10,181 
             
- Group share  12,936   8,500   9,852 
- Minority interests  245   242   329 


F-4

For the year ended December 31, (M€)  2011  2010  2009 

Consolidated net income

   12,581    10,807    8,629  

Other comprehensive income

    

Currency translation adjustment

   1,498    2,231    (244) 

Available for sale financial assets

   337    (100)   38  

Cash flow hedge

   (84)   (80)   128  

Share of other comprehensive income of associates, net amount

   (15)   302    234  

Other

   (2)   (7)   (5) 

Tax effect

   (55)   28    (38) 

Total other comprehensive income (net amount)(note 17)

   1,679    2,374    113  

Comprehensive income

   14,260    13,181    8,742  

— Group share

   13,911    12,936    8,500  

— Non-controlling interests

   349    245    242  

CONSOLIDATED BALANCE SHEET

TOTAL

                     
As of December 31, (M€)      2010   2009   2008 
ASSETS
                    
Non-current assets
                    
Intangible assets, net   (Notes 5 & 10)   8,917    7,514    5,341 
Property, plant and equipment, net   (Notes 5 & 11)   54,964    51,590    46,142 
Equity affiliates: investments and loans   (Note 12)   11,516    13,624    14,668 
Other investments   (Note 13)   4,590    1,162    1,165 
Hedging instruments of non-current financial debt   (Note 20)   1,870    1,025    892 
Other non-current assets   (Note 14)   3,655    3,081    3,044 
 
Total non-current assets
        85,512    77,996    71,252 
 
Current assets
                    
Inventories, net   (Note 15)   15,600    13,867    9,621 
Accounts receivable, net   (Note 16)   18,159    15,719    15,287 
Other current assets   (Note 16)   7,483    8,198    9,642 
Current financial assets   (Note 20)   1,205    311    187 
Cash and cash equivalents   (Note 27)   14,489    11,662    12,321 
 
Total current assets
        56,936    49,757    47,058 
 
Assets classified as held for sale
   (Note 34)   1,270    —    — 
 
Total assets
        143,718    127,753    118,310 
 
LIABILITIES & SHAREHOLDERS’ EQUITY
                    
Shareholders’ equity
                    
Common shares        5,874    5,871    5,930 
Paid-in surplus and retained earnings        60,538    55,372    52,947 
Currency translation adjustment        (2,495)   (5,069)   (4,876)
Treasury shares        (3,503)   (3,622)   (5,009)
 
Total shareholders’ equity — Group share
   (Note 17)   60,414    52,552    48,992 
 
Minority interests
        857    987    958 
 
Total shareholders’ equity
        61,271    53,539    49,950 
 
Non-current liabilities
                    
Deferred income taxes   (Note 9)   9,947    8,948    7,973 
Employee benefits   (Note 18)   2,171    2,040    2,011 
Provisions and other non-current liabilities   (Note 19)   9,098    9,381    7,858 
 
Total non-current liabilities
        21,216    20,369    17,842 
 
Non-current financial debt
   (Note 20)   20,783    19,437    16,191 
 
Current liabilities
                    
Accounts payable        18,450    15,383    14,815 
Other creditors and accrued liabilities   (Note 21)   11,989    11,908    11,632 
Current borrowings   (Note 20)   9,653    6,994    7,722 
Other current financial liabilities   (Note 20)   159    123    158 
 
Total current liabilities
        40,251    34,408    34,327 
 
Liabilities directly associated with the assets classified as held for sale
   (Note 34)   197    —    — 
 
Total liabilities and shareholders’ equity
        143,718    127,753    118,310 
 


F-5

As of December 31, (M€)      2011  2010  2009 

ASSETS

     

Non-current assets

     

Intangible assets, net

   (Notes 5 & 10)   12,413    8,917    7,514  

Property, plant and equipment, net

   (Notes 5 & 11)   64,457    54,964    51,590  

Equity affiliates: investments and loans

   (Note 12)   12,995    11,516    13,624  

Other investments

   (Note 13)   3,674    4,590    1,162  

Hedging instruments of non-current financial debt

   (Note 20)   1,976    1,870    1,025  

Other non-current assets

   (Note 14)   4,871    3,655    3,081  

Total non-current assets

    100,386    85,512    77,996  

Current assets

     

Inventories, net

   (Note 15)   18,122    15,600    13,867  

Accounts receivable, net

   (Note 16)   20,049    18,159    15,719  

Other current assets

   (Note 16)   10,767    7,483    8,198  

Current financial assets

   (Note 20)   700    1,205    311  

Cash and cash equivalents

   (Note 27)   14,025    14,489    11,662  

Total current assets

       63,663    56,936    49,757  

Assets classified as held for sale

   (Note 34)   —    1,270    —  

Total assets

       164,049    143,718    127,753  

LIABILITIES & SHAREHOLDERS’ EQUITY

     

Shareholders’ equity

     

Common shares

    5,909    5,874    5,871  

Paid-in surplus and retained earnings

    66,506    60,538    55,372  

Currency translation adjustment

    (988)   (2,495)   (5,069) 

Treasury shares

       (3,390)   (3,503)   (3,622) 

Total shareholders’ equity — Group share

   (Note 17)   68,037    60,414    52,552  

Non-controlling interests

       1,352    857    987  

Total shareholders’ equity

    69,389    61,271    53,539  

Non-current liabilities

     

Deferred income taxes

   (Note 9)   12,260    9,947    8,948  

Employee benefits

   (Note 18)   2,232    2,171    2,040  

Provisions and other non-current liabilities

   (Note 19)   10,909    9,098    9,381  

Non-current financial debt

   (Note 20)   22,557    20,783    19,437  

Total non-current liabilities

       47,958    41,999    39,806  

Current liabilities

     

Accounts payable

    22,086    18,450    15,383  

Other creditors and accrued liabilities

   (Note 21)   14,774    11,989    11,908  

Current borrowings

   (Note 20)   9,675    9,653    6,994  

Other current financial liabilities

   (Note 20)   167    159    123  

Total current liabilities

       46,702    40,251    34,408  

Liabilities directly associated with the assets classified as held for sale

   (Note 34)   —    197    —  

Total liabilities and shareholders’ equity

       164,049    143,718    127,753  

CONSOLIDATED STATEMENT OF CASH FLOW

TOTAL

(Note 27)

             
For the year ended December 31, (M€) 2010  2009  2008 
CASH FLOW FROM OPERATING ACTIVITIES
            
Consolidated net income  10,807   8,629   10,953 
Depreciation, depletion and amortization  9,117   7,107   6,197 
Non-current liabilities, valuation allowances, and deferred taxes  527   441   (150)
Impact of coverage of pension benefit plans  (60)  —   (505)
(Gains) losses on disposals of assets  (1,046)  (200)  (257)
Undistributed affiliates’ equity earnings  (470)  (378)  (311)
(Increase) decrease in working capital  (496)  (3,316)  2,571 
Other changes, net  114   77   171 
             
Cash flow from operating activities
  18,493   12,360   18,669 
             
CASH FLOW USED IN INVESTING ACTIVITIES
            
Intangible assets and property, plant and equipment additions  (13,812)  (11,849)  (11,861)
Acquisitions of subsidiaries, net of cash acquired  (862)  (160)  (559)
Investments in equity affiliates and other securities  (654)  (400)  (416)
Increase in non-current loans  (945)  (940)  (804)
             
Total expenditures
  (16,273)  (13,349)  (13,640)
Proceeds from disposals of intangible assets and property, plant and equipment  1,534   138   130 
Proceeds from disposals of subsidiaries, net of cash sold  310   —   88 
Proceeds from disposals of non-current investments  1,608   2,525   1,233 
Repayment of non-current loans  864   418   1,134 
             
Total divestments
  4,316   3,081   2,585 
             
Cash flow used in investing activities
  (11,957)  (10,268)  (11,055)
             
CASH FLOW USED IN FINANCING ACTIVITIES
            
Issuance (repayment) of shares:            
- Parent company shareholders  41   41   262 
- Treasury shares  49   22   (1,189)
- Minority shareholders  —   —   (4)
Dividends paid:            
- Parent company shareholders  (5,098)  (5,086)  (4,945)
- Minority shareholders  (152)  (189)  (213)
Other transactions with minority shareholders  (429)  —   — 
Net issuance (repayment) of non-current debt  3,789   5,522   3,009 
Increase (decrease) in current borrowings  (731)  (3,124)  1,437 
Increase (decrease) in current financial assets and liabilities  (817)  (54)  850 
             
Cash flow used in financing activities
  (3,348)  (2,868)  (793)
             
Net increase (decrease) in cash and cash equivalents
  3,188   (776)  6,821 
Effect of exchange rates  (361)  117   (488)
Cash and cash equivalents at the beginning of the period  11,662   12,321   5,988 
             
Cash and cash equivalents at the end of the period
  14,489   11,662   12,321 
             


F-6

For the year ended December 31, (M€)  2011  2010  2009 

CASH FLOW FROM OPERATING ACTIVITIES

    

Consolidated net income

   12,581    10,807    8,629  

Depreciation, depletion and amortization

   8,628    9,117    7,107  

Non-current liabilities, valuation allowances, and deferred taxes

   1,665    527    441  

Impact of coverage of pension benefit plans

   —    (60)   —  

(Gains) losses on disposals of assets

   (1,590)   (1,046)   (200) 

Undistributed affiliates’ equity earnings

   (107)   (470)   (378) 

(Increase) decrease in working capital

   (1,739)   (496)   (3,316) 

Other changes, net

   98    114    77  

Cash flow from operating activities

   19,536    18,493    12,360  

CASH FLOW USED IN INVESTING ACTIVITIES

    

Intangible assets and property, plant and equipment additions

   (17,950)   (13,812)   (11,849) 

Acquisitions of subsidiaries, net of cash acquired

   (854)   (862)   (160) 

Investments in equity affiliates and other securities

   (4,525)   (654)   (400) 

Increase in non-current loans

   (1,212)   (945)   (940) 

Total expenditures

   (24,541)   (16,273)   (13,349) 

Proceeds from disposals of intangible assets and property, plant and equipment

   1,439    1,534    138  

Proceeds from disposals of subsidiaries, net of cash sold

   575    310    —  

Proceeds from disposals of non-current investments

   5,691    1,608    2,525  

Repayment of non-current loans

   873    864    418  

Total divestments

   8,578    4,316    3,081  

Cash flow used in investing activities

   (15,963)   (11,957)   (10,268) 

CASH FLOW USED IN FINANCING ACTIVITIES

    

Issuance (repayment) of shares:

    

— Parent company shareholders

   481    41    41  

— Treasury shares

   —    49    22  

Dividends paid:

    

— Parent company shareholders

   (5,140)   (5,098)   (5,086) 

— Non-controlling interests

   (172)   (152)   (189) 

Other transactions with non-controlling interests

   (573)   (429)   —  

Net issuance (repayment) of non-current debt

   4,069    3,789    5,522  

Increase (decrease) in current borrowings

   (3,870)   (731)   (3,124) 

Increase (decrease) in current financial assets and liabilities

   896    (817)   (54) 

Cash flow used in financing activities

   (4,309)   (3,348)   (2,868) 

Net increase (decrease) in cash and cash equivalents

   (736)   3,188    (776) 

Effect of exchange rates

   272    (361)   117  

Cash and cash equivalents at the beginning of the period

   14,489    11,662    12,321  

Cash and cash equivalents at the end of the period

   14,025    14,489    11,662  

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

TOTAL

                                    
          Paid-in
                     
          surplus
                     
          and
   Currency
         Shareholders’
      Total
   Common shares issued  retained
   translation
  Treasury shares  equity-
  Minority
   shareholders’
(M€)  Number   Amount  earnings   adjustment  Number   Amount  Group share  interests   equity
As of January 1, 2008
   2,395,532,097   5,989   48,797   (4,396)   (151,421,232)  (5,532)  44,858   842   45,700
 
Net income 2008   —   —   10,590   —   —   —  10,590   363   10,953
Other comprehensive income (Note 17)   —   —   (258)  (480)   —   —  (738)   (34)  (772)
 
Comprehensive income
   —   —   10,332   (480)   —   —  9,852   329   10,181
 
Dividend   —   —   (4,945)  —   —   —  (4,945)   (213)  (5,158)
Issuance of common shares (Note 17)   6,275,977   16   246   —   —   —  262   —   262
Purchase of treasury shares   —   —   —   —   (27,600,000)  (1,339)  (1,339)   —   (1,339)
Sale of treasury shares(a)
   —   —   (71)  —   5,939,137   221  150   —   150
Share-based payments (Note 25)   —   —   154   —          154   —   154
Other operations with minority interests   —   —   —   —          —   —   —
 
Share cancellation(Note 17)
   (30,000,000)  (75)   (1,566)  —   30,000,000   1,641  —   —   —
 
Transactions with shareholders
   (23,724,023)  (59)   (6,182)  —   8,339,137   523  (5,718)   (213)  (5,931)
 
As of December 31, 2008
   2,371,808,074   5,930   52,947   (4,876)   (143,082,095)  (5,009)  48,992   958   49,950
 
Net income 2009   —   —   8,447   —   —   —  8,447   182   8,629
Other comprehensive income (Note 17)   —   —   246   (193)   —   —  53   60   113
 
Comprehensive income
   —   —   8,693   (193)   —   —  8,500   242   8,742
 
Dividend   —   —   (5,086)  —   —   —  (5,086)   (189)  (5,275)
Issuance of common shares (Note 17)   1,414,810   3   38   —   —   —  41   —   41
Purchase of treasury shares   —   —   —   —   —   —  —   —   —
Sale of treasury shares(a)
   —   —   (143)  —   2,874,905   165  22   —   22
Share-based payments (Note 25)   —   —   106   —   —   —  106   —   106
Other operations with minority interests   —   —   (23)  —   —   —  (23)   (24)  (47)
 
Share cancellation(Note 17)
   (24,800,000)  (62)   (1,160)  —   24,800,000   1,222  —   —   —
 
Transactions with shareholders
   (23,385,190)  (59)   (6,268)  —   27,674,905   1,387  (4,940)   (213)  (5,153)
 
As of December 31, 2009
   2,348,422,884   5,871   55,372   (5,069)   (115,407,190)  (3,622)  52,552   987   53,539
 
Net income 2010   —   —   10,571   —   —   —  10,571   236   10,807
Other comprehensive income (Note 17)   —   —   (216)  2,581   —   —  2,365   9   2,374
 
Comprehensive income
   —   —   10,355   2,581   —   —  12,936   245   13,181
 
Dividend   —   —   (5,098)  —   —   —  (5,098)   (152)  (5,250)
Issuance of common shares (Note 17)   1,218,047   3   38   —   —   —  41   —   41
Purchase of treasury shares   —   —   —   —   —   —  —   —   —
Sale of treasury shares(a)
   —   —   (70)  —   2,919,511   119  49   —   49
Share-based payments (Note 25)   —   —   140   —   —   —  140   —   140
Other operations with minority interests   —   —   (199)  (7)   —   —  (206)   (223)  (429)
 
Share cancellation(Note 17)
   —   —   —   —   —   —  —   —   —
 
Transactions with shareholders
   1,218,047   3   (5,189)  (7)   2,919,511   119  (5,074)   (375)  (5,449)
 
As of December 31, 2010
   2,349,640,931   5,874   60,538   (2,495)   (112,487,679)  (3,503)  60,414   857   61,271
 

   Common shares
issued		  Paid-in surplus
and retained
earnings		  Currency
translation
adjustment		  Treasury shares  Shareholders’
equity - Group
share		  

Non-controlling
interests

  Total
shareholders’
equity		 
(M€) Number  Amount    Number  Amount    

As of Janurary 1, 2009

  2,371,808,074    5,930    52,947    (4,876)   (143,082,095)   (5,009)   48,992    958    49,950  

Net income 2009

  —    —    8,447    —    —    —    8,447    182    8,629  

Other comprehensive income (Note 17)

  —    —    246    (193)   —    —    53    60    113  

Comprehensive income

  —    —    8,693    (193)   —    —    8,500    242    8,742  

Dividend

  —    —    (5,086)   —    —    —    (5,086)   (189)   (5,275) 

Issuance of common shares (Note 17)

  1,414,810    3    38    —    —    —    41    —    41  

Purchase of treasury shares

  —    —    —    —    —    —    —    —    —  

Sale of treasury shares(a)

  —    —    (143)   —    2,874,905    165    22    —    22  

Share-based payments (Note 25)

  —    —    106    —    —    —    106    —    106  

Share cancellation (Note 17)

  (24,800,000)   (62)   (1,160)   —    24,800,000    1,222    —    —    —  

Other operations with non-controlling interests

  —    —    (23)   —    —    —    (23)   (24)   (47) 

Other items

  —    —    —    —    —    —    —    —    —  

As of December 31, 2009

  2,348,422,884    5,871    55,372    (5,069)   (115,407,190)   (3,622)   52,552    987    53,539  

Net income 2010

  —    —    10,571    —    —    —    10,571    236    10,807  

Other comprehensive income (Note 17)

  —    —    (216)   2,581    —    —    2,365    9    2,374  

Comprehensive income

  —    —    10,355    2,581    —    —    12,936    245    13,181  

Dividend

  —    —    (5,098)   —    —    —    (5,098)   (152)   (5,250) 

Issuance of common shares (Note 17)

  1,218,047    3    38    —    —    —    41    —    41  

Purchase of treasury shares

  —    —    —    —    —    —    —    —    —  

Sale of treasury shares(a)

  —    —    (70)   —    2,919,511    119    49    —    49  

Share-based payments (Note 25)

  —    —    140    —    —    —    140    —    140  

Share cancellation (Note 17)

  —    —    —    —    —    —    —    —    —  

Other operations with non-controlling interests

  —    —    (199)   (7)   —    —    (206)   (223)   (429) 

Other items

  —    —    —    —    —    —    —    —    —  

As of December 31, 2010

  2,349,640,931    5,874    60,538    (2,495)   (112,487,679)   (3,503)   60,414    857    61,271  

Net income 2011

  —    —    12,276    —    —    —    12,276    305    12,581  

Other comprehensive income (Note 17)

  —    —    231    1,404    —    —    1,635    44    1,679  

Comprehensive income

  —    —    12,507    1,404    —    —    13,911    349    14,260  

Dividend

  —    —    (6,457)   —    —    —    (6,457)   (172)   (6,629) 

Issuance of common shares (Note 17)

  14,126,382    35    446    —    —    —    481    —    481  

Purchase of treasury shares

  —    —    —    —    —    —    —    —    —  

Sale of treasury shares(a)

  —    —    (113)   —    2,933,506    113    —    —    —  

Share-based payments (Note 25)

  —    —    161    —    —    —    161    —    161  

Share cancellation (Note 17)

  —    —    —    —    —    —    —    —    —  

Other operations with non-controlling interests

  —    —    (553)   103    —    —    (450)   (123)   (573) 

Other items

  —    —    (23)   —    —    —    (23)   441    418  

As of December 31, 2011

  2,363,767,313    5,909    66,506    (988)   (109,554,173)   (3,390)   68,037    1,352    69,389  

(a)
(a)Treasury shares related to the stock option purchase plans and restricted stock grants.


F-7

TOTAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

On February 10, 2011,9, 2012, the Board of Directors established and authorized the publication of the Consolidated Financial Statements of TOTAL S.A. for the year ended December 31, 2010,2011, which will be submitted for approval to the shareholders’ meeting to be held on May 13, 2011.

11, 2012.

INTRODUCTION

The Consolidated Financial Statements of TOTAL S.A. and its subsidiaries (the Group) are presented in Euros and have been prepared on the basis of IFRS (International Financial Reporting Standards) as adopted by the European Union and IFRS as issued by the IASB (International Accounting Standard Board) as of December 31, 2010.

2011.

The accounting principles applied in the Consolidated Financial Statements as of December 31, 20102011 were the same as those that were used as of December 31, 20092010 except for amendments and interpretations of IFRS which were mandatory for the periods beginning after January 1, 20102011 (and not early adopted). Their adoption has no material impact on the Consolidated Financial Statements as of December 31, 2010.

Among these new standards or interpretations effective for annual periods beginning on or after January 1, 2010, the revised versions of IFRS 3 “Business Combinations” and IAS 27 “Consolidated and Separate Financial Statements” should be noted. These revised standards introduce new provisions regarding the accounting for business combinations. Their application is prospective.
In addition, as of January 1, 2010, jointly-controlled entities are consolidated under the equity method, as provided for in the alternative method of IAS 31 “Interests in Joint Ventures”. Until December 31, 2009, these entities were consolidated under the proportionate consolidation method. This change involves two entities and is not material (see Note 12 to the Consolidated Financial Statements).
2011.

The preparation of financial statements in accordance with IFRS requires the management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of preparation of the financial statements and reported income and expenses for the period. The management reviews these estimates and assumptions on an ongoing basis, by reference to past experience and various other factors considered as reasonable which form the basis for assessing the carrying amount of assets and liabilities. Actual results may differ significantly from these estimates, if different assumptions or circumstances apply. These judgments and estimates relate principally to the application of the successful efforts method for the oil and gas accounting, the valuation of long-lived assets, the provisions for asset retirement obligations and environmental remediation, the pensions and post-retirements benefits and the income tax computation.

Furthermore, where the accounting treatment of a specific transaction is not addressed by any accounting standard or interpretation, the management applies its judgment to

define and apply accounting policies that will lead to relevant and reliable information, so that the financial statements:

give a true and fair view of the Group’s financial position, financial performance and cash flows;

reflect the substance of transactions;

• give a true and fair view of the Group’s financial position, financial performance and cash flows;
• reflect the substance of transactions;
• are neutral;
• are prepared on a prudent basis; and
• are complete in all material aspects.

are neutral;


are prepared on a prudent basis; and

1) ACCOUNTING POLICIES

are complete in all material aspects.

1)ACCOUNTING POLICIES

Pursuant to the accrual basis of accounting followed by the Group, the financial statements reflect the effects of transactions and other events when they occur. Assets and liabilities such as property, plant and equipment and intangible assets are usually measured at amortized cost. Financial assetsAssets and liabilities are usually measured at fair value.

value when required by the standards.

Accounting policies used by the Group are described below:

A)
A) PRINCIPLES OF CONSOLIDATION

Subsidiaries that are directly controlled by the parent company or indirectly controlled by other consolidated subsidiaries are fully consolidated.

Investments in jointly-controlled entities are consolidated under the equity method. The Group accounts for jointly-controlled operations and jointly-controlled assets by recognising its share of assets, liabilities, income and expenses.


F-8

Investments in associates, in which the Group has significant influence, are accounted for by the equity method. Significant influence is presumed when the Group holds, directly or indirectly (e.g. through subsidiaries), 20% or more of the voting rights. Companies in which ownership interest is less than 20%, but over which the Company is deemed to exercise significant influence, are also accounted for by the equity method.

All significant intercompany balances, transactions and income are eliminated.

 

B)
B) BUSINESS COMBINATIONS

Business combinations are accounted for using the acquisition method. This method implies the recognition of the acquired identifiable assets, assumed liabilities and any minority interestnon-controlling interests in the companies acquired by the Group at their fair value.

The acquirer shall recognize goodwill at the acquisition date, being the excess of:

The consideration transferred, the amount of non-controlling interests and, in business combinations achieved in stages, the fair value at the acquisition date of the investment previously held in the acquired company;

Over the fair value at the acquisition date of acquired identifiable assets and assumed liabilities.

• The consideration transferred, the amount of minority interest and, in business combinations achieved in stages, the fair value at the acquisition date of the investment previously held in the acquired company
• Over the fair value at the acquisition date of acquired identifiable assets and assumed liabilities.

If the consideration transferred is lower than the fair value of acquired identifiable assets and assumed liabilities, an additional analysis is performed on the identification and valuation of the identifiable elements of the assets and liabilities. Any residual badwill is recorded as income.

In transactions with minoritynon-controlling interests, the difference between the price paid (received) and the book value of minoritynon-controlling interests acquired (sold) is recognized directly in equity.

The analysis of goodwillpurchase price allocation is finalized within one year from the acquisition date.

Non-monetary contributions by venturers to a jointly-controlled entity in exchange for an equity interest in the jointly-controlled entity are accounted for by applying guidance provided in SIC 13 “Jointly Controlled Entities — Non-Monetary Contributions by Venturers”. A gain or loss on disposal of the previously held investment is recorded up to the share of the co-venturer in the jointly controlled entity.

C)
C) FOREIGN CURRENCY TRANSLATION

The financial statements of subsidiaries are prepared in the currency that most clearly reflects their business environment. This is referred to as their functional currency.

(i)
(i)  Monetary transactions

Transactions denominated in foreign currencies other than the functional currency of the entity are translated at the exchange rate on the transaction date. At each balance sheet date, monetary assets and liabilities are translated at the closing rate and the resulting exchange differences are recognized in “Other income” or “Other expenses”.the statement of income.

(ii)
(ii)  Translation of financial statements denominated in foreign currencies

Assets and liabilities of foreign entities are translated into euros on the basis of the exchange rates at the end of the period. The income and cash flow statements are translated using the average exchange rates for the period. Foreign exchange differences resulting from such translations are either recorded in shareholders’ equity under “Currency translation adjustments” (for the Group share) or under “Minority“Non-controlling interests” (for the minority share)share of non-controlling interests) as deemed appropriate.

D)
D) SALES AND REVENUES FROM SALES
Revenues from sales are recognized when the significant risks and rewards of ownership have been passed to the buyer and when the amount is recoverable and can be reasonably measured.

Sales figures include excise taxes collected by the Group within the course of its oil distribution operations. Excise taxes are deducted from sales in order to obtain the “Revenues from sales” indicator.

(i)Sale of goods

Revenues from sales are recognized when the significant risks and rewards of ownership have been passed to the buyer and when the amount is recoverable and can be reasonably measured.

Revenues from sales of crude oil, natural gas and coal are recorded upon transfer of title, according to the terms of the sales contracts.

Revenues from the production of crude oil and natural gas properties, in which the Group has an interest with other producers, are recognized based on actual volumes sold during the period. Any difference between volumes sold and entitlement volumes, based on the Group net working interest, is recognized as “Crude oil and natural gas inventories” or “Accounts receivable, net”“Other current assets” or “Accounts payable”“Other creditors and accrued liabilities”, as appropriate.

Quantities delivered that represent production royalties and taxes, when paid in cash, are included in oil and gas sales, except for the United States and Canada.

Certain transactions within the trading activities (contracts involving quantities that are purchased to third parties then resold to third parties) are shown at their net value in sales.

Exchanges of crude oil and petroleum products within normal trading activities do not generate any income and therefore these flows are shown at their net value in both the statement of income and the balance sheet.

(ii)Sale of services

Revenues from services are recognized when the services have been rendered.

 

Revenues from gas transport are recognized when services are rendered. These revenues are based on the quantities transported and measured according to procedures defined in each service contract.

Revenues from sales of electricity are recorded upon transfer of ownership, according to the terms of the related contracts.
Revenues from services are recognized when the services have been rendered.


F-9

Shipping revenues and expenses from time-charter activities are recognized on a pro rata basis over a period that commences upon the unloading of the previous voyage and terminates upon the unloading of the current voyage. Shipping revenue recognition starts only when a charter has been agreed to by both the Group and the customer.
Oil and gas sales are inclusive of quantities delivered that represent production royalties and taxes, when paid in cash, and outside the United States and Canada.
Certain transactions within the trading activities (contracts involving quantities that are purchased to third parties then resold to third parties) are shown at their net value in sales.
Exchanges of crude oil and petroleum products within normal trading activities do not generate any income and therefore these flows are shown at their net value in both the statement of income and the balance sheet.

E)
E) SHARE-BASED PAYMENTS

The Group may grant employees stock options, create employee share purchase plans and offer its employees the opportunity to subscribe to reserved capital increases. These employee benefits are recognized as expenses with a corresponding credit to shareholders’ equity.

The expense is equal to the fair value of the instruments granted. The fair value of the options is calculated using the Black-Scholes model at the grant date. The expense is recognized on a straight-line basis between the grant date and vesting date.

For restricted share plans, the expense is calculated using the market price at the grant date after deducting the expected distribution rate during the vesting period.

The cost of employee-reserved capital increases is immediately expensed. A discount reduces the expense in order to account for the nontransferability of the shares awarded to the employees over a period of five years.

F)
F) INCOME TAXES

Income taxes disclosed in the statement of income include the current tax expenses and the deferred tax expenses.

The Group uses the liability method whereby deferred income taxes are recorded based on the temporary differences between the carrying amounts of assets and liabilities recorded in the balance sheet and their tax bases, and on carry-forwards of unused tax losses and tax credits.

Deferred tax assets and liabilities are measured using the tax rates that have been enacted or substantially enacted at the balance sheet date. The tax rates used depend on the timing of reversals of temporary differences, tax losses and other tax credits. The effect of a change in tax rate is recognized either in the Consolidated Statement of Income or in shareholders’ equity depending on the item it relates to.

Deferred tax assets are recognized when future recovery is probable.

Asset retirement obligations and finance leases give rise to the recognition of assets and liabilities for accounting purposes as described in paragraph K “Leases” and paragraph Q “Asset retirement obligations” of this Note. Deferred income taxes resulting from temporary differences between the carrying amounts and tax bases of such assets and liabilities are recognized.

Deferred tax liabilities resulting from temporary differences between the carrying amounts of equity-method investments and their tax bases are recognized. The deferred tax calculation is based on the expected future tax effect (dividend distribution rate or tax rate on the gain or loss upon disposal of these investments).

G)
G) EARNINGS PER SHARE

Earnings per share is calculated by dividing net income (Group share) by the weighted-average number of common shares outstanding during the period, excluding TOTAL shares held by TOTAL S.A. (Treasury shares) and TOTAL shares held by the Group subsidiaries which are deducted from consolidated shareholders’ equity.

Diluted earnings per share is calculated by dividing net income (Group share) by the fully-diluted weighted-average number of common shares outstanding during the period. Treasury shares held by the parent company, TOTAL S.A., and TOTAL shares held by the Group subsidiaries are deducted from consolidated shareholders’ equity. These shares are not considered outstanding for purposes of this calculation which also takes into account the dilutive effect of stock options, restricted share grants and capital increases with a subscription period closing after the end of the fiscal year.

The weighted-average number of fully-diluted shares is calculated in accordance with the treasury stock method provided for by IAS 33. The proceeds, which would be recovered in the event of an exercise of rights related to dilutive instruments, are presumed to be a share buyback at the average market price over the period. The number of shares thereby obtained leads to a reduction in the total number of shares that would result from the exercise of rights.


F-10

H) OIL AND GAS EXPLORATION AND PRODUCING PROPERTIES AND MINING ACTIVITY

The Group applies IFRS 6 “Exploration for and Evaluation of Mineral Resources”. Oil and gas exploration and production properties and assets are accounted for in accordance with the successful efforts method.

 

(i)
(i)  Exploration costs

Geological and geophysical costs, including seismic surveys for exploration purposes are expensed as incurred.

Mineral interests are capitalized as intangible assets when acquired. These acquired interests are tested for impairment on a regular basis,property-by-property, based on the results of the exploratory activity and the management’s evaluation.

In the event of a discovery, the unproved mineral interests are transferred to proved mineral interests at their net book value as soon as proved reserves are booked.

Exploratory wells are tested for impairment on awell-by-well basis and accounted for as follows:

Costs of exploratory wells which result in proved reserves are capitalized and then depreciated using the unit-of-production method based on proved developed reserves;

Costs of dry exploratory wells and wells that have not found proved reserves are charged to expense;

• Costs of exploratory wells which result in proved reserves are capitalized and then depreciated using theunit-of-production method based on proved developed reserves;
• Costs of dry exploratory wells and wells that have not found proved reserves are charged to expense;
• Costs of exploratory wells are temporarily capitalized until a determination is made as to whether the well has found proved reserves if both of the following conditions are met:
• The well has found a sufficient quantity of reserves to justify its completion as a producing well, if appropriate, assuming that the required capital expenditures are made;
• The Group is making sufficient progress assessing the reserves and the economic and operating viability of the project. This progress is evaluated on the basis of indicators such as whether additional exploratory works are under way or firmly planned (wells, seismic or significant studies), whether costs are being incurred for development studies and whether the Group is waiting for governmental or other third-party authorization of a proposed project, or availability of capacity on an existing transport or processing facility.

Costs of exploratory wells are temporarily capitalized until a determination is made as to whether the well has found proved reserves if both of the following conditions are met:

The well has found a sufficient quantity of reserves to justify its completion as a producing well, if appropriate, assuming that the required capital expenditures are made;

The Group is making sufficient progress assessing the reserves and the economic and operating viability of the project. This progress is evaluated on the basis of indicators such as whether additional exploratory works are under way or firmly planned (wells, seismic or significant studies), whether costs are being incurred for development studies and whether the Group is waiting for governmental or other third-party authorization of a proposed project, or availability of capacity on an existing transport or processing facility.

Costs of exploratory wells not meeting these conditions are charged to expense.

(ii)
(ii)  Oil and Gas producing assets

Development costs incurred for the drilling of development wells and for the construction of production facilities are capitalized, together with borrowing costs incurred during

the period of construction and the present value of estimated future costs of asset retirement obligations. The depletion rate is usually equal to the ratio of oil and gas production for the period to proved developed reserves(unit-of-production (unit-of-production method).

With respect to production sharing contracts, this computation is based on the portion of production and reserves assigned to the Group taking into account estimates based on the contractual clauses regarding the reimbursement of exploration, development and production costs (cost oil) as well as the sharing of hydrocarbon rights (profit oil).

Transportation assets are depreciated using theunit-of-production method based on throughput or by using the straight-line method whichever best reflects the economic life of the asset.

Proved mineral interests are depreciated using theunit-of-production method based on proved reserves.

(iii)
(iii)  Mining activity

Before an assessment can be made on the existence of resources, exploration costs, including studies and core drilling campaigns as a whole, are expensed.

When the assessment concludes that resources exist, the costs engaged subsequently to this assessment are capitalized temporarily while waiting for the field final development decision, if a positive decision is highly probable. Otherwise, these costs are expensed.

Once the development decision is taken, the predevelopment costs capitalized temporarily are integrated with the cost of development and depreciated from the start of production at the same pace than development assets.

Mining development costs include the initial stripping costs and all costs incurred to access resources, and particularly the costs of:

Surface infrastructures;

Machinery and mobile equipment which are significantly costly;

• Surface infrastructures;
• Machinery and mobile equipment which are significantly costly;
• Utilities and off-sites.

Utilities and off-sites.

These costs are capitalized and depreciated either on a straight line basis or depleted using the UOP method from the start of production.


F-11

I) GOODWILL AND OTHER INTANGIBLE ASSETS EXCLUDING MINERAL INTERESTS

Other intangible assets include goodwill, patents, trademarks, and lease rights.

 

Intangible assets are carried at cost, after deducting any accumulated depreciation and accumulated impairment losses.

Guidance for calculating goodwill is presented in Note 1 paragraph B to the Consolidated Financial Statements. Goodwill is not amortized but is tested for impairment annually or as soon as there is any indication of impairment (see Note 1 paragraph L to the Consolidated Financial Statements).

In equity affiliates, goodwill is included in the investment book value.

Other intangible assets (except goodwill) have a finite useful life and are amortized on a straight-line basis over 3 to 20 years depending on the useful life of the assets.

Research and development

Research costs are charged to expense as incurred.

Development expenses are capitalized when the following can be demonstrated:

the technical feasibility of the project and the availability of the adequate resources for the completion of the intangible asset;

the ability of the asset to generate probable future economic benefits;

• the technical feasibility of the project and the availability of the adequate resources for the completion of the intangible asset;
• the ability of the asset to generate probable future economic benefits;
• the ability to measure reliably the expenditures attributable to the asset; and
• the feasibility and intention of the Group to complete the intangible asset and use or sell it.

the ability to measure reliably the expenditures attributable to the asset; and

the feasibility and intention of the Group to complete the intangible asset and use or sell it.

Advertising costs are charged to expense as incurred.

J) OTHER PROPERTY, PLANT AND EQUIPMENT

J)OTHER PROPERTY, PLANT AND EQUIPMENT

Other property, plant and equipment are carried at cost, after deducting any accumulated depreciation and accumulated impairment losses. This cost includes borrowing costs directly attributable to the acquisition or production of a qualifying asset incurred until assets are placed in service. Borrowing costs are capitalized as follows:

if the project benefits from a specific funding, the capitalization of borrowing costs is based on the borrowing rate;

if the project is financed by all the Group’s debt, the capitalization of borrowing costs is based on the weighted average borrowing cost for the period.

• if the project benefits from a specific funding, the capitalization of borrowing costs is based on the borrowing rate;
• if the project is financed by all the Group’s debt, the capitalization of borrowing costs is based on the weighted average borrowing cost for the period.

Routine maintenance and repairs are charged to expense as incurred. The costs of major turnarounds of refineries

and large petrochemical units are capitalized as incurred and depreciated over the period of time between two consecutive major turnarounds.

Other property, plant and equipment are depreciated using the straight-line method over their useful lives, which are as follows:

•

Furniture, office equipment, machinery and tools

   3-12 years

•

Transportation equipments

   5-20 years

•

Storage tanks and related equipment

 10-15 years

•

Specialized complex installations and pipelines

 10-30 years

•

    Buildings

  Buildings 10-50 years

K)
K) LEASESLEASES

A finance lease transfers substantially all the risks and rewards incidental to ownership from the lessor to the lessee. These contracts are capitalized as assets at fair value or, if lower, at the present value of the minimum lease payments according to the contract. A corresponding financial debt is recognized as a financial liability. These assets are depreciated over the corresponding useful life used by the Group.

Leases that are not finance leases as defined above are recorded as operating leases.

Certain arrangements do not take the legal form of a lease but convey the right to use an asset or a group of assets in return for fixed payments. Such arrangements are accounted for as leases and are analyzed to determine whether they should be classified as operating leases or as finance leases.

L)
L) IMPAIRMENT OF LONG-LIVED ASSETS

The recoverable amounts of intangible assets and property, plant and equipment are tested for impairment as soon as any indication of impairment exists. This test is performed at least annually for goodwill.

The recoverable amount is the higher of the fair value (less costs to sell) or its value in use.

Assets are grouped into cash-generating units (or CGUs) and tested. A cash-generating unit is a homogeneous group of assets that generates cash inflows that are largely independent of the cash inflows from other groups of assets.

The value in use of a CGU is determined by reference to the discounted expected future cash flows, based upon the management’s expectation of future economic and operating conditions. IfWhen this value is less than the carrying


F-12

amount of the CGU, an impairment loss on property, plant and equipment and mineral interests, or on other intangible assets,is

recorded. It is recognized eitherallocated first to goodwill in counterpart of “Other expenses”. These impairment losses are then allocated to “Depreciation, depletion and amortization of tangible assets and mineral interests” for property, plant and equipmentmineral interests and mineral interests” or into “Other expense”, respectively. This impairment loss is first allocated to reduce the carrying amount of any goodwill.

expenses” for other intangible assets.

Impairment losses recognized in prior periods can be reversed up to the original carrying amount, had the impairment loss not been recognized. Impairment losses recognized for goodwill cannot be reversed.

M)
M) FINANCIAL ASSETS AND LIABILITIES

Financial assets and liabilities are financial loans and receivables, investments in non-consolidated companies, publicly traded equity securities, derivatives instruments and current and non-current financial liabilities.

The accounting treatment of these financial assets and liabilities is as follows:

(i)
(i)  Loans and Receivablesreceivables

Financial loans and receivables are recognized at amortized cost. They are tested for impairment, by comparing the carrying amount of the assets to estimates of the discounted future recoverable cash flows. These tests are conducted as soon as there is any evidence that their fair value is less than their carrying amount, and at least annually. Any impairment loss is recorded in the statement of income.

(ii)
(ii)  Other investments

These assets are classified as financial assets available for sale and therefore measured at their fair value. For listed securities, this fair value is equal to the market price. For unlisted securities, if the fair value is not reliably determinable, securities are recorded at their historical value. Changes in fair value are recorded in shareholders’ equity. If there is any evidence of a significant or long-lasting impairment loss, a loss is recorded in the Statement of Income. This impairment is reversed in the statement of income only when the securities are sold.

(iii)
(iii)  Derivative instruments

The Group uses derivative instruments to manage its exposure to risks of changes in interest rates, foreign exchange rates and commodity prices. Changes in fair value of derivative instruments are recognized in the statement of income or in shareholders’ equity and are recognized in the balance sheet in the accounts corresponding to their nature, according to the risk management strategy described in Note 31 to the

Consolidated Financial Statements. The derivative instruments used by the Group are the following:

•
• 

Cash management

Financial instruments used for cash management purposes are part of a hedging strategy of currency and interest rate risks within global limits set by the Group and are considered to be used for transactions (held for trading). Changes in fair value are systematically recorded in the statement of income. The balance sheet value of those instruments is included in “Current financial assets” or “Other current financial liabilities”.

•
• 

Long-term financing

When an external long-term financing is set up, specifically to finance subsidiaries, and when this financing involves currency and interest rate derivatives, these instruments are qualified as:

 i.Fair value hedge of the interest rate risk on the external debt and of the currency risk of the loans to subsidiaries. Changes in fair value of derivatives are recognized in the statement of income as are changes in fair value of underlying financial debts and loans to subsidiaries.

The fair value of those hedging instruments of long-term financing is included in the assets under “Hedging instruments on non-current financial debt” or in the liabilities under “Non-current financial debt “for the non-current portion. The current portion (less than one year) is accounted for in “Current financial assets” or “Other current financial liabilities”.

In case of the anticipated termination of derivative instruments accounted for as fair value hedges, the amount paid or received is recognized in the statement of income and:

If this termination is due to an early cancellation of the hedged items, the adjustment previously recorded as revaluation of those hedged items is also recognized in the statement of income;

If the hedged items remain in the balance sheet, the adjustment previously recorded as a revaluation of those hedged items is spread over the remaining life of those items.

ii.

Cash flow hedge of the currency risk of the external debt. Changes in fair value are recorded in equity for the effective portion of the hedging and in the statement of income for the ineffective portion of the hedging. Amounts recorded in

 

equity are transferred to the income statement when the hedged transaction affects profit or loss.

The fair value of those hedging instruments of long-term financing is included in the assets under “Hedging instruments on non-current financial debt” or in the liabilities under “Non-current financial debt” for the non-current portion. The current portion (less than one year) is accounted for in “Current financial assets” or “Other current financial liabilities”.

In case of the anticipated termination of derivative instruments accounted for as fair value hedges, the amount paid or received is recognized in the statement of income and:
• If this termination is due to an early cancellation of the hedged items, the adjustment previously recorded as revaluation of those hedged items is also recognized in the statement of income;
• If the hedged items remain in the balance sheet, the adjustment previously recorded as a revaluation of those hedged items is spread over the remaining life of those items.
ii. Cash flow hedge of the currency risk of the external debt. Changes in fair value are recorded in equity for the effective portion of the hedging and in the statement of income for the ineffective portion of


F-13

the hedging. Amounts recorded in equity are transferred to the income statement when the hedged transaction affects profit or loss.
The fair value of those hedging instruments of long-term financing is included in the assets under “Hedging instruments on non-current financial debt” or in the liabilities under “Non-current financial debt” for the non-current portion. The current portion (less than one year) is accounted for in “Current financial assets” or “Other current financial liabilities”.
If the hedging instrument expires, is sold or terminated by anticipation, gains or losses previously recognized in equity remain in equity. Amounts are recycled in the income statement only when the hedged transaction affects profit or loss.

•
• 

Foreign subsidiaries’ equity hedge

Certain financial instruments hedge against risks related to the equity of foreign subsidiaries whose functional currency is not the euro (mainly the dollar). These instruments qualify as “net investment hedges”. Changes in fair value are recorded in shareholders’ equity.

The fair value of these instruments is recorded under “Current financial assets” or “Other current financial liabilities”.

•
• 

Financial instruments related to commodity
contracts

Financial instruments related to commodity contracts, including crude oil, petroleum products, gas, power and coal purchase/sales contracts within the trading activities, together with the commodity contract derivative instruments such as energy contracts and forward freight agreements, are used to adjust the Group’s exposure to price fluctuations within global trading limits. These instruments are considered, accordingAccording to the industry practice, these instruments are considered as held for trading.trading. Changes in fair value are recorded in the statement of income. The fair value of these instruments is recorded in “Other current assets” or “Other creditors and accrued liabilities” depending on whether they are assets or liabilities.

Detailed information about derivatives positions is disclosed in Notes 20, 28, 29, 30 and 31 to the Consolidated Financial Statements.

(iv)
(iv)  Current and non-current financial liabilities

Current and non-current financial liabilities (excluding derivatives) are recognized at amortized cost, except those

for which a hedge accounting can be applied as described in the previous paragraph.

(v)
(v)  Fair value of financial instruments

Fair values are estimated for the majority of the Group’s financial instruments, with the exception of publicly traded equity securities and marketable securities for which the market price is used.

Estimated fair values, which are based on principles such as discounting future cash flows to present value, must be weighted by the fact that the value of a financial instrument at a given time may be influenced by the market environment (liquidity especially), and also the fact that subsequent changes in interest rates and exchange rates are not taken into account.

As a consequence, the use of different estimates, methodologies and assumptions could have a material effect on the estimated fair value amounts.

The methods used are as follows:

•
• 

Financial debts, swaps

The market value of swaps and of bonds that are hedged by those swaps has been determined on an individual basis by discounting future cash flows with the zero coupon interest rate curves existing at year-end.

•
• 

Financial instruments related to commodity
contracts

The valuation methodology is to mark to market all open positions for both physical and derivativepaper transactions. The valuations are determined on a daily basis using observable market data based on organized and over the counter (OTC) markets. In particular cases when market data are not directly available, the valuations are derived from observable data such as arbitrages, freight or spreads and market corroboration. For valuation of risks which are the result of a calculation, such as options for example, commonly known models are used to compute the fair value.

•
• 

Other financial instruments

The fair value of the interest rate swaps and of FRA (Forward Rate Agreement) are calculated by discounting future cash flows on the basis of zero coupon interest rate curves existing at year-end after adjustment for interest accrued but unpaid.

Forward exchange contracts and currency swaps are valued on the basis of a comparison of the negociated


F-14

 

forward rates with the rates in effect on the financial markets at year-end for similar maturities.

Exchange options are valued based on the Garman-Kohlhagen model including market quotations at year-end.

•
• 

Fair value hierarchy

IFRS 7 “Financial instruments: disclosures”, amended in 2009, introduces a fair value hierarchy for financial instruments and proposes the following three-level classification:classification :

level 1: quotations for assets and liabilities (identical to the ones that are being valued) obtained at the valuation date on an active market to which the entity has access;

level 2: the entry data are observable data but do not correspond to quotations for identical assets or liabilities;

• Level 1: quotations for assets and liabilities (identical to the ones that are being valued) obtained at the valuation date on an active market to which the entity has access;
• Level 2: the entry data are observable data but do not correspond to quotations for identical assets or liabilities;
• Level 3: the entry data are not observable data. For example: these data come from extrapolation. This level applies when there is no market or observable data and the company has to use its own hypotheses to estimate the data that other market players would have used to determine the fair value of the asset.

level 3: the entry data are not observable data. For example: these data come from extrapolation. This level applies when there is no market or observable data and the company has to use its own hypotheses to estimate the data that other market players would have used to determine the fair value of the asset.

Fair value hierarchy is disclosed in Notes 29 and 30 to the Consolidated Financial Statements.

N)
N) INVENTORIESINVENTORIES

Inventories are measured in the Consolidated Financial Statements at the lower of historical cost or market value. Costs for petroleum and petrochemical products are determined according to the FIFO(First-In, (First-In, First-Out) method and other inventories are measured using the weighted-average cost method.

Downstream (Refining — Marketing)

Petroleum product inventories are mainly comprised of crude oil and refined products. Refined products principally consist of gasoline, kerosene, diesel, fuel oil and heating oil produced by the Group’s refineries. The turnover of petroleum products does not exceed two months on average.

Crude oil costs include raw material and receiving costs. Refining costs principally include the crude oil costs, production costs (energy, labor, depreciation of producing assets) and allocation of production overhead (taxes, maintenance, insurance, etc.).Start-up costs and general administrative costs are excluded from the cost price of refined products.

Chemicals

Costs of chemical products inventories consist of raw material costs, direct labor costs and an allocation of production overhead.Start-up costs and general administrative costs are excluded from the cost of inventories of chemicals products.

O) TREASURY SHARES

O)TREASURY SHARES

Treasury shares of the parent company held by its subsidiaries or itself are deducted from consolidated shareholders’ equity. Gains or losses on sales of treasury shares are excluded from the determination of net income and are recognized in shareholders’ equity.

P)
P) PROVISIONS AND OTHER NON-CURRENT LIABILITIES

Provisions and non-current liabilities are comprised of liabilities for which the amount and the timing are uncertain. They arise from environmental risks, legal and tax risks, litigation and other risks.

A provision is recognized when the Group has a present obligation (legal or constructive) as a result of a past event for which it is probable that an outflow of resources will be required and when a reliable estimate can be made regarding the amount of the obligation. The amount of the liability corresponds to the best possible estimate.

Q)
Q) ASSET RETIREMENT OBLIGATIONS

Asset retirement obligations, which result from a legal or constructive obligation, are recognized based on a reasonable estimate in the period in which the obligation arises.

The associated asset retirement costs are capitalized as part of the carrying amount of the underlying asset and depreciated over the useful life of this asset.

An entity is required to measure changes in the liability for an asset retirement obligation due to the passage of time (accretion) by applying a risk-free discount rate to the amount of the liability. The increase of the provision due to the passage of time is recognized as “Other financial expense”.

R)
R) EMPLOYEE BENEFITS

In accordance with the laws and practices of each country, the Group participates in employee benefit plans offering retirement, death and disability, healthcare and special termination benefits. These plans provide benefits based on various factors such as length of service, salaries, and contributions made to the governmental bodies responsible for the payment of benefits.


F-15

 

These plans can be either defined contribution or defined benefit pension plans and may be entirely or partially funded with investments made in various non-Group instruments such as mutual funds, insurance contracts, and other instruments.

For defined contribution plans, expenses correspond to the contributions paid.

Defined benefit obligations are determined according to the Projected Unit Method. Actuarial gains and losses may arise from differences between actuarial valuation and projected commitments (depending on new calculations or assumptions) and between projected and actual return of plan assets.

The Group applies the corridor method to amortize its actuarial gains and losses. This method amortizes the net cumulative actuarial gains and losses that exceed 10% of the greater of the present value of the defined benefit obligation and the fair value of plan assets at the opening balance sheet date, over the average expected remaining working lives of the employees participating in the plan.

In case of a change in or creation of a plan, the vested portion of the cost of past services is recorded immediately in the statement of income, and the unvested past service cost is amortized over the vesting period.

The net periodic pension cost is recognized under “Other operating expenses”.

S)
S) CONSOLIDATED STATEMENT OF CASH FLOWS

The Consolidated Statement of Cash Flows prepared in foreign currencies has been translated into euros using the exchange rate on the transaction date or the average exchange rate for the period. Currency translation differences arising from the translation of monetary assets and liabilities denominated in foreign currency into euros using the closing exchange rates are shown in the Consolidated Statement of Cash Flows under “Effect of exchange rates”. Therefore, the Consolidated Statement of Cash Flows will not agree with the figures derived from the Consolidated Balance Sheet.

Cash and cash equivalents

Cash and cash equivalents are comprised of cash on hand and highly liquid short-term investments that are easily convertible into known amounts of cash and are subject to insignificant risks of changes in value.

Investments with maturity greater than three months and less than twelve months are shown under “Current financial assets”.

Changes in current financial assets and liabilities are included in the financing activities section of the Consolidated Statement of Cash Flows.

Non-current financial debt

Changes in non-current financial debt are presented as the net variation to reflect significant changes mainly related to revolving credit agreements.

T)
T) CARBON DIOXIDE EMISSION RIGHTS

In the absence of a current IFRS standard or interpretation on accounting for emission rights of carbon dioxide, the following principles have beenare applied:

Emission rights are managed as a cost of production and as such are recognized in inventories:

Emission rights allocated for free are booked in inventories with a nil carrying amount,

Purchased emission rights are booked at acquisition cost,

Sales or annual restorations of emission rights consist of decreases in inventories recognized based on a weighted average cost,

If the carrying amount of inventories at closing date is higher than the market value, an impairment loss is recorded.

At each closing, a provision is recorded in order to materialize the obligation of emission rights restoration related to the emissions of the period. This provision is calculated based on estimated emissions of the period, valued at weighted average cost of the inventories at the end of the period. It is reversed when the emission rights are restored.

If emission rights to be delivered at the end of the compliance period are higher than emission rights (allocated and purchased) booked in inventories, the shortage is accounted for as a liability at market value.

Forward transactions are recognized at their fair market value in the balance sheet. Changes in the fair value of such forward transactions are recognized in the statement of income.

U)
• emission rights granted free of charge are accounted for at zero carrying amount;
• liabilities resulting from potential differences between available quotas and quotas to be delivered at the end of the compliance period are accounted for as liabilities and measured at fair market value;
• spot market transactions are recognized in income at cost; and
• forward transactions are recognized at their fair market value on the face of the balance sheet. Changes in the fair value of such forward transactions are recognized in income.
U) NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

Pursuant to IFRS 5 “Non-current assets held for sale and discontinued operations”, assets and liabilities of affiliates that are held for sale are presented separately on the face of the balance sheet.

 

Net income from discontinued operations is presented separately on the face of the statement of income. Therefore, the notes to the Consolidated Financial Statements related to the statement of income only refer to continuing operations.

A discontinued operation is a component of the Group for which cash flows are independent. It represents a major line of business or geographical area of operations which has been disposed of or is currently being held for sale.

V)
V) ALTERNATIVE IFRS METHODS

For measuring and recognizing assets and liabilities, the following choices among alternative methods allowable under IFRS have been made:

• 

property, plant and equipment, and intangible assets are measured using historical cost model instead of revaluation model;


F-16

actuarial gains and losses on pension and other post-employment benefit obligations are recognized according to the corridor method (see Note 1 paragraph R to the Consolidated Financial Statements);

jointly-controlled entities are consolidated under the equity method, as provided for in the alternative method of IAS 31 “Interests in joint ventures”.

W) NEW ACCOUNTING PRINCIPLES NOT YET IN EFFECT

• actuarial gains and losses on pension and other post-employment benefit obligations are recognized according to the corridor method (see Note 1 paragraph R to the Consolidated Financial Statements);
• jointly-controlled entities are consolidated under the equity method, as provided for in the alternative method of IAS 31 “Interests in joint ventures”, as from January 1st, 2010.
W) NEW ACCOUNTING PRINCIPLES NOT YET IN EFFECT
The standards or interpretations published respectively by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) which were not yet in effect and not adopted by the European Union at December 31, 2010, were2011, are as follows:

IFRS 9 “Financial Instruments”

In November 2009, the IASB issued standard IFRS 9 “Financial Instruments” that introduces new requirements for the classification and measurement of financial assets, and included in October 2010 requirements regarding classification and measurement of financial liabilities. This standard shall be completed with texts on impairment and hedge accounting. Under standard IFRS 9, financial assets and liabilities are generally measured either at fair value through profit or loss or at amortised cost if certain conditions are met. The standard isshould be applicable for annual periods starting on or after January 1, 2013.2015. The application of the standard as published in 2010 should not have any material effect on the Group’s consolidated balance sheet, statement of income and shareholder’s equity.

Revised

In May 2011, the IASB issued a package of standards on consolidation : standard IFRS 10 “Consolidated financial statements”, standard IFRS 11 “Joint arrangements”, standard IFRS 12 “Disclosure of interests in other entities”, revised standard IAS 24 “Related Party Disclosures”27 “Separate financial statements” and revised standard IAS 28 “Investments in associates and joint ventures”. These standards are applicable for annual periods beginning on or after January 1, 2013. The impact of the application of these standards is currently assessed by the Group.

In November 2009,June 2011, the IASB issued revised standard IAS 24 “Related Party Disclosures” that clarifies19 “Employee benefits”, which leads in particular to the definitionfull recognition of the net position in respect of employee benefits obligations (liabilities net of assets) in the balance sheet, to the elimination of the corridor approach currently used by the Group and to the obligation to evaluate the expected return on plan assets on a related party and reducesnormative basis (via the disclosure requirements for entities controlled by a government. Thediscount rate used to value the debt). This standard is applicable for annual periods startingbeginning on or after January 1, 2011.2013. The impact of the application of this standard should not have any material impact on information presentedis currently assessed by the Group.

In addition, the IASB published in the notes to the Consolidated Financial Statements.

IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments”
In November 2009, the IFRIC issued interpretation IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments”. The interpretation deals with accounting for debt to equity swaps. It clarifies that equity instruments issued are measured at fairMay 2011 standard IFRS 13 “Fair value and that any difference with the carrying amount of the liability is recognised in profit or loss. The interpretation is effectivemeasurement”, applicable for annual periods startingbeginning on or after January 1, 2013, and in June 2011 revised standard IAS 1 “Presentation of financial statements”, applicable for annual periods beginning on or after July 1, 2010 (i.e. starting January 1, 2011 for the Group).2012. The application of IFRIC 19these standards should not have any material effect on the Group’s consolidated balance sheet, statement of income and shareholder’s equity.

2) MAIN INDICATORS — INFORMATION BY BUSINESS SEGMENT

2)MAIN INDICATORS — INFORMATION BY BUSINESS SEGMENT

Performance indicators excluding the adjustment items, such as adjusted operating income, adjusted net operating income, and adjusted net income are meant to facilitate the analysis of the financial performance and the comparison of income between periods.

Adjustment items

The detail of these adjustment items is presented in Note 4 to the Consolidated Financial Statements.

Adjustment items include :

(i)
(i) Special items

Due to their unusual nature or particular significance, certain transactions qualified as “special items” are excluded from the business segment figures. In general,

special items relate to transactions that are significant, infrequent or unusual. However, in certain instances, transactions such as restructuring costs or assets disposals, which are not considered to be representative of the normal course of business, may be qualified as special items although they may have occurred within prior years or are likely to occur again within the coming years.

(ii)
(ii) The inventory valuation effect

The adjusted results of the Downstream and Chemicals segments are presented according to the replacement cost method. This method is used to assess the segments’ performance and facilitate the comparability of the segments’ performance with those of its competitors.

In the replacement cost method, which approximates the LIFO(Last-In, (Last-In, First-Out) method, the variation of inventory values in the statement of income is, depending on the nature of the inventory, determined using either the month-end prices differential between one period and another or the average prices of the period rather than the historical value. The inventory valuation effect is the difference between the results according to the FIFO(First-In, (First-In, First-Out) and the replacement cost.


F-17

(iii)Effect of changes in fair value

As from January 1, 2011, the effect of changes in fair value presented as adjustment item reflects for some transactions differences between internal measure of performance used by TOTAL’s management and the accounting for these transactions under IFRS.

IFRS requires that trading inventories be recorded at their fair value using period end spot prices. In order to best reflect the management of economic exposure through derivative transactions, internal indicators used to measure performance include valuations of trading inventories based on forward prices.

Furthermore, TOTAL, in its trading activities, enters into storage contracts, which future effects are recorded at fair value in Group’s internal economic performance. IFRS precludes recognition of this fair value effect.

(iii) (iv)Until June 30, 2010, TOTAL’s equity share of adjustment items reconciling “Business net income” to Net income attributable to equity holders of Sanofi-AventisSanofi (see Note 3, paragraph on the sales of Sanofi-AventisSanofi shares and loss of significant influence over Sanofi-Aventis)Sanofi)

Main indicators:indicators

(i)
(i) Operating income (measure used to evaluate operating performance)

Revenue from sales after deducting cost of goods sold and inventory variations, other operating expenses,

exploration expenses and depreciation, depletion, and amortization.

Operating income excludes the amortization of intangible assets other than mineral interests, currency translation adjustments and gains or losses on the disposal of assets.

(ii)
(ii) Net operating income (measure used to evaluate the return on capital employed)

Operating income after taking into account the amortization of intangible assets other than mineral interests, currency translation adjustments, gains or losses on the disposal of assets, as well as all other income and expenses related to capital employed (dividends from non-consolidated companies, equity in income of affiliates, capitalized interest expenses), and after income taxes applicable to the above.

The only income and expense not included in net operating income but included in net income are interest expenses related to net financial debt, after applicable income taxes (net cost of net debt) and minoritynon-controlling interests.

(iii)
(iii) Adjusted income

Operating income, net operating income, or net income excluding the effect of adjustment items described above.

(iv)
(iv) Fully-diluted adjusted earnings per share

Adjusted net income divided by the fully-diluted weighted-average number of common shares.

(v)
(v) Capital employed

Non-current assets and working capital, at replacement cost, net of deferred income taxes and non-current liabilities.

(vi)
(vi) ROACE (Return on Average Capital Employed)

Ratio of adjusted net operating income to average capital employed between the beginning and the end of the period.

(vii)ROE (Return on Equity)

Ratio of adjusted consolidated net income to average adjusted shareholders’ equity (after distribution) between the beginning and the end of the period.

(vii) (viii)Net debt

Non-current debt, including current portion, current borrowings, other current financial liabilities less cash and cash equivalents and other current financial assets.

 

3)
3) CHANGES IN THE GROUP STRUCTURE, MAIN ACQUISITIONS AND DIVESTMENTS

During 2011, 2010 2009 and 2008,2009, main changes in the Group structure and main acquisitions and divestments were as follows:

2011

Upstream

TOTAL finalized in March 2011 the acquisition from Santos of an additional 7.5% interest in Australia’s GLNG project. This increases TOTAL’s overall stake in the project to 27.5%.

The acquisition cost amounts to€202 million ($281 million) and mainly corresponds to the value of mineral interests that have been recognized as intangible assets in the consolidated balance sheet for€227 million.

In March 2011, Total E&P Canada Ltd., a TOTAL subsidiary, and Suncor Energy Inc. (Suncor) have finalized a strategic oil sands alliance encompassing the Suncor-operated Fort Hills mining project, the TOTAL-operated Joslyn mining project and the Suncor-operated Voyageur upgrader project. All three assets are located in the Athabasca region of the province of Alberta, in Canada.

TOTAL acquired 19.2% of Suncor’s interest in the Fort Hills project, increasing TOTAL’s overall interest in the project to 39.2%. Suncor, as operator, holds 40.8%. TOTAL also acquired a 49% stake in the Suncor-operated Voyageur upgrader project. For those two acquisitions, the Group paid€1,937 million (CAD 2,666 million) mainly representing the value of intangible assets for€474 million and the value of tangible assets for€1,550 million.

Furthermore, TOTAL sold to Suncor 36.75% interest in the Joslyn project for€612 million (CAD 842 million). The Group, as operator, retains a 38.25% interest in the project.

TOTAL finalized in April 2011 the sale of its 75.8% interest in its upstream Cameroonian affiliate Total E&P Cameroun to Perenco, for an amount of€172 million ($247 million), net of cash sold.

TOTAL and the Russian company Novatek signed in March 2011 two Memorandums of Cooperation to develop the cooperation between TOTAL on one side, and Novatek and its main shareholders on the other side.

This cooperation is developed around the two following axes:

In April 2011, TOTAL took a 12.09% shareholding in Novatek for an amount of€2,901 million ($4,108 million). In December 2011, TOTAL finalized the acquisition of an additional 2% interest in Novatek for an amount of€596 million ($796 million), increasing TOTAL’s overall interest in Novatek to 14.09%. TOTAL considers that it has a significant influence especially through its representation on the Board of Directors of Novatek and its participation in the major Yamal LNG project. Therefore, the interest in Novatek has been accounted for by the equity method since the second quarter of 2011.

In October 2011, TOTAL finalized the acquisition of a 20% interest in the Yamal LNG project and has become Novatek’s partner in this project.

After the all-cash tender of $23.25 per share launched on April 28, 2011 and completed on June 21, 2011, TOTAL has acquired a 60% stake in SunPower Corp., a U.S. company listed on Nasdaq with headquarters in San Jose (California), one of the most established players in the American solar industry. Shares of SunPower Corp. continue to be traded on the Nasdaq.

The acquisition cost, whose cash payment occurred on June 21, 2011, amounts to€974 million ($1,394 million). In accordance with revised IFRS 3, TOTAL is currently assessing the fair value of identifiable acquired assets, liabilities and contingent liabilities. Based on available information, provisional fair value of net assets acquired at 100% amounts to $1,512 million.

Given the estimated fair value of instruments that are likely to confer rights to non-controlling interests, provisional goodwill amounts to $533 million. This goodwill must be allocated within twelve months from the acquisition date.

 
2010

Provisional allocation of the acquisition price and the amount of non-controlling interests at the acquisition date are as follows:

• Upstream
(M$)•  Total E&P Canada Ltd.Fair value at the
acquisition date

Intangible assets

465

Tangible assets

589

Accounts receivable, net

396

Other current assets

223

Other capital employed

292

Net debt

(453) 

Net assets of SunPower (100%) as of June 21, 2011

1,512

Share attributable at 100% to non-controlling interests

(76) 

Net assets of SunPower (100%) as of June 21, 2011 to share

1,436

Group share 60%

861

Goodwill

533

Acquisition cost of SunPower’s shares

1,394

Non-controlling interests (40%)

575

Reinclusion of the share attributable at 100% to non-controlling interests

76

Non-controlling interests as of June 21, 2011

651

Since the acquisition date, sales and net income Group share (before impairment of goodwill) realized by SunPower amount respectively to $1,447 million and $(56) million. The goodwill arising from the acquisition of SunPower has been impaired in 2011 (see Note 4E to the Consolidated Financial Statements).

Acquisition-related costs recognized in the statement of income for the period amount to€9 million.

As part of the transaction, various agreements were signed, including a financial guarantee agreement through which TOTAL guarantees up to $1 billion SunPower’s repayments obligations under letters of credit that would be issued during the next five years for the development of solar power plants and large roofs activities. Furthermore, SunPower’s off-balance sheet commitments and contractual obligations are now included in TOTAL’s notes to the Consolidated Financial Statements (see Note 23 to the Consolidated Financial Statements).

TOTAL finalized in July 2011 the sale of 10% of its interest in the Colombian pipeline OCENSA. The Group still holds a 5.2% interest in this asset.

TOTAL finalized in September 2011 the acquisition of Esso Italiana’s interests respectively in the Gorgoglione concession (25% interest), which contains the Tempa Rossa field, and in two exploration licenses located in the same area (51.7% for each one). The acquisition increases TOTAL’s interest in the operated Tempa Rossa field to 75%.

TOTAL finalized in December 2011 the sale to Silex Gas Norway AS, a wholly owned subsidiary of Allianz, of its entire stake in Gassled (6.4%) and related entities for an amount of€477 million (NOK 3.7 billion).

Total E&P USA Inc. signed in December 2011 an agreement to enter into a Joint Venture with Chesapeake Exploration L.L.C., a subsidiary of Chesapeake Energy Corporation, and its partner EnerVest Ltd. Under the terms of this agreement, TOTAL acquired a 25% share in Chesapeake’s and EnerVest’s liquids-rich area of the Utica shale play. TOTAL paid to Chesapeake and EnerVest€500 million ($696 million) in cash for the acquisition of these assets. TOTAL will also be committed to pay additional amounts up to $1.63 billion over a maximum period of 7 years in the form of a 60% carry of Chesapeake and EnerVest’s future capital expenditures on drilling and completion of wells within the Joint Venture. Furthermore, TOTAL will also acquire a 25% share in any new acreage which will be acquired by Chesapeake in the liquids-rich area of the Utica shale play.

Downstream

TOTAL and International Petroleum Investment Company (a company wholly-owned by the Government of Abu Dhabi) entered into an agreement on February 15, 2011 for the sale, to International Petroleum Investment Company (IPIC), of the 48.83% equity interest held by TOTAL in the share capital of CEPSA, to be completed within the framework of a public tender

offer being launched by IPIC for all the CEPSA shares not yet held by IPIC, at a unit purchase price of€28 per CEPSA share. TOTAL subsidiary, signed in July 2010 an agreement with UTS Energy Corporation (UTS)sold to acquire UTS Corporation withIPIC all of its main asset, a 20%equity interest in the Fort Hills mining project in the Athabasca regionCEPSA and received, as of the Canadian provinceJuly 29, 2011, an amount of Alberta.€3,659 million.

TOTAL finalized in October 2011 the sale of most of its Marketing assets in the United Kingdom, the Channel Islands and the Isle of Man, to Rontec Investments LLP, a consortium led by Snax 24, one of the leading independent forecourt operators in the United Kingdom, for an amount of€424 million (£368 million).

Chemicals

TOTAL finalized in July 2011 the sale of its photocure and coatings resins businesses to Arkema for an amount of€520 million, net of cash sold.

2010

Upstream

Total E&P Canada Ltd., a TOTAL subsidiary, signed in July 2010 an agreement with UTS Energy Corporation (UTS) to acquire UTS Corporation with its main asset, a 20% interest in the Fort Hills mining project in the Athabasca region of the Canadian province of Alberta.

Total E&P Canada completed on September 30, 2010 the acquisition of all UTS shares for a cash amount of 3.08 Canadian dollars per share. Taking into account the cash held by UTS and acquired by TOTAL (€(€232 million), the cost of the acquisition for TOTAL amountsamounted to €862€862 million. This amount mainly representsrepresented the value of mineral interests that have been recognized as intangible assets onin the face of the Consolidated Balance Sheetconsolidated balance sheet for €646€646 million and the value of tangible assets that have been recognized onin the faceconsolidated balance sheet for€217 million.

TOTAL completed in September 2010 an agreement for the sale to BP and Hess of its interests in the Consolidated Balance SheetValhall (15.72%) and Hod (25%) fields, in the Norwegian North Sea, for €217an amount of€800 million.

TOTAL signed in September 2010 an agreement with Santos and Petronas to acquire a 20% interest in the GLNG project in Australia. Upon completion of this transaction finalised in October 2010, the project brought together Santos (45%, operator), Petronas (35%) and TOTAL (20%).

• TOTAL completed in September 2010 an agreement for the sale to BP and Hess of its interests in the Valhall (15.72%) and Hod (25%) fields, in the Norwegian North Sea, for an amount of €800 million.
• TOTAL signed in September 2010 an agreement with Santos and Petronas to acquire a 20% interest in the GLNG project in Australia. Upon completion of this transaction finalised in October 2010, the project brings together Santos (45%, operator), Petronas (35%) and TOTAL (20%).

The acquisition cost amountsamounted to €566€566 million and it mainly representsrepresented the value of mineral interests that have been recognized as intangible assets on


F-18

in the consolidated balance sheet for€617 million.

the face of the Consolidated Balance Sheet for €617 million.
In addition, TOTAL announced in December 2010 the signature of an agreement to acquire an additional 7.5% interest in this project (see Note 34project.

TOTAL sold in December 2010 its 5% interest in Block 31, located in the Angolan ultra deep offshore, to the Consolidated Financial Statements).company China Sonangol International Holding Limited.

Downstream

 •TOTAL sold in December 2010 its 5% interest in Block 31, located in the Angolan ultra deep offshore, to the company China Sonangol International Holding Limited.
• Downstream
 • 

TOTAL and ERG announced in January 2010 that they have signed an agreement to create a joint venture, named TotalErg, by contribution of the major part of their activities in the refining and marketing business in Italy. TotalErg has been operational since October 1st, 2010. The shareholder pact calls for joint governance as well as operating independence for the new entity. TOTAL’s interest in TotalErg is 49% and is accounted for by the equity method (see Note 12 to the Consolidated Financial Statements).

Chemicals

• Chemicals

TOTAL closed on April 1, 2010 the sale of its consumer specialty chemicals business, Mapa Spontex, to U.S.-based Jarden Corporation for an enterprise value of€335 million.

• TOTAL closed on April 1, 2010 the sale of its consumer specialty chemicals business, Mapa Spontex, toU.S.-based Jarden Corporation for an enterprise value of €335 million.

Corporate

• Corporate

On March 24, 2010, TOTAL S.A. filed a public tender offer followed by a squeeze out with the French Autorité des Marchés Financiers (AMF) in order to buy the 1,468,725 Elf Aquitaine shares that it did not already hold, representing 0.52% of Elf Aquitaine’s share capital and 0.27% of its voting rights, at a price of€305 per share (including the remaining 2009 dividend). On April 13, 2010, the French Autorité des marchés financiers (AMF) issued its clearance decision for this offer.

• On March 24, 2010, TOTAL S.A. filed a public tender offer followed by a squeeze out with the French Autorité des Marchés Financiers (AMF) in order to buy the 1,468,725 Elf Aquitaine shares that it did not already hold, representing 0.52% of Elf Aquitaine’s share capital and 0.27% of its voting rights, at a price of €305 per share (including the remaining 2009 dividend). On April 13, 2010, the French Autorité des Marchés Financiers (AMF) issued its clearance decision for this offer.

The public tender offer was open from April 16 to April 29, 2010 inclusive. The Elf Aquitaine shares targeted by the offer which were not tendered to the offer have been transferred to TOTAL S.A. under the squeeze out upon payment to the shareholders equal to the offer price on the first trading day after the offer closing date, i.e. on April 30, 2010.

 

On April 30, 2010, TOTAL S.A. announced that, following the squeeze out, it held 100% of Elf Aquitaine shares, with the transaction amounting to €450€450 million.

In application of revised standard IAS 27 “Consolidated and Separate Financial Statements”, effective for annual periods beginning on or after January 1, 2010, transactions with minoritynon-controlling interests are accounted for as equity transactions, i.e. in consolidated shareholder’s equity.

As a consequence, following the squeeze out of the Elf Aquitaine shares by TOTAL S.A., the difference between the consideration paid and the book value of minoritynon-controlling interests acquired was recognized directly as a decrease in equity.

During 2010, TOTAL progressively sold 1.88% of Sanofi’s share capital, thus reducing its interest to 5.51%.

• During 2010, TOTAL progressively sold 1.88% of Sanofi-Aventis’ share capital, thus reducing its interest to 5.51%.

As from July 1, 2010, given its reduced representation on the Board of Directors and the decrease in the percentage of voting rights, TOTAL ceasesceased to have a significant influence over Sanofi-Aventis and no longer consolidatesconsolidated this investment under the equity method. The investment in Sanofi-AventisSanofi is accounted for as a financial asset available for sale in the line “Other investments” of the consolidated balance sheet at its fair value, i.e. at the stock price.

Net income as of December 31, 2010 includesincluded a €135€135 million gain relating to this change in the accounting treatment.

2009

Upstream

In December 2009, TOTAL signed an agreement with Chesapeake Energy Corporation whereby TOTAL acquired a 25% share in Chesapeake’s Barnett shale gas portfolio located in the United States (State of Texas). The acquisition cost of these assets amounted to€1,562 million and it represented the value of mineral interests that have been recognized as intangible assets in the consolidated balance sheet for€1,449 million and the value of tangible assets that have been recognized in the consolidated balance sheet for€113 million. As no cash payment has occurred in 2009, a corresponding debt has been recognized

2009
• Upstream
 • In December 2009, TOTAL signed an agreement with Chesapeake Energy Corporation whereby Total acquired a 25% share in Chesapeake’s Barnett shale gas portfolio located

in the United States (State of Texas). The acquisition cost of these assets amounted to €1,562 million and it represented the value of mineral interests that have been recognized as intangible assets on the face of the Consolidated Balance Sheet for €1,449 million and the value of tangible assets that have been recognized on the face of the Consolidated Balance Sheet for €113 million. As no cash payment has occurred in 2009, a corresponding debt has been recognized in the


F-19

sections “Provisions and other non-current liabilities” and “Other creditors and accrued liabilities” for €818€818 million and €744€744 million respectively.

Corporate

• Corporate

• 

During 2009, TOTAL progressively sold 3.99% of Sanofi-Aventis’ share capital, thus reducing its interest to 7.39%. Sanofi-Aventis is accounted for by the equity method in TOTAL’s Consolidated Financial Statements for the year ended December 31, 2009.

2008
• Upstream
• Pursuant to the tender offer described in the prospectus on May 13, 2008 and renewed by the notices on June 19, July 4 and July 16, 2008, TOTAL acquired 100% of Synenco Energy Inc’s Class A ordinary shares. Synenco’s main asset is a 60% interest in the Northern Lights project in the Athabasca region of the Canadian province of Alberta.
The acquisition cost, net of cash acquired (€161 million) for all shares amounted to €352 million. This cost essentially represented the value of the company’s mineral interests that have been recognized as intangible assets on the face of the Consolidated Balance Sheet for €221 million.
Synenco Energy Inc. is fully consolidated in TOTAL’s Consolidated Financial Statements. Its contribution toStatements for the consolidated net income for fiscal year 2008 was not material.ended December 31, 2009.

• In August 2008, TOTAL acquired the Dutch company Goal Petroleum BV. The acquisition cost amounted to €349 million. This cost essentially represented the value of the company’s mineral interests that have been recognized as intangible assets on the face of the Consolidated Balance Sheet for €292 million.
Goal Petroleum BV is fully consolidated in TOTAL’s Consolidated Financial Statements. Its contribution to the consolidated net income for fiscal year 2008 was not material.
• Pursuant to the agreements signed between the partners in November 2008, the Group’s participation in the Kashagan field decreased from 18.52% to 16.81%.
• Corporate
• During 2008, TOTAL progressively sold 1.68% of Sanofi-Aventis’ share capital, thus reducing its interest to 11.38%. Sanofi-Aventis is accounted for by the equity method in TOTAL’s Consolidated Financial Statements for the year ended December 31, 2008.
4) BUSINESS SEGMENT INFORMATION

4)BUSINESS SEGMENT INFORMATION

Financial information by business segment is reported in accordance with the internal reporting system and shows internal segment information that is used to manage and measure the performance of TOTAL. The Group’s activities are conducted through three business segments:

the Upstream segment includes the activities of the Exploration & Production division and the Gas & Power division;

the Downstream segment includes activities of the Refining & Marketing division and Chemicals.the Trading & Shipping division; and

the Chemicals segment includes Base Chemicals and Specialties.

• The Upstream segment includes the activities of the Exploration & Production division and the Gas & Power division;
• The Downstream segment includes activities of the Refining & Marketing division and the Trading & Shipping division; and
• The Chemicals segment includes Base Chemicals and Specialties.

The Corporate segment includes the operating and financial activities of the holding companies (including the investment in Sanofi-Aventis)Sanofi).

The operational profit and assets are broken down by business segment prior to the consolidation and inter-segment adjustments.

Sales prices between business segments approximate market prices.

Furthermore, the Group announced in October 2011 a plan of reorganization of its business segments Downstream and Chemicals. The consultation and notification process towards employee representatives is finished and this reorganization became effective as of January 1st, 2012.

This plan changed the organization through the creation of:

a Refining & Chemicals segment that is a major production hub combining TOTAL’s refining, petrochemicals, fertilizers and specialty chemicals operations. This segment also includes Trading & Shipping activities ;


F-20

a Supply & Marketing segment that is dedicated to the global supply and marketing of petroleum products.

 

A)
A) INFORMATION BY BUSINESS SEGMENT

                         
For the year ended December 31, 2010
                  
(M€) Upstream
  Downstream
  Chemicals
  Corporate
  Intercompany
  Total
 
Non-Group sales  18,527   123,245   17,490   7   —   159,269 
Intersegment sales  22,540   4,693   981   186   (28,400)  — 
Excise taxes  —   (18,793)  —   —   —   (18,793)
                         
Revenues from sales
  41,067   109,145   18,471   193   (28,400)  140,476 
                         
Operating expenses  (18,271)  (105,660)  (16,974)  (665)  28,400   (113,170)
Depreciation, depletion and amortization of tangible assets and mineral interests  (5,346)  (2,503)  (533)  (39)  —   (8,421)
                         
Operating income
  17,450   982   964   (511)  —   18,885 
                         
Equity in income (loss) of affiliates and other items  1,533   141   215   595   —   2,484 
Tax on net operating income  (10,131)  (201)  (267)  263   —   (10,336)
                         
Net operating income
  8,852   922   912   347   —   11,033 
                         
Net cost of net debt                      (226)
Minority interests                      (236)
                         
Net income
                      10,571 
                         
                         
For the year ended December 31, 2010 (adjustments(a))
                  
(M€) Upstream
  Downstream
  Chemicals
  Corporate
  Intercompany
  Total
 
Non-Group sales                        
Intersegment sales                        
Excise taxes                        
                         
Revenues from sales
                        
                         
Operating expenses  —   923   92   —           1,015 
Depreciation, depletion and amortization of tangible assets and mineral interests  (203)  (1,192)  (21)  —       (1,416)
                         
Operating income(b)
  (203)  (269)  71   —       (401)
                         
Equity in income (loss) of affiliates and other items(c)
  183   (126)  (16)  227       268 
Tax on net operating income  275   149   —   (6)      418 
                         
Net operating income(b)
  255   (246)  55   221       285 
                         
Net cost of net debt                      — 
Minority interests                      (2)
                         
Net income
                      283 
                         

For the year ended December 31, 2011
(M€)		  Upstream  Downstream  Chemicals  Corporate  Intercompany  Total 

Non-Group sales

   23,298    141,907    19,477    11    —    184,693  

Intersegment sales

   27,301    5,983    1,234    185    (34,703)   —  

Excise taxes

   —    (18,143)   —    —    —    (18,143) 

Revenues from sales

   50,599    129,747    20,711    196    (34,703)   166,550  

Operating expenses

   (23,079)   (126,145)   (19,566)   (667)   34,703    (134,754) 

Depreciation, depletion and amortization of tangible assets and mineral interests

   (5,076)   (1,908)   (487)   (35)   —    (7,506) 

Operating income

   22,444    1,694    658    (506)   —    24,290  

Equity in income (loss) of affiliates and other items

   1,596    401    471    336    —    2,804  

Tax on net operating income

   (13,506)   (409)   (225)   (38)   —    (14,178) 

Net operating income

   10,534    1,686    904    (208)   —    12,916  

Net cost of net debt

        (335) 

Non-controlling interests

                       (305) 

Net income

                       12,276  

For the year ended December 31, 2011
(adjustments(a)) (M€)		  Upstream  Downstream  Chemicals  Corporate  Intercompany   Total 

Non-Group sales

   45         45  

Intersegment sales

         —  

Excise taxes

                        —  

Revenues from sales

   45         45  

Operating expenses

   —    1,156    (33)   —      1,123  

Depreciation, depletion and amortization of tangible assets and mineral interests

   (75)   (700)   (6)   —         (781) 

Operating income(b)

   (30)   456    (39)   —    —     387  

Equity in income (loss) of affiliates and other items

   191    256    209    90      746  

Tax on net operating income

   (32)   (109)   (41)   (80)        (262) 

Net operating income(b)

   129    603    129    10      871  

Net cost of net debt

         —  

Non-controlling interests

                        (19) 

Net income

                        852  

(a)Adjustments include special items, inventory valuation effect and, as from January 1st, 2011, the effect of changes in fair value.

(b)    Of which inventory valuation effect

(a)UpstreamDownstreamChemicalsCorporate

           on operating income

—1,224(9) —

           on net operating income

—85910—

For the year ended December 31, 2011
(adjusted) (M€) (a)		  Upstream  Downstream  Chemicals  Corporate  Intercompany  Total 

Non-Group sales

   23,253    141,907    19,477    11    —    184,648  

Intersegment sales

   27,301    5,983    1,234    185    (34,703)   —  

Excise taxes

   —    (18,143)   —    —    —    (18,143) 

Revenues from sales

   50,554    129,747    20,711    196    (34,703)   166,505  

Operating expenses

   (23,079)   (127,301)   (19,533)   (667)   34,703    (135,877) 

Depreciation, depletion and amortization of tangible assets and mineral interests

   (5,001)   (1,208)   (481)   (35)   —    (6,725) 

Adjusted operating income

   22,474    1,238    697    (506)   —    23,903  

Equity in income (loss) of affiliates and other items

   1,405    145    262    246    —    2,058  

Tax on net operating income

   (13,474)   (300)   (184)   42    —    (13,916) 

Adjusted net operating income

   10,405    1,083    775    (218)   —    12,045  

Net cost of net debt

        (335) 

Non-controlling interests

                       (286) 

Adjusted net income

                       11,424  

Adjusted fully-diluted earnings per share (€)

                       5.06  

(a)Except for earnings per share

For the year ended December 31, 2011
(M€)		  Upstream  Downstream  Chemicals  Corporate  Intercompany  Total 

Total expenditures

   21,689    1,870    847    135      24,541  

Total divestments

   2,656    3,235    1,164    1,523      8,578  

Cash flow from operating activities

   17,054    2,165    512    (195)     19,536  

Balance sheet as of December 31, 2011

        

Property, plant and equipment, intangible assets, net

   64,069    7,918    4,638    245      76,870  

Investments in equity affiliates

   8,932    699    1,118    —      10,749  

Loans to equity affiliates and other non-current assets

   4,793    1,749    1,144    3,105      10,791  

Working capital

   1,240    9,627    2,585    (1,374)     12,078  

Provisions and other non-current liabilities

   (20,095)   (2,577)   (1,593)   (1,136)     (25,401) 

Assets and liabilities classified as held for sale

   —    —    —    —      —  

Capital Employed (balance sheet)

   58,939    17,416    7,892    840      85,087  

Less inventory valuation effect

   —    (3,615)   (419)   13      (4,021) 

Capital Employed (Business segment information)

   58,939    13,801    7,473    853      81,066  

ROACE as a percentage

   20%    7%    10%           16%  

For the year ended December 31, 2010
(M€)		  Upstream  Downstream  Chemicals  Corporate  Intercompany  Total 

Non-Group sales

   18,527    123,245    17,490    7    —    159,269  

Intersegment sales

   22,540    4,693    981    186    (28,400)   —  

Excise taxes

   —    (18,793)   —    —    —    (18,793) 

Revenues from sales

   41,067    109,145    18,471    193    (28,400)   140,476  

Operating expenses

   (18,271)   (105,660)   (16,974)   (665)   28,400    (113,170) 

Depreciation, depletion and amortization of tangible assets and mineral interests

   (5,346)   (2,503)   (533)   (39)   —    (8,421) 

Operating income

   17,450    982    964��   (511)   —    18,885  

Equity in income (loss) of affiliates and other items

   1,533    141    215    595    —    2,484  

Tax on net operating income

   (10,131)   (201)   (267)   263    —    (10,336) 

Net operating income

   8,852    922    912    347    —    11,033  

Net cost of net debt

        (226) 

Non-controlling interests

                       (236) 

Net income

                       10,571  

For the year ended December 31, 2010
(adjustments(a)) (M€)		  Upstream  Downstream  Chemicals  Corporate  Intercompany  Total 

Non-Group sales

        

Intersegment sales

        

Excise taxes

                        

Revenues from sales

        

Operating expenses

   —    923    92    —      1,015  

Depreciation, depletion and amortization of tangible assets and mineral interests

   (203)   (1,192)   (21)   —       (1,416) 

Operating income(b)

   (203)   (269)   71    —      (401) 

Equity in income (loss) of affiliates and other items(c)

   183    (126)   (16)   227      268  

Tax on net operating income

   275    149    —    (6)      418  

Net operating income(b)

   255    (246)   55    221      285  

Net cost of net debt

         —  

Non-controlling interests

                      (2) 

Net income

                      283  

(a)    Adjustments include special items, inventory valuation effect and, until June 30, 2010, equity share of adjustments related to Sanofi-Aventis.Sanofi.

(b)    Of which inventory valuation effect

Upstream

   DownstreamChemicalsCorporate
on operating income
—Upstream     863Downstream     130Chemicals     —Corporate  

       on operating income

—863130—

on net operating income

  —  640  640113  — 113  —

(c)    Of which equity share of adjustments related to Sanofi-AventisSanofi

  —  —  —  (81)  —  (81)


F-21

For the year ended December 31, 2010
(adjusted) (M€)(a)		  Upstream  Downstream  Chemicals  Corporate  Intercompany  Total 

Non-Group sales

   18,527    123,245    17,490    7    —    159,269  

Intersegment sales

   22,540    4,693    981    186    (28,400)   —  

Excise taxes

   —    (18,793)   —    —    —    (18,793) 

Revenues from sales

   41,067    109,145    18,471    193    (28,400)   140,476  

Operating expenses

   (18,271)   (106,583)   (17,066)   (665)   28,400    (114,185) 

Depreciation, depletion and amortization of tangible assets and mineral interests

   (5,143)   (1,311)   (512)   (39)   —    (7,005) 

Adjusted operating income

   17,653    1,251    893    (511)   —    19,286  

Equity in income (loss) of affiliates and other items

   1,350    267    231    368    —    2,216  

Tax on net operating income

   (10,406)   (350)   (267)   269    —    (10,754) 

Adjusted net operating income

   8,597    1,168    857    126    —    10,748  

Net cost of net debt

        (226) 

Non-controlling interests

                       (234) 

Adjusted net income

                       10,288  

Adjusted fully-diluted earnings per share (€)

  

                  4.58  

                         
For the year ended December 31, 2010 (adjusted)
                  
(M€)(a) Upstream
  Downstream
  Chemicals
  Corporate
  Intercompany
  Total
 
Non-Group sales  18,527   123,245   17,490   7   —   159,269 
Intersegment sales  22,540   4,693   981   186   (28,400)  — 
Excise taxes  —   (18,793)  —   —   —   (18,793)
                         
Revenues from sales
  41,067   109,145   18,471   193   (28,400)  140,476 
                         
Operating expenses  (18,271)  (106,583)  (17,066)  (665)  28,400   (114,185)
Depreciation, depletion and amortization of tangible assets and mineral interests  (5,143)  (1,311)  (512)  (39)  —   (7,005)
                         
Adjusted operating income
  17,653   1,251   893   (511)  —   19,286 
                         
Equity in income (loss) of affiliates and other items  1,350   267   231   368   —   2,216 
Tax on net operating income  (10,406)  (350)  (267)  269   —   (10,754)
                         
Adjusted net operating income
  8,597   1,168   857   126   —   10,748 
                         
Net cost of net debt                      (226)
Minority interests                      (234)
                         
Adjusted net income
                      10,288 
                         
Adjusted fully-diluted earnings per share (€)
                      4.58 
                         
(a)
(a)Except for earnings per share
                         
For the year ended December 31, 2010
                  
(M€) Upstream
  Downstream
  Chemicals
  Corporate
  Intercompany
  Total
 
Total expenditures  13,208   2,343   641   81           16,273 
Total divestments  2,067   499   347   1,403       4,316 
Cash flow from operating activities  15,573   1,441   934   545       18,493 
                         
Balance sheet as of December 31, 2010
                        
                         
Property, plant and equipment, intangible assets, net  50,565   8,675   4,388   253       63,881 
Investments in equity affiliates  5,002   2,782   1,349   —       9,133 
Loans to equity affiliates and other non-current assets  4,184   1,366   979   4,099       10,628 
Working capital  (363)  9,154   2,223   (211)      10,803 
Provisions and other non-current liabilities  (16,076)  (2,328)  (1,631)  (1,181)      (21,216)
Assets and liabilities classified as held for sale  660   —   413   —       1,073 
                         
Capital Employed (balance sheet)
  43,972   19,649   7,721   2,960       74,302 
Less inventory valuation effect  —   (4,088)  (409)  1,061       (3,436)
                         
Capital Employed (Business segment information)
  43,972   15,561   7,312   4,021       70,866 
                         
ROACE as a percentage
  21%   8%   12%           16% 
                         


F-22

For the year ended December 31, 2010
(M€)		  Upstream  Downstream  Chemicals  Corporate  Intercompany  Total 

Total expenditures

   13,208    2,343    641    81      16,273  

Total divestments

   2,067    499    347    1,403      4,316  

Cash flow from operating activities

   15,573    1,441    934    545      18,493  

Balance sheet as of December 31, 2010

        

Property, plant and equipment, intangible assets, net

   50,565    8,675    4,388    253      63,881  

Investments in equity affiliates

   5,002    2,782    1,349    —      9,133  

Loans to equity affiliates and other non-current assets

   4,184    1,366    979    4,099      10,628  

Working capital

   (363)   9,154    2,223    (211)     10,803  

Provisions and other non-current liabilities

   (16,076)   (2,328)   (1,631)   (1,181)     (21,216) 

Assets and liabilities classified as held for sale

   660    —    413    —      1,073  

Capital Employed (balance sheet)

   43,972    19,649    7,721    2,960      74,302  

Less inventory valuation effect

   —    (4,088)   (409)   1,061      (3,436) 

Capital Employed (Business segment information)

   43,972    15,561    7,312    4,021      70,866  

ROACE as a percentage

   21%    8%    12%           16%  

For the year ended December 31, 2009
(M€)		  Upstream  Downstream  Chemicals  Corporate  Intercompany  Total 

Non-Group sales

   16,072    100,518    14,726    11    —    131,327  

Intersegment sales

   15,958    3,786    735    156    (20,635)   —  

Excise taxes

   —    (19,174)   —    —    —    (19,174) 

Revenues from sales

   32,030    85,130    15,461    167    (20,635)   112,153  

Operating expenses

   (14,752)   (81,281)   (14,293)   (656)   20,635    (90,347) 

Depreciation, depletion and amortization of tangible assets and mineral interests

   (4,420)   (1,612)   (615)   (35)   —    (6,682) 

Operating income

   12,858    2,237    553    (524)   —    15,124  

Equity in income (loss) of affiliates and other items

   846    169    (58)   697    —    1,654  

Tax on net operating income

   (7,486)   (633)   (92)   326    —    (7,885) 

Net operating income

   6,218    1,773    403    499    —    8,893  

Net cost of net debt

        (264) 

Non-controlling interests

                       (182) 

Net income

                       8,447  

For the year ended December 31, 2009
(adjustments(a)) (M€)		  Upstream  Downstream  Chemicals  Corporate  Intercompany  Total 

Non-Group sales

        

Intersegment sales

        

Excise taxes

                        

Revenues from sales

        

Operating expenses

   (17)   1,558    344    —      1,885  

Depreciation, depletion and amortization of tangible assets and mineral interests

   (4)   (347)   (40)   —       (391) 

Operating income(b)

   (21)   1,211    304    —      1,494  

Equity in income (loss) of affiliates and other items(c)

   (160)   22    (123)   (117)     (378) 

Tax on net operating income

   17    (413)   (50)   (3)      (449) 

Net operating income(b)

   (164)   820    131    (120)     667  

Net cost of net debt

         —  

Non-controlling interests

                      (4) 

Net income

                      663  

                         
For the year ended December 31, 2009
                  
(M€) Upstream
  Downstream
  Chemicals
  Corporate
  Intercompany
  Total
 
Non-Group sales  16,072   100,518   14,726   11   —   131,327 
Intersegment sales  15,958   3,786   735   156   (20,635)  — 
Excise taxes  —   (19,174)  —   —   —   (19,174)
                         
Revenues from sales
  32,030   85,130   15,461   167   (20,635)  112,153 
                         
Operating expenses  (14,752)  (81,281)  (14,293)  (656)  20,635   (90,347)
Depreciation, depletion and amortization of tangible assets and mineral interests  (4,420)  (1,612)  (615)  (35)  —   (6,682)
                         
Operating income
  12,858   2,237   553   (524)  —   15,124 
                         
Equity in income (loss) of affiliates and other items  846   169   (58)  697   —   1,654 
Tax on net operating income  (7,486)  (633)  (92)  326   —   (7,885)
                         
Net operating income
  6,218   1,773   403   499   —   8,893 
                         
Net cost of net debt                      (264)
Minority interests                      (182)
                         
Net income
                      8,447 
                         
                         
For the year ended December 31, 2009 (adjustments(a))
                  
(M€) Upstream
  Downstream
  Chemicals
  Corporate
  Intercompany
  Total
 
Non-Group sales                        
Intersegment sales                        
Excise taxes                        
                         
Revenues from sales
                        
                         
Operating expenses  (17)  1,558   344   —           1,885 
Depreciation, depletion and amortization of tangible assets and mineral interests  (4)  (347)  (40)  —       (391)
                         
Operating income(b)
  (21)  1,211   304   —       1,494 
                         
Equity in income (loss) of affiliates and other items(c)
  (160)  22   (123)  (117)      (378)
Tax on net operating income  17   (413)  (50)  (3)      (449)
                         
Net operating income(b)
  (164)  820   131   (120)      667 
                         
Net cost of net debt                      — 
Minority interests                      (4)
                         
Net income
                      663 
                         
(a)
(a)Adjustments include special items, inventory valuation effect and equity share of adjustments related to Sanofi-Aventis.Sanofi.

(b)    Of which inventory valuation effect

Upstream

   DownstreamChemicalsCorporate
on operating income
—Upstream     1,816Downstream     389Chemicals     —Corporate  

       on operating income

—1,816389—

on net operating income

  —  1,285  1,285254  — 254  —

(c)    Of which equity share of adjustments related to Sanofi-AventisSanofi

  —  —  —  (300)  —  (300)

F-23

For the year ended December 31, 2009
(adjusted) (M€)(a)		  Upstream  Downstream  Chemicals  Corporate  Intercompany  Total 

Non-Group sales

   16,072    100,518    14,726    11    —    131,327  

Intersegment sales

   15,958    3,786    735    156    (20,635)   —  

Excise taxes

   —    (19,174)   —    —    —    (19,174) 

Revenues from sales

   32,030    85,130    15,461    167    (20,635)   112,153  

Operating expenses

   (14,735)   (82,839)   (14,637)   (656)   20,635    (92,232) 

Depreciation, depletion and amortization of tangible assets and mineral interests

   (4,416)   (1,265)   (575)   (35)   —    (6,291) 

Adjusted operating income

   12,879    1,026    249    (524)   —    13,630  

Equity in income (loss) of affiliates and other items

   1,006    147    65    814    —    2,032  

Tax on net operating income

   (7,503)   (220)   (42)   329    —    (7,436) 

Adjusted net operating income

   6,382    953    272    619    —    8,226  

Net cost of net debt

        (264) 

Non-controlling interests

                       (178) 

Adjusted net income

                       7,784  

Adjusted fully-diluted earnings per share (€)

  

                  3.48  

                         
For the year ended December 31, 2009
                  
(adjusted)
                  
(M€)(a) Upstream
  Downstream
  Chemicals
  Corporate
  Intercompany
  Total
 
Non-Group sales  16,072   100,518   14,726   11   —   131,327 
Intersegment sales  15,958   3,786   735   156   (20,635)  — 
Excise taxes  —   (19,174)  —   —   —   (19,174)
                         
Revenues from sales
  32,030   85,130   15,461   167   (20,635)  112,153 
                         
Operating expenses  (14,735)  (82,839)  (14,637)  (656)  20,635   (92,232)
Depreciation, depletion and amortization of tangible assets and mineral interests  (4,416)  (1,265)  (575)  (35)  —   (6,291)
                         
Adjusted operating income
  12,879   1,026   249   (524)  —   13,630 
                         
Equity in income (loss) of affiliates and other items  1,006   147   65   814   —   2,032 
Tax on net operating income  (7,503)  (220)  (42)  329   —   (7,436)
                         
Adjusted net operating income
  6,382   953   272   619   —   8,226 
                         
Net cost of net debt                      (264)
Minority interests                      (178)
                         
Adjusted net income
                      7,784 
                         
Adjusted fully-diluted earnings per share (€)
                      3.48 
                         
(a)
(a)Except for earnings per share

For the year ended December 31, 2009
(M€)		  Upstream  Downstream  Chemicals  Corporate  Intercompany  Total 

Total expenditures

   9,855    2,771    631    92      13,349  

Total divestments

   398    133    47    2,503      3,081  

Cash flow from operating activities

   10,200    1,164    1,082    (86)     12,360  

Balance sheet as of December 31, 2009

        

Property, plant and equipment, intangible assets, net

   43,997    9,588    5,248    271      59,104  

Investments in equity affiliates

   4,260    2,110    652    4,235      11,257  

Loans to equity affiliates and other non-current assets

   3,844    1,369    850    547      6,610  

Working capital

   660    7,624    2,151    58      10,493  

Provisions and other non-current liabilities

   (15,364)   (2,190)   (1,721)   (1,094)     (20,369) 

Assets and liabilities classified as held for sale

   —    —    —    —      —  

Capital Employed (balance sheet)

   37,397    18,501    7,180    4,017      67,095  

Less inventory valuation effect

   —    (3,202)   (282)   840      (2,644) 

Capital Employed (Business segment information)

   37,397    15,299    6,898    4,857      64,451  

ROACE as a percentage

   18%    7%    4%           13%  

B)ROE (RETURN ON EQUITY)

The Group evaluates the return on equity as the ratio of adjusted consolidated net income to average adjusted shareholders’ equity between the beginning and the end of

                         
For the year ended December 31, 2009
                  
(M€) Upstream
  Downstream
  Chemicals
  Corporate
  Intercompany
  Total
 
Total expenditures  9,855   2,771   631   92           13,349 
Total divestments  398   133   47   2,503       3,081 
Cash flow from operating activities  10,200   1,164   1,082   (86)      12,360 
                         
Balance sheet as of December 31, 2009
                        
                         
Property, plant and equipment, intangible assets, net  43,997   9,588   5,248   271       59,104 
Investments in equity affiliates  4,260   2,110   652   4,235       11,257 
Loans to equity affiliates and other non-current assets  3,844   1,369   850   547       6,610 
Working capital  660   7,624   2,151   58       10,493 
Provisions and other non-current liabilities  (15,364)  (2,190)  (1,721)  (1,094)      (20,369)
Assets and liabilities classified as held for sale  —   —   —   —       — 
                         
Capital Employed (balance sheet)
  37,397   18,501   7,180   4,017       67,095 
Less inventory valuation effect  —   (3,202)  (282)  840       (2,644)
                         
Capital Employed (Business segment information)  37,397   15,299   6,898   4,857       64,451 
                         
ROACE as a percentage
  18%   7%   4%           13% 
                         

the period. Thus, adjusted shareholders’ equity for the year ended December 31, 2011 is calculated after payment of a dividend of€2.28 per share, subject to approval by the shareholders’ meeting on May 11, 2012.

 

F-24

The ROE is calculated as follows:

For the year ended December 31, (M€)  2011  2010  2009 

Adjusted net income — Group share

   11,424    10,288    7,784  

Adjusted non-controlling interests

   286    234    178  

Adjusted consolidated net income

   11,710    10,522    7,962  

Shareholders’ equity — Group share

   68,037    60,414    52,552  

Distribution of the income based on existing shares at the closing date

   (1,255)   (2,553)   (2,546) 

Non-controlling interests

   1,352    857    987  

Adjusted shareholders’ equity(a)

   68,134    58,718    50,993  

ROE

   18%    19%    16%  

                         
For the year ended December 31, 2008
                  
(M€) Upstream
  Downstream
  Chemicals
  Corporate
  Intercompany
  Total
 
Non-Group sales  24,256   135,524   20,150   46   —   179,976 
Intersegment sales  25,132   5,574   1,252   120   (32,078)  — 
Excise taxes  —   (19,645)  —   —   —   (19,645)
                         
Revenues from sales
  49,388   121,453   21,402   166   (32,078)  160,331 
                         
Operating expenses  (21,915)  (119,425)  (20,942)  (685)  32,078   (130,889)
Depreciation, depletion and amortization of tangible assets and mineral interests  (4,005)  (1,202)  (518)  (30)  —   (5,755)
                         
Operating income
  23,468   826   (58)  (549)  —   23,687 
                         
Equity in income (loss) of affiliates and other items  1,541   (158)  (34)  590   —   1,939 
Tax on net operating income  (14,563)  (143)  76   315   —   (14,315)
                         
Net operating income
  10,446   525   (16)  356   —   11,311 
                         
Net cost of net debt                      (358)
Minority interests                      (363)
                         
Net income
                      10,590 
                         
                         
For the year ended December 31, 2008 (adjustments(a))
                  
(M€) Upstream
  Downstream
  Chemicals
  Corporate
  Intercompany
  Total
 
Non-Group sales                        
Intersegment sales                        
Excise taxes                        
                         
Revenues from sales
                        
                         
Operating expenses  —   (2,776)  (925)  —           (3,701)
Depreciation, depletion and amortization of tangible assets and mineral interest  (171)  —   (6)  —       (177)
                         
Operating income(b)
  (171)  (2,776)  (931)  —       (3,878)
                         
Equity in income (loss) of affiliates and other items(c)
  (164)  (195)  (82)  (345)      (786)
Tax on net operating income  57   927   329   (2)      1,311 
                         
Net operating income(b)
  (278)  (2,044)  (684)  (347)      (3,353)
                         
Net cost of net debt                      — 
Minority interests                      23 
                         
Net income
                      (3,330)
                         

(a)
(a)Adjustments include special items, inventory valuation effect andAdjusted shareholders’ equity shareas of adjustments relatedDecember 31, 2008 amounted to Sanofi-Aventis.€47,410 million.

C) 
(b)  Of which inventory valuation effectUpstreamDownstreamChemicalsCorporate
on operating income
—(2,776)(727)— 
on net operating income
—(1,971)(504)— 
(c)  Of which equity share of adjustments related to Sanofi-Aventis
—— — (393)

F-25

                         
For the year ended December 31, 2008
                  
(adjusted)
                  
(M€)(a) Upstream
  Downstream
  Chemicals
  Corporate
  Intercompany
  Total
 
Non-Group sales  24,256   135,524   20,150   46   —   179,976 
Intersegment sales  25,132   5,574   1,252   120   (32,078)  — 
Excise taxes  —   (19,645)  —   —   —   (19,645)
                         
Revenues from sales
  49,388   121,453   21,402   166   (32,078)  160,331 
                         
Operating expenses  (21,915)  (116,649)  (20,017)  (685)  32,078   (127,188)
Depreciation, depletion and amortization of tangible assets and mineral interests  (3,834)  (1,202)  (512)  (30)  —   (5,578)
                         
Adjusted operating income
  23,639   3,602   873   (549)  —   27,565 
                         
Equity in income (loss) of affiliates and other items  1,705   37   48   935   —   2,725 
Tax on net operating income  (14,620)  (1,070)  (253)  317   —   (15,626)
                         
Adjusted net operating income
  10,724   2,569   668   703   —   14,664 
                         
Net cost of net debt                      (358)
Minority interests                      (386)
                         
Adjusted net income
                      13,920 
                         
Adjusted fully-diluted earnings per share (€)
                      6.20 
                         
(a)Except for earnings per share
                         
For the year ended December 31, 2008
                  
(M€) Upstream
  Downstream
  Chemicals
  Corporate
  Intercompany
  Total
 
Total expenditures  10,017   2,418   1,074   131           13,640 
Total divestments  1,130   216   53   1,186       2,585 
Cash flow from operating activities  13,765   3,111   920   873       18,669 
                         
Balance sheet as of December 31, 2008
                        
                         
Property, plant and equipment, intangible assets, net  37,090   8,823   5,323   247       51,483 
Investments in equity affiliates  3,892   1,958   677   6,134       12,661 
Loans to equity affiliates and other non-current assets  3,739   1,170   762   545       6,216 
Working capital  570   5,317   2,348   (132)      8,103 
Provisions and other non-current liabilities  (12,610)  (2,191)  (1,903)  (1,138)      (17,842)
Assets and liabilities classified as held for sale  —   —   —   —       — 
                         
Capital Employed (balance sheet)
  32,681   15,077   7,207   5,656       60,621 
Less inventory valuation effect  —   (1,454)  (46)  387       (1,113)
                         
Capital Employed (Business segment information)
  32,681   13,623   7,161   6,043       59,508 
                         
ROACE as a percentage
  36%   20%   9%           26% 
                         

F-26

B) RECONCILIATION BETWEENOF THE INFORMATION BY BUSINESS SEGMENT INFORMATION AND THEWITH CONSOLIDATED STATEMENT OF INCOMEFINANCIAL STATEMENTS

The table below presents the impact of adjustment items on the Consolidated Statement of Income:

             
        Consolidated
 
For the year ended December 31, 2010
       statement of
 
(M€) Adjusted  Adjustments(a)   income 
Sales  159,269   —   159,269 
Excise taxes  (18,793)  —   (18,793)
Revenues from sales  140,476   —   140,476 
Purchases, net of inventory variation  (94,286)  1,115   (93,171)
Other operating expenses  (19,035)  (100)  (19,135)
Exploration costs  (864)  —   (864)
Depreciation, depletion and amortization of tangible assets and mineral interests  (7,005)  (1,416)  (8,421)
Other income  524   872   1,396 
Other expense  (346)  (554)  (900)
Financial interest on debt  (465)  —   (465)
Financial income from marketable securities & cash equivalents  131   —   131 
Cost of net debt  (334)  —   (334)
Other financial income  442   —   442 
Other financial expense  (407)  —   (407)
Equity in income (loss) of affiliates  2,003   (50)  1,953 
Income taxes  (10,646)  418   (10,228)
             
Consolidated net income
  10,522   285   10,807 
             
Group share  10,288   283   10,571 
Minority interests  234   2   236 
             

For the year ended December 31, 2011 (M€)  Adjusted  Adjustments(a)  Consolidated
statement of
income		 

Sales

   184,648    45    184,693  

Excise taxes

   (18,143)   —    (18,143) 

Revenues from sales

   166,505    45    166,550  

Purchases, net of inventory variation

   (115,107)   1,215    (113,892) 

Other operating expenses

   (19,751)   (92)   (19,843) 

Exploration costs

   (1,019)   —    (1,019) 

Depreciation, depletion and amortization of tangible assets and mineral interests

   (6,725)   (781)   (7,506) 

Other income

   430    1,516    1,946  

Other expense

   (536)   (711)   (1,247) 

Financial interest on debt

   (713)   —    (713) 

Financial income from marketable securities & cash equivalents

   273    —    273  

Cost of net debt

   (440)   —    (440) 

Other financial income

   609    —    609  

Other financial expense

   (429)   —    (429) 

Equity in income (loss) of affiliates

   1,984    (59)   1,925  

Income taxes

   (13,811)   (262)   (14,073) 

Consolidated net income

   11,710    871    12,581  

Group share

   11,424    852    12,276  

Non-controlling interests

   286    19    305  

(a)Adjustments include special items, inventory valuation effect and, as from January 1st, 2011, the effect of changes in fair value.

For the year ended December 31, 2010 (M€)  Adjusted  Adjustments(a)  Consolidated
statement of
income		 

Sales

   159,269    —    159,269  

Excise taxes

   (18,793)   —    (18,793) 

Revenues from sales

   140,476    —    140,476  

Purchases, net of inventory variation

   (94,286)   1,115    (93,171) 

Other operating expenses

   (19,035)   (100)   (19,135) 

Exploration costs

   (864)   —    (864) 

Depreciation, depletion and amortization of tangible assets and mineral interests

   (7,005)   (1,416)   (8,421) 

Other income

   524    872    1,396  

Other expense

   (346)   (554)   (900) 

Financial interest on debt

   (465)   —    (465) 

Financial income from marketable securities & cash equivalents

   131    —    131  

Cost of net debt

   (334)   —    (334) 

Other financial income

   442    —    442  

Other financial expense

   (407)   —    (407) 

Equity in income (loss) of affiliates

   2,003    (50)   1,953  

Income taxes

   (10,646)   418    (10,228) 

Consolidated net income

   10,522    285    10,807  

Group share

   10,288    283    10,571  

Non-controlling interests

   234    2    236  

(a)
(a)Adjustments include special items, inventory valuation effect and, until June 30, 2010, equity share of adjustments related to Sanofi-Aventis.Sanofi.


F-27

For the year ended December 31, 2009 (M€)  Adjusted  Adjustments(a)  Consolidated
statement of
income		 

Sales

   131,327    —    131,327  

Excise taxes

   (19,174)   —    (19,174) 

Revenues from sales

   112,153    —    112,153  

Purchases, net of inventory variation

   (73,263)   2,205    (71,058) 

Other operating expenses

   (18,271)   (320)   (18,591) 

Exploration costs

   (698)   —    (698) 

Depreciation, depletion and amortization of tangible assets and mineral interests

   (6,291)   (391)   (6,682) 

Other income

   131    183    314  

Other expense

   (315)   (285)   (600) 

Financial interest on debt

   (530)   —    (530) 

Financial income from marketable securities & cash equivalents

   132    —    132  

Cost of net debt

   (398)   —    (398) 

Other financial income

   643    —    643  

Other financial expense

   (345)   —    (345) 

Equity in income (loss) of affiliates

   1,918    (276)   1,642  

Income taxes

   (7,302)   (449)   (7,751) 

Consolidated net income

   7,962    667    8,629  

Group share

   7,784    663    8,447  

Non-controlling interests

   178    4    182  

             
        Consolidated
 
For the year ended December 31, 2009
       statement of
 
(M€) Adjusted  Adjustments(a)  income 
Sales  131,327   —    131,327 
Excise taxes  (19,174)  —    (19,174)
Revenues from sales  112,153   —    112,153 
Purchases, net of inventory variation  (73,263)  2,205   (71,058)
Other operating expenses  (18,271)  (320)  (18,591)
Exploration costs  (698)  —    (698)
Depreciation, depletion and amortization of tangible assets and mineral interests  (6,291)  (391)  (6,682)
Other income  131   183   314 
Other expense  (315)  (285)  (600)
Financial interest on debt  (530)  —    (530)
Financial income from marketable securities & cash equivalents  132   —    132 
Cost of net debt  (398)  —    (398)
Other financial income  643   —    643 
Other financial expense  (345)  —    (345)
Equity in income (loss) of affiliates  1,918   (276)  1,642 
Income taxes  (7,302)  (449)  (7,751)
             
Consolidated net income
  7,962   667   8,629 
             
Group share  7,784   663   8,447 
Minority interests  178   4   182 
             
(a)
(a)Adjustments include special items, inventory valuation effect and equity share of adjustments related to Sanofi-Aventis.Sanofi.
             
        Consolidated
 
For the year ended December 31, 2008
       statement of
 
(M€) Adjusted  Adjustments(a)  income 
Sales  179,976   —    179,976 
Excise taxes  (19,645)  —    (19,645)
Revenues from sales  160,331   —    160,331 
Purchases, net of inventory variation  (107,521)  (3,503)  (111,024)
Other operating expenses  (18,903)  (198)  (19,101)
Exploration costs  (764)  —    (764)
Depreciation, depletion and amortization of tangible assets and mineral interests  (5,578)  (177)  (5,755)
Other income  153   216   369 
Other expense  (147)  (407)  (554)
Financial interest on debt  (1,000)  —    (1,000)
Financial income from marketable securities & cash equivalents  473   —    473 
Cost of net debt  (527)  —    (527)
Other financial income  728   —    728 
Other financial expense  (325)  —    (325)
Equity in income (loss) of affiliates  2,316   (595)  1,721 
Income taxes  (15,457)  1,311   (14,146)
             
Consolidated net income
  14,306   (3,353)  10,953 
             
Group share  13,920   (3,330)  10,590 
Minority interests  386   (23)  363 
             
(a)Adjustments include special items, inventory valuation effect and equity share of adjustments related to Sanofi-Aventis.

F-28

D)ADJUSTMENT ITEMS BY BUSINESS SEGMENT

C) ADJUSTMENT ITEMS BY BUSINESS SEGMENT
The adjustment items for income as per Note 2 to the Consolidated Financial Statements are detailed as follows:
Adjustments to operating income
                     
For the year ended December 31, 2010 (M€) Upstream  Downstream  Chemicals  Corporate  Total 
Inventory valuation effect  —   863   130   —   993 
Restructuring charges  —   —   —   —   — 
Asset impairment charges  (203)  (1,192)  (21)  —   (1,416)
Other items  —   60   (38)  —   22 
                     
Total
  (203)  (269)  71   —   (401)
                     
Adjustments to net income, Group share
                     
For the year ended December 31, 2010 (M€) Upstream  Downstream  Chemicals  Corporate  Total 
Inventory valuation effect  —   635   113   —   748 
TOTAL’s equity share of adjustments related to Sanofi-Aventis  —   —   —   (81)  (81)
Restructuring charges  —   (12)  (41)  —   (53)
Asset impairment charges  (297)  (913)  (14)  —   (1,224)
Gains (losses) on disposals of assets  589   122   33   302   1,046 
Other items  (37)  (83)  (33)  —   (153)
                     
Total
  255   (251)  58   221   283 
                     
Adjustments to operating income
                     
For the year ended December 31, 2009 (M€) Upstream  Downstream  Chemicals  Corporate  Total 
Inventory valuation effect  —   1,816   389   —   2,205 
Restructuring charges  —   —   —   —   — 
Asset impairment charges  (4)  (347)  (40)  —   (391)
Other items  (17)  (258)  (45)  —   (320)
                     
Total
  (21)  1,211   304   —   1,494 
                     
Adjustments to net income, Group share
                     
For the year ended December 31, 2009 (M€) Upstream  Downstream  Chemicals  Corporate  Total 
Inventory valuation effect  —   1,279   254   —   1,533 
TOTAL’s equity share of adjustments related to Sanofi-Aventis  —   —   —   (300)  (300)
Restructuring charges  —   (27)  (102)  —   (129)
Asset impairment charges  (52)  (253)  (28)  —   (333)
Gains (losses) on disposals of assets  —   —   —   179   179 
Other items  (112)  (182)  7   —   (287)
                     
Total
  (164)  817   131   (121)  663 
                     


F-29

Adjustments to operating income
For the year ended December 31, 2011 (M€)		  Upstream  Downstream  Chemicals  Corporate   Total 

Inventory valuation effect

   —    1,224    (9)   —     1,215  

Effect of changes in fair value

   45    —    —    —     45  

Restructuring charges

   —    —    —    —     —  

Asset impairment charges

   (75)   (700)   (6)   —     (781) 

Other items

   —    (68)   (24)   —     (92) 

Total

   (30)   456    (39)   —     387  

Adjustments to net income, Group share
For the year ended December 31, 2011 (M€)		  Upstream  Downstream  Chemicals  Corporate  Total 

Inventory valuation effect

   —    824    10    —    834  

Effect of changes in fair value

   32    —    —    —    32  

Restructuring charges

   —    (113)   (9)   —    (122) 

Asset impairment charges

   (531)   (478)   (5)   —    (1,014) 

Gains (losses) on disposals of assets

   843    412    209    74    1,538  

Other items

   (202)   (74)   (76)   (64)   (416) 

Total

   142    571    129    10    852  

Adjustments to operating income
For the year ended December 31, 2010 (M€)		  Upstream  Downstream  Chemicals  Corporate   Total 

Inventory valuation effect

   —    863    130    —     993  

Restructuring charges

   —    —    —    —     —  

Asset impairment charges

   (203)   (1,192)   (21)   —     (1,416) 

Other items

   —    60    (38)   —     22  

Total

   (203)   (269)   71    —     (401) 

Adjustments to net income, Group share
For the year ended December 31, 2010 (M€)		  Upstream  Downstream  Chemicals  Corporate  Total 

Inventory valuation effect

   —    635    113    —    748  

TOTAL’s equity share of adjustments related to Sanofi

   —    —    —    (81)   (81) 

Restructuring charges

   —    (12)   (41)   —    (53) 

Asset impairment charges

   (297)   (913)   (14)   —    (1,224) 

Gains (losses) on disposals of assets

   589    122    33    302    1,046  

Other items

   (37)   (83)   (33)   —    (153) 

Total

   255    (251)   58    221    283  

Adjustments to operating income

For the year ended December 31, 2009 (M€)

  Upstream  Downstream  Chemicals  Corporate  Total 

Inventory valuation effect

   —    1,816    389    —    2,205  

Restructuring charges

   —    —    —    —    —  

Asset impairment charges

   (4)   (347)   (40)   —    (391) 

Other items

   (17)   (258)   (45)   —    (320) 

Total

   (21)   1,211    304    —    1,494  
      

Adjustments to net income, Group share

For the year ended December 31, 2009 (M€)

  Upstream  Downstream  Chemicals  Corporate  Total 

Inventory valuation effect

   —    1,279    254    —    1,533  

TOTAL’s equity share of adjustments related to Sanofi

   —    —    —    (300)   (300) 

Restructuring charges

   —    (27)   (102)   —    (129) 

Asset impairment charges

   (52)   (253)   (28)   —    (333) 

Gains (losses) on disposals of assets

   —    —    —    179    179  

Other items

   (112)   (182)   7    —    (287) 

Total

   (164)   817    131    (121)   663  

Adjustments to operating income
                     
For the year ended December 31, 2008 (M€) Upstream  Downstream  Chemicals  Corporate  Total 
Inventory valuation effect  —   (2,776)  (727)  —   (3,503)
Restructuring charges  —   —   —   —   — 
Asset impairment charges  (171)  —   (6)  —   (177)
Other items  —   —   (198)  —   (198)
                     
Total
  (171)  (2,776)  (931)  —   (3,878)
                     
Adjustments to net income, Group share
                     
For the year ended December 31, 2008 (M€) Upstream  Downstream  Chemicals  Corporate  Total 
Inventory valuation effect  —   (1,949)  (503)  —   (2,452)
TOTAL’s equity share of adjustments related toSanofi-Aventis
  —   —   —   (393)  (393)
Restructuring charges  —   (47)  (22)  —   (69)
Asset impairment charges  (172)  (26)  (7)  —   (205)
Gains (losses) on disposals of assets  130   —   —   84   214 
Other items  (236)  —   (151)  (38)  (425)
                     
Total
  (278)  (2,022)  (683)  (347)  (3,330)
                     
E)
D) ADDITIONAL INFORMATION ON IMPAIRMENTS

In the Upstream, Downstream and Chemicals segments, impairments of assets have been recognized for the year ended December 31, 2010,2011, with an impact of €1,416€781 million in operating income and €1,224€1,014 million in net income, Group share. These impairments have been disclosed as adjustments to operating income and adjustments to net income, Group share. These items are identified in paragraph 4C4D above as adjustment items with the heading “Asset impairment charges”.

The impairment losses impact certain Cash Generating Units (CGU) for which there were indications of impairment, due mainly to changes in the operating conditions or the economic environment of their specific businesses.

The principles applied are the following:

the recoverable amount of CGUs has been based on their value in use, as defined in Note 1 paragraph L to the Consolidated Financial Statements “Impairment of long-lived assets”;

future cash flows have been determined with the assumptions in the long-term plan of the Group. These assumptions (including future prices of products, supply and demand for products, future production volumes) represent the best estimate by management of the Group of all economic conditions during the remaining life of assets;

future cash flows, based on the long-term plan, are prepared over a period consistent with the life of the assets within the CGU. They are prepared post-tax and include specific risks attached to CGU assets. They are discounted using an 8% post-tax discount rate, this rate being a weighted-average capital cost estimated from historical market data. This rate has been applied consistently for the years ending in 2009, 2010 and 2011.

SunPower is a CGU acquired in 2011 for which specific assumptions were applied because of its own financing and its listing on Nasdaq. Thus, future cash flows of this CGU have been discounted using a 14% post-tax discount rate, corresponding to the weighted-average capital cost of this CGU.

value in use calculated by discounting the above post-tax cash flows using an 8% post-tax discount rate is not materially different from value in use calculated by discounting pre-tax cash flows using a pre-tax discount rate determined by an iterative computation from the post-tax value in use. These pre-tax discount rates are in a range from 10% to 13% in 2011. SunPower’s pre-tax discount rate is 16%.

• The recoverable amount of CGUs has been based on their value in use, as defined in Note 1 paragraph L to the Consolidated Financial Statements “Impairment of long-lived assets”;
• Future cash flows have been determined with the assumptions in the long-term plan of the Group. These assumptions (including future prices of products, supply and demand for products, future production volumes) represent the best estimate by management of the Group of all economic conditions during the remaining life of assets;
• Future cash flows, based on the long-term plan, are prepared over a period consistent with the life of the assets within the CGU. They are prepared post-tax and include specific risks attached to CGU assets. They are discounted using a 8% post-tax discount rate, this rate being a weighted-average capital cost estimated from historical market data. This rate has been applied consistently for the years ending in 2008, 2009 and 2010;
• Value in use calculated by discounting the above post-tax cash flows using a 8% post-tax discount rate is not materially different from value in use calculated by discounting pre-tax cash flows using a pre-tax discount rate determined by an iterative computation from the post-tax value in use. These pre-tax discount rates are in a range from 9% to 12% in 2010.

The CGUs of the Upstream segment affected by these impairments are oil fields, assets in solar energy and investments in associates accounted for by the equity method. For the year ended December 31, 2010,2011, the Group has recognized impairments with an impact of €203€75 million in operating income and €297€531 million in net income, Group share,share. A 10% decrease in hydrocarbons prices would not lead to additional impairment losses. In 2011, impairment losses accounted for mainly including aninclude the impairment of assets relatedthe whole goodwill arising from the acquisition of SunPower for€383 million. Indeed, the stress on public debt markets of some European states during the second half of 2011, successive austerity plans adopted by these states and their impact on financial incentives specific to its projectthe solar industry have greatly worsened the financial situation and forecasts of future cash flows of the solar industry companies, including SunPower. The market capitalization of these companies fell sharply in 2011, thus the share price of SunPower as of December 31, 2011 stood at $6.23 per share, down 73% compared to build an upgrader in Edmonton, the Group giving up this project as part of its agreements with Suncor.


F-30share price at the acquisition date.

 

The CGUs of the Downstream segment are affiliates or groups of affiliates (or industrial assets) organized mostly by country for the refining activities and by relevant geographical area for the marketing activities. In 2010,For the economic environment of refining activities, remainedthe unfavorable trends observed in 2010 have continued in 2011, with a worldwide context of surplus in refining capacities compared to the demand for petroleum products. This surplus is more and morestill based in Europe wherewith a falling demand, whereas the demand has been decreasing whereas in emerging countries (in Middle(Middle East and Asia) report a strong growth in the consumption growth is strong. Considering the specificities of industrial tools,petroleum products. In this remainingpersistent context of deteriorated margins, had a particularly negative impact on the results of the refining CGUs in France and in the United Kingdom and lead to strong operationalhave suffered substantial operating losses despite the constant efforts made to improve operations. Moreover inThis situation, coupled with less favorable outlooks, led the last few months some operators have announced site closures or triedGroup to dispose of some sites although no material transaction has occurred in 2010. These factors have triggered off the recognition ofrecognize impairments of assets in Europe, especially within the CGUs Refining France and United Kingdom reducing thewith an impact of€700 million in operating income by €1,192and€478 million and thein net income, Group share by €913 million. Sensitivity analysis performed on other European refining CGUs, using different actualization ratesshare. A variation of +5% of projections of gross margin in identical operating conditions would have a positive impact of€676 million in operating income and margins,€443 million in net income, Group share. A variation of (1) % of the discount rate would have not led to additional impairment charge.a positive impact of€335 million in operating income and€219 million in net income, Group share. Inverse variations of projections of gross margin and discount rate would have impacts of respectively

€(683) million and€(249) million in operating income and€(448) million and€(164) million in net income, Group share.

The CGUs of the Chemicals segment are worldwide business units, including activities or products with common strategic, commercial and industrial characteristics.

The different scenarios of sensitivity would not lead to additional impairment losses.

For the year ended December 31, 2010, impairments of assets have been recognized in the Upstream, Downstream and Chemicals segments with an impact of€1,416 million in operating income and€1,224 million in net income, Group share. These impairments have been disclosed as adjustments to operating income and adjustments to net income, Group share.

For the year ended December 31, 2009, impairments of assets have been recognized in the Upstream, Downstream and Chemicals segments with an impact of €413€413 million in operating income and €382€382 million in net income, Group share. These impairments have been disclosed as adjustments to operating income for €391€391 million and adjustments to net income, Group share for €333€333 million.

For the year ended December 31, 2008, impairments of assets have been recognized in the Upstream, Downstream and Chemicals segments with an impact of €216 million in operating income and €244 million in net income, Group share. These impairments have been disclosed as adjustments to operating income for €177 million and adjustments to net income, Group share for €205 million.

For the years ended December 31, 2011, 2010 and 2009, no reversal of impairment has been recognized. For the year ended December 31, 2008, reversals of impairment losses have been recognized in the Upstream segment with an impact of €41 million in operating income and €29 million in net income, Group share.

 

5)INFORMATION BY GEOGRAPHICAL AREA

(M€)  France   Rest of
Europe		   North
America		   Africa   Rest of the
world		   Total 

For the year ended December 31, 2011

            

Non-Group sales

   42,626     81,453     15,917     15,077     29,620     184,693  

Property, plant and equipment, intangible assets, net

   5,637     15,576     14,518     23,546     17,593     76,870  

Capital expenditures

   1,530     3,802     5,245     5,264     8,700     24,541  

For the year ended December 31, 2010

            

Non-Group sales

   36,820     72,636     12,432     12,561     24,820     159,269  

Property, plant and equipment, intangible assets, net

   5,666     14,568     9,584     20,166     13,897     63,881  

Capital expenditures

   1,062     2,629     3,626     4,855     4,101     16,273  

For the year ended December 31, 2009

            

Non-Group sales

   32,437     60,140     9,515     9,808     19,427     131,327  

Property, plant and equipment, intangible assets, net

   6,973     15,218     8,112     17,312     11,489     59,104  

Capital expenditures

   1,189     2,502     1,739     4,651     3,268     13,349  

6)OPERATING EXPENSES

For the year ended December 31, (M€)  2011  2010  2009 

Purchases, net of inventory variation(a)

   (113,892)(b)   (93,171)   (71,058) 

Exploration costs

   (1,019)   (864)   (698) 

Other operating expenses(c)

   (19,843)   (19,135)   (18,591) 

of which non-current operating liabilities (allowances) reversals

   615    387    515  

of which current operating liabilities (allowances) reversals

   (150)   (101)   (43) 

Operating expenses

   (134,754)   (113,170)   (90,347) 

(a)
5) INFORMATION BY GEOGRAPHICAL AREA
                         
     Rest of
  North
     Rest of
    
(M€) France  Europe  America  Africa  the world  Total 
For the year ended December 31, 2010
                        
Non-Group sales  36,820   72,636   12,432   12,561   24,820   159,269 
Property, plant and equipment, intangible assets, net  5,666   14,568   9,584   20,166   13,897   63,881 
Capital expenditures  1,062   2,629   3,626   4,855   4,101   16,273 
                         
For the year ended December 31, 2009
                        
Non-Group sales  32,437   60,140   9,515   9,808   19,427   131,327 
Property, plant and equipment, intangible assets, net  6,973   15,218   8,112   17,312   11,489   59,104 
Capital expenditures  1,189   2,502   1,739   4,651   3,268   13,349 
                         
For the year ended December 31, 2008
                        
Non-Group sales  43,616   82,761   14,002   12,482   27,115   179,976 
Property, plant and equipment, intangible assets, net  7,260   13,485   5,182   15,460   10,096   51,483 
Capital expenditures  1,997   2,962   1,255   4,500   2,926   13,640 
                         


F-31

6) OPERATING EXPENSES
             
For the year ended December 31, (M€) 2010  2009  2008 
Purchases, net of inventory variation(a)
  (93,171)  (71,058)  (111,024)
Exploration costs  (864)  (698)  (764)
Other operating expenses(b)
  (19,135)  (18,591)  (19,101)
of which non-current operating liabilities (allowances) reversals
  387   515   459 
of which current operating liabilities (allowances) reversals
  (101)  (43)  (29)
             
Operating expenses
  (113,170)  (90,347)  (130,889)
             
(a)Includes taxes paid on oil and gas production in the Upstream segment, namely royalties.

(b)As of December 31, 2011, the Group valued under / over lifting at market value. The impact in operating expenses is€577 million and€103 million in net income, Group share as of December 31, 2011.
(c)Principally composed of production and administrative costs (see in particular the payroll costs as detailed in Note 26 to the Consolidated Financial Statements “Payroll and staff”).

7)
7) OTHER INCOME AND OTHER EXPENSE
             
For the year ended December 31, (M€) 2010  2009  2008 
Gains (losses) on disposal of assets  1,117   200   257 
Foreign exchange gains  —   —   112 
Other  279   114   — 
             
Other income
  1,396   314   369 
             
Foreign exchange losses  —   (32)  — 
Amortization of other intangible assets (excl. mineral interests)  (267)  (142)  (162)
Other  (633)  (426)  (392)
             
Other expense
  (900)  (600)  (554)
             

For the year ended
December 31, (M€)		  2011  2010  2009 

Gains (losses) on disposal of assets

   1,650    1,117    200  

Foreign exchange gains

   118    —    —  

Other

   178    279    114  

Other income

   1,946    1,396    314  

Foreign exchange losses

   —    —    (32) 

Amortization of other intangible assets (excl. mineral interests)

   (592)   (267)   (142) 

Other

   (655)   (633)   (426) 

Other expense

   (1,247)   (900)   (600) 

Other income

In 2011, gains and losses on disposal of assets are mainly related to the sale of the interest in CEPSA, to the sale of assets in the Upstream segment (especially the sale of 10% Group’s interest in the Colombian pipeline OCENSA) and to the sale of photocure and coatings resins businesses. These disposals are described in Note 3 to the Consolidated Financial Statements.

In 2010, gains and losses on disposal of assets arewere mainly related to sales of assets in the Upstream segment (sale of the interests in the Valhall and Hod fields in Norway and sale of the interest in Block 31 in Angola, see Note 3 to the Consolidated Financial Statements), as well as the change in the accounting treatment and the disposal of shares of Sanofi-AventisSanofi (see Note 3 to the Consolidated Financial Statements).

In 2009, gains and losses on disposal of assets were mainly related to the disposal of shares of Sanofi-Aventis.

In 2008, gains and losses on disposal of assets were mainly related to sales of assets in the Upstream segment, as well as the disposal of shares of Sanofi-Aventis.
Sanofi.

Other expense

In 2010,2011, the heading “Other” is mainly comprised of €248€243 million of restructuring charges in the Upstream, Downstream and Chemicals segments.

In 2010, the heading “Other” was mainly comprised of€248 million of restructuring charges in the Downstream and Chemicals segments.

In 2009, the heading “Other” was mainly comprised of €190€190 million of restructuring charges in the Downstream and Chemicals segments.

In 2008, the heading “Other” was mainly comprised of:
8)
• €107 million of restructuring charges in the Upstream, Downstream and Chemicals segments; and
• €48 million of changes in provisions related to various antitrust investigations as described in Note 32 to the Consolidated Financial Statements “Other risks and contingent liabilities”.


F-32

8) OTHER FINANCIAL INCOME AND EXPENSE
             
As of December 31, (M€) 2010  2009  2008 
Dividend income on non-consolidated subsidiaries  255   210   238 
Capitalized financial expenses  113   117   271 
Other  74   316   219 
Other financial income
  442   643   728 
             
Accretion of asset retirement obligations  (338)  (283)  (229)
Other  (69)  (62)  (96)
             
Other financial expense
  (407)  (345)  (325)
             
9) INCOME TAXES

As of December 31, (M€)  2011  2010  2009 

Dividend income on non-consolidated subsidiaries

   330    255    210  

Capitalized financial expenses

   171    113    117  

Other

   108    74    316  

Other financial income

   609    442    643  

Accretion of asset retirement obligations

   (344)   (338)   (283) 

Other

   (85)   (69)   (62) 

Other financial expense

   (429)   (407)   (345) 

9)INCOME TAXES

Since 1966, the Group hashad been taxed in accordance with the consolidated income tax treatment approved on a three-year renewable basis by the French Ministry of Economy, Finance and Industry. The approval for the period 2008-2010 expired on December 31, 2010 and TOTAL S.A. announced in July 2011 that it took the decision not to proceed with its initial application for the renewal of this approvalagreement.

As a consequence, TOTAL S.A. is taxed in accordance with the common tax regime as from 2011. The exit of the consolidated income tax treatment has been requested forno significant impact, neither on the2011-2013 period. It is being reviewed by Group’s financial situation nor on the French Department of Budget, Public Accounts, Civil Service and State Reform.

consolidated results.

No deferred tax is recognized for the temporary differences between the carrying amounts and tax bases of investments in foreign subsidiaries which are considered to be permanent investments. Undistributed earnings from foreign subsidiaries considered to be reinvested indefinitely amounted to €26,458€27,444 million as of December 31, 2010.2011. The determination of the tax effect relating to such reinvested income is not practicable.

In addition, no deferred tax is recognized on unremitted earnings (approximately €21,147€22,585 million) of the Group’s French subsidiaries since the remittance of such earnings would be tax exempt for the subsidiaries in which the Company owns 95% or more of the outstanding shares.

Income taxes are detailed as follows:

For the year ended
December 31, (M€)		  2011  2010  2009 

Current income taxes

   (12,495)   (9,934)   (7,213) 

Deferred income taxes

   (1,578)   (294)   (538) 

Total income taxes

   (14,073)   (10,228)   (7,751) 
 
             
For the year ended December 31, (M€) 2010  2009  2008 
Current income taxes  (9,934)  (7,213)  (14,117)
Deferred income taxes  (294)  (538)  (29)
             
Total income taxes
  (10,228)  (7,751)  (14,146)
             

Before netting deferred tax assets and liabilities by fiscal entity, the components of deferred tax balances are as follows:

             
As of December 31, (M€) 2010  2009  2008 
Net operating losses and tax carry forwards  1,145   1,114   1,031 
Employee benefits  535   517   519 
Other temporary non-deductible provisions  2,757   2,184   2,075 
             
Gross deferred tax assets
  4,437   3,815   3,625 
             
Valuation allowance  (576)  (484)  (475)
             
Net deferred tax assets
  3,861   3,331   3,150 
             
Excess tax over book depreciation  (10,966)  (9,791)  (8,836)
Other temporary tax deductions  (1,339)  (1,179)  (1,171)
             
Gross deferred tax liability
  (12,305)  (10,970)  (10,007)
             
Net deferred tax liability
  (8,444)  (7,639)  (6,857)
             


F-33

As of December 31, (M€)  2011  2010  2009 

Net operating losses and tax carry forwards

   1,584    1,145    1,114  

Employee benefits

   621    535    517  

Other temporary non-deductible provisions

   3,521    2,757    2,184  

Gross deferred tax assets

   5,726    4,437    3,815  

Valuation allowance

   (667)   (576)   (484) 

Net deferred tax assets

   5,059    3,861    3,331  

Excess tax over book depreciation

   (12,831)   (10,966)   (9,791) 

Other temporary tax deductions

   (2,721)   (1,339)   (1,179) 

Gross deferred tax liability

   (15,552)   (12,305)   (10,970) 

Net deferred tax liability

   (10,493)   (8,444)   (7,639) 

Net operating losses and tax carry forwards only come from foreign subsidiaries.

After netting deferred tax assets and liabilities by fiscal entity, deferred taxes are presented on the balance sheet as follows:
             
As of December 31, (M€) 2010  2009  2008 
Deferred tax assets, non-current (note 14)  1,378   1,164   1,010 
Deferred tax assets, current (note 16)  151   214   206 
Deferred tax liabilities, non-current  (9,947)  (8,948)  (7,973)
Deferred tax liabilities, current  (26)  (69)  (100)
             
Net amount
  (8,444)  (7,639)  (6,857)
             

As of December 31, (M€)  2011  2010  2009 

Deferred tax assets, non-current(note 14)

   1,767    1,378    1,164  

Deferred tax assets, current(note 16)

   —    151    214  

Deferred tax liabilities, non-current

   (12,260)   (9,947)   (8,948) 

Deferred tax liabilities, current

   —    (26)   (69) 

Net amount

   (10,493)   (8,444)   (7,639) 

The net deferred tax variation in the balance sheet is analyzed as follows:

             
As of December 31, (M€) 2010  2009  2008 
Opening balance
  (7,639)  (6,857)  (7,251)
Deferred tax on income  (294)  (538)  (29)
Deferred tax on shareholders’ equity(a)
  28   (38)  30 
Changes in scope of consolidation  (59)  (1)  (1)
Currency translation adjustment  (480)  (205)  394 
             
Closing balance
  (8,444)  (7,639)  (6,857)
             

As of December 31, (M€)  2011  2010  2009 

Opening balance

   (8,444)   (7,639)   (6,857) 

Deferred tax on income

   (1,578)   (294)   (538) 

Deferred tax on shareholders’ equity(a)

   (55)   28    (38) 

Changes in scope of consolidation

   (17)   (59)   (1) 

Currency translation adjustment

   (399)   (480)   (205) 

Closing balance

   (10,493)   (8,444)   (7,639) 

(a)
(a)This amount includes mainly current income taxes and deferred taxes for changes in fair value of listed securities classified as financial assets available for sale as well as deferred taxes related to the cash flow hedge (see Note 17 to the Consolidated Financial Statements).

Reconciliation between provision for income taxes and pre-tax income:

             
For the year ended December 31, (M€) 2010  2009  2008 
Consolidated net income  10,807   8,629   10,953 
Provision for income taxes  10,228   7,751   14,146 
Pre-tax income
  21,035   16,380   25,099 
French statutory tax rate  34.43%   34.43%   34.43% 
             
Theoretical tax charge
  (7,242)  (5,640)  (8,642)
             
Difference between French and foreign income tax rates  (4,921)  (3,214)  (6,326)
Tax effect of equity in income (loss) of affiliates  672   565   593 
Permanent differences  1,375   597   315 
Adjustments on prior years income taxes  (45)  (47)  12 
Adjustments on deferred tax related to changes in tax rates  2   (1)  (31)
Changes in valuation allowance of deferred tax assets  (65)  (6)  (63)
Other  (4)  (5)  (4)
             
Net provision for income taxes
  (10,228)  (7,751)  (14,146)
             

For the year ended December 31, (M€)  2011  2010  2009 

Consolidated net income

   12,581    10,807    8,629  

Provision for income taxes

   14,073    10,228    7,751  

Pre-tax income

   26,654    21,035    16,380  

French statutory tax rate

   36.10%    34.43%    34.43%  

Theoretical tax charge

   (9,622)   (7,242)   (5,640) 

Difference between French and foreign income tax rates

   (5,740)   (4,921)   (3,214) 

Tax effect of equity in income (loss) of affiliates

   695    672    565  

Permanent differences

   889    1,375    597  

Adjustments on prior years income taxes

   (19)   (45)   (47) 

Adjustments on deferred tax related to changes in tax rates

   (201)   2    (1) 

Changes in valuation allowance of deferred tax assets

   (71)   (65)   (6) 

Other

   (4)   (4)   (5) 

Net provision for income taxes

   (14,073)   (10,228)   (7,751) 

The French statutory tax rate includes the standard corporate tax rate (33.33%) and additional applicable taxes that bring the overall tax rate to 36.10% in 2011 (versus 34.43% in 2010 (identical to 2009 and 2008)2009).

Permanent differences are mainly due to impairment of goodwill and to dividends from non-consolidated companies as well as the specific taxation rules applicable to certain activities and within the consolidated income tax treatment.


F-34activities.

Net operating losses and tax credit carryforwards

Deferred tax assets related to net operating losses and tax carryforwards expire in the following years:

                         
As of December 31, (M€) 2010  2009  2008 
  Basis  Tax  Basis  Tax  Basis  Tax 
2009  —   —   —   —   233   115 
2010  —   —   258   126   167   79 
2011  225   110   170   83   93   42 
2012  177   80   121   52   61   19 
2013(a)
  146   59   133   43   1,765   587 
2014(b)
  1,807   602   1,804   599   —   — 
2015 and after  190   62   —   —   —   — 
Unlimited  774   232   661   211   560   189 
                         
Total
  3,319   1,145   3,147   1,114   2,879   1,031 
                         

    2011   2010   2009 

As of December 31, (M€)

  Basis   Tax   Basis   Tax   Basis   Tax 

2010

   —     —     —     —     258     126  

2011

   —     —     225     110     170     83  

2012

   242     115     177     80     121     52  

2013

   171     81     146     59     133     43  

2014(a)

   104     47     1,807     602     1,804     599  

2015(b)

   8     2     190     62     —     —  

2016 and after

   2,095     688     —     —     —     —  

Unlimited

   2,119     651     774     232     661     211  

Total

   4,739     1,584     3,319     1,145     3,147     1,114  

(a)

(a)

Net operating losses and tax credit carryforwards in 2013 and after for 2008
(b)Net operating losses and tax credit carryforwards in 2014 and after for 20092009.

(b)

10) Net operating losses and tax credit carryforwards in 2015 and after for 2010.

INTANGIBLE ASSETS

             
     Amortization
    
     and
    
As of December 31, 2010 (M€) Cost  impairment  Net 
Goodwill  1,498   (596)  902 
Proved and unproved mineral interests  10,099   (2,712)  7,387 
Other intangible assets  2,803   (2,175)  628 
             
Total intangible assets
  14,400   (5,483)  8,917 
             
             
     Amortization
    
     and
    
As of December 31, 2009 (M€) Cost  impairment  Net 
Goodwill  1,776   (614)  1,162 
Proved and unproved mineral interests  8,204   (2,421)  5,783 
Other intangible assets  2,712   (2,143)  569 
             
Total intangible assets
  12,692   (5,178)  7,514 
             
             
     Amortization
    
     and
    
As of December 31, 2008 (M€) Cost  impairment  Net 
Goodwill  1,690   (616)  1,074 
Proved and unproved mineral interests  6,010   (2,268)  3,742 
Other intangible assets  2,519   (1,994)  525 
             
Total intangible assets
  10,219   (4,878)  5,341 
             

10)INTANGIBLE ASSETS

As of December 31, 2011 (M€)  Cost   Amortization and
impairment		  Net 

Goodwill

   1,903     (993)   910  

Proved and unproved mineral interests

   13,719     (3,181)   10,538  

Other intangible assets

   3,377     (2,412)   965  
Total intangible assets  18,999   (6,586)  12,413 

As of December 31, 2010 (M€)  Cost   Amortization and
impairment		  Net 

Goodwill

   1,498     (596)   902  

Proved and unproved mineral interests

   10,099     (2,712)   7,387  

Other intangible assets

   2,803     (2,175)   628  

Total intangible assets

   14,400     (5,483)   8,917  

As of December 31, 2009 (M€)  Cost   Amortization and
impairment		  Net 

Goodwill

   1,776     (614)   1,162  

Proved and unproved mineral interests

   8,204     (2,421)   5,783  

Other intangible assets

   2,712     (2,143)   569  

Total intangible assets

   12,692     (5,178)   7,514  

Changes in net intangible assets are analyzed in the following table:

                             
           Amortization
  Currency
       
  Net amount as of
        and
  translation
     Net amount as of
 
(M€) January 1,  Acquisitions  Disposals  impairment  adjustment  Other  December 31, 
2010
  7,514   2,466   (62)  (553)  491   (939)  8,917 
2009  5,341   629   (64)  (345)  2   1,951   7,514 
2008  4,650   404   (3)  (259)  (93)  642   5,341 
                             


F-35

(M€)  Net
amount
as of
January 1,		   Acquisitions   Disposals  Amortization
and
impairment		  Currency
translation
adjustment		   Other  Net amount
as of
December 31,		 

2011

   8,917     2,504     (428)   (991)   358     2,053    12,413  

2010

   7,514     2,466     (62)   (553)   491     (939)   8,917  

2009

   5,341     629     (64)   (345)   2     1,951    7,514  

In 2010,2011, the heading “Other” mainly includes Chesapeake’s Barnett shale mineral interests reclassified into the acquisitions for €(975)€(649) million, the not yet paid part of the acquisition of Chesapeake’s mineral interests in Utica for€1,216 million, the reclassification of Joslyn’s mineral interests sold in 2011 and formerly classified in accordance with IFRS 5 “Non-current assets held for sale and discontinued operations” for€384 million, and€697 million related to the acquisition of SunPower.

In 2010, the heading “Other” mainly included Chesapeake’s Barnett shale mineral interests reclassified

into the acquisitions for€(975) million and the reclassification of Joslyn’s mineral interests in accordance with IFRS 5 “Non-current assets held for sale and discontinued operations” for €(390)€(390) million, including the currency translation adjustment, (see Note 34 to the Consolidated Financial Statements), partially compensated by the acquisition of UTS for €646€646 million (see Note 3 to the Consolidated Financial Statements).

In 2009, the heading “Other” mainly included Chesapeake’s Barnett shale mineral interests for €1,449€1,449 million (see Note 3 to the Consolidated Financial Statements).

 
In 2008, the heading “Other” mainly included the impact of “proved and unproved mineral interests” from Synenco Energy Inc. for €221 million and from Goal Petroleum B.V. for €292 million.

A summary of changes in the carrying amount of goodwill by business segment for the year ended December 31, 20102011 is as follows:

                     
  Net goodwill as of
           Net goodwill as of
 
(M€) January 1, 2010  Increases  Impairments  Other  December 31, 2010 
Upstream  78   —   —   —   78 
Downstream  202   22   (88)  (54)  82 
Chemicals  857   —   —   (140)  717 
Corporate  25   —   —   —   25 
                     
Total
  1,162   22   (88)  (194)  902 
                     
The heading “Other” mainly corresponds

(M€)  Net goodwill as of
January 1, 2011		   Increases   Impairments  Other  Net goodwill as of
December 31, 2011		 

Upstream

   78     396     (383)   (2)   89  

Downstream

   82     —     (1)   (12)   69  

Chemicals

   717     23     (4)   (9)   727  

Corporate

   25     —     —    —    25  

Total

   902     419     (388)   (23)   910  

In 2011, impairments of goodwill in the Upstream segment amount to€383 million and correspond to the sale of Mapa Spontex and the reclassificationimpairment of the whole goodwill arising from the acquisition of resins businesses subjectSunPower (see Note 4E to a disposal plan in accordance with IFRS 5 “Non-current assets held for sale and discontinued operations”the Consolidated Financial Statements).

11) PROPERTY, PLANT AND EQUIPMENT
             
     Depreciation
    
     and
    
As of December 31, 2010 (M€) Cost  impairment  Net 
Upstream properties
            
Proved properties  77,183   (50,582)  26,601 
Unproved properties  347   (1)  346 
Work in progress  14,712   (37)  14,675 
             
Subtotal
  92,242   (50,620)  41,622 
             
Other property, plant and equipment
            
Land  1,304   (393)  911 
Machinery, plant and equipment (including transportation equipment)  23,831   (17,010)  6,821 
Buildings  6,029   (3,758)  2,271 
Work in progress  2,350   (488)  1,862 
Other  6,164   (4,687)  1,477 
             
Subtotal
  39,678   (26,336)  13,342 
             
Total property, plant and equipment
  131,920   (76,956)  54,964 
             


F-36

11)PROPERTY, PLANT AND EQUIPMENT

As of December 31, 2011 (M€)  Cost   Depreciation and
impairment		  Net 

Upstream properties

     

Proved properties

   84,222     (54,589)   29,633  

Unproved properties

   209     —    209  

Work in progress

   21,190     (15)   21,175  

Subtotal

   105,621     (54,604)   51,017  

Other property, plant and equipment

     

Land

   1,346     (398)   948  

Machinery, plant and equipment (including transportation equipment)

   25,838     (18,349)   7,489  

Buildings

   6,241     (4,131)   2,110  

Work in progress

   1,534     (306)   1,228  

Other

   6,564     (4,899)   1,665  

Subtotal

   41,523     (28,083)   13,440  

Total property, plant and equipment

   147,144     (82,687)   64,457  

As of December 31, 2010 (M€)  Cost   Depreciation and
impairment		  Net 

Upstream properties

     

Proved properties

   77,183     (50,582)   26,601  

Unproved properties

   347     (1)   346  

Work in progress

   14,712     (37)   14,675  

Subtotal

   92,242     (50,620)   41,622  

Other property, plant and equipment

     

Land

   1,304     (393)   911  

Machinery, plant and equipment (including transportation equipment)

   23,831     (17,010)   6,821  

Buildings

   6,029     (3,758)   2,271  

Work in progress

   2,350     (488)   1,862  

Other

   6,164     (4,687)   1,477  

Subtotal

   39,678     (26,336)   13,342  

Total property, plant and equipment

   131,920     (76,956)   54,964  

             
     Depreciation
    
     and
    
As of December 31, 2009 (M€) Cost  impairment  Net 
Upstream properties
            
Proved properties  71,082   (44,718)  26,364 
Unproved properties  182   (1)  181 
Work in progress  10,351   (51)  10,300 
             
Subtotal
  81,615   (44,770)  36,845 
             
Other property, plant and equipment
            
Land  1,458   (435)  1,023 
Machinery, plant and equipment (including transportation equipment)  22,927   (15,900)  7,027 
Buildings  6,142   (3,707)  2,435 
Work in progress  2,774   (155)  2,619 
Other  6,506   (4,865)  1,641 
             
Subtotal
  39,807   (25,062)  14,745 
             
Total property, plant and equipment
  121,422   (69,832)  51,590 
             
     Depreciation
    
     and
    
As of December 31, 2008 (M€) Cost  impairment  Net 
Upstream properties
            
Proved properties  61,727   (39,315)  22,412 
Unproved properties  106   (1)  105 
Work in progress  9,586   —    9,586 
             
Subtotal
  71,419   (39,316)  32,103 
             
Other property, plant and equipment
            
Land  1,446   (429)  1,017 
Machinery, plant and equipment (including transportation equipment)  21,734   (14,857)  6,877 
Buildings  5,739   (3,441)  2,298 
Work in progress  2,226   (10)  2,216 
Other  6,258   (4,627)  1,631 
             
Subtotal
  37,403   (23,364)  14,039 
             
Total property, plant and equipment
  108,822   (62,680)  46,142 
             
As of December 31, 2009 (M€)  Cost   Depreciation and
impairment		  Net 

Upstream properties

     

Proved properties

   71,082     (44,718)   26,364  

Unproved properties

   182     (1)   181  

Work in progress

   10,351     (51)   10,300  

Subtotal

   81,615     (44,770)   36,845  

Other property, plant and equipment

     

Land

   1,458     (435)   1,023  

Machinery, plant and equipment (including transportation equipment)

   22,927     (15,900)   7,027  

Buildings

   6,142     (3,707)   2,435  

Work in progress

   2,774     (155)   2,619  

Other

   6,506     (4,865)   1,641  

Subtotal

   39,807     (25,062)   14,745  

Total property, plant and equipment

   121,422     (69,832)   51,590  

Changes in net property, plant and equipment are analyzed in the following table:

(M€)  Net amount as
of January 1,		   Acquisitions   Disposals  Depreciation and
impairment		  Currency
translation
adjustment		   Other  Net amount as of
December 31,		 

2011

   54,964     15,443     (1,489)   (7,636)   1,692     1,483    64,457  

2010

   51,590     11,346     (1,269)   (8,564)   2,974     (1,113)   54,964  

2009

   46,142     11,212     (65)   (6,765)   397     669    51,590  

                             
  Net amount
        Depreciation
  Currency
     Net amount
 
  as of
        and
  translation
     as of
 
(M€) January 1,  Acquisitions  Disposals  impairment  adjustment  Other  December 31, 
2010
  51,590   11,346   (1,269)  (8,564)  2,974   (1,113)  54,964 
2009  46,142   11,212   (65)  (6,765)  397   669   51,590 
2008  41,467   11,442   (102)  (5,941)  (1,151)  427   46,142 

In 2010,2011, the heading “Disposals” mainly includes the impact of sales of assets in the Upstream segment (disposal of the interests in Gassled in Norway and in Joslyn’s field in Canada) and in the Downstream segment (disposal of Marketing assets in the United Kingdom) (see Note 3 to the Consolidated Financial Statements).

In 2011, the heading “Depreciation and impairment” includes the impact of impairments of assets recognized for€781 million (see Note 4D to the Consolidated Financial Statements).

In 2011, the heading “Other” corresponds to the increase of the asset for sites restitution for an amount of€653 million. It also includes€428 million related to the reclassification of tangible assets of Joslyn and resins businesses sold in 2011 and formerly classified in accordance with IFRS 5 “Non-current assets held for sale and discontinued operations”.

In 2010, the heading “Disposals” mainly included the impact of sales of assets in the Upstream segment (sale of

the interests in the Valhall and Hod fields in Norway and sale of the interest in Block 31 in Angola, see Note 3 to the Consolidated Financial Statements).

In 2010, the heading “Depreciation and impairment” includesincluded the impact of impairments of assets recognized for €1,416€1,416 million (see Note 4C4D to the Consolidated Financial Statements).

F-37

In 2010, the heading “Other” mainly correspondscorresponded to the change in the consolidation method of Samsung Total Petrochemicals (see Note 12 to the Consolidated Financial Statements) for €(541)€(541) million and the reclassification for €(537)€(537) million, including the currency translation adjustment, of property, plant and equipment related to Joslyn, Total E&P Cameroun, and resins businesses subject to a disposal project in accordance with IFRS 5 “Non-current assets held for sale and discontinued operations” (see Note 34 to the Consolidated Financial Statements), partially compensated by the acquisition of UTS for €217€217 million (see Note 3 to the Consolidated Financial Statements).

 

In 2009, the heading “Other” mainly included changes in net property, plant and equipment related to asset retirement obligations and Chesapeake’s Barnett shale tangible assets for €113€113 million (see Note 3 to the Consolidated Financial Statements).

In 2008, the heading “Other” mainly included changes in net property, plant and equipment related to asset retirement obligations.

Property, plant and equipment presented above include the following amounts for facilities and equipment under finance leases that have been capitalized:

             
     Depreciation
    
     and
    
As of December 31, 2010 (M€) Cost  impairment  Net 
Machinery, plant and equipment  480   (332)  148 
Buildings  54   (24)  30 
Other  —   —   — 
             
Total
  534   (356)  178 
             
             
     Depreciation
    
     and
    
As of December 31, 2009 (M€) Cost  impairment  Net 
Machinery, plant and equipment  548   (343)  205 
Buildings  60   (30)  30 
Other  —   —   — 
             
Total
  608   (373)  235 
             
             
     Depreciation
    
     and
    
As of December 31, 2008 (M€) Cost  impairment  Net 
Machinery, plant and equipment  558   (316)  242 
Buildings  35   (28)  7 
Other  —   —   — 
             
Total
  593   (344)  249 
             

As of December 31, 2011 (M€)  Cost   Depreciation and
impairment		  Net 

Machinery, plant and equipment

   414     (284)   130  

Buildings

   54     (25)   29  

Other

   —     —    —  

Total

   468     (309)   159  
As of December 31, 2010 (M€)  Cost   Depreciation and
impairment		  Net 

Machinery, plant and equipment

   480     (332)   148  

Buildings

   54     (24)   30  

Other

   —     —    —  

Total

   534     (356)   178  
As of December 31, 2009 (M€)  Cost   Depreciation and
impairment		  Net 

Machinery, plant and equipment

   548     (343)   205  

Buildings

   60     (30)   30  

Other

   —     —    —  

Total

   608     (373)   235  

12)EQUITY AFFILIATES: INVESTMENTS AND LOANS

        As of December 31, 

Equity value (M€)

 

  2011  2010  2009  2011   2010   2009 
  % owned  equity value 

NLNG

   15.00%   15.00%   15.00%   953     1,108     1,136  

PetroCedeño — EM

   30.32%   30.32%   30.32%   1,233     1,136     874  

CEPSA (Upstream share)(d)

   —    48.83%   48.83%   —     340     385  

Angola LNG Ltd.

   13.60%   13.60%   13.60%   869     710     490  

Qatargas

   10.00%   10.00%   10.00%   97     85     83  

Société du Terminal Méthanier de Fos Cavaou

   27.60%   28.03%   28.79%   119     125     124  

Dolphin Energy Ltd (Del) Abu Dhabi

   24.50%   24.50%   24.50%   208     172     118  

Qatar Liquefied Gas Company Limited II (Train B)

   16.70%   16.70%   16.70%   209     184     143  

Yemen LNG Co

   39.62%   39.62%   39.62%   169     25     (15) 

Shtokman Development AG

   25.00%   25.00%   25.00%   248     214     162  

AMYRIS(a)

   21.37%   22.03%   —    79     101     —  

Novatek(e)

   14.09%   —    —    3,368     —     —  

Other

   —    —    —    803     724     760  

Total associates

      8,355     4,924     4,260  

Yamal LNG(e)

   20.01%   —    —    495     —     —  

Ichthys LNG Ltd(e)

   24.00%   —    —    82     —     —  

Other

   —    —    —    —     78     —  

Total jointly-controlled entities

               577     78     —  

Total Upstream

      8,932     5,002     4,260  

CEPSA (Downstream share)(d)

   —    48.83%   48.83%   —     2,151     1,927  

Saudi Aramco Total Refining & Petrochemicals (Downstream share)

   37.50%   37.50%   37.50%   112     47     60  

Other

   —    —    —    166     159     123  

Total associates

      278     2,357     2,110  

SARA(c)

   50.00%   50.00%   —    125     134     —  

TotalErg(a)

   49.00%   49.00%   —    296     289     —  

Other

   —    —    —    —     2     —  

Total jointly-controlled entities

               421     425     —  

Total Downstream

      699     2,782     2,110  

CEPSA (Chemicals share)(d)

   —    48.83%   48.83%   —     411     396  

Qatar Petrochemical Company Ltd.

   20.00%   20.00%   20.00%   240     221     205  

Saudi Aramco Total Refining & Petrochemicals (Chemicals share)

   37.50%   37.50%   37.50%   9     4     5  

Qatofin Company Limited

   36.36%   36.36%   36.36%   136     27     9  

Other

   —    —    —    27     41     37  

Total associates

      412     704     652  

Samsung Total Petrochemicals(c)

   50.00%   50.00%   —    706     645     —  

Total jointly-controlled entities

               706     645     —  

Total Chemicals

      1,118     1,349     652  

Sanofi(b)

   —    —    7.39%   —     —     4,235  

Total associates

      —     —     4,235  

Total jointly-controlled entities

               —     —     —  

Total Corporate

               —     —     4,235  

Total investments

      10,749     9,133     11,257  

Loans

               2,246     2,383     2,367  

Total investments and loans

               12,995     11,516     13,624  

(a)
12) EQUITY AFFILIATES: INVESTMENTS AND LOANS
As from January 1st, 2010, jointly-controlled entities are consolidated under the equity method, as provided for in the alternative method of IAS 31 “Interests in joint ventures” (see Note 1 “Accounting policies” paragraphs A and V to the Consolidated Financial Statements). Until December 31, 2009, these entities were consolidated using the proportionate method.


F-38

                         
Equity value (M€) As of December 31, 
  2010  2009  2008  2010  2009  2008 
  % owned  equity value 
NLNG  15.00%  15.00%  15.00%  1,108   1,136   1,135 
PetroCedeño — EM  30.32%  30.32%  30.32%  1,136   874   760 
CEPSA (Upstream share)  48.83%  48.83%  48.83%  340   385   403 
Angola LNG Ltd.   13.60%  13.60%  13.60%  710   490   326 
Qatargas  10.00%  10.00%  10.00%  85   83   251 
Société du Terminal Méthanier de Fos Cavaou  28.03%  28.79%  30.30%  125   124   114 
Dolphin Energy Ltd (Del) Abu Dhabi  24.50%  24.50%  24.50%  172   118   85 
Qatar Liquefied Gas Company Limited II (Train B)  16.70%  16.70%  16.70%  184   143   82 
Shtokman Development AG(a)
  25.00%  25.00%  25.00%  214   162   35 
AMYRIS(b)
  22.03%  —   —   101   —   — 
Other  —   —   —   749   745   700 
Total associates
              4,924   4,260   3,891 
Other  —   —   —   78   —   — 
Total jointly-controlled entities
              78   —   — 
                         
Total Upstream
              5,002   4,260   3,891 
CEPSA (Downstream share)  48.83%  48.83%  48.83%  2,151   1,927   1,810 
Saudi Aramco Total Refining & Petrochemicals (Downstream share)(a)
  37.50%  37.50%  37.50%  47   60   75 
Wepec  22.41%  22.41%  22.41%  —   —   — 
Other  —   —   —   159   123   73 
Total associates
              2,357   2,110   1,958 
SARA(d)
  50.00%  —   —   134   —   — 
TotalErg(b)
  49.00%  —   —   289   —   — 
Other  —   —   —   2   —   — 
Total jointly-controlled entities
              425   —   — 
                         
Total Downstream
              2,782   2,110   1,958 
CEPSA (Chemicals share)  48.83%  48.83%  48.83%  411   396   424 
Qatar Petrochemical Company Ltd.   20.00%  20.00%  20.00%  221   205   192 
Saudi Aramco Total Refining & Petrochemicals (Chemicals share)(a)
  37.50%  37.50%  37.50%  4   5   6 
Other  —   —   —   68   46   55 
Total associates
              704   652   677 
Samsung Total Petrochemicals(d)
  50.00%  —   —   645   —   — 
Total jointly-controlled entities
              645   —   — 
                         
Total Chemicals
              1,349   652   677 
Sanofi-Aventis(c)
  —   7.39%  11.38%  —   4,235   6,137 
Total associates
              —   4,235   6,137 
Total jointly-controlled entities
              —   —   — 
                         
Total Corporate
              —   4,235   6,137 
                         
Total investments
              9,133   11,257   12,663 
                         
Loans              2,383   2,367   2,005 
                         
Total investments and loans
              11,516   13,624   14,668 
                         
(a)Investment accounted for by the equity method as from 2008.
(b)Investment accounted for by the equity method as from 2010.
(b)

(c)

End of the accounting for by the equity method of Sanofi-AventisSanofi as of July 1st,1st, 2010 (see Note 3 to the Consolidated Financial Statements).

(c)

(d)

Change in the consolidation method as of January 1st, 2010.

F-39

                         
Equity in income (loss) (M€) As of December 31,  For the year ended December 31, 
  2010  2009  2008  2010  2009  2008 
  % owned  equity in income (loss) 
NLNG  15.00%  15.00%  15.00%  207   227   554 
PetroCedeño — EM  30.32%  30.32%  30.32%  195   166   193 
CEPSA (Upstream share)  48.83%  48.83%  48.83%  57   23   50 
Angola LNG Ltd.   13.60%  13.60%  13.60%  8   9   10 
Qatargas  10.00%  10.00%  10.00%  136   114   126 
Société du Terminal Méthanier de Fos Cavaou  28.03%  28.79%  30.30%  —   —   (5)
Dolphin Energy Ltd (Del) Abu Dhabi  24.50%  24.50%  24.50%  121   94   83 
Qatar Liquefied Gas Company Limited II (Train B)  16.70%  16.70%  16.70%  288   8   (11)
Shtokman Development AG(a)
  25.00%  25.00%  25.00%  (5)  4   — 
AMYRIS(b)
  22.03%  —   —   (3)        
Other  —   —   —   177   214   178 
Total associates
              1,181   859   1,178 
Other  —   —   —   6   —   — 
Total jointly-controlled entities
              6   —   — 
                         
Total Upstream
              1,187   859   1,178 
CEPSA (Downstream share)  48.83%  48.83%  48.83%  172   149   76 
Saudi Aramco Total Refining & Petrochemicals (Downstream share)(a)
  37.50%  37.50%  37.50%  (19)  (12)  — 
Wepec  22.41%  22.41%  22.41%  29   —   (110)
Other  —   —   —   47   81   (13)
Total associates
              229   218   (47)
SARA(d)
  50.00%  —   —   31   —   — 
TotalErg(b)
  49.00%  —   —   (11)  —   — 
Other  —   —   —   2   —   — 
Total jointly-controlled entities
              22   —   — 
                         
Total Downstream
              251   218   (47)
CEPSA (Chemicals share)  48.83%  48.83%  48.83%  78   10   10 
Qatar Petrochemical Company Ltd.   20.00%  20.00%  20.00%  84   74   66 
Saudi Aramco Total Refining & Petrochemicals (Chemicals share)(a)
  37.50%  37.50%  37.50%  (1)  (1)  — 
Other  —   —   —   41   (4)  (1)
Total associates
              202   79   75 
Samsung Total Petrochemicals(d)
  50.00%  —   —   104   —   — 
Total jointly-controlled entities
              104   —   — 
                         
Total Chemicals
              306   79   75 
Sanofi-Aventis(c)
  —   7.39%  11.38%  209   486   515 
Total associates
              209   486   515 
Total jointly-controlled entities
              —   —   — 
                         
Total Corporate
              209   486   515 
                         
Total investments
              1,953   1,642   1,721 
                         
(d)

Sale of CEPSA on July 29th, 2011.

(e)
(a)Investment accounted for by the equity method as from 2008.2011.

    As of December 31,  For the year ended December 31, 
    2011  2010  2009  2011  2010  2009 
Equity in income (loss) (M€)  % owned  Equity in income (loss) 

NLNG

   15.00%   15.00%   15.00%   374    207    227  

PetroCedeño — EM

   30.32%   30.32%   30.32%   55    195    166  

CEPSA (Upstream share)(d)

   —    48.83%   48.83%   15    57    23  

Angola LNG Ltd.

   13.60%   13.60%   13.60%   6    8    9  

Qatargas

   10.00%   10.00%   10.00%   196    136    114  

Société du Terminal Méthanier de Fos Cavaou

   27.60%   28.03%   28.79%   13    —    —  

Dolphin Energy Ltd (Del) Abu Dhabi

   24.50%   24.50%   24.50%   131    121    94  

Qatar Liquefied Gas Company Limited II (Train B)

   16.70%   16.70%   16.70%   446    288    8  

Yemen LNG Co

   39.62%   39.62%   39.62%   130    37    34  

Shtokman Development AG

   25.00%   25.00%   25.00%   1    (5)   4  

AMYRIS(a)

   21.37%   22.03%   —    (23)   (3)   —  

Novatek(e)

   14.09%   —    —    24    —    —  

Other

   —    —    —    274    140    180  

Total associates

      1,642    1,181    859  

Yamal LNG(e)

   20.01%   —    —    —    —    —  

Ichthys LNG Ltd(e)

   24.00%   —    —    (7)   —    —  

Other

   —    —    —    (56)   6    —  

Total jointly-controlled entities

               (63)   6    —  

Total Upstream

      1,579    1,187    859  

CEPSA (Downstream share)(d)

   —    48.83%   48.83%   26    172    149  

Saudi Aramco Total Refining & Petrochemicals (Downstream share)

   37.50%   37.50%   37.50%   (27)   (19)   (12) 

Other

   —    —    —    24    76    81  

Total associates

      23    229    218  

SARA(c)

   50.00%   50.00%   —    11    31    —  

TotalErg(a)

   49.00%   49.00%   —    7    (11)   —  

Other

   —    —    —    1    2    —  

Total jointly-controlled entities

               19    22    —  

Total Downstream

      42    251    218  

CEPSA (Chemicals share)(d)

   —    48.83%   48.83%   19    78    10  

Qatar Petrochemical Company Ltd.

   20.00%   20.00%   20.00%   89    84    74  

Saudi Aramco Total Refining & Petrochemicals (Chemicals share)

   37.50%   37.50%   37.50%   (3)   (1)   (1) 

Qatofin Company Limited

   36.36%   36.36%   36.36%   98    36    (5) 

Other

   —    —    —    (13)   5    1  

Total associates

      190    202    79  

Samsung Total Petrochemicals(c)

   50.00%   50.00%   —    114    104    —  

Total jointly-controlled entities

               114    104    —  

Total Chemicals

      304    306    79  

Sanofi(b)

   —    —    7.39%   —    209    486  

Total associates

      —    209    486  

Total jointly-controlled entities

               —    —    —  

Total Corporate

               —    209    486  

Total investments

               1,925    1,953    1,642  

(b)(a)Investment accounted for by the equity method as from 2010.
(c)(b)

End of the accounting for by the equity method of Sanofi-AventisSanofi as of July 1st,1st, 2010 (see Note 3 to the Consolidated Financial Statements).

(d)(c)

Change in the consolidation method as of January 1st, 2010.

(d)

Sale of CEPSA on July 29th, 2011.

(e)Investment accounted for by the equity method as from 2011.

The market value of the Group’s share in CEPSANovatek amounts to €2,389€4,034 million as of December 31, 20102011 for an equity value of €2,902€3,368 million. The recoverable amount of CEPSA determined by reference to the value of discounted future cash flows being greater than the equity value, no impairment loss has been accounted for.

F-40

In Group share, the main financial items of the equity affiliates are as follows :
                         
  2010  2009  2008 
     Jointly-
     Jointly-
     Jointly-
 
     controlled
     controlled
     controlled
 
As of December 31, (M€) Associates  entities  Associates  entities  Associates  entities 
Assets  19,192   2,770   22,681   —   23,173   — 
Shareholders’ equity  7,985   1,148   11,257   —   12,663   — 
Liabilities  11,207   1,622   11,424   —   10,510   — 
                         
                         
  2010  2009  2008 
     Jointly-
     Jointly-
     Jointly-
 
     controlled
     controlled
     controlled
 
For the year ended December 31, (M€) Associates  entities  Associates  entities  Associates  entities 
Revenues from sales  16,529   2,575   14,434   —   19,982   — 
Pre-tax income  2,389   166   2,168   —   2,412   — 
Income tax  (568)  (34)  (526)  —   (691)  — 
                         
Net income
  1,821   132   1,642       1,721     
                         
13) OTHER INVESTMENTS
follows:

As of December 31,

(M€)

  2011  2010  2009 

  

  Associates  Jointly-
controlled
entities		  Associates  Jointly-
controlled
entities		  Associates  Jointly-
controlled
entities		 

Assets

   18,088    3,679    19,192    2,770    22,681    —  

Shareholders’ equity

   9,045    1,704    7,985    1,148    11,257    —  

Liabilities

   9,043    1,975    11,207    1,622    11,424    —  
                          
    2011  2010  2009 
For the year ended December 31, (M€)  Associates  Jointly-
controlled
entities		  Associates  Jointly-
controlled
entities		  Associates  Jointly-
controlled
entities		 

Revenues from sales

   9,948    5,631    16,529    2,575    14,434    —  

Pre-tax income

   2,449    119    2,389    166    2,168    —  

Income tax

   (594)   (49)   (568)   (34)   (526)   —  

Net income

   1,855    70    1,821    132    1,642      

13)OTHER INVESTMENTS

The investments detailed below are classified as “Financial assets available for sale” (see Note 1 paragraph M(ii) to the Consolidated Financial Statements).

             
  Carrying
  Unrealized gain
  Balance
 
As of December 31, 2010 (M€) amount  (loss)  sheet value 
Sanofi-Aventis(a)
  3,510   (56)  3,454 
Areva(b)
  69   63   132 
Arkema  —    —    —  
Chicago Mercantile Exchange Group(c)
  1   9   10 
Olympia Energy Fund — energy investment fund(d)
  37   (3)  34 
Other publicly traded equity securities  2   (1)  1 
             
Total publicly traded equity securities(e)
  3,619   12   3,631 
             
BBPP  60   —    60 
BTC Limited  141   —    141 
Other equity securities  758   —    758 
             
Total other equity securities(e)
  959   —    959 
             
Other investments
  4,578   12   4,590 
             


F-41

As of December 31, 2011

(M€)

  Carrying
amount		   Unrealized gain (loss)  Balance sheet value 

Sanofi(a)

   2,100     351    2,451  

Areva(b)

   69     1    70  

Arkema

   —     —    —  

Chicago Mercantile Exchange Group

   1     6    7  

Olympia Energy Fund — energy investment fund

   38     (5)   33  

Gevo

   15     (3)   12  

Other publicly traded equity securities

   3     (1)   2  

Total publicly traded equity securities(c)

   2,226     349    2,575  

BBPP

   62     —    62  

Ocensa(d)

   85     —    85  

BTC Limited

   132     —    132  

Other equity securities

   820     —    820  

Total other equity securities(c)

   1,099     —    1,099  

Other investments

   3,325     349    3,674  
               

As of December 31, 2010

(M€)

  Carrying
amount		   Unrealized gain (loss)  Balance sheet value 

Sanofi(a)

   3,510     (56)   3,454  

Areva(b)

   69     63    132  

Arkema

   —     —    —  

Chicago Mercantile Exchange Group

   1     9    10  

Olympia Energy Fund — energy investment fund

   37     (3)   34  

Other publicly traded equity securities

   2     (1)   1  

Total publicly traded equity securities(c)

   3,619     12    3,631  

BBPP

   60     —    60  

BTC Limited

   141     —    141  

Other equity securities

   758     —    758  

Total other equity securities(c)

   959     —    959  

Other investments

   4,578     12    4,590  

As of December 31, 2009

(M€)

  Carrying
amount		   Unrealized gain (loss)  Balance sheet value 

Areva(b)

   69     58    127  

Arkema

   15     47    62  

Chicago Mercantile Exchange Group

   1     9    10  

Olympia Energy Fund — energy investment fund

   35     (2)   33  

Other publicly traded equity securities

   —     —    —  

Total publicly traded equity securities(c)

   120     112    232  

BBPP

   72     —    72  

BTC Limited

   144     —    144  

Other equity securities

   714     —    714  

Total other equity securities(c)

   930     —    930  

Other investments

   1,050     112    1,162  

             
  Carrying
 Unrealized gain,
 Balance
As of December 31, 2009 (M€) amount (loss) sheet value
Areva(b)
  69   58   127 
Arkema  15   47   62 
Chicago Mercantile Exchange Group(c)
  1   9   10 
Olympia Energy Fund — energy investment fund(d)
  35   (2)  33 
Other publicly traded equity securities  —   —   — 
             
Total publicly traded equity securities(e)
  120   112   232 
             
BBPP  72   —   72 
BTC Limited  144   —   144 
Other equity securities  714   —   714 
             
Total other equity securities(e)
  930   —   930 
             
Other investments
  1,050   112   1,162 
             
 
             
  Carrying
 Unrealized gain
 Balance
As of December 31, 2008 (M€) amount (loss) sheet value
 
Areva(b)
  69   59   128 
Arkema  16   15   31 
Chicago Mercantile Exchange Group(c)
  1   5   6 
Olympia Energy Fund — energy investment fund(d)
  36   (5)  31 
Other publicly traded equity securities  —   —   — 
             
Total publicly traded equity securities(e)
  122   74   196 
             
BBPP  75   —   75 
BTC Limited  161   —   161 
Other equity securities  733   —   733 
             
Total other equity securities(e)
  969   —   969 
             
Other investments
  1,091   74   1,165 
             
(a)
(a)End of the accounting for by the equity method of Sanofi-AventisSanofi as of July 1st, 2010 (see Note 3 to the Consolidated Financial Statements).
(b)
(b)Unrealized gain based on the investment certificate.
(c)The Nymex Holdings Inc. securities have been traded during the acquisition process running from June 11 to August 22, 2008 through which Chicago Mercantile Exchange Group acquired all the Nymex Holdings Inc. securities.
(d)Securities acquired in 2008.
(e)Including cumulative impairments of €597€604 million in 2011,€597 million in 2010 €599and€599 million in 2009 and €608 million2009.
(d)End of the accounting for by the equity method of Ocensa in 2008.July 2011 (see Note 3 to the Consolidated Financial Statements).

F-42

14)OTHER NON-CURRENT ASSETS

As of December 31, 2011

(M€)

  Gross value   Valuation
allowance		  Net value 

Deferred income tax assets

   1,767     —    1,767  

Loans and advances(a)

   2,454     (399)   2,055  

Other

   1,049     —    1,049  

Total

   5,270     (399)   4,871  

As of December 31, 2010

(M€)

  Gross value   Valuation
allowance		  Net value 

Deferred income tax assets

   1,378     —    1,378  

Loans and advances(a)

   2,060     (464)   1,596  

Other

   681     —    681  

Total

   4,119     (464)   3,655  

As of December 31, 2009

(M€)

  Gross value   Valuation
allowance		  Net value 

Deferred income tax assets

   1,164     —    1,164  

Loans and advances(a)

   1,871     (587)   1,284  

Other

   633     —    633  

Total

   3,668     (587)   3,081  

(a)
14) OTHER NON-CURRENT ASSETS
             
  Gross
  Valuation
  Net
 
As of December 31, 2010 (M€) value  allowance  value 
Deferred income tax assets  1,378   —    1,378 
Loans and advances(a)
  2,060   (464)  1,596 
Other  681   —    681 
             
Total
  4,119   (464)  3,655 
             
             
  Gross
  Valuation
  Net
 
As of December 31, 2009 (M€) value  allowance  value 
Deferred income tax assets  1,164   —    1,164 
Loans and advances(a)
  1,871   (587)  1,284 
Other  633   —    633 
             
Total
  3,668   (587)  3,081 
             
             
  Gross
  Valuation
  Net
 
As of December 31, 2008 (M€) value  allowance  value 
Deferred income tax assets  1,010   —    1,010 
Loans and advances(a)
  1,932   (529)  1,403 
Other  631   —    631 
             
Total
  3,573   (529)  3,044 
             
(a)Excluding loans to equity affiliates.

Changes in the valuation allowance on loans and advances are detailed as follows:

                     
           Currency
    
  Valuation
        translation
  Valuation
 
  allowance as of
        adjustment and
  allowance as of
 
For the Year Ended December 31, (M€) January 1,  Increases  Decreases  other variations  December 31, 
2010
  (587)  (33)  220   (64)  (464)
2009  (529)  (19)  29   (68)  (587)
2008  (527)  (33)  52   (21)  (529)
15) INVENTORIES
             
  Gross
  Valuation
  Net
 
As of December 31, 2010 (M€) value  allowance  value 
Crude oil and natural gas  4,990   —    4,990 
Refined products  7,794   (28)  7,766 
Chemicals products  1,350   (99)  1,251 
Other inventories  1,911   (318)  1,593 
             
Total
  16,045   (445)  15,600 
             


F-43

For the year ended December 31,

(M€)

  Valuation
allowance as
of January 1,		  Increases  Decreases   Currency
translation
adjustment and
other variations		  Valuation
allowance as of
December 31,		 

2011

   (464)   (25)   122     (32)   (399) 

2010

   (587)   (33)   220     (64)   (464) 

2009

   (529)   (19)   29     (68)   (587) 

15)INVENTORIES

As of December 31, 2011

(M€)

  Gross value   Valuation
allowance		  Net value 

Crude oil and natural gas

   4,735     (24)   4,711  

Refined products

   9,706     (36)   9,670  

Chemicals products

   1,489     (103)   1,386  

Other inventories

   2,761     (406)   2,355  

Total

   18,691     (569)   18,122  

             
  Gross
  Valuation
  Net
 
As of December 31, 2009 (M€) value  allowance  value 
Crude oil and natural gas  4,581   —    4,581 
Refined products  6,647   (18)  6,629 
Chemicals products  1,234   (113)  1,121 
Other inventories  1,822   (286)  1,536 
             
Total
  14,284   (417)  13,867 
             
             
  Gross
  Valuation
  Net
 
As of December 31, 2008 (M€) value  allowance  value 
Crude oil and natural gas  2,772   (326)  2,446 
Refined products  4,954   (416)  4,538 
Chemicals products  1,419   (105)  1,314 
Other inventories  1,591   (268)  1,323 
             
Total
  10,736   (1,115)  9,621 
             
As of December 31, 2010 (M€)  Gross value   Valuation
allowance		  Net value 

Crude oil and natural gas

   4,990     —    4,990  

Refined products

   7,794     (28)   7,766  

Chemicals products

   1,350     (99)   1,251  

Other inventories

   1,911     (318)   1,593  

Total

   16,045     (445)   15,600  

As of December 31, 2009 (M€)  Gross value   Valuation
allowance		  Net value 

Crude oil and natural gas

   4,581     —    4,581  

Refined products

   6,647     (18)   6,629  

Chemicals products

   1,234     (113)   1,121  

Other inventories

   1,822     (286)   1,536  

Total

   14,284     (417)   13,867  

Changes in the valuation allowance on inventories are as follows:

                 
        Currency
    
        translation
  Valuation
 
  Valuation
     adjustment
  allowance
 
  allowance as of
  Increase
  and other
  as of
 
For the year ended December 31, (M€) January 1,  (net)  variations  December 31, 
2010
  (417)  (39)  11   (445)
2009  (1,115)  700   (2)  (417)
2008  (325)  (740)  (50)  (1,115)
16) ACCOUNTS RECEIVABLE AND OTHER CURRENT ASSETS
             
  Gross
  Valuation
  Net
 
As of December 31, 2010 (M€) value  allowance  value 
Accounts receivable
  18,635   (476)  18,159 
             
Recoverable taxes  2,227   —    2,227 
Other operating receivables  4,543   (136)  4,407 
Deferred income tax  151   —    151 
Prepaid expenses  657   —    657 
Other current assets  41   —    41 
             
Other current assets
  7,619   (136)  7,483 
             
             
  Gross
  Valuation
  Net
 
As of December 31, 2009 (M€) value  allowance  value 
Accounts receivable
  16,187   (468)  15,719 
             
Recoverable taxes  2,156   —    2,156 
Other operating receivables  5,214   (69)  5,145 
Deferred income tax  214   —    214 
Prepaid expenses  638   —    638 
Other current assets  45   —    45 
             
Other current assets
  8,267   (69)  8,198 
             

F-44

For the year ended December 31, (M€)  Valuation
allowance as
of January 1,		  Increase (net)  Currency
translation
adjustment and
other variations		  Valuation
allowance as of
December 31,		 

2011

   (445)   (83)   (41)   (569) 

2010

   (417)   (39)   11    (445) 

2009

   (1,115)   700    (2)   (417) 

16)ACCOUNTS RECEIVABLE AND OTHER CURRENT ASSETS

As of December 31, 2011 (M€)  Gross
value		   Valuation
allowance		  Net
value		 

Accounts receivable

   20,532     (483)   20,049  

Recoverable taxes

   2,398     —    2,398  

Other operating receivables

   7,750     (283)   7,467  

Deferred income tax

   —     —    —  

Prepaid expenses

   840     —    840  

Other current assets

   62     —    62  

Other current assets

   11,050     (283)   10,767  

As of December 31, 2010 (M€)  Gross
value		   Valuation
allowance		  Net
value		 

Accounts receivable

   18,635     (476)   18,159  

Recoverable taxes

   2,227     —    2,227  

Other operating receivables

   4,543     (136)   4,407  

Deferred income tax

   151     —    151  

Prepaid expenses

   657     —    657  

Other current assets

   41     —    41  

Other current assets

   7,619     (136)   7,483  

As of December 31, 2009 (M€)  Gross
value		   Valuation
allowance		  Net
value		 

Accounts receivable

   16,187     (468)   15,719  

Recoverable taxes

   2,156     —    2,156  

Other operating receivables

   5,214     (69)   5,145  

Deferred income tax

   214     —    214  

Prepaid expenses

   638     —    638  

Other current assets

   45     —    45  

Other current assets

   8,267     (69)   8,198  

             
  Gross
  Valuation
  Net
 
As of December 31, 2008 (M€) value  allowance  value 
Accounts receivable
  15,747   (460)  15,287 
             
Recoverable taxes  2,510   —   2,510 
Other operating receivables  6,227   (19)  6,208 
Deferred income tax  206   —   206 
Prepaid expenses  650   —   650 
Other current assets  68   —   68 
             
Other current assets
  9,661   (19)  9,642 
             

Changes in the valuation allowance on “Accounts receivable” and “Other current assets” are as follows:

(M€)  Valuation
allowance
as of
January 1,		  Increase
(net)		  Currency
translation
adjustments
and other
variations		  Valuation
allowance as of
December 31,		 

Accounts receivable

     

2011

   (476)   4    (11)   (483) 

2010

   (468)   (31)   23    (476) 

2009

   (460)   (17)   9    (468) 

Other current assets

     

2011

   (136)   (132)   (15)   (283) 

2010

   (69)   (66)   (1)   (136) 

2009

   (19)   (14)   (36)   (69) 

                 
  Valuation
     Currency translation
  Valuation
 
  allowance as of
     adjustments and
  allowance as of
 
(M€) January 1,  Increase (net)  other variations  December 31, 
Accounts receivable
                
                 
2010
  (468)  (31)  23   (476)
2009  (460)  (17)  9   (468)
2008  (482)  9   13   (460)
Other current assets
                
                 
2010
  (69)  (66)  (1)  (136)
2009  (19)  (14)  (36)  (69)
2008  (27)  7   1   (19)

As of December 31, 2011, the net portion of the overdue receivables includes in “Accounts receivable” and “Other current assets” is€3,556 million, of which€1,857 million has expired for less than 90 days,€365 million has expired between 90 days and 6 months,€746 million has expired between 6 and 12 months and€588 million has expired for more than 12 months.

As of December 31, 2010, the net portion of the overdue receivables includedincludes in “Accounts receivable” and “Other current assets” is €3,141€3,141 million, of which €1,885€1,885 million has expired for less than 90 days, €292€292 million has expired between 90 days and 6 months, €299€299 million has expired between 6 and 12 months and €665€665 million has expired for more than 12 months.

As of December 31, 2009, the net portion of the overdue receivables included in “Accounts receivable” and “Other current assets” is €3,610€3,610 million, of which €2,116€2,116 million has expired for less than 90 days, €486€486 million has expired between 90 days and 6 months, €246€246 million has expired between 6 and 12 months and €762€762 million has expired for more than 12 months.

As of December 31, 2008, the net portion of the overdue receivables included in “Accounts receivable” and “Other current assets” was €3,744 million, of which €2,420 million had expired for less than 90 days, €729 million had expired between 90 days and 6 months, €54 million had expired between 6 and 12 months and €541 million had expired for more than 12 months.

17)SHAREHOLDERS’ EQUITY

17) 

SHAREHOLDERS’ EQUITY
Number of TotalTOTAL shares

The Company’s common shares, par value €2.50,€2.50, as of December 31, 20102011 are the only category of shares. Shares may be held in either bearer or registered form.

Double voting rights are granted to holders of shares that are fully-paid and held in the name of the same shareholder for at least two years, with due consideration for the total portion of the share capital represented. Double voting rights are also assigned to restricted shares in the event of an increase in share capital by incorporation of reserves, profits or premiums based on shares already held that are entitled to double voting rights.

Pursuant to the Company’s bylaws (Statuts)(Statuts), no shareholder may cast a vote at a shareholders’ meeting, either by himself or through an agent, representing more than 10% of the total voting rights for the Company’s shares. This limit applies to the aggregated amount of voting rights held directly, indirectly or through voting proxies. However, in the case of double voting rights, this limit may be extended to 20%.

These restrictions no longer apply if any individual or entity, acting alone or in concert, acquires at least two-thirds of the total share capital of the Company, directly or indirectly, following a public tender offer for all of the Company’s shares.

F-45

The authorized share capital amounts to 3,446,401,650 shares as of December 31, 2011 compared to 3,439,391,697 shares as of December 31, 2010 compared toand 3,381,921,458 shares as of December 31, 2009 and 3,413,204,025 as of December 31, 2008.2009.

 

Variation of the share capital

As of January 1, 2009

2,371,808,074

Shares issued in connection with:

Exercise of TOTAL share subscription options934,780
Exchange guarantee offered to the beneficiaries of Elf Aquitaine share subscription options480,030

Cancellation of shares(a)

      (24,800,000) 

As of January 1, 20082010

     2,395,532,0972,348,422,884

Shares issued in connection with:

Exercise of TOTAL share subscription options1,218,047  

As of January 1, 2011

     2,349,640,931

Shares issued in connection with:

  Capital increase reserved for employees   4,870,3868,902,717  
   Exercise of TOTAL share subscription options   1,178,1675,223,665  
Exchange guarantee offered to the beneficiaries

As of
Elf Aquitaine share subscription options

227,424
Cancellation of shares December 31, 2011(a)(b)

     (30,000,0002,363,767,313)
As of January 1, 2009
2,371,808,074
Shares issued in connection with:Exercise of TOTAL share subscription options934,780
Exchange guarantee offered to the beneficiaries of
Elf Aquitaine share subscription options		480,030
Cancellation of shares(b)
(24,800,000)
As of January 1, 2010
2,348,422,884
Shares issued in connection with:Exercise of TOTAL share subscription options1,218,047
As of December 31, 2010(c)
2,349,640,931

(a)
(a)Decided by the Board of Directors on July 31, 2008.
(b)Decided by the Board of Directors on July 30, 2009.
(c)(b)Including 112,487,679109,554,173 treasury shares deducted from consolidated shareholders’ equity.

The variation of both weighted-average number of shares and weighted-average number of diluted shares respectively used in the calculation of earnings per share and fully-diluted earnings per share is detailed as follows:

             
  2010  2009  2008 
Number of shares as of January 1,
  2,348,422,884   2,371,808,074   2,395,532,097 
             
Number of shares issued during the year (pro rated)
            
Exercise of TOTAL share subscription options  412,114   221,393   742,588 
Exercise of TOTAL share purchase options  984,800   93,827   2,426,827 
Exchange guarantee offered to the beneficiaries of Elf Aquitaine share subscription options  —    393,623   86,162 
TOTAL restricted shares  416,420   1,164,389   1,112,393 
Global free TOTAL share plan(a)
  15   —    —  
Capital increase reserved for employees  —    —    3,246,924 
TOTAL shares held by TOTAL S.A. or by its subsidiaries and deducted from shareholders’ equity  (115,407,190)  (143,082,095)  (168,290,440)
             
Weighted-average number of shares
  2,234,829,043   2,230,599,211   2,234,856,551 
             
Dilutive effect
            
TOTAL share subscription and purchase options  1,758,006   1,711,961   6,784,200 
TOTAL restricted shares  6,031,963   4,920,599   4,172,944 
Global free TOTAL share plan(a)
  1,504,071   —    —  
Exchange guarantee offered to the beneficiaries of Elf Aquitaine share subscription options  —    60,428   460,935 
Capital increase reserved for employees  371,493   —    383,912 
             
Weighted-average number of diluted shares
  2,244,494,576   2,237,292,199   2,246,658,542 
             

    2011  2010  2009 

Number of shares as of January 1,

   2,349,640,931    2,348,422,884    2,371,808,074  

Number of shares issued during the year (pro rated)

     —  

Exercise of TOTAL share subscription options

   3,412,123    412,114    221,393  

Exercise of TOTAL share purchase options

   —    984,800    93,827  

Exchange guarantee offered to the beneficiaries of Elf Aquitaine share subscription options

   —    —    393,623  

TOTAL performance shares

   978,503    416,420    1,164,389  

Global free TOTAL share plan(a)

   506    15    —  

Capital increase reserved for employees

   5,935,145    —    —  

TOTAL shares held by TOTAL S.A. or by its subsidiaries and deducted from shareholders’ equity

   (112,487,679)   (115,407,190)   (143,082,095) 

Weighted-average number of shares

   2,247,479,529    2,234,829,043    2,230,599,211  

Dilutive effect

     —  

TOTAL share subscription and purchase options

   470,095    1,758,006    1,711,961  

TOTAL performance shares

   6,174,808    6,031,963    4,920,599  

Global free TOTAL share plan(a)

   2,523,233    1,504,071   

Exchange guarantee offered to the beneficiaries of Elf Aquitaine share subscription options

   —    —    60,428  

Capital increase reserved for employees

   303,738    371,493    —  

Weighted-average number of diluted shares

   2,256,951,403    2,244,494,576    2,237,292,199  

(a)
(a)The Board of Directors approved on May 21, 2010 the implementation and conditions of a global free share plan intended for the Group employees.


F-46

Capital increase reserved for Group employees
Pursuant to the authorization granted by the shareholders’ meeting held on May 11, 2007, the Board of Directors, during its November 6, 2007 meeting, implemented a first capital increase reserved for employees within the limit of 12 million shares, at a price of €44.40 per share, with dividend rights as of January 1, 2007. The subscription period ran from March 10, 2008 to March 28, 2008. 4,870,386 shares were subscribed by employees pursuant to the capital increase.
At the shareholders’ meeting held on May 21, 2010, the shareholders delegated to the Board of Directors the authority to increase the share capital of the Company in one or more transactions and within a maximum period of 26 months from the date of the meeting, by an amount not exceeding 1.5% of the share capital outstanding on the date of the meeting of the Board of Directors at which a decision to proceed with an issuance is made reserving subscriptions for such issuance to the Group employees participating in a company savings plan. It is being specified that the amount of any such capital increase reserved for Group employees is counted against the aggregate maximum nominal amount of share capital increases authorized by the shareholders’ meeting held on May 21, 2010 for issuing new ordinary shares or other securities granting immediate or future access to the Company’s share capital with preferential subscription rights (€2.5 billion in nominal value).
Pursuant to this delegation of authorization, the Board of Directors, during its October 28, 2010 meeting, decided to proceed with a capital increase reserved for employees in 2011 within the limit of 12 million shares with dividend rights as of January 1, 2010 and delegated to the Chairman and CEO all powers to determine the opening and closing of the subscription period and the subscription price.
Share cancellation
Pursuant to the authorization granted by the shareholders’ meeting held on May 11, 2007 authorizing reduction of capital by cancellation of shares held by the Company within the limit of 10% of the outstanding capital every 24 months, the Board of Directors decided on July 30, 2009 to cancel 24,800,000 shares acquired in 2008 at an average price of €49.28 per share.
Treasury shares (TOTAL shares held by TOTAL S.A.)
As of December 31, 2010, TOTAL S.A. held 12,156,411 of its own shares, representing 0.52% of its share capital, detailed as follows:
• 6,012,460 shares allocated to TOTAL restricted shares plans for Group employees;
• 6,143,951 shares intended to be allocated to new TOTAL share purchase option plans or to new restricted shares plans.
These shares are deducted from the consolidated shareholders’ equity.
As of December 31, 2009, TOTAL S.A. held 15,075,922 of its own shares, representing 0.64% of its share capital, detailed as follows:
• 6,017,499 shares allocated to covering TOTAL share purchase option plans for Group employees and executive officers;
• 5,799,400 shares allocated to TOTAL restricted shares plans for Group employees; and
• 3,259,023 shares intended to be allocated to new TOTAL share purchase option plans or to new restricted shares plans.
These shares were deducted from the consolidated shareholders’ equity.
As of December 31, 2008, TOTAL S.A. held 42,750,827 of its own shares, representing 1.80% of its share capital, detailed as follows:
• 12,627,522 shares allocated to covering TOTAL share purchase option plans for Group employees;
• 5,323,305 shares allocated to TOTAL restricted shares plans for Group employees; and
• 24,800,000 shares purchased for cancellation between January and October 2008 pursuant to the authorization granted by the shareholders’ meetings held on May 11, 2007 and May 16, 2008. The Board of Directors on July 30, 2009 decided to cancel these 24,800,000 shares acquired at an average price of €49.28 per share.
These shares were deducted from the consolidated shareholders’ equity.
TOTAL shares held by Group subsidiaries
As of December 31, 2010, 2009 and 2008, TOTAL S.A. held indirectly through its subsidiaries 100,331,268 of its own shares, representing 4.27% of its share capital as of December 31, 2010, 4.27% of its share capital as of

F-47

December 31, 2009 and 4.23% of its share capital as of December 31, 2008 detailed as follows:
• 2,023,672 shares held by a consolidated subsidiary, Total Nucléaire, 100% indirectly controlled by TOTAL S.A.; and
• 98,307,596 shares held by subsidiaries of Elf Aquitaine (Financière Valorgest, Sogapar and Fingestval).
These shares are deducted from the consolidated shareholders’ equity.
Dividend
TOTAL S.A. paid on June 1, 2010 the balance of the dividend of €1.14 per share for the 2009 fiscal year (the ex-dividend date was May 27, 2010). In addition, TOTAL S.A. paid on November 17, 2010 an interim dividend of €1.14 per share for the fiscal year 2010 (the ex-dividend date was November 12, 2010).
A resolution will be submitted at the shareholders’ meeting on May 13, 2011 to pay a dividend of €2.28 per share for the 2010 fiscal year, i.e. a balance of €1.14 per share to be distributed after deducting the interim dividend of €1.14 already paid.
Paid-in surplus
In accordance with French law, the paid-in surplus corresponds to share premiums of the parent company which can be capitalized or used to offset losses if the legal reserve has reached its minimum required level. The amount of the paid-in surplus may also be distributed subject to taxation unless the unrestricted reserves of the parent company are distributed prior to this item.
As of December 31, 2010, paid-in surplus amounted to €27,208 million (€27,171 million as of December 31, 2009 and €28,284 million as of December 31, 2008).
Reserves
Under French law, 5% of net income must be transferred to the legal reserve until the legal reserve reaches 10% of the nominal value of the share capital. This reserve cannot be distributed to the shareholders other than upon liquidation but can be used to offset losses.
If wholly distributed, the unrestricted reserves of the parent company would be taxed for an approximate amount of €514 million as of December 31, 2010 (€514 million as of December 31, 2009).
Other comprehensive income
Detail of other comprehensive income showing items reclassified from equity to net income is presented in the table below:
                         
For the year ended December 31, (M€) 2010  2009  2008 
Currency translation adjustment
      2,231       (244)      (722)
– Unrealized gain/(loss) of the period  2,234       (243)      (722)    
– Less gain/(loss) included in net income  3       1       —     
                         
                         
Available for sale financial assets
      (100)      38       (254)
– Unrealized gain/(loss) of the period  (50)      38       (254)    
– Less gain/(loss) included in net income  50       —       —     
Cash flow hedge
      (80)      128       — 
– Unrealized gain/(loss) of the period  (195)      349       —     
– Less gain/(loss) included in net income  (115)      221       —     
                         
                         
Share of other comprehensive income of equity affiliates, net amount
      302       234       173 
                         
                         
Other
      (7)      (5)      1 
– Unrealized gain/(loss) of the period  (7)      (5)      1     
– Less gain/(loss) included in net income  —       —       —     
Tax effect
      28       (38)      30 
                         
Total other comprehensive income, net amount
      2,374       113       (772)
                         


F-48

Tax effects relating to each component of other comprehensive income are as follows:
                                     
  2010  2009  2008 
  Pre-tax
  Tax
  Net
  Pre-tax
  Tax
  Net
  Pre-tax
  Tax
  Net
 
For the year ended December 31, (M€) amount  effect  amount  amount  effect  amount  amount  effect  amount 
Currency translation adjustment  2,231   —   2,231   (244)  —   (244)  (722)  —   (722)
Available for sale financial assets  (100)  2   (98)  38   4   42   (254)  30   (224)
Cash flow hedge  (80)  26   (54)  128   (42)  86   —   —   — 
Share of other comprehensive income of equity affiliates, net amount  302   —   302   234   —   234   173   —   173 
Other  (7)  —   (7)  (5)  —   (5)  1   —   1 
                                     
Total other comprehensive income
  2,346   28   2,374   151   (38)  113   (802)  30   (772)
                                     
18) EMPLOYEE BENEFITS OBLIGATIONS
Liabilities for employee benefits obligations consist of the following:
             
As of December 31, (M€) 2010  2009  2008 
Pension benefits liabilities  1,268   1,236   1,187 
Other benefits liabilities  605   592   608 
Restructuring reserves (early retirement plans)  298   212   216 
             
Total
  2,171   2,040   2,011 
             
The Group’s main defined benefit pension plans are located in France, in the United Kingdom, in the United States, in Belgium and in Germany. Their main characteristics are the following:
• The benefits are usually based on the final salary and seniority;
• They are usually funded (pension fund or insurer); and
• They are closed to new employees who benefit from defined contribution pension plans.
The pension benefits include also termination indemnities and early retirement benefits.
The other benefits are the employer contribution to post-employment medical care.


F-49

The fair value of the defined benefit obligation and plan assets in the Consolidated Financial Statements is detailed as follows:
                         
  Pension benefits  Other benefits 
As of December 31, (M€) 2010  2009  2008  2010  2009  2008 
Change in benefit obligation
                        
Benefit obligation at beginning of year  8,169   7,405   8,129   547   544   583 
Service cost  159   134   143   11   10   14 
Interest cost  441   428   416   29   30   24 
Curtailments  (4)  (5)  (3)  (3)  (1)  — 
Settlements  (60)  (3)  (5)  —   —   (4)
Special termination benefits  —   —   —   1   —   — 
Plan participants’ contributions  11   10   12   —   —   — 
Benefits paid  (471)  (484)  (463)  (33)  (33)  (37)
Plan amendments  28   118   12   1   (2)  (12)
Actuarial losses (gains)  330   446   (248)  57   —   (27)
Foreign currency translation and other  137   120   (588)  13   (1)  3 
                         
Benefit obligation at year-end
  8,740   8,169   7,405   623   547   544 
Change in fair value of plan assets
                        
Fair value of plan assets at beginning of year  (6,286)  (5,764)  (6,604)  —   —   — 
Expected return on plan assets  (396)  (343)  (402)  —   —   — 
Actuarial losses (gains)  (163)  (317)  1,099   —   —   — 
Settlements  56   2   2   —   —   — 
Plan participants’ contributions  (11)  (10)  (12)  —   —   — 
Employer contributions(a)
  (269)  (126)  (855)  —   —   — 
Benefits paid  394   396   375   —   —   — 
Foreign currency translation and other  (134)  (124)  633   —   —   — 
                         
Fair value of plan assets at year-end
  (6,809)  (6,286)  (5,764)  —   —   — 
                         
Unfunded status
  1,931   1,883   1,641   623   547   544 
                         
Unrecognized prior service cost  (105)  (153)  (48)  10   15   21 
Unrecognized actuarial (losses) gains  (1,170)  (1,045)  (953)  (28)  30   43 
Asset ceiling  9   9   5   —   —   — 
                         
Net recognized amount
  665   694   645   605   592   608 
                         
Pension benefits and other benefits liabilities  1,268   1,236   1,187   605   592   608 
Other non-current assets  (603)  (542)  (542)  —   —   — 
                         
(a)In 2010, the Group covered certain employee pension benefit plans through insurance companies for an amount of €90 million (€757 million in 2008).
As of December 31, 2010, the fair value of pension benefits and other pension benefits which are entirely or partially funded amounted to €7,727 million and the present value of the unfunded benefits amounted to €1,636 million (against €7,206 million and €1,510 million respectively as of December 31, 2009 and €6,515 million and €1,434 million respectively as of December 31, 2008).
The experience actuarial (gains) losses related to the defined benefit obligation and the fair value of plan assets are as follows:
                 
For the year ended December 31, (M€) 2010  2009  2008  2007 
Experience actuarial (gains) losses related to the defined benefit obligation  (54)  (108)  12   80 
Experience actuarial (gains) losses related to the fair value of plan assets  (163)  (317)  1,099   140 
                 


F-50

                     
As of December 31, (M€) 2010  2009  2008  2007  2006 
Pension benefits
                    
Benefit obligation  8,740   8,169   7,405   8,129   8,742 
Fair value of plan assets  (6,809)  (6,286)  (5,764)  (6,604)  (6,401)
                     
Unfunded status
  1,931   1,883   1,641   1,525   2,341 
                     
Other benefits
                    
Benefits obligation  623   547   544   583   648 
Fair value of plan assets  —   —   —   —   — 
                     
Unfunded status
  623   547   544   583   648 
                     
The Group expects to contribute €251 million to its pension plans in 2011.
         
Estimated future payments (M€) Pension benefits  Other benefits 
2011  487   38 
2012  478   38 
2013  477   38 
2014  477   39 
2015  497   40 
2016-2020  2,628   203 
         
             
Asset allocation
 Pension benefits 

As of December 31,		 2010  2009  2008 
Equity securities  34%  31%  25%
Debt securities  60%  62%  56%
Monetary  3%  3%  16%
Real estate  3%  4%  3%
             
The Group’s assumptions of expected returns on assets are built up by asset class and by country based on long-term bond yields and risk premiums.
The discount rate retained corresponds to the rate of prime corporate bonds according to a benchmark per country of different market data on the closing date.
                         
Assumptions used to determine benefits obligations
 Pension benefits  Other benefits 

As of December 31,		 2010  2009  2008  2010  2009  2008 
     
Discount rate (weighted average for all regions)  5.01%  5.41%  5.93%  5.00%  5.60%  6.00%
Of which Euro zone
  4.58%  5.12%  5.72%  4.55%  5.18%  5.74%
Of which United States
  5.49%  6.00%  6.23%  5.42%  5.99%  6.21%
Of which United Kingdom
  5.50%  5.50%  6.00%  —   —   6.00%
Average expected rate of salary increase  4.55%  4.50%  4.56%  —   —   — 
Expected rate of healthcare inflation                        
— Initial rate  —   —   —   4.82%  4.91%  4.88%
— Ultimate rate  —   —   —   3.75%  3.79%  3.64%
                         

F-51

                         
Assumptions used to determine the net periodic benefit cost (income)
 Pension benefits  Other benefits 
For the year ended December 31, 2010  2009  2008  2010  2009  2008 
Discount rate (weighted average for all regions)  5.41%  5.93%  5.50%  5.60%  6.00%  5.50%
Of which Euro zone
  5.12%  5.72%  5.15%  5.18%  5.74%  5.14%
Of which United States
  6.00%  6.23%  6.00%  5.99%  6.21%  5.98%
Of which United Kingdom
  5.50%  6.00%  5.75%  —   6.00%  5.75%
Average expected rate of salary increase  4.50%  4.56%  4.29%  —   —   — 
Expected return on plan assets  6.39%  6.14%  6.60%  —   —   — 
Expected rate of healthcare inflation                        
— Initial rate  —   —   —   4.91%  4.88%  5.16%
— Ultimate rate  —   —   —   3.79%  3.64%  3.64%
                         
A 0.5% increase or decrease in discount rates – all other things being equal – would have the following approximate impact:
         
  0.5%
  0.5%
 
(M€) increase  decrease 
Benefit obligation as of December 31, 2010  (520)  574 
2011 net periodic benefit cost (income)  (19)  52 
         
A 0.5% increase or decrease in expected return on plan assets rate – all other things being equal – would have an impact of €30 million on 2011 net periodic benefit cost (income).
The components of the net periodic benefit cost (income) in 2010, 2009 and 2008 are:
                         
  Pension benefits          
   Other benefits 
For the year ended December 31, (M€) 2010  2009  2008  2010  2009  2008 
Service cost  159   134   143   11   10   14 
Interest cost  441   428   416   29   30   24 
Expected return on plan assets  (396)  (343)  (402)  —   —   — 
Amortization of prior service cost  74   13   34   (5)  (7)  (10)
Amortization of actuarial losses (gains)  66   50   22   (4)  (6)  (2)
Asset ceiling  (3)  4   1   —   —   — 
Curtailments  (3)  (4)  (3)  (3)  (1)  — 
Settlements  7   (1)  (2)  —   —   (3)
Special termination benefits  —   —   —   1   —   — 
                         
Net periodic benefit cost (income)
  345   281   209   29   26   23 
                         
A positive or negative change of one-percentage-point in the healthcare inflation rate would have the following approximate impact:
         
  1% point
  1% point
 
(M€) increase  decrease 
Benefit obligation as of December 31, 2010  63   (52)
2010 net periodic benefit cost (income)  5   (4)
         

F-52

19) PROVISIONS AND OTHER NON-CURRENT LIABILITIES
             
As of December 31, (M€) 2010  2009  2008 
Litigations and accrued penalty claims  485   423   546 
Provisions for environmental contingencies  644   623   558 
Asset retirement obligations  5,917   5,469   4,500 
Other non-current provisions  1,116   1,331   1,804 
Other non-current liabilities  936   1,535   450 
             
Total
  9,098   9,381   7,858 
             
In 2010, litigation reserves mainly include a provision covering risks concerning antitrust investigations related to Arkema amounting to €17 million as of December 31, 2010. Other risks and commitments that give rise to contingent liabilities are described in Note 32 to the Consolidated Financial Statements.
In 2010, other non-current provisions mainly include:
• The contingency reserve related to the Toulouse-AZF plant explosion (civil liability) for €31 million as of December 31, 2010;
• Provisions related to restructuring activities in the Downstream and Chemicals segments for €261 million as of December 31, 2010; and
• The contingency reserve related to the Buncefield depot explosion (civil liability) for €194 million as of December 31, 2010.
In 2010, other non-current liabilities mainly include debts (whose maturity is more than one year) related to fixed assets acquisitions.
In 2009, litigation reserves mainly include a provision covering risks concerning antitrust investigations related to Arkema amounting to €43 million as of December 31, 2009. Other risks and commitments that give rise to contingent liabilities are described in Note 32 to the Consolidated Financial Statements.
In 2009, other non-current provisions mainly include:
• The contingency reserve related to the Toulouse-AZF plant explosion (civil liability) for €40 million as of December 31, 2009;
• Provisions related to restructuring activities in the Downstream and Chemicals segments for €130 million as of December 31, 2009; and
• The contingency reserve related to the Buncefield depot explosion (civil liability) for €295 million as of December 31, 2009.
In 2009, other non-current liabilities mainly include debts (whose maturity is more than one year) related to fixed assets acquisitions. This heading is mainly composed of a €818 million debt related to Chesapeake acquisition (see Note 3 to the Consolidated Financial Statements).
In 2008, litigation reserves mainly included a provision covering risks concerning antitrust investigations related to Arkema amounting to €85 million as of December 31, 2008. Other risks and commitments that give rise to contingent liabilities are described in Note 32 to the Consolidated Financial Statements.
In 2008, other non-current provisions mainly included the contingency reserve related to the Toulouse-AZF plant explosion (civil liability) for €256 million as of December 31, 2008.
Changes in provisions and other non-current liabilities
Changes in provisions and other non-current liabilities are as follows :
                         
           Currency
       
           translation
     As of
 
(M€) As of January 1,  Allowances  Reversals  adjustment  Other  December 31, 
2010
  9,381   1,052   (971)  497   (861)  9,098 
2009  7,858   1,254   (1,413)  202   1,480   9,381 
2008  6,843   1,424   (864)  (460)  915   7,858 
                         


F-53

Allowances
In 2010, allowances of the period (€1,052 million) mainly include:
• Asset retirement obligations for €338 million (accretion);
• Environmental contingencies for €88 million in the Downstream and Chemicals segments;
• The contingency reserve related to the Buncefield depot explosion (civil liability) for €79 million; and
• Provisions related to restructuring of activities for €226 million.
In 2009, allowances of the period (€1,254 million) mainly included:
• Asset retirement obligations for €283 million (accretion);
• Environmental contingencies for €147 million in the Downstream and Chemicals segments;
• The contingency reserve related to the Buncefield depot explosion (civil liability) for €223 million; and
• Provisions related to restructuring of activities for €121 million.
In 2008, allowances of the period (€1,424 million) mainly included:
• Asset retirement obligations for €229 million (accretion);
• The contingency reserve related to the Toulouse-AZF plant explosion (civil liability) for €140 million;
• Environmental contingencies for €89 million;
• An allowance of €48 million for litigation reserves in connection with antitrust investigations, as described in Note 32 to the Consolidated Financial Statements “Other risks and contingent liabilities”; and
• Provisions related to restructuring of activities for €27 million.
Reversals
In 2010, reversals of the period (€971 million) mainly relate to the following incurred expenses:
• Provisions for asset retirement obligations for €214 million;
• €26 million for litigation reserves in connection with antitrust investigations;
• Environmental contingencies written back for €66 million;
• The contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for €9 million;
• The contingency reserve related to the Buncefield depot explosion (civil liability), written back for €190 million; and
• Provisions for restructuring and social plans written back for €60 million.
In 2009, reversals of the period (€1,413 million) were mainly related to the following incurred expenses:
• Provisions for asset retirement obligations for €191 million;
• €52 million for litigation reserves in connection with antitrust investigations;
• Environmental contingencies written back for €86 million;
• The contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for €216 million;
• The contingency reserve related to the Buncefield depot explosion (civil liability), written back for €375 million; and
• Provisions for restructuring and social plans written back for €28 million.
In 2008, reversals of the period (€864 million) were mainly related to the following incurred expenses:
• Provisions for asset retirement obligations for €280 million;
• €163 million for litigation reserves in connection with antitrust investigations;
• Environmental contingencies written back for €96 million;
• The contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for €18 million; and
• Provisions for restructuring and social plans written back for €10 million.
CHANGES IN THE ASSET RETIREMENT OBLIGATION
Changes in the asset retirement obligation are as follows:
                                 
        Revision
     Spending on
  Currency
       
  As of
     in
  New
  existing
  translation
     As of
 
(M€) January 1,  Accretion  estimates  obligations  obligations  adjustment  Other  December 31, 
2010
  5,469   338   79   175   (214)  316   (246)  5,917 
2009  4,500   283   447   179   (191)  232   19   5,469 
2008  4,206   229   563   188   (280)  (414)  8   4,500 
                                 

F-54

20) FINANCIAL DEBT AND RELATED FINANCIAL INSTRUMENTS
A) NON-CURRENT FINANCIAL DEBT AND RELATED FINANCIAL INSTRUMENTS
             
As of December 31, 2010 (M€)
         

(Assets)/Liabilities		 Secured  Unsecured  Total 
Non-current financial debt  287   20,496   20,783 
of which hedging instruments of non-current financial debt (liabilities)
  —   178   178 
Hedging instruments of non-current financial debt (assets)(a)
  —   (1,870)  (1,870)
             
Non-current financial debt – net of hedging instruments
  287   18,626   18,913 
             
Bonds after fair value hedge  —   15,491   15,491 
Fixed rate bonds and bonds after cash flow hedge  —   2,836   2,836 
Bank and other, floating rate  47   189   236 
Bank and other, fixed rate  65   110   175 
Financial lease obligations  175   —   175 
             
Non-current financial debt – net of hedging instruments
  287   18,626   18,913 
             
(a)See the description of these hedging instruments in Notes 1 paragraph M (iii) “Long-term financing”, 28 and 29 to the Consolidated Financial Statements.
             
As of December 31, 2009 (M€)
         

(Assets)/Liabilities		 Secured  Unsecured  Total 
Non-current financial debt  312   19,125   19,437 
of which hedging instruments of non-current financial debt (liabilities)
  —   241   241 
Hedging instruments of non-current financial debt (assets)(a)
  —   (1,025)  (1,025)
             
Non-current financial debt – net of hedging instruments
  312   18,100   18,412 
             
Bonds after fair value hedge  —   15,884   15,884 
Fixed rate bonds and bonds after cash flow hedge  —   1,700   1,700 
Bank and other, floating rate  60   379   439 
Bank and other, fixed rate  50   79   129 
Financial lease obligations  202   58   260 
             
Non-current financial debt – net of hedging instruments
  312   18,100   18,412 
             
(a)See the description of these hedging instruments in Notes 1 paragraph M(iii) “Long-term financing”, 28 and 29 to the Consolidated Financial Statements.
             
As of December 31, 2008 (M€)
         

(Assets)/Liabilities		 Secured  Unsecured  Total 
Non-current financial debt  895   15,296   16,191 
of which hedging instruments of non-current financial debt (liabilities)
  —   440   440 
Hedging instruments of non-current financial debt (assets)(a)
  —   (892)  (892)
             
Non-current financial debt – net of hedging instruments
  895   14,404   15,299 
             
Bonds after fair value hedge  —   13,380   13,380 
Fixed rate bonds and bonds after cash flow hedge  —   287   287 
Bank and other, floating rate  553   665   1,218 
Bank and other, fixed rate  140   6   146 
Financial lease obligations  202   66   268 
             
Non-current financial debt – net of hedging instruments
  895   14,404   15,299 
             
(a)See the description of these hedging instruments in Notes 1 paragraph M(iii) “Long-term financing”, 28 and 29 to the Consolidated Financial Statements.


F-55

Fair value of bonds, as of December 31, 2010, after taking into account currency and interest rates swaps, is detailed as follows:
                           
    Fair value after hedging as of          
  Year of
 December 31,
  December 31,
  December 31,
        Initial rate before hedging
 
Bonds after fair value hedge (M€) issue 2010  2009  2008  Currency  Maturity  instruments 
                           
Parent company
                          
                           
Bond
 1997  — —    —    124   FRF   2009   6.200%
                           
Bond 1998  —    —    119   FRF   2009   5.125%
                           
Bond 1998  125   116   121   FRF   2013   5.000%
                           
Bond 2000  —    61   63   EUR   2010   5.650%
                           
Current portion (less than one year)    —    (61)  (243)            
                           
                           
Total parent company
    125   116   184             
                           
                           
Elf Aquitaine SA
                          
                           
Bond 1999  —    —    1 003   EUR   2009   4.500%
                           
Current portion (less than one year)    —    —    (1 003)            
                           
                           
Total Elf Aquitaine SA
    —    —    —              
                           
                           
TOTAL CAPITAL(a)
                          
                           
Bond 2002  15   14   14   USD   2012   5.890%
                           
Bond 2003  —    —    52   AUD   2009   6.250%
                           
Bond 2003  —    —    154   CHF   2009   2.385%
                           
Bond 2003  —    160   166   CHF   2010   2.385%
                           
Bond 2003  22   21   22   USD   2013   4.500%
                           
Bond 2003-2004  —    —    395   USD   2009   3.500%
                           
Bond 2004  —    —    57   AUD   2009   6.000%
                           
Bond 2004  —    —    28   AUD   2009   6.000%
                           
Bond 2004  —    53   55   CAD   2010   4.000%
                           
Bond 2004  —    113   117   CHF   2010   2.385%
                           
Bond 2004  —    438   454   EUR   2010   3.750%
                           
Bond 2004  —    322   334   GBP   2010   4.875%
                           
Bond 2004  —    128   132   GBP   2010   4.875%
                           
Bond 2004  —    185   191   GBP   2010   4.875%
                           
Bond 2004  57   53   55   AUD   2011   5.750%
                           
Bond 2004  116   107   111   CAD   2011   4.875%
                           
Bond 2004  235   203   216   USD   2011   4.125%
                           
Bond 2004  75   69   72   USD   2011   4.125%
                           
Bond 2004  125   116   120   CHF   2012   2.375%
                           
Bond 2004  51   47   49   NZD   2014   6.750%
                           
Bond 2005  —    —    36   USD   2009   3.500%
                           
Bond 2005  57   53   55   AUD   2011   5.750%
                           
Bond 2005  60   56   58   CAD   2011   4.000%
                           
Bond 2005  120   112   116   CHF   2011   1.625%
                           
Bond 2005  226   226   226   CHF   2011   1.625%
                           
Bond 2005  139   144   144   USD   2011   4.125%
                           
Bond 2005  63   63   63   AUD   2012   5.750%
                           
Bond 2005  194   180   187   CHF   2012   2.135%
                           
Bond 2005  65   65   65   CHF   2012   2.135%
                           
Bond 2005  97   97   98   CHF   2012   2.375%
                           
Bond 2005  391   363   376   EUR   2012   3.250%
                           
Bond 2005  57   57   57   NZD   2012   6.500%
                           
Bond 2006  —    75   75   GBP   2010   4.875%
                           
Bond 2006  —    50   50   EUR   2010   3.750%
                           
Bond 2006  —    50   50   EUR   2010   3.750%
                           
Bond 2006  —    100   102   EUR   2010   3.750%
                           
Bond 2006  42   42   42   EUR   2011   EURIBOR 3 months +0.040%
                           
Bond 2006  300   300   300   EUR   2011   3.875%
                           
Bond 2006  150   150   150   EUR   2011   3.875%
                           
Bond 2006  300   300   300   EUR   2011   3.875%
                           
Bond 2006  120   120   120   USD   2011   5.000%
                           
Bond 2006  300   300   300   EUR   2011   3.875%
                           
Bond 2006  472   472   473   USD   2011   5.000%


F-56

                           
    Fair value after hedging as of          
  Year of
 December 31,
  December 31,
  December 31,
        Initial rate before hedging
 
Bonds after fair value hedge (M€) issue 2010  2009  2008  Currency  Maturity  instruments 
                           
Bond 2006  62   62   62   AUD   2012   5.625%
                           
Bond 2006  72   72   72   CAD   2012   4.125%
                           
Bond 2006  100   100   100   EUR   2012   3.250%
                           
Bond 2006  74   74   74   GBP   2012   4.625%
                           
Bond 2006  100   100   100   EUR   2012   3.250%
                           
Bond 2006  125   125   125   CHF   2013   2.510%
                           
Bond 2006  127   127   127   CHF   2014   2.635%
                           
Bond 2006  130   130   130   CHF   2016   2.385%
                           
Bond 2006  65   65   65   CHF   2016   2.385%
                           
Bond 2006  64   64   64   CHF   2016   2.385%
                           
Bond 2006  63   63   64   CHF   2016   2.385%
                           
Bond 2006  129   129   129   CHF   2018   3.135%
                           
Bond 2007  —    60   60   CHF   2010   2.385%
                           
Bond 2007  —    74   74   GBP   2010   4.875%
                           
Bond 2007  77   77   77   USD   2011   5.000%
                           
Bond 2007  370   370   370   USD   2012   5.000%
                           
Bond 2007  222   222   222   USD   2012   5.000%
                           
Bond 2007  61   61   61   AUD   2012   6.500%
                           
Bond 2007  72   72   72   CAD   2012   4.125%
                           
Bond 2007  71   71   71   GBP   2012   4.625%
                           
Bond 2007  300   300   300   EUR   2013   4.125%
                           
Bond 2007  73   73   74   GBP   2013   5.500%
                           
Bond 2007  306   306   306   GBP   2013   5.500%
                           
Bond 2007  72   72   73   GBP   2013   5.500%
                           
Bond 2007  248   248   248   CHF   2014   2.635%
                           
Bond 2007  31   31   31   JPY   2014   1.505%
                           
Bond 2007  61   61   61   CHF   2014   2.635%
                           
Bond 2007  49   49   49   JPY   2014   1.723%
                           
Bond 2007  121   121   121   CHF   2015   3.125%
                           
Bond 2007  300   300   300   EUR   2017   4.700%
                           
Bond 2007  76   76   76   CHF   2018   3.135%
                           
Bond 2007  60   60   60   CHF   2018   3.135%
                           
Bond 2008  —    63   63   GBP   2010   4.875%
                           
Bond 2008  —    66   66   GBP   2010   4.875%
                           
Bond 2008  92   92   92   AUD   2011   7.500%
                           
Bond 2008  100   100   100   EUR   2011   3.875%
                           
Bond 2008  150   150   151   EUR   2011   3.875%
                           
Bond 2008  50   50   50   EUR   2011   3.875%
                           
Bond 2008  50   50   50   EUR   2011   3.875%
                           
Bond 2008  60   60   60   JPY   2011   EURIBOR 6 months + 0.018%
                           
Bond 2008  102   102   102   USD   2011   3.750%
                           
Bond 2008  62   62   62   CHF   2012   2.135%
                           
Bond 2008  124   124   124   CHF   2012   3.635%
                           
Bond 2008  46   46   46   CHF   2012   2.385%
                           
Bond 2008  92   92   92   CHF   2012   2.385%
                           
Bond 2008  64   64   64   CHF   2012   2.385%
                           
Bond 2008  50   50   50   EUR   2012   3.250%
                           
Bond 2008  63   63   63   GBP   2012   4.625%
                           
Bond 2008  63   63   63   GBP   2012   4.625%
                           
Bond 2008  63   63   64   GBP   2012   4.625%
                           
Bond 2008  62   62   62   NOK   2012   6.000%
                           
Bond 2008  69   69   69   USD   2012   5.000%
                           
Bond 2008  60   60   60   AUD   2013   7.500%
                           
Bond 2008  61   61   61   AUD   2013   7.500%
                           
Bond 2008  127   127   128   CHF   2013   3.135%
                           
Bond 2008  62   62   63   CHF   2013   3.135%
                           
Bond 2008  200   200   200   EUR   2013   4.125%
                           
Bond 2008  100   100   100   EUR   2013   4.125%
                           
Bond 2008  1,000   1,000   1,002   EUR   2013   4.750%
                           
Bond 2008  63   63   63   GBP   2013   5.500%

F-57

                           
    Fair value after hedging as of          
  Year of
 December 31,
  December 31,
  December 31,
        Initial rate before hedging
 
Bonds after fair value hedge (M€) issue 2010  2009  2008  Currency  Maturity  instruments 
                           
Bond 2008  149   149   149   JPY   2013   EURIBOR 6 months + 0.008%
                           
Bond 2008  191   191   194   USD   2013   4.000%
                           
Bond 2008  61   61   61   CHF   2015   3.135%
                           
Bond 2008  62   62   62   CHF   2015   3.135%
                           
Bond 2008  61   61   62   CHF   2015   3.135%
                           
Bond 2008  62   62   62   CHF   2018   3.135%
                           
Bond 2009  56   56   —    AUD   2013   5.500%
                           
Bond 2009  54   54   —    AUD   2013   5.500%
                           
Bond 2009  236   236   —    CHF   2013   2.500%
                           
Bond 2009  77   77   —    USD   2013   4.000%
                           
Bond 2009  131   131   —    CHF   2014   2.625%
                           
Bond 2009  997   998   —    EUR   2014   3.500%
                           
Bond 2009  150   150   —    EUR   2014   3.500%
                           
Bond 2009  40   40   —    HKD   2014   3.240%
                           
Bond 2009  103   96   —    AUD   2015   6.000%
                           
Bond 2009  550   550   —    EUR   2015   3.625%
                           
Bond 2009  684   684   —    USD   2015   3.125%
                           
Bond 2009  224   208   —    USD   2015   3.125%
                           
Bond 2009  99   99   —    CHF   2016   2.385%
                           
Bond 2009  115   115   —    GBP   2017   4.250%
                           
Bond 2009  225   225   —    GBP   2017   4.250%
                           
Bond 2009  448   448   —    EUR   2019   4.875%
                           
Bond 2009  69   69   —    HKD   2019   4.180%
                           
Bond 2009  374   347   —    USD   2021   4.250%
                           
Bond 2010  102           AUD   2014   5.750%
                           
Bond 2010  108           CAD   2014   2.500%
                           
Bond 2010  53           NZD   2014   4.750%
                           
Bond 2010  187           USD   2015   2.875%
                           
Bond 2010  935           USD   2015   3.000%
                           
Bond 2010  748           USD   2016   2.300%
                           
Bond 2010  68           AUD   2015   6.000%
                           
Bond 2010  69           AUD   2015   6.000%
                           
Bond 2010  64           AUD   2015   6.000%
                           
Bond 2010  476           EUR   2022   3.125%
                           
Current portion (less than one year)    (3,450)  (1,937)  (722)            
                           
Total TOTAL CAPITAL
    15,143   15,615   13,093             
                           
                           
Other consolidated subsidiaries    223   153   103             
                           
Total bonds after fair value hedge
    15,491   15,884   13,380             
    Amount after hedging as of          
  Year of
 December 31,
  December 31,
  December 31,
        Initial rate before hedging
 
Fixed rate bonds and bonds after cash flow hedge (M€) issue 2010  2009  2008  Currency  Maturity  instruments 
                           
TOTAL CAPITAL(a)
                          
                           
Bond 2005  293   292   287   GBP   2012   4.625%
                           
Bond 2009  691   602   —    EUR   2019   4.875%
                           
Bond 2009  917   806   —    EUR   2024   5.125%
                           
Bond 2010  935           USD   2020   4.450%
                           
Total fixed rate bonds and bonds after cash flow hedge
    2,836   1,700   287             
                           
(a)TOTAL CAPITAL is a wholly-owned indirect subsidiary of TOTAL S.A. (with the exception of one share held by each member of its Board of Directors). It acts as a financing vehicle for the Group. Its debt securities are fully and unconditionally guaranteed by TOTAL S.A. as to payment of principal, premium, if any, interest and any other amounts due.

F-58

Loan repayment schedule (excluding current portion)
                    
     of which hedging
         
     instruments of
  Hedging instruments
      
     non-current
  of non-current
  Non-current financial
   
As of December 31, 2010
 Non-current
  financial debt
  financial debt
  debt - net of hedging
   
(M€) financial debt  (liabilities)  (assets)  instruments  %
2012  3,756   34   (401)  3,355   18%
2013  4,017   76   (473)  3,544   19%
2014  2,508   1   (290)  2,218   12%
2015  3,706   2   (302)  3,404   18%
2016 and beyond  6,796   65   (404)  6,392   33%
                    
Total
  20,783   178   (1,870)  18,913   100%
                    
                    
     of which hedging
         
     instruments of
  Hedging instruments
      
     non-current
  of non-current
  Non-current financial
   
As of December 31, 2009
 Non-current
  financial debt
  financial debt
  debt - net of hedging
   
(M€) financial debt  (liabilities)  (assets)  instruments  %
2011  3,857   42   (199)  3,658   20%
2012  3,468   48   (191)  3,277   18%
2013  3,781   95   (236)  3,545   19%
2014  2,199   6   (90)  2,109   11%
2015 and beyond  6,132   50   (309)  5,823   32%
                    
Total
  19,437   241   (1,025)  18,412   100%
                    
                    
     of which hedging
         
     instruments of
  Hedging instruments
      
     non-current
  of non-current
  Non-current financial
   
As of December 31, 2008
 Non-current
  financial debt
  financial debt
  debt - net of hedging
   
(M€) financial debt  (liabilities)  (assets)  instruments  %
2010  3,160   170   (168)  2,992   20%
2011  3,803   24   (145)  3,658   24%
2012  3,503   115   (179)  3,324   22%
2013  3,430   127   (198)  3,232   21%
2014 and beyond  2,295   4   (202)  2,093   13%
                    
Total
  16,191   440   (892)  15,299   100%
                    
Analysis by currency and interest rate
These analyses take into account interest rate and foreign currency swaps to hedge non-current financial debt.
                         
As of December 31, (M€) 2010  %  2009  %  2008  % 
U.S. Dollar  7,248   39%   3,962   21%   3,990   26% 
Euro  11,417   60%   14,110   77%   10,685   70% 
Other currencies  248   1%   340   2%   624   4% 
                         
Total
  18,913   100%   18,412   100%   15,299   100% 
                         


F-59

                         
As of December 31,
                  
(M€) 2010  %  2009  %  2008  % 
Fixed rate  3,177   17%   2,064   11%   633   4% 
Floating rate  15,736   83%   16,348   89%   14,666   96% 
                         
Total
  18,913   100%   18,412   100%   15,299   100% 
                         
B) CURRENT FINANCIAL ASSETS AND LIABILITIES
Current borrowings consist mainly of commercial papers or treasury bills or draws on bank loans. These instruments bear interest at rates that are close to market rates.
             
As of December 31, (M€)
         
(Assets) / Liabilities 2010  2009  2008 
Current financial debt(a)
  5,867   4,761   5,586 
Current portion of non-current financial debt  3,786   2,233   2,136 
             
Current borrowings(note 28)
  9,653   6,994   7,722 
             
Current portion of hedging instruments of debt (liabilities)  12   97   12 
Other current financial instruments (liabilities)  147   26   146 
             
Other current financial liabilities(note 28)
  159   123   158 
             
Current deposits beyond three months  (869)  (55)  (1)
Current portion of hedging instruments of debt (assets)  (292)  (197)  (100)
Other current financial instruments (assets)  (44)  (59)  (86)
             
Current financial assets(note 28)
  (1,205)  (311)  (187)
             
Current borrowings and related financial assets and liabilities, net
  8,607   6,806   7,693 
             
(a)As of December 31, 2010, the current financial debt includes a commercial paper program in Total Capital Canada Ltd. Total Capital Canada Ltd. is a wholly-owned direct subsidiary of TOTAL S.A. It acts as a financing vehicle for the activities of the Group in Canada. Its debt securities are fully and unconditionally guaranteed by TOTAL S.A. as to payment of principal, premium, if any, interest and any other amounts due.
C) NET-DEBT-TO-EQUITY RATIO
For its internal and external communication needs, the Group calculates a debt ratio by dividing its net financial debt by equity. Shareholders’ equity as of December 31, 2010 is calculated after distribution of a dividend of €2.28 per share of which €1.14 per share was paid on November 17, 2010.

F-60

The net-debt-to-equity ratio is calculated as follows:
             
As of December 31, (M€)
         
(Assets)/Liabilities 2010  2009  2008 
Current borrowings  9,653   6,994   7,722 
Other current financial liabilities  159   123   158 
Current financial assets  (1,205)   (311)   (187) 
Non-current financial debt  20,783   19,437   16,191 
Hedging instruments on non-current financial debt  (1,870)   (1,025)   (892) 
Cash and cash equivalents  (14,489)   (11,662)   (12,321) 
             
Net financial debt
  13,031   13,556   10,671 
             
Shareholders’ equity-Group share  60,414   52,552   48,992 
Estimated dividend payable  (2,553)   (2,546)   (2,540) 
Minority interest  857   987   958 
             
Total shareholder’s equity
  58,718   50,993   47,410 
             
Net-debt-to-equity ratio
  22.2%   26.6%   22.5% 
             
21) OTHER CREDITORS AND ACCRUED LIABILITIES
             
As of December 31, (M€) 2010  2009  2008 
Accruals and deferred income  184   223   151 
Payable to States (including taxes and duties)  7,235   6,024   6,256 
Payroll  996   955   928 
Other operating liabilities  3,574   4,706   4,297 
             
Total
  11,989   11,908   11,632 
             
As of December 31, 2009, the heading “Other operating liabilities” mainly included €744 million related to Chesapeake acquisition (see Note 3 to the Consolidated Financial Statements).
22) LEASE CONTRACTS
The Group leases real estate, retail stations, ships, and other equipments (see Note 11 to the Consolidated Financial Statements).
The future minimum lease payments on operating and finance leases to which the Group is committed are shown as follows:
         
  Operating
  Finance
 
For the year ended December 31, 2010 (M€) leases  leases 
2011  582   39 
2012  422   39 
2013  335   39 
2014  274   35 
2015  230   35 
2016 and beyond  1,105   54 
         
Total minimum payments
  2,948   241 
Less financial expenses  —    (43)
         
Nominal value of contracts
  —    198 
Less current portion of finance lease contracts  —    (23)
         
Outstanding liability of finance lease contracts
  —    175 
         


F-61

         
  Operating
  Finance
 
For the year ended December 31, 2009 (M€) leases  leases 
2010  523   42 
2011  377   43 
2012  299   42 
2013  243   41 
2014  203   39 
2015 and beyond  894   128 
         
Total minimum payments
  2,539   335 
Less financial expenses  —    (53)
         
Nominal value of contracts
  —    282 
Less current portion of finance lease contracts  —    (22)
         
Outstanding liability of finance lease contracts
  —    260 
         
         
  Operating
  Finance
 
For the year ended December 31, 2008 (M€) leases  leases 
2009  429   47 
2010  306   42 
2011  243   42 
2012  208   42 
2013  166   40 
2014 and beyond  675   148 
         
Total minimum payments
  2,027   361 
Less financial expenses  —    (70)
         
Nominal value of contracts
  —    291 
Less current portion of finance lease contracts  —    (23)
         
Outstanding liability of finance lease contracts
  —    268 
         
Net rental expense incurred under operating leases for the year ended December 31, 2010 is €605 million (against €613 million in 2009 and €426 million in 2008).
23) COMMITMENTS AND CONTINGENCIES
                 
  Maturity and installments 
    
As of December 31, 2010    Less than 1
  Between 1
  More than 5
 
(M€)
 Total  year  and 5 years  years 
Non-current debt obligations net of hedging instruments(Note 20)
  18,738   —    12,392   6,346 
Current portion of non-current debt obligations net of hedging instruments(Note 20)
  3,483   3,483   —    —  
Finance lease obligations(Note 22)
  198   23   129   46 
Asset retirement obligations(Note 19)
  5,917   177   872   4,868 
                 
Contractual obligations recorded in the balance sheet
  28,336   3,683   13,393   11,260 
Operating lease obligations(Note 22)
  2,948   582   1,261   1,105 
Purchase obligations  61,293   6,347   14,427   40,519 
                 
Contractual obligations not recorded in the balance sheet
  64,241   6,929   15,688   41,624 
                 
Total of contractual obligations
  92,577   10,612   29,081   52,884 
                 
Guarantees given for excise taxes  1,753   1,594   71   88 
Guarantees given against borrowings  5,005   1,333   493   3,179 
Indemnities related to sales of businesses  37   —    31   6 
Guarantees of current liabilities  171   147   19   5 
Guarantees to customers / suppliers  3,020   1,621   96   1,303 
Letters of credit  1,250   1,247   —    3 
Other operating commitments  2,057   467   220   1,370 
                 
Total of other commitments given
  13,293   6,409   930   5,954 
                 
Mortgages and liens received  429   2   114   313 
Other commitments received  6,387   3,878   679   1,830 
                 
Total of commitments received
  6,816   3,880   793   2,143 
                 

F-62

                 
  Maturity and installments 
    
As of December 31, 2009    Less than 1
  Between 1
  More than 5
 
(M€)
 Total  year  and 5 years  years 
Non-current debt obligations net of hedging instruments(Note 20)
  18,152   —    12,443   5,709 
Current portion of non-current debt obligations net of hedging instruments(Note 20)
  2,111   2,111   —    —  
Finance lease obligations(Note 22)
  282   22   146   114 
Asset retirement obligations(Note 19)
  5,469   235   972   4,262 
                 
Contractual obligations recorded in the balance sheet
  26,014   2,368   13,561   10,085 
Operating lease obligations(Note 22)
  2,539   523   1,122   894 
Purchase obligations  49,808   4,542   9,919   35,347 
                 
Contractual obligations not recorded in the balance sheet
  52,347   5,065   11,041   36,241 
                 
Total of contractual obligations
  78,361   7,433   24,602   46,326 
                 
Guarantees given for excise taxes  1,765   1,617   69   79 
Guarantees given against borrowings  2,882   1,383   709   790 
Indemnities related to sales of businesses  36   —    1   35 
Guarantees of current liabilities  203   160   38   5 
Guarantees to customers / suppliers  2,770   1,917   70   783 
Letters of credit  1,499   1,485   2   12 
Other operating commitments  765   582   103   80 
                 
Total of other commitments given
  9,920   7,144   992   1,784 
                 
Mortgages and liens received  330   5   106   219 
Other commitments received  5,637   3,187   481   1,969 
                 
Total of commitments received
  5,967   3,192   587   2,188 
                 


F-63

                 
  Maturity and installments 
    
As of December 31, 2008    Less than
  Between 1
  More than
 
(M€)
 Total  1 year  and 5 years  5 years 
Non-current debt obligations net of hedging instruments(Note 20)
  15,031   —    13,064   1,967 
Current portion of non-current debt obligations net of hedging instruments(Note 20)
  2,025   2,025   —    —  
Finance lease obligations(Note 22)
  291   23   142   126 
Asset retirement obligations(Note 19)
  4,500   154   653   3,693 
                 
Contractual obligations recorded in the balance sheet
  21,847   2,202   13,859   5,786 
Operating lease obligations(Note 22)
  2,027   429   923   675 
Purchase obligations  60,226   4,420   13,127   42,679 
                 
Contractual obligations not recorded in the balance sheet
  62,253   4,849   14,050   43,354 
                 
Total of contractual obligations
  84,100   7,051   27,909   49,140 
                 
Guarantees given for excise taxes  1,720   1,590   58   72 
Guarantees given against borrowings  2,870   1,119   519   1,232 
Indemnities related to sales of businesses  39   3   1   35 
Guarantees of current liabilities  315   119   164   32 
Guarantees to customers / suppliers  2,866   68   148   2,650 
Letters of credit  1,080   1,024   17   39 
Other operating commitments  648   246   132   270 
                 
Total of other commitments given
  9,538   4,169   1,039   4,330 
                 
Mortgages and liens received  321   72   110   139 
Other commitments received  4,218   2,440   234   1,544 
                 
Total of commitments received
  4,539   2,512   344   1,683 
                 
A. CONTRACTUAL OBLIGATIONS
Debt obligations
“Non-current debt obligations” are included in the items “Non-current financial debt” and “Hedging instruments of non-current financial debt” of the Consolidated Balance Sheet. It includes the non-current portion of swaps hedging bonds, and excludes non-current finance lease obligations of €175 million.
The current portion of non-current debt is included in the items “Current borrowings”, “Current financial assets” and “Other current financial liabilities” of the Consolidated Balance Sheet. It includes the current portion of swaps hedging bonds, and excludes the current portion of finance lease obligations of €23 million.
The information regarding contractual obligations linked to indebtedness is presented in Note 20 to the Consolidated Financial Statements.
Lease contracts
The information regarding operating and finance leases is presented in Note 22 to the Consolidated Financial Statements.
Asset retirement obligations
This item represents the discounted present value of Upstream asset retirement obligations, primarily asset removal costs at the completion date. The information regarding contractual obligations linked to asset retirement obligations is presented in Notes 1Q and 19 to the Consolidated Financial Statements.
Purchase obligations
Purchase obligations are obligations under contractual agreements to purchase goods or services, including capital projects. These obligations are enforceable and legally binding on the company and specify all significant terms, including the amount and the timing of the payments.
These obligations mainly include: hydrocarbon unconditional purchase contracts (except where an active, highly-liquid market exists and when the hydrocarbons are expected to be re-sold shortly after purchase), reservation of transport capacities in pipelines, unconditional exploration works and development works in the Upstream segment, and contracts for capital investment projects in the Downstream segment.

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B. OTHER COMMITMENTS GIVEN
Guarantees given for excise taxes
They consist of guarantees given to other oil and gas companies in order to comply with French tax authorities’ requirements for oil and gas imports in France. A payment would be triggered by a failure of the guaranteed party with respect to the French tax authorities. The default of the guaranteed parties is however considered to be highly remote by the Group.
Guarantees given against borrowings
The Group guarantees bank debt and finance lease obligations of certain non-consolidated subsidiaries and equity affiliates. Maturity dates vary, and guarantees will terminate on paymentand/or cancellation of the obligation. A payment would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee, and no assets are held as collateral for these guarantees. As of December 31, 2010, the maturities of these guarantees are up to 2023.
Guarantees given against borrowings include the guarantee given in 2008 by TOTAL S.A. in connection with the financing of the Yemen LNG project for an amount of €1,335 million. In turn, certain partners involved in this project have given commitments that could, in the case of Total S.A.’s guarantees being called for the maximum amount, reduce the Group’s exposure by up to €427 million, recorded under “Other commitments received”.
In 2010, TOTAL S.A. provided guarantees in connection with the financing of the Jubail project (operated by SAUDI ARAMCO TOTAL Refining and Petrochemical Company (SATORP)) of up to €2,385 million, proportional to TOTAL’s share in the project (37.5%). In addition, TOTAL S.A. provided in 2010 a guarantee in favor of its partner in the Jubail project (Saudi Arabian Oil Company) with respect to Total Refining Saudi Arabia SAS’s obligations under the shareholders agreement with respect to SATORP. As of December 31, 2010, this guarantee is of up to €1,271 million and has been recorded under “Other operating commitments”.
Indemnities related to sales of businesses
In the ordinary course of business, the Group executes contracts involving standard indemnities in oil industry and indemnities specific to transactions such as sales of businesses. These indemnities might include claims against any of the following: environmental, tax and shareholder matters, intellectual property rights, governmental regulations and employment-related matters, dealer, supplier, and other commercial contractual relationships. Performance under these indemnities would generally be triggered by a breach of terms of the contract or by a third party claim. The Group regularly evaluates the probability of having to incur costs associated with these indemnities.
The guarantees related to antitrust investigations granted as part of the agreement relating to the spin-off of Arkema are described in Note 32 to the Consolidated Financial Statements.
Other guarantees given
Non-consolidated subsidiaries
The Group also guarantees the current liabilities of certain non-consolidated subsidiaries. Performance under these guarantees would be triggered by a financial default of the entity.
Operating agreements
As part of normal ongoing business operations and consistent with generally and accepted recognized industry practices, the Group enters into numerous agreements with other parties. These commitments are often entered into for commercial purposes, for regulatory purposes or for other operating agreements.
24) RELATED PARTIES
The main transactions and balances with related parties (principally non-consolidated subsidiaries and equity affiliates) are detailed as follows:
             

Balance sheet
         
As of December 31, (M€) 2010  2009  2008 
             
Receivables
            
Debtors and other debtors  432   293   244 
Loans (excl. loans to equity affiliates)  315   438   354 
Payables
            
Creditors and other creditors  497   386   136 
Debts  28   42   50 
             
             

Statement of income
         
For the year ended December 31,
         
(M€) 2010  2009  2008 
Sales  3,194   2,183   3,082 
Purchases  5,576   2,958   4,061 
Financial expense  69   1   —  
Financial income  74   68   114 


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Compensation for the administration and management bodies
The aggregate amount paid directly or indirectly by the French and foreign affiliates of the Company as compensation to the executive officers of TOTAL (the members of the Management Committee and the Treasurer) and to the members of the Board of Directors who are employees of the Group, is detailed as follows:
             
For the year ended December 31,         
(M€) 2010  2009  2008 
Number of people  26   27   30 
             
Direct or indirect compensation  20.8   19.4   20.4 
Pension expenses(a)
  12.2   10.6   11.9 
Other long-term benefits  —    —    —  
Termination benefits  —    —    —  
Share-based payments expense (IFRS 2)(b)
  10.0   11.2   16.6 
             
(a)The benefits provided for executive officers and certain members of the Board of Directors, employees and former employees of the Group, include severance to be paid on retirement, supplementary pension schemes and insurance plans, which represent €113.8 million provisioned as of December 31, 2010 (against €96.6 million as of December 31, 2009 and €98.0 million as of December 31, 2008).
(b)Share-based payments expense computed for the executive officers and the members of the Board of Directors who are employees of the Group as described in Note 25 paragraph E to the Consolidated Financial Statements and based on the principles of IFRS 2 “Share-based payments” described in Note 1 paragraph E to the Consolidated Financial Statements.
The compensation allocated to members of the Board of Directors for directors’ fees totaled €0.96 million in 2010 (€0.97 million in 2009 and €0.83 million in 2008).


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25) SHARE-BASED PAYMENTS
A. TOTAL SHARE SUBSCRIPTION OPTION PLANS
                                         
  
                             Weighted
 
                             average
 
  2003
  2004
  2005
  2006
  2007
  2008
  2009
  2010
     exercise
 
  Plan  Plan  Plan  Plan  Plan  Plan  Plan  Plan  Total  price 
  
 
                                         
Date of the shareholders’ meeting
  05/17/2001   05/14/2004   05/14/2004   05/14/2004   05/11/2007   05/11/2007   05/11/2007   05/21/2010         
                                         
Grant Date(a)
  07/16/2003   07/20/2004   07/19/2005   07/18/2006   07/17/2007   10/09/2008   09/15/2009   09/14/2010         
                                         
Exercise price until May 23, 2006 included(b)
  33.30   39.85   49.73   —    —    —    —    —          
                                         
Exercise price since May 24, 2006(b)
  32.84   39.30   49.04   50.60   60.10   42.90   39.90   38.20         
                                         
Expiry date
  07/16/2011   07/20/2012   07/19/2013   07/18/2014   07/17/2015   10/09/2016   09/15/2017   09/14/2018         
 
 
                                         
Number of options(c)
                                        
                                         
Outstanding as of January 1, 2008
  8,368,378   13,197,236   6,243,438   5,711,060   5,920,105               39,440,217   44.23 
                                         
Awarded  —    —    —    —    —    4,449,810           4,449,810   42.90 
                                         
Canceled  (25,184)  (118,140)  (34,032)  (53,304)  (34,660)  (6,000)          (271,320)  44.88 
                                         
Exercised  (841,846)  (311,919)  (17,702)  (6,700)  —    —            (1,178,167)  34.89 
                                         
Outstanding as of January 1, 2009
  7,501,348   12,767,177   6,191,704   5,651,056   5,885,445   4,443,810           42,440,540   44.35 
                                         
Awarded  —    —    —    —    —    —    4,387,620       4,387,620   39.90 
                                         
Canceled  (8,020)  (18,387)  (6,264)  (5,370)  (13,780)  (2,180)  (10,610)      (64,611)  45.04 
                                         
Exercised  (681,699)  (253,081)  —    —    —    —    —        (934,780)  34.59 
                                         
Outstanding as of January 1, 2010
  6,811,629   12,495,709   6,185,440   5,645,686   5,871,665   4,441,630   4,377,010       45,828,769   44.12 
                                         
Awarded  —    —    —    —    —    —    —    4,788,420   4,788,420   38.20 
                                         
Canceled(d)
  (1,420)  (15,660)  (6,584)  (4,800)  (5,220)  (92,472)  (4,040)  (1,120)  (131,316)  43.50 
                                         
Exercised  (1,075,765)  (141,202)  —    —    —    —    (1,080)  —    (1,218,047)  33.60 
                                         
Outstanding as of December 31, 2010
  5,734,444   12,338,847   6,178,856   5,640,886   5,866,445   4,349,158   4,371,890   4,787,300   49,267,826   43.80 
 
 
(a)The grant date is the date of the Board meeting awarding the share subscription options, except for the grant of October 9, 2008, decided by the Board on September 9, 2008.
(b)Exercise price in euro. The exercise prices of TOTAL subscription shares of the plans in force at that date were multiplied by 0.25 to take into account thefour-for-one stock split on May 18, 2006. Moreover, following the spin-off of Arkema, the exercise prices of TOTAL subscription shares of these plans were multiplied by an adjustment factor equal to 0.986147 effective as of May 24, 2006.
(c)The number of options awarded, outstanding, canceled or exercised before May 23, 2006 included, was multiplied by four to take into account thefour-for-one stock split approved by the shareholders’ meeting on May 12, 2006.
(d)Out of 92,472 options awarded under the 2008 Plan that were canceled, 88,532 options were canceled due to the performance condition. The acquisition rate applicable to the subscription options that were subject to the performance condition of the 2008 Plan was 60%.
Options are exercisable, subject to a continued employment condition, after a2-year period from the date of the Board meeting awarding the options and expire eight years after this date. The underlying shares may not be transferred during four years from the date of grant. For the 2007, 2008, 2009 and 2010 Plans, the four-year transfer restriction period does not apply to employees of non-French subsidiaries as of the date of the grant, who may transfer the underlying shares after a two-year period from the date of the grant.
The continued employment condition states that the termination of the employment contract will result in the employee losing the right to exercise the options.
For the 2010 Plan, the Board of Directors decided that:
• For each grantee of up to 3,000 options, other than the Chairman and Chief Executive Officer, the options will be finally granted to their beneficiary.
• For each grantee of more than 3,000 options and less or equal to 50,000 options (other than the Chairman and Chief Executive Officer):
•  The first 3,000 options and two-thirds above the first 3,000 options will be finally granted to their beneficiary;
•  The outstanding options, that is one-third of the options above the first 3,000 options, will be finally granted provided that the performance condition described below is fulfilled.


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• For each grantee of more than 50,000 options, other than the Chairman and Chief Executive Officer:
•  The first 3,000 options, two-thirds of the options above the first 3,000 options and below the first 50,000 options, and one-third of the options above the first 50,000 options, will be finally granted to their beneficiary;
•  The outstanding options, that is one-third of the options above the first 3,000 options and below the first 50,000 options and two-thirds of the options above the first 50,000 options, will be finally granted provided that the performance condition is fulfilled.
The performance condition states that the number of options finally granted is based on the average of the Return On Equity (ROE) of the Group. The average ROE is calculated by the Group based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate:
• is equal to zero if the average ROE is less than or equal to 7%;
• varies on straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and
• is equal to 100% if the average ROE is more than or equal to 18%.
In addition, as part of the 2010 plan, the Board of Directors decided that the number of share subscription options finally awarded to the Chairman and Chief Executive Officer will be subject to two performance conditions:
• For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROE of the Group. The average ROE is calculated by the Group based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate is equal to zero if the average ROE is less than or equal to 7%; varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and is equal to 100% if the average ROE is more than or equal to 18%.
• For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average of the Return On Average Capital Employed (ROACE) of the Group. The average ROACE is calculated by the Group based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate is equal to zero if the average ROACE is less than or equal to 6%; varies on a straight-line basis between 0% and 100% if the average ROACE is more than 6% and less than 15%; and is equal to 100% if the average ROACE is more than or equal to 15%.
For the 2009 Plan, the Board of Directors decided that for each beneficiary, other than the Chief Executive Officer, of more than 25,000 options, one third of the options granted in excess of this number will be finally granted subject to a performance condition. This condition states that the final number of options finally granted is based on the average ROE of the Group as published by TOTAL. The average ROE is calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate:
• is equal to zero if the average ROE is less than or equal to 7%;
• varies on straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and
• is equal to 100% if the average ROE is more than or equal to 18%.
In addition, the Board of Directors decided that, for the Chief Executive Officer, the number of share subscription options finally granted will be subject to two performance conditions:
• For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROE of the Group as published by TOTAL. The average ROE is calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate is equal to zero if the average ROE is less than or equal to 7%; varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and is equal to 100% if the average ROE is more than or equal to 18%.
• For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROACE of the Group as published by TOTAL. The average ROACE is calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate is equal to zero if the average ROACE is less than or equal to 6%; varies on a straight-line basis between 0% and 100% if the average ROACE is more than 6% and less than 15%; and is equal to 100% if the average ROACE is more than or equal to 15%.


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For the 2008 Plan, the Board of Directors decided that for each beneficiary of more than 25,000 options, one third of the options in excess of this number will be finally granted subject to a performance condition. This condition states that the number of subscription options finally granted is based on the ROE of the Group. The ROE is calculated based on the consolidated accounts published by TOTAL for the fiscal year preceding the final grant. The acquisition rate:
• is equal to zero if the ROE is less than or equal to 10%;
• varies on a straight-line basis between 0% and 80% if the ROE is more than 10% and less than 18%;
• varies on a straight-line basis between 80% and 100% if the ROE is more than or equal to 18% and less than 30%; and
• is equal to 100% if the ROE is more than or equal to 30%.
Due to the application of the performance condition, the acquisition rate was 60% for the 2008 plan.
As a consequence, 88,532 options were canceled.
B. TOTAL SHARE PURCHASE OPTION PLANS
                     
              Weighted
 
              average
 
  2000 Plan(a)  2001 Plan(b)  2002 Plan(c)  Total  exercise price 
Date of the shareholders’ meeting
  05/21/1997   05/17/2001   05/17/2001         
Grant date(d)
  07/11/2000   07/10/2001   07/09/2002         
Exercise price until May 23, 2006 included(e)
  40.68   42.05   39.58         
Exercise price since May 24, 2006(e)
  40.11   41.47   39.03         
Expiry date
  07/11/2008   07/10/2009   07/09/2010         
                     
Number of options(f)
                    
Outstanding as of January 1, 2008
  3,142,188   5,150,258   7,063,183   15,355,629   40.07 
Awarded  —    —    —    —    —  
Canceled  (480,475)  (3,652)  (13,392)  (497,519)  40.09 
Exercised  (2,661,713)  (455,180)  (598,934)  (3,715,827)  40.10 
Outstanding as of January 1, 2009
  —    4,691,426   6,450,857   11,142,283   40.06 
Awarded      —    —    —    —  
Canceled      (4,650,446)  (7,920)  (4,658,366)  41.47 
Exercised      (40,980)  (507,676)  (548,656)  39.21 
Outstanding as of January 1, 2010
      —    5,935,261   5,935,261   39.03 
Awarded          —    —    —  
Canceled(g)
          (4,671,989)  (4,671,989)  39.03 
Exercised          (1,263,272)  (1,263,272)  39.03 
Outstanding as of December 31, 2010
          —    —    —  
                     
(a)Options were exercisable, subject to a continued employment condition, after a4-year vesting period from the date of the Board meeting awarding the options and expired eight years after this date. The underlying shares may not be transferred during the5-year period from the date of the grant. This plan expired on July 11, 2008.
(b)Options were exercisable, subject to a continued employment condition, after a 3.5-year vesting period from the date of the Board meeting awarding the options and expired eight years after this date. The underlying shares may not be transferred during the4-year period from the date of the grant. This plan expired on July 10, 2009.
(c)Options were exercisable, subject to a continued employment condition, after a2-year vesting period from the date of the Board meeting awarding the options and expired eight years after this date. The underlying shares may not be transferred during the4-year period from the date of the grant. This plan expired on July 9, 2010.
(d)The grant date is the date of the Board meeting awarding the options.
(e)Exercise price in euro. The exercise prices of TOTAL share purchase options of the plans at that date were multiplied by 0.25 to take into account thefour-for-one stock split on May 18, 2006. Moreover, following the spin-off of Arkema, the exercise prices of TOTAL share purchase options of these plans were multiplied by an adjustment factor equal to 0.986147 effective as of May 24, 2006.
(f)The number of options awarded, outstanding, canceled or exercised before May 23, 2006 included, was multiplied by four to take into account thefour-for-one stock split approved by the shareholders’ meeting on May 12, 2006.
(g)Out of the 4,671,989 options canceled in 2010, 4,671,145 options that were not exercised expired due to the expiry of the 2002 purchase option Plan on July 9, 2010.


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C. EXCHANGE GUARANTEE GRANTED TO THE HOLDERS OF ELF AQUITAINE SHARE SUBSCRIPTION OPTIONS
Pursuant to the public exchange offer for Elf Aquitaine shares which was made in 1999, the Group made a commitment to guarantee the holders of Elf Aquitaine share subscription options, at the end of the period referred to in Article 163 bis C of the French Tax Code (CGI), and until the end of the period for the exercise of the options, the possibility to exchange their future Elf Aquitaine shares for TOTAL shares, on the basis of the exchange ratio of the offer (nineteen TOTAL shares for thirteen Elf Aquitaine shares).
In order to take into account the spin-off of S.D.A. (Société de Développement Arkema) by Elf Aquitaine, the spin-off of Arkema by TOTAL S.A. and thefour-for-one TOTAL stock split, the Board of Directors of TOTAL S.A., in accordance with the terms of the share exchange undertaking, approved on March 14, 2006 to adjust the exchange ratio described above (see pages 24 and 25 of the “Prospectus for the purpose of listing Arkema shares on Euronext Paris in connection with the allocation of Arkema shares to TOTAL S.A. shareholders”). Following the approval by Elf Aquitaine shareholders’ meeting on May 10, 2006 of the spin-off of S.D.A. by Elf Aquitaine, the approval by TOTAL S.A. shareholders’ meeting on May 12, 2006 of the spin-off of Arkema by TOTAL S.A. and thefour-for-one TOTAL stock split, the exchange ratio was adjusted to six TOTAL shares for one Elf Aquitaine share on May 22, 2006.
This exchange guarantee expired on September 12, 2009, due to the expiry of the Elf Aquitaine share subscription option plan No. 2 of 1999. Subsequently, no Elf Aquitaine shares are covered by the exchange guarantee.
D. TOTAL RESTRICTED SHARE GRANTS
                             
  2005 Plan  2006 Plan  2007 Plan  2008 Plan  2009 Plan  2010 Plan  Total 
Date of the shareholders’ meeting
  05/17/2005   05/17/2005   05/17/2005   05/16/2008   05/16/2008   05/16/2008     
Grant date(a)
  07/19/2005   07/18/2006   07/17/2007   10/09/2008   09/15/2009   09/14/2010     
                             
Final grant date (end of the vesting period)
  07/20/2007   07/19/2008   07/18/2009   10/10/2010   09/16/2011   09/15/2012     
Transfer possible from
  07/20/2009   07/19/2010   07/18/2011   10/10/2012   09/16/2013   09/15/2014     
                             
Number of restricted shares
                            
Outstanding as of January 1, 2008
  —    2,263,956   2,363,057               4,627,013 
Awarded  —    —    —    2,791,968           2,791,968 
Canceled  2,840   (43,822)  (29,504)  (19,220)          (89,706)
Finally granted(b)(c)
  (2,840)  (2,220,134)  (336)  —            (2,223,310)
Outstanding as of January 1, 2009
  —    —    2,333,217   2,772,748           5,105,965 
Awarded  —    —    —    —    2,972,018       2,972,018 
Canceled  1,928   2,922   (12,418)  (9,672)  (5,982)      (23,222)
Finally granted(b)(c)
  (1,928)  (2,922)  (2,320,799)  (600)  —        (2,326,249)
Outstanding as of January 1, 2010
  —    —    —    2,762,476   2,966,036       5,728,512 
Awarded  —    —    —    —    —    3,010,011   3,010,011 
Canceled(d)
  1,024   3,034   552   (1,113,462)  (9,796)  (8,738)  (1,127,386)
Finally granted(b)(c)
  (1,024)  (3,034)  (552)  (1,649,014)  (1,904)  (636)  (1,656,164)
Outstanding as of December 31, 2010
  —    —    —    —    2,954,336   3,000,637   5,954,973 
                             
(a)The grant date is the date of the Board of Directors meeting that awarded the shares, except for the shares awarded by the Board of Directors at their meeting of September 9, 2008, and granted on October 9, 2008.
(b)Restricted shares finally granted following the death of their beneficiaries (2007 Plan for fiscal year 2008, 2008 Plan for fiscal year 2009, 2009 Plan for fiscal year 2010).
(c)Including restricted shares finally granted for which the entitlement right had been canceled erroneously.
(d)Out of the 1,113,462 canceled rights to the grant share under the 2008 Plan, 1,094,914 entitlement rights were canceled due to the performance condition. The acquisition rate for the 2008 Plan was 60%.


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The restricted shares, which are bought back by the Company on the market, are finally granted to their beneficiaries after a2-year vesting period from the date of the grant. The final grant is subject to a continued employment condition and a performance condition. Moreover, the transfer of the restricted shares finally granted will not be permitted until the end of a2-year mandatory holding period from the date of the final grant.
The continued employment condition states that the termination of the employment contract during the vesting period will also terminate the grantee’s right to a restricted share grant.
For the 2010 Plan, the Board of Directors decided that, for each beneficiary of more than 100 shares, half of the shares in excess of this number will be finally granted subject to a performance condition. This condition is based on the average ROE calculated by the Group based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate:
• is equal to zero if the average ROE is less than or equal to 7%;
• varies on a straight-line basis between 0% and 100% if the average ROE is greater than 7% and less than 18%; and
• is equal to 100% if the average ROE is greater than or equal to 18%.
For the 2009 Plan, the Board of Directors decided that, for each beneficiary of more than 100 shares, half of the shares in excess of this number will be finally granted subject to a performance condition. This condition states that the number of shares finally granted is based on the average ROE as published by the Group and calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate:
• is equal to zero if the average ROE is less than or equal to 7%;
• varies on a straight-line basis between 0% and 100% if the average ROE is greater than 7% and less than 18%; and
• is equal to 100% if the average ROE is greater than or equal to 18%.
For the 2008 Plan, the Board of Directors decided that, for each beneficiary, the shares will be finally granted subject to a performance condition. This performance condition states that the number of restricted shares finally granted is based on the ROE of the Group. The ROE is calculated based on the consolidated accounts published by TOTAL for the fiscal year preceding the final grant. This acquisition rate:
• is equal to zero if the ROE is less than or equal to 10%;
• varies on a straight-line basis between 0% and 80% if the ROE is greater than 10% and less than 18%;
• varies on a straight-line basis between 80% and 100% if the ROE is greater than or equal to 18% and less than 30%; and
• is equal to 100% if the ROE is greater than or equal to 30%.
Due to the application of the performance condition, the acquisition rate was 60% for the 2008 Plan.
As a consequence, entitlement rights to 1,094,914 shares were canceled.
E. GLOBAL FREE TOTAL SHARE PLAN
The Board of Directors approved at its meeting on May 21, 2010 the implementation and conditions of a global free share plan intended for the Group employees, that is more than 100,000 employees in 124 countries. On June 30, 2010, entitlement rights to 25 free shares were granted to every employee. The final grant is subject to a continued employment condition during the plan’s vesting period. The shares are not subject to any performance condition. 1,508,850 shares were awarded to employees from countries with a 2+2 scheme(2-year vesting period followed by2-year of mandatory holding period) and 1,070,650 shares were awarded to employees in countries with a 4+0 scheme(4-year vesting period and no mandatory holding period), representing a total of 2,579,500 shares. Following the vesting period, the shares awarded will be new shares.


F-71

             
  2010 Plan
  2010 Plan
    
  (2+2)  (4+0)  Total 
Date of the shareholders’ meeting
  05/16/2008   05/16/2008     
Grant date(a)
  06/30/2010   06/30/2010     
Final grant date (end of the vesting period)
  07/01/2012   07/01/2014     
Transfer possible from
  07/01/2014   07/01/2014     
             
Number of free shares
            
Outstanding as of January 1, 2008
            
Awarded            
Canceled            
Finally granted            
Outstanding as of January 1, 2009
            
Awarded            
Canceled            
Finally granted            
Outstanding as of January 1, 2010
            
Awarded  1,508,850   1,070,650   2,579,500 
Canceled  (125)  (75)  (200)
Finally granted(b)
  (75)  —    (75)
Outstanding as of December 31, 2010
  1,508,650   1,070,575   2,579,225 
             
(a)The June 30, 2010, grant was decided by the Board of Directors on May 21, 2010.
(b)Final grant following the death or disability of the beneficiary of the shares.
F. SHARE-BASED PAYMENT EXPENSE
Share-based payment expense before tax for the year 2010 amounts to €140 million and can be broken down as follows:
• €31 million for TOTAL share subscription plans; and
• €109 million for TOTAL restricted shares plans.
Share-based payment expense before tax for the year 2009 amounts to €106 million and can be broken down as follows:
• €38 million for TOTAL share subscription plans; and
• €68 million for TOTAL restricted shares plans.
Share-based payment expense before tax for the year 2008 amounted to €154 million and can be broken down as follows:
• €61 million for TOTAL share subscription plans;
• €105 million for TOTAL restricted shares plans; and
• €(12) million for the adjustment to the expense booked in 2007 related to TOTAL capital increase reserved for employees (see Note 17 to the Consolidated Financial Statements).
The fair value of the options granted in 2010, 2009 and 2008 has been measured according to the Black-Scholes method and based on the following assumptions:
             
For the year ended December 31, 2010  2009  2008 
Risk free interest rate (%)(a)
  2.1   2.9   4.3 
Expected dividends (%)(b)
  5.9   4.8   8.4 
Expected volatility (%)(c)
  25.0   31.0   32.7 
Vesting period (years)  2   2   2 
Exercise period (years)  8   8   8 
Fair value of the granted options (€ per option)  5.8   8.4   5.0 
             
(a)Zero coupon Euro swap rate at 6 years.
(b)The expected dividends are based on the price of TOTAL share derivatives traded on the markets.
(c)The expected volatility is based on the implied volatility of TOTAL share options and of share indices options traded on the markets.
At the shareholders’ meeting held on May 21, 2010, the shareholders delegated to the Board of Directors the authority to increase the share capital of the Company in one or more transactions and within a maximum period of 26 months from the date of the meeting, by an amount not exceeding 1.5% of the share capital outstanding on the date of the meeting of the Board of Directors at which a decision to proceed with an issuance is made reserving subscriptions for such issuance to the Group employees participating in a company savings plan. It is being specified that the amount of any such capital increase reserved for Group employees was counted against the

F-72

aggregate maximum nominal amount of share capital increases authorized by the shareholders’ meeting held on May 21, 2010 for issuing new ordinary shares or other securities granting immediate or future access to the Company’s share capital with preferential subscription rights (€(€2.5 billion in nominal value).

Pursuant to this delegation of authorization, the Board of Directors, during its October 28, 2010 meeting, decided to proceed with a capital increase reserved for employees in 2011 within the limit of 12 million shares with dividend rights as of January 1, 2010 and delegated to the Chairman and Chief Executive Officer all powers to determine the opening and closing of the subscription period and the subscription price.

 

On March 14, 2011, the Chairman and Chief Executive Officer decided that the subscription period would be set from March 16, 2011 to April 1, 2011 included, and acknowledged that the subscription price per ordinary share would be set at€34.80. With respect to this capital increase, 8,902,717 TOTAL shares were subscribed and created on April 28, 2011.

Share cancellation

Pursuant to the authorization granted by the shareholders’ meeting held on May 11, 2007 authorizing reduction of capital by cancellation of shares held by the Company within the limit of 10% of the outstanding capital every 24 months, the Board of Directors decided on July 30, 2009 to cancel 24,800,000 shares acquired in 2008 at an average price of€49.28 per share.

Treasury shares (TOTAL shares held by TOTAL S.A.)

As of December 31, 2011, TOTAL S.A. holds 9,222,905 of its own shares, representing 0.39% of its share capital, detailed as follows:

6,712,528 shares allocated to TOTAL share grant plans for Group employees;

2,510,377 shares intended to be allocated to new TOTAL share purchase option plans or to new share grant plans.

These shares are deducted from the consolidated shareholders’ equity.

As of December 31, 2010, TOTAL S.A. held 12,156,411 of its own shares, representing 0.52% of its share capital, detailed as follows:

6,012,460 shares allocated to TOTAL share grant plans for Group employees;

6,143,951 shares intended to be allocated to new TOTAL share purchase option plans or to new share grant plans.

These shares were deducted from the consolidated shareholders’ equity.

As of December 31, 2009, TOTAL S.A. held 15,075,922 of its own shares, representing 0.64% of its share capital, detailed as follows:

6,017,499 shares allocated to covering TOTAL share purchase option plans for Group employees and executive officers;

5,799,400 shares allocated to TOTAL share grant plans for Group employees; and

3,259,023 shares intended to be allocated to new TOTAL share purchase option plans or to new share grant plans.

These shares were deducted from the consolidated shareholders’ equity.

TOTAL shares held by Group subsidiaries

As of December 31, 2011, 2010 and 2009, TOTAL S.A. held indirectly through its subsidiaries 100,331,268 of its own shares, representing 4.24% of its share capital as of December 31, 2011, 4.27% of its share capital as of December 31, 2010 and 4.27% of its share capital as of December 31, 2009 detailed as follows:

2,023,672 shares held by a consolidated subsidiary, Total Nucléaire, 100% indirectly controlled by TOTAL S.A.; and

98,307,596 shares held by subsidiaries of Elf Aquitaine (Financière Valorgest, Sogapar and Fingestval), 100% indirectly controlled by TOTAL S.A.

These shares are deducted from the consolidated shareholders’ equity.

Dividend

TOTAL S.A. paid on May 26, 2011 the balance of the dividend of€1.14 per share for the 2010 fiscal year (the ex-dividend date was May 23, 2011). In addition, TOTAL S.A. paid two quarterly interim dividends for the fiscal year 2011:

The first quarterly interim dividend of€0.57 per share for the fiscal year 2011, decided by the Board of Directors on April 28, 2011, was paid on September 22, 2011 (the ex-dividend date was September 19, 2011);

The second quarterly interim dividend of€0.57 per share for the fiscal year 2011, decided by the Board of Directors on July 28, 2011, was paid on December 22, 2011 (the ex-dividend date was December 19, 2011).

The Board of Directors, during its October 27, 2011 meeting, decided to set the third quarterly interim dividend for the fiscal year 2011 at€0.57 per share. This interim dividend will be paid on March 22, 2012 (the ex-dividend date will be March 19, 2012).

A resolution will be submitted at the shareholders’ meeting on May 11, 2012 to pay a dividend of€2.28 per share for the 2011 fiscal year, i.e. a balance of€0.57 per share to be distributed after deducting the three quarterly interim dividends of€0.57 per share that will have already been paid.

Paid-in surplus

In accordance with French law, the paid-in surplus corresponds to share premiums of the parent company which can be capitalized or used to offset losses if the legal reserve has reached its minimum required level. The amount of the paid-in surplus may also be distributed subject to taxation unless the unrestricted reserves of the parent company are distributed prior to this item.

As of December 31, 2011, paid-in surplus amounted to€27,655 million (€27,208 million as of December 31, 2010 and€27,171 million as of December 31, 2009).

Reserves

Under French law, 5% of net income must be transferred to the legal reserve until the legal reserve reaches 10% of the nominal value of the share capital. This reserve cannot be distributed to the shareholders other than upon liquidation but can be used to offset losses.

If wholly distributed, the unrestricted reserves of the parent company would be taxed for an approximate amount of€539 million as of December 31, 2011 (€514 million as of December 31, 2010 and as of December 31, 2009).

Other comprehensive income

Detail of other comprehensive income showing items reclassified from equity to net income is presented in the table below:

For the year ended December 31, (M€)  2011  2010  2009 

Currency translation adjustment

    1,498     2,231     (244) 

— Unrealized gain/(loss) of the period

   1,435     2,234     (243)  

— Less gain/(loss) included in net income

   (63)       3        1      

Available for sale financial assets

    337     (100)    38  

— Unrealized gain/(loss) of the period

   382     (50)    38   

— Less gain/(loss) included in net income

   45        50        —      

Cash flow hedge

    (84)    (80)    128  

— Unrealized gain/(loss) of the period

   (131)    (195)    349   

— Less gain/(loss) included in net income

   (47)       (115)       221      

Share of other comprehensive income of equity affiliates, net amount

       (15)       302        234  

Other

    (2)    (7)    (5) 

— Unrealized gain/(loss) of the period

   (2)    (7)    (5)  

— Less gain/(loss) included in net income

   —        —        —      

Tax effect

       (55)       28        (38) 

Total other comprehensive income, net amount

       1,679        2,374        113  

Tax effects relating to each component of other comprehensive income are as follows:

    2011  2010  2009 

For the year ended
December 31, (M€)

  Pre-tax
amount		  Tax
effect		  Net
amount		  Pre-tax
amount		  Tax
effect		   Net
amount		  Pre-tax
amount		  Tax
effect		  Net
amount		 

Currency translation adjustment

   1,498    —    1,498    2,231    —     2,231    (244)   —    (244) 

Available for sale financial assets

   337    (93)   244    (100)   2     (98)   38    4    42  

Cash flow hedge

   (84)   38    (46)   (80)   26     (54)   128    (42)   86  

Share of other comprehensive income of equity affiliates, net amount

   (15)   —    (15)   302    —     302    234    —    234  

Other

   (2)   —    (2)   (7)   —     (7)   (5)   —    (5) 

Total other comprehensive income

   1,734    (55)   1,679    2,346    28     2,374    151    (38)   113  

18)EMPLOYEE BENEFITS OBLIGATIONS

Liabilities for employee benefits obligations consist of the following:

As of December 31, (M€)  2011   2010   2009 

Pension benefits liabilities

   1,268     1,268     1,236  

Other benefits liabilities

   620     605     592  

Restructuring reserves (early retirement plans)

   344     298     212  

Total

   2,232     2,171     2,040  

The Group’s main defined benefit pension plans are located in France, in the United Kingdom, in the United States, in Belgium and in Germany. Their main characteristics are the following:

The benefits are usually based on the final salary and seniority;

They are usually funded (pension fund or insurer); and

They are closed to new employees who benefit from defined contribution pension plans.

The pension benefits include also termination indemnities and early retirement benefits.

The other benefits are the employer contribution to post-employment medical care.

The fair value of the defined benefit obligation and plan assets in the Consolidated Financial Statements is detailed as follows:

    Pension benefits  Other benefits 
As of December 31, (M€)  2011  2010  2009  2011  2010  2009 

Change in benefit obligation

       

Benefit obligation at beginning of year

   8,740    8,169    7,405    623    547    544  

Service cost

   163    159    134    13    11    10  

Interest cost

   420    441    428    28    29    30  

Curtailments

   (24)   (4)   (5)   (1)   (3)   (1) 

Settlements

   (111)   (60)   (3)   —    —    —  

Special termination benefits

   —    —    —    —    1    —  

Plan participants’ contributions

   9    11    10    —    —    —  

Benefits paid

   (451)   (471)   (484)   (34)   (33)   (33) 

Plan amendments

   33    28    118    4    1    (2) 

Actuarial losses (gains)

   435    330    446    (9)   57    —  

Foreign currency translation and other

   108    137    120    4    13    (1) 

Benefit obligation at year-end

   9,322    8,740    8,169    628    623    547  

Change in fair value of plan assets

       

Fair value of plan assets at beginning of year

   (6,809)   (6,286)   (5,764)   —    —    —  

Expected return on plan assets

   (385)   (396)   (343)   —    —    —  

Actuarial losses (gains)

   155    (163)   (317)   —    —    —  

Settlements

   80    56    2    —    —    —  

Plan participants’ contributions

   (9)   (11)   (10)   —    —    —  

Employer contributions

   (347)   (269)   (126)   —    —    —  

Benefits paid

   386    394    396    —    —    —  

Foreign currency translation and other

   (99)   (134)   (124)   —    —    —  

Fair value of plan assets at year-end

   (7,028)   (6,809)   (6,286)   —    —    —  

Unfunded status

   2,294    1,931    1,883    628    623    547  

Unrecognized prior service cost

   (78)   (105)   (153)   9    10    15  

Unrecognized actuarial (losses) gains

   (1,713)   (1,170)   (1,045)   (17)   (28)   30  

Asset ceiling

   10    9    9    —    —    —  

Net recognized amount

   513    665    694    620    605    592  

Pension benefits and other benefits liabilities

   1,268    1,268    1,236    620    605    592  

Other non-current assets

   (755)   (603)   (542)   —    —    —  

As of December 31, 2011, the fair value of pension benefits and other pension benefits which are entirely or partially funded amounts to€8,277 million and the present value of the unfunded benefits amounts to€1,673 million (against€7,727 million and€1,636 million respectively as of December 31, 2010 and€7,206 million and€1,510 million respectively as of December 31, 2009).

The experience actuarial (gains) losses related to the defined benefit obligation and the fair value of plan assets are as follows:

For the year ended December 31, (M€)  2011  2010  2009  2008   2007 

Experience actuarial (gains) losses related to the defined benefit obligation

   (58)   (54)   (108)   12     80  

Experience actuarial (gains) losses related to the fair value of plan assets

   155    (163)   (317)   1,099     140  

As of December 31, (M€)  2011  2010  2009  2008  2007 

Pension benefits

      

Benefit obligation

   9,322    8,740    8,169    7,405    8,129  

Fair value of plan assets

   (7,028)   (6,809)   (6,286)   (5,764)   (6,604) 

Unfunded status

   2,294    1,931    1,883    1,641    1,525  

Other benefits

      

Benefits obligation

   628    623    547    544    583  

Fair value of plan assets

   —    —    —    —    —  

Unfunded status

   628    623    547    544    583  

The Group expects to contribute€182 million to its pension plans in 2012.

Estimated future payments (M€)  Pension benefits   Other benefits 

2012

   479     35  

2013

   467     35  

2014

   505     35  

2015

   511     35  

2016

   512     37  

2017-2021

   2,767     191  

Asset allocation  Pension benefits 
As of December 31,  2011  2010  2009 

Equity securities

   29%   34%   31%  

Debt securities

   64%   60%   62%  

Monetary

   4%   3%   3%  

Real estate

   3%   3%   4%  

The Group’s assumptions of expected returns on assets are built up by asset class and by country based on long-term bond yields and risk premiums.

The discount rate retained corresponds to the rate of prime corporate bonds according to a benchmark per country of different market data on the closing date.

Assumptions used to determine benefits
obligations		      Pension benefits  Other benefits 
As of December 31,      2011  2010  2009  2011  2010  2009 

Discount rate (weighted average for all regions)

     4.61%   5.01%   5.41%   4.70%   5.00%   5.60%  
  Of which Euro zone   4.21%   4.58%   5.12%   4.25%   4.55%   5.18%  
  Of which United States   5.00%   5.49%   6.00%   4.97%   5.42%   5.99%  
  Of which United Kingdom   4.75%   5.50%   5.50%   —    —    —  

Average expected rate of salary increase

     4.69%   4.55%   4.50%   —    —    —  

Expected rate of healthcare inflation

         

— initial rate

     —    —    —    4.82%   4.82%   4.91%  

— ultimate rate

      —    —    —    3.77%   3.75%   3.79%  
    
Assumptions used to determine the net periodic
benefit cost (income)		      Pension benefits  Other benefits 
For the year ended December 31,      2011  2010  2009  2011  2010  2009 

Discount rate (weighted average for all regions)

     5.01%   5.41%   5.93%   5.00%   5.60%   6.00%  
  Of which Euro zone   4.58%   5.12%   5.72%   4.55%   5.18%   5.74%  
  Of which United States   5.49%   6.00%   6.23%   5.42%   5.99%   6.21%  
  Of which United Kingdom   5.50%   5.50%   6.00%   —    —    6.00%  

Average expected rate of salary increase

     4.55%   4.50%   4.56%   —    —    —  

Expected return on plan assets

     5.90%   6.39%   6.14%   —    —    —  

Expected rate of healthcare inflation

         

— initial rate

     —    —    —    4.82%   4.91%   4.88%  

— ultimate rate

      —    —    —    3.75%   3.79%   3.64%  

A 0.5% increase or decrease in discount rates — all other things being equal — would have the following approximate impact:

(M€)  0.5% increase  0.5% decrease 

Benefit obligation as of December 31, 2011

   (513)   551  

2012 net periodic benefit cost (income)

   (41)   56  

A 0.5% increase or decrease in expected return on plan assets rate — all other things being equal — would have an impact of€31 million on 2012 net periodic benefit cost (income).

The components of the net periodic benefit cost (income) in 2011, 2010 and 2009 are:

    Pension benefits  Other benefits 
For the year ended December 31, (M€)  2011  2010  2009  2011  2010  2009 

Service cost

   163    159    134    13    11    10  

Interest cost

   420    441    428    28    29    30  

Expected return on plan assets

   (385)   (396)   (343)   —    —    —  

Amortization of prior service cost

   58    74    13    2    (5)   (7) 

Amortization of actuarial losses (gains)

   46    66    50    —    (4)   (6) 

Asset ceiling

   2    (3)   4    —    —    —  

Curtailments

   (22)   (3)   (4)   (1)   (3)   (1) 

Settlements

   (9)   7    (1)   —    —    —  

Special termination benefits

   —    —    —    —    1    —  

Net periodic benefit cost (income)

   273    345    281    42    29    26  

A positive or negative change of one-percentage-point in the healthcare inflation rate would have the following approximate impact:

(M€)  1% point
increase		   1% point
decrease		 

Benefit obligation as of December 31, 2011

   53     (63) 

2011 net periodic benefit cost (income)

   5     (5) 

19)PROVISIONS AND OTHER NON-CURRENT LIABILITIES

As of December 31, (M€)  2011   2010   2009 

Litigations and accrued penalty claims

   572     485     423  

Provisions for environmental contingencies

   600     644     623  

Asset retirement obligations

   6,884     5,917     5,469  

Other non-current provisions

   1,099     1,116     1,331  

Other non-current liabilities

   1,754     936     1,535  

Total

   10,909     9,098     9,381  

In 2011, litigation reserves mainly include a provision covering risks concerning antitrust investigations related to Arkema amounting to€17 million as of December 31, 2011. Other risks and commitments that give rise to contingent liabilities are described in Note 32 to the Consolidated Financial Statements.

In 2011, other non-current provisions mainly include:

The contingency reserve related to the Toulouse-AZF plant explosion (civil liability) for€21 million as of December 31, 2011;

Provisions related to restructuring activities in the Downstream and Chemicals segments for€211 million as of December 31, 2011; and

The contingency reserve related to the Buncefield depot explosion (civil liability) for€80 million as of December 31, 2011.

In 2011, other non-current liabilities mainly include debts (whose maturity is more than one year) related to fixed assets acquisitions. This heading is mainly composed of a€991 million debt related to the acquisition of an interest in the liquids-rich area of the Utica shale play (see Note 3 to the Consolidated Financial Statements).

In 2010, litigation reserves mainly included a provision covering risks concerning antitrust investigations related to Arkema amounting to€17 million as of December 31, 2010. Other risks and commitments that give rise to contingent liabilities are described in Note 32 to the Consolidated Financial Statements.

In 2010, other non-current provisions mainly included:

The contingency reserve related to the Toulouse-AZF plant explosion (civil liability) for€31 million as of December 31, 2010;

Provisions related to restructuring activities in the Downstream and Chemicals segments for€261 million as of December 31, 2010; and

The contingency reserve related to the Buncefield depot explosion (civil liability) for€194 million as of December 31, 2010.

In 2010, other non-current liabilities mainly included debts (whose maturity is more than one year) related to fixed assets acquisitions.

In 2009, litigation reserves mainly included a provision covering risks concerning antitrust investigations related to Arkema amounting to€43 million as of December 31, 2009. Other risks and commitments that give rise to contingent liabilities are described in Note 32 to the Consolidated Financial Statements.

In 2009, other non-current provisions mainly included:

The contingency reserve related to the Toulouse-AZF plant explosion (civil liability) for€40 million as of December 31, 2009;

Provisions related to restructuring activities in the Downstream and Chemicals segments for€130 million as of December 31, 2009; and

The contingency reserve related to the Buncefield depot explosion (civil liability) for€295 million as of December 31, 2009.

In 2009, other non-current liabilities mainly included debts (whose maturity is more than one year) related to fixed assets acquisitions. This heading was mainly composed of a€818 million debt related to Chesapeake acquisition (see Note 3 to the Consolidated Financial Statements).

Changes in provisions and other non-current liabilities

Changes in provisions and other non-current liabilities are as follows:

(M€)  As of
January 1,		   Allowances   Reversals  Currency
translation
adjustment		   Other  As of
December 31,		 

2011

   9,098     921     (798)   227     1,461    10,909  

2010

   9,381     1,052     (971)   497     (861)   9,098  

2009

   7,858     1,254     (1,413)   202     1,480    9,381  

Allowances

In 2011, allowances of the period (€921 million) mainly include:

Asset retirement obligations for€344 million (accretion);

Environmental contingencies for€100 million in the Downstream and Chemicals segments ; and

Provisions related to restructuring of activities for€79 million.

In 2010, allowances of the period (€1,052 million) mainly included:

Asset retirement obligations for€338 million (accretion);

Environmental contingencies for€88 million in the Downstream and Chemicals segments ;

The contingency reserve related to the Buncefield depot explosion (civil liability) for€79 million ; and

Provisions related to restructuring of activities for€226 million.

In 2009, allowances of the period (€1,254 million) mainly included:

Asset retirement obligations for€283 million (accretion);

Environmental contingencies for€147 million in the Downstream and Chemicals segments;

The contingency reserve related to the Buncefield depot explosion (civil liability) for€223 million; and

Provisions related to restructuring of activities for€121 million.

Reversals

In 2011, reversals of the period (€798 million) are mainly related to the following incurred expenses:

Provisions for asset retirement obligations for€189 million;

Environmental contingencies written back for€70 million;

The contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for€10 million;

The contingency reserve related to the Buncefield depot explosion (civil liability), written back for€116 million; and

Provisions for restructuring and social plans written back for€164 million.

In 2010, reversals of the period (€971 million) were mainly related to the following incurred expenses:

Provisions for asset retirement obligations for€214 million;

€26 million for litigation reserves in connection with antitrust investigations;

Environmental contingencies written back for€66 million;

The contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for€9 million;

The contingency reserve related to the Buncefield depot explosion (civil liability), written back for€190 million; and

Provisions for restructuring and social plans written back for€60 million.

In 2009, reversals of the period (€1,413 million) were mainly related to the following incurred expenses:

Provisions for asset retirement obligations for€191 million;

€52 million for litigation reserves in connection with antitrust investigations;

Environmental contingencies written back for€86 million;

The contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for€216 million;

The contingency reserve related to the Buncefield depot explosion (civil liability), written back for€375 million; and

Provisions for restructuring and social plans written back for€28 million.

Changes in the asset retirement obligation

Changes in the asset retirement obligation are as follows:

(M€)  As of
January 1,		   Accretion   Revision in
estimates		   New
obligations		   Spending
on existing
obligations		  Currency
translation
adjustment		   Other  As of
December 31,		 

2011

   5,917     344     330     323     (189)   150     9    6,884  

2010

   5,469     338     79     175     (214)   316     (246)   5,917  

2009

   4,500     283     447     179     (191)   232     19    5,469  

20)FINANCIAL DEBT AND RELATED FINANCIAL INSTRUMENTS

A)NON-CURRENT FINANCIAL DEBT AND RELATED FINANCIAL INSTRUMENTS

As of December 31, 2011 (M€)
(Assets) / Liabilities		  Secured   Unsecured  Total 

Non-current financial debt

   349     22,208    22,557  

of which hedging instruments of non-current financial debt (liabilities)

   —     146    146  

Hedging instruments of non-current financial debt (assets)(a)

   —     (1,976)   (1,976) 

Non-current financial debt — net of hedging instruments

   349     20,232    20,581  

Bonds after fair value hedge

   —     15,148    15,148  

Fixed rate bonds and bonds after cash flow hedge

   —     4,424    4,424  

Bank and other, floating rate

   129     446    575  

Bank and other, fixed rate

   76     206    282  

Financial lease obligations

   144     8    152  

Non-current financial debt — net of hedging instruments

   349     20,232    20,581  

(a)See the description of these hedging instruments in Notes 1 paragraph M(iii) “Long-term financing”, 28 and 29 to the Consolidated Financial Statements.

As of December 31, 2010 (M€)
(Assets) / Liabilities		  Secured   Unsecured  Total 

Non-current financial debt

   287     20,496    20,783  

of which hedging instruments of non-current financial debt (liabilities)

   —     178    178  

Hedging instruments of non-current financial debt (assets)(a)

   —     (1,870)   (1,870) 

Non-current financial debt — net of hedging instruments

   287     18,626    18,913  

Bonds after fair value hedge

   —     15,491    15,491  

Fixed rate bonds and bonds after cash flow hedge

   —     2,836    2,836  

Bank and other, floating rate

   47     189    236  

Bank and other, fixed rate

   65     110    175  

Financial lease obligations

   175     —    175  

Non-current financial debt — net of hedging instruments

   287     18,626    18,913  

(a)See the description of these hedging instruments in Notes 1 paragraph M(iii) “Long-term financing”, 28 and 29 to the Consolidated Financial Statements.

As of December 31, 2009 (M€)
(Assets) / Liabilities		  Secured   Unsecured  Total 

Non-current financial debt

   312     19,125    19,437  

of which hedging instruments of non-current financial debt (liabilities)

   —     241    241  

Hedging instruments of non-current financial debt (assets)(a)

   —     (1,025)   (1,025) 

Non-current financial debt — net of hedging instruments

   312     18,100    18,412  

Bonds after fair value hedge

   —     15,884    15,884  

Fixed rate bonds and bonds after cash flow hedge

   —     1,700    1,700  

Bank and other, floating rate

   60     379    439  

Bank and other, fixed rate

   50     79    129  

Financial lease obligations

   202     58    260  

Non-current financial debt — net of hedging instruments

   312     18,100    18,412  

(a)See the description of these hedging instruments in Notes 1 paragraph M(iii) “Long-term financing”, 28 and 29 to the Consolidated Financial Statements.

Fair value of bonds, as of December 31, 2011, after taking into account currency and interest rates swaps, is detailed as follows:

Bonds after fair value
hedge (M€)		  Year of
issue		   Fair value
after hedging
as of
December 31,
2011		   Fair value
after hedging
as of
December 31,
2010		   Fair value
after hedging
as of
December 31,
2009		  Currency   Maturity   Initial rate
before
hedging
instruments

Parent company

             

Bond

   1998     129     125     116    FRF     2013    5.000%

Bond

   2000     —     —     61    EUR     2010    5.650%

Current portion (less than one year)

        —     —     (61)             

Total parent company

        129     125     116              

Bonds after fair value
hedge (M€)		  Year of
issue		   Fair value
after hedging
as of
December 31,
2011		   Fair value
after hedging
as of
December 31,
2010		   Fair value
after hedging
as of
December 31,
2009		   Currency   Maturity   

Initial rate

before

hedging

instruments

TOTAL CAPITAL(a)

              

Bond

   2002     15     15     14     USD     2012    5.890%

Bond

   2003     —     —     160     CHF     2010    2.385%

Bond

   2003     23     22     21     USD     2013    4.500%

Bond

   2004     —     —     53     CAD     2010    4.000%

Bond

   2004     —     —     113     CHF     2010    2.385%

Bond

   2004     —     —     438     EUR     2010    3.750%

Bond

   2004     —     —     322     GBP     2010    4.875%

Bond

   2004     —     —     128     GBP     2010    4.875%

Bond

   2004     —     —     185     GBP     2010    4.875%

Bond

   2004     —     57     53     AUD     2011    5.750%

Bond

   2004     —     116     107     CAD     2011    4.875%

Bonds after fair value
hedge (M€)		  Year of
issue		   Fair value
after hedging
as of
December 31,
2011		   Fair value
after hedging
as of
December 31,
2010		   Fair value
after hedging
as of
December 31,
2009		   Currency   Maturity   

Initial rate

before

hedging

instruments

Bond

   2004     —     235     203     USD     2011    4.125%

Bond

   2004     —     75     69     USD     2011    4.125%

Bond

   2004     129     125     116     CHF     2012    2.375%

Bond

   2004     52     51     47     NZD     2014    6.750%

Bond

   2005     —     57     53     AUD     2011    5.750%

Bond

   2005     —     60     56     CAD     2011    4.000%

Bond

   2005     —     120     112     CHF     2011    1.625%

Bond

   2005     —     226     226     CHF     2011    1.625%

Bond

   2005     —     139     144     USD     2011    4.125%

Bond

   2005     63     63     63     AUD     2012    5.750%

Bond

   2005     200     194     180     CHF     2012    2.135%

Bond

   2005     65     65     65     CHF     2012    2.135%

Bond

   2005     97     97     97     CHF     2012    2.375%

Bond

   2005     404     391     363     EUR     2012    3.250%

Bond

   2005     57     57     57     NZD     2012    6.500%

Bond

   2006     —     —     75     GBP     2010    4.875%

Bond

   2006     —     —     50     EUR     2010    3.750%

Bond

   2006     —     —     50     EUR     2010    3.750%

Bond

   2006     —     —     100     EUR     2010    3.750%

Bond

   2006     —     42     42     EUR     2011    EURIBOR

3 months

+0.040%

Bond

   2006     —     300     300     EUR     2011    3.875%

Bond

   2006     —     150     150     EUR     2011    3.875%

Bond

   2006     —     300     300     EUR     2011    3.875%

Bond

   2006     —     120     120     USD     2011    5.000%

Bond

   2006     —     300     300     EUR     2011    3.875%

Bond

   2006     —     472     472     USD     2011    5.000%

Bond

   2006     62     62     62     AUD     2012    5.625%

Bond

   2006     72     72     72     CAD     2012    4.125%

Bond

   2006     100     100     100     EUR     2012    3.250%

Bond

   2006     74     74     74     GBP     2012    4.625%

Bond

   2006     100     100     100     EUR     2012    3.250%

Bond

   2006     125     125     125     CHF     2013    2.510%

Bond

   2006     127     127     127     CHF     2014    2.635%

Bond

   2006     130     130     130     CHF     2016    2.385%

Bond

   2006     65     65     65     CHF     2016    2.385%

Bond

   2006     64     64     64     CHF     2016    2.385%

Bond

   2006     63     63     63     CHF     2016    2.385%

Bond

   2006     129     129     129     CHF     2018    3.135%

Bond

   2007     —     —     60     CHF     2010    2.385%

Bond

   2007     —     —     74     GBP     2010    4.875%

Bond

   2007     —     77     77     USD     2011    5.000%

Bond

   2007     370     370     370     USD     2012    5.000%

Bond

   2007     222     222     222     USD     2012    5.000%

Bond

   2007     61     61     61     AUD     2012    6.500%

Bond

   2007     72     72     72     CAD     2012    4.125%

Bond

   2007     71     71     71     GBP     2012    4.625%

Bond

   2007     300     300     300     EUR     2013    4.125%

Bond

   2007     73     73     73     GBP     2013    5.500%

Bond

   2007     306     306     306     GBP     2013    5.500%

Bond

   2007     72     72     72     GBP     2013    5.500%

Bond

   2007     248     248     248     CHF     2014    2.635%

Bond

   2007     31     31     31     JPY     2014    1.505%

Bond

   2007     61     61     61     CHF     2014    2.635%

Bond

   2007     49     49     49     JPY     2014    1.723%

Bond

   2007     121     121     121     CHF     2015    3.125%

Bond

   2007     300     300     300     EUR     2017    4.700%

Bond

   2007     76     76     76     CHF     2018    3.135%

December 31,December 31,December 31,December 31,December 31,December 31,December 31,
Bonds after fair value
hedge (M€)		  Year of
issue		   Fair value
after hedging
as of
December 31,
2011		   Fair value
after hedging
as of
December 31,
2010		   Fair value
after hedging
as of
December 31,
2009		   Currency   Maturity   

Initial rate

before

hedging

instruments

Bond

   2007     60     60     60     CHF     2018    3.135%

Bond

   2008     —     —     63     GBP     2010    4.875%

Bond

   2008     —     —     66     GBP     2010    4.875%

Bond

   2008     —     92     92     AUD     2011    7.500%

Bond

   2008     —     100     100     EUR     2011    3.875%

Bond

   2008     —     150     150     EUR     2011    3.875%

Bond

   2008     —     50     50     EUR     2011    3.875%

Bond

   2008     —     50     50     EUR     2011    3.875%

Bond

   2008     —     60     60     JPY     2011    EURIBOR
6 months
+ 0.018%

Bond

   2008     —     102     102     USD     2011    3.750%

Bond

   2008     62     62     62     CHF     2012    2.135%

Bond

   2008     124     124     124     CHF     2012    3.635%

Bond

   2008     46     46     46     CHF     2012    2.385%

Bond

   2008     92     92     92     CHF     2012    2.385%

Bond

   2008     64     64     64     CHF     2012    2.385%

Bond

   2008     50     50     50     EUR     2012    3.250%

Bond

   2008     63     63     63     GBP     2012    4.625%

Bond

   2008     63     63     63     GBP     2012    4.625%

Bond

   2008     63     63     63     GBP     2012    4.625%

Bond

   2008     62     62     62     NOK     2012    6.000%

Bond

   2008     69     69     69     USD     2012    5.000%

Bond

   2008     60     60     60     AUD     2013    7.500%

Bond

   2008     61     61     61     AUD     2013    7.500%

Bond

   2008     128     127     127     CHF     2013    3.135%

Bond

   2008     62     62     62     CHF     2013    3.135%

Bond

   2008     200     200     200     EUR     2013    4.125%

Bond

   2008     100     100     100     EUR     2013    4.125%

Bond

   2008     1,000     1,000     1,000     EUR     2013    4.750%

Bond

   2008     63     63     63     GBP     2013    5.500%

Bond

   2008     149     149     149     JPY     2013    EURIBOR
6 months
+ 0.008%

Bond

   2008     191     191     191     USD  ��  2013    4.000%

Bond

   2008     61     61     61     CHF     2015    3.135%

Bond

   2008     62     62     62     CHF     2015    3.135%

Bond

   2008     61     61     61     CHF     2015    3.135%

Bond

   2008     62     62     62     CHF     2018    3.135%

Bond

   2009     56     56     56     AUD     2013    5.500%

Bond

   2009     54     54     54     AUD     2013    5.500%

Bond

   2009     236     236     236     CHF     2013    2.500%

Bond

   2009     77     77     77     USD     2013    4.000%

Bond

   2009     131     131     131     CHF     2014    2.625%

Bond

   2009     998     997     998     EUR     2014    3.500%

Bond

   2009     150     150     150     EUR     2014    3.500%

Bond

   2009     40     40     40     HKD     2014    3.240%

Bond

   2009     107     103     96     AUD     2015    6.000%

Bond

   2009     550     550     550     EUR     2015    3.625%

Bond

   2009     684     684     684     USD     2015    3.125%

Bond

   2009     232     224     208     USD     2015    3.125%

Bond

   2009     99     99     99     CHF     2016    2.385%

Bond

   2009     115     115     115     GBP     2017    4.250%

Bond

   2009     225     225     225     GBP     2017    4.250%

Bond

   2009     448     448     448     EUR     2019    4.875%

Bond

   2009     69     69     69     HKD     2019    4.180%

Bond

   2009     —     374     347     USD     2021    4.250%

Bond

   2010     105     102     —     AUD     2014    5.750%

December 31,December 31,December 31,December 31,December 31,December 31,December 31,
Bonds after fair value
hedge (M€)		  Year of
issue		   Fair value
after hedging
as of
December 31,
2011		  Fair value
after hedging
as of
December 31,
2010		  Fair value
after hedging
as of
December 31,
2009		  Currency   Maturity   

Initial rate

before

hedging

instruments

Bond

   2010     111    108    —    CAD     2014    2.500%

Bond

   2010     54    53    —    NZD     2014    4.750%

Bond

   2010     193    187    —    USD     2015    2.875%

Bond

   2010     966    935    —    USD     2015    3.000%

Bond

   2010     70    68    —    AUD     2015    6.000%

Bond

   2010     71    69    —    AUD     2015    6.000%

Bond

   2010     64    64    —    AUD     2015    6.000%

Bond

   2010     773    748    —    USD     2016    2.300%

Bond

   2010     491    476    —    EUR     2022    3.125%

Bond

   2011     116    —    —    USD     2016    6.500%

Bond

   2011     597    —    —    USD     2018    3.875%

Current portion (less than one year)

        (2 992)   (3 450)   (1,937)             

Total TOTAL CAPITAL

        12,617    15,143    15,615              

TOTAL CAPITAL CANADA Ltd.(b)

           

Bond

   2011     565    —    —    CAD     2014    1.625%

Bond

   2011     565    —    —    CAD     2014    USLIBOR
3 months
+ 0.38 %

Bond

   2011     75    —    —    CAD     2014    5.750%

Bond

   2011     738    —    —    CAD     2013    USLIBOR
3 months
+ 0.09 %

Bond

   2011     82    —    —    CAD     2016    4.000%

Bond

   2011     69    —    —    CAD     2016    3.625%

Current portion (less than one year)

     —    —    —       

Total TOTAL CAPITAL CANADA Ltd

        2,094                      

TOTAL CAPITAL INTERNATIONAL(c)

     —    —    —       

Other consolidated subsidiaries

     308    223    153       

Total bonds after fair value hedge

        15,148    15,491    15,884              

December 31,December 31,December 31,December 31,December 31,December 31,December 31,
Bonds after cash flow
hedge and fix rate
bonds
(€ million)		  Year of
issue		   

Amount after
hedging

as of
December 31,
2011

  

Amount after
hedging

as of
December 31,
2010

   

Amount after
hedging

as of
December 31,
2009

   Currency   Maturity   

Initial rate
before

hedging
instruments

 

TOTAL CAPITAL(a)

             

Bond

   2005     294    293     292     GBP     2012     4.625% 

Bond

   2009     744    691     602     EUR     2019     4.875% 

Bond

   2009     386    —     —     USD     2021     4.250% 

Bond

   2009     1,016    917     806     EUR     2024     5.125% 

Bond

   2010     966    935     —     USD     2020     4.450% 

Bond

   2011     386    —     —     USD     2021     4.125% 

Current portion (less than one year)

     (294)   —     —        

Total TOTAL CAPITAL

        3,498    2,836     1,700                 

Other consolidated subsidiaries(d)

     926    —     —        

Total Bonds after cash flow hedge

        4,424    2,836     1,700                 

(a)TOTAL CAPITAL is a wholly-owned indirect subsidiary of TOTAL S.A. (with the exception of one share held by each member of its Board of Directors). It acts as a financing vehicle for the Group. Its debt securities are fully and unconditionally guaranteed by TOTAL S.A. as to payment of principal, premium, if any, interest and any other amounts due.
(b)TOTAL CAPITAL CANADA Ltd. is a wholly-owned direct subsidiary of TOTAL S.A. It acts as a financing vehicle for the activities of the Group in Canada. Its debt securities are fully and unconditionally guaranteed by TOTAL S.A. as to payment of principal, premium, if any, interest and any other amounts due.
(c)TOTAL CAPITAL INTERNATIONAL is a wholly-owned direct subsidiary of TOTAL S.A. It acts as a financing vehicle for the Group. Its debt securities are fully and unconditionally guaranteed by TOTAL S.A. as to payment of principal, premium, if any, interest and any other amounts due.
(d)This amount includes SunPower’s convertible bonds for an amount of€355 million.

Loan repayment schedule (excluding current portion)

As of December 31,  2011
(M€)		 Non-current financial
debt		  of which hedging
instruments of
non-current financial
debt (liabilities)		  Hedging instruments
of non-current
financial debt (assets)		  Non-current financial
debt - net of hedging
instruments		  % 

2013

  5,021    80    (529)   4,492    22%  

2014

  4,020    3    (390)   3,630    18%  

2015

  4,070    6    (456)   3,614    18%  

2016

  1,712    9    (193)   1,519    7%  

2017 and beyond

  7,734    48    (408)   7,326    35%  

Total

  22,557    146    (1,976)   20,581    100%  
      
As of  December 31, 2010
(M€)		 Non-current financial
debt		  of which hedging
instruments of
non-current financial
debt (liabilities)		  Hedging instruments
of non-current
financial debt (assets)		  Non-current financial
debt - net of hedging
instruments		  % 

2012

  3,756    34    (401)   3,355    18%  

2013

  4,017    76    (473)   3,544    19%  

2014

  2,508    1    (290)   2,218    12%  

2015

  3,706    2    (302)   3,404    18%  

2016 and beyond

  6,796    65    (404)   6,392    33%  

Total

  20,783    178    (1,870)   18,913    100%  
      
As of  December 31, 2009
(M€)		 Non-current financial
debt		  of which hedging
instruments of
non-current financial
debt (liabilities)		  Hedging instruments
of non-current
financial debt (assets)		  Non-current financial
debt - net of hedging
instruments		  % 

2011

  3,857    42    (199)   3,658    20%  

2012

  3,468    48    (191)   3,277    18%  

2013

  3,781    95    (236)   3,545    19%  

2014

  2,199    6    (90)   2,109    11%  

2015 and beyond

  6,132    50    (309)   5,823    32%  

Total

  19,437    241    (1,025)   18,412    100%  

Analysis by currency and interest rate

These analyses take into account interest rate and foreign currency swaps to hedge non-current financial debt.

As of December 31, (M€)  2011   %   2010   %   2009   % 

U.S. Dollar

   8,645     42%     7,248     39%     3,962     21%  

Euro

   9,582     47%     11,417     60%     14,110     77%  

Other currencies

   2,354     11%     248     1%     340     2%  

Total

   20,581     100%     18,913     100%     18,412     100%  

As of December 31, (M€)  2011   %   2010   %   2009   % 

Fixed rate

   4,854     24%     3,177     17%     2,064     11%  

Floating rate

   15,727     76%     15,736     83%     16,348     89%  

Total

   20,581     100%     18,913     100%     18,412     100%  

B)CURRENT FINANCIAL ASSETS AND LIABILITIES

Current borrowings consist mainly of commercial papers or treasury bills or draws on bank loans. These instruments bear interest at rates that are close to market rates.

As of December 31, (M€)  2011  2010  2009 

(Assets) / Liabilities

    

Current financial debt(a)

   5,819    5,867    4,761  

Current portion of non-current financial debt

   3,856    3,786    2,233  

Current borrowings(note 28)

   9,675    9,653    6,994  

Current portion of hedging instruments of debt (liabilities)

   40    12    97  

Other current financial instruments (liabilities)

   127    147    26  

Other current financial liabilities(note 28)

   167    159    123  

Current deposits beyond three months

   (101)   (869)   (55) 

Current portion of hedging instruments of debt (assets)

   (383)   (292)   (197) 

Other current financial instruments (assets)

   (216)   (44)   (59) 

Current financial assets(note 28)

   (700)   (1,205)   (311) 

Current borrowings and related financial assets and liabilities, net

   9,142    8,607    6,806  

(a)As of December 31, 2011 and as of December 31, 2010, the current financial debt includes a commercial paper program in Total Capital Canada Ltd. Total Capital Canada Ltd. is a wholly-owned direct subsidiary of TOTAL S.A. It acts as a financing vehicle for the activities of the Group in Canada. Its debt securities are fully and unconditionally guaranteed by TOTAL S.A. as to payment of principal, premium, if any, interest and any other amounts due.

C)NET-DEBT-TO-EQUITY RATIO

For its internal and external communication needs, the Group calculates a debt ratio by dividing its net financial debt by equity. Adjusted shareholders’ equity for the year ended December 31, 2011 is calculated after payment of a dividend of€2.28 per share, subject to approval by the shareholders’ meeting on May 11, 2012.

The net-debt-to-equity ratio is calculated as follows:

As of December 31, (M€)  2011  2010  2009 

(Assets) / Liabilities

    

Current borrowings

   9,675    9,653    6,994  

Other current financial liabilities

   167    159    123  

Current financial assets

   (700)   (1,205)   (311) 

Non-current financial debt

   22,557    20,783    19,437  

Hedging instruments on non-current financial debt

   (1,976)   (1,870)   (1,025) 

Cash and cash equivalents

   (14,025)   (14,489)   (11,662) 

Net financial debt

   15,698    13,031    13,556  

Shareholders’ equity — Group share

   68,037    60,414    52,552  

Distribution of the income based on existing shares at the closing date

   (1,255)   (2,553)   (2,546) 

Non-controlling interests

   1,352    857    987  

Adjusted shareholders’ equity

   68,134    58,718    50,993  

Net-debt-to-equity ratio

   23.0%    22.2%    26.6%  

21)OTHER CREDITORS AND ACCRUED LIABILITIES

As of December 31, (M€)  2011   2010   2009 

Accruals and deferred income

   231     184     223  

Payable to States (including taxes and duties)

   8,040     7,235     6,024  

Payroll

   1,062     996     955  

Other operating liabilities

   5,441     3,574     4,706  

Total

   14,774     11,989     11,908  

As of December 31, 2011, the heading “Other operating liabilities” mainly includes the third quarterly interim dividend for the fiscal year 2011 for€1,317 million. This interim dividend will be paid on March 2012.

As of December 31, 2009, the heading “Other operating liabilities” mainly included€744 million related to Chesapeake acquisition (see Note 3 to the Consolidated Financial Statements).

22)LEASE CONTRACTS

The Group leases real estate, retail stations, ships, and other equipments (see Note 11 to the Consolidated Financial Statements).

The future minimum lease payments on operating and finance leases to which the Group is committed are shown as follows:

For the year ended December 31,
2011 (M€)		  Operating
leases		   Finance
leases		 

2012

   762     41  

2013

   552     40  

2014

   416     37  

2015

   335     36  

2016

   316     34  

2017 and beyond

   940     20  

Total minimum payments

   3,321     208  

Less financial expenses

   —     (31) 

Nominal value of contracts

   —     177  

Less current portion of finance lease contracts

   —     (25) 

Outstanding liability of finance lease contracts

   —     152  

For the year ended December 31,
2010 (M€)		  Operating
leases		   Finance
leases		 

2011

   582     39  

2012

   422     39  

2013

   335     39  
For the year ended December 31,
2010 (M€)		  Operating
leases		   Finance
leases		 

2014

   274     35  

2015

   230     35  

2016 and beyond

   1,105     54  

Total minimum payments

   2,948     241  

Less financial expenses

   —     (43) 

Nominal value of contracts

   —     198  

Less current portion of finance lease contracts

   —     (23) 

Outstanding liability of finance lease contracts

   —     175  

For the year ended December 31,
2009 (M€)		  Operating
leases		   Finance
leases		 

2010

   523     42  

2011

   377     43  

2012

   299     42  

2013

   243     41  

2014

   203     39  

2015 and beyond

   894     128  

Total minimum payments

   2,539     335  

Less financial expenses

   —     (53) 

Nominal value of contracts

   —     282  

Less current portion of finance lease contracts

   —     (22) 

Outstanding liability of finance lease contracts

   —     260  

Net rental expense incurred under operating leases for the year ended December 31, 2011 is€645 million (against€605 million in 2010 and€613 million in 2009).

23)COMMITMENTS AND CONTINGENCIES

    Maturity and installments 

As of December 31, 2011

(M€)

  Total   Less than
1 year		   Between 1
and 5 years		   More than
5 years		 

Non-current debt obligations net of hedging instruments(Note 20)

   20,429     —     13,121     7,308  

Current portion of non-current debt obligations net of hedging instruments(Note 20)

   3,488     3,488     —     —  

Finance lease obligations(Note 22)

   177     25     134     18  

Asset retirement obligations(Note 19)

   6,884     272     804     5,808  

Contractual obligations recorded in the balance sheet

   30,978     3,785     14,059     13,134  

Operating lease obligations (Note 22)

   3,321     762     1,619     940  

Purchase obligations

   77,353     11,049     20,534     45,770  

Contractual obligations not recorded in the balance sheet

   80,674     11,811     22,153     46,710  

Total of contractual obligations

   111,652     15,596     36,212     59,844  

Guarantees given for excise taxes

   1,765     1,594     73     98  

Guarantees given against borrowings

   4,778     3,501     323     954  

Indemnities related to sales of businesses

   39     —     34     5  

Guarantees of current liabilities

   376     262     35     79  

Guarantees to customers / suppliers

   3,265     1,634     57     1,574  

Letters of credit

   2,408     1,898     301     209  

Other operating commitments

   2,477     433     697     1,347  

Total of other commitments given

   15,108     9,322     1,520     4,266  

Mortgages and liens received

   408     7     119     282  

Goods and services sale obligations(a)

   62,216     4,221     17,161     40,834  

Other commitments received

   6,740     4,415     757     1,568  

Total of commitments received

   69,364     8,643     18,037     42,684  

(a)As from December 31, 2011, the Group discloses its goods and services sale obligations.

    Maturity and installments 
As of December 31, 2010 (M€)  Total   Less than
1 year		   Between 1
and 5 years		   More than
5 years		 

Non-current debt obligations net of hedging instruments(Note 20)

   18,738     —     12,392     6,346  

Current portion of non-current debt obligations net of hedging instruments(Note 20)

   3,483     3,483     —     —  

Finance lease obligations(Note 22)

   198     23     129     46  

Asset retirement obligations(Note 19)

   5,917     177     872     4,868  

Contractual obligations recorded in the balance sheet

   28,336     3,683     13,393     11,260  

Operating lease obligations(Note 22)

   2,948     582     1,261     1,105  

Purchase obligations

   61,293     6,347     14,427     40,519  

Contractual obligations not recorded in the balance sheet

   64,241     6,929     15,688     41,624  

Total of contractual obligations

   92,577     10,612     29,081     52,884  

Guarantees given for excise taxes

   1,753     1,594     71     88  

Guarantees given against borrowings

   5,005     1,333     493     3,179  

Indemnities related to sales of businesses

   37     —     31     6  

Guarantees of current liabilities

   171     147     19     5  

Guarantees to customers / suppliers

   3,020     1,621     96     1,303  

Letters of credit

   1,250     1,247     —     3  

Other operating commitments

   2,057     467     220     1,370  

Total of other commitments given

   13,293     6,409     930     5,954  

Mortgages and liens received

   429     2     114     313  

Other commitments received

   6,387     3,878     679     1,830  

Total of commitments received

   6,816     3,880     793     2,143  

    Maturity and installments 
As of December 31,2009 (M€)  Total   Less than
1 year		   Between 1
and 5 years		   More than
5 years		 

Non-current debt obligations net of hedging instruments(Note 20)

   18,152     —     12,443     5,709  

Current portion of non-current debt obligations net of hedging instruments(Note 20)

   2,111     2,111     —     —  

Finance lease obligations(Note 22)

   282     22     146     114  

Asset retirement obligations(Note 19)

   5,469     235     972     4,262  

Contractual obligations recorded in the balance sheet

   26,014     2,368     13,561     10,085  

Operating lease obligations(Note 22)

   2,539     523     1,122     894  

Purchase obligations

   49,808     4,542     9,919     35,347  

Contractual obligations not recorded in the balance sheet

   52,347     5,065     11,041     36,241  

Total of contractual obligations

   78,361     7,433     24,602     46,326  

Guarantees given for excise taxes

   1,765     1,617     69     79  

Guarantees given against borrowings

   2,882     1,383     709     790  

Indemnities related to sales of businesses

   36     —     1     35  

Guarantees of current liabilities

   203     160     38     5  

Guarantees to customers / suppliers

   2,770     1,917     70     783  

Letters of credit

   1,499     1,485     2     12  

Other operating commitments

   765     582     103     80  

Total of other commitments given

   9,920     7,144     992     1,784  

Mortgages and liens received

   330     5     106     219  

Other commitments received

   5,637     3,187     481     1,969  

Total of commitments received

   5,967     3,192     587     2,188  

A.CONTRACTUAL OBLIGATIONS

Debt obligations

“Non-current debt obligations” are included in the items “Non-current financial debt” and “Hedging instruments of non-current financial debt” of the Consolidated Balance Sheet. It includes the non-current portion of swaps hedging bonds, and excludes non-current finance lease obligations of€152 million.

The current portion of non-current debt is included in the items “Current borrowings”, “Current financial assets” and “Other current financial liabilities” of the Consolidated Balance Sheet. It includes the current portion of swaps hedging bonds, and excludes the current portion of finance lease obligations of€25 million.

The information regarding contractual obligations linked to indebtedness is presented in Note 20 to the Consolidated Financial Statements.

Lease contracts

The information regarding operating and finance leases is presented in Note 22 to the Consolidated Financial Statements.

Asset retirement obligations

This item represents the discounted present value of Upstream asset retirement obligations, primarily asset removal costs at the completion date. The information regarding contractual obligations linked to asset retirement obligations is presented in Notes 1Q and 19 to the Consolidated Financial Statements.

Purchase obligations

Purchase obligations are obligations under contractual agreements to purchase goods or services, including capital projects. These obligations are enforceable and legally binding on the company and specify all significant terms, including the amount and the timing of the payments.

These obligations mainly include: hydrocarbon unconditional purchase contracts (except where an active, highly-liquid market exists and when the hydrocarbons are expected to be re-sold shortly after purchase), reservation of transport capacities in pipelines, unconditional exploration works and development works in the Upstream segment, and contracts for capital investment projects in the Downstream segment.

B.OTHER COMMITMENTS GIVEN

Guarantees given for excise taxes

They consist of guarantees given to other oil and gas companies in order to comply with French tax authorities’ requirements for oil and gas imports in France. A payment would be triggered by a failure of the guaranteed party with respect to the French tax authorities. The default of the guaranteed parties is however considered to be highly remote by the Group.

Guarantees given against borrowings

The Group guarantees bank debt and finance lease obligations of certain non-consolidated subsidiaries and equity affiliates. Maturity dates vary, and guarantees will terminate on payment and/or cancellation of the obligation. A payment would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee, and no assets are held as collateral for these guarantees. As of December 31, 2011, the maturities of these guarantees are up to 2023.

Guarantees given against borrowings include the guarantee given in 2008 by TOTAL S.A. in connection with the financing of the Yemen LNG project for an amount of€1,208 million. In turn, certain partners involved in this project have given commitments that could, in the case of Total S.A.’s guarantees being called for the maximum amount, reduce the Group’s exposure by up to€404 million, recorded under “Other commitments received”.

In 2010, TOTAL S.A. provided guarantees in connection with the financing of the Jubail project (operated by SAUDI ARAMCO TOTAL Refining and Petrochemical Company (SATORP)) of up to€2,463 million, proportional to TOTAL’s share in the project (37.5%). In addition, TOTAL S.A. provided in 2010 a guarantee in favor of its partner in the Jubail project (Saudi Arabian Oil Company) with respect to Total Refining Saudi Arabia SAS’s obligations under the shareholders agreement with respect to SATORP. As of December 31, 2011, this guarantee is of up to€1,095 million and has been recorded under “Other operating commitments”.

Indemnities related to sales of businesses

In the ordinary course of business, the Group executes contracts involving standard indemnities in oil industry and indemnities specific to transactions such as sales of businesses. These indemnities might include claims against any of the following: environmental, tax and shareholder matters, intellectual property rights, governmental regulations and employment-related matters,

dealer, supplier, and other commercial contractual relationships. Performance under these indemnities would generally be triggered by a breach of terms of the contract or by a third party claim. The Group regularly evaluates the probability of having to incur costs associated with these indemnities.

The guarantees related to antitrust investigations granted as part of the agreement relating to the spin-off of Arkema are described in Note 32 to the Consolidated Financial Statements.

Other guarantees given

Non-consolidated subsidiaries

The Group also guarantees the current liabilities of certain non-consolidated subsidiaries. Performance under these guarantees would be triggered by a financial default of the entity.

Operating agreements

As part of normal ongoing business operations and consistent with generally and accepted recognized industry practices, the Group enters into numerous agreements with other parties. These commitments are often entered into for commercial purposes, for regulatory purposes or for other operating agreements.

C.COMMITMENTS RECEIVED

Goods and services sale obligations

These amounts represent binding obligations under contractual agreements to sell goods or services, including in particular hydrocarbon unconditional sale contracts (except when an active, highly-liquid market exists and volumes are re-sold shortly after purchase).

24)RELATED PARTIES

The main transactions and balances with related parties (principally non-consolidated subsidiaries and equity affiliates) are detailed as follows:

As of December 31, (M€)  2011   2010   2009 

Balance sheet

      

Receivables

      

Debtors and other debtors

   585     432     293  

Loans (excl. loans to equity affiliates)

   331     315     438  

Payables

      

Creditors and other creditors

   724     497     386  

Debts

   31     28     42  
    
For the year ended December 31, (M€)  2011   2010   2009 

Statement of income

      

Sales

   4,400     3,194     2,183  

Purchases

   5,508     5,576     2,958  

Financial expense

   —     69     1  

Financial income

   79     74     68  

Compensation for the administration and management bodies

The aggregate amount of direct and indirect compensation accounted for by the French and foreign affiliates of the Company for the executive officers of TOTAL (the members of the Management Committee and the Treasurer) and for the members of the Board of Directors who are employees of the Group, is detailed as follows:

For the year ended December 31, (M€)  2011   2010   2009 

Number of people

   30     26     27  

Direct or indirect compensation received

   20.4     20.8     19.4  

Pension expenses(a)

   9.4     12.2     10.6  

Other long-term benefits expenses

   —     —     —  

Termination benefits expenses

   4.8     —     —  

Share-based payments expense (IFRS 2)(b)

   10.2     10.0     11.2  

(a)The benefits provided for executive officers and certain members of the Board of Directors, employees and former employees of the Group, include severance to be paid on retirement, supplementary pension schemes and insurance plans, which represent€139.7 million provisioned as of December 31, 2011 (against€113.8 million as of December 31, 2010 and€96.6 million as of December 31, 2009).
(b)Share-based payments expense computed for the executive officers and the members of the Board of Directors who are employees of the Group as described in Note 25 paragraph E to the Consolidated Financial Statements and based on the principles of IFRS 2 “Share-based payments” described in Note 1 paragraph E to the Consolidated Financial Statements.

The compensation allocated to members of the Board of Directors for directors’ fees totaled€1.07 million in 2011 (€0.96 million in 2010 and€0.97 million in 2009).

25)SHARE-BASED PAYMENTS

A.TOTAL SHARE SUBSCRIPTION OPTION PLANS

   2003 Plan  2004 Plan  2005 Plan  2006 Plan  2007 Plan  2008 Plan  2009 Plan  2010 Plan  2011 Plan  Total  Weighted
average
exercise
price		 

Date of the shareholders’ meeting

  05/17/2001    05/14/2004    05/14/2004    05/14/2004    05/11/2007    05/11/2007    05/11/2007    05/21/2010    05/21/2010    

Date of the award(a)

  07/16/2003    07/20/2004    07/19/2005    07/18/2006    07/17/2007    10/09/2008    09/15/2009    09/14/2010    09/14/2011    

Exercise price until May 23, 2006 included(b)

  33.30    39.85    49.73    —    —    —    —    —    —    

Exercise price since May 24, 2006(b)

  32.84    39.30    49.04    50.60    60.10    42.90    39.90    38.20    33.00    

Expiry date

  07/16/2011    07/20/2012    07/19/2013    07/18/2014    07/17/2015    10/09/2016    09/15/2017    09/14/2018    09/14/2019          

Number of options(c)

           

Existing options as of January 1, 2008

  8,368,378    13,197,236    6,243,438    5,711,060    5,920,105    —    —    —    —    39,440,217    44.23  

Granted

  —    —    —    —    —    4,449,810    —    ���    —    4,449,810    42.90  

Cancelled

  (25,184)   (118,140)   (34,032)   (53,304)   (34,660)   (6,000)   —    —    —    (271,320)   44.88  

Exercised

  (841,846)   (311,919)   (17,702)   (6,700)   —    —    —    —    —    (1,178,167)   34.89  

Existing options as of January 1, 2009

  7,501,348    12,767,177    6,191,704    5,651,056    5,885,445    4,443,810    —    —    —    42,440,540    44.35  

Granted

  —    —    —    —    —    —    4,387,620    —    —    4,387,620    39.90  

Cancelled

  (8,020)   (18,387)   (6,264)   (5,370)   (13,780)   (2,180)   (10,610)   —    —    (64,611)   45.04  

Exercised

  (681,699)   (253,081)   —    —    —    —    —    —    —    (934,780)   34.59  

Existing options as of January 1, 2010

  6,811,629    12,495,709    6,185,440    5,645,686    5,871,665    4,441,630    4,377,010    —    —    45,828,769    44.12  

Granted

  —    —    —    —    —    —    —    4,788,420    —    4,788,420    38.20  

Cancelled(d)

  (1,420)   (15,660)   (6,584)   (4,800)   (5,220)   (92,472)   (4,040)   (1,120)   —    (131,316)   43.50  

Exercised

  (1,075,765)   (141,202)   —    —    —    —    (1,080)   —    —    (1,218,047)   33.60  

Existing options as of January 1, 2011

  5,734,444    12,338,847    6,178,856    5,640,886    5,866,445    4,349,158    4,371,890    4,787,300    —    49,267,826    43.80  

Granted

  —    —    —    —    —    —    —    —    1,518,840    1,518,840    33.00  

Cancelled(e)

  (738,534)   (28,208)   (16,320)   (17,380)   (16,080)   (13,260)   (14,090)   (85,217)   (1,000)   (930,089)   34.86  

Exercised

  (4,995,910)   (216,115)   —    —    —    (200)   —    (2,040)   (9,400)   (5,223,665)   33.11  

Existing options as of December 31, 2011

  —    12,094,524    6,162,536    5,623,506    5,850,365    4,335,698    4,357,800    4,700,043    1,508,440    44,632,912    44.87  

(a)The grant date is the date of the Board meeting awarding the share subscription options, except for the grant of October 9, 2008, decided by the Board on September 9, 2008.
(b)Exercise price in euro. The exercise prices of TOTAL subscription shares of the plans in force at that date were multiplied by 0.25 to take into account the four-for-one stock split on May 18, 2006. Moreover, following the spin-off of Arkema, the exercise prices of TOTAL subscription shares of these plans were multiplied by an adjustment factor equal to 0.986147 effective as of May 24, 2006.
(c)The number of options awarded, outstanding, canceled or exercised before May 23, 2006 included, was multiplied by four to take into account the four-for-one stock split approved by the shareholders’ meeting on May 12, 2006.
(d)Out of 92,472 options awarded under the 2008 Plan that were canceled, 88,532 options were canceled due to the performance condition. The acquisition rate applicable to the subscription options that were subject to the performance condition of the 2008 Plan was 60%.
(e)Out of the 930,089 options canceled in 2011, 738,534 options that were not exercised expired due to the expiry of the 2003 subscription option Plan on July 16, 2011.

Options are exercisable, subject to a continuous employment condition, after a 2-year period from the date of the Board meeting awarding the options and expire eight years after this date. The underlying shares may not be transferred during four years from the date of grant. For the 2007 to 2011 Plans, the 4-year transfer restriction period does not apply to employees of non-French subsidiaries as of the date of the grant, who may transfer the underlying shares after a 2-year period from the date of the grant.

2011 Plan

For the 2011 Plan, the Board of Directors decided that for each grantee other than the Chairman and Chief Executive Officer, the options will be finally granted to their beneficiary provided that the performance condition is fulfilled.

The performance condition states that the number of options finally granted is based on the average of the Return On Equity (ROE) of the Group. The average ROE is calculated by the Group from the consolidated balance sheet and statement of income of the Group for fiscal years 2011 and 2012.

The acquisition rate:

is equal to zero if the average ROE is less than or equal to 7%;

varies on straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and

is equal to 100% if the average ROE is more than or equal to 18%.

In addition, as part of the 2011 Plan, the Board of Directors decided that the number of share subscription options finally awarded to the Chairman and Chief Executive Officer will be subject to two performance conditions:

For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROE of the Group. The average ROE is calculated by the Group from the consolidated balance sheet and statement of income of the Group for fiscal years 2011 and 2012. The acquisition rate is equal to zero if the average ROE is less than or equal to 7%; varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and is equal to 100% if the average ROE is more than or equal to 18%.

For 50% of the share subscription options granted, the performance condition states that the number of

options finally granted is based on the average of the Return On Average Capital Employed (ROACE) of the Group. The average ROACE is calculated by the Group from the consolidated balance sheet and statement of income of the Group for fiscal years 2011 and 2012. The acquisition rate is equal to zero if the average ROACE is less than or equal to 6%; varies on a straight-line basis between 0% and 100% if the average ROACE is more than 6% and less than 15%; and is equal to 100% if the average ROACE is more than or equal to 15%.

2010 Plan

For the 2010 Plan, the Board of Directors decided that:

For each grantee of up to 3,000 options, other than the Chairman and Chief Executive Officer, the options will be finally granted to their beneficiary.

For each grantee of more than 3,000 options and less or equal to 50,000 options (other than the Chairman and Chief Executive Officer):

The first 3,000 options and two-thirds above the first 3,000 options will be finally granted to their beneficiary;

The outstanding options, that is one-third of the options above the first 3,000 options, will be finally granted provided that the performance condition described below is fulfilled.

For each grantee of more than 50,000 options (other than the Chairman and Chief Executive Officer):

The first 3,000 options, two-thirds of the options above the first 3,000 options and below the first 50,000 options, and one-third of the options above the first 50,000 options, will be finally granted to their beneficiary;

The outstanding options, that is one-third of the options above the first 3,000 options and below the first 50,000 options and two-thirds of the options above the first 50,000 options, will be finally granted provided that the performance condition is fulfilled.

The performance condition states that the number of options finally granted is based on the average ROE of the Group. The average ROE is calculated by the Group based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate:

is equal to zero if the average ROE is less than or equal to 7%;

varies on straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and

is equal to 100% if the average ROE is more than or equal to 18%.

In addition, as part of the 2010 Plan, the Board of Directors decided that the number of share subscription options finally awarded to the Chairman and Chief Executive Officer will be subject to two performance conditions:

For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROE of the Group. The average ROE is calculated by the Group based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate is equal to zero if the average ROE is less than or equal to 7%; varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and is equal to 100% if the average ROE is more than or equal to 18%.

For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROACE of the Group. The average ROACE is calculated by the Group based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate is equal to zero if the average ROACE is less than or equal to 6%; varies on a straight-line basis between 0% and 100% if the average ROACE is more than 6% and less than 15%; and is equal to 100% if the average ROACE is more than or equal to 15%.

2009 Plan

For the 2009 Plan, the Board of Directors decided that for each beneficiary, other than the Chief Executive Officer, of more than 25,000 options, one third of the options granted in excess of this number will be finally granted subject to a performance condition. This condition states that the final number of options finally granted is based on the average

ROE of the Group as published by TOTAL. The average ROE is calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate:

is equal to zero if the average ROE is less than or equal to 7%;

varies on straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and

is equal to 100% if the average ROE is more than or equal to 18%.

In addition, the Board of Directors decided that, for the Chief Executive Officer, the number of share subscription options finally granted will be subject to two performance conditions:

For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROE of the Group as published by TOTAL. The average ROE is calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate is equal to zero if the average ROE is less than or equal to 7%; varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and is equal to 100% if the average ROE is more than or equal to 18%.

For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROACE of the Group as published by TOTAL. The average ROACE is calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate is equal to zero if the average ROACE is less than or equal to 6%; varies on a straight-line basis between 0% and 100% if the average ROACE is more than 6% and less than 15%; and is equal to 100% if the average ROACE is more than or equal to 15%.

Due to the application of the performance condition, the acquisition rates were 100% for the 2009 Plan.

B.TOTAL SHARE PURCHASE OPTION PLANS

    2001 Plan(a)  2002 Plan(b)  Total  Weighted
average exercise
price		 

Date of the shareholders’ meeting

   05/17/2001    05/17/2001    

Grant date(c)

   07/10/2001    07/09/2002    

Exercise price until May 23, 2006 included(d)

   42.05    39.58    

Exercise price since May 24, 2006(d)

   41.47    39.03    

Expiry date

   07/10/2009    07/09/2010          

Number of options(e)

     

Outstanding as of January 1, 2009

   4,691,426    6,450,857    11,142,283    40.06  

Awarded

   —    —    —    —  

Cancelled

   (4,650,446)   (7,920)   (4,658,366)   41.47  

Exercised

   (40,980)   (507,676)   (548,656)   39.21  

Outstanding as of January 1, 2010

   —    5,935,261    5,935,261    39.03  

Awarded

   —    —    —    —  

Cancelled(f)

   —    (4,671,989)   (4,671,989)   39.03  

Exercised

   —    (1,263,272)   (1,263,272)   39.03  

Outstanding as of January 1, 2011

   —    —    —    —  

Awarded

   —    —    —    —  

Cancelled

   —    —    —    —  

Exercised

   —    —    —    —  

Outstanding as of December 31, 2011

   —    —    —    —  

(a)Options were exercisable, subject to a continued employment condition, after a 3.5-year vesting period from the date of the Board meeting awarding the options and expired 8 years after this date. The underlying shares may not be transferred during the 4-year period from the date of the grant. This plan expired on July 10, 2009.
(b)Options were exercisable, subject to a continued employment condition, after a 2-year vesting period from the date of the Board meeting awarding the options and expired 8 years after this date. The underlying shares may not be transferred during the 4-year period from the date of the grant. This plan expired on July 9, 2010.
(c)The grant date is the date of the Board meeting awarding the options.
(d)Exercise price in euro. The exercise prices of TOTAL share purchase options of the plans at that date were multiplied by 0.25 to take into account the four-for-one stock split on May 18, 2006. Moreover, following the spin-off of Arkema, the exercise prices of TOTAL share purchase options of these plans were multiplied by an adjustment factor equal to 0.986147 effective as of May 24, 2006.
(e)The number of options awarded, outstanding, canceled or exercised before May 23, 2006 included, was multiplied by four to take into account the four-for-one stock split approved by the shareholders’ meeting on May 12, 2006.
(f)Out of the 4,671,989 options canceled in 2010, 4,671,145 options that were not exercised expired due to the expiry of the 2002 purchase option Plan on July 9, 2010.

C.EXCHANGE GUARANTEE GRANTED TO THE HOLDERS OF ELF AQUITAINE SHARE SUBSCRIPTION OPTIONS

Pursuant to the public exchange offer for Elf Aquitaine shares which was made in 1999, the Group made a commitment to guarantee the holders of Elf Aquitaine share subscription options, at the end of the period referred to in Article 163 bis C of the French Tax Code (CGI), and until the end of the period for the exercise of the options, the possibility to exchange their future Elf Aquitaine shares for TOTAL shares, on the basis of the exchange ratio of the offer (nineteen TOTAL shares for thirteen Elf Aquitaine shares).

In order to take into account the spin-off of S.D.A. (Société de Développement Arkema) by Elf Aquitaine, the spin-off of Arkema by TOTAL S.A. and the four-for-one TOTAL stock split, the Board of Directors of TOTAL S.A., in accordance

with the terms of the share exchange undertaking, approved on March 14, 2006 to adjust the exchange ratio described above (see pages 24 and 25 of the “Prospectus for the purpose of listing Arkema shares on Euronext Paris in connection with the allocation of Arkema shares to TOTAL S.A. shareholders”). Following the approval by Elf Aquitaine shareholders’ meeting on May 10, 2006 of the spin-off of S.D.A. by Elf Aquitaine, the approval by TOTAL S.A. shareholders’ meeting on May 12, 2006 of the spin-off of Arkema by TOTAL S.A. and the four-for-one TOTAL stock split, the exchange ratio was adjusted to six TOTAL shares for one Elf Aquitaine share on May 22, 2006.

This exchange guarantee expired on September 12, 2009, due to the expiry of the Elf Aquitaine share subscription option plan No. 2 of 1999. Subsequently, no Elf Aquitaine shares are covered by the exchange guarantee.

D.TOTAL PERFORMANCE SHARE GRANTS

   2005 Plan  2006 Plan  2007 Plan  2008 Plan  2009 Plan  2010 Plan  2011 Plan  Total 

Date of the shareholders’ meeting

  05/17/2005    05/17/2005    05/17/2005    05/16/2008    05/16/2008    05/16/2008    05/13/2011   

Grant date(a)

  07/19/2005    07/18/2006    07/17/2007    10/09/2008    09/15/2009    09/14/2010    09/14/2011   

Final grant date (end of the vesting period)

  07/20/2007    07/19/2008    07/18/2009    10/10/2010    09/16/2011    09/15/2012    09/15/2013   

Transfer possible from

  07/20/2009    07/19/2010    07/18/2011    10/10/2012    09/16/2013    09/15/2014    09/15/2015      

Number of performance shares

        

Outstanding as of January 1, 2009

  —    —    2,333,217    2,772,748       5,105,965  

Awarded

  —    —    —    —    2,972,018      2,972,018  

Canceled

  1,928    2,922    (12,418)   (9,672)   (5,982)     (23,222) 

Finally granted(b)(c)

  (1,928)   (2,922)   (2,320,799)   (600)   —      (2,326,249) 

Outstanding as of January 1, 2010

  —    —    —    2,762,476    2,966,036      5,728,512  

Awarded

  —    —    —    —    —    3,010,011     3,010,011  

Canceled(d)

  1,024    3,034    552    (1,113,462)   (9,796)   (8,738)    (1,127,386) 

Finally granted(b)(c)

  (1,024)   (3,034)   (552)   (1,649,014)   (1,904)   (636)    (1,656,164) 

Outstanding as of January 1, 2011

  —    —    —    —    2,954,336    3,000,637     5,954,973  

Awarded

  —    —    —    —    —    —    3,649,770    3,649,770  

Canceled

  800    700    792    356    (26,214)   (10,750)   (19,579)   (53,895) 

Finally granted(b)(c)(e)

  (800)   (700)   (792)   (356)   (2,928,122)   (1,836)   —    (2,932,606) 

Outstanding as of December 31, 2011

  —    —    —    —    —    2,988,051    3,630,191    6,618,242  

(a)The grant date is the date of the Board of Directors meeting that awarded the shares, except for the shares awarded by the Board of Directors at their meeting of September 9, 2008, and granted on October 9, 2008.
(b)Performance shares finally granted following the death of their beneficiaries.
(c)Including performance shares finally granted for which the entitlement right had been canceled erroneously.
(d)Out of the 1,113,462 canceled rights to the grant share under the 2008 Plan, 1,094,914 entitlement rights were canceled due to the performance condition. The acquisition rate for the 2008 Plan was 60%.
(e)The acquisition rate for the 2009 Plan was 100%.

The performance shares, which are bought back by the Company on the market, are finally granted to their beneficiaries after a 2-year vesting period from the date of the grant. The final grant is subject to a continued employment condition and a performance condition. Moreover, the transfer of the performance shares finally granted will not be permitted until the end of a 2-year mandatory holding period from the date of the final grant.

2011 Plan

For the 2011 Plan, the Board of Directors decided that, for each senior executive (other than the Chairman and Chief Executive Officer), the shares will be finally granted subject to a performance condition. This condition is based on the average ROE as published by the Group and calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2011 and 2012. The acquisition rate:

is equal to zero if the average ROE is less than or equal to 7%;

varies on a straight-line basis between 0% and 100% if the average ROE is greater than 7% and less than 18%; and

is equal to 100% if the average ROE is greater than or equal to 18%.

The Board of Directors decided also that, for each for each beneficiary (other than the Chairman and Chief Executive Officer and the senior executives) of more than 100 shares, the shares in excess of this number will be finally granted subject to the performance condition mentioned before.

In addition, as part of the 2011 plan, the Board of Directors decided that the number of performance share finally granted to the Chairman and Chief Executive Officer will be subject to two performance conditions:

For 50% of the share granted, the performance condition states that the number of shares finally granted is based on the average ROE of the Group. The average ROE is calculated by the Group from the consolidated balance sheet and statement of income of the Group for fiscal years 2011 and 2012. The acquisition rate is equal to zero if the average ROE is less than or equal to 7%; varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and is equal to 100% if the average ROE is more than or equal to 18%.

For 50% of the share granted, the performance condition states that the number of shares finally

granted is based on the average ROACE of the Group. The average ROACE is calculated by the Group from the consolidated balance sheet and statement of income of the Group for fiscal years 2011 and 2012. The acquisition rate is equal to zero if the average ROACE is less than or equal to 6%; varies on a straight-line basis between 0% and 100% if the average ROACE is more than 6% and less than 15%; and is equal to 100% if the average ROACE is more than or equal to 15%.

2010 Plan

For the 2010 Plan, the Board of Directors decided that, for each beneficiary of more than 100 shares, half of the shares in excess of this number will be finally granted subject to a performance condition. This condition is based on the average ROE calculated by the Group based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate:

is equal to zero if the average ROE is less than or equal to 7%;

varies on a straight-line basis between 0% and 100% if the average ROE is greater than 7% and less than 18%; and

is equal to 100% if the average ROE is greater than or equal to 18%.

2009 Plan

For the 2009 Plan, the Board of Directors decided that, for each beneficiary of more than 100 shares, half of the shares in excess of this number will be finally granted subject to a performance condition. This condition states that the number of shares finally granted is based on the average ROE as published by the Group and calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate:

is equal to zero if the average ROE is less than or equal to 7%;

varies on a straight-line basis between 0% and 100% if the average ROE is greater than 7% and less than 18%; and

is equal to 100% if the average ROE is greater than or equal to 18%.

Due to the application of the performance condition, the acquisition rate was 100% for the 2009 Plan.

E.GLOBAL FREE TOTAL SHARE PLAN

The Board of Directors approved at its meeting on May 21, 2010 the implementation and conditions of a global free share plan intended for the Group employees. On June 30, 2010, entitlement rights to 25 free shares were granted to every employee. The final grant is subject to a continued employment condition during the plan’s vesting period. The shares are not subject to any performance condition. Following the vesting period, the shares awarded will be new shares.

    2010 Plan
(2+2)		  2010 Plan
(4+0)		  Total 

Date of the shareholders’ meeting

   05/16/2008    05/16/2008   

Date of the award(a)

   06/30/2010    06/30/2010   

Date of the final award

   07/01/2012    07/01/2014   

Transfer authorized as from

   07/01/2014    07/01/2014      

Number of free shares

    

Outstanding as of January 1, 2010

    

Notified

   1,508,850    1,070,650    2,579,500  

Cancelled

   (125)   (75)   (200) 

Finally granted(b)

   (75)   —    (75) 

Outstanding as of January 1, 2011

   1,508,650    1,070,575    2,579,225  

Notified

   —    —    —  

Cancelled

   (29,175)   (54,625)   (83,800) 

Finally granted(b)

   (475)   (425)   (900) 

Outstanding as of December 31, 2011

   1,479,000    1,015,525    2,494,525  

(a)The June 30, 2010, grant was decided by the Board of Directors on May 21, 2010.
(b)Final grant following the death or disability of the beneficiary of the shares.

F.SUNPOWER PLANS

SunPower has three stock incentive plans: the 1996 Stock Plan (“1996 Plan”), the Second Amended and Restated 2005 SunPower Corporation Stock Incentive Plan (“2005 Plan”) and the PowerLight Corporation Common Stock Option and Common Stock Purchase Plan (“PowerLight Plan”). The PowerLight Plan was assumed by SunPower by way of the acquisition of PowerLight in fiscal 2007. Under the terms of all three plans, SunPower may issue incentive or non-statutory stock options or stock purchase rights to directors, employees and consultants to purchase common stock. The 2005 Plan was adopted by SunPower’s Board of Directors in August 2005, and was approved by shareholders in November 2005. The 2005 Plan replaced the 1996 Plan and allows not only for the grant of options, but also for the grant of stock appreciation rights, restricted stock grants, restricted stock units and other equity rights. The 2005 Plan also allows for tax withholding obligations related to stock option exercises or restricted stock awards to be satisfied through the retention of shares otherwise released upon vesting. The PowerLight Plan was adopted by PowerLight’s Board of Directors in October 2000.

In May 2008, SunPower’s stockholders approved an automatic annual increase available for grant under the 2005 Plan, beginning in fiscal 2009. The automatic annual increase is equal to the lower of three percent of the outstanding shares of all classes of SunPower’s common stock measured on the last day of the immediately preceding fiscal quarter, 6.0 million shares, or such other

number of shares as determined by SunPower’s Board of Directors. As of January 1, 2012, approximately 3.3 million shares were available for grant under the 2005 Plan. No new awards are being granted under the 1996 Plan or the PowerLight Plan.

Incentive stock options may be granted at no less than the fair value of the common stock on the date of grant. Non-statutory stock options and stock purchase rights may be granted at no less than 85% of the fair value of the common stock at the date of grant. The options and rights become exercisable when and as determined by SunPower’s Board of Directors, although these terms generally do not exceed ten years for stock options. Under the 1996 and 2005 Plans, the options typically vest over five years with a one-year cliff and monthly vesting thereafter. Under the PowerLight Plan, the options typically vest over five years with yearly cliff vesting. Under the 2005 Plan, the restricted stock grants and restricted stock units typically vest in three equal installments annually over three years.

The majority of shares issued are net of the minimum statutory withholding requirements that SunPower pays on behalf of its employees. During the six months ended January 1, 2012 SunPower withheld 221,262 shares to satisfy the employees’ tax obligations. SunPower pays such withholding requirements in cash to the appropriate taxing authorities. Shares withheld are treated as common stock repurchases for accounting and disclosure purposes and reduce the number of shares outstanding upon vesting.

The following table summarizes SunPower’s stock option activities:

    Outstanding Stock Options 

  

  Shares
(in thousands)		  Weighted-Average
Exercise Price
Per Share
(in dollars)		   Weighted-Average
Remaining
Contractual Term
(in years)		   Aggregate
Intrinsic Value
(in thousands
dollars)		 

Outstanding as of July 3, 2011

   519    25.39      

Exercised

   (29)   3.93      

Forfeited

   (6)   31.29      
  

 

 

     

Outstanding as of January 1, 2012

   484    26.62     4.71     480  
  

 

 

     

Exercisable as of January 1, 2012

   441    24.52     4.53     480  

Expected to vest after January 1, 2012

   40    48.08     6.64     —  

The intrinsic value of options exercised in the six months ended January 1, 2012 was $0.3 million. There were no stock options granted in the six months ended January 1, 2012.

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on

SunPower’s closing stock price of $6.23 at December 30, 2011, which would have been received by the option holders had all option holders exercised their options as of that date. The total number of in-the-money options exercisable was 0.1 million shares as of January 1, 2012.

The following table summarizes SunPower’s non-vested stock options and restricted stock activities thereafter:

    Stock Options   Restricted Stock Awards and Units 

  

  Shares
(in thousands)		  Weighted-Average
Exercise Price
Per Share
(in dollars)		   Shares
(in thousands)		  Weighted-Average
Grant Date Fair
Value Per Share
(in dollars)(1)		 

Outstanding as of July 3, 2011

   67    41.34     7,198    16.03  

Granted

   —    —     2,336    6.91  

Vested(2)

   (19)   28.73     (691)   18.96  

Forfeited

   (5)   31.29     (1,473)   14.10  

Outstanding as of December 31, 2011

   43    48.33     7,370    13.25  

(1)The Company estimates the fair value of the restricted stock unit awards as the stock price on the grant date.
(2)Restricted stock awards and units vested include shares withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements.

G.SHARE-BASED PAYMENT EXPENSE

Share-based payment expense before tax for the year 2011 amounts to€178 million and is broken down as follows:

€27 million for TOTAL share subscription plans;

€134 million for TOTAL restricted shares plans; and

€17 million for SunPower plans.

Share-based payment expense before tax for the year 2010 amounted to€140 million and was broken down as follows:

€31 million for TOTAL share subscription plans; and

€109 million for TOTAL restricted shares plans.

Share-based payment expense before tax for the year 2009 amounted to€106 million and was broken down as follows:

€38 million for TOTAL share subscription plans; and

€68 million for TOTAL restricted shares plans.

The fair value of the options granted in 2011, 2010 and 2009 has been measured according to the Black-Scholes method and based on the following assumptions:

For the year ended December 31,  2011   2010   2009 

Risk free interest rate (%)(a)

   2.0     2.1     2.9  

Expected dividends (%)(b)

   5.6     5.9     4.8  

Expected volatility (%)(c)

   27.5     25.0     31.0  

Vesting period (years)

   2     2     2  

Exercice period (years)

   8     8     8  

Fair value of the granted options
(€ per option)

   4.4     5.8     8.4  

(a)Zero coupon Euro swap rate at 6 years.
(b)The expected dividends are based on the price of TOTAL share derivatives traded on the markets.
(c)The expected volatility is based on the implied volatility of TOTAL share options and of share indices options traded on the markets.

At the shareholders’ meeting held on May 21, 2010, the shareholders delegated to the Board of Directors the authority to increase the share capital of the Company in

one or more transactions and within a maximum period of 26 months from the date of the meeting, by an amount not exceeding 1.5% of the share capital outstanding on the date of the meeting of the Board of Directors at which a decision to proceed with an issuance is made reserving subscriptions for such issuance to the Group employees participating in a company savings plan. It is being specified that the amount of any such capital increase reserved for Group employees was counted against the aggregate maximum nominal amount of share capital increases authorized by the shareholders’ meeting held on May 21, 2010 for issuing new ordinary shares or other securities granting immediate or future access to the Company’s share capital with preferential subscription rights (€2.5 billion in nominal value).

Pursuant to this delegation of authorization, the Board of Directors, during its October 28, 2010 meeting, implemented a capital increase reserved for employees within the limit of 12 million shares, with dividend rights as of the January 1, 2010 and delegated all power to the Chairman and CEOChief Executive Officer to determine the opening and closing of subscription period and the subscription price.

On March 14, 2011, the Chairman and Chief Executive Officer decided that the subscription period would be set from March 16, 2011 to April 1, 2011 and acknowledged that the subscription price per ordinary share would be set at€34.80. During this capital increase, 8,902,717 TOTAL shares were subscribed and created on April 28, 2011.

The cost of capital increases reserved for employees is reduced to take into account the non-transferability of the shares that could be subscribed by the employees over a period of five years. The valuation method of non-transferability of the shares is based on a strategy cost in two steps consisting, first, in a five years forward sale of the non-transferable shares, and second, in purchasing the same number of shares in cash with a loan financing reimbursable “in fine”. During the year 2011, the main

 

assumptions used for the valuation of the cost of capital increase reserved for employees were the following:

26) For the year ended December 31,PAYROLL AND STAFF2011

Date of the Board of Directors meeting that decided the issue

October 28, 2010

Subscription price (€)

34.80

Share price at the reference date (€)(a)

41.60

Number of shares (in millions)

8.90

Risk free interest rate (%)(b)

2.82

Employees loan financing rate (%)(c)

7.23

Non transferability cost (% of the reference’s share price)

17.6
             
For the year ended December 31, (M€) 2010  2009  2008 
Personnel expenses
            
Wages and salaries (including social charges)  6,246   6,177   6,014 
Group employees
            
France
            
• Management
  10,852   10,906   10,688 
• Other
  24,317   25,501   26,413 
International
            
• Management
  15,146   15,243   14,709 
• Other
  42,540   44,737   45,149 
             
Total
  92,855   96,387   96,959 
             

(a)Share price at the date which the Chairman and Chief Executive Officer decided the subscription period.
(b)Zero coupon Euro swap rate at 5 years.
(c)The employees loan financing rate is based on a 5-year consumer’s credit rate.

Due to the fact that the non-transferability cost is higher than the discount, no cost has been accounted to the fiscal year 2011.

26)PAYROLL AND STAFF

For the year ended
December 31,		  2011   2010   2009 

Personnel expenses (M€)

      

Wages and salaries (including social charges)

   6,579     6,246     6,177  

Group employees

      

France

      

• Management

   11,123     10,852     10,906  

• Other

   23,914     24,317     25,501  

International

      

• Management

   15,713     15,146     15,243  

• Other

   45,354     42,540     44,737  

Total

   96,104     92,855     96,387  

The number of employees includes only employees of fully consolidated subsidiaries.

The decreaseincrease in the number of employees between December 31, 20092011 and December 31, 2010 is mainly explained by the acquisition of SunPower, partially compensated by the sale of the consumer specialty chemicals business Mapa Spontexphotocure and coatings resins businesses (see Note 3 to the Consolidated Financial Statements).

27)STATEMENT OF CASH FLOWS

A)
27) STATEMENT OF CASH FLOWSFLOW FROM OPERATING ACTIVITIES
A) Cash flow from operating activities

The following table gives additional information on cash paid or received in the cash flow from operating activities:

             
For the year ended December 31, (M€)
 2010  2009  2008 
Interests paid  (470)  (678)  (958)
Interests received  132   148   505 
Income tax paid  (6,990)  (6,202)  (10,631)
Dividends received  1,722   1,456   1,590 
             

For the year ended
December 31, (M€)		  2011  2010  2009 

Interests paid

   (679)   (470)   (678) 

Interests received

   277    132    148  

Income tax paid(a)

   (12,061)   (8,848)   (7,027) 

Dividends received

   2,133    1,722    1,456  

(a)These amounts include taxes paid in kind under production-sharing contracts in the exploration-production.

Changes in working capital are detailed as follows:

             
For the year ended December 31, (M€) 2010  2009  2008 
Inventories  (1,896)  (4,217)  4,020 
Accounts receivable  (2,712)  (344)  3,222 
Other current assets  911   1,505   (982)
Accounts payable  2,482   571   (3,056)
Other creditors and accrued liabilities  719   (831)  (633)
             
Net amount
  (496)  (3,316)  2,571 
             

For the year ended
December 31, (M€)		  2011  2010  2009 

Inventories

   (1,845)   (1,896)   (4,217) 

Accounts receivable

   (1,287)   (2,712)   (344) 

Other current assets

   (2,409)   911    1,505  

Accounts payable

   2,646    2,482    571  

Other creditors and accrued liabilities

   1,156    719    (831) 

Net amount

   (1,739)   (496)   (3,316) 

B)
B) Cash flow used in financing activities

Changes in non-current financial debt are detailed in the following table under a net value due to the high number of multiple drawings:

             
For the year ended December 31, (M€) 2010  2009  2008 
Issuance of non-current debt  3,995   6,309   5,513 
Repayment of non-current debt  (206)  (787)  (2,504)
             
Net amount
  3,789   5,522   3,009 
             

For the year ended
December 31, (M€)		  2011  2010  2009 

Issuance of non-current debt

   4,234    3,995    6,309  

Repayment of non-current debt

   (165)   (206)   (787) 

Net amount

   4,069    3,789    5,522  

C)
C) Cash and cash equivalents

Cash and cash equivalents are detailed as follows:

             
For the year ended December 31, (M€) 2010  2009  2008 
Cash  4,679   2,448   1,836 
Cash equivalents  9,810   9,214   10,485 
             
Total
  14,489   11,662   12,321 
             

For the year ended
December 31, (M€)		  2011   2010   2009 

Cash

   4,715     4,679     2,448  

Cash equivalents

   9,310     9,810     9,214  

Total

   14,025     14,489     11,662  

Cash equivalents are mainly composed of deposits less than three months deposited in government institutions or deposit banks selected in accordance with strict criteria.


F-73

 
28) FINANCIAL ASSETS AND LIABILITIES ANALYSIS PER INSTRUMENTS CLASS AND STRATEGY

28)FINANCIAL ASSETS AND LIABILITIES ANALYSIS PER INSTRUMENTS CLASS AND STRATEGY

The financial assets and liabilities disclosed on the face ofin the balance sheet are detailed as follows:

                                         
     Other financial
     Fair
 
  Financial instruments related to financing and trading activities  instruments  Total  value 
       
As of December 31, 2010 Amortized
  Fair
          
(M€)
 cost  value          
Assets /
    Available
  Held for
     Hedging of
  Cash
  Net investment
          
(Liabilities)    for sale(a)  trading  Financial debt(b)  financial debt  flow hedge  hedge and other          
Equity affiliates:                                        
loans  2,383                               2,383   2,383 
Other investments      4,590                           4,590   4,590 
Hedging instruments of non-current financial debt                  1,814   56           1,870   1,870 
Other non-current assets  1,596                               1,596   1,596 
Accounts receivable, net                              18,159   18,159   18,159 
Other operating receivables          499                   3,908   4,407   4,407 
Current financial assets  869       38       292       6       1,205   1,205 
Cash and cash equivalents                              14,489   14,489   14,489 
                                         
Total financial assets
  4,848   4,590   537   —   2,106   56   6   36,556   48,699   48,699 
                                         
Total non-financial assets
                                  95,019     
                                         
Total assets
                                  143,718     
                                         
                                         
Non-current financial  (3,186)          (17,419)  (178)              (20,783)  (21,172)
debt                                        
Accounts payable                              (18,450)  (18,450)  (18,450)
Other operating          (559)                  (3,015)  (3,574)  (3,574)
liabilities                                        
Current borrowings  (5,916)          (3,737)                  (9,653)  (9,653)
Other current financial liabilities          (147)      (12)      —       (159)  (159)
                                         
Total financial liabilities
  (9,102)      (706)  (21,156)  (190)  —   —   (21,465)  (52,619)  (53,008)
                                         
Total non-financial liabilities
                                  (91,099)    
                                         
Total liabilities
                                  (143,718)    

   Financial instruments related to financing and trading activities  Other financial
instruments		  Total  Fair
value		 
  Amortized
cost		  Fair value             
As of  December 31, 2011 (M€) Assets / (Liabilities)     Available
for sale(a)		  Held for
trading		  Financial
debt(b)		  Hedging of
financial debt		  Cash flow
hedge		  Net investment
hedge and other		             

Equity affiliates: loans

  2,246           2,246    2,246  

Other investments

   3,674          3,674    3,674  

Hedging instruments of non-current financial debt

      1,971    5      1,976    1,976  

Other non-current assets

  2,055           2,055    2,055  

Accounts receivable, net

         20,049    20,049    20,049  

Other operating receivables

    1,074        6,393    7,467    7,467  

Current financial assets

  146     159     383    12    —     700    700  

Cash and cash equivalents

                              14,025    14,025    14,025  

Total financial assets

  4,447    3,674    1,233    —    2,354    17    —    40,467    52,192    52,192  

Total non-financial assets

                                  111,857      

Total assets

                                  164,049      

Non-current financial debt

  (4,858)     (17,551)   (97)   (49)    (2)   (22,557)   (23,247) 

Accounts payable

         (22,086)   (22,086)   (22,086) 

Other operating liabilities

    (606)       (4,835)   (5,441)   (5,441) 

Current borrowings

  (6,158)     (3,517)       (9,675)   (9,675) 

Other current financial liabilities

          (87)       (40)   (14)   (26)       (167)   (167) 

Total financial liabilities

  (11,016)   —    (693)   (21,068)   (137)   (63)   (26)   (26,923)   (59,926)   (60,616) 

Total non-financial liabilities

                                  (104,123)     

Total liabilities

                                  (164,049)     

(a)
(a)Financial assets available for sale are measured at their fair value except for unlisted securities (see Note 1 paragraph M(ii) and Note 13 to the Consolidated Financial Statements).
(b)The financial debt is adjusted to the hedged risks value (currency and interest rate) as part of hedge accounting (see Note 1 paragraph M(iii) to the Consolidated Financial Statements).


F-74

   Financial instruments related to financing and trading activities  Other financial
instruments		  Total  Fair
value		 
  Amortized
cost		      Fair value                     
As of December 31, 2010 (M€) Assets / (Liabilities)     Available
for sale(a)		  Held for
trading		  Financial
debt(b)		  Hedging of
financial debt		  Cash flow
hedge		  Net investment
hedge and other		             

Equity affiliates: loans

  2,383           2,383    2,383  

Other investments

   4,590          4,590    4,590  

Hedging instruments of non-current financial debt

      1,814    56      1,870    1,870  

Other non-current assets

  1,596           1,596    1,596  

Accounts receivable, net

         18,159    18,159    18,159  

Other operating receivables

    499        3,908    4,407    4,407  

Current financial assets

  869     38     292     6     1,205    1,205  

Cash and cash equivalents

                              14,489    14,489    14,489  

Total financial assets

  4,848    4,590    537    —    2,106    56    6    36,556    48,699    48,699  

Total non-financial assets

                                  95,019      

Total assets

                                  143,718      

Non-current financial debt

  (3,186)     (17,419)   (178)      (20,783)   (21,172) 

Accounts payable

         (18,450)   (18,450)   (18,450) 

Other operating liabilities

    (559)       (3,015)   (3,574)   (3,574) 

Current borrowings

  (5,916)     (3,737)       (9,653)   (9,653) 

Other current financial liabilities

          (147)       (12)       —        (159)   (159) 

Total financial liabilities

  (9,102)       (706)   (21,156)   (190)   —    —    (21,465)   (52,619)   (53,008) 

Total non-financial liabilities

                                  (91,099)     

Total liabilities

                                  (143,718)     

                                         
     Other financial
     Fair
 
  Financial instruments related to financing and trading activities  instruments  Total  value 
       
As of December 31, 2009 Amortized
  Fair
          
(M€)
 cost  value          
Assets /
    Available
  Held for
     Hedging of
  Cash
  Net investment
          
(Liabilities)    for sale(a)  trading  Financial debt(b)  financial debt  flow hedge  hedge and other          
Equity affiliates:                                        
loans  2,367                               2,367   2,367 
Other investments      1,162                           1,162   1,162 
Hedging instruments of non-current financial debt                  889   136           1,025   1,025 
Other non-current assets  1,284                               1,284   1,284 
Accounts receivable, net                              15,719   15,719   15,719 
Other operating receivables          1,029                   4,116   5,145   5,145 
Current financial assets  55       53       197       6       311   311 
Cash and cash equivalents                              11,662   11,662   11,662 
                                         
Total financial assets
  3,706   1,162   1,082   —   1,086   136   6   31,497   38,675   38,675 
                                         
Total non-financial assets
                                  89,078     
                                         
Total assets
                                  127,753     
                                         
Non-current financial debt  (2,089)          (17,107)  (241)              (19,437)  (19,905)
Accounts payable                              (15,383)  (15,383)  (15,383)
Other operating liabilities          (923)                  (3,783)  (4,706)  (4,706)
Current borrowings  (4,849)          (2,145)                  (6,994)  (6,994)
Other current financial liabilities          (25)      (97)      (1)      (123)  (123)
                                         
Total financial liabilities
  (6,938)      (948)  (19,252)  (338)  —   (1)  (19,166)  (46,643)  (47,111)
                                         
Total non-financial liabilities
                                  (81,110)    
                                         
Total liabilities
                                  (127,753)    
                                         
(a)
(a)Financial assets available for sale are measured at their fair value except for unlisted securities (see Note 1 paragraph M(ii) and Note 13 to the Consolidated Financial Statements).
(b)The financial debt is adjusted to the hedged risks value (currency and interest rate) as part of hedge accounting (see Note 1 paragraph M(iii) to the Consolidated Financial Statements).

F-75

   Financial instruments related to financing and trading activities  Other financial
instruments		  Total  Fair
value		 
  Amortized
cost		      Fair value                     
As of December 31, 2009 (M€) Assets / (Liabilities)     Available
for sale(a)		  Held for
trading		  Financial
debt(b)		  Hedging of
financial debt		  Cash flow
hedge		  Net investment
hedge and other		             

Equity affiliates: loans

  2,367           2,367    2,367  

Other investments

   1,162          1,162    1,162  

Hedging instruments of non-current financial debt

      889    136      1,025    1,025  

Other non-current assets

  1,284           1,284    1,284  

Accounts receivable, net

         15,719    15,719    15,719  

Other operating receivables

    1,029        4,116    5,145    5,145  

Current financial assets

  55     53     197     6     311    311  

Cash and cash equivalents

                              11,662    11,662    11,662  

Total financial assets

  3,706    1,162    1,082    —    1,086    136    6    31,497    38,675    38,675  

Total non-financial assets

                                  89,078      

Total assets

                                  127,753      

Non-current financial debt

  (2,089)     (17,107)   (241)      (19,437)   (19,905) 

Accounts payable

         (15,383)   (15,383)   (15,383) 

Other operating liabilities

    (923)       (3,783)   (4,706)   (4,706) 

Current borrowings

  (4,849)     (2,145)       (6,994)   (6,994) 

Other current financial liabilities

          (25)       (97)       (1)       (123)   (123) 

Total financial liabilities

  (6,938)       (948)   (19,252)   (338)   —    (1)   (19,166)   (46,643)   (47,111) 

Total non-financial liabilities

                                  (81,110)     

Total liabilities

                                  (127,753)     

                                         
     Other financial
     Fair
 
  Financial instruments related to financing and trading activities  instruments  Total  value 
       
As of December 31, 2008 Amortized
  Fair
          
(M€)
 cost  value          
Assets /
    Available
  Held for
     Hedging of
     Net investment
          
(Liabilities)    for sale(a)  trading  Financial debt(b)  financial debt  Cash flow hedge  hedge and other          
Equity affiliates:                                        
loans  2,005                               2,005   2,005 
Other investments      1,165                           1,165   1,165 
Hedging instruments of non-current financial debt                  892               892   892 
Other non-current assets  1,403                               1,403   1,403 
Accounts receivable, net          —                   15,287   15,287   15,287 
Other operating receivables          1,664                   4,544   6,208   6,208 
Current financial assets  1       86       100       —       187   187 
Cash and cash                              12,321   12,321   12,321 
equivalents                                        
                                         
Total financial assets
  3,409   1,165   1,750   —   992   —   —   32,152   39,468   39,468 
                                         
Total non-financial assets
                                  78,842     
                                         
Total assets
                                  118,310     
                                         
Non-current financial debt  (701)          (15,050)  (440)              (16,191)  (16,191)
Accounts payable          —                   (14,815)  (14,815)  (14,815)
Other operating liabilities          (1,033)                  (3,264)  (4,297)  (4,297)
Current borrowings  (5,721)          (2,001)                  (7,722)  (7,722)
Other current financial liabilities          (146)      (12)              (158)  (158)
                                         
Total financial liabilities
  (6,422)      (1,179)  (17,051)  (452)  —   —   (18,079)  (43,183)  (43,183)
                                         
Total non-financial liabilities
                                  (75,127)    
                                         
Total liabilities
                                  (118,310)    
                                         
(a)
(a)Financial assets available for sale are measured at their fair value except for unlisted securities (see Note 1 paragraph M(ii) and Note 13 to the Consolidated Financial Statements).
(b)
(b)The financial debt is adjusted to the hedged risks value (currency and interest rate) as part of hedge accounting (see Note 1 paragraph M(iii) to the Consolidated Financial Statements).

F-76

29)FAIR VALUE OF FINANCIAL INSTRUMENTS (EXCLUDING COMMODITY CONTRACTS)

A)
29) FAIR VALUE OF FINANCIAL INSTRUMENTS (EXCLUDING COMMODITY CONTRACTS)
A) IMPACT ON THE STATEMENT OF INCOME PER NATURE OF FINANCIAL INSTRUMENTS

Operating assets and liabilities

The impact on the statement of income is detailed as follows:

             
For the year ended December 31,         
(M€) 2010  2009  2008 
Assets available for sale (investments):            
— Dividend income on non-consolidated subsidiaries  255   210   238 
— Gains (losses) on disposal of assets  60   6   15 
— Other  (17)  (18)  (15)
Loans and receivables  90   41   100 
             
Impact on net operating income
  388   239   338 
             

For the year ended December 31,
(M€)		  2011  2010  2009 

Assets available for sale (investments):

    

— dividend income on non-consolidated subsidiaries

   330    255    210  

— gains (losses) on disposal of assets

   103    60    6  

— other

   (29)   (17)   (18) 

Loans and receivables

   (34)   90    41  

Impact on net operating income

   370    388    239  

The impact in the statement of income mainly includes:

Dividends and gains or losses on disposal of other investments classified as “Other investments”;

Financial gains and depreciation on loans related to equity affiliates, non-consolidated companies and on receivables reported in “Loans and receivables”.

•  Dividends and gains or losses on disposal of other investments classified as “Other investments”;
•  Financial gains and depreciation on loans related to equity affiliates, non-consolidated companies and on receivables reported in “Loans and receivables”.

Assets and liabilities from financing activities

The impact on the statement of income of financing assets and liabilities is detailed as follows:

             
For the year ended December 31,         
(M€) 2010  2009  2008 
Loans and receivables  133   158   547 
Financing liabilities and associated hedging instruments  (469)  (563)  (996)
Fair value hedge (ineffective portion)  4   33   (4)
Assets and liabilities held for trading  (2)  (26)  (74)
             
Impact on the cost of net debt
  (334)  (398)  (527)
             

For the year ended December 31,
(M€)		  2011  2010  2009 

Loans and receivables

   271    133    158  

Financing liabilities and associated hedging instruments

   (730)   (469)   (563) 

Fair value hedge (ineffective portion)

   17    4    33  

Assets and liabilities held for trading

   2    (2)   (26) 

Impact on the cost of net debt

   (440)   (334)   (398) 

The impact on the statement of income mainly includes:

Financial income on cash, cash equivalents, and current financial assets (notably current deposits

• Financial income on cash, cash equivalents, and current financial assets (notably current deposits

beyond three months) classified as “Loans and receivables”;

•  Financial expense of long term subsidiaries financing, associated hedging instruments (excluding ineffective portion of the hedge detailed below) and financial expense of short term financing classified as “Financing liabilities and associated hedging instruments”;
•  Ineffective portion of bond hedging; and
•  Financial income, financial expense and fair value of derivative instruments used for cash management purposes classified as “Assets and liabilities held for trading”.

Financial expense of long term subsidiaries financing, associated hedging instruments (excluding ineffective portion of the hedge detailed below) and financial expense of short term financing classified as “Financing liabilities and associated hedging instruments”;

Ineffective portion of bond hedging; and

Financial income, financial expense and fair value of derivative instruments used for cash management purposes classified as “Assets and liabilities held for trading”.

Financial derivative instruments used for cash management purposes (interest rate and foreign exchange) are considered to be held for trading. Based on practical documentation issues, the Group did not elect to set up hedge accounting for such instruments. The impact on income of the derivatives is offset by the impact of loans and current liabilities they are related to. Therefore these transactions taken as a whole do not have a significant impact on the Consolidated Financial Statements.

B)
B) IMPACT OF THE HEDGING STRATEGIES

Fair value hedge

The impact on the statement of income of the bond hedging instruments which is recorded in the item “Financial interest on debt” in the Consolidated Statement of Income is detailed as follows:

             
For the year ended December 31,         
(M€) 2010  2009  2008 
Revaluation at market value of            
bonds  (1,164)  (183)  (66)
Swap hedging of bonds  1,168   216   62 
             
Ineffective portion of the fair value hedge
  4   33   (4)
             

For the year ended December 31,
(M€)		  2011  2010  2009 

Revaluation at market value of bonds

   (301)   (1,164)   (183) 

Swap hedging of bonds

   318    1,168    216  

Ineffective portion of the fair value hedge

   17    4    33  

The ineffective portion is not representative of the Group’s performance considering the Group’s objective to hold swaps to maturity. The current portion of the swaps valuation is not subject to active management.

 


F-77

Net investment hedge

These instruments are recorded directly in shareholders’ equity under “Currency translation adjustments”. The variations of the period are detailed in the table below:

                 
For the year ended December 31, (M€) As of January 1,  Variations  Disposals  As of December 31, 
2010
  25   (268)  —   (243)
2009  124   (99)  —   25 
2008  29   95   —   124 
                 

For the year ended December 31, (M€)  As of January 1,  Variations  Disposals   As of December 31, 

2011

   (243)   139    —     (104) 

2010

   25    (268)   —     (243) 

2009

   124    (99)   —     25  

As of December 31, 2010,2011, the fair value of the open instruments amounts to €6€(26) million compared to €5€6 million in 20092010 and zero€5 million in 2008.

2009.

Cash flow hedge

The impact on the statement of income and on equity of the bond hedging instruments qualified as cash flow hedges is detailed as follows:

             
For The year ended December 31, (M€) 2010  2009  2008 
Profit (Loss) recorded in equity during the period  (80)  128   — 
Recycled amount from equity to the income statement during the period  (115)  221   — 
             

For the year ended December 31, (M€)  2011  2010  2009 

Profit (Loss) recorded in equity during the period

   (84)   (80)   128  

Recycled amount from equity to the income statement during the period

   (47)   (115)   221  

As of December 31, 2011, 2010 and 2009, the ineffective portion of these financial instruments is equal to zero.


F-78

C)
C) MATURITY OF DERIVATIVE INSTRUMENTS

The maturity of the notional amounts of derivative instruments, excluding the commodity contracts, is detailed in the following table:

                                 
As of December 31, 2010 (M€)    Notional value(a) 
                       2016
 
  Fair
                    and
 
ASSETS/(LIABILITIES) value  Total  2011  2012  2013  2014  2015  after 
Fair value hedge
                                
Swaps hedging fixed-rates bonds (liabilities)  (178)  2,244                         
Swaps hedging fixed-rates bonds (assets)  1,814   13,939                         
                                 
Total swaps hedging fixed-rates bonds (assets and liabilities)
  1,636   16,183       2,967   3,461   2,421   3,328   4,006 
Swaps hedging fixed-rates bonds (current portion) (liabilities)  (12)  592                         
Swaps hedging fixed-rates bonds (current portion) (assets)  292   2,815                         
                                 
Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities)
  280   3,407   3,407                     
Cash flow hedge
                                
Swaps hedging fixed-rates bonds (liabilities)  —   —                         
Swaps hedging fixed-rates bonds (assets)  56   1,957                         
                                 
Total swaps hedging fixed-rates bonds (assets and liabilities)
  56   1,957       295               1,662 
Swaps hedging fixed-rates bonds (current portion) (liabilities)                                
Swaps hedging fixed-rates bonds (current portion) (assets)                                
                                 
Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities)
  —   —   —                     
Net investment hedge
                                
Currency swaps and forward exchange contracts (assets)  6   381                         
Currency swaps and forward exchange contracts (liabilities)  —��  —                         
                                 
Total swaps hedging net investments
  6   381   381                     
Held for trading
                                
Other interest rate swaps (assets)  1   6,463                         
Other interest rate swaps (liabilities)  (3)  11,395                         
                                 
Total other interest rate swaps (assets and liabilities)
  (2)  17,858   17,667   189   —   —   2   — 
Currency swaps and forward exchange contracts (assets)  37   1,532                         
Currency swaps and forward exchange contracts (liabilities)  (144)  6,757                         
                                 
Total currency swaps and forward exchange contracts (assets and liabilities)
  (107)  8,289   8,102   —   25   49   31   82 
                                 

As of December 31, 2011 (M€)

Assets / (Liabilities)

  Fair
value		  Notional value(a) 
   Total   2012   2013   2014   2015   2016   2017
and
after		 

Fair value hedge

               

Swaps hedging fixed-rates bonds (liabilities)

   (97)   1,478              

Swaps hedging fixed-rates bonds (assets)

   1,971    15,653                                

Total swaps hedging fixed-rates bonds (assets and liabilities)

   1,874    17,131       4,204     4,215     3,380     1,661     3,671  

Swaps hedging fixed-rates bonds (current portion) (liabilities)

   (40)   642              

Swaps hedging fixed-rates bonds (current portion) (assets)

   383    2,349                                

Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities)

   343    2,991     2,991            

Cash flow hedge

               

Swaps hedging fixed-rates bonds (liabilities)

   (49)   967              

Swaps hedging fixed-rates bonds (assets)

   5    749                                

Total swaps hedging fixed-rates bonds (assets and liabilities)

   (44)   1,716       —     —     —     —     1,716  

Swaps hedging fixed-rates bonds (current portion) (liabilities)

   (14)   582              

Swaps hedging fixed-rates bonds (current portion) (assets)

   12    908                                

Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities)

   (2)   1,490     1,490            

Net investment hedge

               

Currency swaps and forward exchange contracts (assets)

   —    —              

Currency swaps and forward exchange contracts (liabilities)

   (26)   881                                

Total swaps hedging net investments

   (26)   881     881            

Held for trading

               

Other interest rate swaps (assets)

   1    3,605              

Other interest rate swaps (liabilities)

   (2)   14,679                                

Total other interest rate swaps (assets and liabilities)

   (1)   18,284     18,284     —     —     —     —     —  

Currency swaps and forward exchange contracts (assets)

   158    6,984              

Currency swaps and forward exchange contracts (liabilities)

   (85)   4,453                                

Total currency swaps and forward exchange contracts (assets and liabilities)

   73    11,437     11,176     80     58     36     31     56  

(a)
(a)These amounts set the levels of notional commitment and are not indicative of a contingent gain or loss.


F-79

As of December 31, 2010 (M€)

Assets / (Liabilities)

      Notional value(a) 
  Fair
value		  Total   2011   2012   2013   2014   2015   2016
and
after		 

Fair value hedge

               

Swaps hedging fixed-rates bonds (liabilities)

   (178)   2,244              

Swaps hedging fixed-rates bonds (assets)

   1,814    13,939                                

Total swaps hedging fixed-rates bonds (assets and liabilities)

   1,636    16,183       2,967     3,461     2,421     3,328     4,006  

Swaps hedging fixed-rates bonds (current portion) (liabilities)

   (12)   592              

Swaps hedging fixed-rates bonds (current portion) (assets)

   292    2,815                                

Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities)

   280    3,407     3,407            

Cash flow hedge

               

Swaps hedging fixed-rates bonds (liabilities)

   —    —              

Swaps hedging fixed-rates bonds (assets)

   56    1,957                                

Total swaps hedging fixed-rates bonds (assets and liabilities)

   56    1,957       295           1,662  

Swaps hedging fixed-rates bonds (current portion) (liabilities)

               

Swaps hedging fixed-rates bonds (current portion) (assets)

                                       

Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities)

   —    —     —            

Net investment hedge

               

Currency swaps and forward exchange contracts (assets)

   6    381              

Currency swaps and forward exchange contracts (liabilities)

   —    —                                

Total swaps hedging net investments

   6    381     381            

Held for trading

               

Other interest rate swaps (assets)

   1    6,463              

Other interest rate swaps (liabilities)

   (3)   11,395                                

Total other interest rate swaps (assets and liabilities)

   (2)   17,858     17,667     189     —     —     2     —  

Currency swaps and forward exchange contracts (assets)

   37    1,532              

Currency swaps and forward exchange contracts (liabilities)

   (144)   6,757                                

Total currency swaps and forward exchange contracts (assets and liabilities)

   (107)   8,289     8,102     —     25     49     31     82  

                                 
As of December 31, 2009 (M€)    Notional value(a) 
                       2015
 
  Fair
                    and
 
ASSETS/(LIABILITIES) value  Total  2010  2011  2012  2013  2014  after 
Fair value hedge
                                
Swaps hedging fixed-rates bonds (liabilities)  (241)  4,615                         
Swaps hedging fixed-rates bonds (assets)  889   11,076                         
                                 
Total swaps hedging fixed-rates bonds (assets and liabilities)
  648   15,691   —   3,345   2,914   3,450   1,884   4,098 
Swaps hedging fixed-rates bonds (current portion) (liabilities)  (97)  912                         
Swaps hedging fixed-rates bonds (current portion) (assets)  197   1,084                         
                                 
Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities)
  100   1,996   1,996                     
Cash flow hedge
                                
Swaps hedging fixed-rates bonds (liabilities) Swaps hedging fixed-rates bonds (assets)  136   1,837           295           1,542 
                                 
Total swaps hedging fixed-rates bonds (assets and liabilities)
  136   1,837           295           1,542 
Swaps hedging fixed-rates bonds (current portion) (liabilities) Swaps hedging fixed-rates bonds (current portion) (assets)                                
                                 
Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities)
                                
Net investment hedge
                                
Currency swaps and forward exchange contracts (assets)  6   701                         
Currency swaps and forward exchange contracts (liabilities)  (1)  224                         
                                 
Total swaps hedging net investments
  5   925   925                     
Held for trading
                                
Other interest rate swaps (assets)      1,459                         
Other interest rate swaps (liabilities)  (1)  10,865                         
                                 
Total other interest rate swaps (assets and liabilities)
  (1)  12,324   12,208   114               2 
Currency swaps and forward exchange contracts (assets)  53   4,017                         
Currency swaps and forward exchange contracts (liabilities)  (24)  3,456                         
                                 
Total currency swaps and forward exchange contracts (assets and liabilities)
  29   7,473   7,224       52   50   47   100 
                                 
(a)
(a)These amounts set the levels of notional commitment and are not indicative of a contingent gain or loss.

F-80

As of December 31, 2009 (M€)

Assets / (Liabilities)

      Notional value(a) 
  Fair
value		  Total   2010   2011   2012   2013   2014   2015
and
after		 

Fair value hedge

               

Swaps hedging fixed-rates bonds (liabilities)

   (241)   4,615              

Swaps hedging fixed-rates bonds (assets)

   889    11,076                                

Total swaps hedging fixed-rates bonds (assets and liabilities)

   648    15,691     —     3,345     2,914     3,450     1,884     4,098  

Swaps hedging fixed-rates bonds (current portion) (liabilities)

   (97)   912              

Swaps hedging fixed-rates bonds (current portion) (assets)

   197    1,084                                

Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities)

   100    1,996     1,996            

Cash flow hedge

               

Swaps hedging fixed-rates bonds (liabilities)

               

Swaps hedging fixed-rates bonds (assets)

   136    1,837               295               1,542  

Total swaps hedging fixed-rates bonds (assets and liabilities)

   136    1,837         295         1,542  

Swaps hedging fixed-rates bonds (current portion) (liabilities)

               

Swaps hedging fixed-rates bonds (current portion) (assets)

                                       

Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities)

               

Net investment hedge

               

Currency swaps and forward exchange contracts (assets)

   6    701              

Currency swaps and forward exchange contracts (liabilities)

   (1)   224                                

Total swaps hedging net investments

   5    925     925            

Held for trading

               

Other interest rate swaps (assets)

    1,459              

Other interest rate swaps (liabilities)

   (1)   10,865                                

Total other interest rate swaps (assets and liabilities)

   (1)   12,324     12,208     114           2  

Currency swaps and forward exchange contracts (assets)

   53    4,017              

Currency swaps and forward exchange contracts (liabilities)

   (24)   3,456                                

Total currency swaps and forward exchange contracts (assets and liabilities)

   29    7,473     7,224          52     50     47     100  

                                 
As of December 31, 2008 (M€)    Notional value(a) 
                       2014
 
  Fair
                    and
 
ASSETS/(LIABILITIES) value  Total  2009  2010  2011  2012  2013  after 
Fair value hedge
                                
Swaps hedging fixed-rates bonds (liabilities)  (440)  9,309                         
Swaps hedging fixed-rates bonds (assets)  892   4,195                         
                                 
Total swaps hedging fixed-rates bonds (assets and liabilities)
  452   13,504   —   2,048   3,373   3,233   3,032   1,818 
Swaps hedging fixed-rates bonds (current portion) (liabilities)  (12)  92                         
Swaps hedging fixed-rates bonds (current portion) (assets)  100   1,871                         
                                 
Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities)
  88   1,963   1,963                     
Net investment hedge
                                
                                 
Currency swaps and forward exchange contracts (liabilities)  —   1,347   1,347                     
Held for trading
                                
Other interest rate swaps (assets)  —   2,853                         
Other interest rate swaps (liabilities)  (4)  5,712                         
                                 
Total other interest rate swaps (assets and liabilities)
  (4)  8,565   8,559   4               2 
Currency swaps and forward exchange contracts (assets)  86   5,458                         
Currency swaps and forward exchange contracts (liabilities)  (142)  2,167                         
                                 
Total currency swaps and forward exchange contracts (assets and liabilities)
  (56)  7,625   6,595   483   114   67   76   290 
                                 
(a)
(a)These amounts set the levels of notional commitment and are not indicative of a contingent gain or loss.

D)
D) FAIR VALUE HIERARCHY

The fair value hierarchy for financial instruments excluding commodity contracts is as follows:

                 
  Quoted prices in
          
  active markets
     Prices based on
    
  for identical
  Prices based on
  non observable
    
  assets
  observable data
  data
    
As of December 31, 2010 (M€) (level 1)  (level 2)  (level 3)  Total 
Fair value hedge instruments  —   1,916   —   1,916 
Cash flow hedge instruments  —   56   —   56 
Net investment hedge instruments  —   6   —   6 
Assets and liabilities held for trading  —   (109)  —   (109)
Assets available for sale  3,631   —   —   3,631 
                 
Total
  3,631   1,869   —   5,500 
                 

F-81

As of December 31, 2011 (M€)  Quoted prices in
active markets
for identical
assets
(level 1)		   Prices based on
observable data
(level 2)		  Prices based on non-
observable data
(level 3)		   Total 

Fair value hedge instruments

   —     2,217    —     2,217  

Cash flow hedge instruments

   —     (46)   —     (46) 

Net investment hedge instruments

   —     (26)   —     (26) 

Assets and liabilities held for trading

   —     72    —     72  

Assets available for sale

   2,575     —    —     2,575  

Total

   2,575     2,217    —     4,792  

As of December 31, 2010 (M€)  Quoted prices in
active markets
for identical
assets
(level 1)		   Prices based on
observable data
(level 2)		  Prices based on
non-observable
data
(level 3)		   Total 

Fair value hedge instruments

   —     1,916    —     1,916  

Cash flow hedge instruments

   —     56    —     56  

Net investment hedge instruments

   —     6    —     6  

Assets and liabilities held for trading

   —     (109)   —     (109) 

Assets available for sale

   3,631     —    —     3,631  

Total

   3,631     1,869    —     5,500  

As of December 31, 2009 (M€)  Quoted prices in
active markets
for identical
assets
(level 1)		   Prices based on
observable data
(level 2)		   Prices based on
non-observable
data
(level 3)		   Total 

Fair value hedge instruments

   —     748     —     748  

Cash flow hedge instruments

   —     136     —     136  

Net investment hedge instruments

   —     5     —     5  

Assets and liabilities held for trading

   —     28     —     28  

Assets available for sale

   232     —     —     232  

Total

   232     917     —     1,149  

                 
  Quoted prices in
          
  active markets
     Prices based on
    
  for identical
  Prices based on
  non observable
    
  assets
  observable data
  data
    
As of December 31, 2009 (M€) (level 1)  (level 2)  (level 3)  Total 
Fair value hedge instruments  —   748   —   748 
Cash flow hedge instruments  —   136   —   136 
Net investment hedge instruments  —   5   —   5 
Assets and liabilities held for trading  —   28   —   28 
Assets available for sale  232   —   —   232 
                 
Total
  232   917   —   1,149 
                 
The description of each fair value level is presented in Note 1 paragraph M(v) to the Consolidated Financial Statements.
30) FINANCIAL INSTRUMENTS RELATED TO COMMODITY CONTRACTS

30)FINANCIAL INSTRUMENTS RELATED TO COMMODITY CONTRACTS

Financial instruments related to oil, gas and power activities as well as related currency derivatives are recorded at fair value under “Other current assets” or “Other creditors and accrued liabilities” depending on whether they are assets or liabilities.

         
As of December 31, 2010 (M€)      
  Carrying
  Fair
 
Assets/(Liabilities) amount  value(b)  
Crude oil, petroleum products and freight rates activities
        
Petroleum products and crude oil swaps  (2)  (2)
Freight rate swaps  —   — 
Forwards(a)
  5   5 
Options  51   51 
Futures  (12)  (12)
Options on futures  (4)  (4)
         
Total crude oil, petroleum products and freight rates
  38   38 
         
Gas & Power activities
        
Swaps  (1)  (1)
Forwards(a)
  (102)  (102)
Options  5   5 
Futures  —   — 
         
Total Gas & Power
  (98)  (98)
         
Total
  (60)  (60)
         
Total of fair value non recognized in the balance sheet      — 
         

As of December 31, 2011 (M€)         

Assets / (Liabilities)

  Carrying amount  Fair value(b) 

Crude oil, petroleum products and freight rates activities

   

Petroleum products and crude oil swaps

   3    3  

Freight rate swaps

   —    —  

Forwards(a)

   (16)   (16) 

Options

   (4)   (4) 

Futures

   (14)   (14) 

Options on futures

   (6)   (6) 

Total crude oil, petroleum products and freight rates

   (37)   (37) 

Gas & Power activities

   

Swaps

   57    57  

Forwards(a)

   452    452  

Options

   (3)   (3) 

Futures

   —    —  

Total Gas & Power

   506    506  

Total

   469    469  

Total of fair value non-recognized in the balance sheet

    —  

(a)
(a)Forwards: contracts resulting in physical delivery are accounted for as derivative commodity contracts and included in the amounts shown.
(b)When the fair value of derivatives listed on an organized exchange market (futures, options on futures and swaps) is offset with the margin call received or paid on the face ofin the balance sheet, this fair value is set to zero.

F-82

As of December 31, 2010 (M€)

Assets / (Liabilities)

  Carrying amount  Fair value(b) 

Crude oil, petroleum products and freight rates activities

   

Petroleum products and crude oil swaps

   (2)   (2) 

Freight rate swaps

   —    —  

Forwards(a)

   5    5  

Options

   51    51  

Futures

   (12)   (12) 

Options on futures

   (4)   (4) 

Total crude oil, petroleum products and freight rates

   38    38  

Gas & Power activities

   

Swaps

   (1)   (1) 

Forwards(a)

   (102)   (102) 

Options

   5    5  

Futures

   —    —  

Total Gas & Power

   (98)   (98) 

Total

   (60)   (60) 

Total of fair value non-recognized in the balance sheet

    —  

         
As of December 31, 2009 (M€)      
  Carrying
  Fair
 
ASSETS/(LIABILITIES) amount  value(b)  
Crude oil, petroleum products and freight rates activities
        
Petroleum products and crude oil swaps  (29)  (29)
Freight rate swaps  —   — 
Forwards(a)
  (9)  (9)
Options  21   21 
Futures  (17)  (17)
Options on futures  6   6 
         
Total crude oil, petroleum products and freight rates
  (28)  (28)
         
Gas & Power activities
        
Swaps  52   52 
Forwards(a)
  78   78 
Options  4   4 
Futures  —   — 
         
Total Gas & Power
  134   134 
         
Total
  106   106 
         
Total of fair value non recognized in the balance sheet      — 
         
(a)
(a)Forwards: contracts resulting in physical delivery are accounted for as derivative commodity contracts and included in the amounts shown.
(b)When the fair value of derivatives listed on an organized exchange market (futures, options on futures and swaps) is offset with the margin call received or paid on the face ofin the balance sheet, this fair value is set to zero.
         
As of December 31, 2008 (M€)      
  Carrying
  Fair
 
ASSETS/(LIABILITIES) amount  value(b)  
Crude oil, petroleum products and freight rates activities
        
Petroleum products and crude oil swaps  141   141 
Freight rate swaps  8   8 
Forwards(a)
  (120)  (120)
Options  —   — 
Futures  17   17 
Options on futures  (7)  (7)
         
Total crude oil, petroleum products and freight rates
  39   39 
         
Gas & Power activities
        
Swaps  (48)  (48)
Forwards(a)
  659   659 
Options  —   — 
Futures  (19)  (19)
         
Total Gas & Power
  592   592 
         
Total
  631   631 
         
Total of fair value non recognized in the balance sheet      — 
         

As of December 31, 2009 (M€)

Assets / (Liabilities)

  Carrying amount  Fair value(b) 

Crude oil, petroleum products and freight rates activities

   

Petroleum products and crude oil swaps

   (29)   (29) 

Freight rate swaps

   —    —  

Forwards(a)

   (9)   (9) 

Options

   21    21  

Futures

   (17)   (17) 

Options on futures

   6    6  

Total crude oil, petroleum products and freight rates

   (28)   (28) 

Gas & Power activities

   

Swaps

   52    52  

Forwards(a)

   78    78  

Options

   4    4  

Futures

   —    —  

Total Gas & Power

   134    134  

Total

   106    106  

Total of fair value non-recognized in the balance sheet

    —  

(a)
(a)Forwards: contracts resulting in physical delivery are accounted for as derivative commodity contracts and included in the amounts shown.
(b)When the fair value of derivatives listed on an organized exchange market (futures, options on futures and swaps) is offset with the margin call received or paid on the face ofin the balance sheet, this fair value is set to zero.

Most commitments on crude oil and refined products have a short term maturity (less than one year). The maturity of most Gas & Power energy derivatives is less than three years forward.

F-83

The changes in fair value of financial instruments related to commodity contracts are detailed as follows:
                     
  Fair value as
  Impact on
  Settled
     Fair value as
 
For the year ended December 31, (M€) of January 1,  income  contracts  Other  of December 31, 
Crude oil, petroleum products and freight rates activities
2010
  (28)  1,556   (1,488)  (2)  38 
2009  39   1,713   (1,779)  (1)  (28)
2008  18   1,734   (1,715)  2   39 
                     
                     
Gas & Power activities
                    
2010
  134   410   (648)  6   (98)
2009  592   327   (824)  39   134 
2008  232   787   (310)  (117)  592 
                     

For the year ended December 31, (M€)  

Fair value

as of  January 1,

  

Impact on

income

   

Settled

contracts

  Other  

Fair value

as of  December 31,

 

Crude oil, petroleum products and freight rates activities

         ��            

2011

   38    1,572     (1,648)   1    (37) 

2010

   (28)   1,556     (1,488)   (2)   38  

2009

   39    1,713     (1,779)   (1)   (28) 

Gas & Power activities

                      

2011

   (98)   899     (295)   0    506  

2010

   134    410     (648)   6    (98) 

2009

   592    327     (824)   39    134  

The fair value hierarchy for financial instruments related to commodity contracts is as follows:

                 
  Quoted prices
  Prices based
  Prices based
    
  in active
  on
  on non
    
  markets for
  observable
  observable
    
  identical assets
  data
  data
    
As of December 31, 2010 (M€) (level 1)  (level 2)  (level 3)  Total 
Crude oil, petroleum products and freight rates activities  (10)  48   —   38 
Gas & Power activities  50   (148)  —   (98)
                 
Total
  40   (100)  —   (60)
                 
                 
  Quoted prices
  Prices based
  Prices based
    
  in active
  on
  on non
    
  markets for
  observable
  observable
    
  identical assets
  data
  data
    
As of December 31, 2009 (M€) (level 1)  (level 2)  (level 3)  Total 
Crude oil, petroleum products and freight rates activities  (45)  17   —   (28)
Gas & Power activities  140   (6)  —   134 
                 
Total
  95   11   —   106 
                 

As of December 31, 2011 (M€)  

Quoted prices

in active  markets for

identical

assets (level 1)

  

Prices based on

observable data

(level 2)

   

Prices based on

non-observable

data (level 3)

   Total 

Crude oil, petroleum products and freight rates activities

   (38)   1     —     (37) 

Gas & Power activities

   (44)   550     —     506  

Total

   (82)   551     —     469  

As of December 31, 2010 (M€)  

Quoted prices

in active  markets for
identical

assets (level 1)

  

Prices based on

observable data

(level 2)

  

Prices based on

non-observable
data (level 3)

   Total 

Crude oil, petroleum products and freight rates activities

   (10)   48    —     38  

Gas & Power activities

   50    (148)   —     (98) 

Total

   40    (100)   —     (60) 

As of December 31, 2009 (M€)  

Quoted prices

in active  markets for

identical

assets (level 1)

  

Prices based on

observable data

(level 2)

  

Prices based on

non-observable

data (level 3)

   Total 

Crude oil, petroleum products and freight rates activities

   (45)   17    —     (28) 

Gas & Power activities

   140    (6)   —     134  

Total

   95    11    —     106  

The description of each fair value level is presented in Note 1 paragraph M(v) to the Consolidated Financial Statements.

31)FINANCIAL RISKS MANAGEMENT

31) 

MARKET RISKS
Oil and gas market related risks

Due to the nature of its business, the Group has significant oil and gas trading activities as part of itsday-to-day operations in order to optimize revenues from its oil and gas production and to obtain favorable pricing to supply its refineries.

In its international oil trading business, the Group follows a policy of not selling its future production. However, in connection with this trading business, the Group, like most other oil companies, uses energy derivative instruments to adjust its exposure to price fluctuations of crude oil, refined products, natural gas, power and coal. The Group also uses freight rate derivative contracts in its shipping business to adjust its exposure to freight-rate fluctuations. To hedge against this risk, the Group uses various instruments such as futures, forwards, swaps and options on organised markets orover-the-counter markets. The list of the different derivatives held by the Group in these markets is detailed in Note 30 to the Consolidated Financial Statements.

The Trading & Shipping division measures its market risk exposure,i.e. potential loss in fair values, on its crude oil, refined products and freight rates trading activities using avalue-at-risk technique. This technique is based on an historical model and makes an assessment of the market risk arising from possible future changes in market values over a24-hour period. The calculation of the range of potential changes in fair values takes into account a

snapshot of theend-of-day exposures and the set of historical price movements for the last 400 business days for all instruments and maturities in the global trading activities. Options are systematically reevaluated using appropriate models.

The potential movement in fair values corresponds to a 97.5%value-at-risk type confidence level. This means that


F-84

the Group’s portfolio result is likely to exceed thevalue-at-risk loss measure once over 40 business days if the portfolio exposures were left unchanged.

Trading & Shipping :value-at-risk with a 97.5% probability

                 
As of December 31,          Year
 
(M€) High  Low  Average  end 
2010
  23.1   3.4   8.9   3.8 
2009  18.8   5.8   10.2   7.6 
2008  13.5   2.8   6.9   11.8 
                 

As of December 31,
(M€)		  High   Low   Average   Year end 

2011

   10.6     3.7     6.1     6.3  

2010

   23.1     3.4     8.9     3.8  

2009

   18.8     5.8     10.2     7.6  

As part of its gas, power and coal trading activity, the Group also uses derivative instruments such as futures, forwards, swaps and options in both organised andover-the-counter markets. In general, the transactions are settled at maturity date through physical delivery. The Gas & Power division measures its market risk exposure,i.e.potential loss in fair values, on its trading business using avalue-at-risk technique. This technique is based on an historical model and makes an assessment of the market risk arising from possible future changes in market values over aone-day period. The calculation of the range of potential changes in fair values takes into account a

snapshot of theend-of-day exposures and the set of historical price movements for the past two years for all instruments and maturities in the global trading business.

Gas & Power trading :value-at-risk with a 97.5% probability

                 
As of December 31,          Year
 
(M€) High  Low  Average  end 
2010
  13.9   2.7   6.8   10.0 
2009  9.8   1.9   5.0   4.8 
2008  16.3   1.3   5.0   1.4 
                 

As of December 31,
(M€)		  High   Low   Average   Year end 

2011

   21.0     12.7     16.0     17.6  

2010

   13.9     2.7     6.8     10.0  

2009

   9.8     1.9     5.0     4.8  

The Group has implemented strict policies and procedures to manage and monitor these market risks. These are based on the splittingseparation of supervisory functions from operationalcontrol and front-office functions and on an integrated information system that enables real-time monitoring of trading activities.

Limits on trading positions are approved by the Group’s Executive Committee and are monitored daily. To increase flexibility and encourage liquidity, hedging operations are performed with numerous independent operators, including other oil companies, major energy producers or consumers and financial institutions. The Group has established counterparty limits and monitors outstanding amounts with each counterparty on an ongoing basis.

Financial markets related risks

As part of its financing and cash management activities, the Group uses derivative instruments to manage its exposure to changes in interest rates and foreign exchange rates. These instruments are principally interest rate and currency swaps. The Group may also use, on a less frequent basis, futures and options contracts. These operations and their accounting treatment are detailed in Notes 1 paragraph M, 20, 28 and 29 to the Consolidated Financial Statements.

Risks relative to cash management operations and to interest rate and foreign exchange financial instruments are managed according to rules set by the Group’s senior management, which provide for regular pooling of available cash balances, open positions and management of the financial instruments by the Treasury Department. Excess cash of the Group is deposited mainly in government institutions, or deposit banks, or major companies through deposits, reverse repurchase agreements and purchase of commercial paper. Liquidity positions and the management of financial instruments are centralized by the Treasury Department, where they are managed by a team specialized in foreign exchange and interest rate market transactions.

The Cash Monitoring-Management Unit within the Treasury Department monitors limits and positions per bank on a daily basis and reports results.results of the Front Office. This unit also preparesmarked-to-market valuations of used financial instruments and, when necessary, performs sensitivity analysis.

Counterparty risk

The Group has established standards for market transactions under which bank counterparties must be approved in advance, based on an assessment of the counterparty’s financial soundness (multi-criteria analysis including a review of market prices and of the Credit Default Swap (CDS), its ratings with Standard & Poor’s and Moody’s, which must be of high quality, and its overall financial condition).

An overall authorized credit limit is set for each bank and is allotted among the subsidiaries and the Group’s central treasury entities according to their needs.

To reduce the market values risk on its commitments, in particular for swaps set as part of bonds issuance, the Treasury Department also developed a system of margin call that is gradually implemented with significant counterparties.

Currency exposure

The Group seeks to minimize the currency exposure of each entity to its functional currency (primarily the euro, the dollar, the Canadian dollar, the pound sterling and the Norwegian krone).


F-85

For currency exposure generated by commercial activity, the hedging of revenues and costs in foreign currencies is typically performed using currency operations on the spot market and, in some cases, on the forward market. The Group rarely hedges future cash flows, although it may use options to do so.

With respect to currency exposure linked to non-current assets booked in a currency other than the euro, the Group has a policy of reducing the related currency exposure by financing these assets in the same currency.

Net short-term currency exposure is periodically monitored against limits set by the Group’s senior management.

The non-current debt described in Note 20 to the Consolidated Financial Statements is generally raised by the corporate treasury entities either directly in dollars, in euros or euros,in Canadian dollars, or in other currencies which are then exchanged for dollars or euros through swaps issues to appropriately match general corporate needs. The proceeds from these debt issuances are loaned to

affiliates whose accounts are kept in dollars, in Canadian dollars or in euros. Thus, the net sensitivity of these positions to currency exposure is not significant.

The Group’s short-term currency swaps, the notional value of which appears in Note 29 to the Consolidated Financial Statements, are used to attempt to optimize the centralized cash management of the Group. Thus, the sensitivity to currency fluctuations which may be induced is likewise considered negligible.

Short-term interest rate exposure and cash

Cash balances, which are primarily composed of euros and dollars, are managed according to the guidelines established by the Group’s senior management (maintain an adequate level of liquidity, optimize revenue from investments considering existing interest rate yield curves,

and minimize the cost of borrowing) over a less than twelve-month horizon and on the basis of a daily interest rate benchmark, primarily through short-term interest rate swaps and short-term currency swaps, without modifying currency exposure.

Interest rate risk on non-current debt

The Group’s policy consists of incurring non-current debt primarily at a floating rate, or, if the opportunity arises at the time of an issuance, at a fixed rate. Debt is incurred in dollars, in euros or in eurosCanadian dollars according to general corporate needs. Long-term interest rate and currency swaps may be used to hedge bonds at their issuance in order to create a variable or fixed rate synthetic debt. In order to partially modify the interest rate structure of the long-term debt, TOTAL may also enter into long-term interest rate swaps.


F-86

 

Sensitivity analysis on interest rate and foreign exchange risk

The tables below present the potential impact of an increase or decrease of 10 basis points on the interest rate yield curves for each of the currencies on the fair value of the current financial instruments as of December 31, 2011, 2010 2009 and 2008.

                 
ASSETS/(LIABILITIES)
       Change in fair value due to a
 
(M€) Carrying
  Estimated
  change in interest rate by 
As of December 31, 2010 amount  fair value  + 10 basis points  - 10 basis points 
Bonds (non-current portion, before swaps)  (20,019)  (20,408)  86   (84)
Swaps hedging fixed-rates bonds (liabilities)
  (178)  (178)        
Swaps hedging fixed-rates bonds (assets)
  1,870   1,870         
Total swaps hedging fixed-rates bonds (assets and liabilities)  1,692   1,692   (59)  59 
Current portion of non-current debt after swap (excluding capital lease obligations)  3,483   3,483   4   (4)
Other interest rates swaps  (2)  (2)  3   (3)
Currency swaps and forward exchange contracts  (101)  (101)  —   — 
                 
As of December 31, 2009
                
                 
Bonds (non-current portion, before swaps)  (18,368)  (18,836)  75   (75)
Swaps hedging fixed-rates bonds (liabilities)
  (241)  (241)        
Swaps hedging fixed-rates bonds (assets)
  1,025   1,025         
Total swaps hedging fixed-rates bonds (assets and liabilities)  784   784   (57)  57 
Current portion of non-current debt after swap (excluding capital lease obligations)  (2,111)  (2,111)  3   (3)
Other interest rates swaps  (1)  (1)  1   (1)
Currency swaps and forward exchange contracts  34   34   —   — 
                 
As of December 31, 2008
                
                 
Bonds (non-current portion, before swaps)  (14,119)  (14,119)  47   (43)
Swaps hedging fixed-rates bonds (liabilities)
  (440)  (440)        
Swaps hedging fixed-rates bonds (assets)
  892   892         
Total swaps hedging fixed-rates bonds (assets and liabilities)  452   452   (44)  44 
Current portion of non-current debt after swap (excluding capital lease obligations)  (2,025)  (2,025)  3   (3)
Other interest rates swaps  (4)  (4)  1   (1)
Currency swaps and forward exchange contracts  (56)  (56)  —   — 
2009.

            Change in fair
value due to a change
in interest rate by		 

Assets / (Liabilities) (M€)

   
 		Carrying
amount		  
  		  
 		Estimated
fair value		  
  		  
 		+ 10 basis
points		  
  		  
 		- 10 basis
points		  
  

As of December 31, 2011

                 

Bonds (non-current portion, before swaps)

   (21,402)   (22,092)   83    (83) 

    Swaps hedging fixed-rates bonds (liabilities)

   (146)   (146)   

    Swaps hedging fixed-rates bonds (assets)

   1,976    1,976    

Total swaps hedging fixed-rates bonds (assets and liabilities)

   1,830    1,830    (49)   49  

Current portion of non-current debt after swap (excluding capital lease obligations)

   3,488    3,488    3    (3) 

Other interest rates swaps

   (1)   (1)   3    (3) 

Currency swaps and forward exchange contracts

   47    47    —    —  

As of December 31, 2010

                 

Bonds (non-current portion, before swaps)

   (20,019)   (20,408)   86    (84) 

    Swaps hedging fixed-rates bonds (liabilities)

   (178)   (178)   

    Swaps hedging fixed-rates bonds (assets)

   1,870    1,870    

Total swaps hedging fixed-rates bonds (assets and liabilities)

   1,692    1,692    (59)   59  

Current portion of non-current debt after swap (excluding capital lease obligations)

   3,483    3,483    4    (4) 

Other interest rates swaps

   (2)   (2)   3    (3) 

Currency swaps and forward exchange contracts

   (101)   (101)   —    —  

As of December 31, 2009

                 

Bonds (non-current portion, before swaps)

   (18,368)   (18,836)   75    (75) 

    Swaps hedging fixed-rates bonds (liabilities)

   (241)   (241)   

    Swaps hedging fixed-rates bonds (assets)

   1,025    1,025    

Total swaps hedging fixed-rates bonds (assets and liabilities)

   784    784    (57)   57  

Current portion of non-current debt after swap (excluding capital lease obligations)

   (2,111)   (2,111)   3    (3) 

Other interest rates swaps

   (1)   (1)   1    (1) 

Currency swaps and forward exchange contracts

   34    34    —    —  

The impact of changes in interest rates on the cost of net debt before tax is as follows:

             
For The year ended December 31, (M€) 2010  2009  2008 
Cost of net debt  (334)  (398)  (527)
Interest rate translation of :            
+ 10 basis points  (11)  (11)  (11)
- 10 basis points  11   11   11 
+ 100 basis points  (107)  (108)  (113)
- 100 basis points  107   108   113 
             

For the year ended December 31, (M€)  2011  2010  2009 

Cost of net debt

   (440)   (334)   (398) 

Interest rate translation of :

    

+ 10 basis points

   (10)   (11)   (11) 

- 10 basis points

   10    11    11  

+ 100 basis points

   (103)   (107)   (108) 

- 100 basis points

   103    107    108  

As a result of the policy for the management of currency exposure previously described, the Group’s sensitivity to currency exposure is primarily influenced by the net equity of the subsidiaries whose functional currency is the dollar and, to a lesser extent, the pound sterling, the Norwegian krone and the Norwegian krone.


F-87

Canadian dollar.

This sensitivity is reflected in the historical evolution of the currency translation adjustment recorded in the statement of changes in shareholders’ equity which, in the course of the last three fiscal years, is essentially related to the fluctuation of dollar and pound sterling and is set forth in the table below:
         
  Euro / Dollar
 Euro / Pound sterling
  exchange rates exchange rates
As of December 31, 2010
  1.34   0.86 
As of December 31, 2009  1.44   0.89 
As of December 31, 2008  1.39   0.95 
         
                     
              Other
 
              currencies
 
           Pound
  and equity
 
As of December 31, 2010 (M€) Total  Euro  Dollar  sterling  affiliates(a) 
Shareholders’ equity at historical exchange rate  62,909   32,894   22,242   4,997   2,776 
Currency translation adjustment before net investment hedge  (2,501)  —   (1,237)  (1,274)  10 
Net investment hedge — open instruments  6   —   6   —   — 
Shareholders’ equity at exchange rate as of December 31, 2010  60,414   32,894   21,011   3,723   2,786 
                     
                     
              Other
 
              currencies
 
           Pound
  and equity
 
As of December 31, 2009 (M€) Total  Euro  Dollar  sterling  affiliates 
Shareholders’ equity at historical exchange rate  57,621   27,717   18,671   5,201   6,032 
Currency translation adjustment before net investment hedge  (5,074)  —   (3,027)  (1,465)  (582)
Net investment hedge — open instruments  5   —   6   (1)  — 
Shareholders’ equity at exchange rate as of December 31, 2009  52,552   27,717   15,650   3,735   5,450 
                     
                     
              Other
 
              currencies
 
           Pound
  and equity
 
As of December 31, 2008 (M€) Total  Euro  Dollar  sterling  affiliates 
Shareholders’ equity at historical exchange rate  53,868   25,084   15,429   5,587   7,768 
Currency translation adjustment before net investment hedge  (4,876)  —   (2,191)  (1,769)  (916)
Net investment hedge — open instruments  —   —   —   —   — 
Shareholders’ equity at exchange rate as of December 31, 2008  48,992   25,084   13,238   3,818   6,852 
                     

    Euro / Dollar
exchange rates		   Euro / Pound sterling
exchange rates		 

As of December 31, 2011

   1.29     0.84  

As of December 31, 2010

   1.34     0.86  

As of December 31, 2009

   1.44     0.89  

As of December 31, 2011 (M€)  Total  Euro   Dollar  Pound
sterling		  Other currencies and
equity affiliates(a)		 

Shareholders’ equity at historical exchange rate

   69,025    41,396     21,728    4,713    1,188  

Currency translation adjustment before net investment hedge

   (962)     127    (923)   (166) 

Net investment hedge — open instruments

   (26)     (25)   (1)   —  

Shareholders’ equity at exchange rate as of December 31, 2011

   68,037    41,396     21,830    3,789    1,022  
      
As of December 31, 2010 (M€)  Total  Euro   Dollar  Pound
sterling		  Other currencies and
equity affiliates(a)		 

Shareholders’ equity at historical exchange rate

   62,909    32,894     22,242    4,997    2,776  

Currency translation adjustment before net investment hedge

   (2,501)   —     (1,237)   (1,274)   10  

Net investment hedge — open instruments

   6    —     6    —    —  

Shareholders’ equity at exchange rate as of December 31, 2010

   60,414    32,894     21,011    3,723    2,786  
As of December 31, 2009 (M€)  Total  Euro   Dollar  Pound
sterling		  Other currencies and
equity affiliates		 

Shareholders’ equity at historical exchange rate

   57,621    27,717     18,671    5,201    6,032  

Currency translation adjustment before net investment hedge

   (5,074)   —     (3,027)   (1,465)   (582) 

Net investment hedge — open instruments

   5    —     6    (1)   —  

Shareholders’ equity at exchange rate as of December 31, 2009

   52,552    27,717     15,650    3,735    5,450  

(a)
(a)The decrease in the heading “Other currencies and equity affiliates” is mainly explained by the change in the consolidation method of Sanofi-AventisSanofi (see Note 3 to the Consolidated Financial Statements). The contribution to the shareholders’ equity of this investment is now reclassified into the heading for the Eurozone.

As a result of this policy, the impact of currency exchange rate fluctuations on consolidated income, as illustrated in Note 7 to the Consolidated Financial Statements, has not been significant over the last three years despite the considerable fluctuation of the dollar (nil(gain of€118 million in 2011, nil result in 2010, loss of €32€32 million in 2009, gain of €112 million in 2008)2009).

Stock market risk

The Group holds interests in a number of publicly-traded companies (see Notes 12 and 13 to the Consolidated Financial Statements). The market value of these holdings fluctuates due to various factors, including stock market trends, valuations of the sectors in which the companies operate, and the economic and financial condition of each individual company.

Liquidity risk

TOTAL S.A. has confirmed lines of credit granted by international banks, which are calculated to allow it to manage its short-term liquidity needs as required.

As of December 31, 2010,2011, these lines of credit amounted to $9,592$10,139 million, of which $9,581$10,096 million was unused. The agreements for the lines of credit granted to TOTAL S.A. do not contain conditions related to the Company’s financial ratios, to its financial ratings from specialized agencies, or to the occurrence of events that could have a material adverse effect on its financial position. As of December 31, 2010,2011, the aggregate amount of the principal confirmed lines of credit


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granted by international banks to Group companies, including TOTAL S.A., was $10,395$11,447 million, of which $10,383$11,154 million was unused. 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.

The following tables show the maturity of the financial assets and liabilities of the Group as of December 31, 2011, 2010 2009 and 20082009 (see Note 20 to the Consolidated Financial Statements).

                             
As of December 31, 2010 (M€)
 Less than
              More than
    
ASSETS/(LIABILITIES) one year  1-2 years  2-3 years  3-4 years  4-5 years  5 years  Total 
Non-current financial debt (notional value excluding interests)      (3,355)  (3,544)  (2,218)  (3,404)  (6,392)  (18,913)
Current borrowings  (9,653)                      (9,653)
Other current financial liabilities  (159)                      (159)
Current financial assets  1,205                       1,205 
Cash and cash equivalents  14,489                       14,489 
                             
Net amount before financial expense
  5,882   (3,355)  (3,544)  (2,218)  (3,404)  (6,392)  (13,031)
Financial expense on non-current financial debt  (843)  (729)  (605)  (450)  (358)  (1,195)  (4,180)
Interest differential on swaps  461   334   153   33   2   (78)  905 
                             
Net amount
  5,500   (3,750)  (3,996)  (2,635)  (3,760)  (7,665)  (16,306)
                             
                             
As of December 31, 2009 (M€)
 Less than
              More than
    
ASSETS/(LIABILITIES) one year  1-2 years  2-3 years  3-4 years  4-5 years  5 years  Total 
Non-current financial debt (notional value excluding interests)      (3,658)  (3,277)  (3,545)  (2,109)  (5,823)  (18,412)
Current borrowings  (6,994)                      (6,994)
Other current financial liabilities  (123)                      (123)
Current financial assets  311                       311 
Cash and cash equivalents  11,662                       11,662 
                             
Net amount before financial expense
  4,856   (3,658)  (3,277)  (3,545)  (2,109)  (5,823)  (13,556)
Financial expense on non-current financial debt  (768)  (697)  (561)  (448)  (301)  (1,112)  (3,887)
Interest differential on swaps  447   233   100   25   (16)  (55)  734 
                             
Net amount
  4,535   (4,122)  (3,738)  (3,968)  (2,426)  (6,990)  (16,709)
                             
                             
As of December 31, 2008 (M€)
 Less than
              More than
    
ASSETS/(LIABILITIES) one year  1-2 years  2-3 years  3-4 years  4-5 years  5 years  Total 
Non-current financial debt (notional value excluding interests)      (2,992)  (3,658)  (3,324)  (3,232)  (2,093)  (15,299)
Current borrowings  (7,722)                      (7,722)
Other current financial liabilities  (158)                      (158)
Current financial assets  187                       187 
Cash and cash equivalents  12,321                       12,321 
                             
Net amount before financial expense
  4,628   (2,992)  (3,658)  (3,324)  (3,232)  (2,093)  (10,671)
Financial expense on non-current financial debt  (554)  (512)  (431)  (299)  (189)  (174)  (2,159)
Interest differential on swaps  118   211   100   62   37   (7)  521 
                             
Net amount
  4,192   (3,293)  (3,989)  (3,561)  (3,384)  (2,274)  (12,309)
                             


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As of December 31, 2011 (M€)
Assets/(Liabilities)		  Less than
one year		  1-2 years  2-3 years  3-4 years  4-5 years  More than
5 years		  Total 

Non-current financial debt (notional value excluding interests)

    (4,492)   (3,630)   (3,614)   (1,519)   (7,326)   (20,581) 

Current borrowings

   (9,675)        (9,675) 

Other current financial liabilities

   (167)        (167) 

Current financial assets

   700         700  

Cash and cash equivalents

   14,025                        14,025  

Net amount before financial expense

   4,883    (4,492)   (3,630)   (3,614)   (1,519)   (7,326)   (15,698) 

Financial expense on non-current financial debt

   (785)   (691)   (521)   (417)   (302)   (1,075)   (3,791) 

Interest differential on swaps

   320    331    221    120    55    44    1,091  

Net amount

   4,418    (4,852)   (3,930)   (3,911)   (1,766)   (8,357)   (18,398) 
                              
As of December 31, 2010
(M€) Assets/(Liabilities)		  Less than
one year		  1-2 years  2-3 years  3-4 years  4-5 years  More than
5 years		  Total 

Non-current financial debt (notional value excluding interests)

    (3,355)   (3,544)   (2,218)   (3,404)   (6,392)   (18,913) 

Current borrowings

   (9,653)        (9,653) 

Other current financial liabilities

   (159)        (159) 

Current financial assets

   1,205         1,205  

Cash and cash equivalents

   14,489                        14,489  

Net amount before financial expense

   5,882    (3,355)   (3,544)   (2,218)   (3,404)   (6,392)   (13,031) 

Financial expense on non-current financial debt

   (843)   (729)   (605)   (450)   (358)   (1,195)   (4,180) 

Interest differential on swaps

   461    334    153    33    2    (78)   905  

Net amount

   5,500    (3,750)   (3,996)   (2,635)   (3,760)   (7,665)   (16,306) 
                              
As of December 31, 2009
(M€) Assets/(Liabilities)		  Less than
one year		  1-2 years  2-3 years  3-4 years  4-5 years  More than
5 years		  Total 

Non-current financial debt (notional value excluding interests)

    (3,658)   (3,277)   (3,545)   (2,109)   (5,823)   (18,412) 

Current borrowings

   (6,994)        (6,994) 

Other current financial liabilities

   (123)        (123) 

Current financial assets

   311         311  

Cash and cash equivalents

   11,662                        11,662  

Net amount before financial expense

   4,856    (3,658)   (3,277)   (3,545)   (2,109)   (5,823)   (13,556) 

Financial expense on non-current financial debt

   (768)   (697)   (561)   (448)   (301)   (1,112)   (3,887) 

Interest differential on swaps

   447    233    100    25    (16)   (55)   734  

Net amount

   4,535    (4,122)   (3,738)   (3,968)   (2,426)   (6,990)   (16,709) 

In addition, the Group guarantees bank debt and finance lease obligations of certain non-consolidated companies and equity affiliates. A payment would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee, and no assets are held as collateral for these guarantees. Maturity dates and amounts are set forth in Note 23 to the Consolidated Financial Statements (“Guarantees given against borrowings”).

The Group also guarantees the current liabilities of certain non-consolidated companies. Performance under these guarantees would be triggered by a financial default of these entities. Maturity dates and amounts are set forth in Note 23 to the Consolidated Financial Statements (“Guarantees of current liabilities”).

The following table sets forth financial assets and liabilities related to operating activities as of December 31, 2011, 2010 2009 and 20082009 (see Note 28 to the Consolidated Financial Statements).

             
As of December 31
         
(M€)
         
ASSETS/(LIABILITIES) 2010  2009  2008 
Accounts payable  (18,450)  (15,383)  (14,815)
Other operating liabilities  (3,574)  (4,706)  (4,297)
including financial instruments related to commodity contracts
  (559)  (923)  (1,033)
Accounts receivable, net  18,159   15,719   15,287 
Other operating receivables  4,407   5,145   6,208 
including financial instruments related to commodity contracts
  499   1,029   1,664 
             
Total
  542   775   2,383 
             

As of December 31 (M€)
Assets/(Liabilities)		  2011  2010  2009 

Accounts payable

   (22,086)   (18,450)   (15,383) 

Other operating liabilities

   (5,441)   (3,574)   (4,706) 

    including financial instruments related to commodity contracts

   (606)   (559)   (923) 

Accounts receivable, net

   20,049    18,159    15,719  

Other operating receivables

   7,467    4,407    5,145  

    including financial instruments related to commodity contracts

   1,074    499    1,029  

Total

   (11)   542    775  

These financial assets and liabilities mainly have a maturity date below one year.

Credit risk

Credit risk is defined as the risk of the counterparty to a contract failing to perform or pay the amounts due.

The Group is exposed to credit risks in its operating and financing activities. The Group’s maximum exposure to credit risk is partially related to financial assets recorded on its balance sheet, including energy derivative instruments that have a positive market value.

The following table presents the Group’s maximum credit risk exposure:

             
As of December 31
         
(M€)
         
ASSETS/(LIABILITIES) 2010  2009  2008 
Loans to equity affiliates(Note 12)
  2,383   2,367   2,005 
Loans and advances(Note 14)
  1,596   1,284   1,403 
Hedging instruments of non-current financial debt(Note 20)
  1,870   1,025   892 
Accounts receivable(Note 16)
  18,159   15,719   15,287 
Other operating receivables (Note 16)  4,407   5,145   6,208 
Current financial assets(Note 20)
  1,205   311   187 
Cash and cash equivalents(Note 27)
  14,489   11,662   12,321 
             
Total
  44,109   37,513   38,303 
             

As of December 31, (M€) Assets/
(Liabilities)		 2011  2010  2009 

Loans to equity affiliates(Note 12)

  2,246    2,383    2,367  

Loans and advances(Note 14)

  2,055    1,596    1,284  

Hedging instruments of non-current financial debt(Note 20)

  1,976    1,870    1,025  

Accounts receivable(Note 16)

  20,049    18,159    15,719  

Other operating receivables (Note 16)

  7,467    4,407    5,145  

Current financial assets(Note 20)

  700    1,205    311  

Cash and cash equivalents (Note 27)

  14,025    14,489    11,662  

Total

  48,518    44,109    37,513  

The valuation allowance on loans and advances and on accounts receivable and other operating receivables is detailed respectively in Notes 14 and 16 to the Consolidated Financial Statements.

As part of its credit risk management related to operating and financing activities, the Group has developed margin call contracts with certain counterparties. As of

December 31, 2010,2011, the net amount received as part of these margin calls was €1,560€1,682 million (against €693€1,560 million as of December 31, 2010 and€693 million as of December 31, 2009).

Credit risk is managed by the Group’s business segments as follows:

Upstream Segment

Exploration & Production

• Upstream Segment

- Exploration & Production

Risks arising under contracts with government authorities or other oil companies or under long-term supply contracts necessary for the development of projects are evaluated during the project approval process. The long-term aspect of these contracts and the high-quality of the other parties lead to a low level of credit risk.

Risks related to commercial operations, other than those described above (which are, in practice, directly monitored by subsidiaries), are subject to procedures for establishing and reviewing credit.

Customer receivables are subject to provisions on acase-by-case basis, based on prior history and management’s assessment of the facts and circumstances.

Gas & Power


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- Gas & Power
The Gas & Power division deals with counterparties in the energy, industrial and financial sectors throughout the world. Financial institutions providing credit risk coverage are highly rated international bank and insurance groups.

Potential counterparties are subject to credit assessment and approval before concluding transactions and are thereafter subject to regular review, including re-appraisal and approval of the limits previously granted.

The creditworthiness of counterparties is assessed based on an analysis of quantitative and qualitative data regarding financial standing and business risks, together with the review of any relevant third party and market information, such as data published by rating agencies. On this basis, credit limits are defined for each potential counterparty and, where appropriate, transactions are subject to specific authorisations.

Credit exposure, which is essentially an economic exposure or an expected future physical exposure, is permanently monitored and subject to sensitivity measures.

Credit risk is mitigated by the systematic use of industry standard contractual frameworks that permit netting, enable requiring added security in case of adverse change in the counterparty risk, and allow for termination of the contract upon occurrence of certain events of default.

 

•
• Downstream Segment
 - Refining & Marketing

Downstream Segment

Refining & Marketing

Internal procedures for the Refining & Marketing division include rules on credit risk that describe the basis of internal control in this domain, including the separation of authority between commercial and financial operations. Credit policies are defined at the local level, complemented by the implementation of procedures to monitor customer risk (credit committees at the subsidiary level, the creation of credit limits for corporate customers, portfolio guarantees, etc.).

Each entity also implements monitoring of its outstanding receivables. Risks related to credit may be mitigated or limited by subscription of credit insurance and/or requiring security or guarantees.

Bad debts are provisioned on acase-by-case basis at a rate determined by management based on an assessment of the facts and circumstances.risk of credit loss.

Trading & Shipping

- Trading & Shipping

Trading & Shipping deals with commercial counterparties and financial institutions located throughout the world. Counterparties to physical and derivative transactions are primarily entities involved in the oil and gas industry or in the trading of energy commodities, or financial institutions. Credit risk coverage is concluded with financial institutions, international banks and insurance groups selected in accordance with strict criteria.

The Trading & Shipping division has a strict policy of internal delegation of authority governing establishment of country and counterparty credit limits and approval of specific transactions. Credit exposures contracted under these limits and approvals are monitored on a daily basis.

Potential counterparties are subject to credit assessment and approval prior to any transaction being concluded and all active counterparties are subject to regular reviews, including re-appraisal and approval of granted limits. The creditworthiness of counterparties is assessed based on an analysis of quantitative and qualitative data regarding financial standing and business risks, together with the review of any relevant third party and market information, such as ratings published by Standard & Poor’s, Moody’s Investors Service and other agencies.

Contractual arrangements are structured so as to maximize the risk mitigation benefits of netting between transactions wherever possible and additional protective

terms providing for the provision of security in the event of financial deterioration and the termination of transactions on the occurrence of defined default events are used to the greatest permitted extent.

Credit risks in excess of approved levels are secured by means of letters of credit and other guarantees, cash deposits and insurance arrangements. In respect of derivative transactions, risks are secured by margin call contracts wherever possible.

Chemicals Segment

• Chemicals Segment

Credit risk in the Chemicals segment is primarily related to commercial receivables. Each division implements procedures for managing and provisioning credit risk that differ based on the size of the subsidiary and the market in which it operates. The principal elements of these procedures are:

implementation of credit limits with different authorization procedures for possible credit overruns;

use of insurance policies or specific guarantees (letters of credit);

regular monitoring and assessment of overdue accounts (aging balance), including collection procedures; and

provisioning of bad debts on a customer-by-customer basis, according to payment delays and local payment practices (provisions may also be calculated based on statistics).

32)
 • Implementation of credit limits with different authorization procedures for possible credit overruns;
• Use of insurance policies or specific guarantees (letters of credit);
• Regular monitoring and assessment of overdue accounts (aging balance), including collection procedures; and


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• Provisioning of bad debts on acustomer-by-customer basis, according to payment delays and local payment practices (provisions may also be calculated based on statistics).
32) OTHER RISKS AND CONTINGENT LIABILITIES

TOTAL is not currently aware of any exceptional event, dispute, risks or contingent liabilities that could have a material impact on the assets and liabilities, results, financial position or operations of the Group.

The contingent commitments and contractual obligations are detailed in note 23 to the consolidated financial statement.

ANTITRUST INVESTIGATIONS

For the year ended 2010, the Group has not been fined pursuant to a Court ruling.

The principal antitrust proceedings in which the Group isGroup’s companies are involved are described thereafter.hereafter.

 

Chemicals Segment

•
• 

As part of the spin-off of Arkema(1)(1) in 2006, TOTAL S.A. or certain other Group companies agreed to grant Arkema guaranteesa guarantee for potential monetary consequences related to antitrust proceedings arising from events prior to the spin-off.

These guarantees cover, for a period of ten years, 90% of amounts paid by Arkema related to (i) fines imposed by European authorities or European member-states for competition law violations, (ii) fines imposed by U.S. courts or antitrust authorities for federal antitrust violations or violations of the competition laws of U.S. states, (iii) damages awarded in civil proceedings related to the government proceedings mentioned above, and (iv) certain costs related to these proceedings. The guarantee related to anti-competition violations in Europe applies to amounts above a €176.5 million threshold. On the other hand, the agreements provide that Arkema will indemnify TOTAL S.A. or any Group company for 10% of any amount that TOTAL S.A. or any Group company are required to pay under any of the proceedings covered by these guarantees.

This guarantee covers, for a period of ten years from the date of the spin-off, 90% of amounts paid by Arkema related to (i) fines imposed by European authorities or European member-states for competition law violations, (ii) fines imposed by U.S. courts or antitrust authorities for federal antitrust violations or violations of the competition laws of U.S. states, (iii) damages awarded in civil proceedings related to the government proceedings mentioned above, and (iv) certain costs related to these proceedings. The guarantee related to anti-competition violations in Europe applies to amounts above a€176.5 million threshold. On the other hand, the agreements provide that Arkema will indemnify TOTAL S.A. or any Group company for 10% of any amount that TOTAL S.A. or any Group company are required to pay under any of the proceedings covered by this guarantee, in Europe.

If one or more individuals or legal entities, acting alone or together, directly or indirectly holds more than one-third of the voting rights of Arkema, or if Arkema transfers more than 50% of its assets (as calculated under the enterprise valuation method, as of the date of the transfer) to a third party or parties acting together, irrespective of the type or number of transfers, these guaranteesthis guarantee will become void.

In the United States, civil liability lawsuits, for which TOTAL S.A. has been named as the parent company, are closed without significant impact on the Group’s financial position.

• In the United States, investigations into certain commercial practices of some subsidiaries of the Arkema group have been closed since 2007; no charges have been brought against Arkema. Civil liability lawsuits, for which TOTAL S.A. has been named as the parent company, are about to be closed and are not expected to have a significant impact on the Group’s financial position.
• In Europe, since May 2006, the European Commission has fined companies of the Group in its configuration prior to the spin-off an overall amount of €385.47

In Europe, since 2006, the European Commission has fined companies of the Group in its configuration prior to the spin-off an overall amount of€385.47 million, of which Elf Aquitaine and/or TOTAL S.A. were held jointly liable for€280.17 million, Elf Aquitaine being personally fined€23.6 million for deterrence. These fines are entirely settled as of today.

and/or TOTAL S.A. and their subsidiaries were held jointly liable for €280.17 million, Elf Aquitaine being personally fined €23.6 million for deterrence. These fines are entirely settled as of today.

As a result,(2) since the spin-off, the Group has paid the overall amount of €188.07€188.07 million(2), corresponding to 90% of the fines overall amount once the threshold

provided for by the guarantee is deducted.

deducted to which an amount of€31.31 million of interest has been added as explained hereinafter.

The European Commission imposed these fines following investigations between 2000 and 2004 into commercial practices involving eight products sold by Arkema. Five of these investigations resulted in prosecutions from the European Commission for which Elf Aquitaine has been named as the parent company, and two of these investigations named TOTAL S.A. as the ultimate parent company of the Group.

TOTAL S.A. and Elf Aquitaine are contesting their liability based solely on their status as parent companies and appealed for cancellation and reformation of the rulings that are still pending before the relevant EU court of appeals or supreme court of appeals.

During the year 2011, four of the proceedings have evolved and are closed as far as Arkema is concerned:

–

In one of these proceedings, the Court of Justice of the European Union (CJEU) has rejected the action of Arkema while the decisions of the European Commission and of the General Court of the European Union against the parent companies have been squashed. Consequently, this proceeding is definitively closed regarding Arkema as well as the parent companies.

–

In two other proceedings, previous decisions against Arkema and the parent companies have been upheld by the General Court of the European Union. While the parent companies have introduced an appeal before the CJEU, Arkema did not appeal to the CJEU.

–

Finally, in a last proceeding, the General Court has decided to reduce the amount of the fine initially ordered against Arkema while, in parallel, it has rejected the actions of the parent companies that have remained obliged to pay the whole amount of the fine initially ordered by the European Commission. Arkema has accepted this decision while the parent companies have introduced an appeal before the CJEU.

 

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(1)Arkema is used in this section to designate those companies of the Arkema group whose ultimate parent company is Arkema S.A. Arkema became an independent company after being spun-off from TOTAL S.A. in May 2006.
(2)This amount does not take into account a case that led to Arkema, prior to Arkema’s spin-off from TOTAL, and Elf Aquitaine being fined jointly€45 million and Arkema being fined€13.5 million.

Besides, a

With the exception of the€31.31 million of interest charged by the European Commission to the parent companies, which has been required to pay in accordance with the decision concerning the last proceeding referred hereinabove, the evolution of the proceedings during the year 2011 did not modify the global amount assumed by the Group in execution of the guarantee.

In addition, civil proceedingproceedings against Arkema and fiveother groups of companies waswere initiated in 2009 and 2011, respectively, before a German regional courtand Dutch courts by a third partyparties for an alleged damagedamages pursuant to onetwo of the above describedmentioned legal proceedings. TOTAL S.A. was summoned to serve notice of the dispute before thisthe German court. At this point, the probability to have a favorable verdict and the financial impacts of this procedurethese proceedings are uncertain due to the number of legal difficulties it gavethey give rise to, the

(1)  Arkema is used in this section to designate those companies of the Arkema group whose ultimate parent company is Arkema S.A. Arkema became an independent company after being spun-off from TOTAL S.A. in May 2006.
(2)  This amount does not take into account a case that led to Arkema, prior to Arkema’s spin-off from TOTAL, and Elf Aquitaine being fined jointly €45 million and Arkema being fined €13.5 million. This case is referred to in past Registration Documents.


F-92

lack of documented claimclaims and the complex evaluationevaluations of the alleged damage.
damages.

Arkema began implementing compliance procedures in 2001 that are designed to prevent its employees from violating antitrust provisions. However, it is not possible to exclude the possibility that the relevant authorities could commence additional proceedings involving Arkema regarding events prior to the spin-off, as well as Elf Aquitaineand/or TOTAL S.A. based on their status as parent company.

Within the framework of all of the legal proceedings described above, a €17€17 million reserve isremains booked in the Group’s consolidated financial statements as of December 31, 2010.

2011.

Downstream segment

Pursuant to a statement of objections received by Total Nederland N.V. and TOTAL S.A. (based on its status as parent company) from the European Commission, Total Nederland N.V. was fined€20.25 million in 2006, for which TOTAL S.A. was held jointly liable for€13.5 million. TOTAL S.A. appealed this decision before the relevant court and this appeal is still pending.

• Pursuant to a statement of objections received by Total Nederland N.V. and TOTAL S.A. (based on its status as parent company) from the European Commission, Total Nederland N.V. was fined in 2006 €20.25 million, which has been paid, and for which TOTAL S.A. was held jointly liable for €13.5 million. TOTAL S.A. appealed this decision before the relevant court and this appeal is still pending.

In addition, pursuant to a statement of objections received by Total Raffinage Marketing (formerly Total France) and TOTAL S.A. from the European Commission regarding another product line of the Refining & Marketing division, Total Raffinage Marketing was fined €128.2€128.2 million in 2008, which has been paid, and for which TOTAL S.A. was held jointly liable based on its status as parent company. TOTAL S.A. also appealed this decision before the relevant court and this appeal is still pending.

• Finally, TotalGaz and Total Raffinage Marketing received a statement of objections from the French Antitrust Authority (Autorité de la concurrence française) regarding alleged antitrust practices concerning another product line of the Refining & Marketing division. The case was dismissed by decision of the French antitrust authorities on December 17, 2010.
Given

In addition, civil proceedings against TOTAL S.A and Total Raffinage Marketing and other companies were initiated before U.K and Dutch courts by third parties for alleged damages in connection with the discretionary powers grantedprosecutions brought by the European Commission in this case. At this point, the probability to have a favorable verdict and the financial impacts of these procedures are uncertain due to the antitrust authorities for determining fines relatingnumber of legal difficulties they gave rise to, antitrust regulations, itthe lack of documented claims and evaluations of the alleged damages.

Within the framework of the legal proceedings described above, a€30 million reserve is not currently possible to determine with certaintybooked in the outcomeGroup’s consolidated financial statements as of these investigations and proceedings. TOTAL S.A. and Elf Aquitaine are contesting their liability andDecember 31, 2011.

Whatever the methodevolution of determining these fines. Although it is not possible to predict the ultimate outcome of these proceedings described above, the Group believes that they willtheir outcome should not have a material adverse effect on itsthe Group’s financial situation or consolidated results.

GRANDE PAROISSE

An explosion occurred at the Grande Paroisse industrial site in the city of Toulouse in France on September 21, 2001. Grande Paroisse, a former subsidiary of Atofina which became a subsidiary of Elf Aquitaine Fertilisants on December 31, 2004, as part of the reorganization of the Chemicals segment, was principally engaged in the production and sale of agricultural fertilizers. The explosion, which involved a stockpile of ammonium nitrate pellets, destroyed a portion of the site and caused the death of thirty-one people, including twenty-one workers at the site, and injured many others. The explosion also caused significant damage to certain property in part of the city of Toulouse.

This plant has been closed and individual assistance packages have been provided for employees. The site has been rehabilitated.

On December 14, 2006, Grande Paroisse signed, under the supervision of the city of Toulouse, the deed whereby it donated the former site of the AZF plant to the greater agglomeration of Toulouse (CAGT) and theCaisse des dépôts et consignations and its subsidiary ICADE. Under this deed, TOTAL S.A. guaranteed the site restoration obligations of Grande Paroisse and granted a€10 million endowment to the InNaBioSanté research foundation as part of the setting up of a cancer research center at the site by the city of Toulouse.

Regarding the cause of the explosion, the hypothesis that the explosion was caused by Grande Paroisse through the accidental mixing of hundreds of kilos of a chlorine compound at a storage site for ammonium nitrate was

 

BUNCEFIELD

discredited over the course of the investigation. As a result, proceedings against ten of the eleven Grande Paroisse employees charged during the criminal investigation conducted by the Toulouse Regional Court (Tribunal de grande instance) were dismissed and this dismissal was upheld on appeal. Nevertheless, the final experts’ report filed on May 11, 2006 continued to focus on the hypothesis of a chemical accident, although this hypothesis was not confirmed during the attempt to reconstruct the accident at the site. After having articulated several hypotheses, the experts no longer maintain that the accident was caused by pouring a large quantity of a chlorine compound over ammonium nitrate. Instead, the experts have retained a scenario where a container of chlorine compound sweepings was poured between a layer of wet ammonium nitrate covering the floor and a quantity of dry agricultural nitrate at a location not far from the principal storage site. This is claimed to have caused an explosion which then spread into the main storage site. Grande Paroisse was investigated based on this new hypothesis in 2006; Grande Paroisse is contesting this explanation, which it believes to be based on elements that are not factually accurate.

All the requests for additional investigations that were submitted by Grande Paroisse, the former site manager and various plaintiffs were denied on appeal after the end of the criminal investigation procedure. On July 9, 2007, the investigating judge brought charges against Grande Paroisse and the former plant manager before the criminal chamber of the Court of Appeal of Toulouse. In late 2008, TOTAL S.A. and Mr. Thierry Desmarest were summoned to appear in Court pursuant to a request by a victims association. The trial for this case began on February 23, 2009, and lasted approximately four months.

On November 19, 2009, the Toulouse Criminal Court acquitted both the former Plant Manager, and Grande Paroisse due to the lack of reliable evidence for the explosion. The Court also ruled that the summonses against TOTAL S.A. and Mr. Thierry Desmarest, Chairman and CEO at the time of the disaster, were inadmissible.

Due to the presumption of civil liability that applied to Grande Paroisse, the Court declared Grande Paroisse civilly liable for the damages caused by the explosion to the victims in its capacity as custodian and operator of the plant.

The Prosecutor’s office, together with certain third parties, has appealed the Toulouse Criminal Court verdict. In order to preserve its rights, Grande Paroisse lodged a cross-appeal with respect to civil charges.

The appeal proceedings before the Court of Appeal of Toulouse started on November 3, 2011.

A compensation mechanism for victims was set up immediately following the explosion.€2.3 billion was paid for the compensation of claims and related expenses amounts. As of December 31, 2011, a€21 million reserve was recorded in the Group’s consolidated balance sheet.

BUNCEFIELD

On December 11, 2005, several explosions, followed by a major fire, occurred at an oil storage depot at Buncefield, north of London. This depot was operated by Hertfordshire Oil Storage Limited (HOSL), a company in which TOTAL’s UK subsidiary holds 60% and another oil group holds 40%.

The explosion caused injuries, most of which were minor injuries, to a number of people and caused property damage to the depot and the buildings and homes located nearby. The official Independent Investigation Board has indicated that the explosion was caused by the overflow of a tank at the depot. The Board’s final report was released on December 11, 2008. The civil procedure for claims, which had not yet been settled, took place between October and December 2008. The Court’s decision of March 20, 2009, declared TOTAL’s UK subsidiary liable for the accident and solely liable for indemnifying the victims. The subsidiary appealed the decision. The appeal trial took place in January 2010. The Court of Appeals, by a decision handed down on March 4, 2010, confirmed the prior judgment. The Supreme Court of United Kingdom has partially authorized TOTAL’s UK subsidiary to contest the decision. The hearings before the Supreme Court are expectedTOTAL’s UK subsidiary finally decided to be held during the first half ofwithdraw from this recourse due to settlement agreements reached in mid-February 2011.

The Group carries insurance for damage to its interests in these facilities, business interruption and civil liability claims from third parties. The provision for the civil liability that appears in the Group’s consolidated financial statements as of December 31, 2010,2011, stands at €194€80 million after taking into account the payments previously made.

The Group believes that, based on the information currently available, on a reasonable estimate of its liability and on provisions recognized, this accident should not have a significant impact on the Group’s financial situation or consolidated results.

In addition, on December 1, 2008, the Health and Safety Executive (HSE) and the Environment Agency (EA) issued a Notice of prosecution against five companies, including TOTAL’s UK subsidiary. By a judgment on July 16, 2010, TOTAL’s UKthe subsidiary was fined £3.6 million.million and paid it. The decision takes into account a number of elements that have mitigated the impact of the charges brought against it.


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ERIKA

Following the sinking in December 1999 of the Erika, a tanker that was transporting products belonging to one of the Group companies, theTribunal de grande instanceof Paris convicted TOTAL S.A. of marine pollution pursuant to a judgment issued on January 16, 2008, finding that TOTAL S.A. was negligent in its vetting procedure for vessel selection, and ordering TOTAL S.A. to pay a fine of €375,000.€375,000. The courtCourt also ordered compensation to be paid to those affected by the pollution from the Erika up to an aggregate amount of €192€192 million, declaring TOTAL S.A. jointly and severally liable for such payments together with the Erika’s inspection and classification firm, the Erika’s owner and the Erika’s manager.

TOTAL has appealed the verdict of January 16, 2008. In the meantime, it nevertheless proposed to pay third parties who so requested definitive compensation as determined by the court. Forty-oneCourt. Forty-two third parties have been compensated for an aggregate amount of €171.5€171.5 million.

By a decision dated March 30, 2010, the Court of Appeal of Paris upheld the lower courtCourt verdict pursuant to which TOTAL S.A. was convicted of marine pollution and fined €375,000.€375,000. TOTAL appealed this decision to the French Supreme Court (Cour de cassation).

However, the Court of Appeal ruled that TOTAL S.A. bears no civil liability according to the applicable international conventions and consequently ruled that TOTAL S.A. be not convicted.

To facilitate the payment of damages awarded by the Court of Appeal in Paris to third parties against Erika’s controlling and classification firm, the ship-owner and the ship-manager, a global settlement agreement was signed late 2011 between these parties and TOTAL S.A. under the auspices of the IOPC Fund. Under this global settlement agreement, each party agreed to the withdrawal of all civil proceedings initiated against all other parties to the agreement.

TOTAL S.A. believes that, based on the information currently available, the case should not have a significant impact on the Group’s financial situation or consolidated results.

BLUE RAPID AND THE RUSSIAN OLYMPIC COMMITTEE –— RUSSIAN REGIONS AND INTERNEFT

Blue Rapid, a Panamanian company, and the Russian Olympic Committee filed a claim for damages with the Paris Commercial Court against Elf Aquitaine, concerning the withdrawalalleging a so-called non-completion by a former subsidiary of oneElf Aquitaine of its subsidiaries froma contract related to an exploration and

production project in Russia that was negotiated in the early 1990s. Elf Aquitaine believesbelieved this claim to be unfounded.unfounded and opposed it. On January 12, 2009, the Commercial Court of Paris rejected Blue Rapid’s claim against Elf Aquitaine and found that the Russian Olympic Committee did not have standing in the matter. ThisBlue Rapid and the Russian Olympic Committee appealed this decision. On June 30, 2011, the Court of Appeal of Paris dismissed as inadmissible the claim of Blue Rapid and the Russian Olympic Committee against Elf Aquitaine, notably on the grounds of the contract’s termination. Blue Rapid and the Russian Olympic Committee appealed this decision has been appealed. The hearings should be held duringto the first half of 2011.

French Supreme Court.

In connection with the same facts, and fifteen years after the termination of thisthe exploration and production project,contract, a Russian company, which was held not to be the contracting party to the contract, and two regions of the Russian Federation which were not even parties to the contract, have launched an arbitration procedure against athe aforementioned former subsidiary of Elf Aquitaine that was liquidated in 2005, claiming alleged damages of an unspecified amount at this stage ofU.S.$ 22.4 billion. For the procedure. Thesame reasons as those successfully adjudicated by Elf Aquitaine against Blue Rapid and the Russian Olympic Committee, the Group considers this claim to be unfounded.unfounded as to a matter of law or fact. The Group has lodged a criminal complaint to denounce the fraudulent claim which the Group believes it is a victim of and, has taken and reserved its rights to take anyother actionsand/or and measures that would be appropriate to defend its interests.

IRAN

In 2003, the United States Securities and Exchange Commission (SEC) followed by the Department of Justice (DoJ) issued a formal order directing an investigation in connection with the pursuit of business in Iran, by certain oil companies including, among others, TOTAL.

The inquiry concerns an agreement concluded by the Company with a consultant concerning a gas field in Iran and aims to verify whether certain payments made under this agreement would have benefited Iranian officials in violation of the Foreign Corrupt Practices Act (FCPA) and the Company’s accounting obligations.

Investigations are still pending and the Company is cooperating with the SEC and the DoJ. In 2010, the Company opened talks with U.S. authorities, without any acknowledgement of facts, to consider anout-of-court settlement. Generally,out-of-court settlements with U.S. authorities include payment settlement as it is often the case in this kind of finesproceeding.

Late in 2011, the SEC and the obligationDoJ proposed to improve internal compliance systems or other measures.TOTAL out-of-court settlements that would close their inquiries, in exchange for TOTAL’s committing to a number of

 

obligations and paying fines. As TOTAL was unable to agree to several substantial elements of the proposal, the Company is continuing discussions with the U.S. authorities. The Company is free not to accept an out-of-court settlement solution, in which case it would be exposed to the risk of prosecution in the United States.

In this same case,affair, a parallel judicial inquiry related to TOTAL was initiated in France in 2006. In 2007, the Company’s Chief Executive Officer was placed under formal investigation in relation to this inquiry, as the former President of the Middle East department of the Group’s Exploration & Production division. The Company has not been notified of any significant developments in the proceedings since the formal investigation was launched.

At this point, the Company cannot determine when these investigations will terminate, and cannot predict their results, or the outcome of the talks that have been initiated, or the costs of a potentialout-of-court settlement.initiated. Resolving this casethese cases is not expected to have a significant impact on the Group’s financial situation or any impactconsequences on its future planned operations.

OIL-FOR-FOOD PROGRAM

Several countries have launched investigations concerning possible violations related to the United Nations (UN) Oil-for-Food program in Iraq.

Pursuant to a French criminal investigation, certain current or former Group employees were placed under formal criminal investigation for possible charges as accessories to the misappropriation of corporate assets and as accessories to the corruption of foreign public agents. The Chairman and Chief Executive Officer of the Company, formerly President of the Group’s Exploration & Production division, was also placed under formal investigation in October 2006. In 2007, the criminal investigation was closed and the case was transferred to the Prosecutor’s office. In 2009, the Prosecutor’s office recommended to the investigating judge that the case against the Group’s current and former employees and TOTAL’s Chairman and Chief Executive Officer not be pursued.

In early 2010, despite the recommendation of the Prosecutor’s office, a new investigating judge, having taken over the case, decided to indict TOTAL S.A. on bribery charges as well as complicity and influence peddling. The indictment was brought eight years after the beginning of the investigation without any new evidence being introduced.

In October 2010, the Prosecutor’s office recommended to the investigating judge that the case against TOTAL S.A., the Group’s current and former employees and TOTAL’s Chairman and Chief Executive Officer not be pursued.

However, by ordinance notified in early August 2011, the investigating judge on the matter decided to send the case to trial.

The Company believes that its activities related to the Oil-for-Food program have been in compliance with this program, as organized by the UN in 1996.

The Volcker report released by the independent investigating committee set up by the UN had discarded any bribery grievance within the framework of the Oil-For-Food program with respect to TOTAL.

ITALY

As part of an investigation led by the Prosecutor of the Republic of the Potenza Court, Total Italia and certain Group’s employees are the subject of an investigation related to certain calls for tenders that Total Italia made for the preparation and development of an oil field. On February 16, 2009, as a preliminary measure before the proceedings go before the Court, the preliminary investigation judge of Potenza served notice to Total Italia of a decision that would suspend the concession for this field for one year. Total Italia has appealed the decision by the preliminary investigation judge before the Court of Appeal of Potenza. In a decision dated April 8, 2009, the Court reversed the suspension of the concession and appointed for one year,i.e.until February 16, 2010, a judicial administrator to supervise the operations related to the development of the concession, allowing the Tempa Rossa project to continue.

The criminal investigation was closed in the first half of 2010. The preliminary hearing judge, who will decide whether the case shall be returned to the Criminal Court to be judged on the merits, held the first hearing on December 6, 2010. The proceedings before the Judge of the preliminary hearing are still pending.

In 2010, Total Italia’s exploration and production operations were transferred to Total E&P Italia and refining and marketing operations were merged with those of Erg Petroli.

LIBYA

During the financial year 2011, the Group’s activities were affected by the security context in Libya, and the Group’s production was gradually shut down as from the end of February. The Group’s production started up again at the end of September 2011 on the offshore Al Jurf field located in zones 15, 16 & 32 (ex C137) at the level existing before the events, and has gradually restarted since October 2011 in onshore zones 129, 130 and 131. The restart of the Group’s production on the other onshore zones is expected to occur progressively in 2012.

 

In June 2011, the United States Securities and Exchange Commission (SEC) issued to certain oil companies — including, among others, TOTAL — a formal request for information related to their operations in Libya. TOTAL is cooperating with this non public investigation.

YEMEN

During the financial year 2011, the Group’s activities were not significantly impacted by the security context in Yemen, but the Group nevertheless reorganized locally to minimize the risks to its personnel. In addition, on October 15, 2011, the gas pipeline supplying Yemen LNG was sabotaged, and then repaired with no delay, enabling LNG production to resume as from October 26, 2011.

SYRIA

In May 2011, the European Union adopted measures with criminal and financial penalties that prohibit the supply of certain equipment to Syria, as well as certain financial and asset transactions with respect to a list of named individuals and entities. These measures apply to European persons and to entities constituted under the laws of a EU Member State. In September 2011, the EU adopted further measures, including, notably, a prohibition on the purchase, import or transportation from Syria of crude oil and petroleum products. Since early September 2011, the Group ceased to purchase hydrocarbons from Syria. On December 1, 2011, the EU extended sanctions against, among others, three state-owned Syrian oil firms, including General Petroleum Corporation, the Group’s co-contracting partner in PSA 1988 (Deir Es Zor license) and the Tabiyeh contract. Since early December 2011, TOTAL has ceased its activities that contribute to oil and gas production in Syria.

33)OTHER INFORMATION

33) 

OTHER INFORMATION
A) RESEARCH AND DEVELOPMENT COSTS
Research and development costs incurred by the Group in 20102011 amounted to €715€776 million (€(€715 million in 2010 and€650 million in 2009


F-94

and €612 million in 2008)2009), corresponding to 0.4% of the sales.

The staff dedicated in 20102011 to these research and development activities are estimated at 4,0873,946 people (4,016(4,087 in 20092010 and 4,2854,016 in 2008)2009).

34)
B) CARBON DIOXIDE EMISSION RIGHTS
The principles governing the accounting for emission rights are presented in Note 1 paragraph T to the Consolidated Financial Statements.
As of December 31, 2010, given the emission rights granted in the National Allocations Plans (NAPs), the position of the Group’s industrial facilities that are covered by the European Union Emissions Trading System (EU ETS) is getting longer. This long position is expected to be confirmed at the end of the 2008 — 2012 period.
34) CHANGES IN PROGRESS IN THE GROUP STRUCTURE

TOTAL signed in March 2011 agreements for the acquisition in Uganda of a one-third interest in Blocks 1, 2 and 3A held by Tullow Oil plc for $1,467 million (amount as of January 1, 2010, to which will add costs of interim period). Following this acquisition, TOTAL would become an equal partner with Tullow and CNOOC in the blocks, each with a one-third interest and each being an operator of one of the blocks. Subject to the decision of the Authorities, TOTAL would be the operator of Block 1.

• Upstream

TOTAL announced in February 2012 the signature of an agreement with Sinochem to sell its interests in the Cusiana field and in OAM and ODC pipelines. This transaction is subject to approval by the relevant authorities.

• TOTAL finalized in November 2010 an agreement in principle with Perenco, an independent exploration and production French company, to sell its 75.8% equity in its upstream Cameroonian affiliate Total E&P Cameroun. This agreement is subject to the Cameroonian Authorities’ approval.

As of December 31, 2010, assets and liabilities of the affiliate Total E&P Cameroun have been classified respectively assections “Assets classified as held for sale” on the face of the Consolidated Balance Sheet for €183 million and as “Liabilities directly associated with the assets classified as held for sale” onincluded the face of the Consolidated Balance Sheet for €137 million. The concerned assets and liabilities mainly include tangible assets for €109 millionof Total E&P Cameroun, of Joslyn and provisionsof photocure and other non-current liabilities for €74 million.

• In addition to the agreement signed during September 2010 (see Note 3 to the Consolidated Financial Statements), TOTAL signed in December 2010 an agreement to acquire an additional 7.5% interest in Australia’s GLNG project from Santos for an amount of $281 million. This will increase Total’s overall stake in the project to 27.5%.
At the same time, South Korea’s Kogas has signed an agreement to join the project with a 15% stake. Once both transactions, which are subject to the approval of Australia’s Foreign Investment Review Board, have been finalized, interests in the project will be: Santos (30%, operator), Petronas (27.5%), TOTAL (27.5%) and Kogas (15%).
• Total E&P Canada Ltd., a TOTAL subsidiary, and Suncor Energy Inc. (Suncor) have signed in December 2010 several agreements to form a strategic oil sands alliance encompassing the Suncor-operated Fort Hills mining project, the TOTAL-operated Joslyn mining project and the Suncor-operated Voyageur upgrader project. All three assets are located in the Athabasca region of the province of Alberta, in Canada. Under the alliance, the companies will pool their combined interests in these projects, with the respective operator holding 51% and the other partner 49%.
The agreements comprise four significant and related transactions:
• TOTAL is acquiring 19.2% of Suncor’s interest in the Fort Hills project. Taking into account the acquisition of UTS, finalized in September 2010, TOTAL will have an overall 39.2% interest in Fort Hills. Suncor, as operator, will hold 40.8%;
• Suncor is acquiring 36.75% of TOTAL’s interest in the Joslyn project. TOTAL, as operator, will retain a 38.25% interest in the project;
• TOTAL is also acquiring a 49% stake in the Suncor-operated Voyageur upgrader project;
• As a result of the terms of these transactions and the related net balancing of the portfolio, in particular to contribute to the past costs of the Voyageur project, TOTAL will pay Suncor CAD 1,751 million, with a value date of January 1st, 2011.
The implementation of the agreements is subject to securing the necessary regulatory approvals from the Government of Canada and certain other approvals.
As a result of the agreements, TOTAL will no longer proceed with the planned construction of an upgrader in Edmonton.coatings resins businesses.


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35)CONSOLIDATION SCOPE

As of December 31, 2010, the share of assets and liabilities of the Joslyn mining project covered by the agreements has been classified respectively as “Assets classified as held for sale” on the face of the Consolidated Balance Sheet for €622 million and as “Liabilities directly associated with the assets classified as held for sale” on the face of the Consolidated Balance Sheet for €8 million. The concerned assets include mineral interests for €390 million and tangible assets for €232 million.
• Chemicals
• TOTAL has announced in December 2010 a plan to sell its photocure and coatings resins businesses to Arkema for a €550 million enterprise value. The divestment is subject to the applicable legally required consultation and notification processes for employee representatives at TOTAL and Arkema and to the approval of the anti-trust authorities in the countries concerned. It could take place in the first half of 2011.
As of December 31, 2010, assets and liabilities of the photocure and coatings resins businesses have been classified respectively as “Assets classified as held for sale” on the face of the Consolidated Balance Sheet for €465 million and as “Liabilities directly associated with the assets classified as held for sale” on the face of the Consolidated Balance Sheet for €52 million. The concerned assets mainly include a goodwill for €63 million, tangible assets for €196 million and inventories for €138 million.
35) CONSOLIDATION SCOPE
As of December 31, 2010, 6872011, 870 entities are consolidated of which 596783 are fully consolidated, and 9187 are accounted for under the equity method (identified with the letter E).

This simplified organizational chart shows the main consolidated entities. For each of them, the Group interest is mentioned between brackets. This chart of legal detentions is not exhaustive and does not reflect neither the operational structure nor the relative economic size of the Group entities and the business segments.


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(FLOW CHART)


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TOTAL
 

LOGO

TOTAL

SUPPLEMENTAL OIL AND GAS INFORMATION (Unaudited)

As from 2009, the amendments to the Securities and Exchange Commission (SEC)Rule 4-10 ofRegulation S-X set forth in the “Modernization of Oil and Gas Reporting” release (SEC Release n°33-8995) and the Financial Accounting Standard Board (FASB) Accounting Standards Update regarding Extractive Activities — OilActivities-Oil and Gas (ASC 932) change a number of reserves estimation and disclosure requirements. As a reminder, in terms of reserves estimation, the main changes are: the use of an average price instead of a single year-end price; the use of new reliable technologies to assess proved reserves; and the inclusion, under certain conditions, ofnon-traditional sources as oil and gas producing activities. The revised rules form the basis of the 2011, 2010 and 2009 year-end estimation of proved reserves. The main impact of the application of the revised rules was related to, for 2009, the use of new reliable technologies and, for 2010, the booking of proved reserves on an oil sands mining project.

Preparation of reserves estimates

The estimation of reserves is an ongoing process which is done within affiliates by experienced geoscientists, engineers and economists under the supervision of each affiliate’s General Management. Persons involved in reserves evaluation are trained to follow SEC-compliant internal guidelines and policies regarding criteria that must be met before reserves can be considered as proved.

The technical validation process relies on a ReservoirTechnical Reserves Committee that is responsible for approving proved reserves changes above a certain threshold and technical evaluations of reserves associated with any investment decision that requires approval from the Exploration & Production Executive Committee. The Chairman of the ReservoirTechnical Reserves Committee is appointed by the PresidentSenior Management of Exploration & Production and its members represent expertise in reservoir engineering, production geology, production geophysics, drilling, and pre-development projects.

development studies.

An internal control process related to reserves estimation is well established within TOTAL and involves the following elements:

A central Reserve Entity whose responsibility is to consolidate, document and archive the Group’s reserves; to ensure coherence of evaluations worldwide; to maintain the Corporate Reserves Guidelines Standards in line with SEC guidelines and policies; to deliver training on reserves

• A central Reserve Entity whose responsibility is: to consolidate, document and archive the Group’s reserves; to ensure the coherence of evaluations worldwide; to maintain the Corporate Reserves Guidelines Standards in line with SEC guidelines and policies; to deliver training on reserves

evaluation and classification; and to conduct periodically in-depth technical review of reserves for each affiliate.

• An annual review of affiliates reserves is conducted by an internal group of specialists selected for their expertise in geosciences and engineering or their knowledge of the affiliate. All members of this group chaired by the Geoscience Reserve Manager and composed of at least three Reservoir Committee members are knowledgeable in the SEC guidelines for proved reserves evaluation. Their responsibility is to provide an independent review of reserves changes proposed by affiliates and ensure that reserves are estimated using appropriate standards and procedures.
• At the end of the annual review carried out by the Geoscience Division, an SEC Reserves Committee chaired by the Exploration & Production Finance Senior Vice President and comprised of the Geoscience, Strategy and Legal Senior Vice Presidents, or their representatives, as well as the Chairman of the Reservoir Committee and the Geoscience Reserves Manager, approves the SEC reserve booking proposals as regards to criteria that are not dependent upon reservoir and geoscience techniques. The results of the annual review and the proposals for including revisions or additions of SEC Proved Reserves are presented to the Exploration & Production Executive Committee for approval before final validation by the Group Executive Management.

An annual review of affiliates reserves conducted by an internal group of specialists selected for their expertise in geosciences and engineering or their knowledge of the affiliate. All members of this group chaired by the Reserves Vice-president and composed of at least three Technical Reserves Committee members are knowledgeable in the SEC guidelines for proved reserves evaluation. Their responsibility is to provide an independent review of reserves changes proposed by affiliates and ensure that reserves are estimated using appropriate standards and procedures.

At the end of the annual review carried out by the Development Division, an SEC Reserves Committee chaired by the Exploration & Production Finance Senior Vice President and comprised of the Development, Exploration, Strategy and Legal Senior Vice Presidents, or their representatives, as well as the Chairman of the Technical Reserves Committee and the Reserves Vice-President, approves the SEC reserve booking proposals regarding criteria that are not dependent upon reservoir and geosciences techniques. The results of the annual review and the proposals for including revisions or additions of SEC Proved Reserves are presented to the Exploration & Production Executive Committee for approval before final validation by the Group Executive Management.

The reserves evaluation and control process is audited periodically by the Group’s internal auditors who verify the effectiveness of the reserves evaluation process and control procedures.

The Geosciences Reserves Manager (GRM)Vice-President (RVP) is the technical person responsible for preparing the reserves estimates for the Group. The GRMAppointed by the President of Exploration & Production, the RVP supervises the Reserve Entity, chairs the annual review of reserves, and is a member of the ReservoirTechnical Reserves Committee and the SEC Reserves Committee. The GRMRVP has over twenty-fivethirty years of experience in the oil & gas industry. He previously held several

management positions in the Group in reservoir engineering and geosciences, and has more than tenfifteen years of experience in the field of reserves evaluation and control process. He holds an engineering degree fromÉcole Institut National des Sciences Appliquées, Lyon, France, and a petroleum engineering degree from Ecole Nationale Supérieure de Géologiedu Pétrole et des Moteurs (IFP School), Nancy, France, and a Ph.D in rock physics from Stanford University, California, USA.France. He is a past member and past chairman of the Society of


S-1

Petroleum Engineering Oil and Gas Reserves Committee and a member of the UNECE (United Nations Economic Commission for Europe) Expert Group on Resource Classification.

Proved developed reserves

At the end of 2011, proved developed reserves of oil and gas were 6,046 Mboe and represented 53% of the proved reserves. At the end of 2010, proved developed reserves of oil and gas were 5,708 Mboe and represented 53% of the proved reserves. At year-endthe end of 2009, proved developed reserves of oil and gas were 5,835 Mboe and represented 56% of proved reserves. At the end of 2008, proved developed reserves were 5,243 Mboe and represented 50% of proved reserves. Over the past three years, the level of proved developed reserves has remained above 5.25.7 Bboe and over 50%53% of proved reserves, illustrating TOTAL’s ability to consistently transfer proved undeveloped reserves into developed status.

Proved undeveloped reserves

As of December 31, 2010,2011, TOTAL’s combined proved undeveloped reserves of oil and gas were 4,9875,377 Mboe as compared to 4,6484,987 Mboe at the end of 2009.2010. The net increase of 339390 Mboe of proved undeveloped reserves is due to the addition of 291+639 Mboe of undeveloped reserves related to extensions and discoveries, a net increase of +401 Mboe due to acquisitions/divestitures, the revision of +183-168 Mboe of previous estimates a net increase of +416 Mboe due to acquisitions/divestitures(partly resulting from negative price effects), and the conversiontransfer of −551482 Mboe offrom proved undeveloped reserves intoto proved developed reserves. In 2010,2011, the capital expendedcosts incurred to develop proved undeveloped reserves (PUDs) was €6.7€10.2 billion, which represents 81%84% of 20102011 development costs incurred, and was related to projects located for the most part in Angola, Australia, Canada, Kazakhstan, Angola,Nigeria, Norway, Nigeria, Indonesia, United Kingdom Thailand and the United States.

Russia.

Approximately 60%57% of the Group’s proved undeveloped reserves are associated with producing fieldsprojects and are

located for the most part in Angola, Canada, Nigeria, the United Arab Emirates, VenezuelaNorway, and Norway.Venezuela. These reserves are expected to be developed over time as part of initial field development plans or additional development phases. The timing to bring these proved reserves into production will depend upon several factors including reservoir performance, surface facilities or plant capacity constraints and contractual limitations on production level. The remaining proved undeveloped reserves correspond to undeveloped fields or assets for which a development has been sanctioned or is in progress.

The Group’s portfolio of projects includes a few large scale and complex developments for which it anticipates that it may take more than five years from the time of recording proved reserves to the start of production. These specific projects represent approximately 30%26% of the Group’s proved undeveloped reserves and include the development of a giant field in Kazakhstan, deep offshore developments in Angola, Nigeria and the United Kingdom and development of oil sands in Canada. These projects are highly complex to develop due to a combination of factors that include, among others, the nature of the reservoir rock and fluid properties, challenging operating environments and the size of the projects. In addition, some of these projects are generally designed and optimized for a given production capacity that controls the pace at which the field is developed and the wells are drilled. At productionstart-up, only a portion of the proved reserves are developed in order to deliver sufficient production potential to meet capacity constraints and contractual obligations. The remaining PUDsPUD’s associated with the complete development plan will therefore remain undeveloped for more than five years following project approval and booking. Under these specific circumstances, the Group believes that it is justified to report as proved reserves the level of reserves used in connection with the approved project, despite the fact that some of these PUDs may remain undeveloped for more than five years. In addition, TOTAL has demonstrated in recent years the Group’s ability to successfully develop and bring into production similar large scale and complex projects, including the development of deep-offshore fields in Angola, Nigeria, the Republic of Congo, HP/HT fields in the United Kingdom, heavy oil projects in Venezuela and LNG projects in Qatar, Yemen, Nigeria and Indonesia.

 

Information shown in the following tables is presented in accordance with the FASB’s ASC 932 and the requirements of the SECRegulation S-K (Items 1200 to 1208).

The tables provided below are presented by the following geographic areas: Europe, Africa, the Americas, Middle East and Asia (including CIS). Certain previously reported amounts for 2008 have been reclassified to conform to the current presentation adopted since 2009.


S-2

ESTIMATED PROVED RESERVES OF OIL, BITUMEN AND GAS RESERVES

The following tables present, for oil, bitumen and gas reserves, an estimate of the Group’s oil, bitumen and gas quantities by geographic areas as of December 31, 2011, 2010 2009 and 2008.2009. Quantities shown concern proved developed and undeveloped reserves together with changes in quantities for 2011, 2010 2009 and 2008.

2009.

The definitions used for proved, proved developed and proved undeveloped oil and gas reserves are in accordance with the revisedRule 4-10 of SECRegulation S-X.

All references in the following tables to reserves or production are to the Group’s entire share of such reserves or production. TOTAL’s worldwide proved reserves include the proved reserves of its consolidated subsidiaries as well as its proportionate share of the proved reserves of equity affiliates and of two companies accounted for by the cost method.


S-3affiliates.

Changes in oil, bitumen and gas reserves
                         
Proved developed and undeveloped reserves Consolidated subsidiaries 
           Middle
       
(in million barrels of oil equivalent) Europe  Africa  Americas  East  Asia  Total 
Balance as of December 31, 2007
  1,900   3,516   737   474   1,224   7,851 
                         
Revisions of previous estimates  41   374   50   106   144   715 
Extensions, discoveries and other  82   110   —   —   19   211 
Acquisitions of reserves in place  17   —   —   —   —   17 
Sales of reserves in place  —   (74)  —   —   (46)  (120)
Production for the year  (225)  (280)  (55)  (50)  (99)  (709)
                         
Balance as of December 31, 2008
  1,815   3,646   732   530   1,242   7,965 
                         
Revisions of previous estimates  46   76   14   (7)  25   154 
Extensions, discoveries and other  18   53   284   76   —   431 
Acquisitions of reserves in place  12   —   130   —   —   142 
Sales of reserves in place  (2)  (43)  (14)  —   —   (59)
Production for the year  (224)  (266)  (56)  (55)  (101)  (702)
                         
Balance as of December 31, 2009
  1,665   3,466   1,090   544   1,166   7,931 
                         
Revisions of previous estimates  92   200   82   (10)  1   365 
Extensions, discoveries and other  182   —   18   96   30   326 
Acquisitions of reserves in place  23   —   425   —   9   457 
Sales of reserves in place  (45)  (26)  (5)  —   (8)  (84)
Production for the year  (211)  (269)  (70)  (56)  (99)  (705)
                         
Balance as of December 31, 2010
  1,706   3,371   1,540   574   1,099   8,290 
                         
Minority interest in proved developed and undeveloped reserves as of
                
December 31, 2008  27   100   —   —   —   127 
December 31, 2009  26   98   —   —   —   124 
December 31, 2010
  26   100   —   —   —   126 
                         
Proved developed and undeveloped reserves Equity & non-consolidated affiliates 
           Middle
       
(in million barrels of oil equivalent) Europe  Africa  Americas  East  Asia  Total 
Balance as of December 31, 2007
  —   69   554   1,975   —   2,598 
                         
Revisions of previous estimates  —   22   —   (2)  —   20 
Extensions, discoveries and other  —   14   —   3   —   17 
Acquisitions of reserves in place  —   —   6   —   —   6 
Sales of reserves in place  —   —   —   —   —   — 
Production for the year  —   (7)  (33)  (108)  —   (148)
                         
Balance as of December 31, 2008
  —   98   527   1,868   —   2,493 
                         
Revisions of previous estimates  —   10   (7)  51   —   54 
Extensions, discoveries and other  —   —   —   136   —   136 
Acquisitions of reserves in place  —   —   —   —   —   — 
Sales of reserves in place  —   —   —   —   —   — 
Production for the year  —   (8)  (18)  (105)  —   (131)
                         
Balance as of December 31, 2009
  —   100   502   1,950   —   2,552 
                         
Revisions of previous estimates  —   14   4   (2)  —   16 
Extensions, discoveries and other  —   —   —   —   —   — 
Acquisitions of reserves in place  —   —   —   —   —   — 
Sales of reserves in place  —   —   —   —   —   — 
Production for the year  —   (7)  (20)  (136)  —   (163)
                         
Balance as of December 31, 2010
  —   107   486   1,812   —   2,405 
                         


S-4

Proved developed and undeveloped reserves  Consolidated subsidiaries 

(in million barrels of oil equivalent)

  Europe  Africa  Americas  Middle
East		  Asia  Total 

Balance as of December 31, 2008

   1,815    3,646    732    530    1,242    7,965  

Revisions of previous estimates

   46    76    14    (7)   25    154  

Extensions, discoveries and other

   18    53    284    76    —    431  

Acquisitions of reserves in place

   12    —    130    —    —    142  

Sales of reserves in place

   (2)   (43)   (14)   —    —    (59) 

Production for the year

   (224)   (266)   (56)   (55)   (101)   (702) 

Balance as of December 31, 2009

   1,665    3,466    1,090    544    1,166    7,931  

Revisions of previous estimates

   92    200    82    (10)   1    365  

Extensions, discoveries and other

   182    —    18    96    30    326  

Acquisitions of reserves in place

   23    —    425    —    9    457  

Sales of reserves in place

   (45)   (26)   (5)   —    (8)   (84) 

Production for the year

   (211)   (269)   (70)   (56)   (99)   (705) 

Balance as of December 31, 2010

   1,706    3,371    1,540    574    1,099    8,290  

Revisions of previous estimates

   117    (61)   (36)   (68)   (19)   (67) 

Extensions, discoveries and other

   57    6    —    —    588    651  

Acquisitions of reserves in place

   44    —    309    —    2    355  

Sales of reserves in place

   —    (65)   —    —    —    (65) 

Production for the year

   (187)   (237)   (75)   (56)   (93)   (648) 

Balance as of December 31, 2011

   1,737    3,014    1,738    450    1,577    8,516  

Minority interest in proved developed and undeveloped reserves as of

  

    

December 31, 2009

   26    98    —    —    —    124  

December 31, 2010

   26    100    —    —    —    126  

December 31, 2011

   —    98    —    —    —    98  
Proved developed and undeveloped reserves  Equity affiliates 

(in million barrels of oil equivalent)

  Europe  Africa  Americas  Middle
East		  Asia  Total 

Balance as of December 31, 2008

   —    98    527    1,868    —    2,493  

Revisions of previous estimates

   —    10    (7)   51    —    54  

Extensions, discoveries and other

   —    —    —    136    —    136  

Acquisitions of reserves in place

   —    —    —    —    —    —  

Sales of reserves in place

   —    —    —    —    —    —  

Production for the year

   —    (8)   (18)   (105)   —    (131) 

Balance as of December 31, 2009

   —    100    502    1,950    —    2,552  

Revisions of previous estimates

   —    14    4    (2)   —    16  

Extensions, discoveries and other

   —    —    —    —    —    —  

Acquisitions of reserves in place

   —    —    —    —    —    —  

Sales of reserves in place

   —    —    —    —    —    —  

Production for the year

   —    (7)   (20)   (136)   —    (163) 

Balance as of December 31, 2010

   —    107    486    1,812    —    2,405  

Revisions of previous estimates

   —    (1)   (8)   (20)   —    (29) 

Extensions, discoveries and other

   —    —    —    —    —    —  

Acquisitions of reserves in place

   —    —    —    —    779    779  

Sales of reserves in place

   —    (24)   (4)   (11)   —    (39) 

Production for the year

   —    (4)   (18)   (152)   (35)   (209) 

Balance as of December 31, 2011

   —    78    456    1,629    744    2,907  

   Consolidated subsidiaries and equity affiliates 

(in million barrels of oil equivalent)

  Europe   Africa   Americas   Middle
East		   Asia   Total 

As of December 31, 2009

            

Proved developed and undeveloped reserves

   1,665     3,566     1,592     2,494     1,166     10,483  

Consolidated subsidiaries

   1,665     3,466     1,090     544     1,166     7,931  

Equity affiliates

   —     100     502     1,950     —     2,552  

Proved developed reserves

   1,096     1,775     631     1,918     415     5,835  

Consolidated subsidiaries

   1,096     1,745     503     482     415     4,241  

Equity affiliates

   —     30     128     1,436     —     1,594  

Proved undeveloped reserves

   569     1,791     961     576     751     4,648  

Consolidated subsidiaries

   569     1,721     587     62     751     3,690  

Equity affiliates

   —     70     374     514     —     958  

As of December 31, 2010

            

Proved developed and undeveloped reserves

   1,706     3,478     2,026     2,386     1,099     10,695  

Consolidated subsidiaries

   1,706     3,371     1,540     574     1,099     8,290  

Equity affiliates

   —     107     486     1,812     —     2,405  

Proved developed reserves

   962     1,692     638     2,055     361     5,708  

Consolidated subsidiaries

   962     1,666     505     427     361     3,921  

Equity affiliates

   —     26     133     1,628     —     1,787  

Proved undeveloped reserves

   744     1,786     1,388     331     738     4,987  

Consolidated subsidiaries

   744     1,705     1,035     147     738     4,369  

Equity affiliates

   —     81     353     184     —     618  

As of December 31, 2011

            

Proved developed and undeveloped reserves

   1,737     3,092     2,194     2,079     2,321     11,423  

Consolidated subsidiaries

   1,737     3,014     1,738     450     1,577     8,516  

Equity affiliates

   —     78     456     1,629     744     2,907  

Proved developed reserves

   894     1,660     647     1,869     976     6,046  

Consolidated subsidiaries

   894     1,639     524     371     321     3,749  

Equity affiliates

   —     21     123     1,498     655     2,297  

Proved undeveloped reserves

   843     1,432     1,547     210     1,345     5,377  

Consolidated subsidiaries

   843     1,375     1,214     79     1,256     4,767  

Equity affiliates

   —     57     333     131     89     610  

                         
  Consolidated subsidiaries and equity & non-consolidated affiliates 
           Middle
       
(in million barrels of oil equivalent) Europe  Africa  Americas  East  Asia  Total 
As of December 31, 2008
                        
Proved developed and undeveloped reserves
  1,815   3,744   1,259   2,398   1,242   10,458 
Consolidated subsidiaries  1,815   3,646   732   530   1,242   7,965 
Equity and non-consolidated affiliates  —   98   527   1,868   —   2,493 
                         
Proved developed reserves
  1,252   1,801   515   1,194   481   5,243 
Consolidated subsidiaries  1,252   1,754   381   504   481   4,372 
Equity and non-consolidated affiliates  —   47   134   690   —   871 
                         
Proved undeveloped reserves
  563   1,943   744   1,204   761   5,215 
Consolidated subsidiaries  563   1,892   351   26   761   3,593 
Equity and non-consolidated affiliates  —   51   393   1,178   —   1,622 
                         
As of December 31, 2009
                        
Proved developed and undeveloped reserves
  1,665   3,566   1,592   2,494   1,166   10,483 
Consolidated subsidiaries  1,665   3,466   1,090   544   1,166   7,931 
Equity and non-consolidated affiliates  —   100   502   1,950   —   2,552 
                         
Proved developed reserves
  1,096   1,775   631   1,918   415   5,835 
Consolidated subsidiaries  1,096   1,745   503   482   415   4,241 
Equity and non-consolidated affiliates  —   30   128   1,436   —   1,594 
                         
Proved undeveloped reserves
  569   1,791   961   576   751   4,648 
Consolidated subsidiaries  569   1,721   587   62   751   3,690 
Equity and non-consolidated affiliates  —   70   374   514   —   958 
                         
As of December 31, 2010
                        
Proved developed and undeveloped reserves
  1,706   3,478   2,026   2,386   1,099   10,695 
Consolidated subsidiaries  1,706   3,371   1,540   574   1,099   8,290 
Equity and non-consolidated affiliates  —   107   486   1,812   —   2,405 
                         
Proved developed reserves
  962   1,692   638   2,055   361   5,708 
Consolidated subsidiaries  962   1,666   505   427   361   3,921 
Equity and non-consolidated affiliates  —   26   133   1,628   —   1,787 
                         
Proved undeveloped reserves
  744   1,786   1,388   331   738   4,987 
Consolidated subsidiaries  744   1,705   1,035   147   738   4,369 
Equity and non-consolidated affiliates  —   81   353   184   —   618 
                         

S-5

Changes in oil reserves

The oil reserves for the years prior to 2009 include crude oil, natural gas liquids (condensates, LPG) and bitumen reserves. Bitumen reserves as from 2009 are shown separately.

                         
Proved developed and undeveloped reserves Consolidated subsidiaries 
           Middle
       
(in million barrels) Europe  Africa  Americas  East  Asia  Total 
Balance as of December 31, 2007
  880   2,498   285   203   530   4,396 
                         
Revisions of previous estimates  15   297   (17)  54   64   413 
Extensions, discoveries and other  12   107   —   —   3   122 
Acquisitions of reserves in place  2   —   —   —   —   2 
Sales of reserves in place  —   (74)  —   —   (43)  (117)
Production for the year  (111)  (231)  (16)  (32)  (16)  (406)
                         
Balance as of December 31, 2008
  798   2,597   252   225   538   4,410 
                         
Revisions of previous estimates  34   92   (170)  (4)  51   3 
Extensions, discoveries and other  8   38   22   1   —   69 
Acquisitions of reserves in place  1   —   —   —   —   1 
Sales of reserves in place  —   (44)  (1)  —   —   (45)
Production for the year  (108)  (223)  (15)  (34)  (17)  (397)
                         
Balance as of December 31, 2009
  733   2,460   88   188   572   4,041 
                         
Revisions of previous estimates  46   131   7   (2)  —   182 
Extensions, discoveries and other  146   —   2   82   4   234 
Acquisitions of reserves in place  2   —   —   —   —   2 
Sales of reserves in place  (37)  (23)  (2)  —   (7)  (69)
Production for the year  (98)  (218)  (16)  (29)  (15)  (376)
                         
Balance as of December 31, 2010
  792   2,350   79   239   554   4,014 
                         
Minority interest in proved developed and undeveloped reserves as of
                
December 31, 2008  12   89   —   —   —   101 
December 31, 2009  12   88   —   —   —   100 
December 31, 2010  11   89   —   —   —   100 
                         
Proved developed and undeveloped reserves Equity & non-consolidated affiliates 
           Middle
       
(in million barrels) Europe  Africa  Americas  East  Asia  Total 
Balance as of December 31, 2007
  —   43   533   806   —   1,382 
Revisions of previous estimates  —   22   1   (2)  —   21 
Extensions, discoveries and other  —   —   —   3   —   3 
Acquisitions of reserves in place  —   —   6   —   —   6 
Sales of reserves in place  —   —   —   —   —   — 
Production for the year  —   (7)  (32)  (88)  —   (127)
                         
Balance as of December 31, 2008
  —   58   508   719   —   1,285 
                         
Revisions of previous estimates  —   (14)  (5)  (15)  —   (34)
Extensions, discoveries and other  —   —   —   136   —   136 
Acquisitions of reserves in place  —   —   —   —   —   — 
Sales of reserves in place  —   —   —   —   —   — 
Production for the year  —   (7)  (18)  (79)  —   (104)
                         
Balance as of December 31, 2009
  —   37   485   761   —   1,283 
                         
Revisions of previous estimates  —   4   4   3   —   11 
Extensions, discoveries and other  —   —   —   —   —   — 
Acquisitions of reserves in place  —   —   —   —   —   — 
Sales of reserves in place  —   —   —   —   —   — 
Production for the year  —   (7)  (19)  (84)  —   (110)
                         
Balance as of December 31, 2010
  —   34   470   680   —   1,184 
                         


S-6

Proved developed and undeveloped reserves  Consolidated subsidiaries 
   Europe  Africa  Americas  Middle
East		  Asia  Total 

(in million barrels)

       

Balance as of December 31, 2008

   798    2,597    252    225    538    4,410  

Revisions of previous estimates

   34    92    (170)   (4)   51    3  

Extensions, discoveries and other

   8    38    22    1    —    69  

Acquisitions of reserves in place

   1    —    —    —    —    1  

Sales of reserves in place

   —    (44)   (1)   —    —    (45) 

Production for the year

   (108)   (223)   (15)   (34)   (17)   (397) 

Balance as of December 31, 2009

   733    2,460    88    188    572    4,041  

Revisions of previous estimates

   46    131    7    (2)   —    182  

Extensions, discoveries and other

   146    —    2    82    4    234  

Acquisitions of reserves in place

   2    —    —    —    —    2  

Sales of reserves in place

   (37)   (23)   (2)   —    (7)   (69) 

Production for the year

   (98)   (218)   (16)   (29)   (15)   (376) 

Balance as of December 31, 2010

   792    2,350    79    239    554    4,014  

Revisions of previous estimates

   49    (19)   9    (33)   (24)   (18) 

Extensions, discoveries and other

   17    6    —    —    58    81  

Acquisitions of reserves in place

   42    —    —    —    —    42  

Sales of reserves in place

   —    (57)   —    —    —    (57) 

Production for the year

   (88)   (185)   (15)   (25)   (15)   (328) 

Balance as of December 31, 2011

   812    2,095    73    181    573    3,734  

Minority interest in proved developed and undeveloped reserves as of

       

December 31, 2009

   12    88    —    —    —    100  

December 31, 2010

   11    89    —    —    —    100  

December 31, 2011

   —    88    —    —    —    88  
Proved developed and undeveloped reserves  Equity affiliates 
   Europe  Africa  Americas  Middle
East		  Asia  Total 

(in million barrels)

       

Balance as of December 31, 2008

   —    58    508    719    —    1,285  

Revisions of previous estimates

   —    (14)   (5)   (15)   —    (34) 

Extensions, discoveries and other

   —    —    —    136    —    136  

Acquisitions of reserves in place

   —    —    —    —    —    —  

Sales of reserves in place

   —    —    —    —    —    —  

Production for the year

   —    (7)   (18)   (79)   —    (104) 

Balance as of December 31, 2009

   —    37    485    761    —    1,283  

Revisions of previous estimates

   —    4    4    3    —    11  

Extensions, discoveries and other

   —    —    —    —    —    —  

Acquisitions of reserves in place

   —    —    —    —    —    —  

Sales of reserves in place

   —    —    —    —    —    —  

Production for the year

   —    (7)   (19)   (84)   —    (110) 

Balance as of December 31, 2010

   —    34    470    680    —    1,184  

Revisions of previous estimates

   —    2    (6)   (12)   —    (16) 

Extensions, discoveries and other

   —    —    —    —    —    —  

Acquisitions of reserves in place

   —    —    —    —    51    51  

Sales of reserves in place

   —    (22)   (4)   (12)   —    (38) 

Production for the year

   —    (4)   (17)   (91)   (3)   (115) 

Balance as of December 31, 2011

   —    10    443    565    48    1,066  

   Consolidated subsidiaries and equity affiliates 
   Europe   Africa   Americas   Middle
East		   Asia   Total 

(in million barrels)

            

As of December 31, 2009

            

Proved developed and undeveloped reserves

   733     2,497     573     949     572     5,324  

Consolidated subsidiaries

   733     2,460     88     188     572     4,041  

Equity affiliates

   —     37     485     761     —     1,283  

Proved developed reserves

   457     1,331     187     728     65     2,768  

Consolidated subsidiaries

   457     1,303     66     174     65     2,065  

Equity affiliates

   —     28     121     554     —     703  

Proved undeveloped reserves

   276     1,166     386     221     507     2,556  

Consolidated subsidiaries

   276     1,157     22     14     507     1,976  

Equity affiliates

   —     9     364     207     —     580  

As of December 31, 2010

            

Proved developed and undeveloped reserves

   792     2,384     549     919     554     5,198  

Consolidated subsidiaries

   792     2,350     79     239     554     4,014  

Equity affiliates

   —     34     470     680     —     1,184  

Proved developed reserves

   394     1,250     180     662     58     2,544  

Consolidated subsidiaries

   394     1,226     53     151     58     1,882  

Equity affiliates

   —     24     127     511     —     662  

Proved undeveloped reserves

   398     1,134     369     257     496     2,654  

Consolidated subsidiaries

   398     1,124     26     88     496     2,132  

Equity affiliates

   —     10     343     169     —     522  

As of December 31, 2011

            

Proved developed and undeveloped reserves

   812     2,105     516     746     621     4,800  

Consolidated subsidiaries

   812     2,095     73     181     573     3,734  

Equity affiliates

   —     10     443     565     48     1,066  

Proved developed reserves

   351     1,206     165     565     91     2,378  

Consolidated subsidiaries

   351     1,202     48     116     50     1,767  

Equity affiliates

   —     4     117     449     41     611  

Proved undeveloped reserves

   461     899     351     181     530     2,422  

Consolidated subsidiaries

   461     893     25     65     523     1,967  

Equity affiliates

   —     6     326     116     7     455  

                         
  Consolidated subsidiaries and equity & non-consolidated affiliates 
           Middle
       
(in million barrels) Europe  Africa  Americas  East  Asia  Total 
As of December 31, 2008
                        
Proved developed and undeveloped reserves
  798   2,655   760   944   538   5,695 
Consolidated subsidiaries  798   2,597   252   225   538   4,410 
Equity and non-consolidated affiliates  —   58   508   719   —   1,285 
                         
Proved developed reserves
  516   1,357   183   681   65   2,802 
Consolidated subsidiaries  516   1,313   56   201   65   2,151 
Equity and non-consolidated affiliates  —   44   127   480   —   651 
                         
Proved undeveloped reserves
  282   1,298   577   263   473   2,893 
Consolidated subsidiaries  282   1,284   196   24   473   2,259 
Equity and non-consolidated affiliates  —   14   381   239   —   634 
                         
As of December 31, 2009
                        
Proved developed and undeveloped reserves
  733   2,497   573   949   572   5,324 
Consolidated subsidiaries  733   2,460   88   188   572   4,041 
Equity and non-consolidated affiliates  —   37   485   761   —   1,283 
                         
Proved developed reserves
  457   1,331   187   728   65   2,768 
Consolidated subsidiaries  457   1,303   66   174   65   2,065 
Equity and non-consolidated affiliates  —   28   121   554   —   703 
                         
Proved undeveloped reserves
  276   1,166   386   221   507   2,556 
Consolidated subsidiaries  276   1,157   22   14   507   1,976 
Equity and non-consolidated affiliates  —   9   364   207   —   580 
                         
As of December 31, 2010
                        
Proved developed and undeveloped reserves
  792   2,384   549   919   554   5,198 
Consolidated subsidiaries  792   2,350   79   239   554   4,014 
Equity and non-consolidated affiliates  —   34   470   680   —   1,184 
                         
Proved developed reserves
  394   1,250   180   662   58   2,544 
Consolidated subsidiaries  394   1,226   53   151   58   1,882 
Equity and non-consolidated affiliates  —   24   127   511   —   662 
                         
Proved undeveloped reserves
  398   1,134   369   257   496   2,654 
Consolidated subsidiaries  398   1,124   26   88   496   2,132 
Equity and non-consolidated affiliates  —   10   343   169   —   522 
                         


S-7

Changes in bitumen reserves

Bitumen reserves as of December 31, 2008 and before are included in oil reserves presented in the table “Changes in oil reserves”.

                         
Proved developed and undeveloped reserves Consolidated subsidiaries 
           Middle
       
(in million barrels) Europe  Africa  Americas  East  Asia  Total 
Balance as of December 31, 2008
  —   —   —   —   —   — 
                         
Revisions of previous estimates  —   —   176   —   —   176 
Extensions, discoveries and other  —   —   192   —   —   192 
Acquisitions of reserves in place  —   —   —   —   —   — 
Sales of reserves in place  —   —   —   —   —   — 
Production for the year  —   —   (3)  —   —   (3)
                         
Balance as of December 31, 2009
  —   —   365   —   —   365 
                         
Revisions of previous estimates  —   —   3   —   —   3 
Extensions, discoveries and other  —   —   —   —   —   — 
Acquisitions of reserves in place  —   —   425   —   —   425 
Sales of reserves in place  —   —   —   —   —   — 
Production for the year  —   —   (4)  —   —   (4)
                         
Balance as of December 31, 2010
  —   —   789   —   —   789 
                         
Proved developed reserves as of
                        
December 31, 2009  —   —   19   —   —   19 
                         
December 31, 2010
  —   —   18   —   —   18 
                         
Proved undeveloped reserves as of
                        
December 31, 2009  —   —   346   —   —   346 
                         
December 31, 2010
  —   —   771   —   —   771 
                         

Proved developed and undeveloped reserves  Consolidated subsidiaries 

(in million barrels)

  Europe   Africa   Americas  Middle
East		   Asia   Total 

Balance as of December 31, 2008

   —     —     —    —     —     —  

Revisions of previous estimates

   —     —     176    —     —     176  

Extensions, discoveries and other

   —     —     192    —     —     192  

Acquisitions of reserves in place

   —     —     —    —     —     —  

Sales of reserves in place

   —     —     —    —     —     —  

Production for the year

   —     —     (3)   —     —     (3) 

Balance as of December 31, 2009

   —     —     365    —     —     365  

Revisions of previous estimates

   —     —     3    —     —     3  

Extensions, discoveries and other

   —     —     —    —     —     —  

Acquisitions of reserves in place

   —     —     425    —     —     425  

Sales of reserves in place

   —     —     —    —     —     —  

Production for the year

   —     —     (4)   —     —     (4) 

Balance as of December 31, 2010

   —     —     789    —     —     789  

Revisions of previous estimates

   —     —     (109)   —     —     (109) 

Extensions, discoveries and other

   —     —     —    —     —     —  

Acquisitions of reserves in place

   —     —     308    —     —     308  

Sales of reserves in place

   —     —     —    —     —     —  

Production for the year

   —     —     (4)   —     —     (4) 

Balance as of December 31, 2011

   —     —     984    —     —     984  

Proved developed reserves as of

           

December 31, 2009

   —     —     19    —     —     19  

December 31, 2010

   —     —     18    —     —     18  

December 31, 2011

   —     —     21    —     —     21  

Proved undeveloped reserves as of

           

December 31, 2009

   —     —     346    —     —     346  

December 31, 2010

   —     —     771    —     —     771  

December 31, 2011

   —     —     963    —     —     963  

There are no bitumen reserves for equity and non-consolidated affiliates.

There are no minority interests for bitumen reserves.


S-8

Changes in gas reserves
                         
Proved developed and undeveloped reserves Consolidated subsidiaries 
           Middle
       
(in billion cubic feet) Europe  Africa  Americas  East  Asia  Total 
Balance as of December 31, 2007
  5,531   5,371   2,564   1,572   4,045   19,083 
                         
Revisions of previous estimates  145   381   366   300   458   1,650 
Extensions, discoveries and other  377   17   —   —   90   484 
Acquisitions of reserves in place  76   —   —   —   —   76 
Sales of reserves in place  —   —   —   —   (15)  (15)
Production for the year  (622)  (240)  (216)  (103)  (480)  (1,661)
                         
Balance as of December 31, 2008
  5,507   5,529   2,714   1,769   4,098   19,617 
                         
Revisions of previous estimates  73   (127)  25   (18)  (165)  (212)
Extensions, discoveries and other  55   61   382   399   —   897 
Acquisitions of reserves in place  58   —   752   —   —   810 
Sales of reserves in place  (13)  —   (64)  —   —   (77)
Production for the year  (633)  (217)  (212)  (122)  (467)  (1,651)
                         
Balance as of December 31, 2009
  5,047   5,246   3,597   2,028   3,466   19,384 
                         
Revisions of previous estimates  271   346   415   (80)  15   967 
Extensions, discoveries and other  193   —   88   70   138   489 
Acquisitions of reserves in place  111   —   —   —   51   162 
Sales of reserves in place  (43)  (20)  (16)  —   (4)  (83)
Production for the year  (617)  (258)  (278)  (151)  (472)  (1,776)
                         
Balance as of December 31, 2010
  4,962   5,314   3,806   1,867   3,194   19,143 
                         
Minority interest in proved developed and undeveloped reserves as of
December 31, 2008  75   64   —   —   —   139 
December 31, 2009  73   60   —   —   —   133 
                         
December 31, 2010
  83   67   —   —   —   150 
                         


S-9

Proved developed and undeveloped reserves Consolidated subsidiaries 

(in billion cubic feet)

 Europe  Africa  Americas  Middle
East		  Asia  Total 

Balance as of December 31, 2008

  5,507    5,529    2,714    1,769    4,098    19,617  

Revisions of previous estimates

  73    (127)   25    (18)   (165)   (212) 

Extensions, discoveries and other

  55    61    382    399    —    897  

Acquisitions of reserves in place

  58    —    752    —    —    810  

Sales of reserves in place

  (13)   —    (64)   —    —    (77) 

Production for the year

  (633)   (217)   (212)   (122)   (467)   (1,651) 

Balance as of December 31, 2009

  5,047    5,246    3,597    2,028    3,466    19,384  

Revisions of previous estimates

  271    346    415    (80)   15    967  

Extensions, discoveries and other

  193    —    88    70    138    489  

Acquisitions of reserves in place

  111    —    —    —    51    162  

Sales of reserves in place

  (43)   (20)   (16)   —    (4)   (83) 

Production for the year

  (617)   (258)   (278)   (151)   (472)   (1,776) 

Balance as of December 31, 2010

  4,962    5,314    3,806    1,867    3,194    19,143  

Revisions of previous estimates

  358    (216)   367    (180)   1    330  

Extensions, discoveries and other

  211    —    —    —    2,824    3,035  

Acquisitions of reserves in place

  11    —    7    —    13    31  

Sales of reserves in place

  —    (46)   —    —    —    (46) 

Production for the year

  (528)   (259)   (317)   (169)   (445)   (1,718) 

Balance as of December 31, 2011

  5,014    4,793    3,863    1,518    5,587    20,775  

Minority interest in proved developed and undeveloped reserves as of

  

December 31, 2009

  73    60    —    —    —    133  

December 31, 2010

  83    67    —    —    —    150  

December 31, 2011

  —    62    —    —    —    62  
Proved developed and undeveloped reserves Equity affiliates 

(in billion cubic feet)

 Europe  Africa  Americas  Middle
East		  Asia  Total 

Balance as of December 31, 2008

  —    215    110    6,276    —    6,601  

Revisions of previous estimates

  —    127    (13)   363    —    477  

Extensions, discoveries and other

  —    —    —    —    —    —  

Acquisitions of reserves in place

  —    —    —    —    —    —  

Sales of reserves in place

  —    —    —    —    —    —  

Production for the year

  —    (1)   (2)   (141)   —    (144) 

Balance as of December 31, 2009

  —    341    95    6,498    —    6,934  

Revisions of previous estimates

  —    50    (2)   (52)   —    (4) 

Extensions, discoveries and other

  —    —    —    —    —    —  

Acquisitions of reserves in place

  —    —    —    —    —    —  

Sales of reserves in place

  —    —    —    —    —    —  

Production for the year

  —    (1)   (2)   (282)   —    (285) 

Balance as of December 31, 2010

  —    390    91    6,164    —    6,645  

Revisions of previous estimates

  —    (16)   (10)   (31)   —    (57) 

Extensions, discoveries and other

  —    —    —    —    —    —  

Acquisitions of reserves in place

  —    —    —    —    3,865    3,865  

Sales of reserves in place

  —    (10)   —    —    —    (10) 

Production for the year

  —    (1)   (2)   (331)   (167)   (501) 

Balance as of December 31, 2011

  —    363    79    5,802    3,698    9,942  

   Consolidated subsidiaries and equity affiliates 

(in billion cubic feet)

  Europe   Africa   Americas   Middle
East		   Asia   Total 

As of December 31, 2009

            

Proved developed and undeveloped reserves

   5,047     5,587     3,692     8,526     3,466     26,318  

Consolidated subsidiaries

   5,047     5,246     3,597     2,028     3,466     19,384  

Equity affiliates

   —     341     95     6,498     —     6,934  

Proved developed reserves

   3,463     2,272     2,388     6,606     2,059     16,788  

Consolidated subsidiaries

   3,463     2,261     2,343     1,773     2,059     11,899  

Equity affiliates

   —     11     45     4,833     —     4,889  

Proved undeveloped reserves

   1,584     3,315     1,304     1,920     1,407     9,530  

Consolidated subsidiaries

   1,584     2,985     1,254     255     1,407     7,485  

Equity affiliates

   —     330     50     1,665     —     2,045  

As of December 31, 2010

            

Proved developed and undeveloped reserves

   4,962     5,704     3,897     8,031     3,194     25,788  

Consolidated subsidiaries

   4,962     5,314     3,806     1,867     3,194     19,143  

Equity affiliates

   —     390     91     6,164     —     6,645  

Proved developed reserves

   3,089     2,240     2,474     7,649     1,790     17,242  

Consolidated subsidiaries

   3,089     2,229     2,439     1,578     1,790     11,125  

Equity affiliates

   —     11     35     6,071     —     6,117  

Proved undeveloped reserves

   1,873     3,464     1,423     382     1,404     8,546  

Consolidated subsidiaries

   1,873     3,085     1,367     289     1,404     8,018  

Equity affiliates

   —     379     56     93     —     528  

As of December 31, 2011

            

Proved developed and undeveloped reserves

   5,014     5,156     3,942     7,320     9,285     30,717  

Consolidated subsidiaries

   5,014     4,793     3,863     1,518     5,587     20,775  

Equity affiliates

   —     363     79     5,802     3,698     9,942  

Proved developed reserves

   2,943     2,308     2,600     7,170     4,854     19,875  

Consolidated subsidiaries

   2,943     2,216     2,567     1,450     1,594     10,770  

Equity affiliates

   —     92     33     5,720     3,260     9,105  

Proved undeveloped reserves

   2,071     2,848     1,342     150     4,431     10,842  

Consolidated subsidiaries

   2,071     2,577     1,296     68     3,993     10,005  

Equity affiliates

   —     271     46     82     438     837  

                         
Proved developed and undeveloped reserves Equity & non-consolidated affiliates 
           Middle
       
(in billion cubic feet) Europe  Africa  Americas  East  Asia  Total 
Balance as of December 31, 2007
  —   140   125   6,382   —   6,647 
                         
Revisions of previous estimates  —   —   (13)  —   —   (13)
Extensions, discoveries and other  —   76   —   —   —   76 
Acquisitions of reserves in place  —   —   —   —   —   — 
Sales of reserves in place  —   —   —   —   —   — 
Production for the year  —   (1)  (2)  (106)  —   (109)
                         
Balance as of December 31, 2008
  —   215   110   6,276   —   6,601 
                         
Revisions of previous estimates  —   127   (13)  363   —   477 
Extensions, discoveries and other  —   —   —   —   —   — 
Acquisitions of reserves in place  —   —   —   —   —   — 
Sales of reserves in place  —   —   —   —   —   — 
Production for the year  —   (1)  (2)  (141)  —   (144)
                         
Balance as of December 31, 2009
  —   341   95   6,498   —   6,934 
                         
Revisions of previous estimates  —   50   (2)  (52)  —   (4)
Extensions, discoveries and other  —   —   —   —   —   — 
Acquisitions of reserves in place  —   —   —   —   —   — 
Sales of reserves in place  —   —   —   —   —   — 
Production for the year  —   (1)  (2)  (282)  —   (285)
                         
Balance as of December 31, 2010
  —   390   91   6,164   —   6,645 
                         

S-10

                         
  Consolidated subsidiaries and equity & non-consolidated affiliates 
(in billion cubic feet) Europe  Africa  Americas  Middle East  Asia  Total 
As of December 31, 2008
                        
Proved developed and undeveloped reserves
  5,507   5,744   2,824   8,045   4,098   26,218 
Consolidated subsidiaries  5,507   5,529   2,714   1,769   4,098   19,617 
Equity and non-consolidated affiliates  —   215   110   6,276   —   6,601 
                         
Proved developed reserves
  3,989   2,292   1,849   2,893   2,440   13,463 
Consolidated subsidiaries  3,989   2,280   1,807   1,766   2,440   12,282 
Equity and non-consolidated affiliates  —   12   42   1,127   —   1,181 
                         
Proved undeveloped reserves
  1,518   3,452   975   5,152   1,658   12,755 
Consolidated subsidiaries  1,518   3,249   907   3   1,658   7,335 
Equity and non-consolidated affiliates  —   203   68   5,149   —   5,420 
                         
As of December 31, 2009
                        
Proved developed and undeveloped reserves
  5,047   5,587   3,692   8,526   3,466   26,318 
Consolidated subsidiaries  5,047   5,246   3,597   2,028   3,466   19,384 
Equity and non-consolidated affiliates  —   341   95   6,498   —   6,934 
                         
Proved developed reserves
  3,463   2,272   2,388   6,606   2,059   16,788 
Consolidated subsidiaries  3,463   2,261   2,343   1,773   2,059   11,899 
Equity and non-consolidated affiliates  —   11   45   4,833   —   4,889 
                         
Proved undeveloped reserves
  1,584   3,315   1,304   1,920   1,407   9,530 
Consolidated subsidiaries  1,584   2,985   1,254   255   1,407   7,485 
Equity and non-consolidated affiliates  —   330   50   1,665   —   2,045 
                         
As of December 31, 2010
                        
Proved developed and undeveloped reserves
  4,962   5,704   3,897   8,031   3,194   25,788 
Consolidated subsidiaries  4,962   5,314   3,806   1,867   3,194   19,143 
Equity and non-consolidated affiliates  —   390   91   6,164   —   6,645 
                         
Proved developed reserves
  3,089   2,240   2,474   7,649   1,790   17,242 
Consolidated subsidiaries  3,089   2,229   2,439   1,578   1,790   11,125 
Equity and non-consolidated affiliates  —   11   35  ��6,071   —   6,117 
                         
Proved undeveloped reserves
  1,873   3,464   1,423   382   1,404   8,546 
Consolidated subsidiaries  1,873   3,085   1,367   289   1,404   8,018 
Equity and non-consolidated affiliates  —   379   56   93   —   528 
                         

S-11

RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES

The following tables do not include revenues and expenses related to oil and gas transportation activities and LNG liquefaction and transportation activities.

                         
  Consolidated subsidiaries 
           Middle
       
(in million euros) Europe  Africa  Americas  East  Asia  Total 
2008
                        
Non-Group sales  4,521   2,930   707   1,558   2,819   12,535 
Group sales  6,310   11,425   360   409   626   19,130 
Total Revenues
  10,831   14,355   1,067   1,967   3,445   31,665 
Production costs  (1,280)  (1,055)  (213)  (249)  (263)  (3,060)
Exploration expenses  (185)  (209)  (130)  (4)  (236)  (764)
Depreciation, depletion and amortization and valuation allowances  (1,266)  (1,195)  (318)  (364)  (471)  (3,614)
Other expenses(a)
  (260)  (1,214)  (225)  (357)  (60)  (2,116)
Pre-tax income from producing activities
  7,840   10,682   181   993   2,415   22,111 
Income tax  (5,376)  (7,160)  (109)  (481)  (1,212)  (14,338)
Results of oil and gas producing activities
  2,464   3,522   72   512   1,203   7,773 
                         
2009
                        
Non-Group sales  2,499   1,994   583   859   1,926   7,861 
Group sales  4,728   7,423   310   556   597   13,614 
Total Revenues
  7,227   9,417   893   1,415   2,523   21,475 
Production costs  (1,155)  (1,122)  (193)  (204)  (243)  (2,917)
Exploration expenses  (160)  (265)  (121)  (81)  (70)  (697)
Depreciation, depletion and amortization and valuation allowances  (1,489)  (1,471)  (262)  (314)  (613)  (4,149)
Other expenses(a)
  (261)  (895)  (181)  (170)  (56)  (1,563)
Pre-tax income from producing activities
  4,162   5,664   136   646   1,541   12,149 
Income tax  (2,948)  (3,427)  (103)  (309)  (747)  (7,534)
Results of oil and gas producing activities
  1,214   2,237   33   337   794   4,615 
                         
2010
                        
Non-Group sales  2,839   2,639   628   1,038   2,540   9,684 
Group sales  5,599   9,894   540   644   683   17,360 
                         
Total Revenues
  8,438   12,533   1,168   1,682   3,223   27,044 
                         
Production costs  (1,281)  (1,187)  (222)  (259)  (279)  (3,228)
Exploration expenses  (266)  (275)  (216)  (8)  (99)  (864)
Depreciation, depletion and amortization and valuation allowances  (1,404)  (1,848)  (368)  (264)  (830)  (4,714)
Other expenses(a)
  (299)  (1,014)  (218)  (241)  (72)  (1,844)
                         
Pre-tax income from producing activities
  5,188   8,209   144   910   1,943   16,394 
                         
Income tax  (3,237)  (5,068)  (83)  (402)  (950)  (9,740)
                         
Results of oil and gas producing activities
  1,951   3,141   61   508   993   6,654 
                         

   Consolidated subsidiaries 

(M€)

  Europe  Africa  Americas  Middle
East		  Asia  Total 

2009

       

Non-Group sales

   2,499    1,994    583    859    1,926    7,861  
Group sales   4,728    7,423    310    556    597    13,614  

Total Revenues

   7,227    9,417    893    1,415    2,523    21,475  

Production costs

   (1,155)   (1,122)   (193)   (204)   (243)   (2,917) 

Exploration expenses

   (160)   (265)   (121)   (81)   (70)   (697) 

Depreciation, depletion and amortization and valuation allowances

   (1,489)   (1,471)   (262)   (314)   (613)   (4,149) 

Other expenses(a)

   (261)   (895)   (181)   (170)   (56)   (1,563) 

Pre-tax income from producing activities

   4,162    5,664    136    646    1,541    12,149  

Income tax

   (2,948)   (3,427)   (103)   (309)   (747)   (7,534) 

Results of oil and gas producing activities

   1,214    2,237    33    337    794    4,615  

2010

       
Non-Group sales   2,839    2,639    628    1,038    2,540    9,684  
Group sales   5,599    9,894    540    644    683    17,360  

Total Revenues

   8,438    12,533    1,168    1,682    3,223    27,044  

Production costs

   (1,281)   (1,187)   (222)   (259)   (279)   (3,228) 

Exploration expenses

   (266)   (275)   (216)   (8)   (99)   (864) 

Depreciation, depletion and amortization and valuation allowances

   (1,404)   (1,848)   (368)   (264)   (830)   (4,714) 

Other expenses(a)

   (299)   (1,014)   (218)   (241)   (72)   (1,844) 

Pre-tax income from producing activities

   5,188    8,209    144    910    1,943    16,394  

Income tax

   (3,237)   (5,068)   (83)   (402)   (950)   (9,740) 

Results of oil and gas producing activities

   1,951    3,141    61    508    993    6,654  

2011

                         
Non-Group sales   3,116    3,188    776    1,159    3,201    11,440  
Group sales   7,057    11,365    764    737    712    20,635  

Total Revenues

   10,173    14,553    1,540    1,896    3,913    32,075  

Production costs

   (1,235)   (1,179)   (250)   (286)   (304)   (3,254) 

Exploration expenses

   (343)   (323)   (48)   (11)   (294)   (1,019) 

Depreciation, depletion and amortization and valuation allowances

   (1,336)   (1,845)   (352)   (278)   (791)   (4,602) 

Other expenses(a)

   (307)   (1,181)   (274)   (276)   (95)   (2,133) 

Pre-tax income from producing activities

   6,952    10,025    616    1,045    2,429    21,067  

Income tax

   (5,059)   (6,484)   (293)   (465)   (1,302)   (13,603) 

Results of oil and gas producing activities

   1,893    3,541    323    580    1,127    7,464  

(a)
(a)Included production taxes and accretion expense as provided for by IAS 37 (€223(€271 million in 2008, €2712009,€326 million in 20092010 and €326€338 million in 2010)2011).


S-12

   Equity affiliates 

(M€)

  Europe   Africa  Americas  Middle
East		  Asia  Total 

2009

        

Non-Group sales

   —     203    528    231    —    962  
Group sales   —     —    —    3,382    —    3,382  

Total Revenues

   —     203    528    3,613    —    4,344  

Production costs

   —     (31)   (41)   (271)   —    (343) 

Exploration expenses

   —     —    (17)   —    —    (17) 

Depreciation, depletion and amortization and valuation allowances

   —     (42)   (73)   (247)   —    (362) 

Other expenses

   —     (9)   (205)   (2,800)   —    (3,014) 

Pre-tax income from producing activities

   —     121    192    295    —    608  

Income tax

   —     (93)   (74)   (101)   —    (268) 

Results of oil and gas producing activities

   —     28    118    194    —    340  

2010

        
Non-Group sales   —     148    120    596    —    864  

Group sales

   —     3    565    4,646    —    5,214  

Total Revenues

   —     151    685    5,242    —    6,078  

Production costs

   —     (44)   (53)   (195)   (1)   (293) 

Exploration expenses

   —     (7)   (23)   —    —    (30) 

Depreciation, depletion and amortization and valuation allowances

   —     (44)   (89)   (259)   —    (392) 

Other expenses

   —     —    (268)   (4,034)   —    (4,302) 

Pre-tax income from producing activities

   —     56    252    754    (1)   1,061  

Income tax

   —     —    (44)   (142)   —    (186) 

Results of oil and gas producing activities

   —     56    208    612    (1)   875  

2011

        

Non-Group sales

   —     26    15    1,080    256    1,377  

Group sales

   —     —    831    6,804    —    7,635  

Total Revenues

   —     26    846    7,884    256    9,012  

Production costs

   —     (7)   (48)   (250)   (28)   (333) 

Exploration expenses

   —     —    —    —    (4)   (4) 

Depreciation, depletion and amortization and valuation allowances

   —     (7)   (44)   (225)   (109)   (385) 

Other expenses

   —     —    (550)   (6,101)   (36)   (6,687) 

Pre-tax income from producing activities

   —     12    204    1,308    79    1,603  

Income tax

   —     —    (95)   (285)   (34)   (414) 

Results of oil and gas producing activities

   —     12    109    1,023    45    1,189  

COST INCURRED

                         
  Equity affiliates 
           Middle
       
(in million euros) Europe  Africa  Americas  East  Asia  Total 
Group’s share of results of oil and gas producing activities
                        
2008  —   49   245   287   —   581 
                         
2009
                        
                         
Non-Group sales  —   203   528   231   —   962 
Group sales  —   —   —   3,382   —   3,382 
Total Revenues
  —   203   528   3,613   —   4,344 
Production costs  —   (31)  (41)  (271)  —   (343)
Exploration expenses  —   —   (17)  —   —   (17)
Depreciation, depletion and amortization and valuation allowances  —   (42)  (73)  (247)  —   (362)
Other expenses  —   (9)  (205)  (2,800)  —   (3,014)
Pre-tax income from producing activities
  —   121   192   295   —   608 
Income tax  —   (93)  (74)  (101)  —   (268)
Results of oil and gas producing activities
  —   28   118   194   —   340 
                         
2010
                        
                         
Non-Group sales  —   148   120   596   —   864 
Group sales  —   3   565   4,646   —   5,214 
                         
Total Revenues
  —   151   685   5,242   —   6,078 
                         
Production costs  —   (44)  (53)  (195)  (1)  (293)
Exploration expenses  —   (7)  (23)  —   —   (30)
Depreciation, depletion and amortization and valuation allowances  —   (44)  (89)  (259)  —   (392)
Other expenses  —   —   (268)  (4,034)  —   (4,302)
                         
Pre-tax income from producing activities
  —   56   252   754   (1)  1,061 
                         
Income tax  —   —   (44)  (142)  —   (186)
                         
Results of oil and gas producing activities
  —   56   208   612   (1)  875 
                         

S-13

COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION AND DEVELOPMENT
The following tables set forth the costs incurred in the Group’s oil and gas property acquisition, exploration and development activities, including both capitalized and expensed amounts. They do not include costs incurred related to oil and gas transportation and LNG liquefaction and transportation activities.
                         
  Consolidated subsidiaries 
           Middle
       
(in million euros) Europe  Africa  Americas  East  Asia  Total 
2008
                        
Proved property acquisition  269   78   —   8   18   373 
Unproved property acquisition  24   143   22   5   3   197 
Exploration costs  228   493   155   11   312   1,199 
Development costs(a)
  2,035   3,121   408   281   1,596   7,441 
Total cost incurred
  2,556   3,835   585   305   1,929   9,210 
2009
                        
Proved property acquisition  71   45   1,551   105   —   1,772 
Unproved property acquisition  26   8   403   —   21   458 
Exploration costs  284   475   222   87   123   1,191 
Development costs(a)
  1,658   3,288   618   250   1,852   7,666 
Total cost incurred
  2,039   3,816   2,794   442   1,996   11,087 
2010
                        
Proved property acquisition  162   137   26   139   21   485 
Unproved property acquisition  5   124   1,186   8   619   1,942 
Exploration costs  361   407   276   17   250   1,311 
Development costs(a)
  1,565   3,105   718   247   2,007   7,642 
                         
Total cost incurred
  2,093   3,773   2,206   411   2,897   11,380 
                         
                         
Group’s share of costs of property acquisition, exploration and development Equity affiliates 
           Middle
       
(in million euros) Europe  Africa  Americas  East  Asia  Total 
2008
  —   360   85   527   —   972 
                         
2009
                        
Proved property acquisition  —   —   —   —   —   — 
Unproved property acquisition  —   —   —   —   —   — 
Exploration costs  —   —   22   3   —   25 
Development costs(a)
  —   28   93   293   23   437 
Total cost incurred
  —   28   115   296   23   462 
2010
                        
Proved property acquisition  —   —   —   —   —   — 
Unproved property acquisition  —   —   —   —   —   — 
Exploration costs  —   4   30   4   —   38 
Development costs(a)
  —   20   99   476   73   668 
                         
Total cost incurred
  —   24   129   480   73   706 
                         

   Consolidated subsidiaries 

(M€)

  Europe   Africa   Americas   Middle
East		   Asia   Total 

2009

            

Proved property acquisition

   71     45     1,551     105     —     1,772  

Unproved property acquisition

   26     8     403     —     21     458  

Exploration costs

   284     475     222     87     123     1,191  

Development costs(a)

   1,658     3,288     618     250     1,852     7,666  

Total cost incurred

   2,039     3,816     2,794     442     1,996     11,087  

2010

            

Proved property acquisition

   162     137     26     139     21     485  

Unproved property acquisition

   5     124     1,186     8     619     1,942  

Exploration costs

   361     407     276     17     250     1,311  

Development costs(a)

   1,565     3,105     718     247     2,007     7,642  

Total cost incurred

   2,093     3,773     2,206     411     2,897     11,380  

2011

            

Proved property acquisition

   298     10     413     2     251     974  

Unproved property acquisition

   1     397     1,692     3     14     2,107  

Exploration costs

   505     384     239     17     417     1,562  

Development costs(a)

   2,352     3,895     1,329     329     2,823     10,728  

Total cost incurred

   3,156     4,686     3,673     351     3,505     15,371  

   Equity affiliates 

(M€)

  Europe   Africa   Americas   Middle
East		   Asia   Total 

2009

            

Proved property acquisition

   —     —     —     —     —     —  

Unproved property acquisition

   —     —     —     —     —     —  

Exploration costs

   —     —     22     3     —     25  

Development costs(a)

   —     28     93     293     23     437  

Total cost incurred

   —     28     115     296     23     462  

2010

            

Proved property acquisition

   —     —     —     —     —     —  

Unproved property acquisition

   —     —     —     —     —     —  

Exploration costs

   —     4     30     4     —     38  

Development costs(a)

   —     20     99     476     73     668  

Total cost incurred

   —     24     129     480     73     706  

2011

            

Proved property acquisition

   —     —     —     —     2,691     2,691  

Unproved property acquisition

   —     —     —     —     1,116     1,116  

Exploration costs

   —     —     2     —     —     2�� 

Development costs(a)

   —     2     106     314     939     1,361  

Total cost incurred

   —     2     108     314     4,746     5,170  

(a)
(a)Including asset retirement costs capitalized during the year and any gains or losses recognized upon settlement of asset retirement obligation during the year.


S-14


CAPITALIZED COSTS RELATED TO OIL AND GAS PRODUCING ACTIVITIES

The following tables do not include capitalized costs related to oil and gas transportation and LNG liquefaction and transportation activities.

                         
  Consolidated subsidiaries 
           Middle
       
(in million euros) Europe  Africa  Americas  East  Asia  Total 
As of December 31, 2008
                        
Proved properties  26,030   25,136   4,508   4,824   8,836   69,334 
Unproved properties  132   1,145   204   25   410   1,916 
Total capitalized costs
  26,162   26,281   4,712   4,849   9,246   71,250 
Accumulated depreciation, depletion and amortization  (18,382)  (12,339)  (2,051)  (3,420)  (2,598)  (38,790)
Net capitalized costs
  7,780   13,942   2,661   1,429   6,648   32,460 
                         
As of December 31, 2009
                        
Proved properties  30,613   27,557   7,123   5,148   10,102   80,543 
Unproved properties  337   1,138   839   30   555   2,899 
Total capitalized costs
  30,950   28,695   7,962   5,178   10,657   83,442 
Accumulated depreciation, depletion and amortization  (21,870)  (13,510)  (2,214)  (3,325)  (3,085)  (44,004)
Net capitalized costs
  9,080   15,185   5,748   1,853   7,572   39,438 
                         
As of December 31, 2010
                        
Proved properties  31,735   32,494   7,588   5,715   12,750   90,282 
Unproved properties  402   1,458   2,142   49   1,433   5,484 
Total capitalized costs
  32,137   33,952   9,730   5,764   14,183   95,766 
Accumulated depreciation, depletion and amortization  (23,006)  (16,716)  (2,302)  (3,849)  (4,092)  (49,965)
                         
Net capitalized costs
  9,131   17,236   7,428   1,915   10,091   45,801 
                         
                         
Group’s share of net capitalized costs Equity affiliates 
           Middle
       
(in million euros) Europe  Africa  Americas  East  Asia  Total 
As of December 31, 2008  —   403   288   638   —   1,329 
                         
As of December 31, 2009
                        
Proved properties  —   610   726   2,404   —   3,740 
Unproved properties  —   —   135   —   62   197 
Total capitalized costs
  —   610   861   2,404   62   3,937 
Accumulated depreciation, depletion and amortization  —   (387)  (171)  (1,723)  —   (2,281)
Net capitalized costs
  —   223   690   681   62   1,656 
                         
As of December 31, 2010
                        
Proved properties  —   639   887   3,110   —   4,636 
Unproved properties  —   25   168   —   138   331 
Total capitalized costs
  —   664   1,055   3,110   138   4,967 
Accumulated depreciation, depletion and amortization  —   (462)  (307)  (2,029)  —   (2,798)
                         
Net capitalized costs
  —   202   748   1,081   138   2,169 
                         


S-15

   Consolidated subsidiaries 

(M€)

  Europe  Africa  Americas  Middle
East		  Asia  Total 
As of December 31, 2009       

Proved properties

   30,613    27,557    7,123    5,148    10,102    80,543  

Unproved properties

   337    1,138    839    30    555    2,899  

Total capitalized costs

   30,950    28,695    7,962    5,178    10,657    83,442  

Accumulated depreciation, depletion and amortization

   (21,870)   (13,510)   (2,214)   (3,325)   (3,085)   (44,004) 

Net capitalized costs

   9,080    15,185    5,748    1,853    7,572    39,438  

As of December 31, 2010

       

Proved properties

   31,735    32,494    7,588    5,715    12,750    90,282  

Unproved properties

   402    1,458    2,142    49    1,433    5,484  

Total capitalized costs

   32,137    33,952    9,730    5,764    14,183    95,766  

Accumulated depreciation, depletion and amortization

   (23,006)   (16,716)   (2,302)   (3,849)   (4,092)   (49,965) 

Net capitalized costs

   9,131    17,236    7,428    1,915    10,091    45,801  

As of December 31, 2011

       

Proved properties

   34,308    37,032    8,812    6,229    17,079    103,460  

Unproved properties

   460    1,962    4,179    62    911    7,574  

Total capitalized costs

   34,768    38,994    12,991    6,291    17,990    111,034  

Accumulated depreciation, depletion and amortization

   (24,047)   (18,642)   (2,294)   (4,274)   (5,066)   (54,323) 

Net capitalized costs

   10,721    20,352    10,697    2,017    12,924    56,711  

   Equity affiliates 

(M€)

  Europe   Africa  Americas  Middle
East		  Asia  Total 

As of December 31, 2009

        

Proved properties

   —     610    726    2,404    —    3,740  

Unproved properties

   —     —    135    —    62    197  

Total capitalized costs

   —     610    861    2,404    62    3,937  

Accumulated depreciation, depletion and amortization

   —     (387)   (171)   (1,723)   —    (2,281) 

Net capitalized costs

   —     223    690    681    62    1,656  

As of December 31, 2010

        

Proved properties

   —     639    887    3,110    —    4,636  

Unproved properties

   —     25    168    —    138    331  

Total capitalized costs

   —     664    1,055    3,110    138    4,967  

Accumulated depreciation, depletion and amortization

   —     (462)   (307)   (2,029)   —    (2,798) 

Net capitalized costs

   —     202    748    1,081    138    2,169  

As of December 31, 2011

        

Proved properties

   —     —    731    3,496    3,973    8,200  

Unproved properties

   —     —    —    —    1,146    1,146  

Total capitalized costs

   —     —    731    3,496    5,119    9,346  

Accumulated depreciation, depletion and amortization

   —     —    (96)   (2,337)   (213)   (2,646) 

Net capitalized costs

   —     —    635    1,159    4,906    6,700  

STANDARDIZED MEASURE OF

DISCOUNTED FUTURE NET CASH FLOWS

(EXCLUDING TRANSPORTATION)

The standardized measure of discounted future net cash flows relating to proved oil and gas reserve quantities was developed as follows:

estimates of proved reserves and the corresponding production profiles are based on existing technical and economic conditions;

the estimated future cash flows are determined based on prices used in estimating the Group’s proved oil and gas reserves;

the future cash flows incorporate estimated production costs (including production taxes), future development costs and asset retirement costs. All cost estimates are based on year-end technical and economic conditions;

future income taxes are computed by applying the year-end statutory tax rate to future net cash flows after consideration of permanent differences and future income tax credits; and

• Estimates of proved reserves and the corresponding production profiles are based on existing technical and economic conditions;
• The estimated future cash flows are determined based on prices used in estimating the Group’s proved oil and gas reserves;
• The future cash flows incorporate estimated production costs (including production taxes), future development costs and asset retirement costs. All cost estimates are based on year-end technical and economic conditions;
• Future income taxes are computed by applying the year-end statutory tax rate to future net cash flows after consideration of permanent differences and future income tax credits; and
• Future net cash flows are discounted at a standard discount rate of 10 percent.

future net cash flows are discounted at a standard discount rate of 10%.

These principles applied are those required by ASC 932 and do not reflect the expectations of real revenues from these reserves, nor their present value; hence, they do not constitute criteria for investment decisions. An estimate of the fair value of reserves should also take into account, among other things, the recovery of reserves not presently classified as proved, anticipated future changes in prices and costs and a discount factor more representative of the time value of money and the risks inherent in reserves estimates.


S-16

                         
  Consolidated subsidiaries 
           Middle
       
(in million euros) Europe  Africa  Americas  East  Asia  Total 
As of December 31, 2008
                        
Future cash inflows  42,749   67,761   7,963   7,047   19,745   145,265 
Future production costs  (8,593)  (15,372)  (4,040)  (1,942)  (5,224)  (35,171)
Future development costs  (10,423)  (21,594)  (1,863)  (733)  (7,497)  (42,110)
Future income taxes  (15,651)  (14,571)  (367)  (1,577)  (2,545)  (34,711)
                         
Future net cash flows, after income taxes
  8,082   16,224   1,693   2,795   4,479   33,273 
Discount at 10%  (3,645)  (8,144)  (715)  (1,333)  (3,450)  (17,287)
                         
Standardized measure of discounted future net cash flows
  4,437   8,080   978   1,462   1,029   15,986 
                         
As of December 31, 2009
                        
Future cash inflows  50,580   107,679   18,804   9,013   32,004   218,080 
Future production costs  (11,373)  (23,253)  (8,286)  (2,831)  (6,996)  (52,739)
Future development costs  (12,795)  (21,375)  (5,728)  (698)  (6,572)  (47,168)
Future income taxes  (17,126)  (36,286)  (1,293)  (2,041)  (5,325)  (62,071)
                         
Future net cash flows, after income taxes
  9,286   26,765   3,497   3,443   13,111   56,102 
Discount at 10%  (3,939)  (13,882)  (2,696)  (1,558)  (8,225)  (30,300)
                         
Standardized measure of discounted future net cash flows
  5,347   12,883   801   1,885   4,886   25,802 
                         
As of December 31, 2010
                        
Future cash inflows  65,644   142,085   42,378   14,777   41,075   305,959 
Future production costs  (16,143)  (29,479)  (19,477)  (4,110)  (6,476)  (75,685)
Future development costs  (18,744)  (25,587)  (8,317)  (3,788)  (8,334)  (64,770)
Future income taxes  (20,571)  (51,390)  (3,217)  (2,541)  (7,281)  (85,000)
                         
Future net cash flows, after income taxes
  10,186   35,629   11,367   4,338   18,984   80,504 
Discount at 10%  (5,182)  (16,722)  (8,667)  (2,106)  (11,794)  (44,471)
                         
Standardized measure of discounted future net cash flows
  5,004   18,907   2,700   2,232   7,190   36,033 
                         
Minority interests in future net cash flows as of
                        
December 31, 2008
  217   (50)  —   —   —   167 
December 31, 2009  212   60   —   —   —   272 
                         
As of December 31, 2010
  273   344   —   —   —   617 
                         
 


S-17

  Consolidated subsidiaries 

(M€)

 Europe  Africa  Americas  Middle
East		  Asia  Total 

As of December 31, 2009

      

Future cash inflows

  50,580    107,679    18,804    9,013    32,004    218,080  

Future production costs

  (11,373)   (23,253)   (8,286)   (2,831)   (6,996)   (52,739) 

Future development costs

  (12,795)   (21,375)   (5,728)   (698)   (6,572)   (47,168) 

Future income taxes

  (17,126)   (36,286)   (1,293)   (2,041)   (5,325)   (62,071) 

Future net cash flows, after income taxes

  9,286    26,765    3,497    3,443    13,111    56,102  

Discount at 10%

  (3,939)   (13,882)   (2,696)   (1,558)   (8,225)   (30,300) 

Standardized measure of discounted future net cash flows

  5,347    12,883    801    1,885    4,886    25,802  

As of December 31, 2010

      

Future cash inflows

  65,644    142,085    42,378    14,777    41,075    305,959  

Future production costs

  (16,143)   (29,479)   (19,477)   (4,110)   (6,476)   (75,685) 

Future development costs

  (18,744)   (25,587)   (8,317)   (3,788)   (8,334)   (64,770) 

Future income taxes

  (20,571)   (51,390)   (3,217)   (2,541)   (7,281)   (85,000) 

Future net cash flows, after income taxes

  10,186    35,629    11,367    4,338    18,984    80,504  

Discount at 10%

  (5,182)   (16,722)   (8,667)   (2,106)   (11,794)   (44,471) 

Standardized measure of discounted future net cash flows

  5,004    18,907    2,700    2,232    7,190    36,033  

As of December 31, 2011

      

Future cash inflows

  85,919    167,367    53,578    14,297    67,868    389,029  

Future production costs

  (18,787)   (31,741)   (22,713)   (3,962)   (12,646)   (89,849) 

Future development costs

  (21,631)   (22,776)   (11,548)   (3,110)   (11,044)   (70,109) 

Future income taxes

  (28,075)   (71,049)   (4,361)   (2,794)   (12,963)   (119,242) 

Future net cash flows, after income taxes

  17,426    41,801    14,956    4,431    31,215    109,829  

Discount at 10%

  (9,426)   (17,789)   (12,298)   (2,186)   (20,717)   (62,416) 

Standardized measure of discounted future net cash flows

  8,000    24,012    2,658    2,245    10,498    47,413  

Minority interests in future net cash flows as of

      

December 31, 2009

  212    60    —    —    —    272  

December 31, 2010

  273    344    —    —    —    617  

December 31, 2011

  —    558    —    —    —    558  
  Equity affiliates 

(M€)

 Europe  Africa  Americas  Middle
East		  Asia  Total 

As of December 31, 2009

      

Future cash inflows

  —    1,432    16,750    48,486    —    66,668  

Future production costs

  —    (624)   (6,993)   (30,739)   —    (38,356) 

Future development costs

  —    (26)   (1,924)   (3,891)   —    (5,841) 

Future income taxes

  —    (245)   (3,650)   (1,843)   —    (5,738) 

Future net cash flows, after income taxes

  —    537    4,183    12,013    —    16,733  

Discount at 10%

  —    (239)   (2,816)   (6,383)   —    (9,438) 

Standardized measure of discounted future net cash flows

  —    298    1,367    5,630    —    7,295  

As of December 31, 2010

      

Future cash inflows

  —    1,814    22,293    59,472    —    83,579  

Future production costs

  —    (765)   (8,666)   (40,085)   —    (49,516) 

Future development costs

  —    (26)   (2,020)   (3,006)   —    (5,052) 

Future income taxes

  —    (349)   (5,503)   (2,390)   —    (8,242) 

Future net cash flows, after income taxes

  —    674    6,104    13,991    —    20,769  

Discount at 10%

  —    (203)   (3,946)   (7,386)   —    (11,535) 

Standardized measure of discounted future net cash flows

  —    471    2,158    6,605    —    9,234  

As of December 31, 2011

      

Future cash inflows

  —    210    29,887    64,977    7,116    102,190  

Future production costs

  —    (95)   (17,393)   (39,800)   (2,683)   (59,971) 

Future development costs

  —    —    (1,838)   (2,809)   (1,297)   (5,944) 

Future income taxes

  —    (29)   (5,152)   (3,942)   (2,280)   (11,403) 

Future net cash flows, after income taxes

  —    86    5,504    18,426    856    24,872  

Discount at 10%

  —    (36)   (3,652)   (9,757)   (196)   (13,641) 

Standardized measure of discounted future net cash flows

  —    50    1,852    8,669    660    11,231  

                         
  Equity affiliates 
           Middle
       
(in million euros) Europe  Africa  Americas  East  Asia  Total 
Group’s share of future net cash flows
                        
As of December 31, 2008  —   418   608   4,275   —   5,301 
                         
As of December 31, 2009
                        
Future cash inflows  —   1,432   16,750   48,486   —   66,668 
Future production costs  —   (624)  (6,993)  (30,739)  —   (38,356)
Future development costs  —   (26)  (1,924)  (3,891)  —   (5,841)
Future income taxes  —   (245)  (3,650)  (1,843)  —   (5,738)
                         
Future net cash flows, after income taxes
  —   537   4,183   12,013   —   16,733 
Discount at 10%  —   (239)  (2,816)  (6,383)  —   (9,438)
                         
Standardized measure of discounted future net cash flows
  —   298   1,367   5,630   —   7,295 
                         
As of December 31, 2010
                        
Future cash inflows  —   1,814   22,293   59,472   —   83,579 
Future production costs  —   (765)  (8,666)  (40,085)  —   (49,516)
Future development costs  —   (26)  (2,020)  (3,006)  —   (5,052)
Future income taxes  —   (349)  (5,503)  (2,390)  —   (8,242)
                         
Future net cash flows, after income taxes
  —   674   6,104   13,991   —   20,769 
Discount at 10%  —   (203)  (3,946)  (7,386)  —   (11,535)
                         
Standardized measure of discounted future net cash flows
  —   471   2,158   6,605   —   9,234 
                         

S-18

CHANGES IN THE STANDARDIZED MEASURE OF DISCOUNTED

FUTURE NET CASH FLOWS

             
(in million euros) 2010  2009  2008 
Consolidated subsidiaries
            
Beginning of year
  25,802   15,986   48,464 
Sales and transfers, net of production costs  (22,297)  (17,266)  (26,109)
Net change in sales and transfer prices and in production costs and other expenses  30,390   35,738   (81,358)
Extensions, discoveries and improved recovery  716   (267)  556 
Changes in estimated future development costs  (7,245)  (4,847)  (2,227)
Previously estimated development costs incurred during the year  7,896   7,552   6,960 
Revisions of previous quantity estimates  5,523   164   2,693 
Accretion of discount  2,580   1,599   4,846 
Net change in income taxes  (6,773)  (12,455)  63,611 
Purchases of reserves in place  442   230   50 
Sales of reserves in place  (1,001)  (632)  (1,500)
             
End of year
  36,033   25,802   15,986 
             
         
(in million euros) 2010  2009 
Equity affiliates
        
Beginning of year
  7,295   5,301 
Sales and transfers, net of production costs  (1,583)  (987)
Net change in sales and transfer prices and in production costs and other expenses  2,366   2,789 
Extensions, discoveries and improved recovery  —   407 
Changes in estimated future development costs  195   (88)
Previously estimated development costs incurred during the year  651   854 
Revisions of previous quantity estimates  308   (790)
Accretion of discount  730   530 
Net change in income taxes  (728)  (721)
Purchases of reserves in place  —   — 
Sales of reserves in place  —   — 
         
End of year
  9,234   7,295 
         

   Consolidated subsidiaries 

(M€)

  2009  2010  2011 

Beginning of year

   15,986    25,802    36,033  

Sales and transfers, net of production costs

   (17,266)   (22,297)   (27,026) 

Net change in sales and transfer prices and in production costs and other expenses

   35,738    30,390    44,315  

Extensions, discoveries and improved recovery

   (267)   716    1,680  

Changes in estimated future development costs

   (4,847)   (7,245)   (4,798) 

Previously estimated development costs incurred during the year

   7,552    7,896    9,519  

Revisions of previous quantity estimates

   164    5,523    1,288  

Accretion of discount

   1,599    2,580    3,603  

Net change in income taxes

   (12,455)   (6,773)   (16,925) 

Purchases of reserves in place

   230    442    885  

Sales of reserves in place

   (632)   (1,001)   (1,161) 

End of year

   25,802    36,033    47,413  
   Equity affiliates 

(M€)

  2009  2010  2011 

Beginning of year

   5,301    7,295    9,234  

Sales and transfers, net of production costs

   (987)   (1,583)   (1,991) 

Net change in sales and transfer prices and in production costs and other expenses

   2,789    2,366    3,715  

Extensions, discoveries and improved recovery

   407    —    —  

Changes in estimated future development costs

   (88)   195    (383) 

Previously estimated development costs incurred during the year

   854    651    635  

Revisions of previous quantity estimates

   (790)   308    (749) 

Accretion of discount

   530    730    923  

Net change in income taxes

   (721)   (728)   (1,341) 

Purchases of reserves in place

   —    —    1,812  

Sales of reserves in place

   —    —    (624) 

End of year

   7,295    9,234    11,231  

OTHER INFORMATION

Net gas production, production prices and production costs

                         
  Consolidated subsidiaries 
           Middle
       
  Europe  Africa  Americas  East  Asia  Total 
2009
                        
Natural gas production available for sale (Mcf/d)(a)
  1,643   480   545   297   1,224   4,189 
Production prices(b)
                        
Oil (€/b)  40.76   40.77   36.22   39.94   37.66   40.38 
Bitumen (€/b)  —   —   23.17   —   —   23.17 
Natural gas (€/kcf)  4.81   1.33   1.56   0.72   4.47   3.70 
Production costs per unit of production (€/boe)(c)(d)
                        
Total liquids and natural gas  5.30   4.35   3.59   3.86   2.52   4.30 
Bitumen  —   —   25.45   —   —   25.45 
                         


S-19

   Consolidated subsidiaries 

  

  Europe   Africa   Americas   Middle
East		   Asia   Total 
2009            

Natural gas production available for sale (Mcf/d)(a)

   1,643     480     545     297     1,224     4,189  

Production prices(b)

            

Oil (€/b)

   40.76     40.77     36.22     39.94     37.66     40.38  

Bitumen (€/b)

   —     —     23.17     —     —     23.17  

Natural gas (€/kcf)

   4.81     1.33     1.56     0.72     4.47     3.70  

Production costs per unit of production (€/boe)(c)

            

Total liquids and natural gas

   5.30     4.35     3.59     3.86     2.52     4.30  

Bitumen

   —     —     25.45     —     —     25.45  
   Equity affiliates 

  

  Europe   Africa   Americas   Middle
East		   Asia   Total 
2009            

Natural gas production available for sale (Mcf/d)(a)

   —     —     —     268     —     268  

Production prices(b)

            

Oil (€/b)

   —     42.98     33.14     43.98     —     42.18  

Bitumen (€/b)

   —     —     —     —     —     —  

Natural gas (€/kcf)

   —     —     —     3.53     —     3.53  

Production costs per unit of production (€/boe)(c)

            

Total liquids and natural gas

   —     4.21     2.24     2.81     —     2.81  

Bitumen

   —     —     —     —     —     —  
   Consolidated subsidiaries 

  

  Europe   Africa   Americas   Middle
East		   Asia   Total 

2010

            

Natural gas production available for sale (Mcf/d)(a)

   1,603     608     732     375     1,234     4,552  

Production prices(b)

            

Oil (€/b)

   55.70     56.18     45.28     55.83     52.33     55.39  

Bitumen (€/b)

   —     —     33.19     —     —     33.19  

Natural gas (€/kcf)

   5.17     1.55     1.83     0.63     5.67     3.94  

Production costs per unit of production (€/boe)(c)

            

Total liquids and natural gas

   6.23     4.53     3.29     4.82     2.93     4.72  

Bitumen

   —     —     17.49     —     —     17.49  
   Equity affiliates 

  

  Europe   Africa   Americas   Middle
East		   Asia   Total 

2010

            

Natural gas production available for sale (Mcf/d)(a)

   —     —     —     650     —     650  

Production prices(b)

            

Oil (€/b)

   —     53.96     43.81     57.03     —     54.95  

Bitumen (€/b)

   —     —     —     —     —     —  

Natural gas (€/kcf)

   —     —     —     2.30     —     2.30  

Production costs per unit of production (€/boe)(c)

            

Total liquids and natural gas

   —     6.31     2.76     1.54     —     1.91  

Bitumen

   —     —     —     —     —     —  

   Consolidated subsidiaries 
    Europe   Africa   Americas   Middle
East		   Asia   Total 

2011

            

Natural gas production available for sale (Mcf/d)(a)

   1,350     607     839     424     1,162     4,382  

Production prices(b)

            

Oil (€/b)

   74.24     74.72     55.13     73.73     68.76     73.34  

Bitumen (€/b)

   —     —     31.36     —     —     31.36  

Natural gas (€/kcf)

   6.58     1.81     2.06     0.54     7.45     4.72  

Production costs per unit of production (€/boe)(c)

            

Total liquids and natural gas

   6.86     5.14     3.41     5.36     3.40     5.20  

Bitumen

   —     —     20.70     —     —     20.70  
   Equity affiliates 
    Europe   Africa   Americas   Middle
East		   Asia   Total 

2011

            

Natural gas production available for sale (Mcf/d)(a)

   —     —     —     891     457     1,348  

Production prices(b)

            

Oil (€/b)

   —     66.21     61.15     77.07     30.75     73.61  

Bitumen (€/b)

   —     —     —     —     —     —  

Natural gas (€/kcf)

   —     —     —     1.29     0.95     1.23  

Production costs per unit of production (€/boe)(c)

            

Total liquids and natural gas

   —     1.99     2.75     1.66     0.79     1.61  

Bitumen

   —     —     —     —     —     —  

                         
  Equity affiliates 
           Middle
       
  Europe  Africa  Americas  East  Asia  Total 
2009
                        
Natural gas production available for sale (Mcf/d)(a)
  —   —   —   268   —   268 
Production prices(b)
                        
Oil (€/b)  —   42.98   33.14   43.98   —   42.18 
Bitumen (€/b)  —   —   —       —   — 
Natural gas (€/kcf)  —   —   —   3.53   —   3.53 
Production costs per unit of production (€/boe)(c)
                        
Total liquids and natural gas  —   4.21   2.24   2.81   —   2.81 
Bitumen  —   —   —   —   —   — 
                         
                         
  Consolidated subsidiaries 
           Middle
       
  Europe  Africa  Americas  East  Asia  Total 
2010
                        
Natural gas production available for sale (Mcf/d)(a)
  1,603   608   732   375   1,234   4,552 
Production prices(b)
                        
Oil (€/b)  55.70   56.18   45.28   55.83   52.33   55.39 
Bitumen (€/b)  —   —   33.19   —   —   33.19 
Natural gas (€/kcf)  5.17   1.55   1.83   0.63   5.67   3.94 
Production costs per unit of production (€/boe)(c)
                        
Total liquids and natural gas  6.23   4.53   3.29   4.82   2.93   4.72 
Bitumen  —   —   17.49   —   —   17.49 
                         
                         
  Equity affiliates 
           Middle
       
  Europe  Africa  Americas  East  Asia  Total 
2010
                        
Natural gas production available for sale (Mcf/d)(a)
  —   —   —   650   —   650 
Production prices(b)
                        
Oil (€/b)  —   53.96   43.81   57.03   —   54.95 
Bitumen (€/b)  —   —   —   —   —   — 
Natural gas (€/kcf)  —   —   —   2.30   —   2.30 
Production costs per unit of production (€/boe)(c)
                        
Total liquids and natural gas  —   6.31   2.76   1.54   —   1.91 
Bitumen  —   —   —   —   —   — 
                         
(a)
(a)The reported volumes are different from those shown in the reserves table due to gas consumed in operations.
(b)The volumes used for calculation of the average sales prices are the ones sold from the Group’s own production.
(c)The volumes of liquids used for this computation are shown in the proved reserves tables of this report. The reported volumes for natural gas are different from those shown in the reserves table due to gas consumed in operations.
(d)Production costs previously reported for consolidated subsidiaries have been restated.

S-20

S-19